Document:

exv4w5

 

EXHIBIT 4.5

INDENTURE

between

CAPITALSOURCE FUNDING II TRUST

as Issuer,

and

WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION

as Indenture Trustee

Dated as of September 17, 2003

CAPITALSOURCE FUNDING II TRUST

COMMERCIAL LOAN BACKED NOTES

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	ARTICLE I
	 	 	 	 
	DEFINITIONS
	 	 	 	 
	Section 1.01 Definitions
	 	 	-2-	 
	Section 1.02 Rules of Construction
	 	 	-8-	 
	ARTICLE II
	 	 	 	 
	GENERAL PROVISIONS WITH RESPECT TO THE NOTES
	 	 	 	 
	Section 2.01. Method of Issuance and Form of Notes
	 	 	-8-	 
	Section 2.02. Execution, Authentication, Delivery and Dating
	 	 	-9-	 
	Section 2.03. Registration; Registration of Transfer and Exchange
	 	 	-9-	 
	Section 2.04. Mutilated, Destroyed, Lost or Stolen Notes
	 	 	-11-	 
	Section 2.05. Persons Deemed Noteholders
	 	 	-11-	 
	Section 2.06. Payment of Principal and/or Interest; Defaulted Interest
	 	 	-12-	 
	Section 2.07. Cancellation
	 	 	-12-	 
	Section 2.08. Conditions Precedent to the Authentication of the Notes
	 	 	-13-	 
	Section 2.09. Release of Collateral
	 	 	-14-	 
	Section 2.10. Additional Note Principal Balance
	 	 	-15-	 
	Section 2.11. Tax Treatment
	 	 	-15-	 
	Section 2.12. Limitations on Transfer of the Notes
	 	 	-15-	 
	ARTICLE III
	 	 	 	 
	COVENANTS
	 	 	 	 
	Section 3.01. Payment of Principal and/or Interest
	 	 	-16-	 
	Section 3.02. Maintenance of Office or Agency
	 	 	-16-	 
	Section 3.03. Money for Payments to Be Held in Trust
	 	 	-16-	 
	Section 3.04. Existence
	 	 	-18-	 
	Section 3.05. Protection of Collateral
	 	 	-18-	 
	Section 3.06. Negative Covenants
	 	 	-19-	 
	Section 3.07. Performance of Obligations; Servicing of Loans
	 	 	-20-	 
	Section 3.08. Reserved
	 	 	-21-	 
	Section 3.09. Annual Statement as to Compliance
	 	 	-21-	 
	Section 3.10. Covenants of the Issuer
	 	 	-22-	 
	Section 3.11. Servicer’s Obligations
	 	 	-22-	 
	Section 3.12. Restricted Payments
	 	 	-22-	 
	Section 3.13. Treatment of Notes as Debt for All Purposes
	 	 	-22-	 
	Section 3.14. Notice of Events of Default
	 	 	-22-	 
	Section 3.15. Further Instruments and Acts
	 	 	-22-	 
	ARTICLE IV
	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	SATISFACTION AND DISCHARGE
	 	 	 	 
	Section 4.01. Satisfaction and Discharge of Indenture
	 	 	-23-	 
	Section 4.02. Application of Trust Money
	 	 	-24-	 
	Section 4.03. Repayment of Moneys Held by Paying Agent
	 	 	-24-	 
	ARTICLE V
	 	 	 	 
	REMEDIES
	 	 	 	 
	Section 5.01. Events of Default
	 	 	-24-	 
	Section 5.02. Acceleration of Maturity; Rescission and Annulment
	 	 	-26-	 
	Section 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee
	 	 	-27-	 
	Section 5.04. Remedies; Priorities
	 	 	-29-	 
	Section 5.05. Optional Preservation of the Collateral
	 	 	-30-	 
	Section 5.06. Limitation of Suits
	 	 	-31-	 
	Section 5.07. Unconditional Rights of Noteholders to Receive Principal and/or Interest
	 	 	-31-	 
	Section 5.08. Restoration of Rights and Remedies
	 	 	-31-	 
	Section 5.09. Rights and Remedies Cumulative
	 	 	-32-	 
	Section 5.10. Delay or Omission Not a Waiver
	 	 	-32-	 
	Section 5.11. Control by Noteholders
	 	 	-32-	 
	Section 5.12. Waiver of Past Defaults
	 	 	-33-	 
	Section 5.13. Undertaking for Costs
	 	 	-33-	 
	Section 5.14. Waiver of Stay or Extension Laws
	 	 	-33-	 
	Section 5.15. Action on Notes
	 	 	-33-	 
	Section 5.16. Performance and Enforcement of Certain Obligations
	 	 	-34-	 
	ARTICLE VI
	 	 	 	 
	THE INDENTURE TRUSTEE
	 	 	 	 
	Section 6.01. Duties of Indenture Trustee
	 	 	-34-	 
	Section 6.02. Rights of Indenture Trustee
	 	 	-36-	 
	Section 6.03. Individual Rights of Indenture Trustee
	 	 	-36-	 
	Section 6.04. Indenture Trustee’s Disclaimer
	 	 	-36-	 
	Section 6.05. Notices of Default
	 	 	-36-	 
	Section 6.06. Reports by Paying Agent to Holders
	 	 	-37-	 
	Section 6.07. Compensation and Indemnity
	 	 	-37-	 
	Section 6.08. Replacement of Indenture Trustee
	 	 	-37-	 
	Section 6.09. Successor Indenture Trustee by Merger
	 	 	-38-	 
	Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee
	 	 	-39-	 
	Section 6.11. Eligibility
	 	 	-40-	 
	ARTICLE VII
	 	 	 	 
	NOTEHOLDERS LISTS AND REPORTS
	 	 	 	 
	Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of Noteholders
	 	 	-40-	 

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	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	Section 7.02. Preservation of Information
	 	 	-40-	 
	Section 7.03. 144A Information
	 	 	-41-	 
	ARTICLE VIII
	 	 	 	 
	ACCOUNTS, DISBURSEMENTS AND RELEASES
	 	 	 	 
	Section 8.01. Collection of Money
	 	 	-41-	 
	Section 8.02. Trust Accounts; Distributions
	 	 	-41-	 
	Section 8.03. General Provisions Regarding Trust Accounts
	 	 	-42-	 
	Section 8.04. The Paying Agent
	 	 	-42-	 
	Section 8.05. Release of Collateral
	 	 	-42-	 
	Section 8.06. Opinion of Counsel
	 	 	-43-	 
	ARTICLE IX
	 	 	 	 
	SUPPLEMENTAL INDENTURES
	 	 	 	 
	Section 9.01. Supplemental Indentures Without the Consent of the Noteholders
	 	 	-43-	 
	Section 9.02. Supplemental Indentures with Consent of Noteholders
	 	 	-44-	 
	Section 9.03. Execution of Supplemental Indentures
	 	 	-46-	 
	Section 9.04. Effect of Supplemental Indentures
	 	 	-46-	 
	Section 9.05. Reference in Notes to Supplemental Indentures
	 	 	-46-	 
	ARTICLE X
	 	 	 	 
	REDEMPTION OF NOTES; PUT OPTION
	 	 	 	 
	Section 10.01. Redemption
	 	 	-46-	 
	Section 10.02. Form of Redemption Notice
	 	 	-46-	 
	Section 10.03. Notes Payable on Redemption Date
	 	 	-47-	 
	Section 10.04. Put: Required Principal Payments
	 	 	-47-	 
	ARTICLE XI
	 	 	 	 
	MISCELLANEOUS
	 	 	 	 
	Section 11.01. Compliance Certificates and Opinions, etc
	 	 	-47-	 
	Section 11.02. Form of Documents Delivered to Indenture Trustee
	 	 	-48-	 
	Section 11.03. Acts of Noteholders
	 	 	-49-	 
	Section 11.04. Notices, etc., to Indenture Trustee and Issuer
	 	 	-49-	 
	Section 11.05. Notices to Noteholders; Waiver
	 	 	-50-	 
	Section 11.06. Effect of Headings and Table of Contents
	 	 	-50-	 
	Section 11.07. Successors and Assigns
	 	 	-51-	 
	Section 11.08. Separability
	 	 	-51-	 
	Section 11.09. Benefits of Indenture
	 	 	-51-	 
	Section 11.10. Legal Holidays
	 	 	-51-	 
	Section 11.11. Governing Law
	 	 	-51-	 
	Section 11.12. Counterparts
	 	 	-51-	 

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	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	Section 11.13. Recording of Indenture
	 	 	-51-	 
	Section 11.14. Trust Obligation
	 	 	-51-	 
	Section 11.15. No Petition
	 	 	-52-	 
	Section 11.16. Inspection
	 	 	-52-	 
	Section 11.17. Limitation on Liability
	 	 	-52-	 

EXHIBITS

	 	 	 	 	 
	EXHIBIT A	 	
-
	 	Form of Notes
	EXHIBIT B-1	 	
-
	 	Form of Transferor Affidavit (144A)
	EXHIBIT B-2	 	
-
	 	Form of Transferee Affidavit (Accredited Investor)
	EXHIBIT B-3	 	
-
	 	Form of Transfer Affidavit
	EXHIBIT C	 	
-
	 	Form of Securities Legend

-iv-

 

INDENTURE

          INDENTURE dated as of September 17, 2003 (this “Indenture”), between
CapitalSource Funding II Trust, a Delaware statutory trust, as Issuer (the
“Issuer”) and Wells Fargo Bank Minnesota, National Association, as Indenture
Trustee (the “Indenture Trustee”).

W I T N E S S E T H   T H A T:

          In consideration of the mutual covenants herein contained, the Issuer has
duly authorized the execution and delivery of this Indenture to provide for the
issuance of Notes, issuable as provided in this Indenture. All covenants and
agreements made by the Issuer herein are for the benefit and security of the
Noteholders.

GRANTING CLAUSE

          Subject to the terms of this Indenture, the Issuer hereby Grants on the
Closing Date, to the Indenture Trustee, as Indenture Trustee for the benefit of
the Noteholders, all of the Issuer’s right, title and interest, whether now
owned or hereafter acquired, in and to: (i) such Eligible Loans as from time to
time are subject to the Sale and Servicing Agreement as listed in the Loan
Schedule, as the same may be amended or supplemented on each Transfer Date and
by the removal of Deleted Loans, repurchased Loans and Unqualified Loans and by
the addition of Qualified Substitute Loans, together with the Servicer’s Loan
Files and the Custodial Loan Files relating thereto and all proceeds thereof,
(ii) the Mortgages and security interests in the Mortgaged Properties, (iii)
all payments in respect of interest and principal with respect to each Eligible
Loan received on or after the related Transfer Date, (iv) such assets as from
time to time are identified as Foreclosure Property, (v) such assets and funds
(other than Excluded Amounts) as are from time to time deposited in the
Distribution Account, the Principal Collections Account and the Collection
Account, including, without limitation, amounts on deposit in such accounts
that are invested in Permitted Investments, (vi) lenders’ rights to any
Insurance Proceeds, (vii) Net Proceeds, (viii) all right, title and interest of
each of the Depositor, the Loan Originator and the Issuer in and under the
Basic Documents including, without limitation, the obligations of the Loan
Originator under the Loan Sale Agreement, and all proceeds of any of the
foregoing, (ix) all right, title and interest of the Issuer in and to the Sale
and Servicing Agreement, (including the Issuer’s right to cause the Loan
Originator to repurchase Loans from the Issuer under certain circumstances
described therein), (x) all other property of the Issuer from time to time and
(xi) all present and future claims, demands, causes of action and choses in
action in respect of any or all of the foregoing and all payments on or under
and all proceeds of every kind and nature whatsoever in respect of any or all
of the foregoing, including all proceeds of the conversion thereof, voluntary
or involuntary, into cash or other liquid property, all cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, insurance proceeds, condemnation awards, rights to
payment of any and every kind and other forms of obligations and receivables,
instruments and other property which at any time constitute all or part of or
are included in the proceeds of any of the foregoing (collectively, the
“Collateral”).

-1-

 

          The foregoing Grant is made in trust to secure the payment of principal of
and interest on, and any other amounts owing in respect of, the Notes, and to
secure compliance with the provisions of this Indenture, all as provided in
this Indenture.

          The Indenture Trustee, as Indenture Trustee on behalf of the Noteholders,
acknowledges such Grant, accepts the trusts hereunder and agrees to perform its
duties required in this Indenture to the best of its ability to the end that
the interests of the Noteholders may adequately and effectively be protected.

ARTICLE I

DEFINITIONS

          Section 1.01 Definitions. (a) Except as otherwise specified herein, the
following terms have the respective meanings set forth below for all purposes
of this Indenture.

          “Act” has the meaning specified in Section 11.03(a) hereof.

          “Administration Agreement” means the Administration Agreement dated as of
September 17, 2003.

          “Administrator” means CapitalSource Finance LLC, in its capacity as
Administrator, or any successor Administrator under the Administration
Agreement.

          “Authorized Officer” means, with respect to the Issuer, any officer of the
Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized Officers
delivered by the Owner Trustee to the Indenture Trustee on the Closing Date (as
such list may be modified or supplemented from time to time thereafter) and, so
long as the Administration Agreement is in effect, any Vice President or more
senior officer of the Administrator who is authorized to act for the
Administrator in matters relating to the Issuer and to be acted upon by the
Administrator pursuant to the Administration Agreement and who is identified on
the list of Authorized Officers delivered by the Administrator to the Indenture
Trustee on the Closing Date (as such list may be modified or supplemented from
time to time thereafter).

          “Certificate of Trust” means the certificate of trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.

          “Change of Control” has the meaning specified in the Sale and Servicing
Agreement.

          “Closing Date” means September 17, 2003.

          “Collateral” has the meaning specified in the Granting Clause of this
Indenture.

          “Commission” means the Securities and Exchange Commission.

-2-

 

          “Corporate Trust Office” means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at date of execution of this Indenture is located,
for note transfer purposes, at MAC N9311-61, Sixth Street and Marquette Avenue,
Minneapolis, MN 55479, telecopy number: (612) 667-3539, or at such other
address as the Indenture Trustee may designate from time to time by notice to
the Noteholders and the Issuer, or the principal corporate trust office of any
successor Indenture Trustee at the address designated by such successor
Indenture Trustee by notice to the Noteholders and the Issuer.

          “Default” means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.

          “Depositor” shall mean CS Funding II Depositor LLC, a Delaware limited
liability company; in its capacity as depositor under the Sale and Servicing
Agreement, or any successor in interest thereto.

          “Depository Institution” means any depository institution or trust
company, including the Indenture Trustee, that (a) is incorporated under the
laws of the United States of America or any State thereof, (b) is subject to
supervision and examination by federal or state banking authorities and (c) has
outstanding unsecured commercial paper or other short-term unsecured debt
obligations that are rated at a rating to which the Majority Noteholders
consent in writing.

          “Event of Default” has the meaning specified in Section 5.01 hereof.

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

          “Executive Officer” means, with respect to (i) the Depositor, the
Servicer, the Loan Originator or any Affiliate of any of them, the President,
any Vice President or the Treasurer of such Person; with respect to any
partnership, any general partner thereof and with respect to any limited
liability company, any managing member thereof, (ii) the Note Registrar, any
Responsible Officer of the Indenture Trustee, (iii) any other corporation, the
Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such entity and (iv) any partnership, any general partner thereof.

          “Grant” means mortgage, pledge, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, create and grant a lien upon and a security
interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the granting party or otherwise, and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.

          “Holder” means the Person in whose name a Note is registered on the Note
Register.

-3-

 

          “ICA Owner” means “beneficial owner” as such term is used in Section
3(c)(1) of the Investment Company Act of 1940, as amended (other than any
persons who are excluded
from such term or from the 100-beneficial owner test of Section 3(c)(1) by law
or regulations adopted by the Commission).

          “Indenture” means this Indenture and any amendments hereto.

          “Indenture Trustee” means Wells Fargo Bank Minnesota, National
Association, a national banking association, as Indenture Trustee under this
Indenture, or any successor Indenture Trustee hereunder.

          “Issuer” means CapitalSource Funding II Trust, a Delaware statutory trust.

          “Issuer Order” and “Issuer Request” mean a written order or request signed
in the name of the Issuer by any one of its Authorized Officers and delivered
to the Indenture Trustee.

          “Loan Originator” means CapitalSource Finance LLC, a Delaware limited
liability company.

          “Majority Certificateholders” has the meaning specified in the Trust
Agreement.

          “Maximum Note Principal Balance” has the meaning specified in the Note
Purchase Agreement.

          “Note” means any Note authorized by and authenticated and delivered under
this Indenture.

          “Note Interest Rate” means for each Accrual Period, a per annum interest
rate equal to One-Month LIBOR for the related LIBOR Determination Date plus the
LIBOR Margin for such Accrual Period.

          “Note Purchase Agreement” means the Note Purchase Agreement dated as of
September 17, 2003, among the Issuer, the Depositor and the Purchaser as the
same may be amended or supplemented from time to time.

          “Note Register” and “Note Registrar” have the respective meanings
specified in Section 2.03 hereof.

          “Noteholder” means the Person in whose name a Note is registered on the
Note Register.

          “Officer’s Certificate” means a certificate signed by any Authorized
Officer of the Issuer or the Administrator, under the circumstances described
in, and otherwise complying with, the applicable requirements of Section 11.01
hereof, and delivered to the Indenture Trustee. Unless

-4-

 

otherwise specified, any
reference in this Indenture to an Officer’s Certificate shall be to an
Officer’s Certificate of any Authorized Officer of the Issuer or the
Administrator.

          “Opinion of Counsel” means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be an employee
of or counsel to the Issuer, and which opinion or opinions shall be addressed
to the Indenture Trustee, as Indenture
Trustee, and shall comply with any applicable requirements of Section 11.01
hereof and shall be in form and substance satisfactory to the Initial
Noteholder.

          “Outstanding” means, with respect to any Note and as of the date of
determination, any Note theretofore authenticated and delivered under this
Indenture except:

		
	 	     (i)     Notes theretofore canceled by the Note Registrar or delivered to
the Note Registrar for cancellation;

		
	 	     (ii)     Notes or portions thereof the payment for which money in the
necessary amount has theretofore been deposited with the Indenture
Trustee or any Paying Agent in trust for the Noteholders (provided,
however, that if such Notes are to be redeemed, notice of such redemption
has been duly given pursuant to this Indenture or provision for such
notice satisfactory to the Indenture Trustee has been made); and
	 
	 	     (iii)     Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes
are held by a bona fide purchaser; provided, however, that in determining
whether the Noteholders representing the requisite Percentage Interests
of the Outstanding Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any Basic
Document, Notes owned by the Issuer, any other obligor upon the Notes,
the Depositor or any Affiliate of any of the foregoing Persons shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver,
only Notes that the Indenture Trustee actually knows to be owned in such
manner shall be disregarded. Notes owned in such manner that have been
pledged in good faith may be regarded as Outstanding if the pledgee
certifies to the Indenture Trustee (y) that the pledgee has the right so
to act with respect to such Notes and (z) that the pledgee is not the
Issuer, any other obligor upon the Notes, the Depositor or any Affiliate
of any of the foregoing Persons.

          “Owner Trustee” means Wilmington Trust Company, acting not in its
individual capacity, but solely as Owner Trustee under the Trust Agreement.

          “Paying Agent” means a Person that meets the eligibility standards for the
Indenture Trustee specified in Section 3.03 hereof and is authorized by the
Issuer to make payments to and distributions from the Distribution Account,
including payment of principal of or interest on the

-5-

 

Notes on behalf of the
Issuer. The initial Paying Agent shall be the Indenture Trustee until another
Paying Agent is appointed by the Initial Noteholder pursuant to Section 8.04
herein.

          “Percentage Interest” means, with respect to any Note and as of any date
of determination, the percentage equal to a fraction, the numerator of which is
the principal balance of such Note as of such date of determination and the
denominator of which is the Note Principal Balance.

          “Predecessor Note” means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.04 hereof in lieu of a mutilated,
lost, destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.

          “Proceeding” means any suit in equity, action at law or other judicial or
administrative proceeding.

          “Purchaser” means Citigroup Global Markets Realty Corp.

          “Redemption Date” means in the case of a redemption of the Notes pursuant
to Section 10.01 hereof, the Payment Date specified by the Servicer pursuant to
such Section 10.01.

          “Registered Holder” means the Person in the name of which a Note is
registered on the Note Register on the applicable Record Date.

          “Sale Agent” has the meaning assigned to such term in Section 5.11 hereof.

          “Sale and Servicing Agreement” means the Sale and Servicing Agreement
dated as of September 17, 2003, among the Issuer, the Depositor, the Servicer,
the Loan Originator and the Indenture Trustee on behalf of the Noteholders as
the same may be amended and supplemented from time to time.

          “Securities Act” means the Securities Act of 1933, as amended.

          “Servicer” shall mean Capital Source Finance LLC, in its capacity as
servicer under the Sale and Servicing Agreement, and any successor servicer
thereunder.

          “State” means any one of the States of the United States of America or the
District of Columbia.

          “Termination Date” has the meaning specified in the Sale and Servicing
Agreement.

          “Trust Agreement” means the Trust Agreement dated as of September 17,
2003, between the Depositor and the Owner Trustee as the same may be amended
and supplemented from time to time.

-6-

 

          “Trust Certificate” has the meaning assigned to such term in Section 1.1
of the Trust Agreement.

          “Trust Indenture Act” means the Trust Indenture Act of 1939 as in force on
the date hereof, unless otherwise specifically provided.

          (b)     Except as otherwise specified herein or as the context may otherwise
require, capitalized terms used but not otherwise defined herein have the
respective meanings set forth in the Sale and Servicing Agreement for all
purposes of this Indenture.

          Section 1.02 Rules of Construction. Unless the context otherwise requires:

		
	 	     (i)     a term has the meaning assigned to it;
	 
	 	     (ii)     an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
	 
	 	     (iii)     “or” is not exclusive;
	 
	 	     (iv)     “including” means including without limitation;
	 
	 	     (v)     words in the singular include the plural and words in the plural
include the singular; and
	 
	 	     (vi)     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 (as provided in such agreements) 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

GENERAL PROVISIONS WITH RESPECT TO THE NOTES

          Section 2.01. Method of Issuance and Form of Notes.

          The Notes shall be designated generally as the “CapitalSource Funding II
Trust Commercial Loan Backed Notes” of the Issuer. Each Note shall bear upon
its face the designation so selected for the Notes. All Notes shall be
identical in all respects except for the denominations thereof. All Notes
issued under this Indenture shall be in all respects equally and ratably
entitled to the benefits thereof without preference, priority or distinction on
account of the actual time or times of authentication and delivery, all in
accordance with the terms and provisions of this Indenture.

-7-

 

          The Notes may be typewritten, printed, lithographed or engraved or
produced by any combination of these methods, all as determined by the officers
executing such Notes, as evidenced by their execution of such Notes.

          Each Note shall be dated the date of its authentication.

          The terms of the Notes shall be set forth in this Indenture.

          The Notes shall be in definitive form and shall bear a legend
substantially in the form of Exhibit C attached hereto.

          Section 2.02. Execution, Authentication, Delivery and Dating. The Notes
shall be executed on behalf of the Issuer by an Authorized Officer of the Owner
Trustee or the Administrator. The signature of any such Authorized Officer on
the Notes may be manual or facsimile.

          Notes bearing the manual or facsimile signature of individuals who were at
any time Authorized Officers of the Owner Trustee or the Administrator shall
bind the Issuer, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of such
Notes or did not hold such offices at the date of such Notes.

          Subject to the satisfaction of the conditions set forth in Section 2.08
hereof, the Indenture Trustee shall upon Issuer Order authenticate and deliver
the Notes.

          The Notes that are authenticated and delivered by the Indenture Trustee to
or upon the order of the Issuer on the Closing Date shall be dated as of such
Closing Date. All other Notes that are authenticated after the Closing Date
for any other purpose under the Indenture shall be dated the date of their
authentication. The Notes shall be issued in such denominations as may be
agreed by the Issuer and the Noteholders.

          No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Note a certificate
of authentication substantially in the form provided for herein executed by the
Indenture Trustee by the manual signature of one of its authorized signatories,
and such certificate upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly authenticated and delivered hereunder.

          Section 2.03. Registration; Registration of Transfer and Exchange. The
Issuer shall cause to be kept a register (the “Note Register”) in which,
subject to such reasonable regulations as it may prescribe, the Issuer shall
provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee initially shall be the “Note Registrar” for the
purpose of registering Notes and transfers of Notes as herein provided. Upon
any resignation of any Note Registrar, the Issuer shall promptly appoint a
successor or, if it elects not to make such an appointment, assume the duties
of the Note Registrar.

          If a Person other than the Indenture Trustee is appointed by the Issuer as
Note Registrar, the Issuer will give the Indenture Trustee prompt written
notice of the appointment of such

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Note Registrar and of the location, and any
change in the location, of the Note Register, and the Indenture Trustee shall
have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof, and the Indenture Trustee shall have the right to rely
upon a certificate executed on behalf of the Note Registrar by an Executive
Officer thereof as to the names and addresses of the Noteholders and the
principal amounts and number of the Notes.

          Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer to be maintained as provided in Section 3.02 hereof, the
Issuer shall execute, and the Indenture Trustee shall authenticate and the
Noteholder shall obtain from the Indenture Trustee, in the name of the
designated transferee or transferees, one or more new Notes in any authorized
denominations, of a like aggregate Note Principal Balance.

          At the option of the Holder, Notes may be exchanged for other Notes in any
authorized denominations, of a like aggregate principal amount, upon surrender
of the Notes to be exchanged at such office or agency. Whenever any Notes are
so surrendered for exchange, the Issuer shall execute, and the Indenture
Trustee shall authenticate and the Noteholder shall obtain from the Indenture
Trustee, the Notes which the Noteholder making the exchange is entitled to
receive.

          All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.

          Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument
of transfer in the form attached to the form of Note attached as Exhibit A
hereto duly executed by the Holder thereof or such Holder’s attorney duly
authorized in writing, with such signature guaranteed by an “eligible guarantor
institution” meeting the requirements of the Securities Transfer Agents’
Medallion Program (“STAMP”).

          No service charge shall be made to a Noteholder for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 9.05 hereof not involving any transfer.

          The preceding provisions of this Section 2.03 notwithstanding, the Issuer
shall not be required to make, and the Note Registrar need not register,
transfers or exchanges of Notes selected for redemption or of any Note for a
period of 15 days preceding the due date for any payment with respect to such
Note.

          Section 2.04. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, and (ii) there is delivered to the Issuer and Indenture Trustee
such security or indemnity as may reasonably be required by it to hold the
Issuer and the Indenture Trustee, as applicable, harmless, then, in the absence
of notice to the Issuer, the Note

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Registrar or the Indenture Trustee that such
Note has been acquired by a bona fide purchaser, an Authorized Officer of the
Owner Trustee or the Administrator on behalf of the Issuer shall execute, and
upon its written request the Indenture Trustee shall authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Note, a replacement Note; provided, however, that if any such destroyed, lost
or stolen Note, but not a mutilated Note, shall have become or within seven
days shall be due and payable, or shall have been called for redemption,
instead of issuing a replacement Note, the Issuer may pay such destroyed, lost
or stolen Note when so due or payable or upon the Redemption Date without
surrender thereof. If, after the delivery of such replacement Note or payment
of a destroyed, lost or stolen Note pursuant to the proviso to the preceding
sentence, a bona fide purchaser of the original Note in lieu of which such
replacement Note was issued presents for payment such original Note, the Issuer
shall be entitled to recover such replacement Note (or such payment) from the
Person to which it was delivered or any Person taking such replacement Note
from such
Person to which such replacement Note was delivered or any assignee of such
Person, except a bona fide purchaser, and the Issuer and the Indenture Trustee
shall be entitled to recover upon the security or indemnity provided therefor
to the extent of any loss, damage, cost or expense incurred by the Issuer or
the Indenture Trustee in connection therewith.

          Upon the issuance of any replacement Note under this Section 2.04, the
Issuer may require the payment by the Holder of such Note of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.

          Every replacement Note issued pursuant to this Section 2.04 in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.

          The provisions of this Section 2.04 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.

          Section 2.05. Persons Deemed Noteholders. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Paying Agent, the
Indenture Trustee and any agent of the Issuer or the Indenture Trustee may
treat the Person in the name of which any Note is registered (as of the day of
determination) as the Noteholder for the purpose of receiving payments of
principal of and interest, if any, on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and none of the Issuer, the
Paying Agent, the Indenture Trustee or any agent of the Issuer, the Paying
Agent, or the Indenture Trustee shall be affected by notice to the contrary.

          Section 2.06. Payment of Principal and/or Interest; Defaulted Interest.

          (a)     The Notes shall accrue interest at the Note Interest Rate, and such
interest shall be payable on each Payment Date, subject to Section 3.01 hereof.
Any installment of interest or principal, if any, payable on any Note that is
punctually paid or duly provided for by the Issuer

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on the applicable Payment
Date shall be paid to the Person in the name of which such Note (or one or more
Predecessor Notes) is registered on the next preceding Record Date based on the
Percentage Interest represented by its respective Note, without preference or
priority of any kind, and, except as otherwise provided in the next succeeding
sentence, shall be made by wire transfer of immediately available funds to the
account of such Noteholder, if such Noteholder shall have so notified the
Paying Agent and the Indenture Trustee, and otherwise by check mailed to the
address of such Noteholder appearing in the Note Register no less than five
days preceding the related Record Date. The final installment of principal
payable with respect to such Note shall be payable as provided in Section
2.06(b) below. The funds represented by any such checks returned undelivered
shall be held in accordance with Section 3.03 hereof.

          (b)     The principal of each Note shall be payable in installments on each
Payment Date as provided in Sections 5.01 and 5.02 of the Sale and Servicing
Agreement and Section 5.04(b) hereof. Notwithstanding the foregoing, the entire
unpaid principal amount of the
Notes shall be due and payable, if not previously paid, on the earlier of (i)
the Termination Date, (ii) the Redemption Date and (iii) the date on which an
Event of Default shall have occurred and be continuing, if the Indenture
Trustee or the Majority Noteholders shall have declared the Notes to be
immediately due and payable in the manner provided in Section 5.02 hereof.

          All principal payments on the Notes shall be made pro rata to the
Noteholders based on their respective Percentage Interests. The Paying Agent
shall notify the Person in the name of which a Note is registered at the close
of business on the Record Date preceding the Payment Date on which the Issuer
expects that the final installment of principal of and interest on such Note
will be paid. Such notice shall be mailed or transmitted by facsimile prior to
such final Payment Date and shall specify that such final installment will be
payable only upon presentation and surrender of such Note and shall specify the
place where such Note may be presented and surrendered for payment of such
installment. Notices in connection with redemptions of Notes shall be provided
to Noteholders as set forth in Section 10.02 hereof.

          Section 2.07. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall promptly be canceled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall promptly be canceled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange
for any Notes canceled as provided in this Section 2.07, except as expressly
permitted by this Indenture. All canceled Notes may be held or disposed of by
the Indenture Trustee in accordance with its standard retention or disposal
policy as in effect at the time unless the Issuer shall direct by an Issuer
Order that they be destroyed or returned to it; provided, however, that such
Issuer Order is timely and the Notes have not been previously disposed of by
the Indenture Trustee.

          Section 2.08. Conditions Precedent to the Authentication of the Notes.
The Notes may be authenticated by the Indenture Trustee upon receipt by the
Indenture Trustee of the following:

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          (a)     An Issuer Order authorizing authentication of such Notes by the
Indenture Trustee;

          (b)     All of the items of Collateral which are to be delivered pursuant to
the Basic Documents to the Indenture Trustee or its designee by the related
Closing Date shall have been delivered;

          (c)     An executed counterpart of each Basic Document;

          (d)     One or more Opinions of Counsel addressed to the Indenture Trustee to
the effect that:

		
	 	     (i)     the Owner Trustee has power and authority to execute, deliver
and perform its obligations under the Trust Agreement;
	 
	 	     (ii)     the Issuer has been duly formed, is validly existing as a
statutory trust under the laws of the State of Delaware, 12 Del. C.
Section 3801 et seq., and has power,
authority and legal right to execute and deliver this Indenture, the Note
Purchase Agreement and the Sale and Servicing Agreement;
	 
	 	     (iii)     assuming due authorization, execution and delivery hereof by
the Indenture Trustee, the Indenture is a valid, legal and binding
obligation of the Issuer, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, arrangement,
moratorium, fraudulent or preferential conveyance and other similar laws
of general application affecting the rights of creditors generally and to
general principles of equity (regardless of whether such enforcement is
considered in a Proceeding in equity or at law);
	 
	 	     (iv)     the Notes, when executed and authenticated as provided herein
and delivered against payment therefor, will be the valid, legal and
binding obligations of the Issuer pursuant to the terms of this
Indenture, entitled to the benefits of this Indenture, and will be
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, reorganization, arrangement, moratorium, fraudulent or
preferential conveyance and other similar laws of general application
affecting the rights of creditors generally and to general principles of
equity (regardless of whether such enforcement is considered in a
Proceeding in equity or at law);
	 
	 	     (v)     this Indenture is not required to be qualified under the Trust
Indenture Act;
	 
	 	     (vi)     no authorization, approval or consent of any governmental body
having jurisdiction over the Issuer or its assets which has not been
obtained by the Issuer is required to be obtained by the Issuer for the
valid issuance and delivery of the Notes, except that no opinion need be
expressed with respect to any such authorizations, approvals or consents
as may be required under any state securities or “blue sky” laws; and
	 
	 	     (vii)     any other matters that the Indenture Trustee may reasonably
request.

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          (e)     An Officer’s Certificate complying with the requirements of Section
11.01 hereof and stating that:

		
	 	     (i)     the Issuer is not in Default under this Indenture and the
issuance of the Notes applied for will not result in any breach of any of
the terms, conditions or provisions of, or constitute a default under,
the Trust Agreement, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Issuer is a party or by which it is
bound, or any order of any court or administrative agency entered in any
Proceeding to which the Issuer is a party or by which it may be bound or
to which it may be subject, and that all conditions precedent provided in
this Indenture relating to the authentication and delivery of the Notes
applied for have been complied with;
	 
	 	     (ii)     the Issuer is the owner of all of the Loans, the Issuer has not
assigned any interest or participation in any of the Eligible Loans (or,
if any such interest or participation has been assigned, it has been
released) and the Issuer has the right to Grant all of the Loans, to the
Indenture Trustee; and
	 
	 	     (iii)     the Issuer has Granted to the Indenture Trustee all of its
right, title and interest in and to the Collateral, and has delivered or
caused the same to be delivered to the Indenture Trustee.

          Section 2.09. Release of Collateral. (a) Except as otherwise provided by
the terms of the Basic Documents, the Indenture Trustee shall release the
Collateral from the lien of this Indenture only upon receipt of an Issuer
Request accompanied by the written instructions furnished by the Noteholders or
by the Indenture Trustee on behalf of the Noteholders. To the extent it deems
necessary, the Indenture Trustee may seek direction from the Noteholders with
regard to the release of Collateral other than the Custodial Loan File.

          (b)     The Indenture Trustee shall, if requested by the Servicer, temporarily
release to the Servicer the Custodial Loan File for purposes of facilitating
the servicing or administration of a Loan; provided, however, that the
Collateral Custodian’s records shall indicate the Issuer’s pledge to the
Indenture Trustee under the Indenture.

          Section 2.10. Additional Note Principal Balance. In the event of payment
of Additional Note Principal Balance by the Noteholders as provided in Section
2.01(c) of the Sale and Servicing Agreement, each Noteholder shall, and is
hereby authorized to, record on the schedule attached to its Note the date and
amount of any Additional Note Principal Balance advanced by it, and each
repayment thereof; provided that failure to make any such recordation on such
schedule or any error in such schedule shall not adversely affect any
Noteholder’s rights with respect to its Additional Note Principal Balance and
its right to receive interest payments in respect of the Additional Note
Principal Balance held by such Noteholder. The Noteholders shall give written
notice to the Indenture Trustee and the Paying Agent of any Additional Note
Principal Balance.

          Absent manifest error, the Note Principal Balance of each Note as set
forth in the notations made by the Initial Noteholder on such Note shall be
binding upon the Indenture Trustee

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and the Issuer; provided that failure by the
Initial Noteholder to make such recordation on its Note or any error in such
notation shall not adversely affect any Noteholder’s rights with respect to its
Note Principal Balance and its right to receive principal and interest payments
in respect thereof.

          Section 2.11. Tax Treatment. The Issuer has entered into this Indenture,
and the Notes will be issued, with the intention that for all purposes,
including federal, state and local income, single business and franchise tax
purposes, the Notes will qualify as indebtedness of the Issuer secured by the
Collateral. The Issuer, by entering into this Indenture, and each Noteholder,
by its acceptance of a Note, agree to treat the Notes for all purposes,
including federal, state and local income, single business and franchise tax
purposes, as indebtedness of the Issuer. The Indenture Trustee will have no
responsibility for filing or preparing any tax returns.

          Section 2.12. Limitations on Transfer of the Notes.

          (a)     The Notes have not been and will not be registered under the
Securities Act and will not be listed on any exchange. No transfer of a Note
shall be made unless such transfer is made pursuant to an effective
registration statement under the Securities Act and all applicable state
securities laws or is exempt from the registration requirements under the
Securities Act and such state securities laws. In order to assure compliance
with the Securities
Act and state securities laws, any transfer of a Note shall be made (A) in
reliance on Rule 144A under the Securities Act, in which case, the Indenture
Trustee shall require that the transferor deliver a certification substantially
in the form of Exhibit B-1 hereto and that the transferee deliver a
certification substantially in the form of Exhibit B-3 hereto, or (B) to an
institutional “accredited investor” within the meaning of Rule 501(a)(1), (2),
(3) or (7) of Regulation D under the Securities Act that is not a “qualified
institutional buyer,” in which case the Indenture Trustee shall require that
the transferee deliver a certification substantially in the form of Exhibit B-2
hereto. The Indenture Trustee shall not make any transfer or re-registration
of the Notes if after such transfer or re-registration, there would be more
than five (5) Noteholders. Each Noteholder shall, by its acceptance of a Note,
be deemed to have represented and warranted that the number of ICA Owners with
respect to all of its Notes shall not exceed four (4).

          (b)     The Note Registrar shall not register the transfer of any Note unless
the Indenture Trustee has received a certificate from the transferee to the
effect that either (i) the transferee is not an employee benefit plan or other
retirement plan or arrangement subject to Title I of the Employee Retirement
Income Security Act of 1974, as amended, or Section 4975 of the Internal
Revenue Code of 1986, as amended (each, a “Plan”), and is not acting on behalf
of or investing the assets of a Plan or (ii) if the transferee is a Plan or is
acting on behalf of or investing the assets of a Plan, 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”).

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ARTICLE III

COVENANTS

          Section 3.01. Payment of Principal and/or Interest. The Issuer will duly
and punctually pay (or will cause to be paid duly and punctually) the principal
of and interest on the Notes in accordance with the terms of the Notes, this
Indenture and the Sale and Servicing Agreement. The Paying Agent shall notify
the Person in the name of which a Note is registered and the Indenture Trustee
at the close of business on the Record Date preceding the Payment date on which
the Issuer expects that the final installment of principal of and interest on
such Note will be paid. Amounts properly withheld under the Code by any Person
from a payment to any of the Noteholders of interest and/or principal shall be
considered as having been paid by the Issuer to such Noteholder for all
purposes of this Indenture. The Notes shall be non-recourse obligations of the
Issuer and shall be limited in right of payment to amounts available from the
Collateral, as provided in this Indenture. The Issuer shall not otherwise be
liable for payments on the Notes. If any other provision of this Indenture
shall be deemed to conflict with the provisions of this Section 3.01, the
provisions of this Section 3.01 shall control.

