Exhibit 10.17

 

EXECUTION COPY

 

Dated as of June 22, 2006

 

 

N-STAR REAL ESTATE CDO VII LTD.,
as Issuer

 

 

LASALLE 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

2

 

1.1.

Definitions

2

 

1.2.

Assumptions as to Collateral Debt Securities, Fees, Etc.

57

 

1.3.

Rules of Construction

59

 

 

ARTICLE II  The Rated Notes

60

 

2.1.

Forms Generally

60

 

2.2.

Authorized Amount; Applicable Periodic Interest Rate; Stated

 

 

 

Maturity Date; Denominations

61

 

2.3.

Execution, Authentication, Delivery and Dating

62

 

2.4.

Registration, Transfer and Exchange of Rated Notes

62

 

2.5.

Mutilated, Defaced, Destroyed, Lost or Stolen Rated Notes

70

 

2.6.

Payment of Principal and Interest; Rights Preserved

71

 

 

ARTICLE III  Conditions Precedent

75

 

3.1.

General Provisions

75

 

3.2.

Security for the Rated Notes

76

 

3.3.

Custodianship; Transfer of Collateral Debt Securities and Eligible

 

 

 

Investments

78

 

 

ARTICLE IV  Satisfaction and Discharge

81

 

4.1.

Satisfaction and Discharge of Indenture

81

 

4.2.

Application of Trust Money

82

 

4.3.

Repayment of Funds Held by Note Paying Agent

83

 

 

ARTICLE V  Events of Default; Remedies

83

 

5.1.

Events of Default

83

 

5.2.

Acceleration of Maturity; Rescission and Annulment

84

 

5.3.

Collection of Indebtedness and Suits for Enforcement by Trustee

85

 

5.4.

Remedies

87

 

5.5.

Preservation of Collateral

89

 

5.6.

Trustee May Enforce Claims Without Possession

91

 

5.7.

Application of Funds Collected

91

 

5.8.

Limitation on Suits

91

 

5.9.

Unconditional Rights of Rated Noteholders to Receive Principal and

 

 

 

Interest

92

 

5.10.

Restoration of Rights and Remedies

92

 

5.11.

Rights and Remedies Cumulative

92

 

5.12.

Delay or Omission Not Waiver

92

 

5.13.

Control by Controlling Class

93

 

5.14.

Waiver of Past Defaults

93

 

5.15.

Undertaking for Costs

94

 

5.16.

Waiver of Stay or Extension Laws

94

 

5.17.

Sale of Collateral

94

 

5.18.

Action on the Rated Notes

95

 

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TABLE OF CONTENTS

(continued)

 

Section

 

Page

 

 

 

 

ARTICLE VI  The Trustee

95

 

6.1.

Certain Duties and Responsibilities

95

 

6.2.

Notice of Default

97

 

6.3.

Certain Rights of Trustee

97

 

6.4.

Authenticating Agents

99

 

6.5.

Not Responsible for Recitals or Issuance of Rated Notes

99

 

6.6.

May Hold Rated Notes

100

 

6.7.

Funds Held in Trust

100

 

6.8.

Compensation and Reimbursement

100

 

6.9.

Corporate Trustee Required; Eligibility

101

 

6.10.

Resignation and Removal; Appointment of Successor

102

 

6.11.

Acceptance of Appointment by Successor

103

 

6.12.

Merger, Conversion, Consolidation or Succession to Business of

 

 

 

Trustee

103

 

6.13.

Co-Trustees

103

 

6.14.

Certain Duties Related to Delayed Payment of Proceeds; Other

 

 

 

Notices

104

 

6.15.

Representations and Warranties of the Bank

105

 

6.16.

Exchange Offers, Proposed Amendments etc.

105

 

6.17.

Fiduciary for Rated Noteholders Only; Agent For Other Secured

 

 

 

Parties

106

 

6.18.

Withholding

106

 

 

ARTICLE VII  Covenants

107

 

7.1.

Payment of Principal and Interest

107

 

7.2.

Maintenance of Office or Agency

107

 

7.3.

Funds for Rated Note Payments to be Held in Trust

108

 

7.4.

Existence of Issuer

109

 

7.5.

Protection of Collateral

110

 

7.6.

Opinions as to Collateral

111

 

7.7.

Performance of Obligations

111

 

7.8.

Negative Covenants

113

 

7.9.

Statement as to Compliance

114

 

7.10.

Issuer May Consolidate, Etc., Only on Certain Terms

114

 

7.11.

Successor Substituted

116

 

7.12.

No Other Business

116

 

7.13.

Change or Withdrawal of Rating

117

 

7.14.

Reporting

117

 

7.15.

Rated Note Calculation Agent

117

 

7.16.

Listing

118

 

7.17.

Amendment of Certain Documents

118

 

7.18.

Purchase of Collateral; Information Regarding Collateral; Rating

 

 

 

Confirmation

118

 

 

ARTICLE VIII  Supplemental Indentures

120

 

8.1.

Supplemental Indentures Without Consent of Rated Noteholders

120

 

8.2.

Supplemental Indentures with Consent of Rated Noteholders

122

 

8.3.

Execution of Supplemental Indentures

124

 

8.4.

Effect of Supplemental Indentures

125

 

8.5.

Reference in Rated Notes to Supplemental Indentures

125

 

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TABLE OF CONTENTS

(continued)

 

Section

 

Page

 

 

 

 

ARTICLE IX  Redemption of Rated Notes

125

 

9.1.

Redemption of Rated Notes

125

 

9.2.

Redemption Procedures; Auction

126

 

9.3.

Record Date; Notice to Trustee of Redemption

127

 

9.4.

Notice of Redemption

128

 

9.5.

Notice of Withdrawal

128

 

9.6.

Rated Notes Payable on Redemption Date

129

 

9.7.

Special Amortization

129

 

 

 

 

ARTICLE X  Accounts, Accountings and Releases

130

 

10.1.

Collection of Funds

130

 

10.2.

General Provisions Applicable to Accounts

130

 

10.3.

Collateral Account

131

 

10.4.

Uninvested Proceeds Account

131

 

10.5.

Collection Account

132

 

10.6.

Expense Reserve Account

132

 

10.7.

Non-Monthly Pay Asset Interest Reserve Account

133

 

10.8.

Ramp-Up Interest Reserve Account

133

 

10.9.

Payment Account

133

 

10.10.

Derivative Contract Counterparty Accounts

134

 

10.11.

Derivative Contract Issuer Account

135

 

10.12.

Reports by Trustee

136

 

10.13.

Accountings

136

 

10.14.

Release of Securities

141

 

10.15.

Reports by Independent Accountants

142

 

10.16.

Reports to Rating Agencies

143

 

10.17.

Tax Matters

143

 

10.18.

Tax Information

143

 

 

 

 

ARTICLE XI  Application of Monies

144

 

11.1.

Disbursements of Funds from Payment Account; Priority of Payments

144

 

 

 

 

ARTICLE XII  Purchase and Sale of Collateral Debt Securities

154

 

12.1.

Sale of Collateral Debt Securities

154

 

12.2.

Portfolio Characteristics

156

 

12.3.

Conditions Applicable to all Transactions Involving Sale or Grant

159

 

 

 

 

ARTICLE XIII  Secured Parties’ Relations

160

 

13.1.

Subordination

160

 

13.2.

Standard of Conduct

164

 

 

 

 

ARTICLE XIV  Miscellaneous

164

 

14.1.

Form of Documents Delivered to Trustee

164

 

14.2.

Acts of Rated Noteholders

165

 

14.3.

Notices, Etc., to Trustee, the Issuer and the Rating Agencies

165

 

14.4.

Notices and Reports to Rated Noteholders; Waiver

167

 

14.5.

Effect of Headings and Table of Contents

167

 

14.6.

Successors and Assigns

167

 

14.7.

Severability

168

 

14.8.

Benefits of Indenture

168

 

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TABLE OF CONTENTS

(continued)

 

Section

 

Page

 

 

 

 

 

14.9.

Governing Law

168

 

14.10.

Submission to Jurisdiction

168

 

14.11.

Counterparts

168

 

14.12.

Waiver of Jury Trial

168

 

14.13.

Judgment Currency

169

 

14.14.

Confidential Treatment of Documents

169

 

 

 

 

ARTICLE XV  Assignment of Agreements, Etc.

169

 

15.1.

Assignment

169

 

15.2.

No Impairment

170

 

15.3.

Termination, Etc.

170

 

15.4.

Issuer Agreements, Etc.

170

 

 

 

 

ARTICLE XVI  Hedge Agreement

170

 

16.1.

 Hedge Agreements

170

 

Schedules

 

Schedule A

Schedule of Collateral Debt Securities as of the Closing Date

Schedule B

LIBOR Formula

Schedule C

Schedule of Temporary Ramp-Up Securities

Schedule D-1

S&P’s Recovery Rate Matrix

Schedule D-2

Moody’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

Fitch Industry Classification Groups

 

 

Exhibits

 

Exhibit A-1

Form of Regulation S Global Note

Exhibit A-2

Form of Rule 144A Global Note

Exhibit B-1

Form of Definitive Class E Note

Exhibit C-1

Form of Rule 144A Transfer Certificate

Exhibit C-2

Form of Regulation S Transfer Certificate

Exhibit C-3

Form of Definitive Class E Transfer Certificate

Exhibit D

Form of Funding Certificate

Exhibit E-1

Form of Opinion of Clifford Chance US 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

Form of Opinion of internal counsel to Bank of America, N.A.

Exhibit I

Rated Noteholder’s Certificate

 

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THIS INDENTURE dated as of June 22, 2006 among:

 

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

 

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

 

PRELIMINARY STATEMENT

 

The Issuer is duly authorized to execute and deliver this Indenture to provide
for the issuance of the Rated Notes as provided in this Indenture. All covenants
and agreements made by the Issuer herein are for the benefit and security of the
Secured Parties. The Issuer is 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 Issuer 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 Debt
Securities listed on Schedule A, the Temporary Ramp-Up Securities listed on
Schedule C, the Collateral Debt Securities acquired after the Closing Date and
any Equity Securities 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 Collateral Sub-Account established therein),
each Derivative Contract Issuer Account, the Ramp-Up Interest Reserve Account,
the Non-Monthly Pay Asset Interest Reserve Account, the Payment Account, the
Expense Reserve Account (including each Collateral Sub-Account), the Collateral
Account, the Uninvested Proceeds 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 Rated Notes equally and ratably without prejudice, priority
or distinction between any Rated Note and any other Rated 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 Rated
Notes and under the 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, the Hedge Agreement and the Collateral Management Agreement, all as
provided in this Indenture (collectively, the Secured Obligations).

 

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

 

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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.

 

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

 

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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 Ramp-Up Interest Reserve Account, the
Non-Monthly Pay Asset Interest Reserve Account the Expense Reserve Account
(including each Collateral Sub-Account established therein), each Derivative
Contract Issuer Account, if any, and each Derivative Contract Counterparty
Account.

 

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 10.14(a), which may be the firm of Independent accountants that reviews
or performs procedures with respect to the financial reports prepared by the
Issuer.

 

Accountholder means the holder of the Accounts pursuant to the Account Control
Agreement.

 

Act has the meanings specified in Section 14.2.

 

Actual Rating means, with respect to any Collateral Debt Security or Eligible
Investment, the actual expressly monitored outstanding public rating assigned by
a Rating Agency without reference to any other rating by another Rating Agency.

 

Administrative Expenses means amounts (including any applicable indemnities) due
from, or accrued for, the account of the Issuer with respect to any Payment Date
to (i) the Trustee for Trustee Expenses; (ii) the Income Note Paying Agent
pursuant to the Income Note Paying Agency Agreement; (iii) the Collateral
Administrator pursuant to the Collateral Administration Agreement; (iv) the
independent accountants, agents and counsel of the Issuer 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); and (ix) 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 Income
Note Paying Agency Agreement, the Collateral Management Agreement and the Notes;
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.

 

Affected Party has the meaning given to such term in the applicable Hedge
Agreement or Synthetic Security.

 

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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 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, (iii) the Trustee
Expenses and other expenses (including other Administrative Expenses) of the
Issuer (including the fees to be paid to the Irish Stock Exchange), (iv) taxes
payable by the Issuer, if any, and (v) all other expenses of the Issuer
(including, without limitation, Administrative Expenses) payable on such Payment
Date pursuant to Section 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 D Cumulative Applicable Periodic Interest
Shortfall Amount with respect to such Class D Notes at such time and (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.

 

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 and (v) with respect to the Class E Notes, the applicable
Class E Note Interest Rate.

 

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

 

Approved Replacement Person means a replacement or additional Key Manager
appointed in accordance with the procedures described in Section 16 of the
Collateral Management Agreement.

 

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

 

4

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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.

 

Assumed Reinvestment Rate means, with respect to any Account or fund securing
the Rated Notes, the greater of (i) LIBOR minus 0.50% 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 Debt Securities 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 Rated Notes or any Class of the
Rated Notes, the Person designated by the Trustee, if any, to authenticate such
Rated Notes on behalf of the Trustee pursuant to Section 6.4.

 

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 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,
(iii) 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 and (iv) with
respect to the Income Note Paying Agent, any officer who is authorized to act
for the Income Note Paying Agent in matters relating to, and binding upon, the
Income Note Paying 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 Debt
Security (other than any Trust Preferred Security), 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 Debt Security (assuming that (1) no Collateral Debt Securities
default or are sold, (2) any optional redemption of the Collateral Debt
Securities occurs in accordance with their respective terms and (3) any
extension of the Real Estate Interests is exercised) 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 Debt
Security. The Average Life of any Trust Preferred Security on any Calculation
Date occurring on or after the Closing Date, to and including the Payment Date
in June 2018, shall be the call date of such Trust Preferred Security or, in the
event the call is not exercised on or prior to such call date, the excess of 20
years over the period of time from the Closing Date of such Trust Preferred
Security to the date such

 

5

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Trust Preferred Security is acquired by the Issuer (rounded to the nearest 0.5
year) and for any Calculation Date thereafter shall be reduced by 0.5 years for
every six month period thereafter.

 

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 LaSalle 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.

 

BAS means Banc of America Securities LLC.

 

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 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 Rated 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 Notes) or the Income Note Register (in the
case of the Income Notes)); provided that the Trustee and the Income 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 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.

 

Board of Directors means, with respect to the Issuer, the directors of the
Issuer duly appointed in accordance with the Articles.

 

Board Resolution means, with respect to the Issuer, a resolution of the Board of
Directors of the Issuer.

 

Business Day means any day that is not a Saturday, Sunday or other day on which
commercial banking institutions in New York, New York, Chicago, Illinois or any
other city in which the Corporate Trust Office of the Trustee 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.”

 

6

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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).

 

Cashflow Hedge Agreement means any Hedge Agreement entered into for the purpose
of protecting the Issuer against a cashflow timing mismatch with respect to one
or more Collateral Debt Securities.

 

CDO of CDO Securities means securities that entitle the Holders thereof to
receive payments that depend on the cash flow from a portfolio of assets, the
majority in principal amount of which are collateralized debt obligations.

 

CDS Principal Balance means, prior to the Effective Date, not less than
U.S.$467,500,000, and thereafter, the aggregate Principal Balance of
(i) Collateral Debt Securities included in the Collateral (including any
Collateral Debt Securities that have become Defaulted Securities or Written Down
Securities) and (ii) Eligible Investments, in each case, purchased with the
proceeds of the issuance of the Notes or thereafter with Collateral Principal
Collections.

 

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

 

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

 

Class means each of the classes comprised of the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes, the Class E Notes and the Income
Notes.

 

Class A Note Break-Even Default Rate means the maximum percentage of defaults
that the portfolio of Collateral Debt Securities can sustain, as determined 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 the Class A-1 Note Interest Rate, the Class A-2
Note Interest Rate or the Class A-3 Note Interest Rate, as applicable.

 

Class A Note Scenario Default Rate means an estimate of the cumulative default
rate for the portfolio of Collateral Debt Securities 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 Class A-1 Notes, the Class A-2 Notes and the Class A-3
Notes.

 

Class A-1 Note Interest Rate means LIBOR plus 0.27%.

 

Class A-1 Notes means the U.S.$338,250,000 aggregate principal amount of
Class A-1 Floating Rate Notes due 2051.

 

7

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Class A-2 Note Interest Rate means LIBOR plus 0.32%.

 

Class A-2 Notes means the U.S.$54,250,000 aggregate principal amount of
Class A-2 Floating Rate Notes due 2051.

 

Class A-3 Note Interest Rate means LIBOR plus 0.33%.

 

Class A-3 Notes means the U.S.$50,000,000 aggregate principal amount of
Class A-3 Floating Rate Notes due 2051.

 

Class A/B Coverage Tests means the Class A/B Interest Coverage Test and the
Class A/B Principal Coverage Test.

 

Class A/B Interest Coverage Ratio means, on any Measurement Date, the ratio
(expressed as a percentage) of (i) to (ii), where (i) is equal to the Interest
Coverage Amount as of such Measurement Date and where (ii) is the sum of the
Periodic Interest for the Class A Notes and the Class B 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 Non-Monthly Pay Asset Interest Reserve Account for the Payment Date
immediately following such Measurement Date.

 

Class A/B Interest Coverage Test means, for so long as any Class A Notes or
Class B Notes remain Outstanding, a test that is satisfied as of any Measurement
Date if the Class A/B Interest Coverage Ratio as of such date of determination
is equal to or greater than 115.0%; provided that for any Measurement Date
occurring on the Effective Date through the Payment Date immediately subsequent
to the Effective Date, the Class A/B Interest Coverage Test will be satisfied if
Class A/B Interest Coverage Ratio is equal to or greater than 100%.

 

Class A/B Principal Coverage Ratio means, on any Measurement Date, the ratio
(expressed as a percentage) of (i) to (ii), where (i) is the Principal Coverage
Amount as of such Measurement Date and (ii) is the sum of the Aggregate
Outstanding Amount of the Class A Notes and the Class B Notes Outstanding as of
such Measurement Date.

 

Class A/B Principal Coverage Test means, for so long as any Class A Notes or
Class B Notes remain Outstanding, a test satisfied on any Measurement Date if
the Class A/B Principal Coverage Ratio as of such date of determination is equal
to or greater than 106.3%.

 

Class B Note Break-Even Default Rate means the maximum percentage of defaults
that the portfolio of Collateral Debt Securities can sustain, as determined 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 Date 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 0.38%.

 

Class B Note Scenario Default Rate means an estimate of the cumulative default
rate for the portfolio of Collateral Debt Securities 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.

 

8

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Class B Notes means the U.S.$30,300,000 aggregate principal amount of Class B
Floating Rate Notes due 2051.

 

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 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 Class C Interest Coverage Test and the Class C
Principal Coverage Test.

 

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 Interest Coverage Ratio means on any Measurement Date, the ratio
(expressed as a percentage) of (i) to (ii), where (i) is equal to the Interest
Coverage Amount as of such Measurement Date and where (ii) is the sum of the
Periodic Interest for the Class A Notes, the Class B Notes and the Class C 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 Non-Monthly Pay Asset Interest Reserve Account for the
Payment Date immediately following such Measurement Date.

 

Class C Interest Coverage Test means, for so long as any Class A Notes, Class B
Notes or Class C Notes are Outstanding, a test that is satisfied as of any
Measurement Date when the Class C Interest Coverage Ratio is equal to or greater
than 110.0%; provided that for any Measurement Date occurring on the Effective
Date through the Payment Date immediately subsequent to the Effective Date, the
Class C Interest Coverage Test will be satisfied if Class C Interest Coverage
Ratio is equal to or greater than 100%.

 

Class C Note Break-Even Default Rate means the maximum percentage of defaults
that the portfolio of Collateral Debt Securities can sustain, as determined 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 Date and the ultimate 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 0.60%.

 

Class C Note Scenario Default Rate means an estimate of the cumulative default
rate for the portfolio of Collateral Debt Securities 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.$22,000,000 aggregate principal amount of Class C
Deferrable Floating Rate Notes due 2051.

 

9

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Class C Principal Coverage Ratio means, on any Measurement Date, the ratio
(expressed as a percentage) of (i) to (ii), where (i) is the Principal Coverage
Amount as of such Measurement Date and (ii) is the sum of the Aggregate
Outstanding Amount of the Class A Notes, the Class B Notes and the Class C Notes
Outstanding as of such Measurement Date.

 

Class C Principal Coverage Test means, for so long as any Class A Notes, Class B
Notes or Class C Notes remain Outstanding, a test satisfied on any Measurement
Date if the Class C Principal Coverage Ratio as of such Measurement Date is
equal to or greater than 104.1%.

 

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 Class D Interest Coverage Test and the Class D
Principal Coverage Test.

 

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-FL Note Interest Rate means LIBOR plus 1.40%.

 

Class D-FX Note Interest Rate means 6.913%.

 

Class D-FL Notes means the U.S.$14,000,000 aggregate principal amount of Class D
Deferrable Floating Rate Notes due 2051.

 

Class D-FX Notes means the U.S.$2,000,000 aggregate principal amount of Class D
Deferrable Fixed Rate Notes due 2051.

 

Class D Interest Coverage Ratio means, on any Measurement Date, the ratio
(expressed as a percentage) of (i) to (ii), where (i) is equal to the Interest
Coverage Amount as of such Measurement Date and where (ii) is the sum of the
Periodic Interest for the Class A Notes, the Class B Notes, the Class C Notes
and the Class D 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 Non-Monthly Pay Asset
Interest Reserve Account for the Payment Date immediately following such
Measurement Date.

 

Class D Interest Coverage Test means, for so long as any Class A Notes, Class B
Notes, Class C Notes or Class D Notes are Outstanding, a test that is satisfied
as of any Measurement Date when the Class D Interest Coverage Ratio is equal to
or greater than 105.0%; provided that for any Measurement Date occurring on the
Effective Date through the Payment Date immediately subsequent to the Effective
Date, the Class D Interest Coverage Test will be satisfied if Class D Interest
Coverage Ratio is equal to or greater than 100%.

 

Class D Note Break-Even Default Rate means the maximum percentage of defaults
that the portfolio of Collateral Debt Securities can sustain, as determined by
S&P by application of the S&P CDO Monitor,

 

10

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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 Date
and the ultimate payment of interest on such Class D Notes.

 

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 Scenario Default Rate means an estimate of the cumulative default
rate for the portfolio of Collateral Debt Securities 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 collectively the Class D-FL Notes and the Class D-FX Notes.

 

Class D Principal Coverage Ratio means, on any Measurement Date, the ratio
(expressed as a percentage) of (i) to (ii), where (i) is the Principal Coverage
Amount as of such Measurement Date and (ii) is the sum of the Aggregate
Outstanding Amount of the Class A Notes, the Class B Notes, the Class C Notes
and the Class D Notes Outstanding as of such Measurement Date.

 

Class D Principal Coverage Test means a test that is satisfied as of any date of
determination when the Class D Principal Coverage Ratio is equal to or exceeds
102.6%.

 

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 Class E Interest Coverage Test and the Class E
Principal Coverage Test.

 

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 Interest Coverage Ratio means, on any Measurement Date, the ratio
(expressed as a percentage) of (i) to (ii), where (i) is equal to the Interest
Coverage Amount as of such Measurement Date and where (ii) is the sum of the
Periodic Interest for the Class A Notes, the Class B Notes, the Class C Notes,
the Class D Notes and the Class E 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
Non-Monthly Pay Asset Interest Reserve Account for the Payment Date immediately
following such Measurement Date.

 

Class E Interest Coverage Test means, for so long as any Class A Notes, Class B
Notes, Class C Notes, Class D Notes or Class E Notes are Outstanding, a test
that is satisfied as of any Measurement Date when the Class E Interest Coverage
Ratio is equal to or greater than 102.5%; provided that for any Measurement Date
occurring on the Effective Date through the Payment Date immediately subsequent
to the Effective Date, the Class E Interest Coverage Test will be satisfied if
Class E Interest Coverage Ratio is equal to or greater than 100%.

 

11

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Class E Note Break-Even Default Rate means the maximum percentage of defaults
that the portfolio of Collateral Debt Securities 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 Date and the ultimate 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 8.232%.

 

Class E Note Scenario Default Rate means an estimate of the cumulative default
rate for the portfolio of Collateral Debt Securities 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.$16,200,000 aggregate principal amount of Class E
Deferrable Fixed Rate Notes due 2051.

 

Class E Principal Coverage Ratio means, on any Measurement Date, the ratio
(expressed as a percentage) of (i) to (ii), where (i) is the Principal Coverage
Amount as of such Measurement Date and (ii) is the sum of the Aggregate
Outstanding Amount of the Class A Notes, the Class B Notes, the Class C Notes,
the Class D Notes and the Class E Notes Outstanding as of such Measurement Date.

 

Class E Principal Coverage Test means a test that is satisfied as of any date of
determination when the Class E Principal Coverage Ratio is equal to or exceeds
101.8%.

 

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 22, 2006.

 

CMBS Conduit Securities means Commercial Mortgage Backed Securities (a) issued
by a single-seller or multi-seller conduit under which the holders of such
Commercial Mortgage Backed Securities have recourse to a specified pool of
assets (but not other assets originated by the conduit that support payments on
other series of securities) and (b) that entitle the holders thereof to receive
payments that depend (except for rights or other assets designed to assure the
servicing or timely distribution of proceeds to holders of the Commercial
Mortgage Backed Securities) on the cash flow from a pool of commercial mortgage
loans.

 

CMBS Credit Tenant Lease Securities means Commercial Mortgage Backed Securities
(other than CMBS Large Loan Securities and CMBS Conduit 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 leased to corporate tenants (or on the cash flow from
such leases); 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 CMBS Securities such as a financial
guaranty insurance policy.

 

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CMBS Franchise Securities means Commercial Mortgage Backed Securities that
entitle the holders thereof to receive payments that depend (except for rights
or other assets designed to assure the servicing or timely distribution of
proceeds to holders of such Commercial Mortgage Backed Securities) on the cash
flow from (a) a pool of franchise loans made to operators of franchises that
provide oil, gasoline, restaurant or food services and provide other services
related thereto and (b) leases or subleases of equipment to such operators for
use in the provision of such goods and services.

 

CMBS Large Loan Securities means Commercial Mortgage Backed Securities (other
than CMBS Conduit Securities) that entitle the holders thereof to receive
payments that depend (except for rights or other assets designed to assure the
servicing or timely distribution of proceeds to holders of the Commercial
Mortgage Backed Securities) on the cash flow from a commercial mortgage loan or
a small pool of commercial mortgage loans made to finance the acquisition or
improvement of real properties.

 

CMBS Re-REMIC Securities means any security that is secured directly by,
referenced to or representing ownership of, a pool consisting primarily of CMBS
Conduit Securities, other CMBS Securities or certificates representing a
beneficial interest therein, but not including any Synthetic Security. For the
avoidance of doubt, a CMBS Re-REMIC Security shall include any security backed
by more than one credit default swap or referencing more than one Reference
Obligation or a synthetic collateralized debt obligation or a synthetic
resecuritization that (in each case) references more than one CMBS Conduit
Security or other CMBS Security or certificates representing a beneficial
interest therein.

 

CMBS Securities means CMBS Conduit Securities, CMBS Franchise Securities, CMBS
Large Loan Securities, CMBS Single Borrower Securities, CMBS Re-REMIC Securities
or CMBS Credit Tenant Lease Securities, as the case may be.

 

CMBS Single Borrower Securities means CMBS Securities (other than CMBS Large
Loan Securities and CMBS Credit Tenant Lease Securities) that entitle the
holders thereof to receive payments that depend on the cash flow from one or
more loans with a single borrower or group of affiliated borrowers secured by
one or more properties; 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 CMBS Securities such as a
financial guaranty insurance policy.

 

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

 

Collateral has the meaning specified in the Granting Clauses.

 

Collateral Administration Agreement means the Collateral Administration
Agreement, dated June 22, 2006, 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 LaSalle 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 Assignment of Hedge Agreement means the collateral assignment of
Hedge Agreement, dated the date that the Issuer enters into the Hedge Agreement,
among the Issuer, the Trustee and the Initial Hedge Counterparty, and any other
Collateral Assignment of the Hedge Agreement in respect of any Hedge Agreement
entered into between the Issuer, the Trustee and a Hedge Counterparty after the
Closing Date.

