Document:

exv10w3w1

 

EXHIBIT 10.3.1

AMENDED AND RESTATED TRUST AGREEMENT

between

CS FUNDING II DEPOSITOR LLC

as Depositor

and

WILMINGTON TRUST COMPANY

as Owner Trustee

Dated as of September 17, 2003

CAPITALSOURCE FUNDING II TRUST

COMMERCIAL LOAN-BACKED NOTES

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	 	 	 	 	ARTICLE I	 	 	 	 
	 	 	 	 	DEFINITIONS	 	 	 	 
	SECTION 1.1	 	Capitalized Terms
	 	 	1	 
	SECTION 1.2	 	Other Definitional Provisions
	 	 	3	 
	 	 	 	 	ARTICLE II	 	 	 	 
	 	 	 	 	ORGANIZATION	 	 	 	 
	SECTION 2.1	 	Name
	 	 	4	 
	SECTION 2.2	 	Office
	 	 	4	 
	SECTION 2.3	 	Purposes and Powers
	 	 	4	 
	SECTION 2.4	 	Appointment of Owner Trustee
	 	 	5	 
	SECTION 2.5	 	Initial Capital Contribution of Owner Trust
Estate
	 	 	5	 
	SECTION 2.6	 	Declaration of Trust
	 	 	5	 
	SECTION 2.7	 	Title to Trust Property
	 	 	6	 
	SECTION 2.8	 	Situs of Trust
	 	 	6	 
	SECTION 2.9	 	Representations and Warranties of the
Depositor
	 	 	6	 
	 	 	 	 	ARTICLE III	 	 	 	 
	 	 	 	 	TRUST CERTIFICATES AND TRANSFER OF INTERESTS	 	 	 	 
	SECTION 3.1	 	Initial Ownership
	 	 	7	 
	SECTION 3.2	 	The Trust Certificates
	 	 	7	 
	SECTION 3.3	 	Execution, Authentication and Delivery of Trust
Certificates
	 	 	7	 
	SECTION 3.4	 	Registration of Transfer and Exchange of Trust
Certificates
	 	 	8	 
	SECTION 3.5	 	Mutilated, Destroyed, Lost or Stolen Trust
Certificates
	 	 	8	 
	SECTION 3.6	 	Persons Deemed Owners
	 	 	9	 
	SECTION 3.7	 	Access to List of Owners’ Names and
Addresses
	 	 	9	 
	SECTION 3.8	 	Maintenance of Office or Agency
	 	 	9	 
	SECTION 3.9	 	Investments of Certificateholders
	 	 	9	 
	SECTION 3.10	 	Restrictions on Transfer of Trust
Certificates
	 	 	10	 
	 	 	 	 	ARTICLE IV	 	 	 	 
	 	 	 	 	ACTIONS BY OWNER TRUSTEE	 	 	 	 
	SECTION 4.1	 	Prior Notice to Owners with Respect to Certain
Matters; Covenants
	 	 	12	 
	SECTION 4.2	 	Action by Owners with Respect to Certain
Matters
	 	 	15	 
	SECTION 4.3	 	Restrictions on Owners’ Power
	 	 	16	 
	SECTION 4.4	 	Majority Control
	 	 	16	 

i

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	ARTICLE V	 	 	 	 
	 	 	 	 	CERTAIN DUTIES	 	 	 	 
	SECTION 5.1	 	Reserved
	 	 	16	 
	SECTION 5.2	 	Accounting of Trust Funds
	 	 	16	 
	SECTION 5.3	 	Method of Payment
	 	 	17	 
	SECTION 5.4	 	Reserved
	 	 	17	 
	SECTION 5.5	 	Accounting and Reports to the Certificateholder,
Owners, the Internal Revenue
Service and Others
	 	 	17	 
	 	 	 	 	ARTICLE VI	 	 	 	 
	 	 	 	 	AUTHORITY AND DUTIES OF OWNER TRUSTEE	 	 	 	 
	SECTION 6.1	 	General Authority
	 	 	18	 
	SECTION 6.2	 	General Duties
	 	 	18	 
	SECTION 6.3	 	Action Upon Instruction
	 	 	18	 
	SECTION 6.4	 	No Duties Except as Specified in this Agreement, the
Basic Documents or in
Instructions
	 	 	19	 
	SECTION 6.5	 	No Action Except Under Specified Documents or
Instructions
	 	 	20	 
	SECTION 6.6	 	Restrictions
	 	 	20	 
	 	 	 	 	ARTICLE VII	 	 	 	 
	 	 	 	 	CONCERNING THE OWNER TRUSTEE	 	 	 	 
	SECTION 7.1	 	Acceptance of Trusts and Duties
	 	 	20	 
	SECTION 7.2	 	Furnishing of Documents
	 	 	22	 
	SECTION 7.3	 	Representations and Warranties
	 	 	22	 
	SECTION 7.4	 	Reliance; Advice of Counsel
	 	 	22	 
	SECTION 7.5	 	Not Acting in Individual Capacity
	 	 	23	 
	SECTION 7.6	 	Owner Trustee Not Liable for Trust Certificates or
Loans
	 	 	23	 
	SECTION 7.7	 	Licenses
	 	 	23	 
	 	 	 	 	ARTICLE VIII	 	 	 	 
	 	 	 	 	COMPENSATION OF OWNER TRUSTEE	 	 	 	 
	SECTION 8.1	 	Fees and Expenses
	 	 	24	 
	SECTION 8.2	 	Indemnification
	 	 	24	 
	SECTION 8.3	 	Payments to the Owner Trustee
	 	 	24	 
	 	 	 	 	ARTICLE IX	 	 	 	 
	 	 	 	 	TERMINATION OF TRUST AGREEMENT	 	 	 	 
	SECTION 9.1	 	Termination of Trust Agreement
	 	 	24	 

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	 	 	 	 	ARTICLE X	 	 	 	 
	 	 	 	 	SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES	 	 	 	 
	SECTION 10.1	 	Eligibility Requirements for Owner
Trustee
	 	 	26	 
	SECTION 10.2	 	Resignation or Removal of Owner
Trustee
	 	 	26	 
	SECTION 10.3	 	Successor Owner Trustee
	 	 	27	 
	SECTION 10.4	 	Merger or Consolidation of Owner
Trustee
	 	 	27	 
	SECTION 10.5	 	Appointment of Co-Owner Trustee or Separate Owner
Trustee
	 	 	27	 
	 	 	 	 	ARTICLE XI	 	 	 	 
	 	 	 	 	MISCELLANEOUS	 	 	 	 
	SECTION 11.1	 	Supplements and Amendments
	 	 	29	 
	SECTION 11.2	 	No Legal Title to Owner Trust Estate in
Owners
	 	 	30	 
	SECTION 11.3	 	Limitations on Rights of Others
	 	 	30	 
	SECTION 11.4	 	Notices
	 	 	30	 
	SECTION 11.5	 	Severability
	 	 	30	 
	SECTION 11.6	 	Separate Counterparts
	 	 	31	 
	SECTION 11.7	 	Successors and Assigns
	 	 	31	 
	SECTION 11.8	 	No Petition
	 	 	31	 
	SECTION 11.9	 	No Recourse
	 	 	31	 
	SECTION 11.10	 	Headings
	 	 	31	 
	SECTION 11.11	 	GOVERNING LAW
	 	 	31	 
	SECTION 11.12	 	Limitation on Liability
	 	 	31	 

EXHIBIT A    Form of Trust Certificate

EXHIBIT B    Form of Certificate of Trust

EXHIBIT C    Form of Certificate of Non-Foreign Status

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AMENDED AND RESTATED TRUST AGREEMENT

          AMENDED AND RESTATED TRUST AGREEMENT, dated as of September 17, 2003 (the
“Agreement”), between CS Funding II Depositor LLC, a Delaware limited liability
company, as Depositor (the “Depositor”), and Wilmington Trust Company, a
Delaware banking corporation, as Owner Trustee (the “Owner Trustee”).

WITNESSETH:

          WHEREAS, the Certificate of Trust was filed on September 9, 2003 and in
connection therewith the Depositor and the Owner Trustee entered into a
Declaration of Trust (the “Original Trust Agreement”); and

          WHEREAS, the Depositor and the Owner Trustee desire to amend and restate
the Original Trust Agreement in its entirety.

          In consideration of the mutual agreements and covenants herein contained,
the Depositor and the Owner Trustee hereby agree for the benefit of each of
them and the holders of the Trust Certificates as follows:

ARTICLE I

DEFINITIONS

          SECTION 1.1 Capitalized Terms. For all purposes of this Agreement, the
following
terms shall have the meanings set forth below:

          “Administration Agreement” shall mean the Administration Agreement, dated
as of September 17, 2003 between the Issuer and the Administrator.

          “Administrator” shall mean CSF or any successor in interest thereto, in
its capacity
as Administrator under the Administration Agreement.

          “Agreement” shall mean this Amended and Restated Trust Agreement, as the
same may be further amended and supplemented from time to time.

          “Bankruptcy Action” shall have the meaning assigned to such term in
Section 4.1(c).

          “Benefit Plan Investor” shall have the meaning assigned to such term in
Section 3.10(b).

          “CSF” shall mean CapitalSource Finance LLC, a Delaware limited liability
company.

          “Certificate of Trust” shall mean the Certificate of Trust in the form of
Exhibit B to be filed for the Trust pursuant to Section 3810(a) of the
Statutory Trust Statute.

 

 

          “Certificate Register” and “Certificate Registrar” shall mean the register
mentioned and the registrar appointed pursuant to Section 3.4.

          “Certificateholder” or “Holder” shall mean a Person in whose name a Trust
Certificate is registered.

          “Code” shall mean the Internal Revenue Code of 1986, as amended, and
Treasury Regulations promulgated thereunder.

          “Corporate Trust Office” shall mean, with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee located at Rodney
Square North,1100 North Market Street,
Wilmington, Delaware 19890, Attention: Corporate Trust Administration, telecopy
number: (302) 636-4140, telephone number: (302) 651-1000; or at such other
address in the State of Delaware as the Owner Trustee may designate by notice
to the Owners and the Depositor, or the principal corporate trust office of any
successor Owner Trustee (the address (which shall be in the State of Delaware)
of which the successor owner trustee will notify the Owners and the Depositor).

          “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.

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

          “Expenses” shall have the meaning assigned to such term in Section 8.2.

          “Indemnified Party” shall have the meaning assigned to such term in
Section 8.2.

          “Issuer” shall mean CapitalSource Funding II Trust, the Delaware statutory
trust created pursuant to this Agreement.

          “Issuer/Depositor Indemnity” shall mean each obligation of the Issuer or
the Depositor to indemnify any Person under Section 9.01 of the Note Purchase
Agreement.

          “Majority Certificateholders” shall mean the Holders of more than an
aggregate 50% Percentage Interest.

          “Non-permitted Foreign Holder” shall have the meaning set forth in Section
3.10.

          “Non-U.S. Person” shall mean a person other than a “U.S. Person”.

          “Owner” shall mean each holder of a Trust Certificate.

          “Owner Trust Estate” shall mean the contribution of Loans referred to in
Section 2.5 and the Loan Collateral (as defined in the Indenture).

2

 

          “Owner Trustee” shall mean 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 hereunder.

          “Percentage Interest” with respect to each Trust Certificate, the
percentage indicated on the face thereof.

          “Prospective Owner” shall have the meaning set forth in Section 3.10(a).

          “Sale and Servicing Agreement” means the Sale and Servicing Agreement
dated as of September 17, 2003, among the Issuer, CSF, as Loan Originator and
Servicer, and Wells Fargo Minnesota, National Association, as Indenture
Trustee, Collateral Custodian and Backup Servicer on behalf of the Noteholders.

          “Secretary of State” shall mean the Secretary of State of the State of
Delaware.

          “Statutory Trust Statute” shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code § 3801 et seq., as the same may be amended from
time to time.

          “Treasury Regulations” shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to
specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor Treasury
Regulations.

          “Trust” shall mean the trust established by this Agreement.

          “Trust Certificate” shall mean a certificate substantially in the form
attached as Exhibit A hereto representing an undivided beneficial ownership
interest in the Trust.

