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CAPLEASE CDO 2005-1, LTD.
Issuer,
 
CAPLEASE CDO 2005-1 CORP.
Co-Issuer,
 
CAPLEASE INVESTMENT MANAGEMENT, LLC
Advancing Agent
 
AND
 
LASALLE BANK NATIONAL ASSOCIATION
Trustee, Paying Agent, Calculation Agent, Transfer Agent,
Custodial Securities Intermediary and Notes Registrar
 
INDENTURE
 
Dated as of March 10, 2005
 
COLLATERALIZED DEBT OBLIGATIONS

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Table of Contents

 
Page
ARTICLE 1 DEFINITIONS
2
Section 1.1.
Definitions.
2
Section 1.2.
Assumptions as to Pledged Obligations.
36
Section 1.3.
Interest Calculation Convention.
37
Section 1.4.
Rounding Convention.
37
ARTICLE 2 THE SECURED NOTES
38
Section 2.1.
Forms Generally.
38
Section 2.2.
Forms of Secured Notes and Certificate of Authentication.
38
Section 2.3.
Authorized Amount; Stated Maturity; and Denominations.
39
Section 2.4.
Execution, Authentication, Delivery and Dating.
39
Section 2.5.
Registration, Registration of Transfer and Exchange.
39
Section 2.6.
Mutilated, Defaced, Destroyed, Lost or Stolen Secured Note.
43
Section 2.7.
Payment of Principal and Interest and Other Amounts; Principal and Interest
Rights Preserved.
44
Section 2.8.
Persons Deemed Owners.
47
Section 2.9.
Cancellation.
47
Section 2.10.
Global Secured Notes; Temporary Notes.
47
Section 2.11.
US Tax Treatment of Secured Notes.
48
Section 2.12.
Authenticating Agents.
49
Section 2.13.
Forced Sale on Failure to Comply with Restrictions.
49
ARTICLE 3 CONDITIONS PRECEDENT
50
Section 3.1.
General Provisions.
50
Section 3.2.
Security for Secured Notes.
51
Section 3.3.
Transfer of Collateral Securities and Eligible Investments.
52
ARTICLE 4 SATISFACTION AND DISCHARGE
56
Section 4.1.
Satisfaction and Discharge of Indenture.
56
Section 4.2.
Application of Trust Money.
56
Section 4.3.
Repayment of Monies Held by Paying Agent.
56
ARTICLE 5 REMEDIES
58
Section 5.1.
Events of Default.
58
Section 5.2.
Acceleration of Maturity; Rescission and Annulment.
59
Section 5.3.
Collection of Indebtedness and Suits for Enforcement by Trustee.
60
Section 5.4.
Remedies.
62
Section 5.5.
Preservation of Assets.
63
Section 5.6.
Trustee May Enforce Claims Without Possession of Secured Notes.
64
Section 5.7.
Application of Money Collected.
64
Section 5.8.
Limitation on Suits.
64
Section 5.9.
Unconditional Rights of Noteholders to Receive Principal and Interest.
64
Section 5.10.
Restoration of Rights and Remedies.
65
Section 5.11.
Rights and Remedies Cumulative.
65
Section 5.12.
Delay or Omission Not Waiver.
65
Section 5.13.
Control by the Controlling Class.
65
Section 5.14.
Waiver of Past Defaults.
65
Section 5.15.
Undertaking for Costs.
66
Section 5.16.
Waiver of Stay or Extension Laws.
66
Section 5.17.
Sale of Assets.
66
Section 5.18.
Action on the Secured Notes.
67
ARTICLE 6 THE TRUSTEE
68
Section 6.1.
Certain Duties and Responsibilities.
68
Section 6.2.
Notice of Default.
69
Section 6.3.
Certain Rights of Trustee.
69
Section 6.4.
Not Responsible for Recitals or Issuance of Secured Notes.
70