 

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Collateral Concentration Limitations will be satisfied if, as of any Measurement
Date after the Effective Date, and after giving effect to each purchase of a
Collateral Debt Security, each of the following conditions (collectively, the
“Collateral Concentration Limitations”) is satisfied in the aggregate (or, in
the case of a Collateral Concentration Limitation not satisfied immediately
prior to such purchase, such purchase maintains or improves compliance with such
Collateral Concentration Limitation):

 

(i)                                   General Limitations

 

(a)                                  the aggregate Principal Balance of all
Collateral Debt Securities that are PIK Bonds does not exceed 6.0% of the CDS
Principal Balance;

 

(b)                                 the aggregate Principal Balance of all
Collateral Debt Securities that are Deemed Floating Rate Collateral Debt
Securities does not exceed 17.5% of the CDS Principal Balance;

 

(c)                                  the aggregate Principal Balance of all
Fixed Rate Collateral Debt Securities does not exceed 75.0% of the CDS Principal
Balance;

 

(d)                                 the aggregate Principal Balance of all
Collateral Debt Securities that provide for periodic payments of interest in
Cash less frequently than monthly does not exceed 35.0% of the CDS Principal
Balance;

 

(e)                                  the aggregate Principal Balance of all
Collateral Debt Securities that mature after the Stated Maturity Date does not
exceed 15.0% of the CDS Principal Balance;

 

(ii)                                Collateral Debt Security Type Limitations

 

(a)                                  the aggregate Principal Balance of all
Collateral Debt Securities that are CMBS Securities does not exceed 85.0% of the
CDS Principal Balance; provided that no more than 25.0% of the CDS Principal
Balance shall consist of CMBS Large Loan Securities, no more than 7.5% of the
CDS Principal Balance shall consist of CMBS Credit Tenant Lease Securities and
no more than 20.0% of the CDS Principal Balance shall consist of CMBS Re-REMIC
Securities;

 

(b)                                 the sum of the aggregate Principal Balances
of all REIT Debt Securities, Trust Preferred Securities and CRE Debt Obligations
does not exceed 25.0% of the CDS Principal Balance; provided that not more than
2.75% of the CDS Principal Balance shall consist of Trust Preferred Securities
and not more than 10.0% of the CDS Principal Balance shall consist of CRE Debt
Obligations;

 

(c)                                  the aggregate Principal Balance of all
Collateral Debt Securities that are Real Estate CDO Securities does not exceed
6.0% of the CDS Principal Balance;

 

(d)                                 the aggregate Principal Balance of all
Collateral Debt Securities that are Real Estate Interests does not exceed 15.0%
of the CDS Principal Balance;

 

(e)                                  the aggregate Principal Balance of all
Collateral Debt Securities that are Synthetic Securities does not exceed 5.0% of
the CDS Principal Balance;

 

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(iii)                             Ratings Limitations

 

(a)                                  the aggregate Principal Balance of all
Collateral Debt Securities with an Actual Rating from S&P or Fitch below “BBB-”
or an Actual Rating from Moody’s below “Baa3” does not exceed 35.0% of the CDS
Principal Balance;

 

(b)                                 the aggregate Principal Balance of all
Collateral Debt Securities with an Actual Rating from S&P or Fitch below “BB-”
or an Actual Rating from Moody’s below “Ba3” does not exceed 7.0% of the CDS
Principal Balance;

 

(iv)                            Single Issue Limitations

 

(a)                                  the aggregate Principal Balance of all
Collateral Debt Securities with an Actual Rating from S&P or Fitch of higher
than “BB+” or an Actual Rating from Moody’s of higher than “Ba1” that are part
of the same Issue does not exceed 3.0% of the CDS Principal Balance, except for
up to four Issues not to exceed 4.0% of the CDS Principal Balance; and

 

(b)                                 the aggregate Principal Balance of all
Collateral Debt Securities that have an Actual Rating from S&P or Fitch of below
“BBB-” or an Actual Rating from Moody’s of below “Baa3” that are part of the
same Issue does not exceed 2.0% of the CDS Principal Balance, except for up to
three Issues not to exceed 3.0% of the CDS Principal Balance;

 

(v)                                 Servicer Limitations: with respect to the
servicer of the security being acquired, the aggregate Principal Balance of all
Collateral Debt Securities serviced by such servicer does not exceed 20.0% of
the CDS Principal Balance, except that the aggregate Principal Balance of all
Collateral Debt Securities serviced by servicers rated “Below Average” by S&P,
or if there is no servicer rating by S&P, having long-term unsecured debt
securities rated “BB” or lower, shall not exceed 5.0% of the CDS Principal
Balance.

 

(vi)                              Property Type Limitations: the aggregate
Principal Balance of all CMBS Conduit Securities and CMBS Large Loan Securities
related to Mortgaged Properties that are classified as: (A) multifamily
properties does not exceed 40.0% of the CDS Principal Balance; (B) retail
properties does not exceed 40.0% of the CDS Principal Balance; (C) office
properties does not exceed 45.0% of the CDS Principal Balance; (D) lodging
properties does not exceed 35.0% of the CDS Principal Balance; (E) healthcare
properties does not exceed 20.0% of the CDS Principal Balance; (F) industrial
properties does not exceed 15.0% of the CDS Principal Balance; (G) manufactured
housing properties does not exceed 10.0% of the CDS Principal Balance; (H) self
storage properties does not exceed 10.0% of the CDS Principal Balance; and
(I) any other property type other than those specified in clauses (A) through
(H) above does not exceed 15.0% of the CDS Principal Balance;

 

(vii)                           Geographic Limitations: the aggregate Principal
Balance of all CMBS Conduit Securities and CMBS Large Loan Securities related to
Mortgaged Properties located in: (A) California does not exceed 30.0% of the CDS
Principal Balance; (B) New York does not exceed 30.0% of the CDS Principal
Balance; (C) Texas does not exceed 30.0% of the CDS Principal Balance;
(D) Florida does not exceed 30.0% of the CDS Principal Balance; and (E) any
other single state other than California, New York, Texas and Florida does not
exceed 15.0% of the CDS Principal Balance;

 

For purposes of determining compliance with any Collateral Concentration
Limitation, (a) all calculated percentages will be rounded to the nearest
hundredth of 1% (e.g., 5.13%), (b) Temporary Ramp-Up Securities will be excluded
from the calculation of the Collateral Concentration Limitations and (c) with
respect to Synthetic Securities, satisfaction of the Collateral Concentration
Limitations shall be based on

 

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the Synthetic Security itself and not on the related Reference Obligations.
During the Ramp-Up Period, the Collateral Concentration Limitations will not be
taken into account for the purpose of determining compliance by the Issuer with
any requirements under the Indenture.

 

Collateral Debt Security 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) (a) all cash payments
of interest with respect to any Collateral Debt Securities and Eligible
Investments included in the Collateral (including any Sale Proceeds of a
Collateral Debt Security sold at a price greater than or equal to 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 and (b) all Synthetic Security Periodic
Payments payable to the Issuer under a Synthetic Security, net, in the case of a
Derivative Contract, of any Synthetic Security Periodic Payments payable by the
Issuer to the Derivative Contract Counterparty during the related Collection
Period, but excluding in the case of the foregoing clauses (a) and (b) all funds
received on a Defaulted Security (including any unpaid interest) and any unpaid
interest accrued on a Deferred Interest PIK Bond or a Written Down Security to
the date of sale) which are received during the related Due Period, (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 (including the Initial 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 Debt Securities or in connection with Defaulted
Securities or Written Down Securities) (excluding any payments representing exit
fees, extension fees or prepayment premiums paid in connection with Real Estate
Interests), (v) the Principal Balance of any Eligible Investments purchased with
Collateral Interest Collections, (vi) all interest accrued on the Closing Date
on Collateral Debt Securities included in the Collateral, (vii) any amounts on
deposit in the Non-Monthly Pay Asset Interest Reserve Account, (viii) any
amounts in the Ramp-Up Interest Reserve Account that are transferred to the
Payment Account, (ix) after the Effective Date, at the option of the Collateral
Manager, any amount on deposit in the Expense Reserve Account in excess of
U.S.$25,000, (x) all income received during the related Due Period on any
Eligible Investments then in any Derivative Contract Counterparty Accounts, to
the extent transferred to the Collection Account pursuant to and in accordance
with Section 10.9 and (xi) all proceeds from the foregoing; provided, however,
that Collateral Interest Collections shall not include (i) 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, (ii) principal of any Collateral Debt
Security representing capitalized interest after the date of purchase thereof by
the Issuer, (iii) Purchased Accrued Interest or (iv) any amounts contributed by
the Income Noteholders as capital contributions pursuant to Section 4.5 of the
Income Note Paying Agency Agreement.

 

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.

 

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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 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. Collateral Principal
Collections shall include, without limitation, (A) principal of any Collateral
Debt Security representing capitalized interest after the date of purchase
thereof by the Issuer, (B) any Uninvested Proceeds which have not been invested
on or prior to the Effective Date and (C) any amounts contributed by the Income
Noteholders as capital contributions pursuant to Section 4.5 of the Income Note
Paying Agency Agreement.

 

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

 

Collateral Principal Payments means Collateral Principal Collections excluding
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 Debt Securities comply, in the aggregate, with all of the
requirements set forth below (collectively, the “Collateral Quality Tests”):

 

(1)                                  the Fitch Weighted Average Rating Factor
does not exceed 8.50;

 

(2)                                  (a) the Weighted Average Fixed Rate Coupon
as of such date equals or exceeds 5.70% and (b) the Weighted Average Spread as
of such date equals or exceeds 2.07%;

 

(3)                                  the Weighted Average Life Test is
satisfied;

 

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

 

(5)                                  the S&P Minimum Weighted Average Recovery
Rate Test is satisfied;

 

(6)                                  the Moody’s WARF Test is satisfied;

 

(7)                                  the Moody’s Recovery Rate Test is
satisfied; and

 

(8)                                  the Herfindahl Score of the Collateral Debt
Securities is at least 41;

 

provided that Temporary Ramp-Up Securities will be excluded from the calculation
of the Collateral Quality Tests.

 

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

 

Collateralization Event means, provided that no Substitution Event has occurred,
any of the following events: (a) the Hedge Ratings Determining Party’s
short-term rating from Moody’s is lower than “P-1” or its long-term rating is
withdrawn, suspended or downgraded below “Al”, (b) the Hedge Ratings Determining
Party’s short-term rating from Fitch is lower than “Fl” or the long-term rating
of the Hedge Ratings Determining Party from Fitch is withdrawn, suspended or
downgraded below “A”, or (c) the short term rating of the Hedge Ratings
Determining Party from S&P is lower than “A-1” or, if the Hedge Ratings
Determining Party does not have a short term rating from S&P, the long term
rating of such Hedge Ratings Determining Party is lower than “A+”.

 

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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 Backed Security means securities 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, such as regional malls, retail space, office buildings,
warehouse or industrial properties, hotels, nursing homes and senior living
centers.

 

Commission means the United States Securities and Exchange Commission.

 

Controlling Class means the Class A-1 Notes voting as a single Class, so long as
any Class A-1 Notes are Outstanding, and then the Class A-2 Notes, so long as
any Class A-2 Notes are Outstanding, and then the Class A-3 Notes, so long as
any Class A-3 Notes are Outstanding, and then the Class B Notes, so long as any
Class B Notes are Outstanding, and then the Class C Notes, so long as any
Class C Notes are Outstanding, and then the Class D Notes, so long as any
Class D Notes are Outstanding, and then the Class E Notes, so long as any
Class E Notes are Outstanding, in each case, based on the Aggregate Outstanding
Amount thereof.

 

Controlling Class Objection means written notice to the Collateral Manager by
the Holders of a majority in aggregate principal amount of Outstanding Notes of
the Controlling Class objecting in their reasonable discretion to a proposed
replacement Key Manager.

 

Controlling Person means 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 the Closing Date, 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 181 West Madison Street, 32nd Floor, Chicago,
Illinois 60602, Attention: CDO Trust Services Group — N-Star Real Estate CDO VII
Ltd., telephone number 312-904-4047, fax number 312-602-3935, 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 Issuer or
the principal corporate trust office of any successor Trustee.

 

Coverage Tests means the Class A/B Coverage Tests, the Class C Coverage Tests,
the Class D Coverage Tests and the Class E Coverage Tests.

 

CRE Debt Obligations means interests in a secured or unsecured, senior or senior
subordinated term bank or non-bank loans or other debt obligations, whether in
loan or security form, or participations (senior or subordinate) therein, that
are obligations (direct or by way of guarantee) of corporations, partnerships or
other entities organized under the laws of the United States (or any State
thereof) whose business is significantly related to real estate, real estate
management and/or real estate ownership; provided that no

 

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Real Estate Interests, Mezzanine Loans, REIT Debt Securities or Trust Preferred
Securities shall constitute CRE Debt Obligations.

 

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 Event means, with respect to any Collateral Debt Security, (i) such
Collateral Debt Security has been put on watch for possible downgrade, or has
been downgraded, by any Rating Agency, (ii) such Collateral Debt Security has
experienced an increase in credit spread of 10% or more (due to credit related
reasons as determined by the Collateral Manager in its reasonable business
judgment) compared to the credit spread at which such Collateral Debt Security
was purchased by the Issuer, determined by reference to an applicable index
selected by the Collateral Manager or (iii) there has been an event or
circumstance that constitutes a change in the condition of the issuer of such
Collateral Debt Security (or of available information with respect to such
issuer) that evidences, in the good faith judgment of the Collateral Manager,
(a) a significant risk of such Collateral Debt Security materially declining in
credit quality, or (b) a significant risk, with a lapse of time, of such
Collateral Debt Security becoming a Defaulted Security or a Written Down
Security.

 

Credit Risk Security means any Collateral Debt Security with respect to which
there shall have occurred a Credit Risk Event.

 

Credit Support Annex means the ISDA Credit Support Annex to a Hedge Agreement
between a Hedge Counterparty and the Issuer.

 

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

 

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 Debt
Security, 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 Debt Security over time and (ii) payment dates identical to the
Payment Dates of the Issuer under the Indenture; provided that, (w) at the time
of entry into the Deemed Floating Asset Hedge, (i) the expected principal
payments on the Fixed Rate Collateral Debt Security comprising a Deemed Floating
Rate Collateral Debt Security will not extend beyond the Stated Maturity Date
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 Debt Security (as calculated at such time), (x) 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,
(y) such Deemed Floating Asset Hedge will require Rating Agency Confirmation
from S&P to the extent the applicable master agreement or schedule attached
thereto is not a hedge agreement with respect to which the documentation thereof
conforms in all material respects to a form in respect of which Rating Agency
Confirmation was previously obtained by the Issuer and (z) such Deemed Floating
Asset Hedge is priced at then-current market rates.

 

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Deemed Floating Rate Collateral Debt Security means a Fixed Rate Collateral Debt
Security the interest rate of which is hedged into a Floating Rate Collateral
Debt Security 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 Debt Security 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. Pursuant to this Indenture, a Deemed Floating Rate
Collateral Debt Security will be deemed a Floating Rate Collateral Debt Security
with a spread over LIBOR equal to the related Deemed Floating Spread.

 

Deemed Floating Spread means the difference between the stated rate at which
interest accrues on each Fixed Rate Collateral Debt Security that comprises a
Deemed Floating Rate Collateral Debt Security (excluding all Defaulted
Securities 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.

 

Defaulted Derivative Contract Counterparty Termination Payment means an amount
payable by the Issuer to a Derivative Contract Counterparty that is due
following the designation of an “Early Termination Date” (as such term is
defined in the related Derivative Contract) (other than in respect of an
“Illegality” or a “Tax Event” (as each such term is defined in the related
Derivative Contract)), in respect of which the related Derivative Contract
Counterparty is the “Defaulting Party” or the sole “Affected Party”.

 

Defaulted Interest means any interest due and payable in respect of any Class A
Note or 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, 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.

 

Defaulted Securities Amount means the sum, with respect to each Defaulted
Security in the Collateral, of the lesser of (i) the product of the Principal
Balance of such Defaulted Security and the lowest of the Applicable Recovery
Rates of such Defaulted Security and (ii) the product of the Principal Balance
of such Defaulted Security and the Market Value of such Defaulted Security.

 

Defaulted Security means any Collateral Debt Security or any other security
included in the Collateral:

 

(i)                                     as to which (a) the issuer thereof has
defaulted in the payment of principal or interest (without giving effect to any
applicable notice or grace period or waiver, unless the Collateral Manager
certifies to the Trustee that in the Collateral Manager’s judgment such default
of up to the lesser of (1) three Business Days and (2) the grace period provided
for in the Underlying Instruments is due to non-credit and non-fraud related
reasons and the Collateral Manager has so certified in writing to the Trustee or
(b) pursuant to its Underlying Instruments, there has occurred any default or
event of default which entitles the holders thereof, with notice or passage of
time or both, to accelerate the maturity (whether by mandatory prepayments,
mandatory redemption or otherwise) of all or a portion of the outstanding
principal amount of such security, unless (1) in the case of a default or event
of default consisting of a failure of the obligor on such security to make
required interest payments and/or scheduled principal payments, such security
has resumed current payments of interest and scheduled principal in cash
(including all past due interest and scheduled principal) and, in the Collateral
Manager’s judgment, will continue to make such current payments of interest in
cash (provided that no restructuring has been effected) or (2) in

 

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the case of any other default or event of default, such default or event of
default is no longer continuing (provided that no event of default has been
waived with respect to (A) a default in the payment of principal or interest or
(B) insolvency in the event that all outstanding amounts have not been paid) and
such security satisfies the criteria for inclusion of securities in the
definition of “Collateral Debt Security”;

 

(ii)                                that ranks pari passu with or subordinate to
any other indebtedness for borrowed money owing by the issuer of such security,
if any (for purposes hereof, “Other Indebtedness”; provided, however, that such
Other Indebtedness of such issuer will not include series of such Other
Indebtedness that may be issued or owing by a separate special purpose entity
and is not guaranteed by the issuer) if such issuer had defaulted in the payment
of principal or interest in respect of such Other Indebtedness (without giving
effect to any applicable notice or grace period or waiver, unless the Collateral
Manager certifies to the Trustee that in the Collateral Manager’s judgment such
default of up to the lesser of (a) three Business Days and (b) the grace period
provided for in the Underlying Instruments is due to non-credit and non-fraud
related reasons and the Collateral Manager has so certified in writing to the
Trustee), unless, in the case of a default or event of default consisting of a
failure of the obligor on such security to make required interest payments
and/or scheduled principal payments, such Other Indebtedness has resumed current
payments of interest and scheduled principal (including all due interest and
scheduled principal) in cash (whether or not any waiver or restructuring has
been effected) and, in the Collateral Manager’s judgment, will continue to make
such current payments of interest and scheduled principal in cash; provided that
a security shall be considered a Defaulted Security pursuant to this clause
(ii) only if the Collateral Manager knows, after due inquiry as required
pursuant to the Collateral Management Agreement, that the issuer thereof is (or
is reasonably expected by the Collateral Manager to be, as of the next scheduled
payment distribution date) in default (without giving effect to any applicable
grace period or waiver) as to payment of principal and/or interest on another
obligation (and such default has not been cured or waived) which is senior or
pari passu in right of payment to such Collateral Debt Security;

 

(iii)                            with respect to which any bankruptcy,
insolvency or receivership proceeding has been initiated in respect of the
issuer of such Collateral Debt Security, or there has been proposed or effected
any distressed exchange or other debt restructuring where the issuer of such
Collateral Debt Security has offered the debt holders a new security or package
of securities that, in the judgment of the Collateral Manager either (a) amounts
to a diminished financial obligation or (b) has the purpose of helping the
issuer to avoid default. For the avoidance of doubt in applying and interpreting
this definition of Defaulted Security, the Collateral Manager shall be deemed to
have knowledge of all information that Authorized Officers of the Collateral
Manager have actually received, and shall be responsible under the Collateral
Management Agreement for obtaining and reviewing information available to it
either in its capacity as an investment manager of national standing or as
holder of such Collateral Debt Security;

 

(iv)                            if such Collateral Debt Security has been rated
“C” or lower by Moody’s or “CC” or lower by S&P or Fitch or if S&P has withdrawn
its rating and has not provided the Issuer with a shadow rating;

 

(v)                                 which is a Written Down Security unless S&P
has affirmed its rating of such Written Down Security; or

 

(vi)                            that is a Synthetic Security that has a single
Reference Obligation (A) the Reference Obligation of which would (if owned by
the Issuer) constitute a Defaulted Security or (B) the Derivative

 

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Contract Counterparty with respect to which is a “Defaulting Party” or the sole
“Affected Party” (as such terms are defined therein) thereunder.

 

Defaulting Party has the meaning given to such term in the applicable Hedge
Agreement or Synthetic Security.

 

Deferred Interest PIK Bond means (A) a PIK Bond (other than a Trust Preferred
Security) with respect to which interest has been deferred or capitalized or
does not pay interest when scheduled (other than a Defaulted Security) 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; or (B) a PIK Bond that is a Trust Preferred Security
with respect to which interest has been deferred or capitalized and remains
outstanding.

 

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 lowest of the Applicable
Recovery Rates 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.

 

Definitive Class A-D Note has the meaning specified in Section 2.1(c).

 

Definitive Class E Note has the meaning specified in Section 2.1(d).

 

Definitive Class E Note Transfer Certificate has the meaning specified in
Section 2.4(d)(1).

 

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

 

Depositary means, with respect to the Rated 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.

 

Derivative Contract means a credit derivative, total return swap or other
similar contract or agreement executed by the Issuer with a Derivative Contract
Counterparty, in respect of which the Issuer has exposure synthetically through
such contract to one or more (including a pool of) Reference Obligations or
obligors; provided that any Derivative Contract executed by the Issuer shall
(i) contain appropriate limited recourse and non-petition provisions equivalent
(mutatis mutandis) to those set forth herein and Rating Agency Confirmation from
S&P shall have been obtained before entering into such Derivative Contract and
(ii) require the Issuer to deposit into the Derivative Contract Counterparty
Account an amount equal to its maximum potential exposure under such Derivative
Contract.

 

Derivative Contract Counterparty means an entity required to make periodic
premium payments to the Issuer pursuant to the terms of a Derivative Contract
and which satisfies the Derivative Contract Counterparty Rating Requirement.

 

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Derivative Contract Counterparty Account means each account established for the
benefit of a Derivative Contract Counterparty in connection with a Derivative
Contract pursuant to Section 10.9 hereof.

 

Derivative Contract Counterparty Rating Requirement means the requirement that
an entity will satisfy if it has (or its guarantor under a guarantee meeting
S&P’s then-current criteria for guarantees has) (A) (i) a long term debt rating
of at least “Aa3” by Moody’s or (ii) a long term debt rating of at least “Al” by
Moody’s and a short-term debt rating of “P-1” and (B) a short term rating of at
least “A-1+” by S&P (or “A-1” by S&P if the premium (and any other relevant
amount (such as coupon) required under the relevant Derivative Contract) to be
paid by such Derivative Contract Counterparty is posted one payment period in
advance for the term of the Derivative Contract) and is not on negative watch.

 

Derivative Contract Issuer Account means each account established for the
benefit of the Issuer in connection with a Derivative Contract pursuant to
Section 10.10 hereof.

 

Derivative Security means a security in the form of a credit-linked note, trust
certificate, collateralized bond obligation or collateralized loan or similar
obligation in respect of which the Issuer has exposure synthetically to one or
more (including a pool of) Reference Obligations or obligors through a swap or
other agreement executed by the issuer of such security with a person other than
the Issuer and in respect of which the Issuer has no ongoing payment
obligations; provided, however that a Derivative Security shall not include any
security backed by more than one credit default swap or referencing more than
one Reference Obligation or a synthetic collateralized debt obligation or
synthetic resecuritization that (in each case) references CMBS Conduit
Securities or other CMBS Securities or certificates representing a beneficial
interest therein (which, for the avoidance of doubt, shall (in each case) be
treated as a CMBS Re-REMIC Security).

 

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, 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 later of (i) the
close of business on the fourth Business Day preceding such Payment Date and
(ii) the close of business on the fourth Business Day following the 11th day of
the same calendar month as such Payment Date, or if the 11th day of such
calendar month is not a Business Day, the fifth Business Day following the 11th
day of such calendar month.

 

Effective Date means the date that is the earliest of (i) the 120 days following
the Closing Date, (ii) the date on which the Issuer has purchased Collateral
Debt Securities, excluding Temporary Ramp-Up Securities, having an aggregate par
amount of U.S.$ 550,000,000 or (iii) such earlier date (if any) that is
designated by the Collateral Manager by notice to the Trustee under the
Indenture; provided that in the event that such day does not fall on a Business
Day, the Effective Date shall be the next succeeding Business Day.

 

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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, “AA+” by S&P and “AA” if rated by Fitch; or

 

(b)                                 in the case of commercial paper and
short-term debt obligations including time deposits, “P-1” by Moody’s, “A-1+” by
S&P and “Fl” if rated by Fitch (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 and a short- and long-term credit rating of
not less than “F1+” and “AA”, respectively, if rated by Fitch; provided,
however, that (1) so long as LaSalle Bank National Association is rated at least
“A-1” by S&P and not on negative watch and (2) LaSalle Bank National Association
is the Trustee, overnight time deposits with LaSalle Bank National Association
shall be an Eligible Investment);

 

(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 “Aa2” by Moody’s, “AA+” by S&P and “AA” if rated by Fitch 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, “A-1+” by S&P and “F1+”
if rated by Fitch 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, “AA+” by S&P and “AA” if rated by Fitch 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;

 

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(vi)                            commercial paper or other short-term obligations
having at the time of such investment a credit rating of (a) (1)“F1” by Fitch
and that have a maturity of not more than 30 days from its date of issuance or
(2) “F1+” by Fitch and that have a maturity of more than 30 days but less than
one year from its date of issuance and (b) “P-1” by Moody’s and “A-1+” by S&P
that are registered and are either bearing interest 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, “AA+” by S&P and “AA” if rated by Fitch;

 

(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) and a credit rating of “AAA” if rated by
Fitch, 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 approved in writing by the
Rating Agencies;

 

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 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, or if such security has an assigned rating
with an “r”, “t”, “p”, “pi” or “q” subscript, or if such security is a
mortgage-backed security or if such security is subject to an Offer.

 

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 “Aa” by Moody’s, “AA” by S&P and “AA” by Fitch; 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.

 

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

 

Equity Security 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
Debt Securities, in conjunction with the purchase of Collateral Debt Securities
or in exchange for a Collateral Debt Security.

 

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

 

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 CDS Principal Balance (excluding the aggregate Principal Balance
of Defaulted Securities) on the first day of the related Due Period and the
aggregate CDS Principal Balance (excluding the aggregate Principal Balance of
Defaulted Securities) 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.

 

Fitch means Fitch, Inc. and any successor or successors thereto.

 

Fitch Industry Classification Group means any of the Fitch industry and
sub-industry classification groups as currently set forth in “Global Rating
Criteria for Collateralised Debt Obligations” available at www.fitchratings.com.
Fitch may, from time to time, modify or replace this criteria which may have
modified or replaced this report if Fitch provides notice thereof to the Issuer,
the Collateral Manager and the Trustee.

 

Fitch Rating means (A) with respect to any Collateral Debt Security other than a
Trust Preferred Security, for determining the Fitch Rating as of any date of
determination:

 

(i)                                     if such Collateral Debt Security is
rated by Fitch, the Fitch Rating shall be such rating as published in any
publicly available source;

 

(ii)                                  if such Collateral Debt Security is not
rated by Fitch, or the Fitch Rating cannot be determined by the method in clause
(i) above, and a rating is publicly available from both S&P and Moody’s, the
Fitch Rating shall be the lower of such ratings; and if a rating is publicly
available from only one of S&P and Moody’s, the Fitch Rating shall be the
equivalent of such rating by S&P or Moody’s, as the case may be; and

 

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(iii)                            in all other circumstances, the Fitch Rating
shall be the private rating assigned by Fitch upon request of the Collateral
Manager;

 

(B)                              with respect to any Collateral Debt Security
that is a Trust Preferred Security, (i) if the issuing entity (or the direct or
indirect parent of such issuing entity) of such Trust Preferred Security has a
public rating by Fitch, that public rating shall apply, or (ii) if such Trust
Preferred Security has no public rating by Fitch, it shall be the private rating
assigned by Fitch upon request of the Collateral Manager.

