exv10w27w2



 





Exhibit 10.27.2




EXECUTION VERSION










AMENDED AND RESTATED NOTE PURCHASE AGREEMENT




among




CAPITALSOURCE FUNDING II TRUST,

as Issuer




CS FUNDING II DEPOSITOR LLC,

as Depositor




CAPITALSOURCE FINANCE LLC,

as Loan Originator




and




CITIGROUP GLOBAL MARKETS REALTY CORP.,

as Purchaser




Dated as of September 17, 2003 and Amended and Restated as of October 7, 2004




COMMERCIAL LOAN BACKED NOTES










 









 








TABLE OF CONTENTS




	 	 	 	 	 
	ARTICLE I
	 	 	 	 
	DEFINITIONS
	 	 	 	 
	SECTION 1.01 Certain Defined Terms
	 	 	4	 
	SECTION 1.02 Other Definitional Provisions
	 	 	6	 
	ARTICLE II
	 	 	 	 
	CLOSING AND PURCHASES OF ADDITIONAL NOTE PRINCIPAL BALANCES
	 	 	 	 
	SECTION 2.01 Closing
	 	 	6	 
	SECTION 2.02 Requests for Purchases of Additional Note Principal
Balances; Reductions in Note Principal Balance
	 	 	7	 
	ARTICLE III
	 	 	 	 
	TRANSFER DATES
	 	 	 	 
	SECTION 3.01 Transfer Dates
	 	 	7	 
	ARTICLE IV
	 	 	 	 
	CONDITIONS PRECEDENT
	 	 	 	 
	SECTION 4.01 Closing Subject to Conditions Precedent
	 	 	9	 
	SECTION 4.02 Conditions Precedent to Amendment and Restatement
	 	 	10	 
	ARTICLE V
	 	 	 	 
	REPRESENTATIONS AND WARRANTIES OF THE ISSUER AND THE DEPOSITOR
	 	 	 	 
	SECTION 5.01 Representations and Warranties
	 	 	11	 
	SECTION 5.02 Securities Act
	 	 	13	 
	SECTION 5.03 No Fee
	 	 	14	 
	SECTION 5.04 Information
	 	 	14	 
	SECTION 5.05 The Purchased Notes
	 	 	14	 
	SECTION 5.06 Use of Proceeds
	 	 	14	 
	SECTION 5.07 The Depositor
	 	 	14	 
	SECTION 5.08 Taxes, etc
	 	 	14	 
	SECTION 5.09 Financial Condition
	 	 	14	 
	ARTICLE VI
	 	 	 	 
	REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE PURCHASER
	 	 	 	 
	SECTION 6.01 Representations and Warranties
	 	 	15	 







 i 




 









 








	 	 	 	 	 
	ARTICLE VII
	 	 	 	 
	COVENANTS OF THE ISSUER AND THE DEPOSITOR
	 	 	 	 
	SECTION 7.01 Information from the Issuer
	 	 	16	 
	SECTION 7.02 Access to Information
	 	 	17	 
	SECTION 7.03 Ownership and Security Interests; Further Assurances
	 	 	17	 
	SECTION 7.04 Covenants
	 	 	17	 
	SECTION 7.05 Amendments
	 	 	17	 
	SECTION 7.06 With Respect to the Exempt Status of the Purchased Notes
	 	 	17	 
	ARTICLE VIII
	 	 	 	 
	ADDITIONAL COVENANTS
	 	 	 	 
	SECTION 8.01 Legal Conditions to Closing
	 	 	18	 
	SECTION 8.02 Mutual Obligations
	 	 	18	 
	SECTION 8.03 Restrictions on Transfer
	 	 	18	 
	ARTICLE IX
	 	 	 	 
	INDEMNIFICATION
	 	 	 	 
	SECTION 9.01 Indemnification of Purchaser
	 	 	18	 
	ARTICLE X
	 	 	 	 
	LIMITED RECOURSE
	 	 	 	 
	SECTION 10.01 Limited Recourse
	 	 	19	 
	ARTICLE XI
	 	 	 	 
	MISCELLANEOUS
	 	 	 	 
	SECTION 11.01 Amendments
	 	 	19	 
	SECTION 11.02 Notices
	 	 	19	 
	SECTION 11.03 No Waiver; Remedies
	 	 	19	 
	SECTION 11.04 Binding Effect; Assignability
	 	 	19	 
	SECTION 11.05 Provision of Documents and Information
	 	 	20	 
	SECTION 11.06 GOVERNING LAW; JURISDICTION
	 	 	20	 
	SECTION 11.07 No Proceedings
	 	 	21	 
	SECTION 11.08 Execution in Counterparts
	 	 	21	 
	SECTION 11.09 No Recourse - Purchaser and Depositor
	 	 	21	 
	SECTION 11.10 Survival
	 	 	21	 
	SECTION 11.11 Tax Characterization
	 	 	21	 
	SECTION 11.12 Conflicts
	 	 	22	 
	SECTION 11.13 Limitation on Liability
	 	 	22	 
	SECTION 11.14 Amendment and Restatement
	 	 	22	 







 ii 





 









 








	 	 	 
	Schedule I

	 	Information for Notices
	Exhibit A

	 	Form of Certificate from Closing Attorney
	Exhibit B

	 	Incremental Note







 iii 




 









 








AMENDED AND RESTATED NOTE PURCHASE AGREEMENT




          AMENDED AND RESTATED NOTE PURCHASE AGREEMENT dated as of September 17,
2003 and amended and restated as of October 7, 2004 (as amended, supplemented
and otherwise modified from time to time, the “Note Purchase Agreement”), among
CapitalSource Funding II Trust (the “Issuer”), CS Funding II Depositor LLC (the
“Depositor”), CapitalSource Finance LLC (“CapitalSource”) and Citigroup Global
Markets Realty Corp. (“Citigroup,” and in its capacity as Purchaser hereunder,
the “Purchaser”).



          The parties hereto agree as follows:



ARTICLE I




DEFINITIONS




          SECTION 1.01 Certain Defined Terms. Capitalized terms used herein
without definition shall have the meanings set forth in the Indenture and the
Sale and Servicing Agreement (as defined below). Additionally, the following
terms shall have the following meanings:



          “Amended and Restated Note” shall mean the Amended and Restated
Note in the principal amount of Six Hundred Million Dollars ($600,000,000.00),
executed by the Issuer in favor of the Purchaser.



          “Closing” shall have the meaning set forth in Section 2.01.



          “Closing Date” shall have the meaning set forth in Section 2.01.



          “Commitment Fee” shall mean, with respect to the Closing Date, the
commitment fee payable to the Purchaser on the Closing Date equal to (a) 35
basis points (0.35%) multiplied by (b) $400,000,000, such payment to be made in
Dollars, in immediately available funds, without deduction, set-off or
counterclaim.