          Section 3.02. Maintenance of Office or Agency. The Indenture Trustee
shall maintain at the Corporate Trust Office an office or agency where Notes
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Issuer in respect of the Notes and this Indenture
may be served. The Indenture Trustee shall give prompt
written notice to the Issuer of the location, and of any change in the
location, of any such office or agency.

          Section 3.03. Money for Payments to Be Held in Trust. As provided in
Section 8.02(a) and (b) hereof, all payments of amounts due and payable with
respect to any Notes that are to be made from amounts withdrawn from the
Distribution Account pursuant to Section 8.02(c) hereof shall be made on behalf
of the Issuer by the Indenture Trustee or by the Paying Agent, as applicable,
and no amounts so withdrawn from the Distribution Account for payments of Notes
shall be paid over to the Issuer except as provided in this Section 3.03.

          Any Paying Agent shall be appointed by the Issuer, with the consent of the
Majority Noteholders with written notice thereof to the Indenture Trustee. The
initial Paying Agent shall be the Indenture Trustee. The Issuer shall not
appoint any Paying Agent (other than the Indenture Trustee) which is not, at
the time of such appointment, a Depository Institution.

          The Issuer will cause each Paying Agent other than the Indenture Trustee
to execute and deliver to the Indenture Trustee an instrument in which such
Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions
of this Section 3.03, that such Paying Agent will:

		
	 	     (i)     hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as
herein provided;

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	 	     (ii)     give the Indenture Trustee notice of any Default by the Issuer
(or any other obligor upon the Notes) of which it has actual knowledge in
the making of any payment required to be made with respect to the Notes;
	 
	 	     (iii)     at any time during the continuance of any such Default, upon
the written request of the Majority Noteholders or the Indenture Trustee,
forthwith pay to the Indenture Trustee all sums so held in trust by such
Paying Agent;
	 
	 	     (iv)     immediately resign as a Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes
if at any time it ceases to meet the standards required to be met by a
Paying Agent at the time of its appointment; and
	 
	 	     (v)     comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith; provided, however, that
with respect to withholding and reporting requirements applicable to
original issue discount (if any) on the Notes, the Issuer shall have
first provided the calculations pertaining thereto to the Indenture
Trustee.

          Subject to applicable laws with respect to escheat of funds or abandoned
property, any money held by the Indenture Trustee or any Paying Agent in trust
for the payment of any amount due with respect to any Note and remaining
unclaimed for two years after such amount
has become due and payable shall be discharged from such trust and be paid to
the Issuer on Issuer Request; and the Holder of such Note shall thereafter, as
an unsecured general creditor, look only to the Issuer for payment thereof (but
only to the extent of the amounts so paid to the Issuer), and all liability of
the Indenture Trustee or such Paying Agent with respect to such trust money
shall thereupon cease; provided, however, that the Indenture Trustee or such
Paying Agent, before being required to make any such repayment, shall at the
expense and direction of the Issuer cause to be published, once in a newspaper
of general circulation in the City of New York customarily published in the
English language on each Business Day, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication, any unclaimed balance of such money then
remaining will be repaid to the Issuer. The Indenture Trustee shall also adopt
and employ any other reasonable means of notification of such repayment
(including, but not limited to, mailing notice of such repayment to Noteholders
whose Notes have been called but have not been surrendered for redemption or
whose right to or interest in moneys due and payable but not claimed at the
last address of record for each such Noteholder determinable from the records
of the Indenture Trustee or of any Paying Agent). Any costs and expenses of the
Indenture Trustee and the Paying Agent incurred in the holding of such funds
shall be charged against such funds. Monies so held shall not bear interest.

          Section 3.04. Existence. (a) Subject to subparagraph (b) of this Section
3.04, the Issuer will keep in full effect its existence, rights and franchises
as a statutory trust under the laws of the State of Delaware (unless it
becomes, or any successor Issuer hereunder is or becomes, organized under the
laws of any other State or of the United States of America, in which case the
Issuer will keep in full effect its existence, rights and franchises under the
laws of such other

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jurisdiction) and will obtain and preserve its qualification
to do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Notes and the Collateral. The Issuer shall comply in all respects with the
covenants contained in the Trust Agreement, including without limitation, the
“special purpose entity” covenants set forth in Section 4.1 thereof.

          (b)     Any successor to the Owner Trustee appointed pursuant to Section 10.2
of the Trust Agreement shall be the successor Owner Trustee under this
Indenture without the execution or filing of any paper, instrument or further
act to be done on the part of the parties hereto.

          (c)     Upon any consolidation or merger of or other succession to the Owner
Trustee, the Person succeeding to the Owner Trustee under the Trust Agreement
may exercise every right and power of the Owner Trustee under this Indenture
with the same effect as if such Person had been named as the Owner Trustee
herein.

          Section 3.05. Protection of Collateral. The Issuer shall from time to
time execute and deliver all such reasonable supplements and amendments hereto
and all such financing statements, continuation statements, instruments of
further assurance and other instruments, and will take such other action
necessary or advisable to:

		
	 	     (i)     provide further assurance with respect to the Grant of all or
any portion of the Collateral;
	 
	 	     (ii)     maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
	 
	 	     (iii)     perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
	 
	 	     (iv)     enforce any rights with respect to the Collateral; and
	 
	 	     (v)     preserve and defend title to the Collateral and the rights of
the Indenture Trustee and the Noteholders in such Collateral against the
claims of all Persons and parties.

The Issuer hereby designates the Administrator, its agent and attorney-in-fact
to execute any financing statement, continuation statement or other instrument
required to be executed pursuant to this Section 3.05.

          Section 3.06. Negative Covenants. Without the written consent of the
Majority Noteholders, so long as any Notes are Outstanding, the Issuer shall
not:

		
	 	     (i)     except as expressly permitted by the Basic Documents, sell,
transfer, exchange or otherwise dispose of any of its properties or
assets, including those included in any part of the Owner Trust Estate
(as defined in the Trust Agreement), unless directed to do so by the
Noteholders as permitted herein;

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	 	     (ii)     claim any credit on, or make any deduction from the principal
or interest payable in respect of, the Notes (other than amounts properly
withheld from such payments under the Code) or assert any claim against
any present or former Noteholder by reason of the payment of the taxes
levied or assessed upon any part of the Owner Trust Estate;
	 
	 	     (iii)     engage in any business or activity other than as expressly
permitted by this Indenture and the other Basic Documents, other than in
connection with, or relating to, the issuance of Notes pursuant to this
Indenture, or amend this Indenture as in effect on the Closing Date other
than in accordance with Article IX hereof;
	 
	 	     (iv)     issue any debt obligations except under this Indenture;
	 
	 	     (v)     incur or assume any indebtedness or guaranty any indebtedness of
any Person, except for such indebtedness as may be incurred by the Issuer
in connection with the issuance of the Notes pursuant to this Indenture;
	 
	 	     (vi)     dissolve or liquidate in whole or in part or merge or
consolidate with any other Person;
	 
	 	     (vii)     (A) permit the validity or effectiveness of this Indenture to
be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any
Person to be released from any covenants or obligations with respect to
the Notes except as may expressly be permitted hereby, (B) except as
provided in the Basic Documents, permit any lien, charge, excise, claim,
security interest,
mortgage or other encumbrance to be created on or extend to or otherwise
arise upon or burden the Trust Estate or any part thereof or any interest
therein or the proceeds thereof (other than, tax liens, mechanics’ liens
and other liens that arise by operation of law, in each case, on any
Mortgaged Property and arising solely as a result of an action or
omission of the related Borrowers) or (C) except as provided in the Basic
Documents, permit any Person other than itself, the Owner Trustee and the
Noteholders to have any right, title or interest in the Trust Estate;
	 
	 	     (viii)     remove the Administrator without the prior written consent of the
Majority Noteholders; or
	 
	 	     (ix)     take any other action or fail to take any action which may
cause the Issuer to be taxable as (a) an association pursuant to Section
7701 of the Code and the corresponding regulations, or (b) as a taxable
mortgage pool pursuant to Section 7701(i) of the Code.

          Section 3.07. Performance of Obligations; Servicing of Loans. (a) The
Issuer shall not take any action and will use its commercially reasonable
efforts not to permit any action to be taken by others that would release any
Person from any of such Person’s material covenants or obligations under any
instrument or agreement included in the Collateral or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or

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effectiveness of, any such instrument or agreement, except as
expressly provided in the Basic Documents or such other instrument or
agreement.

          (b)     The Issuer may contract with or otherwise obtain the assistance of
other Persons (including, without limitation, the Administrator under the
Administration Agreement) to assist it in performing its duties under this
Indenture, and any performance of such duties by a Person identified to the
Indenture Trustee in an Officer’s Certificate of the Issuer shall be deemed to
be action taken by the Issuer. Initially, the Issuer has contracted with the
Servicer to assist the Issuer in performing its duties under this Indenture.

          (c)     The Issuer will punctually perform and observe all of its obligations
and agreements contained in this Indenture, in the Basic Documents and in the
instruments and agreements included in the Collateral, including but not
limited to (i) filing or causing to be filed all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture and
the Sale and Servicing Agreement and (ii) recording or causing to be recorded
all Mortgages, Assignments of Mortgage, all intervening Assignments of Mortgage
and all assumption and modification agreements required to be recorded by the
terms of the Sale and Servicing Agreement, in accordance with and within the
time periods provided for in this Indenture and/or the Sale and Servicing
Agreement, as applicable. Except as otherwise expressly provided therein, the
Issuer shall not waive, amend, modify, supplement or terminate any Basic
Document or any provision thereof without the consent of the Indenture Trustee
and the Majority Noteholders.

          (d)     If the Issuer shall have knowledge of the occurrence and continuance
of a Servicer Event of Default, the Issuer shall promptly notify the Indenture
Trustee and the Majority Noteholder thereof, and shall specify in such notice
the action, if any, the Issuer is taking with respect to such default. If a
Servicer Event of Default shall be continuing due to the
failure of the Servicer to perform any of its duties or obligations under the
Sale and Servicing Agreement with respect to the Eligible Loans, the Issuer
shall take all reasonable steps available to it to remedy such failure.

          (e)     Upon any termination of the Servicer’s rights and powers pursuant to
the Sale and Servicing Agreement, the Issuer shall promptly notify the
Indenture Trustee. As soon as a successor servicer is appointed, the Issuer
shall notify the Indenture Trustee of such appointment, specifying in such
notice the name and address of such successor servicer.

          (f)     Without derogating from the absolute nature of the assignment granted
to the Indenture Trustee under this Indenture or the rights of the Indenture
Trustee hereunder, the Issuer agrees (i) that it will not, without the prior
written consent of the Indenture Trustee, amend, modify, waive, supplement,
terminate or surrender, or agree to any amendment, modification, supplement,
termination, waiver or surrender of, the terms of any Collateral (except to the
extent otherwise permitted by the Sale and Servicing Agreement) or the Basic
Documents, or waive timely performance or observance by the Servicer or the
Depositor under the Sale and Servicing Agreement; and (ii) that any such
amendment shall not (A) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, distributions that are required to be made
for the benefit of the Noteholders or (B) reduce the aforesaid percentage of
the Notes that is required to

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consent to any such amendment, without the
consent of Noteholders evidencing 100% Percentage Interests of the Outstanding
Notes. If any such amendment, modification, supplement or waiver shall so be
consented to by the Indenture Trustee, the Issuer agrees, promptly following a
request by the Indenture Trustee to do so, to execute and deliver, in its own
name and at its own expense, such agreements, instruments, consents and other
documents as the Indenture Trustee may deem necessary or appropriate in the
circumstances.

          Section 3.08. Reserved.

          Section 3.09. Annual Statement as to Compliance. So long as the Notes
are Outstanding, the Issuer will deliver to the Indenture Trustee, within 120
days after the end of each fiscal year of the Issuer (commencing with the
fiscal year beginning on May 1, 2004), an Officer’s Certificate stating, as to
the Authorized Officer signing such Officer’s Certificate, that:

		
	 	     (i)     a review of the activities of the Issuer during such year and of
its performance under this Indenture has been made under such Authorized
Officer’s supervision; and
	 
	 	     (ii)     to the best of such Authorized Officer’s knowledge, based on
such review, the Issuer has materially complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a default in its compliance with any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.

          Section 3.10. Covenants of the Issuer. All covenants of the Issuer in this
Indenture are covenants of the Issuer and are not covenants of the Owner
Trustee. The Owner Trustee is, and any successor Owner Trustee under the Trust
Agreement will be, entering into this Indenture solely as Owner Trustee under
the Trust Agreement and not in its respective individual capacity, and in no
case whatsoever shall the Owner Trustee or any such successor Owner Trustee be
personally liable on, or for any loss in respect of, any of the statements,
representations, warranties or obligations of the Issuer hereunder, as to all
of which the parties hereto agree to look solely to the property of the Issuer.

          Section 3.11. Servicer’s Obligations. The Issuer shall cause the
Servicer to comply with the Sale and Servicing Agreement.

          Section 3.12. Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or
security in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire
or otherwise acquire for value any such ownership or equity interest or
security or (iii) set aside or otherwise segregate any amounts for any such
purpose; provided, however, that the Issuer may make, or cause to be made
distributions to the Servicer, the Indenture Trustee, the Owner Trustee and the
Noteholders and the holders of the Trust Certificates as contemplated by, and
to the extent funds are available for such purpose under, the Sale and
Servicing Agreement or the Trust Agreement. The Issuer will not, directly or
indirectly,

-20-

 

make or cause to be made payments to or distributions from the
Distribution Account except in accordance with this Indenture and the Basic
Documents.

          Section 3.13. Treatment of Notes as Debt for All Purposes. The Issuer
shall, and shall cause the Administrator to, treat the Notes as indebtedness
for all purposes.

          Section 3.14. Notice of Events of Default. The Issuer shall give the
Indenture Trustee and the Noteholders prompt written notice of each Event of
Default hereunder and each default on the part of the Servicer or the Loan
Originator of their respective obligations under any of the Basic Documents.

          Section 3.15. Further Instruments and Acts. Upon request of the
Indenture Trustee, the Issuer will execute and deliver such further instruments
and do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Indenture.

ARTICLE IV

SATISFACTION AND DISCHARGE

          Section 4.01. Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes (except as to (i)
rights of registration of transfer and exchange, (ii) substitution of
mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to
receive payments of principal thereof and interest thereon, (iv) Sections 3.03,
3.04 and 3.10 hereof, (v) the rights, obligations and immunities of the
Indenture Trustee hereunder (including the rights of the Indenture Trustee
under Section 6.07 hereof and the obligations of the Indenture Trustee under
Section 4.02 hereof) and (vi) the rights of Noteholders as beneficiaries hereof
with respect to the property so deposited with the Indenture Trustee payable to
all or any of them), and the Indenture Trustee, on demand of and at the expense
of the Issuer, shall execute proper instruments satisfactory to it, and
prepared and delivered to it by the
Issuer, acknowledging satisfaction and discharge of this Indenture with respect
to the Notes, when all of the following have occurred:

	 	(A)	 	either
	 
	 	(1)	 	all Notes theretofore authenticated and delivered
(other than (i) Notes that have been destroyed, lost or stolen
and that have been replaced or paid as provided in Section
2.04 hereof and (ii) Notes for the payment of which money has
theretofore been deposited in trust or segregated and held in
trust by the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section 3.03
hereof) shall have been delivered to the Indenture Trustee for
cancellation; or
	 
	 	(2)	 	all Notes not theretofore delivered to the
Indenture Trustee for cancellation
	 
	 		 	a.    shall have become due and payable, or

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	 	b.	 	are to be called for redemption
within one year under arrangements satisfactory to the
Indenture Trustee for the giving of notice of redemption
by the Indenture Trustee in the name, and at the
expense, of the Issuer,
	 
	 	c.	 	and the Issuer, in the case of clause
a. or b. above, has irrevocably deposited or caused
irrevocably to be deposited with the Indenture Trustee
cash or direct obligations of or obligations guaranteed
by the United States of America (which will mature prior
to the date such amounts are payable), in trust for such
purpose, in an amount sufficient to pay and discharge
the entire indebtedness on such Notes not theretofore
delivered to the Indenture Trustee for cancellation when
due to the applicable Termination Date or the Redemption
Date (if Notes shall have been called for redemption
pursuant to Section 10.01 hereof), as the case may be;
and

          (B)     the latest of (a) the payment in full of all outstanding obligations
under the Notes, (b) the payment in full of all unpaid Trust Fees and Expenses
and (c) the date on which the Issuer has paid or caused to be paid all other
sums payable hereunder by the Issuer; and

          (C)     the Issuer shall have delivered to the Indenture Trustee an Officer’s
Certificate and an Opinion of Counsel, each meeting the applicable requirements
of Section 11.01 hereof and, subject to Section 11.02 hereof, each stating that
all conditions precedent herein provided for, relating to the satisfaction and
discharge of this Indenture with respect to the Notes, have been complied with.

          Section 4.02. Application of Trust Money. All moneys deposited with the
Indenture Trustee pursuant to Sections 3.03 and 4.01 hereof shall be held in
trust and applied by it, in accordance with the provisions of the Notes and
this Indenture, to the payment, either directly or through any Paying Agent, as
the Indenture Trustee may determine, to the
Noteholders for the payment or redemption of which such moneys have been
deposited with the Indenture Trustee, of all sums due and to become due thereon
for principal and/or interest; but such moneys need not be segregated from
other funds except to the extent required herein or in the Sale and Servicing
Agreement or required by law.

          Section 4.03. Repayment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the
Notes, all moneys then held by any Paying Agent other than the Indenture
Trustee under the provisions of this Indenture with respect to such Notes
shall, upon demand of the Issuer, be paid to the Indenture Trustee to be held
and applied according to Section 3.03 hereof and thereupon such Paying Agent
shall be released from all further liability with respect to such moneys.

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ARTICLE V

REMEDIES

          Section 5.01. Events of Default. “Event of Default,” wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):

          (a)     notwithstanding any insufficiency of funds in the Distribution Account
for payment thereof on the related Payment Date, default in the payment of any
interest on any Note within      days of when the same becomes due and payable;
or

          (b)     notwithstanding any insufficiency of funds in the Distribution Account
for payment thereof on the related Payment Date, default in the payment of any
installment of the principal required to be made pursuant to the Sale and
Servicing Agreement or a shortfall with respect to the Required
Overcollateralization Amount of any Note (i) on any Payment Date or (ii) on the
Termination Date, or, to the extent that there are funds available in the
Distribution Account therefor, default in the payment of any installment of the
principal of any Note from such available funds, as a result of the occurrence
of a Trigger Event; or

          (c)     the occurrence of a Servicer Event of Default; or

          (d)     default in the observance or performance of any covenant or agreement
of the Issuer made in any Basic Document to which it is a party (other than a
covenant or agreement, a default in the observance or performance of which is
elsewhere in this Section 5.01 specifically dealt with), or any representation
or warranty of the Issuer made in any Basic Document to which it is a party or
in any certificate or other writing delivered pursuant thereto or in connection
therewith proving to have been incorrect in any material respect as of the time
when the same shall have been made, and such default shall continue or not be
cured, or the circumstance or condition in respect of which such
misrepresentation or warranty was incorrect shall not have been eliminated or
otherwise cured, for a period of 30 days after there shall have been given, by
registered or certified mail, to the Issuer by the Indenture Trustee, or to the
Issuer, the Depositor and the Indenture Trustee by Noteholders evidencing at
least 25% Percentage Interests of the Outstanding Notes, a written notice
specifying such default or incorrect
representation or warranty and requiring it to be remedied and stating that
such notice is a notice of Default hereunder; or

          (e)     default in the observance or performance of any covenant or agreement
of the Depositor made in any Basic Document to which it is a party or any
representation or warranty of the Depositor (except as otherwise expressly
provided in the Basic Documents with respect to representations and warranties
regarding the Loans) or Loan Originator made in any Basic Document to which
they are a party, proving to have been incorrect in any material respect as of
the time when the same shall have been made, and such default shall continue or
not be cured, or the circumstance or condition in respect of which such
misrepresentation or warranty was incorrect shall not have been eliminated or
otherwise cured, for a period of 30 days after there shall have been given, by

-23-

 

registered or certified mail, to the Issuer and the Depositor by the Indenture
Trustee, or to the Issuer, the Depositor and the Indenture Trustee by
Noteholders evidencing at least 25% Percentage Interests of the Outstanding
Notes, a written notice specifying such Default or incorrect representation or
warranty and requiring it to be remedied and stating that such notice is a
notice of Default hereunder; or

          (f)     default in the observance or performance of any covenant or agreement
of the Loan Originator made in any repurchase agreement, loan and security
agreement or other similar credit facility agreement entered into by the Loan
Originator and any third party for borrowed funds in excess of $10,000,000, it
being understood that a default under another agreement shall constitute an
Event of Default hereunder only when and if the lender or counterparty under
the other agreement is presently entitled to exercise default remedies by the
terms of that other agreement; or

          (g)     the filing of a decree or order for relief by a court having
jurisdiction over the Issuer, the Depositor or the Loan Originator or all or
substantially all of the Collateral in an involuntary case under any applicable
federal or state bankruptcy, insolvency or other similar law now or hereafter
in effect, or the appointing of a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of the Issuer, the Depositor or the
Loan Originator or for all or substantially all of the Collateral, or the
ordering of the winding-up or liquidation of the affairs of the Issuer, the
Depositor or the Loan Originator, and such decree or order shall remain
unstayed and in effect for a period of sixty (60) consecutive days; or

          (h)     the commencement by the Issuer, the Depositor or the Loan Originator
of a voluntary case under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or the consent by
the Issuer, the Depositor or the Loan Originator to the entry of an order for
relief in an involuntary case under any such law, or the consent by the Issuer
to the appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Issuer, the
Depositor or the Loan Originator or for any substantial part of the Collateral,
or the making by the Issuer, the Depositor or the Loan Originator of any
general assignment for the benefit of creditors, or the failure by the Issuer,
the Depositor or the Loan Originator generally to pay its respective debts as
such debts become due, or the taking of any action by the Issuer, the Depositor
or the Loan Originator in furtherance of any of the foregoing; or

          (i)     the Notes shall be Outstanding on the day after the end of the
Amortization Period.

          The Issuer shall deliver to the Indenture Trustee, within five days after
the occurrence thereof, written notice in the form of an Officer’s Certificate
of any event which with the giving of notice and the lapse of time would become
an Event of Default under clause (d) above, the status of such event and what
action the Issuer is taking or proposes to take with respect thereto.

          Section 5.02. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default should occur and be continuing, then and in every such case
the Indenture Trustee, at the direction or upon the prior written consent of
the Majority Noteholders, may declare all the Notes to be immediately due and
payable, by a notice in writing to the Issuer (and to the Indenture Trustee

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if
given by Noteholders), and upon any such declaration, the unpaid principal
amount of such Notes, together with accrued and unpaid interest thereon through
the date of acceleration, shall become immediately due and payable.

          At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the moneys due has been
obtained by the Indenture Trustee as hereinafter in this Article V provided,
the Majority Noteholders, by written notice to the Issuer and the Indenture
Trustee, may rescind and annul such declaration and its consequences if:

          (a)     the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay:

	 	1.	 	all payments of principal of and/or interest on all Notes and
all other amounts that would then be due hereunder or upon such
Notes if the Event of Default giving rise to such acceleration had
not occurred; and
	 
	 	2.	 	all sums paid or advanced by the Indenture Trustee hereunder
and the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee and its agents and counsel; and

          (b)     all Events of Default, other than the nonpayment of the principal of
the Notes that has become due solely by such acceleration, have been cured or
waived as provided in Section 5.12 hereof. No such rescission shall affect any
subsequent default or impair any right consequent thereto.

          Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee. (a) The Issuer covenants that if (i) default is made in the
payment of any interest on any Note when the same becomes due and payable, and
such default continues for a period of five days, or (ii) default is made in
the payment of the principal of or any installment of the principal of any Note
when the same becomes due and payable, the Issuer will, upon demand of the
Indenture Trustee, pay to the Indenture Trustee, for the benefit of the
Noteholders, the whole amount then due and payable on such Notes for principal
and/or interest, with interest upon the overdue principal and, to the extent
payment at such rate of interest shall be legally enforceable, upon overdue
installments of interest at the rate borne by the Notes and in addition thereto
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee and its agents and counsel.

          (b)     In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Indenture Trustee shall at the direction of the Majority
Noteholders, subject to Section 5.06(c) institute a Proceeding for the
collection of the sums so due and unpaid, and may prosecute such Proceeding to
judgment or final decree, and may enforce the same against the Issuer or other
obligor upon such Notes and collect in the manner provided by law out of the
property of the Issuer or other obligor upon such Notes, wherever situated, the
moneys adjudged or decreed to be payable.

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          (c)     If an Event of Default occurs and is continuing, the Indenture Trustee
shall at the direction of the Majority Noteholders, as more particularly
provided in Section 5.04 hereof, subject to Section 5.06(c) hereof, proceed to
protect and enforce its rights and the rights of the Noteholders by such
appropriate Proceedings as the Indenture Trustee shall deem most effective to
protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy or legal or
equitable right vested in the Indenture Trustee by this Indenture or by law.

          (d)     In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest
in the Collateral, Proceedings under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee
shall have made any demand pursuant to the provisions of this Section 5.03,
shall be entitled and empowered by intervention in such Proceedings or
otherwise:

		
	 	     (i)     to file and prove a claim or claims for the whole amount of
principal and/or interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Indenture Trustee (including any claim
for reasonable compensation to the Indenture Trustee, each predecessor
Indenture Trustee, and its agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances
made, by the Indenture Trustee and each predecessor Indenture Trustee,
except as a result of negligence or bad faith) and of the Noteholders
allowed in such Proceedings;
	 
	 	     (ii)     unless prohibited by applicable law and regulations, to vote on
behalf of the Noteholders in any election of a trustee, a standby trustee
or Person performing similar functions in any such Proceedings;
	 
	 	     (iii)     to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received
with respect to the claims of the Noteholders and the Indenture Trustee
on their behalf; and
	 
	 	     (iv)     to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the
Indenture Trustee or the Noteholders allowed in any judicial proceedings
relative to the Issuer its creditors and its property; and any trustee,
receiver, liquidator, custodian or other similar official in any such
Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee and, in the event that the Indenture
Trustee shall consent to the making of

-26-

 

		
	 	payments directly to such
Noteholders, to pay to the Indenture Trustee such amounts as shall be
sufficient to cover reasonable compensation to the Indenture Trustee,
each predecessor Indenture Trustee and their respective agents, attorneys
and counsel, and all other expenses and liabilities incurred and all
advances made by the Indenture Trustee and each predecessor Indenture
Trustee except as a result of negligence or bad faith.

          (e)     Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the
election of a trustee in bankruptcy or similar Person.

          (f)     All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or Proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents, attorneys and counsel, shall be
for the ratable benefit of the Noteholders.

          (g)     In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be held to
represent all the Noteholders, and it shall not be necessary to make any
Noteholder a party to any such Proceedings.

          Section 5.04. Remedies; Priorities. (a) If an Event of Default shall
have occurred and be continuing, the Indenture Trustee, at the direction of the
Majority Noteholders shall, subject to 5.06(c), do one or more of the following
(subject to Section 5.05 hereof):

		
	 	    (i)     institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the Notes
or under this Indenture with respect thereto, whether by declaration or
otherwise, enforce any judgment obtained, and collect from the Issuer and
any other obligor upon such Notes moneys adjudged due;

		
	 	    (ii)     institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Collateral;

		
	 	    (iii)     exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights and
remedies of the Indenture Trustee or the Noteholders; and

		
	 	    (iv)     sell the Collateral or any portion thereof or rights or
interest therein in a commercially reasonable manner, at one or more
public or private sales called and conducted in any manner permitted by
law; provided, however, that the Indenture Trustee may not sell

-27-

 

		
	 	or otherwise liquidate the Collateral following an Event of Default, unless
(A) the Holders of 100% Percentage Interests of the Outstanding Notes
consent thereto, (B) the proceeds of such sale or liquidation
distributable to the Noteholders are sufficient to discharge in full all
amounts then due and unpaid upon such Notes for principal and/or interest
or (C) the Indenture Trustee determines that the Collateral will not
continue to provide sufficient funds for the payment of principal of and
interest on the Notes as they would have become due if the Notes had not
been declared due and payable, and the Indenture Trustee obtains the
consent of Holders of not less than 66-2/3% Percentage Interests of the
Outstanding Notes. In determining such sufficiency or insufficiency with
respect to clause (B) and (C) of this subsection (a)(iv), the Indenture
Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national reputation
as to the feasibility of such proposed action and as to the sufficiency
of the Collateral for such purpose.

            (b)     If the Indenture Trustee or Paying Agent collects any money or
property pursuant to this Article V, it shall pay out the money or property in
the following order:

		
	 	     FIRST:   
       in the following order of priority: (a) to the Indenture
Trustee, an amount equal to all unreimbursed Indenture Trustee Fees and
indemnities and any other amounts payable to the Indenture Trustee
pursuant to the Basic Documents, including amounts owed to it in
connection with the appointment of a successor servicer and in its role
as successor servicer, and to the Indenture Trustee or Sale Agents, as
applicable, all reasonable fees and expenses incurred by them and their
agents and representatives in connection with the enforcement of the
remedies provided for in this Article V, (b) to the
Collateral Custodian, an amount equal to all unpaid fees of the
Collateral Custodian and indemnities and any other amounts payable to the
Collateral Custodian pursuant to the Basic Documents, (c) to the
Servicer, an amount equal to (i) all unreimbursed Servicing Compensation
and (ii) all unreimbursed Nonrecoverable Servicing Advances, and (d) to
the Servicer, in trust for the Owner Trustee, an amount equal to the
Owner Trustee Fee and all unpaid Owner Trustee Fees and indemnities and
any other amounts payable to the Owner Trustee pursuant to the Basic
Documents;

		
	 	     SECOND:     to the Noteholders pro rata, all amounts in respect of
interest due and owing under the Notes;

		
	 	     THIRD:         to the Noteholders pro rata, all amounts in respect of unpaid
principal of the Notes;

		
	 	     FOURTH:     to the Purchaser or any other Indemnified Party (as each
such term is defined in the Note Purchase Agreement), amounts in respect
of Issuer/Depositor Indemnities (as defined in the Trust Agreement) and
to the Initial Noteholder until such amounts are paid in full;

		
	 	     FIFTH:          to the Paying Agent, for any amounts to be distributed pro
rata to the holders of the Trust Certificates pursuant to the Trust
Agreement.

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          The Indenture Trustee may fix a record date and payment date for any
payment to be made to the Noteholders pursuant to this Section 5.04. At least
15 days before such record date, the Indenture Trustee shall mail to each
Noteholder and the Issuer a notice that states the record date, the payment
date and the amount to be paid.

          Section 5.05. Optional Preservation of the Collateral. If the Notes have
been declared to be due and payable under Section 5.02 hereof following an
Event of Default and such declaration and its consequences have not been
rescinded and annulled, the Indenture Trustee may, but need not, elect to
maintain possession of the Collateral. It is the desire of the parties hereto
and the Noteholders that there be at all times sufficient funds for the payment
of principal of and interest on the Notes, and the Indenture Trustee shall take
such desire into account when determining whether or not to maintain possession
of the Collateral. In determining whether to maintain possession of the
Collateral, the Indenture Trustee may, but need not, obtain and rely upon an
opinion of an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Collateral for such purpose.

          Section 5.06. Limitation of Suits. No Noteholder shall have any right to
institute any Proceeding, judicial or otherwise, with respect to this Indenture
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless:

          (a)     such Noteholder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;

          (b)     the Noteholders evidencing not less than 25% Percentage Interests of
the Outstanding Notes have made written request to the Indenture Trustee to
institute such Proceeding in respect of such Event of Default in its own name
as Indenture Trustee hereunder;

          (c)     such Noteholder or Noteholders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in complying with such request;

          (d)     the Indenture Trustee for thirty (30) days after its receipt of such
notice, request and offer of reasonable indemnity has failed to institute such
Proceeding; and

          (e)     no direction inconsistent with such written request has been given to
the Indenture Trustee during such thirty (30) day period by the Majority
Noteholders.

          It is understood and intended that no one or more Noteholders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Noteholders or to obtain or to seek to obtain priority or preference over any

other Noteholders or to enforce any right under this Indenture, except in the
manner herein provided.

          In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Noteholders,
neither of which evidences Percentage

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Interests of the Outstanding Notes
greater than 50%, the Indenture Trustee in its sole discretion may determine
what action, if any, shall be taken, notwithstanding any other provisions of
this Indenture and shall have no obligation or liability to any such group of
Noteholders for such action or inaction.

          Section 5.07. Unconditional Rights of Noteholders to Receive Principal
and/or Interest. Notwithstanding any other provisions in this Indenture, any
Noteholder shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest, if any, on such Note on or
after the applicable Termination Date thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) and
to institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Noteholder.

          Section 5.08. Restoration of Rights and Remedies. If the Indenture
Trustee or any Noteholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Issuer, the
Indenture Trustee and the Noteholders shall, subject to any determination in
such Proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Indenture
Trustee and the Noteholders shall continue as though no such Proceeding had
been instituted.

          Section 5.09. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

          Section 5.10. Delay or Omission Not a Waiver. No delay or omission of
the Indenture Trustee or any Noteholder to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Indenture Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Noteholders, as the case may be.

          Section 5.11. Control by Noteholders. The Majority Noteholders shall
have the right to direct the time, method and place of conducting any
Proceeding for any remedy available to the Indenture Trustee with respect to
the Notes or the Collateral or exercising any trust or power conferred on the
Indenture Trustee; provided, however, that:

          (a)     such direction shall not be in conflict with any rule of law or with
this Indenture;

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          (b)     subject to the express terms of Section 5.04(a)(iv) hereof, any
direction to the Indenture Trustee to sell or liquidate the Collateral shall be
by Holders of Notes representing Percentage Interests of the Outstanding Notes
of not less than 100%;

          (c)     if the conditions set forth in Section 5.05 hereof have been satisfied
and the Indenture Trustee elects to retain the Collateral pursuant to such
Section, then any direction to the Indenture Trustee by Holders of Notes
representing Percentage Interests of the Outstanding Notes of less than 100% to
sell or liquidate the Collateral shall be of no force and effect; and

          (d)     the Indenture Trustee may take any other action deemed proper by the
Indenture Trustee that is not inconsistent with such direction.

          In connection with any sale of the Collateral in accordance with paragraph
(c) above, the Majority Noteholders may, in their sole discretion appoint
agents to effect the sale of the Collateral (such agents, “Sale Agents”), which
Sale Agents may be Affiliates of any Noteholder. The Sale Agents shall be
entitled to reasonable compensation in connection with such activities from the
proceeds of such sale.

          Notwithstanding the rights of the Noteholders set forth in this Section
5.11, subject to Section 6.01 hereof, the Indenture Trustee need not take any
action that it determines might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.

          Section 5.12. Waiver of Past Defaults. The Majority Noteholders may
waive any past Default or Event of Default and its consequences, except a
Default (a) in the payment of principal of or interest on any of the Notes or
(b) in respect of a covenant or provision hereof that cannot be modified or amended without
the consent of each Noteholder. In the case of any such waiver, the Issuer,
the Indenture Trustee and Noteholders shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereto.

          Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto.

          Section 5.13. Undertaking for Costs. All parties to this Indenture
agree, and each Noteholder by such Noteholder’s acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in any
suit against the Indenture Trustee for any action taken, suffered or omitted by
it as Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys’ fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.13 shall not apply to (a) any suit instituted by
the Indenture Trustee, (b) any suit instituted by any Noteholder,

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or group of
Noteholders, in each case holding in the aggregate Percentage Interests of the
Outstanding Notes of more than 10% or (c) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on
or after the respective due dates expressed in such Note and in this Indenture
(or, in the case of redemption, on or after the Redemption Date).

          Section 5.14. Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that
it will not hinder, delay or impede the execution of any power herein granted
to the Indenture Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.

          Section 5.15. Action on Notes. The Indenture Trustee’s right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of the Indenture Trustee or the Noteholders shall be impaired by the
recovery of any judgment by the Indenture Trustee against the Issuer or by the
levy of any execution under such judgment upon any portion of the Collateral or
upon any of the assets of the Issuer. Any money or property collected by the
Indenture Trustee shall be applied in accordance with Section 5.04(b) hereof.

          Section 5.16. Performance and Enforcement of Certain Obligations.

          (a)     Promptly following a request from the Indenture Trustee to do so, the
Issuer shall take all such lawful action as the Indenture Trustee may request
to compel or secure the performance and observance by the Loan Originator and
the Servicer, as applicable, of each of their obligations to the Issuer under
or in connection with the Sale and Servicing Agreement or the Loan Sale
Agreement, and to exercise any and all rights, remedies, powers and privileges
lawfully available to the Issuer under or in connection with the Sale and
Servicing Agreement to the extent and in the manner directed by the Indenture
Trustee, including the transmission of notices of default on the part of the
Loan Originator or the Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Loan Originator or the Servicer of each of their obligations under the Sale and
Servicing Agreement and the Loan Sale Agreement.

          (b)     If an Event of Default has occurred and is continuing, the Indenture
Trustee may, and at the direction (which direction shall be in writing or by
telephone, confirmed in writing promptly thereafter) of the Majority
Noteholders shall, subject to Section 5.06(c) exercise all rights, remedies,
powers, privileges and claims of the Issuer against the Loan Originator or the
Servicer under or in connection with the Sale and Servicing Agreement or the
Loan Sale Agreement, including the right or power to take any action to compel
or secure performance or observance by the Loan Originator or the Servicer, as
the case may be, of each of their obligations to the Issuer

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thereunder and to
give any consent, request, notice, direction, approval, extension, or waiver
under the Sale and Servicing Agreement, and any right of the Issuer to take
such action shall be suspended.

ARTICLE VI

THE INDENTURE TRUSTEE

          Section 6.01. Duties of Indenture Trustee. (a) If an Event of Default
has occurred and is continuing, the Indenture Trustee shall exercise the rights
and powers vested in it by this Indenture and use the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person’s own affairs.

          (b)     Except during the continuance of an Event of Default:

		
	 	   (i)     the Indenture Trustee shall undertake to perform such duties and
only such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Indenture Trustee; and

		
	 	   (ii)     in the absence of bad faith on its part, the Indenture Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; provided, however, that the Indenture
Trustee shall examine the certificates and opinions to determine whether
or not they conform to the requirements of this Indenture to the extent
specifically set forth herein.

          (c)     The Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:

		
	 	   (i)     this paragraph does not limit the effect of paragraph (b) of
this Section 6.01;

		
	 	   (ii)     the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts;

	 
	 	   (iii)     the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.11 hereof; and

          (d)     The Indenture Trustee shall not be liable for interest on any money
received by it and held in a Trust Account except as may be provided in the
Sale and Servicing Agreement or as the Indenture Trustee may agree in writing
with the Issuer.

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          (e)     Money held in trust by the Indenture Trustee shall be segregated from
other funds except to the extent permitted by law or the terms of this
Indenture or the Sale and Servicing Agreement.

          (f)     No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it; provided, however, that nothing in this Section
6.01(f) shall be construed to limit the exercise by the Indenture Trustee of
any right or remedy permitted under this Indenture or otherwise in the event of
the Issuer’s failure to pay the Indenture Trustee’s fees and expenses pursuant
to Section 6.07 hereof.

          (g)     Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Indenture Trustee shall be
subject to the provisions of this Section 6.01.