          “Trust Officer” shall mean any officer of the Owner Trustee who is
authorized to act for the Owner Trustee and whose name appears on a list of
such officers furnished by the Owner Trustee, as such list may be amended and
supplemented from time to time.

          “U.S. Person” shall mean a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any state thereof or the District of Columbia
(except, in the case of a partnership, to the extent provided in regulations)
or an estate whose income is subject to United States federal income tax
regardless of its source, or a trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more United States persons have the authority to control all substantial
decisions of the trust. To the extent prescribed in regulations by the
Secretary of the Treasury, which have not yet been issued, a trust which was in
existence on August 20, 1996 (other than a trust treated as owned by the
grantor under subpart E of part I of subchapter J of chapter 1 of the Code),
and which was treated as a United States person on August 20, 1996 may elect to
continue to be treated as a United States person notwithstanding the previous
sentence. The term “United States” shall have the meaning set forth in Section
7701 of the Code.

3

 

          SECTION 1.2 Other Definitional Provisions.

          (a) Capitalized terms used herein and not otherwise defined herein have
the meanings assigned to them in the Sale and Servicing Agreement or, if not
defined therein, in the Indenture.

          (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 generally accepted accounting principles. 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 generally
accepted accounting principles, 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; Section and Exhibit references
contained in this Agreement are references to Sections 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.

          (f) 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.

ARTICLE II

ORGANIZATION

          SECTION 2.1 Name. The Trust created hereby shall be known as
“CapitalSource Funding II Trust”, in which name the Owner Trustee may conduct
the business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.

          SECTION 2.2 Office. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address in
Delaware as the Owner Trustee may designate by written notice to the Owners and
the Depositor.

4

 

          SECTION 2.3 Purposes and Powers. (a) The purpose of the Trust is to
engage in the following activities and the Trust shall have the power and
authority:

		
	 	     (i) to issue the Notes pursuant to the Indenture and to sell such Notes;
	 
	 	     (ii) with the proceeds of the sale of the Notes, to pay the
organizational, start-up and transactional expenses of the Trust and to pay the
balance to the Depositor, as its interests may appear pursuant to the Sale and
Servicing Agreement;
	 
	 	     (iii) to purchase, hold, assign, grant, transfer, pledge, mortgage and
convey the Owner Trust Estate pursuant to the Indenture and to hold, manage and
distribute to the Owners pursuant to the terms of the Sale and Servicing
Agreement any portion of the Owner Trust Estate released from the lien of, and
remitted to the Trust pursuant to, the Indenture;
	 
	 	     (iv) to enter into and perform its obligations under the Basic Documents
to which it is a party;
	 
	 	     (v) subject to compliance with the Basic Documents, to engage in such
other activities as may be required in connection with conservation of the
Owner Trust Estate and the making of distributions to the Owners and the
Noteholders;
	 
	 	     (vi) to issue the Trust Certificates pursuant to this Agreement; and
	 
	 	     (vii) to engage in those activities, including entering into agreements,
that are necessary, suitable or convenient to accomplish the foregoing or are
incidental thereto or connected therewith.

The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the
Basic Documents.

          SECTION 2.4 Appointment of Owner Trustee. The Depositor hereby appoints
the Owner Trustee as trustee of the Trust effective as of the date hereof, to
have all the rights, powers and duties set forth herein and in the Statutory
Trust Statute.

          SECTION 2.5 Initial Capital Contribution of Owner Trust Estate. The
Depositor hereby sells, assigns, transfers, conveys and sets over to the Trust,
as of the date hereof, Loans having an aggregate outstanding unpaid principal
balance at least equal to the Required Equity Contribution. The Trust hereby
acknowledges receipt in trust from the Depositor, as of the date hereof, of the
Required Equity Contribution, which shall constitute the initial Owner Trust
Estate. The Depositor shall pay reasonable organizational expenses of the
Trust as they may arise or shall, upon the request of the Owner Trustee,
promptly reimburse the Owner Trustee for any such expenses paid by the Owner
Trustee.

5

 

          SECTION 2.6 Declaration of Trust. The Owner Trustee hereby declares that
it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of
the Owners, subject to the obligations of the Trust under the Basic Documents.
It is the intention of the parties hereto that the Trust constitute a statutory
trust under the Statutory Trust Statute and that this Agreement constitute the
governing instrument of such statutory trust. It is the intention of the
parties hereto that, solely for federal, state and local income and franchise
tax purposes (i) so long as there is a sole Owner, the Trust shall be treated
as a security arrangement, with the assets of the Trust being the Loans,
related property and the other assets held by the Trust, the owner of the Loans
being the sole Owner and the Notes being non-recourse debt of the sole Owner
and (ii) if there is more than one Owner, the Trust shall be treated as a
partnership, with the assets of the partnership being the Loans and other
assets held by the Trust, the partners of the partnership being the holders of
the Trust Certificates and the Notes being non-recourse debt of the
partnership. The Trust shall not elect to be treated as an association under
Treasury Regulations Section 301.7701-3(a) for federal income tax purposes.
The parties agree that, unless otherwise required by appropriate tax
authorities, the Trust will file or cause to be filed annual or other necessary
returns, reports and other forms consistent with the characterization of the
Trust as provided in the second preceding sentence for such tax purposes.
Effective as of the date hereof, the Owner Trustee shall have all rights,
powers and duties set forth herein and in the Statutory Trust Statute with
respect to accomplishing the purposes of the Trust. The Owner Trustee is
hereby authorized to file the Certificate of Trust with the Secretary of State.

          SECTION 2.7 Title to Trust Property.

          (a) Subject to the Indenture, legal title to all the Owner Trust Estate
shall be vested at all times in the Trust as a separate legal entity except
where applicable law in any jurisdiction requires title to any part of the
Owner Trust Estate to be vested in a trustee or trustees, in which case title
shall be deemed to be vested in the Owner Trustee and/or a separate trustee, as
the case may be.

          (b) The Owners shall not have legal title to any part of the Owner Trust
Estate. No transfer by operation of law or otherwise of any interest of the
Owners shall operate to terminate this Agreement or the trusts hereunder or
entitle any transferee to an accounting or to the transfer to it of any part of
the Owner Trust Estate.

          SECTION 2.8 Situs of Trust. The Trust will be located and administered
in the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of Delaware or the State of
New York, except with respect to accounts maintained by the Paying Agent or the
Indenture Trustee on behalf of the Owner Trustee. The Trust shall not have any
employees; provided, however, that nothing herein shall restrict or prohibit
the Owner Trustee from having employees within or without the State of
Delaware. Payments will be received by the Trust only in Delaware or New York,
and payments will be made by the Trust only from Delaware or New York, except
with respect to payments made by the Paying Agent or the Indenture Trustee on
behalf of the Owner Trustee. The only office of the Trust will be at the
Corporate Trust Office in Delaware.

6

 

          SECTION 2.9 Representations and Warranties of the Depositor.

          (a) The Depositor hereby represents and warrants to the Owner Trustee each
of the representations and warranties set forth in Section 3.01 of the Sale and
Servicing Agreement as of the Closing Date and as of each Transfer Date.

          (b) The Depositor covenants with the Owner Trustee that during the
continuance of this Agreement it will comply in all respects with the
provisions of its limited liability company agreement in effect from time to
time.

          (c) CSF hereby represents and warrants to the Owner Trustee each of the
representations and warranties set forth in Section 3.04 of the Sale and
Servicing Agreement as of the Closing Date with respect to the Loans
transferred to the Owner Trustee pursuant to Section 2.5 hereof.

ARTICLE III

TRUST CERTIFICATES AND TRANSFER OF INTERESTS

          SECTION 3.1 Initial Ownership. Upon the formation of the Trust by the
contribution of the Depositor pursuant to Section 2.5 and until the issuance of
the Trust Certificates, the Depositor shall be the sole Owner of the Trust.

          SECTION 3.2 The Trust Certificates. The Trust Certificates shall not be
issued with a principal amount. The Trust Certificates shall be executed on
behalf of the Trust by manual or facsimile signature of a Trust Officer of the
Owner Trustee. Trust Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures shall have been affixed,
authorized to sign on behalf of the Trust, shall be valid and binding
obligations of the Trust, notwithstanding that such individuals or any of them
shall have ceased to be so authorized prior to the authentication and delivery
of such Trust Certificates or did not hold such offices at the date of
authentication and delivery of such Trust Certificates.

          A transferee of a Trust Certificate shall become an Owner, and shall be
entitled to the rights and subject to the obligations of an Owner hereunder and
under the Sale and Servicing Agreement, upon such transferee’s acceptance of a
Trust Certificate duly registered in such transferee’s name pursuant to Section
3.4. The Trust Certificates shall represent the undivided beneficial ownership
interest in the Trust.

          SECTION 3.3 Execution, Authentication and Delivery of Trust Certificates.
On the first Closing Date, the Owner Trustee shall, pursuant to instructions
from the Depositor, cause the Trust Certificates representing 100% of the
Percentage Interests of the Trust to be executed on behalf of the Trust,
authenticated and delivered to or upon the written order of the Depositor,
signed by its chairman of the board, its president or any vice president,
without further corporate action by the Depositor, in authorized denominations.
No Trust Certificate shall entitle its holder to any benefit

7

 

under this
Agreement, or shall be valid for any purpose, unless there shall appear on such
Trust Certificate a certificate of authentication substantially in the form set
forth in Exhibit A, executed by the Owner Trustee or the Administrator, as the
Owner Trustee’s authenticating agent, by manual or facsimile signature; such
authentication shall constitute conclusive evidence that such Trust Certificate
shall have been duly authenticated and delivered hereunder. All Trust
Certificates shall be dated the date of their authentication.

          SECTION 3.4 Registration of Transfer and Exchange of Trust Certificates.
The Certificate Registrar shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 3.8 a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Owner Trustee
shall provide for the registration of Trust Certificates and of transfers and
exchanges of Trust Certificates as herein provided. The Owner Trustee shall be
the initial Certificate Registrar.

          Upon surrender for registration of transfer of any Trust Certificate at
the office or agency maintained pursuant to Section 3.8, the Owner Trustee
shall execute, authenticate and deliver, in the name of the designated
transferee or transferees, one new Trust Certificate with the same Percentage
Interest dated the date of authentication by the Owner Trustee or any
authenticating agent provided that prior to such execution, authentication and
delivery, the Owner Trustee shall have received an Opinion of Counsel, which
shall be an expense of the Trust, to the effect that the proposed transfer will
not (i) cause the Trust to be characterized as an association (or a publicly
traded partnership) taxable as a corporation or (ii) alter the tax
characterization of the Notes for federal income tax purposes.

          Every Trust Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer
in form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Owner or his attorney duly authorized in writing. In addition,
each Trust Certificate presented or surrendered for registration of transfer
and exchange must be accompanied by a letter from the Prospective Owner
certifying as to the representations set forth in Sections 3.10(a) and (b).
Each Trust Certificate surrendered for registration of transfer or exchange
shall be canceled and disposed of by the Owner Trustee in accordance with its
customary practice.

          No service charge shall be made for any registration of transfer or
exchange of Trust Certificates, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Trust Certificates.

          The Owner Trustee shall not make any transfer or re-registration of the
Trust Certificates if, after such transfer or re-registration, there would be
more than three Certificateholders. Each Certificateholder, by its acceptance
of a Trust Certificate, shall be deemed to have represented and warranted that
the number of ICA Owners with respect to all of its Trust Certificates shall
not exceed four.

8

 

          The preceding provisions of this Section notwithstanding, the Owner
Trustee shall not make and the Certificate Registrar shall not register
transfer or exchanges of Trust Certificates for a period of 15 days preceding
the due date for any payment with respect to the Trust Certificates.

          SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Trust Certificates. If
(a) any mutilated Trust Certificate shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Trust Certificate and (b)
there shall be delivered to the Certificate Registrar and the Owner Trustee
such security or indemnity as may be required by them to save each of them
harmless, then in the absence of notice that such Trust Certificate shall have
been acquired by a bona fide purchaser, the Owner Trustee on behalf of the
Trust shall execute and the Owner Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Trust
Certificate, a new Trust Certificate of like tenor and denomination. In
connection with the issuance of any new Trust Certificate under this Section,
the Owner Trustee or the Certificate Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Trust Certificate issued pursuant to this
Section shall constitute conclusive evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Trust
Certificate shall be found at any time.