 
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Section 6.5.
May Hold Secured Notes.
70
Section 6.6.
Money Held in Trust.
70
Section 6.7.
Compensation and Reimbursement.
70
Section 6.8.
Corporate Trustee Required; Eligibility.
71
Section 6.9.
Resignation and Removal; Appointment of Successor.
72
Section 6.10.
Acceptance of Appointment by Successor.
73
Section 6.11.
Merger, Conversion, Consolidation or Succession to Business of Trustee.
73
Section 6.12.
Co-Trustees and Separate Trustee.
73
Section 6.13.
Certain Duties of Trustee Related to Delayed Payment of Proceeds.
74
Section 6.14.
Representations and Warranties of the Trustee.
74
Section 6.15.
Requests for Consents.
75
ARTICLE 7 COVENANTS
76
Section 7.1.
Payment of Principal and Interest.
76
Section 7.2.
Maintenance of Office or Agency.
76
Section 7.3.
Money for Note Payments to be Held in Trust.
76
Section 7.4.
Existence of the Issuer and Co-Issuer.
78
Section 7.5.
Protection of Assets.
78
Section 7.6.
Notice of Any Amendments.
79
Section 7.7.
Performance of Obligations.
79
Section 7.8.
Negative Covenants.
80
Section 7.9.
Statement as to Compliance.
81
Section 7.10.
Issuer and Co-Issuer May Consolidate or Merge Only on Certain Terms.
81
Section 7.11.
Successor Substituted.
83
Section 7.12.
No Other Business.
83
Section 7.13.
Reporting.
84
Section 7.14.
Certain Tax Matters.
84
Section 7.15.
Maintenance of Listing.
84
Section 7.16.
Ratings.
84
Section 7.17.
Calculation Agent.
84
ARTICLE 8 SUPPLEMENTAL INDENTURES
86
Section 8.1.
Supplemental Indentures Without Consent of Noteholders.
86
Section 8.2.
Supplemental Indentures with Consent of Noteholders.
87
Section 8.3.
Execution of Supplemental Indentures.
88
Section 8.4.
Effect of Supplemental Indentures.
88
Section 8.5.
Reference in Secured Notes to Supplemental Indentures.
88
ARTICLE 9 REDEMPTION OF SECURED NOTES; REDEMPTION PROCEDURES
90
Section 9.1.
Clean-up Call; Tax Redemption and Optional Redemption.
90
Section 9.2.
Auction Call Redemption.
90
Section 9.3.
Notice of Redemption.
91
Section 9.4.
Notice of Redemption or Maturity by the Issuer.
92
Section 9.5.
Securities Payable on Redemption Date.
92
Section 9.6.
Mandatory Redemption.
92
Section 9.7.
Special Amortization.
93
ARTICLE 10 ACCOUNTS, ACCOUNTINGS AND RELEASES
94
Section 10.1.
Collection of Money.
94
Section 10.2.
Collection Accounts.
94
Section 10.3.
Payment Account.
95
Section 10.4.
Expense Account.
95
Section 10.5.
Interest Advances.
96
Section 10.6.
Reports by Parties.
97
Section 10.7.
Reports; Accountings.
98
Section 10.8.
Release of Pledged Collateral Securities; Release of Assets.
104
Section 10.9.
Reports by Independent Accountants.
105
Section 10.10.
Reports to Rating Agencies.
105
Section 10.11.
United States Federal Income Tax Reporting.
105
Section 10.12.
Posting of Reports on Repository.
106
Section 10.13.
Posting of Documents on Repository.
106
Section 10.14.
Consent to Posting of Documents on Repository.
106
Section 10.15.
Certain Procedures.
106