          (h)     The Indenture Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any Event of Default (other than an Event
of Default pursuant to Section 5.01(a) or (b) hereof) unless a Responsible
Officer of the Indenture Trustee shall have received written notice thereof or
otherwise shall have actual knowledge thereof. In the absence of receipt of
notice or such knowledge, the Indenture Trustee may conclusively assume that
there is no Event of Default.

          (i)     The Indenture Trustee shall be under no obligation to institute any
suit, or to take any remedial Proceeding under this Indenture, or to enter any
appearance or in any way defend in any suit in which it may be made defendant,
or to take any steps in the execution of the trusts hereby created or in the
enforcement of any rights and powers hereunder until it shall be indemnified to
its satisfaction against any and all costs and expenses, outlays and counsel
fees and other reasonable disbursements and against all liability, except
liability that is adjudicated, in connection with any action so taken.

          Section 6.02. Rights of Indenture Trustee. (a) The Indenture Trustee may
rely on any document believed by it to be genuine and to have been signed or
presented by the proper person. The Indenture Trustee need not investigate any
fact or matter stated in the document.

          (b)     Before the Indenture Trustee acts or refrains from acting, it may
require an Officer’s Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on an Officer’s Certificate or Opinion of Counsel.

          (c)     The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee.

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          (d)     The Indenture Trustee shall not be liable for (i) any action it takes
or omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that such action or omission by the
Indenture Trustee does not constitute willful misconduct, negligence or bad
faith; or (ii) any action or inaction on the part of the Collateral Custodian.

          (e)     The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.

          Section 6.03. Individual Rights of Indenture Trustee. The Indenture
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Issuer or its Affiliates with the same
rights it would have if it were not Indenture Trustee. Any Paying Agent, Note
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Indenture Trustee must comply with Section 6.11 hereof.

          Section 6.04. Indenture Trustee’s Disclaimer. The Indenture Trustee
shall not be responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, shall not be accountable for the
Issuer’s use of the proceeds from the Notes, or responsible for any statement
of the Issuer in the Indenture or in any document issued in connection with the
sale of the Notes or in the Notes other than the Indenture Trustee’s
certificate of authentication.

          Section 6.05. Notices of Default. If a Default occurs and is continuing
and if it is actually known to a Responsible Officer of the Indenture Trustee,
the Indenture Trustee shall mail to each Noteholder a notice of the Default
within two (2) Business Days after it receives actual notice of such
occurrence.

          Section 6.06. Reports by Paying Agent to Holders. The Paying Agent shall
deliver to each Noteholder and the Indenture Trustee such information specifically requested by each Noteholder and the
Indenture Trustee and in the Paying Agent’s possession and as may be reasonably
required to enable such Noteholder to prepare its federal and state income tax
returns.

          Section 6.07. Compensation and Indemnity. As compensation for its
services hereunder, the Indenture Trustee shall be entitled to receive, on each
Payment Date, the Indenture Trustee’s Fee pursuant to Section 8.02(c) hereof
(which compensation shall not be limited by any law on compensation of a
trustee of an express trust) and shall be entitled to reimbursement by the
Servicer for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Indenture Trustee’s agents,
counsel, accountants and experts. The Issuer agrees to cause the Servicer to
indemnify the Indenture Trustee, the Paying Agent and their officers,
directors, employees and agents against any and all loss, liability or expense
(including reasonable attorneys’ fees) incurred by it or them in connection
with the administration of this trust and the performance of its or their
duties under the Basic Documents. The Indenture Trustee shall notify the
Issuer and the Servicer promptly of any

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claim for which it may seek indemnity.
Failure by the Indenture Trustee to so notify the Issuer and the Servicer shall
not relieve the Issuer or the Servicer of its or their obligations hereunder.
The Issuer shall, or shall cause the Servicer to, defend any such claim;
provided, however, that if the defendants with respect to any such claim
include the Issuer and/or the Servicer and the Indenture Trustee, and the
Indenture Trustee shall have reasonably concluded that there may be legal
defenses available to it which are different from or in addition to those
defenses available to the Issuer or the Servicer, as the case may be, the
Indenture Trustee shall have the right, at the expense of the Servicer, to
select separate counsel to assert such legal defenses and to otherwise defend
itself against such claim. Neither the Issuer nor the Servicer need reimburse
any expense or indemnify against any loss, liability or expense incurred by the
Indenture Trustee through the Indenture Trustee’s own willful misconduct,
negligence or bad faith.

          The Issuer’s payment obligations to the Indenture Trustee pursuant to this
Section 6.07 shall survive the discharge of this Indenture and the termination
or resignation of the Indenture Trustee. When the Indenture Trustee incurs
expenses after the occurrence of a Default specified in Section 5.01(g) or (h)
hereof with respect to the Issuer, the expenses are intended to constitute
expenses of administration under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or similar law.

          Notwithstanding anything in this Section 6.07 to the contrary, all amounts
due the Indenture Trustee hereunder shall be payable in the first instance by
the Servicer and, if not paid by the Servicer within sixty (60) days after
payment is requested from the Servicer by the Indenture Trustee, in accordance
with the priorities set forth in Section 5.01 of the Sale and Servicing
Agreement.

          Section 6.08. Replacement of Indenture Trustee. No resignation or
removal of the Indenture Trustee and no appointment of a successor Indenture
Trustee shall become effective until the acceptance of appointment by the
successor Indenture Trustee pursuant to this Section 6.08. The Indenture
Trustee may resign at any time by so notifying the Issuer. The Majority
Noteholders may remove the Indenture Trustee (with the consent of the Majority
Certificateholders, not to be unreasonably withheld) by so notifying the
Indenture Trustee and may appoint a successor Indenture Trustee; provided,
that all of the reasonable costs and expenses incurred by the Indenture Trustee
in connection with such removal shall be reimbursed to it prior to the
effectiveness of such removal. The Issuer shall remove the Indenture Trustee
if:

          (a)     the Indenture Trustee fails to comply with Section 6.11 hereof;

          (b)     the Indenture Trustee is adjudged a bankrupt or insolvent;

          (c)     a receiver or other public officer takes charge of the Indenture
Trustee or its property; or

          (d)     the Indenture Trustee otherwise becomes incapable of acting.

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          If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee.

          A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon the
resignation or removal of the retiring Indenture Trustee shall become
effective, and the successor Indenture Trustee shall have all the rights,
powers and duties of the Indenture Trustee under this Indenture. The successor
Indenture Trustee shall mail a notice of its succession to Noteholders. The
retiring Indenture Trustee shall promptly transfer all property held by it as
Indenture Trustee to the successor Indenture Trustee.

          If a successor Indenture Trustee does not take office within sixty (60)
days after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Majority Noteholders may petition any
court of competent jurisdiction for the appointment of a successor Indenture
Trustee.

          If the Indenture Trustee fails to comply with Section 6.11 hereof, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.

          Notwithstanding the replacement of the Indenture Trustee pursuant to this
Section 6.08, the Issuer’s obligations under Section 6.07 hereof shall continue
for the benefit of the retiring Indenture Trustee.

          Section 6.09. Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Indenture Trustee;
provided, however, that such corporation or banking association shall otherwise
be qualified and eligible under Section 6.11 hereof. The Indenture Trustee
shall provide the Majority Noteholders written notice of any such transaction.

          In case at the time such successor or successors by merger, conversion or
consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the
certificate of authentication of any predecessor trustee, and deliver such
Notes so authenticated; and in case at that time any of the Notes shall not
have been authenticated, any successor to the Indenture Trustee may
authenticate such Notes either in the name of any predecessor hereunder or in
the name of the successor to the Indenture Trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the Notes or in
this Indenture provided that the certificate of the Indenture Trustee shall
have.

          Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.

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          (a)     Notwithstanding any other provisions of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Collateral may at the time be located, the Indenture Trustee
shall have the power and may execute and deliver all instruments to appoint one
or more Persons to act as a co-trustee or co-trustees, or separate trustee or
separate trustees, of all or any part of the Issuer and to vest in such Person
or Persons, in such capacity and for the benefit of the Noteholders, such title
to the Collateral, or any part hereof, and, subject to the other provisions of
this Section 6.10, such powers, duties, obligations, rights and trusts as the
Indenture Trustee may consider necessary or desirable. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 6.11 hereof and no notice to Noteholders
of the appointment of any co-trustee or separate trustee shall be required
under Section 6.08 hereof.

          (b)     Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and
conditions:

		
	 	   (i)     all rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such separate trustee
or co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Indenture
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 Indenture 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 Collateral or any portion thereof
in any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Indenture Trustee;
	 
	 	   (ii)     no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
	 
	 	   (iii)     the Indenture Trustee may at any time accept the resignation
of or remove any separate trustee or co-trustee.

          (c)     Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to
this Indenture and the conditions of this Article VI. Each separate
trustee and co-trustee, upon its acceptance of the trusts conferred, shall be
vested with the estates or property specified in its instrument of appointment,
jointly with the Indenture Trustee, subject to all the provisions of this
Indenture, specifically including every provision of this Indenture relating to
the conduct of, affecting the liability of, or affording protection to, the
Indenture Trustee. Every such instrument shall be filed with the Indenture
Trustee.

          (d)     Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee 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 Indenture on its behalf and in its name. If any

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separate trustee or
co-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 Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.

          Section 6.11. Eligibility. The Indenture Trustee shall (i) have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition or (ii) otherwise be acceptable in
writing to the Majority Noteholders.

ARTICLE VII

NOTEHOLDERS LISTS AND REPORTS

          Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Indenture
Trustee (a) not more than five (5) days after the earlier of (i) each Record
Date and (ii) three (3) months after the last Record Date, a list, in such form
as the Indenture Trustee may reasonably require, of the names and addresses of
the Noteholders as of such Record Date, (b) at such other times as the
Indenture Trustee may request in writing, within thirty (30) days after receipt
by the Issuer of any such request, a list of similar form and content as of a
date not more than ten (10) days prior to the time such list is furnished;
provided, however, that so long as the Indenture Trustee is the Note Registrar,
no such list shall be required to be furnished.

          Section 7.02. Preservation of Information. The Indenture Trustee shall
preserve, in as current a form as is reasonably practicable, the names and
addresses of the Noteholders contained in the most recent list furnished to the
Indenture Trustee as provided in Section 7.01 hereof and the names and
addresses of Noteholders received by the Indenture Trustee in its capacity as
Note Registrar. The Indenture Trustee may destroy any list furnished to it as
provided in such Section 7.01 upon receipt of a new list so furnished.

          Section 7.03. 144A Information. The Indenture Trustee, to the extent it
has any such information in its possession, shall provide to any Noteholder and
any prospective transferee designated by any such Noteholder information
regarding the Notes and the Loans and such other information as shall be
necessary to satisfy the condition to eligibility set forth in Rule 144A(d)(4)
under the Securities Act for transfer of any such Note without
registration thereof under the Securities Act pursuant to the registration
exemption provided by Rule 144A under the Securities Act.

ARTICLE VIII

ACCOUNTS, DISBURSEMENTS AND RELEASES

          Section 8.01. Collection of Money. General. Except as otherwise
expressly provided herein, the Indenture Trustee may demand payment or delivery
of, and shall receive and collect, directly and without intervention or
assistance of any intermediary, all money and other property payable to or
receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee

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shall apply all such money received by it as provided in this
Indenture. Except as otherwise expressly provided in this Indenture, if any
default occurs in the making of any payment or performance under any agreement
or instrument that is part of the Collateral, the Indenture Trustee may take
such action as may be appropriate to enforce such payment or performance,
including the institution and prosecution of appropriate Proceedings. Any such
action shall be without prejudice to any right to claim a Default or Event of
Default under this Indenture and any right to proceed thereafter as provided in
Article V hereof.

          Section 8.02. Trust Accounts; Distributions. (a) On or prior to the
Closing Date, the Issuer shall cause the Servicer to establish and maintain, in
the name of the Indenture Trustee for the benefit of the Noteholders, or on
behalf of the Owner Trustee for the benefit of the Securityholders, the
Collection Account and the Principal Collections Account as provided in the
Sale and Servicing Agreement. The Servicer shall deposit amounts into such
accounts in accordance with the terms hereof and the Sale and Servicing
Agreement.

          (b)     Distribution Account. With respect to the Distribution Account, the
Servicer shall make (i) such deposits as specified in Section 5.01(c)(4) of the
Sale and Servicing Agreement and (ii) the Paying Agent shall make such
withdrawals and distributions as specified in Section 5.01(c)(5) of the Sale
and Servicing Agreement in accordance with the terms thereof.

          Section 8.03. General Provisions Regarding Trust Accounts. (a) All or a
portion of the funds in the Collection Account may be invested in Permitted
Investments in accordance with the provisions of Section 5.03(b) of the Sale
and Servicing Agreement.

          (b)     Subject to Section 6.01(c) hereof, the Indenture Trustee shall not in
any way be held liable by reason of any insufficiency in the Collection Account
or the Principal Collections Account resulting from any loss on any Permitted
Investment included therein.

          Section 8.04. The Paying Agent. The initial Paying Agent shall be the
Indenture Trustee. The Paying Agent may be removed by the Initial Noteholder
in its sole discretion at any time with written notice to the Indenture
Trustee. Upon removal of the Paying Agent, the Initial Noteholder will appoint
a successor Paying Agent within 30 days; provided that the Indenture Trustee
will be the Paying Agent until such successor is appointed.
Upon such termination, the Paying Agent shall immediately transfer all
funds in its possession to the Indenture Trustee or any successor paying agent
appointed pursuant to this Indenture. Following such termination, the Paying
Agent shall have no further right to make withdrawals from the Distribution
Account. Upon the direction of the Majority Noteholders, the Indenture Trustee
shall establish a new Distribution Account to which the Paying Agent shall have
no access. Unless the Indenture Trustee is also acting as Paying Agent, the
Indenture Trustee shall have no obligation to oversee or direct the actions of
the Paying Agent and the Indenture Trustee shall have no liability for any of
the obligations, warranties or covenants of the Paying Agent hereunder.

          Section 8.05. Release of Collateral. (a) Subject to the payment of its
reasonable fees and expenses pursuant to Section 6.07 hereof, the Indenture
Trustee may, and when required by the provisions of this Indenture shall,
execute instruments acceptable to it and prepared and delivered

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to it by the
Issuer to release property from the lien of this Indenture, or convey the
Indenture Trustee’s interest in the same, without recourse, representation or
warranty in a manner as provided in the Sale and Servicing Agreement and under
circumstances that are not inconsistent with the provisions of this Indenture
and the other Basic Documents. No party relying upon an instrument executed by
the Indenture Trustee as provided in this Article VIII shall be bound to
ascertain the Indenture Trustee’s authority, inquire into the satisfaction of
any conditions precedent or see to the application of any moneys.

          (b)     The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due to the Noteholders (and their Affiliates), the
Initial Noteholder, the Sale Agents, the Indenture Trustee, the Owner Trustee
and the Collateral Custodian under the Basic Documents have been paid, release
any remaining portion of the Collateral that secured the Notes from the lien of
this Indenture and release to the Issuer or any other Person entitled thereto
any funds then on deposit in the Trust Accounts. The Indenture Trustee shall
release property from the lien of this Indenture pursuant to this subsection
(b) only upon receipt of an Issuer Request accompanied by an Officer’s
Certificate and an Opinion of Counsel meeting the applicable requirements of
Section 11.01 hereof.

          Section 8.06. Opinion of Counsel. Except to the extent specifically
permitted by the terms of the Basic Documents, the Indenture Trustee shall
receive at least seven Business Days’ prior notice when requested by the Issuer
to take any action pursuant to Section 8.05(a) hereof, accompanied by copies of
any instruments involved, and the Indenture Trustee may also require, as a
condition to such action, an Opinion of Counsel, in form and substance
satisfactory to the Indenture Trustee, from the Issuer concluding that all
conditions precedent to the taking of such action have been complied with and
such action will not materially and adversely impair the security for the Notes
or the rights of the Noteholders in contravention of the provisions of this
Indenture; provided, however, that such Opinion of Counsel shall not be
required to express an opinion as to the fair value of the Collateral. Counsel
rendering any such opinion may rely, without independent investigation, on the
accuracy and validity of any certificate or other instrument delivered to the
Indenture Trustee in connection with any such action.

ARTICLE IX

SUPPLEMENTAL INDENTURES

          Section 9.01. Supplemental Indentures Without the Consent of the
Noteholders. Without the consent of any Noteholder but with prior notice to
the Majority Noteholders, the Issuer and the Indenture Trustee, at any time and
from time to time, may enter into one or more indentures supplemental hereto,
in form satisfactory to the Indenture Trustee, for any of the following
purposes:

		
	 	     (i)     to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure, convey
and confirm unto the Indenture Trustee any property subject or required
to be subjected to the lien of this Indenture, or to subject to the lien
of this Indenture additional property;

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	 	     (ii)     to evidence the succession, in compliance with the applicable
provisions hereof, of another Person to the Issuer, and the assumption by
any such successor of the covenants of the Issuer herein and in the Notes
contained;
	 
	 	     (iii)     to add to the covenants of the Issuer for the benefit of the
Noteholders, or to surrender any right or power herein conferred upon the
Issuer;
	 
	 	     (iv)     to convey, transfer, assign, mortgage or pledge any property to
or with the Indenture Trustee;
	 
	 	     (v)     to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture that may be inconsistent with any
other provision herein or in any supplemental indenture or to make any
other provisions with respect to matters or questions arising under this
Indenture or in any supplemental indenture; provided, however, that such
action shall not adversely affect the interests of the Noteholders; or
	 
	 	     (vi)     to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add to
or change any of the provisions of this Indenture as shall be necessary
to facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI hereof.

          The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.

          Section 9.02. Supplemental Indentures with Consent of Noteholders. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may,
with the consent of the Majority Noteholders, by Act of such Noteholders
delivered to the Issuer and the Indenture Trustee, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Indenture
or of modifying in any manner the rights of any Noteholder under this
Indenture; provided, however, that no such supplemental indenture shall,
without the consent of each Noteholder affected thereby:

          (a)     change to a later date the date of payment of any installment of
principal of or interest on any Note, or reduce the principal balance thereof,
the interest rate thereon or the Termination Price with respect thereto, change the provisions of this
Indenture in a manner which has the effect of reducing the amount of
collections received by any Noteholder on, or the proceeds of the sale of, the
Collateral to payment of principal of or interest on the Notes, or change any
place of payment where, or the coin or currency in which, any Note or the
interest thereon is payable, or impair the right to institute suit for the
enforcement of the provisions of this Indenture requiring the application of
funds available therefor, as provided in Article V hereof, to the payment of
any such amount due on the Notes on or after the respective due dates thereof
(or, in the case of redemption, on or after the Redemption Date);

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          (b)     reduce the Percentage Interest, the consent of the Holders of which is
required for any such supplemental indenture, or the consent of the Holders of
which is required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences provided for in
this Indenture;

          (c)     modify or alter the provisions of the definition of the term
“Outstanding” or “Percentage Interest”;

          (d)     reduce the Percentage Interest of the Outstanding Notes, the consent
of the Holders of which is required to direct the Indenture Trustee to direct
the Issuer to sell or liquidate the Collateral pursuant to Section 5.04 hereof;

          (e)     modify any provision of this Section 9.02 except to increase any
percentage specified herein or to provide that certain additional provisions of
this Indenture or the Basic Documents cannot be modified or waived without the
consent of the Holder of each Outstanding Note affected thereby;

          (f)     modify any of the provisions of this Indenture in such manner as to
affect the calculation of the amount of any payment of interest or principal
due on any Note on any Payment Date (including the calculation of any of the
individual components of such calculation) or to adversely affect the rights of
the Noteholders to the benefit of any provisions for the mandatory redemption
of the Notes contained herein; or

          (g)     permit the creation of any lien ranking prior to or on a parity with
the lien of this Indenture with respect to any part of the Collateral or,
except as otherwise permitted or contemplated herein, terminate the lien of
this Indenture on any property at any time subject hereto or deprive any
Noteholder of the security provided by the lien of this Indenture.

          In connection with requesting the consent of the Noteholders pursuant to
this Section 9.02, the Indenture Trustee shall mail to the Holders of the Notes
to which such amendment or supplemental indenture relates a notice prepared by
the Issuer setting forth in general terms the substance of such supplemental
indenture. It shall not be necessary for any Act of Noteholders under this
Section 9.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.

          Section 9.03. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modification thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.01 and 6.02 hereof, shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Indenture Trustee
may, but shall not be obligated to, enter into any such supplemental indenture
that affects the Indenture Trustee’s own rights, duties, liabilities or
immunities under this Indenture or otherwise.

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          Section 9.04. Effect of Supplemental Indentures. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and shall be deemed to be modified and amended in accordance therewith
with respect to the Notes affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Indenture of the Indenture Trustee, the Issuer and the Holders of the
Notes shall thereafter be determined, exercised and enforced hereunder subject
in all respects to such modifications and amendments, and all the terms and
conditions of any such supplemental indenture shall be and be deemed to be part
of the terms and conditions of this Indenture for any and all purposes.

          Section 9.05. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee
shall, bear a notation in form approved by the Indenture Trustee as to any
matter provided for in such supplemental indenture. If the Issuer or the
Indenture Trustee shall so determine, new Notes so modified as to conform, in
the opinion of the Indenture Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Indenture Trustee in exchange for Outstanding Notes.

ARTICLE X

REDEMPTION OF NOTES; PUT OPTION

          Section 10.01. Redemption. The Servicer may, at its option, effect an
early redemption of the Notes on any Business Day on or after the Clean-up Call
Date. The Servicer shall effect such early termination in the manner specified
in and subject to the provisions of Section 12.02 of the Sale and Servicing
Agreement.

          The Servicer shall furnish the Indenture Trustee with notice of any such
redemption in order to facilitate the Indenture Trustee’s compliance with its
obligation to notify the Noteholders of such redemption in accordance with
Section 10.02 hereof.

          Section 10.02. Form of Redemption Notice. Notice of redemption under
Section 10.01 hereof shall be by first-class mail, postage prepaid, or by
facsimile mailed or transmitted not later than 10 days prior to the applicable
Redemption Date to each Noteholder, as of the close of business on the Record
Date preceding the applicable Redemption Date, at such Noteholder’s address or
facsimile number appearing in the Note Register.

          All notices of redemption shall state:

		
	 	   (i)     the Redemption Date;
	 
	 	   (ii)     that on the Redemption Date Noteholders shall receive the Note
Redemption Amount; and

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	 	   (iii)     the place where such Notes are to be surrendered for payment
of the Termination Price (which shall be the office or agency of the
Issuer to be maintained as provided in Section 3.02 hereof).

          Notice of redemption of the Notes shall be given by the Indenture Trustee
in the name of the Issuer and at the expense of the Servicer. Failure to give
to any Noteholder notice of redemption, or any defect therein, shall not impair
or affect the validity of the redemption of any other Note.

          Section 10.03. Notes Payable on Redemption Date. The Notes to be redeemed
shall, following notice of redemption as required by Section 10.02 hereof (in
the case of redemption pursuant to Section 10.01) hereof, on the Redemption
Date become due and payable at the Note Redemption Amount and (unless the
Issuer shall default in the payment of the Note Redemption Amount) no interest
shall accrue thereon for any period after the date to which accrued interest is
calculated for purposes of calculating the Note Redemption Amount. The Issuer
may not redeem the Notes unless all outstanding obligations under the Notes
have been paid in full.

ARTICLE XI

MISCELLANEOUS

          Section 11.01. Compliance Certificates and Opinions, etc. Upon any
application or request by the Issuer to the Indenture Trustee to take any
action under any provision of this Indenture (except with respect to the
Servicer’s servicing activity in the ordinary course of its business), the
Issuer shall furnish to the Indenture Trustee (i) an Officer’s Certificate
stating that all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with and (ii) an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with.

          Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:

	 	(1)	 	a statement that each signatory of
such certificate or opinion has read or has caused to be
read such covenant or condition and the definitions
herein relating thereto;
	 
	 	(2)	 	a brief statement as to the nature
and scope of the examination or investigation upon which
the statements or opinions contained in such certificate
or opinion are based;
	 
	 	(3)	 	a statement that, in the opinion of
each such signatory, such signatory has made such
examination or investigation as is necessary to enable
such signatory to express an informed opinion as to
whether or not such covenant or condition has been
complied with; and

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	 	(4)	 	a statement as to whether, in the
opinion of each such signatory, such condition or
covenant has been complied with.

The Officer’s Certificate issued pursuant to this Section 11.01 may be executed
on behalf of the Issuer by the Administrator.

          Section 11.02. Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.

          Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such officer’s
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Servicer, the Loan Originator, the Issuer or the
Administrator, stating that the information with respect to such factual
matters is in the possession of the Servicer, the Loan Originator, the Issuer
or the Administrator, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.

          Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

          Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer’s compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of
the facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not,
however, be construed to affect the Indenture Trustee’s right to rely upon
the truth and accuracy of any statement or opinion contained in any such
document as provided in Article VI hereof.

          Section 11.03. Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except
as

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herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Indenture Trustee, and,
where it is hereby expressly required, to the Issuer. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the “Act” of the Noteholders signing such instrument
or instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.01 hereof) conclusive in favor of the Indenture
Trustee and the Issuer, if made in the manner provided in this Section 11.03.

          (b)     The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.

          (c)     The ownership of Notes shall be proved by the Note Register.

          (d)     Any request, demand, authorization, direction, notice, consent, waiver
or other action by any Noteholder shall bind the Holder of every Note issued
upon the registration thereof or in exchange therefor or in lieu thereof, in
respect of anything done, omitted or suffered to be done by the Indenture
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.

          Section 11.04. Notices, etc., to Indenture Trustee and Issuer. Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Noteholders or other documents provided or permitted by this Indenture shall be
in writing and if such request, demand, authorization, direction, notice,
consent, waiver or act of Noteholders is to be made upon, given or furnished to
or filed with:

		
	 	   (i)     the Indenture Trustee by any Noteholder or by the Issuer shall
be sufficient for every purpose hereunder if made, given, furnished or
filed in writing (including by facsimile) to or with the Indenture
Trustee at its Corporate Trust Office, or

		
	 	   (ii)     the Issuer by the Indenture Trustee or by any Noteholder shall
be sufficient for every purpose hereunder if in writing and made, given,
furnished, filed or transmitted via facsimile to the Issuer at:
CapitalSource Funding II Trust, c/o Wilmington Trust Company, as Owner
Trustee, Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890, Attention:      , telecopy number: (302)
636-4140, telephone number: (302) 651-1000, or at any other address or
facsimile number previously furnished in writing to the Indenture Trustee
by the Issuer or the Administrator. The Issuer shall promptly transmit
any notice received by it from the Noteholders to the Indenture Trustee.

          Section 11.05. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class, postage prepaid to each
Noteholder affected by such event, at its address as it appears on the Note
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Noteholders is given by mail, neither the failure to mail such notice nor any
defect in any notice so mailed to any particular Noteholder shall affect the
sufficiency of such notice with respect to other

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Noteholders, and any notice that is mailed in the manner
herein provided shall conclusively be presumed to have duly been given.

          Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Noteholders shall be filed with the Indenture Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.

          In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be
a sufficient giving of such notice.

          Section 11.06. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.

          Section 11.07. Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee
in this Indenture shall bind its successors, co-trustees and agents.

          Section 11.08. Separability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.

          Section 11.09. Benefits of Indenture. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, and any other party
secured hereunder, and any other Person with an ownership interest in any part
of the Collateral, any benefit or any legal or equitable right, remedy or claim
under this Indenture. In addition, the Owner Trustee is an intended third
party beneficiary to this Indenture.

          Section 11.10. Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.

          Section 11.11. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE

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DETERMINED IN ACCORDANCE WITH SUCH LAWS. THE ISSUER
HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY.

          Section 11.12. Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.

          Section 11.13. Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee; provided, however, that the expense of
such Opinion of Counsel shall in no event be an expense of the Indenture
Trustee) to the effect that such recording is necessary either for the
protection of the Noteholders or any other Person secured hereunder or for the
enforcement of any right or remedy granted to the Indenture Trustee under this
Indenture.

          Section 11.14. Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or, except as expressly provided for in
Article VI hereof, under this Indenture or any certificate or other writing
delivered in connection
herewith or therewith, against (i) the Indenture Trustee or the Owner Trustee
in its individual capacity, (ii) any owner of a beneficial interest in the
Issuer or (iii) any partner, owner, beneficiary, agent, officer, director,
employee, agent or “control person” within the meaning of the Securities Act
and the Exchange Act, of the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as
any such Person may expressly have agreed (it being understood that the
Indenture Trustee and the Owner Trustee have no such obligations in their
individual capacity) and except that any such partner, owner or beneficiary of
the Issuer shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity. For all purposes of this
Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles VI, VII and VIII of the Trust
Agreement.

          Section 11.15. No Petition. The Indenture Trustee, by entering into
this Indenture, and each Noteholder, by accepting a Note, hereby covenant and
agree that they will not at any time institute against the Issuer, or join in
any institution against the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States federal or state bankruptcy or similar law, in connection
with any obligations relating to the Notes, this Indenture or any of the Basic
Documents.

          Section 11.16. Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee or the
Servicer, during the Issuer’s normal business hours, to examine all the books
of account, records, reports and other papers of the Issuer to make copies and
extracts therefrom, to cause such books to be audited by Independent certified

-49-

 

public accountants, and to discuss the Issuer’s affairs, finances and accounts
with the Issuer’s officers, employees, and Independent certified public
accountants, all at such reasonable times and as often as may reasonably be
requested and at the expense of the Servicer; provided that the Indenture
Trustee shall notify the Servicer prior to any contact with such accountants
and provide the Servicer with the opportunity to participate in such
discussions. The Indenture Trustee shall and shall cause its representatives to
hold in confidence all such information except to the extent disclosure may be
required by law (and all reasonable applications for confidential treatment are
unavailing) and except to the extent that the Indenture Trustee may reasonably
determine that such disclosure is consistent with its obligations hereunder.
The Indenture Trustee shall be under no obligation to make any such inspection.

          Section 11.17. Limitation on Liability. It is expressly understood and
agreed by the parties hereto that (a) this Indenture is executed and delivered
by Wilmington Trust Company and Indenture Trustee, not individually or
personally, but solely as Owner Trustee of CapitalSource Funding II Trust and
Indenture Trustee in the exercise of the powers and authority conferred and
vested in them, (b) each of the representations, undertakings and agreements
herein made on the part of the Issuer or the Indenture Trustee is made and
intended not as personal representations, undertakings and
agreements by Wilmington Trust Company or the Indenture Trustee but is made and
intended for the purpose for binding only the Issuer or the Indenture Trustee,
(c) nothing herein contained shall be construed as creating any liability on
Wilmington Trust Company or the Indenture Trustee, 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 or the Indenture Trustee 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 Indenture or
any other related documents.

-50-

 

          IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized and duly attested, all as of the day and year first above written.

	 	 	 	 	 
	 	 	CAPITALSOURCE FUNDING II TRUST
	 	 	 	 	 
	 	 	
By:
	 	Wilmington Trust Company not in its individual
	 	 	 	 	capacity but solely as Owner Trustee
	 	 	 	 	 
	 	 	
By:
	 	 
	 	 	
 
	 	

	 	 	 	 	Name:
	 	 	 	 	Title:
	 	 	 	 	 
	 	 	WELLS FARGO BANK MINNESOTA, NATIONAL 

ASSOCIATION, as Indenture Trustee
	 	 	 	 	 
	 	 	
By:
	 	 
	 	 	
 
	 	

	 	 	 	 	Name:
	 	 	 	 	Title:

Indenture

 

 

	 	 	 	 	 	 	 
	STATE OF	 	 	 	)	 	 
	 	 	 	 	)	 	ss.:
	COUNTY OF	 	 	 	)	 	 

          BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared      ,
known to me to be the person and officer whose name is subscribed to the
foregoing instrument and acknowledged to me that the same was the act of the
said Wilmington Trust Company, a Delaware banking corporation, not in its
individual capacity, but solely as Owner Trustee on behalf of CapitalSource
Funding II Trust, a Delaware statutory trust, and that such person executed the
same as the act of said statutory trust for the purpose and consideration
therein expressed, and in the capacities therein stated.

          GIVEN
UNDER MY HAND AND SEAL OF OFFICE, this
     day of      ,
200   .

	 	

Notary Public

(Seal)

My commission expires:

Indenture

 

 

	 	 	 	 	 	 	 
	STATE OF	 	 	 	)	 	 
	 	 	 	 	)	 	ss.:
	COUNTY OF	 	 	 	)	 	 

Indenture

 

 

	 	 	 	 	 	 	 
	STATE OF	 	 	 	)	 	 
	 	 	 	 	)	 	ss.:
	COUNTY OF	 	 	 	)	 	 

          BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared           ,
known to me to be the person and officer whose name is subscribed to the
foregoing instrument and acknowledged to me that the same was the act of the
said Wells Fargo Bank Minnesota, National Association, and that such person
executed the same as the act of said corporation for the purpose and
consideration therein stated.

          GIVEN
UNDER MY HAND AND SEAL OF OFFICE, this
     day of      ,
200    .

	 	

Notary Public

(Seal)

My commission expires:

Indenture

 

 

EXHIBIT A

FORM OF NOTES

THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
MAXIMUM NOTE PRINCIPAL BALANCE SHOWN ON THE FACE HEREOF. ANY PURCHASER OF THIS
NOTE MAY ASCERTAIN THE OUTSTANDING PRINCIPAL AMOUNT HEREOF BY INQUIRY OF THE
INDENTURE TRUSTEE.

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “1933 ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.

THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH NOTE ONLY (A) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE 1933 ACT, (B) FOR SO LONG AS THIS
NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE 1933 ACT, TO A
PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED
IN RULE 144A UNDER THE 1933 ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A OR (C) TO AN INSTITUTIONAL
“ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR
(7) OF RULE 501 UNDER THE 1933 ACT THAT IS ACQUIRING THE NOTE 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 1933 ACT, IN EACH CASE IN COMPLIANCE
WITH THE REQUIREMENTS OF THE INDENTURE AND APPLICABLE STATE SECURITIES LAWS.

THIS NOTE MAY NOT BE TRANSFERRED UNLESS THE INDENTURE TRUSTEE HAS RECEIVED A
CERTIFICATE FROM THE TRANSFEREE TO THE EFFECT THAT EITHER (I) THE TRANSFEREE IS
NOT AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT PLAN OR ARRANGEMENT SUBJECT TO
TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (EACH, A “PLAN”),
AND IS NOT ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN OR (II) IF THE
TRANSFEREE IS A PLAN OR IS ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A
PLAN, THE CONDITIONS FOR EXEMPTIVE RELIEF UNDER AT LEAST ONE OF THE FOLLOWING
PROHIBITED
TRANSACTION CLASS EXEMPTIONS HAVE BEEN SATISFIED: PROHIBITED TRANSACTION CLASS
EXEMPTION (“PTCE”)

A-1

 

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”).

A-2

 

Maximum Note Principal Balance: $

Initial Percentage Interest:     %

No.

CAPITALSOURCE FUNDING II TRUST

COMMERCIAL LOAN BACKED NOTES

          CapitalSource Funding II Trust, a Delaware statutory trust (the “Issuer”),
for value received, hereby promises to pay to     , or
registered assigns (the “Noteholder”), the principal sum of
     ($     ) or so much thereof as may be advanced and
outstanding hereunder and to pay interest on such principal sum or such part
thereof as shall remain unpaid from time to time, at the rate and at the times
provided in the Sale and Servicing Agreement and the Indenture. Principal of
this Note is payable on each Payment Date in an amount equal to the result
obtained by multiplying (i) the Percentage Interest of this Note by (ii) the
principal amount distributed in respect of such Payment Date.

          The Outstanding Note Principal Balance of this Note bears interest at the
Note Interest Rate. On each Payment Date amounts in respect of interest on this
Note will be paid in an amount equal to the result obtained by multiplying (i)
the Percentage Interest of this Note by (ii) the aggregate amount paid in
respect of interest on the Notes with respect to such Payment Date.

          Capitalized terms used but not defined herein have the meanings set forth
in the Indenture (the “Indenture”), dated as of September 17, 2003 between the
Issuer and Wells Fargo Bank Minnesota, National Association, as Indenture
Trustee (the “Indenture Trustee”) or, if not defined therein, the Sale and
Servicing Agreement (the “Sale and Servicing Agreement”), dated as of
September 17, 2003 among the Issuer, the Depositor, the Servicer, the Paying
Agent, the Loan Originator and the Indenture Trustee on behalf of the
Noteholders.

          In the event of an advance of Additional Note Principal Balance by the
Noteholders as provided in Section 2.01(c) of the Sale and Servicing Agreement,
each Noteholder shall, and is hereby authorized to, record on the schedule
attached to its Note the date and amount of any Additional Note Principal
Balance advanced by it, and each repayment thereof; provided that failure to
make any such recordation on such schedule or any error in such schedule shall
not adversely affect any Noteholder’s rights with respect to its Additional
Note Principal Balance and its right to receive interest payments in respect of
the Additional Note Principal Balance held by such Noteholder.

          Absent manifest error, the Note Principal Balance of each Note as set
forth in the notations made by the related Noteholder on such Note shall be
binding upon the Indenture Trustee and the Issuer; provided that failure by a
Noteholder to make such recordation on its Note or any error in such notation
shall not adversely affect any Noteholder’s rights with respect to its Note
Principal Balance and its right to receive principal and interest payments in
respect thereof.

A-3

 

          The Servicer may, at its option, effect an early redemption of the Notes
for an amount equal to the Note Redemption Amount on any Business Day on or
after the Clean-up Call Date. The Servicer shall effect such early termination
by providing notice thereof to the Indenture Trustee and Owner Trustee and by
purchasing all of the Loans at a purchase price, payable in cash, equal to the
Termination Price.

          Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.

          The statements in the legend set forth above are an integral part of the
terms of this Note and by acceptance hereof each Holder of this Note agrees to
be subject to and bound by the terms and provisions set forth in such legend.

          Unless the Certificate of authentication hereon shall have been executed
by an authorized officer of the Indenture Trustee, by manual signature, this
Note shall not entitle the Noteholder hereof to any benefit under the Indenture
or the Sale and Servicing Agreement and/or be valid for any purpose.

          THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED WITHIN THE
STATE OF NEW YORK AND WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PROVISIONS
THEREOF.

A-4

 

          IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.

	 	 	 	 	 
	Date: _____ __, 200_	 	CAPITALSOURCE FUNDING II TRUST

By: Wilmington Trust Company, not in its 

individual capacity but solely as Owner Trustee
	 	 	 	 	 
	 	 	
By:
	 	 
	 	 	
 
	

	 	 	 	 	Authorized Signatory

INDENTURE TRUSTEE’S CERTIFICATE OF AUTHENTICATION

     This is one of the Notes designated above and referred to in the
within-mentioned Indenture.

Date: _____ __, 200_

	 	 	 	 	 
	 	 	WELLS FARGO BANK MINNESOTA, NATIONAL

ASSOCIATION, not in its individual capacity

but solely as Indenture Trustee
	 	 	 	 	 
	 	 	
By:
	 	 
	 	 	
 
	

	 	 	 	 	Authorized Signatory

A-5

 

[Reverse of Note]

          This Note is one of the duly authorized Notes of the Issuer, designated as
its Commercial Loan Backed Notes (herein called the “Notes”), all issued under
the Indenture. Reference is hereby made to the Indenture and all indentures
supplemental thereto, and the Sale and Servicing Agreement for a statement of
the respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. To the extent that any provision of this
Note contradicts or is inconsistent with the provisions of the Indenture or the
Sale and Servicing Agreement, the provisions of the Indenture or the Sale and
Servicing Agreement, as applicable, shall control and supersede such
contradictory or inconsistent provision herein. The Notes are subject to all
terms of the Indenture and the Sale and Servicing Agreement.

