Exhibit 10.11

 

Dated as of June 14, 2005

 

 

N-STAR REL CDO IV LTD.,
as Issuer

 

N-STAR REL CDO IV CORP.,
as Co-Issuer

 

NS ADVISORS, LLC.

As Advancing Agent

 

and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION
as Trustee

 

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INDENTURE

 

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TABLE OF CONTENTS

 

Section

 

 

Page

 

 

 

PRELIMINARY STATEMENT

 

1

 

 

 

 

GRANTING CLAUSES

 

1

 

 

 

 

ARTICLE I Definitions and Interpretation

 

3

1.1.

Definitions

 

3

1.2.

Assumptions as to Collateral Interests, Fees, Etc.

 

46

1.3.

Rules of Construction

 

48

 

 

 

 

ARTICLE II The Indenture Issued Notes

 

48

2.1.

Forms Generally

 

48

2.2.

Authorized Amount; Applicable Periodic Interest Rate; Stated Maturity Date;
Denominations

 

49

2.3.

Execution, Authentication, Delivery and Dating

 

50

2.4.

Registration, Transfer and Exchange of Indenture Issued Notes

 

51

2.5.

Mutilated, Defaced, Destroyed, Lost or Stolen Indenture Issued Notes

 

60

2.6.

Payment of Principal and Interest; Rights Preserved

 

61

 

 

 

 

ARTICLE III Conditions Precedent

 

66

3.1.

General Provisions

 

66

3.2.

Security for the Indenture Issued Notes

 

68

3.3.

Custodianship; Transfer of Collateral Interests and Eligible Investments

 

70

 

 

 

 

ARTICLE IV Satisfaction and Discharge

 

73

4.1.

Satisfaction and Discharge of Indenture

 

73

4.2.

Application of Trust Money

 

74

4.3.

Repayment of Funds Held by Note Paying Agent

 

74

 

 

 

 

ARTICLE V Events of Default; Remedies

 

74

5.1.

Events of Default

 

74

5.2.

Acceleration of Maturity; Rescission and Annulment

 

76

5.3.

Collection of Indebtedness and Suits for Enforcement by Trustee

 

77

5.4.

Remedies

 

79

5.5.

Preservation of Collateral

 

81

5.6.

Trustee May Enforce Claims Without Possession

 

83

5.7.

Application of Funds Collected

 

83

5.8.

Limitation on Suits

 

83

5.9.

Unconditional Rights of Rated Noteholders to Receive Principal and Interest

 

84

5.10.

Restoration of Rights and Remedies

 

84

5.11.

Rights and Remedies Cumulative

 

84

5.12.

Delay or Omission Not Waiver

 

84

5.13.

Control by Controlling Class

 

84

5.14.

Waiver of Past Defaults

 

85

5.15.

Undertaking for Costs

 

85

5.16.

Waiver of Stay or Extension Laws

 

86

5.17.

Sale of Collateral

 

86

5.18.

Action on the Rated Notes

 

87

 

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TABLE OF CONTENTS

(continued)

 

Section

 

 

Page

 

 

 

ARTICLE VI The Trustee

 

87

6.1.

Certain Duties and Responsibilities

 

87

6.2.

Notice of Default

 

89

6.3.

Certain Rights of Trustee

 

89

6.4.

Authenticating Agents

 

91

6.5.

Not Responsible for Recitals or Issuance of Rated Notes

 

91

6.6.

May Hold Rated Notes

 

92

6.7.

Funds Held in Trust

 

92

6.8.

Compensation and Reimbursement

 

92

6.9.

Corporate Trustee Required; Eligibility

 

93

6.10.

Resignation and Removal; Appointment of Successor

 

94

6.11.

Acceptance of Appointment by Successor

 

95

6.12.

Merger, Conversion, Consolidation or Succession to Business of Trustee

 

95

6.13.

Co-Trustees

 

96

6.14.

Certain Duties Related to Delayed Payment of Proceeds; Other Notices

 

97

6.15.

Representations and Warranties of the Bank

 

97

6.16.

Exchange Offers, Proposed Amendments etc.

 

98

6.17.

Fiduciary for Rated Noteholders Only; Agent For Other Secured Parties

 

98

6.18.

Withholding

 

98

 

 

 

 

ARTICLE VII Covenants

 

99

7.1.

Payment of Principal and Interest

 

99

7.2.

Maintenance of Office or Agency

 

99

7.3.

Funds for Rated Note Payments to be Held in Trust

 

100

7.4.

Existence of Co-Issuers

 

102

7.5.

Protection of Collateral

 

102

7.6.

Opinions as to Collateral

 

104

7.7.

Performance of Obligations

 

104

7.8.

Negative Covenants

 

105

7.9.

Statement as to Compliance

 

106

7.10.

Co-Issuers May Consolidate, Etc., Only on Certain Terms

 

107

7.11.

Successor Substituted

 

110

7.12.

No Other Business

 

110

7.13.

Change or Withdrawal of Rating

 

110

7.14.

Reporting

 

111

7.15.

Rated Note Calculation Agent

 

111

7.16.

Listing

 

112

7.17.

Amendment of Certain Documents

 

112

7.18.

Purchase of Collateral; Information Regarding Collateral; Rating Confirmation

 

112

 

 

 

 

ARTICLE VIII Supplemental Indentures

 

113

8.1.

Supplemental Indentures Without Consent of Rated Noteholders

 

113

8.2.

Supplemental Indentures with Consent of Rated Noteholders

 

116

8.3.

Execution of Supplemental Indentures

 

118

8.4.

Effect of Supplemental Indentures

 

118

8.5.

Reference in Indenture Issued Notes to Supplemental Indentures

 

119

 

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TABLE OF CONTENTS

(continued)

 

Section

 

 

Page

 

 

 

ARTICLE IX Redemption of Rated Notes

 

119

9.1.

Redemption of Rated Notes

 

119

9.2.

Redemption Procedures; Auction

 

119

9.3.

Record Date; Notice to Trustee of Redemption

 

121

9.4.

Notice of Redemption

 

121

9.5.

Notice of Withdrawal

 

122

9.6.

Rated Notes Payable on Redemption Date

 

122

9.7.

Special Amortization

 

123

 

 

 

 

ARTICLE X Accounts, Accountings and Releases

 

123

10.1.

Collection of Funds

 

123

10.2.

General Provisions Applicable to Accounts

 

124

10.3.

Collateral Account

 

125

10.4.

Uninvested Proceeds Account

 

125

10.5.

Collection Account

 

125

10.6.

Expense Reserve Account

 

126

10.7.

Interest Reserve Account

 

127

10.8.

Earn-Out Asset Account

 

127

10.9.

Payment Account

 

127

10.10.

Reports by Trustee

 

128

10.11.

Accountings

 

129

10.12.

Release of Securities

 

133

10.13.

Reports by Independent Accountants

 

134

10.14.

Reports to Rating Agencies

 

135

10.15.

Tax Matters

 

135

10.16.

Tax Information

 

136

10.17.

Interest Advances

 

136

 

 

 

 

ARTICLE XI Application of Monies

 

139

11.1.

Disbursements of Funds from Payment Account; Priority of Payments

 

139

 

 

 

 

ARTICLE XII Purchase and Sale of Collateral Interests

 

151

12.1.

Sale of Collateral Interests

 

151

12.2.

Portfolio Characteristics

 

152

12.3.

Conditions Applicable to all Transactions Involving Sale or Grant

 

156

 

 

 

 

ARTICLE XIII Secured Parties’ Relations

 

157

13.1.

Subordination

 

157

13.2.

Standard of Conduct

 

159

 

 

 

 

ARTICLE XIV Miscellaneous

 

160

14.1.

Form of Documents Delivered to Trustee

 

160

14.2.

Acts of Rated Noteholders

 

160

14.3.

Notices, Etc., to Trustee, the Co-Issuers and the Rating Agencies

 

161

14.4.

Notices and Reports to Rated Noteholders; Waiver

 

163

14.5.

Effect of Headings and Table of Contents

 

163

14.6.

Successors and Assigns

 

163

14.7.

Severability

 

164

14.8.

Benefits of Indenture

 

164

 

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TABLE OF CONTENTS

(continued)

 

Section

 

 

Page

 

 

 

14.9.

Governing Law

 

164

14.10.

Submission to Jurisdiction

 

164

14.11.

Counterparts

 

164

14.12.

Waiver of Jury Trial

 

164

14.13.

Judgment Currency

 

165

14.14.

Confidential Treatment of Documents

 

165

 

 

 

 

ARTICLE XV Assignment of Agreements, Etc.

 

165

15.1.

Assignment

 

165

15.2.

No Impairment

 

166

15.3.

Termination, Etc.

 

166

15.4.

Issuer Agreements, Etc

 

166

 

 

 

 

ARTICLE XVI Hedge Agreements

 

166

16.1.

Hedge Agreement

 

166

 

Schedules

 

Schedule A

 

Schedule of Collateral Interests as of the Closing Date

 

Schedule B

 

LIBOR Formula

 

Schedule C

 

Moody’s Recovery Rate Matrix

 

Schedule D

 

S&P’s Recovery Rate Matrix

 

Schedule E

 

Auction Procedures

 

Schedule F

 

S&P’s Notching Criteria

 

Schedule G

 

S&P’s Types of Asset-Backed Securities ineligible for Notching

 

Schedule H

 

S&P’s Industry Classification Groups

 

Schedule I

 

S&P’s Shadow Rating Grid

 

Schedule J-1

 

Form of S&P’s Representations, Warranties and Covenants for Commercial Mortgage
Loans, Subordinate Mortgage Loan Interests And Mezzanine Loans

 

Schedule J-2

 

Form of S&P’s Representations, Warranties and Covenants for Credit Lease Loans
and Tenant Lease Loan Interests

 

 

 

 

 

Exhibits

 

 

 

 

 

 

 

Exhibit A-1

 

Form of Regulation S Global Note

 

Exhibit A-2

 

Form of Rule 144A Global Note

 

Exhibit B

 

Form of Certificated Note

 

Exhibit C-1

 

Form of Rule 144A Transfer Certificate

 

Exhibit C-2

 

Form of Regulation S Transfer Certificate

 

Exhibit C-3

 

Form of Certificated Note Transfer Certificate

 

Exhibit C-4

 

Form of ERISA Restriction Certificate

 

Exhibit D

 

Form of Funding Certificate

 

Exhibit E-1

 

Form of Opinion of Thacher Proffitt & Wood LLP

 

Exhibit E-2

 

Form of Opinion of Walkers

 

Exhibit F

 

Form of Opinion of Kennedy Covington Lobdell & Hickman, L.L.P.

 

Exhibit G

 

Form of Opinion of Thacher Proffitt & Wood LLP

 

Exhibit H

 

Rated Noteholder’s Certificate

 

 

iv

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THIS INDENTURE dated as of June 14, 2005 among:

 

N-STAR REL CDO IV LTD., an exempted company incorporated and existing under the
law of the Cayman Islands;

 

N-STAR REL CDO IV CORP., a corporation organized and existing under the law of
the State of Delaware;

 

NS ADVISORS, LLC a limited liability company organized and existing under the
law of the State of Delaware; and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association,
organized under the law of the United States, as trustee.

 

PRELIMINARY STATEMENT

 

The Co-Issuers (in the case of the Indenture Issued Notes other than the Class F
Notes) and the Issuer (in the case of the Class F Notes) are duly authorized to
execute and deliver this Indenture to provide for the issuance of the Indenture
Issued Notes as provided in this Indenture.  All covenants and agreements made
by the Co-Issuers herein are for the benefit and security of the Secured
Parties.  The Co-Issuers are entering into this Indenture, and the Trustee is
accepting the trusts created hereby, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged.

 

All things necessary to make this Indenture a valid agreement of the Co-Issuers
in accordance with its terms have been done.

 

GRANTING CLAUSES

 

The Issuer hereby Grants to the Trustee, for the benefit and security of the
Secured Parties, all of its right, title and interest in, to and under, in each
case, whether now owned or existing, or hereafter acquired or arising, the
following property (other than the Excepted Property) (a) the Collateral
Interests listed on Schedule A, the Collateral Interests acquired after the
Closing Date and any Equity Interests which, in each case, are delivered to the
Trustee (directly or through a Securities Intermediary) after the Closing Date
pursuant to the terms hereof and all payments thereon or with respect thereto,
(b) the Collection Account (including each Sub-Account established therein), the
Interest Reserve Account, the Payment Account, the Expense Reserve Account, the
Collateral Account, the Uninvested Proceeds Account, the Earn-Out Asset Account,
all amounts credited to such accounts, and Eligible Investments purchased with
funds credited to such accounts and all income from the investment of funds
therein, (c) the rights of the Issuer under each of the Transaction Documents to
which the Issuer is a party and all payments to the Issuer thereunder or with
respect thereto, (d) all Cash or other property delivered to the Trustee
(directly or through a Securities Intermediary) and (e) all proceeds, whether
voluntary or involuntary, of and to any of the property of the Issuer described
in the preceding clauses (collectively, the Collateral).  Such Grants are made
to the Trustee to hold in trust, to secure the Indenture Issued Notes equally
and ratably without prejudice, priority or distinction between any such
Indenture Issued Note and any other such Indenture Issued Note by reason of
difference in time of issuance or otherwise, except as expressly provided in
this Indenture, and to secure (i) the payment of all amounts due on the
Indenture Issued Notes and under any Hedge Agreement and the Collateral
Management Agreement in accordance with their respective terms, (ii) the payment
of all other sums payable under this Indenture and (iii) compliance with the
provisions of this Indenture, any Hedge Agreement and the Collateral Management
Agreement, all as provided in this Indenture (collectively, the Secured
Obligations).

 

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Except to the extent otherwise provided in this Indenture, the Issuer does
hereby constitute and irrevocably appoint the Trustee the true and lawful
attorney of the Issuer, with full power (in the name of the Issuer or
otherwise), to exercise all rights of the Issuer with respect to the Collateral
held for the benefit and security of the Secured Parties and to ask, require,
demand, receive, settle, compromise, compound and give acquittance for any and
all moneys and claims for moneys due and to become due under or arising out of
any of the Collateral held for the benefit and security of the Secured Parties,
to endorse any checks or other instruments or orders in connection therewith and
to file any claims or take any action or institute any proceedings which the
Trustee may deem to be necessary or advisable in the premises.  The power of
attorney granted pursuant to this Indenture and all authority hereby conferred
are granted and conferred solely to protect the Trustee’s interest in the
Collateral held for the benefit and security of the Secured Parties and shall
not impose any duty upon the Trustee to exercise any power.  This power of
attorney shall be irrevocable as one coupled with an interest prior to the
payment in full of all the obligations secured hereby.

 

Except to the extent otherwise provided in this Indenture, this Indenture shall
constitute a security agreement under the law of the State of New York.  Upon
the occurrence of any Event of Default and in addition to any other rights
available under this Indenture or any other instruments included in the
Collateral held for the benefit and security of the Secured Parties or otherwise
available at law or in equity, the Trustee shall have all rights and remedies of
a secured party on default under the law of the State of New York and other
applicable law to enforce the assignments and security interests contained
herein and, in addition, shall have the right, subject to compliance with any
mandatory requirements of applicable law, to sell or apply any rights and other
interests assigned or pledged hereby in accordance with the terms hereof at
public or private sale.

 

It is expressly agreed that anything therein contained to the contrary
notwithstanding, the Issuer shall remain liable under any instruments included
in the Collateral to perform all the obligations assumed by it thereunder, all
in accordance with and pursuant to the terms and provisions thereof, and except
as otherwise expressly provided herein, the Trustee shall not have any
obligations or liabilities under such instruments by reason of or arising out of
this Indenture, nor shall the Trustee be required or obligated in any manner to
perform or fulfill any obligations of the Issuer under or pursuant to such
instruments or to make any payment, to make any inquiry as to the nature or
sufficiency of any payment received by it, to present or file any claim, or to
take any action to collect or enforce the payment of any amounts which may have
been assigned to it or to which it may be entitled at any time or times.

 

The designation of the Trustee in any transfer document or record is intended
and shall be deemed, first, to refer to the Trustee as custodian on behalf of
the Issuer and second, to refer to the Trustee as secured party on behalf of the
Secured Parties, provided that the Grant made by the Issuer to the Trustee
pursuant to the granting clauses hereof shall apply to any Collateral bearing
such designation.

 

The Trustee acknowledges such Grants, accepts the trust hereunder in accordance
with the provisions hereof, and agrees to perform the duties herein in
accordance with the required standard of care set forth herein such that the
interests of the Secured Parties may be protected.

 

Each of the Secured Parties hereby agrees and acknowledges that it shall not
have any claim on the funds and property from time to time deposited in or
credited to the Income Note Distribution Account and the proceeds thereof.

 

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ARTICLE I

DEFINITIONS AND INTERPRETATION

 

1.1.      DEFINITIONS

 

Except as otherwise specified herein or as the context may otherwise require,
the following terms have the respective meanings set forth below for all
purposes of this Indenture.  Whenever any reference is made to an amount the
determination of which is governed by Section 1.2, the provisions of Section 1.2
shall be applicable to such determination or calculation, whether or not
reference is specifically made to Section 1.2, unless some other method of
calculation or determination is expressly specified in the particular
provision.  In addition, terms defined in Article 9 of the UCC and used but not
capitalized herein have the meanings assigned thereto in Article 9 of the UCC.

 

Account means any of  the Collection Account (including each Collateral
Sub-Account established therein), the Collateral Account, the Uninvested
Proceeds Account, the Payment Account, the Interest Reserve Account and the
Expense Reserve Account (including each Collateral Sub-Account established
therein).

 

Account Control Agreement means that certain Account Control Agreement, dated as
of the Closing Date, as the same may be amended or supplemented from time to
time, among the Issuer, the Trustee and the Custodian.

 

Accountants’ Report means a report of a firm of Independent certified public
accountants of recognized national reputation appointed by the Issuer (or the
Collateral Manager on its behalf) on the Closing Date pursuant to
Section 10.13(a), which may be the firm of Independent accountants that reviews
or performs procedures with respect to the financial reports prepared by the
Issuer.

 

Act has the meanings specified in Section 14.2.

 

Administrative Expenses means amounts (including any applicable indemnities) due
from, or accrued for, the account of the Co-Issuers with respect to any Payment
Date to (i) the Trustee for Trustee Expenses and the Trustee Interest Advance
Fee and the Underlying Trustee for Underlying Trust Expenses; (ii) the PAA
Issued Note Paying Agent pursuant to the Paying Agency Agreement; (iii) the
Collateral Administrator pursuant to the Collateral Administration Agreement;
(iv) the independent accountants, agents and counsel of the Co-Issuers for fees
and expenses (including, without limitation, tax reports); (v) the Rating
Agencies for fees and expenses in connection with any Class of Notes rated by
each such Rating Agency (including, without limitation, expenses for credit
estimates and ongoing surveillance of the ratings of the Notes); (vi) the
Administrator pursuant to the Corporate Services Agreement; (vii) the Collateral
Manager and its counsel for fees, expenses and indemnities under the Transaction
Documents to the extent set forth therein (including, without limitation,
amounts payable under the Collateral Management Agreement but excluding the
Collateral Management Fee); (viii) any other Person in respect of any
governmental fee, charge or tax (including all filing, registration and annual
return fees payable to the Cayman Islands’ government and registered office
fees); (ix) any servicer of any Collateral Interest owned directly by the Issuer
or to Wachovia pursuant to the Servicing Agreement (to the extent payment of
such amounts is not otherwise provided for in the Servicing Agreement); (x) to
the Advancing Agent for the Advancing Agent Fee; and (xi) any other Person in
respect of any other fees or expenses permitted under the Indenture and the
documents delivered pursuant to or in connection with this Indenture, the Paying
Agency Agreement, the Collateral Management Agreement and the Notes;

 

3

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provided that Administrative Expenses may not include any amounts due or accrued
with respect to the actions taken on, or prior to, the Closing Date.

 

Administrator means Walkers SPV Limited and any successor thereto appointed
under the Corporate Services Agreement.

 

Advancing Agent means NS Advisors, LLC and any successor or successors thereto.

 

Advancing Agent Fee means, a per annum fee payable to the Advancing Agent on
each Payment Date in accordance with the Priority of Payments equal to 0.00125%
of the outstanding principal amount of the Class A Notes and the Class B Notes
immediately prior to such Payment Date.

 

Affected Party has the meaning given to such term in the standard form 1992 ISDA
Master Agreement (Multicurrency-Cross Border).

 

Affiliate means any person, directly or indirectly through one or more
intermediaries, controlling, controlled by or under common control with the
person; provided that (i) with respect to the Issuer, “Affiliate” shall be
deemed not to include Walkers SPV Limited or any entity which Walkers SPV
Limited controls and (ii) control of a person shall mean the power, direct or
indirect, (a) to vote more than 50% of the securities having ordinary voting
power for the election of directors of such person or (b) to direct or cause the
direction of the management and policies of such person whether by contract or
otherwise.

 

Agent Members means members of, or participants in, the Clearing Agencies.

 

Aggregate Fees and Expenses means, on any Payment Date, the sum of (i) the
Trustee Fee with respect to such Payment Date and any unpaid Trustee Fee accrued
with respect to a previous Payment Date, (ii) the PAA Issued Note Paying Agent
Fee with respect to such Payment Date and any unpaid PAA Issued Note Paying
Agent Fee accrued with respect to a previous Payment Date (iii) the Senior
Collateral Management Fee and all expenses of the Collateral Manager payable by
the Issuer pursuant to the Collateral Management Agreement with respect to such
Payment Date and any unpaid Senior Collateral Management Fee and unpaid expenses
of the Collateral Manager accrued with respect to a previous Payment Date,
(iv) the Trustee Expenses and other expenses (including other Administrative
Expenses) of the Co-Issuer (including the fees to be paid to the Irish Stock
Exchange), (v) taxes payable by the Co-Issuers, if any, (vi) the trustee fees
with respect to the Underlying Trust and (vii) all other expenses of the
Co-Issuers (including, without limitation, Administrative Expenses) payable on
such Payment Date pursuant to Sections 11.1(a)(1) and 11.1(b)(1) (in each case
to the extent not included in clauses (i) through (vi) above).

 

Aggregate Outstanding Amount means, when used with respect to any of the Rated
Notes at any time, the aggregate principal amount of such Rated Notes
Outstanding at such time.  Except as otherwise provided herein, (i) the
Aggregate Outstanding Amount of any Class C Notes at any time shall include the
Class C Cumulative Applicable Periodic Interest Shortfall Amount with respect to
such Class C Notes at such time, (ii) the Aggregate Outstanding Amount of any
Class D Notes at any time shall include the Class D Cumulative Applicable
Periodic Interest Shortfall Amount with respect to such Class  D Notes at such
time, (iii) the Aggregate Outstanding Amount of any Class E Notes at any time
shall include the Class E Cumulative Applicable Periodic Interest Shortfall
Amount with respect to such Class E Notes at such time, (iv) the Aggregate
Outstanding Amount of any Class F Notes at any time shall include the Class F
Cumulative Applicable Periodic Interest Shortfall Amount with respect to such
Class F Notes at such time and (v) the Aggregate Outstanding Amount of any
Class G Notes at any time shall include the

 

4

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Class G Cumulative Applicable Periodic Interest Shortfall Amount with respect to
such Class G Notes at such time.

 

Applicable Periodic Interest Rate means, for any Interest Period, (i) with
respect to the Class A Notes, the applicable Class A Note Interest Rate,
(ii) with respect to the Class B Notes, the applicable Class B Note Interest
Rate, (iii) with respect to the Class C Notes, the applicable Class C Note
Interest Rate, (iv) with respect to the Class D Notes, the applicable Class D
Note Interest Rate, (v) with respect to the Class E Notes, the applicable
Class E Note Interest Rate, (vi) with respect to the Class F Notes, the
applicable Class F Note Interest Rate and (vii) with respect to the Class G
Notes, the applicable Class G Note Interest Rate.

 

Applicable Recovery Rate means, with respect to any Collateral Interest on any
Measurement Date, the lesser of the Moody’s Recovery Rate and the S&P’s Recovery
Rate applicable to such Collateral Interest on such date.

 

Articles means the Amended and Restated Memorandum and Articles of Association
of the Issuer, filed under the Companies Law (2004 Revision) of the Cayman
Islands, as modified and supplemented and in effect from time to time.

 

Asset-Backed Securities are debt securities that entitle the holders thereof to
receive payments that depend primarily on the cash flow from (i) a specified
pool of financial assets, either fixed or revolving, that by their terms convert
into cash within a finite time period, together with rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of such securities (including, for the avoidance of doubt, leases) or (ii) real
estate mortgages, either fixed or revolving, together with rights or other
assets designed to assure the servicing or timely distribution of proceeds to
the holders of such securities.

 

Asset Transfer Agreement means that certain Asset Transfer Agreement, dated as
of June 14, 2005, as the same may be amended or supplemented from time to time,
among the Seller, the Depositor and Northstar Realty Finance Corp.

 

Assumed Reinvestment Rate means, with respect to any Account or fund securing
the Indenture Issued Notes, the greater of (i) LIBOR minus 0.5% and (ii) zero.

 

Auction has the meaning specified in Section 9.2.

 

Auction Call Redemption has the meaning specified in Section 9.1(c).

 

Auction Date has the meaning specified in Section 9.2; provided that, for the
purposes of Section 5.5, “Auction Date” means the date upon which an Auction of
the Collateral Interests is conducted in connection with an Event of Default.

 

Auction Procedures has the meaning specified in Section 9.2.

 

Auction Purchase Agreement has the meaning specified in Schedule E.

 

Authenticating Agent means, with respect to the Indenture Issued Notes or any
Class of the Indenture Issued Notes, the Person designated by the Trustee, if
any, to authenticate such Indenture Issued Notes on behalf of the Trustee
pursuant to Section 6.4.

 

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Authorized Officer means (i) with respect to the Issuer, any Officer of the
Issuer who is authorized to act for the Issuer in matters relating to, and
binding upon, the Issuer, (ii) with respect to the Co-Issuer, any Officer who is
authorized to act for the Co-Issuer in matters relating to, and binding upon,
the Co-Issuer, (iii) with respect to the Collateral Manager, any officer of the
Collateral Manager who is authorized to act for the Collateral Manager in
matters relating to, and binding upon, the Collateral Manager, (iv) with respect
to the Trustee or any other bank or trust company acting as trustee of an
express trust or as custodian, a Trust Officer, (v) with respect to the PAA
Issued Note Paying Agent, any officer who is authorized to act for the PAA
Issued Note Paying Agent in matters relating to, and binding upon, the PAA
Issued Note Paying Agent and (vi) with respect to the Advancing Agent, any
Officer of the Advancing Agent who is authorized to act for the Advancing Agent
in matters relating to, and binding upon, the Advancing Agent.  Each party may
receive and accept a certification of the authority of any other party as
conclusive evidence of the authority of any person to act, and such
certification may be considered as in full force and effect until receipt by
such other party of written notice to the contrary.

 

Available Funds means, with respect to any Payment Date, the amount of any
positive balance of Cash or Eligible Investments in the Collection Account as of
the Calculation Date relating to such Payment Date and, with respect to any
other date, such amount as of that date.

 

Average Life means, on any Calculation Date with respect to any Collateral
Interest, the quotient obtained by the Collateral Manager by dividing (i) the
sum of the products of (a) the number of years (rounded to the nearest one tenth
thereof) from such Calculation Date to the respective dates of each successive
distribution of principal of such Collateral Interest (assuming that (1) no
Collateral Interests default or are sold and (2) any optional redemption of the
Collateral Interests occurs in accordance with their respective terms) and
(b) the respective amounts of principal of such scheduled distributions by
(ii) the sum of all successive scheduled distributions of principal on such
Collateral Interest.

 

Balance means at any time, with respect to Cash or Eligible Investments in any
Account at such time, the aggregate of the (i) current balance of Cash, demand
deposits, time deposits, certificates of deposit and federal funds;
(ii) principal amount of interest-bearing corporate and government securities,
money market accounts and repurchase obligations; and (iii) purchase price (but
not greater than the face amount) of non-interest-bearing government and
corporate securities and commercial paper.

 

Bank means Wells Fargo Bank, National Association, a national banking
association organized under the laws of the United States, in its individual
capacity and not as Trustee.

 

Bankruptcy Code means the U.S. Bankruptcy Code, Title 11 of the United States
Code, as amended or where the context requires, the applicable insolvency
provisions of the laws of the Cayman Islands.

 

Beneficial Owner means, with respect to any Global Note, each Person that
appears on the records of a Clearing Agency (other than each such Clearing
Agency to the extent that it is an accountholder with the other Clearing Agency
for the purpose of operating the “bridge” between them) as entitled to a
particular amount of Indenture Issued Notes by reason of an interest in a Global
Note (for all purposes other than with respect to the payment of principal of
and interest on the Indenture Issued Notes, the right to which will be vested,
as against the Issuer and the Trustee, solely in the Person in whose name the
Global Note is registered in the Note Register (in the case of the Rated Notes)
or the PAA Issued Note Register (in the case of the Class Notes or the Income
Notes)); provided that the Trustee and the PAA Issued Note Paying Agent may
conclusively rely upon the certificate of a Clearing Agency as to the identity
of such Persons holding an interest in a Global Note.

 

Benefit Plan Investor means (i) an “employee benefit plan” (as defined in
Section 3(3) of ERISA), whether or not subject to Title I of ERISA, including
without limitation governmental plans, foreign plans

 

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and church plans, (ii) a “plan” (as defined in Section 4975(e)(1) of the Code),
whether or not subject to Section 4975 of the Code, including, without
limitation, individual retirement accounts and Keogh plans or (iii) an entity
whose underlying assets include plan assets by reason of such an employee
benefit plan’s or plan’s investment in such entity, including, without
limitation, as applicable, an insurance company general account.

 

Bill of Sale means that certain Bill of Sale, dated June 14th, 2005, as the same
may be amended or supplemented from time to time, between the Depositor and the
Issuer.

 

Board of Directors means, with respect to the Issuer, the directors of the
Issuer duly appointed in accordance with the Articles, and, with respect to the
Co-Issuer, the directors of the Co-Issuer duly appointed by the shareholders of
the Co-Issuer.

 

Board Resolution means, with respect to the Issuer or the Co-Issuer, a
resolution of the Board of Directors of the Issuer or the Co-Issuer, as the case
may be.

 

Business Day means any day that is not a Saturday, Sunday or other day on which
commercial banking institutions in New York, New York, Minneapolis, Minnesota,
Columbia, Maryland or any other cities in which the Corporate Trust Office of
the Trustee or the Advancing Agent is located are authorized or obligated by law
or executive order to be closed; provided that, if any action is required of the
Irish Paying Agent, solely for purposes of determining when such action of the
Irish Paying Agent is required, days on which commercial banking institutions in
Dublin, Ireland are authorized or obligated by law or executive order to be
closed will also be considered in determining whether such day is a “Business
Day;” provided, further that if any action is required of the Issuer (or of the
Administrator on its behalf), solely for purposes of determining when such
action of the Issuer is required, days on which commercial banking institutions
in the Cayman Islands are authorized or obligated by law or executive order to
be closed will also be considered in determining whether such day is a “Business
Day.”

 

Buy/Sell Interest means a pari passu Participation Interest for which one of the
participants has exercised its right to purchase its corresponding participant’s
interest, or sell its interest to such corresponding participant for the same
price, in accordance with the related Underlying Instrument.

 

Calculation Date means, with respect to any Payment Date, the last day of the
related Due Period.

 

Call Period has the meaning specified in Section 9.1(a) hereof.

 

Cash means such funds denominated with currency of the United States as at the
time shall be legal tender for payment of all public and private debts,
including funds credited to a deposit account or a Securities Account.

 

Cash Release Conditions has the meaning specified in Section 12.1(c).

 

Certificate of Authentication has the meaning specified in Section 2.3(f).

 

Certificated Class A-E Note has the meaning specified in Section 2.1(c).

 

Certificated Class F Note has the meaning specified in Section 2.1(d).

 

Certificated Class F Note Transfer Certificate has the meaning specified in
Section 2.4(c)(1)

 

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Certificated Income Notes means Income Notes issued in the form of physical
certificates in definitive, fully registered form.

 

Certificated Note means any Rated note or Income Note issued in the form of
physical certificates in certificated, fully registered form.

 

Certificated Security has the meaning specified in Section 8-102(a)(4) of the
UCC.

 

Class means any class of the Notes, consisting of the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes, the Class E Notes, the Class F
Notes, the Class G Notes and the Income Notes.

 

Class A Note Break-Even Default Rate means the maximum percentage of defaults
that the portfolio of Collateral Interests can sustain, as determined by S&P by
application of the S&P CDO Monitor, after giving effect to S&P’s assumptions on
recoveries, defaults and timing and to the Priority of Payments such that
sufficient funds will remain for the payment of principal of the Class A Notes
in full by their Stated Maturity Dates and the timely payment of interest on
such Class A Notes.

 

Class A Note Default Differential means, with respect to any Calculation Date,
the rate obtained by subtracting the Class A Note Scenario Default Rate from the
Class A Note Break-Even Default Rate.

 

Class A Note Interest Rate means LIBOR plus 0.35%.

 

Class A Note Scenario Default Rate means an estimate of the cumulative default
rate for the portfolio of Collateral Interests consistent with S&P’s rating of
the Class A Notes on the Closing Date, determined by S&P by application of the
S&P CDO Monitor.

 

Class A Notes means the U.S.$185,000,000 aggregate principal amount of Class A
Floating Rate Notes Due 2040.

 

Class B Note Break-Even Default Rate means the maximum percentage of defaults
that the portfolio of Collateral Interests can sustain, as determined by S&P by
application of the S&P CDO Monitor, after giving effect to S&P’s assumptions on
recoveries, defaults and timing and to the Priority of Payments such that
sufficient funds will remain for the payment of principal of the Class B Notes
in full by their Stated Maturity Dates and the timely payment of interest on
such Class B Notes.

 

Class B Note Default Differential means, with respect to any Calculation Date,
the rate obtained by subtracting the Class B Note Scenario Default Rate from the
Class B Note Break-Even Default Rate.

 

Class B Note Interest Rate means LIBOR plus 0.45%.

 

Class B Note Scenario Default Rate means an estimate of the cumulative default
rate for the portfolio of Collateral Interests consistent with S&P’s rating of
the Class B Notes on the Closing Date, determined by S&P by application of the
S&P CDO Monitor.

 

Class B Notes means the U.S.$32,600,000 aggregate principal amount of Class B
Floating Rate Notes Due 2040.

 

Class C Applicable Periodic Interest Shortfall Amount means, with respect to any
Interest Period, the amount of unpaid interest for such Interest Period that
will be added to the principal amount of the Class C Notes and paid thereafter
in accordance with the Priority of Payments in the event that any Class A Notes
or Class B Notes are Outstanding and funds are not available in accordance with
the

 

8

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Priority of Payments on any Payment Date to pay the full amount of Periodic
Interest on the Class C Notes.

 

Class C Coverage Tests means the Interest Coverage Test and the Principal
Coverage Test applied with respect to the Class C Notes.

 

Class C Cumulative Applicable Periodic Interest Shortfall Amount means, with
respect to any date of determination, the sum of all Class C Applicable Periodic
Interest Shortfall Amounts with respect to all Payment Dates preceding such date
of determination, less any amounts applied on all preceding Payment Dates,
pursuant to the Priority of Payments, to reduce such sum.

 

Class C Note Break-Even Default Rate means the maximum percentage of defaults
that the portfolio of Collateral Interests can sustain, as determined by S&P by
application of the S&P CDO Monitor, after giving effect to S&P’s assumptions on
recoveries, defaults and timing and to the Priority of Payments such that
sufficient funds will remain for the payment of principal of the Class C Notes
in full by their Stated Maturity Dates and the timely payment of interest on
such Class C Notes.

 

Class C Note Default Differential means, with respect to any Calculation Date,
the rate obtained by subtracting the Class C Note Scenario Default Rate from the
Class C Note Break-Even Default Rate.

 

Class C Note Interest Rate means LIBOR plus 0.75%.

 

Class C Note Scenario Default Rate means an estimate of the cumulative default
rate for the portfolio of Collateral Interests consistent with S&P’s rating of
the Class C Notes on the Closing Date, determined by S&P by application of the
S&P CDO Monitor.

 

Class C Notes means the U.S.$31,800,000 aggregate principal amount of Class C
Floating Rate Notes Due 2040.

 

Class D Applicable Periodic Interest Shortfall Amount means, with respect to any
Interest Period, the amount of unpaid interest for such Interest Period that
will be added to the principal amount of the Class D Notes and paid thereafter
in accordance with the Priority of Payments in the event that any Class A Notes,
Class B Notes or Class C Notes are Outstanding and funds are not available in
accordance with the Priority of Payments on any Payment Date to pay the full
amount of Periodic Interest on the Class D Notes.

 

Class D Coverage Tests means the Interest Coverage Test and the Principal
Coverage Test applied to the Class D Notes.

 

Class D Cumulative Applicable Periodic Interest Shortfall Amount means, with
respect to any date of determination, the sum of all Class D Applicable Periodic
Interest Shortfall Amounts with respect to all Payment Dates preceding such date
of determination, less any amounts applied on all preceding Payment Dates,
pursuant to the Priority of Payments to reduce such sum.

 

Class D Note Break-Even Default Rate means the maximum percentage of defaults
that the portfolio of Collateral Interests can sustain, as determined by S&P by
application of the S&P CDO Monitor, after giving effect to S&P’s assumptions on
recoveries, defaults and timing and to the Priority of Payments such that
sufficient funds will remain for the payment of principal of the Class D Notes
in full by their Stated Maturity Dates and the timely payment of interest on
such Class D Notes.

 

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Class D Note Default Differential means, with respect to any Calculation Date,
the rate obtained by subtracting the Class D Note Scenario Default Rate from the
Class D Note Break-Even Default Rate.

 

Class D Note Interest Rate means LIBOR plus 1.60%.

 

Class D Note Scenario Default Rate means an estimate of the cumulative default
rate for the portfolio of Collateral Interests consistent with S&P’s rating of
the Class D Notes on the Closing Date, determined by S&P by application of the
S&P CDO Monitor.

 

Class D Notes means the U.S.$38,600,000 aggregate principal amount of Class D
Floating Rate Notes Due 2040.

 

Class E Applicable Periodic Interest Shortfall Amount means, with respect to any
Interest Period, the amount of unpaid interest for such Interest Period that
will be added to the principal amount of the Class E Notes and paid thereafter
in accordance with the Priority of Payments in the event that any Class A Notes,
Class B Notes, Class C Notes or Class D Notes are Outstanding and funds are not
available in accordance with the Priority of Payments on any Payment Date to pay
the full amount of Periodic Interest on the Class E Notes.

 

Class E Coverage Tests means the Interest Coverage Test and the Principal
Coverage Test applied to the Class E Notes.

 

Class E Cumulative Applicable Periodic Interest Shortfall Amount means, with
respect to any date of determination, the sum of all Class E Applicable Periodic
Interest Shortfall Amounts with respect to all Payment Dates preceding such date
of determination, less any amounts applied on all preceding Payment Dates,
pursuant to the Priority of Payments, to reduce such sum.

 

Class E Note Break-Even Default Rate means the maximum percentage of defaults
that the portfolio of Collateral Interests can sustain, as determined by S&P by
application of the S&P CDO Monitor, after giving effect to S&P’s assumptions on
recoveries, defaults and timing and to the Priority of Payments such that
sufficient funds will remain for the payment of principal of the Class E Notes
in full by their Stated Maturity Dates and the timely payment of interest on
such Class E Notes.

 

Class E Note Default Differential means, with respect to any Calculation Date,
the rate obtained by subtracting the Class E Note Scenario Default Rate from the
Class E Note Break-Even Default Rate.

 

Class E Note Interest Rate means LIBOR plus 1.75%.

 

Class E Note Scenario Default Rate means an estimate of the cumulative default
rate for the portfolio of Collateral Interests consistent with S&P’s rating of
the Class E Notes on the Closing Date, determined by S&P by application of the
S&P CDO Monitor.

 

Class E Notes means the U.S.$12,000,000 aggregate principal amount of Class E
Floating Rate Notes Due 2040.

 

Class F Applicable Periodic Interest Shortfall Amount means, with respect to any
Interest Period, the amount of unpaid interest for such Interest Period that
will be added to the principal amount of the Class F Notes and paid thereafter
in accordance with the Priority of Payments in the event that any Class A Notes,
Class B Notes, Class C Notes, Class D Notes or Class E Notes are Outstanding and
funds are not available in accordance with the Priority of Payments on any
Payment Date to pay the full amount of Periodic Interest on the Class F Notes.

 

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Class F Coverage Tests means the Interest Coverage Test and the Principal
Coverage Test applied to the Class F Notes.

 

Class F Cumulative Applicable Periodic Interest Shortfall Amount means, with
respect to any date of determination, the sum of all Class F Applicable Periodic
Interest Shortfall Amounts with respect to all Payment Dates preceding such date
of determination, less any amounts applied on all preceding Payment Dates,
pursuant to the Priority of Payments, to reduce such sum.

 

Class F Note Break-Even Default Rate means the maximum percentage of defaults
that the portfolio of Collateral Interests can sustain, as determined by S&P by
application of the S&P CDO Monitor, after giving effect to S&P’s assumptions on
recoveries, defaults and timing and to the Priority of Payments such that
sufficient funds will remain for the payment of principal of the Class F Notes
in full by their Stated Maturity Dates and the timely payment of interest on
such Class F Notes.

 

Class F Note Default Differential means, with respect to any Calculation Date,
the rate obtained by subtracting the Class F Note Scenario Default Rate from the
Class F Note Break-Even Default Rate.

 

Class F Note Interest Rate means 7.00%.

 

Class F Note Scenario Default Rate means an estimate of the cumulative default
rate for the portfolio of Collateral Interests consistent with S&P’s rating of
the Class F Notes on the Closing Date, determined by S&P by application of the
S&P CDO Monitor.

 

Class F Notes means the U.S.$20,000,000 aggregate principal amount of Class F
Fixed Rate Notes Due 2040.

 

Class G Applicable Periodic Interest Shortfall Amount means, with respect to any
Interest Period, the amount of unpaid interest for such Interest Period that
will be added to the principal amount of the Class G Notes and paid thereafter
in accordance with the Priority of Payments in the event that any Class A Notes,
Class B Notes, Class C Notes, Class D Notes, Class E Notes or Class F Notes are
Outstanding and funds are not available in accordance with the Priority of
Payments on any Payment Date to pay the full amount of Periodic Interest on the
Class F Notes.

 

Class G Coverage Tests means the Interest Coverage Test and the Principal
Coverage Test applied to the Class G Notes.

 

Class G Cumulative Applicable Periodic Interest Shortfall Amount means, with
respect to any date of determination, the sum of all Class G Applicable Periodic
Interest Shortfall Amounts with respect to all Payment Dates preceding such date
of determination, less any amounts applied on all preceding Payment Dates,
pursuant to the Priority of Payments, to reduce such sum.

 

Class G Note Break-Even Default Rate means the maximum percentage of defaults
that the portfolio of Collateral Interests can sustain, as determined by S&P by
application of the S&P CDO Monitor, after giving effect to S&P’s assumptions on
recoveries, defaults and timing and to the Priority of Payments such that
sufficient funds will remain for the payment of principal of the Class G Notes
in full by their Stated Maturity Dates and the timely payment of interest on
such Class G Notes.

 

Class G Note Default Differential means, with respect to any Calculation Date,
the rate obtained by subtracting the Class G Note Scenario Default Rate from the
Class G Note Break-Even Default Rate.

 

Class G Note Interest Rate means 7.00%.

 

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Class G Note Scenario Default Rate means an estimate of the cumulative default
rate for the portfolio of Collateral Interests consistent with S&P’s rating of
the Class G Notes on the Closing Date, determined by S&P by application of the
S&P CDO Monitor.

 

Class G Notes means the U.S.$20,000,000 aggregate principal amount of Class G
Fixed Rate Notes Due 2040.

 

Clearing Agency means DTC, Euroclear or Clearstream.

 

Clearing Corporation has the meaning specified in Section 8-102(a)(5) of the
UCC.

 

Clearstream means Clearstream Banking, société anonyme.

 

Closing Date means June 14, 2005.

 

CMBS means commercial mortgage-backed securities issued pursuant to a
transaction in which one or more classes of such securities have been (and are)
rated “AAA” or its equivalent by one or more of S&P, Moody’s or Fitch (unless
Rating Agency Confirmation is received), which securities are backed by
obligations (including certificates of participations in obligations) that are
principally secured by mortgages on real property or interests therein having a
multifamily or commercial use.

 

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

 

Co-Issuer means N-Star REL CDO IV Corp., a corporation organized under the law
of the State of Delaware, unless a successor Person shall have become the
Co-Issuer pursuant to the applicable provisions of this Indenture, and
thereafter Co-Issuer shall mean such successor Person.

 

Co-Issuers means the Issuer and Co-Issuer.

 

Collateral has the meaning specified in the Granting Clauses.

 

Collateral Administration Agreement means the Collateral Administration
Agreement, dated June 14, 2005, by and among the Issuer, the Collateral Manager
and the Collateral Administrator, as the same may be amended and modified from
time to time in accordance with its terms.

 

Collateral Administrator means Wells Fargo Bank, National Association, solely in
its capacity as Collateral Administrator under the Collateral Administration
Agreement, unless a successor Person shall have become the Collateral
Administrator pursuant to the applicable provisions of Collateral Administration
Agreement, in which case Collateral Administrator shall mean such successor
Person.

 

Collateral Interest means an item of Collateral which satisfies the Eligibility
Criteria specified in Section 12.2.

 

Collateral Interest Collections means, with respect to any Due Period and the
related Payment Date, without duplication, the sum of (i) all cash payments of
interest with respect to any Collateral Interests and Eligible Investments
included in the Collateral ((A) including any Sale Proceeds of a Collateral
Interest sold at price equal to or greater than its Principal Balance
representing unpaid interest accrued thereon to the date of the sale thereof to
the extent not treated as Collateral Principal Collections at the option of the
Collateral Manager, but (B) excluding all funds received on an Impaired Interest
(including any unpaid interest) and any unpaid interest accrued on a Deferred
Interest PIK Bond or a Written Down Interest to the date of sale) which are
received during the related Due Period (excluding any Purchased

 

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Accrued Interest), (ii) all payments on Eligible Investments purchased with
Collateral Interest Collections, (iii) payments received or scheduled to be
received from a Hedge Counterparty under any Hedge Agreement on the related
Payment Date, excluding any payments received from a Hedge Counterparty upon
reduction of the notional amount and any termination payments (provided that so
long as the Notes are Outstanding, any termination payments received from a
Hedge Counterparty will be used to enter into a substitute Hedge Agreement to
the extent required to maintain the then-current rating of the Notes by each
Rating Agency), (iv) all amendment and waiver fees, all late payment fees and
all other fees and commissions received during the related Due Period (other
than fees and commissions received in connection with the sale, restructuring,
workout or default of Collateral Interests or in connection with Impaired
Interests or Written Down Interests) (excluding any payments representing exit
fees, extension fees or prepayment premiums paid in connection with Commercial
Mortgage Loans), (v) the Principal Balance of any Eligible Investments purchased
with Collateral Interest Collections, (vi) all interest accrued on the Closing
Date on Collateral Interests included in the Collateral, (vii) any amounts on
deposit in the Interest Reserve Account, (viii) at the option of the Collateral
Manager, any amount on deposit in the Expense Reserve Account in excess of
U.S.$300,000, (ix) commitment fees on unfunded amounts and other similar fees
(in each case, net of applicable withholding taxes) actually received by the
Issuer during the related Due Period in respect of any Earn-Out Assets, (x) any
Uninvested Proceeds remaining on deposit in the Uninvested Proceeds Account on
the Effective Date, if Rating Agency Confirmation to treat such Uninvested
Proceeds as Collateral Interest Collections has been obtained and (xi) all
proceeds from the foregoing; provided, however, that Collateral Interest
Collections shall not include the funds and other property (including, without
limitation, the paid-up share capital of the Issuer) with respect to the Income
Notes and the bank account in which such funds and the proceeds thereof are
held); provided, further, that Collateral Interest Collections shall not include
principal of any Collateral Interest representing capitalized interest after the
date of purchase thereof by the Issuer.

 

Collateral Interest Principal Balance means, prior to the Effective Date,
U.S.$400,000,000, and thereafter, the aggregate Principal Balance of the sum of
(i) Collateral Interests included in the Collateral (including any Collateral
Interests that have become Impaired Interests or Written Down Interests) and
(ii) Eligible Investments, in each case, purchased with the proceeds of the
issuance of the Notes or thereafter with Collateral Principal Collections.

 

Collateral Manager means NS Advisors, LLC, a Delaware limited liability company,
unless a successor Person shall have become Collateral Manager pursuant to the
applicable provisions of the Collateral Management Agreement, in which case
Collateral Manager shall mean such successor Person.

 

Collateral Management Agreement means the Collateral Management Agreement, dated
as of the Closing Date, as the same may be amended or supplemented from time to
time, between the Issuer and the Collateral Manager.

 

Collateral Management Fee means the Senior Collateral Management Fee and the
Subordinate Collateral Management Fee.

 

Collateral Principal Collections means, with respect to any Due Period and the
related Payment Date, all amounts received by the Issuer during such Due Period
that do not constitute Collateral Interest Collections; provided, however, that
Collateral Principal Collections shall include principal of any Collateral
Interest representing capitalized interest after the date of purchase thereof by
the Issuer.

 

Collateral Principal Collections Sub-Account has the meaning specified in
Section 10.5(a)(1) hereof.

 

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Collateral Principal Payments means, with respect to any Due Period and the
related Payment Date, Collateral Principal Collections other than Sale Proceeds
and any amounts received in respect of Eligible Investments.

 

Collateral Quality Tests will be satisfied if, as of any Measurement Date, the
Collateral Interests comply, in the aggregate, with all of the requirements set
forth below (collectively, the “Collateral Quality Tests”):

 

(1)                      the aggregate Principal Balance of all Collateral
Interests that are CMBS (other than Rake Bonds) does not exceed 15% of the
Collateral Interest Principal Balance;

 

(2)                      the aggregate Principal Balance of all Collateral
Interests that are Tenant Lease Interests with an S&P Rating below “BBB” does
not exceed 15% of the Collateral Interest Principal Balance;

 

(3)                      the aggregate Principal Balance of all Collateral
Interests that are REIT Debt Securities with an S&P Rating below “BBB” does not
exceed 7.5% of the Collateral Interest Principal Balance;

 

(4)                      the aggregate Principal Balance of all Collateral
Interests that are Real Estate CDO Securities does not exceed 5% of the
Collateral Interest Principal Balance;

 

(5)                      the aggregate Principal Balance of all Collateral
Interests that are Mezzanine Loans does not exceed 50% of the Collateral
Interest Principal Balance;

 

(6)                      the Moody’s Maximum Weighted Average Rating Factor Test
is satisfied;

 

(7)                      (i) the Weighted Average Fixed Rate Coupon as of such
date equals or exceeds 5.00% and (ii) the Weighted Average Spread as of such
date equals or exceeds 4.00%;

 

(8)                      the Weighted Average Life Test is satisfied;

 

(9)                      The maximum property concentration limits (by Aggregate
Collateral Balance) for Collateral Interests other than CMBS that are not Rake
Bonds (and including CMBS that are Rake Bonds) are as follows:

 

(i)                       not more than 40% of the Collateral Interest Principal
Balance may be related to Mortgaged Properties which are each of office, retail
and multifamily properties;

 

(ii)                    not more than 35% of the Collateral Interest Principal
Balance may be related to Mortgaged Properties which are each of industrial and
hospitality properties;

 

(iii)                 not more than 10% of the Collateral Interest Principal
Balance may be related to Mortgaged Properties which are condominium conversion
properties;

 

(iv)                not more than 5% of the Collateral Interest Principal
Balance may be related to Mortgaged Properties which are healthcare properties;

 

(v)                   not more than 5% of the Collateral Interest Principal
Balance may be related to Mortgaged Properties which are self-storage
properties; and

 

(vi)                not more than 5% of the Collateral Interest Principal
Balance may be related to Mortgaged Properties which in the aggregate are any
property type other than those specified in clauses (i) through (v) above;

 

(10)                            the Aggregate Collateral Balance of all
Collateral Interests (other than CMBS) backed or otherwise invested in Mortgaged
Properties located in any single U.S. state does not exceed 25% of the

 

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Collateral Interest Principal Balance, except that up to 50% of the Collateral
Interest Principal Balance may relate to New York, up to 40% of the Collateral
Interest Principal Balance may relate to California, up to 35% of the Collateral
Interest Principal Balance may relate to Florida and up to 30% of the Collateral
Interest Principal Balance may relate to Washington D.C.;

 

 (11)                   the Herfindahl Score of the Collateral Interests is at
least 20;

 

(12)                      the aggregate Principal Balance of all Collateral
Interests that represent obligations of any single obligor or group of
affiliated obligors does not exceed 8.5% of the Collateral Interest Principal
Balance;

 

(13)                      the aggregate Principal Balance of all Collateral
Interests that consist of CMBS issued in any single calendar year does not
exceed 75% of the Collateral Interest Principal Balance;

 

(14)                    the aggregate Principal Balance of all Fixed Rate
Collateral Interests does not exceed 20% of the Collateral Interest Principal
Balance; provided that no more than 40% of the Collateral Interests shall
consist of Fixed Rate Collateral Interests if (i) the Issuer enters into
corresponding Hedge Agreements priced at a rate of 4.05% or (ii) Rating Agency
Confirmation is obtained with respect to an additional Fixed Rate Collateral
Interest acquired without a corresponding Hedge Agreement;

 

(15)                    the amount on deposit in the Earn-Out Asset Account does
not exceed 7.5% of the Collateral Interest Principal Balance;

 

(16)                    the aggregate Principal Balance of all Collateral
Interests that provide for the payment of interest less frequently than monthly
does not exceed 10% of the Collateral Interest Principal Balance;

 

(17                          the aggregate Principal Balance of all Collateral
Interests that consist of Floating Rate Collateral Interests does not exceed 90%
of the Collateral Interest Principal Balance;

 

(18)                      the S&P CDO Monitor Test is satisfied; and

 

(19)                      the S&P Minimum Average Recovery Rate Test is
satisfied.

 

Collateral Sub-Account means any sub-account established within an Account.

 

Collection Account means the Securities Account designated the “Collection
Account” and established in the name of the Trustee pursuant to Section 10.5,
including the Collateral Principal Collections Sub-Account.

 

Collections means, with respect to any Payment Date, the sum of (i) the
Collateral Interest Collections collected during the applicable Due Period and
(ii) the Collateral Principal Collections collected during the applicable Due
Period.

 

Commercial Mortgage Loans means commercial mortgage loans whether such
commercial mortgage loans are Collateral Interests or underlie or comprise the
other types of Collateral Interests (as the context may require).

 

Commission means the United States Securities and Exchange Commission.

 

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Controlling Class means the Class A Notes voting as a single Class, so long as
any Class A Notes are Outstanding, then the Class B Notes, so long as any
Class B Notes are Outstanding, then the Class C Notes voting as a single Class,
so long as any Class C Notes are Outstanding, then the Class D Notes, so long as
any Class D Notes are Outstanding, then the Class E Notes, so long as any
Class E Notes are Outstanding, then the Class F Notes, so long as any Class F
Notes are Outstanding and then the Class G Notes, so long as any Class G Notes
are Outstanding, in each case, based on the then Aggregate Outstanding Amount
thereof.

 

Controlling Person any other person (other than a Benefit Plan Investor) that
has discretionary authority or control with respect to the assets of the Issuer,
a person who provides investment advice for a fee (direct or indirect) with
respect to the assets of the Issuer, or any “affiliate” (within the meaning of
29 C.F.R. Section 2510.3-101(f)(3)) of any such person.

 

Corporate Services Agreement means that certain Corporate Services Agreement,
dated as of June 14, 2005, as the same may be amended or supplemented from time
to time, between the Issuer and the Administrator.

 

Corporate Trust Office means the designated corporate trust office of the
Trustee, currently located at:  (i) for note transfer purposes, Wells Fargo
Center, Sixth Street and Marquette Avenue, Minneapolis, Minnesota 66749,
Attention:  CDO Trust Services – N-Star REL CDO IV and (ii) for all other
purposes, 9062 Old Annapolis Road, Columbia, Maryland 21045.  Attention: CDO
Trust Services – N-Star REL CDO IV, telephone number 410-884-2000, fax number
410-715-3748, or such other address as the Trustee may designate from time to
time by notice to the Rated Noteholders, the Income Noteholders, the Collateral
Manager and the Co-Issuers or the principal corporate trust office of any
successor Trustee.

 

Coverage Tests means the Class C Coverage Tests, the Class D Coverage Tests, the
Class E Coverage Tests, the Class F Coverage Tests and the Class G Coverage
Tests.

 

Credit Lease Loans means mortgage loans secured by mortgages on commercial real
estate properties that are subject to a lease to a single tenant.

 

Credit Risk Interest means any Collateral Interest which, in the Collateral
Manager’s reasonable business judgment, has a significant risk of declining in
credit quality or over time may become an Impaired Interest.

 

Cumulative Applicable Periodic Interest Shortfall Amount means the Class C
Cumulative Applicable Periodic Interest Shortfall Amount, Class D Cumulative
Applicable Periodic Interest Shortfall Amount, Class E Cumulative Applicable
Periodic Interest Shortfall Amount, Class F Cumulative Applicable Periodic
Interest Shortfall Amount and Class G Cumulative Applicable Periodic Interest
Shortfall Amount.

 

Cure Advance means, amounts advanced by a Holder of Income Notes pursuant to the
Paying Agency Agreement to permit the Issuer to exercise its right to cure
payment defaults with respect to any Senior Loan related to a Collateral
Interest in accordance with the applicable underlying instrument.

 

Current Portfolio means the portfolio (measured by Principal Balance) of (a) the
Pledged Collateral Interests and the proceeds of the disposition thereof held as
Cash and (b) Eligible Investments purchased with proceeds of the disposition of
Pledged Collateral Interests, existing immediately prior to the sale, maturity
or other disposition of a Pledged Collateral Interest or immediately prior to
the acquisition of a Pledged Collateral Interest, as the case may be.

 

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Custodian has the meaning specified in Section 3.3(a).

 

Daily Official List means the Daily Official List of the Irish Stock Exchange.

 

Deemed Floating Asset Hedge means, with respect to a Fixed Rate Collateral
Interest, an interest rate swap having (i) a notional schedule equal to the
Principal Balance as it is reduced by expected amortization of such Fixed Rate
Collateral Interest over time and (ii) payment dates identical to the Payment
Dates of the Issuer under this Indenture; provided that, (x) at the time of
entry into the Deemed Floating Asset Hedge, (i) the expected principal payments
on the Fixed Rate Collateral Interest comprising a Deemed Floating Rate
Collateral Interest will not extend beyond 10 years after the effective date
thereof and (ii) the scheduled notional amount of such Deemed Floating Asset
Hedge at any time is equal to the expected principal amount of the related Fixed
Rate Collateral Interest (as calculated at such time), (y) the Rating Agencies
and the Trustee are notified prior to the Issuer’s entry into a Deemed Floating
Asset Hedge, and each will be provided with the identity of the proposed hedge
counterparty and copies of the hedge documentation and notional schedule and
(z) such Deemed Floating Asset Hedge is priced at then-current market rates.  In
the event any Deemed Floating Asset Hedge is not a Form-Approved Hedge
Agreement, the Collateral Manager will provide prior written notice to S&P of
the Issuer’s entry into such Deemed Floating Asset Hedge and will obtain Rating
Agency Confirmation from S&P with respect to the entry of the Issuer into such
Deemed Floating Asset Hedge.

 

Deemed Floating Rate Collateral Interest means a Fixed Rate Collateral Interest
the interest rate of which is hedged into a Floating Rate Collateral Interest
using a Deemed Floating Asset Hedge; provided that at the time of entry into the
Deemed Floating Asset Hedge the Average Life of such Deemed Floating Rate
Collateral Interest would not increase or decrease by more than one year from
its expected average life if it were to prepay at either 50% or 150% of its
pricing speed.

 

Deemed Floating Spread means the difference between the stated rate at which
interest accrues on each Fixed Rate Collateral Interest that comprises a Deemed
Floating Rate Collateral Interest (excluding all Impaired Interests and Deferred
Interest PIK Bonds) and the fixed rate that the Issuer agrees to pay on the
Deemed Floating Asset Hedge at the time such swap is executed.

 

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

 

Defaulting Party has the meaning given to such term in the standard form 1992
ISDA Master Agreement (Multicurrency –Cross Border).

 

Defaulted Interest means any interest due and payable in respect of any Class A
Note or any Class B Note or, if no Class A Notes or Class B Notes are
Outstanding, in respect of any Class C Note or, if no Class C Notes are
Outstanding, in respect of any Class D Note, or if no Class D Notes are
Outstanding, in respect of any Class E Note, or if no Class E Notes are
Outstanding, in respect of any Class F Note, or if no Class F Notes are
Outstanding, in respect of any Class G Note and any interest on such Defaulted
Interest that (in each case) is not punctually paid or duly provided for on the
applicable Payment Date (including the applicable Stated Maturity Date) of the
applicable Rated Note.

 

Deferred Interest PIK Bond means a PIK Bond with respect to which interest has
been deferred or capitalized or does not pay interest when scheduled (other than
an Impaired Interest) for each consecutive payment date occurring over a period
of the lesser of (i) six months or (ii) two consecutive payment dates, but only
until such time as payment of interest on such PIK Bond has resumed and all
capitalized and deferred interest and any interest thereon has been paid in cash
in accordance with the terms of the Underlying Instruments.

 

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Deferred Interest PIK Bond Amount means, with respect to each Deferred Interest
PIK Bond in the Collateral, the lesser of (i) the product of the Principal
Balance of such Deferred Interest PIK Bond and the Applicable Recovery Rate of
such Deferred Interest PIK Bond and (ii) the product of the Principal Balance of
such Deferred Interest PIK Bond and the Market Value of such Deferred Interest
PIK Bond.

 

Depositary means, with respect to the Indenture Issued Notes issued in the form
of one or more Global Notes, the Person designated as Depositary pursuant to
Section 2.2(e), or any successor thereto, appointed pursuant to the applicable
provisions of this Indenture.

 

Depositary Participant means a broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depositary effects
book-entry transfers and pledges of notes deposited with the Depositary.

 

Depositor means N-Star REL CDO Depositor Corp. and any successors or assigns, in
its capacity as depositor under the Master Trust Agreement.

 

Deutsche Bank means Deutsche Bank Securities Inc.

 

Distribution means any payment of principal, interest or fee or any dividend or
premium payment made on, or any other distribution in respect of, an obligation
or security.

 

Dollar or U.S.$ means currency of the United States as at the time shall be
legal tender for all debts, public and private.

 

DTC means The Depository Trust Company, a New York corporation, and its nominees
and their respective successors.

