Exhibit 10.73
Execution Copy
 
SALE AND SERVICING AGREEMENT
among
CAPITALSOURCE FUNDING VII TRUST,
as Issuer
and
CS FUNDING VII DEPOSITOR LLC,
as Depositor
and
CAPITALSOURCE FINANCE LLC,
as Loan Originator and Servicer
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Indenture Trustee, Collateral Custodian and Backup Servicer
Dated as of April 19, 2007
COMMERCIAL LOAN BACKED NOTES
 

 

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TABLE OF CONTENTS

              Page ARTICLE I
 
        DEFINITIONS
 
       
Section 1.01 Definitions
    1  
Section 1.02 Other Definitional Provisions
    27  
 
        ARTICLE II
 
        CONVEYANCE OF THE COLLATERAL; ADDITIONAL NOTE PRINCIPAL BALANCES
 
       
Section 2.01 Conveyance of the Collateral; Additional Note Principal Balances
    28  
Section 2.02 Ownership and Possession of Loan Files
    29  
Section 2.03 Books and Records; Intention of the Parties
    30  
Section 2.04 Delivery of Loan Documents
    30  
Section 2.05 Acceptance by the Indenture Trustee of the Loans; Certain
Substitutions and Repurchases; Certification by the
                  Collateral Custodian
    31  
Section 2.06 Conditions Precedent to Transfer Dates
    33  
Section 2.07 Additional Advances by Initial Noteholder
    35  
Section 2.08 Termination of Revolving Period
    35  
Section 2.09 Correction of Errors
    35  
 
        ARTICLE III
 
        REPRESENTATIONS AND WARRANTIES
 
       
Section 3.01 Representations and Warranties of the Depositor
    36  
Section 3.02 Representations and Warranties of the Loan Originator
    38  
Section 3.03 [RESERVED]
    40  
Section 3.04 Representations and Warranties Regarding Eligible Loans
    40  
Section 3.05 Purchase and Substitution
    46  
Section 3.06 Dispositions
    48  
Section 3.07 Removal or Repurchase of Call Loans
    51  
Section 3.08 Underwriting Guidelines; Modifications
    51  
 
        ARTICLE IV
 
        ADMINISTRATION AND SERVICING OF THE LOANS
 
       
Section 4.01 Servicer’s Servicing Obligations
    51  
Section 4.02 Loan Register
    51  
Section 4.03 The Backup Servicer; Duties of the Backup Servicer
    52  

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              Page ARTICLE V
 
        ESTABLISHMENT OF TRUST ACCOUNTS
 
       
Section 5.01 Collection Account, Principal Collections Account and Distribution
Account
    54  
Section 5.02 Payments to Securityholders
    59  
Section 5.03 Trust Accounts; Trust Account Property
    60  
 
        ARTICLE VI
 
        STATEMENTS AND REPORTS; SPECIFICATION OF TAX MATTERS
 
       
Section 6.01 Statements
    62  
Section 6.02 Specification of Certain Tax Matters
    62  
 
        ARTICLE VII
 
        COVENANTS
 
       
Section 7.01 Financial Covenants of CapitalSource
    62  
Section 7.02 Financial Statements of CapitalSource
    62  
 
        ARTICLE VIII
 
        THE SERVICER AND THE BACKUP SERVICER
 
       
Section 8.01 Indemnification; Third Party Claims
    63  
Section 8.02 Merger or Consolidation of the Servicer and Backup Servicer
    65  
Section 8.03 Limitation on Liability of the Servicer and the Backup Servicer
    66  
Section 8.04 No Resignation; Assignment
    66  
Section 8.05 Relationship of Servicer to Issuer and the Indenture Trustee
    67  
Section 8.06 Servicer May Own Securities
    67  
Section 8.07 Indemnification of the Indenture Trustee and Initial Noteholder
    68  
 
        ARTICLE IX
 
        SERVICER EVENTS OF DEFAULT
 
       
Section 9.01 Servicer Events of Default
    68  
Section 9.02 Appointment of Successor
    70  
Section 9.03 Waiver of Defaults
    72  
Section 9.04 Accounting Upon Termination of Servicer
    73  
Section 9.05 Removal of Backup Servicer
    73  
 
        ARTICLE X
 
        THE COLLATERAL CUSTODIAN
 
       
Section 10.01 Appointment
    73  
Section 10.02 No Representations
    74  

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              Page
Section 10.03 Custody of Custodial Loan Files
    74  
Section 10.04 Standard of Care
    74  
Section 10.05 Acknowledgment
    74  
 
        ARTICLE XI
 
        [RESERVED.]
 
        ARTICLE XII
 
        TERMINATION
 
       
Section 12.01 Termination
    74  
Section 12.02 Optional Termination
    75  
Section 12.03 Notice of Termination
    75  
 
        ARTICLE XIII
 
        MISCELLANEOUS PROVISIONS
 
       
Section 13.01 Acts of Securityholders
    75  
Section 13.02 Amendment
    76  
Section 13.03 Recordation of Agreement
    76  
Section 13.04 Duration of Agreement
    76  
Section 13.05 Governing Law
    77  
Section 13.06 Notices
    77  
Section 13.07 Severability of Provisions
    77  
Section 13.08 No Partnership
    78  
Section 13.09 Counterparts
    78  
Section 13.10 Successors and Assigns
    78  
Section 13.11 Headings
    78  
Section 13.12 Actions of Securityholders
    78  
Section 13.13 Non-Petition Agreement
    79  
Section 13.14 Holders of the Securities
    79  
Section 13.15 Due Diligence
    79  
Section 13.16 No Reliance
    80  
Section 13.17 Conflicts
    80  
Section 13.18 Limitation on Liability
    80  
Section 13.19 No Agency
    80  
Section 13.20 Third Party Beneficiaries
    81  
Section 13.21 Performance by Wells Fargo Bank, National Association
    81  

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EXHIBIT A
  Form of Notice of Additional Note Principal Balance
EXHIBIT B
  Form of Monthly Servicer Report
EXHIBIT C
  Form of S&SA Assignment
EXHIBIT D
  Form of Loan Schedule
EXHIBIT E-1
  Form of Initial Certification
EXHIBIT E-2
  Form of Final Certification
EXHIBIT F
  Form of Borrowing Base Certificate
EXHIBIT G
  List of Investors
EXHIBIT H
  Monthly Officer’s Certification
EXHIBIT I
  List of Loans Sold in Connection With a Noteholder SS Advance
EXHIBIT J
  Exceptions With Respect to Representations and Warranties Made With Respect To
Each SS Underlying Loan (Section 3.04(tt))
EXHIBIT K
  Schedule of Certain Loans (Section 2.05(b)(iv))

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SALE AND SERVICING AGREEMENT
          This Sale and Servicing Agreement is entered into effective as of
April 19, 2007, among CapitalSource Funding VII Trust, a Delaware statutory
trust (the “Issuer”), CS Funding VII Depositor LLC, a Delaware limited liability
company, as Depositor (in such capacity, the “Depositor”), CapitalSource Finance
LLC, a Delaware limited liability company (“CapitalSource”), as Loan Originator
(in such capacity, the “Loan Originator”) and as Servicer (in such capacity, the
“Servicer”) and Wells Fargo Bank, National Association, a national banking
association, as Indenture Trustee on behalf of the Noteholders (in such
capacity, the “Indenture Trustee”), as Collateral Custodian (the “Collateral
Custodian”) and as Backup Servicer (the “Backup Servicer”).
W I T N E S S E T H:
          In consideration of the mutual agreements herein contained, the
parties hereto hereby agree as follows for the benefit of each of them and for
the benefit of the holders of the Securities:
ARTICLE I
DEFINITIONS
          Section 1.01 Definitions.
          Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the meanings specified in this
Article. Unless otherwise specified, all calculations of interest described
herein shall be made on the basis of a 360-day year and the actual number of
days elapsed in each Accrual Period.
          Accepted Servicing Practices: The servicing practices and collection
procedures of the Servicer that are in accordance with the Underwriting
Guidelines, the Required Loan Documents and applicable law and which are, in any
event, customary servicing practices of prudent institutions which service loans
similar to the Loans for their own account.
          Accrual Period: With respect to the Notes, the period commencing on
and including the preceding Payment Date (or, in the case of the first Payment
Date, the period commencing on and including the first Transfer Date (which
first Transfer Date is the first date on which the Note Principal Balance is
greater than zero)) and ending on the day preceding the related Payment Date.
          Act or Securities Act: The Securities Act of 1933.
          Acquired Loan: A Loan that is originated by a Person other than the
Loan Originator and is acquired by the Loan Originator in a “true sale”
transaction pursuant to an acquisition agreement and is otherwise acceptable to
the Initial Noteholder.
          Additional Note Principal Balance: With respect to each Transfer Date,
the aggregate Sales Price of all Loans conveyed to the Issuer on such date.

 

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          Additional Noteholder: Any Noteholder other than the Initial
Noteholder.
          Administration Agreement: The Administration Agreement, dated as of
April 19, 2007, between the Issuer and the Administrator, as the same may be
amended and supplemented from time to time.
          Administrator: CapitalSource Finance LLC, in its capacity as
Administrator under the Administration Agreement.
          Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, “control” when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms “controlling” and
“controlled” have meanings correlative to the foregoing.
          Agreement: This Sale and Servicing Agreement, as the same may be
amended and supplemented from time to time.
          Alarm Service Loan: An Eligible Loan to a Dealer (or any other Person
agreed to by the Issuer and the Initial Noteholder) that has secured its
repayment obligations with the payments from one or more individuals, businesses
or other entities which have entered into security alarm monitoring or security
alarm monitoring and maintenance contracts to receive the security alarm
monitoring or security alarm monitoring and maintenance services provided
thereby.
          Assigned Loan: A Loan originated by a Person other than the Loan
Originator in which a constant percentage or a fixed principal amount has been
assigned to the Loan Originator or in which a participation interest has been
granted to the Loan Originator by such Person in accordance with the Loan
Originator’s Underwriting Guidelines and (a) such transaction has been fully
consummated prior to such Loan becoming subject to this Agreement; (b) except
with respect to participation interests, the Loan Originator is not a party to
(but is instead an assignee of) the underlying loan documents; (c) upon the sale
of any Underlying Notes or related Participation Certificates to the Depositor
under the Loan Sale Agreement and sale to the Issuer by the Depositor under this
Agreement, any such Underlying Notes or Participation Certificates, as the case
may be, will be endorsed in blank and held by the Collateral Custodian on behalf
of the Indenture Trustee for the benefit of the Noteholders; (d) the Issuer, as
assignee of any Underlying Notes or Participation Certificates, as applicable,
will have all of the rights (but none of the obligations) of the Loan Originator
with respect to any such Underlying Notes or Participation Certificates, as
applicable and the Loan Originator’s right, title and interest in and to the
Loan Collateral; (e) any Underlying Notes are secured by, and the Participation
Certificates represent, an undivided interest in any and all Loan Collateral
that also secures and is shared by, on a pro rata basis, all other holders of
such Obligor’s notes of equal priority; and (f) the agent bank receives payment
directly from the Obligor thereof on behalf of each lender that has been
assigned a percentage interest in such Loan.
          Assignment: A LPA Assignment or S&SA Assignment.

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          Backup Servicer: Wells Fargo Bank, National Association or any
successor thereto appointed as provided herein.
          Backup Servicer Fee Letter: Shall mean that certain fee letter, dated
as of April 19, 2007, among the Loan Originator, the Servicer, Citigroup Global
Markets Inc. and the Backup Servicer.
          Backup Servicing Fee: Shall have the meaning given such term in the
Backup Servicer Fee Letter.
          Backup Servicer Termination Notice: Has the meaning set forth in
Section 9.05(a) hereof.
          Bankruptcy Code: Title 11 of the United States Code.
          Bankruptcy Event: With respect to a Person, shall be deemed to have
occurred if either:
          (a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court seeking the liquidation,
reorganization, debt arrangement, dissolution, winding up, or composition or
readjustment of debts of such Person, the appointment of a trustee, receiver,
custodian, liquidator, assignee, sequestrator or the like for such Person or for
all or substantially all of its assets, or any similar action with respect to
such Person under any law relating to bankruptcy, insolvency, reorganization,
winding up or composition or adjustment of debts, and such case or proceeding
shall continue undismissed or unstayed, and in effect, for a period of 60
consecutive days; or an order for relief in respect of such Person shall be
entered in an involuntary case under the Bankruptcy Code or other similar laws
now or hereafter in effect, or
          (b) such Person shall commence a voluntary case or other proceeding
under any applicable bankruptcy, insolvency, reorganization, debt arrangement,
dissolution or other similar law now or hereafter in effect, or shall consent to
the appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) for such Person or
for any substantial part of its assets, or shall make any general assignment for
the benefit of creditors, or shall fail to, or admit in writing its inability
to, pay its debts generally as they become due, or, if a corporation or similar
entity, its board of directors shall vote to implement any of the foregoing.
          Basic Documents: This Agreement, the Indenture, the Loan Sale
Agreement, the Note Purchase Agreement, the Trust Agreement, the Lockbox
Agreement, the Intercreditor Agreement, the Administration Agreement, each
Interest Rate Hedge Agreement, and, as and when required to be executed and
delivered, the Assignments.
          Borrowing Base: On any date of determination, the sum of:

  (i)   the product of (A) the Rated Retained Securities, plus the outstanding
unpaid principal balance of all Eligible Loans included in the Loan Pool prior
to such date of determination

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      minus the amount (calculated without duplication) by which such Eligible
Loans exceed the Concentration Limitation and minus, with respect to Charged-Off
Loans, (x) 50% of the outstanding unpaid principal balance of all Charged-Off
Loans for which any Scheduled Payment is at least ninety (90) days but less than
one hundred eighty (180) days delinquent as of such date of determination and
(y) the outstanding unpaid principal balance of all Charged-Off Loans that are
Charged-Off Loans for any reason other than the Scheduled Payment delinquency
referenced in clause (x) above and (B) the Purchase Price Percentage (determined
on such date), and     (ii)   the amount on deposit in the Principal Collections
Account on such date of determination, but only to the extent such amount has
been applied to reduce the outstanding principal balance of the related Loans
(without duplication).

          Borrowing Base Certificate: The certificate in the form attached
hereto as Exhibit F.
          Borrowing Base Deficiency: With respect to any date of determination,
an amount equal to excess of the Note Principal Balance over the Borrowing Base
as of such date of determination.
          Borrowing Base Excess: With respect to any date of determination, an
amount equal to the excess of the Borrowing Base over the Note Principal
Balance, in each case as of such date of determination.
          Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking institutions in New York City or in the city in which the
Corporate Trust Office of the Indenture Trustee or the Paying Agent is located
or the city in which the Servicer’s servicing operations are located are
authorized or obligated by law or executive order to be closed.
          Call Loan: As of any date of Disposition, any Loan which does not meet
criteria established by independent rating agencies or surety agency conditions
for securitizations at the time of such Disposition.
          Certificateholder: A holder of a Trust Certificate.
          Change of Control: Shall occur if either (a) Any “Person” or
“group”(as such terms are used in Sections 13(d) and 14(d) of the Securities and
Exchange Act of 1934, as amended), other than the Investors, shall become the
“beneficial owner” (as defined in Section 13(d)-3 and 13(d)-5 under such Act),
directly or indirectly, of shares representing more than the greater of (i) 20%
of the shares outstanding of CapitalSource Inc. and (ii) the percentage of the
aggregate then outstanding voting stock of CapitalSource Inc. owned
beneficially, directly or indirectly, by the Investors; or (b) the board of
directors of CapitalSource Inc. shall not consist of at least a majority of
Continuing Directors.

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          Charged-Off Loan: A Loan in the Loan Pool as to which there has
occurred and is continuing one or more of the following: (i) the occurrence of
both (A) all or any portion of a payment of interest on or principal of such
Loan is not paid when due (without giving effect to any grace period) or would
be so delinquent, but for any amendment or modification made to such Loan
resulting from the Obligor’s inability to pay such Loan in accordance with its
terms and (B) within ninety (90) calendar days of when such delinquent payment
was first due, all delinquencies have not been cured, (ii) a Bankruptcy Event
has occurred with respect to the related Obligor, (iii) the related Obligor has
suffered any material adverse change that materially affects its viability as a
going concern, (iv) the Servicer has determined, in its sole discretion, in
accordance with the Underwriting Guidelines, that all or a portion of such Loan
is not collectible, or (v) any portion of the proceeds used to make payments of
principal of or interest on such Loan have come from a new Loan or a new loan by
the Loan Originator or an entity controlled by the Loan Originator to the
Obligor or any of its Affiliates.
          Clean-up Call Date: The first Payment Date occurring after the end of
the Revolving Period on which the Note Principal Balance declines to 10% or less
of the aggregate Note Principal Balance as of the end of the Revolving Period.
          Closing Date: April 19, 2007.
          Code: The Internal Revenue Code of 1986, as amended from time to time,
and the regulations promulgated by the United States Treasury thereunder.
          Collateral: Has the meaning set forth in the Indenture.
          Collateral Custodian: Wells Fargo Bank, National Association.
          Collection Account: The account designated as such, established and
maintained by the Servicer in accordance with Section 5.01(a)(1) hereof.
          Collection Date: The date following the Termination Date on which the
Note Principal Balance has been reduced to zero and paid in full.
          Commission: The Securities and Exchange Commission.
          Concentration Limitation: On any date of determination, the aggregate
Principal Balance of all Loans made to a single Obligor shall not exceed 2.75%
of the aggregate Note Principal Balance.
          Continued Errors: Has the meaning set forth in Section 9.02(d) hereof.
          Continuing Directors: The directors of CapitalSource Inc. on the
Closing Date, and each other director if, in each case, such other director’s
nomination for election to the board of directors is recommended by majority of
the then Continuing Directors or such other director receives the vote of the
Investors in his or her election by the stockholders of CapitalSource Inc.
          Custodial Loan File: With respect to each Eligible Loan, the documents
delivered to the Collateral Custodian, as agent for the Indenture Trustee, for
the benefit of the Noteholders pursuant to Section 2.04 hereof.

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          Daily Interest Accrual Amount: With respect to each day and the
related Accrual Period, an amount equal to the interest accrued at the Note
Interest Rate with respect to such Accrual Period on an amount equal to the Note
Principal Balance, determined as of the preceding Business Day after giving
effect to all changes to the Note Principal Balance on or prior to such
preceding Business Day.
          Dealer: The security alarm dealer who sells one or more security alarm
monitoring or security alarm monitoring and maintenance contracts to one or more
Persons obligated to pay for the service(s) provided under such contract(s).
          Default: Any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
          Deleted Loan: An Eligible Loan replaced or to be replaced by one or
more Qualified Substitute Loans.
          Delinquent Loan: A Loan (other than a Charged-Off Loan) in the Loan
Pool as to which there has occurred one or more of the following: (i) the
occurrence of both (A) all or any portion of a payment of interest on or
principal of such Loan is not paid when due (without giving effect to any grace
period) or would be so delinquent, but for any amendment, modification, waiver
or variance made to such Loan resulting from the Obligor’s inability to pay such
Loan in accordance with its terms and (B) within sixty (60) calendar days of
when such delinquent payment was first due, all delinquencies have not been
cured or (ii) consistent with the Loan Originator’s Underwriting Guidelines such
Loan would be classified as delinquent by the Servicer or the Loan Originator.
          Delivery: When used with respect to Trust Account Property means:
     (a) with respect to bankers’ acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute “instruments”
within the meaning of Section 9-105(l)(i) of the UCC and are susceptible of
physical delivery (except with respect to Trust Account Property consisting of
certificated securities (as defined in Section 8-102(a)(4) of the UCC)),
physical delivery to the Indenture Trustee or its custodian (or the related
Securities Intermediary) endorsed to the Indenture Trustee or its custodian (or
the related Securities Intermediary) or endorsed in blank (and if delivered and
endorsed to the Securities Intermediary, by continuous credit thereof by book
entry to the related Trust Account);
     (b) with respect to a certificated security (i) delivery of such
certificated security endorsed to, or registered in the name of, the Indenture
Trustee or endorsed in blank to its custodian or the related Securities
Intermediary and the making by such Securities Intermediary of appropriate
entries in its records identifying such certificated securities as credited to
the related Trust Account, or (ii) by delivery thereof to a “clearing
corporation” (as defined in Section 8-102(5) of the UCC) and the making by such
clearing corporation of appropriate entries in its records crediting the
securities account of the related Securities Intermediary by the amount of such
certificated security and the making by such Securities Intermediary of
appropriate entries in its records identifying such certificated securities as
credited to the related Trust Account (all of the Trust Account Property
described in Subsections (a) and (b), “Physical Property”);

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and, in any event, any such Physical Property in registered form shall be in the
name of the Indenture Trustee or its nominee or custodian (or the related
Securities Intermediary); and such additional or alternative procedures as may
hereafter become appropriate to effect the complete transfer of ownership of any
such Trust Account Property to the Indenture Trustee or its nominee or
custodian, consistent with changes in applicable law or regulations or the
interpretation thereof;
     (c) with respect to any security issued by the U.S. Treasury, Fannie Mae or
Freddie Mac that is a book-entry security held through the Federal Reserve
System pursuant to federal book-entry regulations, the following procedures, all
in accordance with applicable law, including applicable federal regulations and
Articles 8 and 9 of the UCC: the making by a Federal Reserve Bank of an
appropriate entry crediting such Trust Account Property to an account of the
related Securities Intermediary or the securities intermediary that is (x) also
a “participant” pursuant to applicable federal regulations and (y) is acting as
securities intermediary on behalf of the Securities Intermediary with respect to
such Trust Account Property; the making by such Securities Intermediary or
securities intermediary of appropriate entries in its records crediting such
book-entry security held through the Federal Reserve System pursuant to federal
book-entry regulations and Articles 8 and 9 of the UCC to the related Trust
Account; and such additional or alternative procedures as may hereafter become
appropriate to effect complete transfer of ownership of any such Trust Account
Property to the Indenture Trustee or its nominee or custodian, consistent with
changes in applicable law or regulations or the interpretation thereof; and
     (d) with respect to any item of Trust Account Property that is an
uncertificated security (as defined in Section 8-102(a)(18) of the UCC) and that
is not governed by clause (c) above, registration in the records of the issuer
thereof in the name of the related Securities Intermediary, and the making by
such Securities Intermediary of appropriate entries in its records crediting
such uncertificated security to the related Trust Account.
          Depositor: CS Funding VII Depositor LLC, a Delaware limited liability
company.
          Designated Depository Institution: With respect to an Eligible
Account, an institution whose deposits are insured by the Bank Insurance Fund or
the Savings Association Insurance Fund of the FDIC, the long-term deposits of
which shall be rated “A” or better by S&P or “A2” or better by Moody’s and the
short-term deposits of which shall be rated “P-1” or better by Moody’s and “A-1”
or better by S&P, unless otherwise approved in writing by the Initial Noteholder
and which is any of the following: (A) a federal savings and loan association
duly organized, validly existing and in good standing under the federal banking
laws, (B) an institution duly organized, validly existing and in good standing
under the applicable banking laws of any state, (C) a national banking
association duly organized, validly existing and in good standing under the
federal banking laws, (D) a principal subsidiary of a bank holding company or
(E) approved in writing by the Initial Noteholder and, in each case acting or
designated by the Servicer as the depository institution for the Eligible
Account; provided, however, that any such institution or association shall have
combined capital, surplus and undivided profits of at least $50,000,000.

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          DIP Loan: A Loan to an Obligor that is a “debtor-in-possession” as
defined under the Bankruptcy Code.
          Disposition: A Securitization, Whole Loan Sale transaction, or other
disposition of Loans, including, without limitation, pursuant to Section 3.06.
          Disposition Participant: As applicable, with respect to a Disposition,
any “depositor” with respect to such Disposition, the Majority Noteholders, the
Issuer, the Servicer, the related trustee and the related custodian, any
nationally recognized credit rating agency, the related underwriters, the
related placement agent, the related credit enhancer, the related whole-loan
purchaser, the related purchaser of securities and/or any other party necessary
or, in the good faith belief of any of the foregoing, desirable to effect a
Disposition.
          Disposition Proceeds: With respect to a Disposition, (x) the proceeds
of the Disposition remitted to the Issuer in respect of the Loans transferred on
the date of and with respect to such Disposition, including without limitation,
any cash less all costs, fees and expenses incurred in connection with such
Disposition, including, without limitation, all amounts deposited into any
reserve accounts upon the closing thereof plus or minus (y) all other amounts
agreed upon in writing by the Initial Noteholder, the Issuer and the Servicer.
          Distribution Account: The account established and maintained pursuant
to Section 5.01(a)(3) hereof.
          Due Date: The day of the month on which the Scheduled Payment is due
from the Obligor with respect to an Eligible Loan.
          Eligible Account: At any time, an account which is: (i) maintained
with a Designated Depository Institution; or (ii) fully insured by either the
Bank Insurance Fund or the Savings Association Insurance Fund of the FDIC; or
(iii) a trust account (which shall be a “segregated trust account”) maintained
with the corporate trust department of a federal or state chartered depository
institution or trust company with trust powers and acting in its fiduciary
capacity for the benefit of the Indenture Trustee and the Issuer, which
depository institution or trust company shall have capital and surplus of not
less than $50,000,000; or (iv) with the prior written consent of the Majority
Noteholders, any other account.
          Eligible Loan: With respect to any date of determination, a Rated
Retained Security or any Loan which complies with the representations and
warranties set forth in Section 3.04 with respect to such Loan.
          Eligible Obligor: For any date of determination, any Obligor that
(i) is either (x) a legal operating entity or holding company or (y) an Obligor
which is a special purpose entity, and not a natural person, (ii) has not
entered into the Loan primarily for personal, family or household purposes,
(iii) is not a Governmental Authority, (iv) is not in the gaming, nuclear waste,
biotechnology or natural resources industry, (v) except with respect to a DIP
Loan, is not the subject of a Bankruptcy Event, and (vi) is not an Obligor of a
Charged-Off Loan or Delinquent Loan; provided however that the foregoing clause
(iv) shall not be deemed to prohibit an Obligor in the biotechnology industry
from being an Eligible Obligor, except for where such Obligor’s business
consists of conducting proprietary research on new drug development, if it
otherwise satisfies each of the foregoing criteria for eligibility.