          “Confidential Information” means all marketing information,
financial information, terms sheets and other information concerning the
transactions contemplated thereby, prepared by the Purchaser and its
Affiliates.



          “Eligible Loan” shall have the meaning set forth in the Sale and
Servicing Agreement.



          “Exchange Act” means the Securities Exchange Act of 1934, as
amended.



          “Governmental Actions” means any and all consents, approvals,
permits, orders, authorizations, waivers, exceptions, variances, exemptions or
licenses of, or registrations, declarations or filings with, any Governmental
Authority required under any Governmental Rules.



          “Governmental Authority” means the United States of America, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory



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or administrative functions of or
pertaining to government and having jurisdiction over the applicable Person.



          “Governmental Rules” means any and all laws, statutes, codes,
rules, regulations, ordinances, orders, writs, decrees and injunctions, of any
Governmental Authority and any and all legally binding conditions, standards,
prohibitions, requirements and judgments of any Governmental Authority.



          “Incremental Commitment Fee” shall mean, with respect to the
effective date of the amendment and restatement of this Note Purchase
Agreement, an amount equal to thirty five (35) basis points (0.35%) multiplied
by Two Hundred Million Dollars ($200,000,000), such payment to be made in
Dollars in immediately available funds, without deduction, set-off or
counterclaim.



          “Incremental Note” means a note in the maximum principal amount of
Sixty Million Dollars, substantially in the form of Exhibit B hereto, issued by
the Issuer to the Purchaser. The Incremental Note will evidence the increase
in the commitment and will be equally and ratably secured with all Notes issued
pursuant to the terms of the Basic Documents. The Incremental Note represents
the CIG Allocated Principal Balance.



          “Indemnified Party” means the Purchaser and any of its officers,
directors, employees, agents, representatives, assignees and Affiliates and any
Person who controls the Purchaser or its Affiliates within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act.



          “Indenture” means the Indenture dated as of September 17, 2003
among the Issuer as Issuer and Wells Fargo Bank, National Association as
Indenture Trustee as the same may be amended and supplemented from time to
time.



          “Investment Company Act” shall have the meaning provided in Section
5.01(i).



          “Lien” means, 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.



          “Loan Originator” means CapitalSource, as originator of the Loans.



          “Maximum Note Principal Balance” means an amount equal to Six
Hundred Million Dollars ($600,000,000), less any reductions pursuant to Section
2.05 of the Sale and Servicing Agreement. In addition, with respect to the
Incremental Note, the Maximum Note Principal Balance shall be increased by 60%
of the then outstanding principal balance of the CIG Underlying Loans on the
related Transfer Date, and thereafter, the Maximum Note Principal Balance shall
be increased by the then outstanding principal balance of the Incremental Note.



          “Purchaser” means the Purchaser and its permitted successors and
assigns.



5









 





          “Purchased Notes” means the CapitalSource Funding II Trust
Commercial Loan Backed Notes issued by the Issuer pursuant to the Indenture.



          “Sale and Servicing Agreement” means the Amended and Restated Sale
and Servicing Agreement dated as of September 17, 2003 and amended and restated
as of October 7, 2004, among the Issuer, the Depositor, the Loan Originator,
the Servicer and Wells Fargo Bank, National Association as Indenture Trustee,
Collateral Custodian and Backup Servicer, as the same may be amended, modified
or supplemented from time to time.



          “Servicer” means CapitalSource Finance LLC or its permitted
successors and assigns.



          SECTION 1.02 Other Definitional Provisions.



          (a) All terms defined in this Note Purchase Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.



          (b) As used herein and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in Section
1.01, and accounting terms partially defined in Section 1.01 to the extent not
defined, shall have the respective meanings given to them under generally
accepted accounting principles. To the extent that the definitions of
accounting terms herein are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained herein
shall control.



          (c) The words “hereof,” “herein” and “hereunder” and words of similar
import when used in this Note Purchase Agreement shall refer to this Note
Purchase Agreement as a whole and not to any particular provision of this Note
Purchase Agreement; and Section, subsection, Schedule and Exhibit references
contained in this Note Purchase Agreement are references to Sections,
subsections, and Exhibits in or to this Note Purchase Agreement unless
otherwise specified.



ARTICLE II




CLOSING AND PURCHASES OF

ADDITIONAL NOTE PRINCIPAL BALANCES




          SECTION 2.01 Closing. The closing (the “Closing”) of the
execution of the Basic Documents shall take place at 10:00 a.m. at the offices
of Thacher Proffitt & Wood LLP, Two World Financial Center, New York, New York
10281 on September 17, 2003, or if the conditions to closing set forth in
Section 4.01 of this Note Purchase Agreement shall not have been satisfied or
waived by such date, as soon as practicable after such conditions shall have
been satisfied or waived, or at such other time, date and place as the parties
shall agree upon (the date of the Closing being referred to herein as the
“Closing Date”). On the Closing Date the Purchaser shall have received
the Commitment Fee in immediately available
funds, in accordance with the Purchaser’s wiring instructions. On the
effective date of the amendment and restatement of this Note Purchase
Agreement, the Purchaser shall have received the Incremental



6









 







Commitment Fee in
immediately available funds and in accordance with the Purchase’s wiring
instructions.



          SECTION 2.02 Requests for Purchases of Additional Note Principal
Balances; Reductions in Note Principal Balance. (a) At any time during the
Revolving Period no later than 12:00 p.m. New York time at least one (1)
Business Day prior to a proposed Transfer Date, to the extent that the
aggregate outstanding Note Principal Balance of the Purchased Notes (after
giving effect to the proposed purchase) is less than the Maximum Note Principal
Balance, and subject to the terms and conditions hereof and in accordance with
the other Basic Documents, the Issuer may request that the Purchaser purchase
Additional Note Principal Balances (each such request, a “Notice of Additional
Note Principal Balance”) in the form attached as Exhibit A to the Sale and
Servicing Agreement. In addition, in connection with such Notice of Additional
Note Principal Balance the Issuer shall deliver or cause the delivery of (i) a
Borrowing Base Certificate in the form attached as Exhibit F to the Sale and
Servicing Agreement, and a Loan Schedule, (ii) a copy of the S&SA Assignment
executed by the Depositor and the Issuer with respect to the Eligible Loans
proposed as Collateral for such Additional Note Principal Balance, (iii) a copy
of the LPA Assignment executed by the Loan Originator and the Depositor and
(iv) such additional information as may be reasonably requested by the
Purchaser.