 

Due Date means each date on which a Distribution is due on a Pledged Security.

 

Due Period means, with respect to each Payment Date, the period beginning on the
day following the last day of the preceding Due Period relating to the preceding
Payment Date (or, in the case of the Due Period that is applicable to the first
Payment Date, beginning on the Closing Date) and ending at the close of business
on the fourth (4th) Business Day preceding such Payment Date.

 

Earn-Out Asset means, a Collateral Interest that (a) requires the Issuer to make
one or more future advances to the obligor under the Underlying Instruments
relating thereto, subject to satisfaction of conditions precedent therein,
(b) specifies a maximum amount that can be borrowed on one or more fixed
borrowing dates and (c) does not permit the re-borrowing of any amount
previously repaid by the obligor thereof; provided, however, that any such
Earn-Out Asset will be an Earn-Out Asset only until all commitments by the
Issuer to make advances to the obligor thereof expire or are terminated or
reduced to zero.

 

Earn-Out Asset Account means the Securities Account designated the “Earn-Out
Asset Account” and established in the name of the Trustee pursuant to
Section 10.8.

 

Effective Date means the date that is the earliest of (i) the 180th day
following the Closing Date, (ii) the date on which the Issuer has purchased
Collateral Interests with amounts on deposit in the Uninvested Proceeds Account
having an aggregate par amount of U.S.$100,000,000 or (iii) such earlier date
(if any) that is designated by the Collateral Manager by notice to the Trustee
under the Indenture; provided that the Collateral Manager has received Rating
Agency Confirmation on such date; provided, further, that

 

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in the event that such day does not fall on a Business Day, the Effective Date
shall be the next succeeding Business Day.

 

Eligibility Criteria has the meaning specified in Section 12.2.

 

Eligible Investments means any U.S. dollar denominated investment that, at the
time it is delivered to the Trustee, is one or more of the following obligations
or securities, including, without limitation, those investments for which the
Trustee or an Affiliate of the Trustee provides services:

 

(i)                                     cash;

 

(ii)                                  direct Registered obligations of, and
Registered obligations the timely payment of principal of and interest on which
is fully and expressly guaranteed by, the United States of America, or any
agency or instrumentality of the United States of America the obligations of
which are backed by the full faith and credit of the United States of America;

 

(iii)                               demand and time deposits in, interest
bearing trust accounts and certificates of deposit of, bankers’ acceptances
issued by, or federal funds sold by any depository institution or trust company
(including the Trustee) incorporated under the laws of the United States of
America or any state thereof and subject to the supervision and examination by
federal and/or state banking authorities so long as the commercial paper and/or
debt obligations of such depository institution or trust company (or, in the
case of the principal depository institution in a holding company system, the
commercial paper or debt obligations of such holding company) at the time of
such investment or contractual commitment providing for such investment have a
credit rating of:

 

(a)                                  in the case of long-term debt obligations,
not less than “Aa2” by Moody’s and “AAA” by S&P; or

 

(b)                                 in the case of commercial paper and
short-term debt obligations including time deposits, P-1 by Moody’s and “A-1” by
S&P (provided that, in the case of commercial paper and short-term debt
obligations with a maturity of longer than 91 days, the issuer thereof must also
have at the time of such investment a long-term credit rating of not less than
“AA+” by S&P);

 

(iv)                              Registered securities other than
mortgage-backed securities bearing interest or sold at a discount issued by any
corporation under the laws of the United States of America or any state thereof
that have a credit rating of “AA+” by S&P at the time of such investment or
contractual commitment providing for such investment;

 

(v)                                 unleveraged repurchase obligations (if
treated as debt for tax purposes by the issuer) with respect to any security
described in clause (ii) above, entered into with a depository institution or
trust company (acting as principal) described in clause (iii) or entered into
with broker-dealers registered with the Commission (acting as principal) whose
short-term debt has a credit rating of “P-1” by Moody’s and “A-1+” by S&P at the
time of such investment in the case of any repurchase obligation for a security
having a maturity not more than 183 days from the date of its issuance or whose
long-term debt has a credit rating of at least “Aa2” by Moody’s and “AA+” by S&P
at the time of such investment in the case of any repurchase obligation for a
security having a maturity more than 183 days from the date of its issuance;

 

(vi)                              commercial paper or other short-term
obligations having at the time of such investment a credit rating of “P-1” by
Moody’s and “A-1+” by S&P that are registered and are either bearing interest

 

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or are sold at a discount from the face amount thereof and that have a maturity
of not more than 183 days from its date of issuance; provided that in the case
of commercial paper with a maturity of longer than 91 days, the issuer of such
commercial paper (or, in the case of a principal depository institution in a
holding company system, the holding company of such system), if rated by the
Rating Agencies, must have at the time of such investment a long-term credit
rating of at least “Aa2” by Moody’s and “AA+” by S&P;

 

(vii)                           money market funds with respect to any
investments described in clauses (ii) through (vi) above having, at the time of
such investment, a credit rating of not less than “AAA” by Moody’s
“AAA/AAAm/AAAm-G” by S&P (if such funds are rated by S&P), respectively
(including those for which the Trustee is investment manager or advisor),
provided that such fund or vehicle is formed and has its principal office
outside the United States; and

 

(viii)                        any other investments for which Rating Agency
Confirmation is received;

 

provided that (a) Eligible Investments purchased with funds in the Collection
Account will be held until maturity except as otherwise specifically provided
herein and will include only such obligations or securities as mature no later
than the Business Day prior to the Payment Date next succeeding the date of
investment in such obligations or securities, unless such Eligible Investments
are investments of the type described in clause (i) or (iii) above, in which
event such Eligible Investments may mature on such Payment Date and (b) none of
the foregoing obligations or securities will constitute Eligible Investments if
all, or substantially all, of the remaining amounts payable thereunder will
consist of interest and not principal payments, if such security is purchased at
a price in excess of 100% of par, if such security is subject to substantial
non-credit related risk, as determined by the Collateral Manager in its
judgment, if any income from or proceeds of disposition of the obligation or
security is or will be subject to deduction or withholding for or on account of
any withholding or similar tax or, from the time, if any, that the Issuer  is no
longer a Qualified REIT Subsidiary, the acquisition (including the manner of
acquisition), ownership, enforcement or disposition of the obligation or
security will subject the Issuer to net income tax in any jurisdiction outside
its jurisdiction of incorporation.

 

Eligible SPV Jurisdiction means Bahamas, Bermuda, the Cayman Islands, the
Channel Islands, the Netherlands Antilles, Luxembourg or any other similar
jurisdiction (so long as Rating Agency Confirmation is obtained in connection
with the inclusion of such other jurisdiction) generally imposing either no or
nominal taxes on the income of companies organized under the laws of such
jurisdiction.

 

Emerging Market Issuer means a sovereign or non-sovereign issuer located in a
country that is in Latin America, Asia, Africa, Eastern Europe or the Caribbean
or in a country the dollar-denominated sovereign debt obligations of which are
rated lower than “Aa2” by Moody’s and lower than “AA” by S&P; provided that an
issuer of Asset-Backed Securities located in any Eligible SPV Jurisdiction shall
not be an Emerging Market Issuer for purposes hereof if the underlying
collateral of such Asset-Backed Securities consists solely of obligations of
obligors located in the United States and Qualifying Foreign Obligors.

 

Entitlement Holder has the meaning specified in Section 8-102(a)(7) of the UCC.

 

Entitlement Order has the meaning specified in Section 8-102(a)(8) of the UCC.

 

Equity Interest means any security that does not entitle the holder thereof to
receive periodic payments of interest and one or more installments of principal
acquired by the Issuer as a result of the exercise or conversion of Collateral
Interests, in conjunction with the purchase of Collateral Interests or in
exchange for a Collateral Interest.

 

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ERISA means the U.S. Employee Retirement Income Security Act of 1974, as
amended.

 

ERISA Restriction Certificate means the ERISA Restriction Certificate
substantially in the form set forth in Exhibit C-4 hereto.

 

Euroclear means Euroclear Bank S.A/N.V., as operator of the Euroclear system.

 

Event of Default has the meaning specified in Section 5.1.

 

Excepted Property means the U.S.$ 1,000 of capital contributed to the Issuer in
respect of the Issuer’s Ordinary Shares in accordance with the Articles and
U.S.$ 1,000 representing a profit fee to the Issuer.

 

Exchange Act means the United States Securities Exchange Act of 1934, as
amended.

 

Expense Reserve Account means the Securities Account designated the “Expense
Reserve Account” and established in the name of the Trustee pursuant to
Section 10.6.

 

Fee Basis Amount means an amount equal, for any Payment Date, to the average of
the aggregate Collateral Interest Principal Balance (excluding the aggregate
Principal Balance of Impaired Interests) on the first day of the related Due
Period and the aggregate Collateral Interest Principal Balance (excluding the
aggregate Principal Balance of Impaired Interests) on the last day of such Due
Period.

 

Financial Asset has the meaning specified in Section 8-102(a)(9) of the UCC.

 

Financing Statement means a financing statement relating to the Collateral
naming the Issuer as debtor and the Trustee on behalf of the Secured Parties as
secured party.

 

Fixed Rate Collateral Interest means any Collateral Interest which bears a fixed
rate of interest.

 

Fixed Rate Notes means the Class F Notes and Class G Notes.

 

Floating Rate Collateral Interest means any Collateral Interest that bears
interest based upon a floating rate index.

 

Floating Rate Notes means, collectively, the Class A Notes, the Class B Notes,
the Class C Notes, the Class D Notes and the Class E Notes.

 

Form-Approved Hedge Agreement means a Hedge Agreement relating to a specific
Hedge Counterparty with respect to which (a) the related Collateral Interest
could be purchased by the Issuer without any required action by the Rating
Agencies and (b) the documentation of which conforms in all material respects to
a form for which Rating Agency Confirmation was previously obtained (as
certified to the Trustee by the Collateral Manager) for use of such form by the
Issuer; provided that (i) such Form-Approved Hedge Agreement shall not provide
for any upfront payments to be made to any Hedge Counterparty, (ii) any revised
Form-Approved Hedge Agreement with respect to a particular Hedge Counterparty
shall be approved by each of the Rating Agencies at least 10 days prior to the
initial use thereof as evidenced by Rating Agency Confirmation, (iii) any Rating
Agency may withdraw its consent to the use of a particular Form-Approved Hedge
Agreement by written notice to the Trustee, the Collateral Manager and the
relevant Hedge Counterparty (provided that such withdrawal of consent shall not
affect any existing Hedge Agreement entered into with such Hedge Counterparty)
and (iv) the Issuer (or the Collateral Manager on its behalf) shall deliver to
the Trustee and each Rating Agency a copy of each Form-Approved Hedge Agreement
specifying the Hedge Counterparty to which it relates upon

 

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receipt of Rating Agency Confirmation with respect thereto, and the Trustee’s
records (when taken together with any correspondence received from the Rating
Agencies pursuant to clause (ii)) shall be conclusive evidence of such form.

 

GAAP has the meaning specified in Section 6.3(k).

 

Global Notes means the Rule 144A Global Notes and the Regulation S Global Notes.

 

Grant means to grant, bargain, sell, warrant, alienate, remise, demise, release,
convey, assign, transfer, mortgage, pledge, create and grant a security interest
in and right of set-off against, deposit, set over and confirm.  A Grant of the
Pledged Securities, or of any other instrument, shall include all rights, powers
and options (but none of the obligations) of the granting party thereunder,
including the immediate continuing right to claim for, collect, receive and
receipt for principal, interest and fee payments in respect of the Pledged
Securities or such other instruments, and all other amounts 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.

 

Hedge Agreement means the interest rate protection agreement, as amended from
time to time, together with any replacement hedge agreement on substantially
identical terms (or that otherwise satisfies the conditions of Section 16.1),
entered into pursuant to Section 16.1 or a Deemed Floating Asset Hedge.  The
Hedge Agreement shall provide that any amount payable to the Hedge Counterparty
thereunder shall be subject to the Priority of Payments and that any amount
payable upon the early termination or liquidation thereof shall be payable only
on a Payment Date in accordance with the Priority of Payments.

 

Hedge Counterparty means (a) any hedge counterparty (or any permitted assignee
or successor) under a Hedge Agreement that satisfies the Hedge Counterparty
Ratings Requirement and (b) any substitute or additional parties therefore
appointed in accordance with Section 16.1.

 

Hedge Counterparty Collateral Account means each Securities Account designated
the “Hedge Counterparty Collateral Account” and established in the name of the
Trustee pursuant to Section 16.1(d).

 

Hedge Counterparty Ratings Requirement means, with respect to any Hedge Ratings
Determining Party: (a) either (x) the short-term rating of such Hedge Ratings
Determining Party is not lower than “A-1” by Standard & Poor’s or (y) if such
Hedge Ratings Determining Party does not have a short-term rating from
Standard & Poor’s, the long-term rating of such Hedge Ratings Determining Party
by Standard & Poor’s is not lower than “A+” and (b) (x) a rating on the
short-term unsecured, unsubordinated debt obligations of the Hedge Ratings
Determining Party of “P-1” by Moody’s and a rating on the long-term unsecured,
unsubordinated debt obligations of the Hedge Ratings Determining Party of at
least “A1” by Moody’s or (y) if there is no short-term rating by Moody’s, a
rating on the long-term unsecured, unsubordinated debt obligations of the Hedge
Ratings Determining Party of at least “Aa3” by Moody’s; provided, that any
rating shall be reduced by one subcategory to the extent it is on credit watch
with negative implications by Moody’s.

 

Hedge Payment Amount means, with respect to any Hedge Agreement and any Payment
Date, the amount, if any, then payable by the Issuer to such Hedge Counterparty,
including any amounts so payable in respect of a termination of any Hedge
Agreement.

 

Hedge Ratings Determining Party means (a) unless clause (b) applies with respect
to the Hedge Agreement, the Hedge Counterparty or any transferee thereof or
(b) any Affiliate of the Hedge

 

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Counterparty or any transferee thereof that unconditionally and absolutely
guarantees (with the form of such guarantee meeting S&P’s then-current published
criteria with respect to guarantees) the obligations of the Hedge Counterparty
or such transferee, as the case may be, under the Hedge Agreement.  For the
purpose of this definition, no direct or indirect recourse against one or more
shareholders of the Hedge Counterparty or any such transferee (or against any
Person in control of, or controlled by, or under common control with, any such
shareholder) shall be deemed to constitute a guarantee, security or support of
the obligations of the Hedge Counterparty or any such transferee.

 

Hedge Receipt Amount means, with respect to any Hedge Agreement and any Payment
Date, the amount, if any, then payable to the Issuer by the related Hedge
Counterparty, including any amounts so payable in respect of a termination of
any Hedge Agreement.

 

Herfindahl Index means an index calculated by the Collateral Manager by dividing
(i) one by (ii) the sum of, with respect to each Commercial Mortgage Loan
comprising or underlying a Collateral Interest, (x) the principal balance of
such Collateral Interest divided by (y) the aggregate principal balance of all
Collateral Interests, raised to the second power. For purposes of calculating
the Herfindahl Index, all Collateral Interests from a single issue of CMBS shall
be treated as a single Collateral Interest and each $12,000,000 increment of
Cash in any Account shall be treated as a single Collateral Interest.

 

Herfindahl Score means a measurement of the diversity of a pool of loans of
unequal size calculated in accordance with the Herfindahl Index.

 

Highest Auction Price means, in connection with a Redemption, the bid or bids
for the Collateral Interests resulting in the highest auction price of one or
more Subpools of Collateral Interests.

 

Holder or Noteholder means (i) with respect to any Rated Note, any Rated
Noteholder, (ii) with respect to any Income Note, any Income Noteholder and
(iii) with respect to any Indenture Issued Note, any Indenture Issued
Noteholder, as the context may require.

 

Impaired Interests Amount means the sum, with respect to each Impaired Interest
in the Collateral, of the lesser of (i) the product of the Principal Balance of
such Impaired Interest and the Applicable Recovery Rate of such Impaired
Interest and (ii) the product of the Principal Balance of such Impaired Interest
and the Market Value of such Impaired Interest.

 

Impaired Interest means any Collateral Interest or any other security included
in the Collateral which (a) is not a CMBS and foreclosure or a payment default
(whether or not declared) with respect to the related Commercial Mortgage Loan
has occurred or (b) is a CMBS and the published rating from of such Collateral
Interest has been downgraded, qualified or withdrawn by any Rating Agency from
the ratings that were in place as of the Closing Date (or, in the case of
additional Collateral Interests, the date of purchase by the Issuer).

 

Income Note Distribution Account means the account designated the “Income Note
Distribution Account” and established by the PAA Issued Note Paying Agent in the
name of the PAA Issued Note Paying Agent for the benefit of the Issuer pursuant
to the Paying Agency Agreement.

 

Income Note Excess Funds means all remaining Collateral Interest Collections and
Collateral Principal Collections as set forth in Section 11.1(a)(27) and
11.1(b)(23).

 

Income Noteholder means, with respect to any Income Note, the Person in whose
name such Income Note is registered in the Income Note Register.

 

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Income Notes means the U.S.$60,000,000 Income Notes Due 2040.

 

Income Notes Stated Amount means U.S.$60,000,000.

 

Indenture means this instrument and, if from time to time supplemented or
amended by one or more indentures supplemental hereto entered into pursuant to
the applicable provisions hereof, as so supplemented or amended.

 

Indenture Issued Notes means, collectively, the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes, the Class E Notes and the Class F
Notes.

 

Indenture Issued Noteholder means, with respect to any Indenture Issued Note,
the Person in whose name such Note is registered; provided that Beneficial
Owners or Agent Members will have no rights under the Indenture with respect to
Global Notes, and the Indenture Issued Noteholder may be treated by the Issuer
and the Trustee (and any agent of any of the foregoing) as the owner of such
Global Notes for all purposes whatsoever.

 

Independent means, as to any Person, any other Person (including, in the case of
an accountant, or lawyer, a firm of accountants or lawyers and any member
thereof) who (i) does not have and is not committed to acquire any material
direct or any material indirect financial interest in such Person or in any
Affiliate of such Person, (ii) is not connected with such Person as an Officer,
employee, promoter, underwriter, voting trustee, partner, director or Person
performing similar functions and (iii) if required to deliver an opinion or
certificate to the Trustee pursuant to this Indenture, states in such opinion or
certificate that the signer has read this definition and that the signer is
Independent within the meaning hereof. “Independent” when used with respect to
any accountant may include an accountant who audits the books of such Person if
in addition to satisfying the criteria set forth above the accountant is
independent with respect to such Person within the meaning of Rule 101 of the
Code of Ethics of the American Institute of Certified Public Accountants.

 

Initial Hedge Agreement means the first Hedge Agreement (other than a Deemed
Floating Asset Hedge) entered into by the Issuer in connection with this
transaction; provided that Rating Agency Confirmation is received with respect
thereto.

 

Initial Hedge Counterparty means the Hedge Counterparty with respect to the
Initial Hedge Agreement.

 

Initial Payment Date means the Payment Date occurring in July, 2005.

 

Initial Purchasers means Deutsche Bank Securities Inc, Citigroup Global Markets
Inc. and Wachovia Capital Markets, LLC, each as an initial purchaser of the
Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes and the
Class E Notes.

 

Instrument has the meaning specified in Section 9-102(a)(47) of the UCC.

 

Interest Advance has the meaning specified in Section 10.17.

 

Interest Coverage Amount means, as of any Measurement Date, an amount equal to
(i) the amount received or scheduled to be received as Collateral Interest
Collections during the related Due Period, less (ii) the amounts scheduled to be
paid on the related Payment Date pursuant to Section 11(a)(1) through (3) and
(to the extent not covered by Section 11(a)(1) through (3))
Section 11(b)(1) and, for purposes of calculating the Interest Coverage Ratios,
any amounts scheduled to be paid to the Interest Reserve Account on the related
Payment Date pursuant to Section 11.1(a)(6); provided that (a) following the
date

 

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on which a Collateral Interest becomes an Impaired Interest, scheduled
Collateral Interest Collections shall not include any amount scheduled to be
received on Impaired Interests or any amount scheduled to be received on
securities that are currently deferring interest until (1) such amounts are
actually received in Cash or (2) the cumulative aggregate amounts actually
received on an Impaired Interest exceed the Principal Balance of such Impaired
Interest, (b) the expected interest income on Floating Rate Collateral Interests
and Eligible Investments shall be calculated using the then-current interest
rate applicable thereto and (c) with respect to any Written Down Interest, the
Interest Coverage Amount shall exclude any interest accrued on any Written Down
Amount.

 

Interest Coverage Ratio means, on any Measurement Date for any Class of Notes,
the ratio (expressed as a percentage) of (x) to (y), where (x) is equal to the
Interest Coverage Amount as of such Measurement Date and where (y) is the sum of
the Periodic Interest for such Class and each Senior Class of Notes for the
Payment Date immediately following such Measurement Date; provided that the
Interest Coverage Amount shall be calculated after giving effect to any
scheduled payment to the Interest Reserve Account for the Payment Date
immediately following such Measurement Date.

 

Interest Coverage Test means, for any Class of Notes Outstanding, a test that is
satisfied as of any Measurement Date when the applicable Interest Coverage Ratio
is equal to or greater than the applicable Required Coverage Rates.

 

Interest Only Security means any security that by its terms provides for
periodic payments of interest and does not provide for the repayment of a stated
principal amount.

 

Interest Period means (i) with respect to the Initial Payment Date, the period
from and including the Closing Date to but excluding the Initial Payment Date
and (ii) thereafter with respect to each Payment Date, the period beginning on
the first day following the end of the preceding Interest Period and ending on
(and including) the day before the next Payment Date.

 

Interest Reserve Account means the account established by the Trustee, held in
the name of the Trustee for the benefit and on behalf of the Secured Parties and
into which the Trustee will deposit, on each Payment Date, the Interest Reserve
Amount, if any, in accordance with the Priority of Payments.

 

Interest Reserve Amount means, as of any Calculation Date, the sum of (i) the
aggregate Quarterly Pay Security Interest Reserve Amounts and (ii) the aggregate
amount of Semi-Annual Pay Security Interest Reserve Amounts.

 

Investment Advisers Act means the United States Investment Advisers Act of 1940,
as amended.

 

Investment Company Act means the U.S. Investment Company Act of 1940, as
amended, and the rules thereunder.

 

Irish Listing Agent means NCB Stockbrokers Limited.

 

Irish Paying Agent means NCB Stockbrokers Limited.

 

Issue means Collateral Interests issued by the same issuer secured by the same
collateral pool.

 

Issuer means N-Star REL CDO IV Ltd., an exempted company incorporated and
existing under the law of the Cayman Islands, unless a successor Person shall
have become the Issuer pursuant to the applicable provisions of this Indenture,
and thereafter “Issuer” shall mean such successor Person.

 

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Issuer Order and Issuer Request mean, respectively, a written order or a written
request, which may be in the form of a standing order or request in each case
dated and signed in the name of the Issuer (or, as expressly provided herein,
the Collateral Manager on its behalf) by an Authorized Officer of the Issuer
(or, as expressly provided herein, the Collateral Manager) and (if
appropriate) the Co-Issuer, as the context may require or permit.

 

LIBOR means, with respect to each Interest Period (other than the first Interest
Period), a floating rate equal to the London interbank offered rate for
one-month U.S. Dollar deposits determined in the manner described in Schedule B.
LIBOR for the first Interest Period is 3.25358%.

 

LIBOR Calculation Date has the meaning specified in Schedule B.

 

Listed Bidders has the meaning specified in Schedule E.

 

London Banking Day has the meaning specified in Schedule B.

 

Majority means (a) with respect to any Class or Classes of Rated Notes, the
Holders of more than 50% of the Aggregate Outstanding Amount of the Rated Notes
of such Class or Classes of Rated Notes, as the case may be and (b) with respect
to Income Notes, the Holders of more than 50% Income Notes Stated Amount.

 

Margin Stock means “margin stock” as defined under Regulation U issued by the
Board of Governors of the Federal Reserve System.

 

Market Value means, on any date of determination, the average of three or more
bid-side prices expressed as a percentage of the par amount, obtained from
independent, nationally recognized financial institutions in the relevant market
for one or more Collateral Interests, each unaffiliated with each other and the
Collateral Manager, as certified by the Collateral Manager (to the extent that
such bid-side prices may be obtained by the Collateral Manager using its
commercially reasonable efforts and commercially reasonable business judgment). 
If three or more bid-side prices cannot be so obtained, then the Market Value on
such date of determination will be the lower of two bid-side prices, if two
bid-side prices are obtained in the manner described above, and the sole
bid-side price if only one bid-side price is obtained in the manner described
above.  If no bids can be obtained in the manner described above, the Market
Value will be the price, expressed as a percentage of the par amount, determined
by the Collateral Manager in its commercially reasonable judgment.

 

Master Trust Agreement means that certain Master Trust Agreement, dated as of
June 14, 2005, as the same may be amended or supplemented from time to time,
between the Depositor and the Underlying Trustee.

 

Measurement Date means any of the following:  (a) the Effective Date; (b) any
date after the Effective Date upon which the Issuer disposes or acquires (which
date of acquisition shall be deemed to be the date on which the Issuer enters
into commitments to acquire such Collateral Interest) any Collateral Interest;
(c) each Calculation Date; (d) the last Business Day of each calendar month
(other than the calendar month preceding the month in which a Calculation Date
occurs and any calendar month prior to and including the month in which the
Effective Date occurs); and (e) with reasonable notice to the Issuer, the
Collateral Manager and the Trustee, any other Business Day that any Rating
Agency or Holders of more than 50% of the then Aggregate Outstanding Amount of
any Class of Rated Notes requests to be a “Measurement Date”; provided that if
any such date would otherwise fall on a day that is not a Business Day, the
relevant Measurement Date will be the next succeeding day that is a Business
Day.

 

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Mezzanine Loans means mezzanine loans secured by ownership interests in entities
owning commercial properties.

 

Moneyline Telerate Page 3750 means the display page so designated on Moneyline
Telerate Service (or such other page as may replace that page on that service,
or such other service as may be nominated as the information vendor, for the
purposes of displaying rates comparable to LIBOR).

 

Monitoring Fee means, with respect to each Payment Date, an amount equal to
0.10% per annum of the Fee Basis Amount payable to the Collateral Manager
pursuant to the Collateral Management Agreement.

 

Moody’s means Moody’s Investors Service, Inc. and any successor or successors
thereto.

 

Moody’s Maximum Weighted Average Rating Factor Test means a test that will be
satisfied on any Measurement Date if the Moody’s Tranched Weighted Average
Rating Factor of the Collateral Interests is equal to or less than 4,000.

 

Moody’s Rating means, with respect to any Collateral Interest:

 

(i)                                     if such Collateral Interest is rated by
Moody’s, such rating;

 

(ii)                                  if such Collateral Interest is not rated
by Moody’s, then the Moody’s Rating of such Collateral Interest shall be deemed
to be the rating thereof as may be assigned by Moody’s upon the request of the
Issuer or the Collateral Administrator, provided that the Collateral
Administrator may, consistent with Moody’s published criteria for underwriting
and tranching of commercial real estate loans, use its estimated tranched
ratings for Collateral Interests representing up to 10% of the Collateral
Interest Principal Balance represented by Commercial Mortgage Loans, Subordinate
Mortgage Loan Interests, and Mezzanine Loans; provided that the Collateral
Manager shall submit such Collateral Interests for a Moody’s estimated rating
with 30 days of acquisition;

 

(iii)                               with respect to the CMBS that are CMBS
conduit securities (i.e., CMBS representing interests in a pool of commercial
mortgage loans), if such Collateral Interest is not rated by Moody’s, and no
other security or obligation of the issuer or the obligor is rated by Moody’s
and neither the Issuer nor the Collateral Administrator obtains a Moody’s Rating
for such Collateral Interest pursuant to clause (ii) above, then the Moody’s
Rating of such Collateral Interest may be determined using any one of the
following methods:

 

                                                (a)           if such Collateral
Interest is rated by both S&P and Fitch or if such Collateral Interest is only
rated by either S&P or Fitch but Moody’s has rated other classes in the same
transaction then the Moody’s Rating will be 2 subcategories lower than the
lowest Moody’s equivalent rating then outstanding on the Collateral Interest; or

 

(b)           if such Collateral Interest is only rated by one rating agency,
then the Issuer or the Collateral Administrator on behalf of the Issuer may
request that Moody’s assign a rating for such Collateral Interest, which shall
be such Collateral Interest’s Moody’s Rating.

 

(iv)                              with respect to the Collateral Interests that
are REIT Debt Securities or other corporate debt securities, if such Collateral
Interest is not rated by Moody’s, and no other security or obligation of the
issuer or the obligor is rated by Moody’s and neither the Issuer nor the
Collateral Administrator obtains a Moody’s Rating for such Collateral Interest

 

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pursuant to clause (ii) above, then the Moody’s Rating of such Collateral
Interest may be determined using any one of the following methods:

 

(a)           if such Collateral Interest is rated at least “BBB” by S&P, then
the Moody’s Rating of such Collateral Interest will be one subcategory below the
Moody’s equivalent of the rating assigned by S&P; or

 

(b)           if such Collateral Interest is rated “BB+” or below by S&P, then
the Moody’s Rating of such Collateral Interest will be two subcategories below
the Moody’s equivalent of the rating assigned by S&P.

 

Notwithstanding the foregoing, Collateral Interests representing no more that
20% of the Collateral Interest Principal Balance may be rated pursuant to
clauses (iii) and (iv) above and no single Collateral Interest Principal Balance
that represents more than 5% of the Collateral Interest Principal Balance can be
rated pursuant to clause (iii) or (iv) above.

 

Moody’s Rating Factor means with respect to any Collateral Interest, the number
set forth in the table below opposite the Moody’s Rating of such Collateral
Interest.

 

Moody’s Rating

 

Moody’s Rating Factor

 

Aaa

 

1

 

Aa1

 

10

 

Aa2

 

20

 

Aa3

 

40

 

A1

 

70

 

A2

 

120

 

A3

 

180

 

Baa1

 

260

 

Baa2

 

360

 

Baa3

 

610

 

Ba1

 

940

 

Ba2

 

1,350

 

Ba3

 

1,766

 

B1

 

2,220

 

B2

 

2,720

 

B3

 

3,490

 

Caa1

 

4,770

 

Caa2

 

6,500

 

Caa3

 

8,070

 

Ca or lower

 

10,000

 

 

Moody’s Recovery Rate means, with respect to a Collateral Interest on any
Measurement Date, an amount equal to the percentage for such Collateral Interest
set forth in the Moody’s Recovery Rate Matrix attached as Schedule C hereto) in
(x) the applicable table and (y) the row in such table opposite the Moody’s
Rating (determined in accordance with procedures prescribed by Moody’s for such
Collateral Interest on the date of its purchase by the Issuer or, in the case of
an Impaired Interest, the Moody’s Rating immediately prior to default).

 

Moody’s Tranched Weighted Average Rating Factor means, on any Measurement Date
the number obtained by dividing (i) the sum of the series of products obtained
for any Collateral Interest that by multiplying (a) the tranched principal
balance on such Measurement Date of each such Collateral Interest by (b) its
respective Moody’s Rating Factor on such Measurement Date by (ii) the aggregate
tranched principal balance on such Measurement Date of all Collateral Interests
and rounding the result up to the nearest whole number.

 

Mortgaged Property means the multifamily or commercial property or properties
securing the Commercial Mortgage Loans.

 

Nonrecoverable Advance means any Interest Advance previously made or proposed to
be made which, in the judgment of the Advancing Agent or the Trustee, as
applicable, will not be ultimately recoverable from subsequent payments or
collections with respect to the Collateral Interests.  Any determination of

 

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recoverability by the Advancing Agent or the Trustee, as applicable, shall be
subject to the standard set forth in Section 10.17.

 

Northstar Subsidiary shall have the meaning ascribed to such term in the S&P
Letter.

 

Note Paying Agent means any Person authorized by the Issuer to pay the principal
of or interest on any Indenture Issued Notes on behalf of the Issuer as
specified in Section 7.2.

 

Note Payment Sequence means the application of Collections to pay principal on
the Rated Notes in the following order, in each case until paid in full:
(i) Class A Notes, (ii) Class B Notes, (iii) Class C Notes, (iv) Class D Notes,
(v) Class E Notes, (vi) Class F Notes and (vii) Class G Notes.

 

Note Register and Note Registrar have the respective meanings specified in
Section 2.4(a).

 

Note Transfer Agent has the meaning specified in Section 2.4(a).

 

Note Valuation Report has the meaning specified in Section 10.11(a).

 

Notes means the Rated Notes and the Income Notes.

 

Offer means, with respect to any security, (a) any offer by the issuer of such
security or by any other Person made to all of the holders of such security to
purchase or otherwise acquire such security (other than pursuant to any
redemption in accordance with the terms of the related Underlying Instruments)
or to convert or exchange such security into or for Cash, securities or any
other type of consideration or (b) any solicitation by the issuer of such
security or any other Person to amend, modify or waive any provision of such
security or any related Underlying Instrument.

 

Offering means the offering of the Rated Notes (other than the Class F Notes and
the Class G Notes) under the Offering Circular.

 

Offering Circular means the Offering Circular, prepared and delivered on or
prior to the Closing Date in connection with the offer and sale of the Rated
Notes (other than the Class F Notes and the Class G Notes), as amended or
supplemented from time to time.

 

Officer means, (a) with respect to the Issuer, the Co-Issuer and any
corporation, the Chairman of the Board of Directors (or, with respect to the
Issuer, any director), the President, any Vice President, the Secretary, an
Assistant Secretary, the Treasurer or an Assistant Treasurer of such entity; and
(b) with respect to any bank or trust company acting as trustee of an express
trust or as custodian, any Trust Officer.

 

Opinion of Counsel means a written opinion addressed to the Trustee and each
Rating Agency (each, a Recipient), in form and substance reasonably satisfactory
to each Recipient, of an attorney at law admitted to practice before the highest
court of any state of the United States or the District of Columbia (or the
Cayman Islands, in the case of an opinion relating to the laws of the Cayman
Islands), which attorney may, except as otherwise expressly provided in this
Indenture, be inside or outside counsel for the Issuer or the Co-Issuer, as the
case may be, and which attorney shall be reasonably satisfactory to the
Trustee.  Whenever an Opinion of Counsel is required hereunder, such Opinion of
Counsel may rely on opinions of other counsel who are so admitted and so
satisfactory which opinions of other counsel shall accompany such Opinion of
Counsel and shall either be addressed to each Recipient or shall state that each
Recipient shall be entitled to rely thereon.

 

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Optional Redemption has the meaning specified in Section 9.1(a).

 

Ordinary Shares means the 1,000 ordinary shares, par value U.S.$1.00 per share
issued by the Issuer.

 

Outstanding means with respect to the Notes as of any Measurement Date, any and
all Notes theretofore authenticated and delivered under the Indenture and the
Paying Agency Agreement other than Notes cancelled, redeemed, exchanged or
replaced in accordance with the terms of the Indenture or the Paying Agency
Agreement, as applicable; provided that in determining whether the Holders of
the requisite percentage of Notes have given any direction, notice, consent,
approval or objection, any Notes held or beneficially owned by the Collateral
Manager or any of its Affiliates or by an account or fund for which the
Collateral Manager or any of its Affiliates acts as the investment advisor with
discretionary authority will be disregarded with respect to any vote or consent
relating to the removal, termination, substitution or replacement of the
Collateral Manager or the assignment by the Collateral Manager of its rights and
obligations under the Collateral Management Agreement, except for any
assignments or transfers by the Collateral Manager of its rights and obligations
to Affiliates of the Collateral Manager, subject to any applicable requirements
under the Investment Advisers Act.

 

PAA Issued Note Paying Agent means Wells Fargo Bank, National Association, and
any successors or assigns in its capacity as PAA Issued Note Paying Agent under
the Paying Agency Agreement.

 

PAA Issued Note Paying Agent Expenses means, with respect to any Payment Date,
an amount equal to the sum of all expenses or indemnities incurred by, or
otherwise owing to, the PAA Issued Note Paying Agent during the preceding Due
Period in accordance with the Paying Agency Agreement.

 

PAA Issued Note Paying Agent Fee means, with respect to any Payment Date, for so
long as any Class G Notes or Income Notes remain Outstanding, the fee payable to
the PAA Issued Note Paying Agent in an aggregate amount equal to U.S.$10,000 per
annum.

 

PAA Issued Note Register means, with respect to the Income Notes and the Class G
Notes, the note register maintained by the PAA Issued Note Registrar.

 

PAA Issued Note Registrar means Wells Fargo Bank, National Association, and any
successors or assigns in its capacity as PAA Issued Note Registrar under the
Paying Agency Agreement.

 

PAA Issued Notes means, together, the Class G Notes and the Income Notes.

 

Participation Interests pari passu participation interests in commercial
mortgage loans.

 

Paying Agency Agreement means that certain Paying Agency Agreement, dated as of
June 14, 2005, as the same may be amended or supplemented from time to time,
between the Issuer and the PAA Issued Note Paying Agent.

 

Paying Agents means, together, the Note Paying Agent and the PAA Issued Note
Paying Agent.

 

Payment Account means the Securities Account designated the “Payment Account”
and established in the name of the Trustee pursuant to Section 10.9.

 

Payment Date means the 27th day of each calendar month, or if such day is not a
Business Day, the next succeeding Business Day, commencing in July, 2005 and
ending in July, 2040 or such earlier date upon which all of the Notes are
redeemed as provided herein.

 

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Periodic Interest means the amount of interest payable (i) in respect of each
Class of Floating Rate Notes, calculated with respect to each such Class for the
relevant Interest Period by multiplying the Applicable Periodic Interest Rate by
the Aggregate Outstanding Amount of the related Class at the close of business
on the day immediately preceding the relevant Payment Date, multiplying the
resulting figure by the actual number of days in such Interest Period, dividing
by 360 and rounding the resulting figure to the nearest U.S.$0.01 (U.S.$0.005
being rounded upwards), and (ii) in respect of each Class of Fixed Rate Notes,
calculated with respect to each such Class for the relevant Interest Period by
multiplying the Applicable Periodic Interest Rate by the Aggregate Outstanding
Amount of the related Class at the close of the Business Day immediately
preceding the relevant Payment Date, multiplying the resulting figure by (a) for
the first Interest Period, 43 days, and (b) for every other Interest Period, 30
days, dividing by 360 and rounding the resulting figure to the nearest U.S.$0.01
(U.S.$0.005 being rounded upwards).

 

Permitted NS Purchaser means (i) NS CDO Holdings IV, LLC or (ii) NS Advisors,
LLC or any “affiliate” thereof within the meaning of Rule 405 under the
Securities Act that is an “accredited investor” within the meaning of
Rule 501(a) under the Securities Act.

 

Person means any individual, corporation, partnership, limited liability
partnership, limited liability company, joint venture, association, joint stock
company, trust (including any beneficiary thereof), unincorporated organization
or government or any agency or political subdivision thereof or any similar
entity.

 

PIK Bond means any security that, pursuant to the terms of the related
Underlying Instruments, permits the payment of interest thereon to be deferred
or capitalized as additional principal thereof or not pay interest when
scheduled (but without being an Impaired Interest) or that issues identical
securities in lieu of payments of interest in Cash.

 

Plan Asset Regulation  means the U.S. Department of Labor regulation at 29
C.F.R. Section 2510.3-101.

 

Pledged Collateral Interest means as of any date of determination, any
Collateral Interest that has been Granted to the Trustee and has not been
released from the lien of this Indenture pursuant to Section 10.12.

 

Pledged Securities means on any date of determination, (a) the Collateral
Interests, Equity Interests and the Eligible Investments that have been Granted
to the Trustee and (b) all non-Cash proceeds thereof, in each case, to the
extent not released from the lien of this Indenture pursuant hereto.

 

Principal Balance means, with respect to any Collateral Interest or Eligible
Investment, as of any date of determination, the outstanding principal amount of
such Collateral Interest or Eligible Investment; provided that the Principal
Balance of (i) any Collateral Interest which permits the deferral or
capitalization of interest will not include any outstanding balance of the
deferred and/or capitalized interest, (ii) any Equity Interest will be zero,
(iii) any putable Collateral Interest which matures after the Stated Maturity
Date will be the lower of the put price and the outstanding principal amount,
(iv) any Collateral Interest or Eligible Investment in which the Trustee does
not have a first priority perfected security interest shall be deemed to be zero
and (v) the Principal Balance of an Earn-Out Asset will be the outstanding
principal balance of such Earn-Out Asset, plus any undrawn commitments that have
not been irrevocably reduced with respect to such Earn-Out Asset; provided,
further, that for purposes of calculating the Principal Coverage Amount, an
appraisal reduction of a Collateral Interest will be assumed to result in an
implied reduction of Principal Balance for such Collateral Interest only if such
appraisal reduction is intended to reduce the interest payable on such
Collateral Interest and only in proportion to such interest reduction.

 

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Principal Coverage Amount means, on any Measurement Date, an amount equal to
(i) the aggregate Principal Balance of all Collateral Interests (other than
Impaired Interests, Written Down Interests and Deferred Interest PIK Bonds)
included in the Collateral on such date, plus (ii) the aggregate Principal
Balance of the Eligible Investments in the Collateral Account on such date that
represent Collateral Principal Collections, plus (iii) the Impaired Interests
Amount, plus (iv) with respect to Written Down Interests, the Reduced Principal
Balance, plus (v) the Deferred Interest PIK Bond Amount.  For purposes of
calculating the Principal Coverage Amount, any Collateral Interest that has
sustained an implied reduction of Principal Balance due to an appraisal
reduction will not be considered an Impaired Interest solely due to such implied
reduction.

 

Principal Coverage Ratio means, on any Measurement Date for any Class of Notes,
the ratio (expressed as a percentage) based on the ratio of (x) to (y), where
(x) is the Principal Coverage Amount as of such Measurement Date and (y) is the
sum of the aggregate principal amount of such as class and each Senior Class of
Notes as of such Measurement Date.

 

Principal Coverage Test means, for any Class of Notes Outstanding, a test
satisfied on any Measurement Date if the applicable Principal Coverage Ratio as
of such Measurement Date is equal to or greater than the applicable Required
Coverage Rates.

 

Principal Prepayments means, following any failure of any Coverage Test as of
any Calculation Date, amounts that would otherwise be used (i) for payments of
Income Note Excess Funds, (ii) for the purchase of additional Collateral
Interests, (iii) for the payment of certain fees and expenses, (iv) in the case
of a failure to satisfy any Coverage Test for any Class of Notes, for interest
payments on each Subordinate Class of Notes, in each case to the extent
necessary to satisfy such Coverage Test as of the related Calculation Date, to
principal payments on each Class of Notes, starting with the most senior
Class of Notes then Outstanding, until such Coverage Test is satisfied as of the
related Calculation Date or the Notes are paid in full.

 

Priority of Payments means, collectively, the priority of payments specified in
Section 11.1(a), (b) and (c) or upon an Event of Default, the priority of
payments in connection therewith.

 

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

 

Proposed Portfolio means the portfolio (measured by Principal Balance) of
(a) the Pledged Collateral Interests and the proceeds of disposition thereof
held as Cash, (b) Uninvested Proceeds held as Cash and (c) Eligible Investments
purchased with Uninvested Proceeds or the proceeds of disposition of Pledged
Collateral Interests resulting from the sale, maturity or other disposition of a
Pledged Collateral Interest or a proposed purchase of a Collateral Interest, as
the case may be.

 

Purchased Accrued Interest means all payments of interest received, or amounts
collected that are attributable to interest received on Collateral Interests and
Eligible Investments, to the extent such payments or amounts constitute accrued
interest purchased with Collateral Principal Collections except for interest
accrued on Collateral Interests prior to the Closing Date.

 

Qualified Bidder List means a list of not less than three Persons that are
Independent from one another and the Issuer prepared by the Collateral Manager
and delivered to the Trustee prior to an Auction, as may be amended and
supplemented by the Collateral Manager from time to time upon written notice to
the Trustee; provided that (i) the Qualified Bidder List may include the
Collateral Manager as a Qualified Bidder if it is Independent from the other
Persons on such list and (ii) any such notice referred to above shall only be
effective on any Auction Date if it was received by the Trustee at least two
Business Days prior to such Auction Date.

 

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Qualified Bidders means the Persons whose names appear from time to time on the
Qualified Bidder List.

 

Qualified Institutional Buyer has the meaning given in Rule 144A under the
Securities Act.

 

Qualified Institutional Lender means a qualified institutional lender of the
type typically permitted to acquire subordinate interests in commercial mortgage
loans (all or a portion of which will be included in a CMBS transaction)
pursuant to the documents creating such interests.

 

Qualified Purchaser means (i) a “qualified purchaser” as defined in
Section 2(a)(51) of the Investment Company Act and the rules thereunder, (ii) a
“knowledgeable employee” with respect to the Issuer as defined in rule 3c-5
under the Investment Company Act or (iii) a company beneficially owned
exclusively by one or more “qualified purchasers” and/or “knowledgeable
employees” with respect to the Issuer.

 

Qualified REIT Subsidiary means a “Qualified REIT Subsidiary” within the meaning
of Section 856(i)(2) of the Code.

 

Qualifying Foreign Obligor means a corporation, partnership or other entity
organized or incorporated under the law of any of Australia, Canada, France,
Germany, Ireland, Italy, New Zealand, Sweden, Switzerland or the United Kingdom,
so long as the unguaranteed, unsecured and otherwise unsupported long-term
Dollar sovereign debt obligations of such country are rated “Aa2” or better by
Moody’s and “AA” or better by S&P.

 

Quarterly Pay Security means a security that provides for periodic payments of
interest in cash quarterly.

 

Quarterly Pay Security Interest Reserve Amount means, with respect to each
Collateral Interest that is a Quarterly Pay Security, as of any Calculation
Date, the amount equal to (i) the amount of interest paid by the obligor on the
most recent payment date (or, if no payment date has occurred, the estimated
interest payment due on the first payment date) with respect to such Quarterly
Pay Security multiplied by (ii) (A) the number of months until the next payment
date with respect to such Quarterly Pay Security minus one (rounded up to the
nearest whole number) divided by (B) three; provided that for any Quarterly Pay
Security with respect to which no scheduled interest payments remain, the
Quarterly Pay Security Interest Reserve Amount shall be zero.

 

Rake Bond means a CMBS backed solely by a single promissory note secured by a
mortgaged property, which promissory note is subordinate in right of payment to
one or more separate promissory notes secured by the same mortgaged property.

 

Ramp-Up Period means the period commencing on the Closing Date and ending on the
Effective Date.

 

Rated Note Calculation Agent has the meaning specified in Section 7.15.

 

Rated Notes means, collectively, the Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes, the Class F Notes and the
Class G Notes.

 

Rated Noteholder means, with respect to any Rated Note, the Person in whose name
such Note is registered; provided that Beneficial Owners or Agent Members will
have no rights under the Indenture with respect to Global Notes, and the Rated
Noteholder may be treated by the Issuer and the Trustee (and any agent of any of
the foregoing) as the owner of such Global Notes for all purposes whatsoever.

 

Rating means, as the context requires, an S&P Rating or a Moody’s Rating.

 

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Rating Agency means each of (i) Moody’s, for so long as any of the Outstanding
Rated Notes are rated by Moody’s (including any private or confidential
rating) and (ii) S&P, for so long as any of the Outstanding Rated Notes are
rated by Moody’s (including any private or confidential rating) or, with respect
to Pledged Securities generally, if at any time Moody’s or S&P ceases to provide
rating services, any other nationally recognized investment rating agency
selected by the Issuer (upon consultation with the Collateral Manager) and
reasonably satisfactory to a Majority of each Class of Rated Notes.  In the
event that at any time Moody’s ceases to be a Rating Agency, references to
rating categories of Moody’s in this Indenture shall be deemed instead to be
references to the equivalent categories of such other rating agency as of the
most recent date on which such other rating agency and Moody’s published ratings
for the type of security in respect of which such alternative rating agency is
used.  In the event that at any time S&P ceases to be a Rating Agency,
references to rating categories of S&P in this Indenture shall be deemed instead
to be references to the equivalent categories of such other rating agency as of
the most recent date on which such other rating agency and S&P published ratings
for the type of security in respect of which such alternative rating agency is
used.

 

Rating Agency Confirmation means, with respect to any specified action or
determination, for so long as any of the Rated Notes are Outstanding and rated
by Moody’s or S&P, the receipt of written confirmation by each Rating Agency
rating any Rated Notes, that such specified action or determination will not
result in the reduction or withdrawal or other adverse action with respect to
their then-current ratings on the Rated Notes (including any private or
confidential rating) unless Rating Agency Confirmation is specified herein to be
required by only Moody’s or S&P, in which case such Rating Agency Confirmation
will be sufficient.

 

Rating Confirmation has the meaning specified in Section 7.18(e).

 

Rating Confirmation Failure has the meaning specified in Section 7.18(e).

 

Real Estate CDO Securities means securities that entitle the holders thereof to
receive payments that depend on the cash flow from or the credit exposure to a
portfolio consisting primarily of (i) REIT Debt Securities, (ii) commercial
mortgage backed securities or (iii) a combination of the foregoing; provided
that such dependence may in addition be conditioned upon rights or additional
assets designed to assure the servicing or timely distribution of proceeds to
holders of the Real Estate CDO Securities such as a financial guaranty insurance
policy.

 

Record Date means the date on which the Holders of Rated Notes entitled to
(i) vote with respect to any matters under the Indenture are determined, such
date being the 15th day (whether or not a Business Day) prior to the date the
Trustee delivers notice with respect to such vote and (ii) receive a payment in
respect of principal or interest on the succeeding Payment Date or Redemption
Date are determined, such date as to any Payment Date or Redemption Date with
respect to any Global Note being the first day (whether or not a Business Day)
prior to such Payment Date or Redemption Date and with respect to any
Certificated Note being the fifteenth day (whether or not a Business Day) prior
to such Payment Date or Redemption Date.

 

Redemption means an Optional Redemption, an Auction Call Redemption or a Tax
Redemption.

 

Redemption Date means the Payment Date upon which the Rated Notes are redeemed
pursuant to an Optional Redemption, an Auction Call Redemption or a Tax
Redemption.

 

Redemption Date Statement has the meaning specified in Section 10.11(b).

 

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Redemption Premium The premium payable to Holders of each Class of Fixed Rate
Notes in connection with an Optional Redemption of such Class of Fixed Rate
Notes in an amount equal to the excess, if any, of (i) the present value
(discounted to the applicable Redemption Date using the Reinvestment Yield on a
monthly basis using a 360-day year of twelve 30-day months as the discount
rate) of the remaining payments of interest and principal due on such Class of
Fixed Rate Notes, assuming that the entire outstanding principal amount of such
Class of Fixed Rate Notes will be paid on the Payment Date occurring in
July 2017 and that each intervening payment of interest on such Class of Fixed
Rate Notes will be made on the related Payment Date in its entirety (and
therefore there is no Defaulted Interest on such Class of Fixed Rate Notes) over
(ii) the outstanding principal amount of such Class of Fixed Rate Notes on the
applicable Redemption Date.

 

Redemption Price means, (i) with respect to each Class of Rated Notes, (a) their
then Aggregate Outstanding Amount plus (b) accrued interest thereon to the date
of redemption to the extent not already paid (including, without limitation, any
Cumulative Applicable Periodic Interest Shortfall Amount together with interest
thereon) plus (c) unreimbursed Interest Advances plus (d) in the case of an
Optional Redemption only and with respect to any Fixed Rate Notes, the
applicable Redemption Premium and (ii) if the Income Notes are redeemed, the
“Redemption Price” for the Income Notes, means an amount equal to the aggregate
of any residual amounts distributable on the Income Notes in respect of such
redemption pursuant to Section 11.1(a) and (b).

 

Redemption Spread means, with respect to the Class F Notes, 5.75% and with
respect to the Class G Notes, 6.50%.

 

Reduced Principal Balance means, with respect to each Written Down Interest, the
original Principal Balance of such Written Down Interest minus the Written Down
Amount as notified by or on behalf of the related issuer or trustee to the
holders of such Written Down Interest (including appraisal reductions on CMBS).

 

Reference Banks has the meaning specified in Schedule B.

 

Registered means in registered form for U.S. federal income tax purposes and
issued after July 18, 1984; provided that a certificate of interest in a trust
that is treated as a grantor trust for U.S. federal income tax purposes will not
be treated as Registered unless each of the obligations or securities held by
the trust was issued after that date.

 

Registered Form has the meaning specified in Section 8-102(a)(13) of the UCC.

 

Regulation S means Regulation S under the Securities Act.

 

Regulation S Certificated Note has the meaning specified in
Section 2.4(b)(1)(vi).

 

Regulation S Global Note has the meaning specified in Section 2.1(a).

 

Regulation S Note has the meaning specified in Section 2.1(a).

 

Regulation S Transfer Certificate has the meaning specified in
Section 2.4(b)(1)(iii).

 

Regulation U means Regulation U of the Board of Governors of the Federal Reserve
System, 12 C.F.R. § 221, or any successor regulation.

 

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Reimbursement Rate means a per annum rate equal to the “prime rate” as published
in the “Money Rates” section of the Wall Street Journal, as such “prime rate”
may change from time to time.

 

Reinvestment Criteria means, with respect to any reinvestment of Collateral
Principal Payments, the following criteria:

 

(i)            the Collateral Quality Tests are satisfied, or, if any Collateral
Quality Test was not satisfied immediately prior to such investments, such
Collateral Quality Test will be maintained or improved following such
reinvestment;

 

(ii)           the Coverage Tests are satisfied, or, if any Coverage Test was
not satisfied immediately prior to such investments, such Coverage Test will be
maintained or improved following such reinvestment;

 

(iii)          if immediately prior to such reinvestment the Moody’s Maximum
Weighted Average Rating Factor Test was not satisfied, the weighted average of
the Moody’s Rating Factors of the Substitute Collateral Interests purchased with
Sale Proceeds from the Collateral Interests being replaced will be no higher
than the weighted average of the Moody’s Rating Factors of such Collateral
Interests at the time they were released for sale by the Trustee;

 

(iv)          if immediately prior to such reinvestment the Weighted Average
Spread Test was not satisfied, the Weighted Average Spread of the Substitute
Collateral Interests purchased with Sale Proceeds from the Collateral Interests
being replaced will be no lower than the Weighted Average Spread of such
Collateral Interests at the time they were released for sale by the Trustee; and

 

(v)           no Event of Default has occurred and is continuing.

 

Reinvestment Period means the period beginning on the Closing Date and ending on
and including the Payment Date in July, 2010.

 

Reinvestment Yield means with respect to either class of the Fixed Rate Notes,
the rate equal to the sum of the Redemption Spread with respect to such Fixed
Rate Note and the applicable yield to maturity implied by (i) the yields
reported as of 10:00 a.m. (New York City time) on the tenth Business Day
preceding the related Optional Redemption Date on the display page designated as
“Page 678” on the Telerate Service (or such other display as may replace
Page 678 on the Telerate Service) for actively traded U.S. Treasury securities
having a maturity as nearly as practicable equal to the Payment Date occurring
in July 2017 or (ii) if such yields are not reported as of such time or the
yields reported as of such time are not ascertainable, the Treasury Constant
Maturity Series Yields reported, for the latest day for which such yields have
been so reported as of the tenth Business Day preceding the Optional Redemption
Date, in Federal Reserve Statistical Release H.15 (519) (or any comparable
successor publication) for actively traded U.S. Treasury securities having a
constant maturity as nearly as practicable equal to the Payment Date occurring
in July 2017.

 

REIT Debt Securities means securities issued by a real estate investment trust
(as defined in Section 856 of the Code or any successor provision) whose assets
consist (except for rights or other assets designed to assure the servicing or
timely distribution of proceeds to holders of such securities) of a portfolio of
real property interests.

 

Relevant Jurisdiction means, as to any obligor on any Collateral Interest, any
jurisdiction (a) in which the obligor is incorporated, organized, managed and
controlled or considered to have its seat, (b) where an office through which the
obligor is acting for purposes of the relevant Collateral Interest is located,
(c) in

 

36

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which the obligor executes Underlying Instruments or (d) in relation to any
payment, from or through which such payment is made.

 

Repository means the internet-based password protected electronic repository of
transaction documents relating to privately offered and sold collateralized debt
obligation securities located at www.cdolibrary.com and maintained by the Bond
Market Association.

 

Required Coverage Ratio means, with respect to a specified Class of Notes and
the related Interest Coverage Test or Principal Coverage Test, as the case may
be, as of any Calculation Date, the applicable percentage indicated below
opposite such specified Class or Classes:

 

Class

 

Principal Coverage Test

 

Interest Coverage Test

 

Class C

 

137.00

%

135.00

%

Class D

 

132.10

%

125.00

%

Class E

 

119.40

%

118.00

%

Class F

 

114.90

%

115.00

%

Class G

 

110.00

%

110.00

%

 

Requisite Noteholders means the Holders of 662/3% or more of the then Aggregate
Outstanding Amount of (i) the Class A Notes, so long as any Class A Notes remain
Outstanding, (ii) thereafter the Class B Notes so long as any Class B Notes
remain Outstanding, (iii) thereafter the Class C Notes so long as any Class C
Notes remain Outstanding, (iv) thereafter the Class D Notes so long as any
Class D Notes remain Outstanding, (v) thereafter the Class E Notes so long as
any Class E Notes remain Outstanding, (vi) thereafter the Class F Notes so long
as any Class F Notes remain Outstanding and (vii) thereafter the Class G Notes
so long as any Class G Notes remain Outstanding.

 

Reserved Matters has the meaning specified in Section 8.2(j).

 

Rule 144A means Rule 144A under the Securities Act.

 

Rule 144A Certificated Note has the meaning specified in Section 2.4(b)(1)(vi).

 

Rule 144A Global Note has the meaning specified in Section 2.1(b).

 

Rule 144A Information means such information as is specified pursuant to
Rule 144A(d)(4) under the Securities Act (or any successor provision thereto).

 

Rule 144A Note has the meaning specified in Section 2.1(b).

 

Rule 144A Transfer Certificate has the meaning specified in
Section 2.4(b)(1)(ii).

 

S&P means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and any successor or successors thereto.

 

S&P CDO Monitor means the dynamic, analytical computer model provided by S&P to
the Collateral Manager and the Trustee (together with such instructions and
assumptions as are necessary to run such model) on or prior to the Effective
Date used to determine the credit risk of a portfolio of Collateral Interests,
as may be modified by S&P from time to time.

 

S&P CDO Monitor Test means the test which is satisfied, as of any Calculation
Date, if each of the Class A Note Default Differential, the Class B Note Default
Differential, the Class C Note Default

 

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Differential, the Class D Note Default Differential, the Class E Note Default
Differential, the Class F Note Default Differential and the Class G Note Default
Differential of the Current Portfolio or the Proposed Portfolio, as applicable,
is positive.  The S&P CDO Monitor Test will be considered to be improved if the
Class A Note Default Differential of the Proposed Portfolio is greater than the
Class A Note Default Differential of the Current Portfolio, the Class B Note
Default Differential of the Proposed Portfolio is greater than the Class B Note
Default Differential of the Current Portfolio, the Class C Note Default
Differential of the Proposed Portfolio is greater than the Class C Note Default
Differential of the Current Portfolio, the Class D Note Default Differential of
the Proposed Portfolio is greater than the Class D Note Default Differential of
the Current Portfolio, the Class E Note Default Differential of the Proposed
Portfolio is greater than the Class E Note Default Differential of the Current
Portfolio, the Class F Note Default Differential of the Proposed Portfolio is
greater than the Class F Note Default Differential of the Current Portfolio, and
the Class G Note Default Differential of the Proposed Portfolio is greater than
the Class G Note Default Differential of the Current Portfolio.

 

S&P Industry Classification Group means any of the S&P industrial classification
groups as set forth on Schedule H and any additional classification groups
established by S&P with respect to the Collateral Interests and provided, in
each case, by the Collateral Manager or S&P to the Trustee.

 

S&P Letter means that certain letter dated December 10, 2004, from S&P to
Northstar Capital (as predecessor in interest to Northstar Realty Finance
Corp.).

 

S&P Minimum Average Recovery Rate means, as of any date or determination, a rate
expressed as a percentage equal to the number obtained by (i) summing the
products obtained by multiplying the Principal Balance of each Collateral
Interest by its S&P Recovery Rate set forth in a schedule of the Indenture and
(ii) dividing such sum by the Collateral Interest Principal Balance less cash
and Eligible Investments representing Collateral Principal Collections and
(iii) rounding up to the first decimal place.

 

S&P Minimum Average Recovery Rate Test means a test that will be satisfied as of
any Measurement Date if the S&P Minimum Average Recovery Rate is greater than or
equal to (i) 27.30% with respect to the Class A Notes, (ii) 27.60% with respect
to the Class B Notes, (iii) 27.70% with respect to the Class C Notes,
(iv) 29.90% with respect to the Class D Notes, (v) 29.90% with respect to the
Class E Notes, (vi) 31.20% with respect to the Class F Notes and (vii) 32.50%
with respect to the Class G Notes.

 

S&P’s Preferred Format means an electronic spreadsheet file to be provided to
S&P, which file shall include the following information, if available (to the
extent such information is not confidential) with respect to each Collateral
Interest: (a) the name and country of domicile of the issuer thereof and the
particular issue held by the Issuer, (b) the CUSIP or other applicable
identification number associated with such Collateral Interest, (c) the par
value of such Collateral Interest, (d) the type of issue (including, by way of
example, whether such Collateral Interest is a bond, loan or asset-backed
security), using such abbreviations as may be selected by the Trustee, (e) a
description of the index or other applicable benchmark upon which the interest
payable on such Collateral Interest is based (including, by way of example,
fixed rate, step-up rate, zero coupon and LIBOR), (f) the coupon (in the case of
a Collateral Interest which bears interest at a fixed rate) or the spread over
the applicable index (in the case of a Collateral Interest which bears interest
at a floating rate), (g) the S&P Industry Classification Group for such
Collateral Interest, (h) the Stated Maturity Date of such Collateral Interest,
(i) the S&P Rating of such Collateral Interest or the issuer thereof, as
applicable, (j) the priority category assigned by S&P to such Collateral
Interest, if available and (k) such other information as the Trustee may
determine to include in such file.