 
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ARTICLE 11 APPLICATION OF MONIES
108
Section 11.1.
Disbursements of Monies from Payment Account.
108
Section 11.2.
Trust Accounts.
113
ARTICLE 12 SALE OF COLLATERAL SECURITIES; REPURCHASE OF COLLATERAL SECURITIES
114
Section 12.1.
Sales of Collateral Securities.
114
Section 12.2.
Reinvestment Criteria and Trading Restrictions.
115
Section 12.3.
Conditions Applicable to all Transactions Involving Sale or Grant.
116
Section 12.4.
Purchase and Sale of Collateral Securities.
116
Section 12.5.
Sale of Collateral Securities with respect to an Auction Call Redemption.
117
ARTICLE 13 NOTEHOLDERS’ RELATIONS
119
Section 13.1.
Subordination.
119
Section 13.2.
Standard of Conduct.
120
ARTICLE 14 MISCELLANEOUS
121
Section 14.1.
Form of Documents Delivered to the Trustee.
121
Section 14.2.
Acts of Noteholders.
121
Section 14.3.
Notices, etc., to the Trustee, the Issuer, the Co-Issuer, the Collateral
Manager, the Preferred Share Paying and Transfer Agent, the Initial Purchaser,
each Hedge Counterparty and each Rating Agency.
121
Section 14.4.
Notices to Noteholders; Waiver.
123
Section 14.5.
Effect of Headings and Table of Contents.
123
Section 14.6.
Successors and Assigns.
123
Section 14.7.
Separability.
123
Section 14.8.
Benefits of Indenture.
123
Section 14.9.
Governing Law.
124
Section 14.10.
Submission to Jurisdiction.
124
Section 14.11.
Counterparts.
124
Section 14.12.
Liability of Co-Issuers.
124
ARTICLE 15 ASSIGNMENT OF CERTAIN AGREEMENTS
125
Section 15.1.
Assignment of Certain Agreements.
125
ARTICLE 16 HEDGE AGREEMENT
127
Section 16.1.
Issuer’s Obligations under Hedge Agreement.
127
ARTICLE 17 REPRESENTATIONS AND WARRANTIES
130
Section 17.1.
Collateral Purchase Agreements.
130
Section 17.2.
Cure Rights.
130
Section 17.3.
Purchase Right; Majority Shareholders.
130
Section 17.4.
Representations and Warranties Related to Loans.
130
Section 17.5.
Opinions Related to Certain Sales by the Collateral Manager and any Affiliates.
131
Section 17.6.
Operating Advisor; Additional Debt.
131
ARTICLE 18 ADVANCING AGENT
133
Section 18.1.
Liability of the Advancing Agent.
133
Section 18.2.
Merger or Consolidation of the Advancing Agent.
133
Section 18.3.
Limitation on Liability of the Advancing Agent and Others.
133
Section 18.4.
Representations and Warranties of the Advancing Agent.
133
Section 18.5.
Resignation and Removal; Appointment of Successor.
134
Section 18.6.
Acceptance of Appointment by Successor Advancing Agent.
134

 
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SCHEDULES
 
Schedule 1 - Collateral Securities
 
Schedule 2 - LIBOR
 
Schedule 3 - List of Authorized Officers of Collateral Manager
 
Schedule 4  - List of Initial Loans
 
Schedule 5 - Scheduled Principal Payments
 
Schedule 6 - Moody’s Recovery Rate Assumptions
 
Schedule 7 - S&P Recovery Matrix
 
Schedule 8 - S&P Non-Eligible Notching Asset Types
 
Schedule 9 - S&P Eligible Notching Asset Types
 
Schedule 10 -  Closing Date Advance Collateral Securities
 
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EXHIBITS
 
Exhibit A - Form of Class A Fixed Rate Note
 
Exhibit B - Form of Class B Fixed Rate Note
 
Exhibit C  Form of Class C Fixed Rate Note
 
Exhibit D - Form of Class D Fixed Rate Note
 
Exhibit E - Form of Class E Fixed Rate Note
 
Exhibit F -  Form of Transfer Certificate for (1) Transfer at the Closing to a
Regulation S Global Secured Note or (2) Subsequent Transfer from a Rule 1
44A Global Secured Note to a Regulation S Global Secured Note
 
Exhibit G -  Form of Transfer Certificate for (1) Transfer at the Closing to a
Rule
144A Global Secured Note or (2) Subsequent Transfer from a Regulation S
Global Secured Note to a Rule 144A Global Secured Note
 
Exhibit H - Form of Opinions of Sidley Austin Brown & Wood llp
 
Exhibit I - Form of Opinion of Maples and Calder
 
Exhibit J -    Forms of Opinion of Counsel to Hedge Counterparty, Collateral
Manager,
Advancing Agent and Trustee and Preferred Share Paying and Transfer Agent
 