          The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied in accordance with the
Indenture and the Sale and Servicing Agreement.

          The entire unpaid principal amount of this Note shall be due and payable
on the earlier of the Termination Date and the Redemption Date.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which an Event of Default shall have
occurred and be continuing and the Indenture Trustee, at the direction or upon
the prior written consent of the Majority Noteholders, has declared the Notes
to be immediately due and payable in the manner provided in Section 5.02 of the
Indenture. All principal payments on the Notes shall be made pro rata to the
Holders of the Notes entitled thereto.

          The Collateral secures this Note and all other Notes equally and ratably
without prejudice, priority or distinction between any Note and any other Note.
The Notes are non-recourse obligations of the Issuer and are limited in right
of payment to amounts available from the Collateral, provided in the Indenture.
The Issuer shall not otherwise be liable for payments on the Notes, and none
of the owners, agents, officers, directors, employees, or successors or assigns
of the Issuer shall be personally liable for any amounts payable, or
performance due, under the Notes or the Indenture.

          Any installment of interest or principal on this Note shall be paid on the
applicable Payment Date to the Person in whose name this Note (or one or more
Predecessor Notes) is registered in the Note Register as of the close of
business on the related Record Date by wire transfer in immediately available
funds to the account specified in writing by the related Noteholder to the
extent provided by the Indenture and otherwise by check mailed to the
Noteholder.

          Any reduction in the principal amount of this Note (or any one or more
Predecessor Notes) effected by any payments made on any Payment Date shall be
binding upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof,
whether or not noted hereon. Any increase in the principal amount of this Note
(or any one or more Predecessor Notes) effected by payments to the Issuer of
Additional Note Principal Balances shall be binding upon the Issuer and shall
inure to the benefit of all future Holders

A-6

 

of this Note and of any Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon.

          As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in the form attached hereto
duly executed by, the Holder hereof or such Holder’s attorney duly authorized
in writing, with such signature guaranteed by an “eligible guarantor
institution” meeting the requirements of the Securities Transfer Agent’s
Medallion Program (“STAMP”), and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for
any registration of transfer or exchange of this Note, but the Issuer may
require the Noteholder to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such
registration of transfer or exchange.

          Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note, covenants and agrees that no recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Indenture
Trustee or the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director employee or “control person” within the meaning of the
1933 Act and the Exchange Act of the Indenture Trustee or the Owner Trustee in
its individual capacity, any holder of a beneficial interest in the Issuer, the
Indenture Trustee or the Owner Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as
any such Person may have expressly agreed and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.

          Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note, covenants and agrees by accepting the benefits of the Indenture that such
Noteholder will not at any time institute against the Issuer, or join in any
institution against the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to the
Notes or the Basic Documents.

          The Issuer has entered into the Indenture and this Note is issued with the
intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Collateral. Each Noteholder, by acceptance of a Note, agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer. Each Noteholder, by its
acceptance of a Note, represents and warrants that the number of ICA Owners
with respect to all of its Notes shall not exceed four.

A-7

 

           Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.

          The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Majority Noteholders. The Indenture
also contains provisions permitting the Holders of Notes representing specified
Percentage Interests of the Outstanding Notes, on behalf of all of the
Noteholders, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one or more
Predecessor Notes) shall be conclusive and binding upon such Holder and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits
the Indenture Trustee to amend or waive certain terms and conditions set forth
in the Indenture without the consent of any Noteholder.

          The term “Issuer” as used in this Note includes any successor to the
Issuer under the Indenture.

          The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.

          No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note
at the times, place and rate, and in the coin or currency herein prescribed.

          Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of the Issuer in its individual capacity,
the Owner Trustee in its individual capacity, any owner of a beneficial
interest in the Issuer, or any of their respective partners, beneficiaries,
agents, officers, directors, employees or successors or assigns shall be
personally liable for, nor shall recourse be had to any of them for, the
payment of principal of or interest on this Note or performance of, or omission
to perform, any of the covenants, obligations or indemnifications contained in
the Indenture. The Holder of this Note by its acceptance hereof agrees that,
except as expressly provided in the Basic Documents, in the case of an Event of
Default under the Indenture, the Holder shall have no claim against any of the
foregoing for any deficiency, loss or claim therefrom; provided, however, that
nothing contained herein shall be taken to prevent recourse to, and enforcement
against, the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.

A-8

 

ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee:

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

(name and address of assignee)

the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for
registration thereof, with full power of substitution in the premises.

	 	 	 
	Dated: 	

	 

	 	 	 	 	 
	 	 	
 
	 	*/
	 	 	

	 	 
	 	 	
Signature Guaranteed:	 	 
	 
	 	 	
 
	 	*/
	 	 	

	 	 

          */NOTICE: The signature to this assignment must correspond
with the name of the registered owner as it appears on the face of the within
Note in every particular, without alteration, enlargement or any change
whatever. Such signature must be guaranteed by an “eligible guarantor
institution” meeting the requirements of STAMP.

A-9

 

Schedule to Note

dated as of September      , 2003

of CapitalSource Funding II Trust

	 	 	 	 	 	 	 	 	 
	Date of advance	 	Amount of 	 	 	 	 	 	 
	of Additional	 	advance of 	 	 	 	Aggregate Note	 	 
	 Note Principal	 	Additional Note	 	Percentage	 	Principal	 	Note Principal
	 Balance	 	Principal Balance	 	 Interest	 	 Balance	 	Balance of Note
	
		
	 	

	 	
	 	

		 		 	100%	 		 	
	
	 	

	 	

	 	

	 	

	
	 	

	 	

	 	

	 	

	
	 	

	 	

	 	

	 	

	
	 	

	 	

	 	

	 	

	
	 	

	 	

	 	

	 	

	
	 	

	 	

	 	

	 	

	
	 	

	 	

	 	

	 	

	
	 	

	 	

	 	

	 	

	
	 	

	 	

	 	

	 	

	
	 	

	 	

	 	

	 	

	
	 	

	 	

	 	

	 	

	
	 	

	 	

	 	

	 	

	
	 	

	 	

	 	

	 	

	
	 	

	 	

	 	

	 	

	
	 	

	 	

	 	

	 	

	
	 	

	 	

	 	

	 	

A-10

 

EXHIBIT B-1

FORM OF RULE 144A TRANSFEROR CERTIFICATE

Wells Fargo Bank Minnesota, National Association

MAC N9311-161

Sixth Street and Marquette Avenue

Minneapolis, MN 55479

     Re: CapitalSource Funding II Trust, Commercial Loan Backed Notes

     Reference is hereby made to the Indenture dated as of September 17, 2003
(the “Indenture”) between CapitalSource Funding II Trust (the “Issuer”), and
Wells Fargo Bank Minnesota, National Association (the “Indenture Trustee”).
Capitalized terms used but not defined herein shall have the meanings given to
them in the Sale and Servicing Agreement dated as of September 17, 2003 among
the Issuer, the Depositor, CapitalSource Finance LLC (the “Servicer” and the
“Loan Originator”) and the Indenture Trustee.

     The undersigned (the “Transferor”) has requested a transfer of $     
current principal balance Notes to [insert name of transferee].

     In connection with such request, and in respect of such Notes, the
Transferor hereby certifies that such Notes are being transferred in accordance
with (i) the transfer restrictions set forth in the Indenture and the Notes and
(ii) Rule 144A under the Securities Act of 1933, as amended to a purchaser that
the Transferor reasonably believes is a “qualified institutional buyer” within
the meaning of Rule 144A purchasing for its own account or for the account of a
“qualified institutional buyer,” which purchaser is aware that the sale to it
is being made in reliance upon Rule 144A, in a transaction meeting the
requirements of Rule 144A and in accordance with any applicable securities laws
of any state of the United States or any other applicable
jurisdiction.

     This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer.

	 	 	 	 	 
	 	 	

	 	 	[Name of Transferor]
	 	 	 	 	 
	 	 	
By:

	 	 	 	 	

	 	 	 	 	Name:
	 	 	 	 	Title:

Dated: _______ __, 200_

B-1-1

 

EXHIBIT B-2

FORM OF TRANSFEREE CERTIFICATE FOR INSTITUTIONAL

ACCREDITED INVESTOR

Wells Fargo Bank Minnesota, National Association

[MAC N9311-161

Sixth Street and Marquette Avenue

Minneapolis, MN 55479

     Re: CapitalSource Funding II Trust

     In connection with our proposed purchase of $          Note
Principal Balance Commercial Loan Backed Notes (the “Offered Notes”) issued by
CapitalSource Funding II Trust, we confirm that:

	(1)	 	We understand that the Offered Notes have not been, and will not be,
registered under the Securities Act of 1933, as amended (the “1933 Act”)
or any state securities laws, and may not be sold except as permitted in
the following sentence. We agree, on our own behalf and on behalf of any
accounts for which we are acting as hereinafter stated, that if we should
sell any Offered Notes we will do so only (A) pursuant to a registration
statement which has been declared effective under the 1933 Act, (B) for so
long as the Offered Notes are eligible for resale pursuant to Rule 144A
under the 1933 Act, to a Person we reasonably believe is a “qualified
institutional buyer” as defined in Rule 144A that purchases for its own
account or for the account of a qualified institutional buyer to whom
notice is given that the transfer is being made in reliance on Rule 144A,
(C) to 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 Offered Notes
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
1933 Act, in each case in compliance with the requirements of the
Indenture dated as of September 17, 2003 between CapitalSource Funding II
Trust and Wells Fargo Bank Minnesota, National Association, as Indenture
Trustee, and applicable state securities laws; and we further agree, in
the capacities stated above, to provide to any person purchasing any of
the Offered Notes from us a notice advising such purchaser that resales of
the Offered Notes are restricted as stated herein.
	 
	(2)	 	We understand that, in connection with any proposed resale of any Offered
Notes to an Institutional Accredited Investor, we will be required to
furnish to the Indenture Trustee and the Issuer a certification from such
transferee as provided in Section 2.12 of the Indenture to confirm that
the proposed sale is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the 1933 Act
and applicable state securities laws. We further understand that the
Offered Notes purchased by us will bear a legend to the foregoing effect.

B-2-1

 

	(3)	 	We are acquiring the Offered Notes for investment purposes and not with a
view to, or for offer or sale in connection with, any distribution in
violation of the 1933 Act. We have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits
and risks of our investment in the Offered Notes, and we and any account
for which we are acting are each able to bear the economic risk of such
investment.
	 
	(4)	 	We are an Institutional Accredited Investor and we are acquiring the
Offered Notes purchased by us for our own account or for one or more
accounts (each of which is an Institutional Accredited Investor) as to
each of which we exercise sole investment discretion.
	 
	(5)	 	We have received such information as we deem necessary in order to make
our investment decision.
	 
	(6)	 	We either (i) are not, and are not acquiring the Offered 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) are, or are acquiring the Offered 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”).

     Terms used in this letter which are not otherwise defined herein have the
respective meanings assigned thereto in the Indenture.

     You and the Issuer are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.

	 	 	 	 	 
	 	 	

	 	 	[Name of Transferor]
	 	 	 	 	 
	 	 	
By:

	 	 	 	 	

	 	 	 	 	Name:
	 	 	 	 	Title:

Dated: _______ __, 200_

B-2-2

 

EXHIBIT B-3

FORM OF RULE 144A TRANSFEREE CERTIFICATE

Wells Fargo Bank Minnesota, National Association

MAC N9311-161

Sixth Street and Marquette Avenue

Minneapolis, MN 55479

     Re: CapitalSource Funding II Trust

     1.     The undersigned is the      of      (the
“Investor”), a [corporation duly organized] and existing under the laws of
     on behalf of which he makes this affidavit.

     2.     The Investor either (i) is not, and is not acquiring the Offered 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 Offered 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”).

     3.     The Investor understands that the Offered Notes have not been, and will
not be, registered under the Securities Act of 1933, as amended (the “1933
Act”) or any state securities laws, and may not be sold except as permitted in
the following sentence. The Investor agrees, on its own behalf and on behalf of
any accounts for which it is acting as hereinafter stated, that if it should
sell any Offered Notes it will do so only (A) pursuant to a registration
statement which has been declared effective under the 1933 Act, (B) for so long
as the Offered Notes are eligible for resale pursuant to Rule 144A under the
1933 Act, to a Person it reasonably believes is a “qualified institutional
buyer” as defined in Rule 144A that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
transfer is being made in reliance on Rule 144A, (C) to 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 Offered Notes 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 1933 Act, in each case in compliance with the requirements of
the Indenture dated as of September 17, 2003 between CapitalSource Funding II
Trust and Wells Fargo Bank Minnesota, National Association, as Indenture
Trustee, and applicable state securities laws; and the Investor further agrees,
in the capacities stated above, to provide to any person purchasing

B-3-1

 

any of the Offered
Notes from it a notice advising such purchaser that resales of the Offered
Notes are restricted as stated herein.

[FOR TRANSFERS IN RELIANCE UPON RULE 144A]

     4.     The Investor is a “qualified institutional buyer” (as such term is
defined under Rule 144A under the Securities Act of 1933, as amended (the “1933
Act”), and is acquiring the Offered Notes for its own account or as a fiduciary
or agent for others (which others also are “qualified institutional buyers”).
The Investor is familiar with Rule 144A under the 1933 Act, and is aware that
the transferor of the Offered Notes and other parties intend to rely on the
statements made herein and the exemption from the registration requirements of
the 1933 Act provided by Rule 144A.

	 	 	 	 	 
	 	 	

	 	 	[Name of Transferor]
	 	 	 	 	 
	 	 	
By:

	 	 	 	 	

	 	 	 	 	Name:
	 	 	 	 	Title:

Dated: _______ __, 200_

B-3-2

 

EXHIBIT C

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “1933 ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.

THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH NOTE ONLY (A) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE 1933 ACT, (B) FOR SO LONG AS THIS
NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE 1933 ACT, TO A
PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED
IN RULE 144A UNDER THE 1933 ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A OR (C) TO AN INSTITUTIONAL
“ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR
(7) OF RULE 501 UNDER THE 1933 ACT THAT IS ACQUIRING THE NOTE 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 1933 ACT, IN EACH CASE IN COMPLIANCE
WITH THE REQUIREMENTS OF THE INDENTURE AND APPLICABLE STATE SECURITIES LAWS.

THIS NOTE MAY NOT BE TRANSFERRED UNLESS THE INDENTURE TRUSTEE HAS RECEIVED A
CERTIFICATE FROM THE TRANSFEREE TO THE EFFECT THAT EITHER (I) THE TRANSFEREE IS
NOT AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT PLAN OR ARRANGEMENT SUBJECT TO
TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (EACH, A “PLAN”),

AND IS NOT ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN OR (II) IF THE
TRANSFEREE IS A PLAN, OR IS ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A
PLAN, 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”).

C-1exv10w1

 

EXHIBIT 10.1

MASTER REPURCHASE AGREEMENT

CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL, LLC, as buyer

(“Buyer”), and

CAPITALSOURCE SNF FUNDING LLC, as seller (“Seller”)

Dated as of August 1, 2003

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	 	 	 	 	

	1.	 	
Applicability
	 	 	1	 
	2.	 	
Definitions
	 	 	1	 
	3.	 	
Program; Initiation of Transactions
	 	 	14	 
	4.	 	
Repurchase
	 	 	15	 
	5.	 	
Price Differential
	 	 	16	 
	6.	 	
Margin Maintenance and Repurchase
	 	 	17	 
	7.	 	
Income Payments
	 	 	17	 
	8.	 	
Security Interest
	 	 	17	 
	9.	 	
Payment and Transfer
	 	 	19	 
	10.	 	
Conditions Precedent
	 	 	19	 
	11.	 	
Program; Costs
	 	 	22	 
	12.	 	
Servicing
	 	 	23	 
	13.	 	
Representations and Warranties
	 	 	24	 
	14.	 	
Covenants
	 	 	29	 
	15.	 	
Events of Default
	 	 	34	 
	16.	 	
Remedies Upon Default
	 	 	36	 
	17.	 	
Reports
	 	 	38	 
	18.	 	
Repurchase Transactions
	 	 	41	 
	19.	 	
Single Agreement
	 	 	41	 
	20.	 	
Notices and Other Communications
	 	 	42	 
	21.	 	
Entire Agreement; Severability
	 	 	42	 
	22.	 	
Non assignability
	 	 	43	 
	23.	 	
Set-off
	 	 	43	 

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	 	 	 	 	Page
	 	 	 	 	

	24.	 	
Binding Effect; Governing Law; Jurisdiction
	 	 	43	 
	25.	 	
No Waivers, Etc.
	 	 	44	 
	26.	 	
Intent
	 	 	44	 
	27.	 	
Disclosure Relating to Certain Federal Protections
	 	 	45	 
	28.	 	
Power of Attorney
	 	 	45	 
	29.	 	
Buyer May Act Through Affiliates
	 	 	45	 
	30.	 	
Indemnification; Obligations
	 	 	46	 
	31.	 	
Counterparts
	 	 	47	 
	32.	 	
Confidentiality
	 	 	47	 
	33.	 	
Recording of Communications
	 	 	47	 
	34.	 	
Periodic Due Diligence Review
	 	 	47	 
	35.	 	
Facility Fee
	 	 	48	 
	36.	 	
Authorizations
	 	 	48	 

SCHEDULES

Schedule 1 – Representations and Warranties with Respect to Purchased Mortgage Loans

Schedule 2 – Authorized Representatives

EXHIBITS

Exhibit A – Form of Transaction Request

Exhibit B – Form of Purchase Confirmation

Exhibit C – Form of Mortgage Loan Schedule and Exception Report

Exhibit D – Form of Officer’s Compliance Certificate

Exhibit E – Intentionally Omitted

Exhibit F – Underwriting Guidelines

Exhibit G – Authorized Signatories of Seller

Exhibit H – Officer’s Certificate of the Seller and Corporate Resolutions of Seller

-ii-

 

Exhibit I – Seller’s Tax Identification Number

Exhibit J – Intentionally Omitted

Exhibit K – Blocked Account Agreement

Exhibit L – Distribution Worksheet

-iii-

 

     1.     Applicability

          From time to time the parties hereto may enter into transactions in which
Seller agrees to transfer to Buyer Mortgage Loans (as hereinafter defined)
against the transfer of funds by Buyer, with a simultaneous agreement by Buyer
to transfer to Seller such Mortgage Loans at a date certain or on demand,
against the transfer of funds by Seller. Each such transaction shall be
referred to herein as a “Transaction” and, unless otherwise agreed in writing,
shall be governed by this Agreement, including any supplemental terms or
conditions contained in any annexes identified herein, as applicable hereunder.

     2.     Definitions

          Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:

          “Accepted Servicing Practices” means, with respect to any Mortgage Loan
the higher of the following standards of care (A) the same manner in which, and
with the same care, skill, prudence and diligence with which the Primary
Servicer services and administers similar commercial mortgage loans for third
parties, giving due consideration to the customary and usual standards of
practice of prudent institutional commercial mortgage master servicers
servicing commercial mortgage loans for third parties, and (B) the same care,
skill, prudence and diligence with which the Servicer services and administers
similar commercial mortgage loans owned by the Servicer exercising reasonable
business judgment and acting in accordance with applicable laws, in each case,
without regard to (a) any relationship that the Servicer or any Affiliate
thereof may have with any Mortgagor any of their respective Affiliates, (b) the
Servicer’s obligation to make advances, (c) the ownership, servicing or
management for others by the Servicer or any Affiliate thereof of any mortgage
loan or property, (d) the right of the Servicer to receive reimbursement of
costs, or the sufficiency of any compensation payable to it under this
Agreement or with respect to any particular transaction; and (e) the
origination of the Mortgage Loans by the originator.

          “Act of Insolvency” means, with respect to any Person or its Affiliates,
(i) the filing of a petition, commencing, or authorizing the commencement of
any case or proceeding, or the voluntary joining of any case or proceeding
under any bankruptcy, insolvency, reorganization, liquidation, dissolution or
similar law relating to the protection of creditors, or suffering any such
petition or proceeding to be commenced by another which is consented to, not
timely contested or results in entry of an order for relief; (ii) the seeking
of the appointment of a receiver, trustee, custodian or similar official for
such party or an Affiliate or any substantial part of the property of either;
(iii) the appointment of a receiver, conservator, or manager for such party or
an Affiliate by any governmental agency or authority having the jurisdiction to
do so; (iv) the making or offering by such party or an Affiliate of a
composition with its creditors or a general assignment for the benefit of
creditors; (v) the admission by such party or an Affiliate of such party of its
inability to pay its debts or discharge its obligations as they become due or
mature; or (vi) that any governmental authority or agency or any person, agency
or entity acting or purporting to act under governmental authority shall have
taken any action to condemn, seize

 

 

or appropriate, or to assume custody or control of, all or any substantial
part of the property of such party or of any of its Affiliates, or shall have
taken any action to displace the management of such party or of any of its
Affiliates or to curtail its authority in the conduct of the business of such
party or of any of its Affiliates.

          “Affiliate” means, with respect to any Person, any “affiliate” of such
Person, as such term is defined in the Bankruptcy Code.

          “Agreement” means this Master Repurchase Agreement, as it may be amended,
supplemented or otherwise modified from time to time.

          “Appraised Value” means the value set forth in an appraisal made in
connection with the origination of the related Mortgage Loan as the value of
the Mortgaged Property.

          “Asset Tape” means a remittance report on a monthly basis or as requested
by Buyer pursuant to Section 17d hereof containing servicing information,
including, without limitation, those fields reasonably requested by Buyer from
time to time, on a loan-by-loan basis and in the aggregate, with respect to the
Purchased Mortgage Loans serviced by Seller or any Servicer for the month (or
any portion thereof) prior to the Reporting Date.

          “Assignment of Mortgage” means an assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to
reflect the sale of the Mortgage to Buyer.

          “Authorized Person” means a person authorized to act for the Seller as set
forth on Exhibit G.

          “Bank” means Bank of American, N.A. or another bank approved by the Buyer
in its sole discretion, in its capacity as bank with respect to the Blocked
Account Agreement.

          “Bankruptcy Code” means the United States Bankruptcy Code of 1978, as
amended from time to time.

          “Blocked Account” shall mean any bank account subject to a Blocked Account
Agreement, including, without limitation, the Collection Account.

          “Blocked Account Agreement” shall mean with respect to any Purchased
Mortgage Loan the agreement between the Servicer and the Buyer substantially in
the form of Exhibit K, attached hereto.

          “Business Day” means any day other than (A) a Saturday or Sunday and (B) a
public or bank holiday in New York City.

          “Buyer” means Credit Suisse First Boston Mortgage Capital LLC, and any
successor hereunder.

          “Buyer’s Margin Amount” means with respect to any Transaction as of any
date of determination, an amount equal to the product of (A) the Purchase Price
Percentage as of such

-2-

 

date of determination with respect to each Eligible Mortgage Loan subject
to such Transaction and (B) the outstanding principal amount of such Eligible
Mortgage Loans subject to such Transaction.

          “Capital Lease Obligations” means, for any Person, all obligations of such
Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP, and, for purposes of this Agreement, the
amount of such obligations shall be the capitalized amount thereof, determined
in accordance with GAAP.

          “Cash Equivalents” means (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of one year or less from the date of
acquisition and overnight bank deposits of any Lender or of any commercial bank
having capital and surplus in excess of $200,000,000, (c) repurchase
obligations of any Lender or of any commercial bank satisfying the requirements
of clause (b) of this definition, having a term of not more than seven days
with respect to securities issued or fully guaranteed or insured by the United
States Government, (d) commercial paper of a domestic issuer rated at least A-1
or the equivalent thereof by Standard and Poor’s Ratings Group (“S&P”) or P-1
or the equivalent thereof by Moody’s Investors Service, Inc. (“Moody’s”) and in
either case maturing within one year after the day of acquisition, (e)
securities with maturities of one year or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the
United States, by any political subdivision or taxing authority of any such
state, commonwealth or territory or by any foreign government, the securities
of which state, commonwealth, territory, political subdivision, taxing
authority or foreign government (as the case may be) are rated at least A by
S&P or A2 by Moody’s, (f) securities with maturities of one year or less from
the date of acquisition backed by standby letters of credit issued by any
Lender or any commercial bank satisfying the requirements of clause (b) of this
definition or (g) shares of money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition.

          “Change in Control” means:

		
	 	     (A) any transaction or event as a result of which Parent ceases to
own, beneficially or of record, 100% of the stock of Seller;
	 
	 	     (B) any transaction or event as a result of which the current
members of the Parent ceases to own, beneficially or of record, either
30% of the membership interests of Parent or voting control of the
Parent;
	 
	 	     (C) the sale, transfer, or other disposition of all or substantially
all of Seller’s or Parent’s assets (excluding any such action taken in
connection with any securitization transaction); or
	 
	 	     (D) the consummation of a merger or consolidation of Seller or the
Parent with or into another entity or any other corporate reorganization,
if more than 50% of the

-3-

 

		
	 	combined voting power of the continuing or surviving entity’s stock
outstanding immediately after such merger, consolidation or such other
reorganization is owned by persons who were not stockholders of Seller
immediately prior to such merger, consolidation or other reorganization

		
	 	     provided, that an initial public offering of the Parent or any
Affiliate of the Parent (other than Seller) which is widely
distributed shall not be deemed to be a Change in Control.

          “Code” means the Internal Revenue Code of 1986, as amended.

          “Collection Account” means one or more accounts established by the
Servicer for the benefit of Buyer, into which all collections and proceeds on
or in respect of the Mortgage Loans shall be deposited by Servicer which is
subject to the Blocked Account Agreement.

          “Cross-Default Event: has the meaning set forth in Section 10b.7(e)
hereof.

          “Custodial Agreement” means the custodial agreement dated as of the date
hereof, among Seller, Buyer and Custodian as the same may be amended from time
to time.

          “Custodian” means Deutsche Bank National Trust Company or such other party
specified by Buyer and agreed to by Seller, which approval shall not be
unreasonably withheld.

          “Debt Service Coverage Ratio” or “DSCR” means, with respect to any
Mortgage Loan, as of any date of determination, Net Underwritable Cash Flow for
such Mortgage Loan divided by 11.83% of the principal balance of the Mortgage
Loan.

          “Default” means an Event of Default or an event that with notice or lapse
of time or both would become an Event of Default.

          “Defaulted Mortgage Loan” means any Mortgage Loan (a) which is 90 days or
more delinquent or (b) for which there is a breach of the representations and
warranties set forth on Schedule 1 hereto that materially and adversely affects
the value of the Mortgaged Loan or (c) for which there is a material
non-monetary default under the related Mortgage Loan Documents that has not
been cured within the applicable cure period in the related Mortgage Loan
Documents, if any.

          “Delinquent Mortgage Loan” means either a 30 Day Delinquent Mortgage Loan
or a 60 Day Delinquent Mortgage Loan.

          “Determination Date” shall mean, with respect to any Interest Period, the
date that is two (2) London Business Days prior to the fifteenth (15th) day of
the calendar month in which such Interest Period commences.

          “Distribution Worksheet” means a worksheet setting forth the amounts and
recipients of remittances to be made on the next succeeding Price Differential
Payment Date, substantially in the form of Exhibit L.

-4-

 

          “Dollars” and “$” means dollars in lawful currency of the United States of
America.

          “Due Date” means the day of the month on which the Monthly Payment is due
on a Mortgage Loan, exclusive of any days of grace.

          “E&O Insurance” means insurance coverage with respect to employee
dishonesty, forgery or alteration, theft, disappearance and destruction,
robbery and safe burglary, property (other than money and securities) and
computer fraud in an aggregate amount acceptable to the Buyer.

          “Effective Date” means the date upon which the conditions precedent set
forth in Section 10 shall have been satisfied.

          “Eligible Mortgage Loan” shall mean any Mortgage Loan which has been
approved as an Approved Loan under Article II of the Program Agreement.

          “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

          “ERISA Affiliate” means any corporation or trade or business that is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which Seller is a member and (ii) solely for purposes of potential
liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code
and the lien created under Section 302(f) of ERISA and Section 412(n) of the
Code, described in Section 414(m) or (o) of the Code of which Seller is a
member.

          “Event of Default” has the meaning specified in Section 15 hereof.

          “Event of Termination” means with respect to Seller (i) with respect to
any Plan, a reportable event, as defined in Section 4043 of ERISA, as to which
the PBGC has not by regulation waived the requirement of Section 4043(a) of
ERISA that it be notified with 30 days of the occurrence of such event, or (ii)
the withdrawal of Seller or any ERISA Affiliate thereof from a Plan during a
plan year in which it is a substantial employer, as defined in Section
4001(a)(2) of ERISA, or (iii) the failure by Seller or any ERISA Affiliate
thereof to meet the minimum funding standard of Section 412 of the Code or
Section 302 of ERISA with respect to any Plan, including, without limitation,
the failure to make on or before its due date a required installment under
Section 412(m) of the Code or Section 302(e) of ERISA, or (iv) the distribution
under Section 4041 of ERISA of a notice of intent to terminate any Plan or any
action taken by Seller or any ERISA Affiliate thereof to terminate any plan,
or (v) the adoption of an amendment to any Plan that, pursuant to Section
401(a)(29) of the Code or Section 307 of ERISA, would result in the loss of
tax-exempt status of the trust of which such Plan is a part if Seller or any
ERISA Affiliate thereof fails to timely provide security to the Plan in
accordance with the provisions of said sections, or (vi) the institution by the
PBGC of proceedings under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or (vii) the receipt by
Seller or any ERISA Affiliate thereof of a notice from a Multiemployer Plan
that action of the type described in the previous clause (vi) has been taken by
the PBGC with respect to such Multiemployer Plan, or (viii) any event or
circumstance exists which may reasonably be expected to constitute grounds for
Seller or any ERISA Affiliate

-5-

 

thereof to incur liability under Title IV of ERISA or under Sections
412(c)(11) or 412(n) of the Code with respect to any Plan.

          “Existing Indebtedness” has the meaning specified in Section 13(a)(23)
hereof.

          “Facility” means a skilled nursing facility securing a Mortgage Loan.

          “Facility Agreements” means, collectively, this Agreement, the Custodial
Agreement, the Program Agreement, the Transfer Agreement, the Interim Servicing
Agreement and the Blocked Account Agreement.

          “GAAP” means generally accepted accounting principles in effect from time
to time in the United States of America and applied on a consistent basis.

          “Governmental Authority” means any nation or government, any state or
other political subdivision thereof, or any entity exercising executive,
legislative, judicial, regulatory or administrative functions over Seller or
Buyer, as applicable.

          “Guarantee” means, as to any Person, any obligation of such Person
directly or indirectly guaranteeing any Indebtedness of any other Person or in
any manner providing for the payment of any Indebtedness of any other Person or
otherwise protecting the holder of such Indebtedness against loss (whether by
virtue of partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, or to take-or-pay or otherwise);
provided that the term “Guarantee” shall not include (i) endorsements for
collection or deposit in the ordinary course of business, or (ii) obligations
to make servicing advances for delinquent taxes and insurance or other
obligations in respect of a Mortgaged Property, to the extent required by
Buyer. The amount of any Guarantee of a Person shall be deemed to be an amount
equal to the stated or determinable amount of the primary obligation in respect
of which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by such
Person in good faith. The terms “Guarantee” and “Guaranteed” used as verbs
shall have correlative meanings.

          “Hedging Agreement” means, with respect to any or all of the Mortgage
Loans, any short sale of a US Treasury Security, or futures contract, or
mortgage related security, or Eurodollar futures contract, or options related
contract, or interest rate swap, cap or collar agreement or take-out
commitment, or similar arrangement providing for protection against
fluctuations in interest rates or the exchange of nominal interest obligations,
either generally or under specific contingencies, entered into by Seller and an
Affiliate of Buyer or such other party acceptable to Buyer in its sole
discretion, which agreement is acceptable to Buyer in its sole discretion.

          “Holdings” means, CapitalSource Holdings LLC or its successors and
assigns.

          “Income” means with respect to any Purchased Mortgage Loan at any time
until repurchased by the Seller, any principal received thereon or in respect
thereof and all interest, dividends or other distributions thereon.

-6-

 

          “Indebtedness” means, for any Person: (a) obligations created, issued or
incurred by such Person for borrowed money (whether by loan, the issuance and
sale of debt securities or the sale of Property to another Person subject to an
understanding or agreement, contingent or otherwise, to repurchase such
Property from such Person); (b) obligations of such Person to pay the deferred
purchase or acquisition price of Property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business, so long as such trade accounts
payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person; (d) obligations
(contingent or otherwise) of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial
institutions for the account of such Person; (e) Capital Lease Obligations of
such Person; (f) obligations of such Person under repurchase agreements,
sale/buy-back agreements or like arrangements; (g) Indebtedness of others
Guaranteed by such Person; (h) all obligations of such Person incurred in
connection with the acquisition or carrying of fixed assets by such Person; and
(i) Indebtedness of general partnerships of which such Person is a general
partner.

          “Interest Period” shall mean, with respect to any Price Differential
Payment Date, the period commencing on the ninth (9th) day of the preceding
calendar month and terminating on the eighth (8th) day of the calendar month in
which such Price Differential Payment Date occurs; and with respect to each
Transaction, the initial Interest Period shall begin on the Purchase Date and
shall end on the immediately following eighth (8th) day of a calendar month.

          “Interim Servicing Agreement” means a servicing agreement, by and between
the Seller, the Primary Servicer, and the Master Servicer, in form and
substance acceptable to the Buyer.

          “Late Fee” means, with respect to any payment not made on the date due, a
fee equal to 5% of the amount of such payment.

          “LIBOR” shall mean, with respect to each Interest Period, the rate
(expressed as a percentage per annum and rounded upward, if necessary, to the
next nearest 1/8 of 1%) for deposits in U.S. dollars, for a one-month period,
that appears on Telerate Page 3750 (or the successor thereto) as of 11:00 a.m.,
London time, on the related Determination Date. If such rate does not appear
on Telerate Page 3750 as of 11:00 a.m., London time, on such Determination
Date, LIBOR shall be the arithmetic mean of the offered rates (expressed as a
percentage per annum) for deposits in U.S. dollars for a one-month period that
appear on the Reuters Screen Libor Page as of 11:00 a.m., London time, on such
Determination Date, if at least two such offered rates so appear. If fewer
than two such offered rates appear on the Reuters Screen Libor Page as of 11:00
a.m., London time, on such Determination Date, Lender shall request the
principal London office of any four major reference banks in the London
interbank market selected by Lender to provide such bank’s offered quotation
(expressed as a percentage per annum) to prime banks in the London interbank
market for deposits in U.S. dollars for a one-month period as of 11:00 a.m.,
London time, on such Determination Date for the amounts of not less than U.S.
$1,000,000. If at least two such offered quotations are so provided, LIBOR
shall be the arithmetic mean of such quotations. If fewer than two such
quotations are so provided,

-7-

 

Lender shall request any three major banks in New York City selected by
Lender to provide such bank’s rate (expressed as a percentage per annum) for
loans in U.S. dollars to leading European banks for a one-month period as of
approximately 11:00 a.m., New York City time on the applicable Determination
Date for amounts of not less than U.S. $1,000,000. If at least two such rates
are so provided, LIBOR shall be the arithmetic mean of such rates. LIBOR shall
be determined conclusively by Lender or its agent.

          “Lien” means any mortgage, lien, pledge, charge, security interest or
similar encumbrance.

          “Loan-to-Value Ratio” or “LTV”: means, with respect to any Mortgage Loan,
the ratio of the outstanding principal amount of the Mortgage Loan as of the
Purchase Date to the value of the Mortgaged Property (calculated as the Net
Underwritable Cash Flow on the Mortgage Loan divided by 13.5%), expressed as a
percentage.

          “London Business Day” means any day other than a Saturday, Sunday or any
other day on which commercial banks in London, England are not open for
business.

          “Margin Call” has the meaning specified in Section 6(a) hereof.

          “Margin Deadline” has the meaning specified in Section 6(b) hereof.

          “Margin Deficit” has the meaning specified in Section 6(a) hereof.

          “Master Servicer” means ORIX Capital Markets LLC or another servicer
mutually agreed upon between the Seller and the Parent.

          “Material Adverse Effect” means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, financial
condition or prospects of Seller, the Servicer, the Parent or any Affiliate
that is a party to any Facility Agreement taken as a whole; (b) a material
impairment of the ability of Seller, the Parent, the Servicer or any Affiliate
that is a party to any Facility Agreement to perform under any Facility
Agreement and to avoid any Event of Default; or (c) a material adverse effect
upon the legality, validity, binding effect or enforceability of any Facility
Agreement against Seller, the Parent, the Servicer or any Affiliate of any of
the foregoing that is a party to any Facility Agreement.

          “Maximum Aggregate Purchase Price” means THREE HUNDRED MILLION DOLLARS
($300,000,000).

          “Member” means CapitalSource Finance LLC, a Delaware limited liability
company, as the initial member of the Seller, and includes any Person admitted
as an additional member of the Seller or a substitute member of the Seller
pursuant to the provisions of the Seller’s operating agreement (the “LLC
Agreement”), each in its capacity as a member of the Seller; provided, however,
the term “Member” shall not include an Independent Member.

          “Monthly Payment” means the scheduled monthly payment of principal and/or
interest on a Mortgage Loan.

-8-

 

          “Moody’s” means Moody’s Investors Service, Inc. or any successors thereto.

          “Mortgage” means each mortgage, assignment of rents, security agreement
and fixture filing, or deed of trust, assignment of rents, security agreement
and fixture filing, deed to secure debt, assignment of rents, security
agreement and fixture filing, or similar instrument creating and evidencing a
lien on real property and other property and rights incidental thereto.

          “Mortgage File” means, with respect to a Mortgage Loan, the documents and
instruments relating to such Mortgage Loan and set forth on Exhibit 1 to the
Custodial Agreement.

          “Mortgage Interest Rate” means the rate of interest borne on a Mortgage
Loan from time to time in accordance with the terms of the related Mortgage
Note.

          “Mortgage Loan” means a first lien mortgage loan secured by a skilled
nursing facility.

          “Mortgage Loan Documents” means the documents in the related Mortgage File
to be delivered to the Custodian.

          “Mortgage Loan Schedule” means with respect to any Transaction as of any
date, a mortgage loan schedule in the form of either (a) Exhibit C attached
hereto or (b) a computer tape or other electronic medium generated by Seller,
and delivered to Buyer and Custodian, which provides information (including,
without limitation, the information set forth on Exhibit C attached hereto)
relating to the Purchased Mortgage Loans in a format acceptable to Buyer.

          “Mortgage Loan Schedule and Exception Report” has the meaning assigned to
such term in the Custodial Agreement.

          “Mortgage Note” means the promissory note or other evidence of the
indebtedness of a Mortgagor secured by a Mortgage.

          “Mortgaged Property” means the real property securing repayment of the
debt evidenced by a Mortgage Note.

          “Mortgagor” means the obligor or obligors on a Mortgage Note, including
any person who has assumed or guaranteed the obligations of the obligor
thereunder.

          “Multiemployer Plan” means a multiemployer plan defined as such in Section
3(37) of ERISA to which contributions have been or are required to be made by
Seller or any ERISA Affiliate and that is covered by Title IV of ERISA.

          “Net Underwritable Cash Flow” shall mean, with respect to each Mortgage
Loan, the underwritable cash flow from the related Mortgaged Property or
Properties, as determined in good faith by the Buyer.

          “Net Worth” means, with respect to any Person, an amount equal to, on a
consolidated basis, such Person’s stockholder equity (determined in accordance
with GAAP).

-9-

 

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

          “Notice Date” has the meaning given to it in Section 3(b) hereof.