 

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S&P Rating means a rating of any Collateral Interest determined as follows:

 

(a)                                  if S&P has assigned a rating to such
Collateral Interest either publicly or privately (in the case of a private
rating, with the written consent of the issuer of such Collateral Interest for
use of such private rating and delivery of a copy of such consent to S&P), the
S&P Rating shall be the rating assigned thereto by S&P; provided that, solely
for purposes of determining compliance with the S&P CDO Monitor Test, if such
Collateral Interest is placed on a watch list for possible upgrade or downgrade
by S&P, the S&P Rating applicable to such Collateral Interest shall be one
rating subcategory above or below, respectively, the S&P Rating applicable to
such Collateral Interest immediately prior to such Collateral Interest being
placed on such watch list;

 

(b)                                 if such Collateral Interest is not rated by
S&P but the Issuer or the Collateral Manager on behalf of the Issuer has
requested that S&P assign a rating to such Collateral Interest, the S&P Rating
shall be the rating so assigned by S&P; provided that pending receipt from S&P
of such rating, if such Collateral Interest is not eligible for notching in
accordance with a Schedule G hereto, such Collateral Interest shall have a S&P
Rating of “CCC-,” otherwise such S&P Rating shall be the rating assigned
according to Schedule F hereto until such time as S&P shall have assigned a
rating thereto; or

 

(c)                                  if any Collateral Interest is a Collateral
Interest that has not been assigned a rating by S&P and is not a Collateral
Interest listed in Schedule G hereto, as identified by the Collateral Manager,
refer to Schedule F hereto to determine the S&P Rating; provided that (i) if any
Collateral Interest shall, at the time of its purchase by the Issuer, be listed
for a possible upgrade or downgrade on either Moody’s or S&P’s then current
credit rating watch list, then the S&P Rating of such Collateral Interest shall
be one subcategory above or below, respectively, the rating then assigned to
such item in accordance with Schedule F hereto; (ii) for purposes of determining
compliance with S&P CDO Monitor Test, if the rating assigned to such Collateral
Interest pursuant to this subparagraph (c) is placed on a watch list for
possible upgrade or downgrade by any Rating Agency, the S&P Rating applicable to
such Collateral Interest shall be one rating subcategory above or below,
respectively, the S&P Rating applicable to such Collateral Interest immediately
prior to such Collateral Interest being placed on such watch list and (iii) the
aggregate Principal Balance that may be given a rating based on this
subparagraph (iii) may not exceed 20% of the aggregate Principal Balance of all
Collateral Interests; provided that if any Collateral Interest has not been
assigned a rating by S&P and is a type of Collateral Interest not listed on
Schedule G hereto, subsequent to the Closing Date, (A) the acquisition of any
such Collateral Interest will require an estimate or shadow rating from S&P, the
assignment of an S&P Recovery Rate to such Collateral Interest and receipt of
Rating Agency Confirmation from S&P prior to the acquisition by the Issuer of
such Collateral Interest or (B) the Collateral Administrator may use the
tranched ratings determined in accordance with Schedule I for Collateral
Interests represented by Commercial Mortgage Loans, Subordinate Mortgage Loan
Interests and Mezzanine Loans representing up to 20% of the Collateral Interests
Principal Balance;

 

notwithstanding the foregoing, if any Collateral Interest shall, at the time of
its purchase by the Issuer, be listed for a possible upgrade or downgrade on the
then current S&P credit rating watch list, then the S&P Rating of such
Collateral Interest shall be one subcategory above or below, respectively, the
rating then assigned to such item by S&P, as applicable; provided that if such
Collateral Interest is removed from such list at any time, it shall be deemed to
have its then-current actual rating by S&P.

 

39

--------------------------------------------------------------------------------

 

S&P Recovery Rate means, with respect to a Collateral Interest on any
Calculation Date, an amount equal to the percentage for such Collateral Interest
set forth in the S&P Recovery Rate Matrix attached as a Schedule D (determined
in accordance with procedures prescribed by S&P for such Collateral Interest on
such Calculation Date or, in the case of Impaired Interests, the S&P Rating
immediately prior to default).

 

Sale has the meaning specified in Section 5.17(a).

 

Sale Proceeds means all proceeds (including accrued interest) received with
respect to Collateral Interests and Equity Interests as a result of sales of
such Collateral Interests and Equity Interests pursuant to the Indenture, net of
any reasonable amounts expended by the Collateral Manager or the Trustee in
their good faith determination in connection with such sale or disposition.

 

Schedule of Collateral Interests means the list of Collateral Interests securing
the Indenture Issued Notes that is attached as Schedule A.

 

Scheduled Distribution means, with respect to any Pledged Security, for each Due
Date, the scheduled payment in Cash of principal and/or interest and/or fees due
on such Due Date with respect to such Pledged Security, determined in accordance
with the assumptions specified in Section 1.2.

 

Second Currency has the meaning specified in Section 14.13.

 

Secured Parties means the Trustee, for the benefit of the Rated Noteholders
(other than the Class G Noteholders) and the Collateral Manager.

 

Securities Account has the meaning specified in Section 8-501(a) of the UCC.

 

Securities Act means the U.S. Securities Act of 1933, as amended.

 

Securities Intermediary has the meaning specified in Section 8-102(a)(14) of the
UCC.

 

Security has the meaning specified in Section 8-102(a)(15) of the UCC.

 

Seller means NRFC DB Holdings, LLC and its successors or assigns, in its
capacity as seller under the Asset Transfer Agreement or any other seller of
Collateral Interests acquired by the Issuer or the Underlying Trustee after the
Closing Date.

 

Semi-Annual Pay Security means a security that provides for periodic payments of
interest in Cash semi-annually.

 

Semi-Annual Pay Security Interest Reserve Amount means, with respect to each
Collateral Interest that is a Semi-Annual Pay Security, as of any Calculation
Date, the amount equal to (i) the amount of interest paid by the obligor on the
most recent payment date (or if no payment date has occurred, the estimated
interest payment due on the first payment date) with respect to such Semi-Annual
Pay Security multiplied by (ii) (A) the number of months until the next payment
date with respect to such Semi-Annual Pay Security minus one (rounded up to the
nearest whole number) divided by (B) six; provided that for any Semi-Annual Pay
Security with respect to which no scheduled interest payments remain, the
Semi-Annual Pay Security Interest Reserve Amount shall be zero.

 

Senior Collateral Management Fee means with respect to each Payment Date, a
senior fee equal to the sum of (a) the Monitoring Fee and (b) the Senior
Structuring Fee payable to the Collateral Manager pursuant to the Collateral
Management Agreement; provided that the Senior Collateral Management Fee

 

40

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will be payable on each Payment Date only to the extent of funds available for
such purpose in accordance with the Priority of Payments.  Any unpaid Senior
Collateral Management Fee will be deferred and paid on the next succeeding
Payment Date to the extent funds are available for such purpose.  Any unpaid
Senior Collateral Management Fee that is deferred due to the operation of the
Priority of Payments will not accrue interest.  Any Senior Collateral Management
Fee accrued but not paid prior to the resignation or removal of the Collateral
Manager shall continue to be payable to the Collateral Manager on the Payment
Date immediately following the effectiveness of such resignation or removal.

 

Senior Interests means the interests in a Commercial Mortgage Loan which rank
senior in priority to the Subordinate Mortgage Loan Interests in the same
Commercial Mortgage Loan.

 

Senior Notes means, with respect any Class of Notes (other than the Class A
Notes) the Class or Classes of Notes with a prior alphabetical designation.

 

Senior Structuring Fee means, with respect to each Payment Date, an amount equal
to 0.04875% per annum of the Fee Basis Amount payable to the Collateral Manager
pursuant to the Collateral Management Agreement.

 

Servicing Agreement means that certain Servicing Agreement, dated as of June 14,
2005, as the same may be amended or supplemented from time to time, between
Wachovia Bank, National Association as servicer and Wells Fargo Bank, National
Association as underlying trustee.

 

Special Amortization Pro Rata Condition means a condition that will be satisfied
with respect to any Payment Date on which either: (A) (I) the aggregate
Collateral Interest Principal Balance as of the related Calculation Date is at
least equal to 50% of the aggregate Collateral Interest Principal Balance on the
Closing Date, (II) the Collateral Quality Tests are satisfied, (III) no
Principal Coverage Test is failing as of such Payment Date and (IV) no Principal
Coverage Test has previously failed for two or more Calculation Dates unless, as
of the related Payment Date, the Principal Coverage Ratio related to such
Principal Coverage Test equals or exceeds the related Principal Coverage Ratio
in existence on the Closing Date; or (B) if clause (A) above is not satisfied,
Rating Agency Confirmation has been provided by Moody’s and S&P with respect to
the pro rata payment of principal of the Rated Notes.

 

Specified Currency has the meaning specified in Section 14.13.

 

Specified Person has the meaning specified in Section 2.5(a).

 

Specified Place has the meaning specified in Section 14.13.

 

Specified Types means any Trust Certificate, CMBS, Real Estate CDO Security and
REIT Debt Security.

 

Stated Maturity Date means the Payment Date occurring in July 2040.

 

Subordinate Collateral Management Fee means the fee payable to the Collateral
Manager at a per annum rate in arrears on each Payment Date pursuant to the
Collateral Management Agreement, in an amount (as certified by the Collateral
Manager to the Trustee) equal to 0.20% of the Fee Basis Amount for such Payment
Date; provided that the Subordinate Collateral Management Fee will be payable on
each Payment Date only to the extent of funds available for such purpose in
accordance with the Priority of Payments.  Any unpaid Subordinate Collateral
Management Fee will be deferred and paid on the next succeeding Payment Date to
the extent funds are available for such purpose.  Any unpaid Subordinate
Collateral Management Fee that is deferred due to the operation of the Priority
of Payments will not accrue interest.  Any Subordinate Collateral Management Fee
accrued but not paid prior to the resignation

 

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or removal of the Collateral Manager shall continue to be payable to the
Collateral Manager on the Payment Date immediately following the effectiveness
of such resignation or removal.

 

Subordinate Mortgage Loan Interests means subordinate interests in commercial
mortgage loans (including subordinate participation interests in commercial
mortgage loans) and subordinate commercial mortgage loans.

 

Subpool means each of the groups of the Collateral Interests designated by the
Collateral Manager in accordance with the Auction Procedures on which the Listed
Bidders may provide a separate bid in an Auction.

 

Substitute Collateral Interest means a debt obligation meeting the Eligibility
Criteria acquired by or on behalf of the Issuer with Collateral Principal
Proceeds or Sale Proceeds that are reinvested in accordance with the provisions
of the Indenture.

 

Synthetic Security means any swap transaction, debt security, security issued by
a trust or similar vehicle or other investment, the returns on which (as
determined by the Collateral Manager) are linked to the credit performance of a
reference obligation, but which may provide for a different maturity, payment
date, interest rate, credit exposure or other credit or non-credit related
characteristics from such reference obligation.

 

Taxed Collateral Interest has the meaning specified in Section 7.7(e).

 

Taxes means any present or future taxes, duties, assessments or governmental
charges of whatsoever nature imposed, levied, collected, withheld or assessed by
any governmental authority having power to tax.

 

Tax Event means an event that will occur if (i) any obligor or withholding agent
is, or on the next scheduled payment date under any Collateral Interest, will
be, required to deduct or withhold from any payment under any Collateral
Interest to the Issuer (other than any commitment fee with respect to the
unfunded portion of any Earn-Out Assets) for or on account of any tax for
whatever reason and such obligor or withholding agent is not required to pay to
the Issuer such additional amount as is necessary to ensure that the net amount
actually received by the Issuer (free and clear of taxes, whether assessed
against such obligor or the Issuer) will equal the full amount that the Issuer
would have received had no such deduction or withholding been required, (ii) any
jurisdiction imposes net income, profits, or similar tax on the Issuer,
(iii) the Issuer being required to deduct or withhold from any payment under a
Hedge Agreement for or on account of any tax and the Issuer being obligated to
make a gross up payment (or otherwise pay additional amounts) to the Hedge
Counterparty or (iv) a Hedge Counterparty being required to deduct or withhold
from any payment under a Hedge Agreement for or on account of any tax for
whatever reason if such Hedge Counterparty is not required to pay to the Issuer
such additional amount as is necessary to ensure that the net amount actually
received by the Issuer (free and clear of taxes, whether assessed against such
obligor or the Issuer) will equal the full amount that the Issuer would have
received had no such deduction or withholding been required, and the sum of the
amount of (i) such a tax or taxes imposed on the Issuer or withheld from
payments to the Issuer to the extent the Issuer receives less than the full
amount that the Issuer would have received had no such deduction occurred and
(ii) such gross up payments required to be made by the Issuer to the extent they
exceed the amounts that the Issuer would have been required to pay had no
deduction or withholding been required, in the aggregate, equals ten percent
(10%) or more of the amount of aggregate interest payments on all of the related
Collateral Interests during the related Due Period.

 

Tax Redemption has the meaning specified in Section 9.1(b).

 

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Tax Subsidiary has the meaning specified in Section 7.7(e).

 

Tenant Lease Loan Interests means commercial mortgage-backed securities that
entitle the holders thereof to receive payments that depend on the cash flow
from a pool of commercial mortgage loans made to finance the acquisition,
construction and improvement of properties primarily leased to tenants engaged
in a business (or on the cash flow from such leases), the underwriting of which
is dependent primarily on the creditworthiness of the related tenants; provided
that such dependence may in addition be conditioned upon rights or additional
assets designed to assure the servicing or timely distribution of proceeds to
holders of the commercial mortgage-backed securities such as a financial
guaranty insurance policy.

 

Transaction Documents means the Indenture, the Collateral Management Agreement,
the Account Control Agreement, the Corporate Services Agreement, the Collateral
Administration Agreement, any Hedge Agreement and the Paying Agency Agreement.

 

Trust Certificate means one or more trust certificates each of which represents
an ownership interest in the Underlying Trust created pursuant to the Master
Trust Agreement, which are secured by Subordinate Mortgage Loan Interests,
Mezzanine Loans, Participation Interests, Commercial Mortgage Loans, Credit
Lease Loans and/or Tenant Lease Loan Interests.

 

Trust Officer means, when used with respect to the Trustee, any Officer within
the Corporate Trust Office working on the transaction described in this
Indenture and (or any successor group of the Trustee) authorized to act for and
on behalf of the Trustee, including any vice president, assistant vice president
or other Officer of the Trustee customarily performing functions similar to
those performed by the persons who at the time shall be such Officers,
respectively, or to whom any corporate trust matter is referred at the Corporate
Trust Office because of such person’s knowledge of and familiarity with the
particular subject.

 

Trustee means Wells Fargo Bank, National Association, and any successors or
assigns, in its capacity as trustee under this Indenture.

 

Trustee Expenses means, with respect to any Payment Date, an amount equal to the
sum of all expenses or indemnities incurred by or otherwise owing to the Trustee
during the preceding Due Period in accordance with the Indenture, other than the
Trustee Fee, including, without limitation, any expenses or indemnities incurred
by the Trustee (and the Bank) in any of its capacities (including in its
capacity as Collateral Administrator, Calculation Agent, Note Paying Agent, PAA
Issued Note Paying Agent and Registrar).

 

Trustee Fee means, with respect to any Payment Date, the fee payable to the
Trustee in an aggregate amount equal to 0.02% per annum of the Collateral
Interest Principal Balance as of the first day of the related Due Period;
provided that in no event shall, so long as any Class of Rated Notes remains
Outstanding, such fee be an annual amount less than U.S.$40,000.

 

Trustee Interest Advance Fee means, a per annum fee payable to the Trustee in
accordance with the Priority of Payments on each Payment Date equal to 0.00125%
of the outstanding principal amount of the Class A Notes and the Class B Notes
immediately prior to such Payment Date.

 

UCC means the Uniform Commercial Code as in effect in the State of New York.

 

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Underlying Instrument means the agreement pursuant to which a Pledged Security
has been issued or created and each other agreement that governs the terms of or
secures the obligations represented by such Pledged Security or of which the
holders of such Pledged Security are the beneficiaries.

 

Underlying Trust means the newly formed trust established pursuant to the Master
Trust Agreement.

 

Underlying Trust Expenses means, all reasonable expenses, disbursements and
advances incurred or made by the Underlying Trustee in accordance with any
provision of the Master Trust Agreement or in the administration or the
enforcement of any provision thereof (including the reasonable compensation,
expenses and disbursements of its agents and counsel) including, without
limitation, any amounts in respect of indemnification owed to the Underlying
Trustee pursuant to Section 6.04 of the Master Trust Agreement, but excluding
any overhead or employee expenses of the Underlying Trustee.

 

Underlying Trustee means Wells Fargo Bank, National Association, in its capacity
as underlying trustee pursuant to the Master Trust Agreement, and any successor
or successors thereto.

 

Uninvested Proceeds means, at any time, the net proceeds received by the Issuer
on the Closing Date from the initial issuance of the Rated Notes and Income
Notes, to the extent such proceeds have not theretofore been invested in
Collateral Interests.

 

Uninvested Proceeds Account has the meaning specified in Section 10.4.

 

United States or U.S. means the United States of America, including the States
thereof and the District of Columbia.

 

Unregistered Securities has the meaning specified in Section 5.17(c).

 

U.S. Person has the meaning given in Regulation S under the Securities Act.

 

USA PATRIOT Act means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub.
L. No. 107-56 (2001).

 

Weighted Average Fixed Rate Coupon means, as of any Measurement Date, the sum
(rounded up to the next 0.001%) obtained by (i) multiplying the Principal
Balance of each Fixed Rate Collateral Interest (except Collateral Interests that
are currently deferring interest) held in the portfolio as of such date by the
then-current interest rate, (ii) summing the amounts determined pursuant to
clause (i) for all Fixed Rate Collateral Interests held in the portfolio as of
such date and (iii) dividing such sum by the aggregate Principal Balance of all
Fixed Rate Collateral Interests held in the portfolio as of such date; provided
that for purposes of calculating the Weighted Average Fixed Rate Coupon of
Collateral Interests that are Impaired Interests, the Written Down Amount with
respect to Written Down Interests and Equity Interests will be excluded, except
for those Impaired Interests that at the time of such calculation have fully
become current on all past due interest and scheduled principal and are paying
full current interest in cash pursuant to the terms of their respective
Underlying Instrument.

 

Weighted Average Life means, on any Calculation Date with respect to all
Collateral Interests (excluding any Impaired Interests), the number obtained by
the Collateral Manager by (i) summing the products obtained by multiplying
(a) the Average Life at such time of each Collateral Interest by (b) the
outstanding Principal Balance of such Collateral Interest and (ii) dividing such
sum by the aggregate Principal Balance at such time of all Collateral Interests.

 

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Weighted Average Life Test means a test that shall be satisfied as of any
Measurement Date during any period set forth below if the Weighted Average Life
of all Collateral Interests as of such Measurement Date is less than or equal to
6.5 years.

 

Weighted Average Spread means, as of any Measurement Date, the sum (rounded up
to the next 0.001%) of the number obtained by (i) summing the products obtained
by multiplying (A) for each Floating Rate Collateral Interest (other than any
Impaired Interest, Written Down Interest or Deferred Interest PIK Bond), the
stated spread above LIBOR at which interest accrues on such Collateral Interest
as of such date and, for each Deemed Floating Rate Collateral Interest (other
than any Impaired Interest, Written Down Interest or Deferred Interest PIK
Bond), the Deemed Floating Spread by (B) the Principal Balance of such
Collateral Interest as of such date and (ii) dividing such sum by the aggregate
Principal Balance of all Floating Rate Collateral Interests and all Deemed
Floating Rate Collateral Interests (excluding, in each case, all Impaired
Interests, Written Down Interests and Deferred Interest PIK Bonds, except for
those Impaired Interests that at the time of such calculation have fully become
current on all past due interest and scheduled principal and are paying full
current interest in cash pursuant to the terms of their respective Underlying
Instrument); provided, that for purposes of calculating the Weighted Average
Spread, each Earn-Out Asset will be deemed to be two separate Floating Rate
Collateral Interests:  (I) one with an outstanding principal balance equal to
the funded portion thereof and a stated interest rate spread equal to the funded
spread on such Earn-Out Asset and (II) the other with an outstanding principal
balance equal to the unfunded portion thereof and an assumed stated interest
rate spread equal to the commitment fee of such Earn-Out Asset, less any
withholding tax on such commitment fee.

 

Withholding Tax Interest means a Collateral Interest if:

 

(i)                                     any payments thereon to the Issuer
(other than any commitment fee with respect to the unfunded portion of any
Earn-Out Assets) are subject to withholding tax imposed by any jurisdiction
(other than U.S. backup withholding tax or other similar withholding tax); and

 

(ii)                                  under the underlying documentation with
respect to such Collateral Interest, the issuer of or counterparty with respect
to such Collateral Interest is not required to make “gross-up” payments to the
Issuer that cover the full amount of such withholding tax on an after-tax basis.

 

Written Down Amount means, with respect to each Written Down Interest, the
amount by which the original Principal Balance of such Written Down Interest is
reduced as notified by or on behalf of the related issuer or trustee to the
holders of such Written Down Interest (including appraisal reductions on CMBS).

 

Written Down Interest means any Collateral Interest as to which the aggregate
par amount of such Collateral Interest and all other securities secured by the
same pool of collateral that rank pari passu with or senior in priority of
payment to such Collateral Interest exceeds the aggregate par amount (including
reserved interest or other amounts available for overcollateralization) of all
collateral securing such securities (excluding defaulted collateral); provided
that the Issuer shall immediately send notice to S&P by facsimile and e-mail
upon any Collateral Interest becoming a Written Down Interest.

 

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1.2.  ASSUMPTIONS AS TO COLLATERAL INTERESTS, FEES, ETC.

 

The provisions set forth in this Section 1.2 shall be applied in connection with
all calculations required to be made pursuant to this Indenture with respect to
Scheduled Distributions on any Pledged Security, or any payments on any other
assets included in the Collateral, and with respect to the income that can be
earned on Scheduled Distributions on such Pledged Securities and on any other
amounts that may be received for deposit in the Collection Account.

 

(a)                                  All calculations with respect to Scheduled
Distributions on the Pledged Securities securing the Indenture Issued Notes
shall be made by the Issuer or the Collateral Administrator on behalf of the
Issuer using (in the case of the Collateral Interests) the assumptions that
(i) no Pledged Security defaults or is sold, (ii) prepayment of any Pledged
Security during any month occurs at a rate equal to the average rate of
prepayment during the period of six consecutive months immediately preceding the
current month (or, with respect to any Pledged Security that has not been
outstanding for at least six consecutive calendar months, at the rate of
prepayment assumed at the time of issuance of such Pledged Security), (iii) any
clean-up call with respect to a Pledged Security will be exercised when economic
to the Person or Persons entitled to exercise such call and (iv) no other
optional redemption of any Pledged Security will occur except for those that
have actually occurred or as to which irrevocable notice thereof shall have been
given.

 

(b)                                 For purposes of determining compliance with
the Interest Coverage Tests, except as otherwise specified in the Interest
Coverage Tests, there shall be excluded all payments in respect of Impaired
Interests and Deferred Interest PIK Bonds unless the Trustee or Collateral
Manager has actual knowledge such payments will be made in Cash and will be
received on or before the Due Date therefor and all other scheduled payments
(whether of principal, interest, fees or other amounts) including payments to
the Issuer under any Hedge Agreement, as to which the Trustee or Collateral
Manager has actual knowledge will not be made in Cash or will not be received
when due.  For purposes of calculating the applicable Interest Coverage Ratio:

 

(1)                                  the expected interest income on Collateral
Interests and Eligible Investments and the expected interest payable on the
Rated Notes and amounts, if any, payable under a Hedge Agreement will be
calculated using the interest rates applicable thereto on the applicable date of
determination;

 

(2)                                  accrued original issue discount on Eligible
Investments will be deemed to be a scheduled interest payment thereon due on the
date such original issue discount is scheduled to be paid; and

 

(3)                                  it will be assumed that no principal
payments are made on the Rated Notes during the applicable periods.

 

(c)                                  For each Due Period, the Scheduled
Distribution on any Pledged Security (other than (i) an Impaired Interest,
(ii) a Deferred Interest PIK Bond or (iii) an Equity Interest, which, in each
case except as otherwise provided herein, shall be assumed to have a Scheduled
Distribution of zero and with respect to any Written Down Interest, the Interest
Coverage Amount shall exclude any interest accrued on any Written Down Amount)
shall be the sum of (x) the total amount of payments and collections in respect
of such Pledged Security (including the proceeds of the sale of such Pledged
Security received during the

 

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Due Period) that, if paid as scheduled, will be available in the Collection
Account at the end of the Due Period for payment on the Rated Notes or other
amounts payable pursuant to this Indenture and of certain expenses of the Issuer
and the Co-Issuer plus (y) any such amounts received in prior Due Periods that
were not disbursed on a previous Payment Date (provided that such sum shall be
computed without regard to any amounts excluded from the determination of
compliance with the Coverage Tests pursuant to Section 1.2(b)).

 

(d)                                 Subject to Section 1.2(b), each Scheduled
Distribution receivable with respect to a Pledged Security shall be assumed to
be received on the applicable Due Date, and each such Scheduled Distribution
shall be assumed to be immediately deposited in the Collection Account and,
except as otherwise specified, to earn interest at the Assumed Reinvestment
Rate.  All such funds shall be assumed to continue to earn interest until the
date on which they are required to be available in the Collection Account for
transfer to the Payment Account and application, in accordance with the terms
hereof, to payments of principal of or interest on the Rated Notes or other
amounts payable pursuant to this Indenture.

 

(e)                                  With respect to any Collateral Interest as
to which any interest or other payment thereon is subject to withholding tax of
any Relevant Jurisdiction, each Distribution thereon shall, for purposes of the
Coverage Tests and each Collateral Quality Test, be deemed to be payable net of
such withholding tax unless the issuer thereof or obligor thereon is required to
make additional payments sufficient on an after tax basis to cover any
withholding tax imposed on payments to the Issuer with respect thereto
(including in respect of any such additional payment).  On any date of
determination, the amount of any Scheduled Distribution due on any future date
shall be assumed to be made net of any such uncompensated withholding tax based
upon withholding tax rates in effect on such date of determination.

 

(f)                                    For purpose of determining compliance
with the Interest Coverage Tests, it will be assumed that any amount required to
be paid for taxes, filing and registration fees on the Payment Date immediately
following the relevant Due Period shall be equal to the aggregate amount for
which the Trustee has received an invoice or demand for payment on or prior to
the relevant Measurement Date.

 

(g)                                 Any reference in the definition of “Trustee
Fee,” “Senior Collateral Management Fee” or “Subordinate Collateral Management
Fee” in Section 1.1(a) to an amount calculated with respect to a period at a per
annum rate shall be computed on the basis of a 360 day year of twelve 30-day
months.

 

(h)                                 Unless otherwise specified, test
calculations that evaluate to a percentage will be rounded to the nearest
one-hundredth, and test calculations that evaluate to a number or decimal will
be rounded to the nearest one hundredth.

 

(i)                                     Unless otherwise specified, all
calculations required to be made and all reports which are to be prepared
pursuant to this Indenture with respect to the Collateral Interests, shall be
made on the basis of the date on which the Issuer makes a commitment to acquire
or to sell an asset, as applicable (the trade date), not the settlement date for
such sale.

 

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(j)                                     For the purpose of determining fees
constituting Administrative Expenses payable under the Priority of Payments
hereunder, periods longer or shorter than a one-month period shall be prorated
based on the number of days in such period.

 

1.3.      RULES OF CONSTRUCTION

 

Unless the context otherwise clearly requires:

 

(a)                                  the definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined;

 

(b)                                 whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms;

 

(c)                                  the words “include”, “includes” and
“including” shall be deemed to be followed by the phrase “without limitation”;

 

(d)                                 the word “will” shall be construed to have
the same meaning and effect as the word “shall”;

 

(e)                                  any definition of or reference to any
agreement, statute, instrument or other document herein shall be construed as
referring to such agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein);

 

(f)                                    any reference herein to any Person, or to
any Person in a specified capacity, shall be construed to include such Person’s
successors and assigns or such Person’s successors in such capacity, as the case
may be; and

 

(g)                                 all references in this instrument to
designated “Sections”, “clauses” and other subdivisions are to the designated
Sections, clauses and other subdivisions of this instrument as originally
executed, and the words “herein”, “hereof”, “hereunder” and other words of
similar import refer to this Indenture as a whole and not to any particular
Section, clause or other subdivision.

 

ARTICLE II

 

THE INDENTURE ISSUED NOTES

 

2.1.      FORMS GENERALLY

 

(a)                                  The Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes and the Class E Notes offered and sold in
reliance on Regulation S (each, a Regulation S Note) shall be issued in fully
Registered form without interest coupons substantially in the form of the note
attached as Exhibit A-1 (each, a Regulation S Global Note) with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and such legends as may be applicable thereto, which
shall be deposited with the Trustee at its Corporate Trust Office in
Minneapolis, Minnesota, as custodian for DTC and registered in the name of DTC
or a nominee of DTC, duly executed by the Co-Issuers and authenticated by the
Trustee or the Authenticating Agent as hereinafter provided.  The Aggregate
Outstanding Amount of each Regulation S

 

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Global Note may from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for DTC or its nominee, as the case
may be.

 

(b)                                 The Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes and the Class E Notes and sold in the United
States pursuant to an exemption from the registration requirements of the
Securities Act (Rule 144A Notes) shall be issued in fully Registered form
without interest coupons substantially in the form of the note attached as
Exhibit A-2 (each, a Rule 144A Global Note), with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture and such legends as may be applicable thereto, which shall be
deposited with the Trustee at its Corporate Trust Office, as custodian for DTC
and registered in the name of DTC or a nominee of DTC, duly executed by the
Co-Issuers and authenticated by the Trustee or the Authenticating Agent as
hereinafter provided.  The Aggregate Outstanding Amount of each Rule 144A Global
Note may from time to time be increased or decreased by adjustments made on the
records of the Trustee, as custodian for DTC or its nominee, as the case may be.

 

(c)                                  Regulation S Global Notes and Rule 144A
Global Notes may also be exchanged under the limited circumstances set forth in
Section 2.4 for notes in definitive fully Registered form without interest
coupons (each, a Certificates Class A-E Note), which may be either a Regulation
S Certificated Class A-E Note or a Rule 144A Certificated Class A-E Note, with
such legends as may be applicable thereto, which shall be duly executed by the
Issuer and the Co-Issuer and authenticated by the Trustee or the Authenticating
Agent as hereinafter provided.

 

(d)                                 The Class F Notes offered or sold in the
United States or to U.S. Persons pursuant to Rule 144A or another applicable
exemption from registration under the Securities Act shall be issued in the form
of physical certificates in definitive fully Registered form without interest
coupons substantially in the form of the certificated note attached as Exhibit B
(each, a Certificated Class F Note) with such legends as may be applicable
thereto, which shall be duly executed by the Issuer and authenticated by the
Trustee or the Authenticating Agent as hereinafter provided.

 

(e)                                  The Co-Issuers (in the case of the
Indenture Issued Notes other than the Class F Notes) and the Issuer (in the case
of the Class F Notes) in issuing the Indenture Issued Notes may use “CUSIP” or
“private placement” numbers (if then generally in use), and, if so, the Trustee
will indicate the “CUSIP” or “private placement” numbers of the Indenture Issued
Notes in notices of redemption and related materials as a convenience to
Holders; provided that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Indenture Issued
Notes or as contained in any notice of redemption and related materials.

 

2.2.      AUTHORIZED AMOUNT; APPLICABLE PERIODIC INTEREST RATE; STATED MATURITY
DATE; DENOMINATIONS

 

(a)                                  The aggregate principal amount of Indenture
Issued Notes which may be issued under this Indenture may not exceed
U.S.$320,000,000, excluding Indenture Issued Notes issued upon registration of,
transfer of, or in exchange for, or in lieu of, other Indenture Issued Notes
pursuant to Section 2.4, 2.5 or 8.5.

 

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(b)                                 The Rated Notes shall be divided into seven
Classes having designations, original principal amounts, original Applicable
Periodic Interest Rates and Stated Maturities as follows:

 

Designation

 

Original Principal
Amount

 

Applicable
Periodic Interest
Rate

 

Indenture Issued
Note Stated
Maturity Date

 

Class A Notes

 

U.S.$185,000,000

 

LIBOR + 0.35%

 

2040

 

Class B Notes

 

U.S.$32,600,000

 

LIBOR + 0.45%

 

2040

 

Class C Notes

 

U.S.$31,800,000

 

LIBOR + 0.75%

 

2040

 

Class D Notes

 

U.S.$38,600,000

 

LIBOR + 1.60%

 

2040

 

Class E Notes

 

U.S.$12,000,000

 

LIBOR + 1.75%

 

2040

 

Class F Notes

 

U.S.$20,000,000

 

7.00%

 

2040

 

Class G Notes

 

U.S.$20,000,000

 

7.00%

 

2040

 

 

The Indenture Issued Notes will be issuable in minimum denominations of
U.S.$500,000 and, in each case, only in integral multiples of U.S.$1,000 in
excess of such minimum denominations.  After issuance, (x) an Indenture Issued
Note may fail to be in compliance with the minimum denomination requirement as a
result of the repayment of principal thereon in accordance with the Priority of
Payments and (y) the Class B Notes, the Class C Notes, the Class D Notes, the
Class E Notes or the Class F Notes may fail to be in an amount which is an
integral multiple of U.S.$1,000 due to the addition to the principal amount
thereof of deferred interest.

 

(c)                                  Interest shall accrue on the Aggregate
Outstanding Amount of each Class of Indenture Issued Notes (determined as of the
first day of each Interest Period and after giving effect to any payment of
principal occurring on such day) from the Closing Date and will be payable in
arrears on each Payment Date.  Interest on each Class of Indenture Issued Notes
and interest on Defaulted Interest will be calculated in accordance with the
definition of Periodic Interest.

 

(d)                                 The Indenture Issued Notes shall be
redeemable as provided in Section 9.

 

(e)                                  The Depositary for the Global Notes shall
initially be DTC.

 

(f)                                    The Indenture Issued Notes shall be
numbered, lettered or otherwise distinguished in such manner as may be
consistent herewith, determined by the Authorized Officers of the Co-Issuers (in
the case of the Indenture Issued Notes other than the Class F Notes) and the
Issuer (in the case of the Class F Notes) executing such Indenture Issued Notes
as evidenced by their execution of such Indenture Issued Notes.

 

2.3.      EXECUTION, AUTHENTICATION, DELIVERY AND DATING

 

(a)                                  The Indenture Issued Notes (other than the
Class F Notes) shall be executed on behalf of the Co-Issuers by an Authorized
Officer of each of the Co-Issuers.  The Class F Notes shall be executed on
behalf of the Issuer by an Authorized Officer of the Issuer.  The

 

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signatures of such Authorized Officers on the Indenture Issued Notes may be
manual or facsimile (including in counterparts).

 

(b)                                 Indenture Issued Notes bearing the manual or
facsimile signatures of individuals who were at any time the Authorized Officers
of either of the Co-Issuers shall bind such Person, notwithstanding the fact
that such individuals or any of them have ceased to hold such offices prior to
the authentication and delivery of such Indenture Issued Notes or did not hold
such offices at the date of issuance of such Indenture Issued Notes.

 

(c)                                  At any time and from time to time after the
execution and delivery of this Indenture, the Co-Issuers may deliver Indenture
Issued Notes (other than the Class F Notes) executed by the Co-Issuers and the
Issuer may deliver the Class F Notes executed by the Issuer, to the Trustee or
the Authenticating Agent for authentication, and the Trustee or the
Authenticating Agent, upon Issuer Order, shall authenticate and deliver such
Indenture Issued Notes as provided in this Indenture and not otherwise.

 

(d)                                 Each Indenture Issued Note authenticated and
delivered by the Trustee or the Authenticating Agent to or upon Issuer Order on
the Closing Date shall be dated as of the Closing Date.  All other Indenture
Issued Notes that are authenticated after the Closing Date for any other purpose
under this Indenture shall be dated the date of their authentication.

 

(e)                                  Indenture Issued Notes issued upon
transfer, exchange or replacement of other Indenture Issued Notes shall be
issued in authorized denominations reflecting the original aggregate principal
amount of the Indenture Issued Notes so transferred, exchanged or replaced, but
shall represent only the current Aggregate Outstanding Amount of the Indenture
Issued Notes so transferred, exchanged or replaced.  In the event that any
Indenture Issued Note is divided into more than one Indenture Issued Note in
accordance with this Section 2, the original principal amount of such Indenture
Issued Note shall be proportionately divided among the Indenture Issued Notes
delivered in exchange therefor and shall be deemed to be the original aggregate
principal amount of such subsequently issued Indenture Issued Notes.

 

(f)                                    No Indenture Issued Note shall be
entitled to any benefit under this Indenture or be valid or obligatory for any
purpose, unless there appears on such Indenture Issued Note a certificate of
authentication (the Certificate of Authentication), substantially in the form
provided for herein, executed by the Trustee or by the Authenticating Agent by
the manual signature of one of their Authorized Officers, and such certificate
upon any Indenture Issued Note shall be conclusive evidence, and the only
evidence, that such Indenture Issued Note has been duly authenticated and
delivered hereunder.

 

2.4.      REGISTRATION, TRANSFER AND EXCHANGE OF INDENTURE ISSUED NOTES

 

(a)                                  Registration of Indenture Issued Notes. 
The Trustee is hereby appointed as the registrar hereunder (the Note
Registrar).  The Trustee is hereby appointed as a transfer agent with respect to
the Indenture Issued Notes (the Note Transfer Agent).  The Note Registrar shall
(acting solely for this purpose as agent for the Issuer) keep a register (the
Note Register) at the Corporate Trust Office in which, subject to such
reasonable regulations as it may prescribe, the Note Registrar shall provide for
the registration of Indenture Issued Notes and the registration of transfers of
Indenture Issued Notes.  Upon any resignation or removal of the Note Registrar,
the Issuer (after consultation with the

 

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Collateral Manager) shall propose a replacement for approval by the Holders of a
Majority of the then Aggregate Outstanding Amount of the Notes of the
Controlling Class.  The Co-Issuers may not terminate the appointment of the Note
Registrar or any Note Transfer Agent without the consent of each Holder of
Indenture Issued Notes.

 

Subject to this Section 2.4, upon surrender for registration of transfer of any
Indenture Issued Notes (other than the Class F Notes) at the office or agency of
the Co-Issuers (or in the case of the Class F Notes, the Issuer) to be
maintained as provided in Section 7.2, the Co-Issuers (in the case of the
Indenture Issued Notes other than the Class F Notes) or the Issuer (in the case
of the Class F Notes) shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Indenture Issued Notes of any authorized denomination and of a like
aggregate principal amount.

 

At the option of the Holder, Indenture Issued Notes may be exchanged for
Indenture Issued Notes of like terms, in any authorized denominations and of
like aggregate principal amount, upon surrender of the Indenture Issued Notes to
be exchanged at such office or agency.  Whenever any Indenture Issued Note is
surrendered for exchange, the Co-Issuers (in the case of the Indenture Issued
Notes other than the Class F Notes) or the Issuer (in the case of the Class F
Notes) shall execute and the Trustee shall authenticate and deliver the
Indenture Issued Notes that the Indenture Issued Noteholder making the exchange
is entitled to receive.

 

All Indenture Issued Notes issued and authenticated upon any registration of
transfer or exchange of Indenture Issued Notes shall be the valid obligations of
the Co-Issuers (in the case of the Indenture Issued Notes other than the Class F
Notes) or the Issuer (in the case of the Class F Notes), evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Indenture
Issued Notes surrendered upon such registration of transfer or exchange.

 

Every Indenture Issued Note presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Co-Issuers (in the case of
the Indenture Issued Notes other than the Class F Notes) or the Issuer (in the
case of the Class F Notes) and the Note Registrar duly executed, by the Holder
thereof or his attorney duly authorized in writing.

 

No service charge shall be made to a Holder for any registration of transfer or
exchange of Indenture Issued Notes, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith and delivery charges, if any, not made by regular mail.

 

(b)                                 Transfers of Class A Notes, Class B Notes,
Class C Notes, Class D Notes and Class E Notes

 

(1)                                  Subject to Section 2.4(b)(4), exchanges or
transfers of beneficial interests in a Global Note may be made only in
accordance with the rules and regulations of the Depositary and the transfer
restrictions contained in the legend on such Global Note and exchanges or
transfers of interests in a Global Note may be made only in accordance with the
following:

 

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(i)                                     Subject to Section 2.4(b)(1)(ii) through
(vi), transfers of a Global Note shall be limited to transfers of such Global
Note in whole, but not in part, to nominees of the Depositary or to a successor
of the Depositary or such successor’s nominee.

 

(ii)                                  The Trustee shall cause the exchange or
transfer of any beneficial interest in a Regulation S Global Note for a
beneficial interest in a Rule 144A Global Note upon provision to the Trustee and
the Co-Issuers of a written certification in the form of Exhibit C-1 (a
Rule 144A Transfer Certificate).

 

(iii)                               The Trustee shall cause the exchange or
transfer of any beneficial interest in a Rule 144A Global Note for a beneficial
interest in a Regulation S Global Note upon provision to the Trustee and the
Co-Issuers of a written certification substantially in the form of Exhibit C-2
(a Regulation S Transfer Certificate).

 

(iv)                              An owner of a beneficial interest in a
Regulation S Global Note may transfer such interest in the form of a beneficial
interest in such Regulation S Global Note without the provision of written
certification; provided that (1) such transfer is made to a Person who is not a
U.S. Person in an offshore transaction in reliance on an exemption from the
registration requirements of the Securities Act under Regulation S and (2) the
transferee, by purchase of such interest in such Regulation S Global Note, will
be deemed to have made all representations, warranties and acknowledgements set
forth in the Regulation S Transfer Certificate.

 

(v)                                 An owner of a beneficial interest in a
Rule 144A Global Note may transfer such interest in the form of a beneficial
interest in such Rule 144A Global Note without the provision of written
certification; provided that the transferee, by purchase of such interest in
such Rule 144A Global Note, will be deemed to have made all representations,
warranties and acknowledgements set forth in the Rule 144A Transfer Certificate.

 

(vi)                              In the event Certificated Class A-E Notes are
issued pursuant to Section 2.4(b)(5), the Trustee shall cause the transfer of
(i) any beneficial interest in a Global Note for a Certificated A-E Note that is
a Regulation S Note (a Regulation S Certificated Note), upon provision to the
Trustee and the Issuer of a Regulation S Transfer Certificate or (ii) any
beneficial interest in a Global Note for a Certificated A-E Note that is a
Rule 144A Note (a Rule 144A Certificated Note), upon provision to the Trustee,
the Co-Issuers and the Note Registrar of a Rule 144A Transfer Certificate.

 

(2)                                  Subject to Section 2.4(b)(4), in the event
Certificated Class A-E Notes are issued pursuant to Section 2.4(b)(5), the
Trustee shall cause the transfer of (i) any Certificated A-E Note for a
beneficial interest in a Regulation S Global Note, upon provision to the Trustee
and the Issuer of a Regulation S Transfer Certificate or (ii) any Certificated
A-E Note for a beneficial interest in a Rule 144A Global Note, upon provision to
the Trustee and the Co-Issuers of a Rule 144A Transfer Certificate.

 

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(3)                                  Upon acceptance for exchange or transfer of
a beneficial interest in a Global Note for a Certificated A-E Note, or upon
acceptance for exchange or transfer of a Certificated A-E Note for a beneficial
interest in a Global Note, each as provided herein, the Trustee shall approve
the instruction at the Depositary to adjust the principal amount of such Global
Note on its records to evidence the date of such exchange or transfer and the
change in the principal amount of such Global Note.

 

(4)                                  Subject to the restrictions on transfer and
exchange set forth in this Section 2.4 and to any additional restrictions on
transfer or exchange specified in the Certificated Class A-E Notes, the Holder
of any Certificated A-E Note may transfer or exchange the same in whole or in
part (in a principal amount equal to the minimum authorized denomination or any
larger authorized amount) by surrendering such Certificated A-E Note at the
Corporate Trust Office or at the office of any Note Transfer Agent, together
with (x) in the case of any transfer, an executed instrument of assignment and
(y) in the case of any exchange, a written request for exchange.  Following a
proper request for transfer or exchange, the Trustee shall (provided it has
available in its possession an inventory of Certificated Class A-E Notes),
within five Business Days of such request if made at such Corporate Trust
Office, or within ten Business Days if made at the office of a Note Transfer
Agent (other than the Trustee), authenticate and make available at such
Corporate Trust Office or at the office of such Note Transfer Agent, as the case
may be, to the transferee (in the case of transfer) or Indenture Issued
Noteholder (in the case of exchange) or send by first class mail (at the risk of
the transferee in the case of transfer or Indenture Issued Noteholder in the
case of exchange) to such address as the transferee or Indenture Issued
Noteholder, as applicable, may request, a Certificated A-E Note or Notes, as the
case may require, for a like aggregate principal amount and in such authorized
denomination or denominations as may be requested.  The presentation for
transfer or exchange of any Certificated Note shall not be valid unless made at
the Corporate Trust Office or at the office of a Note Transfer Agent or by a
duly authorized attorney-in-fact.  Beneficial interests in Global Notes shall be
exchangeable for Certificated Class A-E Notes only under the limited
circumstances described in Section 2.4(b)(5).

 

(5)                                  Interests in a Global Note deposited with
or on behalf of the Depositary pursuant to Section 2.1 hereunder shall be
transferred (A) to the Beneficial Owners thereof in the form of Certificated
Class A-E Notes only if such transfer otherwise complies with this Section 2.4
(including Section 2.4(b)(1) and (2) and (1) the Depositary notifies the Issuer
that it is unwilling or unable to continue as Depositary for the Indenture
Issued Notes, (2) the Depositary ceases to be a “clearing agency” registered
under the Exchange Act and a successor Depositary is not appointed by the Issuer
within 90 days of such notice or (3) as a result of any amendment to or change
in the laws or regulations of the Cayman Islands, or of any authority therein or
thereof having power to tax, or in the interpretation or administration of such
laws or regulations which become effective on or after the Closing Date, the
Issuer, the Trustee or any Note Paying Agent becomes aware that it is or will be
required to make any deduction or withholding from any payment in respect of the
Global Notes which would not be required if the Global Notes were not
represented by a global certificate or (B) to the purchaser thereof

 

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in the form of one or more Certificated Notes in accordance with the provisions
of Section 2.4(b)(1).

 

(6)                                  If interests in any Global Note are to be
transferred to the Beneficial Owners thereof in the form of Certificated
Class A-E Notes pursuant to Section 2.4(b)(5), such Global Note shall be
surrendered by the Depositary, or its custodian on its behalf, to the Corporate
Trust Office or to the Note Transfer Agent located in Minneapolis, Minnesota and
the Trustee shall authenticate and deliver without charge, upon such transfer of
interests in such Global Note, an equal aggregate principal amount of
Certificated Notes of authorized denominations.  The Certificated Class A-E
Notes transferred pursuant to this Section 2.4 shall be executed, authenticated
and delivered only in the denominations specified in Section 2.2(b) and
registered in such names as the Depositary shall direct in writing.

 

(7)                                  For so long as one or more Global Notes are
Outstanding:

 

(i)            the Trustee and its directors, officers, employees and agents may
deal with the Depositary for all purposes (including the making of distributions
on, and the giving of notices with respect to, the Global Notes);

 

(ii)           unless otherwise provided herein and subject to
Section 2.4(b)(7)(i) above, the rights of Beneficial Owners shall be exercised
only through the Depositary and shall be limited to those established by law and
agreements between such Beneficial Owners and the Depositary;

 

(iii)          for purposes of determining the identity of and principal amount
of Indenture Issued Notes beneficially owned by a Beneficial Owner, the records
of the Depositary shall be conclusive evidence of such identity and principal
amount and the Trustee may conclusively rely on such records when acting
hereunder;

 

(iv)          the Depositary will make book-entry transfers among the Depositary
Participants of the Depositary and will receive and transmit distributions of
principal of and interest on the Global Notes to such Depositary Participants;
and

 

(v)           the Depositary Participants of the Depositary shall have no rights
under this Indenture under or with respect to any of the Global Notes held on
their behalf by the Depositary, and the Depositary may be treated by the Trustee
and its agents, employees, officers and directors as the absolute owner of the
Global Notes for all purposes whatsoever.

 

(8)           Each holder of a Class A Note, Class B Note, Class C Note, Class D
Note and Class E Note (in each case, or an interest therein) shall represent or
shall be deemed to represent that either (A) it is not, and it is not acquiring
such Note or interest therein on behalf of or with “plan assets” (within the
meaning of Plan Asset Regulation) of, any employee benefit plan (within the
meaning of Section 3(3) of the ERISA) or plan (within the meaning of
Section 4975 of the Code)

 

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subject to ERISA or Section 4975 of the Code (or any materially similar
applicable law (“Similar Law”)), including certain insurance company general
accounts (each, a “Plan”), or (B)(I) such Note is rated investment grade or
better as of the date of acquisition, (II) the holder believes that the Note is
properly treated as indebtedness without substantial equity features for
purposes of the Plan Asset Regulation and agrees to so treat such Note and
(III) the holder’s acquisition, holding and disposition of such Note will not
constitute or result in a non-exempt prohibited transaction under ERISA or
Section 4975 of the Code (or Similar Law).

 

(c)           Transfers of Class F Notes.

 

(1)           If a holder of a beneficial interest in a Certificated Class F
Note wishes at any time to transfer its interest in such Certificated Class F
Note such holder may transfer or cause the transfer of such interest for an
equivalent beneficial interest in one or more such Certificated Class F Notes,
as provided below.  Upon receipt by the Issuer and the Note Registrar of
(A) such holder’s Certificated Class F Note properly endorsed for assignment to
the transferee and (B) a certificate in the form of Exhibit C-3 (a Certificated
Class F Note Transfer Certificate) given by the transferee of such beneficial
interest, the Note Registrar shall cancel such Certificated Class F Note record
the transfer in the Note Register and authenticate and deliver one or more
Certificated Class F Notes bearing the same designation as the related
Certificated Class F Notes endorsed for transfer, registered in the names
specified in the assignment described in clause (A) above, in principal amounts
designated by the transferee (the aggregate of such amounts being the same as
the beneficial interest in the related Certificated Class F Notes surrendered by
the transferor) and in the minimum denominations and integral multiples in
excess thereof.  In addition, the Note Registrar shall not register any transfer
of any Certificated Class F Notes to a proposed transferee that has represented
that it is a Benefit Plan Investor or a Controlling Person if the transfer would
result in Benefit Plan Investors owning 25% or more of the value of the
Certificated Class F Notes outstanding (as determined without regard to
interests held by Controlling Persons, and otherwise contemplated by the
applicable regulations under ERISA) immediately after such transfer, based on
assurances received from investors.  Without limiting the generality of the
forgoing, the Note Registrar shall not register any transfer of Certificated
Class F Notes represented by Regulation S Notes to a proposed transferee of such
Certificated Class F Notes that has represented that it is or may become a
Benefit Plan Investor or a Controlling Person.  Without limiting the generality
of the foregoing, a transfer of beneficial interests in a Certificated Class F
Note will not be permitted unless an ERISA Restriction Certificate substantially
in the form set forth in Exhibit C-4 is obtained from each transferee of a
Certificated Class F Note, for the benefit of the Issuer, the Trustee and the
Initial Purchasers, (i) in the case of a Certificated Class F Note not
represented by a Regulation S Note, regarding whether it is, or is not and will
not be, a Benefit Plan Investor or Controlling Person, or (ii) in the case of a
Certificated Class F Note or represented by a Regulation S Note, to the effect
that it is not and will not be a Benefit Plan Investor or Controlling Person. 
Any purported transfer in violation of the foregoing requirements shall be null
and void ab initio, and the Note Registrar shall not register any such purported
transfer and shall not authenticate and deliver such Certificated Class F Notes.

 

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(2)                                  If a holder of a beneficial interest in one
or more Certificated Class F Notes wishes at any time to exchange its interest
in such related Certificated Class F Notes for an interest in one or more such
Certificated Class F Notes of different principal amounts, such holder may
exchange or cause the exchange of such interest for an equivalent beneficial
interest in the Certificated Class F Notes bearing the same designation as the
related Certificated Class F Notes endorsed for exchange as provided below. 
Upon receipt by the Note Registrar of (A) such holder’s Certificated Class F
Notes properly endorsed for such exchange and (B) written instructions from such
holder designating the number and principal amounts of the applicable
Certificated Class F Notes to be issued (the aggregate principal amounts of such
Certificated Class F Notes being the same as the Certificated Class F Notes
surrendered for exchange), then the Note Registrar shall cancel such
Certificated Class F Notes, record the exchange in the Note Register and
authenticate and deliver one or more Certificated Class F Notes bearing the same
designation endorsed for exchange, registered in the same names as the related
Certificated Class F Notes surrendered by such holder or such different names as
are specified in the endorsement described in clause (A) above, in different
principal amounts designated by such holder (the Class and the aggregate
principal amounts being the same as the beneficial interest in the Certificated
Class F Notes surrendered by such holder), and the minimum denominations and
integral multiples in excess.

 

(d)                                 Denominations; Qualified Purchaser Status. 
No Person may hold a beneficial interest in any Indenture Issued Note except in
a denomination authorized for the Indenture Issued Notes of such Class under
Section 2.2(b).  In addition, no transfer of an Indenture Issued Note (or any
interest therein) may be made to any Person that is a U.S. Person unless such
Person is (A) a Qualified Institutional Buyer and (B) a Qualified Purchaser.  In
addition, no transfer of an Indenture Issued Note (or any interest therein) may
be made to any Person that is a U.S. Person unless such Person (A) was not
formed for the purpose of investing in either of the Co-Issuers (except when
each beneficial owner of the purchaser is a Qualified Purchaser, (B) has
received the necessary consent from its beneficial owners if it is a private
investment company formed before April 30, 1996, (C) is not a broker-dealer that
owns and invests on a discretionary basis less than U.S.$25,000,000 in
securities of unaffiliated issuers, (D) is not a pension, profit, sharing or
other retirement trust fund or plan in which the partners, beneficiaries or
participants, as applicable, may designate the particular investments to be
made, and in a transaction that may be effected without loss of any applicable
Investment Company Act exemption, (E) will provide notice to any subsequent
transferee of the transfer restrictions provided in the legend, (F) will hold
and transfer in a principal amount of not less than U.S.$500,000, for it or for
each account for which it is acting and (G) will provide the Issuer from time to
time such information as it may reasonably request in order to ascertain
compliance with the foregoing.  Any purported transfer that is not in compliance
with this Section 2.4 or the legends on the Indenture Issued Notes will be void
ab initio, and will not operate to transfer any rights to the transferee,
notwithstanding any instructions to the contrary to the Co-Issuers (in the case
of the Indenture Issued Notes other than the Class F Notes) or the Issuer (in
the case of the Class F Notes), the Trustee or any intermediary.  If any
purported transfer of Indenture

 

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Issued Notes or any beneficial interest therein to a purported transferee does
not comply with the requirements set forth in this Section 2.4 or the legends on
the Indenture Issued Notes, then the purported transferor of such Indenture
Issued Notes or beneficial interest therein shall be required to cause the
purported transferee to surrender the Indenture Issued Notes or any beneficial
interest therein in return for a refund of the consideration paid therefor by
such transferee (together with interest thereon) or to cause the purported
transferee to dispose of such Indenture Issued Notes or beneficial interest
promptly in one or more open market sales to one or more persons each of whom
satisfies the requirements of this Section 2.4 and the legends on the Indenture
Issued Notes and such purported transferor shall take, and shall cause such
transferee to take, all further action necessary or desirable, in the judgment
of the Trustee, to ensure that such Indenture Issued Notes or any beneficial
interest therein are held by persons in compliance therewith.

 

(e)                                  Requirement to Sell.

 

(1)                                  If, notwithstanding the restrictions set
forth in this Section 2.4, either of the Co-Issuers (in the case of the
Indenture Issued Notes other than the Class F Notes) or the Issuer (in the case
of the Class F Notes) determines that any beneficial owner of a Rule 144A Note
(A) is a U.S. Person and (B) is not a Qualified Institutional Buyer and also a
Qualified Purchaser, either of the Co-Issuers or the Issuer, as applicable, may
require, by notice to such beneficial owner that such beneficial owner sell all
of its right, title and interest to such Indenture Issued Note (or interest
therein) to a Person that is both (1) a Qualified Institutional Buyer and (2) a
Qualified Purchaser, with such sale to be effected within 30 days after notice
of such sale requirement is given.  If such beneficial owner fails to effect the
transfer required within such 30-day period, (x) upon written direction from the
Issuer, the Trustee shall, and is hereby irrevocably authorized by such
beneficial owner to cause its interest in such Indenture Issued Note to be
transferred in a commercially reasonable sale (conducted by the Trustee in
accordance with Sections 9-610 and 9-611 of the UCC as applied to securities
that are customarily sold on a recognized market or that may decline speedily in
value) to a Person that certifies to the Trustee, in connection with such
transfer, that such Person is both (1) a Qualified Institutional Buyer and (2) a
Qualified Purchaser and (y) pending such transfer, no further payments will be
made in respect of such Indenture Issued Note (or beneficial interest therein)
held by such beneficial owner.

 

(2)                                  If, notwithstanding the restrictions set
forth in this Section 2.4, either of the Co-Issuers (in the case of the
Indenture Issued Notes other than the Class F Notes) or the Issuer (in the case
of the Class F Notes) determines that any beneficial owner of a Regulation S
Note is (A) a U.S. Person or (B) a Benefit Plan Investor or a Controlling Person
(for the purposes of ERISA), either of the Co-Issuers (in the case of the
Indenture Issued Notes other than the Class F Notes) or the Issuer (in the case
of the Class F Notes) may require, by notice to such beneficial owner that such
beneficial owner sell all of its right, title and interest to such Indenture
Issued Note (or interest therein) to a Person that is not (1) a U.S. Person or
(2) a Benefit Plan Investor or a Controlling Person (for the purposes of ERISA),
with such sale to be effected within 30 days after notice of such sale
requirement is given.  If such beneficial owner fails to effect the transfer
required within such 30-day period, (x) upon written direction from the Issuer,
the Trustee shall, and is hereby irrevocably authorized by such beneficial owner
to cause its interest in such Indenture Issued Note to be transferred in a
commercially reasonable sale (conducted by the Trustee in accordance with
Sections 9-610 and 9-611 of the UCC as applied to securities that are
customarily

 

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sold on a recognized market or that may decline speedily in value) to a Person
that certifies to the Trustee, in connection with such transfer, that such
Person is neither (1) a U.S. Person nor (2) a Benefit Plan Investor or a
Controlling Person (for the purposes of ERISA) and (y) pending such transfer, no
further payments will be made in respect of such Indenture Issued Note (or
beneficial interest therein) held by such beneficial owner.

 

(f)                                    Legends.  Any Indenture Issued Note
issued upon the transfer, exchange or replacement of Indenture Issued Notes
shall bear such applicable legend set forth in the relevant Exhibit hereto
unless there is delivered to the Trustee, the Note Registrar and the Co-Issuers
(in the case of the Indenture Issued Notes other than the Class F Notes) or the
Issuer (in the case of the Class F Notes) such satisfactory evidence, which may
include an Opinion of Counsel, as may be reasonably required by any of the
Trustee, the Note Registrar and the Co-Issuers (in the case of the Indenture
Issued Notes other than the Class F Notes) or the Issuer (in the case of the
Class F Notes) to the effect that neither such applicable legend nor the
restrictions on transfer set forth therein are required to ensure that transfers
thereof comply with the provisions of Rule 144A and to ensure that neither of
the Co-Issuers (in the case of the Indenture Issued Notes other than the Class F
Notes) or the Issuer (in the case of the Class F Notes) nor the pool of
Collateral becomes an investment company required to be registered under the
Investment Company Act.  Upon provision of such satisfactory evidence, the
Trustee, at the direction of the Co-Issuers (in the case of the Indenture Issued
Notes other than the Class F Notes) or the Issuer (in the case of the Class F
Notes), shall authenticate and deliver Indenture Issued Notes that do not bear
such applicable legend.

 

(g)                                 Expenses; Acknowledgment of Transfer. 
Transfer, registration and exchange shall be permitted as provided in this
Section 2.4 without any charge to the Indenture Issued Noteholder except for a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith or the expenses of delivery (if any) not made by regular
mail and payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith pursuant to Section 2.4(a).  Registration
of the transfer of a Indenture Issued Note by the Trustee shall be deemed to be
the acknowledgment of such transfer on behalf of the Co-Issuers (in the case of
the Indenture Issued Notes other than the Class F Notes) and the Issuer (in the
case of the Class F Notes).

 

(h)                                 Surrender upon Final Payment.  Upon final
payment due on the date on which all outstanding unpaid principal of a Indenture
Issued Note becomes due and payable as therein or herein provided, whether at
the Stated Maturity Date or by declaration of acceleration, call for redemption
or otherwise, the Holder thereof shall present and surrender such Indenture
Issued Note at the Corporate Trust Office of the Trustee in Minneapolis,
Minnesota.

 

(i)                                     Repurchase and Cancellation of Indenture
Issued Notes.  The Co-Issuers (in the case of the Indenture Issued Notes other
than the Class F Notes) and the Issuer (in the case of the Class F Notes) will
not purchase, redeem, prepay or otherwise acquire, directly or indirectly, any
of the Outstanding Indenture Issued Notes except upon the redemption of the
Indenture Issued Notes in accordance with the terms of this Indenture and the
Indenture Issued Notes.  The Co-Issuers (in the case of the Indenture Issued
Notes other than the Class F Notes) and the Issuer (in the case of the Class F
Notes) will promptly cancel all Indenture Issued Notes acquired by them pursuant
to any payment, purchase, redemption, prepayment or other acquisition of
Indenture Issued Notes pursuant to any

 

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provision of this Indenture and no Indenture Issued Notes may be issued in
substitution or exchange for any such Indenture Issued Notes.

 

(j)                                     Compliance with Transfer Restrictions. 
Notwithstanding anything contained herein to the contrary, neither the Trustee
nor the Note Registrar shall be responsible for ascertaining whether any
transfer complies with the registration provisions of or exemptions from the
Securities Act, applicable state securities laws, the rules of any Depositary,
ERISA, the Code or the Investment Company Act; provided that if a certificate is
specifically required by the express terms of this Section 2.4 to be delivered
to the Trustee or the Note Registrar by a purchaser or transferee of a Indenture
Issued Note, the Trustee or the Note Registrar, as the case may be, shall be
under a duty to receive and examine the same to determine whether the transfer
contemplated thereby substantially complies with the express terms of this
Indenture and shall promptly notify the party delivering the same if such
transfer does not comply with such terms.  To the extent applicable to the
Issuer, the Issuer shall impose additional restrictions to comply with the USA
PATRIOT Act, and any such transfer restrictions shall be binding on each Holder
or Beneficial Owner of a Indenture Issued Note.  The Issuer shall notify the
Trustee and the Note Registrar of the imposition of any such transfer
restrictions.

 

(k)                                  Physical Indenture Issued Notes.  The
Issuer will promptly make available to the Trustee without charge a reasonable
supply of Certificated Notes in definitive, fully Registered Form, without
interest coupons.