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INDENTURE, dated as of March 10, 2005, by and among CapLease CDO 2005-1, Ltd.,
an exempted company incorporated with limited liability under the laws of the
Cayman Islands (the “Issuer”), CapLease CDO 2005-1 Corp., a corporation formed
under the laws of Delaware (the “Co-Issuer”), CapLease Investment Management,
LLC, a Delaware limited liability company, as advancing agent (herein, together
with its permitted successors and assigns in the trusts hereunder, called the
“Advancing Agent”), and LaSalle Bank National Association, a national banking
association, as trustee, paying agent, calculation agent, transfer agent,
custodial securities intermediary and notes registrar (herein, together with its
permitted successors and assigns in the trusts hereunder, called the “Trustee”).
 
PRELIMINARY STATEMENT
 
Each of the Issuer and the Co-Issuer is duly authorized to execute and deliver
this Indenture to provide for the Secured Notes issuable as provided in this
Indenture. All covenants and agreements made by the Issuer and Co-Issuer herein
are for the benefit and security of the Noteholders, each Hedge Counterparty and
the Trustee, as applicable. The Issuer, Co-Issuer, LaSalle Bank National
Association (in its capacity other than as trustee) and Advancing Agent are
entering into this Indenture, and the Trustee is accepting the trusts created
hereby, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged.
 
All things necessary to make this Indenture a valid agreement of the Issuer and
Co-Issuer in accordance with this Indenture’s terms have been done.
 
GRANTING CLAUSES
 
The Issuer hereby Grants to the Trustee, for the benefit and security of the
Noteholders and each Hedge Counterparty, all of its right, title and interest
in, to and under, in each case, whether now owned or existing, or hereafter
acquired or arising (other than Excepted Assets), (a) the Collateral Securities
listed in the Schedule of Closing Date Collateral Securities which the Issuer
purchases on the Closing Date and causes to be delivered to the Trustee
(directly or through an agent or bailee) herewith all payments thereon or with
respect thereto and all Collateral Securities which are delivered to the Trustee
(directly or through an agent or bailee) after the Closing Date pursuant to the
terms hereof (including the Collateral Securities purchased pursuant to Article
12) and all payments thereon or with respect thereto, (b) the rights of the
Issuer under each Hedge Agreement, (c) the Payment Account, the Interest
Collection Account, the Principal Collection Account, the Expense Account, each
Hedge Collateral Account, each Hedge Termination Account and Eligible
Investments purchased with funds on deposit therein, the Securities Account and
all related securities entitlements and all income from the investment of funds
in any of the foregoing, (d) the rights of the Issuer under the Collateral
Purchase Agreement, any Substitute Collateral Securities Purchase Agreements,
the Servicing Agreement, the Custodial Agreement and the Collateral Management
Agreement, (e) all Cash or Money delivered to the Trustee (or its bailee) in
respect of the Secured Notes or the Assets, (f) all other investment property,
accounts, instruments and general intangibles in which the Issuer has an
interest and (g) all proceeds with respect to the foregoing clauses (a)-(f).
Such Grants are made, however, in trust, to secure the Secured Notes and each
Hedge Agreement, subject to the Priority of Payments, equally and ratably
without prejudice, priority or distinction between any Secured Note and any
other Secured 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 and in respect of the Secured Notes and each Hedge Agreement
in accordance with their terms, (ii) the payment of all other sums payable under
this Indenture and (iii) compliance with the provisions of this Indenture, all
as provided in this Indenture. For the avoidance of doubt, the Assets shall not
include the Excepted Assets. The foregoing Grant shall, for the purpose of
determining the property subject to the lien of this Indenture (but not for the
purpose of determining compliance with any of the Coverage Tests or compliance
by the Issuer with any of the other provisions hereof), be deemed to include any
securities and any investments granted by or on behalf of the Issuer to the
Trustee for the benefit of the Noteholders and each Hedge Counterparty, whether
or not such securities or such investments satisfy the criteria set forth in the
definitions of “Collateral Security” or “Eligible Investment,” as the case may
be.
 