          “Obligations” means (a) all of Seller’s indebtedness, obligations to pay
the Repurchase Price on the Repurchase Date, the Price Differential on each
Price Differential Payment Date, and other obligations and liabilities, to
Buyer, its Affiliates or Custodian arising under, or in connection with, the
Facility Agreements, whether now existing or hereafter arising; (b) any and all
sums paid by Buyer or on behalf of Buyer in order to preserve any Purchased
Mortgage Loan or its interest therein; (c) in the event of any proceeding for
the collection or enforcement of any of Seller’s indebtedness, obligations or
liabilities referred to in clause (a), the reasonable expenses of retaking,
holding, collecting, preparing for sale, selling or otherwise disposing of or
realizing on any Purchased Mortgage Loan, or of any exercise by Buyer of its
rights under the Facility Agreements, including, without limitation, attorneys’
fees and disbursements and court costs; and (d) all of Seller’s indemnity
obligations to Buyer or Custodian or both pursuant to the Facility Agreements.

          “Parent” means CapitalSource Finance LLC, a Delaware limited liability
company, or its permitted successors and assigns.

          “PBGC” means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.

          “Person” means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.

          “Plan” means an employee benefit or other plan established or maintained
by any Seller or any ERISA Affiliate and covered by Title IV of ERISA, other
than a Multiemployer Plan.

          “Portfolio” means all Portfolio Mortgage Loans which are
cross-collateralized and/or cross-defaulted with each other.

          “Portfolio Mortgage Loan” means a Mortgage Loan which is part of a
portfolio of cross-collateralized and/or cross-defaulted mortgage loans.

          “Post Default Rate” means an annual rate of interest equal to the Pricing
Rate plus 5%.

          “Price Differential” means with respect to any Transaction as of any date
of determination, an amount equal to the product of (A) the Pricing Rate for
such Transaction and (B) the Purchase Price for such Transaction, calculated
daily on the basis of a 360-day year for the actual number of days during the
period commencing on (and including) the Purchase Date for such Transaction and
ending on (but excluding) the Repurchase Date.

-10-

 

          “Price Differential Payment Date” means, with respect to a Purchased
Mortgage Loan, the 9th calendar day of the month following the related Purchase
Date and each succeeding 9th calendar day of the month thereafter; provided,
that, with respect to such Purchased Mortgage Loan, the final Price
Differential Payment Date shall be the related Repurchase Date; and provided,
further, that if any such day is not a Business Day, the Price Differential
Payment Date shall be the immediately preceding Business Day.

          “Pricing Rate” means LIBOR plus 1.25%. The Pricing Rate shall change in
accordance with LIBOR, as provided in Section 5(a).

          “Primary Servicer” means CapitalSource Finance LLC, a Delaware limited
liability company, as Servicer, or its permitted successors and assigns.

          “Program Agreement” means the Master Program Agreement by and among
Parent, Buyer, Credit Suisse First Boston, LLC and Column Financial, Inc.

          “Property” means any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.

          “Purchase Confirmation” means a confirmation of a Transaction, in the form
attached as Exhibit B hereto.

          “Purchase Date” means the date on which Purchased Mortgage Loans are to be
transferred by Seller to Buyer.

          “Purchase Price” means (i) the price at which each Purchased Mortgage Loan
is transferred by Seller to Buyer, which shall equal the product of (1) the
outstanding principal amount thereof as set forth on the related Mortgage Loan
Schedule and Exception Report multiplied by (2) the applicable Purchase Price
Percentage and (ii) thereafter, except where Buyer and Seller agree otherwise,
the amount determined under the immediately preceding clause (i) decreased by
the amount of any cash transferred by Seller to Buyer pursuant to Section 6)
hereof or applied to reduce Seller’s obligations under clause (3) of Section 7d
hereof.

          “Purchase Price Percentage” means, with respect to each Mortgage Loan, the
following percentage, as applicable:

		
	 	     (a) with respect to each Mortgage Loan (other than a Defaulted
Mortgage Loan or Delinquent Mortgage Loan):

		
	 	     (i) which has been subject to a Transaction hereunder for 12
months or less, 70%;

		
	 	     (ii) which has been subject to a Transaction hereunder for
more than 12 months but not more than 15 months, 60%;

		
	 	     (iii) which has been subject to a Transaction hereunder for
more than 15 months but not more than 18 months, 50%;

-11-

 

		
	 	     (b) with respect to each 30 Day Delinquent Mortgage Loan, 50%;
	 
	 	     (c) with respect to each 60 Day Delinquent Mortgage Loan, 25%
	 
	 	     (d) with respect to each Defaulted Mortgage Loan, 0%.

          “Purchased Mortgage Loans” means the collective reference to Mortgage
Loans together with the Repurchase Assets related to such Mortgage Loans
transferred by Seller to Buyer in a Transaction hereunder, listed on the
related Mortgage Loan Schedule attached to the related Transaction Request,
which such Mortgage Loans the Custodian has been instructed to hold pursuant to
the Custodial Agreement.

          “Qualified Originator” means an originator of Mortgage Loans which is
acceptable to the Buyer.

          Receivable Loan” means, with respect to any Mortgage Loan, any loan made
by the Parent to the Mortgagor or Operator secured by a lien on the Mortgagor’s
Medicare and Medicaid accounts receivable.

          “Records” means all instruments, agreements and other books, records, and
reports and data generated by other media for the storage of information
maintained by Seller, or any other person or entity with respect to a Purchased
Mortgage Loan. Records shall include the mortgage notes, any Mortgages, the
Mortgage Files, the credit files related to the Purchased Mortgage Loan and any
other instruments necessary to document or service a Mortgage Loan.

          REMIC: A “real estate mortgage investment conduit” within the meaning of
Section 860D of the Code.

          “Reporting
Date” means the 5th day of each month or, if such day is not a
Business Day, the next succeeding Business Day.

          “Repurchase Assets” has the meaning assigned thereto in Section 8 hereof.

          “Repurchase Date” means the earlier of (i) the Termination Date, (ii) the
date set forth in the applicable Purchase Confirmation (which date shall be
eighteen months after the related Purchase Date), (iii) the date determined by
application of Section 16 hereof, or (iv) the date of any voluntary repurchase
pursuant to Section 4b.

          “Repurchase Price” means the price at which Purchased Mortgage Loans are
to be transferred from Buyer to Seller upon termination of a Transaction, which
will be determined in each case (including Transactions terminable upon demand)
as the sum of the Purchase Price and the accrued but unpaid Price Differential
as of the date of such determination.

          “Request for Certification” means a notice sent to the Custodian
reflecting the sale of one or more Purchased Mortgage Loans to Buyer hereunder.

          “Requirement of Law” means, with respect to any Person, any law, treaty,
rule or regulation or determination of an arbitrator, a court or other
governmental authority, applicable

-12-

 

to or binding upon such Person or any of its property or to which such
Person or any of its property is subject.

          “Responsible Officer” means shall mean, as to any Person, the chief
executive officer or, with respect to financial matters, the chief financial
officer of such Person.

          “Rolling Termination Date” means, with respect to any date, the date which
is 364 days from such date, provided, that on and after the date on which the
Buyer delivers to the Seller written notice that the Buyer shall no longer roll
the Rolling Termination Date forward (the “Rolling Termination Notice Date”),
the Rolling Termination Date shall be the date which is 364 days after the
Rolling Termination Notice Date.

          “S&P” means Standard & Poor’s Ratings Services, or any successor thereto.

          “SEC” means the Securities and Exchange Commission, or any successor
thereto.

          “Seller” means CapitalSource SNF Funding LLC or its permitted successors
and assigns.

          “SIPA” means the Securities Investor Protection Act of 1970, as amended
from time to time.

          “60 Day Delinquent Mortgage Loan” means a mortgage loan which is 60 or
more days, but less than 90 days, delinquent.

          “Subsidiary” means, with respect to any Person, any corporation,
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at
the time directly or indirectly owned or controlled by such Person or one or
more Subsidiaries of such Person or by such Person and one or more Subsidiaries
of such Person.

          “Termination Date” means the earlier of (a) July 31, 2008, (b) the Rolling
Termination Date, or (c) the date on which the Buyer has declared an Event of
Default to have occurred pursuant to Section 16.a hereof.

          “Test Period” means any period of three (3) consecutive calendar months.

          “30 Day Delinquent Mortgage Loan” means a mortgage loan which is 30 or
more days, but less than 60 days, delinquent.

          “Transaction” has the meaning set forth in Section 1 hereof.

          “Transaction Request” means a request from Seller to Buyer, in the form
attached as Exhibit A hereto, to enter into a Transaction.

-13-

 

          “Transfer Agreement” means that certain Mortgage Loan Purchase Agreement
dated the same date as this Repurchase Agreement by and between the Parent and
the Seller.

          “Transfer Assignment” means the assignment entered into between the Parent
and the Seller on the Purchase Date in the form of Exhibit A to the Transfer
Agreement.

          “Trust Receipt and Certification” means, with respect to any Transaction
as of any date, a receipt and certification in the form attached as an exhibit
to the Custodial Agreement.

          “Underwriting Guidelines” means the standards, procedures and guidelines
of the Parent for underwriting and acquiring Mortgage Loans, which are set
forth in the written policies and procedures of the Parent, a copy of which is
attached hereto as Exhibit F and such other guidelines as are approved in
writing by Buyer.

          “Uniform Commercial Code” means the Uniform Commercial Code as in effect
on the date hereof in the State of New York or the Uniform Commercial Code as
in effect in the applicable jurisdiction.

     3.     Program; Initiation of Transactions

		
	 	a. From time to time, Buyer will purchase from Seller certain
Eligible Mortgage Loans that have been either originated by Seller
or purchased by Seller from other originators. All Purchased
Mortgage Loans shall have been approved by the Buyer pursuant to
the Program Agreement and shall exceed or meet the Underwriting
Guidelines, and shall be serviced by Servicer. The aggregate
Purchase Price of Purchased Mortgage Loans subject to outstanding
Transactions shall not exceed the Maximum Aggregate Purchase Price.
	 
	 	b. Seller shall give Buyer and Custodian at least six Business
Day’s prior notice of any proposed Purchase Date (the date on which
such notice is given, the “Notice Date”). On the Notice Date,
Seller shall (i) request that Buyer enter into a Transaction by
furnishing to Buyer a Transaction Request, (ii) deliver to Buyer
and Custodian a Mortgage Loan Schedule and (iii) deliver to
Custodian a Request for Certification and each Mortgage File in
accordance with Section 10(b)(2). In the event the Mortgage Loan
Schedule provided by Seller contains erroneous computer data, is
not formatted properly or the computer fields are otherwise
improperly aligned, Buyer shall provide written or electronic
notice to Seller describing such error and Seller may either (a)
give Buyer written or electronic authority to correct the computer
data, reformat the Mortgage Loans or properly align the computer
fields or (b) correct the computer data, reformat or properly align
the computer fields itself and resubmit the Mortgage Loan Schedule
as required herein. The Seller shall hold Buyer harmless for such
correction, reformatting or realigning, as applicable, except as
otherwise expressly provided herein.
	 
	 	c. With respect to each Mortgage Loan, upon receipt of the
Transaction Request, Buyer shall, consistent with this Agreement,
specify the terms for such proposed

-14-

 

		
	 	Transaction, including the Purchase Price, the Pricing Rate, and
the Repurchase Date in respect of such Transaction. The terms
thereof shall be set forth in the Purchase Confirmation to be
delivered to Seller on or prior to the Purchase Date.
	 
	 	d. With respect to each Mortgage Loan, the Purchase Confirmation,
together with this Agreement, shall constitute conclusive evidence
of the terms agreed between Buyer and Seller with respect to the
Transaction to which the Purchase Confirmation relates, and
Seller’s acceptance of the related proceeds shall constitute
Seller’s agreement to the terms of such Purchase Confirmation. It
is the intention of the parties that, with respect to each Mortgage
Loan, each Purchase Confirmation shall not be separate from this
Agreement but shall be made a part of this Agreement. In the event
of any conflict between this Agreement and, with respect to each
Mortgage Loan, a Purchase Confirmation, the terms of the Purchase
Confirmation shall control with respect to the related Transaction.
	 
	 	e. Upon the satisfaction of the applicable conditions precedent set
forth in Section 10 hereof, all of Seller’s interest in the
Repurchase Assets shall pass to Buyer on the Purchase Date, against
the transfer of the Purchase Price to Seller. Upon transfer of the
Mortgage Loans to Buyer as set forth in this Section and until
termination of any related Transactions as set forth in Sections 4
or 16 of this Agreement, ownership of each Mortgage Loan, including
each document in the related Mortgage File and Records, is vested
in Buyer; provided that, prior to the recordation by the Custodian
as provided for in the Custodial Agreement record title in the name
of Seller to each Mortgage shall be retained by Seller in trust,
for the benefit of Buyer, for the sole purpose of facilitating the
servicing and the supervision of the servicing of the Mortgage
Loans.

     4.     Repurchase

		
	 	a. Seller shall repurchase the related Purchased Mortgage Loans
from Buyer on each related Repurchase Date. Such obligation to
repurchase exists without regard to any prior or intervening
liquidation or foreclosure with respect to any Purchased Mortgage
Loan (but liquidation or foreclosure proceeds received by Buyer
shall be applied to reduce the Repurchase Price for such Purchased
Mortgage Loan on each Price Differential Payment Date except as
otherwise provided herein). Seller is obligated to repurchase and
take physical possession of the Purchased Mortgage Loans from Buyer
or its designee (including the Custodian) at Seller’s expense on
the related Repurchase Date.
	 
	 	b. The Seller may repurchase any or all of the Purchased Mortgage
Loans upon one (1) Business Day’s prior written notice thereof by
the Seller to the Buyer, designating the Purchased Mortgage Loans
to be repurchased. If such notice is given, the amount specified
in such notice shall be due and payable on the date specified
therein, and, on receipt, such amount shall be applied to the
Repurchase Price for the designated Purchased Mortgage Loans. Said
Repurchase Price shall be accompanied by the Exit Fee described in
Section 4.c below in those circumstances when an Exit Fee is
payable under Section 4.c below.

-15-

 

		
	 	c. Upon the repurchase of any Purchased Mortgage Loan subject to a
Transaction hereunder other than a Purchased Mortgage Loan (x)
which the Seller is obligated to repurchase or has the specific
right to repurchase pursuant to Section 4.a, Section 6.c, Section
10.b(7), Section 11.b, or Section 22 or (y) with respect to which
Buyer has advised Seller will not be included in a securitization
pursuant to the Program Agreement, the Seller shall pay to the
Buyer a fee in an amount equal to 1.00% of the outstanding
principal balance of such Mortgage Loan as of the date on which
such Purchased Mortgage Loan is removed (the “Exit Fee”), such Exit
Fee to be paid in Dollars, in immediately available funds, without
deduction, set-off or counterclaim to the account set forth in
Section 9 hereof.
	 
	 	d. Provided that no Default shall have occurred and is continuing,
and Buyer has received the related Repurchase Price upon repurchase
of the Purchased Mortgage Loans, Buyer agrees to release its
ownership interest hereunder in the Purchased Mortgage Loans
(including, the Repurchase Assets related thereto) at the request
of Seller. With respect to payments in full by the related
Mortgagor of a Purchased Mortgage Loan, Seller agrees to (i)
provide Buyer with a copy of a report from the related Servicer
indicating that such Purchased Mortgage Loan has been paid in full,
(ii) remit to Buyer, within two Business Days, the Repurchase Price
with respect to such Purchased Mortgage Loans and (iii) provide
Buyer a notice specifying each Purchased Mortgage Loan that has
been prepaid in full. Buyer agrees to release its ownership
interest in Purchased Mortgage Loans which have been prepaid in
full after receipt of evidence of compliance with clauses (i)
through (iii) of the immediately preceding sentence.

     5.     Price Differential.

		
	 	a. On the first day of each Interest Period that a Transaction is
outstanding, the Pricing Rate shall be reset and, unless otherwise
agreed, the accrued and unpaid Price Differential shall be settled
in cash on each related Price Differential Payment Date. Two
Business Days prior to the Price Differential Payment Date, Buyer
shall give Seller written or electronic notice of the amount of the
Price Differential due on such Price Differential Payment Date. On
the Price Differential Payment Date, Seller shall pay to Buyer the
Price Differential for such Price Differential Payment Date (along
with any other amounts to be paid pursuant to Sections 7, and 35
hereof), by wire transfer in immediately available funds.
	 
	 	b. If Seller fails to pay all or part of the Price Differential by
3:00 p.m. (New York City time) on the related Price Differential
Payment Date, with respect to any Purchased Mortgage Loan, Seller
shall be obligated to pay to Buyer (in addition to, and together
with, the amount of such Price Differential) interest on the unpaid
Repurchase Price at a rate per annum equal to the Post Default Rate
until the Price Differential is received in full by Buyer.

-16-

 

     6.     Margin Maintenance and Repurchase

		
	 	a. If on any date the Buyer’s Margin Amount of any Purchased
Mortgage Loan subject to a Transaction is less than the Purchase
Price paid on the Purchase Date for such Transaction as reduced
pursuant to the definition thereof (a “Margin Deficit”), the Buyer
may by notice to the Seller require the Seller to transfer to Buyer
cash in an amount at least equal to the Margin Deficit. Notice
delivered pursuant to this Section may be given by any written
means
	 
	 	b. Such payment shall be made not later than 5:00 p.m. (New York
City time) on the date which is two Business Days after the date of
notice to the Seller of the occurrence of the Margin Deficit (the
foregoing time requirement is referred to as the “Margin
Deadline”). The failure of Buyer, on any one or more occasions, to
exercise its rights hereunder, shall not change or alter the terms
and conditions to which this Agreement is subject or limit the
right of Buyer to do so at a later date. Seller and Buyer each
agree that a failure or delay by Buyer to exercise its rights
hereunder shall not limit or waive Buyer’s rights under this
Agreement or otherwise existing by law or in any way create
additional rights for Seller.
	 
	 	c. In lieu of making a payment to Buyer in an amount at least equal
to the Margin Deficit pursuant to Section 6.a above, Seller, at
Seller’s option, may elect to repurchase any Purchased Mortgage
Loan for which there is a Margin Deficit by notifying Buyer thereof
and paying to Buyer, on or before the Margin Deadline, the
Repurchase Price for such Mortgaged Loan. A repurchase of a
Mortgaged Loan pursuant to this Section 6.c shall be without
penalty, premium or Exit Fee.

     7.     Income Payments

		
	 	a. Notwithstanding that Buyer and Seller intend that the
Transactions hereunder be sales to Buyer of the Purchased Mortgage
Loans, Seller shall pay to Buyer the accreted value of the Price
Differential on each Price Differential Payment Date.
	 
	 	b. Servicer shall cause each Mortgagor to remit all amounts paid on
account of the Purchased Mortgage Loans to the Collection Account
held pursuant to the Blocked Account Agreement.
	 
	 	c. Servicer shall hold for the benefit of, and in trust for, Buyer
all Income, including without limitation all Income received by or
on behalf of Seller (or deposited into the lockbox account) with
respect to such Purchased Mortgage Loans. Servicer shall deposit
such Income in a trust account (the title of which shall indicate
that the funds therein are being held in trust for Buyer) (the
“Collection Account”) with a financial institution acceptable to
Buyer and subject to the Blocked Account Agreement within two
Business Days of receipt by the Servicer.
	 
	 	d. All such Income shall be held in trust for Buyer, shall
constitute the property of Buyer and shall not be commingled with
other property of Seller, any Affiliate

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	 	of Seller or the Servicer. Funds deposited in the Collection
Account during any month shall be held therein, in trust for the
Buyer, until the next Price Differential Payment Date. On or
before 3 p.m. (New York time) on the date prior to the Price
Differential Payment Date, the Seller shall deliver to the Buyer
and the Bank a Distribution Worksheet. Subject to the terms of the
Blocked Account Agreement and in accordance with the Buyer
authorization, the Bank shall withdraw any funds on deposit in the
Collection Account and apply such funds as follows:

		
	 	          (1) first, to the Buyer in payment of any accrued and unpaid
Price Differential;
	 
	 	          (2) second, without limiting the rights of Buyer under Section
6 of this Repurchase Agreement, to the Buyer, in the amount of any
unpaid Margin Deficit;
	 
	 	          (3) third, to the Buyer in an amount equal to, with respect to
each Mortgage Loan, the product of (a) all Income received on
account of principal on such Mortgage Loan, multiplied by (b) the
applicable Purchase Price Percentage;
	 
	 	          (4) fourth, to the payment of all costs and fees payable by
the Seller pursuant to this Repurchase Agreement (including Late
Fees with respect to any late payments); and
	 
	 	          (5) fifth, to the Seller.
	 
	 	e. Notwithstanding the preceding provisions, if an Event of Default
has occurred and Buyer shall have declared an Event of Default to
have occurred hereunder under Section 16.a hereof, all funds in the
Collection Account shall be withdrawn and applied as determined by
the Buyer.
	 
	 	f. Buyer shall offset against the accrued and outstanding Price
Differential all Price Differential payments actually received by
Buyer pursuant to Section 5, excluding any amounts paid pursuant to
any Price Differential payments made at the Post-Default Rate
pursuant to Section 5(b) and any Late Fees. Buyer shall offset
against the Repurchase Price all amounts on account of principal
actually received by Buyer pursuant to Section 7(d).

     8.     Security Interest

          Although the parties intend that all Transactions hereunder be sales and
purchases and not loans, in the event any such Transactions are deemed to be
loans, Seller hereby pledges to Buyer as security for the performance by Seller
of its Obligations and hereby grants, assigns and pledges to Buyer a security
interest in the Purchased Mortgage Loans, the Records, and all related
servicing rights, the Facility Agreements (to the extent such Facility
Agreements and Seller’s right thereunder relate to the Purchased Mortgage
Loans), any Property relating to the Purchased Mortgage Loans, all insurance
policies and insurance proceeds relating to any Purchased Mortgage Loan or the
related Mortgaged Property, including, but not limited to, any

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payments or proceeds under any related primary insurance, hazard
insurance, Income relating to the Purchased Mortgage Loan, all Blocked Accounts
and the balance from time to time standing to the credit of Blocked Accounts
and all rights with respect thereto, Hedging Agreements relating to the
Purchased Mortgage Loan, accounts (including any interest of Seller in escrow
accounts) and any other contract rights, accounts, payments, rights to payment
(including payments of interest or finance charges) general intangibles,
(including, without limitation, any other accounts) or any interest in the
Purchased Mortgage Loans, the servicing of the Purchased Mortgage Loans, and
any proceeds (including the related securitization proceeds) and distributions
with respect to any of the foregoing and any other property, rights, title or
interest as are specified on a Transaction Request and/or Trust Receipt and
Certification, in all instances described herein, whether now owned or
hereafter acquired, now existing or hereafter created (collectively, the
“Repurchase Assets”). Seller agrees to execute, deliver and/or file such
documents and perform such acts as may be reasonably necessary to fully perfect
Buyer’s security interest created hereby. Furthermore, the Seller hereby
authorizes the Buyer to file financing statements relating to the Repurchase
Assets without the signature of the Seller, as the Buyer, at its option, may
deem appropriate. The Seller shall pay the filing costs for any financing
statement or statements prepared pursuant to this Section.

     9.     Payment and Transfer

          Unless otherwise mutually agreed in writing, all transfers of funds to be
made by Seller hereunder shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to Buyer at the following
account maintained by Buyer: Citibank, ABA# 021000089, Column Financial Inc,
A/C# 30489046 or such other account as Buyer shall specify to Seller in
writing. Seller acknowledges that it has no rights of withdrawal from the
foregoing account. All Purchased Mortgage Loans transferred by one party
hereto to the other party shall be in the case of a purchase by Buyer in
suitable form for transfer or shall be accompanied by duly executed instruments
of transfer or assignment in blank and such other documentation as Buyer may
reasonably request. All Purchased Mortgage Loans shall be evidenced by a Trust
Receipt and Certification. Any Repurchase Price received by Buyer after 2:00
p.m. (New York City time) shall be deemed received on the next succeeding
Business Day.

     10.     Conditions Precedent

		
	 	a. Initial Transaction. As conditions precedent to the initial
Transaction, Buyer shall have received on or before the day of such
initial Transaction the following, in form and substance
satisfactory to Buyer and duly executed by Seller and each other
party thereto:
	 
	 	          (1) Facility Agreements. The Facility Agreements (including a
Custodial Agreement in a form acceptable to Buyer) duly executed
and delivered by the parties thereto and being in full force and
effect, free of any modification, breach or waiver.
	 
	 	          (2) Security Interest. Evidence that all other actions
necessary or, in the opinion of Buyer, desirable to perfect and
protect Buyer’s interest in the Purchased Mortgage Loans and other
Repurchase Assets have been taken,

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	 	including, without limitation, duly executed and filed Uniform
Commercial Code financing statements on Form UCC-1.
	 
	 	          (3) Collection Account. The Buyer shall have received
evidence satisfactory to the Buyer of the existence of the
Collection Account which constitutes a “securities account” within
the meaning of the applicable Uniform Commercial Code in the state
in which the Collection Account is located.
	 
	 	          (4) Blocked Account Agreement. With respect to each Collection
Account, the Seller has delivered to Buyer a fully executed Blocked
Account Agreement.
	 
	 	          (5) Organizational Documents. A certificate of the secretary
of Seller, substantially in the form of Exhibit H hereto, attaching
certified copies of Seller’s operating agreement, certificate of
formation and resolutions approving the Facility Agreements and
transactions thereunder (either specifically or by general
resolution) and all documents evidencing other necessary limited
liability company action or governmental approvals as may be
required in connection with the Facility Agreements.
	 
	 	          (6) Parent Organizational Documents. A certificate of the
secretary of Parent, substantially in the form of Exhibit H hereto,
attaching certified copies of Parent’s operating agreement and
certificate of formation.
	 
	 	          (7) Good Standing Certificate. A certified copy of a good
standing certificate of Seller, dated as of no earlier than the
date 10 Business Days prior to the Purchase Date with respect to
the initial Transaction hereunder.
	 
	 	          (8) Incumbency Certificate. An incumbency certificate of the
corporate secretary of Seller, certifying the names, true
signatures and titles of the representatives duly authorized to
request transactions hereunder and to execute the Facility
Agreements.
	 
	 	          (9) Opinions of Counsel.
	 
	 	          (a) An opinion of Seller’s counsel, in form and
substance acceptable to the Buyer.
	 
	 	          (b) An opinion or opinions of outside counsel to the
Seller with respect to nonconsolidation and true sale in form
and substance acceptable to the Buyer.

	 
	 	          (c) An opinion of Parent’s counsel, in form and
substance substantially acceptable to the Buyer.
	 
	 	          (10) Underwriting Guidelines. A true and correct copy of the
Underwriting Guidelines certified by an officer of the Seller.

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	 	          (11) Fees. Payment of any fees due to Buyer hereunder.
	 
	 	          (12) Insurance. Evidence that Seller has added Buyer as a
loss payee under the Seller’s E&O Insurance.
	 
	 	b. All Transactions. The obligation of Buyer to enter into each
Transaction pursuant to this Agreement is subject to the following
conditions precedent:
	 
	 	          (1) Due Diligence Review. Without limiting the generality of
Section 34 hereof, Buyer shall have completed its due diligence
review of the related Mortgage Loans and Seller and determined that
the results are acceptable to the Buyer.
	 
	 	          (2) Required Documents. With respect to each Purchased
Mortgage Loan the Mortgage File has been delivered to the Custodian
at least 24 hours prior to the related Purchase Date;
	 
	 	          (3) Transaction Documents. Buyer or its designee shall have
received on or before the day of such Transaction (unless otherwise
specified in this Agreement) the following, in form and substance
satisfactory to Buyer and (if applicable) duly executed:
	 
	 	     (a) A Transaction Request delivered pursuant to Section 3(c)
hereof and a Purchase Confirmation.
	 
	 	     (b) The Request for Certification and the related Mortgage
Loan Schedule and Exception Report, and the Trust Receipt.
	 
	 	     (c) Such certificates, opinions of counsel or other documents
as Buyer may reasonably request.
	 
	 	          (4) No Default. No Default or Event of Default shall have
occurred and be continuing;
	 
	 	          (5) Requirements of Law. Buyer shall not have determined that
the introduction of or a change in any Requirement of Law or in the
interpretation or administration of any Requirement of Law
applicable to Buyer has made it unlawful, and no Governmental
Authority shall have asserted that it is unlawful, for Buyer to
enter into Transactions with a Pricing Rate based on LIBOR.
	 
	 	          (6) Representations and Warranties. Both immediately prior to
the related Transaction and also after giving effect thereto and to
the intended use thereof, the representations and warranties made
by Seller in each Facility Agreement shall be true, correct and
complete on and as of such Purchase Date in all material respects
with the same force and effect as if made on and as of such date
(or, if any such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific date).

-21-

 

		
	 	          (7) Material Adverse Change. None of the following shall have
occurred and/or be continuing:
	 
	 	     (a) Credit Suisse First Boston, New York Branch’s corporate
bond rating as calculated by S&P or Moody’s has been lowered or
downgraded to a rating below investment grade by S&P or Moody’s;
	 
	 	     (b) an event or events shall have occurred in the good faith
determination of Buyer resulting in the effective absence of a
“repo market” or comparable “lending market” for financing debt
obligations secured by mortgage loans or securities or an event or
events shall have occurred resulting in Buyer not being able to
finance Purchased Mortgage Loans through the “repo market” or
“lending market” with traditional counterparties at rates which
would have been reasonable prior to the occurrence of such event or
events; or
	 
	 	     (c) an event or events shall have occurred resulting in the
effective absence of a “securities market” for securities backed by
mortgage loans or an event or events shall have occurred resulting
in Buyer not being able to sell securities backed by mortgage loans
at prices which would have been reasonable prior to such event or
events; or
	 
	 	     (d) there shall have occurred a material adverse change in the
financial condition of Buyer which affects (or can reasonably be
expected to affect) materially and adversely the ability of Buyer
to fund its obligations under this Agreement; or
	 
	 	     (e) Parent, Affiliate or subsidiary of the Parent shall be in
default under (i) any Indebtedness of Parent, Affiliate or
subsidiary of the Parent with an outstanding principal balance in
excess of $4,000,000, which default (1) involves the failure to pay
a matured obligation, or (2) permits the acceleration of the
maturity of obligations by any other party to or beneficiary with
respect to such Indebtedness, or (ii) any other contract to which
Parent, Affiliate or subsidiary of the Parent is a party which
default (1) involves the failure to pay a matured obligation with
an outstanding principal balance in excess of $4,000,000, or (2)
permits the acceleration of the maturity of obligations with an
outstanding principal balance in excess of $4,000,000 by any other
party to or beneficiary of such contract (any such event, a
‘Cross-Default Event”).

     11.     Program; Costs

		
	 	a. Seller shall reimburse Buyer for any of Buyer’s reasonable
out-of-pocket costs, including due diligence review costs and
reasonable attorney’s fees, incurred by Buyer in determining the
acceptability to Buyer of any Mortgage Loans. Buyer shall notify
the Seller if the costs incurred to review any single Mortgage Loan
exceed $2,500. Seller shall also pay, or reimburse Buyer if Buyer
shall pay, any termination fee, which may be due any servicer.
Seller shall pay to the Buyer an amount equal to one half of the
reasonable fees and expenses of

-22-

 

		
	 	Buyer’s counsel in connection with the Facility Agreements.
Reasonable legal fees for any subsequent amendments to this
Agreement or related documents shall be borne by Seller. Seller
shall pay ongoing custodial and bank fees and expenses as set forth
in the Custodial Agreement, and any other ongoing fees and expenses
under any other Program Document.
	 
	 	b. If Buyer determines that, due to the introduction of, any change
in, or the compliance by Buyer with (i) any eurocurrency reserve
requirement or (ii) the interpretation of any law, regulation or
any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law),
there shall be an increase in the cost to Buyer in engaging in the
present or any future Transactions, then Seller agrees to pay to
Buyer, from time to time, upon demand by Buyer (with a copy to
Custodian) the actual cost of additional amounts as specified by
Buyer to compensate Buyer for such increased costs. In the event
that any additional amounts are payable pursuant to the foregoing
sentence, Seller, at Seller’s option, may elect to repurchase any
Purchased Mortgage Loan for which additional amounts may be due by
notifying Buyer thereof and paying to Buyer, on or before the date
which is thirty (30) days after the date on which Buyer shall have
notified the Seller that such additional amounts are due, by
payment of the Repurchase Price plus any accrued additional amounts
for such Mortgaged Loans. A repurchase of a Mortgaged Loan
pursuant to this Section 11.b shall be without penalty, premium or
Exit Fee.
	 
	 	c. With respect to any Transaction, Buyer may conclusively rely
upon, and shall incur no liability to Seller in acting upon, any
request or other communication that Buyer reasonably believes to
have been given or made by an Authorized Person on Seller’s behalf,
whether or not such person is listed on the certificate delivered
pursuant to Section 10(a)(8) hereof. In each such case, Seller
hereby waives the right to dispute Buyer’s record of the terms of
the Purchase Confirmation, request or other communication.
	 
	 	d. Any payments made by Seller to Buyer shall be free and clear of,
and without deduction or withholding for, any taxes; provided,
however, that if such payer shall be required by law to deduct or
withhold any taxes from any sums payable to Buyer, then such payer
shall (A) make such deductions or withholdings and pay such amounts
to the relevant authority in accordance with applicable law, (B)
pay to Buyer the sum that would have been payable had such
deduction or withholding not been made, and (C) at the time Price
Differential is paid, pay to Buyer all additional amounts as
specified by Buyer to preserve the after-tax yield Buyer would have
received if such tax had not been imposed.

     12.     Servicing

		
	 	a. Seller, on Buyer’s behalf, shall contract with Master Servicer
to service the Mortgage Loans. The Primary Servicer shall service
pursuant to the Interim Servicing Agreement, consistent with the
degree of skill and care that Seller customarily requires with
respect to similar Mortgage Loans owned or managed

-23-

 

		
	 	by it and in accordance with Accepted Servicing Practices. The
Servicer shall (i) comply with all applicable Federal, State and
local laws and regulations, (ii) maintain all state and federal
licenses necessary for it to perform its servicing responsibilities
hereunder and (iii) not impair the rights of Buyer in any Mortgage
Loans or any payment thereunder. Buyer may terminate the servicing
of any Mortgage Loan with the then-existing servicer in accordance
with Section 12(e) hereof.
	 
	 	b. Seller shall cause the Servicer to direct all Mortgagors to
deliver all payments with respect to the Purchased Mortgage Loans
to the Collection Account. Seller shall cause the Servicer not to
commingle any funds with respect to the Purchased Mortgage Loans
with any other funds held by the Servicer.
	 
	 	c. Seller shall cause the Servicer to deposit all collections
received by Servicer on account of the Purchased Mortgage Loans in
the Collection Account no later than two Business Days following
receipt.
	 
	 	d. Upon the occurrence of any of (i) a Default or Event of Default
hereunder, (ii) a Default or Event of Default under the Interim
Servicing Agreement, or (iii) a Cross-Default Event, Buyer shall
have the right to immediately terminate the Servicer’s right to
service the Purchased Mortgage Loans without payment of any penalty
or termination fee. Seller and the Servicer shall cooperate in
transferring the servicing of the Purchased Mortgage Loans to a
successor servicer appointed by Buyer in its sole discretion.
	 
	 	e. If Seller should discover that, for any reason whatsoever,
Servicer or any entity responsible to Seller for managing or
servicing any such Purchased Mortgage Loan has failed to perform
fully Seller’s obligations under the Facility Agreements or any of
the obligations of such entities with respect to the Purchased
Mortgage Loans, Seller shall promptly notify Buyer.

     13.     Representations and Warranties

		
	 	a. Seller represents and warrants to Buyer as of the date hereof
and as of each Purchase Date for any Transaction that:
	 
	 	          (1) Seller Existence. Seller has been duly organized and is
validly existing as a limited liability company in good standing
under the laws of the State of Delaware.
	 
	 	          (2) Licenses. Seller is duly licensed or is otherwise
qualified in each jurisdiction in which it transacts business for
the business which it conducts and is not in default of any
applicable federal, state or local laws, rules and regulations
unless, in either instance, the failure to take such action is not
reasonably likely (either individually or in the aggregate) to
cause a Material Adverse Effect. Seller has the requisite power and
authority and legal right to purchase Mortgage Loans and to own,
sell and grant a lien on all of its right, title and interest in
and to the Mortgage Loans, and to execute and deliver, engage in

-24-

 

		
	 	the transactions contemplated by, and perform and observe the
terms and conditions of, this Agreement, each Facility Agreement
and any Transaction Request or, if applicable, Purchase
Confirmation.
	 
	 	          (3) Power. Seller has all requisite corporate or other power,
and has all governmental licenses, authorizations, consents and
approvals necessary to own its assets and carry on its business as
now being or as proposed to be conducted, except where the lack of
such licenses, authorizations, consents and approvals would not be
reasonably likely to have a Material Adverse Effect.
	 
	 	          (4) Due Authorization. Seller has all necessary corporate or
other power, authority and legal right to execute, deliver and
perform its obligations under each of the Facility Agreements, as
applicable. This Agreement, any Transaction Request, Purchase
Confirmation and the Facility Agreements have been (or, in the case
of Facility Agreements and any Transaction Request, Purchase
Confirmation not yet executed, will be) duly authorized, executed
and delivered by Seller, all requisite action having been taken,
and each is valid, binding and enforceable against Seller in
accordance with its terms except as such enforcement may be
affected by bankruptcy, by other insolvency laws, or by general
principles of equity.
	 
	 	          (5) Financial Statements. The Seller has heretofore furnished
to Buyer a copy of (a) the consolidated balance sheet of Holdings
and the consolidated balance sheets of Holdings’ consolidated
Subsidiaries for the fiscal year of Holdings ended December 31,
2002 and the related consolidated statements of income and members’
equity and of cash flows for Holdings and Holdings’ consolidated
Subsidiaries for such fiscal year, setting forth in each case in
comparative form the figures for the previous year, with the
opinion thereon of Ernst & Young. All such financial statements
are complete and correct and fairly present, in all material
respects, the consolidated financial condition of Holdings and its
Subsidiaries and the consolidated results of their operations as at
such dates and for such fiscal periods, all in accordance with GAAP
applied on a consistent basis. Since December 31, 2002, there has
been no material adverse change in the consolidated business,
operations or financial condition of Holdings and its consolidated
Subsidiaries taken as a whole from that set forth in said financial
statements nor is Seller aware of any state of facts which (without
notice or the lapse of time) would or could result in any such
material adverse change. Holdings has, on the date of the
statements delivered pursuant to this Section (the “Statement
Date”) no material liabilities, direct or indirect, fixed or
contingent, matured or unmatured, known or unknown, or liabilities
for taxes, long-term leases or unusual forward or long-term
commitments not disclosed by, or reserved against in, said balance
sheet and related statements, and at the present time there are no
material unrealized or anticipated losses from any loans, advances
or other commitments of Seller except as heretofore disclosed to
Buyer in writing.
	 
	 	          (6) Event of Default. There exists no Event of Default under
Section 15(b) hereof, which default gives rise to a right to
accelerate indebtedness

-25-

 

		
	 	as referenced in Section 15(b) hereof, under any mortgage,
borrowing agreement or other instrument or agreement pertaining to
indebtedness for borrowed money or to the repurchase of mortgage
loans or securities.
	 