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          Eligible Servicer: (x) CapitalSource or (y) any other Person to which
the Majority Noteholders may consent in writing.
          Enhanced Mezzanine Loan: Any Loan that (a) is ratably secured among
all lenders by a Lien on real property or the membership or other equity
interests of the owner of such real property and has a subordinated right to
payment relative to the senior lenders, (b) has a Loan-to-Value Ratio of less
than or equal to 90% (with the denominator of such ratio calculated using the
projected completed value of the property) and (c) at least 80% of the
underlying real property is planned residential.
          Errors: Has the meaning set forth in Section 9.02(d) hereof.
          Event of Default: Either a Servicer Event of Default or an Event of
Default under the Indenture.
          Excess Spread: For any date of determination, a percentage equal to
the positive difference between (x) the weighted average Loan Interest Rate of
the Loan Pool (determined based on the unpaid principal balance of the Loans in
the Loan Pool) and (y) the sum of (i) the Note Interest Rate and (ii) the rate
at which the Trust Fees and Expenses accrue.
          Exchange Act: The Securities Exchange Act of 1934, as amended.
          Excluded Amounts: (a) Any amount received in the Lock-Box by, on or
with respect to any Loan in the Loan Pool, which is required to be remitted in
payment of any tax, fee or other charge imposed by any Governmental Authority on
such Loan, (b) any amount representing a reimbursement of insurance premiums
which are required to be paid to the related Obligor and (c) any amount with
respect to any Loan retransferred or substituted for that is otherwise replaced
by a Qualified Substitute Loan, to the extent such amount is attributable to a
time after the effective date of such replacement.
          Fannie Mae: The Federal National Mortgage Association and any
successor thereto.
          FDIC: The Federal Deposit Insurance Corporation and any successor
thereto.
          Final Certification: Has the meaning set forth in Section 2.05(b)(ii)
hereof.
          Fitch: Fitch Ratings or any successor in interest.
          Foreclosed Loan: As of any date of determination, any Eligible Loan
that as of the end of the preceding Remittance Period has been discharged as a
result of (i) the completion of foreclosure or comparable proceedings on the
Loan Collateral by the Servicer on behalf of the Issuer; (ii) in respect of any
Loan secured by real property, the acceptance of the deed or other evidence of
title to the related Mortgaged Property in lieu of foreclosure or other
comparable proceeding; or (iii) the acquisition of title to the related Loan
Collateral by operation of law.
          Foreclosure Property: Any real property securing a Foreclosed Loan
that has been acquired by the Servicer on behalf of the Issuer through
foreclosure, deed in lieu of foreclosure or similar proceedings in respect of
the related Foreclosed Loan.

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          Freddie Mac: The Federal Home Loan Mortgage Corporation and any
successor thereto.
          GAAP: Generally Accepted Accounting Principles as in effect in the
United States.
          Governmental Authority: With respect to any Person, any national,
government, state or other political division thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to any court or arbitrator having jurisdiction over such Person.
          Hedge Counterparty: Either (i) Citibank, N.A. or any successor to or
assignee of Citibank, N.A. under the related Interest Rate Hedging Agreement or
(ii) both (A) at the time of execution and delivery of the related Interest Rate
Hedge Agreement, any bank or other financial institution (or any party providing
credit support on such Person’s behalf) that has (x) a long-term unsecured debt
rating of at least “A” from S&P and “A2” from Moody’s and (y) a short-term
unsecured debt rating of “A-1” from S&P and “P-1” from Moody’s or is otherwise
approved by the Initial Noteholder and, (B) thereafter, any bank or other
financial institution (or any party providing credit support on such Person’s
behalf) that has not suffered an Interest Rate Hedge Counterparty Required
Rating Downgrade Event
          Indemnified Parties: Has the meaning set forth in Section 8.01(c)
hereof.
          Indenture: The Indenture dated as of April 19, 2007, between the
Issuer and the Indenture Trustee, as the same may be amended or supplemented
from time to time.
          Indenture Trustee: Wells Fargo Bank, National Association, a national
banking association, as Indenture Trustee under the Indenture, or any successor
indenture trustee under the Indenture.
          Indenture Trustee Fee: Shall have the meaning given such term in the
Backup Servicer Fee Letter.
          Independent: When used with respect to any specified Person, such
Person (i) is in fact independent of the Loan Originator, the Servicer, the
Depositor or any of their respective Affiliates, (ii) does not have any direct
financial interest in, or any material indirect financial interest in, the Loan
Originator, the Servicer, the Depositor or any of their respective Affiliates
and (iii) is not connected with the Loan Originator, the Depositor, the Servicer
or any of their respective Affiliates, as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar functions;
provided, however, that a Person shall not fail to be Independent of the Loan
Originator, the Depositor, the Servicer or any of their respective Affiliates
merely because such Person is the beneficial owner of 1% or less of any class of
securities issued by the Loan Originator, the Depositor, the Servicer or any of
their respective Affiliates, as the case may be.
          Initial Certification: Has the meaning set forth in Section 2.05(a)
hereof.

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          Initial Noteholder: Citigroup Global Markets Realty Corp., a New York
corporation.
          Initial Term: Has the meaning set forth in Section 9.01(c) hereof.
          Insurance Policies: With respect to any Eligible Loan, any insurance
policy covering liability and physical damage to or loss of the related Loan
Collateral, including, but not limited to, any hazard, flood, title,
environmental, flood, accident or life insurance policy.
          Insurance Proceeds: All amounts collected in respect of any Loan, Loan
Collateral or related property under any Insurance Policy and not required
either pursuant to applicable law or the related Loan Documents to be applied to
the restoration of the related Loan Collateral or paid to the related Obligor.
          Intercreditor Agreement: The Fourth Amended and Restated Intercreditor
and Lockbox Administration Agreement, dated as of June 30, 2005, by and among
Bank of America, N.A., as the lockbox bank, the Financing Agents (as defined
therein), the Loan Originator, as the original servicer and as the lockbox
servicer, and CapitalSource Funding LLC, as the owner of the account and as the
owner of the lockbox.
          Interest Carry-Forward Amount: With respect to any Payment Date is
equal to the amount, if any, by which the Interest Payment Amount for the
immediately preceding Payment Date exceeded the amount in respect of interest
that was actually paid from the Distribution Account on the immediately
preceding Payment Date, together with any Interest Carry-Forward Amount
remaining unpaid from the previous Payment Date.
          Interest Payment Amount: With respect to any Payment Date, the sum of
the Daily Interest Accrual Amounts for all days in the related Accrual Period.
          Interest Rate Hedge Agreement: The ISDA Master Agreement and schedule
thereto between the Issuer and the Hedge Counterparty, together with all
confirmations, amendments, supplements and other modifications thereto.
          Interest Rate Hedge Counterparty Required Rating Downgrade Event: The
assignment of a long-term rating of either BBB or lower by S&P or Baa2 or lower
by Moody’s with respect to the unsecured and unsubordinated debt, deposit or
letter of credit obligations of an Interest Rate Hedge Counterparty (or any
party providing credit support on its behalf).
          Investors: Shall mean the investors listed on Exhibit G attached
hereto.
          Lender Fee Letter: The fee letter dated the date hereof executed by
the Issuer and addressed to the Initial Noteholder.
          LIBOR Business Day: Any day on which banks in the City of London are
open and conducting transactions in United States dollars.
          LIBOR Determination Date: With respect to each Accrual Period, each
Business Day during such Accrual Period.
          LIBOR Margin: Has the meaning set forth in the Lender Fee Letter.

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          Lien: With respect to any asset, (a) any mortgage, lien, pledge,
charge, security interest, hypothecation, option or encumbrance of any kind in
respect of such asset or (b) the interest of a vendor or lessor under any
conditional sale agreement, financing lease or other title retention agreement
relating to such asset.
          Liquidated Loan: Any Delinquent Loan with respect to which the
Servicer has recovered, whether through a trustee’s sale, foreclosure sale or
otherwise, all amounts it expects to recover from or on account of such
Delinquent Loan.
          Loan: Any loan sold to the Issuer hereunder and pledged to the
Indenture Trustee, which loan includes, without limitation, (i) the Required
Loan Documents and the Loan File and (ii) all right, title and interest of the
Loan Originator in and to the Loan and the related Loan Collateral.
          Loan Collateral: The collateral securing an Underlying Note which,
depending on the type of Loan, typically consists of accounts receivable,
inventory, real estate and/or other tangible and intangible assets of the
Obligors.
          Loan Documents: With respect to an Eligible Loan, the documents
comprising the Custodial Loan File for such Eligible Loan.
          Loan File: With respect to each Eligible Loan, the Custodial Loan File
and the Servicer’s Loan File.
          Loan Interest Rate: With respect to each Eligible Loan, the annual
rate of interest borne by the related Underlying Note, as shown on the Loan
Schedule, and, in the case of an adjustable rate Loan, as the same may be
periodically adjusted in accordance with the terms of such Eligible Loan.
          Loan Margin: With respect to all Eligible Loans and for any date of
determination, the positive difference between (x) the weighted average Loan
Interest Rate of the Loan Pool based on the unpaid principal balance of the
Loans in the Loan Pool and (y) the then-current value of One-Month LIBOR.
          Loan Maturity Date: With respect to any Eligible Loan as of any date
of determination, the date on which the last payment of principal is due and
payable under the related Underlying Note, after taking into account all
principal prepayments received before such date of determination and any
extension permitted under the related Loan Documents (as in effect on the
Closing Date) and this Agreement, but without giving effect to: (a) any
acceleration of the principal of such Eligible Loan by reason of default
thereunder, (b) any grace period permitted by the related Underlying Note,
(c) any modification, waiver or amendment of such Eligible Loan (other than any
such permitted extension), or (d) any anticipated repayment date for such
Eligible Loan.
          Loan Originator: CapitalSource and its permitted successors and
assigns.
          Loan Pool: As of any date of determination, the pool of all Loans
conveyed to the Issuer pursuant to this Agreement on all Transfer Dates up to
and including such date of determination, which Loans have not been released
from the Lien of the Indenture pursuant to

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the terms of the Basic Documents, together with the rights and obligations of a
holder thereof, and the payments thereon and proceeds therefrom received on and
after the applicable Transfer Date, as identified from time to time on the Loan
Schedule.
          Loan Rating: Shall mean either Loan Rating 1, Loan Rating 2, Loan
Rating 3, Loan Rating 4, Loan Rating 5 or Loan Rating 6, as applicable.
          Loan Rating 1: Shall mean a rating of 1 pursuant to the Underwriting
Guidelines of the Loan Originator.
          Loan Rating 2: Shall mean a rating of 2 pursuant to the Underwriting
Guidelines of the Loan Originator.
          Loan Rating 3: Shall mean a rating of 3 pursuant to the Underwriting
Guidelines of the Loan Originator.
          Loan Rating 4: Shall mean a rating of 4 pursuant to the Underwriting
Guidelines of the Loan Originator.
          Loan Rating 5: Shall mean a rating of 5 pursuant to the Underwriting
Guidelines of the Loan Originator.
          Loan Rating 6: Shall mean a rating of 6 pursuant to the Underwriting
Guidelines of the Loan Originator.
          Loan Register: Shall have the meaning set forth in Section 4.02
hereof.
          Loan Sale Agreement: The Loan Sale Agreement, between CapitalSource,
as seller, and the Depositor, as purchaser, dated as of April 19, 2007, and all
supplements and amendments thereto.
          Loan Schedule: The schedule of Loans conveyed to the Issuer on the
Closing Date and on each Transfer Date and delivered to the Initial Noteholder
and the Collateral Custodian in the form of a computer-readable transmission
specifying the information set forth on Exhibit D.
          Loan-to-Value Ratio or LTV: With respect to any Loan, as of any date
of determination, the percentage equivalent of a fraction (i) the numerator of
which is equal to the total commitment amount of such Loan as of the date of its
origination (or with respect to any Revolving Loans, the amount funded under
such Loan at such date of determination) and (ii) the denominator of which is
equal to the total discounted collateral value of the collateral securing such
Loan.
          Lock-Box: The post office box to which collections on the Loans are
remitted for retrieval by a Lock-Box Bank and deposited by such Lock-Box Bank
into a Lock-Box Account.
          Lock-Box Account: means any of account numbers 003930559738,
003938703751, 0039393996662 or 003922575610, as applicable, held by
CapitalSource or one of its Affiliates at Bank of America, N.A.

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          Lock-Box Agreement: The Fifth Amended and Restated Three Party
Agreement Relating to Lockbox Services and Control (with Activation Upon
Notice), dated as of June 30, 2005, among Bank of America, N.A. as the lockbox
bank, the Financing Agents (as defined therein), the Loan Originator, as the
original servicer and as the lockbox servicer, and CapitalSource Funding LLC, as
the owner of the account and as the owner of the lockbox.
          Lock-Box Bank: Bank of America, N.A., or any of the banks or other
financial institutions holding one or more Lock-Box Accounts.
          LPA Assignment: The Assignment of Loans from the Loan Originator to
the Depositor under the Loan Sale Agreement.
          Majority Certificateholders: Has the meaning set forth in the Trust
Agreement.
          Majority Noteholders: The holder or holders of in excess of 50% of the
Note Principal Balance. In the event of the release of the Lien of the Indenture
in accordance with the terms thereof, the Majority Noteholders shall mean the
Majority Certificateholders.
          Maturity Date: The one hundred eightieth day following the Closing
Date.
          Maximum Note Principal Balance: Has the meaning set forth in
Section 1.01 of the Note Purchase Agreement.
          Monthly Servicer Report: Has the meaning set forth in
Section 4.03(b)(2) hereof.
          Moody’s: Moody’s Investors Service, Inc., or any successor thereto.
          Mortgage: With respect to any Eligible Loan secured by real property,
the mortgage, deed of trust or other instrument securing the related Underlying
Note, which creates a lien on a fee interest in commercial real property and/or
a lien on a leasehold estate in commercial real property and the assignment of
rents and leases related thereto.
          Mortgaged Property: With respect to an Eligible Loan secured by real
property, the related Obligor’s fee and/or leasehold interest in the commercial
real property (and/or all improvements, buildings, fixtures, building equipment
and personal property thereon (to the extent applicable) and all additions,
alterations and replacements made at any time with respect to the foregoing) and
all other collateral securing repayment of all amounts payable under such
Eligible Loan and the other Required Loan Documents.
          Net Proceeds: With respect to any Payment Date, Proceeds received
during the prior Remittance Period, net of any reimbursements to the Servicer
made from such amounts for any unreimbursed Servicing Compensation and Servicing
Advances (including Nonrecoverable Servicing Advances) made and any other fees
and expenses paid in connection with the foreclosure, inspection, conservation,
liquidation, exchange or other disposition of the related Loans or Loan
Collateral.
          Net Loan Losses: With respect to any Delinquent Loan that is subject
to a modification, an amount equal to the portion of the Principal Balance, if
any, released in connection with such modification.

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          Net Worth: With respect to any Person, the excess of total assets of
such Person, over total liabilities of such Person, determined in accordance
with GAAP.
          Nonrecoverable Servicing Advance: With respect to any Eligible Loan or
any Foreclosure Property, (a) any Servicing Advance previously made and not
reimbursed from late collections, condemnation proceeds, Proceeds or Insurance
Proceeds on the related Eligible Loan or Foreclosure Property or (b) a Servicing
Advance proposed to be made in respect of an Eligible Loan or Foreclosure
Property either of which, in the good faith business judgment of the Servicer,
as evidenced by an Officer’s Certificate of a Servicing Officer delivered to the
Initial Noteholder and the Indenture Trustee, would not be ultimately
recoverable.
          Nonutilization Fee: A fee payable by the Issuer to the Initial
Noteholder on each Payment Date in an amount equal to (a) 0.15% multiplied by
(b) the excess, if any, of the Maximum Note Principal Balance over the average
daily amount of the Note Principal Balance for the immediately preceding month
divided by (c) 360 and multiplied by (d) the actual number of calendar days that
have elapsed since the immediately preceding Payment Date (or, with respect to
the first Payment Date, the Closing Date).
          Note: Has the meaning set forth in the Indenture.
          Noteholder: Has the meaning set forth in the Indenture.
          Noteholder SS Advance: Each advance of funds made by the Noteholders
to the Issuer pursuant to the terms of the Basic Documents that allow the Issuer
to fund or maintain its investment in any SS Underlying Loan.
          Note Interest Rate: With respect to each Accrual Period, a per annum
interest rate equal to One-Month LIBOR for the related LIBOR Determination Date
plus the LIBOR Margin for such Accrual Period.
          Noteless Loan: A Loan with respect to which the underlying Loan
Documents do not require the Obligor to execute and deliver a promissory note to
evidence the indebtedness created under such Loan.
          Note Principal Balance: With respect to the Notes, as of any date of
determination (a) the sum of the Additional Note Principal Balances purchased on
or prior to such date of determination pursuant to the Note Purchase Agreement
less (b) all amounts previously distributed in respect of principal of the Notes
on or prior to such date of determination.
          Note Purchase Agreement: The Note Purchase Agreement among the Initial
Noteholder, the Issuer and the Depositor, dated as of April 19, 2007, as the
same may be amended or supplemented from time to time.
          Note Redemption Amount: As of any Record Date, an amount without
duplication equal to the sum of (i) the then outstanding Note Principal Balance
of the Notes, plus the Interest Payment Amount for the related Payment Date,
(ii) any Trust Fees and Expenses due and unpaid on the related Payment Date and
(iii) any Servicing Advance Reimbursement Amount as of such Record Date.

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          Obligor: With respect to any Eligible Loan, means the obligor(s) under
the related Required Loan Documents on an Underlying Note, including any Person
that has acquired the related Loan Collateral and assumed the obligations of the
original obligor under the related Required Loan Documents.
          Officer’s Certificate: A certificate signed by a Responsible Officer
of the Depositor, the Loan Originator, the Servicer or the Issuer, in each case,
as required by this Agreement.
          One-Month LIBOR: With respect to each day during each Accrual Period,
the rate determined by the Indenture Trustee on the related LIBOR Determination
Date on the basis of the offered rate for one-month U.S. dollar deposits, as
such rate appears on Telerate Page 3750 as of 11:00 a.m. (London time) on such
LIBOR Determination Date; provided that if such rate does not appear on Telerate
Page 3750, the rate for such date will be determined on the basis of the offered
rates of the Reference Banks for one-month U.S. dollar deposits, as of
11:00 a.m. (London time) on such LIBOR Determination Date. In such event, the
Indenture Trustee will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If on such LIBOR
Determination Date, two or more Reference Banks provide such offered quotations,
One-Month LIBOR for the related day during such Accrual Period shall be the
arithmetic mean of all such offered quotations (rounded to the nearest whole
multiple of 1/16%). If on such LIBOR Determination Date, fewer than two
Reference Banks provide such offered quotations, One-Month LIBOR for each day
during the Accrual Period shall be the higher of (i) LIBOR as determined on the
previous LIBOR Determination Date and (ii) the Reserve Interest Rate.
Notwithstanding the foregoing, if, under the priorities described above,
One-Month LIBOR for a LIBOR Determination Date would be based on One-Month LIBOR
for the previous LIBOR Determination Date for the third consecutive LIBOR
Determination Date, the Indenture Trustee shall select an alternative comparable
index (over which the Indenture Trustee has no control), used for determining
one-month Eurodollar lending rates that is calculated and published (or
otherwise made available) by an independent party.
          Opinion of Counsel: A written opinion of counsel who may be employed
by the Servicer, the Depositor, the Loan Originator or any of their respective
Affiliates.
          Optional Disposition Date: Any Business Day, provided one Business
Day’s prior written notice is given.
          Originator Indemnified Party: Has the meaning set forth in
Section 8.01(c) hereof.
          Owner Trustee: Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as Owner Trustee under
this Agreement, and any successor owner trustee under the Trust Agreement.
          Owner Trustee Fee: Shall mean the fee payable in the Fee Letter dated
as of the date hereof, among the Loan Originator, the Depositor and the Owner
Trustee.
          Participation Certificate: A valid and enforceable certificate issued
pursuant to a standard participation agreement between the Loan Originator and
the originator of the related Loan, evidencing that the registered owner is the
beneficial owner of an undivided participating ownership interest in the related
Loan.

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          Participation Loan: A Loan, originated by the Loan Originator and
serviced by the Servicer in the ordinary course of its business and in
accordance with Accepted Servicing Practices, in which a participation interest
has been granted to another Person in accordance with the Underwriting
Guidelines and such transaction has been fully consummated, pursuant to a
standard participation agreement.
          Paying Agent: A Person that meets the eligibility standards for the
Indenture Trustee specified in Section 3.03 of the Indenture and is authorized
by the Issuer to make payments to and distributions from the Distribution
Account, including payment of principal of or interest on the Notes on behalf of
the Issuer. The initial Paying Agent shall be the Indenture Trustee.
          Payment Date: The 15th day of each calendar month commencing on the
first such 15th day to occur after the first Transfer Date, or if any such day
is not a Business Day, the first Business Day immediately following such day;
provided that the Maturity Date shall be a Payment Date.
          Percentage Interest: Has the meaning set forth in the Trust Agreement
and the Indenture, as applicable.
          Permitted Investments: Each of the following:
     (a) Direct general obligations of the United States or the obligations of
any agency or instrumentality of the United States fully and unconditionally
guaranteed, the timely payment or the guarantee of which constitutes a full
faith and credit obligation of the United States.
     (b) Federal Housing Administration debentures rated “Aa2” or higher by
Moody’s and “AA” or better by S&P.
     (c) Freddie Mac senior debt obligations rated “Aa2” or higher by Moody’s
and “AA” or better by S&P.
     (d) Federal Home Loan Banks’ consolidated senior debt obligations rated
“Aa2” or higher by Moody’s and “AA” or better by S&P.
     (e) Fannie Mae senior debt obligations rated “Aa2” or higher by Moody’s.
     (f) Federal funds, certificates of deposit, time and demand deposits, and
bankers’ acceptances (having original maturities of not more than 30 days) of
any domestic bank, the short-term debt obligations of which have been rated
“A-1” or better by S&P and “P-1” or better by Moody’s.
     (g) Investment agreements approved by the Initial Noteholder provided:

  1.   the agreement is with a bank or insurance company which has an unsecured,
uninsured and unguaranteed obligation (or claims-paying ability) rated “Aa2” or
better by Moody’s and “AA” or better by S&P; and

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  2.   monies invested thereunder may be withdrawn without any penalty, premium
or charge upon not more than one day’s notice (provided such notice may be
amended or canceled at any time prior to the withdrawal date); and     3.   the
agreement is not subordinated to any other obligations of such insurance company
or bank; and     4.   the same guaranteed interest rate will be paid on any
future deposits made pursuant to such agreement; and     5.   the Indenture
Trustee and the Noteholders receive an opinion of counsel that such agreement is
an enforceable obligation of such insurance company or bank.

     (h) Commercial paper (having original maturities of not more than 30 days)
rated “A-1” or better by S&P and “P-1” or better by Moody’s.
     (i) Investments in money market funds rated “AAAM” or “AAAM-G” by S&P and
“Aaa” or “P-1” by Moody’s.
     (j) Investments approved in writing by the Initial Noteholder;
provided that no instrument described above is permitted to evidence either the
right to receive (a) only interest with respect to obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that no instrument described above may be purchased at a price greater than par
if such instrument may be prepaid or called at a price less than its purchase
price prior to stated maturity; and provided, further, that, with respect to any
instrument described above, such instrument qualifies as a “permitted
investment” within the meaning of Section 860G(a)(5) of the Code and the
regulations thereunder.
          Each of the Permitted Investments may be purchased by the Indenture
Trustee or through an Affiliate of the Indenture Trustee.
          Permitted Liens: With respect to the Loan Collateral (i) Liens for
state, municipal or other local taxes (other than payroll taxes) if such taxes
shall not at the time be due and payable or are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with GAAP so long as
there exists no material risk of sale, forfeiture, loss, or loss of or
interference with use or possession of, or diminution of value, utility or
useful life of, the related Loan Collateral, (ii) liens imposed by operation of
law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s
liens and other similar liens arising in the ordinary course of business
securing obligations that are not overdue for a period of more than thirty
(30) days or are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves or other appropriate provisions are
being maintained in accordance with GAAP so long as there exists no material
risk of sale, forfeiture, loss, or loss of or interference with use or

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possession of, or diminution of value, utility or useful life of, the related
Loan Collateral, (iii) Liens (other than any Lien imposed by ERISA) on or in
respect of deposits or pledges of cash or letters of credit posted in the
ordinary course of business (including, without limitation, surety bonds and
appeal bonds) in connection with workers’ compensation, unemployment insurance
and other types of social security benefits or to secure the performance of
tenders, bids, leases, contracts (other than for the repayment of Indebtedness),
statutory obligations and other similar obligations, provided that any such Lien
attaches only to the cash collateral or letter of credit posted to secure such
obligation, and (iv) Liens pursuant to indebtedness incurred by an Obligor that
is subordinated, pursuant to a customary and appropriate subordination
agreement, to all present and future obligations, indebtedness and liabilities
of Obligor or any related guarantor under or in respect of the related Loan at
any time and from time to time of every kind, nature and description, direct or
indirect, secured or unsecured, joint and several, absolute or contingent, due
or to become due, matured or unmatured, now existing or hereafter arising,
contractual or tortious, liquidated or unliquidated, such that the Lien in favor
of the Originator is senior in priority and the subordinated lien holder is
subject to restrictions for a customary and reasonable period of time with
respect to its right to take foreclosure actions or exercise other remedies with
respect to the related collateral (other than the subordinated lien holder’s
customary purchase option of the senior indebtedness at par) in accordance with
its credit and collection policies. With respect to the Loans, Liens in favor of
the Indenture Trustee.
          Person: Any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust, national
banking association, unincorporated organization or government or any agency or
political subdivision thereof.
          Physical Property: Has the meaning set forth in clause (b) of the
definition of “Delivery” above.
          Pool Charged-Off Ratio: With respect to any date of determination, the
aggregate Principal Balance of all Charged-Off Loans as of such date of
determination divided by the Pool Principal Balance as of such date of
determination.
          Pool Principal Balance: With respect to any date of determination, the
aggregate Principal Balances of the Loans as of such date of determination.
          Pool Purchase Price: With respect to any date of determination, an
amount equal to the sum of the Principal Balance of each Loan as of such date of
determination multiplied by the Purchase Price Percentage relating to each Loan.
          Predecessor Servicer Work Product: Has the meaning set forth in
Section 9.02(d) hereof.
          Principal Balance: With respect to any Loan, (i) at the Transfer Date,
the Transfer Date Principal Balance and (ii) with respect to any other date of
determination, the outstanding unpaid principal balance of the Loan as of such
date of determination (after giving effect to all payments received thereon and
the allocation of any Net Loan Losses with respect thereto for a Delinquent Loan
prior to such date of determination); provided, however, that any Liquidated
Loan shall be deemed to have a Principal Balance of zero.