          (b) In addition, the Issuer shall or shall cause the Servicer to deliver
to the Collateral Custodian (i) no later than 12:00 p.m. New York time on the
Business Day prior to the Transfer Date, by facsimile transmission or in an
electronic format mutually agreed upon by the Servicer and the Collateral
Custodian, a copy of the duly executed original Underlying Notes of the
Eligible Loans and the related Assignments of Mortgage (if any) and, if any
Loans are closed in escrow, a certificate (in the form of Exhibit A) from the
closing attorneys of such Eligible Loans certifying the possession of the
Required Loan Documents; provided, however, notwithstanding the foregoing, the
Required Loan Documents (including any UCCs included in the Required Loan
Documents) shall be in the possession of the Collateral Custodian within two
(2) Business Days of any related Transfer Date as to such Loans.



          On the identified Transfer Date, the Purchaser may (in the exercise of its
sole and absolute discretion) purchase the Additional Note Principal Balances
requested in the Notice of Additional Note Principal Balance, subject to the
terms and conditions and in reliance upon the covenants, representations and
warranties set forth herein and in the other Basic Documents.



ARTICLE III




TRANSFER DATES




          SECTION 3.01 Transfer Dates.



          (a) Subject to the conditions and terms set forth herein and in Section
2.06 of the Sale and Servicing Agreement with respect to each Transfer Date,
the Purchaser’s purchase of Additional Note Principal Balances shall be subject
to the satisfaction, as of the applicable Transfer Date, of each of the
following additional conditions:



7









 






          (i) With respect to the initial Transfer Date only, the Purchaser
shall have received the Commitment Fee and, with respect to any Transfer
Date occurring after the effective date of the amendment and restatement
of this Note Purchase Agreement, the Purchaser shall have received the
Incremental Commitment Fee;




          (ii) Each document required to be provided pursuant to Section 2.02
hereof shall have been provided to the Purchaser;




          (iii) Each condition set forth in Section 2.06 of the Sale and
Servicing Agreement shall have been satisfied;




          (iv) Each of the representations and warranties of the Issuer, the
Servicer, the Loan Originator and the Depositor made in the Basic
Documents shall be true and correct as of such date (except to the extent
they expressly relate to an earlier or later time);




          (v) The Issuer, the Servicer, the Loan Originator and the Depositor
shall be in compliance with all of their respective covenants contained
in the Basic Documents and the Purchased Notes, including, without
limitation, the financial covenants contained in Section 7.01 of the Sale
and Servicing Agreement;




          (vi) No Event of Default or Default shall have occurred and be
continuing; and




          (vii) With respect to each Transfer Date other than the initial
Transfer Date, the Purchaser shall have received evidence reasonably
satisfactory to it of the completion of all recordings, registrations,
and filings as may be necessary or, in the reasonable opinion of the
Purchaser, desirable to perfect or evidence the assignments required to
be effected on such Transfer Date in accordance with the Sale and
Servicing Agreement including, without limitation, the assignment of the
Loans and the proceeds thereof required to be assigned pursuant to the
related LPA Assignment, S&SA Assignment and the Indenture.



          (b) The Purchaser shall determine in its reasonable discretion whether
each of the above conditions have been met and its determination shall be
binding on the parties hereto.



          (c) The price paid by the Purchaser on each Transfer Date for the
Additional Note Principal Balance purchased on such Transfer Date shall be
equal to the amount of such Additional Note Principal Balance, and shall be
remitted not later than 5:00 p.m. New York City time on the Transfer Date by
wire transfer of immediately available funds to or at the direction of the Loan
Originator on behalf of the Issuer.



          (d) The Purchaser shall record on the schedule attached to the Purchased
Notes, the date and amount of any Additional Note Principal Balance purchased
by it; provided, that failure to make such recordation on such schedule
or any error in such schedule shall not adversely affect the Purchaser’s rights
with respect to its Note Principal Balance and its right to receive interest
payments in respect of the Note Principal Balance actually held. Absent
manifest error, the Note Principal Balance of the Purchased Notes as set
forth in the Purchaser’s



8









 







records shall be binding upon the parties hereto,
notwithstanding any notation or record made or kept by any other party hereto.



ARTICLE IV




CONDITIONS PRECEDENT




          SECTION 4.01 Closing Subject to Conditions Precedent. The Closing
of the Basic Documents is subject to the satisfaction at the time of the
Closing of the following conditions (any or all of which may be waived by the
Purchaser in its sole discretion):



          (a) Payment of Commitment Fee. The Purchaser shall have received
the full amount of the Commitment Fee, in immediately available funds, in
accordance with the Purchaser’s wiring instructions.



          (b) Performance by the Issuer, the Depositor, the Servicer and the Loan
Originator. All the terms, covenants, agreements and conditions of the
Basic Documents to be complied with and performed by the Issuer, the Depositor,
the Servicer and the Loan Originator on or before the Closing Date shall have
been complied with and performed in all material respects.



          (c) Representations and Warranties. Each of the representations
and warranties of the Issuer, the Depositor, the Servicer and the Loan
Originator made in the Basic Documents shall be true and correct in all
material respects as of the Closing Date (except to the extent they expressly
relate to an earlier or later time).



          (d) Officer’s Certificate. The Purchaser shall have received in
form and substance reasonably satisfactory to the Purchaser an Officer’s
Certificate from the Loan Originator, the Depositor and the Servicer and a
certificate of an Authorized Officer of the Issuer, dated the Closing Date,
certifying to the satisfaction of the conditions set forth in the preceding
paragraphs (b) and (c).



          (e) Opinions of Counsel to the Issuer, the Loan Originator, the
Servicer and the Depositor. Counsel to the Issuer, the Loan Originator,
the Servicer and the Depositor shall have delivered to the Purchaser opinions,
dated as of the Closing Date and reasonably satisfactory in form and substance
to the Purchaser and its counsel. In addition to the foregoing, the Loan
Originator shall have caused its counsel to deliver to the Purchaser an opinion
to the effect that the Issuer will not be treated as an association (or
publicly traded partnership) taxable as a corporation or as a taxable mortgage
pool, for federal income tax purposes.



          (f) Opinions of Counsel to the Indenture Trustee. Counsel to the
Indenture Trustee shall have delivered to the Purchaser a favorable opinion,
dated as of the Closing Date and reasonably satisfactory in form and substance
to the Purchaser and its counsel.



          (g) Opinions of Counsel to the Owner Trustee. Delaware counsel to
the Owner Trustee of the Issuer shall have delivered to the Purchaser favorable
opinions regarding the formation, existence and standing of the Issuer and of
the Issuer’s execution,
authorization and delivery of each of the Basic Documents to which it is a
party and such other matters as the



9









 







Purchaser may reasonably request, dated as
of the Closing Date and reasonably satisfactory in form and substance to the
Purchaser and its counsel.