          SECTION 3.6 Persons Deemed Owners. Prior to due presentation of a Trust
Certificate for registration of transfer, the Owner Trustee or the Certificate
Registrar may treat the Person in whose name any Trust Certificate shall be
registered in the Certificate Register as the owner of such Trust Certificate
for the purpose of receiving distributions pursuant to Section 5.01(c)(5)(vii)
of the Sale and Servicing Agreement and for all other purposes whatsoever, and
neither the Owner Trustee nor the Certificate Registrar shall be bound by any
notice to the contrary.

          SECTION 3.7 Access to List of Owners’ Names and Addresses. The Owner
Trustee shall furnish or cause to be furnished to the Indenture Trustee, the
Paying Agent (as defined in the Indenture), the Servicer and the Depositor,
within 15 days after receipt by the Owner Trustee of a request therefor from
the Indenture Trustee, the Paying Agent, the Servicer or the Depositor in
writing, a list, in such form as the Indenture Trustee, the Paying Agent, the
Servicer or the Depositor may reasonably require, of the names and addresses of
the Owners as of the most recent Record Date. If a Certificateholder applies
in writing to the Owner Trustee, and such application states that the
applicant’s desire to communicate with other Certificateholders with respect to
their rights under this Agreement or under the Trust Certificates and such
application is accompanied by a copy of the communication that such applicant’s
propose to transmit, then the Owner Trustee shall, within five Business Days
after the receipt of such application, afford such applicant access during
normal business hours to the current list of Certificateholders. Each Owner, by
receiving and holding a Trust Certificate, shall be deemed to have agreed not
to hold the Depositor, the Certificate Registrar or the Owner Trustee
accountable by reason of the disclosure of its name and address, regardless of
the source from which such information was derived.

          SECTION 3.8 Maintenance of Office or Agency. The Owner Trustee shall
maintain an office or offices or agency or agencies where Trust Certificates
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Owner Trustee

9

 

in respect of the Trust Certificates
and the Basic Documents may be served. The Owner Trustee initially designates
its Corporate Trust Office as its principal corporate trust office for such
purposes. The Owner Trustee shall give prompt
written notice to the Certificateholders of any change in the location of the
Certificate Register or any such office or agency.

          SECTION 3.9 Investments of Certificateholders. Each Certificateholder is
deemed to have invested in the Trust its Percentage Interest of (i) the
contribution of the Depositor pursuant to Section 2.5, (ii) plus the amount by
which the market value of each asset transferred to the Trust pursuant to the
Basic Documents exceeds the amount paid by the Trust for such asset, (iii)
minus the amount by which the market value of each asset transferred from the
Trust to another person pursuant to the Basic Documents exceeds the amount
received by the Trust for such asset.

          SECTION 3.10 Restrictions on Transfer of Trust Certificates.

          (a) Each prospective purchaser and any subsequent transferee of a Trust
Certificate (each, a “Prospective Owner”), other than the Depositor, shall
represent and warrant, in writing, to the Owner Trustee and the Certificate
Registrar and any of their respective successors that:

		
	 	          (i) Such Person is (A) a “qualified institutional buyer” as defined in
Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”),
and is aware that the seller of the Trust Certificate may be relying on the
exemption from the registration requirements of the Securities Act provided by
Rule 144A and is acquiring such Trust Certificate for its own account or for
the account of one or more qualified institutional buyers for whom it is
authorized to act, or (B) an institutional “accredited investor” within the
meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the
Securities Act (an “Institutional Accredited Investor”) that is acquiring such
Trust Certificates for its own account, or for the account of such an
Institutional Accredited Investor, for investment purposes and not with a view
to, or for offer or sale in connection with any distribution in violation of
the Securities Act.
	 
	 	          (ii) Such Person understands that the Trust Certificates have not been and
will not be registered under the Securities Act and may be offered, sold or
otherwise transferred only to a person whom the seller reasonably believes is
(A) a qualified institutional buyer or (B) an Institutional Accredited
Investor, and in accordance with any applicable securities laws of any state of
the United States.
	 
	 	          (iii) Such Person understands that the Trust Certificates bear a legend to
the following effect:

	 
	 	“THE INTEREST IN THE TRUST REPRESENTED BY THIS
TRUST CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS.
THIS TRUST CERTIFICATE MAY BE DIRECTLY OR
	 

10

 

	 	INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED
OF BY THE HOLDER HEREOF ONLY TO (I) A “QUALIFIED
INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER
THE ACT, IN A TRANSACTION THAT IS REGISTERED
UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS OR THAT IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE ACT PURSUANT TO RULE 144A OR
(II) AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN
THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF
RULE 501 UNDER THE ACT IN A TRANSACTION THAT IS
REGISTERED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR THAT IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND SUCH
LAWS. NO PERSON IS OBLIGATED TO REGISTER THIS
TRUST CERTIFICATE UNDER THE ACT OR ANY STATE
SECURITIES LAWS.”
	 

		
	 	          (iv) Such Person has neither acquired nor will it transfer the Trust
Certificate or cause the Trust Certificate to be marketed on or through an
“established securities market” within the meaning of Section 7704(b)(1) of the
Code, including, without limitation, an over-the-counter-market or an
interdealer quotation system that regularly disseminates firm buy or sell
quotations.
	 
	 	          (v) Such Person either (A) is not, and will not become, a partnership, S
corporation or grantor trust for U.S. federal income tax purposes, or (B) is
such an entity, but none of the
direct or indirect beneficial owners of any of the interests in such transferee
have allowed or caused, or will allow or cause, fifty percent (50%) or more of
the value of such interests to be attributable to such transferee’s ownership
of the Trust Certificate.
	 
	 	          (vi) Such Person understands that tax counsel to the Trust has provided an
opinion substantially to the effect that the Trust will not be a publicly
traded partnership taxable as a corporation for U.S. federal income tax
purposes and that the validity of such opinion is dependent in part on the
accuracy of the representations in paragraphs (iv) and (v) above.
	 
	 	          (vii) Such Person shall comply with the provisions of Section 3.10(b), as
applicable, relating to the ERISA restrictions with respect to the acceptance
or acquisition of such Trust Certificate.

          (b) Each Prospective Owner, other than the Depositor, shall either:

		
	 	          (i) represent and warrant, in writing, to the Owner Trustee and the
Certificate Registrar and any of their respective successors that the
Prospective Owner is not (A) an “employee benefit plan” within the meaning of
Section 3(3) of

11

 

		
	 	ERISA, or (B) a “plan” within the meaning of Section 4975(e)(1)
of the Code or (C) an entity, including an insurance company separate account
or general account, whose underlying assets include plan assets by reason of a
plan’s investment in the entity (each, a “Benefit Plan Investor”) and is not
directly or indirectly purchasing such Trust Certificate on behalf of, as
investment manager of, as named fiduciary of, as trustee of, or with the assets
of a Benefit Plan Investor; or
	 
	 	          (ii) furnish to the Owner Trustee and the Certificate Registrar and any of
their respective successors an opinion of counsel acceptable to such persons
that the proposed transfer of the Trust Certificate to such Prospective Owner
will not cause any assets of the Trust to be deemed “plan assets” within the
meaning of United States Department of Labor Regulation Section 2510.3-101.

          (c) By its acceptance of a Trust Certificate, each Prospective Owner
acknowledges that it is not a Non-permitted Foreign Holder (as defined below)
and agrees to execute a Certificate of Non-Foreign Status in the form of
Exhibit C hereto and acknowledges that no legal or beneficial interest in all
or any portion of the Trust Certificate may be transferred directly or
indirectly to an individual, corporation, partnership or other person who is a
Non-U.S. Person, unless such person holds the Trust Certificate in connection
with the conduct of a trade or business within the United States, as evidenced
by a duly completed and submitted Form 4224 or successor form, updated at the
time or times and in the manner specified by the Code (any such Non-U.S. Person
who does not meet such exception being referred to herein as a “Non-permitted
Foreign Holder”), and any such purported transfer shall be void and have no
effect.

          (d) The Owner Trustee shall not execute, and shall not countersign and
deliver, a Trust Certificate in connection with any transfer thereof unless the
transferor shall have provided to the Owner Trustee a certificate, signed by
the transferee, which certificate shall contain the consent of the transferee
to any amendments of this Agreement as may be required to effectuate further
the foregoing restrictions on transfer of the Trust Certificates to
Non-permitted Foreign Holders, and an agreement by the transferee that it will
not transfer a Trust Certificate without providing to the Owner Trustee a
substantially identical certificate, signed by the Prospective Owner to whom
the Trust Certificate is to be transferred.

          (e) The Trust Certificates shall bear an additional legend referring to
the foregoing restrictions contained in paragraphs (c) and (d) above.

ARTICLE IV

ACTIONS BY OWNER TRUSTEE

          SECTION 4.1 Prior Notice to Owners with Respect to Certain Matters;
Covenants.

          (a) With respect to the following matters, the Owner Trustee shall not
take action, and the Owners shall not direct the Owner Trustee to take any
action, unless at least 10 days before the taking of such action, the Owner
Trustee shall have notified the Owners and the Initial

12

 

Noteholder in writing of
the proposed action and the Owners and the Majority Noteholders shall not have
notified the Owner Trustee in writing prior to the 10th day after such notice
is given that such Owners have withheld consent or the Owners have provided
alternative direction:

		
	 	          (i) the initiation of any claim or lawsuit by the Trust (except claims or
lawsuits brought in connection with the collection of the Loans) and the
compromise of any action, claim or lawsuit brought by or against the Trust
(except with respect to the aforementioned claims or lawsuits for collection of
the Loans);
	 
	 	          (ii) the election by the Trust to file an amendment to the Certificate of
Trust (unless such amendment is required to be filed under the Statutory Trust
Statute);
	 
	 	          (iii) the amendment or other change to this Agreement or any Basic
Document in circumstances where the consent of any Noteholder is required;
	 
	 	          (iv) the amendment or other change to this Agreement or any Basic Document
in circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the Owners;
	 
	 	          (v) the appointment pursuant to the Indenture of a successor Note
Registrar or Indenture Trustee or pursuant to this Agreement of a successor
Certificate Registrar, or the consent to the assignment by the Note Registrar
or Indenture Trustee or Certificate Registrar of its obligations under the
Indenture or this Agreement, as applicable;
	 
	 	          (vi) the consent to the calling or waiver of any default of any Basic
Document;
	 
	 	          (vii) the consent to the assignment by the Indenture Trustee or the
Servicer of their respective obligations under any Basic Document;
	 
	 	          (viii) except as provided in Article IX hereof, the dissolution,
termination or liquidation of the Trust in whole or in part;
	 
	 	          (ix) the merger or consolidation of the Trust with or into any other
entity, or the conveyance or transfer of all or substantially all of the
Trust’s assets to any other entity;
	 
	 	          (x) the Trust incurring, assuming or guaranteeing any indebtedness other
than as set forth in this Agreement;
	 
	 	          (xi) the performance of any act that conflicts with any other Basic
Document;

13

 

		
	 	          (xii) the performance of any act which would make it impossible to carry
on the ordinary business of the Trust;
	 
	 	          (xiii) confession of a judgment against the Trust;
	 
	 	          (xiv) the possession of Trust assets, or assignment of the Trust’s right
to property, for other than a Trust purpose;
	 
	 	          (xv) the Trust lends any funds to any entity; or
	 
	 	          (xvi) the Trust’s purpose and powers are changed from those set forth in
this Trust Agreement.

          (b) The Owner Trustee on behalf of the Trust agrees to abide by the
following restrictions:

		
	 	          (i) other than as contemplated by the Basic Documents and related
documentation, the Trust shall not incur any indebtedness;
	 
	 	          (ii) other than as contemplated by the Basic Documents and related
documentation, the Trust shall not engage in any dissolution, liquidation,
consolidation, merger or sale of assets;
	 
	 	          (iii) the Trust shall not engage in any business activity in which it is
not currently engaged other than as contemplated by the Basic Documents and
related documentation;
	 
	 	          (iv) the Trust shall not form, or cause to be formed, any subsidiaries and
shall not own or acquire any asset other than as contemplated by the Basic
Documents and related documentation; and
	 
	 	          (v) other than as contemplated by the Basic Documents and related
documentation, the Trust shall not follow the directions or instructions of the
Depositor.