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          Principal Collections Account: The account designated as such,
established and maintained by the Servicer in accordance with Section 5.01(a)(2)
hereof.
          Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.
          Proceeds: With respect to a Liquidated Loan, any cash amounts received
in connection with the liquidation of such Loan, whether through sale,
foreclosure sale, liquidation, exchange or other disposition, whether such
disposition is voluntary or involuntary, and any other amounts required to be
deposited in the Collection Account pursuant to Section 5.01(b) hereof, in each
case other than Insurance Proceeds.
          Purchase Price Percentage: On any Business Day after the Closing Date,
90% with respect to all Eligible Loans.
          Qualified Substitute Loan: An Eligible Loan or Eligible Loans
substituted for a Deleted Loan or other Loan pursuant to Section 3.05 hereof,
which (i) complies or comply as of the date of substitution with each
representation and warranty set forth in Section 3.04 and (ii) is or are not
Delinquent as of the date of substitution for such Deleted Loan(s), Loan(s) or
Unqualified Loan(s), as the case may be.
          Rated Retained Securities: Each of (i) the CapitalSource Commercial
Loan Trust Class E Floating Rate Deferrable Asset Backed Notes, Series 2005-1;
(ii) the CapitalSource Commercial Loan Trust Class E Floating Rate Deferrable
Asset Backed Notes, Series 2006-1; and (iii) such other securities as agreed
upon by mutual consent of the Majority Noteholders and the Issuer.
          Rating Agencies: S&P, Moody’s and Fitch or such other nationally
recognized credit rating agencies as may from time to time be designated in
writing by the Majority Noteholders in their sole discretion.
          Record Date: With respect to each Payment Date, the close of business
two (2) Business Days before such Payment Date.
          Reference Banks: Citibank, N.A., Barclays Bank PLC, The Bank of
Tokyo-Mitsubishi UFJ and National Westminster Bank PLC and their successors in
interest; provided, however, that if the Initial Noteholder determines that any
of the foregoing banks are not suitable to serve as a Reference Bank, then any
leading banks selected by the Initial Noteholder with the approval of the
Issuer, which approval shall not be unreasonably withheld, which are engaged in
transactions in Eurodollar deposits in the international Eurocurrency market
(i) with an established place of business in London and (ii) which have been
designated as such by the Initial Noteholder.
          Remittance Date: The Business Day immediately preceding each Payment
Date.
          Remittance Period: With respect to any Payment Date, the period
commencing immediately following the Record Date for the preceding Payment Date
(or, in the case of the initial Payment Date, commencing immediately following
the initial Transfer Date) and ending on and including the related Record Date.

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          Repurchase Price: With respect to a Loan the product of the Purchase
Price Percentage multiplied by the Principal Balance thereof as of such date of
repurchase.
          Required Equity Contribution: On any date of determination, an amount
equal to the excess of (a) the sum of (i) the Borrowing Base on such date, minus
(b) the Note Principal Balance on such date, which amount shall at all times be
equal to at least $10,000,000.
          Required Interest Coverage Amount: (a) For any date of determination
occurring during the Revolving Period, an amount equal to the sum of (x) the
product of (i) the Maximum Note Principal Balance, (ii) the sum of (A) the Note
Interest Rate and (B) the per annum rate at which the Trust Fees and Expenses
accrue, divided by 12 and (iii) 1.20 and (y) the Interest Carry-Forward Amount
for the preceding Payment Date and (b) for any other date of determination, an
amount equal to amounts collected with respect to the Loans, including without
limitation, all Proceeds, Insurance Proceeds and proceeds in connection with the
repurchase or substitution of any Loan pursuant to the terms hereof.
          Required Loan Documents: With respect to: (a) any Eligible Loan (other
than an Assigned Loan, a Participation Loan, an Alarm Service Loan or a Noteless
Loan), the duly executed original of the Underlying Note and an assignment
(which may be by endorsement or allonge) of such Underlying Note, signed by an
officer of the Loan Originator; any related loan agreement, the Loan Schedule,
participation agreement (if set forth on the Loan Schedule), together with
originals or copies of each of the following: the acquisition agreement (if set
forth on the Loan Schedule), subordination agreement (if set forth on the Loan
Schedule), intercreditor agreement (if set forth on the Loan Schedule), security
agreements or instruments (to the extent any security interest in collateral has
been granted and as set forth in the Loan Schedule or the Loan Register), UCC
financing statements (to the extent any security interest in collateral has been
granted and as set forth in the Loan Schedule or the Loan Register), guarantee
(if set forth on the Loan Schedule), for each Eligible Loan secured by a
Mortgaged Property, an original Assignment of Mortgage and an original
Assignment of Leases and Rents; and (b) any Eligible Loan which is an Assigned
Loan (if such Eligible Loan is identified as an Assigned Loan on the Loan
Schedule), (i) the duly executed original of each of the following: the
Underlying Note including an assignment (which may be by endorsement or
allonge), signed by an officer of the Loan Originator and the assignment
agreement and (ii) duly executed originals or copies of each of the following:
any related loan agreement, subordination agreement (if set forth on the Loan
Schedule), intercreditor agreement (if set forth on the Loan Schedule), security
agreements or instruments (to the extent any security interest in collateral has
been granted and as set forth in the Loan Schedule or the Loan Register), UCC
financing statements (to the extent any security interest in collateral has been
granted and as set forth in the Loan Schedule or the Loan Register), guarantee
(if set forth on the Loan Schedule), for each Assigned Loan secured by a
Mortgaged Property, an original Assignment of Mortgage and an original
Assignment of Leases and Rents; and (c) any Assigned Loan which is a
participation interest, (i) the duly executed original or copy of each of the
following: the participation agreement, signed by an officer of the Loan
Originator, and the related Participation Certificate and (ii) duly executed
originals or copies of each of the following: any related loan agreement,
subordination agreement (if set forth on the Loan Schedule), intercreditor
agreement (if set forth on the Loan Schedule), security agreements or
instruments (to the extent any security interest in collateral has been granted
and as set forth in the Loan Schedule or the Loan Register), UCC financing
statements (to the extent any security interest in collateral has been granted
and as set forth in the Loan Schedule or the Loan Register)

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and guarantee (if set forth on the Loan Schedule); and (d) any Eligible Loan
which is an Alarm Service Loan, the duly executed of each of the following: the
original (and to the extent it exists, the sole chattel paper counterpart)
master purchase agreement and, if any, security agreement and a copy of the
purchase statement related to each Alarm Service Loan, signed by an officer of
the originator of such Alarm Service Loan together with copies of any related
assignment agreements, the Loan Schedule, subordination agreement (if set forth
on the Loan Schedule), intercreditor agreement (if set forth on the Loan
Schedule), security agreements or instruments (to the extent any security
interest in collateral has been granted and as set forth in the Loan Schedule or
the Loan Register), UCC financing statements (to the extent any security
interest in collateral has been granted and as set forth in the Loan Schedule or
the Loan Register) and guarantee (if set forth on the Loan Schedule); and
(e) any Eligible Loan which is a Noteless Loan, a copy of the Loan Register
(together with a certificate of a Responsible Officer of the Servicer certifying
to the accuracy of such Loan Register as of the date such Loan is included as a
part of the Collateral) and the other documents required by clause (a) above
other than an executed original Underlying Note and related allonge.
          Required Overcollateralization Amount: With respect to any Business
Day on or after the Closing Date, an amount equal to the greatest of (a) the
positive difference between (i) the Pool Principal Balance on such Business Day
and (ii) the Pool Purchase Price (reduced by the amount, without duplication, of
any Loan in excess of the Concentration Limitation); and (b) the Required Equity
Contribution.
          Reserve Interest Rate: With respect to any LIBOR Determination Date,
the rate per annum that the Initial Noteholder determines to be either (i) the
arithmetic mean (rounded to the nearest whole multiple of 1/16%) of the
one-month U.S. dollar lending rates which New York City banks selected by the
Initial Noteholder are quoting on the relevant LIBOR Determination Date to the
principal London offices of leading banks in the London interbank market or
(ii) in the event that the Initial Noteholder can determine no such arithmetic
mean, the lowest one-month U.S. dollar lending rate which New York City banks
selected by the Initial Noteholder are quoting on such LIBOR Determination Date
to leading European banks.
          Responsible Officer: When used with respect to the Indenture Trustee
or Collateral Custodian, any officer within the Corporate Trust Office of such
Person, including any Vice President, Assistant Vice President, Secretary,
Assistant Secretary or any other officer of such Person customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer’s knowledge of and familiarity with the
particular subject. When used with respect to the Issuer, any officer of the
Owner Trustee who is authorized to act for the Owner Trustee in matters relating
to the Issuer and any officer of the Administrator who is identified on the list
of Authorized Officers delivered by the Administrator on the date hereof (as
such list may be modified or supplemented from time to time thereafter) to the
Indenture Trustee and the Owner Trustee. When used with respect to the
Depositor, the Servicer, the Loan Originator or any Affiliate of any of them,
the Controller, the President, any Vice President or the Treasurer of such
Person.
          Review Criteria: Has the meaning set forth in Section 2.05(b)(ii)
hereof.

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          Revolving Loan: A Loan that is a line of credit arising from an
extension of credit by the Loan Originator to an Obligor.
          Revolving Period: With respect to the Notes, the period commencing on
the Closing Date and ending on the earlier of (i) one hundred eighty (180) days
after the Closing Date, and (ii) the date on which the Revolving Period is
terminated pursuant to Section 2.08.
          Sales Price: For any Transfer Date and any Eligible Loan, the product
of (i) the Purchase Price Percentage multiplied by (b) the Principal Balance of
such Eligible Loan as of such Transfer Date.
          S&SA Assignment: An Assignment, in the form of Exhibit C hereto, of
Loans and other property from the Depositor to the Issuer pursuant to this
Agreement.
          Scheduled Payment: With respect to any Loan, the payment of principal
and/or interest scheduled to be made by the related Obligor under the terms of
such Loan after the related Transfer Date, as adjusted pursuant to the terms of
the related Required Loan Documents, and any such payment received after the
related Transfer Date.
          Securities: The Notes and the Trust Certificates.
          Securities Intermediary: A “securities intermediary” as defined in
Section 8-102(a)(14) of the UCC that is holding a Trust Account for the
Indenture Trustee as the sole “entitlement holder” as defined in
Section 8-102(a)(7) of the UCC.
          Securitization: A sale or transfer of Loans by the Issuer to any other
Person in order to effect one or a series of structured-finance securitization
transactions, including but not limited to transactions involving the issuance
of securities which may be treated for federal income tax purposes as
indebtedness of CapitalSource or one or more of its wholly owned subsidiaries.
          Securityholder: Any Noteholder or Certificateholder.
          Senior Loan: A Loan that (i) is secured by a first priority lien on
all of the Obligor’s assets constituting Loan Collateral for such Loan (subject
to Permitted Liens), (ii) has a Loan-to-Value Ratio less than or equal to 90%
and (iii) provides that the payment obligation of the related Obligor on such
Loan is either senior to, or pari passu with, all other loans or financings to
such Obligor.
          Senior B-Note Loan: Any multilender Loan that (i) is secured by a
first priority lien on all the Obligor’s assets constituting Loan Collateral for
such Loan (subject to Permitted Liens), (ii) has a Loan-to-Value Ratio less than
or equal to 90%, and (iii) that contains provisions which, upon the occurrence
of an event of default under the underlying loan documents or in the case of any
liquidation or foreclosure on the related Loan Collateral, the Issuer’s portion
of such Loan would be paid only after the other lender party to such Loan (whose
right to payment is contractually senior to the Issuer) is paid in full.
          Senior Secured Loan: Either a Senior Loan or a Senior B-Note Loan.

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          Servicer: CapitalSource, in its capacity as the servicer hereunder, or
any successor appointed as herein provided.
          Servicer Event of Default: Has the meaning set forth in Section 9.01
hereof.
          Servicer Indemnified Party: Has the meaning set forth in
Section 8.01(a) hereof.
          Servicer Extension Notice: Has the meaning set forth in
Section 9.01(c) hereof.
          Servicer’s Loan File: With respect to each Eligible Loan, all
documents (or electronic images thereof) relating to such Eligible Loan,
including, without limitation, copies of all of the Loan Documents included in
the related Custodial Loan File.
          Servicing Advance Reimbursement Amount: With respect to any Record
Date, the amount of any Servicing Advances that have not been reimbursed as of
such date, including Nonrecoverable Servicing Advances.
          Servicing Advances: Advances that are made by the Servicer in
conformity with the Underwriting Guidelines.
          Servicing Compensation: The Servicing Fee, assumption fees, late
payment charges and other ancillary income with respect to any Loan.
          Servicing Fee: With respect to each Eligible Loan (including any
Eligible Loan that has been foreclosed and for which the related Mortgaged
Property has become a Foreclosure Property, but excluding any Liquidated Loan),
for each Remittance Period, a per annum fee equal to the sum of (i) 1.00% of the
Principal Balance of each Loan (other than Revolving Loans) and (ii) 1.25% of
the Principal Balance of each Revolving Loan, in each case at the beginning of
such Remittance Period payable to the Servicer for the servicing of such
Eligible Loan out of Scheduled Payments made by the Obligor thereunder in an
amount determined in the manner in effect on the related Transfer Date.
          Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Eligible Loans whose
name and specimen signature appears on a list of servicing officers annexed to
an Officer’s Certificate furnished by the Servicer on the date hereof to the
Issuer and the Indenture Trustee, on behalf of the Noteholders, as such list may
from time to time be amended.
          S&P: Standard & Poor’s Rating Services, a division of The McGraw-Hill
Companies, Inc.
          SS Underlying Loan: Each of the loans sold and transferred to the
Issuer in connection with the payment of a Noteholder SS Advance. A listing of
such loans is set forth on Exhibit I hereto, as the same may be updated from
time to time by the Servicer.
          State: Any one of the states of the United States of America or the
District of Columbia.
          Subordinated Loan: Any Loan other than a Senior Loan or a Senior
B-Note Loan.

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          Subsidiary: With respect to any Person, any corporation, partnership
or other entity of which at least a majority of the securities or other
ownership interests having by the terms thereof ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
of such corporation, partnership or other entity (irrespective of whether or not
at the time securities or other ownership interests of any other class or
classes of such corporation, partnership or other entity shall have or might
have voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person.
          Substitution Adjustment: As to any date on which a substitution occurs
pursuant to Section 2.05 or Section 3.05 hereof, the amount, if any, by which
(a) the aggregate principal balance of any Qualified Substitute Loans (after
application of principal payments received on or before the related Transfer
Date) is less than (b) the aggregate of the Principal Balances of the related
Deleted Loans as of any date of determination.
          Tangible Net Worth: With respect to any Person, as of any date of
determination, the consolidated Net Worth of such Person and its Subsidiaries,
less the consolidated net book value of all assets of such Person and its
Subsidiaries (to the extent reflected as an asset in the balance sheet of such
Person or any Subsidiary at such date) which will be treated as intangibles
under GAAP, including, without limitation, such items as deferred financing
expenses, net leasehold improvements, good will, trademarks, trade names,
service marks, copyrights, patents, licenses and unamortized debt discount and
expense; provided, that residual securities issued by such Person or its
Subsidiaries shall not be treated as intangibles for purposes of this
definition.
          Term Event: Has the meaning set forth in Section 9.01(c) hereof.
          Termination Date: The earliest of (a) the date of termination of the
Revolving Period, pursuant to Section 2.08, (b) the date upon which this
Agreement terminates pursuant to Section 12.01 or is optionally terminated by
the Servicer pursuant to Section 12.02, (c) the date of declaration of the
Termination Date pursuant to Section 9.01(d) or the date of the automatic
occurrence of the Termination Date pursuant to Section 9.01(e) and (d) the
Maturity Date.
          Termination Price: Has the meaning set forth in Section 12.02 hereof.
          Third Party Claim: Has the meaning set forth in Section 8.01(d)
hereof.
          Transfer Date: With respect to each Eligible Loan, the day such Loan
is sold and conveyed to the Depositor by the Loan Originator pursuant to the
Loan Sale Agreement and to the Issuer by the Depositor pursuant to Section 2.01
hereof, which results in an increase in the Note Principal Balance by the
related Additional Note Principal Balance. With respect to any Qualified
Substitute Loan, the Transfer Date shall be the day such Loan is conveyed to the
Issuer pursuant to Section 2.05 or 3.05. No Transfer Date shall occur following
the termination of the Revolving Period.
          Transfer Date Principal Balance: As to each Loan, its Principal
Balance as of the close of business on the Transfer Date (after giving effect to
any payments received on the Loan on or before the Transfer Date).

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          Transition Costs: Has the meaning set forth in Section 9.02(a) hereof.
          Trigger Event: Shall exist, as of any Record Date, if any of the
following events shall have occurred and be continuing for fifteen (15) days
(i) the available Excess Spread is less than 2.00% (determined at all times
using the LIBOR Margin then in effect); (ii) the weighted average Loan Rating of
the Loan Pool exceeds 3.0; (iii) the aggregate Principal Balance of all
Delinquent Loans and Foreclosed Loans as of such Record Date divided by the Pool
Principal Balance as of such Record Date is greater than 10%; (iv) the Pool
Charged-Off Ratio as of such Record Date is greater than 5%; (v) a Borrowing
Base Deficiency shall have occurred and shall not have been cured within five
(5) Business Days of the occurrence thereof; (vi) a Servicer Event of Default
shall have occurred; (vii) a Change of Control of CapitalSource shall have
occurred; (viii) CapitalSource shall have breached any financial covenant set
forth in Section 7.01 hereof; (ix) the cumulative sum of all Delinquent and
Charged-Off Loans in the loan pools pledged as part of all Securitizations
effected by the Loan Originator prior to such date of determination exceed 7.5%
of the aggregate original pool principal balance of such loan pools; or
(x) CapitalSource shall have suffered an event of default with respect to any
indebtedness for an amount in excess of $10,000,000 (it being understood that a
default under another agreement shall only constitute a Trigger Event hereunder
only when and if the lender or counterparty under the other agreement is
presently entitled to exercise default remedies by the terms of such other
agreement).
          Trust Account Property: The Trust Accounts, all amounts and
investments held from time to time in the Trust Accounts and all proceeds of the
foregoing.
          Trust Accounts: The Distribution Account, the Collection Account and
the Principal Collections Account.
          Trust Agreement: The Trust Agreement dated as of April 19, 2007
between the Depositor and the Owner Trustee, as the same may be amended and
supplemented from time to time.
          Trust Certificate: Has the meaning set forth in the Trust Agreement.
          Trust Fees and Expenses: As of each Payment Date, an amount equal to
the Servicing Compensation, the Owner Trustee Fee, if applicable, and the
Indenture Trustee Fee, if any, the Backup Servicing Fee, and any expenses of the
foregoing.
          UCC: The Uniform Commercial Code as in effect in the State of New
York.
          UCC Assignment: A form “UCC-2” or “UCC-3” statement meeting the
requirements of the Uniform Commercial Code of the relevant jurisdiction to
reflect an assignment of a secured party’s interest in collateral.
          UCC-1 Financing Statement: A financing statement meeting the
requirements of the Uniform Commercial Code of the relevant jurisdiction.
          Underlying Note: With respect to an Eligible Loan, the executed
promissory note or other evidence of the indebtedness (including, without
limitation, the related Loan Register to

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the extent no physical promissory note or other instrument was executed) of the
related Obligor or Obligors.
          Underwriting Guidelines: The written credit and collection policies
and procedures manual of the Loan Originator, as the same may be amended from
time to time.
          Unqualified Loan: Has the meaning set forth in Section 3.05(a) hereof.
Whole Loan Sale: A Disposition of Loans pursuant to a whole-loan sale.
          Section 1.02 Other Definitional Provisions.
          (a) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
          (b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
          (c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under GAAP. To the extent that the definitions of accounting terms in this
Agreement or in any such certificate or other document are inconsistent with the
meanings of such terms under GAAP, the definitions contained in this Agreement
or in any such certificate or other document shall control.
          (d) The words “hereof”, “herein”, “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Article, Section, Schedule
and Exhibit references contained in this Agreement are references to Articles,
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term “including” shall mean “including without limitation”.
          (e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.

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ARTICLE II
CONVEYANCE OF THE COLLATERAL;
ADDITIONAL NOTE PRINCIPAL BALANCES

         Section 2.01 Conveyance of the Collateral; Additional Note Principal
Balances.

          (a) (i) On each Transfer Date during the Revolving Period, the
Depositor agrees to offer for sale and to sell to the Issuer each of the Loans
sold and contributed to the Depositor pursuant to the Loan Sale Agreement on
such Transfer Date and the Issuer agrees to purchase such Loans offered for sale
by the Depositor. No Transfer Date shall occur following the termination of the
Revolving Period. In addition, on each Transfer Date, the Depositor agrees to
offer for sale to the Issuer and the Issuer agrees to purchase from the
Depositor additional Loans in an amount sufficient to maintain the Required
Overcollateralization Amount.
     (ii) In consideration of the payment of the Additional Note Principal
Balance pursuant to Section 2.06 hereof, (A) the Depositor as of the related
Transfer Date and concurrently with the execution and delivery hereof, hereby
sells and assigns to the Issuer, without recourse, but subject to the other
terms and provisions of this Agreement, all of the right, title and interest of
the Depositor in and to the Loans and the Loan Collateral transferred on such
date and (B) the Issuer grants and pledges such Loans and such Loan Collateral
to the Indenture Trustee on behalf of the Noteholders as security for the
Issuer’s obligations under the Indenture and the other Basic Documents.
     (iii) During the Revolving Period, on each Transfer Date, subject to the
conditions precedent set forth in Section 2.06 and in accordance with the
procedures set forth in Section 2.01(c), the Depositor, pursuant to a S&SA
Assignment, will assign to the Issuer without recourse all of its respective
right, title and interest, in and to the Loans and all proceeds thereof listed
on the Loan Schedule attached to such S&SA Assignment, including all interest
and principal on or with respect to such Loans on or after the related Transfer
Date, together with all right, title and interest in and to the proceeds of any
related Insurance Policies and all of the Depositor’s rights, title and interest
in and to (but none of its obligations under) the Loan Sale Agreement and all
proceeds of the foregoing.
          (b) As of the Closing Date and as of each Transfer Date, the Issuer
acknowledges (or will acknowledge pursuant to the S&SA Assignment) the
conveyance to it of the Loans and Loan Collateral, including all rights, title
and interest of the Depositor in and to the Loans and the Loan Collateral,
receipt of which is hereby acknowledged by the Issuer. Concurrently with such
delivery, as of the Closing Date and as of each Transfer Date, pursuant to the
Indenture the Issuer pledges the Loans and the Loan Collateral to the Indenture
Trustee. In addition, concurrently with such delivery on the Closing Date and in
exchange therefor, the Owner Trustee, pursuant to the instructions of the
Depositor, has executed (not in its individual capacity, but solely as Owner
Trustee on behalf of the Issuer) and caused the Trust Certificates to be
authenticated and delivered (which may be by facsimile transmission or in an
electronic format) to or at the direction of the Depositor.
          (c) (i) Pursuant to and subject to the Note Purchase Agreement, the
Issuer may, at its sole option, from time to time request that the Initial
Noteholder advance on any Transfer Date Additional Note Principal Balances and,
upon satisfaction of the conditions

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precedent to such advance in accordance with the Note Purchase Agreement, the
Initial Noteholder shall remit on such Transfer Date, to or at the direction of
the Depositor, an amount equal to such Additional Note Principal Balances.
     (ii) Notwithstanding anything to the contrary herein, in no event shall the
Issuer be required to purchase Loans and the Initial Noteholder shall not be
required to advance Additional Note Principal Balances on a Transfer Date if the
conditions precedent to a transfer of the Loans under Section 2.06 and the
conditions precedent to the purchase of Additional Note Principal Balances set
forth in Section 3.01 of the Note Purchase Agreement have not been fulfilled.
     (iii) The Servicer shall appropriately note such Additional Note Principal
Balance (and the increased Note Principal Balance) in the next succeeding
Monthly Servicer Report; provided, however, that failure to make any such
notation in such Monthly Servicer Report or any error in such notation shall not
adversely affect any Noteholder’s rights with respect to its Note Principal
Balance and its right to receive interest and principal payments in respect of
the Note Principal Balance held by such Noteholder. The Initial Noteholder shall
record on the schedule attached to such Noteholder’s Note, the date and amount
of any Additional Note Principal Balance advanced by it; provided, that failure
to make such recordation on such schedule or any error in such schedule shall
not adversely affect any Noteholder’s rights with respect to its Note Principal
Balance and its right to receive interest payments in respect of the Note
Principal Balance held by such Noteholder.
     (iv) Absent manifest error, the Note Principal Balance of each Note as set
forth in the Initial Noteholder’s records shall be binding upon the Indenture
Trustee, the Noteholders and the Issuer, notwithstanding any notation made by
the Servicer in its Monthly Servicer Report pursuant to the preceding paragraph.
          (d) The Depositor shall, at its own expense, within one Business Day
following the Transfer Date, indicate in its computer files that the Loans
identified in each S&SA Assignment have been sold to the Issuer pursuant to this
Agreement.
          (e) Subject to Section 3.01(o), the parties hereto intend that each of
the conveyances contemplated hereby be sales from the Depositor to the Issuer of
all of the Depositor’s right, title and interest in and to the Loans and the
Loan Collateral. In the event the transactions set forth herein are deemed not
to be a sale, the Depositor hereby grants to the Issuer a security interest in
all of the Depositor’s right, title and interest in, to and under the Loans and
the Loan Collateral related thereto, whether now existing or hereafter created,
to secure all of the Depositor’s obligations hereunder, and this Agreement shall
constitute a security agreement under applicable law.
          Section 2.02 Ownership and Possession of Loan Files.
          With respect to each Loan, as of the related Transfer Date the
ownership of the related Required Loan Documents and the contents of the related
Servicer’s Loan File and Custodial Loan File shall be vested in the Issuer as
part of the Collateral for the benefit of the Securityholders, and with respect
to each Eligible Loan, as of the related Transfer Date, the related Required
Loan Documents and the contents of the related Servicer’s Loan File and

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Custodial Loan File shall be Granted (as defined in the Indenture) and pledged
to the Indenture Trustee on behalf of the Securityholders, and the Collateral
Custodian shall take possession of the Custodial Loan Files as contemplated in
Section 2.05 hereof.
          Section 2.03 Books and Records; Intention of the Parties.
          On the Closing Date, the Depositor shall, at such party’s sole
expense, cause to be filed UCC-1 Financing Statements naming the Issuer as
“secured party” and describing the Collateral being sold by the Depositor to the
Issuer with the office of the Secretary of State of the state in which the
Depositor is located and in any other jurisdictions as shall be necessary to
perfect a security interest in the Collateral. In addition, on the Closing Date,
the Loan Originator shall, at its expense, cause to be filed UCC-1 Financing
Statements naming the Depositor as “secured party” and describing the Loans
being sold by the Loan Originator to the Depositor with the office of the
Secretary of the State in which the Loan Originator is located and in such other
jurisdictions as shall be necessary to perfect a security interest in the
Collateral.
          Section 2.04 Delivery of Loan Documents.
          (a) The Loan Originator shall (i) no later than 12:00 noon New York
time on the Business Day prior to the related Transfer Date, deliver or cause to
be delivered to the Collateral Custodian, as the designated agent of the
Indenture Trustee, by facsimile transmission or in an electronic format mutually
agreed to by the parties, a Loan Schedule and, with regard to each Loan (other
than an Alarm Service Loan) a copy of the executed Underlying Note endorsed in
blank or the related Loan Register and Assignment of Mortgage, if any, endorsed
in blank and (ii) with respect to each Alarm Service Loan transferred to the
Issuer on such Transfer Date, within four Business Days after such Transfer
Date, deliver (or caused to be delivered) to the Collateral Custodian, the
original (and to the extent it exists, the sole chattel paper counterpart)
master purchase agreement and, if any, security agreement and a copy of the
purchase statement related to each Alarm Service Loan, and all other Required
Loan Documents for each Alarm Service Loan, and (iii) with respect to each Loan
(other than an Alarm Service Loan) transferred to the Issuer on such Transfer
Date, within two Business Days after such Transfer Date, deliver (or caused to
be delivered) to the Collateral Custodian the original and duly executed
Underlying Note (if any) and Assignment of Mortgage (if any), any security
agreement related to each Loan (other than an Alarm Service Loan) transferred to
the Issuer, and all other Required Loan Documents for each Loan (other than an
Alarm Service Loan) (other than those documents required to be retained by the
Servicer in connection with the servicing and administration of the Loans) (with
respect to each Loan (including each Alarm Service Loan), a “Custodial Loan
File”).
          (b) The Loan Originator shall, within two (2) Business Days after the
related Transfer Date, deliver or cause to be delivered to the Servicer the
related Servicer’s Loan File for the benefit of, and as agent for, the Indenture
Trustee, on behalf of the Noteholders.
          (c) The Indenture Trustee shall cause the Collateral Custodian to take
and maintain continuous physical possession of the Custodial Loan Files in the
State of Minnesota and, in connection therewith, shall act solely as agent for
the Noteholders in accordance with the terms hereof and not as agent for the
Loan Originator, the Servicer or any other party.