          (h) Filings and Recordations. Within ten (10) days of the Closing
Date and on or prior to each Transfer Date, the Purchaser shall have received
evidence reasonably satisfactory to it of (i) the completion of all recordings,
registrations, and filings as may be necessary or, in the reasonable opinion of
the Purchaser, desirable to perfect or evidence the assignment by the Loan
Originator to the Depositor of the Loan Originator’s ownership interest in the
Trust Estate including, without limitation, the Eligible Loans conveyed
pursuant to the Loan Sale Agreement and the proceeds thereof, (ii) the
completion of all recordings, registrations and filings as may be necessary or,
in the reasonable opinion of the Purchaser, desirable to perfect or evidence
the assignment by the Depositor to the Issuer of the Depositor’s ownership
interest in the Collateral including, without limitation, the Loans, the Loan
Collateral and the proceeds thereof, (iii) the completion of all recordings,
registrations, and filings as may be necessary or, in the reasonable opinion of
the Purchaser, desirable to perfect or evidence the grant of a first priority
perfected security interest in the Issuer’s ownership interest in the
Collateral including, without limitation, the Loans, in favor of the Indenture
Trustee, subject to no Liens prior to the Lien of the Indenture, and (iv)
evidence satisfactory to the Purchaser of the transfer of the Required Equity
Contribution by the Depositor to the Issuer.



          (i) Documents. The Purchaser shall have received a duly executed
counterpart of each of the Basic Documents, in form acceptable to the
Purchaser, the Purchased Notes and each and every document or certification
delivered by any party in connection with any of the Basic Documents or the
Purchased Notes, and each such document shall be in full force and effect.



          (j) Actions or Proceedings. No action, suit, proceeding or
investigation by or before any Governmental Authority shall have been
instituted to restrain or prohibit the consummation of, or to invalidate, any
of the transactions contemplated by the Basic Documents, the Purchased Notes
and the documents related thereto in any material respect.



          (k) Approvals and Consents. All Governmental Actions of all
Governmental Authorities required with respect to the transactions contemplated
by the Basic Documents, the Purchased Notes and the documents related thereto
shall have been obtained or made.



          (l) Accounts. The Purchaser shall have received evidence
reasonably satisfactory to it that each Trust Account has each been established
in accordance with the terms of the Sale and Servicing Agreement.



          (m) Reserved.



          (n) Other Documents. The Issuer, the Loan Originator, the
Depositor and the Servicer shall have furnished to the Purchaser such other
opinions, information, certificates and documents as the Purchaser may
reasonably request.



          (o) Proceedings in Contemplation of Sale of Purchased Notes. All
actions and proceedings undertaken by the Issuer, the Loan Originator, the
Depositor and the Servicer in



10









 







connection with the issuance and sale of the
Purchased Notes as herein contemplated shall be satisfactory in all respects to
the Purchaser and its counsel.



          (p) Financial Covenants. The Loan Originator shall be in compliance
with the financial covenants set forth in Section 7.01 of the Sale and
Servicing Agreement.



          If any condition specified in this Section 4.01 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Purchaser by notice to the Loan Originator at any time at or
prior to the Closing Date, and the Purchaser shall incur no liability as a
result of such termination.



          SECTION 4.02 Conditions Precedent to Amendment and Restatement.
The effectiveness of the amendment and restatement of this Note Purchase
Agreement is subject to the satisfaction of the following conditions (any or
all of which may be waived by the Purchaser in its sole discretion):



          (a) Payment of Incremental Commitment Fee. The Purchaser shall
have received the full amount of the Incremental Commitment Fee, in immediately
available funds, in accordance with the Purchaser’s wiring instructions.



          (b) Delivery of Amended and Restated Sale and Servicing Agreement and
Amended and Restated Note. The Purchaser shall have received a duly
executed counterpart of the Sale and Servicing Agreement and a duly executed
Amended and Restated Note.



          (c) Other Conditions Precedent. The Purchaser shall have satisfied
the conditions precedent set forth in paragraphs (b), (c), (d), (e), (h), (j),
(k), (n), (o) and (p) of Section 4.01 hereof with respect to and as of the
proposed date of the amendment and restatement.



ARTICLE V




REPRESENTATIONS AND WARRANTIES OF

THE ISSUER AND THE DEPOSITOR




          SECTION 5.01 Representations and Warranties. The Issuer and the
Depositor hereby jointly and severally make the following representations and
warranties to the Purchaser, as of the Closing Date, and as of each Transfer
Date, and the Purchaser shall be deemed to have relied on such representations
and warranties in making purchases of Additional Note Principal Balances on
each Transfer Date:



          (a) The Issuer has been duly organized and is validly existing and in good
standing as a statutory trust under the laws of the State of Delaware, with
requisite trust power and authority to own its properties and to transact the
business in which it is now engaged, and is duly qualified to do business and
is in good standing (or is exempt from such requirements) in each State of the
United States where the nature of its business requires it to be so qualified
and
the failure to be so qualified and in good standing would reasonably be
expected to have a material adverse effect on the Issuer or any adverse effect
on the interests of the Purchaser.



11









 





          (b) The issuance, sale, assignment and conveyance of the Purchased Notes
and the Additional Note Principal Balances, the performance of the Issuer’s
obligations under each Basic Document to which it is a party and the
consummation of the transactions therein contemplated will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any Lien (other than
any Lien created by the Basic Documents), charge or encumbrance upon any of the
property or assets of the Issuer or any of its Affiliates pursuant to the terms
of, any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which it or any of its Affiliates is bound or to which any of
its property or assets is subject, nor will such action result in any violation
of the provisions of its organizational documents or any Governmental Rule
applicable to the Issuer, in each case which could reasonably be expected to
have a material adverse effect on the transactions contemplated therein.



          (c) No Governmental Action which has not been obtained is required by or
with respect to the Issuer in connection with the execution and delivery to the
Purchaser of the Purchased Notes. No Governmental Action which has not been
obtained is required by or with respect to the Issuer in connection with the
execution and delivery of any of the Basic Documents to which the Issuer is a
party or the consummation by the Issuer of the transactions contemplated
thereby except for any requirements under state securities or “blue sky” laws
in connection with any transfer of the Purchased Notes.



          (d) The Issuer possesses all material licenses, certificates, authorities
or permits issued by the appropriate state, federal or foreign regulatory
agencies or bodies necessary to conduct the business now operated by it, and
has not received any notice of proceedings relating to the revocation or
modification of any such license, certificate, authority or permit which,
singly or in the aggregate, would reasonably be expected to materially and
adversely affect its condition, financial or otherwise, or its earnings,
business affairs or business prospects.



          (e) Each of the Basic Documents to which the Issuer is a party has been
duly authorized, executed and delivered by the Issuer and is a valid and
legally binding obligation of the Issuer, enforceable against the Issuer in
accordance with its terms, subject to enforcement of bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditors’ rights and to general principles of equity.



          (f) The execution, delivery and performance by the Issuer of each of its
obligations under each of the Basic Documents to which it is a party will not
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any agreement or instrument to which the Issuer is
a party or by which the Issuer is bound or to which any of its properties are
subject or of any statute, order or regulation applicable to the Issuer of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over the Issuer or any of its properties, in each case which could
reasonably be expected to have a material adverse effect on any of the
transactions contemplated therein.