	 	          (7) Solvency. Seller is solvent and will not be rendered
insolvent by any Transaction and, after giving effect to such
Transaction, will not be left with an unreasonably small amount of
capital with which to engage in its business. Seller does not
intend to incur, and does not believe that it has incurred, debts
beyond its ability to pay such debts as they mature and is not
contemplating the commencement of insolvency, bankruptcy,
liquidation or consolidation proceedings or the appointment of a
receiver, liquidator, conservator, trustee or similar official in
respect of such entity or any of its assets. The amount of
consideration being received by Seller upon the sale of the
Purchased Mortgage Loans to Buyer constitutes reasonably equivalent
value and fair consideration for such Purchased Mortgage Loans.
Seller is not transferring any Purchased Mortgage Loans with any
intent to hinder, delay or defraud any of its creditors.
	 
	 	          (8) No Conflicts. The execution, delivery and performance by
Seller of this Agreement, any Transaction Request or Purchase
Confirmation hereunder and the Facility Agreements do not conflict
with any term or provision of the certificate of formation or
operating agreement of Seller or any law, rule, regulation, order,
judgment, writ, injunction or decree applicable to Seller of any
court, regulatory body, administrative agency or governmental body
having jurisdiction over Seller, which conflict would have a
Material Adverse Effect and will not result in any violation of any
such mortgage, instrument, agreement or obligation to which Seller
is a party.
	 
	 	          (9) True and Complete Disclosure. All information, reports,
exhibits, schedules, financial statements or certificates of
Seller, Holdings or any Affiliate thereof or any of their officers
furnished or to be furnished to Buyer in connection with the
initial or any ongoing due diligence of Seller, Holdings or any
Affiliate or officer thereof, negotiation, preparation, or delivery
of the Facility Agreements are true and complete in all material
respects and do not omit to disclose any material facts necessary
to make the statements herein or therein, in light of the
circumstances in which they are made, not misleading. All
financial statements have been prepared in accordance with GAAP.
	 
	 	          (10) Approvals. No consent, approval, authorization or order
of, registration or filing with, or notice to any governmental
authority or court is required under applicable law in connection
with the execution, delivery and performance by Seller of this
Agreement, any Transaction Request, Purchase Confirmation and the
Facility Agreements.
	 
	 	          (11) Litigation. There is no action, proceeding or
investigation pending with respect to which Seller has received
service of process or, to the best of Seller’s knowledge threatened
against it before any court, administrative agency or other
tribunal (A) asserting the invalidity of this Agreement, any

-26-

 

		
	 	Transaction, Transaction Request, Purchase Confirmation or any
Facility Agreement, (B) seeking to prevent the consummation of any
of the transactions contemplated by this Agreement, any Transaction
Request, Purchase Confirmation or any Facility Agreement, (C) makes
a claim individually in an amount greater than $500,000 or in an
aggregate amount greater than $1,000,000, (D) which requires filing
with the Securities and Exchange Commission in accordance with the
1934 Act or any rules thereunder or (E) which might materially and
adversely affect the validity of the Mortgage Loans or the
performance by it of its obligations under, or the validity or
enforceability of, this Agreement, any Transaction Request,
Purchase Confirmation or any Facility Agreement.
	 
	 	          (12) Material Adverse Change. There has been no material
adverse change in the business, operations, financial condition,
properties or prospects of Seller or its Affiliates since the date
set forth in the most recent financial statements supplied to
Buyer.
	 
	 	          (13) Ownership. Upon payment of the Purchase Price and the
filing of the financing statement and delivery of the Mortgage
Files to the Custodian and the Custodian’s receipt of the related
Request for Certification, Buyer shall become the sole owner of the
Purchased Mortgage Loans and related Repurchase Assets, free and
clear of all liens and encumbrances.
	 
	 	          (14) Underwriting Guidelines. The Underwriting Guidelines
provided to Buyer are the true and correct Underwriting Guidelines
of the Parent.
	 
	 	          (15) Taxes. Seller and its Subsidiaries have filed all Federal
income tax returns and all other material tax returns that are
required to be filed by it and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by it, except
for any such taxes as are being appropriately contested in good
faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves have been provided. The
charges, accruals and reserves on the books of Seller and its
Subsidiaries in respect of taxes and other governmental charges
are, in the opinion of Seller, adequate.
	 
	 	          (16) Investment Company. Neither Seller nor any of its
Subsidiaries is required to be registered as an “investment
company”, or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as
amended.
	 
	 	          (17) Chief Executive Office; Jurisdiction of Organization. On
the Effective Date, Seller’s chief executive office is located at
4445 Willard Avenue, Chevy Chase, Maryland 20815. On the Effective Date, Seller’s jurisdiction of organization is Delaware. Seller
shall provide Buyer with thirty days advance notice of any change
in Seller’s principal office or place of business or jurisdiction.
Seller has no trade name. During the preceding five years, Seller
has not been known by or done business under any other name,
corporate or

-27-

 

		
	 	fictitious, and has not filed or had filed against it any
bankruptcy receivership or similar petitions nor has it made any
assignments for the benefit of creditors.
	 
	 	          (18) Location of Books and Records. The location where Seller
keeps its books and records, including all computer tapes and
records relating to the Purchased Mortgage Loans and the related
Repurchase Assets is its chief executive office.
	 
	 	          (19) Net Worth. On the Effective Date, Holdings’ Net Worth is
not less than $200,000,000.
	 
	 	          (20) ERISA. Each Plan to which Parent or its Subsidiaries
make direct contributions, and, to the knowledge of Seller, each
other Plan and each Multiemployer Plan, is in compliance in all
material respects with, and has been administered in all material
respects in compliance with, the applicable provisions of ERISA,
the Code and any other Federal or State law.
	 
	 	          (21) Adverse Selection. Seller has not selected the Purchased
Mortgage Loans in a manner so as to adversely affect Buyer’s
interests.
	 
	 	          (22) Agreements. Neither Parent nor any Affiliate of Parent
is a party to any agreement, instrument, or indenture or subject to
any restriction materially and adversely affecting its business,
operations, assets or financial condition, except as disclosed in
the financial statements described in Section 13(a)(5) hereof.
Neither Parent nor any Affiliate of Parent is in default in the
performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement, instrument, or
indenture which default could have a material adverse effect on the
business, operations, properties, or financial condition of Parent
as a whole. No holder of any indebtedness of Parent or of any
Affiliate of Parent has given notice of any asserted default
thereunder.
	 
	 	          (23) Other Indebtedness. As of June 30, 2003, the total
borrowings of Holdings and its consolidated subsidiaries (as set
forth in the Form S-1 Registration Statement of CapitalSource Inc.
as filed with the Securities and Exchange Commission (the “SEC”)
on June 12, 2003, as amended from time to time, including by
Amendment No. 3 to S-1 Registration Statement filed with the SEC on
July 24, 2003, and as may be amended subsequent to the date hereof)
was $1,141,297,000.
	 
	 	          (24) No Reliance. Seller has made its own independent
decisions to enter into the Facility Agreements and each
Transaction and as to whether such Transaction is appropriate and
proper for it based upon its own judgment and upon advice from such
advisors (including without limitation, legal counsel and
accountants) as it has deemed necessary. Seller is not relying
upon any advice from Buyer as to any aspect of the Transactions,
including without limitation, the legal, accounting or tax
treatment of such Transactions.

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	 	          (25) Purchase of Each Mortgage Loan. a. Each Mortgage Loan
was purchased by the Seller on the relevant Purchase Date pursuant
to the Transfer Agreement and the related Transfer Assignment.
	 
	 	b. With respect to every Purchased Mortgage Loan, Seller represents
and warrants to Buyer as of the applicable Purchase Date for any
Transaction and each date thereafter that each representation and
warranty set forth on Schedule 1 is true and correct.
	 
	 	c. The representations and warranties set forth in this Agreement
shall survive transfer of the Purchased Mortgage Loans to Buyer and
shall continue for so long as the Purchased Mortgage Loans are
subject to this Agreement.

     14.     Covenants

Seller covenants with Buyer that, during the term of this facility:

		
	 	a. Litigation. Seller will promptly, and in any event within ten
(10) days after service of process on any of the following, give to
Buyer notice of (a) all litigation, actions, suits, arbitrations,
investigations (including, without limitation, any of the foregoing
which are threatened or pending) or other legal or arbitrable
proceedings affecting Seller or affecting any of the Property of
any of them before any Governmental Authority or (b) all
litigation, actions, suits, arbitrations, investigations
(including, without limitation, any of the foregoing which are
threatened or pending) or other legal or arbitrable proceedings
affecting Seller or affecting any of the Property of any of them
before any Governmental Authority that (i) questions or challenges
the validity or enforceability of any of the Facility Agreements or
any action to be taken in connection with the transactions
contemplated hereby, (ii) makes a claim or in an aggregate amount
greater than $500,000, or (iii) which, individually or in the
aggregate, if adversely determined, could be reasonably likely to
have a Material Adverse Effect.
	 
	 	b. Prohibition of Fundamental Changes. Seller shall not enter into
any transaction of merger or consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation,
winding up or dissolution) or sell all or substantially all of its
assets.
	 
	 	c. Servicer; Asset Tape. Upon the occurrence of any of the
following (a) the occurrence and continuation of an Event of
Default, (b) the fifth Business Day of each month, or (c) upon the
request of Buyer, Seller shall cause Servicer to provide to Buyer,
electronically, in a format mutually acceptable to Buyer and
Seller, an Asset Tape. Seller shall not cause the Mortgage Loans
to be serviced by any servicer other than a servicer expressly
approved in writing by Buyer, which approval shall be deemed
granted by Buyer with respect to Seller with the execution of this
Agreement.
	 
	 	d. Insurance. Seller will continue to maintain insurance coverage
with respect to employee dishonesty, forgery or alteration, theft,
disappearance and destruction,

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	 	robbery and safe burglary, property (other than money and
securities) and computer fraud in an aggregate amount equal to at
least $2,000,000.
	 
	 	e. No Adverse Claims. Seller warrants and will defend, and shall
cause any Servicer to defend, the right, title and interest of
Buyer in and to all Purchased Mortgage Loans and the related
Repurchase Assets against all adverse claims and demands.
	 
	 	f. Assignment. Except as permitted herein, neither Seller nor any
Servicer shall sell, assign, transfer or otherwise dispose of, or
grant any option with respect to, or pledge, hypothecate or grant a
security interest in or lien on or otherwise encumber (except
pursuant to the Facility Agreements), any of the Purchased Mortgage
Loans or any interest therein.
	 
	 	g. Security Interest. Seller shall do all things necessary to
preserve the Purchased Mortgage Loans and the related Repurchase
Assets so that they remain subject to a first priority perfected
security interest hereunder. Without limiting the foregoing,
Seller will comply with all rules, regulations and other laws of
any Governmental Authority and cause the Purchased Mortgage Loans
or the related Repurchase Assets to comply with all applicable
rules, regulations and other laws. Seller will not allow any
default for which Seller is responsible to occur under any
Purchased Mortgage Loans or the related Repurchase Assets or any
Facility Agreement and Seller shall fully perform or cause to be
performed when due all of its obligations under any Purchased
Mortgage Loans or the related Repurchase Assets and any Facility
Agreement.
	 
	 	h. Records.
	 
	 	          (1) Seller shall collect and maintain or cause to be collected
and maintained all Records relating to the Purchased Mortgage Loans
in accordance with industry custom and practice for assets similar
to the Purchased Mortgage Loans, including those maintained
pursuant to the preceding subparagraph, and all such Records shall
be in Custodian’s possession unless Buyer otherwise approves.
Seller will not allow any such papers, records or files that are an
original or an only copy to leave Custodian’s possession, except
for individual items removed in connection with servicing a
specific Mortgage Loan, in which event Seller will obtain or cause
to be obtained a receipt from a financially responsible person for
any such paper, record or file. Seller or the Servicer of the
Purchased Mortgage Loans will maintain all such Records not in the
possession of Custodian in good and complete condition in
accordance with industry practices for assets similar to the
Purchased Mortgage Loans and preserve them against loss.
	 
	 	          (2) For so long as Buyer has an interest in or lien on any
Purchased Mortgage Loan, Seller will hold or cause to be held all
related Records in trust for Buyer. Seller shall notify, or cause
to be notified, every other party holding any such Records of the
interests and liens in favor of Buyer granted hereby.

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	 	          (3) Upon reasonable advance notice from Custodian or Buyer,
Seller shall (x) make any and all such Records available to
Custodian or Buyer to examine any such Records, either by its own
officers or employees, or by agents or contractors, or both, and
make copies of all or any portion thereof, and (y) permit Buyer or
its authorized agents to discuss the affairs, finances and accounts
of Seller with its chief operating officer and chief financial
officer and to discuss the affairs, finances and accounts of Seller
with its independent certified public accountants.
	 
	 	i. Books. Seller shall keep or cause to be kept in reasonable
detail books and records of account of its assets and business and
shall clearly reflect therein the transfer of Purchased Mortgage
Loans to Buyer.
	 
	 	j. Approvals. Seller shall maintain all licenses, permits or other
approvals necessary for Seller to conduct its business and to
perform its obligations under the Facility Agreements, and Seller
shall conduct its business strictly in accordance with applicable
law.
	 
	 	k. Material Change in Business. Seller shall not make any material
change in the nature of its business as carried on at the date
hereof. At least one of the following individuals shall be part of
the senior management of the Parent: Dean Graham, Jason Fish or
John Delaney.
	 
	 	l. Underwriting Guidelines. Without the prior written consent of
Buyer, Seller shall not permit the Servicer to amend or otherwise
modify the Underwriting Guidelines in any material respect in any
manner that might adversely affect the Mortgage Loans. Without
limiting the foregoing, in the event that the Servicer makes any
amendment or modification to the Underwriting Guidelines, Seller
shall promptly deliver to Buyer a complete copy of the amended or
modified Underwriting Guidelines.
	 
	 	m. Applicable Law. Seller shall comply with the requirements of
all applicable laws, rules, regulations and orders of any
Governmental Authority, except where the failure to comply would
not have a Material Adverse Effect.
	 
	 	n. Existence. Seller shall preserve and maintain its legal
existence and all of its material rights, privileges, licenses and
franchises.
	 
	 	o. Chief Executive Office; Jurisdiction of Organization. Seller
shall not move its chief executive office from the address referred
to in Section 13(a)(17) or change its jurisdiction of organization
from the jurisdiction referred to in Section 13(a)(17) unless it
shall have provided Buyer 30 days’ prior written notice of such
change.
	 
	 	p. Taxes. Seller shall pay and discharge all taxes, assessments
and governmental charges or levies imposed on it or on its income
or profits or on any of its property prior to the date on which
penalties attach thereto, except for any such tax, assessment,
charge or levy the payment of which is being contested in good

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	 	faith and by proper proceedings and against which adequate reserves
are being maintained.
	 
	 	q. Transactions with Affiliates. Seller will not enter into any
transaction, including, without limitation, any purchase, sale,
lease or exchange of property or the rendering of any service, with
any Affiliate unless such transaction is (a) otherwise permitted
under the Facility Agreements, (b) in the ordinary course of
Seller’s business and (c) upon fair and reasonable terms no less
favorable to Seller than it would obtain in a comparable arm’s
length transaction with a Person which is not an Affiliate, or make
a payment that is not otherwise permitted by this Section to any
Affiliate.
	 
	 	r. Guarantees. Seller shall not create, incur, assume or suffer to
exist any Guarantees.
	 
	 	s. True and Correct Information. All information, reports,
exhibits, schedules, financial statements or certificates of
Seller, Holdings, any Affiliate thereof or any of their officers
furnished to Buyer hereunder and during Buyer’s diligence of Seller
are and will be true and complete and do not omit to disclose any
material facts necessary to make the statements herein or therein,
in light of the circumstances in which they are made, not
misleading. All required financial statements, information and
reports delivered by Seller to Buyer pursuant to this Agreement
shall be prepared in accordance with U.S. GAAP, or, if applicable,
to SEC filings, the appropriate SEC accounting regulations.
	 
	 	t. Blocked Account. The Seller shall maintain the Collection
Account subject to the Blocked Account Agreement.
	 
	 	u. Amendment. Without the prior written consent of the Buyer,
neither the Seller nor the Servicer shall enter into any amendment,
supplement or modification of any Mortgage Loan subject to a
Transaction hereunder which would (A) change the aggregate
principal amount evidenced by the Mortgage Note, (B) change the
interest rate payable under the Mortgage Note, (C) modify the
maturity date of the Mortgage Loan, (D) provide for the payment of
any additional interest, additional fees, kicker or similar equity
feature in respect of the Mortgage Loan or (E) change the amount of
any payments required under the Note or modify any related
amortization schedule.
	 
	 	v. Special Purpose Entity. Seller shall (i) maintain its own
separate books and records and bank accounts (except that, for
accounting and reporting purposes, the Seller may be included in
the consolidated financial statements of an equity owner of the
Seller in accordance with GAAP) provided that (A) appropriate
notation shall be made on such consolidated financial statements to
indicate the separateness of the Seller from such Affiliate and to
indicate that the Seller’s assets and credit are not available to
satisfy the debts and other obligations of such Affiliate or any
other Person and (B) such assets shall also be listed on the
Seller’s own separate balance sheet); (ii) at all times hold itself
out to the public

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	 	and all other Persons as a legal entity separate from the Member
and any other Person (except for inclusion in consolidated
financial statements of an equity owner, as described in clause (i)
above) (iii) have a Board of Managers composed differently from
that of the Member and any other Person; (iv) conduct its business
in its own name (or any trade name that will not be reasonably
likely to cause confusion as to its separate existence) and
strictly comply with all organizational formalities to maintain its
separate existence; (v) maintain separate financial statements
(except for inclusion in consolidated financial statements of an
equity owner, as described in clause (i) above); (vi) except as
contemplated under the provisions of clause (ix) below, pay its own
liabilities only out of its own funds; (vii) maintain an arm’s
length relationship with its Affiliates and the Member and any
other party furnishing services to it; (viii) maintain a sufficient
number of employees (which may be zero) for its contemplated
business and pay the salaries of its own employees, if any; (ix)
allocate fairly and reasonably, and pay its share of, any overhead
expenses and other common expenses for shared office space and
facilities, goods or services provided to multiple entities; (xi)
maintain adequate capital in light of its contemplated business
purpose, transactions and liabilities; (xii) observe all limited
liability company formalities necessary to maintain its separate
identity as an entity separate and distinct from the Member and all
of its other Affiliates; (xiii) hold title to its assets in its
own name; (xv) not engage, directly or indirectly, in any business
other than the actions required or permitted to be performed under
Article 4 of the LLC Agreement, the Facility Agreements or this
Section 14 v.; (xvi) not incur, create or assume any indebtedness
other than as expressly permitted under the Facility Agreements;
(xvii) not to the fullest extent permitted by law, engage in or
seek or consent to any dissolution, winding up, liquidation,
consolidation, merger or sale or transfer of all or substantially
all of its assets except as expressly permitted pursuant to any
provision of the Facility Agreements; (xviii) not fail to file
separate federal or state income tax returns, if any, as may be
required under applicable law (to the extent (1) not part of a
consolidated return or returns or (2) not treated as a division of
another taxpayer or a disregarded entity for tax purposes), and pay
any taxes so required to be paid under applicable law; (xix) not
assume or guarantee or become obligated for the debts of any other
Person or hold out its credit as being available to satisfy the
obligations of any other Person; provided, however, that this
provision shall not be deemed to prohibit indemnification and
contribution agreements by the Company and its Affiliates entered
into under the LLC Agreement, or (to the extent not prohibited
under the Facility Agreements) commercially reasonable
indemnification obligations incurred in the ordinary course of
business of the Company; (xx) not fail to correct any known
misunderstanding regarding its separate identity; (xxi) not except
as otherwise contemplated under the Facility Agreements, commingle
its funds or other assets with those of any other Person; (xxii)
not acquire obligations or securities of its Members; (xxiii) not
pledge any of its assets for the benefit of any other Person,
except as otherwise contemplated or permitted by the Facility
Agreements; (xxiv) not make any loans to any other Person, or buy
or hold evidence of indebtedness issued by any other Person;
(xxv)
not identify its

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	 	Members or any of its Affiliates as a division or part of it
(except for inclusion in consolidated financial statements of an
equity owner); (xxvi) not engage (either as transferor or
transferee) in any material transaction with any Affiliate other
than for fair value and on terms similar to those obtainable in
arms-length transactions with unaffiliated parties, or engage in
any transaction with any Affiliate involving any intent to hinder,
delay or defraud any entity; (xxvii) not have or create any
subsidiaries, or hold any equity interest in any other Person and
(xxviii) except as provided in the Facility Agreements, deposit all
of its funds in checking accounts, savings accounts, time deposits
or certificates of deposit in its own name. The Member will (i)
observe all customary formalities necessary to maintain its
identity as an entity separate and distinct from the Seller; (ii)
hold itself out as a separate and distinct entity from the Seller
and not identify the Seller as a division of the Member; (iii)
maintain its books and records and bank accounts separate from the
Seller; and (iv) hold its assets in its own name.
	 
	 	w. Subsidiaries. The Seller shall have no Subsidiaries.

     15.     Events of Default

		
	 	Each of the following shall constitute an “Event of Default” hereunder:
	 
	 	a. Payment Failure. Failure of Seller to (i) make any payment of
Price Differential or Repurchase Price or any other sum which has
become due, on a Price Differential Payment Date or a Repurchase
Date or otherwise, whether by acceleration or otherwise, under the
terms of this Agreement, any other warehouse and security agreement
or any other document evidencing or securing Indebtedness of Seller
to Buyer or to any Affiliate of Buyer, and, in the case of a
failure to make a payment of any sum other than a Price
Differential or a Repurchase Price, the continuance of such failure
for a period of two (2) Business Days after Buyer notifies Seller
of such failure or (ii) cure any Margin Deficit when due pursuant
to Section 6 hereof.
	 
	 	b. Cross Default. (i) Seller shall be in default under (i) any
Indebtedness of Seller which default (1) involves the failure to
pay a matured obligation, or (2) permits the acceleration of the
maturity of obligations by any other party to or beneficiary with
respect to such Indebtedness, or (ii) any other contract to which
Seller is a party which default (1) involves the failure to pay a
matured obligation, or (2) permits the acceleration of the maturity
of obligations by any other party to or beneficiary of such
contract or (iii) Seller or any of Seller’s Affiliates shall be in
default under any Facility Agreement.
	 
	 	c. Assignment. Assignment or attempted assignment by Seller of
this Agreement or any rights hereunder without first obtaining the
specific written consent of Buyer, or the granting by Seller of any
security interest, lien or other encumbrances on any Purchased
Mortgage Loans to any person other than Buyer.

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	 	d. Insolvency. An Act of Insolvency shall have occurred with
respect to Seller, the Parent or any Affiliate.
	 
	 	e. Material Adverse Change. Any material adverse change in the
Property, business, financial condition or operations of Seller or
any of its Affiliates shall occur, in each case as determined by
Buyer in its sole good faith discretion, or any other condition
shall exist which, in Buyer’s sole good faith discretion,
constitutes a material impairment of Seller’s ability to perform
its obligations under this Agreement or any other Facility
Agreement.
	 
	 	f. Breach of Financial Representation or Covenant or Obligation. A
breach by Seller of any of the representations, warranties or
covenants or obligations set forth in Sections 13(a)(1), 13(a)(7),
13(a)(12), 13(a)(19), 13(a)(25), 14a, 14b, 14d, 14k, 14n, 14p, 14q,
14r, 14t, 14u or 14v of this Agreement.
	 
	 	g. Breach of Non-Financial Representation or Covenant. A breach by
Seller of any other material representation, warranty or covenant
set forth in this Agreement (and not otherwise specified in Section
15(f) above), if such breach is not cured within five (5) Business
Days (other than the representations and warranties set forth in
Schedule 1, which shall be considered solely for the purpose of
determining the existence of a Margin Deficit and the obligation to
repurchase such Mortgage Loan) unless (i) such party shall have
made any such representations and warranties with knowledge that
they were materially false or misleading at the time made, (ii) any
such representations and warranties have been determined by Buyer
in its sole discretion to be materially false or misleading on a
regular basis, or (iii) Buyer, in its sole discretion, determines
that such breach of a material representation, warranty or covenant
materially and adversely affects (A) the financial condition of
such party, its Subsidiaries or Affiliates; or (B) Buyer’s
determination to enter into this Agreement or Transactions with
such party, then such breach shall constitute an immediate Event of
Default and Seller shall have no cure right hereunder).
	 
	 	h. Change of Control. The occurrence of a Change in Control of the
Seller or the Parent.
	 
	 	i. Failure to Transfer. Seller fails to transfer the Purchased
Mortgage Loans to Buyer on the applicable Purchase Date (provided
Buyer has tendered the related Purchase Price).
	 
	 	j. Judgment.

			
	 	 	          (1) A final judgment or judgments for the payment of
money shall be rendered against the Seller by one or more
courts, administrative tribunals or other bodies having
jurisdiction and the same shall not be satisfied, discharged
(or provision shall not be made for such discharge) or
bonded, or a stay of execution thereof shall not be procured,
within 30 days from the date of entry thereof.

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	 	 	          (2) A final judgment or judgments for the payment of
money in excess of $2,000,000 in the aggregate shall be
rendered against the Parent or any of its Affiliates by one
or more courts, administrative tribunals or other bodies
having jurisdiction and the same shall not be satisfied,
discharged (or provision shall not be made for such
discharge) or bonded, or a stay of execution thereof shall
not be procured, within 30 days from the date of entry
thereof.

		

	 	k. Government Action. Any Governmental Authority or any person,
agency or entity acting or purporting to act under governmental
authority shall have taken any action to condemn, seize or
appropriate, or to assume custody or control of, all or any
substantial part of the Property of Seller, or shall have taken any
action to displace the management of Seller or to curtail its
authority in the conduct of the business of Seller, or takes any
action in the nature of enforcement to remove, limit or restrict
the approval of Seller as an issuer, buyer or a seller/servicer of
Mortgage Loans or securities backed thereby, and such action
provided for in this subparagraph (m) shall not have been
discontinued or stayed within 30 days.
	 
	 	l. Inability to Perform. An officer of Seller shall admit its
inability to, or its intention not to, perform any of Seller’s
Obligations hereunder.
	 
	 	m. Security Interest. This Agreement shall for any reason cease to
create a valid, first priority security interest in any material
portion of the Purchased Mortgage Loans or other Repurchase Assets
purported to be covered hereby.
	 
	 	n. Financial Statements. Holdings’ audited annual financial
statements or the notes thereto or other opinions or conclusions
stated therein shall be qualified or limited by reference to the
status of Holdings as a “going concern” or a reference of similar
import.

           An Event of Default shall be deemed to be continuing unless expressly
waived by Buyer in writing.

     16.     Remedies Upon Default

		
	 	In the event that an Event of Default shall have occurred:
	 
	 	a. Buyer may, at its option (which option shall be deemed to have
been exercised immediately upon the occurrence of an Act of
Insolvency of Seller or any Affiliate), declare an Event of Default
to have occurred hereunder and, upon the exercise or deemed
exercise of such option, the Repurchase Date for each Transaction
hereunder shall, if it has not already occurred, be deemed
immediately to occur (except that, in the event that the Purchase
Date for any Transaction has not yet occurred as of the date of
such exercise or deemed exercise, such Transaction shall be deemed
immediately canceled). Buyer shall (except upon the occurrence of
an Act of Insolvency) give notice to Seller of the exercise of such
option as promptly as practicable.

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	 	b. If Buyer exercises or is deemed to have exercised the option
referred to in subparagraph (a) of this Section, (i) Seller’s
obligations in such Transactions to repurchase all Purchased
Mortgage Loans, at the Repurchase Price therefor on the Repurchase
Date determined in accordance with subparagraph (a) of this
Section, shall thereupon become immediately due and payable, (ii)
all Income paid after such exercise or deemed exercise shall be
retained by Buyer and applied, in Buyer’s sole discretion, to the
aggregate unpaid Repurchase Prices for all outstanding Transactions
and any other amounts owing by Seller hereunder, and (iii) Seller
shall immediately deliver to Buyer the Mortgage Files relating to
any Purchased Mortgage Loans subject to such Transactions then in
Seller’s possession or control.
	 
	 	c. Buyer also shall have the right to obtain physical possession,
and to commence an action to obtain physical possession, of all
Records and files of Seller relating to the Purchased Mortgage
Loans and all documents relating to the Purchased Mortgage Loans
(including, without limitation, any legal, credit or servicing
files with respect to the Purchased Mortgage Loans) which are then
or may thereafter come in to the possession of Seller or any third
party acting for Seller. To obtain physical possession of any
Purchased Mortgage Loans held by Custodian, Buyer shall present to
Custodian a Trust Receipt and Certification. Buyer shall be
entitled to specific performance of all agreements of Seller
contained in this Agreement.
	 
	 	d. Buyer shall have the right to direct all servicers then
servicing any Purchased Mortgage Loans to remit all collections
thereon to Buyer, and if any such payments are received by Seller,
Seller shall not commingle the amounts received with other funds of
Seller and shall promptly pay them over to Buyer. Buyer shall also
have the right to terminate any one or all of the servicers then
servicing any Purchased Mortgage Loans with or without cause. In
addition, Buyer shall have the right to immediately sell the
Purchased Mortgage Loans and liquidate all Repurchase Assets. Such
disposition of Purchased Mortgage Loans may be, at Buyer’s option,
on either a servicing-released or a servicing-retained basis.
Buyer shall be entitled to place the Purchased Mortgage Loans in a
pool for issuance of mortgage-backed securities at the
then-prevailing price for such securities and to sell such
securities for such prevailing price in the open market. Buyer
shall also be entitled to sell any or all of such Mortgage Loans
individually for the prevailing price.
	 
	 	e. Upon the happening of one or more Events of Default, Buyer may
apply any proceeds from the liquidation of the Purchased Mortgage
Loans and Repurchase Assets to the Repurchase Prices hereunder and
all other Obligations in the manner Buyer deems appropriate in its
sole discretion.
	 
	 	f. Seller shall be liable to Buyer for (i) the amount of all
reasonable legal or other expenses, including, without limitation,
all costs and expenses of Buyer in connection with the enforcement
of this Agreement or any other agreement evidencing a Transaction,
whether in action, suit or litigation or bankruptcy,

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	 	insolvency or other similar proceeding affecting creditors’ rights
generally, further including, without limitation, the reasonable
fees and expenses of counsel (including the costs of internal
counsel of Buyer) incurred in connection with or as a result of an
Event of Default, (ii) damages in an amount equal to the cost
(including all fees, expenses and commissions) of entering into
replacement transactions and entering into or terminating hedge
transactions in connection with or as a result of an Event of
Default, and (iii) any other loss, damage, cost or expense directly
arising or resulting from the occurrence of an Event of Default in
respect of a Transaction.
	 
	 	g. To the extent permitted by applicable law, Seller shall be
liable to Buyer for interest on any amounts owing by Seller
hereunder, from the date Seller becomes liable for such amounts
hereunder until such amounts are (i) paid in full by Seller or (ii)
satisfied in full by the exercise of Buyer’s rights hereunder.
Interest on any sum payable by Seller under this Section 16(g)
shall be at a rate equal to the Post-Default Rate.
	 
	 	h. Buyer shall have, in addition to its rights hereunder, any
rights otherwise available to it under any other agreement or
applicable law.
	 
	 	i. Buyer may exercise one or more of the remedies available to
Buyer immediately upon the occurrence of an Event of Default and,
except to the extent provided in subsections (a) and (d) of this
Section, at any time thereafter without notice to Seller. All
rights and remedies arising under this Agreement as amended from
time to time hereunder are cumulative and not exclusive of any
other rights or remedies which Buyer may have.
	 
	 	j. Buyer may enforce its rights and remedies hereunder without
prior judicial process or hearing, and Seller hereby expressly
waives any defenses Seller might otherwise have to require Buyer to
enforce its rights by judicial process. Seller also waives any
defense (other than a defense of payment or performance) Seller
might otherwise have arising from the use of nonjudicial process,
enforcement and sale of all or any portion of the Purchased
Mortgage Loans, or from any other election of remedies. Seller
recognizes that nonjudicial remedies are consistent with the usages
of the trade, are responsive to commercial necessity and are the
result of a bargain at arm’s length.
	 
	 	k. Buyer shall have the right to perform reasonable due diligence
with respect to Seller and the Mortgage Loans, which review shall
be at the expense of Seller.

     17.     Reports

		
	 	a. Notices. Seller shall furnish to Buyer (x) promptly, copies of
any material and adverse notices (including, without limitation,
notices of defaults, breaches, potential defaults or potential
breaches) and any material financial information that is not
otherwise required to be provided by Seller hereunder which is
given to Seller’s lenders, (y) immediately, notice of the
occurrence of any Event of Default

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	 	hereunder or default or breach by Seller or Parent of any
obligation under any Facility Agreement or any material contract or
agreement of Seller or Parent or the occurrence of any event or
circumstance that such party reasonably expects has resulted in, or
will, with the passage of time, result in, a Material Adverse
Effect or an Event of Default or such a default or breach by such
party and (z) the following:
	 
	 	          (1) as soon as available and in any event within forty-five
(45) calendar days after the end of each calendar quarter, the
unaudited consolidated balance sheets of Holdings and its
consolidated Subsidiaries as at the end of such period and the
related unaudited consolidated statements of income and retained
earnings and of cash flows for Holdings and its consolidated
Subsidiaries for such period and the portion of the fiscal year
through the end of such period, accompanied by a certificate of a
Responsible Officer of Holdings, which certificate shall state that
said consolidated financial statements fairly present in all
material respects the consolidated financial condition and results
of operations of Holdings and its consolidated Subsidiaries in
accordance with GAAP, consistently applied, as at the end of, and
for, such period (subject to normal year-end adjustments);
	 
	 	          (2) as soon as available and in any event within ninety (90)
days after the end of each fiscal year of Holdings, the
consolidated balance sheets of Holdings and its consolidated
Subsidiaries as at the end of such fiscal year and the related
consolidated statements of income and members’ equity and of cash
flows for Holdings and its consolidated Subsidiaries for such year,
setting forth in each case in comparative form the figures for the
previous year, accompanied by an opinion thereon of independent
certified public accountants of recognized national standing, which
opinion and the scope of audit shall be acceptable to Buyer in its
sole discretion, shall have no “going concern” qualification and
shall state that said consolidated financial statements fairly
present the consolidated financial condition and results of
operations of Holdings and its respective consolidated Subsidiaries
as at the end of, and for, such fiscal year in accordance with
GAAP;
	 
	 	          (3) such other prepared statements that Buyer may reasonably
request;
	 
	 	          (4) if applicable, copies of any 10-Ks, 10-Qs, registration
statements and other “corporate finance” SEC filings (other than
8-Ks) by Seller, within 5 Business Days of their filing with the
SEC; provided, that, Seller or any Affiliate will provide Buyer and
Credit Suisse First Boston LLC with a copy of the annual 10-K filed
with the SEC by Seller or its affiliates, no later than 90 days
after the end of the year;
	 
	 	          (5) as soon as available, and in any event within thirty (30)
days of receipt, copies of relevant portions of all final written
Governmental Authority and investor audits, examinations,
evaluations, monitoring reviews and reports of

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	 	operations (including those prepared on a contract basis) with
respect to the Seller or Parent, which provide for or relate to (i)
material corrective action required, (ii) material sanctions
proposed, imposed or required, including without limitation notices
of defaults, notices of termination of approved status, notices of
imposition of supervisory agreements or interim servicing
agreements, and notices of probation, suspension, or non-renewal,
or (iii) “report cards,” “grades” or other classifications of the
quality of Seller’s operations;
	 
	 	          (6) from time to time such other information regarding the
financial condition, operations, or business of the Seller as Buyer
may reasonably request;
	 
	 	          (7) as soon as reasonably possible, and in any event within
thirty (30) days after a Responsible Officer of the Seller has
knowledge of the occurrence of any Event of Termination, stating
the particulars of such Event of Termination in reasonable detail;
	 
	 	          (8) As soon as reasonably possible, notice of any of the
following events:
	 
	 	     (a) reduction in the insurance coverage required of Seller,
Servicer or any other Person pursuant to any Facility Agreement,
with a copy of evidence of same attached;
	 
	 	     (b) any material dispute, litigation, investigation,
proceeding or suspension between Seller or Parent, on the one hand,
and any Governmental Authority or any Person;
	 
	 	     (c) any material change in accounting policies or financial
reporting practices of Seller or Parent;
	 
	 	     (d) with respect to any Purchased Mortgage Loan, immediately
upon receipt of notice or knowledge thereof, that the underlying
Mortgaged Property has been damaged by waste, fire, earthquake or
earth movement, windstorm, flood, tornado or other casualty, or
otherwise damaged so as to affect adversely the value of such
Mortgaged Loan;
	 
	 	     (e) any material issues raised upon examination of Seller or
Seller’s facilities by any Governmental Authority;
	 
	 	     (f) promptly upon receipt of notice or knowledge of (i) any
default related to any Repurchase Asset, (ii) any lien or security
interest (other than security interests created hereby or by the
other Facility Agreements) on, or claim asserted against, any of
the Purchased Mortgage Loans; and
	 
	 	     (g) any other event, circumstance or condition that has
resulted, or is reasonably likely to result in a Material Adverse
Effect with respect to Seller or Parent.

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	 	b. Officer’s Certificates. Seller will furnish to Buyer, at the
time the Seller furnishes each set of financial statements pursuant
to Section 17(a)(1) or (2) above, a certificate of a Responsible
Officer of Seller in the form of Exhibit D hereto.
	 
	 	c. Mortgage Loan Reports. Seller will furnish to Buyer monthly
electronic Mortgage Loan performance data, including, without
limitation, delinquency reports (i.e., delinquency, foreclosure and
net charge-off reports).
	 
	 	d. Asset Tape. Seller shall provide to Buyer, electronically, in a
format mutually acceptable to Buyer and Seller, an Asset Tape by no
later than the Reporting Date.
	 
	 	e. Other. Seller shall deliver to Buyer any other reports or
information reasonably requested by Buyer or as otherwise required
pursuant to this Agreement.

     18.     Repurchase Transactions

          Buyer may, in its sole election, engage in repurchase transactions with
the Purchased Mortgage Loans or otherwise pledge, hypothecate, assign, transfer
or otherwise convey the Purchased Mortgage Loans with a counterparty of Buyer’s
choice. Unless an Event of Default shall have occurred, no such transaction
shall relieve Buyer of its obligations to transfer Purchased Mortgage Loans to
Seller pursuant to Section 4 hereof, or of Buyer’s obligation to credit or pay
Income to, or apply Income to the obligations of, Seller pursuant to Section 7
hereof. In the event Buyer engages in a repurchase transaction with any of the
Purchased Mortgage Loans or otherwise pledges or hypothecates any of the
Purchased Mortgage Loans, Buyer shall have the right to assign to Buyer’s
counterparty any of the applicable representations or warranties herein and the
remedies for breach thereof, as they relate to the Purchased Mortgage Loans
that are subject to such repurchase transaction.

     19.     Single Agreement

          Buyer and Seller acknowledge that, and have entered hereunto, and will
enter into each Transaction hereunder, in consideration of and in reliance upon
the fact that, all Transactions hereunder constitute a single business and
contractual relationship and have been made in consideration of each other.
Accordingly, each of Buyer and Seller agrees (i) to perform all of its
obligations in respect of each Transaction hereunder, and that a default in the
performance of any such obligations shall constitute a default by it in respect
of all Transactions hereunder, (ii) that each of them shall be entitled to
set-off claims and apply property held by them in respect of any Transaction
against obligations owing to them in respect of any other Transactions
hereunder and (iii) that payments, deliveries and other transfers made by
either of them in respect of any Transaction shall be deemed to have been made
in consideration of payments, deliveries and other transfers in respect of any
other Transactions hereunder, and the obligations to make any such payments,
deliveries and other transfers may be applied against each other and netted.