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          (d) Upon discovery by any of the Issuer, the Depositor, the Loan
Originator, the Servicer, the Indenture Trustee, the Paying Agent, the
Collateral Custodian, the Backup Servicer and/or a Noteholder of the Loan
Originator’s or the Depositor’s failure to deliver in accordance with the terms
and conditions of this Agreement and the other Basic Documents any of the
Required Loan Documents required to be included in the Loan File for an Alarm
Service Loan, the Person discovering such breach shall give prompt written
notice of such failure to the Issuer, the Depositor, the Loan Originator, the
Servicer, the Indenture Trustee, the Paying Agent, the Collateral Custodian, the
Backup Servicer and each Noteholder; provided, however, that the failure to give
such notice shall not affect the obligations of the Loan Originator and the
Depositor hereunder. Unless such breach has been waived by the Initial
Noteholder or Depositor shall not have cured such breach within five
(5) Business Days of the earlier of notice of such breach or knowledge thereof
(provided that, with respect to the original (and to the extent it exists, the
sole chattel paper counterpart) master purchase agreement and, if any, security
agreement related to an Alarm Service Loan, there shall be no right to cure such
breach), the Depositor shall repurchase from the Issuer, and the Loan Originator
shall repurchase from the Depositor, the Loan(s) for which such failure has
occurred by paying to the Indenture Trustee the Sales Price therefor.

    Section 2.05 Acceptance by the Indenture Trustee of the Loans; Certain
Substitutions and Repurchases; Certification by the Collateral Custodian.

          (a) Based on the initial certification received by it from the
Collateral Custodian in the form of Exhibit E-1 attached hereto (the “Initial
Certification”), the Indenture Trustee acknowledges receipt of, subject to the
further review and exceptions reported by the Collateral Custodian pursuant to
the procedures described below, the documents (or certified copies thereof)
delivered to the Indenture Trustee or the Collateral Custodian on its behalf
pursuant to Section 2.04 and declares that it holds and will continue to hold
directly those documents and any amendments, replacements or supplements thereto
and all other assets constituting the Collateral delivered to it in trust for
the use and benefit of all present and future Noteholders.
          (b) (i) On or before 11:00 a.m. New York City time on the related
Transfer Date, the Collateral Custodian will deliver to the Initial Noteholder,
with a copy to the Indenture Trustee, an Initial Certification, confirming
whether or not it has received, by facsimile transmission or in electronic
format mutually agreed upon by the parties, a copy of either the executed
Underlying Note or Loan Register and the Assignment of Mortgage, if any, in each
case other than the Loan Register, endorsed in blank, for each Loan which the
Issuer will request the Initial Noteholder to advance Additional Note Principal
Balances on such Transfer Date pursuant to, and subject to the conditions of,
the Note Purchase Agreement.
     (ii) Within five (5) Business Days of its receipt of the remaining Required
Loan Documents for each such Loan, the Collateral Custodian shall review the
related Loan and Required Loan Documents to confirm that (A) any Underlying Note
has been properly executed and has no missing or mutilated pages, (B) Uniform
Commercial Code Financing Statements and other filings (required by the Required
Loan Documents) have been made, (C) other than with respect to a Loan the Loan
Collateral for which consists of receivables only as indicated on the Loan
Schedule, an Insurance Policy is contained

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in such Required Loan Documents with respect to any real or personal property
constituting the Loan Collateral, and (D) the related Principal Balance, Loan
number and Obligor name with respect to such Loan is referenced on the related
Loan List and is not a duplicate Loan (collectively, the “Review Criteria”). In
order to facilitate the foregoing review by the Collateral Custodian, in
connection with each delivery of Required Loan Documents hereunder to the
Collateral Custodian, the Servicer shall provide to the Collateral Custodian an
electronic file (in Excel or a comparable format) that contains the related Loan
Schedule or that otherwise contains the Loan number and the name of the Obligor
with respect to each related Loan. Upon completion of such review the Collateral
Custodian will deliver a final certification in the form attached hereto as
Exhibit E-2 (the “Final Certification”) to the Initial Noteholder, with a copy
to the Indenture Trustee and the Loan Originator, confirming its receipt of the
Required Loan Documents. The Final Certification will also contain an exception
report attached as an exhibit thereto which will identify any Loans for which
(i) the Collateral Custodian has not received a Required Loan Document or
(ii) any Review Criteria is not satisfied.
     (iii) The Loan Originator shall have ten (10) Business Days to deliver any
missing Required Loan Documents or correct any non-compliance with a Review
Criteria. If after the conclusion of such time period the Loan Originator has
not delivered such missing Required Loan Document or cured any non-compliance by
a Loan with a Review Criteria and such failure has a material adverse effect on
the value or enforceability of any Eligible Loan or the interests of the
Securityholders in any Eligible Loan, the Loan Originator shall repurchase such
Eligible Loan within one (1) Business Day of notice thereof from the Indenture
Trustee or the Initial Noteholder at the Repurchase Price thereof with respect
to such Eligible Loan by depositing such Repurchase Price in the Collection
Account; provided, however that the Loan Originator shall only be required to
pay the Repurchase Price with respect to any such Loan to the extent that, at
the time such repurchase is required pursuant to terms hereof, a Borrowing Base
Deficiency would exist. In lieu of such a repurchase, the Depositor and Loan
Originator may comply with the substitution provisions of Section 3.05 hereof;
provided, however that the Loan Originator shall only be required to comply with
the substitution provisions to the extent that a Borrowing Base Deficiency would
exist at the time of such proposed substitution. The Loan Originator shall
provide the Servicer, the Indenture Trustee, the Issuer and the Initial
Noteholder with a certification of a Responsible Officer on or prior to such
repurchase or substitution indicating that the Loan Originator intends to
repurchase or substitute such Eligible Loan.
     (iv) Notwithstanding the foregoing provisions of this Section 2.05(b), it
is understood and agreed that, with respect to the Loans set forth on Schedule K
only, the Loan Originator shall be permitted to deliver the documents required
to be delivered under this Section 2.05(b) within seven (7) calendar days of the
first Transfer Date following the date hereof; provided, that, if the Loan
Originator has not delivered such documents for any Loan as of such date, the
Loan Originator shall be obligated to repurchase or substitute any such Loan
pursuant to this Section 2.05(b) without regard to any grace or cure period set
forth herein.
     (v) It is understood and agreed that the obligation of the Loan Originator
to repurchase or substitute any such Loan pursuant to this Section 2.05(b) shall
constitute

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the sole remedy with respect to such failure to comply with the foregoing
delivery requirements.
          (c) In performing its reviews of the Custodial Loan Files, the
Collateral Custodian shall have no responsibility to determine the genuineness
of any document contained therein and any signature thereon. The Collateral
Custodian shall not have any responsibility for determining whether any document
is valid and binding, whether the text of any assignment or endorsement is in
proper or recordable form, whether any document has been recorded in accordance
with the requirements of any applicable jurisdiction, or whether a blanket
assignment is permitted in any applicable jurisdiction.
          (d) The Servicer’s Loan File shall be held in the custody of the
Servicer for the benefit of the Indenture Trustee, on behalf of the Noteholders.
It is intended that, by the Servicer’s agreement pursuant to this
Section 2.05(d), the Indenture Trustee shall be deemed to have possession of the
Servicer’s Loan Files for purposes of Section 9-313 of the UCC of the state in
which such documents or instruments are located. The Servicer shall promptly
report to the Indenture Trustee any failure by it to hold the Servicer’s Loan
File as herein provided and shall promptly take appropriate action to remedy any
such failure. In acting as custodian of such documents and instruments, the
Servicer agrees not to assert any legal or beneficial ownership interest in the
Eligible Loans or such documents or instruments. Subject to Section 8.01(d), the
Servicer agrees to indemnify the Securityholders and the Indenture Trustee,
their officers, directors, employees, agents and “control persons” as such term
is used under the Act and under the Securities Exchange Act of 1934, as amended
for any and all liabilities, obligations, losses, damages, payments, costs or
expenses of any kind whatsoever which may be imposed on, incurred by or asserted
against the Securityholders or the Indenture Trustee as the result of the gross
negligence or willful misfeasance by the Servicer relating to the maintenance
and custody of such documents or instruments which have been delivered to the
Servicer; provided, however, that the Servicer will not be liable for any
portion of any such amount resulting from the gross negligence or willful
misconduct of any Securityholders or the Indenture Trustee; and provided,
further, that the Servicer will not be liable for any portion of any such amount
resulting from the Servicer’s compliance with any instructions or directions
consistent with this Agreement issued to the Servicer by the Indenture Trustee
or the Majority Noteholders. The Indenture Trustee shall have no duty to monitor
or otherwise oversee the Servicer’s performance as custodian of the Servicer
Loan File hereunder.
          Section 2.06 Conditions Precedent to Transfer Dates.
          At least one (1) Business Day prior to each proposed Transfer Date,
the Issuer shall give notice to the Initial Noteholder, the Indenture Trustee
and the Paying Agent of such proposed upcoming Transfer Date and provide an
estimate of the number of Loans and aggregate Principal Balance of such Loans
proposed to be transferred on such Transfer Date. On the Business Day prior to
each Transfer Date, the Issuer shall provide the Initial Noteholder with a final
Loan Schedule with respect to the Loans proposed to be transferred on such
Transfer Date. On each Transfer Date, the Depositor shall convey to the Issuer
the Loans and the other property and rights related thereto described in the
related S&SA Assignment and the Issuer shall, pursuant to the Indenture, grant
and pledge to the Indenture Trustee the Loans and Loan Collateral, and the
Issuer, only upon the satisfaction of each of the conditions set forth below on
or prior to such Transfer Date, shall pay or cause to be paid cash in the amount
of the Additional

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Note Principal Balance received from the Initial Noteholder in respect of the
Loans to or at the direction of the Depositor.
          As of the Closing Date and each Transfer Date:
     (i) The Servicer shall have delivered to the Issuer and the Initial
Noteholder (with a copy to the Collateral Custodian and the Backup Servicer), no
later than 2:00 p.m. New York City time, one (1) Business Day prior to the
related Transfer Date in a form and substance reasonably satisfactory to the
Majority Noteholders, (A) a Notice of Additional Note Principal Balance, a
Borrowing Base Certificate and Loan Schedule, (B) a S&SA Assignment and (C) a
copy of the fully executed LPA Assignment evidencing the sale of the Loans
proposed to be sold on such Transfer Date from the Loan Originator to the
Depositor;
     (ii) the Initial Noteholder shall have received the Initial Certification
prepared by the Collateral Custodian with respect to the Loans;
     (iii) the amount of the Additional Note Principal Balance requested on such
Transfer Date shall be at least equal to $1,000,000;
     (iv) On and as of such day, after giving effect to such transfer, the Note
Principal Balance shall not exceed the lesser of (x) the Maximum Note Principal
Balance and (y) the Borrowing Base;
     (v) the Depositor shall have deposited, or caused to be deposited, in the
Collection Account all collections received with respect to each of the Eligible
Loans on and after the applicable Transfer Date;
     (vi) a Bankruptcy Event shall not have occurred with respect to the Loan
Originator or the Depositor;
     (vii) the Termination Date shall not have occurred;
     (viii) the Required Overcollateralization Amount shall have been maintained
(after giving effect to the sale of Loans on such Transfer Date);
     (ix) each of the representations and warranties made by the Loan Originator
contained in Section 3.04 with respect to the Eligible Loans purchased and
pledged on a Transfer Date shall be true and correct as of such Transfer Date
with the same effect as if then made and each of the Depositor and the Loan
Originator shall have performed all obligations to be performed by it under the
Basic Documents on or prior to such Transfer Date; provided that, if any
representation or warranty made by the Loan Originator pursuant to Section 3.04
herein shall be incorrect as of any Transfer Date with respect to any Loan to be
purchased on such date, the Issuer shall only be relieved of its obligation to
purchase such Loan and, assuming satisfaction or waiver of the other conditions
set forth in this clause (ix), the Issuer shall nonetheless be obligated to
purchase all Loans to be purchased on such date that are unaffected by such
breach;

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     (x) the Depositor shall have taken any action reasonably requested by the
Indenture Trustee, the Issuer or the Noteholders required to maintain the
ownership interest of the Issuer in the Collateral and the security interest of
the Indenture Trustee in the Collateral;
     (xi) all conditions precedent to the Depositor’s purchase and contribution
of Loans pursuant to the Loan Sale Agreement shall have been fulfilled as of
such Transfer Date; and
     (xii) all conditions precedent to the Noteholders’ purchase of the
Additional Note Principal Balance pursuant to the Note Purchase Agreement shall
have been fulfilled as of such Transfer Date.
          Section 2.07 Additional Advances by Initial Noteholder.
          If on any date of determination, there exists a Borrowing Base Excess,
the Issuer may, upon one (1) Business Days’ notice to the Initial Noteholder, at
its option, request an additional advance from the Initial Noteholder up to an
amount equal to such Borrowing Base Excess. Any advance pursuant to this
Section 2.07 shall be subject to the following conditions:
     (i) as of such date, neither the Loan Originator nor the Depositor shall
(A) be subject to a Bankruptcy Event or (B) have reason to believe that its
insolvency is imminent;
     (ii) the Revolving Period shall not have terminated; and
     (iii) as of such date (after giving effect to such advance), the Required
Overcollateralization Amount shall have been maintained.
          Section 2.08 Termination of Revolving Period.
          Upon the occurrence of (i) a Default or (ii) a Trigger Event, the
Initial Noteholder may, in any such case, in their sole discretion and upon
written notice to the Servicer, terminate the Revolving Period.
          Section 2.09 Correction of Errors.
          The parties hereto who have relevant information shall cooperate to
reconcile any errors in calculating the Sales Price of the Eligible Loans from
and after the related Transfer Date. In the event that an error in the Sales
Price of the Eligible Loans is discovered by either party, any miscalculations
of Principal Balance, accrued interest, miscalculation of the Required
Overcollateralization Amount or aggregate unreimbursed Servicing Advances
attributable to the applicable Eligible Loan, or any prepayments not properly
credited, such party shall give prompt notice to the other parties hereto, and
the party that shall have benefited from such error shall promptly remit to the
other, by wire transfer of immediately available funds, the amount of such error
with no interest thereon.

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ARTICLE III
REPRESENTATIONS AND WARRANTIES
          Section 3.01 Representations and Warranties of the Depositor.
          The Depositor hereby represents, warrants and covenants to the other
parties hereto and the Securityholders that as of the Closing Date and as of
each Transfer Date:
          (a) The Depositor is a limited liability company duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and has, and had at all relevant times, full power to own its
property, to carry on its business as currently conducted and to enter into and
perform its obligations under each Basic Document to which it is a party;
          (b) The execution and delivery by the Depositor of each Basic Document
to which the Depositor is a party and its performance of and compliance with all
of the terms thereof will not violate the Depositor’s organizational documents
or constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, or result in the breach or acceleration
of, any material contract, agreement or other instrument to which the Depositor
is a party or which are applicable to the Depositor or any of its assets;
          (c) The Depositor has the full power and authority to enter into and
consummate the transactions contemplated by each Basic Document to which the
Depositor is a party, has duly authorized the execution, delivery and
performance of each Basic Document to which it is a party and has duly executed
and delivered each Basic Document to which it is a party; each Basic Document to
which it is a party, assuming due authorization, execution and delivery by the
other party or parties thereto, constitutes a valid, legal and binding
obligation of the Depositor, enforceable against it in accordance with the terms
thereof, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar laws relating to or
affecting the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in equity
or at law);
          (d) The Depositor is not in violation of, and the execution and
delivery by the Depositor of each Basic Document to which the Depositor is a
party and its performance and compliance with the terms of each Basic Document
to which the Depositor is a party will not constitute a violation with respect
to any order or decree of any court or any order or regulation of any federal,
state, municipal or governmental agency having jurisdiction, which violation
would materially and adversely affect the financial condition or operations of
the Depositor or any of its properties or materially and adversely affect the
performance of any of its duties hereunder;
          (e) There are no actions or proceedings against, or investigations of,
the Depositor currently pending with regard to which the Depositor has received
service of process and no action or proceeding against, or investigation of, the
Depositor is, to the knowledge of the Depositor, threatened or otherwise pending
before any court, administrative agency or other tribunal that (A) would
prohibit its entering into any of the Basic Documents to which it is a party or
render the Securities invalid, (B) seeks to prevent the issuance of the
Securities or the

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consummation of any of the transactions contemplated by any of the Basic
Documents to which it is a party or (C) would prohibit or materially and
adversely affect the performance by the Depositor of its obligations under, or
the validity or enforceability of, any of the Basic Documents to which it is a
party or the Securities;
          (f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Depositor of, or compliance by the Depositor with, any of the
Basic Documents to which the Depositor is a party or the Securities, or for the
consummation of the transactions contemplated by any of the Basic Documents to
which the Depositor is a party, except for such consents, approvals,
authorizations and orders, if any, that have been obtained prior to such date;
          (g) The Depositor is solvent, is able to pay its debts as they become
due and has capital sufficient to carry on its business and its obligations
hereunder; it will not be rendered insolvent by the execution and delivery of
any of the Basic Documents to which it is a party or the assumption of any of
its obligations thereunder; no petition of bankruptcy (or similar insolvency
proceeding) has been filed by or against the Depositor;
          (h) The Depositor did not transfer the Loans sold to the Issuer with
any intent to hinder, delay or defraud any of its creditors; nor will the
Depositor be rendered insolvent as a result of such sale or pledge;
          (i) The Depositor had good and valid title to, and was the sole owner
of each Loan sold by the Depositor to the Issuer, free and clear of any lien
other than any such lien released simultaneously with the sale contemplated
herein, and, immediately upon each transfer and assignment herein contemplated,
the Depositor will have delivered to the Issuer good and valid title to, and the
Issuer will be the sole owner of, each Loan transferred by the Depositor and,
subject to the Indenture, the Indenture Trustee will have a first priority
perfected security interest in each Loan, in each case free and clear of any
lien;
          (j) The Depositor acquired title to each of the Loans in good faith,
without notice of any adverse claim;
          (k) None of the Basic Documents to which the Depositor is a party, nor
any Officer’s Certificate, statement, report or other document prepared by the
Depositor and furnished or to be furnished by it pursuant to any of the Basic
Documents to which it is a party or in connection with the transactions
contemplated thereby contains any untrue statement of material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading;
          (l) The Depositor is not required to be registered as an “investment
company,” under the Investment Company Act of 1940, as amended;
          (m) The Depositor’s principal place of business and chief executive
offices are located at 4445 Willard Avenue, Chevy Chase, Maryland 20815, or at
such other address as shall be designated by such party in a written notice to
the other parties hereto;

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          (n) The Depositor covenants that during the continuance of this
Agreement it will comply in all respects with the provisions of its
organizational documents in effect from time to time; and
          (o) The transfer of the Loans by the Depositor to the Issuer pursuant
to the Basic Documents upon completion pursuant to the Basic Documents of the
sale of the Notes by the Issuer to the Initial Noteholder, was intended to
constitute a financing of such Loans for tax and consolidated accounting
purposes (with a notation that it is treating the transfers as a sale for legal
and all other purposes on its books, records and financial statements, in each
case, consistent with GAAP).
          Section 3.02 Representations and Warranties of the Loan Originator.
          The Loan Originator hereby represents and warrants to the other
parties hereto and the Securityholders that as of the Closing Date and as of
each Transfer Date:
          (a) The Loan Originator is a limited liability company duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and (i) is duly qualified, in good standing and licensed to carry
on its business in each state where any Loan Collateral related to a Loan sold
by it is located to the extent necessary to ensure the enforceability of each
Loan and the servicing of the Loan in accordance with Accepted Servicing
Practices and (ii) is in compliance with the laws of any such jurisdiction, in
both cases, to the extent necessary to ensure the enforceability of such Loan in
accordance with the terms thereof and had at all relevant times, full power to
originate such Loan, to own its property, to carry on its business as currently
conducted and to enter into and perform its obligations under each Basic
Document to which it is a party;
          (b) The execution and delivery by The Loan Originator of each Basic
Document to which it is a party and its performance of and compliance with the
terms thereof will not violate The Loan Originator’s organizational documents or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach or acceleration of,
any material contract, agreement or other instrument to which The Loan
Originator is a party or which may be applicable to The Loan Originator or any
of its assets in each case that is likely to affect materially and adversely its
ability to carry out the transactions contemplated hereby;
          (c) The Loan Originator has the full power and authority to enter into
and consummate all transactions contemplated by the Basic Documents to be
consummated by it, has duly authorized the execution, delivery and performance
of each Basic Document to which it is a party and has duly executed and
delivered each Basic Document to which it is a party; each Basic Document to
which it is a party, assuming due authorization, execution and delivery by each
of the other parties thereto, constitutes a valid, legal and binding obligation
of The Loan Originator, enforceable against it in accordance with the terms
hereof, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar laws relating to or
affecting the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in equity
or at law);

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          (d) The Loan Originator is not in violation of, and the execution and
delivery of each Basic Document to which it is a party by the Loan Originator
and its performance and compliance with the terms of each Basic Document to
which it is a party will not constitute a violation with respect to, any order
or decree of any court or any order or regulation of any federal, state,
municipal or governmental agency having jurisdiction, which violation would
materially and adversely affect the financial condition, business or operations
of the Loan Originator or its properties or materially and adversely affect the
performance of its duties under any Basic Document to which it is a party;
          (e) There are no actions or proceedings against, or investigations of,
the Loan Originator currently pending with regard to which the Loan Originator
has received service of process and no action or proceeding against, or
investigation of, the Loan Originator is, to the Loan Originator’s knowledge,
threatened or otherwise pending before any court, administrative agency or other
tribunal that (A) would prohibit its entering into any Basic Document to which
it is a party or render the Securities invalid, (B) seeks to prevent the
issuance of the Securities or the consummation of any of the transactions
contemplated by any Basic Document to which it is a party or (C) would prohibit
or materially and adversely affect the sale of the Loans to the Depositor, the
performance by the Loan Originator of its obligations under, or the validity or
enforceability of, any Basic Document to which it is a party or the Securities;
          (f) No consent, approval, authorization or order of any court or
governmental agency or body is required for: (1) the execution, delivery and
performance by the Loan Originator of, or compliance by the Loan Originator
with, any Basic Document to which it is a party, (2) the sale and contribution
of the Eligible Loans to the Depositor, or (3) the consummation of the
transactions required of it by any Basic Document to which it is a party, except
such as shall have been obtained before such date, other than: (A) the filing or
recording of financing statements, instruments of assignment and other similar
documents necessary in connection with the sale of the Loans to the Issuer,
(B) such consents, approvals, authorizations, qualifications, registrations,
filings or notices as have been obtained or made and (C) where the lack of such
consent, approval, authorization, qualification, registration, filing or notice
is unlikely to have a material adverse effect on its performance hereunder;
          (g) Immediately prior to the sale of any Loans to the Depositor, the
Loan Originator had good and valid title to the Loans sold by it on such date
free and clear of all Liens other than Permitted Liens;
          (h) The Loan Originator is solvent, is able to pay its debts as they
become due and has capital sufficient to carry on its business and its
obligations under each Basic Document to which it is a party; it will not be
rendered insolvent by the execution and delivery of this Agreement or by the
performance of its obligations under each Basic Document to which it is a party;
no petition of bankruptcy (or similar insolvency proceeding) has been filed by
or against the Loan Originator prior to the date hereof;
          (i) The Loan Originator has transferred the Loans transferred by it on
or prior to such Transfer Date without any intent to hinder, delay or defraud
any of its creditors;
          (j) The Loan Originator has received fair consideration and reasonably
equivalent value in exchange for the Loans sold and contributed by it on such
Transfer Date to the Depositor;

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          (k) The Loan Originator has not dealt with any broker or agent or
other Person who might be entitled to a fee, commission or compensation in
connection with the transaction contemplated by this Agreement;
          (l) The Loan Originator’s principal place of business and chief
executive offices are located at 4445 Willard Avenue, Chevy Chase, Maryland,
Maryland 20815 or at such other address as shall be designated by such party in
a written notice to the other parties hereto;
          (m) The Loan Originator acknowledges and agrees that the Servicing
Compensation represents reasonable compensation for the performance of its
services hereunder and that the entire Servicing Compensation shall be treated
by the Loan Originator, for accounting purposes, as compensation for the
servicing and administration of the Loans pursuant to this Agreement; and
          (n) The Loan Originator is in compliance with the financial covenants
set forth in Section 7.01.
          It is understood and agreed that the representations and warranties
set forth in this Section 3.02 shall survive delivery of the respective
Custodial Loan Files to the Collateral Custodian (as the agent of the Indenture
Trustee) and shall inure to the benefit of the Securityholders, the Depositor,
the Servicer, the Indenture Trustee, the Owner Trustee and the Issuer. Upon
discovery by the Loan Originator, the Servicer, the Indenture Trustee or the
Issuer of a breach of any of the foregoing representations and warranties that
materially and adversely affects the value of any Loan or the interests of the
Securityholders in any Eligible Loan or in the Securities, the party discovering
such breach shall give prompt written notice to the other parties. The
obligations of the Loan Originator set forth in Sections 2.05 and 3.05 hereof to
cure any breach or to substitute for or repurchase an affected Loan shall
constitute the sole remedies available hereunder to the Securityholders, the
Depositor, the Servicer, the Indenture Trustee or the Issuer respecting a breach
of the representations and warranties contained in this Section 3.02. The fact
that the Initial Noteholder has conducted or has failed to conduct any partial
or complete due diligence investigation of the Loan Files shall not affect the
Securityholders’ rights to demand repurchase or substitution as provided under
this Agreement.
          Section 3.03 [RESERVED].
          Section 3.04 Representations and Warranties Regarding Eligible Loans.
          With respect to each Loan sold to the Issuer on a Transfer Date, the
Loan Originator hereby represents and warrants to the Indenture Trustee, for the
benefit of the Noteholders, as of such Transfer Date and with respect to such
Loan, that:
          (a) the Loan, together with the Loan Collateral, has been originated
or acquired by the Loan Originator and immediately before the transfer, sale and
conveyance thereof to the Depositor pursuant to (and in accordance with) the
Loan Sale Agreement, the Loan Originator had good and valid title to, and was
the sole owner and holder of, such Loan, free and clear of all Liens. Such
transfer, sale and conveyance validly assigns ownership of such Loan to the
Depositor, free and clear of any Liens;