          (g) The Issuer is not in violation of its organizational documents or in
default under any agreement, indenture or instrument the effect of which
violation or default would be
material to the Issuer or the transactions contemplated by the Basic
Documents. The Issuer is not a party to, bound by or in breach or violation of
any indenture or other agreement or



12









 







instrument, or subject to or in violation
of any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the Issuer
that would reasonably be expected to materially and adversely affect (i) the
ability of the Issuer to perform its obligations under any of the Basic
Documents to which it is a party or (ii) the business, operations, financial
condition, properties, assets or prospects of the Issuer.



          (h) There are no actions or proceedings against, or investigations of, the
Issuer pending, or, to the knowledge of the Issuer threatened, before any
Governmental Authority, court, arbitrator, administrative agency or other
tribunal (i) asserting the invalidity of any of the Basic Documents, or (ii)
seeking to prevent the issuance of the Purchased Notes or the consummation of
any of the transactions contemplated by the Basic Documents or the Purchased
Notes, or (iii) that could reasonably be expected to materially and adversely
affect the business, operations, financial condition, properties, assets or
prospects of the Issuer or the validity or enforceability of, or the
performance by the Issuer of its respective obligations under, any of the Basic
Documents to which it is a party or (iv) seeking to affect adversely the income
tax attributes of the Purchased Notes.



          (i) The Issuer is not, and neither the issuance and sale of the Purchased
Notes to the Purchaser nor the activities of the Issuer pursuant to the Basic
Documents, shall render the Issuer an “investment company” or under the
“control” of an “investment company” as such terms are defined in the
Investment Company Act of 1940, as amended (the “Investment Company
Act”).



          (j) It is not necessary to qualify the Indenture under the Trust Indenture
Act of 1939, as amended.



          (k) The Issuer is solvent and has adequate capital for its business and
undertakings.



          (l) The chief executive offices of the Issuer are located at c/o
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890, or, with the consent of the Purchaser, such other
address as shall be designated by the Issuer in a written notice to the other
parties hereto.



          (m) There are no contracts, agreements or understandings between the
Issuer and any Person granting such Person the right to require the filing at
any time of a registration statement under the Act with respect to the
Purchased Notes.



          SECTION 5.02 Securities Act. Assuming the accuracy of the
representations and warranties of and compliance with the covenants of the
Purchaser, contained herein, the sale of the Purchased Notes and the sale of
Additional Note Principal Balances pursuant to this Agreement are each exempt
from the registration and prospectus delivery requirements of the Act. In the
case of the offer or sale of the Purchased Notes, no form of general
solicitation or general advertising was used by the Issuer, any Affiliates of
the Issuer or any person acting on its or their behalf, including, but not
limited to, advertisements, articles, notices or other communications published
in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.
Neither the Issuer, any Affiliates of the Issuer nor any Person



13









 







acting on its
or their behalf has offered or sold, nor will the Issuer or any Person acting
on its behalf offer or sell directly or indirectly, the Purchased Notes or any
other security in any manner that, assuming the accuracy of the representations
and warranties and the performance of the covenants given by the Purchaser and
compliance with the applicable provisions of the Indenture with respect to each
transfer of the Purchased Notes, would render the issuance and sale of the
Purchased Notes as contemplated hereby a violation of Section 5 of the
Securities Act or the registration or qualification requirements of any state
securities laws, nor has any such Person authorized, nor will it authorize, any
Person to act in such manner.



          SECTION 5.03 No Fee. Neither the Issuer, nor the Depositor, nor
any of their Affiliates has paid or agreed to pay to any Person any
compensation for soliciting another to purchase the Purchased Notes.



          SECTION 5.04 Information. The information provided pursuant to
Section 7.01(a) hereof will, at the date thereof, be true and correct in all
material respects.



          SECTION 5.05 The Purchased Notes. The Purchased Notes have been
duly and validly authorized, and, when executed and authenticated in accordance
with the terms of the Indenture, and delivered to and paid for in accordance
with this Note Purchase Agreement, will be duly and validly issued and
outstanding and will be entitled to the benefits of the Indenture.



          SECTION 5.06 Use of Proceeds. No proceeds of a purchase hereunder
will be used (i) for a purpose that violates or would be inconsistent with
Regulations T, U or X promulgated by the Board of Governors of the Federal
Reserve System from time to time or (ii) to acquire any security in any
transaction in violation of Section 13 or 14 of the Exchange Act.



          SECTION 5.07 The Depositor. The Depositor hereby makes to the
Purchaser each of the representations, warranties and covenants set forth in
Section 3.01 of the Sale and Servicing Agreement as of the Closing Date and as
of each Transfer Date (except to the extent that any such representation,
warranty or covenant is expressly made as of another date).



          SECTION 5.08 Taxes, etc. Any taxes, fees and other charges of
Governmental Authorities applicable to the Issuer and the Depositor, except for
franchise or income taxes, in connection with the execution, delivery and
performance by the Issuer and the Depositor of each Basic Document to which
they are parties, the issuance of the Purchased Notes or otherwise applicable
to the Issuer or the Depositor in connection with the Trust Estate have been
paid or will be paid by the Issuer or the Depositor, as applicable, at or prior
to the Closing Date or Transfer Date, to the extent then due.



          SECTION 5.09 Financial Condition. On the date hereof and on each
Transfer Date, neither the Issuer nor the Depositor is subject to a Bankruptcy
Event or has reason to believe that its insolvency is imminent.



14









 





ARTICLE VI




REPRESENTATIONS AND WARRANTIES

WITH RESPECT TO THE PURCHASER




          SECTION 6.01 Representations and Warranties. The Purchaser hereby
makes the following representations and warranties, as to itself, to the Issuer
and the Depositor on which the same are relying in entering into this Note
Purchase Agreement.



          (a) Organization. The Purchaser has been duly organized and is
validly existing and in good standing under the laws of the jurisdiction of its
organization with power and authority to own its properties and to transact the
business in which it is now engaged.



          (b) Authority, etc. The Purchaser has all requisite power and
authority to enter into and perform its obligations under this Note Purchase
Agreement and to consummate the transactions herein contemplated. The
execution and delivery by the Purchaser of this Note Purchase Agreement and the
consummation by the Purchaser of the transactions contemplated hereby have been
duly and validly authorized by all necessary organizational action on the part
of the Purchaser. This Note Purchase Agreement has been duly and validly
executed and delivered by the Purchaser and constitutes a legal, valid and
binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms, subject as to enforcement to bankruptcy,
reorganization, insolvency, moratorium and other similar laws of general
applicability relating to or affecting creditors’ rights and to general
principles of equity. Neither the execution and delivery by the Purchaser of
this Note Purchase Agreement nor the consummation by the Purchaser of any of
the transactions contemplated hereby, nor the fulfillment by the Purchaser of
the terms hereof, will conflict with, or violate, result in a breach of or
constitute a default under any term or provision of the Purchaser’s
organizational documents or any Governmental Rule applicable to the Purchaser.