Except to the extent otherwise provided in this Indenture, this Indenture shall
constitute a security agreement under the laws of the State of New York
applicable to agreements made and to be performed therein, for the benefit of
the Noteholders and each Hedge Counterparty. Upon the occurrence and during the
continuation of any Event of Default hereunder, and in addition to any other
rights available under this Indenture or any other Assets held for the benefit
and security of the Noteholders and each Hedge Counterparty or otherwise
available at law or in equity but subject to the terms hereof, the Trustee shall
have all rights and remedies of a secured party on default under the laws 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 and the
terms of this Indenture, to sell or apply any rights and other interests
assigned or pledged hereby in accordance with the terms hereof at public and
private sales.
 
The Trustee acknowledges such Grants, accepts the trusts hereunder in accordance
with the provisions hereof, and agrees to perform the duties herein in
accordance with, and subject to, the terms hereof, in order that the interests
of the Noteholders and each Hedge Counterparty, as applicable, may be adequately
and effectively protected in accordance with this Indenture.

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ARTICLE 1
 
DEFINITIONS
 
Section 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, and the definitions of such terms are equally
applicable both to the singular and plural forms of such terms and to the
masculine, feminine and neuter genders of such terms. The word “including” and
its variations shall mean “including without limitation.” Whenever any reference
is made to an amount the determination of which is governed by Section 1.2, the
provisions of Section 1.2 shall be applicable to such determination or
calculation, whether or not reference is specifically made to Section 1.2,
unless some other method of calculation or determination is expressly specified
in the particular provision. All references in this instrument to designated
“Articles,” “Sections,” “Subsections” and other subdivisions are to the
designated Articles, Sections, Subsections and other subdivisions of this
instrument as originally executed. The words “herein,” “hereof,” “hereunder” and
other words of similar import refer to this Indenture as a whole and not to any
particular Article, Section, Subsection or other subdivision.
 
“Accountants’ Report”: A report of a firm of Independent certified public
accountants of recognized national reputation appointed by the Issuer pursuant
to Section 10.9(a), which may be the firm of independent accountants that
reviews or performs procedures with respect to the financial reports prepared by
the Issuer or the Collateral Manager in respect of the Collateral Manager.
 
“Account”: Any of the Interest Collection Account, the Principal Collection
Account, the Payment Account, the Expense Account, the Securities Account, each
Hedge Termination Account and each Hedge Collateral Account, and any subaccount
thereof that the Trustee deems necessary or appropriate.
 
“Act” or “Act of Noteholders”: The meaning specified in Section 14.2 hereof.
 
“Additional Termination or Abatement Rights”: Provisions in a Credit Tenant
Lease that allow the tenant to terminate such lease or abate rent under such
lease if the borrower defaults in the performance of various other obligations
under such lease.
 
“Advance Collateral Securities”: Any Corporate Credit Note or B-Note (other than
those that have the benefit of interest advancing which complies with S&P’s
advancing criteria by any Person other than the Advancing Agent or the Trustee
in the capacity of back-up advancing agent hereunder), which as of the Closing
Date are set forth on Schedule 10, and thereafter, upon the acquisition of a
Collateral Security that is an Advance Collateral Security, the Collateral
Manager shall provide the Trustee and the Advancing Agent notice of such
acquisition.
 
“Advancing Agent”: CapLease LLC, unless a successor Person shall have become the
Advancing Agent pursuant to the applicable provisions of this Indenture, and
thereafter “Advancing Agent” shall mean such successor Person.
 
“Advancing Agent Fee”: The fee payable quarterly in arrears on each Payment Date
to the Advancing Agent in accordance with the Priority of Payments, equal to
0.03% per annum on the Aggregate Principal Balance of the Advance Collateral
Securities as of the related Determination Date.
 
“Affiliate” or “Affiliated”: With respect to a Person, (i) any other Person who,
directly or indirectly, is in control of, or controlled by, or is under common
control with, such Person or (ii) any other Person who is a director, Officer or
employee (a) of such Person, (b) of any subsidiary or parent company of such
Person or (c) of any Person described in clause (i) above. For the purposes of
this definition, control of a Person shall mean the power, direct or indirect,
(i) to vote more than 50% of the securities having ordinary voting power for the
election of directors of such Persons, or (ii) to direct or cause the direction
of the management and policies of such Person whether by contract or otherwise.
 