          (c) The Trust shall:

		
	 	          (i) maintain books and records separate from any other person or entity;
	 
	 	          (ii) maintain its bank accounts separate from any other person or entity;
	 
	 	          (iii) not commingle its assets with those of any other person or entity;
	 
	 	          (iv) conduct its own business in its own name;

14

 

		
	 	          (v) other than as contemplated by the Basic Documents and related
documentation, pay its own liabilities and expenses only out of its own funds;
	 
	 	          (vi) observe all formalities required under the Statutory Trust Statute;
	 
	 	          (vii) enter into transactions with Affiliates or the Depositor only if
each such transaction is intrinsically fair, commercially reasonable, and on
the same terms as would be available in an arm’s length transaction with a
person or entity that is not an Affiliate;
	 
	 	          (viii) not guarantee or become obligated for the debts of any other entity
or person;
	 
	 	          (ix) not hold out its credit as being available to satisfy the obligation
of any other person or entity;
	 
	 	          (x) not acquire the obligations or securities of its Affiliates or the
Depositor;
	 
	 	          (xi) other than as contemplated by the Basic Documents and related
documentation, not make loans to any other person or entity or buy or hold
evidence of indebtedness issued by any other person or entity;
	 
	 	          (xii) other than as contemplated by the Basic Documents and related
documentation, not pledge its assets for the benefit of any other person or
entity;
	 
	 	          (xiii) hold itself out as a separate entity from the Depositor and not
conduct any business in the name of the Depositor;
	 
	 	          (xiv) correct any known misunderstanding regarding its separate identity;
and
	 
	 	     (xv) not identify itself as a division of any other person or entity.

          So long as the Notes or any other amounts owed under the Indenture remain
outstanding, the Trust shall not amend this Section 4.1 without the prior
written consent of 100% of the Noteholders.

          The Owner Trustee shall not have the power, except upon the written
direction of the Owners acting with the prior written consent of the Majority
Noteholders (which consent shall be obtained by the Owners), and to the extent
otherwise consistent with the Basic Documents, to (i) remove or replace the
Servicer or the Indenture Trustee, (ii) institute proceedings to have the Trust
declared or adjudicated a bankrupt or insolvent, (iii) consent to the
institution of bankruptcy or insolvency proceedings against the Trust, (iv)
file a petition or consent to a petition seeking reorganization or relief on
behalf of the Trust under any applicable federal or state law relating to

15

 

bankruptcy, (v) consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or any similar official) of the Trust or a substantial
portion of the property of the Trust, (vi) make any assignment for the benefit
of the Trust’s creditors, (vii) cause the Trust to admit in writing its
inability to pay its debts generally as they become due or (viii) take any
action, or cause the Trust to take any action, in furtherance of any of the
foregoing (any of the above, a “Bankruptcy Action”). So long as the Indenture
remains in effect, no Certificateholder shall have the power to take, and shall
not take, any Bankruptcy Action with respect to the Trust or the Depositor or
direct the Owner Trustee to take any Bankruptcy Action with respect to the
Trust or the Depositor.

          SECTION 4.2 Action by Owners with Respect to Certain Matters. The Owner
Trustee shall not have the power, except upon the direction of the Owners, to
(a) remove the Administrator under the Administration Agreement pursuant to
Section 9 thereof, (b) appoint a successor Administrator pursuant to Section 9
of the Administration Agreement or (c) remove the Servicer under the Sale and
Servicing Agreement pursuant to Section 9.01 thereof. The Owner Trustee shall
take the actions referred to in the preceding sentence only upon written
instructions signed by the Owners and consented to in a prior writing by the
Majority Noteholders (which consent shall be obtained by the Owners).

          SECTION 4.3 Restrictions on Owners’ Power. The Owners shall not direct
the Owner Trustee to take or refrain from taking any action if such action or
inaction would be contrary to any obligation of the Trust or the Owner Trustee
under this Agreement or any of the Basic Documents or would be contrary to
Section 2.3 nor shall the Owner Trustee be obligated to follow any such
direction, if given.

          SECTION 4.4 Majority Control. Except as expressly provided herein, any
action that may be taken by the Owners under this Agreement may be taken by the
Majority Certificateholders. Except as expressly provided herein, any written
notice of the Owners delivered pursuant to this Agreement shall be effective if
signed by the Majority Certificateholders at the time of the delivery of such
notice.

ARTICLE V

CERTAIN DUTIES

          SECTION 5.1 Reserved.

          SECTION 5.2 Accounting of Trust Funds.

          (a) On or prior to each Payment Date, the Owner Trustee (acting through
the Administrator) shall cause the Servicer to deliver to each
Certificateholder the statement provided by the Servicer pursuant to Section
6.01 of the Sale and Servicing Agreement with respect to such Payment Date.

          (b) In the event that any withholding tax is imposed on the Trust’s
payment (or allocations of income) to an Owner, such tax shall reduce the
amount otherwise distributable to the

16

 

Owner in accordance with this Section.
The Owner Trustee is hereby authorized and directed to retain or cause the
Paying Agent to retain from amounts otherwise distributable to the Owners
sufficient funds for the payment of any tax that is legally owed by the Trust
(but such authorization shall not prevent the Owner Trustee from contesting any
such tax in appropriate proceedings, and withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings). The amount of any
withholding tax imposed with respect to an Owner shall be treated as cash
distributed to such Owner at the time it is withheld by the Trust and remitted
to the appropriate taxing authority. In the event of any claimed over
withholding, Owners shall have no claim for recovery against the Trust or other
Owners. If the amount withheld was not withheld from actual distributions, the
Trust may, at its option, (i) require the Owner to reimburse the Trust for such
withholding (and each Owner agrees to reimburse the Trust promptly following
such request) or (ii) reduce any subsequent distributions by the amount of such
withholding. If there is a possibility that withholding tax is payable with
respect to a distribution (such as a distribution to a Non-U.S. Person), the
Owner Trustee may in its sole discretion withhold or cause to be withheld such
amounts in accordance with this paragraph (b). In the event that an Owner
wishes to apply for a refund of any such withholding tax, the Owner Trustee
shall reasonably cooperate with such owner in making such claim so long as such
Owner agrees to reimburse the Owner Trustee for any out-of-pocket expenses
incurred.

          SECTION 5.3 Method of Payment. Subject to Section 3.10, distributions
required to be made to Owners on any Payment Date shall be made to each Owner
of record on the preceding Record Date either by wire transfer, in immediately
available funds, to the account of such Owner at a bank or other entity having
appropriate facilities therefor, if such Owner shall have provided to the
Certificate Registrar appropriate written instructions at least five (5)
Business Days prior to such Payment Date; or, if not, by check mailed to such
Owner at the address of such Owner appearing in the Certificate Register.

          SECTION 5.4 Reserved.

          SECTION 5.5 Accounting and Reports to the Certificateholder, Owners, the
Internal Revenue Service and Others. The Owner Trustee shall deliver or cause
to be delivered to each Owner, as may be required by the Code and applicable
Treasury Regulations, or as may be requested by such Owner, such information,
reports or statements as may be necessary to enable each Owner to prepare its
federal and state income tax returns. Consistent with the Trust’s
characterization for tax purposes as a security arrangement for the issuance of
non-recourse debt so long as the Depositor or any other Person is the sole
Owner, no federal income tax return shall be filed on behalf of the Trust
unless either (i) the Owner Trustee shall receive an Opinion of Counsel that,
based on a change in applicable law occurring after the date hereof, or as a
result of a transfer by the Depositor permitted by Section 3.4, the Code
requires such a filing or (ii) the Internal Revenue Service shall determine
that the Trust is required to file such a return. In the event that there shall
be two or more Owners of the Trust, (x) the Owner Trustee shall prepare or
shall cause to be prepared federal and, if applicable, state or local
partnership tax returns required to be filed by the Trust and shall remit such
returns to the Depositor (or if the Depositor no longer owns any Trust
Certificates, the Owner designated for such purpose by the Depositor to the
Owner Trustee in writing) at least five (5) Business Days before such returns
are due to be filed and (y) capital accounts shall be maintained

17

 

for each Owner
in accordance with the Treasury Regulations under Section 704(b) of the Code
reflecting each such Owner’s pro rata share of the income, gains, deductions
and losses of the Trust and contributions to and distributions from, the Trust.
The Depositor (or such designee Owner, as applicable) shall promptly sign such
returns and deliver such returns after signature to the Owner Trustee and such
returns shall be filed or cause to be filed by the Owner Trustee with the
appropriate tax authorities. In the event that a “tax matters partner” (within
the meaning of Code Section 6231(a)(7)) is required to be appointed with
respect to the Trust, the Depositor is hereby designated as tax matters partner
or, if the Depositor is not an Owner, the Owner selected by a majority of the
Owners (by Percentage Interest) shall be designated as tax matters partner. In
no event shall the Owner Trustee or the Depositor (or such designee
Owner, as applicable) be liable for any liabilities, costs or expenses of the
Trust or the Noteholders arising out of the application of any tax law,
including federal, state, foreign or local income or excise taxes or any other
tax imposed on or measured by income (or any interest, penalty or addition with
respect thereto or arising from a failure to comply therewith) except for any
such liability, cost or expense attributable to any act or omission by the
Owner Trustee or the Depositor (or such designee Owner, as applicable), as the
case may be, in breach of their obligations under this Agreement. The duties
and obligations of the Owner Trustee under this Section 5.5 shall be performed
by the Administrator and the Owner Trustee shall cooperate with the
Administrator in its performance of such duties and obligations.

ARTICLE VI

AUTHORITY AND DUTIES OF OWNER TRUSTEE

          SECTION 6.1 General Authority. The Owner Trustee is authorized and
directed to execute and deliver or cause to be executed and delivered the
Notes, the Trust Certificates and each Basic Document to which the Trust is a
party and each certificate or other document attached as an exhibit to or
contemplated by each Basic Document to which the Trust is a party and any other
agreement or instrument described in Article III, in each case, in such form as
the Depositor shall approve, as evidenced conclusively by the Owner Trustee’s
execution thereof, and, on behalf of the Trust, to direct the Indenture Trustee
to authenticate and deliver the Notes. The Owner Trustee shall authenticate
and deliver, or cause to be authenticated and delivered, the Trust
Certificates. In addition to the foregoing, the Owner Trustee is authorized,
but shall not be obligated, to take all actions required of the Trust, pursuant
to the Basic Documents.

          SECTION 6.2 General Duties. It shall be the duty of the Owner Trustee:

          (a) to discharge (or cause to be discharged) all of its responsibilities
pursuant to the terms of this Agreement and the Basic Documents to which the
Trust is a party and to administer the Trust in the interest of the Owners,
subject to the Basic Documents and in accordance with the provisions of this
Agreement. Notwithstanding the foregoing, the Owner Trustee shall be deemed to
have discharged its duties and responsibilities hereunder and under the Basic
Documents to the extent the Administrator, the Servicer, the Paying Agent or
the Indenture Trustee has agreed in the Administration Agreement or this
Agreement, respectively, to perform any act or to discharge any duty of the
Owner Trustee or the Trust hereunder or under any Basic Document, and the Owner
Trustee shall not be held liable for the default or failure of the
Administrator, the Servicer, the

18

 

Paying Agent or the Indenture Trustee to carry
out its obligations under the Administration Agreement or this Agreement,
respectively; and

          (b) to obtain and preserve, the Issuer’s qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of the Indenture, the Notes, the
Collateral and each other instrument and agreement included in the Trust
Estate. The parties hereto agree and acknowledge that this duty has been
delegated to the Administrator pursuant to the Administration Agreement and the
Owner Trustee shall have no liability for the Administrator’s failure to carry
out such duties.

          SECTION 6.3 Action Upon Instruction.