          (c) Institutional Accredited Investor. The Purchaser is an
institutional “accredited investor” within the meaning of subparagraph (a)(1),
(2), (3) or (7) of Rule 501 under the 1933 Act (an “Institutional Accredited
Investor”) that is acquiring the Purchased Notes for its own account or for one
or more accounts (each of which is an Institutional Accredited Investor) as to
each of which it exercises sole investment discretion.



          (d) ERISA. The Purchaser either (i) is not, and not acquiring the
Purchased Notes on behalf of or with the assets of, an employee benefit plan or
other retirement plan or arrangement subject to Title I of ERISA or Section
4975 of the Code, or (b) is, or is acquiring the Purchased Notes on behalf of
or with the assets of, an employee benefit plan or other retirement plan or
arrangement subject to Title I of ERISA of Section 4975 of the Code and the
conditions for exemptive relief under at least one of the following prohibited
transaction class exemptions have been satisfied: Prohibited Transaction Class
Exemption (“PTCE”) 96-23 (relating to transactions effected by an “in-house
asset manager”), PTCE 95-60 (relating to transactions involving insurance
company general accounts), PTCE 91-38 (relating to transactions involving bank
collective investment funds), PTCE 90-1 (relating to transactions involving
insurance company pooled separate accounts), and PTCE 84-14 (relating to
transactions effected by a “qualified professional asset manager”).



15









 





          (e) Securities Act. The Purchaser will acquire the Purchased Notes
pursuant to this Note Purchase Agreement without a view to any public
distribution thereof, and will not offer to sell or otherwise dispose of the
Purchased Notes (or any interest therein) in violation of any of the
registration requirements of the Act or any applicable state or other
securities laws, or by means of any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act) and
will comply with the requirements of the Indenture. The Purchaser acknowledges
that it has no right to require the Issuer or any other Person to register the
Purchased Notes under the Securities Act or any other securities law.



          (f) Conflicts With Law. The execution, delivery and performance by
the Purchaser of its obligations under this Note Purchase Agreement will not
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any agreement or instrument to which the Purchaser
is a party or by which the Purchaser is bound or of any statute, order or
regulation applicable to the Purchaser of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Purchaser, in each case which could be expected to have a material adverse
effect on the transactions contemplated therein.



          (g) Conflicts With Agreements, etc. The Purchaser is not in
violation of its organizational documents or in default under any agreement,
indenture or instrument the effect of which violation or default would be
materially adverse to the Purchaser in the performance of its obligations or
duties under any of the Basic Documents to which it is a party. The Purchaser
is not a party to, bound by or in breach or violation of any indenture or other
agreement or instrument, or subject to or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or governmental
body having jurisdiction over the Purchaser that materially and adversely
affects, or which could be expected in the future to materially and adversely
affect the ability of the Purchaser to perform its obligations under this Note
Purchase Agreement.



ARTICLE VII




COVENANTS OF THE ISSUER AND

THE DEPOSITOR




          SECTION 7.01 Information from the Issuer. So long as the Purchased
Notes remain outstanding, the Issuer and the Depositor shall each furnish to
the Purchaser:



          (a) such information (including financial information), documents, records
or reports with respect to the Collateral, including, without limitation, the
Loans and the Loan Collateral, the Issuer, the Loan Originator, the Servicer or
the Depositor as the Purchaser may from time to time reasonably request;



          (b) as soon as possible and in any event within five (5) Business Days
after the occurrence thereof, notice of each Event of Default under the Sale
and Servicing Agreement or the Indenture, and each Default; and



          (c) promptly and in any event within 30 days after the occurrence thereof,
written notice of a change in address of the chief executive office or place of
organization of the Issuer, the Loan Originator or the Depositor.



16









 





          SECTION 7.02 Access to Information. So long as the Purchased Notes
remain outstanding, each of the Issuer and the Depositor shall, on reasonable
request from time to time during regular business hours, permit the Purchaser,
or their agents or representatives to:



          (a) examine all books, records and documents (including computer tapes and
disks) in the possession or under the control of the Issuer or the Depositor
relating to the Eligible Loans or the Basic Documents as may be requested, and



          (b) visit the offices and property of the Issuer and the Depositor for the
purpose of examining such materials described in clause (a) above.



          SECTION 7.03 Ownership and Security Interests; Further Assurances.
The Depositor will take all action reasonably necessary to maintain the
Issuer’s ownership interest in the Loans and the other items sold pursuant to
Article II of the Sale and Servicing Agreement. The Issuer and the Depositor
will take all action necessary to maintain the Indenture Trustee’s security
interest in the Eligible Loans and the other items pledged to the Indenture
Trustee pursuant to the Indenture.



          The Issuer and the Depositor agree to take any and all acts and to execute
any and all further instruments reasonably necessary or requested by the
Purchaser to more fully effect the purposes of this Note Purchase Agreement.



          SECTION 7.04 Covenants. The Issuer and the Depositor shall each
duly observe and perform each of their respective covenants set forth in each
of the Basic Documents to which they are parties.



          SECTION 7.05 Amendments. Neither the Issuer nor the Depositor
shall make, or permit any Person to make, any amendment, modification or change
to, or provide any waiver under any Basic Document to which the Issuer or the
Depositor, as applicable, is a party without the prior written consent of the
Purchaser.



          SECTION 7.06 With Respect to the Exempt Status of the Purchased
Notes.



          (a) Neither the Issuer nor the Depositor, nor any of their respective
Affiliates, nor any Person acting on their behalf will, directly or indirectly,
make offers or sales of any security, or solicit offers to buy any security,
under circumstances that would require the registration of the Purchased Notes
under the Securities Act.



          (b) Neither the Issuer nor the Depositor, nor any of their Affiliates, nor
any Person acting on their behalf will engage in any form of general
solicitation or general advertising (within the meaning of Regulation D
promulgated under the Securities Act) in connection with any offer or sale of
the Purchased Notes.



17









 





ARTICLE VIII




ADDITIONAL COVENANTS




          SECTION 8.01 Legal Conditions to Closing. The parties hereto will
take all reasonable action necessary to obtain (and will cooperate with one
another in obtaining) any consent, authorization, permit, license, franchise,
order or approval of, or any exemption by, any Governmental Authority or any
other Person, required to be obtained or made by it in connection with any of
the transactions contemplated by this Note Purchase Agreement.



          SECTION 8.02 Mutual Obligations. On and after the Closing, each
party hereto will do, execute and perform all such other acts, deeds and
documents as the other party may from time to time reasonably require in order
to carry out the intent of this Note Purchase Agreement.