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     20.     Notices and Other Communications

          Any and all notices (with the exception of Transaction Requests or
Purchase Confirmations, which shall be delivered via facsimile only),
statements, demands or other communications hereunder may be given by a party
to the other by mail, facsimile, messenger or otherwise to the address
specified below, or so sent to such party at any other place specified in a
notice of change of address hereafter received by the other. All notices,
demands and requests hereunder may be made orally, to be confirmed promptly in
writing, or by other communication as specified in the preceding sentence.

	 	 
	If to Seller:
	 
	 	CapitalSource SNF Funding LLC
	 	4445 Willard Avenue
	 	Chevy Chase, Maryland 20815
	 	Attention: Steven A. Museles
	 	Telephone: (301) 841-2700
	 	Fax: (301) 841-2340
	 
	With a copy to:
	 
	 	Lee E. Berner, Esq.
	 	Hogan & Hartson L.L.P.
	 	8300 Greensboro Drive
	 	Suite 1100
	 	McLean, Virginia 22102
	 	Telephone: (703) 610-6137
	 	Fax: (703) 610-6200
	 
	If to Buyer:
	 
	 	Credit Suisse First Boston Mortgage Capital LLC
	 	Eleven Madison Avenue
	 	Attention: Richard Lerner
	 	Phone Number: (212) 538-5858
	 	Fax
Number:    (212) 743-5540

     21.     Entire Agreement; Severability

          This Agreement shall supersede any existing agreements between the parties
containing general terms and conditions for repurchase transactions. Each
provision and agreement herein shall be treated as separate and independent
from any other provision or agreement herein and shall be enforceable
notwithstanding the unenforceability of any such other provision or agreement.

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     22.     Non assignability

The Facility Agreements are not assignable by Seller. Buyer may from time to
time assign all or a portion of its rights and obligations under this Agreement
and the Facility Agreements; provided, however that (a) Buyer shall not assign
its ongoing obligations under this Agreement to any entity unless such entity
or its Affiliate is rated at least BBB- by S&P, and (b) Buyer shall maintain,
for review by Seller upon written request, a register of assignees and a copy
of an executed assignment and acceptance by Buyer and assignee (“Assignment and
Acceptance”), specifying the percentage or portion of such rights and
obligations assigned; and provided further, that in the event that the Buyer
assigns its rights to an entity which originates loans secured by skilled
nursing facilities, the Seller shall have the right to repurchase all Mortgage
Loans without penalty, premium or Exit Fee. Upon such assignment, such
assignee shall be a party hereto and to each Facility Agreement to the extent
of the percentage or portion set forth in the Assignment and Acceptance, and
shall succeed to the applicable rights and obligations of Buyer hereunder, and
Buyer shall be released from its obligations hereunder and under the Facility
Agreements. Unless otherwise stated in the Assignment and Acceptance, Seller
shall continue to take directions solely from Buyer unless otherwise notified
by Buyer in writing. Buyer may distribute to any prospective assignee any
document or other information delivered to Buyer by Seller.

     23.     Set-off

          In addition to any rights and remedies of Buyer provided by law, Buyer
shall have the right, without prior notice to Seller, any such notice being
expressly waived by Seller to the extent permitted by applicable law, upon any
amount becoming due and payable by Seller hereunder (whether at the stated
maturity, by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by Buyer or any
branch or agency thereof to or for the credit or the account of Seller. Buyer
agrees promptly to notify Seller after any such set-off and application made by
Buyer; provided, that the failure to give such notice shall not affect the
validity of such set-off and application.

     24.     Binding Effect; Governing Law; Jurisdiction

		
	 	a. This Agreement shall be binding and inure to the benefit of the
parties hereto and their respective successors and permitted
assigns. Seller acknowledges that the obligations of Buyer
hereunder or otherwise are not the subject of any guaranty by, or
recourse to, any direct or indirect parent or other Affiliate of
Buyer. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND
GOVERNED BY, THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.

		
	 	b. SELLER HEREBY WAIVES TRIAL BY JURY. SELLER HEREBY IRREVOCABLY
CONSENTS TO THE EXCLUSIVE JURISDICTION OF

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	 	ANY COURT OF THE STATE OF NEW YORK, OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, ARISING OUT
OF OR RELATING TO THE FACILITY AGREEMENTS IN ANY ACTION OR
PROCEEDING. SELLER HEREBY SUBMITS TO, AND WAIVES ANY OBJECTION IT
MAY HAVE TO, EXCLUSIVE PERSONAL JURISDICTION AND VENUE IN THE
COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WITH RESPECT TO ANY
DISPUTES ARISING OUT OF OR RELATING TO THE FACILITY AGREEMENTS.

     25.     No Waivers, Etc.

          No express or implied waiver of any Event of Default by either party shall
constitute a waiver of any other Event of Default and no exercise of any remedy
hereunder by any party shall constitute a waiver of its right to exercise any
other remedy hereunder. No modification or waiver of any provision of this
Agreement and no consent by any party to a departure herefrom shall be
effective unless and until such shall be in writing and duly executed by both
of the parties hereto. Without limitation on any of the foregoing, the failure
to give a notice pursuant to Section 6(a), 16(a) or otherwise, will not
constitute a waiver of any right to do so at a later date.

     26.     Intent

		
	 	a. The parties recognize that each Transaction is a “repurchase
agreement” as that term is defined in Section 101 of Title 11 of
the United States Code, as amended (except insofar as the type of
Purchased Mortgage Loans subject to such Transaction or the term of
such Transaction would render such definition inapplicable), and a
“securities contract” as that term is defined in Section 741 of
Title 11 of the United States Code, as amended (except insofar as
the type of assets subject to such Transaction would render such
definition inapplicable).
	 
	 	b. It is understood that either party’s right to liquidate
Purchased Mortgage Loans delivered to it in connection with
Transactions hereunder or to exercise any other remedies pursuant
to Section 16 hereof is a contractual right to liquidate such
Transaction as described in Sections 555 and 559 of Title 11 of the
United States Code, as amended.
	 
	 	c. The parties agree and acknowledge that if a party hereto is an
“insured depository institution,” as such term is defined in the
Federal Deposit Insurance Act, as amended (“FDIA”), then each
Transaction hereunder is a “qualified financial contract,” as that
term is defined in FDIA and any rules, orders or policy statements
thereunder (except insofar as the type of assets subject to such
Transaction would render such definition inapplicable).
	 
	 	d. It is understood that this Agreement constitutes a “netting
contract” as defined in and subject to Title IV of the Federal
Deposit Insurance Corporation

-44-

 

		
	 	Improvement Act of 1991 (“FDICIA”) and each payment entitlement and
payment obligation under any Transaction hereunder shall constitute
a “covered contractual payment entitlement” or “covered contractual
payment obligation”, respectively, as defined in and subject to
FDICIA (except insofar as one or both of the parties is not a
“financial institution” as that term is defined in FDICIA).

     27.     Disclosure Relating to Certain Federal Protections

          The parties acknowledge that they have been advised that:

		
	 	a. in the case of Transactions in which one of the parties is a
broker or dealer registered with the SEC under Section 15 of the
1934 Act, the Securities Investor Protection Corporation has taken
the position that the provisions of the SIPA do not protect the
other party with respect to any Transaction hereunder;
	 
	 	b. in the case of Transactions in which one of the parties is a
government securities broker or a government securities dealer
registered with the SEC under Section 15C of the 1934 Act, SIPA
will not provide protection to the other party with respect to any
Transaction hereunder; and
	 
	 	c. in the case of Transactions in which one of the parties is a
financial institution, funds held by the financial institution
pursuant to a Transaction hereunder are not a deposit and therefore
are not insured by the Federal Deposit Insurance Corporation or the
National Credit Union Share Insurance Fund, as applicable.

     28.     Power of Attorney

          Seller hereby authorizes Buyer to file such financing statement or
statements relating to the Purchased Mortgage Loans without Seller’s signature
thereon as Buyer, at its option, may deem appropriate. Seller hereby appoints
Buyer as Seller’s agent and attorney-in-fact to execute any such financing
statement or statements in Seller’s name and to perform all other acts which
Buyer deems appropriate to perfect and continue its ownership interest in
and/or the security interest granted hereby, if applicable, and to protect,
preserve and realize upon the Purchased Mortgage Loans, including, but not
limited to, the right to endorse notes, complete blanks in documents, transfer
servicing, and sign assignments on behalf of Seller as its agent and
attorney-in-fact. This agency and power of attorney is coupled with an
interest and is irrevocable without Buyer’s consent. Notwithstanding the
foregoing, the power of attorney hereby granted may be exercised only during
the occurrence and continuance of any Event of Default hereunder. Seller shall
pay the filing costs for any financing statement or statements prepared
pursuant to this Section 28.

     29.     Buyer May Act Through Affiliates

          Buyer may, from time to time, designate one or more affiliates for the
purpose of performing any action hereunder.

-45-

 

     30.     Indemnification; Obligations

		
	 	a. Seller agrees to hold Buyer and each of its respective
Affiliates and their officers, directors, employees, agents and
advisors (each, an “Indemnified Party”) harmless from and indemnify
each Indemnified Party (and will reimburse each Indemnified Party
as the same is incurred) against all liabilities, losses, damages,
judgments, costs and expenses (including, without limitation,
reasonable fees and expenses of counsel) of any kind which may be
imposed on, incurred by, or asserted against any Indemnified Party
relating to or arising out of this Agreement, any Transaction
Request, Purchase Confirmation, any Facility Agreement or any
transaction contemplated hereby or thereby resulting from anything
other than the Indemnified Party’s gross negligence or willful
misconduct. Without limiting the generality of the foregoing, the
Seller agrees to hold any Indemnified Party harmless from and
indemnify such Indemnified Party against all Costs with respect to
all Mortgage Loans relating to or arising out of any violation or
alleged violation of any environmental law, rule or regulation.
Seller also agrees to reimburse each Indemnified Party for all
reasonable expenses in connection with the enforcement of this
Agreement and the exercise of any right or remedy provided for
herein, any Transaction Request, Purchase Confirmation and any
Facility Agreement, including, without limitation, the reasonable
fees and disbursements of counsel. Seller’s agreements in this
Section 30 shall survive the payment in full of the Repurchase
Price and the expiration or termination of this Agreement. Seller
hereby acknowledges that (1) its obligations hereunder are recourse
obligations of Seller and are not limited to recoveries each
Indemnified Party may have with respect to the Purchased Mortgage
Loans and (2) Buyer shall have no recourse to any equity owner of
the Seller; provided, however, that the Parent, by executing this
Agreement, hereby agrees to be liable to the Buyer, on a joint and
several basis with the Seller, solely for losses incurred by the
Buyer hereunder as a result of (i) fraud or intentional
misrepresentation by the Seller or the Parent in connection with a
Mortgage Loan, (ii) the gross negligence or willful misconduct of
the Seller or the Parent in connection with a Mortgage Loan or
(iii) the breach of any representation, warranty, covenant or
indemnification provision in a Mortgage concerning a environmental
laws, hazardous substances and asbestos or in any separate
indemnity executed in connection with a Mortgage Loan. Seller also
agrees not to assert any claim against Buyer or any of its
Affiliates, or any of their respective officers, directors,
employees, attorneys and agents, on any theory of liability, for
special, indirect, consequential or punitive damages arising out of
or otherwise relating to the facility established hereunder, the
actual or proposed use of the proceeds of the Transactions, this
Agreement or any of the transactions contemplated thereby.
	 
	 	b. THE FOREGOING INDEMNITY AND AGREEMENT NOT TO ASSERT CLAIMS
EXPRESSLY APPLIES, WITHOUT LIMITATION, TO THE NEGLIGENCE (BUT NOT
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF THE INDEMNIFIED PARTIES.

-46-

 

		
	 	c. Without limitation to the provisions of Section 4, if any
payment of the Repurchase Price of any Transaction is made by
Seller other than on the then scheduled Repurchase Date thereto as
a result of an acceleration of the Repurchase Date pursuant to
Section 16 or for any other reason, Seller shall, upon demand by
Buyer, pay to Buyer an amount sufficient to compensate Buyer for
any losses, costs or expenses that it may reasonably incur as of a
result of such payment.
	 
	 	d. Without limiting the provisions of Section 30(a) hereof, if
Seller fails to pay when due any costs, expenses or other amounts
payable by it under this Agreement, including, without limitation,
fees and expenses of counsel and indemnities, such amount may be
paid on behalf of Seller by Buyer, in its sole discretion.

     31.     Counterparts

          This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original, and all such counterparts shall together
constitute one and the same instrument.

     32.     Confidentiality

          This Agreement and its terms, provisions, supplements and amendments, and
notices hereunder, are proprietary to Buyer and shall be held by Seller in
strict confidence and shall not be disclosed to any third party without the
written consent of Buyer except for (i) disclosure to Seller’s direct and
indirect Affiliates and Subsidiaries, attorneys or accountants, but only to the
extent such disclosure is necessary and such parties agree to hold all
information in strict confidence, or (ii) disclosure required by law, rule,
regulation or order of a court or other regulatory body.

     33.     Recording of Communications

          Buyer and Seller shall have the right (but not the obligation) from time
to time to make or cause to be made tape recordings of communications between
its employees and those of the other party with respect to Transactions. Buyer
and Seller consent to the admissibility of such tape recordings in any court,
arbitration, or other proceedings. The parties agree that a duly authenticated
transcript of such a tape recording shall be deemed to be a writing
conclusively evidencing the parties’ agreement.

     34.     Periodic Due Diligence Review

          Seller acknowledges that Buyer has the right to perform continuing due
diligence reviews with respect to the Seller and the Mortgage Loans, for
purposes of verifying compliance with the representations, warranties and
specifications made hereunder, or otherwise, and Seller agrees that upon
reasonable (but no less than five (5) Business Day’s) prior notice unless a
Default or an Event of Default shall have occurred, in which case no notice is
required, to Seller, Buyer or its authorized representatives will be permitted
during normal business hours to examine, inspect, and make copies and extracts
of, the Mortgage Files and any and all

-47-

 

documents, records, agreements, instruments or information relating to
such Mortgage Loans in the possession or under the control of Seller, the
Servicer and/or the Custodian. Seller also shall make available to Buyer a
knowledgeable financial or accounting officer for the purpose of answering
questions respecting the Mortgage Files and the Mortgage Loans. Without
limiting the generality of the foregoing, Seller acknowledges that Buyer may
purchase Mortgage Loans from Seller based solely upon the information provided
by Seller to Buyer in the Mortgage Loan Schedule and the representations,
warranties and covenants contained herein, and that Buyer, at its option, has
the right at any time to conduct a partial or complete due diligence review on
some or all of the Mortgage Loans purchased in a Transaction, including,
without limitation, ordering Broker’s price opinions, new credit reports and
new appraisals on the related Mortgaged Properties and otherwise re-generating
the information used to originate such Mortgage Loan. Buyer may underwrite
such Mortgage Loans itself or engage a mutually agreed upon third party
underwriter to perform such underwriting. Seller agrees to cooperate with
Buyer and any third party underwriter in connection with such underwriting,
including, but not limited to, providing Buyer and any third party underwriter
with access to any and all documents, records, agreements, instruments or
information relating to such Mortgage Loans in the possession, or under the
control, of Seller. Seller further agrees that Seller shall pay all
out-of-pocket costs and expenses incurred by Buyer in connection with Buyer’s
activities pursuant to this Section 34 (“Due Diligence Costs”); provided, that
so long as no Default has occurred, Seller shall pay for only one (1) due
diligence review of a Mortgage Loan in any calendar year (not including any
initial due diligence of the Mortgage Loan prior to the Purchase Date.

     35.     Facility Fee

          Subject to the provisions of the following paragraph, the Seller shall pay
to Buyer on each Purchase Date a facility fee in an amount equal to the product
of (a) 0.50% and (b) the amount by which the aggregate Purchase Price of all
outstanding Transactions (including the aggregate Purchase Price of
Transactions entered into on such Purchase Date) exceeds the highest aggregate
Purchase Price of Transactions outstanding on any day prior to such Purchase
Date; provided, that the aggregate facility fees paid pursuant to this section
during the period prior to the Termination Date shall not exceed $1,500,000.

          Each such fee shall be payable in immediately available funds on the
related Purchase Date. Such payment shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to Buyer at the
account set forth in Section 9 hereof.

     36.     Authorizations Any of the persons whose signatures and titles appear
on Schedule 2 are authorized, acting singly, to act for Seller or Buyer, as the
case may be, under this Agreement.

[Signature Page Follows]

-48-

 

     IN WITNESS WHEREOF, the parties have entered into this Repurchase
Agreement as of the date set forth above.

	 	 
	CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC
	 
	By: 	 
	 	

	 	 
	Title:	 
	 	

	 	 
	Date:	 
	 	

	 	 
	CAPITALSOURCE SNF FUNDING LLC
	 
	By:	 
	 	

	 	 
	Title:	 
	 	

	 	 
	Date:	 
	 	

	 	 
	Solely for purposes of Section 30 hereof:
	 
	CAPITALSOURCE FINANCE LLC
	 
	By:	 
	 	

	 	 
	Title:	 
	 	

	 	 
	Date:	 
	 	

 

 

SCHEDULE 1

REPRESENTATIONS AND WARRANTIES OF SELLER

REGARDING MORTGAGE LOANS

          The Seller represents and warrants to the Buyer, with respect to each
Mortgage Loan, that as of the Purchase Date for the purchase of any Purchased
Mortgage Loans by the Buyer from the Seller and as of the date of this
Repurchase Agreement and any Transaction hereunder and at all times while the
Repurchase Documents and any Transaction hereunder is in full force and effect:
For purposes of this Schedule 1 and the representations and warranties set
forth herein, a breach of a representation or warranty shall be deemed to have
been cured with respect to a Mortgage Loan if and when the Seller has taken or
caused to be taken action such that the event, circumstance or condition that
gave rise to such breach no longer adversely affects such Mortgage Loan. With
respect to those representations and warranties which are made to the best of
the Seller’s knowledge, if it is discovered by the Seller or the Buyer that the
substance of such representation and warranty is inaccurate, notwithstanding
the Seller’s lack of knowledge with respect to the substance of such
representation and warranty, such inaccuracy shall be deemed a breach of the
applicable representation and warranty.

		
	 	     (1) No Mortgage Note or Mortgage was subject to any assignment (other
than assignments which show a complete chain of assignment to the Seller),
participation or pledge, and the Seller had good and marketable title to,
and was the sole owner of, the related Mortgage Loan;
	 
	 	     (2) The Seller has full right and authority to sell, assign and
transfer such Mortgage Loan and the assignment to the Buyer constitutes a
legal, valid and binding assignment of such Mortgage Loan;
	 
	 	     (3) The Seller is transferring such Mortgage Loan free and clear of any
and all liens, pledges, charges or security interests of any nature
encumbering such Mortgage Loan;
	 
	 	     (4) Each related Mortgage Note, Mortgage, assignment of leases (if any)
and other agreement executed by or for the benefit of the related Mortgagor,
any guarantor or their successors or assigns in connection with such
Mortgage Loan is the legal, valid and binding obligation of the related
Mortgagor, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the enforcement of creditors’ rights or
by general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law); and there is no valid
defense, counterclaim, or right of rescission available to the related
Mortgagor with respect to such Mortgage Note, Mortgage, assignment of leases
and other agreements, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
the enforcement of creditors’ rights or by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law);

Schedule 1-1

 

		
	 	     (5) Each related assignment of leases creates a valid first priority
collateral assignment of, or a valid first priority lien or security
interest in, certain rights under the related lease or leases, subject only
to a license granted to the related Mortgagor to exercise certain rights and
to perform certain obligations of the lessor under such lease or leases,
including the right to operate the related leased property, except as the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of
creditors’ rights or by general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law); no
person other than the related Mortgagor owns any interest in any payments
due under such lease or leases that is superior to or of equal priority with
the lender’s interest therein;
	 
	 	     (6) Each related assignment of Mortgage from the Seller to the Buyer
and related assignment of the assignment of leases, if any, or assignment of
any other agreement executed by or for the benefit of the related Mortgagor,
any guarantor or their successors or assigns in connection with such
Mortgage Loan from the Seller to the Buyer constitutes the legal, valid and
binding assignment from the Seller to the Buyer, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization,
liquidation, receivership, moratorium or other laws relating to or affecting
the enforcement of creditors’ rights or by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law);
	 
	 	     (7) Since origination, and except as set forth in the related mortgage
file and except as permitted by this Agreement, (a) such Mortgage Loan has
not been modified, altered, satisfied, canceled, subordinated or rescinded
and (b) each related Mortgaged Property has not been released from the lien
of the related Mortgage in any manner which materially interferes with the
security intended to be provided by such Mortgage;
	 
	 	     (8) Each related Mortgage is a valid and enforceable first lien on the
related Mortgaged Property (subject to Permitted Encumbrances (as defined
below)), except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors’ rights or by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law); and such Mortgaged Property is free and clear of any
mechanics’ and materialmen’s liens which are prior to or equal with the lien
of the related Mortgage, except those which are insured against by a
lender’s title insurance policy (as described below) or covered by a bond.
A UCC financing statement has been filed and/or recorded (or sent for filing
or recording) in all places necessary to perfect a valid security interest
in the personal property necessary to operate the Mortgaged Property; any
security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a
valid and enforceable lien on property described therein, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the enforcement of creditors’ rights or
by general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law);
	 
	 	     (9) None of the Seller, the Servicer or the Parent has taken any action
that would cause the representations and warranties made by the related
Mortgagor in the related Mortgage Loan Documents not to be true;

Schedule 1-2

 

		
	 	     (10) None of the Seller, the Parent, or the Servicer has any knowledge
that the material representations and warranties made by the related
Mortgagor in the related Mortgage Loan Documents are not true in any
material respect;
	 
	 	     (11) The lien of each related Mortgage is a first priority lien on the
fee or leasehold interest of the related Mortgagor in the principal amount
of such Mortgage Loan or allocated loan amount of the portions of the
Mortgaged Property covered thereby (as set forth in the related Mortgage)
after all advances of principal and is insured by an ALTA lender’s title
insurance policy (or a binding commitment therefor), or its equivalent as
adopted in the applicable jurisdiction, insuring the Seller and its
successors and assigns as to such lien, subject only to (a) the lien of
current real property taxes, ground rents, water charges, sewer rents and
assessments not yet delinquent or accruing interest or penalties, (b)
covenants, conditions and restrictions, rights of way, easements and other
matters of public record, none of which, individually or in the aggregate,
materially interferes with the current use of the Mortgaged Property or the
security intended to be provided by such Mortgage or with the Mortgagor’s
ability to pay its obligations when they become due or the value of the
Mortgaged Property and (c) the exceptions (general and specific) and
exclusions set forth in such policy, none of which, individually or in the
aggregate, materially interferes with the current general use of the
Mortgaged Property or materially interferes with the security intended to be
provided by such Mortgage or with the related Mortgagor’s ability to pay its
obligations when they become due or the value of the Mortgaged Property
(items (a), (b) and (c) collectively, “Permitted Encumbrances”); the premium
for such policy was paid in full; such policy (or if it is yet to be issued,
the coverage to be afforded thereby) is issued by a title insurance company
licensed to issue policies in the state in which the related Mortgaged
Property is located (unless such state is Iowa) and is assignable (with the
related Mortgage Loan) to the Buyer without the consent of or any
notification to the insurer, and is in full force and effect upon the
consummation of the transactions contemplated by the Agreement; no claims
have been made under such policy and none of the Seller, the Parent or the
Servicer has (a) undertaken any action or omitted to take any action, and
(b) knowledge of any such act or omission, in each case, which would impair
or diminish the coverage of such policy;
	 
	 	     (12) Except where approved by the Buyer, the proceeds of such Mortgage
Loan have been fully disbursed and there is no requirement for future
advances thereunder, and no future advances have been made which are not
reflected in the related mortgage file;
	 
	 	     (13) Except as set forth in a property inspection report or engineering
report prepared in connection with the origination of the Mortgage Loan, as
of the later of the date of origination of such Mortgage Loan or the most
recent inspection of the related Mortgaged Property by the Seller, the
Parent or the Servicer, as applicable, and to the knowledge of Seller, the
Parent and the Servicer as of the date hereof, each related Mortgaged
Property is free of any material damage that would affect materially and
adversely the value of such Mortgaged Property as security for the Mortgage
Loan or reserves have been established to cover the costs to remediate such
damage and, as of the closing date for each Mortgage Loan and, to the and
the Seller’s, the Parent’s and the Servicer’s knowledge, as of the date
hereof, there is no proceeding pending for the total or partial condemnation
of such Mortgaged Property that would have a material adverse effect on the
value of the Mortgaged Property;

Schedule 1-3

 

		
	 	     (14) The Seller, the Parent or the Servicer has inspected or caused to
be inspected each related Mortgaged Property within the past twelve months,
or the originator of the Mortgage Loan inspected or caused to be inspected
each related Mortgage Property within three months of origination of the
Mortgage Loan;
	 
	 	     (15) No Mortgage Loan has a shared appreciation feature, any other
contingent interest feature or a negative amortization feature;
	 
	 	     (16) Each Mortgage Loan is a whole loan and contains no equity
participation by Seller or any affiliate of Seller;
	 
	 	     (17) The Mortgage Interest Rate (exclusive of any default interest,
late charges, or prepayment premiums) of such Mortgage Loan complied as of
the date of origination with, or was exempt from, applicable state or
federal laws, regulations and other requirements pertaining to usury. Except
to the extent any noncompliance did not materially and adversely affect the
value of the related Mortgaged Property, the security provided by the
Mortgage or the related Mortgagor’s operations at the related Mortgaged
Property, any and all other requirements of any federal, state or local
laws, including, without limitation, truth-in-lending, real estate
settlement procedures, equal credit opportunity or disclosure laws,
applicable to such Mortgage Loan have been complied with as of the date of
origination of such Mortgage Loan;
	 
	 	     (18) None of the Seller, the Parent or the Servicer or to the Seller’s,
the Parent’s or Servicer’s knowledge, any originator, committed any
fraudulent acts during the origination process of any Mortgage Loan and the
origination, servicing and collection of each Mortgage Loan is in all
respects legal, proper and prudent in accordance with customary commercial
mortgage lending standards, and no person other than the Servicer has been
granted or conveyed the right to service the Mortgage Loans or receive any
consideration in connection therewith;
	 
	 	     (19) Except as disclosed in the Mortgage Loan Schedule, all taxes and
governmental assessments that became due and owing prior to the date hereof
with respect to each related Mortgaged Property and that are or may become a
lien of priority equal to or higher than the lien of the related Mortgage
have been paid or an escrow of funds has been established and such escrow
(including all escrow payments required to be made prior to the delinquency
of such taxes and assessments) is sufficient to cover the payment of such
taxes and assessments;
	 
	 	     (20) All escrow deposits and payments required pursuant to each
Mortgage Loan are in the possession, or under the control, of the Seller,
the Servicer or their respective agents and there are no deficiencies
(subject to any applicable grace or cure periods) in connection therewith
and all such escrows and deposits are being conveyed by the Seller to the
Buyer and identified as such with appropriate detail;
	 
	 	     (21) Each related Mortgaged Property is insured by a fire and extended
perils insurance policy or an “all-risk” insurance policy, issued by an
insurer meeting the requirements of the Agreement, in an amount not less
than the lesser of the principal amount of the related Mortgage Loan and the
replacement cost (with no deduction for physical

Schedule 1-4

 

		
	 	depreciation) and not less than the amount necessary to avoid the
operation of any co-insurance provisions with respect to the related
Mortgaged Property; each related Mortgaged Property is also covered by
business interruption or rental loss insurance which covers a period of not
less than 12 months and comprehensive general liability insurance in amounts
generally required by commercial mortgage lenders for similar properties;
all premiums on such insurance policies required to be paid as of the date
hereof have been paid; such insurance policies require prior notice to the
insured of termination or cancellation, and no such notice has been received
by the Seller, the Parent or the Servicer; such insurance names the lender
under the Mortgage Loan and its successors and assigns as a named or
additional insured; each related Mortgage Loan obligates the related
Mortgagor to maintain all such insurance and, at such Mortgagor’s failure to
do so, authorizes the lender to maintain such insurance at the Mortgagor’s
cost and expense and to seek reimbursement therefor from such Mortgagor;
	 
	 	     (22) Except for a Mortgage Loan that is a Defaulted or Delinquent
Mortgage Loan, there is no monetary default, breach, violation or event of
acceleration existing under the related Mortgage Loan. To the Seller’s, the
Parent’s and the Servicer’s knowledge, there is no (a) non-monetary default,
breach, violation or event of acceleration existing under the related
Mortgage Loan or (b) event (other than payments due but not yet delinquent)
which, with the passage of time or with notice and the expiration of any
grace or cure period, would and does constitute a default, breach, violation
or event of acceleration, which default, breach, violation or event of
acceleration, in the case of either (a) or (b), materially and adversely
affects the value of the Mortgage Loan or the related Mortgaged Property;
provided, however, that this representation and warranty does not address or
otherwise cover any default, breach, violation or event of acceleration that
specifically pertains to any matter otherwise covered by any other
representation or warranty made by the Seller in any of paragraphs (13),
(19), (23), (25), (27), and (29) of this Schedule 1;
	 
	 	     (23) Except for a Mortgage Loan that is a Defaulted or Delinquent
Mortgage Loan, no Mortgage Loan has been more than 30 days delinquent in
making required payments since origination and as of the related Purchase
Date no Mortgage Loan is 30 or more days delinquent in making required
payments;
	 
	 	     (24) (a) Each related Mortgage contains provisions so as to render the
rights and remedies of the holder thereof adequate for the practical
realization against the Mortgaged Property of the principal benefits of the
security, including realization by judicial or, if applicable, non-judicial
foreclosure, and (b) there is no exemption available to the Mortgagor which
would interfere with such right to foreclose, except, in the case of either
(a) or (b), as the enforcement of the Mortgage may be limited by bankruptcy,
insolvency, reorganization, moratorium, redemption or other laws affecting
the enforcement of creditors’ rights or by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). To the Seller’s, the Parent’s and the Servicer’s
knowledge, no Mortgagor is a debtor in a state or federal bankruptcy or
insolvency proceeding;
	 
	 	     (25) At origination, each Mortgagor represented and warranted in all
material respects that to its knowledge, except as set forth in certain
environmental reports, no hazardous materials or any other substances or
materials which are included under or regulated by

Schedule 1-5

 

		
	 	Environmental Laws are located on or have been handled, manufactured,
generated, stored, processed, or disposed of on or released or discharged
from the Mortgaged Property, except for those substances used by Mortgagor
in the ordinary course of its business and in compliance with all
Environmental Laws. A Phase I environmental report and with respect to
certain Mortgage Loans, a Phase II environmental report, was conducted by a
reputable environmental engineer in connection with such Mortgage Loan,
which report did not indicate any material non-compliance with applicable
environmental laws or material existence of hazardous materials or, if any
material non-compliance or material existence of hazardous materials was
indicated in any such report, then at least one of the following statements
is true: (A) funds reasonably estimated to be sufficient to cover the cost
to cure any material non-compliance with applicable environmental laws or
material existence of hazardous materials have been escrowed by the related
Mortgagor and held by the related mortgagee; (B) an operations or
maintenance plan has been required to be instituted by the related
Mortgagor; (C) the environmental condition identified in the related
environmental report was remediated or abated in all material respects prior
to the date hereof and a no further action or closure letter was obtained
from the applicable governmental regulatory authority (or the environmental
issue affecting the related Mortgaged Property was otherwise listed by such
governmental authority as “closed”); or (D) a lender’s environmental
insurance policy was obtained and is a part of the related mortgage file. To
the best of the Seller’s, the Parent’s and the Servicer’s knowledge, in
reliance on such environmental reports and except as set forth in such
environmental reports, each Mortgaged Property is in material compliance
with all applicable federal, state and local environmental laws, and to the
best of the Seller’s, the Parent’s and the Servicer’s knowledge, no notice
of violation of such laws has been issued by any governmental agency or
authority; and none of the Seller, the Parent or the Servicer has taken any
action which would cause the Mortgaged Property to not be in compliance with
all federal, state and local environmental laws pertaining to environmental
hazards;
	 
	 	     (26) (1) Each Mortgage Loan contains provisions for the acceleration of
the payment of the unpaid principal balance of such Mortgage Loan if,
without the consent of the holder of the Mortgage (and the Mortgage requires
the mortgagor to pay all fees and expenses associated with obtaining such
consent), the related Mortgaged Property is directly or indirectly
transferred or sold, and (2) except with respect to transfers of certain
interests in the related Mortgagor to persons already holding interests in
the Mortgagor, their family members, affiliated companies and other estate
planning related transfers that satisfy certain criteria specified in the
related Mortgage (which criteria is consistent with the practices of prudent
commercial mortgage lenders), each Mortgage Loan with a Stated Principal
Balance of over $20,000,000 also contains the provisions for the
acceleration of the payment of the unpaid principal balance of such Mortgage
Loan if, without the consent of the holder of the Mortgage, (and the
Mortgage requires the mortgagor to pay all fees and expenses associated with
obtaining such consent) a majority interest in the related Mortgagor is
directly or indirectly transferred or sold;
	 
	 	     (27) All improvements included in the related appraisal are within the
boundaries of the related Mortgaged Property, except for encroachments onto
adjoining parcels for which the Seller, the Parent or the Servicer has
obtained title insurance against losses arising therefrom or that do not
materially and adversely affect the value of such Mortgaged

Schedule 1-6

 

		
	 	Property. No improvements on adjoining parcels encroach onto the
related Mortgaged Property except for encroachments that do not materially
and adversely affect the value of such Mortgaged Property, the security
provided by the Mortgage or the related Mortgagor’s operations at the
Mortgaged Property;
	 
	 	     (28) The information pertaining to the Mortgage Loan set forth in the
Mortgage Loan Schedule is complete and accurate in all material respects as
of the dates of the information set forth therein (or, if not set forth
therein, as of the related Purchase Date);
	 
	 	     (29) With respect to any Mortgage Loan where all or a material portion
of the estate of the related Mortgagor therein is a leasehold estate, and
the related Mortgage does not also encumber the related lessor’s fee
interest in such Mortgaged Property, based upon the terms of the ground
lease and any estoppel received from the ground lessor, the Seller
represents and warrants that:

		
	 	          A. The ground lease or a memorandum regarding such ground lease has
been duly recorded. The ground lease permits the interest of the lessee
to be encumbered by the related Mortgage and does not restrict the use of
the related Mortgaged Property by such lessee, its successors or assigns
in a manner that would adversely affect the security provided by the
related Mortgage. To the Seller’s, the Parent’s and the Servicer’s best
knowledge, there has been no material change in the terms of the ground
lease since its recordation, except by any written instruments which are
included in the related mortgage file;
	 
	 	          B. The lessor under such ground lease has agreed in a writing
included in the related mortgage file that the ground lease may not be
amended, modified, canceled or terminated without the prior written
consent of the lender and that any such action without such consent is
not binding on the lender, its successors or assigns;
	 
	 	          C. The ground lease has an original term (or an original term plus
one or more optional renewal terms, which, under all circumstances, may
be exercised, and will be enforceable, by the lender) that extends not
less than 20 years beyond the stated maturity of the related Mortgage
Loan;
	 
	 	          D. Based on the title insurance policy (or binding commitment
therefor) obtained by the Seller, the Parent or the Servicer, the ground
lease is not subject to any liens or encumbrances superior to, or of
equal priority with, the Mortgage, subject to Permitted Encumbrances and
liens that encumber the ground lessor’s fee interest;
	 
	 	          E. The ground lease is assignable to the lender under the leasehold
estate and its assigns without the consent of the lessor thereunder;
	 
	 	          F. As of the Purchase Date, the ground lease is in full force and
effect, none of the Seller, the Parent or the Servicer has any actual
knowledge that any default beyond applicable notice and grace periods has
occurred, and there is no existing condition which, but for the passage
of time or giving of notice, would result in a default under the terms of
the ground lease;

Schedule 1-7

 

		
	 	          G. The ground lease or ancillary agreement between the lessor and
the lessee requires the lessor to give notice of any default by the
lessee to the lender;
	 
	 	          H. A lender is permitted a reasonable opportunity (including, where
necessary, sufficient time to gain possession of the interest of the
lessee under the ground lease through legal proceedings, or to take other
action so long as the lender is proceeding diligently) to cure any
default under the ground lease which is curable after the receipt of
notice of any default before the lessor may terminate the ground lease.
All rights of the lender under the ground lease and the related Mortgage
(insofar as it relates to the ground lease) may be exercised by or on
behalf of the lender;
	 
	 	          I. The ground lease does not impose any restrictions on subletting
that would be viewed as commercially unreasonable by an institutional
investor. The lessor is not permitted to disturb the possession,
interest or quiet enjoyment of any subtenant of the lessee in the
relevant portion of the Mortgaged Property subject to the ground lease
for any reason, or in any manner, which would adversely affect the
security provided by the related Mortgage;
	 
	 	          J. Under the terms of the ground lease and the related Mortgage, any
related insurance proceeds or condemnation award (other than in respect
of a total or substantially total loss or taking) will be applied either
to the repair or restoration of all or part of the related Mortgaged
Property, with the lender or a trustee appointed by it having the right
to hold and disburse such proceeds as repair or restoration progresses,
or to the payment of the outstanding principal balance of the Mortgage
Loan, together with any accrued interest, except that in the case of
condemnation awards, the ground lessor may be entitled to a portion of
such award;
	 
	 	          K. Under the terms of the ground lease and the related Mortgage, any
related insurance proceeds, or condemnation award in respect of a total
or substantially total loss or taking of the related Mortgaged Property
will be applied first to the payment of the outstanding principal balance
of the Mortgage Loan, together with any accrued interest (except as
provided by applicable law or in cases where a different allocation would
not be viewed as commercially unreasonable by any institutional investor,
taking into account the relative duration of the ground lease and the
related Mortgage and the ratio of the market value of the related
Mortgaged Property to the outstanding principal balance of such Mortgage
Loan). Until the principal balance and accrued interest are paid in full,
neither the lessee nor the lessor under the ground lease will have an
option to terminate or modify the ground lease without the prior written
consent of the lender as a result of any casualty or partial
condemnation, except to provide for an abatement of the rent; and
	 
	 	          L. Provided that the lender cures any defaults which are susceptible
to being cured, the lessor has agreed to enter into a new lease upon
termination of the ground lease for any reason, including rejection of
the ground lease in a bankruptcy proceeding;

Schedule 1-8

 

		
	 	     (30) With respect to any Mortgage Loan where all or a material portion
of the estate of the related Mortgagor therein is a leasehold estate, but
the related Mortgage also encumbers the related lessor’s fee interest in
such Mortgaged Property: (a) such lien on the related fee interest is
evidenced by the related Mortgage, (b) such Mortgage does not by its terms
provide that it will be subordinated to the lien of any other mortgage or
encumbrance upon such fee interest, (c) upon the occurrence of a default
under the terms of such Mortgage by the related Mortgagor, any right of the
related lessor to receive notice of, and to cure, such default granted to
such lessor under any agreement binding upon the Seller, the Parent or the
Servicer would not be considered commercially unreasonable in any material
respect by prudent commercial mortgage lenders, (d) the related lessor has
agreed in a writing included in the related mortgage file that the related
ground lease may not be amended or modified without the prior written
consent of the lender and that any such action without such consent is not
binding on the lender, its successors or assigns, and (e) the related ground
lease is in full force and effect, and none of the Seller, the Parent or the
Servicer has actual knowledge that any default beyond applicable notice and
grace periods has occurred or that there is any existing condition which,
but for the passage of time or giving of notice, would result in a default
under the terms of such ground lease;
	 