          (a) Subject to Article IV and in accordance with the terms of the Basic
Documents, the Owners acting with the prior written consent of the Majority
Noteholders (which consent shall be obtained by the Owners) may, by written
instruction, direct the Owner Trustee in the management of the Trust but only
to the extent consistent with the limited purpose of the Trust. Such direction
may be exercised at any time by written instruction of the Owners pursuant to
Article IV hereof, and the Owner Trustee shall have no liability to any Person
for acting in accordance with such directions.

          (b) The Owner Trustee shall not be required to take any action hereunder
or under any Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by
counsel, that such action is likely to result in liability on the part of the
Owner Trustee or is contrary to the terms hereof or of any Basic Document or is
otherwise contrary to law.

          (c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or under
any Basic Document, the Owner Trustee shall promptly give notice (in such form
as shall be appropriate under the circumstances) to the Owners and the Initial
Noteholder requesting instruction from the Owners as to the course of action to
be adopted, and to the extent the Owner Trustee acts in good faith in
accordance with any written instruction of the Owners acting with the prior
written consent of the Majority Noteholders (but only if such consent is
required, and, if required, obtained by the Owners), the Owner Trustee shall
not be liable on account of such action to any Person. If the Owner Trustee
shall not have received appropriate instruction within 10 days of receipt of
such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the Basic Documents, as it shall deem to be
in the best interests of the Owners, and shall have no liability to any Person
for such action or inaction.

          (d) In the event that the Owner Trustee is unsure as to the application of
any provision of this Agreement or any Basic Document or any such provision is
ambiguous as to its application, or is, or appears to be, in conflict with any
other applicable provision, or in the event that this Agreement permits any
determination by the Owner Trustee or is silent or is incomplete as to the
course of action that the Owner Trustee is required to take with respect to a
particular set of facts, the Owner Trustee may give notice (in such form as
shall be appropriate under the circumstances)

19

 

to the Owners and the Indenture
Trustee requesting instruction and, to the extent that the Owner Trustee acts
or refrains from acting in good faith in accordance with any such instruction,
accompanied by a written consent of the Majority Noteholders, received, the
Owner Trustee shall not be liable, on account of such action or inaction, to
any Person. If the Owner Trustee shall not have received appropriate
instruction within 10 days of receipt of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no duty to, take
or refrain from taking such action, not inconsistent with this Agreement or the
Basic Documents, as it shall deem to be in the best interests of the Owners,
and shall have no liability to any Person for such action or inaction.

          SECTION 6.4 No Duties Except as Specified in this Agreement, the Basic
Documents or in Instructions. The Owner Trustee shall not have any duty or
obligation to manage, make any payment with respect to, register, record, sell,
dispose of, or otherwise deal with the Owner Trust Estate, or to otherwise take
or refrain from taking any action under, or in connection with, any document
contemplated hereby to which the Trust is a party, except as expressly provided
by the terms of this Agreement, any Basic Document or in any document or
written instruction received by the Owner Trustee pursuant to Section 6.3; and
no implied duties or obligations shall be read into this Agreement or any Basic
Document against the Owner Trustee. The Owner Trustee shall have no
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder or to prepare or file any
Securities and Exchange Commission filing for the Trust or to record this
Agreement or any Basic Document. The Owner Trustee nevertheless agrees that it
will, at its own cost and expense, promptly take all action as may be necessary
to discharge any liens on any part of the Owner Trust Estate that result from
actions by, or claims against, the Owner Trustee in its individual capacity
that are not related to the ownership or the administration of the Owner Trust
Estate.

          SECTION 6.5 No Action Except Under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Owner Trust Estate except (i) in accordance with the
powers granted to and the authority conferred upon the Owner Trustee pursuant
to this Agreement, (ii) in accordance with the Basic Documents and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.3.

          SECTION 6.6 Restrictions. The Owner Trustee shall not take any action
(a) that is inconsistent with the purposes of the Trust set forth in Section
2.3 or (b) that, to the actual knowledge of the Owner Trustee, would result in
the Trust’s becoming taxable as a corporation for Federal income tax
purposes. The Owners shall not direct the Owner Trustee to take action that
would violate the provisions of this Section.

20

 

ARTICLE VII

CONCERNING THE OWNER TRUSTEE

          SECTION 7.1 Acceptance of Trusts and Duties. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the terms of this Agreement subject to the
Basic Documents. The Owner Trustee also agrees to disburse all moneys actually
received by it constituting part of the Owner Trust Estate upon the terms of
the Basic Documents and this Agreement. The Owner Trustee shall not be
answerable or accountable hereunder or under any Basic Document under any
circumstances, except (i) for its own willful misconduct or gross negligence or
(ii) in the case of the inaccuracy of any representation or warranty contained
in Section 7.3 expressly made by the Owner Trustee. In particular, but not by
way of limitation (and subject to the exceptions set forth in the preceding
sentence):

          (a) the Owner Trustee shall not be liable for any error of judgment made
by a responsible officer of the Owner Trustee;

          (b) the Owner Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in accordance with the instructions of the
Administrator or the Owners;

          (c) no provision of this Agreement or any Basic Document shall require the
Owner Trustee to expend or risk funds or otherwise incur any financial
liability in the performance of any of its rights or powers hereunder or under
any Basic Document if the Owner Trustee shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured or provided to it;

          (d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes;

          (e) the Owner Trustee shall not be responsible for or in respect of the
validity or sufficiency of this Agreement or for the due execution hereof by
the Depositor or for the form, character, genuineness, sufficiency, value or
validity of any of the Owner Trust Estate or for or in respect of the validity
or sufficiency of the Basic Documents, other than the certificate of
authentication on the Trust Certificates, and the Owner Trustee shall in no
event assume or incur any liability, duty, or obligation to any Noteholder or
to any Owner, other than as expressly provided for herein and in the Basic
Documents;

          (f) the Owner Trustee shall not be liable for the default or misconduct of
the Administrator, Loan Originator, the Indenture Trustee or the Servicer under
any of the Basic Documents or otherwise and the Owner Trustee shall have no
obligation or liability to perform the obligations of the Trust under this
Agreement or the Basic Documents that are required to be performed by the
Administrator under this Agreement or the Administration Agreement, the
Indenture Trustee under the Indenture or the Servicer under the Sale and
Servicing Agreement and shall not be liable for monitoring the performance of
such Persons;

21

 

          (g) the Owner Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any Basic Document, at the request, order or direction of any of
the Owners, unless such Owners have offered to the Owner Trustee security or
indemnity satisfactory to it in its reasonable discretion against the costs,
expenses and liabilities that may be incurred by the Owner Trustee therein or
thereby. The right of the Owner Trustee to perform any discretionary act
enumerated in this Agreement or in any Basic Document shall not be construed as
a duty, and the Owner
Trustee shall not be answerable for other than its gross negligence or willful
misconduct in the performance of any such act; and

          (h) with respect to the Noteholders, the Owner Trustee undertakes to
perform or observe only such of the covenants and obligations of the Owner
Trustee as are expressly set forth in this Agreement and the Basic Documents,
and no implied covenants or obligations with respect to the Noteholders shall
be read into this Agreement or the Basic Documents against the Owner Trustee.
The Owner Trustee shall not be deemed to owe any fiduciary duty to the
Noteholders, and shall not be liable to any such person for the failure of the
Trust to perform its obligations to such persons other than as a result of the
gross negligence or willful misconduct of the Owner Trustee in the performance
of its express obligations under this Agreement.

          SECTION 7.2 Furnishing of Documents. The Owner Trustee shall furnish to
the Owners promptly upon receipt of a written request therefor, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to the Owner Trustee under the
Basic Documents.

          SECTION 7.3 Representations and Warranties.

          The Owner Trustee hereby represents and warrants to the Depositor, for the
benefit of the Owners, that:

		
	 	          (i) It is a Delaware banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware. It has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement.
	 
	 	          (ii) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.
	 
	 	          (iii) Neither the execution nor the delivery by it of this Agreement nor
the consummation by it of the transactions contemplated hereby nor compliance
by it with any of the terms or provisions hereof will contravene any Federal or
Delaware law, governmental rule or regulation governing the banking or trust
powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under

22

 

		
	 	its charter documents or by-laws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by which
any of its properties may be bound.

          SECTION 7.4 Reliance; Advice of Counsel.

          (a) The Owner Trustee shall incur no liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond, or other document or paper believed by it
to be genuine and believed by it to be signed by the proper party or parties.
The Owner Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the method of the
determination of which is not specifically prescribed herein, the Owner Trustee
may for all purposes hereof rely on a certificate, signed by a Responsible
Officer, as to such fact or matter and such certificate shall constitute full
protection to the Owner Trustee for any action taken or omitted to be taken by
it in good faith in reliance thereon.

          (b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement or the Basic
Documents, the Owner Trustee (i) may act directly or, at the expense of the
Issuer, through its agents or attorneys pursuant to agreements entered into
with any of them, and the Owner Trustee shall not be liable for the conduct or
misconduct of such agents or attorneys if such agents or attorneys shall have
been selected by the Owner Trustee with reasonable care and (ii) may, at the
expense of the Issuer, consult with counsel, accountants and other skilled
persons to be
selected with reasonable care and employed by it. The Owner Trustee shall not
be liable for anything done, suffered or omitted in good faith by it in
accordance with the opinion or advice of any such counsel, accountants or other
such persons and not clearly contrary to any Basic Document.

          SECTION 7.5 Not Acting in Individual Capacity. Except as provided in
this Article VII, in accepting the trusts hereby created, Wilmington Trust
Company acts solely as Owner Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Owner Trustee by reason
of the transactions contemplated by this Agreement or any Basic Document shall
look only to the Owner Trust Estate for payment or satisfaction thereof.

          SECTION 7.6 Owner Trustee Not Liable for Trust Certificates or Loans.
The recitals contained herein and in the Trust Certificates (other than the
signature and countersignature of the Owner Trustee on the Trust Certificates)
shall be taken as the statements of the Depositor and the other
Certificateholders, and the Owner Trustee assumes no responsibility for the
correctness thereof. The Owner Trustee makes no representations as to the
validity or sufficiency of this Agreement, of any Basic Document or of the
Trust Certificates (other than the signature and countersignature of the Owner
Trustee on the Trust Certificates and as specified in Section 7.3) or the
Notes, or of any Loans or related documents. The Owner Trustee shall at no
time have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Loan, or the perfection and priority of any
security interest created by any Loan or the maintenance of any such perfection
and priority, or for or with respect to the sufficiency of the Owner Trust
Estate or its ability to generate the payments to be distributed to Owners
under this Agreement or the

23

 

Noteholders under the Indenture, including, without
limitation: the existence, condition and ownership of any Loan Collateral; the
existence and enforceability of any insurance thereon; the existence and
contents of any Loan on any computer or other record thereof, the validity of
the assignment of any Loan to the Trust or of any intervening assignment; the
completeness of any Loan; the performance or enforcement of any Loan; the
compliance by the Depositor or the Servicer with any warranty or representation
made under any Basic Document or in any related document or the accuracy of any
such warranty or representation or any action of the Administrator, the
Indenture Trustee or the Servicer or any subservicer taken in the name of the
Owner Trustee.

          SECTION 7.7 Licenses. The Owner Trustee shall cause the Trust to use its
best efforts to obtain and maintain the effectiveness of any licenses required
in connection with this Agreement and the Basic Documents and the transactions
contemplated hereby and thereby until such time as the Trust shall terminate in
accordance with the terms hereof. The parties hereto agree and acknowledge that
this duty has been delegated to the Administrator pursuant to the
Administration Agreement and the Owner Trustee shall have no liability for the
Administrator’s failure to carry out such duties.

ARTICLE VIII

COMPENSATION OF OWNER TRUSTEE

          SECTION 8.1 Fees and Expenses. The Owner Trustee shall receive as
compensation for its services hereunder such fees as have been separately
agreed upon before the date hereof between the Depositor and the Owner Trustee,
which fees shall be paid as provided in the Sale and Servicing Agreement and
which fees may not be altered without the prior written consent of the Majority
Noteholders and the Servicer. Except as provided in Section 8.2 hereof, the
Owner Trustee shall look solely to the Depositor for reimbursement for its
other reasonable expenses hereunder, including the reasonable compensation,
expenses and disbursements of such agents, representatives, experts and counsel
as the Owner Trustee may employ in connection with the exercise and performance
of its rights and its duties hereunder unless and to the extent the Owner
Trustee is reimbursed for such expenses by the Issuer or other Person.