          SECTION 8.03 Restrictions on Transfer. The Purchaser agrees that
it will comply with the restrictions on transfer of the Purchased Notes set
forth in the Indenture and resell the Purchased Notes only in compliance with
such restrictions.



ARTICLE IX




INDEMNIFICATION




          SECTION 9.01 Indemnification of Purchaser. Each of the Issuer and
the Depositor hereby agree to, jointly and severally, indemnify and hold
harmless each Indemnified Party against any and all losses, claims, damages,
liabilities, expenses or judgments (including accounting fees and reasonable
legal fees and other expenses incurred in connection with this Note Purchase
Agreement or any other Basic Document and any action, suit or proceeding or any
claim asserted) (collectively, “Losses”), as incurred (payable promptly
upon written request), for or on account of or arising from or in connection
with any information prepared by and furnished or to be furnished by any of the
Issuer, the Loan Originator or the Depositor pursuant to or in connection with
the transactions contemplated hereby 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 business, operations,
financial condition of the Issuer, the Loan Originator, the Depositor or with
respect to the Eligible Loans, to the extent such information contains any
untrue statement of material fact or omits to state a material fact necessary
to make the statements contained therein in light of the circumstances under
which such statements were made not misleading, except with respect to any such
information used by such Indemnified Party in violation of the Basic Documents
which results in such Losses; provided, however, that neither the Issuer nor
the Depositor will be liable for any portion of any such amount resulting from
the gross negligence or willful misconduct of any Indemnified Party. The
indemnities contained in this Section 9.01 will be in addition to any liability
which the Issuer or the Depositor may otherwise have pursuant to this Note
Purchase Agreement and any other Basic Document.



18









 





ARTICLE X




LIMITED RECOURSE




          SECTION 10.01 Limited Recourse. At the option of the Purchaser, in
the event that the Required Overcollateralization Amount is not satisfied on
any date of determination, CapitalSource Finance LLC shall be required to remit
to the Indenture Trustee an amount equal to such shortfall for payment to the
Noteholders pursuant to Section 5.01(b)(7) of the Sale and Servicing Agreement.
Such payment shall be applied to reduce the Note Principal Balance of the
Purchased Notes. Notwithstanding the foregoing, in no event shall CapitalSource
Finance LLC be required to make any payment pursuant to this Section 10.01 if
the amount of the payment (or any portion thereof) would cause the aggregate
amount of payments made by CapitalSource Finance LLC pursuant to this Section
10.01 on all prior dates during the term of this Agreement to exceed 10% of the
Note Principal Balance outstanding on such date.



ARTICLE XI




MISCELLANEOUS




          SECTION 11.01 Amendments. No amendment or waiver of any provision
of this Note Purchase Agreement shall in any event be effective unless the same
shall be in writing and signed by all of the parties hereto, and then such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.



          SECTION 11.02 Notices. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including telecopies) and mailed, telecopied (with a copy delivered by
overnight courier) or delivered, as to each party hereto, at its address as set
forth in Schedule I hereto or at such other address as shall be designated by
such party in a written notice to the other parties hereto. All such notices
and communications shall be deemed effective upon receipt thereof, and in the
case of telecopies, when receipt is confirmed by telephone.



          SECTION 11.03 No Waiver; Remedies. No failure on the part of any
party hereto to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.



          SECTION 11.04 Binding Effect; Assignability.



          (a) This Note Purchase Agreement shall be binding upon and inure to the
benefit of the Issuer, the Depositor and the Purchaser and their respective
permitted successors and assigns (including any subsequent holders of the
Purchased Notes); provided, however, except as provided in clause
(d) below, neither the Issuer nor the Depositor shall have any right to assign
their respective rights hereunder or interest herein (by operation of law or
otherwise) without the prior written consent of the Purchaser.



19









 





          (b) The Purchaser may, in the ordinary course of its business and in
accordance with the Basic Documents and applicable law, including applicable
securities laws, at any time sell to one or more Persons (each, a
“Participant”), participating interests in all or a portion of its
rights and obligations under this Note Purchase Agreement. Notwithstanding any
such sale by the Purchaser of participating interests to a Participant, the
Purchaser’s rights and obligations under this Note Purchase Agreement shall
remain unchanged, the Purchaser shall remain solely responsible for the
performance thereof, and the Issuer and the Depositor shall continue to deal
solely and directly with the Purchaser and shall have no obligations to deal
with any Participant in connection with the Purchaser’s rights and obligations
under this Note Purchase Agreement.



          (c) This Note Purchase Agreement shall create and constitute the
continuing obligation of the parties hereto in accordance with its terms, and
shall remain in full force and effect until such time as all amounts payable
with respect to the Purchased Notes shall have been paid in full.



          (d) The Purchaser may sell or assign the Purchased Note only with the
prior consent of the Loan Originator unless (i) such sale or assignment is to
an Affiliate of the Purchaser, (ii) such sale or assignment occurs during the
continuance of a Trigger Event under the Sale and Servicing Agreement or (iii)
the Depositor or the Loan Originator breaches a representation or warranty
contained in the Sale and Servicing Agreement. In addition, the Purchaser shall
have the right to sell or finance the Purchased Note pursuant to a repurchase,
financing or similar transaction without the consent of the Loan Originator.



          SECTION 11.05 Provision of Documents and Information. Each of the
Issuer and the Depositor acknowledges and agrees that the Purchaser is
permitted to provide to any subsequent Purchaser, permitted assignees and
Participants, opinions, certificates, documents and other information relating
to the Issuer, the Depositor and the Loans delivered to the Purchaser pursuant
to this Note Purchase Agreement provided that with respect to confidential
information, such subsequent Purchaser, permitted assignees and Participants
agree to be bound by Section 13.15 of the Sale and Servicing Agreement.



          SECTION 11.06 GOVERNING LAW; JURISDICTION. THIS NOTE PURCHASE
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS.
EACH OF THE PARTIES TO THIS NOTE PURCHASE AGREEMENT HEREBY AGREES TO THE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND ANY APPELLATE COURT HAVING JURISDICTION TO REVIEW THE JUDGMENTS
THEREOF. EACH OF THE PARTIES HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY
OF THE AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.



20









 





          SECTION 11.07 No Proceedings. Until the date that is one year and
one day after the last day on which any amount is outstanding under this Note
Purchase Agreement, the Depositor and the Purchaser hereby covenant and agree
that they will not institute against the Issuer or the Depositor, or join in
any institution against the Issuer or the Depositor of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law.



          SECTION 11.08 Execution in Counterparts. This Note Purchase
Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which when taken together shall
constitute one and the same agreement.



          SECTION
11.09 No Recourse - Purchaser and Depositor.