 

provided that (a) if such Collateral Debt Security has been put on rating watch
negative for possible downgrade by any Rating Agency, then the rating used to
determine the Fitch Rating under clause (ii) above shall be one (1) rating
subcategory below such rating by that Rating Agency, (b) if such Collateral Debt
Security has been put on rating watch positive for possible upgrade by any
Rating Agency, then the rating used to determine the Fitch Rating under clause
(ii) above shall be one rating subcategory above such rating by that Rating
Agency and (c) notwithstanding the rating definition described above, Fitch
reserves the right to issue a rating estimate for any Collateral Debt Security
at any time.

 

Fitch Rating Factor means, for the purpose of computing the Fitch Weighted
Average Rating Factor, with respect to any Collateral Debt Security or Eligible
Investment on any relevant date, the number set forth in the table below
opposite the Fitch Rating of such Collateral Debt Security or Eligible
Investment:

 

Fitch Rating

 

Fitch Rating Factor

 

Fitch Rating

 

Fitch Rating Factor

AAA

 

.019

 

BB

 

13.53

AA+

 

.057

 

BB-

 

18.46

AA

 

.089

 

B+

 

22.84

AA-

 

1.15

 

B

 

27.67

A+

 

1.65

 

B-

 

34.98

A

 

1.85

 

CCC+

 

43.36

A-

 

2.44

 

CCC

 

48.52

BBB+

 

3.13

 

CC

 

77.00

BBB

 

3.74

 

C

 

95.00

BBB-

 

7.26

 

DDD-D

 

100.00

BB+

 

10.18

 

 

 

 

 

Fitch Recovery Rate means, with respect to a Collateral Debt Security on any
Calculation Date, an amount equal to the percentage corresponding to the
domicile, original rating, seniority and tranche thickness of such item of
Collateral Debt Security as currently set forth on the Closing Date in “Global
Rating Criteria for Collaterised Debt Obligations” available at
www.fitchratings.com. Fitch may, from time to time, modify or replace this
criteria and Fitch may apply the current criteria which may have modified or
replaced this report if Fitch provides notice thereof to the Issuer, the
Collateral Manager and the Trustee.

 

Fitch Weighted Average Rating Factor means the number determined on any
Calculation Date by dividing (i) the summation of the series of products
obtained (a) for any Collateral Debt Security that is not a Defaulted Security
or Deferred Interest PIK Bond, by multiplying (1) the Principal Balance on such
Calculation Date of each such Collateral Debt Security by (2) its respective
Fitch Rating Factor on such Calculation Date and (b) for any Defaulted Security
or Deferred Interest PIK Bond, by multiplying (1) the Applicable Recovery Rate
for such Defaulted Security or Deferred Interest PIK Bond by (2) the

 

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Principal Balance on such Calculation Date of each such Defaulted Security or
Deferred Interest PIK Bond by (3) its respective Fitch Rating Factor on such
Calculation Date by (ii) the sum of (a) the aggregate Principal Balance on such
Calculation Date of all Collateral Debt Securities and Eligible Investments that
are not Defaulted Securities or Deferred Interest PIK Bonds, plus (b) the
summation of the series of products obtained by multiplying (1) the Applicable
Recovery Rate for each Defaulted Security or Deferred Interest PIK Bond by
(2) the Principal Balance on such Calculation Date of such Defaulted Security or
Deferred Interest PIK Bond, and rounding the result up to the nearest whole
number.

 

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

 

Fixed Rate Excess means, as of any Measurement Date, a fraction (expressed as a
percentage), the numerator of which is equal to the product of (a) the greater
of zero and the excess, if any, of the Weighted Average Fixed Rate Coupon for
such Measurement Date over 5.70%, and (b) the aggregate Principal Balance of all
Collateral Debt Securities that are Fixed Rate Collateral Debt Securities
(excluding, in each case, Defaulted Securities, Written Down Securities,
Deferred Interest PIK Bonds and Deemed Floating Rate Collateral Debt Securities)
and the denominator of which is the aggregate Principal Balance of all
Collateral Debt Securities that are Floating Rate Collateral Debt Securities or
Deemed Floating Rate Collateral Debt Securities (excluding, in each case,
Defaulted Securities, Written Down Securities and Deferred Interest PIK Bonds).

 

Fixed Rate Notes means the Class D-FX Notes and the Class E Notes.

 

Floating Rate Collateral Debt Security means any Collateral Debt Security which
bears interest based upon LIBOR, prime rate or another floating rate index.

 

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

 

Form-Approved Hedge Agreement means a Hedge Agreement relating to a specific
Hedge Counterparty with respect to which (a) the related Collateral Debt
Security 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 such Hedge Counterparty which does not require Rating
Agency Confirmation (as certified to the Trustee by the Collateral Manager,
following receipt of confirmation by the Collateral Manager from the Hedge
Counterparty and the Rating Agencies); provided that (i) such Form-Approved
Hedge Agreement shall not provide for any upfront payments to be made to any
Hedge Counterparty (other than the Initial 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 ten days prior to the
initial use thereof, (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 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.

 

Four-Month Period means, at any time during the Reinvestment Period, the period
of four months following the earliest date as of which the number of Key
Managers that are employed on a substantially

 

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full-time basis in the position of managing director or other management-level
employee by the Collateral Manager (or any of its successors or assigns
permitted pursuant to Section 16 of the Collateral Management Agreement) becomes
less than one.

 

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, collectively, any of one or more interest rate protection
agreements (including the Initial Hedge Agreements) or any Cashflow Hedge
Agreement, as amended from time to time, together with any replacement hedge
agreements on substantially identical terms (or that otherwise satisfies the
conditions of Section 16.1(d)), entered into pursuant to Section 16.1 or a
Deemed Floating Asset Hedge.

 

Hedge Counterparty means (a) with respect to each Initial Hedge Agreement
entered into on the Closing Date, the Initial Hedge Counterparty (or any
permitted assignee or successor) and (b) any hedge counterparty (or any
permitted assignee or successor) under a Hedge Agreement (including under a
Deemed Floating Asset Hedge or any Cashflow Hedge Agreement) that satisfies the
Hedge Counterparty Ratings Requirement.

 

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(f).

 

Hedge Counterparty Ratings Requirement means, with respect to any Hedge Ratings
Determining Party: (a) either (x) (1) a rating on the short-term obligations of
the Hedge Ratings Determining Party of “P-1” and (2) a rating on the long-term
unsecured, senior debt obligations of the Hedge Ratings Determining Party of at
least “Al” by Moody’s or (y) if there is no short-term rating by Moody’s, a
rating on the long-term unsecured, senior debt obligations of the Hedge Ratings
Determining Party of at least “Aa3” by Moody’s; (b) both (x) the short-term
rating of such Hedge Ratings Determining Party by Fitch is not lower than “Fl”
and (y) the long-term rating of such Hedge Ratings Determining Party by Fitch is
not withdrawn, suspended or downgraded below “A”; and (c) either (i) the
short-term rating of such Hedge Ratings Determining Party is not lower than
“A-1” by S&P or (ii) if such Hedge Ratings Determining Party does not have a
short-term rating from S&P, the long-term rating of such Hedge Ratings
Determining Party by S&P is not lower than “A+”.

 

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

 

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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 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 the Hedge Agreement and any Payment
Date, the amount, if any, then payable to the Issuer by the 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 Collateral Debt Security,
(x) the aggregate Principal Balance of all Collateral Debt Securities issued by
a single obligor divided by (y) the CDS Principal Balance, raised to the second
power. For purposes of calculating the Herfindahl Index, each U.S.$ 500,000
increment of cash in any Account shall be treated as a single Collateral Debt
Security.

 

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 Debt Securities resulting in the highest auction price of one
or more Subpools of Collateral Debt Securities.

 

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

 

Income Note Distribution Account means the account designated the “Income Note
Distribution Account” and established by the Income Note Paying Agent in the
name of the Income Note Paying Agent for the benefit of the Issuer pursuant to
the Income Note 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)(23) and
11.1(b)(19).

 

Income Note Paying Agency Agreement means that certain Income Note Paying Agency
Agreement, dated as of June 22, 2006, as the same may be amended or supplemented
from time to time, between the Issuer and the Income Note Paying Agent.

 

Income Note Paying Agent means LaSalle Bank National Association, and any
successors or assigns in its capacity as Income Note Paying Agent under the
Income Note Paying Agency Agreement.

 

Income 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 Income Note Paying Agent during the preceding Due Period in
accordance with the Income Note Paying Agency Agreement.

 

Income Note Redemption Approval Condition means, in connection with a Tax
Redemption at the direction of the Controlling Class and an Auction Call
Redemption, the requirement that, unless and to the extent the Holders of not
less than 662/3% of the aggregate principal amount of the Outstanding Income
Notes have waived payment in full of the Income Notes Stated Amount, the Income
Noteholders

 

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receive in connection with such Tax Redemption or Auction Call Redemption an
amount equal to (x) the Income Notes Stated Amount minus (y) the aggregate
amount of all cash distributions on the Income Notes (whether in respect of
distributions or redemption payments made to the Income Note Paying Agent for
distribution to the Income Noteholders) on or prior to the relevant Auction
Date.

 

Income Note Register means, with respect to the Income Notes, the Income Note
Register maintained by the Income Note Registrar.

 

Income Note Registrar means LaSalle Bank National Association, and any
successors or assigns in its capacity as Income Note Registrar under the Income
Note Paying Agency Agreement.

 

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

 

Income Notes means the U.S.$23,000,000 Income Notes due 2051.

 

Income Notes Stated Amount means U.S.$23,000,000.

 

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.

 

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 Agreements mean, collectively, each of the interest rate swap
agreements entered into between the Issuer and the Initial Hedge Counterparty on
the Closing Date.

 

Initial Hedge Counterparty means Bank of America, N.A. under the Initial Hedge
Agreement and any of its successors, assigns or replacements under the Initial
Hedge Agreement appointed in accordance with the terms of this Indenture and the
Initial Hedge Agreement.

 

Initial Payment Date means the Payment Date occurring in July 2006.

 

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

 

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) (a) the amount payable as
Aggregate Fees and Expenses on the related Payment Date, (b) any amounts paid or
scheduled to be paid to the Hedge Counterparty on the related Payment Date
(excluding any termination payments) and (c) for purposes of calculating the
Class A/B Interest Coverage Ratio, the Class C Interest Coverage Ratio, the
Class D Interest Coverage Ratio and the Class E Interest Coverage

 

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Ratio, any amounts scheduled to be paid to the Non-Monthly Pay Asset Interest
Reserve Account on the related Payment Date; provided that (a) following the
date on which a Collateral Debt Security becomes a Defaulted Security, scheduled
Collateral Interest Collections shall not include any amount scheduled to be
received on Defaulted Securities or any amount scheduled to be received on
securities that are currently deferring interest until (1) such scheduled
amounts are actually received in Cash or (2) the cumulative aggregate amounts
actually received on a Defaulted Security exceed the Principal Balance of such
Defaulted Security, (b) the expected interest income on Floating Rate Collateral
Debt Securities and Eligible Investments shall be calculated using the
then-current interest rate applicable thereto and (c) with respect to any
Written Down Security, the Interest Coverage Amount shall exclude any interest
accrued on any Written Down Amount.

 

Interest Coverage Tests means the Class A/B Interest Coverage Test, the Class C
Interest Coverage Test, the Class D Interest Coverage Test and the Class E
Interest Coverage Test.

 

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.

 

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

 

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

 

Irish Listing Agent means NCB Stockbrokers Limited.

 

Irish Paying Agent means NCB Stockbrokers Limited.

 

Issue of Collateral Debt Securities means Collateral Debt Securities issued by
the same issuer secured by the same collateral pool.

 

Issuer means N-Star Real Estate CDO VII 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.

 

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).

 

Key Manager means any of David T. Hamamoto, Jean-Michel (Mitch) Wasterlain or
any such other additional person as may be appointed Key Managers in accordance
with the Collateral Management Agreement (or if David T. Hamamoto, Jean-Michel
(Mitch) Wasterlain or any such additional Key Managers have been replaced with
one or more Approved Replacement Persons, such Approved Replacement Persons).

 

Key Manager Event means any of the following: (a) the failure by the Collateral
Manager to propose a replacement Key Manager within the applicable Four-Month
Period, (b) the failure by the Collateral Manager, within the Four-Month Period,
to propose a different replacement Key Manager following

 

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receipt of a Controlling Class Objection or (c) the receipt of another
Controlling Class Objection within ten Business Days after delivery of such a
proposal for a different replacement Key Manager to the Holders of the Notes of
the Controlling Class.

 

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 will be determined on the second London
Banking Day prior to the Closing Date.

 

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% of the 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 Debt Securities, 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 (1) in respect of an amount equal to but not greater than
7.5% of the Principal Balance of the Proposed Portfolio, the price, expressed as
a percentage of the par amount, as determined by the Collateral Manager in its
commercially reasonable judgment or (2) the S&P Recovery Rate with respect to
such Collateral Debt Security, to the extent not calculated pursuant to clause
(1) above.

 

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 Debt Security) any Collateral Debt
Security; (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; provided further that for the purposes of determining the Issuer’s
compliance with any Coverage Test, the Measurement Date will be on or subsequent
to the Effective Date.

 

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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.

 

Moody’s Rating of any Collateral Debt Security will be determined as follows:

 

(i)            (x) if such Collateral Debt Security is publicly rated by
Moody’s, the Moody’s Rating will be such rating, or, (y) if such Collateral Debt
Security is not publicly rated by Moody’s, but the Issuer has requested that
Moody’s assign a rating to such Collateral Debt Security, the Moody’s Rating
will be the rating so assigned by Moody’s;

 

(ii)           with respect to a CMBS Security, REIT Debt Security, Trust
Preferred Security, CRE Debt Obligation or Real Estate CDO Security, if such
CMBS Security, REIT Debt Security, Trust Preferred Security, CRE Debt Obligation
or Real Estate CDO Security is not rated by Moody’s, then the Moody’s Rating of
such CMBS Security, REIT Debt Security or Real Estate CDO Security, as
applicable, may be determined using any one of the methods below:

 

(A)          with respect to any REIT Debt Security, Trust Preferred Security or
CRE Debt Obligation not publicly rated by Moody’s that is a REIT Debt Security,
Trust Preferred Security or CRE Debt Obligation, as applicable, if such REIT
Debt Security, Trust Preferred Security or CRE Debt Obligation, as applicable,
is publicly rated by S&P, then the Moody’s Rating thereof will be (x) one
subcategory below the Moody’s equivalent rating assigned by S&P if the rating
assigned by S&P is “BBB-” or greater and (y) two rating subcategories below the
Moody’s equivalent rating assigned by S&P if the rating assigned by S&P is below
“BBB-”;

 

(B)           with respect to any CMBS Conduit Security or CMBS Credit Tenant
Lease Security not publicly rated by Moody’s, (x) if Moody’s has rated a tranche
or class of CMBS Conduit Security or CMBS Credit Tenant Lease Security senior to
the relevant issue, then the Moody’s Rating thereof will be one and one-half
rating subcategories below the Moody’s equivalent of the lower of the rating
assigned by S&P and Fitch to such CMBS Conduit Security or CMBS Credit Tenant
Lease Security and (y) if Moody’s has not rated any such tranche or class and
S&P and Fitch have rated the subject CMBS Conduit Security or CMBS Credit Tenant
Lease Security, then the Moody’s Rating thereof will be two rating subcategories
below the Moody’s equivalent of the lower of the rating assigned by S&P and
Fitch;

 

(C)           with respect to any CMBS Large Loan Security or CMBS Re-REMIC
Security not publicly rated by Moody’s, the Issuer or the Collateral Manager on
behalf of

 

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the Issuer will request Moody’s to assign a rating to such CMBS Large Loan
Security or CMBS Re-REMIC Security on a case-by-case basis;

 

(D)          with respect to any other type of CMBS Security, REIT Debt Security
or Real Estate CDO Security not referred to in clauses (A) through (C) above
will be determined pursuant to subclause (y) of clause (i) above;

 

(iii)          with respect to corporate guarantees on any REIT Debt Security,
if such corporate guarantees are not publicly rated by Moody’s but another
security or obligation of the guarantor or obligor (an Other Security) is
publicly rated by Moody’s, and no rating has been assigned in accordance with
clause (i) above, the Moody’s Rating of such Collateral Debt Security will be
determined as follows:

 

(A)          if the corporate guarantee is a senior secured obligation of the
guarantor or obligor and the other security is also a senior secured obligation,
the Moody’s Rating of such Collateral Debt Security will be the rating of the
other security;

 

(B)           if the corporate guarantee is a senior unsecured obligation of the
guarantor or obligor and the other security is a senior secured obligation, the
Moody’s Rating of such Collateral Debt Security will be one rating subcategory
below the rating of the other security;

 

(C)           if the corporate guarantee is a subordinated obligation of the
guarantor or obligor and the other security is a senior secured obligation that
is: (1) rated “Ba3” or higher by Moody’s, the Moody’s Rating of such corporate
guarantee will be three rating subcategories below the rating of the other
security; or (2) rated “Bl” or lower by Moody’s, the Moody’s Rating of such
corporate guarantee will be two rating subcategories below the rating of the
other security;

 

(D)          if the corporate guarantee is a senior secured obligation of the
guarantor or obligor and the other security is a senior unsecured obligation
that is: (1) rated “Baa3” or higher by Moody’s, the Moody’s Rating of such
corporate guarantee will be the rating of the other security; or (2) rated “Bal”
or lower by Moody’s, the Moody’s Rating of such corporate guarantee will be one
rating subcategory above the rating of the other security;

 

(E)           if the corporate guarantee is a senior unsecured obligation of the
guarantor or obligor and the other security is also a senior unsecured
obligation, the Moody’s Rating of such corporate guarantee will be the rating of
the other security;

 

(F)           if the corporate guarantee is a subordinated obligation of the
guarantor or obligor and the other security is a senior unsecured obligation
that is: (1) rated “Bl” or higher by Moody’s, the Moody’s Rating of such
corporate guarantee will be two rating subcategories below the rating of the
other security; or (2) rated “B2” or lower by Moody’s, the Moody’s Rating of
such corporate guarantee will be one rating subcategory below the rating of the
other security;

 

(G)           if the corporate guarantee is a senior secured obligation of the
guarantor or obligor and the other security is a subordinated obligation that
is: (1) rated “Baa3” or higher by Moody’s, the Moody’s Rating of such corporate
guarantee will be one rating subcategory above the rating of the other security;
(2) rated

 

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below “Baa3” but not rated “B3” by Moody’s, the Moody’s Rating of such corporate
guarantee will be two rating subcategories above the rating of the other
security; or (3) rated “B3” by Moody’s, the Moody’s Rating of such corporate
guarantee will be “B2”;

 

(H)          if the corporate guarantee is a senior unsecured obligation of the
guarantor or obligor and the other security is a subordinated obligation that
is: (1) rated “Baa3” or higher by Moody’s, the Moody’s Rating of such corporate
guarantee will be one rating subcategory above the rating of the other security;
or (2) rated “Bal” or lower by Moody’s, the Moody’s Rating of such corporate
guarantee will also be one rating subcategory above the rating of the other
security; and

 

(I)            if the REIT Debt Security is a subordinated obligation of the
guarantor or obligor and the other security is also a subordinated obligation,
the Moody’s Rating of such corporate guarantee will be the rating of the other
security;

 

(iv)          with respect to a Real Estate Interest, if such Real Estate
Interest is not rated by Moody’s, the Moody’s Rating will be the rating so
assigned by Moody’s; or

 

(v)           if such Collateral Debt Security is a Real Estate CDO Security, no
notching is permitted and the Moody’s Rating will be the rating so assigned by
Moody’s.

 

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

 

 

 

 

Moody’s Rating

 

 

 

Moody’s Rating

 

 

Moody’s Rating

 

Factor

 

Moody’s Rating

 

Factor

 

 

Aaa

 

1

 

Bal

 

940

 

 

Aal

 

10

 

Ba2

 

1,350

 

 

Aa2

 

20

 

Ba3

 

1,766

 

 

Aa3

 

40

 

B1

 

2,220

 

 

Al

 

70

 

B2

 

2,720

 

 

A2

 

120

 

B3

 

3,490

 

 

A3

 

180

 

Caal

 

4,770

 

 

Baal

 

260

 

Caa2

 

6,500

 

 

Baa2

 

360

 

Caa3

 

8,070

 

 

Baa3

 

610

 

Ca or lower

 

10,000

 

 

Moody’s Recovery Rate means, with respect to a Collateral Debt Security on any
Calculation Date, an amount equal to the percentage for such Collateral Debt
Security set forth in the Moody’s Recovery Rate Matrix attached as Schedule D-2
hereto.

 

Moody’s Recovery Rate Test means a test that will be satisfied as of any
Measurement Date if the Moody’s Weighted Average Recovery Rate is at least 20%.

 

Moody’s WARF means, as of any Measurement Date, the number obtained by summing
the products obtained by multiplying the Principal Balance of each Collateral
Debt Security which is not a Defaulted Security held by the Issuer as of such
Measurement Date by its Moody’s Rating Factor, dividing such sum by the
aggregate Principal Balance of all such Collateral Debt Securities (excluding
Defaulted Securities) and rounding the result to the nearest whole number.

 

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Moody’s WARF Test means a test that will be satisfied on the Effective Date and
on any Measurement Date thereafter if the WARF is not more than 850.

 

Moody’s Weighted Average Recovery Rate means the rate on any Measurement Date
calculated as a fraction (expressed as a percentage rounded to the nearest 0.1%)
the numerator of which is the sum of the products obtained by multiplying the
Principal Balance of each Collateral Debt Security (excluding Defaulted
Securities) by the applicable Moody’s Recovery Rate and the denominator of which
is the CDS Principal Balance (excluding Defaulted Securities).

 

Mortgaged Property means with respect to any CMBS Conduit Security, CMBS Large
Loan Security or other applicable CMBS Security, the real property encumbered by
any mortgage, deed of trust or other similar security instrument securing such
loan and creating a lien on the related borrower’s fee estate or leasehold
estate in one or more properties.

 

Non-Monthly Pay Asset 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 Non-Monthly Pay Asset Interest Reserve Amount, if any, in accordance
with the Priority of Payments.

 

Non-Monthly Pay Asset Interest Reserve Amount means the following:

 

(i)            on the Closing Date, U.S.$0;

 

(ii)           as of any Calculation Date after the Effective Date, the sum of
(i) the aggregate amount of Quarterly Pay Security Interest Reserve Amounts for
the related Due Period plus (ii) the aggregate amount of Semi-Annual Pay
Security Interest Reserve Amounts for the related Due Period.

 

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

 

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 10.12(a).

 

Notes means, collectively, 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 and the Income 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 and the Income Notes, as amended or supplemented from time to time.

 

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Officer means, (a) with respect to the 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 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.

 

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
Income Note Paying Agency other than Notes cancelled, redeemed, exchanged or
replaced in accordance with the terms of the Indenture or the Income Note 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 or termination 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.

 

Paying Agents means, collectively, the Note Paying Agent and the Income Note
Paying Agent.

 

Payment Account means the Securities Account designated the “Payment Account”
and established in the name of the Trustee pursuant to Section 10.8.

 

Payment Date means the 25th day of each calendar month, or if such day is not a
Business Day, the next succeeding Business Day, commencing in July 2006 and
ending on the applicable Stated Maturity Date (which shall be the final Payment
Date).

 

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 the
Business 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

 

38

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by (a) for the first Interest Period, 33 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) NorthStar OS VII, 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 a Defaulted Security) or that issues identical
securities in lieu of payments of interest in Cash.

 

Placement Agent means Banc of America Securities LLC.

 

Placement Agreement means the agreement, dated as of the Closing Date, between
the Issuer and the Placement Agent relating to the placement of the Notes.

 

Pledged Collateral Debt Security means as of any date of determination, any
Collateral Debt Security that has been Granted to the Trustee and has not been
released from the lien of this Indenture pursuant to Section 10.13.

 

Pledged Securities means on any date of determination, (a) the Collateral Debt
Securities, Temporary Ramp-Up Securities, Equity Securities 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.

 

Pledgee Counterparty has the meaning specified in Section 10.9.

 

Pledgor Counterparty has the meaning specified in Section 10.10.

 

Principal Balance means, with respect to any Collateral Debt Security or
Eligible Investment, as of any date of determination, the outstanding principal
amount of such Collateral Debt Security or Eligible Investment; provided that
the Principal Balance of (i) any Collateral Debt Security which permits the
deferral or capitalization of interest will not include any outstanding balance
of the deferred and/or capitalized interest, (ii) any Equity Security will be
zero, (iii) any putable Collateral Debt Security which matures after the Stated
Maturity Date will be the lower of the put price and the outstanding principal
amount, (iv) any Collateral Debt Security or Eligible Investment in which the
Trustee does not have a first priority perfected security interest shall be
deemed to be zero and (v) except as otherwise expressly specified herein, the
Principal Balance of a Synthetic Security which is a Derivative Contract shall
be equal to the notional amount of such Synthetic Security.

 

Principal Coverage Amount means, on any Measurement Date, an amount equal to the
sum of:

 

(i)            the aggregate Principal Balance of all Collateral Debt Securities
(other than Defaulted Securities, Written Down Securities and Deferred Interest
PIK Bonds) included in the Collateral on such date;

 

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(ii)           the aggregate Principal Balance of the Eligible Investments in
the Collateral Account on such date that represent Collateral Principal
Collections;

 

(iii)          the Defaulted Securities Amount;

 

(iv)          with respect to Written Down Securities, the Reduced Principal
Balance; and

 

(v)           with respect to Deferred Interest PIK Bond, the Deferred Interest
PIK Bond Amount,

 

provided that for purposes of determining each of the Principal Coverage Ratios,
the Principal Balances for Collateral Debt Securities having an Actual Rating by
Moody’s of “Bal” or lower or an Actual Rating by S&P or Fitch of “BB+” or lower
will reflect the following values:

 

(1)           the Principal Balance of any Collateral Debt Security having an
Actual Rating by Moody’s of “Caal” or lower, or an Actual Rating by S&P or Fitch
of “CCC+” or lower, shall be 60% of its principal amount; and

 

(2)           if more than 7% of the CDS Principal Balance is comprised of
Collateral Debt Securities which have an Actual Rating by Moody’s of “B1” or
lower but higher than “Caal” or an Actual Rating by S&P or Fitch of “B+” or
lower but higher than “CCC+”, then the Principal Balance of such Collateral Debt
Securities in excess of such 7% shall be 70% of the principal amount thereof;
and

 

(3)           after giving effect to (2) above, if more than 35% of the CDS
Principal Balance is comprised of Collateral Debt Securities which have an
Actual Rating by Moody’s of “Bal” or lower or an Actual Rating by S&P or Fitch
of “BB+” or lower, then:

 

(a)           the Principal Balance of Collateral Debt Securities having an
Actual Rating by Moody’s of “Bl” or lower but higher than “Caal” or an Actual
Rating by S&P or Fitch of “B+” or lower but higher than “CCC+” in excess of such
35% shall be 70% of the principal amount thereof, and

 

(b)           after giving effect to the immediately preceding clause (a), the
Principal Balance of Collateral Debt Securities having an Actual Rating by
Moody’s of “Bal” or lower but higher than “Caal” or an Actual Rating by S&P or
Fitch of “BB+” or lower but higher than “CCC+” in excess of 35% shall be 90% of
the principal amount thereof.

 

Principal Coverage Ratios means the Class A/B Principal Coverage Ratio, the
Class C Principal Coverage Ratio, the Class D Principal Coverage Ratio and the
Class E Principal Coverage Ratio.

 

Principal Coverage Tests means the Class A/B Principal Coverage Test, the
Class C Principal Coverage Test, the Class D Principal Coverage Test and the
Class E Principal Coverage Test.

 

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 Debt
Securities, (iii) for the payment of certain fees and expenses, (iv) in the case
of a failure to satisfy either the Class A/B Interest Coverage Test or the
Class A/B Principal

 

40

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Coverage Test, for interest payments on the Class C Notes, the Class D Notes and
the Class E Notes, (v) in the case of a failure to satisfy either the Class C
Interest Coverage Test or the Class C Principal Coverage Test, for interest
payments on the Class D Notes and the Class E Notes, (vi) in the case of a
failure to satisfy either the Class D Interest Coverage Test or the Class D
Principal Coverage Test, for interest payments on the Class E Notes, and
(vii) in the case of a failure to satisfy either the Class E Interest Coverage
Test or the Class E Principal Coverage Test, for payments of Income Note Excess
Funds, that are instead applied on the related Payment Date, 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.