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          (b) at the time such Loan is included in the Loan Pool, the Loan is
not a Charged-Off Loan and the Loan is not more than ten (10) days past due
(after giving effect to the five (5) day grace period set forth in the Loan
Originator’s Underwriting Guidelines in determining the number of days past
due), with respect to payments of principal or interest provided, however that
any Loan previously included in the Loan Pool which was a Charged-Off Loan, but
was subsequently assigned Loan Rating 1, Loan Rating 2 or Loan Rating 3 shall
not violate the representation contained in this clause (b);
          (c) the Loan is an “eligible asset” as defined in Rule 3a-7 under the
Investment Company Act of 1940;
          (d) the Loan has been subject to a grant in favor of the Indenture
Trustee for the benefit of the Noteholders of a first priority perfected
security interest and other than with respect to Subordinated Loans, at the time
of the sale of the Loan to the Depositor pursuant to the Loan Sale Agreement,
the Loan Originator had a first priority perfected security interest in the Loan
Collateral relating to such Loan, subject to Permitted Liens;
          (e) the Loan is an “account”, “chattel paper”, “instrument” or a
“general intangible” within the meaning of Article 9 of the UCC of all
applicable jurisdictions; provided, however, if the Loan constitutes “chattel
paper”, there is not more than one (1) “secured party’s original” counterpart of
the Loan and the sole manually executed counterpart of the Loan is in the
possession of and has been properly endorsed to the Collateral Custodian;
          (f) the Loan is to an Eligible Obligor and is denominated and payable
only in United States dollars in the United States;
          (g) the Loan is evidenced by a promissory note, an entry on the Loan
Register, a security agreement or an instrument and related loan documents that
have been duly authorized and executed, are in full force and effect and
constitute the legal, valid, binding and absolute and unconditional payment
obligation of the related Obligor, enforceable against such Obligor in
accordance with their terms (subject to applicable bankruptcy, insolvency,
moratorium or other similar laws affecting the rights of creditors generally and
to general principles of equity, whether considered in a suit at law or in
equity), and there are no conditions precedent to the enforceability or validity
of the Loan that have not been satisfied or validly waived;
          (h) the Loan does not contravene in any material respect any
applicable laws (including, without limitation, laws, rules and regulations
relating to truth in lending, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt collection practices, licensing and privacy);
          (i) the Loan, (i) satisfies all applicable requirements of and was
originated or acquired, underwritten and closed in accordance with the Loan
Originator’s Underwriting Guidelines (including without limitation the execution
by the Obligor of all documentation required by the Underwriting Guidelines);
(ii) does not contain a confidentiality provision that restricts or purports to
restrict the ability of the Indenture Trustee, on behalf of the Securityholders,
to exercise its rights under this Agreement, including, without limitation, its
rights to review the Loan, the Required Loan Documents and Loan File; (iii) was
generated in the ordinary course of the Loan Originator’s business; (iv) arises
pursuant to loan documentation

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with respect to which the Loan Originator has performed all obligations required
to be performed by it thereunder; (v) is not subject to a guaranty by the Loan
Originator or any Affiliate thereof; and (vi) other than with respect to
Assigned Loans, is executed on forms substantially similar to those in use by
the Loan Originator on the date hereof or in such other form as shall be adopted
by the Loan Originator and approved in writing by the Majority Noteholders at
least ten (10) days prior to such Loan becoming part of the Loan Pool hereunder;
          (j) neither the transfer, sale and assignment of the Loan under the
Loan Sale Agreement by the Loan Originator to the Depositor, the sale of the
Loan by the Depositor to the Issuer hereunder or the pledge of the Loan and the
granting of a security interest therein to the Indenture Trustee, for the
benefit of the Noteholders, pursuant to the Indenture by the Issuer violates,
conflicts with or contravenes any applicable laws or any contractual or other
restriction, limitation or encumbrance applicable to Loan Originator, Depositor
and Issuer;
          (k) on or before the applicable Transfer Date, the Obligor of such
Loan shall have been directed to make all payments to the Lock-Box or directly
to the Lock-Box Account;
          (l) except with respect to a Loan the Loan Collateral for which
consists of receivables only, the Loan requires the Obligor thereof to maintain
adequate property damage and liability insurance with respect to the real or
personal property constituting the Loan Collateral and the same has been at all
times covered by adequate physical damage and liability insurance policies
issued by generally accepted carriers;
          (m) the Loan Collateral (i) has not been foreclosed on, or repossessed
from the current Obligor, by the Servicer, and (ii) since origination or
acquisition has not suffered any material loss or damage that has not been
repaired or restored;
          (n) the Obligor’s payment obligations are absolute and unconditional
with no right of setoff or counterclaim for any reason against the Loan
Originator or any assignee and the Loan contains a clause that has the effect of
unconditionally and irrevocably obligating the Obligor to make periodic payments
(including taxes) which is applicable notwithstanding any rights the Obligor may
have against the assignee and notwithstanding any damage to, defects in or
destruction of the Loan Collateral or any other event, including obsolescence of
any property or improvements;
          (o) the Loan is not subject to any litigation, valid right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the Loan
Documents, or the exercise of any right thereunder, render either the Underlying
Note unenforceable, in whole or in part, or subject to any such right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, and no such right of rescission, set-off, counterclaim or
defense has been asserted with respect thereto;
          (p) the Loan requires the Obligor to maintain the Loan Collateral in
good condition and to bear all the costs of operating and maintaining same,
including taxes and insurance relating thereto;
          (q) the Loan provides (i) for periodic contract payments, which are
due and payable on a monthly or quarterly basis unless otherwise consented to in
writing by the Initial

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Noteholder, and (ii) that the Servicer may accelerate all payments on the Loan
if the Obligor is in default under the Loan;
          (r) the Loan shall not have been originated in, nor shall it be
subject to the laws of, any jurisdiction under which the sale, transfer and
assignment of such Loan under the Basic Documents would be unlawful, void or
voidable;
          (s) the Loan, together with the Required Loan Documents is assignable
and does not require the consent of or notice to the Obligor to consummate the
transactions contemplated by the Basic Documents or contain any other
restriction on the transfer or the assignment of the Loan for the purpose of
consummating the transactions contemplated by the Basic Documents, other than a
consent or waiver of such restriction that has been obtained prior to the date
on which the Loan was sold to the Depositor;
          (t) the Obligor of such Loan is legally responsible for all taxes
relating to the Loan Collateral or other security relating to such Loan, and all
payments in respect of the Loan will be made free and clear of, and without
deduction or withholding for or on account of, any taxes, unless such
withholding or deduction is required by applicable law;
          (u) the Loan complies in all material respects with the
representations and warranties made by the Loan Originator hereunder and all
information with respect to the Loan is true and correct in all material
respects;
          (v) other than with respect to Participation Loans, the Loan and the
Loan Collateral have not been sold, transferred, assigned or pledged by the Loan
Originator to any Person other than as contemplated under the Basic Documents;
          (w) other than Participation Loans and Assigned Loans, with respect to
the Loan Originator’s obligation to fund and the actual funding of the Loan by
the Loan Originator, the Loan Originator has not assigned its obligations, or
granted participations, in whole or in part, to any Person;
          (x) the Loan has not been compromised, adjusted, extended, satisfied,
rescinded, set-off or modified by the Depositor, the Loan Originator or the
Obligor with respect thereto and, with respect to each other Loan, the Obligor
with respect thereto, and no Loan is subject to compromise, adjustment,
extension, satisfaction, rescission, set-off, counterclaim, defense, abatement,
suspension, deferment, deductible, reduction, termination or modification,
whether arising out of transactions concerning the Loan, or otherwise, by the
Depositor, the Loan Originator or the Obligor with respect thereto and, with
respect to each other Loan, the Obligor with respect thereto except for
amendments to such Loan otherwise permitted under this Agreement and in
accordance with the Underwriting Guidelines;
          (y) the particular Loan is not one as to which the Loan Originator has
knowledge which should lead it to expect such Loan will not be paid in full;
          (z) with respect to any DIP Loan, the Loan Originator or its assignee
has been granted a first priority lien status in respect of all or certain of
the Obligor’s assets by final order of the applicable federal bankruptcy or
district court;

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          (aa) except with respect to DIP Loans, the Obligor of such Loan is not
the subject of a Bankruptcy Event;
          (bb) the Loan does not represent capitalized interest or payment
obligations relating to “put” rights;
          (cc) the Loan is not a Loan or extension of credit by the Loan
Originator to the Obligor for the purpose of making any past due principal,
interest or other payments due on such Loan;
          (dd) the Loan is secured by a valid, perfected, first priority (other
than with respect to Subordinated Loans) security interest (subject to Permitted
Liens) in all assets that constitute the collateral for the Loan;
          (ee) all material consents, licenses, approvals or authorizations of,
or registrations or declarations with, any Governmental Authority required to be
obtained, effected or given in connection with the making or performance of the
Loan have been duly obtained, effected or given and are in full force and
effect;
          (ff) the Loan Originator (i) has completed to its satisfaction, in
accordance with the Underwriting Guidelines, a due diligence audit and
collateral assessment with respect to such Loan and (ii) has done nothing to
impair the rights of the Indenture Trustee or the Securityholders with respect
to the Loan, the Loan Collateral, the Scheduled Payments or any income or
Proceeds therefrom;
          (gg) the Loan is a Senior Secured Loan or Subordinated Loan;
          (hh) no provision of the Loan (other than an Alarm Service Loan) has
been waived, modified or altered in any respect, except in accordance with the
Underwriting Guidelines and by instruments duly authorized and executed and
contained in the Required Loan Documents;
          (ii) except with respect to Subordinated Loans and Senior-B Note
Loans, the Loan is not subordinated to any other loan or financing to the
related Obligor;
          (jj) the face amount of the Loan is the dollar amount thereof shown on
the books and records of the Loan Originator and the Depositor;
          (kk) with respect to Subordinated Loans, the Loan Originator has
entered into an intercreditor agreement or subordination agreement with, or
provisions for the benefit of, the senior lender, which agreement or provisions
are assignable to and have been assigned to the Depositor, and which provide
that any standstill of remedies by the Loan Originator or its assignee is
limited (A) such that there shall be no standstill of remedies (x) until after a
payment default in respect of the senior debt, the occurrence of a default in
respect of the senior debt not requiring notice, or the Loan Originator’s or
assignee’s receipt from the senior lender or Obligor of a notice of other
default by the Obligor under the senior debt and (y) unless a covenant or
payment default is also in effect, and (B) provided the Subordinated Loan has
not been accelerated or if a payment default is in effect, to no longer than
180 days in duration in the aggregate in any given year;

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          (ll) with respect to any Acquired Loan or Assigned Loan, such Loan has
been re-underwritten by the Loan Originator and satisfies all of the Loan
Originator’s underwriting criteria as set forth in the Underwriting Guidelines;
          (mm) with respect to any Acquired Loan that is originated by an
Affiliate or subsidiary of the Loan Originator, the Depositor has received a
satisfactory legal opinion concerning the acquisition of such Loan by the Loan
Originator in a true sale transaction;
          (nn) with respect to any Acquired Loan that was acquired in a pool by
the Loan Originator along with one (1) or more other Acquired Loans, the Initial
Noteholder has approved in writing such Loan for inclusion in the Loan Pool and
has completed its own due diligence with respect to such Loan;
          (oo) at origination or acquisition by the Loan Originator, such Loan
was assigned Loan Rating 1, Loan Rating 2 or Loan Rating 3 and, as of any date
thereafter, such Loan is assigned Loan Rating 1, Loan Rating 2, Loan Rating 3,
Loan Rating 4 or Loan Rating 5;
          (pp) each Subordinated Loan must either (i) have an interest coverage
ratio that is not less than 1.25:1, (ii) be an Enhanced Mezzanine Loan or
(iii) be made in respect of construction or development of unimproved land;
          (qq) the Loan was not an Enhanced Mezzanine Loan or a Loan made in
connection with (a) the construction or development of unimproved land unless
(A) the outstanding Principal Balance of such Loan together with all other
Enhanced Mezzanine Loans and Loans made in respect of construction or
development of unimproved land does not exceed ten percent (10%) of the
aggregate Principal Balance of all Loans and (B) the aggregate outstanding
principal balance of such Loan does not exceed Seven Million Five Hundred
Thousand Dollars ($7,500,000), or (b) facilitating the trade-in or exchange of
the related mortgaged property;
          (rr) with respect to each Loan that is an Alarm Service Loan:

  (i)   the Dealer is a Person with a place of business in the United States or,
with respect to two (2) of the Alarm Service Loans, Canada;     (ii)   the
Dealer has all necessary licenses, permits and other authorizations to conduct
security alarm sales, installation, monitoring and maintenance services in the
jurisdiction in which it conducts business;     (iii)   the Loan Originator has
disclosed on the related Transfer Date its calculation of the notional minimum
amount of recurring monthly revenue to be received from each security alarm
monitoring or security alarm monitoring and maintenance contract;     (iv)   the
Loan Originator makes, mutatis mutandis, the applicable representations and
warranties set forth in clauses (a) through (pp) of this Section 3.04 with
respect to (x) the accounts receivable or accounts (as defined in the UCC)
payable pursuant to a security

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      alarm monitoring or a security alarm monitoring and maintenance contract,
(y) each security alarm monitoring or security alarm monitoring and maintenance
contract and (z) each Dealer; and     (v)   the scheduled payments under each
security alarm monitoring or security alarm monitoring and maintenance contract
as set forth in the related Alarm Service Loan are true and correct and
accurately represent the recurring monthly revenue to be received from each
security alarm monitoring or security alarm monitoring and maintenance contract;

          (ss) Reserved.
          (tt) with respect to each SS Underlying Loan, except as set forth in
Exhibit J hereto, the Loan Originator makes, mutatis mutandis, the applicable
representations and warranties set forth in clauses (a) through (qq) of this
Section 3.04 with respect to each SS Underlying Loan.
          It is understood and agreed that the representations and warranties
set forth herein shall survive delivery of the respective Custodial Loan Files
to the Issuer and/or the Collateral Custodian and shall inure to the benefit of
the Issuer or Depositor, as applicable, and their successors and assigns,
notwithstanding any restrictive or qualified endorsement or assignment.
          Section 3.05 Purchase and Substitution.
          (a) (i) It is understood and agreed that the representations and
warranties set forth in Section 3.04 hereto shall survive the conveyance of the
Eligible Loans to the Indenture Trustee on behalf of the Issuer or the
Depositor, as applicable, and the delivery of the Securities to the
Securityholders. Upon discovery by the Depositor, the Servicer, the Loan
Originator, the Collateral Custodian, the Issuer, the Indenture Trustee or any
Securityholder of a breach of any of such representations and warranties or the
representations and warranties of the Loan Originator set forth in Section 3.02
or 3.04 which materially and adversely affects the value or enforceability of
any Eligible Loan or the interests of the Securityholders, in any Eligible Loan
any party discovering such breach shall give prompt written notice to the
others; provided, however, that for purposes of the repurchase and substitution
provisions contained in this Section 3.05, a breach of a representation or
warranty set forth in Section 3.04 shall mean that such representation or
warranty was incorrect as of the date such representation or warranty was made
by the Loan Originator. The Loan Originator shall within 30 days of the earlier
of the Loan Originator’s discovery or the Loan Originator’s receiving notice of
any breach of a representation or warranty, promptly cure such breach in all
material respects. If within 30 days after the earlier of the Loan Originator’s
discovery of such breach or the Loan Originator’s receiving notice thereof such
breach has not been remedied by the Loan Originator and such breach materially
and adversely affects the interests of the Securityholders in the related
Eligible Loan (an “Unqualified Loan”), the Loan Originator shall promptly upon
receipt of written instructions from the Initial Noteholder or the Indenture
Trustee either (i) remove such Unqualified Loan from the Collateral (in which
case it shall become a Deleted Loan) and substitute one or more Qualified
Substitute Loans in the manner and subject to the conditions set forth in this
Section 3.05 (except to the extent that no Borrowing Base Deficiency occurs
following the removal of such Unqualified Loan) or (ii) purchase such
Unqualified Loan at a

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purchase price equal to the Repurchase Price with respect to such Unqualified
Loan by depositing or causing to be deposited such Repurchase Price in the
Collection Account; provided, however, that unless a Borrowing Base Deficiency
exists, the Loan Originator shall only be required to remove such Unqualified
Loan from the Collateral and shall not be required to pay a Repurchase Price or
substitute a Qualified Substitute Loan therefor.
     (ii) On any day prior to the occurrence of the Termination Date, the Issuer
may recommend in writing to the Initial Noteholder (with a copy to the
Collateral Custodian) that any Loan be replaced with one or more Qualified
Substitute Loans.
          Any substitution of Eligible Loans pursuant to this Section 3.05(a)
shall be accompanied by payment by the Loan Originator of the Substitution
Adjustment, if any, remitted to the Noteholders in accordance with
Section 5.01(b)(4).
          (b) As to any Deleted Loan or Eligible Loan for which the Loan
Originator substitutes a Qualified Substitute Loan or Loans, the Loan Originator
shall effect such substitution by delivering to the Indenture Trustee and
Initial Noteholder an Officer’s Certificate of the Loan Originator to the effect
that the Substitution Adjustment has been remitted to the Servicer for deposit
in the Collection Account. As to any Deleted Loan or Eligible Loan for which the
Loan Originator substitutes a Qualified Substitute Loan or Loans, the Loan
Originator shall effect such substitution by delivering to the Collateral
Custodian the documents constituting the Custodial Loan File for such Qualified
Substitute Loan or Loans.
          The Servicer shall deposit in the Collection Account all payments
received in connection with each Qualified Substitute Loan after the date of
such substitution. Scheduled Payments received with respect to Qualified
Substitute Loans on or before the date of substitution will be retained by the
Loan Originator. The Depositor or the Issuer, as applicable, will be entitled to
all payments received on the Deleted Loan or substituted Eligible Loan on or
before the date of substitution and the Loan Originator shall thereafter be
entitled to retain all amounts subsequently received in respect of such Deleted
Loan or substituted Eligible Loan. The Loan Originator shall give written notice
to the Depositor, the Issuer, the Servicer, the Indenture Trustee and Initial
Noteholder that such substitution has taken place and the Servicer shall amend
the Loan Schedule to reflect (i) the removal of such Deleted Loan or substituted
Eligible Loan from the terms of this Agreement and (ii) the substitution of the
Qualified Substitute Loan. The Servicer shall promptly deliver to the Depositor,
Issuer, the Loan Originator, the Indenture Trustee and Initial Noteholder, a
copy of the amended Loan Schedule. Upon such substitution, such Qualified
Substitute Loan or Loans shall be subject to the terms of this Agreement in all
respects, and the Loan Originator shall be deemed to have made with respect to
such Qualified Substitute Loan or Loans, as of the date of substitution, the
covenants, representations and warranties set forth in Section 3.04 hereto. On
the date of such substitution, the Indenture Trustee shall release the Deleted
Loan from the lien of the Indenture and the Servicer will cause such Qualified
Substitute Loan to be pledged to the Indenture Trustee under the Indenture as
part of the Collateral.
          (c) With respect to all Unqualified Loans or other Eligible Loans
repurchased by the Loan Originator pursuant to this Agreement, upon the deposit
of the Repurchase Price therefor into the Collection Account, (i) the Issuer or
the Depositor, as applicable, shall assign to the Loan Originator, without
representation or warranty, all of the Issuer’s or the Depositor’s

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right, title and interest in and to such Unqualified Loan or other Eligible Loan
repurchased by the Loan Originator and (ii) the Indenture Trustee shall assign
to the Loan Originator, without recourse, representation or warranty, all the
Indenture Trustee’s right, title and interest in and to such Unqualified Loans
or Eligible Loans, which right, title and interest were conveyed to the
Indenture Trustee pursuant to Section 2.01 hereof and the Indenture. The Issuer
or the Depositor, as applicable, and the Indenture Trustee shall, at the expense
of the Loan Originator, take any actions as shall be reasonably requested by the
Loan Originator to effect the repurchase of any such Loans, to have the
Collateral Custodian return the Custodial Loan File of such Loans to the
Servicer and to execute any termination statements and other releases or
instruments prepared by the Loan Originator and acceptable to the Indenture
Trustee to effect the release of the lien of the Indenture Trustee and transfer
of such Loans.
          (d) It is understood and agreed that the obligations of the Loan
Originator set forth in this Section 3.05 to cure, purchase or substitute for an
Unqualified Loan constitute the sole remedies hereunder of the Depositor, the
Issuer, the Indenture Trustee, the Owner Trustee and the Securityholders
respecting a breach of the representations and warranties contained in Sections
3.02 and 3.04 hereof. Any cause of action against the Loan Originator relating
to or arising out of a defect in a Custodial Loan File or against the Loan
Originator relating to or arising out of a breach of any representations and
warranties made in Sections 3.02 and 3.04 hereto shall accrue as to any Eligible
Loan upon (i) discovery of such defect or breach by any party and notice thereof
to the Loan Originator or notice thereof by the Loan Originator to the Indenture
Trustee, (ii) failure by the Loan Originator to cure such defect or breach or
purchase or substitute such Eligible Loan as specified above, and (iii) demand
upon the Loan Originator, as applicable, by the Issuer, the Indenture Trustee or
the Majority Noteholders for all amounts payable in respect of such Eligible
Loan.
          (e) Neither the Issuer nor the Indenture Trustee shall have any duty
to conduct any affirmative investigation other than as specifically set forth in
this Agreement as to the occurrence of any condition requiring the repurchase or
substitution of any Eligible Loan pursuant to this Section or the eligibility of
any Eligible Loan for purposes of this Agreement.
          (f) Notwithstanding anything to the contrary contained herein, the
Loan Originator may, at its option, cause the removal or repurchase of any Loan
subject to this Agreement at any time during the term hereof by payment of the
fair market value of such Loan at the time of repurchase in immediately
available funds or by means of a corresponding reduction in capital contribution
or any combination thereof; provided, however, that the Loan Originator shall
only be required to remit a Repurchase Price with respect thereto if, at the
time of such removal or repurchase thereof, a Borrowing Base Deficiency exists
or after giving effect to such removal or repurchase a Borrowing Base Deficiency
would exist.
          Section 3.06 Dispositions.
          (a) On any Optional Disposition Date, the Issuer shall have the right
to prepay all or a portion of the Note Principal Balance in connection with a
Disposition in accordance with the Basic Documents and this Section 3.06. In
addition, in connection with the Issuer’s obligation to maintain the Required
Overcollateralization Amount hereunder, the Issuer shall, if directed by Initial
Noteholder, effect Dispositions in accordance with the Basic Documents and this
Section 3.06.