	 	     (31) With respect to Mortgage Loans that are cross-collateralized or
cross-defaulted, all other loans that are cross-collateralized by or
cross-defaulted with such Mortgage Loans (other than Receivables Loans) are
being transferred to the Buyer;
	 
	 	     (32) Neither Seller nor any affiliate thereof has any obligation to
make any capital contribution to any Mortgagor under a Mortgage Loan, other
than contributions made on or prior to the date hereof;
	 
	 	     (33) (1) The Mortgage Loan is directly secured by a Mortgage on a
skilled nursing facility, and (2) the fair market value of such real
property, as evidenced by an appraisal satisfying the requirements of FIRREA
conducted within 12 months of the origination of the Mortgage Loan, was at
least equal to 80% of the principal amount of the Mortgage Loan (a) at
origination (or if the Mortgage Loan has been modified in a manner that
constituted a deemed exchange under Section 1001 of the Code at a time when
the Mortgage Loan was not in default or default with respect thereto was not
reasonably foreseeable, the date of the last such modification) or (b) at
the date hereof; provided that the fair market value of the real property
must first be reduced by (A) the amount of any lien on the real property
interest that is senior to the Mortgage Loan and (B) a proportionate amount
of any lien that is in parity with the Mortgage Loan (unless such other lien
secures a Mortgage Loan that is cross-collateralized with such Mortgage
Loan, in which event the computation described in (a) and (b) shall be made
on an aggregated basis);
	 
	 	     (34) There are no subordinate mortgages encumbering the related
Mortgaged Property, nor are there any preferred equity interests held by the
Seller, the Parent or the Servicer or any mezzanine debt related to such
Mortgaged Property, except as set forth in the Mortgage Loan Schedule;
	 
	 	     (35) The Mortgage Loan Documents executed in connection with each
Mortgage Loan require that the related Mortgagor be a single-purpose entity
(for this purpose,

Schedule 1-9

 

		
	 	“single-purpose entity” shall mean an entity, other than an individual,
having organizational documents which provide substantially to the effect
that it is formed or organized solely for the purpose of owning and
operating one or more Mortgaged Properties, is prohibited from engaging in
any business unrelated to such property and the related Mortgage Loan, does
not have any assets other than those related to its interest in the related
Mortgaged Property or its financing, or any indebtedness other than as
permitted under the related Mortgage Loan);
	 
	 	     (36) Each Mortgage Loan prohibits the related Mortgagor from mortgaging
or otherwise encumbering the Mortgaged Property without the prior written
consent of the mortgagee or the satisfaction of debt service coverage or
similar criteria specified therein and, except in connection with trade debt
and equipment financings in the ordinary course of Mortgagor’s business,
from carrying any additional indebtedness, except, in each case, liens
contested in accordance with the terms of the Mortgage Loans;
	 
	 	     (37) Each Mortgagor covenants in the Mortgage Loan documents that it
shall keep all licenses, permits, franchises, certificates of occupancy,
consents, and other approvals necessary for the operation of the Property in
full force and effect;
	 
	 	     (38) Each Mortgaged Property (a) is located on or adjacent to a
dedicated road, or has access to an irrevocable easement permitting ingress
and egress, (b) is served by public utilities and services generally
available in the surrounding community or otherwise appropriate for the use
in which the Mortgaged Property is currently being utilized, and (c)
constitutes one or more separate tax parcels or is covered by an endorsement
with respect to the matters described in (a), (b) or (c) under the related
title insurance policy (or the binding commitment therefor);
	 
	 	     (39) Based solely on a flood zone certification or a survey of the
related Mortgaged Property, if any portion of the improvements on the
Mortgaged Property is located in an area identified by the Federal Emergency
Management Agency or the Secretary of Housing and Urban Development as
having special flood hazards categorized as Zone “A” or Zone “V” and flood
insurance is available, the terms of the Mortgage Loan require the Mortgagor
to maintain flood insurance, or at such Mortgagor’s failure to do so,
authorizes the lender to maintain such insurance at the cost and expense of
the Mortgagor;
	 
	 	     (40) To the knowledge of the Seller, the Parent and the Servicer, with
respect to each Mortgage which is a deed of trust, a trustee, duly qualified
under applicable law to serve as such, currently so serves and is named in
the deed of trust or has been substituted in accordance with applicable law
or may be substituted in accordance with applicable law by the related
mortgagee, and except in connection with a trustee’s sale after a default by
the related Mortgagor, no fees are payable to such trustee;
	 
	 	     (41) Except as disclosed in the Mortgage Loan Schedule, to the
knowledge of the Seller, the Parent and the Servicer, as of the date hereof,
there was no pending action, suit or proceeding, arbitration or governmental
investigation (other than routine regulatory investigations) against any
Mortgagor or Mortgaged Property, an adverse outcome of which would
materially and adversely affect such Mortgagor’s ability to perform under
the related Mortgage Loan;

Schedule 1-10

 

		
	 	     (42) No advance of funds has been made by the Seller to the related
Mortgagor and no funds have, to the Seller’s knowledge, been received from
any person other than, or on behalf of, the related Mortgagor, for, or on
account of, payments due on the Mortgage Loan;
	 
	 	     (43) To the extent required under applicable law, as of the related
Purchase Date or as of the date that such entity held the Mortgage Note,
each holder of the Mortgage Note was authorized to transact and do business
in the jurisdiction in which each related Mortgaged Property is located,
except if the failure to be so authorized did not materially and adversely
affect the enforceability of such Mortgage Loan;
	 
	 	     (44) All collateral for the Mortgage Loans is being transferred as part
of the Mortgage Loans;
	 
	 	     (45) No Mortgage Loan requires the lender to release any portion of the
Mortgaged Property from the lien of the related Mortgage except upon (a)
payment in full of the related Mortgage Loan, (b) the satisfaction of
certain legal and underwriting requirements, (c) releases of unimproved
out-parcels or (d) releases of portions of the Mortgaged Property which will
not have a material adverse effect on the value of the collateral for the
related Mortgage Loan;
	 
	 	     (46) Except as provided in paragraphs (29) (J) and (K) above, any
insurance proceeds in respect of a casualty loss or taking will be applied
either to (a) the repair or restoration of all or part of the related
Mortgaged Property, with, in the case of all Mortgage Loans and with respect
to all casualty losses or takings in excess of a specified percentage of the
related loan amount, the lender (or a trustee appointed by it) having the
right to hold and disburse such proceeds as the repair or restoration
progresses (except in any case where a provision entitling another party to
hold and disburse such proceeds would not be viewed as commercially
unreasonable by a prudent commercial mortgage lender) or (b) to the payment
of the outstanding principal balance of such Mortgage Loan together with any
accrued interest thereon;
	 
	 	     (47) Each Form UCC-1 financing statement, if any, filed with respect to
personal property constituting a part of the related Mortgaged Property and
each Form UCC-2 or UCC-3 assignment, if any, of such financing statement to
the Seller or the Servicer was, and each Form UCC-3 assignment, if any, of
such financing statement in blank which the Trustee or its designee is
authorized to complete (but for the insertion of the name of the assignee
and any related filing information which is not yet available to the Seller
or the Servicer) is, in suitable form for filing in the filing office in
which such financing statement was filed;
	 
	 	     (48) Based upon an opinion of counsel and/or other due diligence
considered reasonable by prudent commercial mortgage lenders, the
improvements located on or forming part of each Mortgaged Property comply
with applicable zoning laws and ordinances, or constitute a legal
non-conforming use or structure or, if any such improvement does not so
comply, such non-compliance does not materially and adversely affect the
value of the related Mortgaged Property. With respect to properties with a
principal balance of over $10,000,000, if the related Mortgaged Property
does not so comply, to the extent the Seller, the Parent or the Servicer is
aware of such non-compliance, it has required the related

Schedule 1-11

 

		
	 	Mortgagor to obtain law and ordinance insurance coverage in amounts
customarily required by prudent commercial mortgage lenders;
	 
	 	     (49) Each Mortgage Loan constitutes a “qualified mortgage” within the
meaning of Section 860G(a)(3) of the Code (but without regard to the rule in
Treasury Regulation (as defined herein) Section 1.860G-2(f)(2) that treats a
defective obligation as a qualified mortgage or any substantially similar
successor provision) and all prepayment premiums and yield maintenance
charges constitute “customary prepayment penalties” within the meaning of
Treasury Regulation Section 1.860G-1(b)(2);
	 
	 	     (50) The Mortgage Loan Documents for each Mortgage Loan provide that
the related Mortgagor thereunder shall be liable to the Seller for any
losses incurred by the Seller due to (i) the misapplication or
misappropriation of rents, insurance proceeds or condemnation awards, (ii)
any willful act of material waste, (iii) any breach of the environmental
covenants contained in the related Mortgage Loan Documents, and (iv) fraud;
	 
	 	     (51) The Seller or the Servicer has delivered to the Custodian, with
respect to each Mortgage Loan, in accordance the Custodial Agreement, a
complete Mortgage File;
	 
	 	     (52) The Mortgage Loan has not been subject to a Transaction hereunder
for a period of greater than 540 days;
	 
	 	     (53) The Mortgage Loan Documents are on forms approved by the Buyer;
	 
	 	     (54) No material adverse change in the Property, business, financial
condition or operations of the Mortgagor has occurred since the origination
date of the related Mortgage Loan, as determined by Buyer in its sole good
faith discretion; and
	 
	 	     (55) There is no payment default, or material breach, or event of
acceleration existing under any related Receivables Loan.
	 
	 	     (56) As of the Purchase Date, the Loan-to-Value Ratio does not exceed
80%.
	 
	 	With respect to each Mortgaged Property:

	 	(a)	 	The Mortgagor, the Facility and the operator, administrator or manager of
the Facility (each, as “Operator”) are in compliance with the applicable
provisions of the laws, ordinances, statutes, regulations, orders,
standards, policies, accreditation standards, restrictions or rules of any
federal, state, local or other governmental or quasi-governmental agency,
authority, intermediary or other entity having jurisdiction over the
ownership or operation of the Facility including, without limitation, (1)
health and fire safety codes and (2) the applicable provisions of laws,
rules, regulations and published interpretations or policies to which the
Facility and/or the Mortgagor is subject, including, without limitation,
Medicare, Medicaid, or other federal, state, local or other governmental
or quasi-governmental authorities’, agencies’, intermediaries’ or other
entities’ laws, rules, regulations or published interpretations or
policies relating to the prevention of fraud and abuse, prohibitions
against self-referral, billing for services provided, the quality and
adequacy of medical care, distribution of pharmaceuticals, rate

Schedule 1-12

 

	 	 	 	setting, equipment, personnel, operating policies, additions to
facilities and services and fee-splitting.
	 
	 	(b)	 	All certificates, certifications, permits, licenses and approvals,
including, without limitation, certificates of completion and occupancy
and certificates of need (“CON”), required, necessary or desirable in
connection with the Mortgage Loan and for the legal use, occupancy and
operation of the Facility and approved provider status in any applicable
approved provider payment program (collectively, the “Licenses”) have been
obtained and are in full force and effect. The Mortgagor has obtained all
regulatory approvals necessary for construction on, or renovation of, the
Mortgaged Property, or the purchase of new equipment for the Mortgaged
Property, including any certificates of need.
	 
	 	(c)	 	The Licenses, including, without limitation, the CON:

	 	 	 	(i)	have not been transferred to any location other than the
Facility;
	 
	 	 	 	(ii)	have not been pledged as collateral security for any other
Mortgage Loan or indebtedness; and
	 
	 	 	 	(iii)	are held free from restrictions or known conflicts which
would materially impair the use or operation of the Facility as
intended, and are not provisional, probationary or restricted in any
way.

	 	(d)	 	So long as the Mortgage remains outstanding, neither Mortgagor nor
Operator is permitted pursuant to the terms of the Mortgage without the
consent of the holder of the Mortgage and, if required, the consent or
approval of any federal, state, local or other governmental and
quasi-governmental authorities, agencies, intermediaries or other entities
that have direct or indirect authority or oversight over the Mortgagor,
the Mortgaged Property, or the operations conducted on the Mortgaged
Property, to:

	 	 	 	(i)	rescind, withdraw, revoke, amend, modify, supplement, or
otherwise alter the nature, tenor or scope of the Licenses for any
Facility (other than the addition of services or other matters
expanding or improving the scope of such license);
	 
	 	 	 	(ii)	amend or otherwise change any Facility’s authorized bed
capacity and/or the number of approved beds; or
	 
	 	 	 	(iii)	replace or transfer all or any part of any Facility’s beds
to another site or location.

	 	(e)	 	The Facility is in compliance with the requirements for participation in
Medicare and Medicaid; each Facility is in conformance with all insurance,
reimbursement and cost reporting requirements, and has a current provider
agreement under Title XVIII (Medicare) and/or XIX (Medicaid) of the Social
Security Act or any other applicable laws or regulations for reimbursement
for the type of care or services provided by Mortgagor.

Schedule 1-13

 

	 	(f)	 	There is no threatened or pending revocation, suspension, termination,
probation, restriction, limitation, or nonrenewal affecting any Mortgagor,
Operator, or the Facility or any participation or provider agreement with
any third-party payor, including Medicare, Medicaid, Blue Cross and/or
Blue Shield, and any other private commercial insurance managed care or
employee assistance program (such programs, the “Third-Party Payors’
Programs”) to which the Mortgagor, Operator or Facility presently is
subject. None of the Mortgagor, Operator nor the Facility is currently a
target or subject of, or participant in, any investigation, or a defendant
or respondent in any administrative proceeding, arbitration, lawsuit or
threatened administrative proceeding, audit, investigation, arbitration or
lawsuit brought by any governmental or other third-party payor, including,
without limitation, any managed care company, insurance company, or other
commercial payor. The Mortgage contains representations and covenants by
the Mortgagor that all Medicaid, Medicare, Third-Party Payors’ Programs,
and private insurance cost reports and financial reports submitted by the
Mortgagor, Operator, or Facility are and will be true, accurate and
complete and have not been and will not be misleading in any material
respects, and except as otherwise disclosed, no cost reports for any
Facility remain “open” or unsettled.
	 
	 	(g)	 	None of the Mortgagor, Operator or Facility is currently the target or
subject of any current or threatened action, proceeding, suit, audit,
investigation or sanction by any federal, state, local or other
governmental or quasi-governmental agency, authority, intermediary or
other entity or any other third party or any patient or resident
(including, without limitation, whistleblower suits, suits brought
pursuant to federal or state False Claims Acts, and
Medicaid/Medicare/state/commonwealth fraud/abuse laws or other
investigations) which may directly or indirectly, or with the passage of
time:
	 

	 	(i)	 	result in the imposition of a fine, penalty, alternative,
interim or final sanction, a lower rate certification, suspension,
discontinuance or recoupment of all or part of reimbursement from
any federal, state, commonwealth or local government or
quasi-government body, or by any intermediary, third-party,
insurance carrier or private payor, or a lower reimbursement rate
for services rendered to eligible patients or other civil or
criminal remedy, or the suspension, denial or recoupment of all or
part of payments;

	 
	 	(ii)	 	have a material adverse effect on the Mortgagor, Operator or
Facility;
	 
	 	(iii)	 	result in the appointment of a receiver or manager;
	 
	 	(iv)	 	result in the revocation, transfer, surrender, suspension or
other impairment of the operating certificate(s), provider
agreement(s), license(s), permit(s), approval(s) or authorization(s)
of the Mortgagor or Operator or the operations of the Facility;
and

	 
	 	(v)	 	have a material adverse impact on the Mortgagor’s, Operators
or Facility’s ability to accept and/or retain patients or residents.

Schedule 1-14

 

	 	(h)	 	The Facility and the use thereof complies in all material respects with
all applicable federal, state, local and other building codes, fire codes,
health care, hospital, nursing facility, assisted living facility, senior
housing, continuing care retirement community, psychiatric facility,
intermediate care facility for the developmentally disabled and other
similar regulatory requirements, including, but not limited to, Medicare,
Medicaid or other federal, state, local or intermediary laws, rules,
regulations or published interpretations or guidelines relating to the
prevention of fraud, abuse, neglect or mistreatment (the “Physical Plant
Standards”) and no waivers of Physical Plant Standards exist at any of the
Facilities.
	 
	 	(i)	 	No warning statement of charges or deficiencies, or other equivalent
report or letter, has been issued or penalty enforcement action has been
undertaken against the Operator, Facility or Mortgagor, or against any
officer, director or stockholder of the Operator, Facility or Mortgagor by
any governmental agency during the last three calendar years, and there
have been no violations over the past three years which have resulted in
the loss of Mortgagor’s, Facility’s or Operator’s license or termination
of a provider agreement for any period whatsoever, nor have there been
repeated citations of those deficiencies which may lead to the termination
of a provider agreement when they are cited in consecutive surveys.
	 
	 	(j)	 	There are no current, pending or outstanding Medicaid, Medicare,
Third-Party Payors’ Programs or other reimbursement audits or appeals
pending for any of the Mortgagors, Operators or Facilities concerning
allegations of fraud or that might have a material adverse effect on the
operations of the Facility.
	 
	 	(k)	 	There are no current or pending Medicaid, Medicare, or Third-Party
Payors’ Programs recoupment efforts at the Facility that might have a
material adverse effect on the operations of the Facility.
	 
	 	(l)	 	There are no agreements with residents of the Facility or with any other
persons or organizations which deviate in any material adverse respect
from the standard form customarily used at the Facility or which conflict
with any statutory or regulatory requirements.
	 
	 	(m)	 	All resident records at the Facility, including patient or resident
account records, are true, and correct in all material respects.
	 
	 	(n)	 	Any existing agreement relating to the management, administration or
operation of the Facility with respect to such Facility is in full force
and effect and is not in default by any party thereto.
	 
	 	(o)	 	The terms of the related Mortgage require that no Facility, Operator or
Mortgagor shall, other than in the normal course of business or were
required by law, change the terms of any of the Third-Party Payors’
Programs or its normal billing payment or reimbursement policies and
procedures with respect thereto (including, without limitation, the amount
and timing of finance charges, fees and write-offs) without the prior
written consent of the holder of the Mortgage and, if required, the
consent or approval of any federal, state,

Schedule 1-15

 

	 	 	 	local or other governmental and quasi-governmental authorities, agencies,
intermediaries or other entities that have direct or indirect authority
or oversight over the Mortgagor, the Mortgaged Property, or the
operations conducted on the Mortgaged Property.
	 
	 	(p)	 	The Mortgagor is not a participant in any federal, state, local or other
governmental program (other than Medicare and Medicaid) whereby any
federal, state, local or other governmental or quasi-governmental
authority, agency, intermediary, board or other authority or entity may
have the right to recover funds by reason of the advance of federal, state
or local funds, including, without limitation, those authorized under the
Hill-Burton Act (42 U.S.C. 291, et seq.). The Mortgagor has not received
notice of and is not aware of any violation of applicable antitrust laws
of any federal, state, commonwealth or local government or
quasi-governmental body.
	 
	 	(q)	 	The Mortgagor maintains professional liability and malpractice insurance
with limits of at least $2 million per occurrence (claim)/$6 million in
the aggregate which coverage includes healthcare professionals employed by
the Facility.
	 
	 	(r)	 	Other than the Medicare and Medicaid programs, Mortgagor is not a
participant in any federal, state or local program whereby any federal,
state or local government or quasi-governmental body, or any intermediary,
agency, board or other authority or entity may have the right to recover
funds by reason of the advance of federal, state or local funds,
including, without limitation, those authorized under the Hill-Burton Act
(42 U.S.C. 291, et seq.). Mortgagor has received no notice, and is not
aware of any violation of applicable antitrust laws.
	 
	 	(s)	 	Mortgagor is not a party to any collective bargaining agreement or other
labor contract applicable to persons employed by it and there are no
threatened or pending labor disputes at the Facility, provided that
Mortgagor may adopt or may be deemed to have adopted collective bargaining
agreements respecting employees employed at the Facility prior to the date
hereof, copies of which have been or will be provided to Mortgagee.
	 
	 	(t)	 	If the Facility does not have a compliance plan in place, Mortgagor shall
institute (or cause Operator to institute) within thirty (30) days from
the date hereof, and shall operate (or cause the Operate to operate) the
Facility in accordance with, a compliance plan which follows applicable
guidelines established by the United States Department of Health and Human
Services.

Schedule 1-16

 

SCHEDULE 2

AUTHORIZED REPRESENTATIVES

SELLER NOTICES

	 	 	 
	Name:	 	
Address:
	Telephone:	 	 
	Facsimile:	 	 

SELLER AUTHORIZATIONS

Any of the persons whose signatures and titles appear below are authorized,
acting singly, to act for Seller under this Agreement:

	 	 	 
	Name	 	Title	 	 	Signature
	
	 	
	 	 	

Schedule 2-1

 

BUYER NOTICES

	 	 	 
	Name:	 	
Address: Credit Suisse First Boston
	Telephone:	 	 
	Facsimile:	 	 

BUYER AUTHORIZATIONS

Any of the persons whose signatures and titles appear below, including any
other authorized officers, are authorized, acting singly, to act for Buyer
under this Agreement:

	 	 	 
	Name	 	Title	 	 	Signature
	
	 	
	 	 	

Schedule 2-2

 

EXHIBIT A

FORM OF TRANSACTION REQUEST

[Date]

Credit Suisse First Boston Mortgage Capital LLC

Eleven Madison Avenue

New York, New York 10010

Attention: ________________

	 	 	 
	Re:	 	
Master Repurchase Agreement dated as of August 1, 2003

(the “Master Repurchase Agreement”) by and among CapitalSource SNF
Funding LLC
	 	 	and Credit Suisse First Boston Mortgage Capital LLC

CapitalSource SNF Funding LLC hereby requests that Credit Suisse First Boston
Mortgage Capital LLC (“CSFB”) enter into a Transaction with respect to the
Mortgage Loans listed on the Mortgage Loan Schedule and Exception Report
attached hereto on Attachment 1 and as set forth below, pursuant to the Master
Repurchase Agreement.

	 	 
	TOTAL NUMBER OF MORTGAGE LOANS	Mortgage Loans – (See
Mortgage Loan Schedule and
Exception Report)

	ORIGINAL PRINCIPAL AMOUNT OF MORTGAGE LOANS:	$
	 	
	CURRENT PRINCIPAL AMOUNT OF MORTGAGE LOANS:	$
	 	
	PROPOSED PURCHASE PRICE:	$
	 	
	PURCHASE PRICE INCREASE:	$
	 	
	AGGREGATE PURCHASE PRICE:	$
	 	
	PROPOSED PURCHASE DATE:

The Master Repurchase Agreement is incorporated by reference into this
Transaction Request and is made a part hereof as if it were fully set forth
herein. (All capitalized terms used herein but not defined herein shall have
the meanings specified in the Master Repurchase Agreement.)

A-1

 

[Name]

By: 

Name:

Title:

[wire instructions]

A-2

 

EXHIBIT B

FORM OF PURCHASE CONFIRMATION

[Date]

[Name]

__________

__________

Attention:

Credit Suisse First Boston Mortgage Capital LLC (“CSFB”) is pleased to confirm
your sale and our purchase of the Mortgage Loans described below and on the
attached Mortgage Loan Schedule and Exception Report pursuant to the Master
Repurchase Agreement dated as of August 1, 2003 (the “Master Repurchase
Agreement”) by and among CapitalSource SNF Funding LLC and CSFB under the
following terms and conditions:

	 	 
	Current Principal Amount of Mortgage Loans:	$
	Aggregate Purchase Price:	$
	Purchase Date:
	Repurchase Date:
	Pricing Rate:
	 
	ADDITIONAL INFORMATION:
	 
	Aggregate Purchase Price (date):	$
	Less Previous Aggregate Purchase Price:	$
	Less Price Differential due on (date):	$
	Net funds due [CSFB]/[Name] on (date):	$

The Master Repurchase Agreement is incorporated by reference into this
Transaction Confirmation, is made a part hereof as if it were fully set forth
herein and is extended hereby until all amounts due in connection with this
Transaction are paid in full.

B-1

 

All capitalized terms used herein but not defined herein shall have the
meanings specified in the Master Repurchase Agreement.

	 	 	 	 	 	 	 
	 	 	 	 	CREDIT SUISSE FIRST BOSTON
	 	 	 	 	MORTGAGE CAPITAL LLC
	 	 	 	 	 	 	 
	 	 	 	 	By:	 	 
	 	 	 	 	

	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 
	CAPITALSOURCE SNF FUNDING LLC	 	 	 	 
	 	 	 	 	 	 	 
	By:	 	 	 	 	 	 
	
	 	 	 	 
	Name:	 	 	 	 	 	 
	Title:	 	 	 	 	 	 

B-2

 

EXHIBIT C

MORTGAGE LOAN SCHEDULE

C-1

 

EXHIBIT D

OFFICER’S COMPLIANCE CERTIFICATE

     I,      , do hereby certify that I am duly elected,
qualified and authorized officer of [CapitalSource Entity] (“Servicer”). This
Certificate is delivered to you in connection with Section 17b of the Master
Repurchase Agreement dated as of August 1, 2003, among CapitalSource SNF
Funding LLC and Credit Suisse First Boston Mortgage Capital LLC (the
“Agreement”). I hereby certify that, as of the date of the financial
statements attached hereto and as of the date hereof, Seller is and has been in
compliance with all the terms of the Agreement and, without limiting the
generality of the foregoing, I certify that:

     (i)  Net Worth. Servicer has maintained an Net Worth of at least
$          million.

D-1

 

IN WITNESS WHEREOF, I have set my hand this        day of         ,         .

	 	 	 	 	 
	 	 	
By:
	

	 	 	
Name:
	

	 	 	
Title:
	

Acknowledged and Agreed,

CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC

	 	 	 
	By:	 	

	Name:	 	

	Title:	 	

D-2

 

[Schedule 1]

[to Officer’s Certificate]

D-3

 

EXHIBIT E

INTENTIONALLY OMITTED

E-1

 

EXHIBIT F

UNDERWRITING GUIDELINES

F-1

 

EXHIBIT G

AUTHORIZED SIGNATORIES

               Seller

G-1

 

EXHIBIT H

Certificate of an Officer of the Seller

          The undersigned,      of CapitalSource SNF Funding LLC, a Delaware
limited liability company (the “Seller”), hereby certifies as follows:

     1.     Attached hereto as Exhibit A is a copy of the Certificate of
Incorporation of the Seller, as certified by the Secretary of State of the
State of Delaware.

     2.     Neither any amendment to the Certificate of Incorporation of the Seller
nor any other charter document with respect to the Seller has been filed,
recorded or executed since      , 200     , and no authorization for the
filing, recording or execution of any such amendment or other charter document
is outstanding.

     3.     Attached hereto as Exhibit B is a true, correct and complete copy of
the By-laws of the Seller as in effect as of the date hereof and at all times
since      , 200     .

     4.     Attached hereto as Exhibit C is a true, correct and complete copy of
resolutions adopted by the Board of Directors of the Seller by unanimous
written consent on      , 200     (the “Resolutions”). The Resolutions have
not been further amended, modified or rescinded and are in full force and
effect in the form adopted, and they are the only resolutions adopted by the
Board of Directors of the Seller or by any committee of or designated by such
Board of Directors relating to the execution and delivery of, and performance
of the transactions contemplated by the Master Repurchase Agreement dated as of
August 1, 2003 (the “Repurchase Agreement”), between the Seller, and Credit
Suisse First Boston Mortgage Capital LLC (the “Buyer”) and the Custodial
Agreement dated as of August 1, 2003, among the Seller, the Buyer and Deutsche
Bank National Trust Company, as custodian (the “Custodian”).

     5.     The Repurchase Agreement and the Custodial Agreement are substantially
in the form approved by the Resolutions or pursuant to authority duly granted
by the Resolutions.

     6.     The undersigned, as a officers of the Seller or as attorney-in-fact,
are authorized to and have signed manually the Repurchase Agreement, the
Custodial Agreement or any other document delivered in connection with the
transactions contemplated thereby, were duly elected or appointed, were
qualified and acting as such officer or attorney-in-fact at the respective
times of the signing and delivery thereof, and were duly authorized to sign
such document on behalf of the Seller, and the signature of each such person
appearing on any such document is the genuine signature of each such person.

	 	 	 	 	 
	Name	 	
Title
	 	Signature
	
	 	
	 	

 

 

          IN WITNESS WHEREOF, the undersigned has hereunto executed this Certificate
as of the      day of      , 200  .

	 	 
	CAPITALSOURCE SNF FUNDING LLC, as Seller
	 	 
	By:	

	Name:	 	 
	Title:	 	 

 

 

Exhibit C to Officer’s Certificate of the Seller

CORPORATE RESOLUTIONS OF SELLER

Action of the Board of Directors

Without a Meeting Pursuant to

Section        of

The undersigned, being the directors of CapitalSource SNF Funding LLC a
Delaware limited liability company (the “Seller”), do hereby consent to the
taking of the following action without a meeting and do hereby adopt the
following resolutions by written consent pursuant to Section      of
     of the State of      :

          WHEREAS, it is in the best interests of the Seller to transfer from time
to time to Buyer Mortgage Loans against the transfer of funds by Buyer, with a
simultaneous agreement by Buyer to transfer to Seller such Mortgage Loans at a
date certain or on demand, against the transfer of funds by Seller pursuant to
the terms of the Repurchase Agreement (as defined below).

          NOW, THEREFORE, be it

          RESOLVED, that the execution, delivery and performance by the Seller of
the Master Repurchase Agreement (the “Repurchase Agreement”) to be entered into
by the Seller and Credit Suisse First Boston Mortgage Capital, LLC, as Buyer,
substantially in the form of the draft dated August 1, 2003, attached hereto as
Exhibit A, are hereby authorized and approved and that the [President] or any
[Vice President] (collectively, the “Authorized Officers”) of the Seller be and
each of them hereby is authorized and directed to execute and deliver the
Repurchase Agreement to the Buyer with such changes as the officer executing
the same shall approve, his execution and delivery thereof to be conclusive
evidence of such approval;

          RESOLVED, that the execution, delivery and performance by the Seller of
the Custodial Agreement (the “Custodial Agreement”) to be entered into by the
Seller, the Buyer and Deutsche Bank National Trust Company, as custodian (the
“Custodian”) substantially in the form of the draft dated August 1, 2003,
attached hereto as Exhibit B, are hereby authorized and approved and that the
Authorized Officers of the Seller be and each of them hereby is authorized and
directed to execute and deliver the Custodial Agreement to the Buyer and
Custodian with such changes as the officer executing the same shall approve,
his execution and delivery thereof to be conclusive evidence of such approval;

 

 

          RESOLVED, that the Authorized Officers hereby are, and each hereby is,
authorized to execute and deliver all such aforementioned agreements on behalf
of the Seller and to do or cause to be done, in the name and on behalf of the
Seller, any and all such acts and things, and to execute, deliver and file in
the name and on behalf of the Seller, any and all such agreements,
applications, certificates, instructions, receipts and other documents and
instruments, as such Authorized Officer may deem necessary, advisable or
appropriate in order to carry out the purposes of the foregoing resolutions.

          RESOLVED, that the proper officers, agents and counsel of the Seller are,
and each of such officers, agents and counsel is, hereby authorized for and in
the name and on behalf of the Seller to take all such further actions and to
execute and deliver all such other agreements, instruments and documents, and
to make all governmental filings, in the name and on behalf of the Seller and
such officers are authorized to pay such fees, taxes and expenses, as advisable
in order to fully carry out the intent and accomplish the purposes of the
resolutions heretofore adopted hereby.

Dated as of:                         , 200  

 

 

EXHIBIT I

SELLER’S TAX IDENTIFICATION NUMBER

I-1

 

EXHIBIT J

INTENTIONALLY OMITTED

J-1

 

EXHIBIT K

FORM OF BLOCKED ACCOUNT AGREEMENT

        , 20  

_____________________________

______________________________

______________________________

     Re: CapitalSource SNF Funding LLC

Ladies and Gentlemen:

               CapitalSource SNF Funding LLC (the “Seller”) hereby notifies you that it
has transferred exclusive ownership, dominion and control of deposit account
(No.      ) maintained with you (the “Collection Account”) to Credit
Suisse First Boston Mortgage Capital, LLC (the “Buyer”), located at 11 Madison
Avenue, New York, New York 10010, under the terms of Master Repurchase
Agreement, dated as of August 1, 2003, among the Seller and the Buyer (as the
same may be amended, supplemented or otherwise modified from time to time, the
“Repurchase Agreement”). The Seller has granted to the Buyer a security
interest in the Collection Account, and all cash, checks, drafts and other
similar writings for the payment of money from time to time held in or credited
to the Collection Account.

               The Seller hereby irrevocably instructs you to make all payments to be
made by you out of or in connection with the Collection Account in accordance
with the instructions of the Buyer. In this regard, the Seller wishes to note
that the Buyer in the accompanying Acknowledgment and Instructions has
authorized you to continue to accept instructions from the Seller until receipt
by you of contrary and/or terminating instructions in writing from the Buyer.

               The Seller also hereby notifies you that the Buyer, subject to the
immediately preceding paragraph, shall be irrevocably entitled to exercise any
and all rights in respect of or in connection with the Collection Account,
including, without limitation, the right to specify when payments are to be
made out of or in connection with the Collection Account. Without limitation
on the foregoing, you agree that you will comply with instruction originated by
the Buyer concerning the disposition of funds in the Collection Account without
further consent by the Seller.

               By executing this letter agreement you acknowledge that you have not
heretofore received a notice, writ, order or any form of legal process from any
other person asserting, claiming or exercising, any right of set-off, banker’s
lien or other purported form of claim with respect to the items collected from
the Collection Account or any funds from time to time therein or in transit
thereto, and agree to inform the Buyer in writing of any such action in the
future.

K-1

 

               All funds deposited into the Collection Account will not be subject to
deduction, set-off, banker’s lien or any other right in favor of any other
person other than the Buyer, except (i) that you may set off against the
Collection Account the face amount of any check deposited in and credited to
the Collection Account which is subsequently returned for any reason and (ii)
for your statutory security interest in items and their proceeds to the extent
of deposit credits posted therefor. Your compensation for providing the
services contemplated herein shall be as mutually agreed between the Seller and
you from time to time and the Seller will continue to pay such compensation.
The Buyer shall have no liability to you or the Seller for any compensation to
you for providing the services contemplated herein.

               You agree not to (i) change the name or account number of the Collection
Account without the prior written consent of the Buyer, (ii) enter into any
agreement pursuant to which you agree with any party other than the Buyer or
the Seller to comply with such party’s instructions concerning the Collection
Account, (iii) enter into any agreement purporting to impair, limit or modify
the Buyer’s right to issue instructions hereunder, or (iv) terminate the
Collection Account without giving the Buyer at least 30 days prior written
notice. Upon the termination of this letter agreement, you will close the
Collection Account and, subject to your rights to charge the Collection Account
as set forth herein, transfer any monies remaining therein at the direction of
the Buyer. You agree that you shall forward all incoming mail addressed to the
Collection Account and all wire transfers and deposits to the Collection
Account that you receive after such termination in the form received at the
direction of the Buyer, promptly after you discover that you have received any
such mail or transfers.

               By signing this letter below, you agree that this letter and the
accompanying Acknowledgment and Instructions constitute notice in writing of
the security interest of the Buyer in the Collection Account and all cash,
checks, drafts and similar writings for the payment of money from time to time
therein, and you hereby consent to such notice. This Agreement may not be
changed except pursuant to a writing signed by us and the Buyer.

               All notices and other communications provided for hereunder shall, unless
otherwise stated herein, be in writing (including facsimile communication) and
shall be personally delivered or sent by certified mail, postage prepaid, by
facsimile or by overnight courier, to the intended person at the address or
facsimile number of such person set forth under its name on the signature pages
hereof or at such other address or facsimile number as shall be designated by
such person in a written notice to the other parties hereto given in accordance
with the requirements of this paragraph.

               All notices and communications provided for hereunder shall be effective
when received or if transmitted by facsimile, when receipt is confirmed by
telephone.

               This letter agreement shall be binding upon you and your successors and
assigns and shall inure to the benefit of the Seller and the Buyer and their
respective successors, transferees and assigns; provided, however, that you may
not assign your rights and duties under this letter agreement.

K-2

 

               This letter agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the principles of
conflict of laws.

               You shall be entitled to rely conclusively upon any notice or instruction
that you receive from the Buyer and shall have no obligation to investigate or
verify the authenticity or correctness of any such notice or instruction. You
shall have no liability for the honoring of any instructions or directions
regarding the Collection Account which you receive from the Buyer during the
term of the Repurchase Agreement, and you shall be fully discharged from
liability with respect to any funds on deposit in the Collection Account to the
extent that you honor such instructions and transfer the same to or at the
direction of the Buyer.

               Please agree to the terms of, and acknowledge receipt of, this letter by
signing in the space provided below on four of the enclosed copies.

	 	 	 	 	 
	 	 	Very truly yours,
	 	 	 	 	 
	 	 	CAPITALSOURCE SNF FUNDING LLC
	 	 	 	 	 
	 	 	
By:
	

	 	 	
Name:
	

	 	 	
Title:
	

	 	 	 	 	 
	 	 	Address for Notice:
	 	 	 	 	 
	 	 	[Address]

Acknowledged and agreed to

as of this   th day of

      , 20     by:

[                                          ]

	 	 	 
	By:	 	

	 	 	
Name:
	 	 	
Title:

	 	 	 	 
	 	 	
Address for Notice:	 
	 	 	 	 
	 	 	
[Collection Account Bank]
	 
	 	 	

	 	 	

	 	 	
     	
	 	 	
Attention:	 
	 	 	
 	

	 	 	

	 	 	
Phone Number:	

	 	 	
Fax Number:	

K-3

 

CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL, LLC

	 	 	 
	By:	 	

	 	 	
Name:
	 	 	
Title:

	 	 	 
	By:	 	

	 	 	
Name:
	 	 	
Title:

	 	 	 
	 	 	Address for Notice:

 

 

ACKNOWLEDGMENT AND INSTRUCTIONS

               Credit Suisse First Boston Mortgage Capital, LLC (the “Buyer”) under the
terms of the Master Repurchase Agreement (as amended, supplemented or otherwise
modified from time to time, the “Repurchase Agreement”), dated as of August 1,
2003, among the Buyer and CapitalSource SNF Funding LLC (the “Seller”) hereby
acknowledges the transfer to the Buyer of exclusive ownership, dominion and
control of the Collection Account (as defined in, and pursuant to the terms of,
the foregoing letter (the “Letter Agreement”)) executed by the Seller and
acknowledged by the Buyer and      (the “Bank”). Pursuant
to the second paragraph of the Letter Agreement, the Bank may continue to
accept instructions from the Seller in connection with the Collection Account
until such time as the Bank receives contrary and/or terminating instructions
from the Buyer. Any such written notice shall be effective on the business day
received by the Bank if received before 12:00 P.M. (New York time) and, if not
received by such time, on the next succeeding business day. This
Acknowledgment and Instructions may not be changed except pursuant to a writing
signed by us and the Seller.

	 	 	 	 	 
	 	 	CREDIT SUISSE FIRST BOSTON MORTGAGE
	 	 	CAPITAL, LLC, as Buyer
	 	 	 	 	 
	 	 	
By:
	

	 	 	
Name:
	

	 	 	
Title:
	

	 	 	 	 	 
	 	 	
By:
	

	 	 	
Name:
	

	 	 	
Title:
	

 

 

Acknowledged and agreed to

as of this     th day of

      , 20     by:

[Collection Account Bank]

	 	 	 
	By:	

	Name:	

	Title:	

CAPITALSOURCE SNF FUNDING LLC

	 	 	 
	By:	

	Name:	

	Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00057-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00057-of-00352.parquet"}]]