 

Prohibited Asset means any of the following asset types: aircraft lease
securities, enhanced equipment trust certificates, structured settlement
securities, tobacco settlement securities, manufactured housing securities,
12(b)-1 fee securities, future flow securities, emerging markets securities, sub
and re-performing credit card securities, franchise loan securities, market
value collateralized debt obligations, collateralized loan obligations or CDO of
CDO Securities.

 

Proposed Portfolio means the portfolio (measured by Principal Balance) of
(a) the Pledged Collateral Debt Securities 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 Debt Securities resulting from the sale, maturity or other
disposition of a Pledged Collateral Debt Security or a proposed acquisition of a
Collateral Debt Security, 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 Debt
Securities and Eligible Investments, to the extent such payments or amounts
constitute accrued interest purchased with Collateral Principal Collections or
Uninvested Proceeds except for purchased accrued interest on Collateral Debt
Securities purchased on 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.

 

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 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.

 

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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 U.S.
Dollar-denominated sovereign debt obligations of such country are rated “AA” or
better by S&P and “AA” or better by Fitch.

 

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 Debt Security that is a Quarterly Pay Security and not entitled to
the benefit of a Cashflow Hedge Agreement, as of any Calculation Date, the
amount equal to (i) the amount of interest received by the Issuer on the most
recent payment date with respect to such Quarterly Pay Security multiplied by
(ii) (A) three minus the number of months since the most recent payment date
with respect to such Quarterly Pay Security (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.

 

Ramp-Up Collateral Debt Security means each additional Collateral Debt Security
selected by the Collateral Manager for purchase by the Issuer and pledged to the
Trustee during the Ramp-Up Period.

 

Ramp-Up 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 the Ramp-Up Interest Reserve
Amount on the Closing Date.

 

Ramp-Up Interest Reserve Amount means, on the Closing Date, U.S.$1,000,000.

 

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 and the Class E Notes.

 

Rated Notes Interest Shortfall Amount means, on any Calculation Date until (but
excluding) the first Calculation Date after the Effective Date, the aggregate
amount of interest due and payable (without giving effect to any applicable
deferments of interest) on the Rated Notes for which Collateral Interest
Collections (excluding, prior to the first Calculation Date after the Effective
Date, amounts in the Ramp-Up Interest Reserve Account) are insufficient to make
payments in full thereon in accordance with the Priority of Payments.

 

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, a Fitch Rating, a Moody’s Rating or an
S&P Rating.

 

Rating Agency means each of Fitch, Moody’s and S&P.

 

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, S&P or Fitch, respectively, the receipt of

 

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written confirmation by Moody’s, S&P and Fitch, 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, S&P or Fitch, in which case
such Rating Agency Confirmation will be sufficient. For the purposes of this
definition, “Rating Agencies” will be deemed to not include Fitch except with
respect to the Effective Date; provided that notification will be made to Fitch
within 30 days of any instance in which Rating Agency Confirmation is required
by either Moody’s or S&P.

 

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) CMBS
Securities, (iii) other Specified Types or (iv) 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; provided, that a Real Estate CDO Security shall not
include a CMBS Re-REMIC Security.

 

Real Estate Interests means interests (other than CRE Debt Obligations, REIT
Debt Securities, Real Estate Trust Preferred Securities and Real Estate CDO
Securities but including Tenant Lease Loan Interests) that entitle the holders
thereof to receive payments that depend primarily on the cash flow from or sale
proceeds of mortgage loans on commercial and multifamily properties, including
senior and subordinate mortgage loans, participation interests in mortgage loans
on commercial and multifamily properties, including subordinate interests,
mezzanine loans secured by ownership interests in entities owning commercial
properties, mortgage loans secured by mortgages on commercial real estate
properties that are subject to a lease to a single tenant or trust certificates
representing beneficial ownership interests in the foregoing.

 

Real Estate Trust Preferred Securities means securities that entitle the holders
thereof to receive payments that depend (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of such securities) on the cash flow from either an individual trust security or
a pool of trust securities issued (in each case) by a wholly-owned trust
subsidiary of an entity whose business is significantly related to real estate,
real estate management or real estate ownership and that issues an obligation to
such trust subsidiary in exchange for the net issuance proceeds of such
securities.

 

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 being
the 15th 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.

 

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Redemption Date Statement has the meaning specified in Section 10.12(b).

 

Redemption Premium means the premium payable to Holders of each Class of Fixed
Rate Notes in connection with an Optional Redemption of each 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
June 2018 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
Class C Cumulative Applicable Periodic Interest Shortfall Amount, Class D
Cumulative Applicable Periodic Interest Shortfall Amount and Class E Cumulative
Applicable Periodic Interest Shortfall Amount plus (c) 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, except to the extent the Income Note
Redemption Approval Condition applies, means an amount equal to the aggregate of
any amounts distributable on the Income Notes in respect of such redemption
pursuant to Section 11.1(a) and (b) and in any instance where the Income Note
Redemption Approval Condition applies, an amount equal to the amounts necessary
to satisfy the Income Note Redemption Approval Condition.

 

Redemption Spread means, with respect to the Class D-FX Notes, 0.70%, and the
Class E Notes, 1.375%.

 

Reduced Principal Balance means, with respect to each Written Down Security, the
amount to which the original Principal Balance of such Written Down Security is
reduced.

 

Reference Banks has the meaning specified in Schedule B.

 

Reference Obligation means the debt securities or other obligations or types of
obligations constituting in each case a Specified Type and upon which, in whole
or in part, the payment rights of the holder of a Synthetic Security or CMBS
Re-REMIC Security are based.

 

Reference Obligor means, with respect to a Reference Obligation, the obligor on
such Reference Obligation.

 

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 Definitive Note has the meaning specified in Section 2.4(c)(1)(vi).

 

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

 

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

 

Regulation S Transfer Certificate has the meaning specified in
Section 2.4(c)(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.

 

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, the extent
of compliance with such Collateral Quality Test will be maintained or improved
immediately following such reinvestment;

 

(ii)           after the Effective Date, the Collateral Concentration
Limitations are satisfied, or, if any of the Collateral Concentration
Limitations was not satisfied immediately prior to such investments, such
compliance with the Collateral Concentration Limitations will be maintained or
improved following such reinvestment;

 

(iii)          after the Effective Date, 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;
and

 

(iv)          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 June 2011; provided, however that if (i) a Key
Manager Event occurs and (ii) the Holders of a majority in aggregate principal
amount of the Outstanding Notes of the Controlling Class direct in writing that
the Trustee terminate the Reinvestment Period, then the Reinvestment Period
shall instead end upon the Trustee’s issuance of written notice of such
termination to the Collateral Manager.

 

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 June 2011 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 June 2018.

 

REIT means a real estate investment trust, as defined in Section 856 of the Code
or any successor provision.

 

REIT Debt Securities means, collectively, REIT Debt Securities—Diversified, REIT
Debt Securities— Health Care, REIT Debt Securities—Hotel, REIT Debt
Securities—Industrial, REIT Debt Securities— Mortgage, REIT Debt
Securities—Multi-Family, REIT Debt Securities—Office, REIT Debt Securities—
Residential, REIT Debt Securities—Retail and REIT Debt Securities—Storage.

 

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REIT Debt Securities—Diversified means Collateral Debt 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 the Collateral Debt Securities) of a portfolio of diverse real property
interests; provided that any Collateral Debt Security falling within any other
ABS REIT Debt Security description set forth herein will be excluded from this
definition.

 

REIT Debt Securities—Health Care means Collateral Debt 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 the Collateral Debt Securities) of a portfolio of properties including
hospitals, clinics, sport clubs, spas and other health care facilities and other
similar real property interests used in one or more similar businesses.

 

REIT Debt Securities—Hotel means Collateral Debt 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 the
Collateral Debt Securities) of a portfolio of properties including hotels,
motels, youth hostels, bed and breakfasts and other similar real property
interests used in one or more similar businesses.

 

REIT Debt Securities—Industrial means Collateral Debt 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 the Collateral Debt Securities) of a portfolio of properties including
warehouse, industrial and distribution facilities, factories, refinery plants,
breweries and other similar real property interests used in one or more similar
businesses.

 

REIT Debt Securities—Mortgage means Collateral Debt 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 the
Collateral Debt Securities) of mortgages, commercial mortgage-backed securities,
collateralized mortgage obligations and other similar mortgage-related
securities (including Collateral Debt Securities issued by a hybrid form of such
trust that invests in both commercial real estate and commercial mortgages).

 

REIT Debt Securities—Multi-Family means Collateral Debt 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 the Collateral Debt Securities) of a portfolio of properties including
multi-family dwellings such as apartment blocks, condominiums and co-operative
owned buildings.

 

REIT Debt Securities—Office means Collateral Debt 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 the
Collateral Debt Securities) of a portfolio of properties including office
buildings, conference facilities and other similar real property interests used
in the commercial real estate business.

 

REIT Debt Securities—Residential means Collateral Debt 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 the Collateral Debt Securities) of residential mortgages (other than
multi-family dwellings) and other similar real property interests.

 

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REIT Debt Securities—Retail means Collateral Debt 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 the
Collateral Debt Securities) of regional malls, neighborhood shopping centers,
big box centers, retail stores, restaurants, bookstores, clothing stores and
other similar real property interests used in one or more similar businesses.

 

REIT Debt Securities—Storage means Collateral Debt 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 the
Collateral Debt Securities) a portfolio of properties including storage
facilities and other similar real property interests used in one or more similar
businesses.

 

REIT Trust Preferred Securities means securities that entitle the holders
thereof to receive payments that depend (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of such securities) on the cash flow from either an individual trust security or
a pool of trust securities issued (in each case) by a wholly-owned trust
subsidiary of a REIT, or of an operating partnership subsidiary of a REIT, that
issues obligations to such trust subsidiary in exchange for the net issuance
proceeds of such securities.

 

Relevant Jurisdiction means, as to any obligor on any Collateral Debt Security,
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 Debt Security is
located, (c) in 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.

 

Requisite Noteholders means the Holders of 662/3% or more of the Outstanding
aggregate principal amount of (i) the Class A-1 Notes, so long as any Class A-1
Notes remain Outstanding, (ii) thereafter the Class A-2 Notes, so long as any
Class A-2 Notes remain Outstanding, (iii) thereafter the Class A-3 Notes, so
long as any Class A-3 Notes remain Outstanding, (iv) thereafter the Class B
Notes, so long as any Class B Notes remain Outstanding, (v) thereafter the
Class C Notes so long as any Class C Notes remain Outstanding, (vi) thereafter
the Class D Notes so long as any Class D Notes remain Outstanding and
(vii) thereafter the Class E Notes so long as any Class E 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 Definitive Note has the meaning specified in Section 2.4(c)(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).

 

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

 

S&P means Standard & Poor’s, 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 Debt
Securities, 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 Differential, the Class D Note Default
Differential and the Class E 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 and the Class E Note
Default Differential of the Proposed Portfolio is greater than the Class E 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 Debt Securities and provided,
in each case, by the Collateral Manager or S&P to the Trustee.

 

S&P Minimum Average Recovery Rate means, as of any date of 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 Debt
Security by its S&P Recovery Rate set forth in a schedule of the Indenture and
(ii) dividing such sum by the CDS Principal Balance less cash and Eligible
Investments representing Collateral Principal Collections and (iii) rounding up
to the first decimal place.

 

S&P Minimum Weighted 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) 39.50% with respect to the Class A Notes,
(ii) 43.25% with respect to the Class B Notes, (iii) 47.00% with respect to the
Class C Notes, (iv) 49.75% with respect to the Class D Notes and (v) 53.00% with
respect to the Class E 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
Debt Security: (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 Debt Security, (c) the par
value of such Collateral Debt Security, (d) the type of issue (including, by way
of example, whether such Collateral Debt Security 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 Debt Security 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 Debt Security which bears interest at a fixed rate)
or the spread over the applicable index (in the case of a Collateral Debt
Security which bears interest at a floating rate), (g) the S&P Industry
Classification Group for such Collateral Debt Security, (h) the Stated Maturity
Date of such

 

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Collateral Debt Security, (i) the S&P Rating of such Collateral Debt Security or
the issuer thereof, as applicable, (j) the Principal Balance in cash and in
Eligible Investments, (k) the priority category assigned by S&P to such
Collateral Debt Security, if available, and (1) such other information as the
Trustee may determine to include in such file.

 

S&P Rating means the rating by S&P of any Collateral Debt Security determined as
follows:

 

(a)           if S&P has assigned a rating to such Collateral Debt Security
either publicly or privately (in the case of a private rating, with the written
consent of the issuer of such Collateral Debt Security 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 Debt
Security is placed on a watch list for possible upgrade or downgrade by S&P, the
S&P Rating applicable to such Collateral Debt Security shall be one rating
subcategory above or below, respectively, the S&P Rating applicable to such
Collateral Debt Security immediately prior to such Collateral Debt Security
being placed on such watch list;

 

(b)           if such Collateral Debt Security 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 Debt Security, the S&P Rating shall be the
credit estimate rating so assigned by S&P; provided that pending receipt from
S&P of such rating, if such Collateral Debt Security is not eligible for
notching in accordance with Schedule G, such Collateral Debt Security shall have
an S&P Rating of “CCC-”, otherwise such S&P Rating shall be the rating assigned
according to Schedule F until such time as S&P shall have assigned a credit
estimate rating thereto; provided further that, so long as any of the Notes
remain Outstanding, prior to or immediately following the acquisition of any
Collateral Debt Security where S&P has assigned a credit estimate rating, the
Issuer shall submit to S&P a request to perform a credit estimate on such
Collateral Debt Security, on or prior to the one-year anniversary of the
acquisition of any such Collateral Debt Security, together with all information
reasonably required by S&P to perform such estimate; or

 

(c)           if any Collateral Debt Security is a Collateral Debt Security that
has not been assigned a rating by S&P and is not a Collateral Debt Security
listed in Schedule G, as identified by the Collateral Manager, the S&P Rating of
such Collateral Debt Security shall be the rating determined by reference to
Schedule F; provided that (i) if any Collateral Debt Security shall, at the time
of its purchase by the Issuer, be listed for a possible upgrade or downgrade on
either Moody’s or Fitch’s then current credit rating watch list, then the S&P
Rating of such Collateral Debt Security shall be one subcategory above or below,
respectively, the rating then assigned to such item as set forth in Schedule A,
(ii) for purposes of determining compliance with S&P CDO Monitor Test, if the
rating assigned to such Collateral Debt Security 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 Debt Security shall be one
rating subcategory above or below, respectively, the S&P Rating applicable to
such Collateral Debt Security immediately prior to such Collateral Debt Security
being placed on such watch list and (iii) the aggregate Principal Balance that
may be given a rating based on this subparagraph (c) may not exceed 20% of the
aggregate Principal Balance of all Collateral Debt Securities; provided that if
any Collateral Debt Security has not been assigned a rating by S&P and is a type
of Collateral Debt Security not listed on Schedule G, subsequent to the Closing
Date, the acquisition of any such Collateral Debt Security will require an
estimate or shadow rating from S&P, the assignment of an S&P Recovery Rate to
such Collateral Debt Security and receipt of Rating Agency Confirmation from S&P
prior to the acquisition by the Issuer of such Collateral Debt Security.

 

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Notwithstanding the foregoing, if any Collateral Debt Security 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 Debt Security 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 Debt Security is removed from such list at any
time, it shall be deemed to have its then-current actual rating by S&P.

 

S&P Recovery Rate means, with respect to a Collateral Debt Security on any
Calculation Date, an amount equal to the percentage for such Collateral Debt
Security set forth in the S&P Recovery Rate Matrix attached as Schedule D-1
hereto (determined in accordance with procedures prescribed by S&P for such
Collateral Debt Security on such Calculation Date or, in the case of Defaulted
Securities, the S&P Rating immediately prior to default).

 

S&P Weighted Average Recovery Rate means, as of any Calculation Date, 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 Debt
Security by its S&P Recovery Rate and (ii) dividing such sum by the aggregate
Principal Balance of the Collateral Debt Securities and (iii) rounding up to the
first decimal place. For this purpose, the Principal Balance of a Defaulted
Security or Deferred Interest PIK Bond will be deemed to be equal to its
outstanding principal amount (excluding any capitalized interest thereon).

 

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

 

Sale Proceeds means all proceeds (including accrued interest) received with
respect to Collateral Debt Securities and Equity Securities as a result of sales
of such Collateral Debt Securities and Equity Securities 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 Debt Securities means the list of Collateral Debt
Securities securing the Rated 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, the
Collateral Manager and each Hedge Counterparty.

 

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

 

Securities Act means the United States 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.

 

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

 

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Semi-Annual Pay Security Interest Reserve Amount means, with respect to each
Collateral Debt Security that is a Semi-Annual Pay Security and not entitled to
the benefit of a Cashflow Hedge Agreement, as of any Calculation Date, the
amount equal to (i) the amount of interest received by the Issuer on the most
recent payment date with respect to such Semi-Annual Pay Security multiplied by
(ii) (A) six minus the number of months since the most recent payment date with
respect to such Semi-Annual Pay Security (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 means having a higher position or priority in respect of rights
(including, unless otherwise specified, a right to payment) vis-à-vis one or
more other parties or classes, including among Classes of Notes.

 

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 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 Structuring Fee means, with respect to each Payment Date, an amount equal
to 0.05% per annum of the Fee Basis Amount payable to the Collateral Manager
pursuant to the Collateral Management Agreement.

 

Special Amortization Pro Rata Condition means with respect to any Payment Date
that either:

 

(A)                              (I) the aggregate CDS Principal Balance as of
the related Calculation Date is at least equal to 50% of the aggregate CDS
Principal Balance on the Effective 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 Effective Date; or

 

(B)                                if clause (A) above is not satisfied, Rating
Agency Confirmation has been provided by S&P and Moody’s 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 CMBS Securities, REIT Debt Securities, Real Estate CDO
Securities, CRE Debt Obligations, Trust Preferred Securities and Real Estate
Interests.

 

Spread has the meaning specified in the definition of Reinvestment Criteria.

 

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Spread Excess means, as of any Measurement Date, a fraction (expressed as a
percentage), the numerator of which is equal to the product of (a) the greater
of zero and the excess, if any, of the Weighted Average Spread for such date
over 2.07%, and (b) the aggregate Principal Balance of all Floating Rate
Collateral Debt Securities and Deemed Floating Rate Collateral Debt Securities
(excluding, in each case, Defaulted Securities, Written Down Securities or
Deferred Interest PIK Bonds) and the denominator of which is the aggregate
Principal Balance of all Collateral Debt Securities that are Fixed Rate
Collateral Debt Securities (excluding Defaulted Securities, Written Down
Securities, Deferred Interest PIK Bonds and Deemed Floating Rate Collateral Debt
Securities).

 

Stated Maturity Date means June 22, 2051.

 

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 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 means having a lower position or priority in respect of rights
(including, unless otherwise specified, a right to payment) vis-à-vis one or
more other parties or Classes, including among Classes of Notes.

 

Subordinate Interests has the meaning specified in Section 13.1(a), (b), (c),
(d), (e), (f) or (g), as applicable.

 

Subpool means each of the groups of the Collateral Debt Securities 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 Debt Security 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.

 

Substitute Party has the meaning specified in Section 16.1(d).

 

Substitution Event means, in connection with the Initial Hedge Counterparty, any
of the following:

 

(i)                                The short-term rating of the Hedge Ratings
Determining Party from Moody’s is “P-2” or lower or the long-term rating of the
Hedge Ratings Determining Party from Moody’s is withdrawn, suspended or
downgraded to “A3” or lower or, if the related Hedge Ratings Determining Party
does not have a short-term rating, the long-term rating of the related Hedge
Ratings Determining Party from Moody’s is withdrawn, suspended or falls to “A2”
or lower;

 

(ii)                             So long as any of the Notes are Outstanding and
rated by S&P, the short-term rating from S&P of the Initial Hedge Counterparty
is withdrawn, suspended or downgraded below

 

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“A-3” or, if no short-term rating is available, the long-term rating from S&P of
the Initial Hedge Counterparty is withdrawn, suspended or downgraded below
“BBB-”; or

 

(iii)        The short-term rating of the Initial Hedge Counterparty from Fitch
is withdrawn, suspended or downgraded below “F2” or the long-term rating of the
Initial Hedge Counterparty from Fitch is withdrawn, suspended or downgraded
below “BBB+”.

 

Synthetic Security means a Derivative Contract or a Derivative Security pursuant
to which the Issuer sells credit protection with respect to one or more
(including a pool of) Reference Obligations or obligors; provided that:

 

(a)                                  for physical settlement to the Issuer, such
Synthetic Security must also provide (or warrant) that delivery of any
deliverable obligations thereunder to the Issuer and transfer of such
deliverable obligations by the Issuer to a third party will not require or cause
the Issuer to assume, and will not subject the Issuer to, any obligation or
liability (other than immaterial, nonpayment obligations and any assignment or
transfer fee in respect of loans), or the issuer thereof will indemnify the
Issuer against such obligations and liabilities;

 

(b)                                 such Synthetic Security shall have a Fitch
Rating, an S&P Rating and an S&P Recovery Rate and a Moody’s Recovery Rate and a
Moody’s Rating Factor assigned by the respective Rating Agency;

 

(c)                                  Rating Agency Confirmation from S&P is
received at or prior to the time of acquisition of the Synthetic Security;

 

(d)                                 the Reference Obligation is a Specified
Type; and

 

(e)                                  such Synthetic Security shall not be a
security wherein the Issuer is buying credit protection or otherwise acquiring a
“short” position in any one or more Reference Obligations.

 

Synthetic Security Counterparty means a Derivative Contract Counterparty or
other entity (other than the Issuer) required to make payments on a Synthetic
Security pursuant to the terms of the Synthetic Security.

 

Synthetic Security Periodic Payments means, with respect to a Synthetic
Security, periodic payments made pursuant thereto other than (i) any credit
protection or cash or physical settlement amount payable upon a credit event and
(ii) any breakage amount or other termination amount owing upon a termination,
in whole or in part, of such Synthetic Security.

 

Tax Event means a new, or change in any, U.S. or foreign tax statute, treaty,
regulation, rule, ruling, practice, procedure or judicial decision or
interpretation, occurring in each case after the Closing Date, which results in
(i) any portion of any payment due from any issuer or obligor under any
Collateral Debt Security becoming properly subject to the imposition of U.S. or
foreign withholding tax, which withholding tax is not compensated for by a
“gross up” provision under the terms of the related Collateral Debt Security,
(ii) any jurisdiction imposing 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 a
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

 

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deduction or withholding been required, and where 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 10% or more of the amount of
aggregate interest payments on all of the related Collateral Debt Securities
during the related Due Period.

 

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

 

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

 

Taxed Collateral Debt Security 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.

 

Temporary Ramp-Up Security means each security that is listed on Schedule C
hereto that (i) is a direct unsecured debt obligation of the U.S. Government,
(ii) bears interest at a fixed rate, (iii) is acquired by the Issuer on the
Closing Date in furtherance of interest rate hedging of the Issuer’s portfolio
by being sold on or prior to the Effective Date in conjunction with the
acquisition of one or more Ramp-Up Collateral Debt Securities and (iv) is rated
in the highest rating category by at least one nationally recognized rating
agency.

 

Tenant Lease Loan Interests means securities that entitle the holders thereof to
receive payments that depend (except for rights or other assets designed to
assure the servicing or timely distribution of proceeds to holders of such
securities) on the cash flow from a commercial mortgage loan made to finance the
acquisition, construction and improvement of properties leased to corporate
tenants (or on the cash flow from such leases).

 

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

 

Trust Officer means, when used with respect to the Trustee, any Officer within
the CDO Trust Services Group of 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 CDO Trust Services Group of the Corporate Trust Office because
of such person’s knowledge of and familiarity with the particular subject.

 

Trust Preferred Securities means collectively REIT Trust Preferred Securities
and Real Estate Trust Preferred Securities.

 

Trustee means LaSalle 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

 

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accordance with the Indenture, other than the Trustee Fee, including, without
limitation, any expenses or indemnities incurred by the Trustee and the Bank in
its capacities as Collateral Administrator, Calculation Agent, Note Paying
Agent, Income 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 0.015% per annum of the CDS Principal
Balance as of the first day of the related Due Period; provided that so long as
any Class of Rated Notes remain Outstanding, such fee shall in no event be an
annual amount less than U.S.$25,000.

 

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

 

Underlying Instrument means each of the agreements 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 holders of such Pledged Security are the beneficiaries.

 

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

 

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%) of:

 

(a)                                  the number obtained by (i) multiplying the
Principal Balance of each Fixed Rate Collateral Debt Security (except Collateral
Debt Securities 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 Debt Securities
held in the portfolio as of such date and (iii) dividing such sum by the
aggregate Principal Balance of all Fixed Rate Collateral Debt Securities held in
the portfolio as of such date; provided that for purposes of calculating the
Weighted Average Fixed Rate Coupon of Collateral Debt Securities that are
Defaulted Securities, the Written Down Amount with respect to Written Down
Securities and Equity Securities will be excluded, except for those Defaulted
Securities 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; plus

 

(b)                                 if the number obtained in clause (a) is less
than 5.70%, the Spread Excess.

 

Weighted Average Life means, on any Calculation Date with respect to all
Collateral Debt Securities (excluding any Defaulted Securities), 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 Debt Security
by

 

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(b) the outstanding Principal Balance of such Collateral Debt Security and
(ii) dividing such sum by the aggregate Principal Balance at such time of all
Collateral Debt Securities.

 

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 Debt Securities as of such Measurement Date is less than or
equal to the number of years set forth in the table below:

 

As of any Calculation Date

 

Weighted Average Life

 

Occurring During the Period Below

 

(in Years)

 

Closing Date – <1.0 year

 

10.0 years

 

>1.0 year – <2.0 years

 

9.0 years

 

>2.0 years – <3.0 years

 

8.0 years

 

>3.0 years – <4.0 years

 

7.0 years

 

>4.0 years – <5.0 years

 

6.0 years

 

>5.0 years – Stated Maturity Date

 

5.0 years

 

 

Weighted Average Spread means, as of any Measurement Date, the sum (rounded up
to the next 0.001%) of:

 

(a)                                  the number obtained by (i) summing the
products obtained by multiplying (A) for each Floating Rate Collateral Debt
Security (other than any Defaulted Security, Written Down Security or Deferred
Interest PIK Bond), the stated spread above LIBOR at which interest accrues on
such Collateral Debt Security as of such date and, for each Deemed Floating Rate
Collateral Debt Security (other than any Defaulted Security, Written Down
Security or Deferred Interest PIK Bond), the Deemed Floating Spread by (B) the
Principal Balance of such Collateral Debt Security as of such date and
(ii) dividing such sum by the aggregate Principal Balance of all Floating Rate
Collateral Debt Securities and all Deemed Floating Rate Collateral Debt
Securities; provided that for purposes of calculating the Weighted Average
Spread, Collateral Debt Securities that are Defaulted Securities, the Written
Down Amount with respect to Written Down Securities and Equity Securities will
be excluded, except for those Defaulted Securities 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; plus

 

(b)                                if the number obtained pursuant to the
calculations in clause (a) is less than 2.07%, the Fixed Rate Excess.

 

Withholding Tax Security means a Collateral Debt Security if:

 

(i)                                    any payments thereon to the Issuer 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 Debt Security, the issuer of or counterparty with
respect to such Collateral Debt Security 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 Security, the
amount by which the original Principal Balance of such Written Down Security is
reduced as notified by or on behalf of the related issuer or trustee to the
holders of such Written Down Security (including appraisal reductions on CMBS
Securities).

 

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Written Down Security means any Collateral Debt Security as to which the
aggregate par amount of such Collateral Debt Security 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 Debt Security 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 Debt Security becoming a Written
Down Security.

 

1.2.          ASSUMPTIONS AS TO COLLATERAL DEBT SECURITIES, 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 Rated Notes shall be made
by the Issuer or the Collateral Administrator on behalf of the Issuer using (in
the case of the Collateral Debt Securities) 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 Defaulted
Securities 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 Class A/B Interest Coverage Ratio, the
Class C Interest Coverage Ratio, the Class D Interest Coverage Ratio and the
Class E Interest Coverage Ratio:

 

(1)                             the expected interest income on Collateral Debt
Securities and Eligible Investments and the expected interest payable on the
Rated Notes and amounts, if any, payable under the 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.