“Agent Members”: Members of, or participants in, the Depository, Clearstream,
Luxembourg or Euroclear.
 
“Aggregate Amortized Cost”: With respect to any Interest-Only Security or
Principal Only Security as of any date of determination, (a) on the date of
acquisition thereof by the Issuer, the cost of purchase thereof and (b) on any
date thereafter, the present value of all remaining payments on such security
discounted to such date of determination as of each subsequent due date for such
security at a discount rate per annum equal to the internal rate of return on
such security as calculated in good faith by the Collateral Manager at the time
of purchase thereof by the Issuer.
 
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“Aggregate Collateral Balance”: The Aggregate Principal Balance of (i)
Collateral Securities and (ii) Eligible Investments purchased with Principal
Proceeds and cash held as Principal Proceeds.
 
“Aggregate Outstanding Amount”: With respect to any Class or Classes of the
Secured Notes, the aggregate principal balance (excluding any Class C
Capitalized Interest, any Class D Capitalized Interest and any Class E
Capitalized Interest, as the case may be) of such Class or Classes Outstanding
at the date of determination, and with respect to the Preferred Shares, the
excess of the Initial Issued Amount over prior distributions on the Preferred
Shares.
 
“Aggregate Principal Balance”: When used with respect to any Pledged Collateral
Security as of any date of determination, the sum of the Principal Balances on
such date of determination of all such Pledged Collateral Securities.
 
“A-Note”: Any senior debt secured by the same Underlying Mortgage Property as a
B-Note.
 
“Applicable Recovery Rate”: The lowest of the Moody’s Recovery Rate and the S&P
Recovery Rate, as applicable.
 
“Approved Servicer”: A servicer that is on the S&P list of approved master
servicers and special servicers.
 
“Article 15 Agreement”: The meaning specified in Section 15.1(a) hereof.
 
“Assets”: All Money, instruments and other property and rights subject or
intended to be subject to the lien of this Indenture for the benefit of the
Noteholders and each Hedge Counterparty as of any particular time, including all
property, rights, interests and assets described in clauses (a) through (g)
inclusive of the first paragraph of the Granting Clause of this Indenture (other
than Excepted Assets).
 
“Assumed Portfolio”: The portfolio with characteristics developed in accordance
with the Eligibility Criteria and Collateral Quality Tests for purposes of
determining the Class A Break-Even Loss Rate, the Class B Break-Even Loss Rate,
the Class C Break-Even Loss Rate, the Class D Break-Even Loss Rate and the Class
E Break-Even Loss Rate.
 
“Assumed Weighted Average Life”: With respect to the Secured Notes or a Class of
Secured Notes, is the average amount of time that will elapse from the date of
determination until each dollar of the principal of such Secured Note will be
paid to the investor assuming that (i) there will be no delinquencies or
defaults on any Collateral Securities, (ii) there will be no prepayments on any
Collateral Securities and (iii) a Successful Auction occurs in January 2015.
 
“Auction”: Any auction conducted in connection with an Auction Call Redemption.
 
“Auction Agent”: The Collateral Manager in its capacity as Auction Agent
hereunder and under the Collateral Management Agreement any successor Person
that shall have become the Collateral Manager pursuant to the provisions of the
Collateral Management Agreement and thereafter “Auction Agent ” shall mean such
successor Person.
 
“Auction Bid Date”: The meaning specified in Section 12.5(b)(ii) hereof.
 
“Auction Call Period”: The meaning specified in Section 9.2(a) hereof.
 
“Auction Call Redemption”: The meaning specified in Section 9.2(a) hereof.
 
“Auction Call Redemption Date”: The meaning specified in Section 9.2(a) hereof.
 
“Auction Date”: The meaning specified in Section 12.5(a)(i) hereof.
 
“Auction Procedures”: The required procedures with respect to an Auction set
forth in Section 12.5.
 
“Auction Purchase Agreement”: The meaning specified in Section 12.5(a)(iii)
hereof.
 
“Auction Purchase Closing Date”: The meaning specified in Section 12.5(b)(v)
hereof.
 