          SECTION 8.2 Indemnification. To the fullest extent permitted by
applicable law, CSF shall be liable pursuant to the Administration Agreement,
for, and shall indemnify the Owner Trustee, in its individual and trustee
capacities, and its officers, directors, employees, successors, assigns, agents
and servants (collectively, the “Indemnified Parties”) from and against, any
and all liabilities, obligations,
losses, damages, taxes, claims, actions and suits, and any and all reasonable
costs, expenses and disbursements (including reasonable legal fees and
expenses) of any kind and nature whatsoever (collectively, “Expenses”) which
may at any time be imposed on, incurred by, or asserted against the Owner
Trustee or any Indemnified Party in any way relating to or arising out of this
Agreement, the other Basic Documents, the Owner Trust Estate, the
administration of the Owner Trust Estate or the action or inaction of the Owner
Trustee hereunder, except only that CSF shall not be liable for or required to
indemnify an Indemnified Party from and against Expenses arising or resulting
from such Indemnified Party’s willful misfeasance, bad faith or gross
negligence in the performance of the duties, or by reason of reckless disregard
of its duties under the Basic

24

 

Documents. The indemnities contained in this
Section shall survive the resignation or termination of the Owner Trustee or
the termination of this Agreement. In the event of any claim, action or
proceeding for which indemnity will be sought pursuant to this Section, the
Owner Trustee’s choice of legal counsel shall be subject to the approval of the
CSF, which approval shall not be unreasonably withheld, delayed or conditioned.

          SECTION 8.3 Payments to the Owner Trustee. Any amounts paid to the Owner
Trustee pursuant to this Article VIII shall be deemed not to be a part of the
Owner Trust Estate immediately after such payment.

ARTICLE IX

TERMINATION OF TRUST AGREEMENT

          SECTION 9.1 Termination of Trust Agreement.

          (a) This Agreement (other than Article VIII) shall terminate and the Trust
shall dissolve and terminate upon the satisfaction and discharge of the
Indenture pursuant to Section 4.01 of the Indenture and the termination of the
Sale and Servicing Agreement. The bankruptcy, liquidation, dissolution, death
or incapacity of any Owner shall not (x) operate to terminate this Agreement or
the Trust, nor (y) entitle such Owner’s legal representatives or heirs to claim
an accounting or to take any action or proceeding in any court for a partition
or winding up of all or any part of the Trust or Owner Trust Estate nor (z)
otherwise affect the rights, obligations and liabilities of the parties hereto.

          (b) The Trust Certificates shall be subject to an early redemption or
termination at the option of the Majority Certificateholders in the manner and
subject to the provisions of Section 12.02 of the Sale and Servicing Agreement.

          (c) Except as provided in Sections 9.1(a) and (b) above, neither the
Depositor nor any Owner shall be entitled to revoke or terminate the Trust.

          (d) Notice of any termination of the Trust, specifying the Payment Date
upon which the Certificateholders shall surrender their Trust Certificates to
the Paying Agent for payment of the final distributions and cancellation, shall
be given by the Owner Trustee to the Certificateholders and the Initial
Noteholder mailed within five Business Days of receipt by the Owner Trustee of
notice of such termination pursuant to Section 9.1(a) or (b) above, which
notice received by and given by the Owner Trustee shall state (i) the Payment
Date upon or with respect to which final payment of the Trust Certificates
shall be made upon presentation and surrender of the Trust Certificates at the
office of the Paying Agent therein designated, (ii) the amount of any such
final payment and (iii) that the Record Date otherwise applicable to such
Payment Date is not applicable, payments being made only upon presentation and
surrender of the Trust Certificates at the office of the Paying Agent therein
designated. The Owner Trustee shall give such notice to the Certificate
Registrar (if other than the Owner Trustee) and the Indenture Trustee at the
time such notice is given to Certificateholders and the Initial Noteholder.
Upon presentation and surrender of

25

 

the Trust Certificates, the Paying Agent
shall cause to be distributed to Certificateholders amounts distributable on
such Payment Date pursuant to Section 5.01(c) of the Sale and Servicing
Agreement.

          In the event that all of the Certificateholders shall not surrender their
Trust Certificates for cancellation within six months after the date specified
in the above mentioned written notice, the Paying
Agent shall give a second written notice to the remaining Certificateholders to
surrender their Trust Certificates for cancellation and receive the final
distribution with respect thereto. If within one year after the second notice
all the Trust Certificates shall not have been surrendered for cancellation,
the Paying Agent may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Trust Certificates, and the cost thereof shall be paid out
of the funds and other assets that shall remain subject to this Agreement. Any
funds remaining in the Trust after exhaustion of such remedies shall be
distributed by the Paying Agent to the Certificateholders on a pro rata basis.

          (e) Upon the winding up of the Trust and its termination, including the
making of reasonable provisions for the payment to creditors of the Trust in
accordance with Section 3808 of the Statutory Trust Statute, the Owner Trustee
shall, upon receipt of written direction of the Depositor, cause the
Certificate of Trust to be canceled by filing a certificate of cancellation
with the Secretary of State in accordance with the provisions of Section 3810
of the Statutory Trust Statute. The Administrator shall be responsible for the
liquidation of the Owner Trust Estate and the winding up and dissolution of the
Trust.

ARTICLE X

SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES

          SECTION 10.1 Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation satisfying the provisions of
Section 3807(a) of the Statutory Trust Statute; authorized to exercise
corporate powers having a combined capital and surplus of at least $50,000,000
and subject to supervision or examination by Federal or state authorities; and
having (or having a parent which has) a long-term rating of at least “A” by
Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. and Moody’s
Investors Service, Inc. If such corporation shall publish reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purpose of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Owner Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Owner Trustee
shall resign immediately in the manner and with the effect specified in Section
10.2.

          SECTION 10.2 Resignation or Removal of Owner Trustee. The Owner Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Administrator and the Indenture Trustee.
Upon receiving such notice of resignation, the Administrator shall promptly
appoint a successor Owner Trustee by written instrument, in duplicate, one copy
of which instrument shall be delivered to the resigning Owner Trustee and one
copy to the successor Owner Trustee. If no successor Owner Trustee shall have
been so appointed and have

26

 

accepted appointment within 30 days after the giving
of such notice of resignation, the resigning Owner Trustee may petition any
court of competent jurisdiction for the appointment of a successor Owner
Trustee.

          If at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of Section 10.1 and shall fail to resign after written
request therefor by the Administrator, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or
a receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Administrator may remove the Owner Trustee. If the
Administrator shall remove the Owner Trustee under the authority of the
immediately preceding sentence, the Administrator shall promptly appoint a
successor Owner Trustee by written instrument in duplicate, one copy of which
instrument shall be delivered to the outgoing Owner Trustee so removed and one
copy to the successor Owner Trustee and payment of all fees owed to the
outgoing Owner Trustee.

          Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.3 and payment of all fees and expenses
owed to the outgoing Owner Trustee. The Administrator shall provide notice of
such resignation or removal of the Owner Trustee to the Initial Noteholder.

          SECTION 10.3 Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to
the Administrator and to its predecessor Owner Trustee an instrument accepting
such appointment under this Agreement, and thereupon the resignation or removal
of the predecessor Owner Trustee shall become effective and such successor
Owner Trustee, without any further act, deed or conveyance, shall become fully
vested with all the rights, powers, duties, and obligations of its predecessor
under this Agreement, with like effect as if originally named as Owner Trustee.
The predecessor Owner Trustee shall upon payment of its fees and expenses
deliver to the successor Owner Trustee all documents and statements and monies
held by it under this Agreement; and the Administrator and the predecessor
Owner Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the successor Owner Trustee all such rights, powers, duties, and
obligations.

          No successor Owner Trustee shall accept appointment as provided in this
Section 10.3 unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 10.1. Promptly following its
appointment, any successor Owner Trustee shall file an amendment to the
Certificate of Trust with the Secretary of State in accordance with the
Statutory Trust Statute.

          Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice of the successor of such
Owner Trustee to all Owners, the Indenture Trustee and the Noteholders. If the
Administrator fails to mail such notice within 10

27

 

days after acceptance of
appointment by the successor Owner Trustee, the successor Owner Trustee shall
cause such notice to be mailed at the expense of the Administrator.

          SECTION 10.4 Merger or Consolidation of Owner Trustee. Any Person into
which the Owner Trustee may be merged or converted or with which it may be
consolidated or any Person resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any Person
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided
such Person shall be eligible pursuant to Section 10.1, without the execution
or filing of any instrument or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided
further that the Owner Trustee shall mail notice of such merger or
consolidation to the Initial Noteholder.

          SECTION 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Owner Trust Estate or any Loan Collateral may at the time be located,
and for the purpose of performing certain duties and obligations of the Trust
pursuant to the Basic Documents, the Administrator and the Owner Trustee acting
jointly shall have the power and shall execute and deliver all instruments to
appoint one or more Persons approved by the Owner Trustee to act as co-owner
trustee, jointly with the Owner Trustee, or separate trustee or separate
trustees, of all or any part of the Owner Trust Estate, and to vest in such
Person, in such capacity, such title to the Trust, or any part thereof, and,
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Administrator and the Owner Trustee may
consider necessary or desirable. If the Administrator shall not have joined in
such appointment within 25 days after the receipt by it of a request so to do,
the Owner Trustee shall have the power to make such appointment. No co-owner
trustee or separate owner trustee under this Agreement shall be required to
meet the terms of eligibility as a successor trustee pursuant to Section 10.1
and no notice of the appointment of any co-trustee or separate owner trustee
shall be required pursuant to Section 10.3.

          Each separate owner trustee and co-owner trustee shall, to the extent
permitted by law, be appointed and act subject to the following provision and
conditions:

		
	 	          (i) all rights, powers, duties and obligations conferred or imposed upon
the Owner Trustee shall be conferred upon and exercised or performed by the
Owner Trustee and such separate
owner trustee or co-owner trustee jointly (it being understood that such
separate owner trustee or co-owner trustee is not authorized to act separately
without the Owner Trustee joining in such act), except to the extent that under
any law of any jurisdiction in which any particular act or acts are to be
performed, the Owner Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties, and obligations
(including the holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate owner
trustee or co-owner trustee, but solely at the direction of the Owner Trustee;

28

 

		
	 	          (ii) no owner trustee under this Agreement shall be personally liable by
reason of any act or omission of any other owner trustee or co-owner trustee
under this Agreement; and
	 
	 	          (iii) the Administrator and the Owner Trustee acting jointly may at any
time accept the resignation of or remove any separate owner trustee or co-owner
trustee.

          Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to the separate owner trustees and co-owner trustees,
as if given to each of them. Every instrument appointing any separate owner
trustee or co-owner trustee, other than this Agreement, shall refer to this
Agreement and to the conditions of this Article. Each separate owner trustee
and co-owner trustee, upon its acceptance of appointment, shall be vested with
the estates specified in its instrument of appointment, either jointly with the
Owner Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Owner Trustee. Each such instrument shall be filed with the
Owner Trustee and a copy thereof given to the Administrator.

          Any separate owner trustee or co-owner trustee may at any time appoint the
Owner Trustee as its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect
of this Agreement on its behalf and in its name. If any separate owner trustee
or co-owner trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall vest
in and be exercised by the Owner Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.

ARTICLE XI

MISCELLANEOUS

          SECTION 11.1 Supplements and Amendments. This Agreement may be amended
by the Depositor and the Owner Trustee, without the consent of any of the
Noteholders or the Owners, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions in this Agreement
or of modifying in any manner the rights of the Noteholders or the Owners
provided, however, that such action shall not adversely affect in any material
respect the interests of any Owner or Noteholder. An amendment described above
shall be deemed not to adversely affect in any material respect the interests
of any Owner or Noteholder if an Opinion of Counsel acceptable to the Initial
Noteholder in its sole discretion is obtained to such effect. This Agreement
amends and restates the Original Trust Agreement in its entirety.