          (a) The obligations of the Purchaser under this Note Purchase Agreement,
or any other agreement, instrument, document or certificate executed and
delivered by or issued by the Purchaser or any officer thereof are solely the
partnership or corporate obligations of the Purchaser, as the case may be. No
recourse shall be had for payment of any fee or other obligation or claim
arising out of or relating to this Note Purchase Agreement or any other
agreement, instrument, document or certificate executed and delivered or issued
by the Purchaser or any officer thereof in connection therewith, against any
stockholder, limited partner, employee, officer, director or incorporator of
the Purchaser.



          (b) The obligations of the Depositor under this Note Purchase Agreement,
or any other agreement, instrument, document or certificate executed and
delivered by or issued by the Depositor or any officer thereof are solely the
limited liability company obligations of the Depositor. No recourse shall be
had for payment of any fee or other obligation or claim arising out of or
relating to this Note Purchase Agreement or any other agreement, instrument,
document or certificate executed and delivered or issued by the Purchaser or
any officer thereof in connection therewith, against any member, managing
director, employee or officer of the Depositor.



          (c) The Purchaser, by accepting the Purchased Notes, acknowledges that
such Purchased Notes represent an obligation of the Issuer and do not represent
an interest in or an obligation of the Loan Originator, the Servicer, the
Depositor, the Administrator, the Owner Trustee, the Indenture Trustee or any
Affiliate thereof and no recourse may be had against such parties or their
assets, except as may be expressly set forth or contemplated in this Agreement,
the Purchased Notes or the Basic Documents.



          SECTION 11.10 Survival. All representations, warranties,
covenants, guaranties and indemnifications contained in this Note Purchase
Agreement and in any document, certificate or statement delivered pursuant
hereto or in connection herewith shall survive the sale, transfer or repayment
of the Purchased Notes.



          SECTION 11.11 Tax Characterization. Each party to this Note
Purchase Agreement (a) acknowledges and agrees that it is the intent of the
parties to this Note Purchase Agreement that for all purposes, including
federal, state and local income, single
business and franchise tax purposes, the Purchased Notes will be treated
as evidence of indebtedness secured



21









 







by the Loans and proceeds thereof and the
trust created under the Indenture will not be characterized as an association
(or publicly traded partnership) taxable as a corporation, (b) agrees to treat
the Purchased Notes for federal, state and local income and franchise tax
purposes as indebtedness and (c) agrees that the provisions of all Basic
Documents shall be construed to further these intentions of the parties.



          SECTION 11.12 Conflicts. Notwithstanding anything contained herein
to the contrary, in the event of the conflict between the terms of the Sale and
Servicing Agreement and this Note Purchase Agreement, the terms of the Sale and
Servicing Agreement shall control.



          SECTION 11.13 Limitation on Liability. It is expressly understood
and agreed by the parties hereto that (a) this Note Purchase Agreement is
executed and delivered by Wilmington Trust Company, not individually or
personally, but solely as Owner Trustee of CapitalSource Funding II Trust, in
the exercise of the powers and authority conferred and vested in it, (b) each
of the representations, undertakings and agreements herein made on the part of
the Issuer is made and intended not as personal representations, undertakings
and agreements by Wilmington Trust Company but is made and intended for the
purpose for binding only the Issuer, (c) nothing herein contained shall be
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 Note Purchase Agreement or any
other related documents.



          SECTION 11.14 Amendment and Restatement.



          This Note Purchase Agreement is an amendment and restatement of the Note
Purchase Agreement dated as of September 17, 2003 (the “Old Note Purchase
Agreement”). On and after the effective date of this Note Purchase Agreement,
each reference herein and in the Sale and Servicing Agreement and each other
Basic Document to “the Note Purchase Agreement,” “thereunder,” “thereof,”
“therein” or any other expression of like import referring to the Old Note
Purchase Agreement shall mean and be a reference to this Note Purchase
Agreement. The execution, delivery and effectiveness of this Note Purchase
Agreement shall not operate as a waiver of any right, power or remedy hereunder
or constitute a waiver of any provision hereof. This amended and restated Note
Purchase Agreement does not constitute a novation or termination of the “Note
Purchase Agreement” or any other Basic Document and all obligations under the
“Note Purchase Agreement” are in all respects continuing as hereby amended.



[SIGNATURE PAGE FOLLOWS]




22









 








     IN WITNESS WHEREOF, the parties have caused this Note Purchase Agreement
to be executed by their respective officers hereunto duly authorized, as of the
date first above written.



	 	 	 	 	 
	 	 	CAPITALSOURCE FUNDING II TRUST,
	 
	 	 	 	 
	

	 	BY:
	 	Wilmington Trust Company, not in its

individual capacity but solely as

Owner Trustee
	 
	 	 	 	 
	

	 	By:
	 	          /s/ R. K. MANEY
	

	 	 	 	
 
	

	 	 	 	Name:  Roseline K. Maney
	

	 	 	 	Title:   Vice President
	 
	 	 	 	 
	 	 	CS FUNDING II DEPOSITOR LLC
	 
	 	 	 	 
	

	 	By:
	 	          /s/ STEVEN A. MUSELES
	

	 	 	 	
 
	

	 	 	 	Name:  Steven A. Museles
	

	 	 	 	Title:   Senior Vice President
	 
	 	 	 	 
	 	 	CAPITALSOURCE FINANCE LLC
	 
	 	 	 	 
	

	 	By:
	 	          /s/ STEVEN A. MUSELES
	

	 	 	 	
 
	

	 	 	 	Name:  Steven A. Museles
	

	 	 	 	Title:   Senior Vice President
	 
	 	 	 	 
	 	 	CITIGROUP GLOBAL MARKETS REALTY CORP.
	 
	 	 	 	 
	

	 	By:
	 	          /s/ JOHN ECK
	

	 	 	 	
 
	

	 	 	 	Name:  John Eck
	

	 	 	 	Title:   Vice President







Amended And Restated Note Purchase Agreement




 









 








Schedule I

Information for Notices





	1.	 	if to the Issuer:




CapitalSource Funding II Trust

c/o Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware 19890

Attention: Corporate Trust Administration




	 	 	with a copy to the Administrator:




CapitalSource Finance LLC

4445 Willard Avenue - 12th Floor

Chevy Chase, Maryland 20815

Attention: Controller




	2.	 	if to the Depositor:





CS Funding
II Depositor LLC

4445 Willard Avenue - 12th Floor

Chevy Chase, Maryland 20815

Attention: Controller




	3.	 	if to CapitalSource:




CapitalSource Finance LLC

4445 Willard Avenue - 12th Floor

Chevy Chase, Maryland 20815

Attention: Controller




	4.	 	if to the Purchaser:




Citigroup Global Markets Realty Corp.

390 Greenwich Street, 6th Floor

New York, New York 10013

Attention: Asset-Backed Finance



 









 








EXHIBIT A




Form of Certificate from Closing Attorney




(see attached)




 









 








EXHIBIT B




Incremental Note