 

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(c)                                  For each Due Period, the Scheduled
Distribution on any Pledged Security (other than (i) a Defaulted Security,
(ii) a Deferred Interest PIK Bond or (iii) an Equity Security, 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 Security, 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 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 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 Debt
Security 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 “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 and the actual number of
days elapsed during the applicable Due Period.

 

(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.

 

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(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 Debt Securities, 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.

 

(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.

 

(k)                                  If the Issuer or the Collateral Manager
determines that a Collateral Debt Security would fall within the definition of
more than one Specified Type, then the Issuer or the Collateral Manager shall
classify that obligation in a manner it deems appropriate and reasonable.

 

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;

 

(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; and

 

(h)                                 unless otherwise stated to the contrary
herein, any payments to be made by the Issuer (or by the Trustee on behalf of
the Issuer) in respect of a Class of Notes shall be payable pari passu between
any subclasses of such Class of Notes.

 

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ARTICLE II

 

THE RATED NOTES

 

2.1.                              FORMS GENERALLY

 

(a)           The Class A Notes, the Class B Notes, the Class C Notes and the
Class D 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 Chicago, Illinois,
as custodian for DTC and registered in the name of DTC or a nominee of DTC, duly
executed by the Issuer and authenticated by the Trustee or the Authenticating
Agent as hereinafter provided. The Aggregate Outstanding Amount of each
Regulation S 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 and the
Class D Notes offered 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 Issuer 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 Definitive
Class A-D Note), which may be either a Regulation S Definitive Class A-D Note or
a Rule 144A Definitive Class A-D 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.

 

(d)           The Class E 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-1 (each, a Definitive
Class E Note), as the case may be, 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 Issuer in issuing the Rated 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 Rated Notes in
notices of redemption and related materials as a convenience to Holders;
provided that any such notice may state that no representation

 

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is made as to the correctness of such numbers either as printed on the Rated
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 Rated Notes which may be issued
under this Indenture may not exceed U.S.$527,000,000, excluding Rated Notes
issued upon registration of, transfer of, or in exchange for, or in lieu of,
other Rated Notes pursuant to Section 2.4, 2.5 or 8.5.

 

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

 

Designation

 

Original Principal 
Amount

 

Applicable
Periodic Interest
Rate

 

Rated Note Stated

Maturity Date

 

Class A-1 Notes

 

U.S.$338,250,000

 

LIBOR + 0.27%

 

June 2051

 

Class A-2 Notes

 

U.S.$54,250,000

 

LIBOR + 0.32%

 

June 2051

 

Class A-3 Notes

 

U.S.$50,000,000

 

LIBOR + 0.33%

 

June 2051

 

Class B Notes

 

U.S.$30,300,000

 

LIBOR + 0.38%

 

June 2051

 

Class C Notes

 

U.S.$22,000,000

 

LIBOR + 0.60%

 

June 2051

 

Class D-FL Notes

 

U.S.$14,000,000

 

LIBOR + 1.40%

 

June 2051

 

Class D-FX Notes

 

U.S.$2,000,000

 

6.913%

 

June 2051

 

Class E Notes

 

U.S.$16,200,000

 

8.232%

 

June 2051

 

 

The Rated Notes will be issuable in minimum denominations of U.S.$250,000 and,
in each case, only in integral multiples of U.S.$1,000 in excess of such minimum
denominations. After issuance, (x) a Rated 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 or the Class E 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 Rated 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 Rated Notes and interest on
Defaulted Interest will be calculated in accordance with the definition of
Periodic Interest.

 

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

 

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

 

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(f)            The Rated Notes shall be numbered, lettered or otherwise
distinguished in such manner as may be consistent herewith, determined by the
Authorized Officer of the Issuer executing such Rated Notes as evidenced by its
execution of such Rated Notes.

 

2.3.          EXECUTION, AUTHENTICATION, DELIVERY AND DATING

 

(a)                                  The Rated Notes shall be executed on behalf
of the Issuer by an Authorized Officer of the Issuer. The signatures of such
Authorized Officers on the Rated Notes may be manual or facsimile (including in
counterparts).

 

(b)                                 Rated Notes bearing the manual or facsimile
signatures of individuals who were at any time the Authorized Officers of the
Issuer 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 Rated Notes or did not hold such offices at the date of
issuance of such Rated Notes.

 

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

 

(d)                                 Each Rated 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 Rated Notes that
are authenticated after the Closing Date for any other purpose under this
Indenture shall be dated the date of their authentication.

 

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

 

(f)                                    No Rated Note shall be entitled to any
benefit under this Indenture or be valid or obligatory for any purpose, unless
there appears on such Rated 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 Rated Note
shall be conclusive evidence, and the only evidence, that such Rated Note has
been duly authenticated and delivered hereunder.

 

2.4.                              REGISTRATION, TRANSFER AND EXCHANGE OF RATED
NOTES

 

(a)                                  Registration of Rated 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 Rated 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

 

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Trust Office in which, subject to such reasonable regulations as it may
prescribe, the Note Registrar shall provide for the registration of Rated Notes
and the registration of transfers of Rated Notes. Upon any resignation or
removal of the Note Registrar, the Issuer (after consultation with the
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 Issuer may not terminate the appointment of the Note
Registrar or any Note Transfer Agent without the consent of each Holder of Rated
Notes.

 

Subject to this Section 2.4, upon surrender for registration of transfer of any
Rated Notes at the office or agency of the Issuer to be maintained as provided
in Section 7.2, the Issuer shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Rated Notes of any authorized denomination and of a like aggregate principal
amount.

 

At the option of the Holder, Rated Notes may be exchanged for Rated Notes of
like terms, in any authorized denominations and of like aggregate principal
amount, upon surrender of the Rated Notes to be exchanged at such office or
agency. Whenever any Rated Note is surrendered for exchange, the Issuer shall
execute and the Trustee shall authenticate and deliver the Rated Notes that the
Rated Noteholder making the exchange is entitled to receive.

 

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

 

Every Rated 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 Issuer 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 Rated 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)                                 The initial sale of each Note may be made in
accordance with Section 4(2) of (or another applicable exemption from
registration under) the Securities Act or in accordance with Regulation S under
the Securities Act.

 

(c)                                  Transfers of Class A Notes, Class B Notes,
Class C Notes and Class D Notes.

 

(1)                                  Subject to Section 2.4(c)(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:

 

(i)                                     Subject to Section 2.4(c)(1)(ii) through
(vi), transfers of a Global Note shall be limited to transfers of such Global
Note in whole, but not in part,

 

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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 Issuer 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
Issuer 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 Definitive Class A-D Notes are
issued pursuant to Section 2.4(c)(5), the Trustee shall cause the transfer of
(i) any beneficial interest in a Global Note for a Definitive A-D Note that is a
Regulation S Note (a Regulation S Definitive 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 Definitive A-D Note that is a
Rule 144A Note (a Rule 144A Definitive Note), upon provision to the Trustee, the
Issuer and the Note Registrar of a Rule 144A Transfer Certificate.

 

(2)                                  Subject to Section 2.4(c)(4), in the event
Definitive Class A-D Notes are issued pursuant to Section 2.4(c)(5), the Trustee
shall cause the transfer of (i) any Definitive A-D 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 Definitive A-D Note
for a beneficial interest in a Rule 144A Global Note, upon provision to the
Trustee and the Issuer of a Rule 144A Transfer Certificate.

 

(3)                                  Upon acceptance for exchange or transfer of
a beneficial interest in a Global Note for a Definitive A-D Note, or upon
acceptance for exchange or transfer of a

 

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Definitive A-D 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 Definitive Class A-D Notes, the Holder of
any Definitive A-D 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 Definitive A-D 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 Definitive Class A-D 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 Rated Noteholder (in the case of
exchange) or send by first class mail (at the risk of the transferee in the case
of transfer or Rated Noteholder in the case of exchange) to such address as the
transferee or Rated Noteholder, as applicable, may request, a Definitive A-D
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 Definitive 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 Definitive Class A-D Notes only under the
limited circumstances described in Section 2.4(c)(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 Definitive
Class A-D Notes only if such transfer otherwise complies with this Section 2.4
(including Section 2.4(c)(1) and (2) and (1) the Depositary notifies the Issuer
that it is unwilling or unable to continue as Depositary for the Rated 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 in the form of one or more
Definitive Notes in accordance with the provisions of Section 2.4(c)(1).

 

(6)                                  If interests in any Global Note are to be
transferred to the Beneficial Owners thereof in the form of Definitive Class A-D
Notes pursuant to Section 2.4(c)(5),

 

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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
Chicago, Illinois and the Trustee shall authenticate and deliver without charge,
upon such transfer of interests in such Global Note, an equal aggregate
principal amount of Definitive Notes of authorized denominations. The Definitive
Class A-D 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(c)(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 Rated 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.

 

(d)                                 Transfers of Class E Notes.

 

(1)                                  If a holder of a beneficial interest in a
Definitive Class E Note wishes at any time to transfer its interest in such
Definitive Class E Note, such holder may transfer or cause the transfer of such
interest for an equivalent beneficial interest in one or more such Definitive
Class E Notes as provided below. Upon receipt by the Issuer and the Note
Registrar of (A) such holder’s Definitive Class E Note properly endorsed for
assignment to the transferee and (B) a certificate in the form of Exhibit C-3 (a
Definitive Class E Note Transfer Certificate) given by the transferee of such
beneficial interest then the Note Registrar shall cancel such Definitive Class E
Note, record the transfer in the Note Register and authenticate

 

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and deliver one or more Definitive Class E Notes bearing the same designation as
the Definitive Class E 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 Class and the aggregate of such amounts being
the same as the beneficial interest in the Definitive Class E 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 Definitive Class E Notes to a proposed transferee of Definitive Class E Notes
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 outstanding Definitive Class E Notes (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 Definitive
Class E Notes represented by Regulation S Notes to a proposed transferee of such
Definitive Class E 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 Definitive Class E Note will
not be permitted unless an ERISA Restriction Letter is obtained from each
transferee of a Definitive Class E Note, for the benefit of the Issuer, the
Trustee and the Placement Agent, (i) in the case of a Defmitive Class E 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
Definitive Class E Note 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 Definitive Class E Notes.

 

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

 

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(e)           Denominations; Qualified Purchaser Status. No Person may hold a
beneficial interest in any Rated Note except in a denomination authorized for
the Rated Notes of such Class under Section 2.2(b). In addition, no transfer of
a Rated 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 (or, with
respect to the Class E Notes, an Institutional Accredited Investor) or an NS
Purchaser and (B) a Qualified Purchaser. In addition, no transfer of a Rated
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 the Issuer
(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. $250,000,
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 Rated 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 Issuer, the Trustee or
any intermediary. If any purported transfer of Rated 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 Rated Notes, then the
purported transferor of such Rated Notes or beneficial interest therein shall be
required to cause the purported transferee to surrender the Rated 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 Rated 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 Rated
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 Rated Notes or any beneficial interest therein are
held by persons in compliance therewith.

 

(f)            Requirement to Sell.

 

(1)           If, notwithstanding the restrictions set forth in this
Section 2.4, the Issuer 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, the Issuer may require, by notice to such beneficial owner
that such beneficial owner sell all of its right, title and interest to such
Rated 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 Rated 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

 

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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 Rated Note (or beneficial
interest therein) held by such beneficial owner.

 

(2)           If, notwithstanding the restrictions set forth in this
Section 2.4, the Issuer 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), the Issuer may require, by notice to such
beneficial owner that such beneficial owner sell all of its right, title and
interest to such Rated 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 Rated 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 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 Rated Note (or beneficial
interest therein) held by such beneficial owner.

 

 

(g)

Legends. Any Rated Note issued upon the transfer, exchange or replacement of
Rated 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 Issuer 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
Issuer 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 or another exemption from registration under
the Securities Act and to ensure that neither the Issuer 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 Issuer, shall authenticate and deliver Rated
Notes that do not bear such applicable legend.

 

 

 

 

(h)

Expenses; Acknowledgment of Transfer. Transfer, registration and exchange shall
be permitted as provided in this Section 2.4 without any charge to the Rated
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 Rated Note by the Trustee shall be deemed to
be the acknowledgment of such transfer on behalf of the Issuer.

 

 

 

 

(i)

Surrender upon Final Payment. Upon final payment due on the date on which all
outstanding unpaid principal of a Rated Note becomes due and payable as therein
or herein provided, whether at the Stated Maturity Date or by declaration of
acceleration,

 

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call for redemption or otherwise, the Holder thereof shall present and surrender
such Rated Note at the Corporate Trust Office of the Trustee in Chicago,
Illinois.

 

 

 

 

(j)

Repurchase and Cancellation of Rated Notes. The Issuer will not purchase,
redeem, prepay or otherwise acquire, directly or indirectly, any of the
Outstanding Rated Notes except upon the redemption of the Rated Notes in
accordance with the terms of this Indenture and the Rated Notes. The Issuer will
promptly cancel all Rated Notes acquired by them pursuant to any payment,
purchase, redemption, prepayment or other acquisition of Rated Notes pursuant to
any provision of this Indenture and no Rated Notes may be issued in substitution
or exchange for any such Rated Notes.

 

 

 

 

(k)

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 Rated 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 Rated Note. The Issuer shall
notify the Trustee and the Note Registrar of the imposition of any such transfer
restrictions.

 

 

 

 

(1)

Physical Rated Notes. The Issuer will promptly make available to the Trustee
without charge a reasonable supply of Definitive Notes in definitive, fully
Registered Form, without interest coupons.

 

2.5.          MUTILATED, DEFACED, DESTROYED, LOST OR STOLEN RATED NOTES

 

If, (a) any mutilated or defaced Rated Note is surrendered to a Note Transfer
Agent, or if there shall be delivered to the Issuer, the Trustee and the Note
Transfer Agent (each, a Specified Person) evidence to their reasonable
satisfaction of the destruction, loss or theft of any Rated 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 Rated Note has been
acquired by a bona fide purchaser, the Issuer 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
Rated Note, a new Rated Note of the same Class as such mutilated, defaced,
destroyed, lost or stolen Rated 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 Rated Note and
bearing a number not contemporaneously outstanding.

 

If after delivery of such new Rated Note, a bona fide purchaser of the
predecessor Rated Note presents for payment, transfer or exchange such
predecessor Rated Note, the Specified Persons shall be entitled to recover such
new Rated 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.

 

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In case any such mutilated, defaced, destroyed, lost or stolen Rated Note has
become due and payable, the Issuer in its (as applicable) discretion may,
instead of issuing a new Rated Note, pay such Rated Note without requiring
surrender thereof except that any mutilated Rated Note shall be surrendered.

 

Upon the issuance of any new Rated Note under this Section 2.5, the Issuer, 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 Rated Note issued pursuant to this Section 2.5 in lieu of any
mutilated, defaced, destroyed, lost or stolen Rated Note, shall constitute an
original additional contractual obligation of the Issuer and such new Rated 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 Rated 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 Rated 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 A-2 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-1 Notes
(together with any Defaulted Interest thereon), (ii) interest on the Class A-3
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-1 Notes and the
Class A-2 Notes (together with any Defaulted Interest thereon), (iii) 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), (iv) 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), (v) 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), (vi) 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 the Class D 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 Issuer hereunder other
than on a Payment Date.

 

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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.

 

 

 

 

(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-1 Notes are Outstanding, except as provided in Section 9,
the payment of principal of the Class A-2 Notes, the Class A-3 Notes, the B
Notes, the Class C Notes, the Class D Notes and the Class E Notes (x) may only
occur after principal of the Class A-1 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 A-1 Notes or Class A-2 Notes are Outstanding, except as
provided in Section 9, the payment of principal of the Class A-3 Notes, the B
Notes, the Class C Notes, the Class D Notes and the Class E Notes (x) may only
occur after principal of the Class A-1 Notes and Class A-2 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-1 Notes and Class A-2
Notes and other amounts payable in accordance with Section 11.1;

 

 

 

 

 

 

(3)

so long as any Class A Notes are Outstanding, except as provided in Section 9,
the payment of principal of the Class B Notes, the Class C Notes, the Class D
Notes and the Class E Notes (x) may only 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;

 

 

 

 

 

 

(4)

so long as any Class A Notes or Class B Notes are Outstanding, the payment of
principal of the Class C Notes, the Class D Notes and the Class E Notes (x) may

 

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only occur after principal of the Class A Notes and the 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 A Notes and Class B
Notes and other amounts payable in accordance with Section 11.1;

 

 

 

 

 

 

(5)

so long as any Class A Notes, Class B Notes or Class C Notes are Outstanding,
except as provided in Section 9, the payment of principal of the Class D Notes
and the Class E Notes (x) may only occur after principal of the Class A Notes,
the Class B Notes and the 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, the Class B Notes and the Class C Notes
and other amounts payable in accordance with Section 11.1; and

 

 

 

 

 

 

(6)

so long as any Class A Notes, Class B Notes, Class C Notes or Class D Notes are
Outstanding, except as provided in Section 9, the payment of principal of the
Class E Notes (x) may only occur after principal of the Class A Notes, the Class
B Notes, the Class C Notes and the 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, the Class B Notes, the Class
C Notes and the Class D 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 or Class E Notes, to
pay amounts in respect of the Class C Cumulative Applicable Periodic Interest
Shortfall Amount, the Class D Cumulative Applicable Periodic Interest Shortfall
Amount or the Class E 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 Issuer, 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,

 

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then the Issuer will not 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 Issuer to be maintained as provided in Section 7.2.

 

 

 

 

 

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 Issuer 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 Issuer
under the Rated Notes or this Indenture or arising in connection herewith are
limited recourse obligations of the Issuer payable solely from the Collateral
and following realization of the Collateral, all obligations of and all claims
against the Issuer 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
Issuer or its 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 the Issuer as a party

 

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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.

 

ARTICLE III

 

CONDITIONS PRECEDENT

 

3.1.        GENERAL PROVISIONS

 

The Rated Notes may be executed by the Issuer 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)

 

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 Rated Notes and specifying the
Stated Maturity Date, the principal amount and the Applicable Periodic Interest
Rate with respect to each Class of Rated 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)

 

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 and the
Initial Hedge Counterparty on which the Trustee and the Initial Hedge
Counterparty are 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 Rated Notes, or (B) an Opinion of Counsel to the Issuer satisfactory in
form and substance to the Trustee and the Initial Hedge Counterparty to the
effect that no such authorization, approval or consent of any governmental body
is required for the valid issuance of the Rated Notes except as may have been
given; and

 

 

 

 

 

 

(c)

 

(1)

an opinion of Clifford Chance US LLP, special New York counsel to the Issuer,
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;

 

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(4)

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

 

 

 

 

 

 

(5)

an opinion of in-house counsel to the Initial Hedge Counterparty, dated the
Closing Date, substantially in the form of Exhibit H;

 

 

 

(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 Rated 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 Rated 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 Accountants’ Report (A) confirming the information with respect to each
Collateral Debt Security (other than its price) set forth on a schedule setting
forth each Collateral Debt Security 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 Debt Securities set forth on Schedule A meet the
Collateral Quality Tests (with the exception of the S&P CDO Monitor Test) and
(C) specifying the procedures undertaken by them to review data and computations
relating to the foregoing statement;

 

 

 

 

 

 

 

(f)

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

 

 

 

 

 

 

(g)

an executed copy of the Initial Hedge Agreement and an executed copy of the
Collateral Assignment of Hedge Agreement with respect thereto (and all
acknowledgments thereto);

 

 

 

 

 

 

(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 RATED NOTES

 

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

 

(a)           Grant of Security Interest; Delivery of Collateral Debt
Securities. 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 Debt Securities 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).

 

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(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 Debt Securities or Eligible
Investments and (z) in the case of each Collateral Debt Security 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 Debt Security 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 Debt
Security prior to the first Payment Date and owed by the Issuer to the seller of
such Collateral Debt Security;

 

(2)          the Issuer has acquired its ownership in such Collateral Debt
Security 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 Debt Security (or, if any such interest has been
assigned, pledged or 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 Debt
Security to the Trustee;

 

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

 

(6)          each such Collateral Debt Security satisfies the requirements of
the definition of “Collateral Debt Security” and is not a Defaulted Security;
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 Fitch confirming that the Class A-1
Notes have been rated “AAA”, the Class A-2 Notes have been rated “AAA”, the
Class A-3 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” and the Class E Notes have been rated at least

 

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“BB”, (B) a letter signed by Moody’s confirming that the Class A-1 Notes have
been rated “Aaa”, the Class A-2 Notes have been rated “Aaa”, the Class A-3 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” and the Class E Notes have been rated at least “Ba2” and (C) a
letter signed by S&P confirming that the Class A-1 Notes have been rated “AAA”,
the Class A-2 Notes have been rated “AAA”, the Class A-3 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” and
the Class E Notes have been rated at least “BB” 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
Ramp-Up Interest Reserve Account, the Non-Monthly Pay Asset Interest Reserve
Account, the Collateral Account and the Uninvested Proceeds Account, each 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 Rated 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 markets, Collateral Debt Securities having
an aggregate Principal Balance of not less than U.S.$467,500,000.

 

3.3.          CUSTODIANSHIP; TRANSFER OF COLLATERAL DEBT SECURITIES 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 Illinois
(together with any successor, the Custodian) Initially, such Custodian shall be
LaSalle Bank National Association with its address 181 West Madison Street,
32nd Floor, Chicago, Illinois 60602, Attention: CDO Trust Services Group –
N-Star Real Estate CDO VII Ltd. Any successor custodian shall be a state or
national bank or trust company that is not an Affiliate of the 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 Debt Security, Equity Security and Eligible
Investment shall be credited to the appropriate Account. Each time that the
Issuer shall direct or cause the acquisition of any Collateral Debt Security,
Equity Security or Eligible Investment, the Trustee (on behalf of the Issuer)
shall, if such Collateral Debt Security, Equity Security or Eligible Investment
has not already been transferred to the Collateral Account and credited thereto,
cause the transfer of such Collateral Debt Security, Equity Security 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

 

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continue in the Collateral Debt Security, Equity Security or Eligible Investment
so acquired, including all rights of the Issuer in and to any contracts related
to and proceeds of such Collateral Debt Security, Equity Security 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 Debt Securities 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
Debt Security prior to the first payment date and owed by the Issuer to the
seller of such Collateral Debt Security.

 

(3)           The Issuer has acquired its ownership in each such Collateral Debt
Security, or will acquire in the case of any Collateral Debt Securities 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
Debt Securities or Substitute Collateral Debt Securities 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 Debt Security,
or will deliver any Collateral Debt Securities 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 Debt Securities or
Substitute Collateral Debt Securities 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 Debt
Security 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.

 

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(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 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 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.

 

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(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).

 

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 Rated Notes and the Rated Notes except as
to (i) rights of registration of transfer and exchange, (ii) substitution of
mutilated, defaced, destroyed, lost or stolen Rated 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 Rated Notes theretofore authenticated and delivered (other
than (A) Rated 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) Rated 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

 

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(2)             all Rated Notes not theretofore delivered to the Trustee 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 Issuer 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 for cancellation,
including all principal and interest (including Class C Cumulative Applicable
Periodic Interest Shortfall Amount, Class D Cumulative Applicable Periodic
Interest Shortfall Amount and Class E 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;

 

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

 

(c)          the Issuer has delivered to the Trustee and the Initial Hedge
Counterparty 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 Issuer, the Trustee and the 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 the
Hedge Agreement, the Collateral Management Agreement, the Income Note 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.

 

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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 Issuer,
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 Business Days in the payment, when due and
payable, of any interest on any Class A Note or 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 C Notes or Class D
Notes Outstanding, on any Class E Note;

 

(b)           a default in the payment of any principal, when due and payable of
any Rated 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 or the Note Registrar, such default continues for a period of five
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 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 or the Note
Registrar, such default continues for a period of five Business Days);

 

(d)           on any Measurement Date, the Class A/B Principal Coverage Ratio is
less than 100%;

 

(e)           the Issuer 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, the
Collateral Concentration Limitations or the Collateral Quality Tests will not
constitute a default or breach) or of any representation or warranty of the
Issuer 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 30 days (or, in the case of a default, breach or
failure of a representation or warranty regarding the Collateral, 15 days) of
the earlier of knowledge

 

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by the Issuer or the Collateral Manager or notice to the Issuer and the
Collateral Manager by the Trustee or to the Issuer 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 as bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the 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 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 90 consecutive days; or

 

(h)           the institution by the 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 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 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 in furtherance of any such action.

 

If the Issuer shall obtain actual knowledge that an Event of Default shall have
occurred and be continuing, the 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, the 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 Notes of the Controlling Class, 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

 

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Interest Shortfall Amount, the Class D Cumulative Applicable Periodic Interest
Shortfall Amount and the Class E 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 the 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; and

 

(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)           the 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), notwithstanding any previous reversal of
acceleration pursuant to this Section 5.2(b).

 

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 Issuer covenants that if a Default shall occur in respect of the payment of
any principal of or interest on any Class A-1 Note, the payment of principal of
or interest on any Class A-2 Note (but with respect to interest, only after the
Class A-1 Notes and all interest accrued thereon have been paid in full), the
payment of principal of or interest on any Class A-3 Note (but with respect to
interest, only after the Class A-1 Notes and Class A-2 Notes and all interest
accrued thereon have been paid in full), 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)
or 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 Issuer will, upon demand of

 

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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 the Issuer 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 the Notes of Controlling Class (and, if the action of the Issuer pursuant to
such direction would have a material adverse effect on the Hedge Counterparty,
the Initial Hedge Counterparty), prosecute such Proceeding to judgment or final
decree, and may enforce the same against the Issuer 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 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 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 Business Days, (iv) certain events of bankruptcy
or insolvency with respect to the Issuer 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 any other
obligor upon the Rated Notes or 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 or its respective property or such other obligor or its
property, or in case of any other comparable Proceedings relative to the Issuer
or other obligor upon the Rated Notes or Hedge Agreement, or the creditors or
property of the 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

 

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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 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 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 or other obligor
upon the Rated Notes or to the creditors or property of the 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, the Initial Hedge Agreement
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 Issuer agrees that, in
addition to the requirements of Section 5.5(a), the Trustee may, after giving
notice to the Noteholders, the Collateral

 

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Manager, the Initial 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, 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 and amounts due to the Initial Hedge Counterparty, 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 the 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 Placement Agents,
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.

 

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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 Issuer, 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 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 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 (B) any involuntary insolvency
proceeding filed or commenced by a Person other than the Trustee, or (ii) from
commencing against the 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 Rated Notes and the 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 and the Rated Notes and the
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 the Hedge Agreement, 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 Notes of the Controlling
Class 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

 

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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 such notice. The Trustee
shall give written notice of the retention of the Collateral to the Issuer with
a copy to each Holder of the Controlling Class of 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 Rated 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 Issuer a report stating the results of any
determination required pursuant to Section 5.5(a)(1) no later than ten 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 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 Hedge Agreements and the Rated Notes intact, collect and cause the
collection of the proceeds

 

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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.

 

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 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 the Hedge Agreements 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 the 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 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 Notes of the Controlling Class;

 

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

 

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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 Notes of the
Controlling Class, each representing less than a Majority of the then Aggregate
Outstanding Amount of Notes of this Controlling Class, the Trustee shall follow
the instructions of the group representing the higher percentage of aggregate
principal amount of Outstanding Notes of the Controlling Class.

 

5.9.          UNCONDITIONAL RIGHTS OF RATED NOTEHOLDERS TO RECEIVE PRINCIPAL AND
INTEREST

 

Notwithstanding any other provision in this Indenture (other than
Section 2.6(i)), the Holder of any Rated Note shall have the right, which is
absolute and unconditional, to receive payment of the principal of and interest
(if any) on such Rated 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 and
the Class E Notes shall have no right to institute proceedings for the
enforcement of any such 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 Issuer,
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 or 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 or the Initial Hedge
Counterparty, as the case may be.

 

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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 Notes of the
Controlling Class 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:

 

(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 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 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 Issuer, 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.

 

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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 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 Issuer covenants (to the extent that they may lawfully do so) that it will
not at any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law wherever enacted, now or
at any time hereafter in force (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
Issuer (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the 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 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

 

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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. 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.

 

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,

 

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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:

 

(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 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 Issuer, 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).