“Authenticating Agent”: With respect to the Secured Notes or a Class of the
Secured Notes, the Person designated by the Trustee to authenticate such Secured
Notes on behalf of the Trustee pursuant to Section 2.12 hereof.
 
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“Authorized Officer”: With respect to the Issuer or Co-Issuer, any Officer (or
attorney-in-fact appointed by the Issuer or the Co-Issuer) who is authorized to
act for the Issuer or Co-Issuer in matters relating to, and binding upon, the
Issuer or Co-Issuer. With respect to the Collateral Manager, the persons listed
on Schedule 3 hereto. 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.
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.
 
“Average Life”: On any Measurement Date with respect to any Collateral Security
(other than Defaulted Securities), the quotient obtained by dividing (i) the sum
of the products of (a) the number of years (rounded to the nearest one tenth
thereof) from such Measurement Date to the respective dates of each successive
expected distribution of principal of such Collateral Security and (b) the
respective amounts of such expected distributions of principal by (ii) the sum
of all successive expected distributions of principal on such Collateral
Security, calculated by the Collateral Manager.
 
“Bailee Letter”: The meaning specified in Section 12.5(b)(v) hereof.
 
“Bank”: LaSalle Bank National Association, a national banking association, in
its individual capacity and not as Trustee and, if any Person is appointed as a
successor Trustee, such Person in its individual capacity and not as Trustee.
 
“Bankruptcy Code”: The federal Bankruptcy Code, Title 11 of the United States
Code, as amended.
 
“Benefit Plan”: The meaning specified in Section 2.5(g)(vi) hereof.
 
“B-Note”: A promissory note or a certificated interest in a promissory note
secured by a first mortgage on real property, which is subordinate to the
related A-Note secured by a direct or beneficial interest in the same mortgaged
property.
 
“Board of Directors”: With respect to the Issuer, the directors of the Issuer
duly appointed and, with respect to the Co-Issuer, the directors of the
Co-Issuer duly appointed by the shareholders of the Co-Issuer or otherwise.
 
“Board Resolution”: With respect to the Issuer, a resolution of the Board of
Directors of the Issuer and, with respect to the Co-Issuer, a resolution of the
Board of Directors of the Co-Issuer.
 
“Bond-Type Lease”: A Credit Tenant Lease that has neither Maintenance
Termination or Abatement Rights nor Additional Termination or Abatement Rights,
and if it has Casualty or Condemnation Termination or Abatement Rights, a
rejectable offer is required to be made by the tenant such that the remaining
unpaid principal balance is paid off.
 
“Business Day”: Any day other than (i) a Saturday or Sunday or (ii) a day on
which commercial banks are authorized or required by applicable law, regulation
or executive order to close in New York, New York or the location of the
Corporate Trust Office.
 
“Calculation Agent”: The meaning specified in Section 7.17(a) hereof.
 
“Calculation Amount”: With respect to any Defaulted Security, the lesser of (i)
the Market Value of such Defaulted Security determined by the Collateral Manager
at any date of determination and (ii) the Applicable Recovery Rate multiplied by
the Principal Balance of such Defaulted Security.
 
“CapLease LLC”: CapLease Investment Management, LLC, a Delaware limited
liability company, or its successors and assigns.
 
“Caplease, LP”: Caplease, LP, a Delaware limited partnership, or its successors
and assigns.
 
“Cash”: Such coin or currency of the United States of America as at the time
shall be legal tender for payment of all public and private debts.
 
“Cash Flow Swap Agreement”: One or more Hedge Agreements for the purpose of
offsetting potential liquidity shortfalls in the amount available to pay
interest on the Secured Notes due to the difference in payment frequency between
any Collateral Securities which pay interest less frequently than quarterly and
the Secured Notes.
 
“Cash Flow Swap Counterparty”: Any Hedge Counterparty with whom the Issuer
enters into a Cash Flow Swap Agreement.
 
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“Casualty or Condemnation Termination or Abatement Rights”: Provisions in a
Credit Tenant Lease that allow the tenant to terminate such lease or abate rent
due to a casualty and/or a condemnation of all or a portion of the property.
 