 

2.5.      MUTILATED, DEFACED, DESTROYED, LOST OR STOLEN INDENTURE ISSUED NOTES

 

If (a) any mutilated or defaced Indenture Issued Note is surrendered to a Note
Transfer Agent, or if there shall be delivered to either of the Co-Issuers (in
the case of Indenture Issued Notes other than Class F Notes) or the Issuer (in
the case of Class F Notes), the Trustee and the Note Transfer Agent (each, a
Specified Person) evidence to their reasonable satisfaction of the destruction,
loss or theft of any Indenture Issued Note, and (b) there is delivered to the
Specified Persons such security or indemnity as may reasonably be required by
them to save each of them harmless then, in the absence of notice to the
Specified Persons that such Indenture Issued Note has been acquired by a bona
fide purchaser, the Co-Issuers (in the case of the Indenture Issued Notes other
than the Class F Notes) and the Issuer (in the case of the Class F Notes) shall
execute and shall direct the Trustee to authenticate, and upon Issuer Request
the Trustee shall authenticate and deliver, in lieu of any such mutilated,
defaced, destroyed, lost or stolen Indenture Issued Note, a new Indenture Issued
Note of the same Class as such mutilated, defaced, destroyed, lost or stolen
Indenture Issued Note, of like tenor (including the same date of issuance) and
equal principal amount, registered in the same manner, dated the date of its
authentication, bearing interest from the date to which interest has been paid
on the mutilated, defaced, destroyed, lost or stolen Indenture Issued Note and
bearing a number not contemporaneously outstanding.

 

If, after delivery of such new Indenture Issued Note, a bona fide purchaser of
the predecessor Indenture Issued Note presents for payment, transfer or exchange
such predecessor Indenture Issued Note, the Specified Persons shall be entitled
to recover such new Indenture Issued Note from the Person to whom it was
delivered or any Person taking therefrom, and 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 Specified Persons in connection therewith.

 

In case any such mutilated, defaced, destroyed, lost or stolen Indenture Issued
Note has become due and payable, the Co-Issuers (in the case of the Indenture
Issued Notes other than the Class F Notes) and the Issuer (in the case of the
Class F Notes) in their or its (as applicable) discretion may, instead of

 

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issuing a new Indenture Issued Note, pay such Indenture Issued Note without
requiring surrender thereof except that any mutilated Indenture Issued Note
shall be surrendered.

 

Upon the issuance of any new Indenture Issued Note under this Section 2.5, the
Co-Issuers (in the case of the Indenture Issued Notes other than the Class F
Notes) and the Issuer (in the case of the Class F Notes), the Trustee or any
Note Transfer Agent may require the payment by the registered Holder thereof of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith.

 

Every new Indenture Issued Note issued pursuant to this Section 2.5 in lieu of
any mutilated, defaced, destroyed, lost or stolen Indenture Issued Note, shall
constitute an original additional contractual obligation of the Co-Issuers (in
the case of the Indenture Issued Notes other than the Class F Notes) and the
Issuer (in the case of the Class F Notes) and such new Indenture Issued Note
shall be entitled, subject to the second paragraph of this Section 2.5, to all
the benefits of this Indenture equally and proportionately with any and all
other Indenture Issued Notes duly issued hereunder.

 

The provisions of this Section 2.5 are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, defaced, destroyed, lost or stolen Indenture Issued Notes.

 

2.6.      PAYMENT OF PRINCIPAL AND INTEREST; RIGHTS PRESERVED

 

(a)                                  Each Class of Rated Notes shall accrue
interest during each Interest Period applicable to such Class in the manner and
at the Applicable Periodic Interest Rate specified in Section 2.2.  Interest on
each Class of Rated Notes shall be due and payable on each Payment Date;
provided that (i) interest on the Class B Notes is subordinated in right of
payment to the prior payment in full on each Payment Date of the interest due
and payable on the Class A Notes (together with any Defaulted Interest thereon),
(ii) interest on the Class C Notes is subordinated in right of payment to the
prior payment in full on each Payment Date of the interest due and payable on
the Class A Notes (together with any Defaulted Interest thereon) and on the
Class B Notes (together with any Defaulted Interest thereon), (iii) interest on
the Class D Notes is subordinated in right of payment to the prior payment in
full on each Payment Date of the interest due and payable on the Class A Notes
(together with any Defaulted Interest thereon), on the Class B Notes (together
with any Defaulted Interest thereon) and on the Class C Notes (together with any
Defaulted Interest thereon), (iv) interest on the Class E Notes is subordinated
in right of payment to the prior payment in full on each Payment Date of the
interest due and payable on the Class A Notes (together with any Defaulted
Interest thereon), on the Class B Notes (together with any Defaulted Interest
thereon), on the Class C Notes (together with any Defaulted Interest thereon)
and on the Class D Notes (together with any Defaulted Interest thereon),
(v) interest on the Class F Notes is subordinated in right of payment to the
prior payment in full on each Payment Date of the interest due and payable on
the Class A Notes (together with any Defaulted Interest thereon), on the Class B
Notes (together with any Defaulted Interest thereon), on the Class C Notes
(together with any Defaulted Interest thereon), on the Class D Notes (together
with any Defaulted Interest thereon) and on the Class E Notes (together with any
Defaulted Interest thereon), (vi) interest on the Class G Notes is subordinated
in right of payment to the prior payment in full on each Payment Date of the
interest due and payable on the Class A Notes (together with any Defaulted
Interest thereon), on the Class B Notes (together with any Defaulted Interest
thereon), on the

 

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Class E Notes (together with any Defaulted Interest thereon), on the Class D
Notes (together with any Defaulted Interest thereon), on the Class E Notes
(together with any Defaulted Interest thereon) and on the Class F Notes
(together with any Defaulted Interest thereon), and (vii) interest on all Rated
Notes is subordinated in right of payment to the prior payment in full on each
Payment Date of other amounts in accordance with Section 11.1.  Except as
provided in Section 5.5, no payment shall be made by the Co-Issuers hereunder
other than on a Payment Date.

 

So long as any Class A Notes or Class B Notes are Outstanding, any Class C
Applicable Periodic Interest Shortfall Amount shall be deferred and added to the
then Aggregate Outstanding Amount of the Class C Notes and shall not be
considered “due and payable” for the purposes of Section 5.1(a) until the
Payment Date on which funds are available to pay such Class C Applicable
Periodic Interest Shortfall Amount in accordance with Section 11.1.

 

So long as any Class A Notes, Class B Notes or Class C Notes are Outstanding,
any Class D Applicable Periodic Interest Shortfall Amount shall be deferred and
added to the then Aggregate Outstanding Amount of the Class D Notes and shall
not be considered “due and payable” for the purposes of Section 5.1(a) until the
Payment Date on which funds are available to pay such Class D Applicable
Periodic Interest Shortfall Amount in accordance with Section 11.1.

 

So long as any Class A Notes, Class B Notes, Class C Notes or Class D Notes are
Outstanding, any Class E Applicable Periodic Interest Shortfall Amount shall be
deferred and added to the then Aggregate Outstanding Amount of the Class E Notes
and shall not be considered “due and payable” for the purposes of
Section 5.1(a) until the Payment Date on which funds are available to pay such
Class E Applicable Periodic Interest Shortfall Amount in accordance with
Section 11.1.

 

So long as any Class A Notes, Class B Notes, Class C Notes, Class D Notes or
Class E Notes are Outstanding, any Class F Applicable Periodic Interest
Shortfall Amount shall be deferred and added to the then Aggregate Outstanding
Amount of the Class F Notes and shall not be considered “due and payable” for
the purposes of Section 5.1(a) until the Payment Date on which funds are
available to pay such Class F Applicable Periodic Interest Shortfall Amount in
accordance with Section 11.1.

 

So long as any Class A Notes, Class B Notes, Class C Notes, Class D Notes,
Class E Notes or Class F Notes are Outstanding, any Class G Applicable Periodic
Interest Shortfall Amount shall be deferred and added to the then Aggregate
Outstanding Amount of the Class G Notes and shall not be considered “due and
payable” for the purposes of Section 5.1(a) until the Payment Date on which
funds are available to pay such Class G Applicable Periodic Interest Shortfall
Amount in accordance with Section 11.1.

 

(b)                                 The principal of each Rated Note shall be
payable no later than the Stated Maturity Date thereof unless the unpaid
principal of such Rated Note becomes due and payable at an earlier date by
declaration of acceleration, call for redemption or otherwise; provided that:

 

(1)                                  so long as any Class A Notes are
Outstanding, except as provided in Section 9 and Section 11.1(b)(17) and (18),
the payment of principal of the Class B Notes, the Class C Notes, the Class D
Notes, the Class E Notes, the Class F Notes and the Class G Notes to the PAA
Issued Note Paying Agent for payment on the Class G Notes in accordance with the
Paying Agency Agreement (x) may only

 

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occur after principal of the Class A Notes has been paid in full and (y) shall
be subordinated to the payment on each Payment Date of the principal and
interest due and payable on the Class A Notes and other amounts payable in
accordance with Section 11.1;

 

(2)                                  so long as any Class B Notes are
Outstanding, except as provided in Section 9 and Section 11.1(b)(17) and (18),
the payment of principal of the Class C Notes, the Class D Notes, the Class E
Notes, the Class F Notes and the Class G Notes (x) may only occur after
principal of the Class A Notes and Class B Notes has been paid in full and
(y) shall be subordinated to the payment on each Payment Date of the principal
and interest due and payable on the Class B Notes and other amounts payable in
accordance with Section 11.1;

 

(3)                                  so long as any Class A Notes, Class B Notes
or Class C Notes are Outstanding, except as provided in Section 11.1(b)(17) and
(18), the payment of principal of the Class D Notes (x) may only occur after
principal of the Class A Notes, Class B Notes and Class C Notes has been paid in
full and (y) shall be subordinated to the payment on each Payment Date of the
principal and interest due and payable on the Class A Notes, Class B Notes and
Class C Notes and other amounts payable in accordance with Section 11.1;

 

(4)                                  so long as any Class A Notes, Class B
Notes, Class C Notes or Class D Notes are Outstanding, except as provided in
Section 11.1(b)(17) and (18), the payment of principal of the Class E Notes
(x) may only occur after principal of the Class A Notes, Class B Notes, Class C
Notes and Class D Notes has been paid in full and (y) shall be subordinated to
the payment on each Payment Date of the principal and interest due and payable
on the Class A Notes, Class B Notes, Class C Notes and Class D Notes and other
amounts payable in accordance with Section 11.1;

 

(5)                                  so long as any Class A Notes, Class B
Notes, Class C Notes, Class D Notes or Class E Notes are Outstanding, except as
provided in Section 11.1(b)(17) and (18), the payment of principal of the
Class F Notes (x) may only occur after principal of the Class A Notes, Class B
Notes, Class C Notes, Class D Notes and Class E Notes has been paid in full and
(y) shall be subordinated to the payment on each Payment Date of the principal
and interest due and payable on the Class A Notes, Class B Notes, Class C Notes,
Class D Notes and Class E Notes and other amounts payable in accordance with
Section 11.1;

 

(6)                                  so long as any Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes or Class F Notes are
Outstanding, except as provided in Section 11.1(b)(17) and (18), the payment of
principal of the Class G Notes (x) may only occur after principal of the Class A
Notes, Class B Notes, Class C Notes, Class D Notes, Class E Notes and Class F
Notes has been paid in full and (y) shall be subordinated to the payment on each
Payment Date of the principal and interest due and payable on the Class A Notes,
Class B Notes, Class C Notes, Class D Notes, Class E Notes and Class F Notes and
other amounts payable in accordance with Section 11.1.

 

(c)                                  So long as the Coverage Tests are
satisfied, principal will not be payable on any Class of Rated Notes except
(i) upon the occurrence of a Redemption, (ii) in the case of any Class B Notes,
Class C Notes, Class D Notes, Class E Notes, Class F Notes or Class G Notes,

 

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to pay amounts in respect of the Class C Cumulative Applicable Periodic Interest
Shortfall Amount, the Class D Cumulative Applicable Periodic Interest Shortfall
Amount, the Class E Cumulative Applicable Periodic Interest Shortfall Amount,
the Class F Cumulative Applicable Periodic Interest Shortfall Amount or the
Class G Cumulative Applicable Periodic Interest Shortfall Amount, as the case
may be, in accordance with Section 11.1 and (iii) on each Payment Date, in
accordance with Section 11.1.

 

(d)                                 As a condition to the payment of any
principal of or interest on any Rated Note without the imposition of withholding
tax, any Note Paying Agent shall require the previous delivery of properly
completed and signed applicable U.S. federal income tax certifications
(generally, an Internal Revenue Service Form W-9 (or applicable successor form)
in the case of a person that is a “United States person” within the meaning of
Section 7701(a)(30) of the Code or an Internal Revenue Service Form W-8 (or
applicable successor form) in the case of a person that is not a “United States
person” within the meaning of Section 7701(a)(30) of the Code) or other
certification acceptable to it to enable the Co-Issuers (in the case of the
Indenture Issued Notes other than the Class F Notes) or the Issuer (in the case
of the Class F Notes), the Trustee and any Note Paying Agent to determine their
duties and liabilities with respect to any taxes or other charges that they may
be required to pay, deduct or withhold in respect of such Rated Note or the
Holder of such Rated Note under any present or future law or regulation of the
Cayman Islands or the United States or any present or future law or regulation
of any political subdivision thereof or taxing authority therein or to comply
with any reporting or other requirements under any such law or regulation.

 

(e)                                  All payments made by the Issuer under the
Rated Notes will be made without any deduction or withholding for or on the
account of any tax unless such deduction or withholding is required by
applicable law, as modified by the practice of any relevant governmental
authority, then in effect.  If the Issuer is so required to deduct or withhold,
then neither the Issuer nor the Co-Issuer will be obligated to pay any
additional amounts in respect of such withholding or deduction.

 

(f)                                    Payments in respect of principal of and
interest on the Rated Notes shall be payable by wire transfer in immediately
Available Funds to a Dollar account maintained by the Rated Noteholders in
accordance with wire transfer instructions received by any Note Paying Agent on
or before the Record Date or, if no wire transfer instructions are received by a
Note Paying Agent, by a Dollar check drawn on a bank in the United States mailed
to the address of such Rated Noteholder as it appears on the Note Register at
the close of business on the Record Date for such payment.

 

(g)                                 The principal of and interest on any Rated
Note which is payable on a Redemption Date or in accordance with Section 11.1 on
a Payment Date and is punctually paid or duly provided for on such Redemption
Date or Payment Date shall be paid to the Person in whose name that Rated Note
(or one or more predecessor Rated Notes) is registered at the close of business
on the Record Date for such payment.  All such payments that are mailed or wired
and returned to the Note Paying Agent shall be held for payment as herein
provided at the office or agency of the Co-Issuers (in the case of the Rated
Notes other than the Class F Notes and the Class G Notes) or the Issuer (in the
case of the Class F Notes and the Class G Notes) to be maintained as provided in
Section 7.2.

 

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Payments to Holders of the Rated Notes of each Class shall be made in the
proportion that the Aggregate Outstanding Amount of the Rated Notes of such
Class registered in the name of each such Holder on the Record Date for such
payment bears to the Aggregate Outstanding Amount of all Rated Notes of such
Class on such Record Date.

 

(h)                                 Payment of any Defaulted Interest may be
made in any other lawful manner in accordance with Section 11.1 if notice of
such payment is given by the Trustee to the Co-Issuers and the Rated
Noteholders, and such manner of payment shall be deemed practicable by the
Trustee.

 

(i)                                     All reductions in the principal amount
of a Rated Note (or one or more predecessor Rated Notes) effected by payments of
installments of principal made on any Payment Date or Redemption Date shall be
binding upon all future Holders of such Rated Note and of any Rated Note issued
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof, whether or not such payment is noted on such Rated Note.

 

(j)                                     Notwithstanding anything to the contrary
herein, the obligations of the Co-Issuers under the Rated Notes (other than the
Class F Notes and the Class G Notes), the Issuer under the Class F Notes and the
Class G Notes or the Co-Issuers under this Indenture or arising in connection
herewith are limited recourse obligations of the Co-Issuers or the Issuer, as
the case may be, payable solely from the Collateral and following realization of
the Collateral, all obligations of and all claims against the Co-Issuers or the
Issuer, as the case may be, hereunder or arising in connection herewith shall be
extinguished and shall not thereafter revive.  No recourse shall be had against
any Officer, member, director, employee, security holder or incorporator of the
Co-Issuers (in the case of the Rated Notes other than the Class F Notes and the
Class G Notes) or the Issuer (in the case of the Class F Notes and the Class G
Notes) or their respective successors or assigns for the payment of any amounts
payable under the Rated Notes or this Indenture.  It is understood that the
foregoing provisions of this Section 2.6(j) shall not (i) prevent recourse to
the Collateral for the sums due or to become due under any security, instrument
or agreement which is part of the Collateral or (ii) constitute a waiver,
release or discharge of any indebtedness or obligation evidenced by the Rated
Notes or secured by this Indenture until such Collateral has been realized,
whereupon any outstanding indebtedness or obligation shall be extinguished.  It
is further understood that the foregoing provisions of this Section 2.6(j) shall
not limit the right of any Person to name either of the Co-Issuers (in the case
of the Rated Notes other than the class F Notes and the Class G Notes) or the
Issuer (in the case of the Class F Notes and the Class G Notes) as a party
defendant in any action or suit or in the exercise of any other remedy under the
Rated Notes or this Indenture, so long as no judgment in the nature of a
deficiency judgment or seeking personal liability shall be asked for or (if
obtained) enforced against any such Person or entity.

 

(k)                                  Subject to the foregoing provisions of this
Section 2.6 and the provisions of Sections 2.4 and 2.5, each Rated Note
delivered under this Indenture and upon registration of transfer of or in
exchange for or in lieu of any other Rated Note shall carry the rights of unpaid
interest and principal that were carried by such other Rated Note.

 

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ARTICLE III

 

CONDITIONS PRECEDENT

 

3.1.      GENERAL PROVISIONS

 

The Indenture Issued Notes may be executed by the Co-Issuers (in the case of the
Indenture Issued Notes other than the Class F Notes) or the Issuer (in the case
of the Class F Notes) and delivered to the Trustee for authentication and
thereupon the same shall be authenticated and delivered by the Trustee (or an
Authenticating Agent on its behalf) upon Issuer Request, upon receipt by the
Trustee of the following:

 

(a)                                  (1)                                  an
Officer’s certificate of the Issuer, (A) evidencing the authorization by Board
Resolution of the execution and delivery of, and the performance of the Issuer’s
obligations under, each Transaction Document, in each case as may be amended on
or prior to, and as in effect on, the Closing Date, and the execution,
authentication and delivery of the Indenture Issued Notes and specifying the
Stated Maturity Date, the principal amount and the Applicable Periodic Interest
Rate with respect to each Class of Indenture Issued Notes to be authenticated
and delivered, and (B) certifying that (1) the attached copy of such Board
Resolution is a true and complete copy thereof, (2) such resolutions have not
been rescinded and are in full force and effect on and as of the Closing Date
and (3) the Officers authorized to execute and deliver such documents hold the
offices and have the signatures indicated thereon; and

 

(2)                                  an Officer’s certificate of the Co-Issuer
(A) evidencing the authorization by Board Resolution of the execution and
delivery of, and the performance of the Co-Issuer’s obligations under, this
Indenture, as may be amended on or prior to, and as in effect on, the Closing
Date, and the execution, authentication and delivery of the Indenture Issued
Notes (other than the Class F Notes) and specifying the Stated Maturity Date,
the principal amount and the Applicable Periodic Interest Rate of each Class of
Indenture Issued Notes (other than the Class F Notes) to be authenticated and
delivered, and (B) certifying that (1) the attached copy of such Board
Resolution is a true and complete copy thereof, (2) such resolutions have not
been rescinded and are in full force and effect on and as of the Closing Date
and (3) the Officers authorized to execute and deliver such documents hold the
offices and have the signatures indicated thereon;

 

(b)                                 (1)                                  either
(A) a certificate of the Issuer, or other official document evidencing the due
authorization, approval or consent of any governmental body or bodies, at the
time having jurisdiction in the premises, together with an Opinion of Counsel to
the Issuer satisfactory in form and substance to the Trustee on which the
Trustee is entitled to rely to the effect that no other authorization, approval
or consent of any governmental body is required for the valid issuance of the
Indenture Issued Notes, or (B) an Opinion of Counsel to the Issuer satisfactory
in form and substance to the Trustee to the effect that no such authorization,
approval or consent of any governmental body is required for the valid issuance
of the Indenture Issued Notes except as may have been given; and

 

(2)                                  either (A) a certificate of the Co-Issuer
or other official document evidencing the due authorization, approval or consent
of any governmental body or bodies, at

 

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the time having jurisdiction in the premises, together with an Opinion of
Counsel to the Co-Issuer satisfactory in form and substance to the Trustee on
which the Trustee is entitled to rely to the effect that no other authorization,
approval or consent of any governmental body is required for the valid issuance
of the Indenture Issued Notes (other than the Class F Notes), or (B) an Opinion
of Counsel to the Co-Issuer satisfactory in form and substance to the Trustee
that no such authorization, approval or consent of any governmental body is
required for the valid issuance of the Indenture Issued Notes (other than the
Class F Notes) except as may have been given;

 

(c)                                  (1)                                  an
opinion of Thacher Proffitt & Wood LLP, special New York counsel to the
Co-Issuers, dated the Closing Date, substantially in the form of Exhibit E-1;

 

(2)                                  an opinion of Walkers, special Cayman
Islands counsel to the Issuer, dated the Closing Date, substantially in the form
of Exhibit E-2;

 

(3)                                  an opinion of Kennedy Covington Lobdell &
Hickman, L.L.P., counsel to the Trustee, dated the Closing Date, substantially
in the form of Exhibit F; and

 

(4)                                  an opinion of Thacher Proffitt & Wood LLP,
counsel to the Collateral Manager, dated the Closing Date, substantially in the
form of Exhibit G;

 

(d)                                 an Officer’s certificate of the Issuer,
stating that the Issuer is not in Default under this Indenture and that the
issuance of the Indenture Issued Notes will not result in a breach of any of the
terms, conditions or provisions of, or constitute a Default under, the Articles,
any indenture 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; that no Event of Default shall have occurred and be
continuing; that all of the representations and warranties contained herein are
true and correct as of the Closing Date; that all conditions precedent provided
in this Indenture relating to the authentication and delivery of the Indenture
Issued Notes applied for (including in Section 3.2) have been complied with; and
that all expenses due or accrued with respect to the Offering or relating to
actions taken on or in connection with the Closing Date have been paid;

 

(e)                                  an Officer’s certificate of the Co-Issuer
stating that the Co-Issuer is not in Default under this Indenture and that the
issuance of the Indenture Issued Notes will not result in a breach of any of the
terms, conditions or provisions of, or constitute a Default under, the
Certificate of Incorporation or By-Laws of the Co-Issuer, any indenture or other
agreement or instrument to which the Co-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 Co-Issuer is a party or by which it may be bound or to
which it may be subject; that no Event of Default shall have occurred and be
continuing; that all of the representations and warranties contained herein are
true and correct as of the Closing Date; that all conditions precedent provided
in this Indenture relating to the authentication and delivery of the Indenture
Issued Notes applied for have been complied with; and that all expenses due or
accrued with respect to the Offering or relating to actions taken on or in
connection with the Closing Date have been paid;

 

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(f)                                    an Accountants’ Report (A) confirming the
information with respect to each Collateral Interest (other than its price) set
forth on a schedule setting forth each Collateral Interest and the information
provided by the Issuer with respect to every other asset forming part of the
Collateral, by reference to such sources as shall be specified therein,
(B) confirming that, on the Closing Date, the Collateral Interests set forth on
Schedule A meet the Collateral Quality Tests (with the exception of the S&P CDO
Monitor Test), (C) calculating each of the Coverage Tests as of the Closing Date
and (D) specifying the procedures undertaken by them to review data and
computations relating to the foregoing statement;

 

(g)                                 executed counterparts of this Indenture, the
Account Control Agreement, the Collateral Administration Agreement, the
Collateral Management Agreement and the other Transaction Documents;

 

(h)                                 execution and delivery of the Financing
Statement for filing against the Issuer with the Recorder of Deeds in the
District of Columbia; and

 

(i)                                     evidence of an entry having been made in
the Issuer’s Register of Mortgages and Charges in respect of the charge.

 

3.2.      SECURITY FOR THE INDENTURE ISSUED NOTES

 

Prior to the issuance of the Indenture Issued Notes on the Closing Date, the
Issuer shall cause the following conditions to be satisfied:

 

(a)                                  Grant of Security Interest; Delivery of
Collateral Interests.  The Grant pursuant to the Granting clauses of this
Indenture of all of the Issuer’s right, title and interest in and to the
Collateral and the transfer of all Collateral Interests purchased by the Issuer
on the Closing Date (as set forth in Schedule A) to the Trustee in the manner
provided in Section 3.3(b).

 

(b)                                 Certificate of the Issuer.  The delivery to
the Trustee of a certificate of an Authorized Officer of the Issuer or the
Collateral Manager, for and on behalf of the Issuer, dated as of the Closing
Date, to the effect that (x) the Issuer has no assets other than the Collateral,
(y) the Issuer has no investments that do not qualify as Collateral Interests or
Eligible Investments and (z) in the case of each Collateral Interest identified
on Schedule A and pledged to the Trustee for inclusion in the Collateral on the
Closing Date:

 

(1)           the Issuer is the owner of such Collateral Interest free and clear
of any liens, claims or encumbrances of any nature whatsoever except for those
which are being released on the Closing Date and except for those Granted
pursuant to this Indenture and encumbrances arising from due bills, if any, with
respect to interest, or a portion thereof, accrued on such Collateral Interest
prior to the first Payment Date and owed by the Issuer to the seller of such
Collateral Interest;

 

(2)           the Issuer has acquired its ownership in such Collateral Interest
in good faith without notice of any adverse claim (within the meaning given to
such term by Section 8-102(a)(1) of the UCC), except as described in
clause (1) above;

 

(3)           the Issuer has not assigned, pledged or otherwise encumbered any
interest in such Collateral Interest (or, if any such interest has been
assigned, pledged or

 

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otherwise encumbered, it has been released) other than interests Granted
pursuant to this Indenture;

 

(4)           the Issuer has full right to Grant a security interest in and
assign and pledge all of its right, title and interest in such Collateral
Interest to the Trustee;

 

(5)           the information set forth with respect to such Collateral Interest
on Schedule A is correct and each such Collateral Interest is transferred to the
Trustee as required by Section 3.2(a) (or, if any such Collateral Interest is
not so transferred to the Trustee on the Closing Date, the Issuer has entered
into a binding agreement to purchase such Collateral Interest for settlement
within 10 days after the Closing Date);

 

(6)           each such Collateral Interest satisfies the requirements of the
definition of “Collateral Interest” and is not an Impaired Interest; and

 

(7)           upon Grant by the Issuer, the Trustee has a first priority
perfected security interest in the Collateral (assuming that any Clearing
Corporation, Securities Intermediary or other entity not within the control of
the Issuer involved in the Grant of Collateral takes the actions required of it
under Section 3.3(b) for perfection of that interest) and a “securities
entitlement” (as defined in the UCC) with respect to Financial Assets.

 

(c)                                  Rating Letters.  The delivery to the
Trustee of an Officer’s certificate of the Issuer, to the effect that
(i) attached thereto are true and correct copies of (A) a letter signed by S&P
confirming that the Class A Notes have been rated “AAA”, the Class B Notes have
been rated at least “AA”, the Class C Notes have been rated at least “A”, the
Class D Notes have been rated at least “BBB”, the Class E Notes have been rated
at least “BBB-”, the Class F Notes have been rated at least “BB” and the Class G
Notes have been rated at least “B” by S&P and (B) a letter signed by Moody’s
confirming that the Class A Notes have been rated “Aaa”, the Class B Notes have
been rated at least “Aa2”, the Class C Notes have been rated at least “A2”, the
Class D Notes have been rated at least “Baa2”, the Class E Notes have been rated
at least “Baa3”, the Class F Notes have been rated at least “Ba2” and the
Class G Notes have been rated at least “B2” by Moody’s and (ii) each such rating
is in full force and effect on the Closing Date.

 

(d)                                 Accounts.  The delivery by the Trustee of
evidence of the establishment of the Payment Account, the Collection Account
(including each Collateral Sub-Account established therein), the Expense Reserve
Account, the Interest Reserve Account, the Collateral Account and the Uninvested
Proceeds Account and, to be established on the Closing Date.

 

(e)                                  Funding Certificate.  The delivery to the
Trustee of a funding certificate (the Funding Certificate), duly executed by an
Authorized Officer of the Issuer, relating to, among other things, the
disposition of the proceeds of the issuance of the Indenture Issued Notes, dated
the Closing Date, in substantially the form of Exhibit D hereto.

 

(f)                                    Purchases.  The delivery to the Trustee
of a certification of the Issuer that it shall have entered into one or more
agreements to purchase, for settlement on or following the Closing Date in
accordance with customary settlement procedures in the relevant

 

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markets, Collateral Interests having an aggregate Principal Balance of not less
than U.S.$328,916,892.43.

 

3.3.      CUSTODIANSHIP; TRANSFER OF COLLATERAL INTERESTS AND ELIGIBLE
INVESTMENTS

 

(a)                                  The Trustee shall hold all Certificated
Securities and Instruments in physical form at the office of a custodian
appointed by it in Minnesota (together with any successor, the Custodian). 
Initially, such Custodian shall be Wells Fargo Bank, National Association with
its address at Wells Fargo Center, Sixth Street and Marquette Avenue,
Minneapolis, Minnesota 55479, Attention:  CDO Trust Services—N-Star REL CDO IV. 
Any successor custodian shall be a state or national bank or trust company that
is not an Affiliate of the Issuer or the Co-Issuer, has a long-term debt rating
of at least “BBB+” by S&P and has a combined capital and surplus of at least
U.S.$250,000,000.

 

(b)                                 Each Collateral Interest, Equity Interest
and Eligible Investment shall be credited to the appropriate Account.  Each time
that the Issuer shall direct or cause the acquisition of any Collateral
Interest, Equity Interest or Eligible Investment, the Trustee (on behalf of the
Issuer) shall, if such Collateral Interest, Equity Interest or Eligible
Investment has not already been transferred to the Collateral Account and
credited thereto, cause the transfer of such Collateral Interest, Equity
Interest or Eligible Investment to the Custodian to be held in and credited to
the Collateral Account for the benefit of the Trustee in accordance with the
terms of this Indenture.  The security interest of the Trustee in the funds or
other property utilized in connection with such acquisition shall, immediately
and without further action on the part of the Trustee, be released.  The
security interest of the Trustee shall nevertheless come into existence and
continue in the Collateral Interest, Equity Interest or Eligible Investment so
acquired, including all rights of the Issuer in and to any contracts related to
and proceeds of such Collateral Interest, Equity Interest or Eligible
Investment.

 

(c)                                  On the Closing Date, on each day
thereafter, if any, that any Collateral is acquired or otherwise becomes subject
to the lien of this Indenture and on the Effective Date, the Issuer represents
and warrants to the Trustee as follows:

 

(1)           This Indenture creates a valid and continuing security interest
(as defined in the applicable Uniform Commercial Code) in the Collateral in
favor of the Trustee on behalf and for the benefit of the Secured Parties, which
security interest is prior to all other liens and security interests, and is
enforceable as such as against creditors of and purchasers from the Issuer and,
upon delivery of the Collateral Interests and filing of the appropriate
financing statements in the appropriate filing offices, the lien and security
interest created by this Indenture shall be a perfected first priority security
interest in favor of the Trustee for the benefit of the Secured Parties.

 

(2)           The Issuer owns and has good and marketable title to the
Collateral free and clear of any liens, claims, encumbrances or defects of any
nature whatsoever except for those which are being released on the Closing Date
or on the date of purchase by the Issuer or those created pursuant to or
contemplated under this Indenture and encumbrances arising from due bills, if
any, with respect to interest, or a portion thereof, accrued on any Collateral
Interest prior to the first payment date and owed by the Issuer to the seller of
such Collateral Interest.

 

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(3)           The Issuer has acquired its ownership in each such Collateral
Interest, or will acquire in the case of any Collateral Interests which the
Issuer has on or before the Closing Date committed to purchase but which will
not have settled on or before the Closing Date or any additional Collateral
Interests or Substitute Collateral Interests acquired by the Issuer after the
Closing Date, in good faith without notice of any adverse claim, except as
described in clause (2) above.

 

(4)           The Issuer (a) has delivered each such Collateral Interest, or
will deliver any Collateral Interests which the Issuer has on or before the
Closing Date committed to purchase but which will not have settled on or before
the Closing Date or any additional Collateral Interests or Substitute Collateral
Interests acquired by the Issuer after the Closing Date, to the Trustee and
(b) has not assigned, pledged, sold, granted a security interest in or otherwise
encumbered any interest in such Collateral Interest other than interests granted
pursuant to this Indenture.

 

(5)           The Issuer has full right to grant all security interests granted
herein.

 

(6)           All Collateral is comprised of either “securities”, “instruments”,
“tangible chattel paper”, “accounts”, “security entitlements” or “general
intangibles”, in each case as defined in the applicable Uniform Commercial Code.

 

(7)           Each of the Accounts, and all subaccounts thereof, constitute
securities accounts as defined in the applicable Uniform Commercial Code.

 

(8)           All items of the Collateral that constitute security entitlements
have been and will have been credited to one of the securities accounts.  The
securities intermediary for each of the Accounts has agreed to treat all assets
credited to the securities accounts as financial assets under the applicable
Uniform Commercial Code.

 

(9)           Other than the security interest granted to the Trustee on behalf
and for the benefit of the Secured Parties pursuant to this Indenture, the
Issuer has not pledged, assigned, sold, granted a security interest in or
otherwise conveyed any of the Collateral.  The Issuer has not authorized the
filing of and is not aware of any financing statements against the Issuer that
include a description of collateral covering the Collateral other than any
financing statement relating to the security interest granted to the Trustee on
behalf and for the benefit of the Secured Parties hereunder or that has been
terminated.  The Issuer is not aware of any judgment, Pension Benefit Guarantee
Corporation lien or tax lien filings against it.

 

(10)         The Issuer has caused or will have caused, within ten (10) days of
the Closing Date, the filing of all appropriate financing statements in the
proper filing office in the appropriate jurisdictions under applicable law in
order to perfect the security interest in the Collateral granted to the Trustee
on behalf and for the benefit of the Secured Parties hereunder that constitutes
chattel paper, instruments, accounts, securities entitlements or general
intangibles under the applicable Uniform Commercial Code, if any.

 

(11)         The Trustee or the Accountholder has in its possession all original
copies of the instruments that constitute or evidence the Collateral, if any. 
The instruments, loan agreements and leases that constitute or evidence the
Collateral do not have any marks or notations indicating that they have been
pledged, assigned or

 

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otherwise conveyed to any Person other than the Trustee on behalf and for the
benefit of the Secured Parties.  All financing statements filed or to be filed
against the Issuer in favor of the Trustee on behalf and for the benefit of the
Secured Parties in connection herewith describing the Collateral contain a
statement to the following effect:  “A purchase of or security interest in any
collateral described in this financing statement will violate the rights of the
Trustee on behalf and for the benefit of (A) itself and for the benefit of the
Noteholders, (B) the Collateral Manager and (C) each Hedge Counterparty.”

 

(12)         The authoritative copy of any chattel paper that constitutes or
evidences the Collateral, if any, has been communicated to the Trustee and has
no marks or notations indicating that it has been pledged, assigned or otherwise
conveyed to any Person other than the Trustee on behalf and for the benefit of
the Secured Parties.

 

(13)         The Issuer has received or will receive all consents and approvals
required by the terms of the underlying loan agreement, indenture or other
underlying documentation, if any, relating to the Collateral to the transfer to
the Trustee on behalf and for the benefit of the Secured Parties of its interest
and rights in the Collateral hereunder.

 

(14)         The Issuer, the Accountholder and the Trustee have entered into the
Account Control Agreement pursuant to which the Accountholder has agreed to
comply with all instructions originated by the Trustee relating to the Accounts
without further consent by the Issuer.

 

(15)         None of the Accounts is in the name of any person other than the
Trustee, held on behalf and for the benefit of the Secured Parties.  The Issuer
has not consented to the Trustee or the Accountholder maintaining any of the
Accounts to comply with entitlement orders or instructions of any Person other
than the Trustee.

 

(16)         Notwithstanding any other provision of this Indenture or any other
related Transaction Document, the representations in this Section 3.3(c) shall
be continuing and deemed to be updated on any day a new item of Collateral is
acquired, and remain in full force and effect until such time as all obligations
under this Indenture and the Notes have been finally and fully paid and
performed and shall survive the termination of this Indenture for any other
reason.

 

(17)         The parties to this Indenture (i) shall not, without obtaining a
Rating Agency Confirmation, waive any of the representations in this
Section 3.3(c); (ii) shall provide each of the Rating Agencies with prompt
written notice of any breach of the representations contained in this
Section 3.3(c) upon becoming aware thereof; and (iii) shall not, without
obtaining a Rating Agency Confirmation (as determined after any adjustment or
withdrawal of the ratings following notice of such breach), waive a breach of
any of the representations in this Section 3.3(c).

 

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ARTICLE IV

SATISFACTION AND DISCHARGE

 

4.1.      SATISFACTION AND DISCHARGE OF INDENTURE

 

This Indenture shall be discharged and shall cease to be of further effect with
respect to the Collateral securing the Indenture Issued Notes and the Indenture
Issued Notes except as to (i) rights of registration of transfer and exchange,
(ii) substitution of mutilated, defaced, destroyed, lost or stolen Indenture
Issued Notes, (iii) rights of Rated Noteholders to receive payments of principal
thereof and interest thereon, (iv) the rights, obligations and immunities of the
Trustee hereunder, (v) the rights, obligations and immunities of the Collateral
Manager hereunder and under the Collateral Management Agreement and (vi) the
rights of the Secured Parties as beneficiaries hereof with respect to the
property deposited with the Trustee and payable to all or any of them; and the
Trustee, on demand of and at the expense of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when:

 

(a)                                  either:

 

(1)                                  all Indenture Issued Notes theretofore
authenticated and delivered (other than (A) Indenture Issued Notes which have
been mutilated, defaced, destroyed, lost or stolen and which have been replaced
or paid as provided in Section 2.5 and (B) Indenture Issued Notes for whose
payment funds have theretofore irrevocably been deposited in trust and
thereafter repaid to the Issuer or discharged from such trust, as provided in
Section 7.3) have been delivered to the Trustee for cancellation; or

 

(2)                                  all Rated Notes not theretofore delivered
to the Trustee or the PAA Issued Note Paying Agent, as applicable,  for
cancellation (A) have become due and payable, or (B) will become due and payable
at their Stated Maturity Date within one year, or (C) are to be called for
redemption pursuant to Section 9.1 under an arrangement satisfactory to the
Trustee for the giving of notice of redemption by the Co-Issuers pursuant to
Section 9.3 and the Issuer has irrevocably deposited or caused to be deposited
with the Trustee, in trust for such purpose, Cash or non-callable direct
obligations of the United States in an amount sufficient, according to the
Priority of Payments as verified by a firm of nationally recognized Independent
certified public accountants, to pay and discharge the entire indebtedness on
all Rated Notes not theretofore delivered to the Trustee or the PAA Issued Note
Paying Agent, as applicable, for cancellation, including all principal and
interest (including Class C Cumulative Applicable Periodic Interest Shortfall
Amount, Class D Cumulative Applicable Periodic Interest Shortfall Amount,
Class E Cumulative Applicable Periodic Interest Shortfall Amount, Class F
Cumulative Applicable Periodic Interest Shortfall Amount and Class G Cumulative
Applicable Periodic Interest Shortfall Amount accrued to the date of such
deposit (in the case of Rated Notes which have become due and payable) or to the
Stated Maturity Date or the Redemption Date, as the case may be; provided that
(x) such obligations are entitled to the full faith and credit of the United
States and (y) this subclause (2) shall not apply if an election to act in
accordance with the provisions of Section 5.5(a) shall have been made and not
rescinded;

 

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(b)                                 the Issuer has paid or caused to be paid all
other sums payable hereunder (including amounts payable pursuant to the Paying
Agency Agreement, the Corporate Services Agreement, the Collateral Management
Agreement, any Hedge Agreement and the Collateral Administration Agreement) and
no other amounts will become due and payable by the Issuer; and

 

(c)                                  the Co-Issuers have delivered to the
Trustee Officer’s certificates and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.

 

Notwithstanding the satisfaction and discharge of this Indenture, the rights and
obligations of the Co-Issuers, the Trustee and any Hedge Counterparty and, if
applicable, the Rated Noteholders, as the case may be, under Sections 2.6, 4.1,
4.2, 5.9, 5.18, 6.7, 6.8, 7.1 and 7.3 shall survive.

 

4.2.      APPLICATION OF TRUST MONEY

 

All funds deposited with the Trustee pursuant to Section 4.1 for the payment of
principal of and interest on the Rated Notes and amounts payable pursuant to any
Hedge Agreement, the Collateral Management Agreement, the Paying Agency
Agreement, the Corporate Services Agreement and the Collateral Administration
Agreement shall be held in trust and applied by it in accordance with the
provisions of the Rated Notes and this Indenture, including the Priority of
Payments, for the payment either directly or through any Note Paying Agent, as
the Trustee may determine, to the Person entitled thereto of the respective
amounts in respect of which such funds has been deposited with the Trustee; but
such funds need not be segregated from other funds except to the extent required
herein or required by law.

 

4.3.      REPAYMENT OF FUNDS HELD BY NOTE PAYING AGENT

 

In connection with the satisfaction and discharge of this Indenture with respect
to the Rated Notes, all funds then held by any Note Paying Agent other than the
Trustee under the provisions of this Indenture shall, upon demand of the
Co-Issuers, be paid to the Trustee to be held and applied pursuant to
Section 7.3 and in accordance with the Priority of Payments and thereupon such
Note Paying Agent shall be released from all further liability with respect to
such funds.

 

ARTICLE V

EVENTS OF DEFAULT; REMEDIES

 

5.1.      EVENTS OF DEFAULT

 

Event of Default, is defined as any one of the following wherever used herein,
means any one of the following events as set forth in Section 5.1(a) through
(h) (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)                                  a default for five (5) Business Days in the
payment, when due and payable, of any interest on any Class A Note, or if there
are no Class A Notes Outstanding, on any Class B Note, or, if there are no
Class A Notes or Class B Notes Outstanding, on any Class C Note, or, if there
are no Class A Notes, Class B Notes or Class C Notes Outstanding, on any Class D
Note, or if there are no Class A Notes, Class B Notes, Class

 

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C Notes or Class D Notes Outstanding, on any Class E Note, or if there are no
Class A Notes, Class B Notes, Class C Notes, Class D Notes or Class E Notes
Outstanding, on any Class F Note;

 

(b)                                 a default in the payment of any principal,
when due and payable of any Rated Note other than a Class G Note (or, in the
case of a default in payment resulting solely from an administrative error or
omission by the Trustee, the Administrator, any Note Paying Agent, the Note
Registrar or the PAA Issued Note Registrar, such default continues for a period
of five (5) Business Days);

 

(c)                                  the failure on any Payment Date to disburse
amounts available in accordance with Section 11.1 (except as provided in
Section 5.1(a) and (b) above) and a continuation of such failure for
three (3) Business Days (or, in the case of a default in payment resulting
solely from an administrative error or omission by the Trustee, the
Administrator, any Note Paying Agent, the Note Registrar or the PAA Issued Note
Registrar, such default continues for a period of five (5) Business Days);

 

(d)                                 on any date of determination, the failure to
maintain an aggregate principal amount of Collateral Interests and Eligible
Investments at least equal to 100% of the aggregate principal amount of the
Class A Notes Outstanding;

 

(e)                                  the event that either of the Co-Issuers or
the pool of Collateral becomes an investment company required to be registered
under the Investment Company Act;

 

(f)                                    a default in the performance, or breach,
of any other covenant (it being understood that non-compliance with any of the
Coverage Tests or the Collateral Quality Tests will not constitute a default or
breach) or warranty of either of the Co-Issuers under the Indenture of any
representation or if any certificate or writing delivered pursuant thereto
proves to be incorrect when made, which default or breach has a material adverse
effect on the Rated Noteholders and continues for a period of thirty (30) days
(or, in the case of a default, breach or failure of a representation or warranty
regarding the Collateral, fifteen (15) days) of the earlier of knowledge by the
Co-Issuers or the Collateral Manager or notice to the Co-Issuers and the
Collateral Manager by the Trustee or to the Co-Issuers and the Collateral
Manager by the Holders of at least 25%, of the then Aggregate Outstanding Amount
of the Rated Notes of any Class, specifying such default, breach or failure and
requiring it to be remedied and stating that such notice is a “Notice of
Default” under this Indenture;

 

(g)                                 the entry of a decree or order by a court
having competent jurisdiction adjudging the Issuer or the Co-Issuer as bankrupt
or insolvent, or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Issuer or the
Co-Issuer under the Bankruptcy Code or any other applicable law, or appointing a
receiver, liquidator, assignee, or sequestrator (or other similar official) of
the Issuer or the Co-Issuer or of any substantial part of its property; ordering
the winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of ninety (90) consecutive
days; or

 

(h)                                 the institution by the Issuer or the
Co-Issuer of proceedings to be adjudicated as bankrupt or insolvent, or the
consent by it to the institution of bankruptcy or insolvency proceedings against
it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under the Bankruptcy Code or any other similar
applicable law, or

 

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the consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee or sequestrator (or other similar
official) of the Issuer or the Co-Issuer or of any substantial part of its
property, respectively, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its debts
generally as they become due, or the taking of any action by the Issuer or the
Co-Issuer in furtherance of any such action.

 

If either of the Co-Issuers shall obtain actual knowledge that an Event of
Default shall have occurred and be continuing, such Co-Issuer shall (unless the
Trustee shall have provided notice of such Event of Default pursuant to
Section 6.2) promptly notify the Trustee, the Rated Noteholders, any Hedge
Counterparty, the Collateral Manager and each Rating Agency in writing of such
Event of Default.

 

5.2.      ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT

 

(a)                                  If an Event of Default occurs and is
continuing, the Trustee may or, if so directed by the Holders of a Majority in
aggregate principal amount of the Outstanding Rated Notes, will declare the
principal of and accrued interest on all Notes to be immediately due and payable
(except that in the case of an Event of Default described in Section 5.1(g) or
5.1(h) above, such an acceleration will occur automatically).

 

(b)                                 Any Hedge Agreement existing on or after
such acceleration may not be terminated by the Issuer unless and until
liquidation of the Collateral has commenced and annulment of such acceleration
may no longer be affected.

 

(c)                                  At any time after such acceleration of
maturity has been made and before a judgment or decree for payment of the amount
due has been obtained by the Trustee as hereinafter provided in this Section 5,
the Trustee may reverse such acceleration and its consequences if the Trustee
determines that:

 

(1)                                  the Issuer has paid or deposited with the
Trustee funds sufficient to pay:

 

(i)                                     all overdue installments of principal of
and interest on the Notes (including interest upon the Class C Cumulative
Applicable Periodic Interest Shortfall Amount, the Class D Cumulative Applicable
Periodic Interest Shortfall Amount, the Class E Cumulative Applicable Periodic
Interest Shortfall Amount, the Class F Cumulative Applicable Periodic Interest
Shortfall Amount and the Class G Cumulative Applicable Periodic Interest
Shortfall Amount, respectively, at the Applicable Periodic Interest Rate and, to
the extent that payment of such interest is lawful, upon Defaulted Interest at
the Applicable Periodic Interest Rate);

 

(ii)                                  any accrued and unpaid amounts (including
termination payments, if any) payable by the Issuer pursuant to any Hedge
Agreement;

 

(iii)                               all unpaid taxes and Administrative
Expenses, any accrued and unpaid Senior Collateral Management Fee, and other
sums paid or advanced by the Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel;

 

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(2)                                  the Trustee has determined that all Events
of Default of which it has actual knowledge, other than the nonpayment of the
principal of or interest on the Rated Notes that have become due solely by such
acceleration, have been cured; and

 

(3)                                  any Hedge Agreement in effect immediately
prior to such acceleration shall remain in effect.

 

provided that the Trustee shall have obtained (and shall be entitled to rely
upon) a certification of an Independent accounting firm of national reputation
as to the sufficiency of the amounts in Section 5.2(c)(1) above, which
certification shall be conclusive evidence as to such sufficiency.  In addition,
the Trustee may, but is not required to, obtain, at the Issuer’s expense (and
may rely upon), an Opinion of Counsel as to the matters in
Sections 5.2(c)(2) and (3) above.

 

At any such time as the Trustee shall reverse such acceleration and its
consequences, the Trustee shall preserve the Collateral in accordance with the
provisions of Section 5.5; provided that, if the conditions for liquidation of
the Collateral are satisfied pursuant to Section 5.5, the Rated Notes may be
accelerated pursuant to Section 5.2(a).

 

No such reversal of acceleration shall affect any subsequent Default or impair
any right consequent thereon.

 

5.3.      COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE

 

The Co-Issuers (or, with respect to the Class F Notes and the Class G Notes, the
Issuer only) covenant that if a Default shall occur in respect of the payment of
any principal of or interest on any Class A Note, the payment of principal of or
interest on any Class B Note (but with respect to interest, only after the
Class A Notes and all interest accrued thereon have been paid in full), the
payment of principal of or interest on any Class C Note (but with respect to
interest, only after the Class A Notes and Class B Notes and all interest
accrued thereon have been paid in full), the payment of principal of or interest
on any Class D Note (but with respect to interest, only after the Class A Notes,
the Class B Notes and the Class C Notes and all interest accrued thereon have
been paid in full), the payment of principal of or interest on any Class E Note
(but with respect to interest, only after the Class A Notes, the Class B Notes,
the Class C Notes and the Class D Notes and all interest accrued thereon have
been paid in full), the payment of principal of or interest on any Class F Note
(but with respect to interest, only after the Class A Notes, the Class B Notes,
the Class C Notes, the Class D Notes and the Class E Notes and all interest
accrued thereon have been paid in full) or the payment of principal of or
interest on any Class G Note (but with respect to interest, only after the
Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes, the
Class E Notes and the Class F Notes and all interest accrued thereon have been
paid in full), the Co-Issuers (or, with respect to the Class F Notes and the
Class G Notes, the Issuer only) will, upon demand of the Trustee or any affected
Rated Noteholder, pay to the Trustee, for the benefit of the Holder of such
Rated Note, the whole amount, if any, then due and payable on such Rated Note
for principal and interest, with interest upon the overdue principal and, to the
extent that payments of such interest shall be legally enforceable, upon overdue
installments of interest, at the Applicable Periodic Interest Rate 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 Trustee and such Rated Noteholder and their
respective agents and counsel.

 

If either of the Co-Issuers (or, in the case of the Class G Notes and the
Class F Notes, the Issuer only), fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a Proceeding for the collection of the sums so due and unpaid, and
may, and shall, upon the direction by a the Holders of Majority of the then
Aggregate Outstanding Amount of

 

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the Notes of the Controlling Class (and, if the action of the Issuer or the
Co-Issuer pursuant to such direction would have a material adverse effect on the
Initial Hedge Counterparty, the Initial Hedge Counterparty), prosecute such
Proceeding to judgment or final decree, and may enforce the same against the
Issuer or the Co-Issuers, as applicable, or any other obligor upon the Rated
Notes and collect the amounts adjudged or decreed to be payable in the manner
provided by law out of the Collateral; provided that a Holder of a Rated Note
may institute any proceeding if (i) such Holder previously has given to the
Trustee written notice of an Event of Default, (ii) except in the case of a
default in the payment of principal or interest, the Holders of at least 25% of
the then Aggregate Outstanding Amount of the Notes of the Controlling Class have
made a written request upon the Trustee to institute such proceedings in its own
name as Trustee and such Holders have offered the Trustee reasonable indemnity,
(iii) the Trustee has, for thirty (30) days after receipt of notice, request and
offer of such indemnity, failed to institute any such proceeding and (iv) no
direction inconsistent with such written request has been given to the Trustee
during such 30-day period by the Holders of a Majority of the then Aggregate
Outstanding Amount of the Notes of the Controlling Class.

 

If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Secured Parties by such appropriate Proceedings as the Trustee shall deem most
effectual 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 Trustee by this Indenture or by law.

 

The Holders of a Majority of the then Aggregate Outstanding Amount of the Notes
of the Controlling Class may, in certain cases, waive any default with respect
to such Notes, except (i) a default for more than five (5) Business Days in the
payment, when due and payable, of any interest on any Note, (ii) a default in
the payment of principal on any Note at its Stated Maturity Date or Redemption
Date, (iii) the failure on any Payment Date to disburse amounts available in the
Collection Account in accordance with Section 11.1 and continuation of such
failure for a period of three (3) Business Days, (iv) certain events of
bankruptcy or insolvency with respect to the Co-Issuers (or, in the case of the
Class G Notes and the Class F Notes, the Issuer only) or (v) a default in
respect of any provision of the Indenture that cannot be modified or amended
without the waiver or consent of the Holder of each Outstanding Note adversely
affected thereby.

 

In case there shall be pending Proceedings relative to the Issuer or the
Co-Issuer or any other obligor upon the Rated Notes or any Hedge Agreement under
the Bankruptcy Code or any other applicable 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, the Co-Issuer or their
respective property or such other obligor or its property, or in case of any
other comparable Proceedings relative to the Issuer, the Co-Issuer or other
obligor upon the Rated Notes or Hedge Agreement, or the creditors or property of
the Issuer, the Co-Issuer or such other obligor, the Trustee, regardless of
whether the principal of any Rated Notes or Hedge Agreement shall then be due
and payable as therein expressed or by declaration or otherwise and regardless
of whether the Trustee shall have made any demand pursuant to the provisions of
this Section 5.3, shall be entitled and empowered, by intervention in such
Proceedings or otherwise:

 

(a)                                  to file and prove a claim or claims for the
whole amount of principal and interest owing and unpaid in respect of the Rated
Notes or any Hedge Agreement upon direction by a Majority of the Controlling
Class, and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee and each predecessor Trustee, and their
respective agents, attorneys and counsel, and for reimbursement of all expenses
and

 

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liabilities incurred, and all advances made, by the Trustee and each predecessor
Trustee) and of the Rated Noteholders allowed in any Proceedings relative to the
Issuer, the Co-Issuer or other obligor upon the Rated Notes or to the creditors
or property of the Issuer, the Co-Issuer or such other obligor;

 

(b)                                 unless prohibited by applicable law and
regulations, to vote on behalf of the Holders of the Rated Notes, upon the
direction of such Holders, in any election of a trustee or a standby trustee in
arrangement, reorganization, liquidation or other bankruptcy or insolvency
Proceedings or person performing similar functions in comparable Proceedings;
and

 

(c)                                  to collect and receive any amounts or other
property payable to or deliverable on any such claims, and to distribute all
amounts received with respect to the claims of the Rated Noteholders and of the
Trustee on behalf of the Rated Noteholders and the Trustee; and any trustee,
receiver or liquidator, custodian or other similar official is hereby authorized
by each of the Rated Noteholders to make payments to the Trustee, and, in the
event that the Trustee shall consent to the making of payments directly to the
Rated Noteholders, to pay to the Trustee such amounts as shall be sufficient to
cover reasonable compensation to the Trustee, each predecessor Trustee and their
respective agents, attorneys and counsel, and all other reasonable expenses and
liabilities incurred, and all advances made, by the Trustee and each predecessor
Trustee except as a result of negligence or bad faith.

 

Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or vote for or accept or adopt on behalf of any Rated Noteholder
or the Initial Hedge Counterparty, any plan of reorganization, arrangement,
adjustment or composition affecting the Rated Notes or the rights of any Holder
thereof or the Initial Hedge Counterparty, or to authorize the Trustee to vote
in respect of the claim of any Rated Noteholder or the Initial Hedge
Counterparty in any such Proceeding except, as aforesaid, to vote for the
election of a trustee in bankruptcy or similar person.

 

In any Proceedings brought by the Trustee on behalf of the Holders, the Trustee
shall be held to represent, subject to Section 6.17, all the Secured Parties if
applicable, pursuant to Section 6.17.

 

Notwithstanding anything in this Section 5.3 to the contrary, the Trustee may
not sell or liquidate the Collateral or institute Proceedings in furtherance
thereof pursuant to this Section 5.3 except in accordance with Section 5.5(a).

 

5.4.      REMEDIES

 

(a)                                  If an Event of Default shall have occurred
and be continuing, and the Notes have been declared due and payable and such
declaration and its consequences have not been rescinded and annulled, the
Co-Issuers agree that, in addition to the requirements of Section 5.5(a), the
Trustee may, after giving notice to the Noteholders, the Collateral Manager,
each Hedge Counterparty and each Rating Agency, and with the consent of the
Holders of a Majority of the then Aggregate Outstanding Amount of the Notes of
the Controlling Class, and shall, upon written direction by the Holders of a
Majority of the then Aggregate Outstanding Amount of the Notes of the
Controlling Class, to the extent permitted by applicable law, exercise one or
more of the following rights, privileges and remedies:

 

(1)                                  institute Proceedings for the collection of
all amounts then payable on the Notes or otherwise payable under this Indenture,
whether by declaration or otherwise,

 

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enforce any judgment obtained, and collect from the Collateral any amounts
adjudged due;

 

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

 

(3)                                  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 Secured Parties hereunder; and

 

(4)                                  subject to Section 5.4(d) below, exercise
any other rights and remedies that may be available at law or in equity;

 

provided that the Trustee may not sell or liquidate the Collateral or institute
Proceedings in furtherance thereof pursuant to this Section 5.4 except in
accordance with Section 5.5(a).

 

The Trustee may, but need not, obtain and rely upon an opinion of an Independent
investment banking firm of national reputation as to the feasibility of any
action proposed to be taken in accordance with this Section 5.4 and as to the
sufficiency of the proceeds and other amounts receivable with respect to the
Collateral to make the required payments of principal of and interest on the
Notes, which opinion shall be conclusive evidence as to such feasibility or
sufficiency.

 

(b)                                 If an Event of Default as described in
Section 5.1(f) shall have occurred and be continuing, the Trustee may, and at
the request of at least 25% of the Holders of the then Aggregate Outstanding
Amount of the Notes of the Controlling Class shall, institute a Proceeding
solely to compel performance of the covenant or agreement or to cure the
representation or warranty, the breach of which gave rise to the Event of
Default under such Section, and enforce any equitable decree or order arising
from such proceeding; provided that (i) such request does not conflict with any
provision in this Indenture, (ii) the Trustee determines that such action will
not involve the Trustee incurring any liability (unless the Trustee is
indemnified to its satisfaction against any such liability) and (iii) the
Trustee may take other action deemed proper by the Trustee, that is not
inconsistent with such direction.

 

(c)                                  Upon any sale of the Collateral, whether
made under the power of sale hereby given or by virtue of judicial proceedings,
the Initial Purchasers, any Hedge Counterparty, any Noteholder or Noteholders
may bid for and purchase the Collateral or any part thereof and, upon compliance
with the terms of sale, may hold, retain, possess or dispose of such property in
its or their own absolute right without accountability.

 

Upon any sale of the Collateral, whether made under the power of sale hereby
given or by virtue of judicial proceedings, the receipt of the Trustee, or of
the Officer making a sale under judicial proceedings, shall be a sufficient
discharge to the purchaser or purchasers at any sale for its or their purchase
price, and such purchaser or purchasers shall not be obliged to see to the
application thereof.

 

Any such sale, whether under any power of sale hereby given or by virtue of
judicial proceedings, shall bind the Co-Issuers, the Trustee and the
Noteholders, shall operate to divest all right, title and interest whatsoever,
either at law or in equity, of each of them in

 

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and to the property sold, and shall be a perpetual bar, both at law and in
equity, against each of them and their successors and assigns, and against any
and all Persons claiming through or under them.

 

(d)                                 Notwithstanding any other provision of this
Indenture, the Trustee may not, prior to the date which is one year and one day,
or if longer the applicable preference period then in effect, after the payment
in full of all Notes, institute against, or join any other Person in instituting
against, the Issuer or the Co-Issuer any bankruptcy, reorganization,
arrangement, insolvency, moratorium or liquidation proceedings, or other
proceedings under federal or state bankruptcy or similar laws (of any
jurisdiction).  Nothing in this Section 5.4 shall preclude, or be deemed to
stop, the Trustee (i) from taking any action prior to the expiration of the
aforementioned one year and one day period, or if longer the applicable
preference period then in effect, in (A) any case or proceeding voluntarily
filed or commenced by the Issuer or the Co-Issuer or (B) any involuntary
insolvency proceeding filed or commenced by a Person other than the Trustee, or
(ii) from commencing against the Issuer or the Co-Issuer or any of its
properties any legal action which is not a bankruptcy, reorganization,
arrangement, insolvency, moratorium, liquidation or similar proceeding.

 

5.5.      PRESERVATION OF COLLATERAL

 

(a)                                  If an Event of Default shall have occurred
and be continuing when any Class of Rated Notes is Outstanding, the Trustee
shall retain the Collateral securing the Indenture Issued Notes and any Hedge
Agreement intact, collect and cause the collection of the proceeds thereof and
make all payments and deposits and maintain all accounts in respect of the
Collateral, the Rated Notes and any Hedge Agreement in accordance with
Section 11.1 and the provisions of Sections 10, 12 and 13 unless:

 

(1)                                  the Trustee, pursuant to Section 5.5(c),
determines (such determinations may be based upon a certificate from the
Collateral Manager) that the anticipated proceeds of a sale or liquidation of
the Collateral (after deducting reasonable expenses relating to such sale or
liquidation) would be sufficient to discharge in full the Redemption Prices then
due on the Rated Notes, any amounts required to be paid under any Hedge
Agreement, all unreimbursed Interest Advances together with interest thereon,
all unpaid Administrative Expenses and any accrued and unpaid Senior Collateral
Management Fee (to the extent not waived by the Collateral Manager) and the
Holders of a Majority of the then Aggregate Outstanding Amount of Rated Notes
agrees with such determination; or

 

(2)                                  the Holders of at least 662/3% of the
Aggregate Outstanding Amount of the Rated Notes of the Controlling Class (and,
unless it will be paid in full all amounts owing to it by the Issuer, the
Initial Hedge Counterparty), subject to the provisions hereof, and subject to
the Trustee determining that such action will not involve the Trustee incurring
any liability, (unless the Trustee is indemnified to its satisfaction against
any such liability) direct the sale and liquidation of the Collateral.

 

For purposes of Section 5.5(a)(2), if the Initial Hedge Counterparty shall fail
to vote to direct the sale and liquidation of the Collateral within three
Business Days after written notice from the Issuer or the Trustee requesting a
vote pursuant to such Section 5.5(a)(2), the Initial Hedge Counterparty shall
not be entitled to participate in the vote requested by

 

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such notice.  The Trustee shall give written notice of the retention of the
Collateral to the Issuer with a copy to the Co-Issuer, each Holder of the Rated
Notes and the Initial Hedge Counterparty.  So long as such Event of Default is
continuing, any such retention pursuant to this Section 5.5(a) may be rescinded
at any time when the conditions specified in clause Section 5.5(a)(1) or
(2) exist.

 

(b)                                 Nothing contained in Section 5.5(a) shall be
construed to require the Trustee to preserve the Collateral securing the
Indenture Issued  Notes if prohibited by applicable law.