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          (b) (i) In consideration of the consideration received from the
Depositor under the Loan Sale Agreement, the Loan Originator hereby agrees and
covenants that in connection with each Disposition:
     (A) After giving effect to the Disposition on any Optional Disposition
Date, the remaining Note Principal Balance shall not exceed the lesser of the
Maximum Note Principal Balance and the Borrowing Base;
     (B) it shall make such representations and warranties concerning the
Eligible Loans as of the “cut-off date” of the related Disposition to the
Disposition Participants as may be necessary to effect the Disposition and such
additional representations and warranties as may be necessary, in the reasonable
opinion of any of the Disposition Participants, to effect such Disposition;
provided, that, to the extent that the Loan Originator has at the time of the
Disposition actual knowledge of any facts or circumstances that would render any
of such representations and warranties materially false, the Loan Originator may
notify the Disposition Participants of such facts or circumstances and, in such
event, shall have no obligation to make such materially false representation and
warranty;
     (C) it shall supply such information, opinions of counsel, letters from law
and/or accounting firms and other documentation and certificates regarding the
origination of the Eligible Loans as any Disposition Participant shall
reasonably request to effect a Disposition and enter into such indemnification
agreements customary for such transaction relating to or in connection with the
Disposition as the Disposition Participants may reasonably require;
     (D) it shall make itself available for and engage in good faith
consultation with the Disposition Participants concerning information to be
contained in any document, agreement, private placement memorandum, or filing
with the Securities and Exchange Commission relating to the Loan Originator or
the Eligible Loans in connection with a Disposition and shall use reasonable
efforts to compile any information and prepare any reports and certificates,
into a form, whether written or electronic, suitable for inclusion in such
documentation;
     (E) to implement the foregoing and to otherwise effect a Disposition, it
shall enter into, or arrange for its Affiliates to enter into insurance and
indemnity agreements, underwriting or placement agreements, servicing
agreements, purchase agreements and any other documentation which may reasonably
be required of or reasonably deemed appropriate by the Disposition Participants
in order to effect a Disposition;
     (F) it shall use its commercially reasonable efforts to maximize the cash
proceeds received in connection with any such Disposition; and
     (G) it shall take such further actions as may be reasonably necessary to
effect the foregoing;

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provided, that notwithstanding anything to the contrary, (a) the Loan Originator
shall have no liability for the Eligible Loans arising from or relating to the
ongoing ability of the related Obligors to pay under the Eligible Loans;
(b) none of the indemnities hereunder shall constitute an unconditional
guarantee by the Loan Originator of collectibility of the Eligible Loans; and
(c) the Loan Originator shall have no obligation with respect to the financial
inability of any Obligor to pay principal, interest or other amount owing by
such Obligor under an Eligible Loan.
     (ii) [Reserved.]
     (iii) As long as no Servicer Event of Default or Default shall have
occurred and be continuing under this Agreement or the Indenture, the Servicer
may continue to service the Eligible Loans included in any Disposition subject
to any applicable “term-to-term” servicing provisions in Section 9.01(c) and
subject to any required amendments to the related servicing provisions as may be
necessary to effect the related Disposition including but not limited to the
obligation to make recoverable principal and interest advances on the Eligible
Loans.
          The Initial Noteholder shall have the right, in its sole discretion,
upon and following the termination of the Revolving Period, to direct the Loan
Originator, the Issuer and the Depositor to effect a Disposition. Any such
Disposition shall be effected by the Loan Originator, the Issuer and the
Depositor in a commercially reasonable manner.
          (c) In connection with any Disposition under this Section 3.06, the
Issuer agrees to assist the Loan Originator in such Dispositions and accordingly
it shall:
     (i) transfer, deliver and sell all or a portion of the Loans, as of the
“cut-off dates” of the related Dispositions, to such Disposition Participants as
may be necessary to effect the Dispositions;
     (ii) deposit the cash Disposition Proceeds into the Distribution Account
pursuant to Section 5.01(c)(2)(D); and
     (iii) take such further actions, including executing and delivering
documents, certificates and agreements, as may be reasonably necessary to effect
such Dispositions.
          (d) The Servicer hereby covenants that it will take such actions as
may be reasonably necessary to effect Dispositions as the Disposition
Participants may request and direct, including without limitation providing the
Loan Originator such information as may be required to make representations and
warranties required hereunder, and covenants that it will make such
representations and warranties regarding its servicing of the Loans hereunder as
of the “cut-off date” of the related Disposition as reasonably required by the
Disposition Participants.
          (e) Except as otherwise expressly set forth under this Section 3.06,
the parties’ rights and obligations under this Section 3.06 shall continue
notwithstanding the occurrence of an Event of Default.
          (f) The Disposition Participants shall be independent contractors to
the Issuer and shall have no fiduciary obligations to the Issuer or any of its
Affiliates. The Disposition Participants shall not be liable for any error of
judgment made in good faith and shall not be

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liable with respect to any action they take or omit to take in good faith in the
performance of their duties.
          Section 3.07 Removal or Repurchase of Call Loans.
          The Depositor shall be required to remove or repurchase any Loan which
has become a Call Loan within thirty (30) days of the date such Loan became a
Call Loan. If a Borrowing Base Deficiency exists at the time such Loan has
become a Call Loan, the Depositor shall effect such repurchase by deposit of the
Repurchase Price therefor into the Collection Account; provided, that, if a Loan
has become a Call Loan solely due to the Loan being uncollectible on account of
the insolvency, bankruptcy or lack of creditworthiness of the related Obligor or
would constitute recourse to the Servicer for such losses, then the Depositor
shall not be required to remove or repurchase such Call Loan, it being
understood that such Call Loan shall not be an Eligible Loan for purposes of any
a Disposition, including without limitation, any Securitization pursuant to
Section 3.06 nor any Whole Loan Sale pursuant to Section 3.06 hereof.
          Section 3.08 Underwriting Guidelines; Modifications.
          The Loan Originator shall provide the Initial Noteholder with the
Underwriting Guidelines from time to time on reasonable request by the Initial
Noteholder. The Loan Originator shall give the Initial Noteholder prompt written
notification of any modification or change to the Underwriting Guidelines. If
the Initial Noteholder object in writing to such modification or change to the
Underwriting Guidelines within 15 days after receipt of such notice, no Loans
may be conveyed to the Issuer pursuant to this Agreement unless such Loans have
been originated pursuant to the Underwriting Guidelines without giving effect to
such modification or change. Notwithstanding anything contained in this
Agreement to the contrary, any Loan conveyed to the Issuer pursuant to this
Agreement pursuant to a modification or change to the Underwriting Guidelines
that has been rejected by the Initial Noteholder or which the Initial Noteholder
did not receive notice of, such Loan shall be deemed an Unqualified Loan and be
repurchased or substituted for in accordance with Section 3.05.
ARTICLE IV
ADMINISTRATION AND SERVICING OF THE LOANS
          Section 4.01 Servicer’s Servicing Obligations.
          The Servicer, as independent contract servicer, shall service and
administer the Eligible Loans in accordance with Accepted Servicing Practices.
          Section 4.02 Loan Register.
          (a) The Servicer shall maintain with respect to each Noteless Loan a
register in the name of or for the benefit of the Collateral Custodian (each, a
“Loan Register”) in which it will record (v) the amount of such Loan, (w) the
amount of any principal or interest due and payable or to become due and payable
from the Obligor thereunder, (x) the amount of any sum in respect of such Loan
received from the Obligor, (y) the date of origination of such Loan and (z) the
Loan Maturity Date. The entries made in each Loan Register maintained pursuant
to this

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Section 4.02(a) shall be prima facie evidence of the existence and amounts of
the obligations therein recorded; provided, however, that the failure of the
Servicer to maintain any such Loan Register or any error therein shall not in
any manner affect the obligations of the Obligor to repay the related Loans in
accordance with their terms. If at any time the Collateral Custodian shall
receive a notice from the Indenture Trustee or the Noteholders directing
transfer of such Loan Register or other orders concerning such Loan Register
from the Indenture Trustee or the Noteholders, the Collateral Custodian shall
comply with such orders without further consent of the Servicer or the Depositor
or the Issuer. In connection with any such notice the Servicer shall take
whatever action as is requested and reasonably necessary or advisable to
effectuate the foregoing. The Collateral Custodian may rely upon the contents of
any notice or instructions that the Collateral Custodian believes in good faith
to be from the Noteholders or the Indenture Trustee, as the case may be, without
any independent investigation. The Collateral Custodian shall have no duty to
inquire into the authority of the person giving such notice or instruction. In
the event that the Collateral Custodian receives conflicting notices or
instructions, any notice received from the Noteholders shall govern and
supersede any and all conflicting notices.
          (b) At any time a Noteless Loan is included as part of the Collateral
pursuant to this Agreement, the Servicer shall deliver to the Collateral
Custodian a copy of the Loan Register, together with a certificate of a
Responsible Officer of the Servicer certifying to the accuracy of such Loan
Register as of the date such Loan is included as part of the Collateral.
          (c) The Noteholders may terminate the Servicer’s right to maintain
such Loan Register at any time and require that all such Noteless Loans be
evidenced by an originally executed Underlying Note.
          (d) The Depositor will take no action to cause any Loan not originally
evidenced by an Underlying Note to be evidenced by an instrument (as defined in
the UCC), except in connection with the enforcement or collection of such Loan
or as expressly provided in this Agreement.
          Section 4.03 The Backup Servicer; Duties of the Backup Servicer.
          (a) The parties hereto hereby appoint Wells Fargo Bank, National
Association to act as Backup Servicer, for the benefit of the Noteholders. The
Backup Servicer hereby accepts such appointment and agrees to perform the duties
and obligations with respect thereto set forth herein.
          (b) (1) On or before the Closing Date, the Backup Servicer shall
accept from the Servicer delivery of the information required to be set forth in
the Monthly Servicer Report (as described below) in hard copy and on computer
tape; provided, however, the computer tape is in an MS DOS, PC readable ASCII
format or other format to be agreed upon by the Backup Servicer and the Servicer
on or prior to closing.
     (2) Not later than 12:00 noon New York City time on each Record Date, the
Servicer shall deliver to the Backup Servicer a data loan tape and report
(together, the “Monthly Servicer Report”) in the form of Exhibit B attached
hereto, which shall include but not be limited to the information necessary to
enable the Backup Servicer to perform the following duties:

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     (A) compare the information contained in the Monthly Servicer Report to the
definition of Concentration Limitation;
     (B) determine whether or not a Trigger Event described in clauses (i),
(ii), (iii), (iv) or (ix) of such definition has occurred; and
     (C) prepare a trend analysis for the Initial Noteholder comparing the
Concentration Limitation and Trigger Events as set forth in the Monthly Servicer
Report to those set forth in the Monthly Servicer Reports delivered to the
Backup Servicer by the Servicer during each month prior to the Maturity Date.
          The Backup Servicer shall provide a report which summarizes the
results of the performance of the above duties to the Initial Noteholder before
12:00 noon New York City time on the Payment Date immediately following the
Record Date on which such Monthly Servicer Report was delivered to the Backup
Servicer by the Servicer.
     (3) On a weekly basis to the extent a Borrowing Base Certificate and Loan
Schedule has not been received pursuant to a Transfer Date during the
immediately preceding 7 days, not later than 12:00 noon New York City time, the
Servicer shall deliver to the Backup Servicer, with a copy to the Initial
Noteholder, a Borrowing Base Certificate and Loan Schedule. Upon the receipt of
a Borrowing Base Certificate and Loan Schedule pursuant to this
Section 4.03(b)(3) or any other provision this Agreement, the Backup Servicer
shall:
     (A) track the Principal Balances of the Eligible Loans and verify the
Eligible Loans with the Loan Schedule;
     (B) compare the advance rates set forth in the Borrowing Base Certificate
to the percentages set forth under the definition of “Purchase Price Percentage”
herein;
     (C) compare the delinquent and charged-off Loans set forth in the Borrowing
Base Certificate to the definition of “Delinquent” and “Charged-Off Loans” set
forth herein;
     (D) compare the “Subordinated Loans” and “Senior B-Note Loans” set forth in
the Borrowing Base Certificate to the definitions of such terms set forth
herein; and
     (E) calculate the Borrowing Base, Borrowing Base Excess (if applicable),
Borrowing Base Deficiency (if applicable), Required Overcollateralization Amount
and Required Interest Coverage Amount.
          The Backup Servicer shall provide a report which summarizes the
results of the performance of the above duties to the Initial Noteholder within
one (1) Business Day immediately following the day on which any such Borrowing
Base Certificate and Loan Schedule is delivered to the Backup Servicer.

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          (c) With respect to the duties described in Section 4.03(b)(2) and
(3), the Backup Servicer is entitled to rely conclusively, and shall be fully
protected in so relying, on the contents of each Monthly Servicer Report,
Borrowing Base Certificate, Loan Schedule and all other reports, including, but
not limited to, the completeness and accuracy thereof, provided by the Servicer
to the Backup Servicer as described in this Agreement.
ARTICLE V
ESTABLISHMENT OF TRUST ACCOUNTS

         Section 5.01 Collection Account, Principal Collections Account and
Distribution Account.

          (a) (1) Establishment of Collection Account. The Servicer, for the
benefit of the Indenture Trustee and the Noteholders, shall cause to be
established and maintained one or more Collection Accounts (collectively, the
“Collection Account”), which shall be separate Eligible Accounts entitled
“CapitalSource Funding VII Trust Collection Account, CapitalSource Finance LLC,
as Servicer, for the benefit of the Indenture Trustee and the holders of
Commercial Loan Backed Notes.” The Collection Account shall be maintained with a
depository institution and shall satisfy the requirements set forth in the
definition of Eligible Account. Funds in the Collection Account shall be
invested in accordance with Section 5.03 hereof. Net investment earnings shall
not be considered part of funds available in the Collection Account.
     (2) Establishment of Principal Collections Account. The Servicer, for the
benefit of the Indenture Trustee and the Noteholders, shall cause to be
established and maintained one or more Principal Collections Accounts
(collectively, the “Principal Collections Account”), which shall be separate
Eligible Accounts entitled “CapitalSource Funding VII Trust Principal
Collections Account, CapitalSource Finance LLC, as Servicer, for the benefit of
the Indenture Trustee and the holders of Commercial Loan Backed Notes.” The
Principal Collections Account shall be maintained with a depository institution
and shall satisfy the requirements set forth in the definition of Eligible
Account. Funds in the Principal Collections Account shall be invested in
accordance with Section 5.03 hereof. Net investment earnings shall not be
considered part of funds available in the Principal Collections Account.
     (3) Establishment of Distribution Account. The Indenture Trustee, for the
benefit of the Noteholders, shall cause to be established and maintained, one or
more Distribution Accounts (collectively, the “Distribution Account”), which
shall be separate Eligible Accounts, entitled “CapitalSource Funding VII Trust
Distribution Account.” The Distribution Account shall be maintained with a
depository institution and shall satisfy the requirements set forth in the
definition of Eligible Account. Funds in the Distribution Account shall remain
uninvested.
     (4) The Servicer will inform the Indenture Trustee of the location of the
Collection Account and the Principal Collections Account, including any location
to which an account is transferred.

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          (b) Deposits to Collection Account. The Servicer shall deposit or
cause to be deposited (without duplication):
     (1) all payments on or in respect of each Eligible Loan collected on or
after the related Transfer Date (net, in each case, of any Servicing
Compensation retained therefrom by the Servicer (if other than CapitalSource))
within two (2) Business Days after receipt thereof;
     (2) all Net Proceeds within two (2) Business Days after receipt thereof;
     (3) all Insurance Proceeds within two (2) Business Days after receipt
thereof;
     (4) any amounts payable in connection with the repurchase of any Loan and
the amount of any Substitution Adjustment, if any, pursuant to Sections 2.05,
3.05 and 3.07 hereof concurrently with payment thereof;
     (5) the deposit of the Termination Price under Section 12.02 hereof
concurrently with payment thereof;
     (6) the proceeds from any Disposition of the Loans pursuant to Section 3.06
hereof within one (1) Business Day after receipt thereof; and
     (7) any amount required to be remitted by CapitalSource pursuant to Section
10.01 of the Note Purchase Agreement within one (1) Business Day after receipt
of notice thereof.
          Except as otherwise expressly provided in Section 5.01(c)(5)(i), the
Servicer agrees that it will cause the Loan Originator, Depositor, Obligor or
other appropriate Person paying such amounts, as the case may be, to remit
directly to the Lock-Box Accounts for deposit into the Collection Account all
amounts referenced in clauses (1) through (6) to the extent such amounts are in
excess of a Scheduled Payment on the related Loan. To the extent the Servicer
receives any such amounts, it will deposit them into the Collection Account on
the Business Day following receipt thereof.
          (c) Withdrawals From Collection Account; Deposits to the Principal
Collections Account and the Distribution Account.
     (1) Withdrawals From Collection Account — Reimbursement Items. The Servicer
shall periodically but in any event on each Remittance Date, make the following
withdrawals from the Collection Account prior to any other withdrawals, in no
particular order of priority:

  (i)   to withdraw any amount not required to be deposited in the Collection
Account or deposited therein in error,     (ii)   to withdraw the Required
Interest Coverage Amount and such other amounts as may be necessary for payments
required pursuant

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      to Section 5.01(c)(5) and Section 5.01(c)(6) and remit to the Indenture
Trustee for deposit in the Distribution Account for payments required pursuant
to Section 5.01(c)(5) and Section 5.01(c)(6);     (iii)   to deposit into the
Principal Collections Account as described in Section 5.01(c)(2) below; and    
(iv)   to clear and terminate the Collection Account in connection with the
termination of this Agreement.

     (2) Deposits to Principal Collections Account. On any date of determination
occurring during the Revolving Period, the Servicer, at its option, may deposit
into the Principal Collections Account an amount equal to the excess of (i) the
amount on deposit in the Collection Account over the Required Interest Coverage
Amount.
     (3) Withdrawals From the Principal Collections Account. On any date of
determination occurring during the Revolving Period, the Servicer may withdraw
the amount on deposit in the Principal Collections Account and use such amounts
to originate or acquire new Eligible Loans or to pay such amounts as principal
on the Notes.
     (4) [Reserved.]
     (5) Withdrawals From Distribution Account During the Revolving Period—
Payment Dates. On each Payment Date occurring during the Revolving Period, to
the extent funds are available in the Distribution Account, the Paying Agent
(based on the information provided by the Servicer contained in the Monthly
Servicer Report for such Payment Date) shall make withdrawals therefrom for
application in the following order of priority:

  (i)   to the Hedge Counterparty, payment of any amounts due and payable to the
Hedge Counterparty pursuant to the terms of the Interest Rate Hedge Agreement
(including, without limitation, any amounts set forth in the confirmation of the
Interest Rate Hedge Agreement), plus any other amounts then due and owing to the
Hedge Counterparty pursuant to the Interest Rate Hedge Agreement (including,
without limitation, any breakage fee payable in accordance with any such
agreement), plus any past due amounts not previously paid;     (ii)   to
distribute on such Payment Date the following amounts in the following order:
(a) to the Indenture Trustee, an amount equal to one-twelfth of the annual
Indenture Trustee Fee and all unpaid Indenture Trustee Fees from prior Payment
Dates and all amounts owing to the Indenture Trustee pursuant to Section 6.07 of
the Indenture, (b) to the Servicer, an amount equal to the Servicing
Compensation (only if CapitalSource is not the Servicer and such

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      amounts were not previously retained by the Servicer) and any Servicing
Advance Reimbursement Amounts, (c) to the reimbursement or payment of any
expenses incurred by the Indenture Trustee in connection with the appointment of
a successor Servicer pursuant to Section 9.02 hereof, (d) to the Back-up
Servicer, an amount equal to one-twelfth of the annual Backup Servicer Fee and
(e) on each anniversary of the Closing     (iii)   to the holders of the Notes
pro rata, the sum of the Interest Payment Amount for such Payment Date and the
Interest Carry Forward Amount for the preceding Payment Date;     (iv)   to the
Initial Noteholder, the Nonutilization Fee for such Payment Date, together with
any Nonutilization Fees unpaid from any prior Payment Dates;     (v)   to the
holders of the Notes pro rata, the amount required to maintain the Required
Overcollateralization Amount for such Payment Date;     (vi)   if CapitalSource
is the Servicer, to the Servicer, an amount equal to the Servicing Compensation,
all unpaid Servicing Compensation from prior Payment Dates and any Servicing
Advance Reimbursement Amounts;     (vii)   to the appropriate Person, amounts in
respect of Issuer/Depositor Indemnities (as defined in the Trust Agreement)
until such amounts are paid in full;     (viii)   to the Owner Trustee all
amounts owing to the Owner Trustee pursuant to the Trust Agreement and not
otherwise paid; and     (ix)   to the Paying Agent, for distribution to the
holders of the Trust Certificates, in accordance with Section 5.2(b) of the
Trust Agreement, all amounts remaining therein.

     (6) Withdrawals From Distribution Account After the Revolving Period or
During the Existence of a Trigger Event. Notwithstanding anything herein to the
contrary, on each Payment Date after the Termination of the Revolving Period or
during the existence of a Trigger Event, to the extent funds are available in
the Distribution Account, the Paying Agent (based on the information provided by
the Servicer contained in the Monthly Servicer Report for such Payment Date)
shall make withdrawals therefrom for application in the following order of
priority (provided that from and after an Event of Default, if the Indenture
Trustee or Paying Agent collects any money or property pursuant to Article V of
the Indenture, it shall pay out the money or property in accordance with
Section 5.04(b) of the Indenture):

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  (i)   to the Hedge Counterparty, payment of any amounts due and payable to the
Hedge Counterparty pursuant to the terms of the Interest Rate Hedging Agreement
(including, without limitation, any amounts set forth in the confirmation of the
Interest Rate Hedging Agreement), plus any other amounts then due and owing to
the Hedge Counterparty pursuant to the Interest Rate Hedging Agreement
(including, without limitation, any breakage fee payable in accordance with any
such agreement), plus any past due amounts not previously paid;     (ii)   to
distribute on such Payment Date the following amounts in the following order:
(a) the Indenture Trustee, an amount equal to one-twelfth of the annual
Indenture Trustee Fee and all unpaid Indenture Trustee Fees from prior Payment
Dates and all amounts owing to the Indenture Trustee pursuant to Section 6.07 of
the Indenture, (b) to the Servicer, an amount equal to the Servicing
Compensation (only if CapitalSource or an Affiliate thereof is not the Servicer
and such amounts were not previously retained by the Servicer) and any Servicing
Advance Reimbursement Amounts, (c) to the reimbursement or payment of any
expenses incurred by the Indenture Trustee in connection with the appointment of
a successor Servicer pursuant to Section 9.02 hereof, (d) to the Back-up
Servicer, an amount equal to one-twelfth of the annual Backup Servicer Fee and
(e) on each anniversary of the Closing Date, to the Owner Trustee, an amount
equal to the Owner Trustee Fee;     (iii)   to the holders of the Notes pro
rata, the sum of the Interest Payment Amount for such Payment Date and the
Interest Carry-Forward Amount for the preceding Payment Date;     (iv)   to the
holders of the Notes pro rata, in accordance with the amount of the Note
Principal Balance for the account of the applicable holder, the amount necessary
to reduce the Note Principal Balance to zero;     (v)   if CapitalSource is the
Servicer, to the Servicer, an amount equal to the Servicing Compensation, all
unpaid Servicing Compensation from prior Payment Dates and any Servicing Advance
Reimbursement Amounts;     (vi)   to each Indemnified Party (as defined in the
Note Purchase Agreement), amounts in respect of Issuer/Depositor Indemnities (as
defined in the Trust Agreement) until such amounts are paid in full;     (vii)  
to the Owner Trustee, all amounts owing to the Owner Trustee pursuant to the
Trust Agreement and not otherwise paid; and

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  (viii)   to the Paying Agent, for distribution to the holders of the Trust
Certificates, in accordance with Section 5.2(b) of the Trust Agreement, all
amounts remaining therein.

     (7) With the prior written consent of the Initial Noteholder, which consent
shall not be unreasonably withheld (a copy of which will be provided by the
Servicer to the Backup Servicer), the Servicer may withdraw from the Collection
Account any deposits thereto constituting Excluded Amounts if the Servicer has
prior to such withdrawal and consent, delivered to the Initial Noteholder a
report setting forth the calculation of such Excluded Amounts in a format
satisfactory to the Initial Noteholder in its sole discretion.
     (8) The Servicer shall deposit or cause to be deposited all amounts payable
to the Issuer under each Interest Rate Hedge Agreement into the Distribution
Account.
          Notwithstanding that the Notes have been paid in full, the Paying
Agent and the Servicer shall continue to maintain the Distribution Account, the
Collection Account and the Principal Collections Account hereunder until this
Agreement has been terminated.
          Section 5.02 Payments to Securityholders.
          (a) All distributions made on the Notes on each Payment Date or
pursuant to Section 5.04(b) of the Indenture will be made on a pro rata basis
among the Noteholders of record of the Notes on the next preceding Record Date
based on the Percentage Interest represented by their respective Notes, without
preference or priority of any kind, and, except as otherwise provided in the
next succeeding sentence, shall be made by wire transfer of immediately
available funds to the account such Noteholder shall have so notified the Paying
Agent five (5) Business Days prior to the related Record Date, and otherwise by
check mailed to the address of such Noteholder appearing in the Notes Register.
The final distribution on each Note will be made in like manner, but only upon
presentment and surrender of such Note at the location specified in the notice
to Noteholders of such final distribution.
          (b) All distributions made on the Trust Certificates on each Payment
Date or pursuant to Section 5.04(b) of the Indenture will be made in accordance
with the Percentage Interest among the holders of the Trust Certificates of
record on the next preceding Record Date based on their Percentage Interests on
the date of distribution, without preference or priority of any kind, and,
except as otherwise provided in the next succeeding sentence, shall be made by
wire transfer of immediately available funds to the account of each such holder,
if such holder shall own of record a Trust Certificate in an original
denomination aggregating at least 25% of the Percentage Interests and shall have
so notified the Paying Agent and the Indenture Trustee five (5) Business Days
prior to the related Record Date, and otherwise by check mailed to the address
of such Certificateholder appearing in the Certificate Register. The final
distribution on each Trust Certificate will be made in like manner, but only
upon presentment and surrender of such Trust Certificate at the location
specified in the notice to holders of the Trust Certificates of such final
distribution. Any amount distributed to the holders of the Trust Certificates on
any Payment Date shall not be subject to any claim or interest of the
Noteholders.

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          Section 5.03 Trust Accounts; Trust Account Property.
          (a) Control of Trust Accounts. Each of the Trust Accounts established
hereunder has been pledged by the Issuer to the Indenture Trustee under the
Indenture and shall be subject to the lien of the Indenture. Amounts distributed
from each Trust Account in accordance with the terms of this Agreement shall be
released for the benefit of the Securityholders from the Collateral upon such
distribution thereunder or hereunder. The Indenture Trustee shall possess all
right, title and interest in and to all funds on deposit from time to time in
the Trust Accounts and in all proceeds thereof (including all income thereon)
and all such funds, investments, proceeds and income shall be part of the Trust
Account Property and the Collateral. Any Trust Account Property or Collateral
comprising “financial assets” within the meaning of the UCC have been delivered
to and are being held in a “securities account” within the meaning of the UCC
that is maintained in the name of, and under the control and direction of the
Indenture Trustee or another institution that for the purposes of the UCC is a
“securities intermediary” whose “jurisdiction” with respect to the Trust Account
Property and Collateral is the State of Minnesota, the terms of which account
treat the Indenture Trustee as entitled to exercise the rights that comprise any
financial assets credited to such account solely on behalf of and for the
benefit of the Securityholders. If, at any time, any Trust Account ceases to be
an Eligible Account, the Servicer shall, within ten Business Days (i) establish
a new Trust Account as an Eligible Account, (ii) terminate the ineligible Trust
Account, and (iii) transfer any cash and investments from such ineligible Trust
Account to such new Trust Account.
          With respect to the Trust Accounts, the Issuer and the Indenture
Trustee agree, that the Collection Account and the Principal Collections Account
shall be subject to the sole and exclusive dominion, custody and control of the
Servicer and the Distribution Account shall be subject to the sole and exclusive
dominion, custody and control of the Paying Agent on behalf of the Indenture
Trustee, in each case, for the benefit of the Noteholders, and the Servicer and
the Paying Agent on behalf of the Indenture Trustee and the Indenture Trustee,
as applicable, shall have sole signature and withdrawal authority with respect
thereto.
          (b) (1) Investment of Funds. Funds held in the Collection Account and
the Principal Collections Account may be invested (to the extent practicable and
consistent with any requirements of the Code) in Permitted Investments by or at
the direction of the Servicer. In any case, funds in the Collection Account and
the Principal Collections Account must be available for withdrawal without
penalty, and any Permitted Investments must mature or otherwise be available for
withdrawal, one Business Day prior to the next Remittance Date and shall not be
sold or disposed of prior to its maturity subject to Subsection (b)(2) of this
Section. All interest and any other investment earnings on amounts or
investments held in the Collection Account shall be retained by the Servicer.
     (2) Insufficiency and Losses in Trust Accounts. If any amounts are needed
for disbursement from the Collection Account or the Principal Collections
Account and sufficient uninvested funds are not available to make such
disbursement, the Servicer shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in the Collection Account. The Servicer
shall be liable for any investment loss or other charge resulting therefrom.

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          If any losses are realized in connection with any investment in the
Collection Account or Principal Collections Account pursuant to this Agreement,
then the Servicer shall deposit the amount of such losses (to the extent not
offset by income from other investments in the Collection Account or Principal
Collections Account) into the Collection Account or Principal Collections
Account promptly upon the realization of such loss.
          (c) Subject to Section 6.01 of the Indenture, the Indenture Trustee
shall not in any way be held liable by reason of any insufficiency in any Trust
Account held by the Indenture Trustee resulting from any investment loss on any
Permitted Investment included therein.
          (d) With respect to the Trust Account Property, the Indenture Trustee
acknowledges and agrees that:
     (1) any Trust Account Property that is held in deposit accounts shall be
held solely in the Eligible Accounts, subject to the last sentence of Subsection
(a) of this Section 5.03; and each such Eligible Account shall be subject to the
sole and exclusive dominion, custody and control of the Paying Agent on behalf
of the Indenture Trustee; and, without limitation on the foregoing, the Paying
Agent on behalf of the Indenture Trustee shall have sole signature authority
with respect thereto;
     (2) any Trust Account Property that constitutes Physical Property shall be
delivered to the Indenture Trustee or the Paying Agent on behalf of the
Indenture Trustee in accordance with paragraphs (a) and (b) of the definition of
“Delivery” in Section 1.01 hereof and shall be held, pending maturity or
disposition, solely by the Paying Agent on behalf of the Indenture Trustee or
the Indenture Trustee or a securities intermediary (as such term is defined in
Section 8-102(a)(14) of the UCC) acting solely for the Indenture Trustee;
     (3) any Trust Account Property that is a book-entry security held through
the Federal Reserve System pursuant to federal book-entry regulations shall be
delivered in accordance with paragraph (c) of the definition of “Delivery” in
Section 1.01 hereof and shall be maintained by the Paying Agent on behalf of the
Indenture Trustee or the Indenture Trustee, pending maturity or disposition,
through continued book-entry registration of such Trust Account Property as
described in such paragraph; and
     (4) any Trust Account Property that is an “uncertificated security” under
Article 8 of the UCC and that is not governed by clause (3) above shall be
delivered to the Paying Agent on behalf of the Indenture Trustee or the
Indenture Trustee in accordance with paragraph (d) of the definition of
“Delivery” in Section 1.01 hereof and shall be maintained by the Paying Agent on
behalf of the Indenture Trustee or the Indenture Trustee, pending maturity or
disposition, through continued registration of the Paying Agent on behalf of the
Indenture Trustee or the Indenture Trustee’s (or its nominee’s) ownership of
such security.