 

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(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 account,
records, reports and other papers of the Trustee relating to the Rated Notes or
the Hedge Agreement, 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
or the Hedge Agreement, 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 Income 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 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

 

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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 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
Issuer, to examine the books and records of the Issuer or the Collateral Manager
relating to the Rated Notes and the Collateral, personally or by agent or
attorney at a time acceptable to the Issuer 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

 

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depository, Euroclear or Clearstream or for the acts or omissions of the
Collateral Manager or the 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 accountants
appointed pursuant to 10.13 as to the application of GAAP in such connection, in
any instance;

 

(1)                               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.

 

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 Rated 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 Rated Notes. For all purposes of this Indenture,
the authentication of Rated Notes by an Authenticating Agent pursuant to this
Section 6.4 shall be deemed to be the authentication of Rated 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 Issuer. 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 Issuer.

 

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 Issuer, and
the Trustee assumes no responsibility for their correctness. The Trustee makes
no representation as to the validity or sufficiency of this Indenture

 

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(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 Issuer of the Rated Notes or the
proceeds thereof or any amounts paid to the Issuer 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
Issuer, in its individual or any other capacity, may become the owner or pledgee
of Rated Notes and, may otherwise deal with the Issuer or any of its 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 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), 10.11 or 10.13, 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 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

 

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(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 issued under this Indenture.

 

(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)(21), 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 Issuer 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 issued under this Indenture. 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 to 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.$250,000,000, subject to supervision or examination by federal or state
banking authorities, having a rating of at least “BBB+” by S&P and having an
office within the United States. 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

 

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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 Issuer, the Rated Noteholders, the
Initial Hedge Counterparty, the Collateral Manager 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 Issuer as successor trustee by
written instrument, in duplicate, executed by an Authorized Officer of the
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
Issuer.

 

(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 Issuer, by Issuer
Order shall remove the Trustee, or (B) subject to Section 5.15, any Holder or
the Initial Hedge Counterparty 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 Issuer 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,

 

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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 Issuer fails 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
Issuer.

 

6.11.                 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR

 

Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Issuer and the retiring Trustee (with copies to the Initial Hedge
Counterparty and 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 Issuer or a Majority of the then Aggregate Outstanding Amount
of the Notes of any Class of Notes, the Initial Hedge Counterparty 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 Issuer 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 Rated 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 Rated Notes so authenticated with the same
effect as if such successor Trustee had itself authenticated such Rated Notes.

 

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

 

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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 Issuer 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 Issuer does 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 Issuer 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 Issuer. The Issuer agrees 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 Rated 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

 

(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

 

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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
Debt Securities 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 Debt Security has become a Defaulted Security, a Deferred Interest
PIK Bond, a Credit Risk Security or a Written Down Security or (ii) the Trustee
has received an Equity Security in connection with any Collateral Debt Security.

 

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 Issuer, 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.

 

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 Debt Security or Equity Security 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

 

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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 Debt Security or
Equity Security. 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 Debt
Securities (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 Debt Security as
to which a consent or waiver under the Underlying Instruments of such Collateral
Debt Security (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 Debt Security 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 Debt Security.

 

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 Issuer 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 and this Indenture and amounts due
under the 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 Issuer 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
Issuer as provided above.

 

7.2.                       MAINTENANCE OF OFFICE OR AGENCY

 

The Issuer hereby appoints the Trustee as Note Paying Agent for the payment of
principal of and interest on the Rated Notes. Rated Notes may be surrendered for
registration of transfer or exchange at the Corporate Trust Office. 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 listed on the Irish Stock
Exchange may be served and where such Rated Notes may be surrendered for
registration of transfer or exchange.

 

The Issuer 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 Issuer will maintain in the Borough of Manhattan, The City
of New York, an office or agency where notices and demands to or upon the Issuer
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 Issuer may not terminate the
appointment of any Note Paying Agent without the consent of each Income
Noteholder. The Issuer 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.

 

If at any time the Issuer 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 Issuer and Rated Notes
may be presented and surrendered for payment to the Note Paying Agent at its
office in Illinois (and the Issuer hereby appoints the same as its agent to
receive such respective presentations, surrenders, notices and demands).

 

For so long as any Class of Rated Notes is listed on the Irish Stock Exchange
and such exchange shall so require, the Issuer shall maintain a listing agent, a
paying agent and an agent where notices and demands to or upon the Issuer in
respect of any Rated Notes listed on the Irish Stock Exchange may be served and
where such Rated Notes may be surrendered for registration of transfer or
exchange.

 

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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 Issuer by the Trustee or a Note Paying Agent with respect to
payments on the Rated Notes.

 

When the Issuer shall have a Note Paying Agent that is not also the Note
Registrar, it 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 Issuer has 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 Issuer shall promptly
remove such Note Paying Agent and appoint a successor Note Paying Agent. The
Issuer 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 Issuer 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 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 any other
obligor upon the Rated Notes) in the making of any payment required to be made;
and

 

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(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 Issuer 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 Issuer 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 Issuer on Issuer Request; and
the Holder of such Rated Note shall thereafter, as an unsecured general
creditor, look only to the Issuer 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 Issuer) 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 Issuer, 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.

 

7.4.                       EXISTENCE OF ISSUER

 

The Issuer shall maintain in full force and effect its existence and rights as
an exempted company incorporated and registered under the laws of the Cayman
Islands and shall obtain and preserve its 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 or any of the
Collateral.

 

The Issuer shall ensure that all corporate or other formalities regarding its
existence (including holding regular board of directors’ and shareholders’, or
other similar, meetings) or registrations are followed. The Issuer shall not
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 shall be
Independent of other parties to the Transaction Documents. Without limiting the
foregoing, (a) the Issuer shall not have any subsidiaries (other than any Tax
Subsidiary), and (b) the 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.

 

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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, the Initial Hedge Counterparty 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.

 

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 10.13(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

 

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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.

 

(e)                             Without at least 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 30 days prior to the Payment Date in June of each calendar year,
commencing in 2007, the Issuer shall furnish to the Trustee and each Rating
Agency (with copies to the Initial Hedge Counterparty) 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 Debt Security
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:

 

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(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 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 hereunder by such Persons.
Notwithstanding any such arrangement, the Issuer 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 and the Issuer 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.

 

(c)                             The Issuer shall treat all acquisitions of
Collateral Debt Securities as a “purchase” for tax, accounting and reporting
purposes.

 

(d)                            The Issuer 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 Debt Security or property acquired in respect of a Collateral Debt
Security 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 Debt Security becoming a “Taxed Collateral Debt
Security” 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
Debt Security or Taxed Property in accordance with the provisions of the
Indenture, the Collateral Manager on behalf of the Issuer shall, prior to such
Collateral Debt Security becoming a Taxed Collateral Debt Security 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 Debt Security or Taxed Property or transfer such Taxed Collateral
Debt Security or Taxed Property to the Tax Subsidiary or (b) contribute such
taxed Collateral Debt Security or Taxed Property to a REMIC or other
pass-through entity, unless the Issuer has received an opinion of nationally
recognized counsel to the effect that the Issuer can hold such Taxed Collateral
Debt Security 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

 

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such Tax Subsidiary to be restricted solely to the acquisition, holding and
disposition of such Taxed Collateral Debt Security or Taxed Property and shall
require such subsidiary to distribute 100% of the proceeds of any sale of such
Taxed Collateral Debt Security or Taxed Property, net of any tax liabilities, to
the Issuer.

 

7.8.                       NEGATIVE COVENANTS

 

(a)                             The 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;

 

(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

 

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(9)                                  except for any agreements involving the
purchase and sale of Collateral Debt Securities having customary purchase or
sale terms and documents with customary loan trading documentation (but not
excepting the Hedge Agreement), enter into any agreements unless such agreements
contain “non-petition” and “limited recourse” provisions with respect to the
Issuer, nor shall the Issuer amend any such “non-petition” or “limited recourse”
provisions without first obtaining Rating Agency Confirmation from S&P.

 

(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.

 

7.9.                       STATEMENT AS TO COMPLIANCE

 

On or before the Payment Date in June of each calendar year commencing in 2007,
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 Income 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, 2006, 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 10.12 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.                 ISSUER 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

 

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Rated Notes and the performance of every covenant of this Indenture and the
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, 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 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 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;

 

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(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, the Issuer will not be required to register as an investment
company under the Investment Company Act.

 

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 Issuer, in accordance with
Section 7.10, the Person formed by or surviving such consolidation or merger (if
other than the 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 under
this Indenture with the same effect as if such Person had been named as the
Issuer herein. In the event of any such consolidation, merger, transfer or
conveyance, the Person named as the “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 Rated Notes pursuant to this Indenture, (ii) issuing and selling
the Income Notes in accordance with the Income Note 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 Debt Securities, Eligible Investments and other Collateral described
in clauses (a) to (e) of the granting clauses hereof, and (v) such other
activities that are incidental thereto and 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 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, if such amendment would result in
the rating (including any private or confidential rating) of any Class of Rated
Notes being reduced or withdrawn. 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 Securities or securities received in an Offer in accordance
with the provisions of this Indenture.

 

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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.

 

7.14.                        REPORTING

 

At any time when the Issuer is not subject to Section 13 or 15(d) of the
Exchange Act and is 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 Issuer 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 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 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 Issuer
or any of its 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 Business 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
Issuer, 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 Issuer 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 Issuer 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

 

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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 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 on the Irish Stock Exchange.

 

7.17.                        AMENDMENT OF CERTAIN DOCUMENTS

 

The Issuer will not agree to any amendment to or modification of the Corporate
Services Agreement, the Collateral Management Agreement, the Account Control
Agreement or the Hedge Agreement at any time without obtaining Rating Agency
Confirmation with respect to any such modification 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 Initial
Hedge Counterparty, the Holders of Rated Notes of the Controlling Class, the
Collateral Manager and the Rating Agencies with a copy of any such amendment or
modification at least ten 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,
Collateral Debt Securities 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.$550,000,000 (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 Debt Securities 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 Debt Securities
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 and includes the information
required by 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

 

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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), the Collateral Concentration
Limitations or the specified 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, Collateral Concentration Limitations or Coverage Tests
does not constitute an Event of Default but such failure may result in a Rating
Confirmation Failure.

 

(d)                                 No later than 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 Debt Security 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, the Collateral
Concentration Limitations 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 30 Business Days after the Effective
Date (or, in the case of each Rating Agency, any such later date (in no event
longer than 60 Business Days after the Effective Date) that shall be acceptable
to such Rating Agency), 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 such time period (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 next 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)                                    Notwithstanding the foregoing, if (i) the
Issuer (or the Collateral Manager on its behalf) has requested in writing that
each of the Rating Agencies provide Rating Confirmation within five Business
Days after the Effective Date, (ii) the Issuer (or the Collateral Manager on its
behalf) has obtained confirmation by electronic mail, facsimile or telephone
that each of the Rating Agencies has received such request and has promptly
delivered to the applicable Rating Agency any additional information reasonably
requested by such Rating Agency, and (iii) any of the Rating Agencies fails to
respond to such request within 30 Business Days after the Effective Date, then
such failure to respond will not immediately constitute a Rating Confirmation
Failure but shall not constitute receipt of Rating Confirmation; provided that
Rating Confirmation Failure shall thereafter occur immediately upon receipt from
the Rating Agencies of an actual notice of Rating Confirmation Failure.

 

(g)                                 No later than 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.

 

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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, but with
Rating Agency Confirmation for so long as any Class of Notes are rated as such
time by any Rating Agency, the Issuer, when authorized by Board Resolutions, and
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 and the assumption by any such successor Person of the covenants
of the Issuer herein and in the Rated Notes pursuant to Section 7.10 or 7.11;

 

(b)                                 add to the covenants of the Issuer 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 (without
adverse effect to the Issuer) from failing to qualify as a Qualified REIT
Subsidiary or 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 Issuer 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;

 

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(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;

 

(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 Debt Securities 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)                                 with the consent of the Collateral Manager
and the consent of not less than a majority of the aggregate principal amount of
the Controlling Class, to modify the calculation of the Coverage Tests and the
definitions applicable thereto to correspond with published or written changes
in the guidelines, methodology or standards established by the Rating Agencies;
or

 

(q)                                 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 (based upon an opinion of counsel as
described in Section 8.3), proper to make; 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

 

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own rights, duties, liabilities or indemnities under this Indenture or
otherwise, except to the extent required by law.

 

No modification to the Indenture will be effective until the Collateral Manager
has received written notice of such amendment and, if such amendment 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 supplemental indenture that would change any provision of the
Indenture entitling such predecessor Collateral Manager to any fee or other
amount payable to it under the Indenture or to reduce or delay the right of such
predecessor to such payment.

 

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 the Income Notes would
be materially and adversely affected thereby. In determining whether or not the
interests of any Holder of Rated Notes or Income Notes will be materially and
adversely affected, the Trustee shall be entitled to rely upon an Opinion of
Counsel or a certificate of the Issuer or the Collateral Manager 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 Income 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 in writing (which consent will not be unreasonably withheld).
The Issuer will 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 Issuer, the Trustee shall provide to the Rated Noteholders,
the Collateral Manager, the Income Note Paying Agent, the Initial Hedge
Counterparty and each Rating Agency a copy of any proposed supplemental
indenture at least ten 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 Collateral Manager, the Income 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 and rated
by either of the Rating Agencies, 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

 

Except as provided below, with the prior written consent of the Initial Hedge
Counterparty (but only if the right of the Initial Hedge Counterparty to
payments in accordance with the Priority of Payments is adversely affected), the
Holders of not less than a majority of the aggregate principal amount of the
Outstanding Rated Notes of each Class (in principal amount) adversely affected
thereby and the written consent of Holders of not less than 662/3 % of the
aggregate principal amount of the Outstanding Income Notes (if materially and
adversely affected thereby), the Trustee and the Issuer may execute a
supplemental indenture to add provisions to, or change in any manner or
eliminate any provisions of, the Indenture or modify in any manner the rights of
the Holders of the Rated Notes of such Class or of the Income Notes or the Hedge
Counterparty under the Indenture.

 

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

 

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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 Issuer 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 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
or 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 Issuer; or

 

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(j)                                modify provisions stating that the
obligations of the Issuer are limited recourse obligations of the Issuer 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 Issuer, shall mail to the Rated Noteholders, Income 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 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) 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 Majority of aggregate
principal amount 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 or certificate of the Issuer or the Collateral Manager 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 Income 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 Issuer and the Trustee of any supplemental
indenture pursuant to this Section 8.2, the Trustee, at the expense of the
Issuer, shall mail or make available to the Rated Noteholders, the Income Note
Paying Agent (for forwarding to the Income Noteholders), the Initial Hedge
Counterparty, 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 (which may rely on an Officer’s certificate of
the Issuer or Collateral

 

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Manager), 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. Any such Opinion of Counsel may be supported as
to factual (including financial and capital markets) matters by such relevant
certificates and other documents as may be necessary or advisable in the
judgment of counsel delivering such Opinion of Counsel. 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
shall be bound thereby.

 

8.5.                            REFERENCE IN RATED NOTES TO SUPPLEMENTAL
INDENTURES

 

Rated 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 Issuer shall so determine, new Rated Notes,
so modified as to conform in the opinion of the Trustee and the Issuer to any
such supplemental indenture, may be prepared and executed by the Issuer and
authenticated and delivered by the Trustee in exchange for Outstanding Rated
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
June 2011 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 Outstanding Income Notes (an Optional Redemption);

 

(b)                                 on any Payment Date following the occurrence
and during the continuation of a Tax Event, (i) at the direction of the Holders
of not less than 662/3% of the aggregate principal amount of the Outstanding
Income Notes or (ii) subject to the satisfaction of the Income Note Redemption
Approval Condition, at the direction of the Holders of a Majority of the then
Aggregate Outstanding Amount of the Controlling Class (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 June 2018, and (ii) if any of the conditions set forth
in Sections 9.2(a) through (d) below have not been met or if the

 

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highest bidder fails to pay the purchase price within six 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 Debt Securities included in the Collateral on a date (each such
date, an Auction Date) occurring no later than ten Business Days prior to any
scheduled Redemption Date. Any of the Placement Agents, 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
Debt Securities (or for each of the related Subpools) from at least two
Qualified Bidders (including the winning 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 Debt
Securities (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 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), (15) and (16) (including any termination payments payable by
the Issuer resulting from the termination of the Hedge Agreement pursuant to the
Redemption) plus (iii) (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 Debt Securities (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 the 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 Debt Securities (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:

 

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(1)           at least four 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,” Fitch of “Fl” 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 Debt Securities at an aggregate purchase price at least
equal to an amount sufficient together with the balance of all Eligible
Investments maturing on or prior to the scheduled Redemption Date and any
termination payments received by the Issuer under any Hedge Agreements on or
prior to the scheduled redemption date, to pay all administrative and other fees
and expenses, the Collateral Management Fee and any other amount payable under
Section 11.1(b)(1), (15) and (16), to pay any amounts payable under each Hedge
Agreement, if any, and to redeem all of the Notes on the scheduled redemption
date at the applicable Redemption Price; or

 

(2)           prior to selling any Collateral Debt Securities or any other
collateral, the Collateral Manager certifies that the expected proceeds from
such sale will, in the aggregate, equal or exceed, in each case, the sum of
(a) the Redemption Prices 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 Debt Securities (or
each related Subpool), without representation, warranty or recourse, to the
bidder(s) who offered the Highest Auction Price for the Collateral Debt
Securities (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 Debt Securities 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 Debt Securities
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

 

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to the Trustee for the provision of the information necessary for the Issuer to
compile the Redemption Date Statement in accordance with Section 10.12(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 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 to be
redeemed is listed on the Irish Stock Exchange.

 

All notices of redemption shall state:

 

(a)           the applicable Redemption Date;

 

(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 Issuer or, at the Issuers’ request,
by the Trustee in the name and at the expense of the Issuer. 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

 

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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 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 Issuer (i) such security or indemnity as may be required by it
to save it harmless and (ii) an undertaking thereafter to surrender such Note,
then, in the absence of notice to the Issuer that the applicable Note has been
acquired by a bona fide purchaser, such fmal 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.

 

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
Debt Securities would either be impractical or not beneficial, the amount of
such Collateral Principal Collections available pursuant to
Section 11.1(b)(12)(a), 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)(12).

 

In order for amounts to be applied for a Special Amortization on any Payment
Date, the Collateral Manager is required to deliver, 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 Debt Securities that comply
with the Reinvestment Criteria and the other applicable requirements of the
Indenture.

 

On each Payment Date on which a Special Amortization occurs, each related Hedge
Agreement, to the extent provided for therein, 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 the Indenture.

 

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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 in an Account to agree with the parties hereto that (1) each Account is a
Securities Account in 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
Chicago, Illinois.

 

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, Ramp-Up Interest Reserve
Account and Non-Monthly Pay Asset Interest Reserve Account shall remain at all
times with a fmancial 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 the Hedge Counterparty, the Collateral Manager, each Rating Agency and the
Income 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 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 (iii) 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

 

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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 Uninvested Proceeds Account, the Payment Account, the Expense Reserve
Account, the Ramp-Up Interest Reserve Account or the Non-Monthly Pay Asset
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.

 

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 Issuer 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 Issuer (including, without limitation, the legal fees
and expenses of counsel to the Issuer, the Placement Agents and the Collateral
Manager), the expenses of offering the Rated Notes and the Income Notes 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 Debt Securities
and, pending such investment in additional Collateral Debt Securities, 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. 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 Collateral Principal
Collections on the first Payment Date and distributed in accordance with the
Priority of Payments.

 

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10.5.        COLLECTION ACCOUNT

 

(a)           The Trustee shall, prior to the Closing Date, cause to be
established a Securities Account which shall be designated as the “Collection
Account” (and which may be a sub-account of the Collateral 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 Debt Securities in accordance with the
requirements and limitations contained in Section 12.1(c).

 

(b)           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.

 

(c)           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 10.12(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.

 

(d)           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.$75,000 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 subsequent to the Effective 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 10.12(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 Issuer; provided that the Trustee shall deposit
all amounts remaining on deposit in the Expense Reserve Account at the time when
substantially

 

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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.

 

10.7.        NON-MONTHLY PAY ASSET INTEREST RESERVE ACCOUNT

 

The Trustee shall, prior to the Closing Date, cause to be established a
Securities Account which shall be designated as the “Non-Monthly Pay Asset
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
Non-Monthly Pay Asset 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 Non-Monthly Pay Asset Interest Reserve Account in
Eligible Investments. On each Payment Date, in accordance with the Priority of
Payments, the Trustee will deposit the Non-Monthly Pay Asset Interest Reserve
Amount into the Non-Monthly Pay Asset Interest Reserve Account. The only
permitted withdrawal from or application of funds on deposit in, or otherwise
standing to the credit of, the Non-Monthly Pay Asset Interest Reserve Account
shall be to deposit into the Payment Account, on the Business Day prior to each
Payment Date, the Balance of the Non-Monthly Pay Asset Interest Reserve Account
with such amount to be distributed as Collateral Interest Collections in
accordance with the Priority of Payments on the related Payment Date.

 

10.8.        RAMP-UP INTEREST RESERVE ACCOUNT

 

The Trustee shall, prior to the Closing Date, cause to be established a
Securities Account which shall be designated as the “Ramp-Up 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 Ramp-Up 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
Ramp-Up Interest Reserve Account in Eligible Investments. On the Closing Date,
the Trustee will deposit the Ramp-Up Interest Reserve Amount into the Ramp-Up
Interest Reserve Account. Prior to the first Payment Date after the Effective
Date, the only permitted withdrawal from or application of funds on deposit in,
or otherwise standing to the credit of, the Ramp-Up Interest Reserve Account
shall be to deposit into the Payment Account, on the Business Day prior to each
Payment Date, an amount, if any, equal to the lesser of (a) the Balance of the
Ramp-Up Interest Reserve Account or (b) the Rated Notes Interest Shortfall
Amount, with such amount to be distributed as Collateral Interest Collections in
accordance with the Priority of Payments on the related Payment Date. On the
first Payment Date after the Effective Date, the Balance of the Ramp-Up Interest
Reserve Account shall be deposited into the Payment Account to be distributed as
Collateral Interest Collections in accordance with the Priority of Payments on
the related 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 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 and other amounts specified

 

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therein, each in accordance with the Priority of Payments. The Issuer shall not
have any legal, equitable or beneficial interest in the Payment Account other
than in accordance with the Priority of Payments.

 

10.10.      DERIVATIVE CONTRACT COUNTERPARTY ACCOUNTS

 

For each Derivative Contract, the Trustee shall establish a segregated trust
account in respect of each such Derivative Contract, which shall be designated
as a Derivative Contract Counterparty Account and shall be held in trust in the
name and for the benefit of and pledged to the related Derivative Contract
Counterparty (the Pledgee Counterparty) and over which the Trustee shall have
exclusive control and the sole right of withdrawal in accordance with the
applicable Derivative Contract and this Indenture. Each Derivative Contract
Counterparty Account (including any subaccount) shall be a securities account
established with the Securities Intermediary in the name of the Trustee in
accordance with Section 6.17. The Derivative Contract Counterparty Account shall
remain at all times with the Trustee or a financial institution having a
combined capital and surplus of at least U.S.$200,000,000 and a long-term debt
rating by each Rating Agency at least equal to “Baa2” by Moody’s and “BBB” by
S&P or its equivalent.

 

Funds in the Derivative Contract Counterparty Account are to be held as security
for and applied to pay amounts due the Pledgee Counterparty and shall not be
available to pay amounts due the Noteholders unless and to the extent such funds
are released as Collateral Interest Collections or Collateral Principal
Collections in accordance with this Section 10.9, the applicable Derivative
Contract and applicable law. The Issuer shall not have any right to withdraw
money from any Derivative Contract Counterparty Account other than in accordance
with this Section 10.9, the applicable Derivative Contract and applicable law.

 

As directed by the Collateral Manager, the Trustee shall deposit into each
Derivative Contract Counterparty Account all amounts which are required to
secure the obligations of the Issuer to the Pledgee Counterparty in accordance
with the terms of the related Derivative Contract. The Collateral Manager shall
direct any such deposit only to the extent that monies are available therefor as
provided herein.

 

As directed by the Collateral Manager in writing and in accordance with the
applicable Derivative Contract, amounts on deposit in a Derivative Contract
Counterparty Account shall be invested in Eligible Investments. In the absence
of direction from the Collateral Manager, the Trustee shall invest such amounts
in Eligible Investments of the type described in paragraph (iii) of the
definition of Eligible Investments.

 

Income on and proceeds of Eligible Investments on deposit in each Derivative
Contract Counterparty Account shall be applied, as directed by the Collateral
Manager, to the extent required by the Derivative Contract, to the payment of
any periodic amounts owed by the Issuer to the Pledgee Counterparty on the date
any such amounts are due. Any income on or proceeds of Eligible Investments in a
Derivative Contract Counterparty Account not required to pay amounts due the
Pledgee Counterparty will be withdrawn from such account at the end of each Due
Period and deposited in the Collection Account for distribution as Collateral
Interest Collections or Collateral Principal Collections, as the case may be.

 

Upon the occurrence of the designation of an Early Termination Date, Scheduled
Termination Date or Termination Date under (and as each of those terms are
defined in) the applicable Derivative Contract, amounts contained in the related
Derivative Contract Counterparty Account shall be applied by the Trustee, as
directed by the Collateral Manager, to pay any amounts then due the Pledgee
Counterparty.

 

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Any excess amounts held in a Derivative Contract Counterparty Account after
payment of all amounts owing from the Issuer to the Pledgee Counterparty in
accordance with the terms of the Derivative Contract (other than any Defaulted
Derivative Contract Counterparty Termination Payment) shall be withdrawn from
such Derivative Contract Counterparty Account and, in the case of (a) any Cash
or Eligible Investment readily convertible into Cash, deposited in the
Collection Account for application as Collateral Principal Collections (or to
the extent constituting income on an Eligible Investment, Collateral Interest
Collections), and (b) any security which satisfies the definition of a
Collateral Obligation, the inclusion of which in the Collateral would satisfy
the Collateral Concentration Limitations, shall be retained by the Issuer as
Collateral, subject to the terms of this Indenture or otherwise sold by the
Collateral Manager. No property other than Eligible Investments and funds in the
Derivative Contract Counterparty Account shall be available to pay amounts due
the Pledgee Counterparty; provided that, to the extent funds in the Derivative
Contract Counterparty Account are insufficient, Termination Payments shall be
paid solely from amounts available therefor in accordance with the Priority of
Payments.

 

Amounts contained in any Derivative Contract Counterparty Account shall not be
considered to be an asset of the Issuer for purposes of any of the Collateral
Quality Tests, the Collateral Concentration Limitations or the Coverage Tests,
but the Derivative Contract which relates to such Derivative Contract
Counterparty Account shall be so considered an asset of the Issuer.

 

10.11.      DERIVATIVE CONTRACT ISSUER ACCOUNT

 

If and to the extent that any Derivative Contract requires the Derivative
Contract Counterparty (a Pledgor Counterparty) to secure its obligations to the
Issuer with respect to such Derivative Contract, the Trustee shall, on or prior
to the date such Derivative Contract is entered into, establish a segregated
trust account, which shall be designated as a Derivative Contract Issuer
Account. Each Derivative Contract Issuer Account (including any subaccount)
shall be a securities account established with the Securities Intermediary in
the name of the Trustee in accordance with Section 6.17. The Derivative Contract
Issuer Account shall remain at all times with the Trustee or a financial
institution having a combined capital and surplus of at least U.S.$200,000,000
and a long-term debt rating by each Rating Agency at least equal to “Baa2” by
Moody’s and “BBB” by S&P or its equivalent. The Trustee shall deposit into each
Derivative Contract Issuer Account all amounts which are required to secure the
obligations of the Pledgor Counterparty to the Issuer in accordance with the
terms of such Derivative Contract. A Pledgor Counterparty shall not have any
right to withdraw money from a Derivative Contract Issuer Account.

 

As directed by the Collateral Manager in writing, in accordance with the
applicable Derivative Contract, amounts on deposit in a Derivative Contract
Issuer Account shall be invested in Eligible Investments. Income received on
amounts on deposit in each Derivative Contract Issuer Account shall be withdrawn
from such account and, to the extent required by the related Derivative
Contract, released to the applicable Pledgor Counterparty or otherwise retained
in the Derivative Contract Issuer Account. In the absence of direction from the
Collateral Manager, the Trustee shall invest such amounts in Eligible
Investments of the type described in paragraph (iii) of the definition of
Eligible Investments.