 

(c)                                  In determining whether the condition
specified in Section 5.5(a)(1) exists, the Trustee shall obtain bid prices with
respect to each security contained in the Collateral from two nationally
recognized dealers (or if it is unable in good faith to obtain such bid prices
from two nationally recognized dealers, one nationally recognized dealer), as
specified by the Collateral Manager in writing, which are Independent from each
other and the Collateral Manager, at the time making a market in such securities
and shall compute the anticipated proceeds of sale or liquidation on the basis
of the lower of such bid prices for each such security.  In addition, for the
purposes of determining issues relating to the execution of a sale or
liquidation of the Pledged Securities and the execution of a sale or other
liquidation thereof in connection with a determination whether the condition
specified in Section 5.5(a)(1) exists, the Trustee may retain and rely on an
opinion of an Independent investment banking firm of national reputation.

 

The Trustee shall deliver to the Noteholders, the Initial Hedge Counterparty,
the Rating Agencies and the Co-Issuers a report stating the results of any
determination required pursuant to Section 5.5(a)(1) no later than ten (10) days
after making such determination but in any event prior to the sale or
liquidation of the Collateral.  The Trustee shall make the determinations
required by Section 5.5(a)(1) within thirty (30) days after an Event of Default
and at the request of the Holders of a Majority of the then Aggregate
Outstanding Amount of the Notes of the Controlling Class at any time during
which the Trustee retains the Collateral pursuant to Section 5.5(a)(1).  In the
case of each calculation made by the Trustee pursuant to Section 5.5(a)(1), the
Trustee shall obtain a letter of an Independent certified public accountant
confirming the accuracy of the computations of the Trustee and certifying their
conformity to the requirements of this Indenture.  In determining whether the
Holders of the requisite percentage of any Class of Rated Notes or the requisite
percentage of Income Noteholders have given any direction or notice or have
agreed pursuant to Section 5.5(a), any Holder of a Rated Note of a Class or
Income Notes who is also a Holder of Rated Notes of another Class or of Income
Notes or any Affiliate of any such Holder shall be counted as a Holder of each
such Rated Note and/or Income Note for all purposes.

 

(d)                                 If an Event of Default shall have occurred
and be continuing at a time when no Rated Note is Outstanding, the Trustee shall
retain the Collateral securing the Indenture Issued Notes and any Hedge
Agreement intact, collect and cause the collection of the proceeds thereof and
make and apply all payments and deposits and maintain all accounts in respect of
the Collateral and the Rated Notes in accordance with Section 11.1 and the
provisions of Section 10 and Section 12 unless a Majority of the Income
Noteholders direct the sale and liquidation of the Collateral.

 

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5.6.      TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION

 

All rights of action and of asserting claims under this Indenture, or under any
of the Rated Notes, may be enforced by the Trustee without the possession of any
of the Hedge Agreements or the Rated Notes or the production thereof in any
trial or other Proceedings relative thereto, and any action or Proceedings
instituted by the 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
reasonable expenses, disbursements and compensation of the Trustee, each
predecessor trustee and their respective agents and attorneys and counsel, shall
be for the benefit of the Secured Parties and shall be applied as set forth in
Section 5.7.

 

5.7.      APPLICATION OF FUNDS COLLECTED

 

Any funds collected by the Trustee with respect to any Hedge Agreement or the
Rated Notes pursuant to this Section 5 and any funds that may then be held or
thereafter received by the Trustee with respect to any Hedge Agreements or the
Rated Notes hereunder shall be applied subject to Section 13.1 and in accordance
with the provisions of Section 11.1(c), at the date or dates fixed by the
Trustee.

 

5.8.      LIMITATION ON SUITS

 

Only the Trustee may pursue remedies available hereunder and no Holder of any
Note shall have any right to institute any Proceedings, judicial or otherwise,
with respect to this Indenture, or its Note or otherwise, for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless:

 

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

 

(b)                                 except in the case of a default in the
payment of principal or interest, the Holders or Holders of at least 25% of the
then Aggregate Outstanding Amount of the Rated Notes of the Controlling
Class shall have made a written request to the Trustee to institute Proceedings
in respect of such Event of Default in its own name as Trustee hereunder and
such Holder or Holders have offered to the Trustee reasonable indemnity against
the costs, expenses and liabilities to be incurred in compliance with such
request;

 

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

 

(d)                                 no direction inconsistent with such written
request has been given to the Trustee during such 30-day period by the Holders
of a Majority of the then Aggregate Outstanding Amount of the Rated Notes;

 

it being understood and intended that no one or more Holders of Rated Notes
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 Holders of Notes or to obtain or to seek to obtain priority or preference
over any other Holders of the Notes of the same Class or to enforce any right
under this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all the Holders of Notes of the same Class.  In addition, any
action taken by any one or more of the Holders of Notes shall be subject to and
in accordance with Sections 13.1 and 11.1(d).

 

Notwithstanding any other provisions of this Indenture but subject to
Section 5.8(d), if the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of the Rated Notes,
each representing less than a Majority of the then Aggregate Outstanding

 

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Amount of Rated Notes, the Trustee shall follow the instructions of the group
representing the higher percentage of aggregate principal amount of Outstanding
Rated Notes.

 

5.9.      UNCONDITIONAL RIGHTS OF RATED NOTEHOLDERS (OTHER THAN THE CLASS G
NOTEHOLDERS) TO RECEIVE PRINCIPAL AND INTEREST

 

Notwithstanding any other provision in this Indenture (other than
Section 2.6(i)), the Holder of any Indenture Issued Note shall have the right,
which is absolute and unconditional, to receive payment of the principal of and
interest (if any) on such Indenture Issued Note as such principal and/or
interest become due and payable in accordance with Sections 13.1 and
11.1(c) and, subject to the provisions of Section 5.8, to institute proceedings
for the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder.  Holders of the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes, the Class F Notes and the Class G
Notes shall have no right to institute proceedings for the enforcement of any
payment until such time as no Class of Rated Note that is senior to such
Class of them remains Outstanding, which right shall be subject to the
provisions of Section 5.8, and shall not be impaired without the consent of any
such Holder.

 

5.10.                        RESTORATION OF RIGHTS AND REMEDIES

 

If the Trustee or any Rated 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 Trustee or to such Rated Noteholder, then and in every such case the
Co-Issuers, the Trustee and the Rated Noteholder 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
Secured Parties shall continue as though no such Proceeding had been instituted.

 

5.11.                        RIGHTS AND REMEDIES CUMULATIVE

 

No right or remedy herein conferred upon or reserved to the Trustee or to the
Rated 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 by 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.

 

5.12.                        DELAY OR OMISSION NOT WAIVER

 

No delay or omission of the Trustee, any Rated Noteholder or the Initial Hedge
Counterparty to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein.  Every right and remedy given by this
Section 5 or by law to the Trustee, the Rated Noteholders or the Initial Hedge
Counterparty may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee, the Rated Noteholders the Initial Hedge Counterparty,
as the case may be.

 

5.13.                        CONTROL BY CONTROLLING CLASS

 

Notwithstanding any other provision of this Indenture (but subject to the
proviso in the definition of “Outstanding” in Section 1.1(a)), the Holders of a
Majority of the then Aggregate Outstanding Amount of the Rated Notes shall have
the right to cause the institution of and direct the time, method and place of
conducting any Proceeding for any remedy available to the Trustee, or of any
sale of the Collateral, in whole or in part, provided that:

 

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

 

(b)                                 the Trustee may take any other action deemed
proper by it that is not inconsistent with such direction; provided that,
subject to Section 6.1, the Trustee need not take any action that it determines
might involve it in liability (unless the Trustee has received an indemnity
reasonably satisfactory to it against such liability as set forth below);

 

(c)                                  the Trustee shall have been provided with
an indemnity reasonably satisfactory to it; and

 

(d)                                 any direction to the Trustee to undertake a
Sale of the Collateral shall be made only pursuant to, and in accordance with,
Sections 5.4 and 5.5.

 

5.14.                      WAIVER OF PAST DEFAULTS

 

The Holders of a Majority of the then Aggregate Outstanding Amount of the Notes
of the Controlling Class may, in certain cases waive any past Default and its
consequences, except:

 

(a)                                  a Default for more than five (5) Business
Days in the payment, when due and payable, of any interest on any Rated Note; or

 

(b)                                 a Default in the payment of principal on any
Note at its Stated Maturity Date or Redemption Date; or

 

(c)                                  the failure on any Payment Date to disburse
amounts available in the Collection Account in accordance with Section 11.1 and
the continuation of such failure for a period of three (3) Business Days; or

 

(d)                                 a Default arising under Section 5.1(g) or
5.1(h); or

 

(e)                                  a Default in respect of any provision of
this Indenture that under Section 8.2 cannot be modified or amended without the
waiver or consent of the Holder of each Outstanding Note adversely affected
thereby.

 

In the case of any such waiver, (i) the Co-Issuers, the Trustee and the Holders
of the Notes 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, and (ii) the Trustee shall promptly give
written notice of any such waiver to the Collateral Manager and each Holder of
Rated Notes.  The Rating Agencies shall be notified by the Issuer of any such
waiver.

 

Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture, but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereto.

 

5.15.                      UNDERTAKING FOR COSTS

 

All parties to this Indenture agree, and each Holder of any Rated Note by its
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 Trustee for any action taken, or
omitted by it as 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

 

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claims or defenses made by such party litigant; but the provisions of this
Section 5.15 shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Rated Noteholder, or group of Rated Noteholders, holding in
the aggregate more than 10% in Aggregate Outstanding Amount of the Controlling
Class, or to any suit instituted by any Rated Noteholder for the enforcement of
the payment of the principal of or interest on any Rated Note on or after the
Stated Maturity Date expressed in such Rated Note (or, in the case of
redemption, on or after the applicable Redemption Date).

 

5.16.                      WAIVER OF STAY OR EXTENSION LAWS

 

The Co-Issuers covenant (to the extent that they may lawfully do so) that they
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 (including but not limited to filing a
voluntary petition under Chapter 11 of the Bankruptcy Code and by the voluntary
commencement of a proceeding or the filing of a petition seeking winding up,
liquidation, reorganization or other relief under any bankruptcy, insolvency,
receivership or similar law now or hereafter in effect), which may affect the
covenants, the performance of or any remedies under this Indenture; and the
Co-Issuers (to the extent that they may lawfully do so) hereby expressly waive
all benefit or advantage of any such law, and covenant that they will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.

 

5.17.                      SALE OF COLLATERAL

 

(a)                                 The power to effect any sale (a Sale) of any
portion of the Collateral pursuant to Sections 5.4 and 5.5 shall not be
exhausted by any one or more Sales as to any portion of such Collateral
remaining unsold, but shall continue unimpaired until the entire Collateral
shall have been sold or all amounts secured by the Collateral shall have been
paid.  The Trustee hereby expressly waives its rights to any amount fixed by law
as compensation for any Sale; provided that the Trustee shall be authorized to
deduct the reasonable costs, charges and expenses incurred by it in connection
with such Sale from the proceeds thereof notwithstanding the provisions of
Section 6.7.

 

(b)                                The Trustee may bid for and acquire any
portion of the Collateral in connection with a public Sale thereof, by crediting
all or part of the net proceeds of such Sale after deducting the reasonable
costs, charges and expenses incurred by the Trustee in connection with such Sale
notwithstanding the provisions of Section 6.7.  The Rated Notes and the Hedge
Agreement, if any, need not be produced in order to complete any such Sale, or
in order for the net proceeds of such Sale to be credited against amounts owing
on the Rated Notes.  The Trustee may hold, lease, operate, manage or otherwise
deal with any property so acquired in any manner permitted by law in accordance
with this Indenture.

 

(c)                                 If any portion of the Collateral consists of
securities not registered under the Securities Act (Unregistered Securities),
the Trustee may, but shall not be required to, seek an Opinion of Counsel, or,
if no such Opinion of Counsel can be obtained, with the consent of a Majority of
the Controlling Class seek, a no-action position from the Commission or any
other relevant federal or state regulatory authorities, regarding the legality
of a public or private sale of such Unregistered Securities.  In no event will
the Trustee be required to register Unregistered Securities under the Securities
Act.

 

(d)                                The Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any portion of
the Collateral in connection with a sale thereof.

 

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In addition, the Trustee is hereby irrevocably appointed the agent and
attorney-in-fact of the Issuer to transfer and convey its interest in any
portion of the Collateral in connection with a sale thereof, and to take all
action necessary to effect such sale.  No purchaser or transferee at such a sale
shall be bound to ascertain the Trustee’s authority, to inquire into the
satisfaction of any conditions precedent or see to the application of any funds.

 

5.18.                      ACTION ON THE RATED NOTES

 

The Trustee’s right to seek and recover judgment on the Rated Notes or under
this Indenture shall not be affected by the seeking or obtaining of or
application for any other relief under or with respect to this Indenture. 
Neither the lien of this Indenture nor any rights or remedies of the Secured
Parties shall be impaired by the recovery of any judgment by the 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 or the Co-Issuer.

 

ARTICLE VI

 

THE TRUSTEE

 

6.1.      CERTAIN DUTIES AND RESPONSIBILITIES

 

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

 

(1)                                 the Trustee undertakes 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 Trustee; and

 

(2)                                 in the absence of bad faith on its part, the
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 Trustee and conforming to the requirements of this Indenture;
provided that, in the case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or not
they substantially conform to the requirements of this Indenture and shall
promptly, but in any event within three Business Days in the case of an
Officer’s certificate furnished by the Issuer, notify the party delivering the
same if such certificate or opinion does not conform.  If a corrected form shall
not have been delivered to the Trustee within 15 days after such notice from the
Trustee, the Trustee shall promptly notify the Rated Noteholders and the Initial
Hedge Counterparty.

 

(b)                                In case an Event of Default actually known to
the Trustee has occurred and is continuing, the Trustee shall, prior to the
receipt of directions, if any, from a Majority of the Controlling Class,
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in its exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person’s own
affairs.

 

(c)                                 No provision of this Indenture shall be
construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except that:

 

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(1)                                 This Section 6.1(c) shall not be construed
to limit the effect of Section 6.1(a);

 

(2)                                 the Trustee shall not be liable for any
error of judgment made in good faith by a Trust Officer, unless it shall be
proven that the Trustee was negligent in ascertaining the pertinent facts;

 

(3)                                 the Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Issuer or the Co-Issuer in accordance with this
Indenture and/or a Majority (or such other percentage as may be required by the
terms hereof) of the Aggregate Outstanding Amount of the Controlling Class (or
other Class if required or permitted by the terms hereof) relating to the time,
method and place of conducting any Proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under this
Indenture;

 

(4)                                 no provision of this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers contemplated hereunder, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it (if the
amount of such funds or risk or liability does not exceed the amount payable to
the Trustee pursuant to Section 11.1(a)(1) net of the amounts specified in
Section 6.8(a)(1), the Trustee shall be deemed to be reasonably assured of such
repayment) unless such risk or liability relates to performance of its ordinary
services, including under Section 5, under this Indenture; and

 

(5)                                 the Trustee shall not be liable to the Rated
Noteholders for any action taken or omitted by it at the direction of the
Co-Issuers (in the case of the Rated Notes other than the Class G Notes and the
Class F Notes), the Issuer (in the case of the Class G Notes and the Class F
Notes), the Collateral Manager and/or the Holders of the Rated Notes under the
circumstances in which such direction is required or permitted by the terms of
this Indenture.

 

(d)                                For all purposes under this Indenture, the
Trustee shall not be deemed to have notice or knowledge of any Event of Default
described in Section 5.1(e), 5.1(f), 5.1(g) or 5.1(h) unless a Trust Officer
assigned to and working in the Corporate Trust Office has actual knowledge
thereof or unless written notice of any event which is in fact such an Event of
Default or such a Default, as the case may be, is received by the Trustee at the
Corporate Trust Office.  For purposes of determining the Trustee’s
responsibility and liability hereunder, whenever reference is made in this
Indenture to such an Event of Default or such a Default, as the case may be,
such reference shall be construed to refer only to such an Event of Default or
such a Default, as the case may be, of which the Trustee is deemed to have
notice as described in this Section 6.1(d).

 

(e)                                 Whether or not therein expressly so
provided, every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the
provisions of this Section 6.

 

(f)                                   The Trustee shall, upon receipt of
reasonable (but no less than three Business Days’) prior written notice, permit
any representative of a Holder of a Rated Note or the Initial Hedge
Counterparty, during the Trustee’s normal business hours, to examine all books
of

 

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account, records, reports and other papers of the Trustee relating to the Rated
Notes, to make copies and extracts therefrom (the reasonable out-of-pocket
expenses incurred in making any such copies or extracts to be reimbursed to the
Trustee by such Holder) and to discuss the Trustee’s actions, as such actions
relate to the Trustee’s duties with respect to the Rated Notes, with the
Trustee’s officers and employees responsible for carrying out the Trustee’s
duties with respect to the Rated Notes; provided that under no circumstances
shall the Initial Hedge Counterparty be permitted to review any documentation
containing the names or other indicia of identity of any of the Noteholders
unless any such information (including the number of shares held by such
Noteholder) has been redacted from such documentation.

 

(g)                                With respect to the security interests
created hereunder, the Trustee acts as a fiduciary for the Rated Noteholders
only, and serves as a collateral agent for the other Secured Parties.

 

6.2.      NOTICE OF DEFAULT

 

Promptly (and in no event later than three Business Days) after the occurrence
of any Default actually known to a Trust Officer of the Trustee or after
acceleration has been made pursuant to Section 5.2, the Trustee shall send to
the Issuer, the PAA Issued Note Paying Agent, each Rating Agency, (for so long
as any Class of Rated Notes is Outstanding), the Collateral Manager, the Initial
Hedge Counterparty and to all Holders of Rated Notes, as their names and
addresses appear on the Note Register, notice of all Defaults hereunder known to
the Trustee, unless such Default shall have been cured or waived.

 

6.3.      CERTAIN RIGHTS OF TRUSTEE

 

Except as otherwise provided in Sections 6.1 and 8:

 

(a)                                 the Trustee may rely and shall be protected
in acting or refraining from acting in good faith and in reliance upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, note or other paper or document
reasonably believed by it to be genuine and to have been signed or presented by
the proper party or parties;

 

(b)                                any request or direction of the Issuer or the
Co-Issuer mentioned herein shall be sufficiently evidenced by an Issuer Request
or Issuer Order, as the case may be;

 

(c)                                 whenever in the administration of this
Indenture the Trustee shall (i) deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, rely upon an Officer’s certificate or (ii) be
required to determine the value of any Collateral or funds hereunder or the
cashflows projected to be received therefrom, the Trustee may, in the absence of
bad faith on its part, rely on reports of nationally recognized accountants,
investment bankers or other Persons qualified to provide the information
required to make such determination, including nationally recognized dealers in
securities of the type being valued and securities quotation services;

 

(d)                                as a condition to the taking or omitting of
any action by it hereunder, the Trustee may consult with counsel and the advice
of such counsel or any Opinion of Counsel shall be

 

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full and complete authorization and protection in respect of any action taken or
omitted by it hereunder in good faith and in reliance thereon;

 

(e)                                 the Trustee shall be under no obligation to
exercise or to honor any of the rights or powers vested in it by this Indenture
at the request or direction of any of the Rated Noteholders pursuant to this
Indenture, unless such Rated Noteholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which might reasonably be incurred by it in compliance with such request or
direction;

 

(f)                                   the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, note or other paper documents, but the Trustee, in its discretion,
may and, upon the written direction of the Holders of a Majority of the then
Aggregate Outstanding Amount of the Notes of any Class, the Initial Hedge
Counterparty or any Rating Agency shall make such further inquiry or
investigation into such facts or matters as it may see fit or as it shall be
directed, and, the Trustee shall be entitled, on reasonable prior notice to the
Co-Issuers, to examine the books and records of the Co-Issuers or the Collateral
Manager relating to the Rated Notes and the Collateral, personally or by agent
or attorney at a time acceptable to the Co-Issuers or the Collateral Manager in
their reasonable judgment during normal business hours; provided that the
Trustee shall, and shall cause its agents, to hold in confidence all such
information, except (i) to the extent disclosure may be required by law by any
regulatory authority and (ii) to the extent that the Trustee, in its sole
judgment, may determine that such disclosure is consistent with its obligations
hereunder;

 

(g)                                the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys; provided that the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent (other than any
Affiliate of the Trustee) appointed and supervised, or attorney appointed, with
due care by it hereunder;

 

(h)                                the Trustee shall not be liable for any
action it takes or omits to take in good faith that it reasonably and, after the
occurrence and during the continuance of an Event of Default, prudently believes
to be authorized or within its rights or powers hereunder;

 

(i)                                    nothing herein shall be construed to
impose an obligation on the part of the Trustee to recalculate, evaluate or
verify any report, certificate or information received from the Issuer or
Collateral Manager (unless and except to the extent otherwise expressly set
forth herein or upon the request of the Initial Hedge Counterparty, a Rating
Agency or a Majority of the then Aggregate Outstanding Amount of the Notes of
the Controlling Class);

 

(j)                                    the Trustee shall not be responsible or
liable for the actions or omissions of, or any inaccuracies in the records of,
any non-Affiliated custodian, clearing agency, common depository, Euroclear or
Clearstream or for the acts or omissions of the Collateral Manager or either
Co-Issuer;

 

(k)                                 to the extent any defined term hereunder, or
any calculation required to be made or determined by the Trustee hereunder, is
dependent upon or defined by reference to generally accepted accounting
principles in the United States (GAAP), the Trustee shall be entitled to request
and receive (and rely upon) instruction from the Issuer or the

 

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accountants appointed pursuant to 10.14 as to the application of GAAP in such
connection, in any instance;

 

(l)                                    to the extent permitted by law, the
Trustee shall not be required to give any bond or surety in respect of the
execution of this Indenture or otherwise; and

 

(m)                              the permissive right of the Trustee to take or
refrain from taking any actions enumerated in this Indenture shall not be
construed as a duty.

 

(n)                                The Trustee shall be entitled to conclusively
rely upon the Collateral Manager’s determination that the representations and
warranties provided in connection with the acquisition of a Mezzanine Loan, a
Subordinate Mortgage Loan Interest, a Credit Lease Loan, a Tenant Lease Loan
Interest, a Participation Interest or a Commercial Mortgage Loan comply with the
requirements of clause (u) of the definition of “Eligibility Criteria.”

 

6.4.      AUTHENTICATING AGENTS

 

If the Trustee so chooses the Trustee may appoint one or more Authenticating
Agents with power to act on its behalf and subject to its direction in the
authentication of Indenture Issued Notes in connection with issuance, transfers
and exchanges under Sections 2.4, 2.5 and 8.5, as fully to all intents and
purposes as though each such Authenticating Agent had been expressly authorized
by those Sections to authenticate such Indenture Issued Notes.  For all purposes
of this Indenture, the authentication of Indenture Issued Notes by an
Authenticating Agent pursuant to this Section 6.4 shall be deemed to be the
authentication of Indenture Issued Notes “by the Trustee”.

 

Any entity into which any Authenticating Agent may be merged or converted or
with which it may be consolidated, or any entity resulting from any merger,
consolidation or conversion to which any Authenticating Agent shall be a party,
or any entity succeeding to the corporate trust business of any Authenticating
Agent, shall be the successor of such Authenticating Agent hereunder, without
the execution or filing of any further act on the part of the parties hereto or
such Authenticating Agent or such successor entity.

 

Any Authenticating Agent may at any time resign by giving written notice of
resignation to the Trustee and the Issuer.  The Trustee may at any time
terminate the agency of any Authenticating Agent by giving written notice of
termination to such Authenticating Agent and the Co-Issuers.  Upon receiving
such notice of resignation or upon such a termination, the Trustee shall
promptly appoint a successor Authenticating Agent and shall give written notice
of such appointment to the Co-Issuers.

 

The Issuer agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services (provided, however, that, so long as an
Authenticating Agent is the Trustee, or an Affiliate thereof, such compensation
shall be payable by the Trustee, rather than by the Issuer), and reimbursement
for its reasonable expenses relating thereto and the Trustee shall be entitled
to be reimbursed for such payments, subject to Section 6.8.  The provisions of
Sections 2.8, 6.5 and 6.6 shall be applicable to any Authenticating Agent.

 

6.5.      NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF RATED NOTES

 

The recitals contained herein and in the Rated Notes, other than the Certificate
of Authentication thereon, shall be taken as the statements of the Co-Issuers
(with respect to the Rated Notes other than the Class F Notes and the Class G
Notes) and the Issuer (with respect to the Class F Notes and the Class G

 

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Notes), and the Trustee assumes no responsibility for their correctness.  The
Trustee makes no representation as to the validity or sufficiency of this
Indenture (except as may be made with respect to the validity of the Trustee’s
obligations hereunder), of the Collateral or of the Rated Notes.  The Trustee
shall not be accountable for the use or application by the Co-Issuers of the
Rated Notes (other than the Class F Notes or the Class G Notes), by the Issuer
of the Class F Notes or the Class G Notes or the proceeds thereof or any amounts
paid to either of the Co-Issuers pursuant to the provisions hereof.

 

6.6.      MAY HOLD RATED NOTES

 

The Trustee, any Note Paying Agent, the Note Registrar or any other agent of the
Co-Issuers, in its individual or any other capacity, may become the owner or
pledgee of Rated Notes and, may otherwise deal with the Co-Issuers or any of
their Affiliates, with the same rights it would have if it were not Trustee,
Note Paying Agent, Note Registrar or such other agent.

 

6.7.      FUNDS HELD IN TRUST

 

Funds held by the Trustee hereunder shall be held in trust to the extent
required herein.  The Trustee shall be under no liability for interest on any
funds received by it hereunder except as otherwise agreed upon with the Issuer
and except to the extent of income or other gain on investments which are
deposits in or certificates of deposit of the Trustee in its commercial capacity
and income or other gain actually received by the Trustee on Eligible
Investments.

 

6.8.      COMPENSATION AND REIMBURSEMENT

 

(a)                                 The Issuer agrees:

 

(1)                                 to pay the Trustee on each Payment Date the
Trustee Fee, the PAA Issued Note Paying Agent Fee and reasonable compensation
for all other services, including custodial services, rendered by it hereunder
(which compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);

 

(2)                                 except as otherwise expressly provided
herein, to reimburse the Trustee (subject to any written agreement between the
Issuer and the Trustee) in a timely manner upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture or in the enforcement of any
provision hereof and expenses related to the maintenance and administration of
the Collateral (including securities transaction charges and the reasonable
compensation and expenses and disbursements of its agents and legal counsel and
of any accounting firm or investment banking firm employed by the Trustee
pursuant to Section 5.2, 5.4, 5.5, 6.3(c), 6.3(k), 10.12 or 10.14, except any
such expense, disbursement or advance as may be attributable to its negligence,
willful misconduct or bad faith but only to the extent any such securities
transaction charges have not been waived during a Due Period due to the
Trustee’s receipt of a payment from a financial institution with respect to
certain Eligible Investments);

 

(3)                                 to indemnify the Trustee and its Officers,
directors, employees and agents for, and to hold them harmless against, any
loss, liability or expense incurred by it without negligence, willful misconduct
or bad faith on their part, arising out of or in connection with the acceptance
or administration of this trust, including the

 

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reasonable costs and expenses (including reasonable counsel fees) of defending
themselves against any claim or liability in connection with the exercise or
performance of any of their powers or duties hereunder; and

 

(4)                                 to pay the Trustee reasonable additional
compensation together with its expenses (including reasonable counsel fees) for
any collection action taken pursuant to Section 6.14.

 

(b)                                The Issuer may remit payment for such fees
and expenses to the Trustee or, in the absence thereof, the Trustee may from
time to time deduct payment of its fees and expenses hereunder from funds on
deposit in the Expense Account pursuant to Section 11.1.

 

(c)                                 The Trustee hereby agrees not to cause the
filing of a petition in bankruptcy against the Issuer for the non-payment to the
Trustee of any amounts provided by this Section 6.8 until at least one year and
one day, or if longer the applicable preference period then in effect, after the
payment in full of all Rated Notes.

 

(d)                                The amounts payable to the Trustee pursuant
to Sections 6.8(a)(2) through (4) (other than amounts received by the Trustee
from financial institutions under Section 6.8(a)(2) above) shall not, except as
provided by Section 11.1(a)(24) or Section 11.1(b)(20), exceed on any Payment
Date the limitation described in Section 11.1(a)(1) for such Payment Date;
provided that (A) the Trustee shall not institute any proceeding for enforcement
of such lien except in connection with an action pursuant to Section 5.3 or 5.4
for the enforcement of the lien of this Indenture for the benefit of the Secured
Parties and (B) the Trustee may only enforce such a lien in conjunction with the
enforcement of the rights of the Secured Parties in the manner set forth in
Section 5.4.

 

The Trustee shall, subject to the Priority of Payments, receive amounts pursuant
to this Section 6.8 and Section 11.1 only to the extent that the payment thereof
will not result in an Event of Default and the failure to pay such amounts to
the Trustee will not, by itself, constitute an Event of Default.  Subject to
Section 6.10, the Trustee shall continue to serve as Trustee under this
Indenture notwithstanding the fact that the Trustee shall not have received
amounts due it hereunder and hereby agrees not to cause the filing of a petition
in bankruptcy against the Co-Issuers for the nonpayment to the Trustee of any
amounts provided by this Section 6.8 until at least one year and one day, or, if
longer, the applicable preference period then in effect, after the payment in
full of all Rated Notes.  No direction by the Holders of a Majority of the then
Aggregate Outstanding Amount of the Notes of the Controlling Class shall affect
the right of the Trustee t o collect amounts owed to it under this Indenture.

 

The indemnifications in favor of the Trustee in this Section 6.8 shall
(i) survive any resignation or removal of any Person acting as Trustee (to the
extent of any indemnified liabilities, costs, expenses and other amounts arising
or incurred prior to, or arising out of actions or omissions occurring prior to,
such resignation or removal) and (ii) apply to the Trustee in its capacities as
Custodian, Note Paying Agent, Rated Note Calculation Agent and Authenticating
Agent.

 

6.9.      CORPORATE TRUSTEE REQUIRED; ELIGIBILITY

 

There shall at all times be a Trustee hereunder which shall be a bank,
corporation or trust company organized and doing business under the laws of the
United States or of any State thereof, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
U.S.$100,000,000, subject to supervision or examination by federal or state
banking authorities,

 

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and insured by the Federal Deposit Insurance Corporation, whose long-term senior
unsecured debt is rated “AA-” by S&P (or “A+” by S&P, if the Trustee’s
short-term unsecured debt rating is at least “A-1” by S&P), or an entity with
respect to which Rating Agency Confirmation has been received.  If such entity
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 6.9, the combined capital and surplus of such entity
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published.  If at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section 6.9, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Section 6.

 

6.10.                      RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR

 

(a)                                 No resignation or removal of the Trustee and
no appointment of a successor Trustee pursuant to this Section 6 shall become
effective until the acceptance of appointment by the successor Trustee under
Section 6.11.

 

(b)                                The Trustee may resign at any time by giving
90 days prior written notice thereof to the Co-Issuers, the Rated Noteholders,
the Collateral Manager, the Initial Hedge Counterparty and each Rating Agency. 
Upon receiving such notice of resignation, or if the Trustee is removed or
becomes incapable of acting, or if a vacancy shall occur in the office of the
Trustee for any reason, the Issuer shall (after consultation with the Collateral
Manager) promptly propose a successor trustee for approval by the Holders of
662/3% of the then Aggregate Outstanding Amount of the Notes of each Class of
Rated Notes.  A proposed successor trustee approved in accordance with the
preceding sentence shall be appointed by the Co-Issuers as successor trustee by
written instrument, in duplicate, executed by an Authorized Officer of the
Issuer and an Authorized Officer of the Co-Issuer, one copy of which shall be
delivered to the Trustee so resigning and one copy to the successor trustee or
trustees, together with a copy to each Rated Noteholder.  If no successor
trustee shall have been appointed and an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee or any Holder of a
Rated Note or the Initial Hedge Counterparty on behalf of itself and all others
similarly situated, subject to Section 5.15, may petition any court of competent
jurisdiction for the appointment of a successor Trustee.

 

(c)                                 The Trustee may be removed at any time by an
Act of the Holders of at least 662/3% of the then Aggregate Outstanding Amount
of the Notes of each Class of Rated Notes delivered to the Trustee and to the
Co-Issuers.

 

(d)                                If at any time:

 

(1)                                 the Trustee shall cease to be eligible under
Section 6.9 and shall fail to resign after written request therefor by any
Holder; or

 

(2)                                 the Trustee shall become incapable of acting
or shall be adjudged as bankrupt or insolvent or a receiver or liquidator of the
Trustee or of its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation,

 

then, in any such case (subject to Section 6.10(a)), (A) the Co-Issuers, by
Issuer Order shall remove the Trustee, or (B) subject to Section 5.15, any
Holder or the Initial Hedge Counterparty

 

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may, on behalf of itself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee and the appointment of
a successor Trustee.

 

(e)                                 The Co-Issuers shall give prompt notice of
each resignation and each removal of the Trustee and each appointment of a
successor Trustee by mailing written notice of such event by first class mail,
postage prepaid, to each Rating Agency, the Initial Hedge Counterparty, the
Collateral Manager and the Holders as their names and addresses appear in the
Note Register.  Each notice shall include the name of the successor Trustee and
the address of its Corporate Trust Office.  If the Co-Issuers fail to mail such
notice within ten days after acceptance of appointment by the successor Trustee,
the successor Trustee shall cause such notice to be given at the expense of the
Co-Issuers.

 

6.11.                      ACCEPTANCE OF APPOINTMENT BY SUCCESSOR

 

Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Co-Issuers and the retiring Trustee (with copies to the
Collateral Manager) an instrument accepting such appointment.  Upon delivery of
the required instruments, the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any other act, deed
or conveyance, shall become vested with all the rights, powers, trusts, duties
and obligations of the retiring Trustee; but, on request of the Co-Issuers or a
Majority of the then Aggregate Outstanding Amount of the Notes of any Class of
Notes or the successor Trustee, such retiring Trustee shall, upon payment of its
charges, fees, indemnities and expenses then unpaid, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee, and shall duly assign, transfer and deliver to
such successor Trustee all property and funds held by such retiring Trustee
hereunder, subject nevertheless to its lien, if any, provided for in
Section 6.8(d).  Upon request of any such successor Trustee, the Co-Issuers
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and trusts.

 

No successor Trustee shall accept its appointment unless (a) at the time of such
acceptance such successor shall be qualified and eligible under Section 6.9 and
the other provisions of this Section 6 and (b) a Rating Agency Confirmation
shall have been obtained with respect to the appointment of such successor
Trustee shall have been satisfied.  No appointment of a successor Trustee shall
become effective if the Holders of a Majority of the then Aggregate Outstanding
Amount of the Notes of the Controlling Class objects to such appointment; and no
appointment of a successor Trustee shall become effective until the date ten
days after notice of such appointment has been given to each Rated Noteholder
and each Rating Agency.

 

6.12.                      MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS OF TRUSTEE

 

Any Person into which the Trustee may be merged or converted or with which it
may be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
all or substantially all of the corporate trust business of the Trustee, shall
be the successor of the Trustee hereunder; provided such Person shall be
otherwise qualified and eligible under this Section 6, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto.  The successor Trustee will notify each Rating Agency of any such
merger, conversion or consolidation.  In case any of the Indenture Issued Notes
have been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such authentication and deliver the Indenture Issued Notes so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Indenture Issued Notes.

 

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6.13.                     CO-TRUSTEES

 

At any time or times, for the purpose of meeting the legal requirements of any
jurisdiction in which any part of the Collateral may at the time be located, the
Trustee shall have power to appoint one or more Persons to act as Co-trustee,
jointly with the Trustee of all or any part of the Collateral, with the power to
file such proofs of claim and take such other actions pursuant to Section 5.6
and to make such claims and enforce such rights of action on behalf of the
Holders of the Rated Notes subject to the other provisions of this Section 6.13.

 

The Co-Issuers shall join with the Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to appoint a
Co-trustee.  If the Co-Issuers do not join in such appointment within 15 days
after the receipt by them of a request to do so, the Trustee shall have power to
make such appointment.

 

Should any written instrument from the Co-Issuers be required by any Co-trustee
so appointed for more fully confirming to such Co-trustee such property, title,
right or power, any and all such instruments shall, on request, be executed,
acknowledged and delivered by the Co-Issuers.  The Co-Issuers agree to pay
(subject to the Priority of Payments) for any reasonable fees and expenses in
connection with such appointment.

 

Every Co-trustee shall, to the extent permitted by law, but to such extent only,
be appointed subject to the following terms:

 

(a)                                 the Indenture Issued Notes shall be
authenticated and delivered and all rights, powers, duties and obligations
hereunder in respect of the custody of securities, funds and other personal
property held by, or required to be deposited or pledged with, the Trustee
hereunder, shall be exercised solely by the Trustee;

 

(b)                                the rights, powers, duties and obligations
hereby conferred or imposed upon the Trustee in respect of any property covered
by the appointment of a Co-trustee shall be conferred or imposed upon and
exercised or performed by the Trustee or by the Trustee and such Co-trustee
jointly, as shall be provided in the instrument appointing such Co-trustee,
except to the extent that under any law of any jurisdiction in which any
particular act is to be performed, the Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers, duties and
obligations shall be exercised and performed by a Co-trustee;

 

(c)                                 the Trustee at any time, by an instrument in
writing executed by it, may accept the resignation of or remove any Co-trustee
appointed under this Section 6.13.  A successor to any Co-trustee so resigned or
removed may be appointed in the manner provided in this Section 6.13;

 

(d)                                no Co-trustee hereunder shall be personally
liable by reason of any act or omission of the Trustee or any other Co-trustee
hereunder;

 

(e)                                 the Trustee shall not be liable by reason of
any act or omission of a Co-trustee;

 

(f)                                   any Act of Rated Noteholders delivered to
the Trustee shall be deemed to have been delivered to each Co-trustee; and

 

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(g)                                each Co-trustee hereunder shall at the time
of such acceptance satisfy the qualification required of a Trustee under
Section 6.9 and the other provisions of this Section 6.

 

6.14.                     CERTAIN DUTIES RELATED TO DELAYED PAYMENT OF PROCEEDS;
OTHER NOTICES

 

In the event that the Trustee shall not have received a payment with respect to
any Pledged Security within two Business Days after its Due Date, the Trustee
shall (i) notify the Issuer and Collateral Manager in writing and (ii) promptly
request the issuer of such Pledged Security, the trustee under the related
Underlying Instrument or paying agent designated by either of them, as the case
may be, to make such payment as soon as practicable after such request but in no
event later than three Business Days after the date of such request.  In the
event that such payment is not made within such time period, the Trustee,
subject to the provisions of Section 6.1(c)(4), shall, subject to the
restrictions on the sale of Collateral Interests set forth in Section 12.1, take
such action as the Collateral Manager shall direct in writing.  Any such action
shall be without prejudice to any right to claim a Default under this
Indenture.  The Trustee will promptly notify the Issuer if the Collateral
Manager has determined that (i) any Collateral Interest has become an Impaired
Interest, a Deferred Interest PIK Bond, a Credit Risk Interest or a Written Down
Interest or (ii) the Trustee has received an Equity Interest in connection with
any Collateral Interest.

 

6.15.                     REPRESENTATIONS AND WARRANTIES OF THE BANK

 

(a)                                 Organization.  The Bank has been duly
organized and is validly existing as a national banking association under the
laws of the United States and has the power to conduct its business and affairs
as a trustee.

 

(b)                                Authorization; Binding Obligations.  The Bank
has the power and authority to perform the duties and obligations of Trustee,
Note Registrar and Note Transfer Agent or any other capacity to which it is
appointed under this Indenture.  The Bank has taken all necessary action to
authorize the execution, delivery and performance of this Indenture, and all of
the documents required to be executed by the Bank pursuant hereto.  This
Indenture has been duly executed and delivered by the Bank.  Upon execution and
delivery by the Co-Issuers, this Indenture will constitute the legal, valid and
binding obligation of the Bank enforceable in accordance with its terms.

 

(c)                                 Eligibility.  The Bank is eligible under
Section 6.9 to serve as Trustee hereunder.

 

(d)                                No Conflict.  Neither the execution, delivery
and performance of this Indenture, nor the consummation of the transactions
contemplated by this Indenture, (i) is prohibited by, or requires the Bank to
obtain any consent, authorization, approval or registration under, any law,
statute, rule, regulation, judgment, order, writ, injunction or decree that is
binding upon the Bank or any of its properties or assets, or (ii) will violate
any provision of, result in any default or acceleration of any obligations
under, result in the creation or imposition of any lien pursuant to, or require
any consent under, any agreement to which the Bank is a party or by which it or
any of its property is bound.

 

(e)                                 No Proceedings.  There are no proceedings
pending, or to the best knowledge of the Bank, threatened against the Bank
before any federal, state or other governmental agency, authority, administrator
or regulatory body, arbitrator, court or other tribunal, foreign or domestic,
that could have a material adverse effect on the Collateral or any action taken
or to be taken by the Bank under this Indenture.

 

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6.16.                     EXCHANGE OFFERS, PROPOSED AMENDMENTS ETC.

 

The Collateral Manager may, on behalf of the Issuer, instruct the Trustee
pursuant to an Issuer Order to, and the Trustee shall, take any of the following
actions with respect to a Collateral Interest or Equity Interest as to which an
Offer has been made or as to which any consent, waiver, vote or exercise has
been requested:  (i) exchange such instrument for other securities or a mixture
of securities and other consideration pursuant to such Offer (and in making a
determination whether or not to exchange any security, none of the restrictions
set forth in Section 12 shall be applicable); and (ii) give consent, grant
waiver, vote or exercise any or all other rights or remedies with respect to any
such Collateral Interest or Equity Interest.  In the event that the Trustee does
not receive instruction from the Collateral Manager, the Trustee shall have no
obligation to take action with respect to such exchange or such request for
consent, waiver, vote or exercise.  In the event that the Trustee receives
written notice of any proposed amendment, consent or waiver under the Underlying
Instruments of any Collateral Interests (before or after any default), the
Trustee shall promptly deliver copies of such notice to the Issuer and the
Collateral Manager.  The Collateral Manager may, on behalf of the Issuer,
instruct the Trustee pursuant to an Issuer Order to, and the Trustee shall, with
respect to a Collateral Interest as to which a consent or waiver under the
Underlying Instruments of such Collateral Interest (before or after any default)
has been proposed, give consent, grant waiver, vote or exercise any or all other
rights or remedies with respect to any such Collateral Interest only in
accordance with such Issuer Order.  In the absence of any instruction from the
Collateral Manager, the Trustee shall not engage in any vote with respect to
such Collateral Interest.

 

6.17.                     FIDUCIARY FOR RATED NOTEHOLDERS ONLY; AGENT FOR OTHER
SECURED PARTIES

 

With respect to the security interests created hereunder, the pledge of any
portion of the Collateral to the Trustee is to the Trustee as representative of
the Rated Noteholders and agent for other Secured Parties.  In furtherance of
the foregoing, the possession by the Trustee of any portion of the Collateral
and the endorsement to or registration in the name of the Trustee of any portion
of the Collateral (including without limitation as entitlement holder of the
Collateral Account) are all undertaken by the Trustee in its capacity as
representative of the Rated Noteholders and as agent for the other Secured
Parties.  The Trustee shall not by reason of this Indenture be deemed to be
acting as fiduciary for the Initial Hedge Counterparty or the Collateral
Manager, provided that the foregoing shall not limit any of the express
obligations of the Trustee under this Indenture.

 

6.18.                     WITHHOLDING

 

If any withholding tax is imposed on the Issuer’s payment (or allocations of
income) under the Rated Notes to any Rated Noteholder, such tax shall reduce the
amount otherwise distributable to such Rated Noteholder.  The Trustee is hereby
authorized and directed to retain from amounts otherwise distributable to any
Rated Noteholder sufficient funds for the payment of any tax that is required to
be withheld or deducted by the Issuer (but such authorization shall not prevent
the Trustee from contesting any such tax in appropriate proceedings and
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings).  The amount of any withholding tax imposed with respect to
any Rated Noteholder shall be treated as Cash distributed to such Rated
Noteholder at the time it is withheld by the Trustee and remitted to the
appropriate taxing authority.  If there is a possibility that withholding tax is
payable with respect to a distribution, the Trustee may in its sole discretion
withhold such amounts in accordance with this Section 6.18.  If any Rated
Noteholder wishes to apply for a refund of any such withholding tax, the Trustee
shall reasonably cooperate with such Rated Noteholder in making such claim so
long as such Rated Noteholder agrees to reimburse the Trustee for any
out-of-pocket expenses incurred.  Nothing herein shall impose an obligation on
the part of the Trustee to determine the amount of any tax or withholding
obligation on the part of the Issuer or in respect of the Income Notes.

 

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ARTICLE VII

 

COVENANTS

 

7.1.      PAYMENT OF PRINCIPAL AND INTEREST

 

The Co-Issuers will duly and punctually pay all principal (including the Class C
Cumulative Periodic Interest Shortfall Amount, the Class D Cumulative Periodic
Interest Shortfall Amount and the Class E Cumulative Periodic Interest Shortfall
Amount), interest (including Defaulted Interest and interest thereon, if any) in
accordance with the terms of the Rated Notes (other than the Class F Notes and
the Class G Notes) and this Indenture and amounts due under any Hedge Agreement
in accordance with this Indenture.  The Issuer will duly and punctually pay all
principal (including the Class F Cumulative Periodic Interest Shortfall Amount
and the Class G Cumulative Periodic Interest Shortfall Amount), interest
(including Defaulted Interest and interest thereon, if any) in accordance with
the terms of the Class F Notes and the Class G Notes and this Indenture and
amounts due under any Hedge Agreement in accordance with this Indenture. 
Amounts properly withheld under the Code or other applicable law by any Person
from a payment to any Rated Noteholder of principal and/or interest shall be
considered as having been paid by the Co-Issuers (in the case of Rated Notes
other than the Class F Notes and the Class G Notes) or the Issuer (in the case
of the Class F Notes or the Class G Notes) to such Rated Noteholder for all
purposes of this Indenture.

 

The Trustee shall, unless prevented from doing so for reasons beyond its
reasonable control, give notice to each Rated Noteholder and each Rating Agency
of any such withholding requirement no later than ten days prior to the date of
the payment from which amounts are required to be withheld; provided that
despite the failure of the Trustee to give such notice, amounts withheld
pursuant to applicable tax laws shall be considered as having been paid by the
Co-Issuers or the Issuer as provided above.

 

7.2.      MAINTENANCE OF OFFICE OR AGENCY

 

The Co-Issuers hereby appoint the Trustee as Note Paying Agent for the payment
of principal of and interest on the Rated Notes.  The Co-Issuers hereby appoint
Wells Fargo Bank, National Association with an address at 9062 Old Annapolis
Road, Columbia, Maryland 21045, Attn: CDO Trust Services—N-Star REL CDO IV, as
the Co-Issuers’ agent where notices and demands to or upon the Co-Issuers in
respect of the Rated Notes or this Indenture (except service of any and all
process in any action or proceeding) may be served and where the Rated Notes may
be surrendered for registration of transfer or exchange.  The Issuer hereby
appoints NCB Stockbroker Limited, 3 George’s Dock, Dublin 1, Ireland, as
offshore Note Paying Agent and as the Issuer’s agent where notices and demands
to or upon the Issuer in respect of any Rated Notes or Income Notes listed on
the Irish Stock Exchange may be served and where such Rated Notes or Income
Notes may be surrendered for registration of transfer or exchange.

 

The Co-Issuers may at any time and from time to time, terminate the appointment
of any such agent or appoint any additional agents for any or all of such
purposes; provided that (A) the Co-Issuers will maintain in the Borough of
Manhattan, The City of New York, an office or agency where notices and demands
to or upon the Co-Issuers in respect of the Rated Notes and this Indenture may
be served, (B) no Note Paying Agent shall be appointed in a jurisdiction which
subjects payments on the Rated Notes to withholding tax and (C) the Co-Issuers
may not terminate the appointment of any Note Paying Agent without the consent
of each Income Noteholder.  The Co-Issuers shall give prompt written notice to
the Trustee and each Rating Agency and the Rated Noteholders of the appointment
or termination of any such agent and of the location and any change in the
location of any such office or agency.

 

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If at any time the Co-Issuers shall fail to maintain any such required office or
agency in the Borough of Manhattan, The City of New York or shall fail to
furnish the Trustee with the address thereof, presentations and surrenders may
be made at and notices and demands may be served on the Co-Issuers and Rated
Notes may be presented and surrendered for payment to the Note Paying Agent at
its office in Minnesota (and the Co-Issuers hereby appoint the same as their
agent to receive such respective presentations, surrenders, notices and
demands).

 

For so long as any Class of Rated Notes or Income Notes is listed on the Irish
Stock Exchange and such exchange shall so require, the Co-Issuers shall maintain
a listing agent, a paying agent and an agent where notices and demands to or
upon the Co-Issuers in respect of any Rated Notes or Income Notes listed on the
Irish Stock Exchange may be served and where such Rated Notes or Income Notes
may be surrendered for registration of transfer or exchange.

 

7.3.      FUNDS FOR RATED NOTE PAYMENTS TO BE HELD IN TRUST

 

All payments of amounts due and payable with respect to any Rated Notes that are
to be made from amounts withdrawn from the Payment Account shall be made on
behalf of the Co-Issuers or the Issuer, as applicable, by the Trustee or a Note
Paying Agent with respect to payments on the Rated Notes.

 

When the Co-Issuers shall have a Note Paying Agent that is not also the Note
Registrar, they shall direct the Note Registrar to furnish, no later than the
fifth calendar day after each Record Date a list, if necessary, in such form as
such Note Paying Agent may reasonably request, of the names and addresses of the
Holders and of the certificate numbers of individual Rated Notes held by each
such Holder.

 

The initial Note Paying Agent shall be as set forth in Section 7.2.  Any
additional or successor Paying Agents shall be appointed by Issuer Order with
written notice thereof to the Trustee and the Rating Agencies; provided that so
long as any Class of Rated Notes is rated by the Rating Agencies and with
respect to any additional or successor Note Paying Agent for the Rated Notes,
(a) the Note Paying Agent for the Rated Notes has a rating of not less than
“AA-” and not less than “A-1+” by S&P or (b) a Rating Agency Confirmation from
S&P shall have been obtained with respect to the appointment of such Note Paying
Agent.  In the event that (i) the Co-Issuers have actual knowledge that such
successor Note Paying Agent ceases to have a rating of at least “AA-” and of
“A-1+” by S&P or (ii) a Rating Agency Confirmation from S&P shall not have been
obtained with respect to the appointment of such Note Paying Agent, the
Co-Issuers shall promptly remove such Note Paying Agent and appoint a successor
Note Paying Agent.  The Co-Issuers shall not appoint any Note Paying Agent
(other than an initial Note Paying Agent) that is not, at the time of such
appointment, a depository institution or trust company subject to supervision
and examination by federal and/or state and/or national banking authorities. 
The Co-Issuers shall cause each Note Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Note Paying Agent
shall agree with the Trustee (and if the Trustee acts as Note Paying Agent, it
hereby so agrees), subject to the provisions of this Section 7.3, that such Note
Paying Agent will:

 

(a)                                 allocate all sums received for payment to
the Holders of Rated Notes for which it acts as Note Paying Agent on each
Payment Date and Redemption Date among such Holders in the proportion specified
in the instructions set forth in the applicable Note Valuation Report or
Redemption Date Statement or as otherwise provided herein, in each case to the
extent permitted by applicable law;

 

(b)                                hold all amounts held by it for the payment
of amounts due with respect to the Rated Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid

 

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to such Persons or otherwise disposed of as herein provided and pay such sums to
such Persons as herein provided;

 

(c)                                 if such Note Paying Agent is not the
Trustee, immediately resign as a Note Paying Agent and forthwith pay to the
Trustee all amounts held by it in trust for the payment of Rated Notes if at any
time it ceases to meet the standards set forth above required to be met by a
Note Paying Agent at the time of its appointment;

 

(d)                                if such Note Paying Agent is not the Trustee,
immediately give the Trustee notice of any Default by the Issuer or the
Co-Issuer (or any other obligor upon the Rated Notes) in the making of any
payment required to be made; and

 

(e)                                 if such Note Paying Agent is not the Trustee
at any time during the continuance of any such Default, upon the written request
of the Trustee, forthwith pay to the Trustee all amounts so held in trust by
such Note Paying Agent.

 

If the Co-Issuers shall have appointed a Note Paying Agent other than the
Trustee, the Trustee shall deposit on or prior to the Business Day next
preceding each Payment Date or Redemption Date, as the case may be, with such
Note Paying Agent, if necessary, an aggregate amount sufficient to pay the
amounts then becoming due (to the extent funds are then available for such
purpose in the Collection Account, as the case may be), such amount to be held
in trust for the benefit of the Persons entitled thereto.  Any funds deposited
with a Note Paying Agent (other than the Trustee) in excess of an amount
sufficient to pay the amounts then becoming due on the Rated Notes with respect
to which such deposit was made shall be paid over by such Note Paying Agent to
the Trustee for application in accordance with Section 11.

 

The Co-Issuers may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, direct any Note Paying
Agent to pay, to the Trustee all amounts held in trust by such Note Paying
Agent, such amounts to be held by the Trustee upon the same trusts as those upon
which such amounts were held by such Note Paying Agent; and, upon such payment
by any Note Paying Agent to the Trustee, such Note Paying Agent shall be
released from all further liability with respect to such amounts.

 

Except as otherwise required by applicable law, any funds deposited with the
Trustee or any Note Paying Agent in trust for the payment of the principal of or
interest on any Rated Note and remaining unclaimed for two years after the same
has become due and payable shall be paid to the Co-Issuers on Issuer Request;
and the Holder of such Rated Note shall thereafter, as an unsecured general
creditor, look only to the Co-Issuers (in the case of the Rated Notes other than
the Class F Notes and the Class G Notes) or the Issuer (in the case of the
Class F Notes or the Class G Notes) for payment of such amounts and all
liability of the Trustee or such Note Paying Agent with respect to such trust
funds (but only to the extent of the amounts so paid to the Co-Issuers) shall
thereupon cease.  The Trustee or such Note Paying Agent, before being required
to make any such release of payment, may, but shall not be required to, adopt
and employ, at the expense of the Co-Issuers, any reasonable means of
notification of such release of payment, including mailing notice of such
release to Holders whose Rated Notes have been called but have not been
surrendered for redemption or whose right to or interest in amounts due and
payable but not claimed is determinable from the records of any Note Paying
Agent, at the last address of record of each such Holder.

 

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7.4.      EXISTENCE OF CO-ISSUERS

 

The Issuer and the Co-Issuer shall maintain in full force and effect their
existence and rights as an exempted company incorporated and registered under
the laws of the Cayman Islands and as a corporation incorporated under the laws
of the State of Delaware, respectively, and shall obtain and preserve their
qualification to do business in each jurisdiction in which such qualifications
are or shall be necessary to protect the validity and enforceability of this
Indenture, the Rated Notes (in the case of the Issuer), the Rated Notes other
than the Class F Notes and the Class G Notes (in the case of the Co-Issuer) or
any of the Collateral.

 

The Issuer and the Co-Issuer shall ensure that all corporate or other
formalities regarding their respective existences (including holding regular
board of directors’ and shareholders’, or other similar, meetings) or
registrations are followed.  Neither the Issuer nor the Co-Issuer shall take any
action, or conduct its affairs in a manner, that is likely to result in its
separate existence being ignored or in its assets and liabilities being
substantively consolidated with any other Person in a bankruptcy, reorganization
or other insolvency proceeding.  At least one director of the Issuer and of the
Co-Issuer shall be Independent of other parties to the Transaction Documents. 
Without limiting the foregoing, (a) the Issuer shall not have any subsidiaries
(other than the Co-Issuer and any Tax Subsidiary), (b) the Co-Issuer shall not
have any subsidiaries and (c) the Issuer and the Co-Issuer shall not (i) have
any employees, (ii) engage in any transaction with any shareholder that would
constitute a conflict of interest or (iii) pay dividends, provided that the
foregoing shall not prohibit the Issuer from entering into the transactions
contemplated by the Corporate Services Agreement with the Administrator.

 

7.5.      PROTECTION OF COLLATERAL

 

(a)                                 The Issuer shall from time to time, execute
and deliver all such supplements and amendments hereto and all such Financing
Statements, continuation statements, instruments of further assurance and other
instruments, and shall take such other action as may be necessary or advisable
or desirable to secure the rights and remedies of the Secured Parties hereunder
and to:

 

(1)                                 Grant more effectively all or any portion of
the Collateral;

 

(2)                                 maintain, preserve and perfect the lien (and
the first priority nature thereof) of this Indenture or to carry out more
effectively the purposes hereof;

 

(3)                                 perfect, publish notice of or protect the
validity of any Grant made or to be made by this Indenture (including any and
all actions necessary or desirable as a result of changes in law or
regulations);

 

(4)                                 enforce any of the Pledged Securities or
other instruments or property included in the Collateral;

 

(5)                                 preserve and defend title to the Collateral
and the rights therein of the Trustee and the Holders of the Rated Notes against
the claims of all Persons and parties; or

 

(6)                                 pay or cause to be paid any and all taxes
levied or assessed upon all or any part of the Collateral.

 

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The Issuer hereby designates the Trustee its agent and attorney-in-fact to
execute any Financing Statement, continuation statement or other instrument
delivered to it pursuant to this Section 7.5, and the Trustee, as agent of the
Issuer, agrees to file such continuation statements as are necessary to maintain
perfection of the Collateral perfected by the filing of Financing Statements,
provided that the Issuer retains ultimate responsibility to maintain the
perfection of the Collateral perfected by the filing of Financing Statements and
any failure of the Trustee to file continuation statements pursuant to this
undertaking shall not result in any liability of the Trustee and the Trustee
shall be entitled to indemnification pursuant to Section 6.8(a) with respect to
any claim, loss, liability or expense incurred by the Trustee with respect to
the filing of such continuation statements.  The Trustee agrees that it will
from time to time, at the direction of any Secured Party, execute and cause to
be filed Financing Statements and continuation statements.  The Issuer shall
otherwise cause the perfection and priority of the security interest in the
Collateral and the maintenance of such security interest at all times. 
Notwithstanding anything to the contrary herein, the right of a Secured Party to
provide direction to the Trustee shall not impose upon the Trustee, as Secured
Party, any obligation to provide any such direction.  The Issuer agrees that a
carbon, photographic, photostatic or other reproduction of this Indenture or of
a Financing Statement is sufficient as an Indenture or a Financing Statement as
the case may be.

 

(b)                                The Trustee shall not (i) except in
accordance with Section 10.12(a) or (b), as applicable, remove any portion of
the Collateral that consists of Cash or is evidenced by an Instrument,
certificate or other writing (A) from the jurisdiction in which it was held at
the date the most recent Opinion of Counsel was delivered pursuant to
Section 7.6 (or from the jurisdiction in which it was held as described in the
Opinion of Counsel delivered at the Closing Date pursuant to Section 3.1(c), if
no Opinion of Counsel has yet been delivered pursuant to Section 7.6) or
(B) from the possession of the Person who held it on such date or (ii) cause or
permit ownership or the pledge of any portion of the Collateral that consists of
book-entry securities to be recorded on the books of a Person (A) located in a
different jurisdiction from the jurisdiction in which such ownership or pledge
was recorded at such date or (B) other than the Person on whose books such
ownership or pledge was recorded at such date, unless the Trustee shall have
first received an Opinion of Counsel to the effect that the lien and security
interest created by this Indenture with respect to such property will continue
to be maintained after giving effect to such action or actions.

 

(c)                                 The Issuer shall pay or cause to be paid
taxes, if any, levied on account of the beneficial ownership by the Issuer of
any Pledged Securities that secure the Rated Notes; provided that the Issuer
shall not be required to pay or discharge or cause to be paid or discharged any
such tax whose amount, applicability or validity is being contested in good
faith by appropriate proceedings and for which disputed amounts or adequate
reserves have been made or the failure of which to pay or discharge could not
reasonably be expected to have a material adverse effect upon the ability of the
Issuer to timely and fully perform any of its payment or other material
obligations under this Indenture or upon the interests of the Rated Noteholders
in the Collateral.

 

(d)                                The Issuer shall enforce all of its material
rights and remedies under the Transaction Documents to which it is a party.

 

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(e)                                 Without at least thirty (30) days’ prior
written notice to the Trustee, the Issuer shall not change its name, or the name
under which it does business, from the name shown on the signature pages hereto.

 

7.6.      OPINIONS AS TO COLLATERAL

 

On or before May 31 in each calendar year, commencing in 2006, the Issuer shall
furnish to the Trustee and each Rating Agency an Opinion of Counsel (which shall
include assumptions and qualifications substantially similar to those set forth
in Exhibit E-1) stating that, in the opinion of such counsel, as of the date of
such opinion, the lien and security interest created by this Indenture with
respect to the Collateral remains a valid and perfected first priority lien and
describing the manner in which such security interest shall remain perfected.

 

7.7.      PERFORMANCE OF OBLIGATIONS

 

(a)                                 The Trustee shall notify the Issuer, the
Initial Hedge Counterparty and each Rated Noteholder of any request for an
amendment, waiver or supplement to any Underlying Instrument included in the
Collateral or of any other notice of a vote in respect of any Collateral
Interest included in the Collateral.  The Issuer shall not enter into any such
amendment, waiver or supplement; provided that, notwithstanding anything in this
Section 7.7(a) to the contrary, the Issuer may enter into any amendment or
waiver of or supplement to any such Underlying Instrument if such amendment,
supplement or waiver:

 

(1)                                 is required by the provisions of any
Underlying Instrument or by applicable law (other than pursuant to an Underlying
Instrument);

 

(2)                                 is necessary to cure any ambiguity,
inconsistency or formal defect or omission in such Underlying Instrument; or

 

(3)                                 (x) is deemed necessary by the Issuer or the
Collateral Manager and does not materially and adversely affect the Secured
Parties or (y) is effected pursuant to Section 6.16.

 

The Issuer shall be entitled to rely on an Opinion of Counsel as to material
adverse effect and as to whether the entry into an amendment, supplement or
waiver is permitted pursuant to this Indenture.

 

(b)                                The Issuer or the Co-Issuer may, with the
prior written consent of the Holders of a Majority of the then Aggregate
Outstanding Amount of the Notes of each Class of Rated Notes and the Holders of
not less than 662/3% of the aggregate principal amount of the Outstanding Income
Notes and the Initial Hedge Counterparty, contract with other Persons, including
the Collateral Administrator, the Collateral Manager and the Bank, for the
performance of actions and obligations to be performed by the Issuer or the
Co-Issuer hereunder by such Persons.  Notwithstanding any such arrangement, the
Issuer or the Co-Issuer, as the case may be, shall remain liable for all such
actions and obligations.  In the event of such contract, the performance of such
actions and obligations by such Persons shall be deemed to be performance of
such actions and obligations by the Issuer or the Co-Issuer, as the case may be;
and the Issuer or Co-Issuer, as the case may be, will punctually perform, and
use its best efforts to cause such other Person to perform, all of their
obligations and agreements contained in related agreement.