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ARTICLE VI
STATEMENTS AND REPORTS; SPECIFICATION OF TAX MATTERS
          Section 6.01 Statements.
          No later than 12:00 noon (New York City time) on each Record Date, the
Servicer shall deliver to the Indenture Trustee and the Initial Noteholder by
electronic transmission, the Monthly Servicer Report, setting forth the date of
such Report (day, month and year), the name of the Issuer (i.e., “CapitalSource
Funding VII Trust”), and the date of this Agreement, all in substantially the
form set out in Exhibit B hereto. In addition, the Servicer shall provide to the
Noteholders and the Indenture Trustee such additional reports and information
regarding the Loans as the Majority Noteholders or the Indenture Trustee may
reasonably request from time to time.
          Section 6.02 Specification of Certain Tax Matters.
          The Paying Agent shall comply with all requirements of the Code and
applicable state and local law with respect to the withholding from any
distributions made to any Securityholder of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting requirements in
connection therewith, giving due effect to any applicable exemptions from such
withholding and effective certifications or forms provided by the recipient. Any
amounts withheld pursuant to this Section 6.02 shall be deemed to have been
distributed to the Securityholders, as the case may be, for all purposes of this
Agreement. Neither the Paying Agent nor the Indenture Trustee shall have any
responsibility for preparing or filing any tax returns.
ARTICLE VII
COVENANTS
          Section 7.01 Financial Covenants of CapitalSource.
          (a) At all times during the term of this Agreement, CapitalSource
shall maintain a minimum consolidated Tangible Net Worth of $650,000,000.
          (b) CapitalSource may not exceed a maximum leverage ratio (the ratio
of total consolidated liabilities, determined in accordance with GAAP, to its
consolidated Tangible Net Worth) of 6:1 as of any date of determination.
          Section 7.02 Financial Statements of CapitalSource.
          CapitalSource shall furnish or cause to be furnished to Initial
Noteholder the following financial statements: (x) As soon as available and in
any event within ninety (90) days after the end of each fiscal year of
CapitalSource, CapitalSource’s consolidated, audited balance sheets as of the
end of each fiscal year, and CapitalSource’s consolidated, audited financial
statements of income and changes in equity and audited statement of cash flows,
each for such fiscal year and (y) as soon as available and in any event within
forty-five (45) days after the end of the first three quarters of each fiscal
year of CapitalSource, CapitalSource’s consolidated,

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unaudited balance sheets as of the end of each quarter, and CapitalSource’s
unaudited financial statements of income and changes in equity and unaudited
statement of cash flows, each for the portion of the fiscal year then ended.
Each of the financial statements in (x) and (y) shall have been prepared in
accordance with GAAP (subject to year-end adjustments in the case of interim
statements) and certified by a Responsible Officer of CapitalSource in the form
of a compliance certificate to be delivered along with the above financial
statements. Together with each financial statement delivered pursuant to the
foregoing clause (x) or (y), CapitalSource shall execute and deliver to the
Initial Noteholder an officer’s certification substantially in the form of
Exhibit L attached hereto. Each such financial statement and certificate shall
be delivered to the Initial Noteholder at the following electronic mail address
(or such other contact information as may be provided by the Initial
Noteholder): cmwarehouse.monitoring@citigroup.com. CapitalSource shall furnish
or cause to be furnished to Initial Noteholder any other financial information
regarding CapitalSource reasonably requested by Initial Noteholder.
ARTICLE VIII
THE SERVICER AND THE BACKUP SERVICER
          Section 8.01 Indemnification; Third Party Claims.
          (a) The Servicer shall indemnify the Loan Originator, the Owner
Trustee, the Issuer, the Paying Agent, the Depositor, the Indenture Trustee,
each Hedge Counterparty and the Noteholders, their respective officers,
directors, employees, agents and “control persons,” as such term is used under
the Act and under the Securities Exchange Act of 1934 as amended (each a
“Servicer Indemnified Party”) and hold harmless each of them against any and all
claims, losses, damages, penalties, fines, forfeitures, reasonable legal fees
and related costs, judgments, and other costs and expenses resulting from any
claim, demand, defense or assertion based on or grounded upon, or resulting
from, a breach of any of the Servicer’s representations and warranties and
covenants contained in this Agreement or in any way relating to the failure of
the Servicer to perform its duties and service the Eligible Loans in compliance
with the terms of this Agreement except to the extent such loss arises out of
such Servicer Indemnified Party’s fraud, gross negligence or willful misconduct;
provided, however, that if the Servicer is not liable pursuant to the provisions
of Section 8.01(b) hereof for its failure to perform its duties and service the
Eligible Loans in compliance with the terms of this Agreement, then the
provisions of this Section 8.01 shall have no force and effect with respect to
such failure; provided, further that no successor Servicer shall be liable for
the actions or omissions of a predecessor Servicer.
          (b) None of the Depositor or the Servicer or any of their respective
Affiliates, directors, officers, employees or agents shall be under any
liability to the Owner Trustee, the Issuer, the Indenture Trustee or the
Securityholders for any action taken, or for refraining from the taking of any
action, in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Depositor, the
Servicer or any of their respective Affiliates, directors, officers, employees,
agents against the remedies provided herein for the breach of any warranties,
representations or covenants made herein, or against any expense or liability
specifically required to be borne by such party without right of reimbursement
pursuant to the terms hereof, or against any expense or liability which would
otherwise be imposed by reason of misfeasance, bad faith or negligence in the
performance of the respective duties of the Servicer, the Depositor or the Loan
Originator, as the case may be.

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The Loan Originator, the Depositor, the Servicer and any of their respective
Affiliates, directors, officers, employees, agents may rely in good faith on any
document of any kind which, prima facie, is properly executed and submitted by
any Person respecting any matters arising hereunder.
          (c) The Loan Originator agrees to indemnify and hold harmless the
Depositor, the Indenture Trustee, each Hedge Counterparty and the Noteholders,
as the ultimate assignees from the Depositor (each an “Originator Indemnified
Party,” together with the Servicer Indemnified Parties, the “Indemnified
Parties”), from and against any loss, liability, expense, damage, claim or
injury arising out of or based on (i) any breach of any representation, warranty
or covenant of the Loan Originator, the Servicer or their Affiliates, in any
Basic Document, including, without limitation, the origination or prior
servicing of the Loans by reason of any acts, omissions, or alleged acts or
omissions arising out of activities of the Loan Originator, the Servicer or
their Affiliates, and (ii) any untrue statement by the Loan Originator, the
Servicer or its Affiliates of any material fact, including, without limitation,
any Officer’s Certificate, statement, report or other document or information
prepared by any such Person and furnished or to be furnished by it pursuant to
or in connection with the transactions contemplated thereby and not corrected
prior to completion of the relevant transaction including, without limitation,
such written information as may have been and may be furnished in connection
with any due diligence investigation with respect to the Eligible Loans or any
such Person’s business, operations or financial condition, including reasonable
attorneys’ fees and other costs or expenses incurred in connection with the
defense of any actual or threatened action, proceeding or claim; provided that
the Loan Originator shall not indemnify an Originator Indemnified Party to the
extent such loss, liability, expense, damage or injury is due to either an
Originator Indemnified Party’s willful misfeasance, bad faith or negligence or
by reason of an Originator Indemnified Party’s reckless disregard of its
obligations hereunder; provided, further, that the Loan Originator shall not be
so required to indemnify an Originator Indemnified Party or to otherwise be
liable to an Originator Indemnified Party for any losses in respect of the
performance of the Eligible Loans, the creditworthiness of the Mortgagors under
the Eligible Loans, changes in the market value of the Eligible Loans or other
similar investment risks associated with the Eligible Loans arising from a
breach of any representation or warranty set forth in Section 3.04 hereto, a
remedy for the breach of which is provided in Section 3.05 hereof. The
provisions of this indemnity shall run directly to and be enforceable by an
Originator Indemnified Party subject to the limitations hereof.
          (d) With respect to a claim subject to indemnity hereunder made by any
Person against an Indemnified Party (a “Third Party Claim”), such Indemnified
Party shall notify the related indemnifying parties (each an “Indemnifying
Party”) in writing of the Third Party Claim within a reasonable time after
receipt by such Indemnified Party of written notice of the Third Party Claim
unless the Indemnifying Parties shall have previously obtained actual knowledge
thereof. Thereafter, the Indemnified Party shall deliver to the Indemnifying
Parties, within a reasonable time after the Indemnified Party’s receipt thereof,
copies of all notices and documents (including court papers) received by the
Indemnified Party relating to the Third Party Claim. No failure to give such
notice or deliver such documents shall effect the rights to indemnity hereunder.
Each Indemnifying Party shall promptly notify the Indenture Trustee and the
Indemnified Party (if other than the Indenture Trustee) of any claim of which it
has been notified and shall promptly notify the Indenture Trustee and the
Indemnified Party (if applicable) of its intended course of action with respect
to any claim.

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          (e) If a Third Party Claim is made against an Indemnified Party, while
maintaining control over its own defense, the Indemnified Party shall cooperate
and consult fully with the Indemnifying Party in preparing such defense, and the
Indemnified Party may defend the same in such manner as it may deem appropriate,
including settling such claim or litigation after giving notice to the
Indemnifying Party of such terms and the Indemnifying Party will promptly
reimburse the Indemnified Party upon written request; provided, however, that
the Indemnified Party may not settle any claim or litigation without the consent
of the Indemnifying Party; provided, further, that the Indemnifying Party shall
have the right to reject the selection of counsel by the Indemnified Party if
the Indemnifying Party reasonably determines that such counsel is inappropriate
in light of the nature of the claim or litigation and shall have the right to
assume the defense of such claim or litigation if the Indemnifying Party
determines that the manner of defense of such claim or litigation is
unreasonable.
          Section 8.02 Merger or Consolidation of the Servicer and Backup
Servicer.
          The Servicer shall keep in full effect its existence, rights and
franchises as a limited liability company, and will obtain and preserve its
qualification to do business as a foreign entity and maintain such other
licenses and permits in each jurisdiction necessary to protect the validity and
enforceability of each Basic Document to which it is a party and each of the
Eligible Loans and to perform its duties under each Basic Document to which it
is a party; provided, however, that the Servicer may merge or consolidate with
any other corporation upon the satisfaction of the conditions set forth in the
following paragraph.
          Any Person into which the Servicer may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Servicer shall be a party, or any Person succeeding to the business of the
Servicer, shall be an Eligible Servicer and shall be the successor of the
Servicer, as applicable hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding. The Servicer shall send notice of any such merger,
conversion, consolidation or succession to the Indenture Trustee and the Issuer.
          Any Person (i) into which the Backup Servicer may be merged or
consolidated, (ii) that may result from any merger or consolidation to which the
Backup Servicer shall be a party, or (iii) that may succeed to the properties
and assets of the Backup Servicer substantially as a whole, which Person in any
of the foregoing cases executes an agreement of assumption to perform every
obligation of the Backup Servicer hereunder, shall be the successor to the
Backup Servicer under this Agreement without further act on the part of any of
the parties to this Agreement provided such Person is organized under the laws
of the United States of America or any one of the States thereof or the District
of Columbia (or any domestic branch of a foreign bank), (i) (a) that has either
(1) a long-term unsecured debt rating of “A” or better by S&P and “A2” or better
by Moody’s or (2) a short-term unsecured debt rating or certificate of deposit
rating of “A-1” or better by S&P or “P-1” or better by Moody’s, (b) the parent
corporation which has either (1) a long-term unsecured debt rating of “A” or
better by S&P and “A2” or better by Moody’s or (2) a short-term unsecured debt
rating or certificate of deposit rating of “A-1” or better by S&P and “P-1” or
better by Moody’s or (c) is otherwise acceptable to the Majority Noteholders.

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          Section 8.03 Limitation on Liability of the Servicer and the Backup
Servicer.
          (a) The Servicer and any director, officer, employee or agent of the
Servicer may rely on any document of any kind which it in good faith reasonably
believes to be genuine and to have been adopted or signed by the proper
authorities respecting any matters arising hereunder. Subject to the terms of
Section 8.01 hereof, the Servicer shall have no obligation to appear with
respect to, prosecute or defend any legal action which is not incidental to the
Servicer’s duty to service the Eligible Loans in accordance with this Agreement.
          (b) The Backup Servicer undertakes to perform only such duties and
obligations as are specifically set forth in this Agreement, it being expressly
understood by all parties hereto that there are no implied duties or obligations
of the Backup Servicer hereunder. Without limiting the generality of the
foregoing, the Backup Servicer, except as expressly set forth herein, shall have
no obligation to supervise, verify, monitor or administer the performance of the
Servicer. The Backup Servicer may act through its agents, nominees, attorneys
and custodians in performing any of its duties and obligations under this
Agreement, it being understood by the parties hereto that the Backup Servicer
will be responsible for any misconduct or negligence on the part of such agents,
attorneys or custodians acting on the routine and ordinary day-to-day operations
for and on behalf of the Backup Servicer. Neither the Backup Servicer nor any of
its officers, directors, employees or agents shall be liable, directly or
indirectly, for any damages or expenses arising out of the services performed
under this Agreement other than damages or expenses that result from the
negligence or willful misconduct of it or them or the failure to perform
materially in accordance with this Agreement.
          (c) The Backup Servicer shall not be liable for any obligation of the
Servicer contained in this Agreement or for any errors of the Servicer contained
in any computer tape, certificate or other data or document delivered to the
Backup Servicer hereunder or on which the Backup Servicer must rely in order to
perform its obligations hereunder, and the Indenture Trustee, the Noteholders
and the Collateral Custodian each agree to look only to the Servicer to perform
such obligations. The Backup Servicer shall have no responsibility and shall not
be in default hereunder or incur any liability for any failure, error,
malfunction or any delay in carrying out any of its duties under this Agreement
if such failure or delay results from the Backup Servicer acting in accordance
with information prepared or supplied by a Person other than the Backup Servicer
or the failure of any such other Person to prepare or provide such information.
The Backup Servicer shall have no responsibility, shall not be in default and
shall incur no liability for (i) any act or failure to act of any third party,
including the Servicer, (ii) any inaccuracy or omission in a notice or
communication received by the Backup Servicer from any third party, (iii) the
invalidity or unenforceability of any Loan under applicable law, (iv) the breach
or inaccuracy of any representation or warranty made with respect to any Loan,
or (v) the acts or omissions of any successor Backup Servicer.
          Section 8.04 No Resignation; Assignment.
          (a) The Servicer shall not resign from the obligations and duties
hereby imposed on it except (i) with the consent of the Majority Noteholders or
(ii) upon determination that its duties hereunder are no longer permissible
under applicable law. Any such determination pursuant to clause (ii) of the
preceding sentence permitting the resignation of the Servicer shall be evidenced
by an Independent opinion of counsel to such effect delivered (at the expense of
the

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Servicer) to the Indenture Trustee and the Majority Noteholders. No resignation
of the Servicer shall become effective until a successor Servicer, appointed
pursuant to the provisions of Section 9.02 hereof shall have assumed the
Servicer’s responsibilities, duties, liabilities (other than those liabilities
arising prior to the appointment of such successor) and obligations under this
Agreement.
          Except as expressly provided herein, the Servicer shall not assign or
transfer any of its rights, benefits or privileges hereunder to any other
Person, or delegate to or subcontract with, or authorize or appoint any other
Person to perform any of the duties, covenants or obligations to be performed by
the Servicer hereunder and any agreement, instrument or act purporting to effect
any such assignment, transfer, delegation or appointment shall be void.
          The Servicer agrees to cooperate with any successor Servicer in
effecting the transfer of the Servicer’s servicing responsibilities and rights
hereunder pursuant to the first paragraph of this Section 8.04, including,
without limitation, the transfer to such successor of all relevant records and
documents (including any Loan Files in the possession of the Servicer) and all
amounts received with respect to the Loans and not otherwise permitted to be
retained by the Servicer pursuant to this Agreement. In addition, the Servicer,
at its sole cost and expense, shall prepare, execute and deliver any and all
documents and instruments to the successor Servicer including all Loan Files in
its possession and do or accomplish all other acts reasonably necessary or
appropriate to effect such termination and transfer of servicing
responsibilities.
          (b) The Backup Servicer shall not resign (except with prior consent of
the Initial Noteholder which consent shall not be unreasonably withheld) from
the obligations and duties hereby imposed on it except upon the Backup
Servicer’s determination that (i) the performance of its duties hereunder is or
has become impermissible under applicable law and (ii) there is no reasonable
action that the Backup Servicer could take to make the performance of its duties
hereunder permissible under applicable law. Any such determination permitting
the resignation of the Backup Servicer shall be evidenced as to clause (i) above
by an Opinion of Counsel to such effect delivered to the Indenture Trustee and
the Initial Noteholder. No such resignation shall become effective until a
successor Backup Servicer shall have assumed the responsibilities and
obligations of the Backup Servicer hereunder.
          Section 8.05 Relationship of Servicer to Issuer and the Indenture
Trustee.
          The relationship of the Servicer (and of any successor to the Servicer
as servicer under this Agreement) to the Issuer, the Owner Trustee and the
Indenture Trustee under this Agreement is intended by the parties hereto to be
that of an independent contractor and not of a joint venturer, agent or partner
of the Issuer, the Owner Trustee or the Indenture Trustee.
          Section 8.06 Servicer May Own Securities.
          Each of the Servicer and any Affiliate of the Servicer may in its
individual or any other capacity become the owner or pledgee of Securities with
the same rights as it would have if it were not the Servicer or an Affiliate
thereof except as otherwise specifically provided herein; provided, however,
that at any time that CapitalSource or any of its Affiliates is the Servicer,
neither the Servicer nor any of its Affiliates (other than an Affiliate which is
a corporation whose purpose is limited to holding securities and related
activities and which cannot incur recourse debt) may be a Noteholder. Securities
so owned by or pledged to the Servicer or such Affiliate

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shall have an equal and proportionate benefit under the provisions of this
Agreement, without preference, priority, or distinction as among all of the
Securities; provided, however, that any Securities owned by the Servicer or any
Affiliate thereof, during the time such Securities are owned by them, shall be
without voting rights for any purpose set forth in this Agreement unless the
Servicer or such Affiliate owns all outstanding Securities of the related class.
The Servicer shall notify the Indenture Trustee promptly after it or any of its
Affiliates becomes the owner or pledgee of a Security.
          Section 8.07 Indemnification of the Indenture Trustee and Initial
Noteholder.
          CapitalSource agrees to indemnify the Indenture Trustee and its
employees, officers, directors and agents, and reimburse its reasonable
out-of-pocket expenses in accordance with Section 6.07 of the Indenture as if it
was a signatory thereto. CapitalSource agrees to indemnify the Initial
Noteholder in accordance with Section 9.01 of the Note Purchase Agreement as if
it were a signatory thereto. CapitalSource agrees to indemnify the Owner Trustee
in accordance with Section 8.2 of the Trust Agreement as if it were a signatory
thereto. In addition to the foregoing indemnity, each of CapitalSource and the
Depositor, jointly and severally, hereby agrees to indemnify and hold harmless
the Noteholders from any liability, loss, claim or expense incurred as a result
of the Loan Originator’s or the Depositor’s failure to deliver to the Collateral
Custodian the originally executed (and to the extent it exists, the sole chattel
paper counterpart) master purchase agreement and, if any, security agreement
related to any Alarm Service Loan. This Section 8.07 shall survive the
termination of this Agreement.
ARTICLE IX
SERVICER EVENTS OF DEFAULT
          Section 9.01 Servicer Events of Default.
          (a) In case one or more of the following Servicer Events of Default
shall occur and be continuing, that is to say:
     (1) any failure by Servicer to deposit into the Collection Account or the
Distribution Account or any failure by Servicer to make any of the required
payments therefrom which continues unremedied for two (2) Business Day; or
     (2) any failure on the part of the Servicer duly to observe or perform in
any material respect any other of the material covenants or agreements on the
part of the Servicer, contained in any Basic Document to which it is a party,
which continues unremedied for a period of 30 days (or, in the case of payment
of insurance premiums with respect to Loans for which the Servicer is required
pursuant to the Loan Documents to escrow such premiums, for a period of 15 days)
after the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by any other party hereto or to
the Servicer (with copy to each other party hereto), by Holders of 25% of the
Percentage Interests of the Notes or the Trust Certificates; or
     (3) any breach on the part of the Servicer of any representation or
warranty contained in any Basic Document to which it is a party that has a

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material adverse affect on the interests of any of the parties hereto or any
Securityholder and which continues unremedied for a period of 30 days after the
date on which notice of such breach, requiring the same to be remedied, shall
have been given to the Servicer by any other party hereto or to the Servicer
(with copy to each other party hereto) by the Initial Noteholder or Holders of
25% of the Percentage Interests of the Notes; or
     (4) a Bankruptcy Event shall occur with respect to the Servicer;
     (5) so long as the Servicer or the Loan Originator is an Affiliate of
either of the Depositor or the Issuer, any “event of default” by any such party
occurs under any of the Basic Documents; or
     (6) CapitalSource fails to comply with the financial covenants set forth in
Section 7.01.
          (b) Then, and in each and every such case, so long as a Servicer Event
of Default shall not have been remedied, the Indenture Trustee or the Majority
Noteholders, by notice in writing to the Servicer may, in addition to whatever
rights such Person may have at law or in equity to damages, including injunctive
relief and specific performance, on thirty days’ notice, terminate all the
rights and obligations of the Servicer under this Agreement and in and to the
Loans and the proceeds thereof, as servicer under this Agreement. Within a
commercially reasonable time following receipt by the Servicer of such written
notice, all authority and power of the Servicer under this Agreement, whether
with respect to the Loans or otherwise, shall, subject to Section 9.02 hereof,
pass to and be vested in a successor servicer, and the successor servicer is
hereby authorized and empowered to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments and do or cause to be done all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, including, but
not limited to, the transfer and endorsement or assignment of the Loans and
related documents. The Servicer agrees to cooperate with the successor servicer
in effecting the termination of the Servicer’s responsibilities and rights
hereunder, including, without limitation, the transfer to the successor servicer
for administration by it of all amounts which shall at the time be credited by
the Servicer to each Collection Account or thereafter received with respect to
the Loans.
          (c) Upon the occurrence, and during the continuation, of (i) an Event
of Default or Default under any of the Basic Documents, (ii) a Servicer Event of
Default under this Agreement, (iii) a Trigger Event or (iv) a material adverse
change in the business or financial conditions of the Servicer (each, a “Term
Event”), the Servicer’s right to service the Loans pursuant to the terms of this
Agreement shall be in effect for an initial period commencing on the date on
which such Term Event occurred and shall automatically terminate at 5:00 p.m.
(New York City time), on the last business day of the calendar month in which
such Term Event occurred (the “Initial Term”). Thereafter, the Initial Term
shall be extendible in the sole discretion of the Initial Noteholder by written
notice (each, a “Servicer Extension Notice”) of the Initial Noteholder for
successive one-month terms (each such term ending at 5:00 p.m. (New York City
time), on the last business day of the related month). Following a Term Event,
the Servicer hereby agrees that the Servicer shall be bound for the duration of
the Initial Term and the term covered by any such Servicer Extension Notice to
act as the Servicer pursuant to this

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Agreement. Following a Term Event, the Servicer agrees that if, as of 3:00 p.m.
(New York City time) on the last business day of any month, the Servicer shall
not have received a Servicer Extension Notice from the Initial Noteholder, the
Servicer shall give written notice of such non-receipt to the Initial Noteholder
by 4:00 p.m. (New York City time). Following a Term Event, the failure of the
Initial Noteholder to deliver a Servicer Extension Notice by 5:00 p.m. (New York
City time) shall result in the termination of the Servicer upon the completion
of the transfer of the servicing (the “Servicer Termination Date”). The Servicer
and the Initial Noteholder shall comply with all applicable laws in connection
with such transfer and the Servicer shall continue to service the Loans until
completion of such transfer.
          (d) Upon the occurrence of a Term Event (other than the occurrence of
a Bankruptcy Event with respect to the Servicer, the Depositor or the Issuer),
the Indenture Trustee shall, at the request of, or may, with the consent of the
Majority Noteholders, by notice to the Issuer and the Servicer, declare the
Termination Date to have occurred and all amounts due the Noteholders, the
Indenture Trustee and the Owner Trustee shall be immediately due and payable.
          (e) Upon the occurrence of a Bankruptcy Event with respect to the
Servicer, the Depositor or the Issuer, the Termination Date shall occur
immediately and all amounts due and payable to the Noteholders, the Indenture
Trustee and the Owner Trustee shall be immediately due and payable.
          Section 9.02 Appointment of Successor.
          (a) On and after the date the Servicer receives a notice of
termination pursuant to Section 9.01 hereof or is terminated pursuant to
Section 9.01(c) hereof, or the Owner Trustee receives the resignation of the
Servicer evidenced by an Opinion of Counsel or accompanied by the consents
required by Section 8.04 hereof, or the Servicer is removed as servicer pursuant
to this Article IX, then, Backup Servicer shall automatically succeed and assume
all obligations of the Servicer hereunder, and all authority and power of the
Servicer under this Agreement shall pass to and be vested in the Backup
Servicer. As compensation therefor, the Backup Servicer shall be entitled to the
Servicing Fee, together with other servicing compensation in the form of
assumption fees, late payment charges or otherwise as provided herein;
including, without limitation, expenses incurred by the Backup Servicer in
connection with the transition of the servicing obligations (“Transition
Costs”). In the event that there is no Backup Servicer or the Backup Servicer is
unable to assume such obligations on such date, the Indenture Trustee shall
submit to CapitalSource the name of a proposed successor servicer (the
“Successor Servicer”). CapitalSource shall have the right to reject one proposed
Successor Servicer within two (2) Business Days of the Indenture Trustee’s
submission and, upon such rejection CapitalSource shall have no further consent
rights with respect to the appointment of any Successor Servicer. If
CapitalSource shall not have rejected such proposed Successor Servicer within
such two (2) Business Day period, the Indenture Trustee shall, as promptly as
possible, appoint such Successor Servicer as servicer hereunder so long as such
proposed Successor Servicer is acceptable to the Initial Noteholder. The
Successor Servicer shall accept its appointment by a written assumption in a
form acceptable to the Indenture Trustee and the Noteholders. In the event that
a Successor Servicer has not accepted its appointment at the time when the
Servicer ceases to act as Servicer, the Indenture Trustee shall petition a court
of competent jurisdiction to appoint any established financial institution,
having a net worth of not less than United States