 

Upon the occurrence of the designation of an “Early Termination Date,”
“Scheduled Termination Date” or “Termination Date” under (and as each of those
terms are defined in) the applicable Derivative Contract, amounts contained in
the related Derivative Contract Issuer Account shall be applied by the Trustee,
as directed by the Collateral Manager, in accordance with the terms of the
Derivative Contract, to pay any amounts then due the Issuer. Any excess amounts
held in a Derivative Contract Issuer Account, after payment of all amounts owing
from the Pledgor Counterparty to the Issuer in accordance with the terms of the
Derivative Contract shall be withdrawn from such Derivative Contract
Counterparty Account and released to the Pledgor Counterparty in accordance with
the terms of the Derivative Contract.

 

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Amounts contained in any Derivative Contract Issuer Account shall not be
considered to be an asset of the Issuer for purposes of any of the Collateral
Quality Tests, the Collateral Concentration Limitations or the Coverage Tests,
but the Derivative Contract which relates to such Derivative Contract
Counterparty Account shall be so considered an asset of the Issuer.

 

10.12.                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 Income Note Paying Agent, the Placement Agents and the
Issuer 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 10.12.

 

The Trustee shall forward to the Collateral Manager, the Holders of Rated Notes
of the Controlling Class, or upon request therefor, any Holder of a Rated Note
shown on the Note Register, the Placement Agents, the Initial Hedge Counterparty
or the Income Note Paying Agent, copies of notices and other writings received
by it from the issuer of any Collateral Debt Security or from any Clearing
Agency with respect to any Collateral Debt Security 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 Debt
Security 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 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 10.12(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, the
Issuer 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.

 

10.13.                ACCOUNTINGS

 

(a)                                  Payment Date Accounting. The Issuer shall,
not later than the related Payment Date and after the reconciliation process
described in this Section 10.12, 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 and the Collateral Manager and make available
via the Trustee’s internet website, initially located at www.cdotrustee.net to
the Trustee, the Irish Paying Agent, the Initial Hedge Counterparty, the Income
Note Paying Agent, each Note Transfer Agent, the Placement Agents and, upon
written request therefor, any Holder of a Rated Note shown on the Note Register.
The Note Valuation

 

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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 and includes the information required by 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 Debt Securities, 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 Fitch Weighted Average Rating
Factor, the Weighted Average Fixed Rate Coupon, the Weighted Average Spread, the
Weighted Average Life, the S&P Weighted Average Recovery Rate for each Class of
Notes, the Moody’s Recovery Rate Test and the Moody’s WARF Test;

 

(2)                                the estimated remaining Average Life of each
of the Collateral Debt Securities;

 

(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 12 months ending on the next Payment Date on an itemized basis;

 

(8)                                for the Collection Account:

 

(i)                                   the Balance on deposit in the Collection
Account and 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 and 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; and

 

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(v)                               the Balance on deposit in the Collateral
Principal Collections Sub-Account;

 

(9)                                for the Non-Monthly Pay Asset Interest
Reserve Account:

 

(i)                                   the balance on deposit in the Non-Monthly
Pay Asset Interest Reserve Account at the end of the related Due Period;

 

(ii)                                the amount payable from the Non-Monthly Pay
Asset Interest Reserve Account pursuant to the Priority of Payments on the next
Payment Date;

 

(iii)                             the Non-Monthly Pay Asset Interest Reserve
Amount to be paid into the Non-Monthly Pay Asset Interest Reserve Account on the
next Payment Date; and

 

(iv)                            the Balance remaining in the Non-Monthly Pay
Asset Interest Reserve Account immediately after all payments and deposits to be
made on such Payment Date;

 

(10)                          for the Ramp-Up Interest Reserve Account prior to
the Payment Date after the Effective Date, the balance on deposit in the Ramp-Up
Interest Reserve Account at the end of the related Due Period;

 

(11)                          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;

 

(12)                          the nature, source and amount of any proceeds in
the Derivative Contract Issuer Account and any sub-accounts thereof;

 

(13)                          the Hedge Receipt Amount or the Hedge Payment
Amount for the related Payment Date, and for each Hedge Agreement, 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;

 

(14)                          the amount of Income Note Excess Funds on the
related Payment Date;

 

(15)                          the amount of the Senior Collateral Management Fee
and the amount of the Subordinate Collateral Management Fee;

 

(16)                          such other information as the Collateral Manager,
the Placement Agents, the Trustee, S&P, Fitch or any Hedge Counterparty may
reasonably request;

 

(17)                          with respect to each Collateral Debt Security, the
Principal Balance, the annual coupon rate or spread to the relevant floating
rate index, the frequency of coupon

 

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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 Fitch Industry Classification Group, the S&P
Recovery Rate, the S&P Rating and the Fitch Rating (provided that if any Fitch
Rating for any Collateral Debt Security 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
Fitch 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”;

 

(18)                          the identity and current ratings of each
Derivative Contract Counterparty and, unless the Derivative Security is a
Synthetic CDO Security, the Reference Obligation(s) of such related Derivative
Security;

 

(19)                          the Principal Balance, the maturity date, the S&P
Rating, the Fitch Rating and the issuer of each Eligible Investment included in
the Collateral;

 

(20)                          (A) the identity and Principal Balance of each
Collateral Debt Security that became a Credit Risk Security, a Defaulted
Security, an Equity Security, a Written Down Security, a Withholding Tax
Security, a Deferred Interest PIK Bond, (B) the date, as provided by the
Collateral Manager, on which any Collateral Debt Security became a Credit Risk
Security, a Defaulted Security, an Equity Security, a Written Down Security or a
Withholding Tax Security, (C) the date by which the Issuer or the Collateral
Manager is required to declare its intention to sell or to hold such Collateral
Debt Security, (D) whether the Collateral Manager has directed the Issuer to
sell or not to sell such Collateral Debt Security, and (E) the date by which any
such sale must occur;

 

(21)                          the identity of each Collateral Debt Security 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;

 

(22)                          the Principal Balance and identity of each
Collateral Debt Security that was released for sale indicating the reason for
such sale and the amount and identity of each Collateral Debt Security that was
granted since the date of the last Note Valuation Report;

 

(23)                          the identity and Principal Balance of each
Collateral Debt Security that was a Credit Risk Security, a Defaulted Security,
an Equity Security, a Written Down Security, a Withholding Tax Security or a
Deferred Interest PIK Bond;

 

(24)                          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 Debt Security, an Eligible Investment or proceeds in the Collection
Account;

 

(25)                          the amount of Purchased Accrued Interest;

 

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(26)                          a description of any transactions with the
Collateral Manager, the Issuer, the Collateral Administrator and the Trustee and
any Affiliates thereof;

 

(27)                          the Class A Note Break-Even Default Rate, the
Class B Note Break-Even Default Rate, the Class C Note Break-Even Default Rate,
the Class D Note Break-Even Default Rate and the Class E Note Break-Even Default
Rate;

 

(28)                          the Class A Note Default Differential, the Class B
Note Default Differential, the Class C Note Default Differential, the Class D
Note Default Differential and the Class E Note Default Differential; and

 

(29)                          the Class A Note Scenario Default Rate, the
Class B Note Scenario Default Rate, the Class C Note Scenario Default Rate, the
Class D Note Scenario Default Rate, and the Class E Note Scenario Default Rate.

 

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 Business Days after receipt of such Note Valuation Report, notify
each of the Issuer, the Initial Hedge Counterparty, the Collateral Manager, the
Trustee, Fitch 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 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 Issuer has 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), (B) solely with respect to the Class E
Notes, either (1) an “accredited investor” as defined in paragraphs (1), (2),
(3) or (7) of Rule 501(A) under the Securities Act (each an Institutional
Accredited Investor) or (2) any of NorthStar OS VII, 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) or (C) solely
with respect to the Income Notes, a Permitted NS Purchaser and a “qualified
purchaser” (Qualified Purchaser) within the meaning of Section 3(c)(7) of the
1940 Act, purchasing for its own

 

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account or for the account of another Qualified Purchaser, that can make all of
the representations in the 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 of the representations in the 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 the 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 10.12 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 10.12 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.cdotrustee.net. 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.

 

10.14.                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 deposit any proceeds
received by it from the disposition of a Pledged Security in the Collection
Account.

 

(d)                                 The Trustee shall, upon receipt of an Issuer
Order at such time as there are no Rated Notes Outstanding and all obligations
of the Issuer hereunder have been satisfied, release the Collateral from the
lien of this Indenture.

 

(e)                                  The Issuer may retain agents (including the
Collateral Manager) to assist the Issuer in preparing any notice or other report
required under this Section 10.13.

 

10.15.                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 June 25 of each year
(commencing with June 25, 2007), the Issuer shall cause to be delivered to the
Trustee, the Income 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
June 2007 (and, if at any time a successor firm of Independent certified public
accountants is appointed, prior to the Payment Date in May 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 Income 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

 

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Class D Notes or, if no Class D Notes are Outstanding, each Holder of Class E
Notes), at the address shown on the Note Register. The Issuer shall not approve
the institution of such 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 10.14(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.

 

10.16.                REPORTS TO RATING AGENCIES

 

In addition to the information and reports specifically required to be provided
to the Rating Agencies, the Income Note Paying Agent, the Holders of Rated Notes
of the Controlling Class, and the Initial Hedge Counterparty pursuant to the
terms of this Indenture, the Income Note Paying Agency Agreement or the Hedge
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 Income Note Paying Agent or the Initial
Hedge Counterparty may from time to time reasonably request and such information
may be obtained and provided without unreasonable burden or expense. The Issuer
shall promptly notify the Trustee, the Income Note Paying Agent and the Initial
Hedge Counterparty 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 in the case of (i) termination or amendment of
any Transaction Document or organizational document of the 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.
From time to time Fitch may request information or reports from the Collateral
Manager on the properties underlying the Collateral, including, without
limitation, information on underwritten cash flow and occupancy. With respect to
any Collateral Debt Security that is a Trust Preferred Security, for so long as
Fitch is rating any Class of Outstanding Rated Notes, the Issuer shall provide
to Fitch via email to CDO.Surveillance@fitchrating.com the following report or
information (if available) with respect to the issuing entity of the related
Trust Preferred Security: (a) if the issuing entity of such Trust Preferred
Security is a private company, the financials for such company; (b) annual
audited financials; (c) quarterly financials; and (d) quarterly compliance
certificates.

 

10.17.                TAX MATTERS

 

The Issuer agrees to treat, and hereby notify the Trustee to treat, and, by
accepting a Rated Note, each Holder of the Rated Notes agrees to treat, the
Rated Notes, for U.S. federal, state and local income tax purposes, as
indebtedness of the Issuer, 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 not to elect to be treated as other than a corporation for U.S.
federal income tax purposes.

 

10.18.                TAX INFORMATION

 

The Issuer shall provide on a timely basis to any holder of a beneficial
interest in Rule 144A Definitive Notes (or its designee), Rule 144A Global Notes
(or its designee) and Definitive Class E 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

 

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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 Definitive Notes,
Rule 144A Global Notes and Definitive Class E Notes. The Issuer shall also
provide, upon request of a Holder of, or a holder of a beneficial interest in,
any Rule 144A Definitive Notes, Rule 144A Global Notes and Definitive Class E
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.

 

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 Valuation 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 Collection Account, 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 Issuer,
if any; and then,

 

(ii)                                 the amount of any due and unpaid Trustee
Fee; and then,

 

(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 and
expenses of the Rating Agencies; and then,

 

(vi)                             the amount of any due and unpaid expenses of
the Administrator and any due and unpaid Administrative Expenses not included in
(iii), (iv) and (v) above, including amounts payable to the Collateral Manager
under the Collateral Management Agreement but excluding the Collateral
Management Fee; and then,

 

(vii)                          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 (vii) above
(excluding any Administrative Expenses due or accrued with respect to the

 

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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 Debt Securities) may not exceed
U.S.$250,000 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
(excluding any interest payable on such Senior Collateral Management Fee);

 

(3)                                  to pay first, any Hedge Counterparty, any
amounts due to such Hedge Counterparty under any Hedge Agreement, excluding any
termination payments where such Hedge Counterparty is the Defaulting Party or
the sole Affected Party and second, to the extent funds in the related
Derivative Contract Counterparty Account are insufficient, any Synthetic
Security Counterparty, any amounts due to such Synthetic Security Counterparty,
excluding any termination payments where such Synthetic Security Counterparty is
the Defaulting Party or the sole Affected Party;

 

(4)                                  to pay Periodic Interest on the Class A-1
Notes and any Defaulted Interest;

 

(5)                                  to pay Periodic Interest on the Class A-2
Notes and any Defaulted Interest;

 

(6)                                  to pay Periodic Interest on the Class A-3
Notes and any Defaulted Interest;

 

(7)                                  to pay Periodic Interest on the Class B
Notes and any Defaulted Interest;

 

(8)                                  if either of the Class A/B Coverage Tests
is not satisfied as of the preceding Calculation Date, to pay principal of the
most senior Class of Notes then Outstanding until such Class A/B 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 A/B 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 A/B Coverage Test is satisfied or until the
Class B Notes are paid in full; provided that for purposes of determining if the
Class A/B Principal Coverage Test is satisfied after giving effect to any
payments under this Section 11.1(a)(8), the denominator of the Class A/B
Principal Coverage Ratio shall be calculated after giving effect to any payments
of principal on the Notes made pursuant to any of the clauses above and pursuant
to this Section 11.1(a)(8) on the related Payment Date;

 

(9)                                  to pay an amount equal to the Non-Monthly
Pay Asset Interest Reserve Amount for deposit into the Non-Monthly Pay Asset
Interest Reserve Account;

 

(10)                            if a Ratings Confirmation Failure occurs, on
each Payment Date commencing with the Payment Date following the Calculation
Date following such Ratings Confirmation Failure, to pay principal on the
Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class B Notes,
the Class C Notes, the Class D Notes and the Class E Notes, in that order, in
the amounts necessary for each

 

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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;

 

(11)                            to pay Periodic Interest on the Class C Notes
and, if no Class A Notes and no Class B Notes are Outstanding, any Defaulted
Interest on the Class C Notes;

 

(12)                            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) 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; provided that for purposes of determining if the
Class C Principal Coverage Test is satisfied after giving effect to any payments
under this Section 11.1(a)(12), the denominator of the Class C Principal
Coverage Ratio shall be determined after giving effect to any payments of
principal on the Notes pursuant to any of the clauses above and pursuant to this
Section 11.1(a)(12) on the related Payment Date; provided, further, that with
respect to the Class C Notes, payment of principal constituting the Class C
Cumulative Applicable Periodic Interest Shortfall Amount shall be paid before
principal not constituting the Class C Cumulative Applicable Periodic Interest
Shortfall Amount, if any;

 

(13)                            to pay the Class C Cumulative Applicable
Periodic Interest Shortfall Amount and interest thereon, if any;

 

(14)                            to pay Periodic Interest on the Class D Notes
and, if no Class A Notes, no Class B Notes and no Class C Notes are Outstanding,
any Defaulted Interest on the Class D Notes;

 

(15)                            if either of the Class D Coverage Tests is not
satisfied as of the preceding Calculation Date to pay principal (including any
Class D Cumulative Applicable Periodic Interest Shortfall Amount) 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; provided that for purposes of determining if the Class D
Principal Coverage Test is satisfied after giving effect to any payments under
this Section 11.1(a)(15), the denominator of the Class D Principal Coverage
Ratio shall be determined after giving effect to any payments of principal on
the Notes pursuant to any of the clauses above and pursuant to this Section
11.1(a)(15) on the related Payment Date; provided, further, that with respect to
(i) the Class C Notes, 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; and (ii) the Class D Notes, payment of principal
constituting the Class D Cumulative Applicable Periodic

 

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Interest Shortfall Amount shall be paid before principal not constituting the
Class D Cumulative Applicable Periodic Interest Shortfall Amount, if any;

 

(16)                            to pay the Class D Cumulative Applicable
Periodic Interest Shortfall Amount and interest thereon, if any;

 

(17)                            to pay Periodic Interest on the Class E Notes
and, if no Class A Notes, no Class B Notes, no Class C Notes and no Class D
Notes are Outstanding, any Defaulted Interest on the Class E Notes;

 

(18)                            if either of the Class E Coverage Tests is not
satisfied as of the preceding Calculation Date to pay principal (including any
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; provided that for purposes of determining if the
Class E Principal Coverage Test is satisfied after giving effect to any payments
under this Section 11.1(a)(18), the denominator of the Class E Principal
Coverage Ratio shall be determined after giving effect to any payments of
principal on the Notes pursuant to any of the clauses above and pursuant to this
Section 11.1(a)(18) on the related Payment Date; provided, further, that with
respect to (i) the Class C Notes, 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; (ii) the Class D Notes, 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; and (iii) the Class E
Notes, payment of principal constituting the Class E Cumulative Applicable
Periodic Interest Shortfall Amount shall be paid before principal not
constituting the Class E Cumulative Applicable Periodic Interest Shortfall
Amount, if any;

 

(19)                            to pay the Class E Cumulative Applicable
Periodic Interest Shortfall Amount and interest thereon, if any;

 

(20)                            to pay first, any termination payments payable
by the Issuer under any Hedge Agreement upon the termination of the related
Hedge Agreement, and second, any Synthetic Security upon the termination of the
related Synthetic Security, in each case if such termination occurred solely as
the result of an event of default or a termination event with respect to which
any Hedge Counterparty or Synthetic Security Counterparty is the Defaulting
Party or the sole Affected Party, as the case may be;

 

(21)                            to pay, in the following order:

 

(i)                                   any due and unpaid Trustee Fee, Trustee
Expenses and unpaid Administrative Expenses, including amounts payable to the
Collateral

 

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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 Issuer to the extent not paid under clause
(1) above, whether as a result of an amount limitation imposed thereunder or
otherwise;

 

(22)                          to pay, first, 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, and second, any accrued and unpaid
interest on the then-due and unpaid Collateral Management Fee; and

 

(23)                          all Income Note Excess Funds to the Income Note
Paying Agent, on behalf of the Issuer, for distributions on the Income Notes in
accordance with the Income Note Paying Agency Agreement.

 

(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 Collection Account, will be applied by the Trustee in the following order
of priority:

 

(1)                                  to the payment of the amounts referred to
in Section 11.1(a)(1) through (7), in the same order of priority specified
therein, but only to the extent not paid in full thereunder;

 

(2)                                  if either of the Class A/B 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)(8) are insufficient to cause the
Class A/B Coverage Tests to be satisfied, to pay principal of the most senior
Class of Notes then Outstanding until such Class A/B 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 A/B 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 A/B Coverage Test is satisfied or until the Class B
Notes are paid in full; provided that for purposes of determining if the
Class A/B Principal Coverage Test is satisfied after giving effect to any
payments under this Section 11.1(b)(2), the denominator of the Class A/B
Principal Coverage Ratio shall be calculated after giving effect to any payments
of principal on the Notes made pursuant to any clause or subclause of
Section 11.1(a) on the related Payment Date and pursuant to
Section 11.1(b)(1) above and this clause (2); provided, further, that the
numerator of the Class A/B Principal Coverage Ratio shall be calculated after
giving effect to any Collateral Principal Collections applied pursuant to any of
the clauses above and pursuant to this Section 11.1(b)(2) on the related Payment
Date;

 

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(3)                                  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, to the extent that the amounts paid
pursuant to Section 11.1(a)(11) are insufficient to pay such amounts in full
thereunder;

 

(4)                                  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)(12) 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) 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; provided that for purposes of determining if the Class C Principal
Coverage Test is satisfied after giving effect to any payments under this
Section 11.1(b)(4), the denominator of the Class C Principal Coverage Ratio
shall be determined after giving effect to any payments of principal on the
Notes made pursuant to any clause or subclause of Section 11.1(a) on the related
Payment Date and pursuant to any clause above and this Section 11.1(b)(4);
provided, further, that for purposes of determining if the Class C Principal
Coverage Test is satisfied, the numerator of the Class C Principal Coverage
Ratio shall be calculated after giving effect to any Collateral Principal
Collections to be applied pursuant to any clause above and this
Section 11.1(b)(4) on the related Payment Date; and provided, further, that with
respect to the Class C Notes, payment of principal constituting Class C
Cumulative Applicable Periodic Interest Shortfall Amount shall be paid before
principal not constituting the Class C Cumulative Applicable Periodic Interest
Shortfall Amount, if any;

 

(5)                                  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, to the extent that the amounts paid pursuant to
Section 11.1(a)(13) are insufficient to pay such amounts in full thereunder;

 

(6)                                  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, to the extent
that the amounts paid pursuant to Section 11.1(a)(14) are insufficient to pay
such amounts in full thereunder;

 

(7)                                  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)(15) 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; provided that for purposes of determining if the
Class D Principal Coverage

 

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Test is satisfied after giving effect to any payments under this
Section 11.1(b)(7), the denominator of the Class D Principal Coverage Ratio
shall be determined after giving effect to any payment of principal on the Notes
made pursuant to any clause or subclause of Section 11.1(a) on the related
Payment Date and pursuant to any clause or subclause above and this
Section 11.1(b)(7); provided, further, that for purposes of determining if the
Class D Principal Coverage Test is satisfied, the numerator of the Class D
Principal Coverage Ratio shall be calculated after giving effect to any
Collateral Principal Collections to be applied pursuant to any clause or
subclause above and this Section 11.1(b)(7) on the related Payment Date; and
provided, further, that with respect to (i) the Class C Notes, payment of
principal constituting Class C Cumulative Applicable Periodic Interest Shortfall
Amount shall be paid before principal not constituting the Class C Cumulative
Applicable Periodic Interest Shortfall Amount, if any; and (ii) the Class D
Notes, payment of principal constituting Class D Cumulative Applicable Periodic
Interest Shortfall Amount shall be paid before principal not constituting the
Class D Cumulative Applicable Periodic Interest Shortfall Amount, if any;

 

(8)                                  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, to the extent that amounts paid
pursuant to Section 11.1(a)(16) are insufficient to pay such amounts in full
thereunder;

 

(9)                                  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, to the extent that the amounts paid pursuant to Section 11.1(a)(17) are
insufficient to pay such amounts in full thereunder;

 

(10)                            if either of the Class E Coverage Tests is not
satisfied as of the preceding Calculation Date and to the extent that amounts
paid pursuant to Section 11.1(a)(18) 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
Period 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 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; provided that for purposes of determining if the Class E
Principal Coverage Test is satisfied after giving effect to any payments under
this Section 11.1(b)(10), the denominator of the Class E Principal Coverage
Ratio shall be determined after giving effect to any payment of principal on the
Notes made pursuant to any clause or subclause of Section 11.1(a) on the related
Payment Date and pursuant to any clause or subclause above and this
Section 11.1(b)(10); provided, further, that for purposes of determining if the
Class D Principal Coverage Test is satisfied, the numerator of the Class E
Principal Coverage Ratio shall be calculated after giving effect to any
Collateral Principal Collections to be applied pursuant to any clause or
subclause above and this Section 11.1(b)(10) on the related Payment Date; and
provided, further, that with respect to (i) the Class C Notes, payment of
principal constituting Class C Cumulative Applicable Periodic Interest Shortfall
Amount shall be paid before principal not constituting the Class C

 

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Cumulative Applicable Periodic Interest Shortfall Amount, if any; (ii) the Class
D Notes, payment of principal constituting Class D Cumulative Applicable
Periodic Interest Shortfall Amount shall be paid before principal not
constituting the Class D Cumulative Applicable Periodic Interest Shortfall
Amount, if any; and (iii) the Class E Notes, payment of principal constituting
Class E Cumulative Applicable Periodic Interest Shortfall Amount shall be paid
before principal not constituting the Class E Cumulative Applicable Periodic
Interest Shortfall Amount, if any;

 

(11)                            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, to the extent
that amounts paid pursuant to Section 11.1(a)(19) are insufficient to pay such
amounts in full thereunder;

 

(12)                            (i)                                   to the
purchase of Collateral Debt Securities or to the Collection Account for
reinvestment in Eligible Investments pending investment in Substitute Collateral
Obligations in accordance with the Reinvestment Criteria; or:

 

(ii)                                  upon the occurrence of a Special
Amortization, Collateral Principal Collections in an amount determined by the
Collateral Manager (notice of which shall be provided to the Trustee on or prior
to the related Calculation Date) will be applied as follows:

 

(A)                              if the Special Amortization Pro-Rata Condition
is satisfied, to pay principal of the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes, the Class B Notes, the Class C Notes, the Class D Notes and the
Class E Notes pro rata; or

 

(B)                                if the Special Amortization Pro-Rata
Condition is not satisfied, the following payments in the following order of
priority:

 

1)                                      to pay principal of any outstanding
Class A-1 Notes;

 

2)                                      if the principal balance of the
Class A-1 Notes has been repaid in full, to pay principal of the Class A-2
Notes;

 

3)                                      if the principal balance of the
Class A-2 Notes has been repaid in full, to pay principal of the Class A-3
Notes;

 

4)                                      if the principal balance of the
Class A-3 Notes has been repaid in full, to pay principal of the Class B Notes;

 

5)                                      if the principal balance of the Class B
Notes has been repaid in full, to pay principal of the Class C Notes;

 

6)                                      if the principal balance of the Class C
Notes has been repaid in full, to pay principal of the Class D Notes; and

 

7)                                      if the principal balance of the Class D
Notes has been repaid in full, to pay principal of the Class E Notes;

 

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(13)                            after the end of the Reinvestment Period, to pay
each Class of Rated Notes:

 

(i)                                     first, to the Class A-1 Notes, until the
Class A-1 Notes have been paid in full;

 

(ii)                                  second, to the Class A-2 Notes, until the
Class A-2 Notes have been paid in full;

 

(iii)                               third, to the Class A-3 Notes, until the
Class A-3 Notes have been paid in full;

 

(iv)                              fourth, to the Class B Notes, until the
Class B Notes have been paid in full;

 

(v)                                 fifth, to the Class C Notes, until the
Class C Notes have been paid in full;

 

(vi)                              sixth, to the Class D Notes, until the Class D
Notes have been paid in full; and

 

(vii)                           seventh, to the Class E Notes, until the Class E
Notes have been paid in full;

 

(14)                            to pay, first, termination payments payable to
any Hedge Counterparty upon the termination of the related Hedge Agreement, if
such termination occurred solely as the result of an event of default or a
termination event with respect to any Hedge Counterparty as the Defaulting Party
or the sole Affected Party, as the case may be, to the extent that the amounts
paid pursuant to Section 11.1(a)(20) are insufficient to pay such amounts in
full thereunder, and second, termination payments to any Synthetic Security
Counterparty if such termination occurred solely as a result of an event of
default or a termination event with respect to the Synthetic Security
Counterparty as the Defaulting Party or the sole Affected Party, as the case may
be, to the extent funds in the related Derivative Contract Counterparty Account
are insufficient;

 

(15)                            to pay any due and unpaid Trustee Fee, Trustee
Expenses, and any other unpaid 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 clause (1) above and to the extent that the amounts paid pursuant to
Section 11.1(a)(1) and (21) are insufficient to pay such amounts in full
thereunder;

 

(16)                            to pay, first, 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, and second, any accrued and unpaid
interest on the then-due and unpaid Collateral Management Fee, to the extent
that the amounts paid pursuant to Section 11.1(a)(22) are insufficient to pay
such amounts in full thereunder; and

 

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(17)                           all Income Note Excess Funds to the Income Note
Paying Agent, on behalf of the Issuer, for distributions on the Income Notes in
accordance with the Income Note Paying Agency Agreement.

 

(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, 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-1 Notes
(including Defaulted Interest on such Class A-1 Notes, if any);

 

(3)                                outstanding principal on the Class A-1 Notes
until paid in full;

 

(4)                                the Periodic Interest on the Class A-2 Notes
(including Defaulted Interest on such Class A-2 Notes, if any);

 

(5)                                outstanding principal on the Class A-2 Notes
until paid in full;

 

(6)                                the Periodic Interest on the Class A-3 Notes
(including Defaulted Interest on such Class A-3 Notes, if any);

 

(7)                                outstanding principal on the Class A-3 Notes
until paid in full;

 

(8)                                the Periodic Interest on the Class B Notes
(including Defaulted Interest on the Class B Notes, if any) and then outstanding
principal on the Class B Notes until paid in full;

 

(9)                                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 Class C Cumulative Applicable Periodic
Interest Shortfall Amount, if any) until paid in full;

 

(10)                          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;

 

(11)                          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;

 

(12)                          amounts corresponding to the amounts set forth in
Section 11.1(a)(20) through (22), and Section 11.1(b)(12) and (13); and

 

(13)                          to the Income Note Paying Agent, any remaining
amounts for distributions on the Income Notes as set forth in
Section 11.1(a)(23) and Section 11.1(b)(17).