 

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(c)                                 The Co-Issuers shall treat all acquisitions
of Collateral Interests as a “purchase” for tax, accounting and reporting
purposes.

 

(d)                                Each of the Co-Issuers shall file, or cause
to be filed, any tax returns, including information tax returns, required by any
governmental authority.

 

(e)                                 In the event that (i) the ownership of a
Collateral Interest or property acquired in respect of a Collateral Interest
would result in the Issuer being or becoming subject to U.S. tax on a net income
basis or being or becoming subject to the U.S. branch profits tax (in either
case, such Collateral Interest becoming a “Taxed Collateral Interest” and such
property becoming a “Taxed Property”), and (ii) the Issuer does not sell or
otherwise dispose of all or a portion of such Taxed Collateral Interest or Taxed
Property in accordance with the provisions of Section 12.1(a)(3), the Collateral
Manager on behalf of the Issuer shall, prior to such Collateral Interest
becoming a Taxed Collateral Interest or such property becoming a Taxed Property,
(a) set up a special purpose subsidiary meeting S&P’s then current published
criteria for bankruptcy-remote special purpose entities (a “Tax Subsidiary”) to
receive and hold any such Taxed Collateral Interest or Taxed Property or
transfer such Taxed Collateral Interest or Taxed Property to the Tax Subsidiary
or (b) contribute such taxed Collateral Interest or Taxed Property to a REMIC or
other pass-through entity, unless the Issuer has received an opinion of
nationally recognized counsel that the Issuer can hold such Taxed Collateral
Interest directly without causing the Issuer to be treated as engaged in a trade
or business in the United States for United States federal income tax purposes. 
The Issuer shall cause the purposes and permitted activities of any such Tax
Subsidiary to be restricted solely to the acquisition, holding and disposition
of such Taxed Collateral Interest and shall require such subsidiary to
distribute 100% of any payments or distributions received with respect to such
taxed Collateral Interest, together with the proceeds of any sale of such Taxed
Collateral Interest, net of any tax liabilities, to the Issuer.

 

7.8.      NEGATIVE COVENANTS

 

(a)                                 The Issuer will not and, with respect to
Section 7.8(a)(3), (4), (5) and (9), the Co-Issuer will not:

 

(1)                                 intentionally operate so as to be subject to
U.S. federal income taxes on its net income;

 

(2)                                 sell, assign, participate, transfer,
exchange or otherwise dispose of, or pledge, mortgage, hypothecate or otherwise
encumber (or permit such to occur or suffer such to exist), any part of the
Collateral, except as expressly permitted by this Indenture;

 

(3)                                 claim any credit on, make any deduction
from, or dispute the enforceability of, the payment of the principal or interest
(or any other amount) payable in respect of the Rated Notes (other than amounts
required to be paid, deducted or withheld in accordance with any applicable law
or regulation of any governmental authority) or assert any claim against any
present or future Rated Noteholder by reason of the payment of any taxes levied
or assessed upon any part of the Collateral;

 

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(4)                                  (A) incur or assume or guarantee any
indebtedness, other than the Rated Notes and this Indenture and the transactions
contemplated hereby; (B) issue any additional class of securities other than the
Income Notes; or (C) issue any additional shares of stock;

 

(5)                                  (A) take any action that would impair the
validity or effectiveness of this Indenture or any Grant hereunder or the lien
of this Indenture, amend hypothecate, subordinate, terminate, discharge or
release any Person from any covenants or obligations with respect to this
Indenture or the Rated Notes, except as may be permitted hereby, (B) create or
extend any lien, charge, adverse claim, security interest, mortgage or other
encumbrance (other than the lien of this Indenture) on or to the Collateral or
any part thereof, any interest therein or the proceeds thereof, or (C) take any
action that would cause the lien of this Indenture not to constitute a valid
first priority security interest in the Collateral;

 

(6)                                  use any of the proceeds of the Rated Notes
issued hereunder (A) to extend “purpose credit” within the meaning given to such
term in Regulation U or (B) to purchase or otherwise acquire any Margin Stock;

 

(7)                                  permit the aggregate book value of all
Margin Stock held by the Issuer on any date to exceed the net worth of the
Issuer on such date (excluding any unrealized gains and losses) on such date;

 

(8)                                  dissolve or liquidate in whole or in part,
except as permitted hereunder; or

 

(9)                                  except for any agreements involving the
purchase and sale of Collateral Interests having customary purchase or sale
terms and documents with customary loan trading documentation (but not excepting
any Hedge Agreement), enter into any agreements unless such agreements contain
“non-petition” and “limited recourse” provisions with respect to the Issuer.

 

(b)                                 Except as permitted by this Indenture, the
Issuer will not do business under any other name other than the name set forth
in the Articles and neither the Issuer nor the Trustee shall acquire any
Collateral after the Closing Date, sell, transfer, exchange or otherwise dispose
of Collateral, or enter into or engage in any business with respect to any part
of the Collateral.

 

(c)                                  The Co-Issuer will not invest any of its
assets in “securities” (as such term is defined in the Investment Company Act),
and will keep all of its assets in Cash.

 

7.9.      STATEMENT AS TO COMPLIANCE

 

On or before May 31 in each calendar year commencing in 2006, or immediately if
there has been a Default in the fulfillment of an obligation under this
Indenture, the Issuer shall deliver to the Trustee, the PAA Issued Note Paying
Agent, each Rated Noteholder making a written request therefor, the Irish Paying
Agent, the Initial Hedge Counterparty, the Collateral Manager and each Rating
Agency a certificate of the Issuer stating, as to each signer thereof, that:

 

(a)                                  the Officer executing such certificate has
conducted a review of the activities of the Issuer and of the Issuer’s
performance under this Indenture during the 12-month period ending on
December 31 of such year (or from the Closing Date until December 31, 2005,

 

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in the case of the first such certificate) based on reports and other
information delivered to such Officer by the Trustee, the Collateral Manager and
the Collateral Administrator and a review of the Accountant’s Reports prepared
pursuant to Section 10.11 and such other materials as such Officer deems
appropriate; and

 

(b)                                 to the best of knowledge of the Issuer,
based on such review, the Issuer has fulfilled all of its material obligations
under this Indenture throughout the period, or, if there has been a Default in
the fulfillment of any such obligation, specifying each such Default known to
such Officer and the nature and status thereof, including actions undertaken to
remedy the same.

 

7.10.                        CO-ISSUERS MAY CONSOLIDATE, ETC., ONLY ON CERTAIN
TERMS

 

(a)                                  The Issuer shall not consolidate or merge
with or into any other Person or transfer or convey all or substantially all of
its assets to any Person, unless permitted by Cayman Islands law and unless:

 

(1)                                  the Issuer shall be the surviving entity,
or the Person (if other than the Issuer) formed by such consolidation or into
which the Issuer is merged or to which all or substantially all of the assets of
the Issuer are transferred or conveyed shall be an exempted limited liability
company organized and existing under the laws of the Cayman Islands or such
other jurisdiction outside the United States as may be approved by a Majority of
each Class and the Initial Hedge Counterparty, and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, the
Initial Hedge Counterparty and each Rated Noteholder, the due and punctual
payment of the principal of and interest on all Rated Notes and the performance
of every covenant of this Indenture and any Hedge Agreement on the part of the
Issuer to be performed or observed, all as provided herein;

 

(2)                                 each Rating Agency and the Initial Hedge
Counterparty shall have received written notification from the Issuer of such
consolidation, merger, transfer or conveyance and the identity of the surviving
entity and a Rating Agency Confirmation shall have been obtained with respect to
the consummation of such transaction;

 

(3)                                 if the Issuer is not the surviving entity,
the Person formed by such consolidation or into which the Issuer is merged or to
which all or substantially all of the assets of the Issuer are transferred or
conveyed shall have agreed with the Trustee (A) to observe the same legal
requirements for the recognition of such formed or surviving entity as a legal
entity separate and apart from any of its Affiliates as are applicable to the
Issuer with respect to its Affiliates and (B) not to consolidate or merge with
or into any other Person or transfer or convey the Collateral or all or
substantially all of its assets to any other Person except in accordance with
the provisions of this Section 7.10;

 

(4)                                 if the Issuer is not the surviving entity,
the Person formed by such consolidation or into which the Issuer is merged or to
which all or substantially all of the assets of the Issuer are transferred or
conveyed shall have delivered to the Trustee, the Initial Hedge Counterparty and
each Rating Agency an Officer’s certificate and an Opinion of Counsel each
stating that such Person shall be duly organized,

 

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validly existing and (if applicable) in good standing in the jurisdiction in
which such Person is organized; that such Person has sufficient power and
authority to assume the obligations set forth in Section 7.10(a)(1) above and to
execute and deliver an indenture supplemental hereto for the purpose of assuming
such obligations; that such Person has duly authorized the execution, delivery
and performance of an indenture supplemental hereto for the purpose of assuming
such obligations and that such supplemental indenture is a valid, legal and
binding obligation of such Person, enforceable in accordance with its terms,
subject only to bankruptcy, reorganization, insolvency, moratorium and other
laws affecting the enforcement of creditors’ rights generally and to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law); that, immediately following the event which
causes such Person to become the successor to the Issuer, (A) such Person has
good and marketable title, free and clear of any lien, security interest or
charge, other than the lien and security interest of this Indenture, to the
Collateral; (B) the Trustee continues to have a valid perfected first priority
security interest in the Collateral securing all of the Rated Notes; (C) such
Person has received an Opinion of Counsel to the effect that (i) (x) such Person
has been organized in conformity with the requirements for qualification as a
real estate investment trust under the Code, and such Person’s actual method of
operation has (for the time period specified in such Opinion of Counsel)
enabled, and its proposed method of operation will enable, such Person to
satisfy the requirements for qualification and taxation as a real estate
investment trust under the Code or (y) such Person will not be subject to net
income tax or be treated as engaged in a trade or business within the United
States for U.S. federal income tax purposes and (ii) such other matters as the
Trustee, the Initial Hedge Counterparty or any Rated Noteholder may reasonably
require;

 

(5)                                  immediately after giving effect to such
transaction, no Default shall have occurred and be continuing;

 

(6)                                  the Issuer shall have delivered to the
Trustee, the Initial Hedge Counterparty and each Rated Noteholder an Officer’s
certificate and an Opinion of Counsel each stating that such consolidation,
merger, transfer or conveyance and such supplemental indenture comply with this
Section 7, that all conditions precedent in this Section 7 provided for relating
to such transaction have been complied with and that no adverse tax consequences
will result therefrom to any Rated Noteholder or the Initial Hedge Counterparty;
and

 

(7)                                  the Issuer shall have delivered to the
Trustee an Opinion of Counsel stating that after giving effect to such
transaction, neither of the Co-Issuers will be required to register as an
investment company under the Investment Company Act.

 

(b)                                 The Co-Issuer shall not consolidate or merge
with or into any other Person or transfer or convey all or substantially all of
its assets to any Person, unless:

 

(1)                                  the Co-Issuer shall be the surviving
corporation, or the Person (if other than the Co-Issuer) formed by such
consolidation or into which the Co-Issuer is merged or to which all or
substantially all of the assets of the Co-Issuer are transferred or conveyed
shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, the due and punctual payment of the principal of

 

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and interest on all Rated Notes and the performance of every covenant of this
Indenture on the part of the Co-Issuer to be performed or observed, all as
provided herein;

 

(2)                                  each Rating Agency shall have received
written notification from the Co-Issuer of such consolidation, merger, transfer
or conveyance and the identity of the surviving entity and a Rating Agency
Confirmation shall have been obtained with respect to the consummation of such
transaction;

 

(3)                                  if the Co-Issuer is not the surviving
corporation, the Person formed by such consolidation or into which the Co-Issuer
is merged or to which all or substantially all of the assets of the Co-Issuer
are transferred or conveyed shall have agreed with the Trustee (A) to observe
the same legal requirements for the recognition of such formed or surviving
corporation as a legal entity separate and apart from any of its Affiliates as
are applicable to the Co-Issuer with respect to its Affiliates and (B) not to
consolidate or merge with or into any other Person or transfer or convey all or
substantially all of its assets to any other Person except in accordance with
the provisions of this Section 7.10;

 

(4)                                  if the Co-Issuer is not the surviving
corporation, the Person formed by such consolidation or into which the Co-Issuer
is merged or to which all or substantially all of the assets of the Co-Issuer
are transferred or conveyed shall have delivered to the Trustee and each Rating
Agency an Officer’s certificate and an Opinion of Counsel each stating that such
Person shall be duly organized, validly existing and (if applicable) in good
standing in the jurisdiction in which such Person is organized; that such Person
has sufficient power and authority to assume the obligations set forth in
Section 7.10(b)(1) above and to execute and deliver an indenture supplemental
hereto for the purpose of assuming such obligations; that such Person has duly
authorized the execution, delivery and performance of an indenture supplemental
hereto for the purpose of assuming such obligations and that such supplemental
indenture is a valid, legal and binding obligation of such Person, enforceable
in accordance with its terms, subject only to bankruptcy, reorganization,
insolvency, moratorium and other laws affecting the enforcement of creditors’
rights generally and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); and such
other matters as the Trustee or any Rated Noteholder may reasonably require;

 

(5)                                  immediately after giving effect to such
transaction, no Default shall have occurred and be continuing;

 

(6)                                  the Co-Issuer shall have delivered to the
Trustee and each Rated Noteholder an Officer’s certificate and an Opinion of
Counsel each stating that such consolidation, merger, conveyance or transfer and
such supplemental indenture comply with this Section 7 and that all conditions
precedent in this Section 7 provided for relating to such transaction have been
complied with and that no adverse tax consequences will result therefrom to any
Rated Noteholder;

 

(7)                                  after giving effect to such transaction,
neither of the Co-Issuers will be required to register as an investment company
under the Investment Company Act; and

 

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(8)                                  after giving effect to such transaction,
the outstanding stock of the Co-Issuer will not be beneficially owned by any
Person other than the Issuer.

 

7.11.                        SUCCESSOR SUBSTITUTED

 

Upon any consolidation or merger, or transfer or conveyance of all or
substantially all of the assets of the Issuer or the Co-Issuer, in accordance
with Section 7.10, the Person formed by or surviving such consolidation or
merger (if other than the Issuer or the Co-Issuer), or, the Person to which such
transfer or conveyance is made, shall succeed to, and be substituted for, and
may exercise every right and power of, and shall be bound by each obligation or
covenant of, the Issuer or the Co-Issuer, as the case may be, under this
Indenture with the same effect as if such Person had been named as the Issuer or
the Co-Issuer, as the case may be, herein.  In the event of any such
consolidation, merger, transfer or conveyance, the Person named as the “Issuer”
or the “Co-Issuer” in the first paragraph of this Indenture or any successor
which shall theretofore have become such in the manner prescribed in this
Section 7 may be dissolved, wound-up and liquidated at any time thereafter, and
such Person thereafter shall be released from its liabilities as obligor and
maker on all the Rated Notes and from its obligations under this Indenture.

 

7.12.                        NO OTHER BUSINESS

 

The Issuer shall not engage in any business or activity other than (i) issuing
and selling the Indenture Issued Notes pursuant to this Indenture, (ii) issuing
and selling the PAA Issued Notes in accordance with the Paying Agency Agreement
(iii) issuing the Ordinary Shares pursuant to the Issuer Charter,
(iv) acquiring, pledging, holding and disposing of, solely for its own account,
Collateral Interests, Eligible Investments and other Collateral described in
clauses (a) to (e) of the granting clauses hereof, (v) holding the capital stock
of the Co-Issuer and (vi) such other activities that are incidental thereto and
connected therewith.  The Co-Issuer shall not engage in any business or activity
other than issuing and selling the Indenture Issued Notes (other than the
Class F Notes) pursuant to this Indenture and such other activities incidental
thereto or connected therewith.  The Issuer shall not hold itself out as a
derivatives dealer willing to enter into either side of, or to offer to enter
into, assume, offset, assign or otherwise terminate positions in (i) interest
rate, currency, equity or commodity swaps or caps or (ii) derivative financial
instruments (including options, forward contracts, short positions and similar
instruments) in any commodity, currency, share of stock, partnership or trust,
note, bond, debenture or other evidence of indebtedness, swap or cap.  The
foregoing shall not limit the ability of the Issuer to enter into any Hedge
Agreements.  Furthermore, the Issuer shall not hold itself out, whether through
advertising or otherwise, as a bank, insurance company or finance company, or as
originating loans, lending funds, making a market in loans or other assets or
selling loans or other assets to customers.  The Issuer will not amend the
Issuer Charter and the Co-Issuer will not amend its Certificate of Incorporation
or By-Laws, if such amendment would result in the rating (including any private
or confidential rating) of any Class of Rated Notes being reduced or withdrawn. 
At any time at which the Issuer is not a Qualified REIT Subsidiary, the Issuer
shall not engage in any business or activity or hold any asset that would cause
the Issuer to be engaged in a U.S. trade or business for U.S. federal income tax
purposes, except as the result of ownership of Equity Interests or securities
received in an Offer in accordance with the provisions of this Indenture.

 

7.13.                        CHANGE OR WITHDRAWAL OF RATING

 

The Issuer shall promptly notify the Trustee in writing and upon receipt of such
notice the Trustee shall promptly notify the Rated Noteholders and the Initial
Hedge Counterparty if at any time the rating of any Class of Rated Notes has
been, or is known will be, changed or withdrawn.

 

 

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7.14.                        REPORTING

 

At any time when the Co-Issuers are not subject to Section 13 or 15(d) of the
Exchange Act and are not exempt from reporting pursuant to Rule 12g3-2(b) under
the Exchange Act, upon the request of a Holder or Beneficial Owner of a Rated
Note or Income Note, the Co-Issuers shall promptly furnish or cause to be
furnished Rule 144A Information to such Holder or Beneficial Owner, to a
prospective purchaser of such Rated Note or Income Note designated by such
Holder or Beneficial Owner or to the Trustee for delivery to such Holder or
Beneficial Owner or a prospective purchaser designated by such Holder or
Beneficial Owner, as the case may be, in order to permit compliance by such
Holder or Beneficial Owner with Rule 144A under the Securities Act in connection
with the resale of such Rated Note or Income Note by such Holder or Beneficial
Owner.

 

7.15.                        RATED NOTE CALCULATION AGENT

 

(a)                                  The Issuer hereby agrees that for so long
as any of the Rated Notes remain Outstanding the Issuer will at all times cause
there to be an agent appointed to calculate LIBOR in respect of each Interest
Period in accordance with the terms of Schedule B (the Rated Note Calculation
Agent), which agent shall be a financial institution, subject to supervision or
examination by federal or state authority, having a rating of at least “BBB+” by
S&P and having an office within the United States.  Whenever the Rated Note
Calculation Agent is required to act or exercise judgment, it will do so in good
faith and in a commercially reasonable manner.  The Issuer has initially
appointed the Trustee as Rated Note Calculation Agent for purposes of
determining LIBOR for each Interest Period.  If the Rated Note Calculation Agent
is unable or unwilling to act as such or is removed by the Issuer, the Issuer
(after consultation with the Collateral Manager) will propose a leading bank
which is engaged in transactions in Dollar deposits in the international
Eurodollar market and which does not control or is not controlled by or under
common control with the Co-Issuers or any of their Affiliates as a replacement
Rated Note Calculation Agent for approval by Holders of not less than 662/3% of
the aggregate principal amount of the Outstanding Income Notes.  The Rated Note
Calculation Agent may not resign its duties without a successor having been duly
appointed.

 

(b)                                 As soon as possible after 11:00 a.m. (London
time) on each LIBOR Calculation Date, but in no event later than 11:00 a.m. (New
York time) on the London Banking Day immediately following each LIBOR
Calculation Date, the Rated Note Calculation Agent will calculate LIBOR for the
next Interest Period and the Periodic Interest payable for such Interest Period
in respect of the Outstanding Rated Notes, rounded to the nearest cent, with
half a cent being rounded upward, on the related Payment Date to be given to the
Co-Issuers, the Trustee, the Collateral Manager, the Depositary, Euroclear,
Clearstream, the Note Paying Agent and the Irish Paying Agent.  The Rated Note
Calculation Agent will also specify to the Co-Issuers and the Collateral Manager
the quotations upon which the Applicable Periodic Interest Rate for each
Class of Rated Notes is based, and in any event the Rated Note Calculation Agent
must notify the Co-Issuers and the Collateral Manager before 5:00 p.m. (New York
time) on each applicable LIBOR Calculation Date if it has not determined and is
not in the process of determining LIBOR with respect to the Rated Notes and the
Periodic Interest with respect to each Class of Rated Notes, together with its
reasons for the delay.  The Irish Paying Agent also will cause the Applicable
Periodic Interest Rate for each Interest Period for each Class of Rated Notes
listed on the Irish Stock Exchange, the amount of interest payable in respect of
each Class of Rated Notes listed on the Irish Stock Exchange and

 

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each Payment Date to be delivered to the Company Announcements Office of the
Irish Stock Exchange as soon as possible after the Irish Paying Agent has
received notice from the Rated Note Calculation Agent of such Applicable
Periodic Interest Rates and amounts.

 

7.16.                        LISTING

 

The Issuer will use its commercially reasonable efforts to obtain and maintain
the listing of each Class of Rated Notes and Income Notes on the Irish Stock
Exchange.

 

7.17.                        AMENDMENT OF CERTAIN DOCUMENTS

 

The Issuer will not agree to any amendment to or modification, substitution or
replacement of the Corporate Services Agreement, the Collateral Management
Agreement, the Account Control Agreement or any Hedge Agreement at any time
without obtaining Rating Agency Confirmation with respect to any such amendment,
modification, substitution or replacement and will not amend, modify or waive
any “non-petition” or “limited recourse” provisions of any Transaction Document
to which it is a party without obtaining a Rating Agency Confirmation with
respect to such modification.  The Trustee shall provide each of the Holders of
Rated Notes of the Controlling Class, the Collateral Manager, the Initial Hedge
Counterparty and the Rating Agencies with a copy of any such amendment or
modification within 10 Business Days before effecting such amendment or
modification.  Prior to entering into any waiver in respect of the any of the
foregoing agreements, the Issuer will provide to each Rating Agency and the
Trustee with written notice of such waiver.

 

7.18.                        PURCHASE OF COLLATERAL; INFORMATION REGARDING
COLLATERAL; RATING CONFIRMATION

 

(a)                                  The Issuer will use reasonable efforts to
purchase or enter into agreements to purchase, on or before the Effective Date
(first using Collateral Principal Proceeds and then Uninvested Proceeds),
Collateral Interests having an aggregate Principal Balance, together with the
aggregate Principal Balance of all Eligible Investments purchased with
Collateral Principal Collections, of not less than U.S.$400,000,000 (assuming,
for these purposes, settlement (in accordance with customary settlement
procedures in the relevant markets) of all agreements entered into by the Issuer
to acquire Collateral Interests scheduled to settle on or following the
Effective Date).

 

(b)                                 The Issuer (or the Collateral Manager on
behalf of the Issuer) shall cause to be delivered to the Trustee on the
Effective Date an amended Schedule A listing all Collateral Interests purchased
on or before the Effective Date, which schedule will supersede any prior
Schedule A delivered to the Trustee.

 

(c)                                  On or before the Effective Date, the Issuer
(or the Collateral Manager on its behalf) shall deliver an Officer’s certificate
to the Trustee, the Holders of Rated Notes of the Controlling Class, the Initial
Hedge Counterparty and each Rating Agency (in addition to any such Officer’s
Certificate, the information set forth in such Officer’s Certificate shall also
be provided to S&P in a form that complies with S&P’s Preferred Format)
demonstrating compliance by the Issuer with its obligations under
Section 7.18(a) and satisfaction of each applicable Collateral Quality Test
(with the exception of S&P’s CDO Monitor Test), and Coverage Test or, if on the
Effective Date, the Issuer shall be in default in the performance of its
obligations under this Section 7.18 or any of the Collateral Quality Tests (with
the exception of S&P’s CDO Monitor Test) or the specified

 

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Coverage Tests shall fail to be satisfied, the Issuer (or the Collateral Manager
on its behalf) shall deliver an Officer’s certificate to the Trustee, the
Holders of Rated Notes of the Controlling Class, the Initial Hedge Counterparty
and each Rating Agency specifying the details of such default or failure;
provided that the failure to satisfy any of the Collateral Quality Tests or
Coverage Tests does not constitute an Event of Default but such failure may
result in a Rating Confirmation Failure.

 

(d)                                 No later than fifteen (15) Business Days
after the Effective Date, the Issuer (or the Collateral Manager on its behalf)
shall deliver or cause to be delivered to the Trustee an accountant’s
certificate (the Accountant’s Certificate) (i) confirming the information with
respect to each Collateral Interest set forth on the amended schedule delivered
pursuant to Section 7.18(b) as of the Effective Date, and the information
provided by the Issuer with respect to every other asset included in the
Collateral, (ii) certifying as of the Effective Date the procedures applied and
their associated findings with respect to the Coverage Tests and the Collateral
Quality Tests and (iii) specifying the procedures undertaken to review data and
computations relating to the foregoing clause (ii) held by the Issuer on the
Effective Date.

 

(e)                                  The Issuer (or the Collateral Manager on
its behalf) shall request in writing that each of the Rating Agencies confirm in
writing (a Rating Confirmation), within thirty (30) Business Days after the
Effective Date, the ratings (including any private or confidential ratings)
assigned by it on the Closing Date to the Rated Notes.  In the event that the
Issuer fails to obtain a Rating Confirmation within 30 days after the Effective
Date (a Rating Confirmation Failure), Collateral Interest Collections and, to
the extent Collateral Interest Collections are insufficient therefor, Collateral
Principal Collections shall be applied on the first Payment Date and any
succeeding Payment Dates, as applicable as provided in Section 11.1 to the
extent necessary for each of the Rating Agencies to provide a Rating
Confirmation.

 

(f)                                    No later than fifteen (15) Business Days
following the Effective Date, the Trustee shall (i) run the S&P CDO Monitor and
report to S&P whether or not the S&P CDO Monitor Test has been satisfied and
(ii) report the S&P scenario default and break-even default rate for each
Class of Notes.

 

(g)                                 Not later than fifteen (15) Business Days
following the end of each calendar quarter, the Collateral Manager on behalf of
the Issuer shall provide to S&P a report containing the representations and
warranties made with respect to any Commercial Mortgage Loans, Mezzanine Loans,
Subordinate Mortgage Loan Interests, Credit Lease Loans and Tenant Lease Loan
Interests purchased by the Issuer during the preceding calendar quarter,
including any exceptions and qualifications thereto.

 

ARTICLE VIII

SUPPLEMENTAL INDENTURES

 

8.1.      SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF RATED NOTEHOLDERS

 

Without the consent of the Holders of any Rated Notes, the Initial Hedge
Counterparty (except as specified below) or the Income Noteholders, the
Co-Issuers, when authorized by Board Resolutions, and

 

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the Trustee, at any time and from time to time subject to the requirement
provided below in this Section 8.1 with respect to the ratings of the Rated
Notes and subject to Section 8.3, may enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for certain limited
purposes including, inter alia, to:

 

(a)                                  evidence the succession of another Person
to the Issuer or the Co-Issuer and the assumption by any such successor Person
of the covenants of the Issuer herein and in the Rated Notes and the assumption
by any such successor Person of the covenants of the Co-Issuer herein and in the
Rated Notes (other than the Class F Notes and the Class G Notes) pursuant to
Section 7.10 or 7.11;

 

(b)                                 add to the covenants of the Co-Issuers (in
the case of the Rated Notes other than the Class F Notes or the Class G Notes)
or the Issuer (in the case of the Class F Notes or the Class G Notes) or the
Trustee for the benefit of the Holders of all of the Rated Notes;

 

(c)                                  pledge any additional property to the
Trustee;

 

(d)                                 add to the conditions, limitations or
restrictions on the authorized amount, terms and purposes of the issue,
authentication and delivery of the Rated Notes;

 

(e)                                  effect the appointment of a successor;

 

(f)                                    reduce the permitted minimum denomination
of the Rated Notes;

 

(g)                                 take any action necessary or advisable to
prevent the Issuer, any Note Paying Agent or the Trustee from being subject to
withholding or other taxes, fees or assessments, to prevent the Issuer from
failing to qualify as a Qualified REIT Subsidiary or, at any time at which the
Issuer is not a Qualified REIT Subsidiary, to prevent the Issuer from being
treated as engaged in a U.S. trade or business or otherwise being subjected to
U.S. federal, state or local income tax on a net income tax basis; provided that
such action will not cause the Noteholders to experience any material change to
the timing, character or source of income from the Notes and will not be
considered a significant modification resulting in an exchange for purposes of
section 1.1001-3 of the U.S. Treasury regulations;

 

(h)                                 modify the restrictions on and procedures
for resale and other transfer of the Rated Notes in accordance with any change
in any applicable law or regulation (or the interpretation thereof) or to enable
the Co-Issuers to rely upon any less restrictive exemption from registration
under the Securities Act or the Investment Company Act (in addition to that
provided under Section 3(c)(7) thereunder) or to remove restrictions on resale
and transfer to the extent not required thereunder;

 

(i)                                     grant, convey, transfer, assign,
mortgage or pledge any property to or with the Trustee for the benefit of the
Secured Parties;

 

(j)                                     correct or amplify the description of
any property at any time subject to the lien of this Indenture, or to better
assure, convey and confirm unto the Trustee any property subject or required to
be subjected to the lien of this Indenture (including any and all actions
necessary or desirable as a result of changes in law or regulations) or to
subject to the lien of this Indenture any additional property;

 

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(k)                                  make any change required by the stock
exchange on which any Class of Rated Note is listed, if any, in order to permit
or maintain such listing;

 

(l)                                     correct, amend, cure any manifest error,
inconsistency, defect or ambiguity or correct any typographical error in this
Indenture;

 

(m)                               modify this Indenture to conform the terms
herein to the terms set forth in the then current Offering Circular;

 

(n)                                 modify any provision (other than in respect
of a Reserved Matter), with respect to restrictions upon the Issuer’s rights to
acquire and dispose of Collateral Interests and other assets, that the Issuer or
the Collateral Manager determines to be necessary or desirable in order for the
Issuer to maintain any desired exemption from registration of the Issuer under
the Investment Company Act or of the Notes under the Securities Act;

 

(o)                                 with the consent of the Collateral Manager,
modify the calculation of the Collateral Quality Tests and the definitions
applicable thereto to correspond with published or written changes in the
guidelines, methodology or standards established by the Rating Agencies;

 

(p)                                 agree to any modification of the Indenture
or any other Transaction Document (other than in respect of a Reserved Matter),
which is, in the opinion of the Trustee, proper to make if, in the opinion of
the Trustee (based upon an opinion of counsel), such modification will not have
a material adverse effect on the interests of Holders of any Class or Classes of
Notes or the Initial Hedge Counterparty and which is of a formal, minor or
technical nature or is to correct a manifest error.

 

In addition, the Trustee may, but is not obligated to, without the consent of
the Rated Noteholders or of the Holders of any relevant Class or Classes of
Rated Notes, agree to any modification of any other Transaction Document which
is of a formal, minor or technical nature or is to correct a manifest error and
which is, in the opinion of the Trustee, proper to make, in the opinion of the
Trustee (based upon an opinion of counsel); provided such modification will not
have a material adverse effect on the interests of the Initial Hedge
Counterparty or the Holders of any Class or Classes of Notes.  For so long as
any Rated Notes are Outstanding, no such supplemental indenture shall be
effective unless and until Rating Agency Confirmation has been received.

 

The Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations which may be therein contained, but the Trustee shall not be
obligated to enter into any such supplemental indenture which affects the
Trustee’s own rights, duties, liabilities or indemnities under this Indenture or
otherwise, except to the extent required by law.

 

Without obtaining the requisite consents of the applicable parties pursuant to
this Section 8.1, the Trustee shall not enter into any such supplemental
indenture if, as a result of such supplemental indenture, the interests of the
Initial Hedge Counterparty any Holder of Rated Notes or of the Income
Noteholders would be materially and adversely affected thereby.  Unless notified
by (i) a Majority of the then Aggregate Outstanding Amount of any Class of Rated
Notes that such Class will be materially and adversely affected, (ii) a Majority
of the aggregate principal amount of Income Notes Outstanding that the Income
Noteholders will be materially and adversely affected or (iii) the Initial Hedge
Counterparty (with respect to the Initial Hedge Counterparty, only to the extent
that its right to payments in accordance with the Priority of Payments is
adversely affected), the Trustee shall be entitled to rely upon an Opinion of

 

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Counsel as to whether the interests of any Holder of Rated Notes or of Income
Notes would be materially and adversely affected by any such supplemental
indenture (after giving notice of such change to the PAA Issued Note Paying
Agent).  The Collateral Manager will not be bound by any supplemental indenture
that affects the obligations of the Collateral Manager unless the Collateral
Manager has consented thereto (which consent will not be unreasonably
withheld).  The Co-Issuers shall not consent to any supplemental indenture that
would have a material adverse effect on the Initial Hedge Counterparty without
the consent of the Initial Hedge Counterparty.

 

At the cost of the Co-Issuers, the Trustee shall provide to the Rated
Noteholders, the PAA Issued Note Paying Agent, the Initial Hedge Counterparty
and each Rating Agency a copy of any proposed supplemental indenture at least 10
days prior to the execution thereof by the Trustee and, for so long as any Rated
Notes are Outstanding, request a Rating Agency Confirmation from each Rating
Agency with respect to such supplemental indenture.  As soon as practicable
after the execution by the Trustee and the Issuer of any such supplemental
indenture, the Trustee shall provide to the Rated Noteholders, the PAA Issued
Note Paying Agent, the Initial Hedge Counterparty and each Rating Agency a copy
of the executed supplemental indenture.  For so long as any Rated Notes are
Outstanding, no supplemental indenture shall be effective unless and until a
Rating Agency Confirmation from each Rating Agency has been received.

 

8.2.      SUPPLEMENTAL INDENTURES WITH CONSENT OF RATED NOTEHOLDERS

 

With the written consent of the Holders of not less than 75% of the then
Aggregate Outstanding Amount of each adversely affected Class of Rated Notes and
the written consent of 75% of the Holders of the aggregate principal amount of
the Outstanding Income Notes if materially and adversely affected thereby (which
consent shall be evidenced by an Officer’s certificate of the Issuer certifying
that such consent has been obtained), Rating Agency Confirmation and the written
consent of the Initial Hedge Counterparty (which shall be required only if the
right of the Initial Hedge Counterparty to payments in accordance with the
Priority of Payments is adversely affected), the Trustee and Co-Issuers may,
subject to Section 8.3, enter into one or more indentures supplemental hereto in
order to:

 

(a)                                  change the applicable Stated Maturity Date
of the Rated Notes or scheduled redemption of the principal of or the due date
of any installment of interest on the Rated Notes, reduce the principal amount
thereof or the rate of interest thereon, or the Redemption Price with respect
thereto, or change the earliest date on which Rated Notes may be redeemed,
change the provisions of the Indenture relating to the application of proceeds
of any Collateral to the payment of principal of or interest on the Rated Notes
or change any place where, or the coin or currency in which, Rated Notes or the
principal thereof or interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the Stated
Maturity Date thereof (or, in the case of redemption, on or after the Redemption
Date);

 

(b)                                 reduce the percentage, in principal amount,
of Holders of Rated Notes of each Class, or the percentage of Income
Noteholders, whose consent is required for the authorization of any supplemental
indenture or for any waiver of compliance with certain provisions of the
Indenture or certain defaults thereunder or their consequences;

 

(c)                                  impair or adversely affect the Collateral
other than as permitted by the Indenture;

 

(d)                                 permit the creation of any security interest
ranking prior to or on a parity with the security interest of the Indenture with
respect to any part of the Collateral or terminate such security interest on any
property at any time subject thereto (other than in accordance

 

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with the Indenture) or deprive the Holder of any Rated Note or the Initial Hedge
Counterparty of the security afforded by the security interest of the Indenture;

 

(e)                                  reduce the percentage of the aggregate
principal amount of Holders of Rated Notes of each Class whose consent is
required to request the Trustee to preserve the Collateral or rescind the
Trustee’s election to preserve the Collateral pursuant to Section 5.5 or to sell
or liquidate the Collateral pursuant to Section 5.4 or 5.5;

 

(f)                                    modify any of the provisions of this
Section 8.2, except to increase the percentage of the aggregate principal amount
of Outstanding Rated Notes of each Class whose Holders’ consent is required for
any such action or to provide that other provisions of the Indenture cannot be
modified or waived without the written consent of the Holders of 75% of the then
Aggregate Outstanding Amount of each affected Class of Rated Notes Outstanding
and the Initial Hedge Counterparty;

 

(g)                                 modify the definition of the term
“Outstanding” or Section 11.1;

 

(h)                                 modify any of the provisions of the
Indenture in such a manner as to affect the calculation of the amount of any
payment of interest or principal of any Rated Note on any Payment Date or to
affect the right of the Holders of Rated Notes or the Initial Hedge Counterparty
to the benefit of any provisions for the redemption of such Rated Notes
contained therein;

 

(i)                                     modify provisions related to the
bankruptcy or insolvency of the Co-Issuers; or

 

(j)                                     modify provisions stating that the
obligations of the Co-Issuers are joint and several limited recourse obligations
of the Co-Issuers payable solely from the Collateral in accordance with the
terms of the Indenture (Section 8.2(a) through (j) collectively, the Reserved
Matters).

 

The Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations which may be therein contained, but the Trustee shall not be
obligated to enter into any such supplemental indenture which affects the
Trustee’s own rights, duties, liabilities or indemnities under this Indenture or
otherwise, except to the extent required by law.

 

Not later than 15 Business Days prior to the execution of any proposed
supplemental indenture pursuant to this Section 8.2, the Trustee, at the expense
of the Co-Issuers, shall mail to the Rated Noteholders, PAA Issued Note Paying
Agent, the Initial Hedge Counterparty, the Collateral Manager and each Rating
Agency a copy of such proposed supplemental indenture (or a description of the
substance thereof) and shall request Rating Agency Confirmation with respect to
such supplemental indenture.  If any Class of Rated Notes is then rated by any
Rating Agency, the Trustee shall not enter into any such supplemental indenture
if, as a result of such supplemental indenture, Rating Agency Confirmation would
not be received with respect to such supplemental indenture, unless each Holder
of Rated Notes of each Class whose rating will be reduced or withdrawn has,
after notice that the proposed supplemental indenture would result in such
reduction or withdrawal of the rating of the Class of Rated Notes held by such
Holder, consented to such supplemental indenture.  Without having obtained the
consent of the applicable parties pursuant to this Section 8.2, the Trustee
shall not enter into any such supplemental indenture if, as a result of such
supplemental indenture, the interests of any Holder of Rated Notes, the Initial
Hedge Counterparty or of the Income Noteholders would be materially and
adversely affected thereby.  Unless notified by (i) the Holders of a Majority of
the then Aggregate Outstanding Amount of any Class of Rated Notes that such
Class will be materially and adversely affected or (ii) the Holders of a

 

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Majority of aggregate principal balance of the Income Notes that the Income
Noteholders will be materially and adversely affected, the Trustee shall be
entitled to rely upon an Opinion of Counsel as to whether the interests of any
Holder of Rated Notes or of the Income Noteholders would be materially and
adversely affected by any such supplemental indenture (after giving notice of
such change to the PAA Issued Note Paying Agent).

 

It shall not be necessary for any Act of Rated Noteholders or any consent of
Income Noteholders under this Section 8.2 to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such Act or
consent shall approve the substance thereof.

 

Promptly after the execution by the Co-Issuers and the Trustee of any
supplemental indenture pursuant to this Section 8.2, the Trustee, at the expense
of the Co-Issuers, shall mail or make available to the Rated Noteholders, the
Initial Hedge Counterparty, the PAA Issued Note Paying Agent (for forwarding to
the Income Noteholders), the Collateral Manager and each Rating Agency a copy
thereof.  Any failure of the Trustee to publish or mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.  In addition, the Issuer shall cause to be
delivered a copy of the executed supplemental indenture to the Repository for
posting on the Repository in the manner described in Section 14.3.

 

8.3.      EXECUTION OF SUPPLEMENTAL INDENTURES

 

In executing or accepting the additional trusts created by any supplemental
indenture permitted by this Section 8 or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Sections 6.1 and 6.3) shall be fully protected in relying in good
faith upon an Opinion of Counsel, stating that the execution of such
supplemental indenture is authorized, or permitted by this Indenture and that
all conditions precedent thereto have been complied with.  The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee’s own rights, duties or indemnities under this Indenture or
otherwise.  Such supplemental indenture will not be binding on the Collateral
Manager to the extent that it reduces the rights or increases the obligations of
the Collateral Manager, unless such supplemental indenture is consented to in
writing by the Collateral Manager.

 

8.4.      EFFECT OF SUPPLEMENTAL INDENTURES

 

Upon the execution of any supplemental indenture under this Section 8, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Rated Notes theretofore and thereafter authenticated and delivered hereunder
or under the Paying Agency Agreement shall be bound thereby.

 

Notwithstanding anything to the contrary herein, no amendment or modification of
or supplement to this Indenture will be effective until the Collateral Manager
has received written notice of such amendment, modification or supplement and,
if such amendment, modification or supplement affects the rights, obligations or
compensation of the Collateral Manager, the Collateral Manager has consented in
writing to the terms of the proposed amendment.  In addition, the consent of any
predecessor Collateral Manager will be required to implement any such amendment,
modification or supplemental that would change any provision of this Indenture
entitling such predecessor Collateral Manager to any fee or other amount payable
to it under this Indenture or to reduce or delay the right of such predecessor
to such payment.

 

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8.5.      REFERENCE IN INDENTURE ISSUED NOTES TO SUPPLEMENTAL INDENTURES

 

Indenture Issued Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Section 8 may, and if required by the
Trustee shall, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture.  If the Co-Issuers shall so
determine, new Indenture Issued Notes, so modified as to conform in the opinion
of the Trustee and the Co-Issuers to any such supplemental indenture, may be
prepared and executed by the Co-Issuers and authenticated and delivered by the
Trustee in exchange for Outstanding Indenture Issued Notes.

 

ARTICLE IX

REDEMPTION OF RATED NOTES

 

9.1.      REDEMPTION OF RATED NOTES

 

The Rated Notes will be subject to redemption in whole but not in part at their
respective Redemption Prices, in each case, in accordance with the procedures,
and subject to the satisfaction of the conditions, in Section 9.2 below, in the
following circumstances:

 

(a)                                  on or after the Payment Date occurring in
July 2007 and continuing until the Stated Maturity Date (the Call Period), at
the direction of the Holders of not less than 662/3% of the aggregate principal
amount of the Income Notes Outstanding (an Optional Redemption);

 

(b)                                 on any Payment Date following the occurrence
and during the continuation of a Tax Event, at the direction of the Holders of
not less than 662/3% of the aggregate principal amount of the Income Notes
Outstanding (such a redemption, a Tax Redemption); and

 

(c)                                  automatically and without any direction by
any Person, (i) if the Notes have not been redeemed in full on or after the
Payment Date occurring in July 2017, and (ii) if any of the conditions set forth
in Sections 9.2(a) through (d) below have not been met or if the highest bidder
fails to pay the purchase price within six (6) Business Days following such
Payment Date, the Payment Date thereafter, unless the Notes are redeemed in full
prior to the next Auction Date (such a redemption, an Auction Call Redemption).

 

9.2.      REDEMPTION PROCEDURES; AUCTION

 

In connection with any Redemption, the Trustee and the Collateral Manager will,
in accordance with the procedures set forth in Schedule E (the Auction
Procedures) and at the expense of the Issuer, conduct an auction (an Auction) of
the Collateral Interests included in the Collateral on a date (each such date,
an Auction Date) occurring no later than ten (10) Business Days prior to any
scheduled Redemption Date.  Any of the Initial Purchasers, the Collateral
Manager, the Income Noteholders, the Trustee or their respective Affiliates may,
but will not be required to, bid at the Auction.

 

(a)                                  Any Redemption will be subject to the
satisfaction of each of the following conditions:

 

(1)                                  the related Auction has been conducted in
accordance with the Auction Procedures;

 

(2)                                  the Trustee has received bids for the
Collateral Interests (or for each of the related Subpools) from at least two
Qualified Bidders (including the winning

 

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Qualified Bidder) identified on a list of qualified bidders provided by the
Collateral Manager to the Trustee;

 

(3)                                  the Collateral Manager certifies that the
Highest Auction Price would result in the Sale Proceeds from the Collateral
Interests (or the related Subpools) for a purchase price (paid in cash) plus the
Balance of all Eligible Investments and cash held by the Issuer, plus any
termination payments payable by a Hedge Counterparty to the Issuer (in excess of
any amounts payable by the Issuer to a Hedge Counterparty) resulting from the
termination of the related Hedge Agreement pursuant to the Redemption being at
least equal to the sum of (i) the aggregate Redemption Prices of the Notes plus
(ii) any accrued but unpaid fees and expenses of the Issuer pursuant to
Section 11.1(b)(1) and (19) through (22) (including any termination payments
payable by the Issuer resulting from the termination of any Hedge Agreement
pursuant to the Redemption) plus (iii) any Outstanding Interest Advances,
together with interest thereon plus (iv) (a) in connection with a Tax Redemption
at the direction of the Controlling Class and (b) an Auction Call Redemption,
any additional amounts necessary to satisfy the Income Note Redemption Approval
Condition; and

 

(4)                                  the bidder(s) who offered the Highest
Auction Price for the Collateral Interests (or the related Subpools)
enter(s) into a written agreement with the Issuer (which the Issuer will execute
if the conditions set forth above and in this Indenture are satisfied, which
execution will constitute certification by the Issuer that such conditions have
been satisfied) that obligates the highest bidder(s) (or the highest bidder for
each Subpool) to purchase all of the Collateral Interests (or the relevant
Subpool) and provides for payment in full (in Cash) of the purchase price to the
Trustee on or prior to the sixth Business Day following the relevant Auction
Date.

 

(b)                                 In addition, any Optional Redemption
requires the occurrence of the following:

 

(1)                                  at least four (4) Business Days before the
scheduled Redemption Date, the Collateral Manager has furnished to the Trustee
evidence, in form satisfactory to the Trustee, that the Collateral Manager on
behalf of the Issuer has entered into a binding agreement or agreements with an
institution or institutions (or guarantor or guarantors of the obligations):
(A) with regard to which Rating Agency Confirmation has been received; or
(B) whose long-term unsecured debt obligations (other than such obligations
whose rating is based on the credit of a person other than such institution)
have a credit rating from Moody’s, if rated by Moody’s, of “P-1” and of at least
“A-1” from S&P; and in each case, to sell, not later than the Business Day
immediately preceding the scheduled Redemption Date, in immediately available
funds, all or part of the Collateral Interests at a purchase price (paid in
Cash) which together with the Balance of all Eligible Investments and Cash held
by the Issuer will be at least equal to the sum of (i) the aggregate Redemption
Prices of the Notes plus (ii) any accrued but unpaid fees and expenses of the
Issuer pursuant to Section 11.1(b)(1) and (19) through (22) (including any
termination payments payable by the Issuer resulting from the termination of any
Hedge Agreement pursuant to the Redemption); or

 

(2)                                  prior to selling any Collateral Interests
or any other collateral, the Collateral Manager certifies that the expected
proceeds from such sale will, in the

 

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aggregate, equal or exceed, in each case, the sum of (A) any amounts payable in
connection with an Optional Redemption pursuant to Section 9.2 of the Notes plus
(B) all expenses of such redemption and all other administrative fees and
expenses payable on the related Redemption Date.

 

Provided that all of the conditions set forth in Section 9.2(a) through (d) have
been met, the Trustee will sell and transfer the Collateral Interests (or each
related Subpool), without representation, warranty or recourse, to the
bidder(s) who offered the Highest Auction Price for the Collateral Interests (or
the related Subpools) in accordance with and upon completion of the Auction
Procedures.  If any of the conditions set forth in Section 9.2(a) through
(d) are not met, (i) the Redemption will not occur on the Payment Date following
the relevant Auction Date, (ii) the Trustee will give notice of the withdrawal
of the Redemption, (iii) subject to clause (iv) below, the Trustee will decline
to consummate such sale and may not solicit any further bids or otherwise
negotiate any further sale of Collateral Interests in relation to such Auction
and (iv) unless the Rated Notes are redeemed in full prior to the next
succeeding Auction Date, the Trustee will conduct another Auction on the next
succeeding Auction Date.

 

The Trustee will deposit the purchase price for the Collateral Interests in the
Collection Account, and the Rated Notes and, to the extent funds are available
therefor, the Income Notes, will be redeemed on the Payment Date immediately
following the relevant Auction Date in the order of priorities set forth in
Section 11.1.  Any Redemption will only be effected on a Payment Date. 
Installments of principal and interest due on or prior to a Redemption Date
shall continue to be payable to the Holders of such Rated Notes as of the
relevant Record Dates according to their terms.

 

9.3.      RECORD DATE; NOTICE TO TRUSTEE OF REDEMPTION

 

(a)                                  The Issuer shall set the Redemption Date
and the applicable Record Date and give notice thereof to the Trustee pursuant
to Section 9.3(b) below and shall issue an Issuer Request to the Trustee for the
provision of the information necessary for the Issuer to compile the Redemption
Date Statement in accordance with Section 10.11(b).

 

(b)                                 In the event of any Redemption, the Issuer
shall, at least 45 days (but not more than 90 days) prior to the Redemption
Date, notify the Trustee and the Initial Hedge Counterparty of such Redemption
Date, the applicable Record Date, the principal amount of each Class of Notes to
be redeemed on such Redemption Date and the Redemption Price of such Notes.

 

9.4.      NOTICE OF REDEMPTION

 

Notice of Redemption will be given by first-class mail, postage prepaid, mailed
not less than eight (8) Business Days prior to the applicable Redemption Date,
to the Initial Hedge Counterparty, each Rating Agency and each Holder of Rated
Notes at such Holder’s address in the Note Register maintained by the Note
Registrar in accordance with the provisions of this Indenture and to the
Collateral Manager.  Rated Notes called for Redemption must be surrendered at
the office of any Note Paying Agent appointed pursuant to this Indenture in
order to receive the Redemption Price.  The Issuer will also deliver notice of
Redemption to the Irish Paying Agent if and so long as any Class of Rated Notes
or the Income Notes to be redeemed is listed on the Irish Stock Exchange.

 

All notices of redemption shall state:

 

(a)                                  the applicable Redemption Date;

 

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(b)                                 the applicable Record Date;

 

(c)                                  the Redemption Price;

 

(d)                                 that all the Notes of the relevant Class are
being redeemed in full and that interest on the applicable principal amount of
Notes shall cease to accrue on the date specified in the notice; and

 

(e)                                  the place or places where such Rated Notes
are to be surrendered for payment of the Redemption Price, which shall be the
office or agency of the Note Paying Agent to be maintained as provided in
Section 7.2.

 

Notice of redemption shall be given by the Co-Issuers or, at the Co-Issuers’
request, by the Trustee in the name and at the expense of the Co-Issuers. 
Failure to give notice of redemption, or any defect therein, to any Holder of
any Note selected for redemption shall not impair or affect the validity of the
redemption of any other Notes.

 

9.5.      NOTICE OF WITHDRAWAL

 

With regard to an Optional Redemption or a Tax Redemption, any notice of
redemption may be withdrawn by the Issuer up to the fourth Business Day prior to
the Redemption Date by written notice to the Trustee and the Collateral Manager
only if the Collateral Manager is unable to deliver such sale agreement or
agreements or certifications, as the case may be, in form satisfactory to the
Trustee.  With regard to any Redemption, notice of any withdrawal pursuant to
Section 9.2 shall be given by the Trustee to each Holder of Rated Notes at such
Holder’s address in the Note Register maintained by the Note Registrar by
overnight courier guaranteeing next day delivery (or second day delivery outside
the United States) sent not later than the third Business Day prior to such
Redemption Date.  In addition, the Trustee will, if any Class of Rated Notes to
have been redeemed is listed on the Irish Stock Exchange, deliver a notice of
such withdrawal to the Irish Stock Exchange not less than three (3) Business
Days prior to such Redemption Date.

 

9.6.      RATED NOTES PAYABLE ON REDEMPTION DATE

 

Notice of redemption having been given as aforesaid, the Notes so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified, and from and after the Redemption Date (unless the Issuer
shall default in the payment of the Redemption Price) such Rated Notes shall
cease to bear interest.  Upon final payment on a Note to be redeemed, the Holder
shall present and surrender such Note at the place specified in the notice of
redemption on or prior to such Redemption Date; provided that if there is
delivered to the Co-Issuers (i) such security or indemnity as may be required by
them to save each of them harmless and (ii) an undertaking thereafter to
surrender such Note, then, in the absence of notice to the Co-Issuers that the
applicable Note has been acquired by a bona fide purchaser, such final payment
shall be made without presentation or surrender.  Installments of interest on
Rated Notes of a Class so to be redeemed whose Stated Maturity Date is on or
prior to the Redemption Date shall be payable to the Holders of such Rated
Notes, or one or more predecessor Rated Notes, registered as such at the close
of business on the relevant Record Date according to the terms and provisions of
Section 2.6(e).

 

If any Rated Note called for redemption shall not be paid upon surrender thereof
for redemption, the principal thereof shall, until paid, bear interest from the
Redemption Date at the Applicable Periodic Interest Rate for each successive
Interest Period the Rated Note remains Outstanding.

 

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9.7.      SPECIAL AMORTIZATION

 

If the Collateral Manager notifies the Trustee in writing that it has
determined, in its sole discretion, that investments in additional Collateral
Interests would either be impractical or not beneficial, the amount of such
Collateral Principal Collections available pursuant to Section 11.1(b)(17), as
determined by the Collateral Manager (the “Special Amortization Amount”) shall
be applied to the payment of principal on the Notes on the next succeeding
Payment Date (a “Special Amortization”) in accordance with
Section 11.1(b)(17)(ii) hereof.

 

Payments of principal on the Notes pursuant to Section 11.1(b)(17)(ii) shall be
made:

 

(i)                                     if the Special Amortization Pro Rata
Condition is satisfied, pro rata to the respective Classes of the Rated Notes
pursuant to Section 11.1(b)(17)(i) of the Priority of Principal Payments
provided that a Special Amortization Notice is delivered by the Collateral
Manager to the Issuer and the Trustee; or

 

(ii)                                if the criteria for a Special Amortization
Pro Rata Condition are not satisfied, sequentially to the respective Classes of
the Rated Notes pursuant to Section 11.1(b)(17)(ii)(2) of the Priority of
Principal Payments.

 

If the Collateral Manager elects to initiate a Special Amortization, the
Collateral Manager shall deliver on or prior to the related Calculation Date, to
each of the Trustee and each Rating Agency, advance written notice (which may be
included in the related Note Report) (each, a “Special Amortization Notice”)
specifying the identity and principal amount of each Class of Rated Notes to be
paid pursuant to such Special Amortization and that the Collateral Manager has
been unable to identify for purchase by the Issuer Substitute Collateral
Interests that comply with the Reinvestment Criteria and the other applicable
requirements of the Indenture, and that the other applicable requirements of the
Indenture, and that all other Indenture requirements for such Special
Amortization are complied with.

 

On each Payment Date on which a Special Amortization occurs, each related Hedge
Agreement will be terminated in part in accordance with the terms and conditions
thereof, including compliance with any applicable requirement that the Issuer
receive Rating Agency Confirmation from S&P,  and any amounts due and payable
pursuant to such Hedge Agreement in connection with such termination thereof
will be paid on such Payment Date in accordance with the terms thereof subject
to this Indenture.

 

ARTICLE X

ACCOUNTS, ACCOUNTINGS AND RELEASES

 

10.1.                        COLLECTION OF FUNDS

 

(a)                                  Except as otherwise expressly provided
herein, the Trustee may demand payment or delivery of, and shall receive and
collect, directly and without intervention or assistance of any fiscal agent or
other intermediary, all funds and other property payable to or receivable by the
Trustee pursuant to this Indenture, including all payments due on the Pledged
Securities, in accordance with the terms and conditions of such Pledged
Securities.  The Trustee shall segregate and hold all such funds and property
received by it in trust for the Secured Parties and shall apply such funds as
provided in this Indenture.

 

(b)                                 Each of the parties hereto hereby agrees to
cause the Custodian or any other Securities Intermediary that holds any funds or
other property for the Issuer or the Co-Issuer in an Account to agree with the
parties hereto that (1) each Account is a Securities Account in

 

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respect of which the Trustee is the Entitlement Holder, (2) each Account is held
by a financial institution that has a combined capital and surplus of at least
U.S.$250,000,000 and being subject to supervision or examination by federal or
state banking authority, (3) the Cash, Securities and other property credited to
any Account is to be treated as a Financial Asset under Article 8 of the UCC and
(4) the securities intermediary’s jurisdiction (within the meaning of
Section 8-110 of the UCC) for that purpose will be the State of New York.  In no
event may any Financial Asset held in any Account be registered in the name of,
payable to the order of, or specially Indorsed to, the Issuer unless such
Financial Asset has also been Indorsed in blank or to the Custodian or other
Securities Intermediary that holds such Financial Asset in such Account.  Each
Account shall be held and maintained at an office located in Minneapolis,
Minnesota or Columbia, Maryland.

 

10.2.                        GENERAL PROVISIONS APPLICABLE TO ACCOUNTS

 

The Payment Account, Collateral Account, Uninvested Proceeds Account, Collection
Account (including each Collateral Sub-Account therein), Expense Reserve
Account, each Hedge Counterparty Collateral Account (if any) and Interest
Reserve Account shall remain at all times with a financial institution having a
long-term debt rating of at least “BBB+” by S&P.

 

(a)                                  The Trustee agrees to give the Issuer
prompt notice (with a copy to each Hedge Counterparty, the Collateral Manager,
each Rating Agency and the PAA Issued Note Paying Agent) if any Account or any
funds on deposit therein, or otherwise standing to the credit of any Account,
shall become subject to any writ, order, judgment, warrant of attachment,
execution or similar process.

 

(b)                                 The Collateral Manager shall direct the
Trustee to invest and reinvest any funds on deposit in any of the Accounts
(other than the Payment Account) in Eligible Investments.  In the event that the
Collateral Manager has not delivered investment instructions to the Trustee or
after the occurrence of an Event of Default, the Trustee shall invest and
reinvest any funds on deposit in any Account (other than the Payment Account) as
fully as practicable in investments described in clause (vii) of the definition
of Eligible Investments maturing not later than the earlier of (i) 30 days after
the date of such investment or (ii) the Business Day immediately preceding the
next Payment Date.  With respect to each Account, all interest and other income
from Eligible Investments purchased with funds on deposit in such Account shall
be deposited in such Account, any gain realized from such investments shall be
credited to such Account, and any loss resulting from such investments shall be
charged to such Account.  Any gain or loss with respect to an Eligible
Investment shall be allocated in such a manner as to increase or decrease,
respectively, Collateral Principal Collections and/or Collateral Interest
Collections in the proportion that the amount of Collateral Principal
Collections and/or Collateral Interest Collections used to acquire such Eligible
Investment bears to the purchase price thereof.  The Trustee shall not in any
way be held liable by reason of any insufficiency of any such Account resulting
from any loss relating to any such investment.  Nothing herein shall be deemed
to relieve the Bank or its Affiliates from any duties or liabilities with
respect to investments in obligations of the Bank or any Affiliate thereof.

 

(c)                                  All funds deposited from time to time in
the Collection Account, the Expense Reserve Account or the Interest Reserve
Account pursuant to this Indenture shall be held by the Trustee as part of the
Collateral and shall be applied to the purposes herein provided.

 

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10.3.                        COLLATERAL ACCOUNT

 

The Trustee shall, prior to the Closing Date, cause the Custodian to establish a
Securities Account which shall be designated as the “Collateral Account”, which
shall be in the name of the Trustee as Entitlement Holder in trust for the
benefit of the Secured Parties and into which the Trustee shall from time to
time deposit Collateral.  All Collateral from time to time deposited in, or
otherwise standing to the credit of, the Collateral Account pursuant to this
Indenture shall be held by the Trustee as part of the Collateral and shall be
applied to the purposes herein provided.  The Co-Issuers shall not have any
legal, equitable or beneficial interest in the Collateral Account other than in
accordance with the Priority of Payments.

 

10.4.                        UNINVESTED PROCEEDS ACCOUNT

 

The Trustee shall, prior to the Closing Date, cause to be established a
Securities Account which shall be designated as the “Uninvested Proceeds
Account”, which shall be held in the name of the Trustee as Entitlement Holder
in trust for the benefit of the Secured Parties, into which the Trustee shall
deposit all Uninvested Proceeds (other than the organizational and structuring
fees and expenses of the Co-Issuers (including, without limitation, the legal
fees and expenses of counsel to the Co-Issuers, Deutsche Bank and the Collateral
Manager), the expenses of offering the Rated Notes and the Income Notes
(including placement fees and structuring fees) and amounts deposited in the
Expense Reserve Account on such date).  On or prior to the Effective Date, the
Collateral Manager on behalf of the Issuer may direct the Trustee to, and upon
such direction the Trustee shall, apply funds in the Uninvested Proceeds Account
to purchase additional Collateral Interests and, pending such investment in
additional Collateral Interests, such funds will be invested in Eligible
Investments, as directed by the Collateral Manager, with stated maturities no
later than the Business Day immediately preceding the next Payment Date;
provided, however that during the Ramp-Up Period, Substitute Collateral
Interests shall be purchased with Collateral Principal Collections, if
sufficient Collateral Principal Collections are available, and only if
sufficient Collateral Principal Collections are not available, with amounts in
the Uninvested Proceeds Account.  The Trustee shall transfer any Uninvested
Proceeds remaining on deposit in the Uninvested Proceeds Account on the
Effective Date to the Collection Account to be treated as either (i) Collateral
Interest Collections, if Rating Agency Confirmation to treat such Uninvested
Proceeds as such has been obtained or (ii) Collateral Principal Collections, if
such Rating Agency Confirmation has not been obtained, on the first Payment Date
and distributed in accordance with the Priority of Payments.

 

10.5.                        COLLECTION ACCOUNT

 

(a)                                  Collection Account

 

(1)                                  The Trustee shall, prior to the Closing
Date, cause to be established a Securities Account which shall be designated as
the “Collection Account”, which shall be held in the name of the Trustee as
Entitlement Holder in trust for the benefit of the Secured Parties.  The Trustee
shall cause to be established two sub-accounts of the Collection Account.  The
Trustee shall deposit Collateral Principal Collections into one sub-account (the
Collateral Principal Collections Sub-Account) and Collateral Interest
Collections into the other sub-account.  At the direction of the Issuer (or the
Collateral Manager on behalf of the Issuer), the Trustee shall invest all funds
on deposit in the Collection Account (including the Collateral Principal
Collection Sub-Account) in Eligible Investments or Substitute Collateral
Interests in accordance with the requirements and limitations contained in
Section 12.1(c).