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$50,000,000 and whose regular business includes the servicing of loans similar
to the Loans, as the Successor Servicer hereunder.
          (b) Upon its appointment, the Backup Servicer or the Successor
Servicer, as applicable, shall be the successor in all respects to the Servicer
with respect to servicing functions under this Agreement and shall be subject to
all the responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof, and all references in this
Agreement to the Servicer shall be deemed to refer to the Backup Servicer or the
Successor Servicer, as applicable; provided, however, that the Backup Servicer
or Successor Servicer, as applicable, shall have (i) no liability with respect
to any action performed by the terminated Servicer prior to the date that the
Backup Servicer or Successor Servicer, as applicable, becomes the successor to
the Servicer or any claim of a third party based on any alleged action or
inaction of the terminated Servicer, (ii) no obligation to perform any advancing
obligations, if any, of the Servicer unless it elects to in its sole discretion,
(iii) no obligation to pay any taxes required to be paid by the Servicer
(provided that the Backup Servicer or Successor Servicer, as applicable, shall
pay any income taxes for which it is liable), (iv) no obligation to pay any of
the fees and expenses of any other party to the transactions contemplated
hereby, and (v) no liability or obligation with respect to any indemnification
obligations of any prior Servicer, including the original Servicer. The
indemnification obligations of the Backup Servicer or the Successor Servicer, as
applicable, upon becoming a Successor Servicer, are expressly limited to those
instances of negligence or willful misconduct of the Backup Servicer or
Successor Servicer, as applicable.
          (c) All authority and power granted to the Servicer under this
Agreement shall automatically cease and terminate upon termination of this
Agreement and shall pass to and be vested in the Issuer and, without limitation,
the Issuer is hereby authorized and empowered to execute and deliver, on behalf
of the Servicer, as attorney-in-fact or otherwise, all documents and other
instruments, and to do and accomplish all other acts or things necessary or
appropriate to effect the purposes of such transfer of servicing rights. The
Servicer agrees to cooperate with the Seller in effecting the termination of the
responsibilities and rights of the Servicer to conduct servicing of the Loans.
          (d) Upon the Backup Servicer receiving notice that it is required to
serve as the Servicer hereunder pursuant to the foregoing provisions of this
Section 9.02, the Backup Servicer will promptly begin the transition to its role
as Servicer. Notwithstanding the foregoing, the Backup Servicer may, in its
discretion, appoint, or petition a court of competent jurisdiction to appoint,
any established servicing institution as the successor to the Servicer hereunder
in the assumption of all or any part of the responsibilities, duties or
liabilities of the Servicer hereunder. As compensation, any Successor Servicer
so appointed shall be entitled to receive the Servicing Fee, together with any
other servicing compensation in the form of assumption fees, late payment
charges or otherwise as provided herein that accrued prior thereto, including,
without limitation, Transition Costs. In the event the Backup Servicer is
required to solicit bids as provided herein, the Backup Servicer shall solicit,
by public announcement, bids from banks and mortgage servicing institutions
meeting the qualifications set forth in this Section 9.02. Such public
announcement shall specify that the Successor Servicer shall be entitled to the
full amount of the Servicing fee as servicing compensation, together with the
other servicing compensation in the form of assumption fees, late payment
charges or otherwise that accrued prior thereto. Within thirty (30) days after
any such public announcement, the Backup Servicer shall negotiate

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and effect the sale, transfer and assignment of the servicing rights and
responsibilities hereunder to the qualified party submitting the highest
qualifying bid. The Backup Servicer shall deduct from any sum received by the
Backup Servicer from the successor to the Servicer in respect of such sale,
transfer and assignment all costs and expenses of any public announcement and of
any sale, transfer and assignment of the servicing rights and responsibilities
hereunder and the amount of any unreimbursed Servicing Advances. After such
deductions, the remainder of such sum shall be paid by the Backup Servicer to
the Servicer at the time of such sale, transfer and assignment to the Servicer’s
successor. The Backup Servicer and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. No appointment of a successor to the Servicer hereunder shall be
effective until written notice of such proposed appointment shall have been
provided by the Backup Servicer to the Indenture Trustee and the Noteholders and
the Backup Servicer shall have consented thereto. The Backup Servicer shall not
resign as servicer until a Successor Servicer has been appointed and accepted
such appointment. Notwithstanding anything to the contrary contained herein, in
no event shall Wells Fargo Bank, National Association, in any capacity, be
liable for any Servicing Fee or for any differential in the amount of the
Servicing Fee paid hereunder and the amount necessary to induce any Successor
Servicer under this Agreement and the transactions set forth or provided for by
this Agreement.
          If Wells Fargo Bank, National Association becomes the Successor
Servicer, Wells Fargo Bank, National Association shall not be required to
service the Loans in accordance with the terms of the Underwriting Guidelines
but rather it shall be required to service the Loans in accordance with
applicable law, the Required Loan Documents and current industry standards.
          Notwithstanding anything contained in this Agreement to the contrary,
Wells Fargo Bank, National Association as successor Servicer is authorized to
accept and rely on all of the accounting, records (including computer records)
and work of the prior Servicer relating to the Loans (collectively, the
“Predecessor Servicer Work Product”) without any audit or other examination
thereof, and Wells Fargo Bank, National Association shall have no duty,
responsibility, obligation or liability for the acts and omissions of the prior
Servicer. If any error, inaccuracy, omission or incorrect or non-standard
practice or procedure (collectively, “Errors”) exist in any Predecessor Servicer
Work Product and such Errors make it materially more difficult to service or
should cause or materially contribute to Wells Fargo Bank, National Association
making or continuing any Errors (collectively, “Continued Errors”), Wells Fargo
Bank, National Association shall have no duty, responsibility, obligation or
liability to perform servicing or for such Continued Errors; provided, however,
that Wells Fargo Bank, National Association agrees to use its best efforts to
prevent further Continued Errors. In the event that Wells Fargo Bank, National
Association becomes aware of Errors or Continued Errors, Wells Fargo Bank,
National Association shall, with the prior consent of the Initial Noteholder,
use its best efforts to reconstruct and reconcile such data as is commercially
reasonable to correct such Errors and Continued Errors and to prevent future
Continued Errors. Wells Fargo Bank, National Association shall be entitled to
recover its costs thereby expended in accordance with Section 5.01(c)(5)(i) of
this Agreement or Section 5.04(b) of the Indenture, as applicable.
          Section 9.03 Waiver of Defaults.
          The Initial Noteholder may waive any events permitting removal of the
Servicer as servicer pursuant to this Article IX. Upon any waiver of a past
default, such default shall cease

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to exist and any Servicer Event of Default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent thereto
except to the extent expressly so waived.
          Section 9.04 Accounting Upon Termination of Servicer.
          Upon termination of the Servicer under this Article IX, the Servicer
shall, at its own expense:
          (a) deliver to its successor or, if none shall yet have been
appointed, to the Paying Agent the funds in the Collection Account;
          (b) deliver to its successor or, if none shall yet have been
appointed, to the Collateral Custodian all Loan Files and related documents and
statements held by it hereunder and a Loan portfolio computer tape;
          (c) deliver to its successor, the Indenture Trustee, the Issuer and
the Securityholders a full accounting of all funds, including a statement
showing the Scheduled Payments collected by it and a statement of monies held in
trust by it for payments or charges with respect to the Loans; and
          (d) execute and deliver such instruments and perform all acts
reasonably requested in order to effect the orderly and efficient transfer of
servicing of the Loans to its successor and to more fully and definitively vest
in such successor all rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer under this Agreement.
          Section 9.05 Removal of Backup Servicer.
          (a) The Backup Servicer may be removed, with or without cause, by the
Indenture Trustee, at the direction of the Initial Noteholder, by notice given
in writing to the Backup Servicer (the “Backup Servicer Termination Notice”). In
the event of any such removal, a replacement Backup Servicer may be appointed by
the Initial Noteholder or the Indenture Trustee with the consent of the Initial
Noteholder.
          (b) Upon the Backup Servicer’s receipt of a Backup Servicer
Termination Notice from the Indenture Trustee of the designation of a
replacement Backup Servicer, the Backup Servicer agrees that it will terminate
its activities as Backup Servicer hereunder.
ARTICLE X
THE COLLATERAL CUSTODIAN
          Section 10.01 Appointment.
          The Indenture Trustee, at the direction of the Initial Noteholder,
hereby appoints Wells Fargo Bank, National Association to act as Collateral
Custodian, for the benefit of the Indenture Trustee, as agent for the
Noteholders. The Collateral Custodian hereby accepts such appointment and agrees
to perform the duties and obligation with respect thereto set forth herein.

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          Section 10.02 No Representations.
          In taking and retaining custody of the Required Loan Documents, the
Collateral Custodian shall be deemed to be acting as the agent of the
Noteholders; provided, however, that the Collateral Custodian makes no
representations as to the existence, perfection or priority of any Lien on the
Required Loan Documents or the instruments therein; and provided, further, that,
the Collateral Custodian’s duties as agent shall be limited to those expressly
contemplated herein.
          Section 10.03 Custody of Custodial Loan Files.
          All Custodial Loan Files shall be kept in fire resistant vaults, rooms
or cabinets at the office of the Collateral Custodian set forth in Section 13.06
hereof, or at such other office as shall be specified to the Indenture Trustee
by the Collateral Custodian in a written notice delivered at least forty- five
(45) days prior to such change. All Custodial Loan Files shall be placed
together with an appropriate identifying label and maintained in such a manner
so as to permit retrieval and access. All Custodial Loan Files shall be clearly
segregated from any other documents or instruments maintained by the Collateral
Custodian.
          Section 10.04 Standard of Care.
          In performing its duties, the Collateral Custodian shall use the same
degree of care and attention as it employs with respect to loans similar to the
Loans that it holds as Collateral Custodian.
          Section 10.05 Acknowledgment.
          The parties hereto hereby acknowledge and agree that the Collateral
Custodian’s execution of this Agreement shall constitute the Collateral
Custodian’s written acknowledgment and agreement that the Collateral Custodian
is holding any Collateral it receives that may be perfected by possession under
the UCC on behalf of and for the benefit of the Indenture Trustee and the
Noteholders.
ARTICLE XI
[RESERVED.]
ARTICLE XII
TERMINATION
          Section 12.01 Termination.
          (a) This Agreement shall terminate upon either: (A) the later of
(i) the satisfaction and discharge of the Indenture and the provisions thereof,
and payment to the Noteholders of all amounts due and owing in accordance with
the provisions hereof or (ii) the disposition of all funds with respect to the
last Loan and the remittance of all funds due hereunder and the payment of all
amounts due and payable, including, in both cases, without limitation,
indemnification payments payable pursuant to any Basic Document to the Indenture

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Trustee, the Owner Trustee, the Issuer, the Servicer and the Collateral
Custodian, written notice of the occurrence of either of which shall be provided
to the Indenture Trustee by the Servicer; or (B) the mutual consent of the
Servicer, the Depositor and all Securityholders in writing and delivered to the
Indenture Trustee by the Servicer.
          (b) The Securities shall be subject to an early redemption or
termination at the option of the Servicer and the Initial Noteholder in the
manner and subject to the provisions of Section 12.02 of this Agreement.
          (c) Except as provided in this Article XII, none of the Depositor, the
Servicer nor any Certificateholder or Noteholder shall be entitled to revoke or
terminate the Issuer.
          Section 12.02 Optional Termination.
          The Servicer may, at its option, effect an early termination of this
Agreement and the Collateral on any Payment Date on or after the Closing Date.
The Servicer shall effect such early termination by providing notice thereof to
the Indenture Trustee and Owner Trustee and paying all amounts due the Indenture
Trustee, the Owner Trustee and the Noteholders hereunder (the “Termination
Price”).
          Any such early termination by the Servicer shall be accomplished by
depositing into the Collection Account on the third Business Day prior to the
Payment Date on which the purchase is to occur the amount of the Termination
Price to be paid. The Termination Price and any amounts then on deposit in the
Collection Account (other than any amounts withdrawable pursuant to Section
5.01(c)(1) hereof) shall be deposited in the Distribution Account and
distributed by the Paying Agent pursuant to Section 5.01(c)(5) of this Agreement
and Section 9.1 of the Trust Agreement on the next succeeding Payment Date; and
any amounts received with respect to the Loans and Foreclosure Properties
subsequent to the final Payment Date shall belong to the purchaser thereof.
          Section 12.03 Notice of Termination.
          Notice of termination of this Agreement or of early redemption and
termination of the Issuer pursuant to Section 12.01 shall be sent by the
Indenture Trustee to the Noteholders (in accordance with Section 12.02 of the
Indenture).
ARTICLE XIII
MISCELLANEOUS PROVISIONS
          Section 13.01 Acts of Securityholders.
          Except as otherwise specifically provided herein and except with
respect to Section 13.02(b), whenever action, consent or approval of the
Securityholders is required under this Agreement, such action, consent or
approval shall be deemed to have been taken or given on behalf of, and shall be
binding upon, all Securityholders if the Majority Noteholders agree to take such
action or give such consent or approval.

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          Section 13.02 Amendment.
          (a) This Agreement may be amended from time to time by the Depositor,
the Servicer, the Paying Agent, the Loan Originator, the Collateral Custodian,
the Backup Servicer, the Indenture Trustee and the Issuer by written agreement
with notice thereof to the Securityholders, without the consent of any of the
Securityholders, to cure any error or ambiguity, to correct or supplement any
provisions hereof which may be defective or inconsistent with any other
provisions hereof or to add any other provisions with respect to matters or
questions arising under this Agreement; provided, however, that such action will
not adversely affect in any material respect the interests of the
Securityholders, as evidenced by an Opinion of Counsel to such effect provided
at the expense of the party requesting such Amendment.
          (b) This Agreement may also be amended from time to time by the
Depositor, the Servicer, the Paying Agent, the Loan Originator, the Collateral
Custodian, the Backup Servicer, the Indenture Trustee and the Issuer by written
agreement, with the prior written consent of the Majority Noteholders.
          (c) It shall not be necessary for the consent of Securityholders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof.
          Prior to the execution of any amendment to this Agreement, the Issuer
and the Indenture Trustee shall be entitled to receive and rely upon an Opinion
of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement. The Issuer and the Indenture Trustee may, but shall
not be obligated to, enter into any such amendment which affects the Issuer’s
own rights, duties or immunities of the Issuer or the Indenture Trustee, as the
case may be, under this Agreement.
          Any amendment to this Agreement which affects the rights or duties of
the Owner Trustee shall require the prior written consent of the Owner Trustee.
          Section 13.03 Recordation of Agreement.
          To the extent permitted by applicable law, this Agreement, or a
memorandum thereof if permitted under applicable law, is subject to recordation
in all appropriate public offices for real property records in all of the
counties or other comparable jurisdictions in which any or all of the Mortgaged
Property is situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Servicer at the
Securityholders’ expense on direction of the Majority Noteholders but only when
accompanied by an Opinion of Counsel to the effect that such recordation
materially and beneficially affects the interests of the Securityholders or is
necessary for the administration or servicing of the Loans.
          Section 13.04 Duration of Agreement.
          This Agreement shall continue in existence and effect until terminated
as herein provided.

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          Section 13.05 Governing Law.
          THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW (EXCEPT FOR SECTION 5-1401 AND SECTION
5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
          Section 13.06 Notices.
All demands, notices and communications hereunder shall be in writing and shall
be deemed to have been duly given if (i) delivered personally, mailed by
overnight mail, certified mail or registered mail, postage prepaid, or
(ii) transmitted by telecopy, upon telephone confirmation of receipt thereof, as
follows: (A) in the case of the Depositor, to CS Funding VII Depositor LLC, 4445
Willard Avenue, Chevy Chase, Maryland 20815, Attention: Treasury, telecopy
number (301) 841-2307, or such other addresses or telecopy or telephone numbers
as may hereafter be furnished to the Securityholders and the other parties
hereto in writing by the Depositor; (B) in the case of the Issuer, to
CapitalSource Funding VII Trust, c/o Wilmington Trust Company, as Owner Trustee,
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890,
telecopy (302) 636-4140, telephone (302) 651-1000, or such other address or
telecopy or telephone numbers as may hereafter be furnished to the Noteholders
and the other parties hereto in writing by the Issuer; (C) in the case of the
Loan Originator, to CapitalSource Finance LLC, 4445 Willard Avenue, Chevy Chase,
Maryland 20815, Attention: Treasury, telecopy number (301) 841-2307, or such
other addresses or telecopy or telephone numbers as may hereafter be furnished
to the Securityholders and the other parties hereto in writing by the Loan
Originator, (D) in the case of the Servicer, to CapitalSource, 4445 Willard
Avenue, Chevy Chase, Maryland 20815, Attention: Treasury, telecopy number
(301) 841-2307, or such other addresses or telecopy or telephone numbers as may
hereafter be furnished to the Securityholders and the other parties hereto in
writing by the Servicer; (E) in the case of the Collateral Custodian, to Wells
Fargo Bank, National Association, 751 Kasota Avenue, MAC N9328-011, Minneapolis,
Minnesota, Attention: Corporate Trust Services/Asset-Backed Securities Vault,
telecopy number (612) 667-1080, or such other addresses or telecopy or telephone
numbers as may hereafter be furnished to the Securityholders and the other
parties hereto in writing by the Collateral Custodian; (F) in the case of the
Backup Servicer, to Wells Fargo Bank, National Association, MAC N9311-161, Sixth
Street and Marquette, Minneapolis, Minnesota 55479, Attention: Corporate Trust
Services/Asset-Backed Administration, telecopy number (612) 667-3539, or such
other addresses or telecopy or telephone numbers as may hereafter be furnished
to the Securityholders and the other parties hereto in writing by the Backup
Servicer; (G) in the case of the Indenture Trustee, at the Corporate Trust
Office, as defined in the Indenture; and (H) in the case of the Initial
Noteholder, to Asset Backed Finance, Citigroup Global Markets Realty Corp., 390
Greenwich Street, 6th Floor, New York, NY 10013, telecopy number (212) 816-7533.
          Section 13.07 Severability of Provisions.
          If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements,

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provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other covenants, agreements, provisions or terms of this
Agreement.
          Section 13.08 No Partnership.
          Nothing herein contained shall be deemed or construed to create any
partnership or joint venture between the parties hereto and the services of the
Servicer shall be rendered as an independent contractor.
          Section 13.09 Counterparts.
          This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same Agreement.
          Section 13.10 Successors and Assigns.
          This Agreement shall inure to the benefit of and be binding upon the
Servicer, the Loan Originator, the Depositor, the Indenture Trustee, the Issuer
and the Securityholders and their respective successors and permitted assigns.
          Section 13.11 Headings.
          The headings of the various Sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
          Section 13.12 Actions of Securityholders.
          (a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Securityholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Securityholders in person or by an
agent duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Depositor, the Servicer or the Issuer. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Agreement and conclusive in favor of the
Depositor, the Servicer and the Issuer if made in the manner provided in this
Section 13.12.
          (b) The fact and date of the execution by any Securityholder of any
such instrument or writing may be proved in any reasonable manner which the
Depositor, the Servicer or the Issuer may deem sufficient.
          (c) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Securityholder shall bind every holder of every
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done,
by the Depositor, the Servicer or the Issuer in reliance thereon, whether or not
notation of such action is made upon such Security.
          (d) The Depositor, the Servicer or the Issuer may require additional
proof of any matter referred to in this Section 13.12 as it shall deem
necessary.

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          Section 13.13 Non-Petition Agreement.
          Notwithstanding any prior termination of any Basic Document, the Loan
Originator, the Paying Agent, the Servicer, the Depositor and the Indenture
Trustee each severally and not jointly covenants that it shall not, prior to the
date which is one year and one day after the payment in full of the all of the
Notes, acquiesce, petition or otherwise, directly or indirectly, invoke or cause
the Issuer or the Depositor to invoke the process of any governmental authority
for the purpose of commencing or sustaining a case against the Issuer or
Depositor 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 Issuer or Depositor or any substantial part of
their respective property or ordering the winding up or liquidation of the
affairs of the Issuer or the Depositor.
          Section 13.14 Holders of the Securities.
          (a) Any sums to be distributed or otherwise paid hereunder or under
this Agreement to the holders of the Securities shall be paid to such holders
pro rata based on their Percentage Interests;
          (b) Where any act or event hereunder is expressed to be subject to the
consent or approval of the holders of the Securities, such consent or approval
shall be capable of being given by the holder or holders evidencing in the
aggregate not less than 51% of the Percentage Interests.
          Section 13.15 Due Diligence.
          The Loan Originator acknowledges that the Initial Noteholder may
purchase Notes and Additional Note Principal Balances and may enter into
transactions based solely upon the information provided by the Loan Originator
to the Initial Noteholder in the Loan Schedule and the representations,
warranties and covenants contained herein, and that the Initial Noteholder, at
its option, has the right prior to such purchase of the Notes or Additional Note
Principal Balance therein or such Transactions to conduct a partial or complete
due diligence review on some or all of the Eligible Loans securing such
purchase, including without limitation ordering new credit reports on the
related Mortgaged Properties and otherwise re-generating the information used to
originate such Loan. The Initial Noteholder may underwrite such Loans itself or
engage a mutually agreed upon third party underwriter to perform such
underwriting. The Loan Originator agrees to cooperate with the Initial
Noteholder and any third party underwriter in connection with such underwriting,
including, but not limited to, providing the Initial Noteholder and any third
party underwriter with access to any and all documents, records, agreements,
instruments or information relating to such Loans in the possession, or under
the control, of the Servicer. The Loan Originator also shall make available to
the Initial Noteholder a knowledgeable financial or accounting officer for the
purpose of answering questions respecting the Loan Files and the Loans. Each
Noteholder agrees (on behalf of itself and its Affiliates, directors, officers,
employees and representatives) to use reasonable precaution to keep
confidential, in accordance with its customary procedures for handling
confidential information and in accordance with safe and sound practices, and
not to disclose to any third party, any non-public information supplied to it or
otherwise obtained by it hereunder with respect to the Loan Originator or any of
its Affiliates (including, but not limited to, the Loan File); provided,
however, that nothing herein shall prohibit the disclosure of any such

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information to the extent required by statute, rule, regulation or judicial
process; provided, further that, unless specifically prohibited by applicable
law or court order, the Noteholder shall, prior to disclosure thereof, notify
the Loan Originator of any request for disclosure of any such non-public
information. The Noteholder further agrees not to use any such non-public
information for any purpose unrelated to this Agreement and that each such
Noteholder shall not disclose such non-public information to any third party
underwriter in connection with a potential Disposition without obtaining a
written agreement from such third party underwriter to comply with the
confidentiality provisions of this Section 13.15.
          Section 13.16 No Reliance.
          Each of the Loan Originator, the Depositor and the Issuer hereby
acknowledges that it has not relied on the Initial Noteholder or any of its
officers, directors, employees, agents and “control persons” as such term is
used under the Act and under the Securities Exchange Act of 1934, as amended,
for any tax, accounting, legal or other professional advice in connection with
the transactions contemplated by the Basic Documents, that each of the Loan
Originator, the Depositor and the Issuer has retained and been advised by such
tax, accounting, legal and other professionals as it has deemed necessary in
connection with the transactions contemplated by the Basic Documents and that
the Initial Noteholder makes no representation or warranty, and shall have no
liability with respect to, the tax, accounting or legal treatment or
implications relating to the transactions contemplated by the Basic Documents.
          Section 13.17 Conflicts.
          Notwithstanding anything contained in the Basic Documents to the
contrary, in the event of the conflict between the terms of this Agreement and
any other Basic Document, the terms of this Agreement shall control.
          Section 13.18 Limitation on Liability.
          It is expressly understood and agreed by the parties hereto that
(a) this Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally, but solely as Owner Trustee of CapitalSource Funding
VII Trust, in the exercise of the powers and authority conferred and vested in
it, (b) each of the representations, undertakings and agreements herein made on
the part of the Issuer is made and intended not as personal representations,
undertakings and agreements by Wilmington Trust Company but is made and intended
for the purpose for binding only the Issuer, (c) nothing herein contained shall
be construed as creating any liability on Wilmington Trust Company, individually
or personally, to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the parties hereto
and by any Person claiming by, through or under the parties hereto and (d) under
no circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Issuer or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Issuer under this Agreement or any other related documents.
          Section 13.19 No Agency.
          Nothing contained herein or in the Basic Documents shall be construed
to create an agency or fiduciary relationship between the Initial Noteholder,
the Noteholders or any of

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their Affiliates and the Issuer, the Depositor, the Loan Originator or the
Servicer. None of the Initial Noteholder, any Noteholders or any of their
Affiliates shall be liable for any acts or actions affected in connection with a
Disposition including without limitation, any Securitization pursuant to
Section 3.06 nor any Whole Loan Sale pursuant to Section 3.06 hereof.
          Section 13.20 Third Party Beneficiaries.
          The Owner Trustee is an intended third party beneficiary of this
Agreement.
          Section 13.21 Performance by Wells Fargo Bank, National Association.
          The parties expressly acknowledge and consent to Wells Fargo Bank,
National Association acting in the capacities of successor Servicer and in the
capacity as Indenture Trustee, Backup Servicer and Collateral Custodian. Wells
Fargo Bank, National Association may, in such dual capacity, discharge its
separate functions fully, without hindrance or regard to conflict of interest
principles, duty of loyalty principles or other breach of fiduciary duties to
the extent that any such conflict or breach arises from the performance by Wells
Fargo Bank, National Association of express duties set forth in this Agreement
in any of such capacities, all of which defenses, claims or assertions are
hereby expressly waived by the other parties hereto except in the case of
negligence (other than errors in judgment) and willful misconduct by Wells Fargo
Bank, National Association.
(SIGNATURE PAGE FOLLOWS)

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          IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed by their respective officers thereunto duly authorized, as of the day and
year first above written, to this Agreement.

                  CAPITALSOURCE FUNDING VII TRUST,    
 
           
 
  By:   Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee    
 
           
 
  By:   /s/ ROBERT J. PERKINS    
 
           
 
      Name: Robert J. Perkins
Title: Sr Financial Services Officer    
 
                CS FUNDING VII DEPOSITOR LLC, as Depositor    
 
           
 
  BY:   /s/ JEFFREY LIPSON    
 
           
 
      Name: Jeffrey Lipson
Title: Vice President & Treasurer    
 
                CAPITALSOURCE FINANCE LLC, as Loan Originator and Servicer    
 
           
 
  BY:   /s/ JEFFREY LIPSON    
 
           
 
      Name: Jeffrey Lipson
Title: Vice President & Treasurer    
 
                WELLS FARGO BANK, NATIONAL ASSOCIATION, as Indenture Trustee,
Collateral Custodian and Backup Servicer    
 
           
 
  BY:   /s/ JOE NARDI    
 
           
 
      Name: Joe Nardi
Title: Vice President