          This Agreement may also be amended from time to time by the Depositor and
the Owner Trustee, with the prior written consent of the Majority Noteholders
and the Majority Certificateholders, for the purpose of adding any provisions
to or changing in any manner or

29

 

eliminating any of the provisions of this
Agreement or of modifying in any manner the rights of the Noteholders or the
Owners; provided, however, that no such amendment shall (a) increase or reduce
in any manner the amount of, or accelerate or delay the timing of, collections
of payments on the Loans or distributions that shall be required to be made for
the benefit of the Noteholders or the Certificateholders or (b) reduce the
aforesaid percentage of the Notes or the Percentage Interests required to
consent to any such amendment, in either case of clause (a) or (b) without the
unanimous consent of the Noteholders, and in the case of clause (b) without the
consent of the Holders of all the outstanding Trust Certificates.

          Prior to the execution of any amendment or consent pursuant to this
Section 11.1, the Person seeking such amendment or consent shall furnish
written notification of the substance of such amendment or consent to each
Certificateholder, the Indenture Trustee and each Noteholder.

          It shall not be necessary for the consent of Owners or the Noteholders
pursuant to this Section 11.1 to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents (and any other
consents of Owners provided for in this Agreement or in any other Basic
Document) and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable requirements as the
Owner Trustee may prescribe.

          Promptly after the execution of any amendment to the Certificate of Trust,
the Owner Trustee shall cause the filing of such amendment with the Secretary
of State.

          Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner 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 and that all conditions precedent
have been met. The Owner Trustee may, but shall not be obligated to, enter
into any such amendment which affects the Owner Trustee’s own rights, duties or
immunities under this Agreement or otherwise.

          SECTION 11.2 No Legal Title to Owner Trust Estate in Owners. The Owners
shall not have legal title to any part of the Owner Trust Estate. The Owners
shall be entitled to receive distributions with respect to their undivided
beneficial ownership interest therein only in accordance with Articles V and
IX. No transfer, by operation of law or otherwise, of any right, title, or
interest of the Owners to and in their ownership interest in the Owner Trust
Estate shall operate to terminate this Agreement or the trusts hereunder or
entitle any transferee to an accounting or to the transfer to it of legal title
to any part of the Owner Trust Estate.

          SECTION 11.3 Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Owner Trustee, the Depositor, the
Owners, the Administrator and, to the extent expressly provided herein, the
Indenture Trustee and the Noteholders, and nothing in this Agreement, whether
express or implied, shall be construed to give to any other Person any legal or
equitable right, remedy or claim in the Owner Trust Estate or under or in
respect of this Agreement or any covenants, conditions or provisions contained
herein.

30

 

          SECTION 11.4 Notices. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and (i) mailed
by certified mail, postage prepaid, return receipt requested or (ii) telecopied
(upon electronic confirmation of receipt thereof) with a copy delivered by
overnight courier, and shall be deemed given upon actual receipt by the
intended recipient (or telephone confirmation thereof in the case of notice by
facsimile), as follows: (i) if to the Owner Trustee, its Corporate Trust
Office; (ii) if to the Depositor, CS Funding II Depositor LLC, 4445 Willard
Avenue, 12th Floor, Chevy Chase, Maryland 20815, Attention: Thomas Fink,
telecopy number: (301) 841-2375, or, as to each such party, at such other
address, telecopy number and telephone number as shall be designated by such
party in a written notice to each other party.

          (b) Any notice required or permitted to be given to an Owner shall be
given by first-class mail, postage prepaid, at the address of such Owner as
shown in the Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Owner receives such notice.

          SECTION 11.5 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          SECTION 11.6 Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.

          SECTION 11.7 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Depositor, the Owner Trustee and their successors and each owner and its
successors and permitted assigns, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by an Owner shall bind
the successors and assigns of such Owner.

          SECTION 11.8 No Petition. The Owner Trustee, by entering into this
Agreement, each Owner, by accepting a Trust Certificate, and the Indenture
Trustee and each Noteholder by accepting the benefits of this Agreement, hereby
covenant and agree that they will not at any time institute against the
Depositor or the Trust, or join in any institution against the Trust of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States Federal or state bankruptcy or law
in connection with any obligations relating to the Trust Certificates, the
Notes, this Agreement or any of the Basic Documents.

          SECTION 11.9 No Recourse. Each Owner by accepting a Trust Certificate
acknowledges that such Owner’s Trust Certificate represents a beneficial
interest in the Trust only and does 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 Trust
Certificates or the Basic Documents.

31

 

          SECTION 11.10 Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.

          SECTION 11.11 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

          SECTION 11.12 Limitation on Liability. It is expressly understood and
agreed by the parties hereto that (a) 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,
(b) 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 (c) 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.

32

 

          IN WITNESS OF, the parties hereto have caused this Amended and Restated
Trust Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.

	 	 	 	 	 
	 	 	CS FUNDING II DEPOSITOR LLC, as Depositor
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:
	 	 	
Title:
	 	 	 	 	 
	 	 	WILMINGTON TRUST COMPANY, as Owner Trustee
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:
	 	 	
Title:

Agreed and Acknowledged:

CAPITALSOURCE FINANCE, LLC

	 	 	 	 
	By:	 	 	 
	 	 	

	 
	 	 	
Name:	 
	 	 	
Title:	 

Trust Agreement

33

 

EXHIBIT A

TO THE AMENDED AND RESTATED TRUST AGREEMENT

FORM OF TRUST CERTIFICATE

THE INTEREST IN THE TRUST REPRESENTED BY THIS TRUST CERTIFICATE HAS NOT BEEN
AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR ANY STATE SECURITIES LAWS. THIS TRUST CERTIFICATE MAY BE DIRECTLY OR
INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OF BY THE HOLDER HEREOF ONLY
TO (I) A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE ACT,
IN A TRANSACTION THAT IS REGISTERED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR THAT IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT
PURSUANT TO RULE 144A OR (II) AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE
MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE ACT IN A
TRANSACTION THAT IS REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS OR THAT IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH
LAWS. NO PERSON IS OBLIGATED TO REGISTER THIS TRUST CERTIFICATE UNDER THE ACT
OR ANY STATE SECURITIES LAWS.

EXCEPT AS PROVIDED IN SECTION 3.10(B) OF THE TRUST AGREEMENT, NO TRANSFER OF
THIS TRUST CERTIFICATE OR ANY BENEFICIAL INTEREST HEREIN SHALL BE MADE UNLESS
THE OWNER TRUSTEE HAS RECEIVED A CERTIFICATE FROM THE TRANSFEREE TO THE EFFECT
THAT SUCH TRANSFEREE (I) IS NOT (A) AN “EMPLOYEE BENEFIT PLAN” WITHIN THE
MEANING OF SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED, (B) A “PLAN” WITHIN THE MEANING OF SECTION 4975(E)(1) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR (C) AN ENTITY WHOSE UNDERLYING
ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN’S INVESTMENT IN THE ENTITY
(EACH, A “BENEFIT PLAN INVESTOR”), AND (II) IS NOT DIRECTLY OR INDIRECTLY
PURCHASING SUCH TRUST CERTIFICATE ON BEHALF OF, AS INVESTMENT MANAGER OF, AS
NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH THE ASSETS OF A BENEFIT PLAN
INVESTOR.

THE TRANSFEREE OF THIS CERTIFICATE SHALL BE SUBJECT TO UNITED STATES FEDERAL
WITHHOLDING TAX UNLESS THE CERTIFICATE REGISTRAR SHALL HAVE RECEIVED A
CERTIFICATE OF NON-FOREIGN STATUS CERTIFYING AS TO THE TRANSFEREE’S STATUS AS A
U.S. PERSON UNDER U.S. FEDERAL TAX LAW.

THE OWNER TRUSTEE SHALL NOT EXECUTE, AND SHALL NOT COUNTERSIGN AND DELIVER, A
TRUST CERTIFICATE IN CONNECTION WITH ANY TRANSFER OF THIS TRUST CERTIFICATE
UNLESS THE TRANSFEROR SHALL HAVE PROVIDED

A-1

 

TO THE OWNER TRUSTEE A CERTIFICATE,
SIGNED BY THE TRANSFEREE, WHICH CERTIFICATE SHALL CONTAIN THE CONSENT OF THE
TRANSFEREE TO ANY AMENDMENTS OF THE TRUST AGREEMENT AS MAY BE REQUIRED TO
EFFECTUATE FURTHER THE RESTRICTIONS ON TRANSFER OF THE TRUST CERTIFICATES TO
NON-PERMITTED FOREIGN HOLDERS, AND AN AGREEMENT BY THE TRANSFEREE THAT IT WILL
NOT TRANSFER THIS TRUST CERTIFICATE WITHOUT PROVIDING TO THE OWNER TRUSTEE A
SUBSTANTIALLY IDENTICAL CERTIFICATE, SIGNED BY THE PROSPECTIVE OWNER TO WHOM
THIS TRUST CERTIFICATE IS TO BE TRANSFERRED.

A-2

 

TRUST CERTIFICATE

No.

THIS CERTIFIES THAT [                ] (the “Owner”) is the registered
owner of the Percentage Interest from time to time applicable to this
Certificate pursuant to the terms of the Amended and Restated Trust Agreement
referred to below or such other Percentage Interest as shall be set forth from
time to time in Schedule 1 hereto in CapitalSource Funding II Trust (the
“Trust”) existing under the laws of the State of Delaware and created pursuant
to the Amended and Restated Trust Agreement dated as of September 17, 2003 (the
“Trust Agreement”) between CS Funding II Depositor LLC. as Depositor and
Wilmington Trust Company, not in its individual capacity but solely in its
fiduciary capacity as owner trustee under the Trust Agreement (the “Owner
Trustee”). Initially capitalized terms used but not defined herein have the
meanings assigned to them in the Trust Agreement. The Owner Trustee, on behalf
of the Issuer and not in its individual capacity, has executed this Trust
Certificate by one of its duly authorized signatories as set forth below. This
Trust Certificate is one of the Trust Certificates referred to in the Trust
Agreement and is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement to which the holder of this Trust Certificate
by virtue of the acceptance hereof agrees and by which the holder hereof is
bound. Reference is hereby made to the Trust Agreement and the Sale and
Servicing Agreement for the rights of the holder of this Trust Certificate, as
well as for the terms and conditions of the Trust created by the Trust
Agreement.

          Section 11.12 of the Trust Agreement is incorporated by reference.

          The holder, by its acceptance hereof, agrees not to transfer this Trust
Certificate except in accordance with terms and provisions of the Trust
Agreement.

A-3

 

          THIS TRUST CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.

          IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in
its individual capacity, has caused this Trust Certificate to be duly executed.

	 	 	 	 	 
	 	 	CAPITALSOURCE FUNDING II TRUST
	 	 	 	 	 
	 	 	
By: 
	 	WILMINGTON TRUST COMPANY, not in

its individual capacity but solely as

Owner Trustee under the Trust Agreement
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	

	 	 	Authorized Signatory

DATED: September    , 2003

CERTIFICATE OF AUTHENTICATION

     This is one of the Certificates referred to in the within-mentioned Trust
Agreement.

	 	 	 	 	 	 	 	 	 
	 	 	
By:
	 	 	 	WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Owner Trustee under the Trust
Agreement
	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	

	 	 	 	 	Name: 	 	 	 	 
	 	 	 	 	 	 	

	 	 	 	 	Title:	 	 	 	 
	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	or
	 	 	 	 	 	.
	 	 	 	 	
	 
	 	 	 	 	 	as Authenticating Agent
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	By: Authorized Signatory

A-4

 

ASSIGNMENT

          FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto

PLEASE INSERT SOCIAL SECURITY

OR OTHER IDENTIFYING NUMBER

OF ASSIGNEE

          (Please print or type name and address, including postal zip code, of
assignee)

the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing Attorney to transfer said Certificate on the books
of the Certificate Registrar, with full power of substitution in the premises.

	 	 	 	 
	Dated:	 	 	 
	 	 	
	 

	 	 	 
	 	 	*/
	 	
	 
	 	Signature Guaranteed:	 
	 	 	 
	 	 	*/
	 	
	 

*/     NOTICE: The signature to this assignment must correspond with the name as
it appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.