 

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(2)                                The Trustee, within one Business Day after
receipt of any Distribution or other proceeds that are not Cash shall so notify
the Issuer and the Issuer shall sell such Distribution or other proceeds for
Cash in accordance with Section 12.1.

 

(3)                                The Trustee shall transfer to the Payment
Account for application pursuant to Section 11.1(a) and in accordance with the
calculations and the instructions contained in the Note Valuation Report
prepared by the Issuer pursuant to Section 10.11(a), on or prior to the Business
Day prior to each Payment Date, funds on deposit in the Collection Account
(including reinvestment income) other than Collections received after the end of
the Due Period with respect to such Payment Date.  An Authorized Officer of the
Issuer or the Collateral Manager’s approval of the Note Valuation Report shall
constitute direction to the Trustee to, and upon such approval, the Trustee
shall, transfer to the Payment Account, for application pursuant to
Section 11.1(a) no later than the Business Day prior to each Payment Date, all
Interest Advances made to or by the Trustee pursuant to Section 10.17 and any
amounts then held in the Collection Account other than proceeds received after
the end of the Due Period with respect to such Payment Date.

 

(4)                                The Trustee shall withdraw and apply amounts
on deposit in the Collection Account in accordance with any Redemption Date
Statement delivered to the Trustee in connection with the redemption of Rated
Notes pursuant to Section 9.1.

 

10.6.                        EXPENSE RESERVE ACCOUNT

 

The Trustee shall, prior to the Closing Date, cause to be established a
Securities Account which shall be designated as the “Expense Reserve Account”,
which shall be held in the name of the Trustee as Entitlement Holder in trust
for the benefit of the Secured Parties.  Any and all funds at any time on
deposit in, or otherwise standing to the credit of, the Expense Reserve Account
shall be held in trust by the Trustee for the benefit of the Secured Parties. 
On the Closing Date, the Trustee shall deposit into the Expense Reserve Account
an amount equal to U.S.$ 25,000 together with an amount sufficient to pay any
outstanding fees and expenses of the Issuer in relation to the offering of the
Rated Notes and the Income Notes which are not paid on the Closing Date.  At the
direction of the Issuer (or the Collateral Manager on behalf of the Issuer), the
Trustee shall invest all funds on deposit in the Expense Reserve Account in
Eligible Investments.  Any amounts held in the Expense Reserve Account in excess
of U.S.$ 25,000 on the day which is 60 days following the Closing Date (or, if
such day is not a Business Day, the next following Business Day) shall be
transferred by the Trustee into the Uninvested Proceeds Account.  Thereafter,
the Trustee shall transfer to the Expense Reserve Account from the Payment
Account amounts required to be deposited therein pursuant to Section 11.1(a) and
in accordance with the calculations and the instruction contained in the Note
Valuation Report prepared by the Issuer pursuant to Section 10.11(a).  Except as
provided in Section 11.1, the only permitted withdrawal from or application of
funds on deposit in, or otherwise standing to the credit of, the Expense Reserve
Account shall be to pay (on any day other than a Payment Date) accrued and
unpaid Administrative Expenses of the Co-Issuers; provided that the Trustee
shall deposit all amounts remaining on deposit in the Expense Reserve Account at
the time when substantially all of the Issuer’s assets have been sold or
otherwise disposed of into the Collections Account for application as Collateral
Interest Collections on the immediately succeeding Payment Date.

 

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10.7.                        INTEREST RESERVE ACCOUNT

 

The Trustee shall, prior to the Closing Date, cause to be established a
Securities Account which shall be designated as the “Interest Reserve Account”,
which shall be held in the name of the Trustee as Entitlement Holder in trust
for the benefit of the Secured Parties.  Any and all funds at any time on
deposit in, or otherwise standing to the credit of, the Interest Reserve Account
shall be held in trust by the Trustee for the benefit of the Secured Parties. 
At the direction of the Issuer (or the Collateral Manager on behalf of the
Issuer), the Trustee shall invest all funds on deposit in the Interest Reserve
Account in Eligible Investments.  On each Payment Date, in accordance with the
Priority of Payments, the Trustee will deposit the Interest Reserve Amount, if
any, into the Interest Reserve Account.  The only permitted withdrawal from or
application of funds on deposit in, or otherwise standing to the credit of, the
Interest Reserve Account shall be to deposit into the Payment Account, on the
Business Day prior to each Payment Date, the Balance of the Interest Reserve
Account (including reinvestment income) for distribution as Collateral Interest
Collections in accordance with the Priority of Payments on the related Payment
Date.

 

10.8.                        EARN-OUT ASSET ACCOUNT

 

With respect to any Earn-Out Asset, the Trustee, at the direction of the
Collateral Manager, at the time of purchase thereof shall withdraw from the
principal collection subaccount of the Collection Account and deposit into the
Earn-Out Asset Account the amount of funds equal to or greater than the combined
aggregate principal amounts of the funding obligations under the any Earn-Out
Asset included in the Collateral Interests less the amount of any previous
funding, as specified in such direction.  Upon initial purchase of an Earn-Out
Asset, such funding obligations shall be treated as part of the purchase price
for such Collateral Interest.

 

As directed by the Collateral Manager in writing and in accordance with the
Indenture, amounts on deposit in the Earn-Out Asset Account shall be invested in
overnight funds that are Eligible Investments.  On the Business Day immediately
preceding each Payment Date, the income received on amounts contained in the
Earn-Out Asset Account during the related Due Period shall be withdrawn from
such account and deposited in the Collection Account as Collateral Interest
Collections.

 

Any funds in the Earn-Out Asset Account will be available solely to cover any
drawdowns on the related Earn-Out Assets; provided, however, that the excess of
(a) the amounts on deposit in the Earn-Out Asset Account over (b) the combined
aggregate principal amounts of the undrawn commitments under any Earn-Out Assets
included in the Collateral shall be transferred to Collection Account by the
Trustee (upon the direction of the Collateral Manager) from time to time as
Collateral Principal Collections.  Upon (i) the sale or maturity of an Earn-Out
Asset or (ii) the occurrence of an event of default with respect to an Earn-Out
Asset or any other event or circumstance which results in the irrevocable
reduction of the undrawn commitments under such Earn-Out Asset, any funds in the
Earn-Out Asset Account in excess of the amount needed to cover any draw-downs on
all remaining Earn-Out Assets shall be transferred, at the direction of the
Collateral Manager, to the Collection Account for distribution as Collateral
Principal Collections in accordance with Section 11.1 on the immediately
succeeding Payment Date.

 

10.9.                        PAYMENT ACCOUNT

 

The Trustee shall, prior to the Closing Date, establish a Securities Account
which shall be designated as the “Payment Account”, which shall be held in the
name of the Trustee as Entitlement Holder in trust for the benefit of the
Secured Parties.  Any and all funds at any time on deposit in, or otherwise
standing to the credit of, the Payment Account shall be held in trust by the
Trustee for the

 

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benefit of the Secured Parties.  Except as provided in Section 11.1, the only
permitted withdrawal from or application of funds on deposit in, or otherwise
standing to the credit of, the Payment Account shall be to pay the interest on
and the principal of the Rated Notes in accordance with their terms and the
provisions of this Indenture and, upon Issuer Order, to pay Administrative
Expenses, amounts due to the Advancing Agent or the Trustee in connection with
the reimbursement of Interest Advances and interest thereon and other amounts
specified therein, each in accordance with the Priority of Payments.  The
Co-Issuers shall not have any legal, equitable or beneficial interest in the
Payment Account other than in accordance with the Priority of Payments.

 

10.10.                  REPORTS BY TRUSTEE

 

The Trustee shall supply, in a timely fashion to each Rating Agency (so long as
any Rated Notes are rated by such Rating Agency), the Initial Hedge
Counterparty, the Holders of Rated Notes of the Controlling Class, the
Collateral Manager, the PAA Issued Note Paying Agent, the Initial Purchasers,
the Issuer and the Advancing Agent any information regularly maintained by the
Trustee that each such Person may from time to time request with respect to the
Pledged Securities or the Accounts reasonably needed to complete the Note
Valuation Report or to provide any other information reasonably available to the
Trustee by reason of its acting as Trustee hereunder and required to be provided
by Section 10.11.

 

The Trustee shall forward to the Collateral Manager, the Holders of Rated Notes
of the Controlling Class, the Advancing Agent, or upon request therefor, any
Holder of a Rated Note shown on the Note Register, the Initial Purchasers, the
Initial Hedge Counterparty or the PAA Issued Note Paying Agent, copies of
notices and other writings received by it from the issuer of any Collateral
Interest or from any Clearing Agency with respect to any Collateral Interest
advising the holders of such security of any rights that the holders might have
with respect thereto (including notices of calls and redemptions of securities)
as well as all periodic financial reports received from such issuer and Clearing
Agencies with respect to such issuer; provided that the Trustee shall not
disclose any unpublished S&P Rating assigned by S&P with respect to any
Collateral Interest without the prior consent of S&P.

 

So long as any Class of Rated Notes is listed on the Irish Stock Exchange, the
Irish Paying Agent shall notify the Irish Stock Exchange not later than the
Business Day preceding each Payment Date of the amount of principal payments to
be made on the Rated Notes of each Class on such Payment Date, any Class C
Cumulative Periodic Interest Shortfall Amount, any Class D Cumulative Periodic
Interest Shortfall Amount, any Class E Cumulative Periodic Interest Shortfall
Amount, any Class F Cumulative Periodic Interest Shortfall Amount, any Class G
Cumulative Periodic Interest Shortfall Amount and the Aggregate Outstanding
Amount of the Rated Notes of each Class and as a percentage of the original
Aggregate Outstanding Amount of the Rated Notes of such Class after giving
effect to the principal payments, if any, on such Payment Date.

 

As promptly as possible following the delivery of each Note Valuation Report to
the Trustee pursuant to Section 10.11(a) or (b), as applicable, the Issuer shall
cause a copy of such report to be delivered the Repository for posting on the
Repository in the manner described in Section 14.3.  In connection therewith,
each of the Co-Issuers acknowledges and agrees that each Note Valuation Report
shall be posted to the Repository for use in the manner described in the section
headed “Terms of Use” on the Repository.

 

In the event that a Distribution on any Collateral Interest is not paid to the
Trustee on the Due Date therefor, the Trustee shall provide the Advancing Agent
with notice of such default on the Business Day immediately following such
default.  In addition, (i) the Trustee shall provide the Advancing Agent (either
electronically or in hard-copy format) with copies of all reports received from
any trustee, trust administrator, master servicer or similar administrative
entity with respect to the Collateral Interests and

 

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(ii) upon request, the Trustee shall promptly make available to the Advancing
Agent any other information reasonably available to the Trustee by reason of its
acting as Trustee hereunder to permit the Advancing Agent to make a
determination of recoverability with respect to any Interest Advance and to
otherwise perform its advancing obligations hereunder.

 

10.11.                  ACCOUNTINGS

 

(a)                                Payment Date Accounting.  The Issuer shall,
not later than the related Payment Date and after the reconciliation process
described in this Section 10.11, render an accounting (a Note Valuation Report),
determined as of each Calculation Date, and deliver the Note Valuation Report to
each Rating Agency, the Trustee, the Collateral Manager and the Advancing Agent
and make available via the Trustee’s internet website, initially located at
www.cdolink.com to the Trustee, the Irish Paying Agent, the Initial Hedge
Counterparty, the PAA Issued Note Paying Agent, each Note Transfer Agent,
Deutsche Bank, the Advancing Agent and, upon written request therefor, any
Holder of a Rated Note shown on the Note Register.  The Note Valuation Report
shall contain the following information (which shall, in the case of any Note
Valuation Report delivered to S&P, be presented in a form that complies with
S&P’s Preferred Format) determined, unless otherwise specified below, as of the
related Calculation Date:

 

(1)                                the calculation showing compliance with each
of the Coverage Tests, accompanied by a list setting forth the applicable
maximum or minimum value, percentage or ratio which must be maintained pursuant
to this Agreement with respect to each of the Coverage Tests and a list setting
forth the results of the calculation of each of the Coverage Tests with respect
to the Collateral Interests, the calculation showing whether the S&P CDO Monitor
Test is satisfied (including the weighted average rating, the default measure,
variability measure and correlation measure, the scenario default rate and/or
such other information required to be computed with respect to the S&P CDO
Monitor Test), and the calculation showing the Moody’s Maximum Weighted Average
Rating Factor Test, the Weighted Average Fixed Rate Coupon, the Weighted Average
Spread, the Weighted Average Life and the S&P Minimum Average Recovery Rate;

 

(2)                                the estimated remaining Average Life of each
of the Collateral Interests;

 

(3)                                the Applicable Periodic Interest Rate in
respect of each Class of Notes and the amount of Periodic Interest payable to
the Holders of the Notes for such Payment Date (in the aggregate and by Class);

 

(4)                                the amount (if any) payable to each Hedge
Counterparty pursuant to the related Hedge Agreement;

 

(5)                                the amount (if any) payable by each Hedge
Counterparty pursuant to the related Hedge Agreement:

 

(6)                                the Aggregate Fees and Expenses payable on
the next Payment Date on an itemized basis;

 

(7)                                the Aggregate Fees and Expenses paid during a
period of twelve (12) months ending on the next Payment Date on an itemized
basis;

 

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(8)                                for the Collection Account:

 

(i)                                   the Balance on deposit in the Collection
Account, the Collateral Principal Collections Sub-Account at the end of the
related Due Period;

 

(ii)                                the nature and source of any Collections in
the Collection Account, the Collateral Principal Collections Sub-Account,
including Collections received since the date of the last Note Valuation Report;

 

(iii)                             the amounts payable from the Collection
Account in accordance with the priority set forth in Section 11.1 on the next
Payment Date; and

 

(iv)                            the Balance remaining in the Collection Account
immediately after all payments and deposits to be made on such Payment Date;

 

(v)                               the Balance on deposit in the Collateral
Principal Collections Sub-Account.

 

(9)                                for the Interest Reserve Account:

 

(i)                                   the balance on deposit in the Interest
Reserve Account at the end of the related Due Period;

 

(ii)                                the amount payable from the Interest Reserve
Account pursuant to the Priority of Payments on the next Payment Date;

 

(iii)                             the Interest Reserve Amount to be paid into
the Interest Reserve Account on the next Payment Date; and

 

(iv)                            the Balance remaining in the Interest Reserve
Account immediately after all payments and deposits to be made on such Payment
Date;

 

(10)                          for the Expense Reserve Account:

 

(i)                                   the amount to be paid into the Expense
Reserve Account on the next Payment Date; and

 

(ii)                                the Balance remaining in the Expense Reserve
Account immediately after all payments and deposits to be made on such Payment
Date;

 

(11)                          any Hedge Receipt Amount or Hedge Payment Amount
for the related Payment Date, and for each Hedge Agreement (if any), the
outstanding notional amount of such Hedge Agreement and the amounts, if any,
scheduled to be received or paid, as the case may be, by the Issuer pursuant to
such Hedge Agreement for the related Payment Date, separately stating the
portion payable in accordance with Section 11.1;

 

(12)                          the aggregate amount of outstanding Interest
Advances;

 

(13)                          the amount of Income Note Excess Funds on the
related Payment Date;

 

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(14)                          the amount of the Senior Collateral Management Fee
and the amount of the Subordinate Collateral Management Fee;

 

(15)                          such other information as the Collateral Manager,
the Initial Purchasers, the Trustee, any Rating Agency or any Hedge Counterparty
may reasonably request;

 

(16)                          with respect to each Collateral Interest, the
Principal Balance, the annual coupon rate or spread to the relevant floating
rate index, the frequency of coupon payments, the amount of principal payments
received, the maturity date, the issuer, the country in which the issuer is
incorporated or organized, the S&P Industry Classification Group, the Moody’s
Recovery Rate, the S&P Recovery Rate, the S&P Rating and the Moody’s Rating
(provided that if any Moody’s Rating for any Collateral Interest is an
“estimated” or “shadow” rating, such rating shall be identified as “estimated”
or “shadow rated”, shall be disclosed with an asterisk in the place of the
applicable estimated or shadow rating and shall include the date as of which
such rating was first provided by Moody’s to the Issuer); and any S&P Rating
which is determined from an implied rating, a credit estimate, a confidential
rating or another non-public rating, shall not be distinguished and shall either
(i) be reported in a single column with the public ratings of S&P (without
distinguishing the source) or (ii) be reported in a separate column labeled
“Non-public and Implied S&P Rating.”

 

(17)                          the Principal Balance, the maturity date, the S&P
Rating, the Moody’s Rating and the issuer of each Eligible Investment included
in the Collateral;

 

(18)                          (A) the identity and Principal Balance of each
Collateral Interest that became a Credit Risk Interest, an Impaired Interest, an
Equity Interest, a Written Down Interest, a Withholding Tax Interest, a Deferred
Interest PIK Bond, (B) the date, as provided by the Collateral Manager, on which
any Collateral Interest became a Credit Risk Interest, an Impaired Interest, an
Equity Interest, a Written Down Interest or a Withholding Tax Interest, (C) the
date by which the Issuer or the Collateral Manager is required to declare its
intention to sell or to hold such Collateral Interest, (D) whether the
Collateral Manager has directed the Issuer to sell or not to sell such
Collateral Interest, and (E) the date by which any such sale must occur;

 

(19)                          the identity of each Collateral Interest that was
upgraded or downgraded or placed on watch for upgrade or downgrade by any Rating
Agency since the date of the last Note Valuation Report;

 

(20)                          the Principal Balance and identity of each
Collateral Interest that was released for sale indicating the reason for such
sale and the amount and identity of each Collateral Interest that was granted
since the date of the last Note Valuation Report;

 

(21)                          the identity and Principal Balance of each
Collateral Interest that was a Credit Risk Interest, an Impaired Interest, an
Equity Interest, a Written Down Interest, a Buy/Sell Interest, a Withholding Tax
Interest, a Taxed Collateral Interest, a Taxed Property or a Deferred Interest
PIK Bond;

 

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(22)                          the purchase price of each Pledged Security
granted and the sale price of each Pledged Security subject to a sale since the
date of the last Note Valuation Report; and whether such Pledged Security is a
Collateral Interest, an Eligible Investment or proceeds in the Collection
Account;

 

(23)                          the amount of Purchased Accrued Interest;

 

(24)                          a description of any transactions with the
Collateral Manager, the Issuer, the Collateral Administrator and the Trustee and
any Affiliates thereof;

 

(25)                          the Weighted Average Recovery Rate for each
Class of Notes; and

 

(26)                          the  components of the S&P CDO Monitor Test.

 

Upon receipt of each Note Valuation Report, the Trustee and the Collateral
Manager shall compare the information contained therein to the information
contained in their respective records with respect to the Collateral and shall,
within two (2) Business Days after receipt of such Note Valuation Report, notify
each of the Issuer, the Collateral Manager, the Trustee, the Initial Hedge
Counterparty, Moody’s and S&P if the information contained in the Note Valuation
Report does not conform to the information maintained by the Trustee or the
Collateral Manager as applicable, with respect to the Collateral, and detail any
discrepancies.  In the event that any discrepancy exists, the Trustee and the
Issuer, or the Collateral Manager shall attempt to promptly resolve the
discrepancy.  If such discrepancy cannot be promptly resolved, the Trustee shall
within five (5) Business Days after discovery of such discrepancy cause the
Independent Accountants of recognized international reputation to review such
Note Valuation Report and the Trustee’s and the Collateral Manager’s records to
determine the cause of such discrepancy.  If such review reveals an error in the
Note Valuation Report or the records of the Trustee or the Collateral Manager,
as the case may be, such item shall be revised accordingly and, as so revised,
shall be utilized in making further calculations.

 

Subject to the terms of this Agreement, the Trustee shall be entitled to rely on
the information supplied by the Collateral Manager in relation to the
preparation of the Note Valuation Report and shall not be liable for the
accuracy or completeness of such information or the lack thereof.

 

In addition to the foregoing information, each Note Valuation Report shall
include a statement to the following effect:

 

“The Notes have not been and will not be registered under the United States
Securities Act of 1933, as amended (the Securities Act), or under any state
securities laws, and the Co-Issuers have not been and will not be registered
under the United States Investment Company Act of 1940, as amended (the 1940
Act).  Each Holder of the Notes, other than those Holders that are not
“U.S. persons” (U.S. Person) within the meaning of Regulation S (Regulation S)
under the Securities Act and have acquired their Notes outside the United States
pursuant to Regulation S, is required to be both [(i)] (A) with respect to any
Rated Note, a “qualified institutional buyer” as defined in Rule 144A under the
Securities Act (Qualified Institutional Buyer) or (B) solely with respect to the
Income Notes, any of NS CDO Holdings IV, LLC, NS Advisors, LLC or any
“affiliate” thereof within the meaning of Rule 405 under the Securities Act that
is an “accredited investor” within the meaning of Rule 501(A) under the
Securities Act (each of the foregoing, a Permitted NS Purchaser) and (ii) a
“qualified purchaser” (Qualified Purchaser) within the meaning of
Section 3(c)(7) of the 1940 Act, purchasing for its own account or for the
account of another Qualified Purchaser, that can make all of the representations
in this Indenture applicable to a holder that is a U.S. Person.  The beneficial
interest in the Notes may be transferred only to a transferee that meets both of
the criteria in clauses (i) and (ii) above and can make all

 

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of the representations in this Indenture applicable to a Holder that is a U.S.
Person, except that any such transfer in reliance on Regulation S can be made
only to a transferee that is not a U.S. Person.  The Issuer has the right to
compel any Holder that does not meet the qualifications and the transfer
restrictions set forth in this Indenture to sell its interest in the Notes, or
may sell such interest on behalf of such owner, pursuant to the Indenture.”

 

(b)                               Redemption Date Instructions.  Not less than
five Business Days after receiving an Issuer Request requesting information
regarding a redemption pursuant to Section 9.1 of the Rated Notes of a Class as
of a proposed Redemption Date set forth in such Issuer Request, the Trustee
shall provide the necessary information (to the extent it is available to the
Trustee) to the Issuer, and the Issuer shall compute the following information
and provide such information in a statement (the Redemption Date Statement)
delivered to the Trustee:

 

(1)                                the Aggregate Outstanding Amount of the Rated
Notes of the Class or Classes to be redeemed as of such Redemption Date;

 

(2)                                the amount of accrued interest due on such
Rated Notes as of the last day of the Interest Period immediately preceding such
Redemption Date; and

 

(3)                                the amount in the Collection Account
available for application to the redemption of such Rated Notes.

 

(c)                                If the Trustee shall not have received any
accounting provided for in this Section 10.11 on the first Business Day after
the date on which such accounting is due to the Trustee, the Trustee shall use
reasonable efforts to cause such accounting to be made by the applicable Payment
Date or Redemption Date.  To the extent the Trustee is required to provide any
information or reports pursuant to this Section 10.11 as a result of the failure
of the Issuer to provide such information or reports, the Trustee shall be
entitled to retain an Independent certified public accountant in connection
therewith and the reasonable costs incurred by the Trustee for such Independent
certified public accountant shall be reimbursed pursuant to Section 6.8.

 

The Trustee will make the Note Valuation Report available via its internet
website initially located at www.cdolink.com.  All information made available on
the Trustee’s website will be restricted and the Trustee will only provide
access to such reports to those parties entitled thereto pursuant to the
Indenture.  In connection with providing access to its website, the Trustee may
require registration and the acceptance of a disclaimer.  Questions regarding
the Trustee’s website can be directed to the Trustee’s customer service desk at
phone number 301-815-6600.

 

10.12.                  RELEASE OF SECURITIES

 

(a)                                If no Event of Default has occurred and is
continuing and subject to Section 12, the Issuer shall, in connection with any
sale required pursuant to Section 12.1, by Issuer Order executed by an
Authorized Officer of the Issuer and delivered to the Trustee at least two
Business Days prior to the settlement date for any sale of a security certifying
that the conditions set forth in Section 12.1 are satisfied, direct the Trustee
to release such security from the lien of this Indenture against receipt of
payment therefor.

 

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(b)                               The Issuer shall, if notified that the issuer
of the Pledged Security requires delivery of such Pledged Security as a
condition to redemption or payment in full, by Issuer Order executed by an
Authorized Officer of the Issuer and delivered to the Trustee at least two
Business Days prior to the date set for redemption or payment in full of a
Pledged Security, certifying that such security is being redeemed or paid in
full, direct the Trustee or, at the Trustee’s instructions, the Custodian, to
deliver such security, if in physical form, duly endorsed, or, if such security
is a Clearing Corporation Security, to cause it to be presented, to the
appropriate paying agent therefor on or before the date set for redemption or
payment, in each case against receipt of the redemption price or payment in full
thereof.

 

(c)                                The Trustee shall, upon receipt of an Issuer
Order at such time as there are no Rated Notes Outstanding and all obligations
of the Co-Issuers hereunder have been satisfied, release the Collateral from the
lien of this Indenture.

 

(d)                               The Issuer may retain agents (including the
Collateral Manager) to assist the Issuer in preparing any notice or other report
required under Section 10.12 and this Section 10.13.

 

10.13.                  REPORTS BY INDEPENDENT ACCOUNTANTS

 

(a)                                At the Closing Date the Issuer (or the
Collateral Manager on its behalf) shall appoint a firm of Independent certified
public accountants of recognized national reputation for purposes of preparing
and delivering the reports or certificates of such accountants required by this
Indenture.  Upon any resignation by such firm, the Issuer shall (after
consultation with the Collateral Manager) propose a replacement firm meeting the
criteria set forth in the preceding sentence for approval by a Majority of the
Controlling Class.  Upon approval by a Majority of the Controlling Class, the
Issuer shall promptly appoint such firm by Issuer Order delivered to the
Trustee, the Initial Hedge Counterparty, the Collateral Manager and each Rating
Agency.  If the Issuer shall fail to appoint a successor to a firm of
Independent certified public accountants which has resigned within 30 days after
such resignation, the Issuer shall promptly notify the Trustee of such failure
in writing.  The fees of such Independent certified public accountants and its
successor shall be payable by the Issuer as provided in Section 11.1.

 

(b)                               On or before May 31 of each year (commencing
with May 31, 2006), the Issuer shall cause to be delivered to the Trustee, the
PAA Issued Note Paying Agent and each Rating Agency an Accountants’ Report
specifying the procedures applied and their associated findings with respect to
the Note Valuation Reports and any Redemption Date Statements prepared in the
preceding year.  At least 60 days prior to the Payment Date in May 2006 (and, if
at any time a successor firm of Independent certified public accountants is
appointed, prior to the Payment Date in August following the date of such
appointment), the Issuer shall deliver to the Trustee an Accountant’s Report
specifying in advance the procedures that such firm will apply in making the
aforementioned findings throughout the term of its service as accountants to the
Issuer.  The Trustee shall promptly forward a copy of such Accountant’s Report
to the Initial Hedge Counterparty, the Rating Agencies, the PAA Issued Note
Paying Agent and each Holder of Class A Notes (or, if no Class A Notes are
Outstanding, each Holder of Class B Notes or, if no Class B Notes are
Outstanding, each Holder of Class C Notes or, if no Class C Notes are
Outstanding, each Holder of Class D Notes or, if no Class D Notes are
Outstanding, each Holder of Class E Notes or, if no Class E Notes are
Outstanding, each Holder of Class F Notes), at the address shown on the Note
Register.  The Issuer shall not approve the institution of such

 

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procedures if a Majority of the Controlling Class or the Collateral Manager, by
notice to the Issuer and the Trustee within 30 days after the date of the
related notice to the Trustee, object thereto.

 

(c)                                Any statement delivered to the Trustee
pursuant to Section 10.13(b) above shall be made available by the Trustee to any
Holder of a Rated Note shown on the Note Register upon written request therefor.

 

10.14.                  REPORTS TO RATING AGENCIES

 

In addition to the information and reports specifically required to be provided
to the Rating Agencies, the PAA Issued Note Paying Agent, the Holders of Rated
Notes of the Controlling Class and the Initial Hedge Counterparty pursuant to
the terms of this Indenture or the Paying Agency Agreement (as the case may be),
the Issuer shall provide or procure to provide the Rating Agencies and the
Initial Hedge Counterparty with (a) all information or reports delivered to the
Trustee hereunder and (b) such additional information as the Rating Agencies,
the Initial Hedge Counterparty or the PAA Issued Note Paying Agent may from time
to time reasonably request, provided that such information may be obtained and
provided without unreasonable burden or expense.  The Issuer shall promptly
notify the Trustee, the PAA Issued Note Paying Agent if the rating of any
Class of Rated Notes has been, or it is known by the Issuer that such rating
will be, changed or withdrawn.  The Issuer shall notify each Rating Agency and
the Initial Hedge Counterparty in the case of (i) termination or amendment of
any Transaction Document or organizational document of the Issuer or Co-Issuer,
(ii) termination or change of party to any of the Transaction Documents or
(iii) material breach of any of the Transaction Documents by any party thereto.

 

10.15.                  TAX MATTERS

 

The Issuer and the Co-Issuer agree to treat, and hereby notify the Trustee to
treat, and, by accepting a Certificated Class A-E Note, each Holder of a
Certificated Class A-E Note agrees to treat, for U.S. federal income, state and
local income and franchise tax and any other income tax purposes, the
Certificated Class A-E Notes, for so long as NRFC Sub-REIT Corp. or another REIT
(in either case, the “Owner REIT”) qualifies for U.S. federal income tax
purposes as a real estate investment trust (within the meaning of Section 856 of
the Code) and 100% of the Class F Notes, Class G Notes, Income Notes, and
Ordinary Shares are owned by the Owner REIT, directly or indirectly through one
or more Qualified REIT Subsidiaries thereof or one or more entities disregarded
as entities separate from the Owner REIT or its Qualified REIT Subsidiaries, as
indebtedness solely of the Owner REIT, and not as indebtedness of the Issuer or
the Co-Issuer, and at any other time, as indebtedness solely of the Issuer and
not the Co-Issuer.  The Issuer also agrees to treat the Class F Notes as
indebtedness for legal purposes and for certain tax purposes.  The Issuer (and,
with respect to the Certificated Class A-E Notes, the Co-Issuer) agree, and, by
accepting a Certificated Class A-E Note or Class F Note, each Holder of a
Certificated Class A-E Note or Class F Note agrees, to report all income (or
loss) in accordance with such treatment, and not to take any action inconsistent
with such treatment except as otherwise required by any taxing authority under
applicable law.  The Issuer agrees that, for purposes of U.S. federal income
taxes, for so long as the Owner REIT qualifies for U.S. federal income tax
purposes as a real estate investment trust (within the meaning of Section 856 of
the Code) and 100% of the Class F Notes, Class G Notes, Income Notes, and
Ordinary Shares are owned by the Owner REIT, directly or indirectly through one
or more Qualified REIT Subsidiaries thereof or one or more entities disregarded
as entities separate from the Owner REIT or its Qualified REIT Subsidiaries, the
Issuer will be treated as a Qualified REIT Subsidiary of the Owner REIT, and at
any other time, the Issuer agrees not to elect to be treated as other than a
corporation for U.S. federal income tax purposes.

 

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10.16.                TAX INFORMATION

 

The Issuer will furnish to any Holder of Rule 144A Certificated Notes (or its
designee), Rule 144A Global Notes (or its designees), Certificated Class F Notes
(or its designee) and Certificated Class G Notes (or its designee), upon the
request of any such Holder, the necessary information, and will permit such
Holder reasonable access to its books of account, in order to allow such Holder
to make a “qualifying electing fund” election pursuant to Section 1295 of the
Code.

 

The Issuer shall provide on a timely basis to any holder of a beneficial
interest in Rule 144A Certificated Notes (or its designee), Rule 144A Global
Notes (or its designees), Certificated Class F Notes (or its designee) and
Certificated Class G Notes (or its designee), upon written request therefor
certifying that it is such a holder, (i) all information that a U.S. shareholder
making a “qualified electing fund” election (as defined in the Code) is required
to obtain for U.S. federal income tax purposes and (ii) a “PFIC Annual
Information Statement” as described in Treasury Regulation 1.1295-1 (or any
successor Internal Revenue Service release or Treasury Regulation), including
all representations and statements required by such statement, and will take any
other steps necessary to facilitate such election by a holder of a beneficial
interest in any Rule 144A Certificated Notes, Rule 144A Global Notes,
Certificated Class F Notes (or its designee) and Certificated Class G Notes. 
The Issuer shall also provide, upon request of a Holder of, or a holder of a
beneficial interest in, any Rule 144A Certificated Notes, Rule 144A Global
Notes, Certificated Class F Notes (or its designee) and Certificated Class G
Notes, any information that such Holder or holder of a beneficial interest
reasonably requests to assist such Holder or holder of a beneficial interest
with regard to any filing requirements the Holder or holder of a beneficial
interest may have as a result of the controlled foreign corporation rules under
the Code.  The cost and expense of the preparation and delivery of the PFIC
Annual Information Statement shall be at the expense of the Issuer.

 

10.17.                INTEREST ADVANCES

 

(a)                                With respect to each Payment Date for which
the sum of (i) Collateral Interest Collections collected during the related Due
Period and (ii) funds on deposit in the Collection Account, are insufficient to
remit the interest due and payable with respect to the Class A Notes and Class B
Notes on the following Payment Date (the amount of such insufficiency, an
“Interest Shortfall”), provided that no Event of Default is occurring (except an
Event of Default with respect to the non-payment of interest on the Class A
Notes or the Class B Notes), the Trustee shall provide the Advancing Agent with
written notice of such Interest Shortfall no later than 12:00 noon (New York
time) on the Business Day immediately preceding such Payment Date.  The Trustee
shall provide the Advancing Agent with notice, prior to any funding of an
Interest Advance (as defined below) by the Advancing Agent, of any additional
interest remittances received by the Trustee after deliver of such initial
notice that reduce such Interest Shortfall.  No later than 5:00 p.m. (New York
time) on the Business Day immediately preceding the related Payment Date, the
Advancing Agent shall advance the difference between such amounts (each such
advance, an “Interest Advance”) by deposit of an amount equal to such Interest
Shortfall in the Payment Account, subject to a determination of recoverability
by the Advancing Agent as described in Section 10.17(b).  Any Interest Advance
made by the Advancing Agent with respect to a Payment Date that is in excess of
the actual Interest Shortfall for such Payment Date shall be refunded to the
Advancing Agent by the Trustee on the same Business Day that such Interest
Advance was made (or, if such Interest Advance is made prior to final
determination by the Trustee of such Interest Shortfall, on the Business Day of
such final determination).  The Advancing Agent shall provide the Trustee
written notice of a determination by the Advancing Agent that a proposed
Interest Advance would constitute a Nonrecoverable Advance no later than the

 

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close of business on the Business Day immediately preceding the related Payment
Date.  If the Advancing Agent does not make any required Interest Advance at or
prior to the time at which distributions are to be made pursuant to
Section 11.1, the Trustee shall be required to make such Interest Advance,
subject to a determination of recoverability by the Trustee as described in
Section 10.17(b).  The Trustee shall be entitled to conclusively rely on any
determination by the Advancing Agent that an Interest Advance, if made, would
constitute a Nonrecoverable Advance.  Notwithstanding the foregoing, to the
extent the Advancing Agent fails to make an Interest Advance it was required to
make, the Advancing Agent shall not be entitled to make a recoverability
determination affecting the Trustee’s obligation to provide an Interest Advance
and any such determination shall not be binding on the Trustee.

 

Notwithstanding anything herein to the contrary, neither the Advancing Agent nor
the Trustee shall be required to make any Interest Advance unless such Person
determines, in its sole discretion, exercised in good faith and, with respect to
the Advancing Agent, in accordance with the Advancing Standards (as defined
below), that such Interest Advance, plus interest expected to accrue thereon at
the Reimbursement Rate, will be recoverable from subsequent payments or
collections with respect to all Collateral Interests.  Such interest on any
Interest Advance will be payable to the Advancing Agent or the Trustee, as the
case may be, out of default charges collected in respect of the Collateral
Interests for the related period or, in connection with the reimbursement of
such Interest Advance, out of Collateral Interest Collections, and to the extent
not reimbursed in full by Collateral Interest Collections, out of Collateral
Principal Collections then on deposit in the Collection Account or any
collection account established in favor of the Underlying Trust (provided that
interest on Nonrecoverable Advances will be payable first from Collateral
Principal Collections, and to the extent not reimbursed in full from Collateral
Principal Collections, from Collateral Interest Collections then on deposit in
the Collection Account or any collection account established in favor of the
Underlying Trust).  To the extent interest on any outstanding Interest Advance
cannot be offset by such default charges, such interest accrued on outstanding
Interest Advances made in respect thereof will result in a reduction in amounts
payable on the Collateral Interests.  In determining whether any proposed
Interest Advance will be, or whether any Interest Advance previously made is, a
Nonrecoverable Advance, the Advancing Agent or the Trustee, as applicable, will
take into account:

 

(1)                                amounts that may be realized on each
Mortgaged Property in its “as is” or then current condition and occupancy;

 

(2)                                that such Interest Advances, together with
interest accruing thereon, may only be recovered from subsequent payments or
collections on the Collateral Interests, as allocable thereto from recoveries on
the related Mortgage Properties pursuant to the related participation agreement,
intercreditor agreement or other similar agreement;

 

(3)                                that the related Senior Interests may be
required to be fully paid and any advances (and interest thereon) made in
respect of such Senior Interests may be required to be fully reimbursed, prior
to any amounts recovered in respect of the Mortgaged Properties being allocated
or otherwise made available to the Collateral Interests;

 

(4)                                the possibility and effects of future adverse
change with respect to the Mortgaged Properties, the potential length of time
before such Interest Advance may be reimbursed and the resulting degree of
uncertainty with respect to such

 

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reimbursement; and

 

(5)                                the fact that Interest Advances are intended
to provide liquidity only and not credit support to the Noteholders.

 

For purposes of any such determination of whether an Interest Advance
constitutes or would constitute a Nonrecoverable Advance, an Interest Advance
will be deemed to be nonrecoverable if the Advancing Agent or the Trustee, as
applicable, determines that future payments or collections on the Collateral
Interests may be insufficient to fully reimburse such Interest Advance, plus
interest thereon at the Reimbursement Rate within a reasonable period of time. 
Absent bad faith, the determination by the Advancing Agent or the Trustee, as
applicable, as to the nonrecoverability of any Interest Advance shall be
conclusive and binding on the Noteholders.  The Trustee shall be entitled to
conclusively rely on any determination by the Advancing Agent that an Interest
Advance, if made, would constitute a Nonrecoverable Advance.  The Collateral
Manager and the Advancing Agent shall provide any information regarding the
Collateral reasonably requested by the Trustee in connection with the Trustee’s
determination of whether any Interest Advance would be recoverable.

 

(b)                               The Advancing Agent and the Trustee will each
be entitled to recover any previously unreimbursed Interest Advance made by it
(including any Nonrecoverable Advance), together with interest thereon, in
accordance with the Section 11.1(k).

 

(c)                                The Advancing Agent and the Trustee will each
be entitled with respect to any Interest Advance made by it (including
Nonrecoverable Advances) to interest accrued on the amount of such Interest
Advance for so long as it is outstanding at the Reimbursement Rate.

 

(d)                               The Advancing Agent’s obligations to make
Interest Advances in respect of the Class A Notes and the Class B Notes will
continue through the date on which the outstanding principal amount of such
Notes is paid in full or redeemed.

 

(e)                                In no event will the Advancing Agent or the
Trustee be required to advance any payments in respect of interest on any Notes
other than the Class A Notes and the Class B Notes or any payments in respect of
principal.

 

(f)                                  In consideration of the performance of its
obligations hereunder, the Trustee shall be entitled to receive, in its capacity
as backup advancing agent, at the times set forth herein and subject to the
conditions and the priority of distribution provisions hereof, to the extent
funds are available therefor, the Trustee Interest Advance Fee.  In addition, to
the extent that the Trustee makes an Interest Advance on any Payment Date that
the Advancing Agent was required, but failed, to make, the Trustee shall be
entitled to receive the Advancing Agent Fee (in addition to the Trustee Interest
Advance Fee) for such Payment Date and any future Payment Dates upon which such
Interest Advance remains outstanding.

 

(g)                               In consideration of the performance of its
obligations hereunder, the Advancing Agent, at the times set forth herein and
subject to the conditions and the priority of distribution provisions hereof, to
the extent funds are available therefor, the Advancing Agent Fee (except to the
extent the Advancing Agent Fee is being paid to the Trustee as described in
clause (g), above).

 

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(h)                               The determination by the Advancing Agent or
the Trustee, as applicable, (i) that it has made a Nonrecoverable Advance or
(ii) that any proposed Interest Advance, if made, would constitute a
Nonrecoverable Servicing Advance, shall be evidenced by an Officer’s Certificate
delivered promptly to the Trustee (or, if applicable, retained thereby) and the
Issuer, setting forth the basis for such determination; provided, that failure
to give such notice, or any defect therein, shall not impair or affect the
validity of, or the Advancing Agent’s or the Trustee’s entitlement to
reimbursement with respect to, any Interest Advance.

 

(i)                                   The Advancing Agent, in such capacity,
shall act in the best interests of the Class A Noteholders and the Class B
Noteholders (taking into account the interests of the Class A Noteholders and
the Class B Noteholders collectively), as determined by the Advancing Agent, in
its good faith judgment and in accordance with this Indenture and applicable
law, and in all cases without regard to: (i) any relationship that the Advancing
Agent may have with any obligor under a Collateral Interest or any Affiliate of
such obligor, any seller or any other parties to this Indenture; (ii) the
ownership of any Note by the Advancing Agent or any of its Affiliates; (iii) the
adequacy of the Advancing Agent’s right to receive compensation for its services
and reimbursement for its costs hereunder; (iv) the ownership or management of
any interests in any mortgage loans, mortgaged properties, mezzanine loans or
Collateral Interests by the Advancing Agent; (v) any obligation of the Advancing
Agent or any of its Affiliates to cure a breach of a representation or warranty
or document defect with respect to, or repurchase or substitute for any
Collateral Interest; and (vi) any other debt the Advancing Agent or any of its
Affiliates has extended to any obligor under any Collateral Interest or any of
its Affiliates (the criteria specified in this Section 10.17(i), collectively
referred to as the “Advancing Standards”).

 

ARTICLE XI

APPLICATION OF MONIES

 

11.1.                      DISBURSEMENTS OF FUNDS FROM PAYMENT ACCOUNT; PRIORITY
OF PAYMENTS

 

(a)                                Collateral Interest Collections.  On any
Payment Date that is not a Redemption Date or a Payment Date following the
occurrence and continuation of an acceleration of the Rated Notes in connection
with an Event of Default, in accordance with a Note Report prepared by the
Collateral Administrator as of the last day of the Due Period preceding such
Payment Date, Collateral Interest Collections, to the extent of Available Funds
in the Payment Account, together with any Interest Advances applied for such
Payment Date, less any amounts applied to reimburse any outstanding Interest
Advances, together with interest thereon, as described in Section 10.17, will be
applied by the Trustee in the following order of priority:

 

(1)                                to pay, in the following order:

 

(i)                                   taxes and filing fees and registration
fees (including, without limitation, annual return fees) payable by the
Co-Issuers, if any; and then,

 

(ii)                                pro rata the amount of any due and unpaid
Trustee Fee, Trustee Interest Advance Fee, Underlying Trust Expenses and PAA
Issued Note Paying Agent Fee; and then,

 

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(iii)                             the amount of any due and unpaid fees to the
Administrator; and then,

 

(iv)                            the amount of any due and unpaid Trustee
Expenses; and then,

 

(v)                               the amount of any due and unpaid fees of any
Collateral Interest servicer owed directly by the Issuer; and then

 

(vi)                            the amount of any due and unpaid fees and
expenses of the Rating Agencies; and then,

 

(vii)                         pro rata the amount of any due and unpaid
Advancing Agent Fee, expenses of the Administrator and Administrative Expenses
not included in (iii), (iv), (v) and (vi) above, including amounts payable to
the Collateral Manager under the Collateral Management Agreement but excluding
the Collateral Management Fee; and then,

 

(viii)                      to deposit to the Expense Reserve Account the amount
needed to bring the amount on deposit therein to U.S.$25,000 (unless the
Collateral Manager directs that a lesser amount be deposited to the Expense
Reserve Account);

 

provided that the cumulative amount paid under (iii) through (viii) above
(excluding any Administrative Expenses due or accrued with respect to the
actions taken on or prior to the Closing Date and accounting fees that the
Trustee is required to pay (other than certain accountants’ fees related to
annual reviews) and fees the Trustee pays in connection with any Event of
Default and any default of the Collateral Interests) may not exceed U.S.$300,000
in the aggregate in any consecutive 12-month period;

 

(2)                                to pay the Senior Collateral Management Fee
with respect to such Payment Date and any Senior Collateral Management Fee with
respect to a previous Payment Date that was not paid on a previous Payment Date;

 

(3)                                to pay any Hedge Counterparty any amounts due
to such Hedge Counterparty under any Hedge Agreement, pro rata, including any
termination payments other than any termination payments payable under
Section 11.1(a)(23), below;

 

(4)                                to pay Periodic Interest on the Class A Notes
and any Defaulted Interest on the Class A Notes (and interest thereon);

 

(5)                                to pay Periodic Interest on the Class B Notes
and any Defaulted Interest on the Class B Notes (and interest thereon);

 

(6)                                to pay an amount equal to the Interest
Reserve Amount for deposit into the Interest Reserve Account;

 

(7)                                if a Rating Confirmation Failure occurs, on
each Payment Date commencing with the Payment Date immediately following the
Effective Date, to pay principal on the Notes in accordance with the Note
Payment Sequence, in the amounts necessary for each Rating Agency to confirm its
respective ratings of the Notes assigned on the Closing Date or until each
Class of Notes is paid in full;

 

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(8)                                to pay Periodic Interest on the Class C Notes
and, if no Senior Notes are Outstanding, any Defaulted Interest on the Class C
Notes (and interest thereon);

 

(9)                                if either of the Class C Coverage Tests is
not satisfied as of the preceding Calculation Date to pay principal (including
any Class C Cumulative Applicable Periodic Interest Shortfall Amount, as
applicable) of the most Senior Class of Notes then Outstanding until such
Class C Coverage Test is satisfied as of such Calculation Date or until such
most Senior Class of Notes is paid in full, and then to pay principal of the
next most Senior Class of Notes Outstanding until such Class C Coverage Test is
satisfied as of such Calculation Date or until such next most senior Class of
Notes is paid in full and so on, until such Class C Coverage Test is satisfied
or until the Class C Notes are paid in full;

 

(10)                          to pay the Class C Cumulative Applicable Periodic
Interest Shortfall Amount (and interest thereon), if any;

 

(11)                          to pay Periodic Interest on the Class D Notes and,
if no Senior Notes are Outstanding, any Defaulted Interest on the Class D Notes
(and interest thereon);

 

(12)                          if either of the Class D Coverage Tests is not
satisfied as of the preceding Calculation Date, to pay principal (including any
Class C Cumulative Applicable Periodic Interest Shortfall Amount or Class D
Cumulative Applicable Periodic Interest Shortfall Amount, as applicable) of the
most Senior Class of Notes then Outstanding until such Class D Coverage Test is
satisfied as of such Calculation Date or until such most Senior Class of Notes
is paid in full, and then to pay principal of the next most Senior Class of
Notes Outstanding until such Class D Coverage Test is satisfied as of such
Calculation Date or until such next most Senior Class of Notes is paid in full
and so on, until such Class D Coverage Test is satisfied or until the Class D
Notes are paid in full;

 

(13)                          to pay the Class D Cumulative Applicable Periodic
Interest Shortfall Amount (and interest thereon), if any;

 

(14)                          to pay Periodic Interest on the Class E Notes and,
if no Senior Notes are Outstanding, any Defaulted Interest on the Class E Notes
(and interest thereon);

 

(15)                          if either of the Class E Coverage Tests is not
satisfied as of the preceding Calculation Date to pay principal (including any
Class C Cumulative Applicable Periodic Interest Shortfall Amount, Class D
Cumulative Applicable Periodic Interest Shortfall Amount or Class E Cumulative
Applicable Periodic Interest Shortfall Amount, as applicable) of the most Senior
Class of Notes then Outstanding until such Class E Coverage Test is satisfied as
of such Calculation Date or until such most Senior Class of Notes is paid in
full, and then to pay principal of the next most Senior Class of Notes
Outstanding until such Class E Coverage Test is satisfied as of such Calculation
Date or until such next most Senior Class of Notes is paid in full and so on,
until such Class E Coverage Test is satisfied or until the Class E Notes are
paid in full;

 

(16)                          to pay the Class E Cumulative Applicable Periodic
Interest Shortfall Amount (and interest thereon), if any;

 

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(17)                          to pay Periodic Interest on the Class F Notes and,
if no Senior Notes are Outstanding, any Defaulted Interest on the Class F Notes
(and interest thereon);

 

(18)                          if either of the Class F Coverage Tests is not
satisfied as of the preceding Calculation Date to pay principal (including any
Class C Cumulative Applicable Periodic Interest Shortfall Amount, Class D
Cumulative Applicable Periodic Interest Shortfall Amount, Class E Cumulative
Applicable Periodic Interest Shortfall Amount or Class F Cumulative Applicable
Periodic Interest Shortfall Amount, as applicable) of the most Senior Class of
Notes then Outstanding until such Class F Coverage Test is satisfied as of such
Calculation Date or until such most Senior Class of Notes is paid in full, and
then to pay principal of the next most Senior Class of Notes Outstanding until
such Class F Coverage Test is satisfied as of such Calculation Date or until
such next most Senior Class of Notes is paid in full and so on, until such
Class F Coverage Test is satisfied or until the Class F Notes are paid in full;

 

(19)                          to pay the Class F Cumulative Applicable Periodic
Interest Shortfall Amount (and interest thereon), if any;

 

(20)                          to pay Periodic Interest on the Class G Notes and,
if no Senior Notes are Outstanding, any Defaulted Interest on the Class G Notes
(and interest thereon) to the PAA Issued Note Paying Agent for payment on the
Class G Notes in accordance with the Paying Agency Agreement;

 

(21)                          if either of the Class G Coverage Tests is not
satisfied as of the preceding Calculation Date to pay principal (including any
Class C Cumulative Applicable Periodic Interest Shortfall Amount, Class D
Cumulative Applicable Periodic Interest Shortfall Amount, Class E Cumulative
Applicable Periodic Interest Shortfall Amount, Class F Cumulative Applicable
Periodic Interest Shortfall Amount or Class G Cumulative Applicable Periodic
Interest Shortfall Amount, as applicable) of the most Senior Class of Notes then
Outstanding (in the case of the Class G Notes, to the PAA Issued Note Paying
Agent for payment on the Class G Notes in accordance with the Paying Agency
Agreement) until such Class G Coverage Test is satisfied as of such Calculation
Date or until such most Senior Class of Notes is paid in full, and then to pay
principal of the next most Senior Class of Notes Outstanding (in the case of the
Class G Notes, to the PAA Issued Note Paying Agent for payment on the Class G
Notes in accordance with the Paying Agency Agreement) until such Class G
Coverage Test is satisfied as of such Calculation Date or until such next most
Senior Class of Notes is paid in full and so on, until such Class G Coverage
Test is satisfied or until the Class G Notes are paid in full;

 

(22)                          to pay the Class G Cumulative Applicable Periodic
Interest Shortfall Amount (and interest thereon), if any, to the PAA Issued Note
Paying Agent for payment on the Class G Notes in accordance with the Paying
Agency Agreement;

 

(23)                          to pay termination payments payable to any Hedge
Counterparty upon the termination of the related Hedge Agreement, pro rata, if
such termination occurred solely as the result of an event of default or a
termination event with respect to the Hedge Counterparty as Defaulting Party or
sole Affected Party, as the case may be;

 

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(24)                          to pay, in the following order:

 

(i)                                   any due and unpaid Trustee Fee, Trustee
Interest Advance Fee, Underlying Trust Expenses, PAA Issued Note Paying Agent
Fee, Trustee Expenses, Advancing Agent Fee and other Administrative Expenses,
including amounts payable to the Collateral Manager under the Collateral
Management Agreement but excluding the Collateral Management Fee, in each case,
in the same order of priority as provided in Section 11.1(a)(1) above and to the
extent not paid in full under Section 11.1(a)(1) above without regard to any
limitation on any maximum amounts payable on such date contained therein; and

 

(ii)                                on a pro rata basis, any due and unpaid
expenses and other liabilities of the Co-Issuers to the extent not paid under
Section 11.1(a)(1) above, whether as a result of an amount limitation imposed
thereunder or otherwise;

 

(25)                          to pay the Subordinate Collateral Management Fee
with respect to such Payment Date and any due and unpaid Subordinate Collateral
Management Fee with respect to a previous Payment Date that was not paid on a
previous Payment Date;

 

(26)                          to repay, pro rata, the amount of any outstanding
Cure Advances, if any;

 

(27)                          all Income Note Excess Funds to the PAA Issued
Note Paying Agent, on behalf of the Issuer, for distributions on the Income
Notes in accordance with the Paying Agency Agreement;

 

Provided, however, with respect to this Section 11.1(a):

 

(i)                                   For purposes of determining if any
Principal Coverage Test is satisfied after giving effect to payments of
principal, the denominator of such Principal Coverage Test shall be determined
after giving effect to any principal on the Notes paid pursuant to any clauses
prior to such clause and such clause on the related Payment Date; and

 

(ii)                                with respect to the Class C Notes, Class D
Notes, Class E Notes, Class F Notes and Class G Notes, payment of principal not
constituting the related Cumulative Applicable Periodic Interest Shortfall
Amount shall be paid before principal constituting the related Cumulative
Applicable Periodic Interest Shortfall Amount, if any.

 

(b)                               Collateral Principal Collections.  On any
Payment Date that is not a Redemption Date or a Payment Date following the
occurrence and continuation of an acceleration of the Rated Notes in connection
with an Event of Default, in accordance with a Note Valuation Report prepared by
the Collateral Administrator as of the last day of the Due Period preceding such
Payment Date, Collateral Principal Collections, to the extent of Available Funds
in the Payment Account, less any amounts applied to reimburse Interest Advances
together with interest thereon, as described in Section 10.17, will be applied
by the Trustee in the following order of priority:

 

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(1)                                to the payment of the amounts referred to in
Section 11.1(a)(1) through (5), in the same order of priority specified therein,
but only to the extent not paid in full thereunder;

 

(2)                                If the Class A Notes and the Class B Notes
are no longer Outstanding, to pay Periodic Interest on the Class C Notes and any
Defaulted Interest on the Class C Notes (and interest thereon), to the extent
that the amounts paid pursuant to Section 11.1(a)(8) are insufficient to pay
such amounts in full;

 

(3)                                if either of the Class C Coverage Tests is
not satisfied as of the preceding Calculation Date and to the extent that the
amounts paid pursuant to Section 11.1(a)(9) are insufficient to cause the
Class C Coverage Tests to be satisfied, to pay principal (including any Class C
Cumulative Applicable Periodic Interest Shortfall Amount, as applicable) of the
most Senior Class of Notes then Outstanding until such Class C Coverage Test is
satisfied as of such Calculation Date or until such most Senior Class of Notes
is paid in full, and then to pay principal of the next most Senior Class of
Notes Outstanding until such Class C Coverage Test is satisfied as of such
Calculation Date or until such next most senior Class of Notes is paid in full
and so on, until such Class C Coverage Test is satisfied or until the Class C
Notes are paid in full;

 

(4)                                If the Class A Notes and the Class B Notes
are no longer Outstanding, to pay the Class C Cumulative Applicable Periodic
Interest Shortfall Amount (and interest thereon), to the extent that the amounts
paid pursuant to Section 11.1(a)(10) are insufficient to pay such amounts in
full thereunder;

 

(5)                                If the Class A Notes, the Class B Notes and
the Class C Notes are no longer Outstanding, to pay Periodic Interest on the
Class D Notes and any Defaulted Interest on the Class D Notes (and interest
thereon), to the extent that the amounts paid pursuant to Section 11.1(a)(11)
are insufficient to pay such amounts in full thereunder;

 

(6)                                If either of the Class D Coverage Tests is
not satisfied as of the preceding Calculation Date and to the extent that
amounts paid pursuant to Section 11.1(a)(12) are insufficient to cause the
Class D Coverage Tests to be satisfied, to pay principal (including any Class C
Cumulative Applicable Periodic Interest Shortfall Amount or Class D Cumulative
Applicable Periodic Interest Shortfall Amount, as applicable) of the most Senior
Class of Notes then Outstanding until such Class D Coverage Test is satisfied as
of such Calculation Date or until such next most Senior Class of Notes is paid
in full and so on, until such Class D Coverage Test is satisfied or until the
Class D Notes are paid in full;

 

(7)                                if the Class A Notes, the Class B Notes, and
the Class C Notes are no longer Outstanding, to pay the Class D Cumulative
Applicable Periodic Interest Shortfall Amount (and interest thereon), to the
extent that amounts paid pursuant to Section 11.1(a)(13) are insufficient to pay
such amounts in full thereunder;

 

(8)                                if the Class A Notes, the Class B Notes, the
Class C Notes and the Class D Notes are no longer Outstanding, to pay Periodic
Interest on the Class E Notes and any Defaulted Interest on the Class E Notes
(and interest thereon), to the extent that

 

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the amounts paid pursuant to Section 11.1(a)(14) are insufficient to pay such
amounts in full thereunder;

 

(9)                                if either of the Class E Coverage Tests is
not satisfied as of the preceding Calculation Date and to the extent that the
amounts paid pursuant to Section 11.1(a)(15) are insufficient to cause the
Class E Coverage Tests to be satisfied, to pay principal (including any Class C
Cumulative Applicable Periodic Interest Shortfall Amount, Class D Cumulative
Applicable Periodic Interest Shortfall Amount or Class E Cumulative Applicable
Periodic Interest Shortfall Amount, as applicable) of the most Senior Class of
Notes then Outstanding until such Class E Coverage Test is satisfied as of such
Calculation Date or until such most Senior Class of Notes is paid in full, and
then to pay principal of the next most Senior Class of Notes Outstanding until
such Class E Coverage Test is satisfied as of such Calculation Date or until
such next most Senior Class of Notes is paid in full and so on, until such
Class E Coverage Test is satisfied or until the Class E Notes are paid in full;

 

(10)                          if the Class A Notes, the Class B Notes, the
Class C Notes and the Class D Notes are no longer Outstanding, to pay the
Class E Cumulative Applicable Periodic Interest Shortfall Amount (and interest
thereon), to the extent that the amounts paid pursuant to Section 11.1(a)(16)
are insufficient to pay such amounts in full thereunder;

 

(11)                          if the Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes and the Class E Notes are no longer
Outstanding, to pay Periodic Interest on the Class F Notes and any Defaulted
Interest on the Class F Notes (and interest thereon), to the extent that the
amounts paid pursuant to Section 11.1(a)(17) are insufficient to pay such
amounts in full thereunder;

 

(12)                          if either of the Class F Coverage Tests is not
satisfied as of the preceding Calculation Date and to the extent that the
amounts paid pursuant to Section 11.1(a)(18) are insufficient to cause the
Class F Coverage Tests to be satisfied, to pay principal (including any Class C
Cumulative Applicable Periodic Interest Shortfall Amount, Class D Cumulative
Applicable Periodic Interest Shortfall Amount, Class E Cumulative Applicable
Periodic Interest Shortfall Amount or Class F Cumulative Applicable Periodic
Interest Shortfall Amount, as applicable) of the most Senior Class of Notes then
Outstanding until such Class F Coverage Test is satisfied as of such Calculation
Date or until such most Senior Class of Notes is paid in full, and then to pay
principal of the next most Senior Class of Notes Outstanding until such Class F
Coverage Test is satisfied as of such Calculation Date or until such next most
Senior Class of Notes is paid in full and so on, until such Class F Coverage
Test is satisfied or until the Class F Notes are paid in full;

 

(13)                          if the Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes and the Class E Notes are no longer
Outstanding, to pay the Class F Cumulative Applicable Periodic Interest
Shortfall Amount (and interest thereon), to the extent that the amounts paid
pursuant to Section 11.1(a)(19) are insufficient to pay such amounts in full
thereunder;

 

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(14)                          if the Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes and the Class F Notes are no
longer Outstanding, to pay Periodic Interest on the Class G Notes and any
Defaulted Interest on the Class G Notes (and interest thereon) to the PAA Issued
Note Paying Agent for payment on the Class G Notes in accordance with the Paying
Agency Agreement, to the extent that the amounts paid pursuant to
Section 11.1(a)(20) are insufficient to pay such amounts in full thereunder;

 

(15)                          if either of the Class G Coverage Tests is not
satisfied as of the preceding Calculation Date and to the extent that the
amounts paid pursuant to Section 11.1(a)(21) are insufficient to cause the
Class G Coverage Tests to be satisfied, to pay principal (including any Class C
Cumulative Applicable Periodic Interest Shortfall Amount, Class D Cumulative
Applicable Periodic Interest Shortfall Amount, Class E Cumulative Applicable
Periodic Interest Shortfall Amount, Class F Cumulative Applicable Periodic
Interest Shortfall Amount or Class G Cumulative Applicable Periodic Interest
Shortfall Amount, as applicable) of the most Senior Class of Notes then
Outstanding (in the case of the Class G Notes, to the PAA Issued Note Paying
Agent for payment on the Class G Notes in accordance with the Paying Agency
Agreement) until such Class G Coverage Test is satisfied as of such Calculation
Date or until such most Senior Class of Notes is paid in full, and then to pay
principal of the next most Senior Class of Notes Outstanding (in the case of the
Class G Notes, to the PAA Issued Note Paying Agent for payment on the Class G
Notes in accordance with the Paying Agency Agreement) until such Class G
Coverage Test is satisfied as of such Calculation Date or until such next most
Senior Class of Notes is paid in full and so on, until such Class G Coverage
Test is satisfied or until the Class G Notes are paid in full;

 

(16)                          if the Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes and the Class F Notes are no
longer Outstanding, to pay the Class G Cumulative Applicable Periodic Interest
Shortfall Amount (and interest thereon) to the PAA Issued Note Paying Agent for
payment on the Class G Notes in accordance with the Paying Agency Agreement, to
the extent that the amounts paid pursuant to Section 11.1(a)(22) are
insufficient to pay such amounts in full thereunder;

 

(17)                          on or prior to the last day of the Reinvestment
Period to pay, in the following order:

 

(i)                                     to be retained in the Collection Account
(i) to invest in Eligible Investments pending reinvestment in Substitute
Collateral Interests at a later date, (ii) to reinvest in Substitute Collateral
Interests subject to the Reinvestment Criteria and (iii) for payment of a
Special Amortization in accordance with clause (ii) below (to the extent of
available Collateral Principal Collections determined by the Collateral
Manager);

 

(ii)                                  on each Payment Date through and including
the last Payment Date during the Reinvestment Period, if the Collateral Manager
notifies the Trustee in writing that it has decided to declare a Special
Amortization, the amount of available Collateral Principal Collections
determined by the Collateral Manager, (1) if the Special Amortization Pro Rata

 

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Condition is satisfied, to pay each Class of Rated Notes in full, pro rata based
on their respective aggregate outstanding principal amounts and (2) if the
Special Amortization Pro Rata Condition is not satisfied, to pay principal on
each class of Rated Notes in accordance with the Note Payment Sequence until
each such Class of Rated Notes have been paid in full;

 

(18)                          after the end of the Reinvestment Period, to pay
principal on each Class of Rated Notes in accordance with the Note Payment
Sequence until each such Class of Rated Notes have been paid in full;

 

(19)                          to pay termination payments payable to any Hedge
Counterparty upon the termination of the related Hedge Agreement, pro rata, if
such termination occurred solely as the result of an event of default or a
termination event with respect to the Hedge Counterparty as Defaulting Party or
sole Affected Party, as the case may be, to the extent that the amounts paid
pursuant to Section 11.1(a)(23) are insufficient to pay such amounts in full
thereunder;

 

(20)                          to pay, in the following order:

 

(i)                                     any due and unpaid Trustee Fee, Trustee
Interest Advance Fee, Underlying Trust Expenses, PAA Issued Note Paying Agent
Fee, Trustee Expenses, Advancing Agent Fee and other Administrative Expenses,
including amounts payable to the Collateral Manager under the Collateral
Management Agreement but excluding the Collateral Management Fee, in each case,
in the same order of priority as provided in Section 11.1(b)(1) above and to the
extent not paid in full under Section 11.1(b)(1) above and to the extent that
the amounts paid pursuant to Section 11.1(a)(1) and (24) are insufficient to pay
such amounts in full thereunder; and

 

(ii)                                  on a pro rata basis, any due and unpaid
expenses and other liabilities of the Co-Issuers to the extent not paid under
Section 11.1(b)(1) above and to the extent that the amounts paid pursuant to
Section 11.1(a)(1) and (24) are insufficient to pay such amounts in full
thereunder, whether as a result of an amount limitation imposed thereunder or
otherwise;

 

(21)                          to pay the Subordinate Collateral Management Fee
with respect to such Payment Date and any due and unpaid Subordinate Collateral
Management Fee with respect to a previous Payment Date that was not paid on a
previous Payment Date, to the extent that the amounts paid pursuant to
Section 11.1(a)(25) are insufficient to pay such amounts in full thereunder;

 

(22)                          to repay, pro rata, the amount of any outstanding
Cure Advances, if any; and

 

(23)                          all Income Note Excess Funds to the PAA Issued
Note Paying Agent, on behalf of the Issuer, for distributions on the Income
Notes in accordance with the Paying Agency Agreement.