 

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(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 10.13(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)                                 Any amounts to be paid to the Income Note
Paying Agent pursuant to Section 11.1(a)(23) or to Section 11.1(b)(17) will be
released from the lien of this Indenture.

 

(h)                                 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.

 

ARTICLE XII

 

PURCHASE AND SALE OF COLLATERAL DEBT SECURITIES

 

12.1.                        SALE OF COLLATERAL DEBT SECURITIES

 

(a)                                  Sale of Collateral Debt Securities.

 

(1)                                Subject to the satisfaction of the conditions
specified in Section 10.13 as applicable, if the Collateral Manager, on behalf
of the Issuer, pursuant to this Article 12, shall direct the Trustee to sell any
Temporary Ramp-Up Security, Defaulted Security, Equity Security, Credit Risk
Security, Written Down Security or Withholding Tax Security, the Trustee shall
sell in the manner directed by the Collateral Manager, any Temporary Ramp-Up
Security, Defaulted Security, Equity Security, Credit Risk Security, Written
Down Security or Withholding Tax Security.

 

(2)                                During the Ramp-Up Period, and in any event,
no later than the Effective Date, the Collateral Manager shall direct the Issuer
to sell or otherwise dispose of all Temporary Ramp-Up Securities. Sale Proceeds
received with respect to Temporary Ramp-Up Securities shall be reinvested only
in Ramp-Up Collateral Debt Securities that are Fixed Rate Collateral Debt
Securities, provided that any Sale Proceeds received with respect to Temporary
Ramp-Up Securities that are not reinvested in Fixed Rate Collateral Debt
Securities, other than not more than

 

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U.S.$500,000 of such Sale Proceeds that may be reinvested in Substitute
Collateral Debt Securities that are not Fixed Rate Collateral Debt Securities,
shall be treated as Collateral Principal Collections and shall be applied by the
Issuer to the making of payments on the Notes, subject to and in accordance with
the Priority of Payments, on the Payment Date immediately following the
Effective Date.

 

(b)                                 Reinvestment Criteria. Following the Closing
Date, Sale Proceeds received at any time on Collateral Debt Securities that are
Defaulted Securities, Equity Securities, Credit Risk Securities, Written Down
Securities or Withholding Tax Securities, as well as Sale Proceeds from
Discretionary Sales and Collateral Principal Payments, are expected to be
reinvested in Substitute Collateral Debt Securities with an aggregate purchase
price up to the amount of the Sale Proceeds from such sale, in each case during
the Ramp-Up Period and thereafter during the Reinvestment Period, subject to
complying with the Eligibility Criteria and the Reinvestment Criteria described
below, or shall be temporarily reinvested in the Eligible Investments pending
such reinvestment in Substitute Collateral Debt Securities in accordance with
the Priority of Payments. Such Sale Proceeds and Collateral Principal Payments
will be eligible to be reinvested in Substitute Collateral Debt Securities by
the Issuer and pledged to the Trustee if such Substitute Collateral Debt
Securities meet each of the Reinvestment Criteria.

 

If the Collateral Manager determines, in its sole discretion, that investments
in additional Collateral Debt Securities would either be impractical or not
beneficial, an amount of Collateral Principal Collections available for
reinvestment pursuant to the Priority of Payments as determined by the
Collateral Manager will be applied to principal on the Notes in a Special
Amortization. Collateral Principal Collections (including Sale Proceeds) will
not be reinvested following the Reinvestment Period.

 

Notwithstanding the foregoing restrictions, the Collateral Manager will direct
the Trustee to sell, and, the Trustee will sell in accordance with such
direction, all Collateral Debt Securities in connection with a Redemption of the
Notes, subject to the satisfaction of the conditions set forth in Article 9
herein. During the Reinvestment Period, principal of the Notes will be payable
on any Payment Date in a Special Amortization if the Collateral Manager has
notified the Trustee in writing on or before the related Calculation Date that
it has determined, in its sole discretion, that investments in additional
Collateral Debt Securities would not be practical or beneficial.

 

During the Ramp-Up Period, Substitute Collateral Debt Securities will be
purchased with Uninvested Proceeds, if sufficient Uninvested Proceeds are
available, and only if sufficient Uninvested Proceeds are not available, with
Collateral Principal Collections.

 

(c)                                  Discretionary Sales. So long as no Event of
Default has occurred and is continuing, the Collateral Manager, on behalf of the
Issuer, may, during the Reinvestment Period, direct the Trustee to sell, and the
Trustee will sell in the manner directed by the Collateral Manager, any
Collateral Debt Security (in addition to sales of any Defaulted Securities,
Credit Risk Securities, Withholding Tax Securities, Equity Securities and
Written Down Securities) so long as each of the following applies:

 

(1)                                  the aggregate Principal Balance of all
Collateral Debt Securities sold pursuant to such Discretionary Sales for a given
calendar year does not exceed 10% of the

 

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CDS Principal Balance at the beginning of that year (or, with respect to
calendar year 2006, as of the Closing Date);

 

(2)                                 the Collateral Manager believes in good
faith that Sale Proceeds from such sale can be reinvested within 60 Business
Days after the sale of such Collateral Debt Security in one or more Substitute
Collateral Debt Securities having an aggregate Principal Balance of not less
than 100% of the Principal Balance of the Collateral Debt Security being sold;

 

(3)                                 after giving effect to such sale and to the
purchase of Substitute Collateral Debt Securities with the Sale Proceeds
thereof, the Reinvestment Criteria will be met; and

 

(4)                                 such Collateral Manager has not been
removed, or voted to be removed, for “cause” as set forth in the Collateral
Management Agreement.

 

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 Debt Security 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 Debt Security 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 or, it is issued by a Qualifying Foreign Obligor;

 

(b)                                 it is U.S. Dollar-denominated, and it is not
convertible into, or payable in, any other currency;

 

(c)                                  it is one (or in the case of a Synthetic
Security or a CMBS Re-REMIC Security, references at least one of) of the
Specified Types of Collateral Debt Securities;

 

(d)                                 it has an S&P Rating (which rating does not
include a “p”, “pi”, “q”, “t” or “r” subscript), a Moody’s Rating and a Fitch
Rating;

 

(e)                                  the acquisition, ownership, enforcement and
disposition of such security will not cause the Issuer to be treated as 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 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;

 

(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;

 

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(h)                                 it is not a security that is ineligible
under its Underlying Instruments to be purchased by the Issuer and pledged to
the Trustee;

 

(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 is not a security that provides for
the payment of principal upon maturity at less than the par amount thereof;

 

(k)                                  unless it is a Derivative Contract, its
Underlying Instruments do not obligate the Issuer to make any future advances or
any other payment except the purchase price thereof;

 

(l)                                     it is not a security 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 a security issued by an Emerging
Market Issuer;

 

(o)                                 it is not a security that has an Actual
Rating from Moody’s lower than “B3”, an Actual Rating from S&P lower than “B-”
or an Actual Rating from Fitch lower than “B-” at the time of purchase;

 

(p)                                 it is not a security that has, at the time
of purchase, any deferred or capitalized interest;

 

(q)                                 it is not a security that, at the time it is
purchased, is a Credit Risk Security, a Defaulted Security, a Written Down
Security or a Deferred Interest PIK Bond;

 

(r)                                    (a) if it is a Derivative Contract, the
Derivative Contract Counterparty, at the time of entry into such Derivative
Contract, has a short term rating of at least “A-1+” by S&P (or “A-1” by S&P if
the premium (and any other relevant amount (such as coupon) required under the
related Derivative Contract) to be paid by such Derivative Contract Counterparty
is posted one payment period in advance for the term of the Derivative Contract)
and is not on negative watch or (b) in the case of any Synthetic Security other
than a Derivative Contract, such Synthetic Security Counterparty has a short
term rating of at least “A-1” by S&P or, if no such short term rating is
available, a long term rating of at least “A” by S&P;

 

(s)                                  it is not a Real Estate Interest with a
loan-to-value ratio of greater than 85% on the underlying collateral; provided
that, if such Real Estate Interest is a Mezzanine Loan, it will have a Rating of
at least “B-” (or its equivalent) from a Rating Agency; provided further that
all such Mezzanine Loans with a Rating of less than “BB-” (or its equivalent)
from a Rating Agency will not exceed 5% of the CDS Principal Balance;

 

(t)                                    it is not a REIT Debt Security that has a
Moody’s Rating lower than “Ba3”, an S&P Rating lower than “BB-” or a Fitch
Rating lower than “BB-” at the time of purchase;

 

(u)                                 it is not a Real Estate CDO Security that
has a Moody’s Rating lower than “Ba3”, an S&P Rating lower than “BB-” or a Fitch
Rating lower than “BB-” at the time of purchase;

 

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(v)           it is not a CMBS Credit Tenant Lease Security that has a Moody’s
Rating lower than “Ba3”, an S&P Rating lower than “BB-” or a Fitch Rating lower
than “BB-” at the time of purchase;

 

(w)          at the time the security is purchased by the Issuer:

 

(1)           it is not a security 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
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 (2) any solicitation by an issuer of such
security or any other person to amend, modify or waive any provision of such
security or any related underlying instrument, and has not been called for
redemption;

 

(5)           it is not an Equity Security;

 

(6)           it is not a security 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) or
a Moody’s Rating (as defined in clause (i) of the definition of Moody’s Rating)
that addresses the obligation of the obligor (or guarantor, if applicable) to
pay principal of and interest on the relevant Collateral Debt Security in full,
which ratings are monitored on an ongoing basis by the relevant Rating Agency;

 

(9)           it is not a security that provides for the payment of interest (or
in the case of a Synthetic Security which is in the form of a Derivative
Contract, the periodic payment of a floating amount or a fixed amount based on
its notional or equivalent amount) in cash less frequently than semi-annually;

 

(10)         if it is a Mezzanine Loan, (a) the Mezzanine Loan is subject to
servicing, custodial and/or similar arrangements customary for Mezzanine Loans
as

 

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determined by the Collateral Manager in its reasonable discretion, (b) the
requirements set forth in the Indenture regarding the representations and
warranties with respect to the underlying mortgaged property and the Mezzanine
Loan have been met and the terms of the Underlying Instruments are consistent
with the terms of similar Underlying Instruments with respect to Mezzanine Loans
as determined by the Collateral Manager in its reasonable discretion;

 

(11)         if it is a Deemed Floating Rate Collateral Debt Security, the
Deemed Floating Asset Hedge entered into with respect to such Deemed Floating
Rate Collateral Debt Security conforms to all requirements set forth in the
definition of “Deemed Floating Asset Hedge”; and

 

(12)         it is not a Prohibited Asset.

 

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; provided further that
except for property acquired by the Issuer in foreclosure or similar
circumstances and for property expressly permitted to be acquired by the Issuer,
the Issuer may not purchase, acquire or hold (whether as part of a unit with a
Collateral Debt Security, in exchange for a Collateral Debt Security or
otherwise) any asset unless the underlying documents for such asset specify, or
the Issuer has received advice of tax counsel of nationally recognized standing
in the United States experienced in such matters to the effect that, under the
relevant facts and circumstances with respect to such transaction, for U.S.
federal income tax purposes, (i) the obligation or security is indebtedness,
(ii) all obligors and issuers of the assets are classified as corporations (and
no elections have been made to the contrary), (iii) no obligor on or issuer of
the asset is engaged in the conduct of a trade or business within the United
States, or (iv) all obligors and issuers of the assets qualify as “grantor
trusts”, and all of the assets of the obligors and issuers consist of
obligations or securities that the Issuer could have directly acquired and held
as assets (but for restrictions related to withholding taxes) and,
notwithstanding anything to the contrary herein, the Issuer shall not purchase,
acquire or hold any asset the gain from the disposition of which will be subject
to U.S. federal income or withholding tax under Section 897 or Section 1445 of
the Code and the Treasury regulations promulgated thereunder other than United
States real property interests that the Issuer acquires in foreclosure and with
respect to which has made a Section 882(d) election.

 

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 arms’ 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 Debt Security
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

 

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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(d), (2) that the
Collateral Debt Security to be sold constitutes an Equity Security, a Defaulted
Security, a Credit Risk Security, a Withholding Tax Security or a Written Down
Security and (3) that any security to be purchased satisfies the definition of
Collateral Debt Security 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 and 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, in no event may
the Issuer (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. The foregoing shall not, however, preclude
the Issuer from holding Equity Securities or securities received in an Offer
pending their sale in accordance with Section 12.1(a)(1).

 

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 Rated Notes agree for the
benefit of the Initial Hedge Counterparty that the Rated Notes and the Issuer’s
rights in and to the Collateral (solely with respect to all amounts payable to
such Initial Hedge Counterparty pursuant to Section 11.1(a)(3)), the Subordinate
Interests) shall be subordinate and junior to the rights of such Hedge
Counterparty with respect to payments to be made to such Initial Hedge
Counterparty pursuant to the Initial Hedge Agreement to the extent and in the
manner set forth in Section 11.1(a)(3) 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 all amounts payable to the Initial
Hedge Counterparty pursuant to Section 11.1(a)(3) shall be paid in Cash or, to
the extent the Initial Hedge Counterparty consents, other than in Cash, before
any further payment or distribution is made on account of the Subordinate
Interests.

 

(b)         Anything in this Indenture or the Rated Notes to the contrary
notwithstanding, the Issuer and the Holders of the Class A-2 Notes, the
Class A-3 Notes, the Class B Notes, the Class C Notes, the Class D Notes and the
Class E Notes agree for the benefit of the Holders of the Class A-1 Notes that
the Class A-2 Notes, the Class A-3 Notes, the Class B Notes, the Class C Notes,
the Class D Notes and the Class E Notes and the Issuer’s rights in and to the
Collateral (with respect to the Class A-1 Notes, the Subordinate Interests)
shall be

 

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subordinate and junior to the Class A-1 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-1 Notes shall be paid in full in Cash or, to the extent a
Majority of the Class A-1 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 agree, for the benefit of the Holders of the Class A-1
Notes, not to cause the filing of a petition in bankruptcy against the 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-1
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 A-3 Notes, the Class B
Notes, the Class C Notes, the Class D Notes and the Class E Notes agree for the
benefit of the Holders of the Class A-1 Notes and the Class A-2 Notes that the
Class A-3 Notes, the Class B Notes, the Class C Notes, the Class D Notes and the
Class E Notes and the Issuer’s rights in and to the Collateral (with respect to
the Class A-1 Notes and the Class A-2 Notes, the Subordinate Interests) shall be
subordinate and junior to the Class A-1 Notes and the Class A-2 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-1 Notes and the Class A-2 Notes shall be paid
in full in Cash or, to the extent a Majority of the Class A-1 Notes and the
Class A-2 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 agree, for the benefit of the Holders of the Class A-1 Notes and the
Class A-2 Notes, not to cause the filing of a petition in bankruptcy against the
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-1 Notes and the Class A-2 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 B Notes, the Class C
Notes, the Class D Notes and the Class E 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 and the Class E 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 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 for
failure to pay to them amounts due under the Rated Notes evidencing such
Subordinate Interests or hereunder until the payment in

 

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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.

 

(e)          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 and the Class E 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 and the
Class E 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 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 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.

 

(f)          Anything in this Indenture or the Rated Notes to the contrary
notwithstanding, the Issuer and the Holders of the Class D Notes and the Class E
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 and the Class E 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 each
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 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 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.

 

(g)         Anything in this Indenture or the Rated Notes to the contrary
notwithstanding, the Issuer and the Holders of the Class E 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 and the Issuer’s rights in
and to the Collateral (with respect to the Class A Notes, the

 

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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
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 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 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.

 

(h)         In the event that notwithstanding the provisions of this Indenture,
any Holder of any Subordinate Interests shall have received any payment or
distribution in respect of such Subordinate Interests contrary to the provisions
of this Indenture, then, unless and until all amounts payable to the Initial
Hedge Counterparty pursuant to Section 11.1(a)(3) or to the Class A Notes, the
Class B Notes, the Class C Notes, the Class D Notes or the Class E Notes, as the
case may be, shall have been paid in full in Cash or, to the extent the Initial
Hedge Counterparty or a Majority of the Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes or the Class E Notes, as the case may be,
consent, other than in Cash in accordance with this Indenture, such payment or
distribution shall be received and held in trust for the benefit of, and shall
forthwith be paid over and delivered to, the Trustee, which shall pay and
deliver the same to such Initial Hedge Counterparty or the Holders of the
Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes or the
Class E Notes, as the case may be, in accordance with this Indenture; provided
that, if any such payment or distribution is made other than in Cash, it shall
be held by the Trustee as part of the Collateral and subject in all respects to
the provisions of this Indenture, including this Section 13.1.

 

(i)           Each Holder of Subordinate Interests agrees with the Initial Hedge
Counterparty and all Holders of the Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes or the Class E Notes, as the case may be, that
such Holder of Subordinate Interests shall not demand, accept, or receive any
payment or distribution in respect of such Subordinate Interests in violation of
the provisions of this Indenture including this Section 13.1; provided that
after all amounts payable pursuant to Section 11.1(a)(3) and all amounts payable
in respect of the Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes or the Class E Notes, as the case may be, have been paid in full,
the Holders of Subordinate Interests shall be fully subrogated to the rights of
the Initial Hedge Counterparty or the Holders of the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes or the Class E Notes, as the case
may be. Nothing in this Section 13.1 shall affect the obligation of the Issuer
to pay Holders of Subordinate Interests.

 

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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 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 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 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 Collateral Manager or any other Person, stating that the information
with respect to such factual matters is in the possession of the Issuer, the
Collateral Manager or such other Person, unless such Authorized Officer of the
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 or the Collateral Manager, stating that the information with
respect to such matters is in the possession of the 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, then notwithstanding
that the satisfaction of such condition is a condition precedent to the Issuer’s
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).

 

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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 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 Issuer, 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
Issuer in reliance thereon, whether or not notation of such action is made upon
such Rated Note.

 

14.3.        NOTICES, ETC., TO TRUSTEE, THE ISSUER 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 Income Note Paying Agent by any Rated Noteholder
or by the 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 Income Note Paying Agent
addressed to it at 181 West Madison Street, 32nd Floor, Chicago, Illinois 60602,
Attention: CDO Trust Services Group — N-Star Real Estate CDO VII Ltd., telephone
number 312-904-4047, fax number 312-602-3935, or at any other address previously
furnished in writing to the Issuer or Rated Noteholder by the Trustee or Income
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;

 

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(c)           the Rating Agencies by the Issuer 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 Fitch, addressed to Fitch Ratings, One State Street Plaza, New York, New
York 10041, facsimile no. 212-558-2618, Attention: CDO Surveillance (e-mail:
cdo.surveillance@fitchratings.com); (ii) in the case of Moody’s, addressed to
Moody’s Investors Service, 99 Church Street, New York, New York 10007, facsimile
no. (212) 553-0355, Attention: CDO Monitoring (e-mail: cdomonitoring@moodys.com)
and (iii) 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; or

 

(d)           the Initial Hedge Counterparty by the Issuer 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
or sent by overnight courier service or by facsimile in legible form to the
Initial Hedge Counterparty addressed to it at the address specified in the
Initial Hedge Agreement or at any other address previously furnished in writing
to the Issuer or the Trustee by the Initial Hedge Counterparty;

 

(e)           the Collateral Manager by the Issuer 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 Issuer or the Trustee by the
Collateral Manager;

 

(f)            the Income Note Paying Agent by the Trustee in writing sent by
facsimile confirmed by overnight courier guaranteed next day delivery;

 

(g)           the Placement Agents by the Issuer, 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,
(i) to BAS addressed to Banc of America Securities LLC, 214 North Tryon Street,
14th Floor, Charlotte, North Carolina 28255, telecopy no. 704-386-0688,
Attention: Global Structured Products and (ii) to Morgan Stanley addressed to
Morgan Stanley & Co. Incorporated, 1585 Broadway, New York, New York 10036,
telecopy no. 212-507-4011, Attention: Securitized Products Group; 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

 

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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.

 

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 Issuer shall bind its
respective successors and assigns, whether so expressed or not. Written notice
of any assignment shall be promptly provided

 

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by the Issuer to the Initial Hedge Counterparty, the Holders of Notes of the
Controlling Class and each Rating Agency.

 

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 governed by, and construed in
accordance with, the law of the State of New York.

 

14.10.      SUBMISSION TO JURISDICTION

 

The Issuer hereby irrevocably submits 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 Issuer hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in
such New York State or federal court. The Issuer hereby irrevocably waives, to
the fullest extent that it may legally do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding. The Issuer hereby
irrevocably appoints and designates 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 Issuer 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 Issuer. The Issuer
agrees 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

 

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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.

 

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 Issuer 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 Issuer in respect of any such sum due from the Issuer 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
Issuer 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), agrees 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 and the Class E Notes on the Irish Stock
Exchange, this Indenture and the 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 Income 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 and the
Hedge Agreement, including (i) the right to give all notices, consents and
releases thereunder, (ii) the right to give all notices of termination,
including

 

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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 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, the
Collateral Management Agreement or the Hedge 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, the Collateral Management Agreement and the Hedge 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, the Collateral Management Agreement or any
Hedge 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 AGREEMENT

 

16.1.        HEDGE AGREEMENTS

 

The Issuer will, on or prior to the Closing Date, enter into the Initial Hedge
Agreements with the Initial Hedge Counterparty for the purpose of managing the
Issuer’s interest rate risk exposure relating to the variable rate of interest
applicable to certain Classes of Rated Notes and/or the cashflow timing mismatch
with respect to particular Collateral Debt Securities. On the Closing Date (or
any date on which the Issuer enters into a replacement Hedge Agreement), (i) the
Hedge Counterparty entering into such Hedge Agreement shall satisfy the Hedge
Counterparty Ratings Requirement and (ii) the Issuer shall assign such Hedge
Agreement to the Trustee pursuant to this Indenture and the Collateral
Assignment of Hedge Agreement.

 

(a)          The Trustee shall, on behalf of the Issuer and in accordance with
the Note Valuation Report, pay amounts due to the Hedge Counterparty under the
Hedge Agreement on any Payment Date in accordance with Section 11.1.

 

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(b)         If a Collateralization Event occurs, the Hedge Counterparty shall
within 30 days of the occurrence of such Collateralization Event either
(i) enter into a Credit Support Annex and post collateral of such types, in such
amounts and at such times as are sufficient to maintain the then-current rating
of each Class of Rated Notes by each Rating Agency, (ii) find a replacement
Hedge Counterparty as permitted under the Hedge Agreement that satisfies the
Hedge Counterparty Ratings Requirement, (iii) obtain a guarantor for the
obligations of the Hedge Counterparty under the Hedge Agreement which satisfies
the Hedge Counterparty Ratings Requirement or (iv) take such other steps as each
Rating Agency that has downgraded the Hedge Counterparty may require (as
confirmed to the Collateral Manager in writing) to ensure that the then-current
ratings on the Rated Notes by either Rating Agency are not reduced or withdrawn.
If the Hedge Counterparty has not, within 30 days of the occurrence of such
Collateralization Event, taken any of the actions required above, an additional
termination event with respect to which the Hedge Counterparty shall be the sole
“affected party” will be deemed to have occurred and the Issuer shall have the
right to terminate the Hedge Agreement (with all costs and expenses in
connection with any such termination to be paid by the Hedge Counterparty).

 

(c)          If at any time a Substitution Event has occurred and is continuing,
then the Hedge Counterparty will, (x) in the case of a Substitution Event
referred to in sub-clause (i) or sub-clause (iii) of the definition thereof,
within 30 days following such Substitution Event or (y) in the case of a
Substitution Event referred to in sub-clause (ii) of the definition thereof,
within ten Business Days following such Substitution Event, assign its rights
and obligations under the Hedge Agreement, at no cost to the Issuer, to a party
(the Substitute Party) selected by the Hedge Counterparty that (i) satisfies the
Hedge Counterparty Ratings Requirement, (ii) with respect to which a Rating
Agency Confirmation has been obtained and (iii) that assumes all of the Hedge
Counterparty’s obligations under the Hedge Agreement pursuant to an agreement
satisfactory to the Issuer. If the Hedge Counterparty fails to assign its rights
and obligations under the Hedge Agreement to a Substitute Party within 30 days
following such Substitution Event (in the case of a Substitution Event referred
to in sub-clauses (i) or (iii) of the defmition thereof) or within ten Business
Days following such Substitution Event (in the case of a Substitution Event
referred to in sub-clause (i) of the definition thereof), then (x) the Hedge
Counterparty shall, while it continues in good faith to search for an eligible
Substitute Party, post and maintain, or continue to maintain, as the case may
be, collateral in accordance with a Credit Support Annex of such types, in such
amounts and at such times as are sufficient to maintain the then-current rating
of each Class of Rated Notes by each Rating Agency, and (y) the Issuer shall
have the right to terminate the Hedge Agreement with all costs of such
termination to be paid by the Hedge Counterparty.

 

(d)         The Issuer may, after the Closing Date, enter into additional Hedge
Agreements (including one or more Deemed Floating Asset Hedges) with additional
Hedge Counterparties as the Issuer may elect in its sole discretion, in each
case (i) subject to Rating Agency Confirmation, (ii) in the event a proposed
additional Hedge Agreement has an initial notional amount which exceeds
U.S.$25,000,000, with the prior consent of Bank of America, N.A. (so long as it
continues to act as the Initial Hedge Counterparty), and (iii) in the case of
additional Hedge Counterparties, with the delivery to the Issuer of an Opinion
of Counsel to the additional Hedge Counterparty; provided that the Issuer will
not be required to obtain Rating Agency Confirmation in connection with entering
into any Deemed Floating Asset Hedges which are Form-Approved Hedge Agreements
with a Hedge Counterparty that satisfies the Hedge Counterparty Ratings
Requirement.

 

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(e)          The Trustee shall, prior to the Closing Date in respect of the
Initial Hedge Agreement, 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
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 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 Hedge Counterparty when and as required by the
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.

 

(f)          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.

 

(g)         If at any time the 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 Hedge Agreement) solely attributable to the 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 and under the
Collateral Assignment of Hedge Agreement 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 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 Party 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 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).

 

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(h)         The Issuer shall notify each Rating Agency if at any time the Hedge
Counterparty is required to post collateral or assign its rights and obligations
in and under the Hedge Agreement.

 

(i)           The Hedge Agreement may not 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; provided that the Issuer has obtained Rating
Agency Confirmation with respect to any such modification. The Trustee shall
provide the Collateral Manager and the Rating Agencies with a copy of any such
modification within 10 Business Days before effecting such modification.

 

(j)           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 Hedge Counterparty shall be required in accordance with the terms of the
Hedge Agreement to pay additional amounts to the Issuer sufficient to cover any
withholding tax due on payments made by the Hedge Counterparty to the Issuer
under such Hedge Agreement, subject to the Issuer making customary payee tax
representations and providing customary tax documentation. 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.

 

(k)          The Issuer will not terminate or amend any Hedge Agreement without
receiving Rating Agency Confirmation with respect to such termination or
amendment.

 

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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 REAL ESTATE CDO VII LTD.,

 

 

 

as Issuer

 

 

 

 

 

 

 

 

By:

/s/ Derrie Boggess

 

In the presence of:

/s/ Jesse Hydes

 

Name: Derrie Boggess

 

Witness Name: Jesse Hydes

 

Title:   Director

 

 

 

 

 

 

 

 

 

 

LASALLE BANK NATIONAL ASSOCIATION,

 

 

 

as Trustee

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

[INDENTURE]

 

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

 

IN WITNESS WHEREOF, we have set our hands as of the date first above written.

 

 

Executed as a Deed by

 

 

N-STAR REAL ESTATE CDO VII LTD.,

 

 

 

as Issuer

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

LASALLE BANK NATIONAL ASSOCIATION,

 

 

 

as Trustee

 

 

 

 

 

 

 

 

 

 

By:

/s/ Thomas O’Connor

 

 

 

Name: Thomas O’Connor

 

 

 

Title:   Vice President

 

 

 

[INDENTURE]

 

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