A-5

 

EXHIBIT B

TO THE TRUST AGREEMENT

CERTIFICATE OF TRUST OF

CAPITALSOURCE FUNDING II TRUST

          THIS Certificate of Trust of CapitalSource Funding II Trust (the
“Trust”)is being duly executed and filed on behalf of the Trust by the
undersigned, as trustee, to form a statutory trust under the Delaware Statutory
Trust Act (12 Del. Code, § 3801 et seq.) (the “Act”).

          1. Name. The name of the statutory trust formed hereby is CapitalSource
Funding II Trust.

          2. Delaware Trustee. The name and business address of the Trust in the
State of Delaware are Wilmington Trust Company, Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890, Attention: Corporate Trust
Administration.

          3. Effective Date. This Certificate of Trust shall be effective upon
filing.

          IN WITNESS WHEREOF, the undersigned has duly executed this Certificate of
Trust in accordance with Section 3811(a)(1) of the Act.

	 	 	 	 	 
	 	 	WILMINGTON TRUST COMPANY,
	 	 	not in its individual capacity but solely as
	 	 	Owner Trustee
	 	 	 	 	 
	 	 	
By:
	 	 	 	 	

	 	 	
Name:
	 	 	
Title:

B-1

 

EXHIBIT C

TO THE TRUST AGREEMENT

CERTIFICATE OF NON-FOREIGN STATUS

          This Certificate of Non-Foreign Status (“Certificate”) is delivered
pursuant to Section 3.10(c) of the Trust Agreement, dated as of September 17,
2003 (the “Trust Agreement”), between CS Funding II Depositor LLC as Depositor
and Wilmington Trust Company as Owner Trustee, in connection with the
acquisition of, transfer to or possession by the undersigned, whether as
beneficial owner (the “Beneficial Owner”), or nominee on behalf of the
Beneficial Owner of the CapitalSource Funding II Trust, Trust Certificates (the
“Trust Certificate”). Capitalized terms used but not defined in this
Certificate have the respective meanings given them in the Trust Agreement.

Each holder must complete Part I, Part II (if the holder is a nominee), and in
all cases sign and otherwise complete Part III.

In addition, each holder shall submit with the Certificate an IRS Form W-9
relating to such holder.

To confirm to the Trust that the provisions of Sections 871, 881 or 1446 of the
Internal Revenue Code (relating to withholding tax on foreign partners) do not
apply in respect of the Certificate held by the undersigned, the undersigned
hereby certifies:

Part I -              
             
             
             
             
             
Complete Either A or B

	 	 	 	 	 	 	 	
	 	A.	 	Individual as Beneficial Owner
	 	 	 	 	 	 	 
	 	 	 	
1.
	 	I am (The Beneficial Owner is) not a non-resident alien for
purposes of U.S. income taxation;
	 	 	 	 	 	 	 
	 	 	 	
2.
	 	My (The Beneficial Owner’s) name and home address are:
	 	 	 	 	 	 	 
	 	 	 	 	 	
	 
	 	 	 	 	 	
	 
	 	 	 	 	 	
	 
	 	 	 	 	 	 	; and
	 	 	 	 	 	
	 
	 	 	 	 	 	 
	 	 	 	
3.
	 	My (The Beneficial Owner’s) U.S. taxpayer identification number

(Social Security Number) is                   .
	 	 	 	 	 	 
	 	B.	 	Corporate, Partnership or Other Entity as Beneficial Owner
	 	 	 	 	 	 
	 	 	 	
1.
	 	               (Name of the Beneficial
Owner) EITHER (X) is not a foreign corporation, foreign partnership, foreign trust or foreign
estate (as those terms are defined in the Code and Treasury Regulations OR (Y)
has furnished the Owner Trustee with a properly completed Internal Revenue
Service Form 4224 (or

C-1

 

	 	 	 	 	 	 	
	 	 	 	 	 	applicable successor form), indicating that the Trust
Certificate is held in connection with the conduct of a trade or business of
the Beneficial Owner within the United States and that the income therefrom
will be included on the Beneficial Owner’s United States federal income tax
return, and shall update such Form 4224 at the time or times and in the manner
provided by the Code and Treasury Regulations;
	 
	 	 	 	
2.
	 	The Beneficial Owner’s principal United States office address and place
of incorporation (if applicable) is
	 
	 	 	 	 	 	
	 
	 	 	 	 	 	
	 
	 	 	 	 	 	
	 ; and
	 
	 	 	 	
3.
	 	The Beneficial Owner’s U.S. employer identification number is
         .

Part II -       Nominees

          If the undersigned is the nominee for the Beneficial Owner, the
undersigned certifies that this certificate has been made in reliance upon
information contained in:

          ____an IRS Form W-9

          ____a form such as this or substantially similar

provided to the undersigned by an appropriate person and (i) the undersigned
agrees to notify the Trust at least thirty (30) days prior to the date that the
form relied upon becomes obsolete, and (ii) in connection with change in
Beneficial Owners, the undersigned agrees to submit a new Certificate of
Non-Foreign Status to the Trust promptly after such change.

Part III -       Declaration

          The undersigned, as the Beneficial Owner or a nominee thereof, agrees to
notify the Trust within sixty (60) days of the date that the Beneficial Owner
becomes a foreign person. The undersigned understands that this certificate
may be disclosed to the Internal Revenue Service by the Trust and any false
statement contained therein could be punishable by fines, imprisonment or both.

C-2

 

          Under penalties of perjury, I declare that I have examined this
certificate and to the best of my knowledge and belief it is true, correct and
complete and will further declare that I will inform the Trust of any change in
the information provided above, and, if applicable, I further declare that I
have the authority to sign this document.

	 	 	 
	
	 	 
	Name	 	 
	 	 	 
	
	 	 
	Title (if applicable)	 	 
	 	 	 
	
	 	 
	Signature and Date	 	 

C-3exv10w3w2

 

EXHIBIT 10.3.2

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

COMMERCIAL LOAN BACKED NOTES

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	

ARTICLE I	 	 
	 	 	

DEFINITIONS	 	 
	SECTION 1.01	 	
Certain Defined Terms
	 	1
	SECTION 1.02	 	
Other Definitional Provisions
	 	2
	 	 	

ARTICLE II	 	 
	 	 	

CLOSING AND PURCHASES OF

ADDITIONAL NOTE PRINCIPAL BALANCES	 	 
	SECTION 2.01	 	
Closing
	 	3
	SECTION 2.02	 	
Requests for Purchases of Additional Note Principal Balances;
Reductions in Note Principal Balance
	 	3
	 	 	

ARTICLE III	 	 
	 	 	

TRANSFER DATES	 	 
	SECTION 3.01	 	
Transfer Dates
	 	4
	 	 	

ARTICLE IV	 	 
	 	 	

CONDITIONS PRECEDENT	 	 
	SECTION 4.01	 	
Closing Subject to Conditions Precedent
	 	5
	 	 	

ARTICLE V	 	 
	 	 	

REPRESENTATIONS AND WARRANTIES

OF THE ISSUER AND THE DEPOSITOR	 	 
	SECTION 5.01	 	
Representations and Warranties
	 	7
	SECTION 5.02	 	
Securities Act
	 	10
	SECTION 5.03	 	
No Fee
	 	10
	SECTION 5.04	 	
Information
	 	10
	SECTION 5.05	 	
The Purchased Notes
	 	10
	SECTION 5.06	 	
Use of Proceeds
	 	10
	SECTION 5.07	 	
The Depositor
	 	10
	SECTION 5.08	 	
Taxes, etc
	 	10

i

 

	 	 	 	 	 
	SECTION 5.09	 	
Financial Condition
	 	11
	 	 	

ARTICLE VI	 	 
	 	 	

REPRESENTATIONS AND WARRANTIES

WITH RESPECT TO THE PURCHASER	 	 
	SECTION 6.01	 	
Representations and Warranties
	 	11
	 	 	

ARTICLE VII	 	 
	 	 	

COVENANTS OF THE ISSUER AND THE DEPOSITOR	 	 
	SECTION 7.01	 	
Information from the Issuer
	 	12
	SECTION 7.02	 	
Access to Information
	 	13
	SECTION 7.03	 	
Ownership and Security Interests; Further Assurances
	 	13
	SECTION 7.04	 	
Covenants
	 	13
	SECTION 7.05	 	
Amendments
	 	13
	SECTION 7.06	 	
With Respect to the Exempt Status of the Purchased Notes
	 	14
	 	 	

ARTICLE VIII	 	 
	 	 	

ADDITIONAL COVENANTS	 	 
	SECTION 8.01	 	
Legal Conditions to Closing
	 	14
	SECTION 8.02	 	
Mutual Obligations
	 	14
	SECTION 8.03	 	
Restrictions on Transfer
	 	14
	 	 	

ARTICLE IX	 	 
	 	 	

INDEMNIFICATION	 	 
	SECTION 9.01	 	
Indemnification of Purchaser
	 	14
	 	 	

ARTICLE X	 	 
	 	 	

LIMITED RECOURSE	 	 
	SECTION 10.01	 	
Limited Recourse
	 	15
	 	 	

ARTICLE XI	 	 
	 	 	

MISCELLANEOUS	 	 

ii

 

	 	 	 	 	 
	SECTION 11.01	 	
Amendments
	 	15
	SECTION 11.02	 	
Notices
	 	15
	SECTION 11.03	 	
No Waiver; Remedies
	 	15
	SECTION 11.04	 	
Binding Effect; Assignability
	 	16
	SECTION 11.05	 	
Provision of Documents and Information
	 	16
	SECTION 11.06	 	
GOVERNING LAW; JURISDICTION
	 	16
	SECTION 11.07	 	
No Proceedings
	 	17
	SECTION 11.08	 	
Execution in Counterparts
	 	17
	SECTION 11.09	 	
No Recourse - Purchaser and Depositor
	 	17
	SECTION 11.10	 	
Survival
	 	18
	SECTION 11.11	 	
Tax Characterization
	 	18
	SECTION 11.12	 	
Conflicts
	 	18
	SECTION 11.13	 	
Limitation on Liability
	 	18

Schedule I - Information for Notices

Exhibit A                      Borrowing Base Certificate

Exhibit B
                    
Form of Certificate from Closing Attorney

iii

 

NOTE PURCHASE AGREEMENT

          NOTE PURCHASE AGREEMENT dated as of September 17, 2003 (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:

          “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 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 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.

          “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 Minnesota, 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 $400,000,000,
less (i) the aggregate outstanding Note Principal Balance of the Purchased
Notes, less (ii) any reductions pursuant to Section 2.06 of the Sale and
Servicing Agreement.

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

          “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 Sale and Servicing Agreement
dated as of September 17, 2003, among the Issuer, the Depositor, the Loan
Originator, the Servicer and Wells Fargo Bank Minnesota, 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

2

 

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 Article IV 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.

          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

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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 B) 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:

          (i) With respect to the initial Transfer Date only, the Purchaser shall
have received the 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

4

 

          (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 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.

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          (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 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 10 (ten) 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.

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          (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
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.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

OF THE ISSUER AND THE DEPOSITOR

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          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.

          (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

8

 

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 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

9

 

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 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.

10

 

          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.

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

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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”).

          (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,

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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.

          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.

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          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.

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.

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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.

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.

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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.

          (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.

16

 

          (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.

          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

17

 

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 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

18

 

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.

[SIGNATURE PAGE FOLLOWS]

19

 

          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:	 	 
	 	 	 	

	 	 	
Name:	 
	 	 	
Title:	 
	 	 	 	 	 
	 	 	
CS FUNDING II DEPOSITOR LLC
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	

	 	 	
Name:	 
	 	 	
Title:	 
	 	 	 	 	 
	 	 	
CAPITALSOURCE FINANCE LLC
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	

	 	 	
Name:	 
	 	 	
Title:	 
	 	 	 	 	 
	 	 	
CITIGROUP GLOBAL MARKETS REALTY CORP.
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	

	 	 	
Name:	 
	 	 	
Title:	 

Note Purchase Agreement

20

 

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

I-1

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