 

Provided, however, with respect to with respect to this Section 11.1(b);

 

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(i)                                     For purposes of determining if any
Principal Coverage Test is satisfied after giving effect to payments of
principal, the denominator of such Principal Coverage Test shall be determined
after giving effect to any principal on the Notes paid pursuant to any clauses
prior to such clause and such clause on the related Payment Date; and

 

(ii)                                  with respect to the Class C Notes, Class D
Notes, Class E Notes, Class F Notes and Class G Notes, payment of principal not
constituting the related Cumulative Applicable Periodic interest Shortfall
Amount shall be paid before principal constituting the related Cumulative
Applicable Periodic Interest Shortfall Amount, if any.

 

(c)                                If an Event of Default has occurred and is
continuing, on the date or dates determined by the Trustee, the Trustee will
pay, from all collections from, and proceeds of the sale or liquidation of, the
Collateral (excluding any amounts necessary to reimburse any unpaid Interest
Advances, together with interest thereon), in the following order:

 

(1)                                amounts corresponding to the amounts set
forth in clauses Section 11.1(a)(1) through (3), and (to the extent not covered
by Section 11.1(a)(1) through (3)) Section 11.1(b)(1);

 

(2)                                the Periodic Interest on the Class A Notes
(including Defaulted Interest on such Class A Notes, if any);

 

(3)                                outstanding principal on the Class A Notes
until paid in full;

 

(4)                                the Periodic Interest on the Class B Notes
(including Defaulted Interest on such Class B Notes, if any);

 

(5)                                outstanding principal on the Class B Notes
until paid in full;

 

(6)                                the Periodic Interest on the Class C Notes
(including Defaulted Interest on the Class C Notes, if any) and then outstanding
principal on the Class C Notes (including the Class C Cumulative Applicable
Periodic Interest Shortfall Amount, if any) until paid in full;

 

(7)                                the Periodic Interest on the Class D Notes
(including Defaulted Interest on the Class D Notes, if any) and then outstanding
principal on the Class D Notes (including Class D Cumulative Applicable Periodic
Interest Shortfall Amount, if any) until paid in full;

 

(8)                                the Periodic Interest on the Class E Notes
(including Defaulted Interest on the Class E Notes, if any) and then outstanding
principal on the Class E Notes (including Class E Cumulative Applicable Periodic
Interest Shortfall Amount, if any) until paid in full;

 

(9)                                the Periodic Interest on the Class F Notes
(including Defaulted Interest on the Class F Notes, if any) and then outstanding
principal on the Class F Notes (including Class F Cumulative Applicable Periodic
Interest Shortfall Amount, if any) until paid in full;

 

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(10)                          to the PAA Issued Note Paying Agent, the Periodic
Interest on the Class G Notes (including Defaulted Interest on the Class G
Notes, if any) and then outstanding principal on the Class G Notes (including
Class G Cumulative Applicable Periodic Interest Shortfall Amount, if any) until
paid in full;

 

(11)                          amounts corresponding to the amounts set forth in
Section 11.1(a)(23) through (26) and Section 11.1(b)(19) through (22); and

 

(12)                          to the PAA Issued Note Paying Agent, any remaining
amounts for distributions on the Income Notes.

 

(d)                               Not later than 12:00 p.m., New York time, on
or before the Business Day preceding each Payment Date, the Issuer shall,
pursuant to Section 10, remit or cause to be remitted to the Trustee for deposit
in the Payment Account an amount of Cash sufficient to pay the amounts described
in Section 11.1(a) and 11.1(b) required to be paid on such Payment Date.

 

(e)                                If, on any Payment Date, the amount available
in the Payment Account from amounts received in the related Due Period is
insufficient to make the full amount of the disbursements required by the
statements furnished by the Issuer pursuant to Section 10.12(b), the Trustee
shall make the disbursements called for in the order and according to the
priority set forth under Section 11.1(a) and 11.1(b), subject to Section 13.1,
to the extent funds are available therefor.

 

(f)                                  Except as otherwise expressly provided in
this Section 11.1, if on any Payment Date the amount of funds is insufficient to
make the full amount of the disbursements required by any clause or subclause of
Section 11.1(a) or 11.1(b) to different Persons, the Trustee shall make the
disbursements called for by such clause or subclause ratably in accordance with
the respective amounts of such disbursements then due and payable to the extent
funds are available therefor.

 

(g)                               With respect to principal payments of the
Class C Notes, Class D Notes, Class E Notes, Class F Notes and Class G Notes in
connection with a mandatory redemption pursuant to Section 11.1(a)(9), (12),
(15), (18) or (21) and pursuant to Section 11.1(b)(3), (6), (9), (12) or (15),
payment of principal not constituting the Class C Cumulative Applicable Periodic
Interest Shortfall Amount shall be paid before principal constituting the
Class C Cumulative Applicable Periodic Interest Shortfall Amount, if any,
payment of principal not constituting the Class D Cumulative Applicable Periodic
Interest Shortfall Amount shall be paid before principal constituting the
Class D Cumulative Applicable Periodic Interest Shortfall Amount, if any,
payment of principal not constituting the Class E Cumulative Applicable Periodic
Interest Shortfall Amount shall be paid before principal constituting the
Class E Cumulative Applicable Periodic Interest Shortfall Amount, if any,
payment of principal not constituting the Class F Cumulative Applicable Periodic
Interest Shortfall Amount shall be paid before principal constituting the
Class F Cumulative Applicable Periodic Interest Shortfall Amount, if any, and
payment of principal not constituting the Class G Cumulative Applicable Periodic
Interest Shortfall Amount shall be paid before principal constituting the
Class G Cumulative Applicable Periodic Interest Shortfall Amount, if any.

 

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(h)                               Any amounts to be paid to the PAA Issued Note
Paying Agent pursuant to Section 11(a)(20), (21), (22) and (27) or
Section 11.1(b)(14), (15), (16) and (23) will be released from the lien of this
Indenture.

 

(i)                                   No Collateral Principal Collections will
be paid to a Class of Rated Notes in accordance with the Priority of Payments on
a Payment Date if, after giving effect to such payment, any Principal Coverage
Test for a more Senior Class of Rated Notes would have failed.

 

(j)                                   If directed by the Holder of not less than
100% of the Income Notes, the Trustee shall withhold distributions to the PAA
Issued Note Paying Agent that would otherwise be paid pursuant to
Section 11.1(a)(27) and Section 11.1(b)(23) in respect of distributions on the
Income Notes.  Further, any Holder of Income Notes may elect at any time to make
additional capital contributions to the Issuer, which contributions will be
pledged to the Trustee as Collateral pursuant to this Indenture.  Any such
retained distribution or additional capital contribution will be deemed to be
Collateral Principal Collections received in the Due Period following the Due
Period relating to the Payment Date on which the option is exercised.  Any
Holder who makes an additional capital contribution will not be entitled to
interest or additional return thereon.

 

(k)                                The Advancing Agent and the Trustee shall be
entitled to receive the Advancing Agent Fee and the Trustee Interest Advance
Fee, respectively, in each case payable in accordance with the Priority of
Payments.  In addition, the Advancing Agent and the Trustee shall each be
entitled on each Payment Date to reimbursement of any previously unreimbursed
Interest Advance made by it, together with interest thereon, from Collateral
Interest Collections, and to the extent not reimbursed in full by Collateral
Interest Collections, from Collateral Principal Collections, prior to
application of Collections in accordance with Section 11.1(a), (b) and (c);
provided that (i) reimbursement of Interest Advances (other than Nonrecoverable
Advances) shall not cause an additional Interest Shortfall, (ii) reimbursement
of Nonrecoverable Advances, together with interest thereon, will be made first
from Collateral Principal Collections, and to the extent not reimbursed in full
from Collateral Principal Collections, from Collateral Interest Collections and
(iii) reimbursement of Nonrecoverable Advances shall be made regardless of
whether such reimbursement causes an additional Interest Shortfall.  Prior to an
Interest Advance becoming a Nonrecoverable Advance, such reimbursement shall not
be payable to the extent it would trigger an additional Interest Shortfall and
shall be junior in priority to the payment of interest due on the Class A Notes
and the Class B Notes on such Payment Date, but shall be senior in priority to
payment of interest on any other Class of Notes.  For purposes of the foregoing,
an Interest Advance shall be deemed to be a Nonrecoverable Advance if the
Advancing Agent or the Trustee, as applicable, determines that future payments
or collections on the Collateral Interests could reasonably be expected to be
insufficient to fully reimburse such Interest Advance, plus interest thereon. 
Amounts used for the reimbursement of Interest Advances and interest thereon
shall not be included in the Available Funds for any Payment Date. 
Notwithstanding the foregoing, the Advancing Agent or the Trustee, as
applicable, may opt, in their sole discretion, to defer the reimbursement for
Nonrecoverable Advances to a subsequent Payment Date or Payment Dates if such
reimbursement would trigger an additional Interest Shortfall.  In addition,
based upon information available at such time, the Advancing Agent or the
Trustee, as applicable, shall provide 15 days prior notice to the Collateral
Manager, the Trustee and each Rating Agency if an Interest Advance is determined
to be a Nonrecoverable Advance and whether or not reimbursement thereof shall be
deferred; provided, that the failure to provide such notice shall in no way
limit

 

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the rights of either of the Trustee or the Advancing Agent to reimburse itself
for Nonrecoverable Advances on any Payment Date.

 

ARTICLE XII

PURCHASE AND SALE OF COLLATERAL INTERESTS

 

12.1.                        SALE OF COLLATERAL INTERESTS

 

(a)                                Sale of Collateral Interests.

 

(1)                                Subject to the satisfaction of the conditions
specified in Section 10.12 as applicable, if the Collateral Manager, on behalf
of the Issuer, pursuant to this Article 12, shall direct the Trustee to sell any
Impaired Interest, Credit Risk Interest, Written Down Interest, Buy/Sell
Interest, Taxed Collateral Interest, Taxed Property or Withholding Tax Interest,
the Trustee shall sell in the manner directed by the Collateral Manager, such
Impaired Interest, Equity Interest, Credit Risk Interest, Written Down Interest,
Buy/Sell Interest, Taxed Collateral Interest, Taxed Property or Withholding Tax
Interest.

 

(2)                                Reserved.

 

(3)                                The Collateral Manager may, in its reasonable
discretion, direct the Issuer to sell or otherwise dispose of any Impaired
Interest, Credit Risk Interest, Written Down Interest, Buy/Sell Interest, Taxed
Collateral Interest, Taxed Property or Withholding Tax Interest.  The Collateral
Manager shall direct the Issuer to sell or otherwise dispose of any Collateral
Interest that is an Equity Interest as soon as practicable after such Collateral
Interest becomes an Equity Interest.

 

(4)                                The Collateral Manager may direct the Issuer
to (i) sell any Buy/Sell Interest at any time if the Sales Proceeds thereof are
at least equal to its Principal Balance (adjusted for any Collateral Principal
Payments received thereon) or (ii) purchase the corresponding pari passu
participation from the related participant at any time, regardless of whether
such purchase would occur during the Reinvestment Period or whether Reinvestment
Criteria would be satisfied thereafter, so long as the Issuer entered into a
binding agreement with the Collateral Manager, any of its Affiliates or any
other person qualified in accordance with the Indenture to purchase such
corresponding pari passu participation from the Issuer at a purchase price equal
to that paid by the Issuer to such participant and such purchaser thereof either
(A) has a long term rating by S&P of “A-” or a short term rating by S&P of
“A-1”, (B) is a Qualified Institutional Lender or (C) Rating Agency Confirmation
from S&P has been received; provided that Rating Agency Confirmation shall be
deemed to have been received with respect to NRFC DB Holdings, LLC and any
NorthStar Subsidiary as described in the S&P Letter or with respect to any
entities described in any amendments to or renewals of the S&P Letter.

 

(5)                                In the event of a Redemption, the Collateral
Manager shall direct the Trustee to sell Collateral Interests without regard to
the foregoing limitations; provided that the Sale Proceeds therefrom and other
amounts available therefor will be at least sufficient to pay certain expenses,
including all amounts due under any Hedge

 

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Agreements, and redeem, in whole but not in part, the Notes at the applicable
Redemption Prices; and provided, further, that such Sale Proceeds are used to
make such a Redemption.

 

(6)                                The Collateral Manager shall sell any
Collateral Interest pursuant to this Section 12 only at a price that, in its
judgment, is not substantially less than the market value of such Collateral
Interest at the time of such sale.

 

(b)                               Reinvestment of Sale Proceeds and Replacement
of Collateral Interests.  Subject to Section 9.7 above, following the Closing
Date and during the Reinvestment Period, subject to the satisfaction of the
Eligibility Criteria and the Reinvestment Criteria, the Collateral Manager,
acting on behalf of the Issuer, shall use reasonable efforts to cause the
Trustee to reinvest Sale Proceeds received at any time from the sale of
Collateral Interests that are Impaired Interests, Equity Interests, Credit Risk
Interests, Written Down Interests, Buy/Sell Interests, Taxed Collateral
Interests, Taxed Properties or Withholding Tax Interests in Substitute
Collateral Interests with an aggregate purchase price up to the amount of the
Sale Proceeds; provided, however, that prior to any such acquisition of
Substitute Collateral Interests by or on behalf of the Issuer in the manner
described above, the following conditions are satisfied on the date of such
acquisition:

 

(1)                                the rating by any Rating Agency on (A) the
Class A Notes or Class B Notes is one or more notches below the rating assigned
to the Class A Notes or Class B Notes, as applicable, by such Rating Agency on
the Closing Date; or (B) any other Class of Rated Notes is two or more notches
below the rating assigned to such Class of Rated Notes by such Rating Agency on
the Closing Date; and

 

(2)                                the Reinvestment Criteria are satisfied.

 

12.2.                        PORTFOLIO CHARACTERISTICS

 

Except as provided in Section 12.3(c), a security will be eligible for inclusion
in the Collateral as a Pledged Collateral Interest only if, as evidenced by an
Officer’s certificate from the Collateral Manager to the Trustee, each of the
following eligibility criteria is satisfied immediately after the Issuer Grants
such Collateral Interest to the Trustee (collectively, the Eligibility
Criteria):

 

(a)                                it is issued by an issuer incorporated or
organized under the laws of the United States, the Bahamas, Bermuda, the Cayman
Islands, the British Virgin Islands, the Netherlands Antilles, Jersey, Guernsey
or Luxembourg;

 

(b)                               it is U.S. Dollar-denominated and all cash
flows thereunder are to be paid in U.S. Dollars, and it is not convertible into,
or payable in, any other currency; provided, however, the requirements of this
Section (b) will not be applicable if Rating Agency Confirmation is obtained;

 

(c)                                it is one of the Specified Types of
Collateral Interests;

 

(d)                               it has an S&P Rating (which rating does not
include a “p”, “pi”, “q”, “t” or “r” subscript) and a Moody’s Rating;

 

(e)                                either (A) the Issuer is a Qualified REIT
Subsidiary or (B) the acquisition, ownership, enforcement and disposition of
such security will not cause the Issuer to be treated as

 

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engaged in a U.S. trade or business for U.S. federal income tax purposes or
otherwise to be subject to tax on a net income basis in any jurisdiction outside
the Issuer’s jurisdiction of incorporation (other than as attributable to
property received in connection with a workout or foreclosure, as permitted
under the Transaction Documents);

 

(f)                                  the payments on such security are not
subject to withholding tax unless the issuer thereof or the obligor thereon is
required to make additional payments sufficient to cover any withholding tax
imposed at any time on payments made to the Issuer with respect thereto (for the
avoidance of doubt, this clause will not apply to any commitment fees with
respect to the unfunded portion of any Earn-Out Assets;

 

(g)                               its acquisition would not cause the Issuer or
the pool of Collateral to be required to register as an investment company under
the Investment Company Act;

 

(h)                               it is not an obligation that is ineligible
under its Underlying Instruments to be purchased by the Issuer and pledged to
the Trustee, and in the case of a Subordinate Mortgage Loan Interest or
Mezzanine Loan, it is not ineligible under its Underlying Instruments to be
purchased by the Underlying Trust;

 

(i)                                   it is not an insurance-linked debt
instrument containing a provision pursuant to which the issuer’s obligation to
pay interest or principal is deferred or forgiven in the event of loss due to
certain natural catastrophes specified in the Underlying Instruments;

 

(j)                                   it provides for the payment of principal
at not less than par upon maturity;

 

(k)                                (A) its Underlying Instruments do not
obligate the Issuer to make any future advances or any other payment except the
purchase price thereof (except for Earn-Out Assets) and (B) in the case of an
Earn-Out Asset, the Issuer has deposited funds in the Earn-Out Asset Account in
an amount sufficient to meet such future advances or future payment obligations
in full;

 

(l)                                   it is not an obligation with respect to
which, in the reasonable judgment of the Collateral Manager, the timely
repayment of principal and interest is subject to substantial non-credit related
risks;

 

(m)                             it is not an Interest Only Security;

 

(n)                               it is not an obligation issued by an Emerging
Market Issuer;

 

(o)                               it is not an obligation that has, at the time
of purchase, any deferred or capitalized interest;

 

(p)                               it is not an obligation that, at the time it
is purchased, is a Credit Risk Interest, an Impaired Interest, a Written Down
Interest or a Deferred Interest PIK Bond;

 

(q)                               it is not a Synthetic Security;

 

(r)                                  If it is a participation interest in a
commercial mortgage loan, the entity that created such participation interest is
either (A) a special purpose entity meeting S&P’s then current published
criteria for bankruptcy-remote special purpose entities, (B) a Qualified
Institutional Lender or (C) an entity with respect to which Rating Agency
Confirmation

 

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has been received; provided that Rating Agency Confirmation shall be deemed to
have been received with respect to NRFC DB Holdings, LLC and any NorthStar
Subsidiary as described in the S&P Letter or with respect to any entities
described in any amendments to or renewals of the S&P Letter;

 

(s)                                at the time the obligation is purchased by
the Issuer:

 

(1)                                it is not an obligation issued by an issuer
located in a country that imposes foreign exchange controls that effectively
limit the availability or use of U.S. Dollars to make when due the scheduled
payments of principal and interest on such security;

 

(2)                                it is not, and does not provide for
conversion or exchange into, Margin Stock at any time over its life;

 

(3)                                it is not an obligation which (1) was
incurred in connection with a merger, acquisition, consolidation or sale of all
or substantially all of the assets of a person or entity or similar transaction
and (2) by its terms is required to be repaid within one year of the incurrence
thereof with proceeds from additional borrowings or other refinancing;

 

(4)                                it is not the subject of (1) any offer by the
issuer of such obligation or by any other person made to all of the holders of
such obligation to purchase or otherwise acquire such obligation (other than
pursuant to any redemption in accordance with the terms of the related
underlying instruments) or to convert or exchange such obligation into or for
cash, securities or any other type of consideration or (2) any solicitation by
an issuer of such obligation or any other person to amend, modify or waive any
provision of such obligation or any related underlying instrument, and has not
been called for redemption;

 

(5)                                it is not an Equity Interest;

 

(6)                                it is not an obligation that by the terms of
its underlying instruments provides for conversion or exchange (whether
mandatory or at the option of the issuer or the holder thereof) into equity
capital at any time prior to its maturity;

 

(7)                                it is not a financing by a
debtor-in-possession in any insolvency proceeding;

 

(8)                                it is not a first loss tranche of any
securitization that does not have an S&P Rating (as defined in clause (i) of the
definition of S&P Rating) that addresses the obligation of the obligor (or
guarantor, if applicable) to pay principal of and interest on the relevant
Collateral Interest in full, which ratings are monitored on an ongoing basis by
the relevant Rating Agency;

 

(9)                                it is not an obligation that provides for the
payment of interest in cash less frequently than semi-annually;

 

(10)                          (A) if it is a Commercial Mortgage Loan, a
Mezzanine Loan, a Subordinate Mortgage Loan Interest, a Credit Lease Loan or a
Tenant Lease Loan Interest, no commercial mortgage loan underlying, securing or
constituting such Collateral Interest has a maturity date (including any
extension option) that is later than ten

 

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(10) years prior to the Stated Maturity Date; and (B) if it is a CMBS, such CMBS
(without regard to the maturities of any collateral underlying such CMBS) does
not have a rated final maturity date later than the Stated Maturity Date; and
(C) if it is a Real Estate CDO Security, it does not have a stated maturity
later than the Stated Maturity Date; and

 

(11)                          if it is a Deemed Floating Rate Collateral
Interest, the Deemed Floating Asset Hedge entered into with respect to such
Deemed Floating Rate Collateral Interest conforms to all requirements set forth
in the definition of “Deemed Floating Asset Hedge”;

 

(t)                                    if it is a (1) Mezzanine Loan or a
Participation Interest therein, it is serviced (or in the case of a Mezzanine
Loan acquired by the Issuer on the Closing Date or within thirty days
thereafter, will be serviced within thirty days of the Closing Date) in
accordance with a servicing agreement which complies in all material respects
with S&P’s criteria for Mezzanine Loan servicing agreements, (2) Subordinate
Mortgage Loan Interest and the related senior mortgage loan is not otherwise
serviced in connection with a commercial mortgage backed securitization
transaction, it is serviced in accordance with the related participation
agreement or intercreditor agreement and (3) Credit Lease Loan, a Tenant Lease
Loan Interest or a Commercial Mortgage Loan, or a Participation Interest
therein, it is serviced in accordance with a servicing agreement the terms of
which are substantially similar to the terms of servicing agreements entered
into in connection with CMBS transactions rated by S&P or a servicing agreement
with respect to which Rating Agency Confirmation from S&P has been received;

 

(u)                                 if it is a Mezzanine Loan, a Subordinate
Mortgage Loan Interest, a Commercial Mortgage Loan (other than a Credit Lease
Loan or a Tenant Lease Loan Interest), or a Participation Interest therein, such
Collateral Interest shall have the benefit of (i) either (A) representations and
warranties made by the Seller of such Collateral Interest (with such exceptions,
qualifications and omissions as the Collateral Manager shall reasonably
determine) substantially similar to either (x) the representations and
warranties set forth on Schedule J-1 hereto or (y) in the case of a Mezzanine
Loan or a Subordinate Mortgage Loan Interest, the representations and warranties
made by the Seller of such Collateral Interest in connection with the CMBS
transaction including the related senior interest in such Collateral Interest
(provided that such CMBS transaction is rated by S&P) or (B) representations and
warranties with respect to which Rating Agency Confirmation from S&P has been
received and (ii) remedies for the breach of such representations and warranties
or the existence of document defects that are either (A) substantially similar
to the remedies provided in the Asset Transfer Agreement or (B) with respect to
which Rating Agency Confirmation from S&P has been received;

 

(v)                                 if it is a Credit Lease Loan or a Tenant
Lease Loan Interest or a Participation Interest therein, such Collateral
Interest shall have the benefit of (i) either (A) representations and warranties
made by the Seller of such Collateral Interest (with such exceptions,
qualifications and omissions as the Collateral Manager shall reasonably
determine) substantially similar to the representations and warranties set forth
on Schedule J-1 (to the extent such representations and warranties are
applicable to Credit Lease Loans and Tenant Lease Loan Interests) and Schedule
J-2 hereto or (B) representations and warranties with respect to which Rating
Agency Confirmation from S&P has been received and (ii) remedies for the breach
of representations and warranties or the existence of document defects that are
either (A) substantially similar to the remedies provided in the Asset Transfer
Agreement or (B) with respect to which Rating Agency Confirmation from S&P has
been received; and

 

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(w)                               if it is a Collateral Interest acquired after
the Closing Date, it will be transferred (i) from a Seller to the Depositor
pursuant to an agreement substantially similar to the Asset Transfer Agreement
and (ii) from the Depositor (in the case of a CMBS or Real Estate CDO Security)
or the Underlying Trustee (in the case of a Trust Certificate) to the Issuer
pursuant to an agreement substantially similar to the Bill of Sale;

 

provided that notwithstanding anything to the contrary herein, the Issuer may,
while attempting to dispose of property acquired in foreclosure or similar
circumstances, make an election under Section 882(d) of the Code to treat the
income related to real property located in the United States as income that is
effectively connected with a U.S. trade or business.

 

12.3.                      CONDITIONS APPLICABLE TO ALL TRANSACTIONS INVOLVING
SALE OR GRANT

 

(a)                                  Any transaction effected under Section 5,
Section 9, Section 10.2 or Section 12.1 shall be conducted on an arm’s length
basis and if effected with the Issuer, the Trustee, the Collateral Manager or
any Affiliate of any of the foregoing, shall be effected in a secondary market
transaction on terms at least as favorable to the Rated Noteholders as would be
the case if such Person were not so Affiliated; provided that any disposition of
a Collateral Interest in accordance with Section 12.1 shall be deemed to comply
with this Section 12.3(a).  The Trustee shall have no responsibility to oversee
compliance with this clause by the other parties.

 

(b)                                 Upon any purchase or substitution pursuant
to this Section 12, all of the Issuer’s right, title and interest to the Pledged
Security or Securities shall be, and hereby is, Granted to the Trustee pursuant
to this Indenture, such Pledged Security or Securities shall be registered in
the name of the Trustee, and, if applicable, the Trustee shall receive such
Pledged Security or Securities.  The Trustee shall receive, not later than the
date of delivery of any Pledged Security pursuant to a purchase under this
Section 12, (a) an Officer’s Certificate of the Collateral Manager certifying
(1) compliance with the Reinvestment Criteria in accordance with
Section 12.1(b), (2) that the Collateral Debt Security to be sold constitutes an
Impaired Interest, Credit Risk Interest, Written Down Interest, Buy/Sell
Interest, Taxed Collateral Interest, Taxed Property or Withholding Tax Interest
and (3) that any security to be purchased satisfies the definition of Collateral
Interest and (b) an Officer’s Certificate of the Collateral Manager on behalf of
the Issuer containing the statements set forth in Section 3.2(b)(2) through (4),
(6) and (7).

 

(c)                                  Notwithstanding anything contained in this
Section 12 to the contrary, the Issuer shall, subject to Section 12.3(d), have
the right to effect any transaction to which the Initial Hedge Counterparty,
Holders of Rated Notes evidencing 100% of the Aggregate Outstanding Amount of
each Class of Rated Notes, and each Income Noteholder has consented, and of
which each Rating Agency has been notified in advance.

 

(d)                                 Except as specifically provided in this
Indenture, at any time at which the Issuer is not a Qualified REIT Subsidiary,
the Issuer may not (i) engage in any business or activity that would cause the
Issuer to be treated as engaged in a U.S. trade or business for U.S. federal
income tax purposes or (ii) acquire or hold any asset that is an equity interest
in an entity that is treated as a partnership engaged in a U.S. trade or
business for U.S. federal income tax purposes or the acquisition or ownership of
which otherwise would subject the Issuer to net income tax in any jurisdiction
outside its jurisdiction of incorporation.

 

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ARTICLE XIII

SECURED PARTIES’ RELATIONS

 

13.1.                      SUBORDINATION

 

(a)                                  Anything in this Indenture or the Rated
Notes to the contrary notwithstanding, the Issuer and the Holders of the Class B
Notes, the Class C Notes, the Class D Notes, the Class E Notes, the Class F
Notes and the Class G Notes agree for the benefit of the Holders of the Class A
Notes that the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes, the Class F Notes and the Class G Notes and the Issuer’s rights in and to
the Collateral (with respect to the Class A Notes, the Subordinate Interests)
shall be subordinate and junior to the Class A Notes to the extent and in the
manner set forth in this Indenture, including as set forth in
Section 11.1(a) and hereinafter provided.  If any Event of Default (including an
Event of Default specified in Section 5.1(g) or (h)) has occurred and has not
been cured or waived, the Class A Notes shall be paid in full in Cash or, to the
extent a Majority of the Class A Notes consent, other than in Cash, before any
further payment or distribution is made on account of the Subordinate
Interests.  The Holders of Rated Notes evidencing Subordinate Interests and the
holders of equity in the Issuer and the Co-Issuer agree, for the benefit of the
Holders of the Class A Notes, not to cause the filing of a petition in
bankruptcy against the Issuer or the Co-Issuer for failure to pay to them
amounts due under the Rated Notes evidencing such Subordinate Interests or
hereunder until the payment in full of the Class A Notes and not before one year
and one day has elapsed since such payment or, if longer, the applicable
preference period then in effect, including any period established pursuant to
the laws of the Cayman Islands.

 

(b)                                 Anything in this Indenture or the Rated
Notes to the contrary notwithstanding, the Issuer and the Holders of the Class C
Notes, the Class D Notes, the Class E Notes, the Class F Notes and the Class G
Notes agree for the benefit of the Holders of the Class A Notes and the Class B
Notes that the Class C Notes, the Class D Notes, the Class E Notes, the Class F
Notes and the Class G Notes and the Issuer’s rights in and to the Collateral
(with respect to the Class A Notes and the Class B Notes the Subordinate
Interests) shall be subordinate and junior to the Class A Notes and the Class B
Notes to the extent and in the manner set forth in this Indenture, including as
set forth in Section 11.1(a) and hereinafter provided.  If any Event of Default
(including an Event of Default specified in Section 5.1(g) or (h)) has occurred
and has not been cured or waived, the Class A Notes and the Class B Notes shall
be paid in full in Cash or, to the extent a Majority of the Class A Notes and
the Class B Notes consent, other than in Cash, before any further payment or
distribution is made on account of the Subordinate Interests.  The Holders of
Rated Notes evidencing Subordinate Interests and the holders of equity in the
Issuer and the Co-Issuer agree, for the benefit of the Holders of the Class A
Notes and the Class B Notes, not to cause the filing of a petition in bankruptcy
against the Issuer or the Co-Issuer for failure to pay to them amounts due under
the Rated Notes evidencing such Subordinate Interests or hereunder until the
payment in full of the Class A Notes and the Class B Notes and not before one
year and one day has elapsed since such payment or, if longer, the applicable
preference period then in effect, including any period established pursuant to
the laws of the Cayman Islands.

 

(c)                                  Anything in this Indenture or the Rated
Notes to the contrary notwithstanding, the Issuer and the Holders of  the
Class D Notes, the Class E Notes, the Class F Notes and the Class 

 

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G Notes agree for the benefit of the Holders of the Class A Notes, the Class B
Notes and the Class C Notes that the Class D Notes, the Class E Notes, the
Class F Notes and the Class G Notes and the Issuer’s rights in and to the
Collateral (with respect to the Class A Notes, the Class B Notes and the Class C
Notes, the Subordinate Interests) shall be subordinate and junior to the Class A
Notes, the Class B Notes and the Class C Notes to the extent and in the manner
set forth in this Indenture including as set forth in Section 11.1(a) and
hereinafter provided.  If any Event of Default (including an Event of Default
specified in Section 5.1(g) or (h)) has occurred and has not been cured or
waived the Class A Notes, the Class B Notes and the Class C Notes shall be paid
in full in Cash or, to the extent a Majority of the Class A Notes, the Class B
Notes and the Class  C Notes consent, other than in Cash, before any further
payment or distribution is made on account of the Subordinate Interests.  The
Holders of Rated Notes evidencing Subordinate Interests and the holders of
equity in the Issuer and the Co-Issuer agree, for the benefit of the Holders of
the Class A Notes, the Class B Notes and the Class C Notes, not to cause the
filing of a petition in bankruptcy against the Issuer or the Co-Issuer for
failure to pay to them amounts due under the Rated Notes evidencing such
Subordinate Interests or hereunder until the payment in full of the Class A
Notes, the Class B Notes and the Class C Notes and not before one year and one
day has elapsed since such payment or, if longer, the applicable preference
period then in effect, including any period established pursuant to the laws of
the Cayman Islands.

 

(d)                                 Anything in this Indenture or the Rated
Notes to the contrary notwithstanding, the Issuer and the Holders of the Class E
Notes, the Class F Notes and the Class G Notes agree for the benefit of the
Holders of the Class A Notes, the Class B Notes, the Class C Notes and the
Class D Notes that the Class E Notes, the Class F Notes and the Class G Notes
and the Issuer’s rights in and to the Collateral (with respect to the Class A
Notes, the Class B Notes, the Class C Notes and the Class D Notes, the
Subordinate Interests) shall be subordinate and junior to the Class A Notes, the
Class B Notes, the Class C Notes and the Class D Notes to the extent and in the
manner set forth in this Indenture including as set forth in Section 11.1(a) and
hereinafter provided.  If any Event of Default (including an Event of Default
specified in Section 5.1(g) or (h)) has occurred and has not been cured or
waived the Class A Notes, the Class B Notes, the Class C Notes and the Class D
Notes shall be paid in full in Cash or, to the extent a Majority of each of the
Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes
consent, other than in Cash, before any further payment or distribution is made
on account of the Subordinate Interests.  The Holders of Rated Notes evidencing
Subordinate Interests and the holders of equity in the Issuer and the Co-Issuer
agree, for the benefit of the Holders of the Class A Notes, the Class B Notes,
the Class C Notes and the Class D Notes, not to cause the filing of a petition
in bankruptcy against the Issuer or the Co-Issuer for failure to pay to them
amounts due under the Rated Notes evidencing such Subordinate Interests or
hereunder until the payment in full of the Class A Notes, the Class B Notes, the
Class C Notes and the Class D Notes and not before one year and one day has
elapsed since such payment or, if longer, the applicable preference period then
in effect, including any period established pursuant to the laws of the Cayman
Islands.

 

(e)                                  Anything in this Indenture or the Rated
Notes to the contrary notwithstanding, the Issuer and the Holders of the Class F
Notes and the Class G Notes agree for the benefit of the Holders of the Class A
Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E
Notes that the Class F Notes and the Class G Notes and the Issuer’s rights in
and to the Collateral (with respect to the Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes and the Class E Notes, the Subordinate
Interests) shall be

 

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subordinate and junior to the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes and the Class E Notes to the extent and in the manner
set forth in this Indenture including as set forth in Section 11.1(a) and
hereinafter provided.  If any Event of Default (including an Event of Default
specified in Section 5.1(g) or (h)) has occurred and has not been cured or
waived the Class A Notes, the Class B Notes, the Class C Notes, the Class D
Notes and the Class E Notes shall be paid in full in Cash or, to the extent a
Majority of each of Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes and the Class E Notes consent, other than in Cash, before any
further payment or distribution is made on account of the Subordinate
Interests.  The Holders of Rated Notes evidencing Subordinate Interests and the
holders of equity in the Issuer and the Co-Issuer agree, for the benefit of the
Holders of the Class A Notes, the Class B Notes, the Class C Notes, the Class D
Notes and the Class E Notes, not to cause the filing of a petition in bankruptcy
against the Issuer or the Co-Issuer for failure to pay to them amounts due under
the Rated Notes evidencing such Subordinate Interests or hereunder until the
payment in full of the Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes and the Class E Notes and not before one year and one day has
elapsed since such payment or, if longer, the applicable preference period then
in effect, including any period established pursuant to the laws of the Cayman
Islands.

 

(f)                                    Anything in this Indenture or the Rated
Notes to the contrary notwithstanding, the Issuer and the Holders of the Class G
Notes agree for the benefit of the Holders of the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes, the Class E Notes and the Class F
Notes that the Class G Notes and the Issuer’s rights in and to the Collateral
(with respect to the Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes and the Class F Notes, the Subordinate
Interests) shall be subordinate and junior to the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes, the Class E Notes and the Class F
Notes to the extent and in the manner set forth in this Indenture including as
set forth in Section 11.1(a) and hereinafter provided.  If any Event of Default
(including an Event of Default specified in Section 5.1(g) or (h)) has occurred
and has not been cured or waived the Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes and the Class F Notes shall
be paid in full in Cash or, to the extent a Majority of each of Class A Notes,
the Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes and
the Class F Notes consent, other than in Cash, before any further payment or
distribution is made on account of the Subordinate Interests.  The Holders of
Rated Notes evidencing Subordinate Interests and the holders of equity in the
Issuer and the Co-Issuer agree, for the benefit of the Holders of the Class A
Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes and the Class F Notes, not to cause the filing of a petition in bankruptcy
against the Issuer or the Co-Issuer for failure to pay to them amounts due under
the Rated Notes evidencing such Subordinate Interests or hereunder until the
payment in full of the Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes and the Class F Notes and not before one year
and one day has elapsed since such payment or, if longer, the applicable
preference period then in effect, including any period established pursuant to
the laws of the Cayman Islands.

 

13.2.                      STANDARD OF CONDUCT

 

In exercising any of its or their voting rights, rights to direct and consent or
any other rights as a Secured Party under this Indenture, subject to the terms
and conditions of this Indenture, including Section 5.9, a Secured Party or
Secured Parties shall not have any obligation or duty to any Person or to
consider or take into account the interests of any Person and shall not be
liable to any Person for any

 

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action taken by it or them or at its or their direction or any failure by it or
them to act or to direct that an action be taken, without regard to whether such
action or inaction benefits or adversely affects any Secured Party, the Issuer,
or any other Person.

 

ARTICLE XIV

MISCELLANEOUS

 

14.1.                      FORM OF DOCUMENTS DELIVERED TO 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, the Co-Issuer
or the Collateral Manager may be based, insofar as it relates to legal matters,
upon a certificate or opinion of, or representations by, counsel, unless such
Authorized 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 his certificate or opinion is based are erroneous.  Any such
certificate of an Authorized Officer of the Issuer, the Co-Issuer or the
Collateral Manager or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
Authorized Officer of the Issuer, the Co-Issuer, the Collateral Manager or any
other Person, stating that the information with respect to such factual matters
is in the possession of the Issuer, the Co-Issuer, the Collateral Manager or
such other Person, unless such Authorized Officer of the Issuer, the Co-Issuer
or the Collateral Manager or such counsel knows that the certificate or opinion
or representations with respect to such matters are erroneous.  Any Opinion of
Counsel may also be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an Authorized Officer of the
Issuer, the Co-Issuer or the Collateral Manager, stating that the information
with respect to such matters is in the possession of the Issuer, the Co-Issuer
or the Collateral Manager, unless such counsel knows 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 it is provided that the absence of the occurrence and
continuation of a Default is a condition precedent to the taking of any action
by the Trustee at the request or direction of the Issuer or the Co-Issuer, then
notwithstanding that the satisfaction of such condition is a condition precedent
to the Co-Issuers’ rights to make such request or direction, the Trustee shall
be protected in acting in accordance with such request or direction if it does
not have actual knowledge of the occurrence and continuation of such Default as
provided in Section 6.1(d).

 

14.2.                      ACTS OF RATED NOTEHOLDERS

 

(a)                                  Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Rated Noteholders may be embodied in and evidenced by one
or more instruments of substantially similar tenor signed by such Rated
Noteholders in person or by an agent 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 Trustee, and, where it is
hereby expressly required, to the Issuer.  Such instrument or instruments (and
the action or actions embodied therein and evidenced thereby) are herein
sometimes referred to as the Act of the Rated 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 conclusive in favor of the Trustee and the Co-Issuers, if made in
the manner provided in this Section 14.2.

 

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

 

(c)                                  The principal amount and registered numbers
of Rated Notes held by any Person, and the date of his holding the same, shall
be proved by the Note Register.

 

(d)                                 Any request, demand, authorization,
direction, notice, consent, waiver or other action by the Holder of any Rated
Notes shall bind the Holder (and any transferee thereof) of such Rated Note and
of every Rated 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 Trustee or the Co-Issuers in reliance thereon, whether or not notation of
such action is made upon such Rated Note.

 

14.3.                      NOTICES, ETC., TO TRUSTEE, THE CO-ISSUERS AND THE
RATING AGENCIES

 

Any request, demand, authorization, direction, notice, consent, waiver or Act of
Rated Noteholders or other documents provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with:

 

(a)                                  the Trustee or the PAA Issued Note Paying
Agent by any Rated Noteholder or by the Issuer or the Co-Issuer shall be
sufficient for every purpose hereunder if in writing and sent by facsimile in
legible form and confirmed by overnight courier service guaranteed next day
delivery to the Trustee or the PAA Issued Note Paying Agent addressed to it at
9062 Old Annapolis Road, Columbia, Maryland 21045, Attn:  CDO Trust
Services—N-Star REL CDO IV, telephone number 410-884-2000, fax number
410-715-3748 or at any other address previously furnished in writing to the
Co-Issuers or Rated Noteholder by the Trustee or PAA Issued Note Paying Agent;

 

(b)                                 the Issuer by the Trustee or by any Rated
Noteholder shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing and mailed, first class postage
prepaid, hand delivered, sent by overnight courier service or by facsimile in
legible form, to the Issuer addressed to it at c/o Walkers SPV Limited, P.O. Box
908 GT, Walker House, Mary Street, George Town, Grand Cayman, Cayman Islands,
Attention:  The Directors, or at any other address previously furnished in
writing to the Trustee by the Issuer;

 

(c)                                  the Co-Issuer by the Trustee or by any
Rated Noteholder shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, hand delivered, sent by overnight courier service or by
facsimile in legible form, to the Co-Issuer addressed to it at c/o Puglisi &
Associates, 850 Library Avenue, Suite 204, Newark, Delaware 19711, Attention: 
Donald Puglisi, Esq.,

 

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facsimile no. 302-738-7210, or at any other address previously furnished in
writing to the Trustee by the Co-Issuer; or

 

(d)                                 the Rating Agencies by the Co-Issuers or the
Trustee shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, hand
delivered, sent by overnight courier service or by facsimile in legible form,
(i) in the case of Moody’s, addressed to Moody’s Investors Service, Inc., 99
Church Street, New York, New York 10007 facsimile no. (212) 553-7820, Attention:
Northstar REL CDO IV CBO CLO Monitoring (e-mail:  cdomonitoring@moody’s.com);
and (ii) in the case of S&P, addressed to S&P, 55 Water Street, 41st Floor, New
York, New York, 10041, Attention:  CDO Surveillance and all Note Valuation
Reports shall be sent to S&P electronically at cdo_surveillance@sandp.com;

 

(e)                                  the Collateral Manager by the Co-Issuers or
by the Trustee or a Majority of the Controlling Class, or by the Collateral
Administrator shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing and sent by facsimile in legible form
and confirmed by overnight courier service guaranteed next day delivery, or by
electronic mail (where expressly provided herein) to the Collateral Manager
addressed to it at the address specified in the Collateral Management Agreement
or at any other address previously furnished in writing to the Co-Issuers or the
Trustee by the Collateral Manager;

 

(f)                                    the PAA Issued Note Paying Agent by the
Trustee in writing sent by facsimile confirmed by overnight courier guaranteed
next day delivery;

 

(g)                                 Deutsche Bank by the Co-Issuers, the
Collateral Manager or the Trustee shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, hand delivered, sent by overnight courier service
or by telecopy in legible form, to Deutsche Bank addressed to Deutsche Bank
Securities Inc., 60 Wall Street, telecopy no. (212) 797-4461, Attention:  Emile
Van den Bol; and

 

(h)                                 to the Repository by the Issuer pursuant to
this Indenture shall be made available to the Repository by electronic mail as a
pdf (portable document format) file to CDO Library, c/o The Bond Market
Association, 360 Madison Avenue (18th Floor), New York, NY 10017; Electronic
mail address:  admin@cdolibrary.com.

 

Delivery of any request, demand, authorization, direction, notice, consent,
waiver or Act of Rated Noteholders or other documents made as provided above
will be deemed effective:  (i) if in writing and delivered in person or by
overnight courier service, on the date it is delivered; (ii) if sent by
facsimile transmission, on the date that transmission is received by the
recipient in legible form (as evidenced by the sender’s written record of a
telephone call to the recipient in which the recipient acknowledged receipt of
such facsimile transmission); and (iii) if sent by mail, on the date that mail
is delivered or its delivery is attempted; in each case, unless the date of that
delivery (or attempted delivery) or that receipt, as applicable, is not a
Business Day or that communication is delivered (or attempted) or received, as
applicable, after the close of business on a Business Day, in which case that
communication shall be deemed given and effective on the first following day
that is a Business Day.

 

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14.4.                      NOTICES AND REPORTS TO RATED NOTEHOLDERS; WAIVER

 

Except as otherwise expressly provided herein, where this Indenture provides for
a report to Holders or for a notice to Holders of Rated Notes of any event, such
notice shall be sufficiently given to Holders of Rated Notes if in writing and
mailed, first-class postage prepaid, to each Holder of a Rated Note affected by
such event, at the address of such Holder as it appears in the Note Register,
not earlier than the earliest date and not later than the latest date,
prescribed for the giving of such report or notice and such report or notice
shall be in the English language.  Notwithstanding any provision to the contrary
contained herein or in any agreement or document related hereto, any report,
statement or other information to be provided by the Trustee may be provided by
providing access to the Trustee’s website containing such information.  Such
reports and notices will be deemed to have been given on the date of such
mailing.

 

The Trustee will deliver to the Holder of any Rated Note shown on the Note
Register any readily available information or notice requested to be so
delivered, at the expense of the Issuer.  In addition, for so long as any
Class of Rated Notes is listed on the Irish Stock Exchange and so long as the
rules of such exchange so require, notices to the Holders of such Rated Notes
shall also be given by the Trustee to the Irish Paying Agent for delivery to the
Company Announcements Office of the Irish Stock Exchange.

 

Neither the failure to mail any notice, nor any defect in any notice so mailed,
to any particular Holder of a Rated Note shall affect the sufficiency of such
notice with respect to other Holders of Rated Notes.

 

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 Rated Noteholders shall be filed with the Trustee but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.

 

In the event that, by reason of the suspension of the 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 Rated 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 Trustee shall be deemed to be a
sufficient giving of such notice.

 

14.5.                      EFFECT OF HEADINGS AND TABLE OF CONTENTS

 

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

 

14.6.                      SUCCESSORS AND ASSIGNS

 

All covenants and agreements in this Indenture by the Co-Issuers shall bind
their respective successors and assigns, whether so expressed or not.  Written
notice of any assignment shall be promptly provided by the Issuer to the Holders
of Notes of the Controlling Class, the Initial Hedge Counterparty and each
Rating Agency.

 

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14.7.                      SEVERABILITY

 

In case any provision in this Indenture or in the Rated 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.

 

14.8.                      BENEFITS OF INDENTURE

 

The Rated Noteholders, the Initial Hedge Counterparty and each Income Noteholder
is an express third-party beneficiary of this Indenture.  Nothing in this
Indenture or in the Rated Notes, expressed or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, the Rated
Noteholders, the Initial Hedge Counterparty and each Income Noteholder, any
benefit or any legal or equitable right, remedy or claim under this Indenture.

 

14.9.                      GOVERNING LAW

 

This Indenture and each Rated Note shall be construed in accordance with, and
this Indenture and each Rated Note and all matters arising out of or relating in
any way whatsoever (whether in contract, tort or otherwise) to this Indenture or
any Rated Note shall be governed by, the law of the State of New York.

 

14.10.                SUBMISSION TO JURISDICTION

 

The Co-Issuers hereby irrevocably submit to the non-exclusive jurisdiction of
the Supreme Court of the State of New York sitting in Manhattan and the U.S.
District Court for the Southern District of New York, and any court of appeal
therefrom, in any action or proceeding arising out of or relating to the Rated
Notes or this Indenture, and the Co-Issuers hereby irrevocably agree that all
claims in respect of such action or proceeding may be heard and determined in
such New York State or federal court.  The Co-Issuers hereby irrevocably waive,
to the fullest extent that they may legally do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding.  The
Co-Issuers hereby irrevocably appoint and designate CT Corporation, 111 Eighth
Avenue, 13th Floor, New York, New York 10011, or any other Person having and
maintaining a place of business in the State of New York whom the Co-Issuers may
from time to time hereafter designate as the true and lawful attorney and duly
authorized agent for acceptance of service of legal process of the Co-Issuers. 
The Co-Issuers agree that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.

 

14.11.                COUNTERPARTS

 

This instrument 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.

 

14.12.                WAIVER OF JURY TRIAL

 

EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDING.  Each
party hereby (i) certifies that no representative, agent or attorney of the
other has represented, expressly or otherwise, that the other would not, in the
event of a Proceeding, seek to enforce the foregoing waiver and
(ii) acknowledges that it has been induced to enter into this Indenture by,
among other things, the mutual waivers and certifications in this paragraph.

 

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14.13.                JUDGMENT CURRENCY

 

This is an international financing transaction in which the specification of
Dollars (the Specified Currency), and the specification of the place of payment,
as the case may be (the Specified Place), is of the essence, and the Specified
Currency shall be the currency of account in all events relating to payments of
or on the Rated Notes.  The payment obligations of the Co-Issuers under this
Indenture and the Rated Notes shall not be discharged by an amount paid in
another currency or in another place, whether pursuant to a judgment or
otherwise, to the extent that the amount so paid on conversion to the Specified
Currency and transfer to the Specified Place under normal banking procedures
does not yield the amount of the Specified Currency at the Specified Place.  If
for the purpose of obtaining judgment in any court it is necessary to convert a
sum due hereunder or the Rated Notes in the Specified Currency into another
currency (the Second Currency), the rate of exchange which shall be applied
shall be that at which in accordance with normal banking procedures the Trustee
could purchase the Specified Currency with the Second Currency on the Business
Day next preceding that on which such judgment is rendered.  The obligation of
the Co-Issuers in respect of any such sum due from the Co-Issuers hereunder
shall, notwithstanding the rate of exchange actually applied in rendering such
judgment, be discharged only to the extent that on the Business Day following
receipt by the Trustee of any sum adjudged to be due hereunder or under the
Rated Notes in the Second Currency the Trustee may in accordance with normal
banking procedures purchase and transfer to the Specified Place the Specified
Currency with the amount of the Second Currency so adjudged to be due; and the
Co-Issuers hereby, as a separate obligation and notwithstanding any such
judgment (but subject to the Priority of Payments as if such separate obligation
in respect of each Class of Rated Notes constituted additional principal owing
in respect of such Class of Rated Notes), agree to indemnify the Trustee and
each Rated Noteholder against, and to pay the Trustee or such Rated Noteholder,
as the case may be, on demand in the Specified Currency, any difference between
the sum originally due to the Trustee or such Rated Noteholder, as the case may
be, in the Specified Currency and the amount of the Specified Currency so
purchased and transferred.

 

14.14.                CONFIDENTIAL TREATMENT OF DOCUMENTS

 

Except as otherwise provided in this Indenture or as required by law or as
required to maintain the listing of the Class A Notes, Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes, the Class F Notes and the
Class G Notes on the Irish Stock Exchange, this Indenture and any Hedge
Agreement shall be treated by the Trustee and the Collateral Manager as
confidential.  The Trustee shall provide a copy of this Indenture to the PAA
Issued Note Paying Agent and to any Holder of a beneficial interest in any Rated
Note upon written request therefor certifying that it is such a Holder.

 

ARTICLE XV

 

Assignment of Agreements, Etc.

 

15.1.                      ASSIGNMENT

 

The Issuer, in furtherance of the covenants of this Indenture and as security
for the Rated Notes and amounts payable to the Rated Noteholders hereunder and
the performance and observance of the provisions hereof, hereby assigns,
transfers, conveys and sets over to the Trustee, for the benefit of the Secured
Parties, all of the Issuer’s estate, right, title and interest in, to and under
the Corporate Services Agreement, the Collateral Management Agreement, the Asset
Transfer Agreement and any Hedge Agreement into which the Issuer may enter,
including (i) the right to give all notices, consents and releases thereunder,
(ii) the right to give all notices of termination, including the commencement,
conduct and consummation of proceedings at law or in equity, (iii) the right to
receive all notices, accountings, consents, releases and statements thereunder
and (iv) the right to do any and all other things whatsoever

 

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that the Issuer is or may be entitled to do thereunder; provided that nothing
herein shall obligate the Trustee to determine independently whether “cause”
exists for the removal of the Collateral Manager pursuant to the Collateral
Management Agreement.  For the avoidance of doubt, in no event shall the Trustee
be required to perform the obligations of the Collateral Manager under the
Collateral Management Agreement.

 

15.2.                      NO IMPAIRMENT

 

The assignment made hereby is executed as collateral security, and the execution
and delivery hereby shall not in any way impair or diminish the obligations of
the Issuer under the provisions of the Corporate Services Agreement or, the
Collateral Management Agreement.

 

15.3.                      TERMINATION, ETC.

 

Upon the redemption and cancellation of the Rated Notes and the payment of all
other Secured Obligations and the release of the Collateral from the lien of
this Indenture, this assignment and all rights herein assigned to the Trustee
for the benefit of the Secured Parties shall cease and terminate and all the
estate, right, title and interest of the Trustee in, to and under the Corporate
Services Agreement and the Collateral Management Agreement shall revert to the
Issuer and no further instrument or act shall be necessary to evidence such
termination and reversion.

 

15.4.                      ISSUER AGREEMENTS, ETC

 

The Issuer represents that it has not executed any other assignment of the
Collateral Administration Agreement or the Collateral Management Agreement.  The
Issuer agrees that this assignment is irrevocable, and that it will not take any
action which is inconsistent with this assignment or make any other assignment
inconsistent herewith.  The Issuer will, from time to time upon the request of
the Trustee, execute all instruments of further assurance and all such
supplemental instruments with respect to this assignment as the Trustee may
reasonably specify.

 

ARTICLE XVI

 

HEDGE AGREEMENTS

 

16.1.                      HEDGE AGREEMENTS

 

(a)                                  The Issuer may, after the Closing Date,
enter into one or more Hedge Agreements (including one or more Deemed Floating
Asset Hedges) with Hedge Counterparties as the Issuer may elect in its sole
discretion, in each case (i) subject to Rating Agency Confirmation and (ii) 
with the delivery to the Issuer of an Opinion of Counsel to the Hedge
Counterparty; provided that the Issuer will not be required to obtain Rating
Agency Confirmation in connection with entering into any Hedge Agreements
(including, without limitation, any Deemed Floating Asset Hedges) which are
Form-Approved Hedge Agreements with a Hedge Counterparty that satisfies the
Hedge Counterparty Ratings Requirement.

 

(b)                                 The Issuer shall assign such Hedge Agreement
to the Trustee pursuant to Article 15 hereof.

 

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(c)                                  The Trustee shall, on behalf of the Issuer
and in accordance with the Note Valuation Report, pay amounts due to any Hedge
Counterparty under any Hedge Agreement on any Payment Date in accordance with
Section 11.1.

 

(d)                                 Upon the entry of the Issuer into a Hedge
Agreement, the Trustee shall cause the Custodian to establish a segregated,
non-interest bearing Securities Account which shall be designated as a “Hedge
Counterparty Collateral Account” with respect to the Hedge Counterparty in
respect of which the Trustee shall be the Entitlement Holder and which the
Trustee shall hold in trust for the benefit of the Secured Parties.  The Trustee
shall deposit all collateral received from such Hedge Counterparty under the
related Hedge Agreement in such Hedge Counterparty Collateral Account.  Any and
all funds at any time on deposit in, or otherwise standing to the credit of,
each Hedge Counterparty Collateral Account shall be held in trust by the Trustee
for the benefit of the Secured Parties.  The only permitted withdrawal from or
application of funds on deposit in, or otherwise standing to the credit of, each
Hedge Counterparty Collateral Account shall be (i) for application to
obligations of the related Hedge Counterparty to the Issuer under the Hedge
Agreement that are not paid when due (whether when scheduled or upon early
termination) or (ii) to return collateral to the related Hedge Counterparty when
and as required by the related Hedge Agreement in each case upon the direction
of the Issuer pursuant to an Issuer Order.  No assets credited to any Hedge
Counterparty Collateral Account shall be considered an asset of the Issuer for
purposes of any of the Coverage Tests unless and until the Issuer or the Trustee
on its behalf is entitled to foreclose on such assets in accordance with the
terms of the Hedge Agreement.

 

(e)                                  Upon its receipt of notice that the Hedge
Counterparty has defaulted in the payment when due of its obligations to the
Issuer under any Hedge Agreement (or, if earlier, when the Trustee becomes aware
of such default) the Trustee shall make a demand on such Hedge Counterparty, or
any guarantor, if applicable, demanding payment forthwith.  The Trustee shall
give notice to the Rated Noteholders and each Rating Agency upon the continuance
of the failure by such Hedge Counterparty to perform its obligations for two
Business Days following a demand made by the Trustee on such Hedge Counterparty.

 

(f)                                    If at any time any Hedge Agreement
becomes subject to early termination due to the occurrence of an “event of
default” or a “termination event” (each as defined in the related Hedge
Agreement) solely attributable to the related Hedge Counterparty or other
comparable event, the Issuer and the Trustee shall take such actions (following
the expiration of any applicable grace period) to enforce the rights of the
Issuer and the Trustee thereunder as may be permitted by the terms of such Hedge
Agreement and consistent with the terms hereof, and shall apply any proceeds of
any such actions (including the proceeds of the liquidation of any collateral
pledged by the related Hedge Counterparty) to enter into a replacement Hedge
Agreement on substantially identical terms or on such other terms as to which
each Rating Agency shall have provided a Rating Agency Confirmation with a
substitute Hedge Counterparty with respect to which the Hedge Counterparty
Ratings Requirement is satisfied and each Rating Agency shall have provided a
Rating Agency Confirmation.  If the Issuer is the sole non-Affected Party or the
sole non-Defaulting Party with respect to such “event of default” or
“termination event”, the Issuer will (with the assistance of the Collateral
Manager) obtain quotations with respect to such replacement Hedge Agreement from
five prospective counterparties Independent from the Issuer, the Collateral
Manager and each other that satisfy the Hedge Counterparty Ratings Requirement
and with respect to which a Rating Agency Confirmation shall have been obtained
and enter into a replacement Hedge

 

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Agreement with the prospective counterparty that provides the lowest quotation
(if the Issuer is required to make a payment to such replacement counterparty)
or the highest quotation (if such replacement counterparty is required to make a
payment to the Issuer).

 

(g)                                 The Issuer shall notify each Rating Agency
if at any time any Hedge Counterparty is required to post collateral or assign
its rights and obligations in and under the related Hedge Agreement.

 

(h)                                 No Hedge Agreement may be amended or
modified at any time other than to effect the appointment of a substitute Hedge
Counterparty or to effect a modification which is of a formal, minor or
technical nature or is to correct a manifest error and which, in the opinion of
the Trustee (based upon an Opinion of Counsel) would not have a material adverse
effect on the interests of Holders of the Rated Notes or of Holders of any
Class or Classes of Rated Notes or the Holders of the Income Notes unless the
Issuer has obtained Rating Agency Confirmation with respect to such amendment or
modification.  The Trustee shall provide the Collateral Manager and the Rating
Agencies with a copy of any such amendment or modification within 10 Business
Days before effecting such modification.

 

(i)                                     The Issuer shall enter into a Hedge
Agreement only if the payments from the Hedge Counterparty thereunder are not
subject to withholding tax or if the related Hedge Counterparty shall be
required in accordance with the terms of the related Hedge Agreement to pay
additional amounts to the Issuer sufficient to cover any withholding tax due on
payments made by such Hedge Counterparty to the Issuer under such Hedge
Agreement, subject to the Issuer making customary payee tax representations and
providing customary tax documentation.  At any time at which the Issuer is not a
Qualified REIT Subsidiary, the Issuer shall not enter into any Hedge Agreement
the acquisition (including the manner of acquisition), ownership, enforcement or
disposition of which would subject the Issuer to tax on a net income basis in
any jurisdiction outside the Issuer’s jurisdiction of incorporation.

 

(j)                                     The Issuer will not terminate any Hedge
Agreement without receiving Rating Agency Confirmation with respect to such
termination.

 

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IN WITNESS WHEREOF, WE HAVE SET OUR HANDS AS OF THE DATE FIRST ABOVE WRITTEN.

 

Executed as a Deed by

N-STAR REL CDO IV LTD.,

as Issuer

 

 

By:

/s/ Daniel R. Gilbert

 

 

Name: Daniel R. Gilbert

 

Title:   Executive Vice President

 

 

N-STAR REL CDO IV CORP.,

as Co-Issuer

 

 

By:

/s/ Daniel R. Gilbert

 

 

Name: Daniel R. Gilbert

 

Title:   Executive Vice President

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

 

 

By:

/s/ Randall S. Reider

 

 

Name: Randall S. Reider

 

Title:   Vice President

 

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CONFIRMED AND ACCEPTED,

as of the date first above written:

 

NS ADVISORS, LLC,

as Advancing Agent

 

 

By:

/s/ Daniel R. Gilbert

 

Name:

Daniel R. Gilbert

Title:

Managing Director

 

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