“Certificate of Authentication”: The meaning specified in Section 2.1 hereof.
 
“Certificated Security”: A “certificated security” as defined in Section
8-102(a)(4) of the UCC.
 
“Class”: The Class A Notes, the Class B Notes, the Class C Notes, the Class D
Notes, or the Class E Notes, as applicable.
 
“Class A Break-Even Loss Rate”: At any time, the maximum percentage of defaults
that the Assumed Portfolio should be able to sustain, which after giving effect
to S&P’s assumptions on recoveries and timing and to the Priority of Payments,
will result in sufficient funds remaining for the timely payment of interest and
the ultimate payment of principal of the Class A Notes.
 
“Class A Defaulted Interest Amount”: As of each Payment Date, the accrued and
unpaid amount due to holders of the Class A Notes on account of any shortfalls
in the payment of the Class A Interest Distribution Amount with respect to any
preceding Payment Date or Payment Dates, together with interest accrued thereon
(to the extent lawful) at the Class A Rate.
 
“Class A Interest Distribution Amount”: On each Payment Date, the amount due to
Holders of the Class A Notes on account of interest equal to the product of (i)
the Aggregate Outstanding Amount of the Class A Notes with respect to the
related Interest Accrual Period, (ii) 90 (or, with respect to the initial
Payment Date, 49) divided by 360 and (iii) the Class A Rate.
 
“Class A Loss Differential”: At any time, the rate calculated by subtracting the
Class A Scenario Loss Rate from the Class A Break-Even Loss Rate at such time.
 
“Class A Notes”: Each of the Class A Senior Secured Fixed Rate Term Notes, Due
2040, issued by the Issuer and the Co-Issuer pursuant to this Indenture.
 
“Class A Rate”: With respect to any Class A Note, the per annum fixed rate at
which interest accrues on such Secured Note for any Interest Accrual Period,
which shall be equal to 4.926% per annum.
 
“Class A Redemption Price”: The Redemption Price for the Class A Notes as
specified under the definition of “Redemption Price.”
 
“Class A Scenario Loss Rate”: At any time, an estimate of the cumulative default
rate for the Current Portfolio or the Proposed Portfolio, as applicable,
consistent with a rating of “AAA” of the Class A Notes by S&P, determined by
application of the S&P CDO Monitor at such time.
 
“Class A/B Coverage Tests”: The Class A/B Overcollateralization Test and the
Class A/B Interest Coverage Test.
 
“Class A/B Interest Coverage Ratio”: As specified under the definition of
“Interest Coverage Ratio.”
 
“Class A/B Interest Coverage Test”: The test that is met on any Measurement Date
on which any Class A Notes or Class B Notes remain Outstanding, if the Class A/B
Interest Coverage Ratio as of such Measurement Date is equal to or greater than
126.0%.
 
“Class A/B Overcollateralization Ratio”: As of any Measurement Date, the number
(expressed as a percentage) calculated by dividing (a) the Net Outstanding
Portfolio Balance on such Measurement Date by (b) the sum of the Aggregate
Outstanding Amount of the Class A Notes and the Class B Notes and any
unreimbursed Interest Advances.
 
“Class A/B Overcollateralization Test”: The test that is met on any Measurement
Date on which any Class A Notes or Class B Notes remain Outstanding if the
Class A/B Overcollateralization Ratio on such Measurement Date is equal to or
greater than 104.90%.
 
“Class B Break-Even Loss Rate”: At any time, the maximum percentage of defaults
that the Assumed Portfolio should be able to sustain, which after giving effect
to S&P’s assumptions on recoveries and timing and to the Priority of Payments,
will result in sufficient funds remaining for the timely payment of interest and
the ultimate payment of principal of the Class B Notes.
 
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“Class B Defaulted Interest Amount”: As of each Payment Date, the accrued and
unpaid amount due to holders of the Class B Notes on account of any shortfalls
in the payment of the Class B Interest Distribution Amount with respect to any
preceding Payment Date or Payment Dates, together with interest accrued thereon
(to the extent lawful) at the Class B Rate.
 
“Class B Interest Distribution Amount”: On each Payment Date, the amount due to
Holders of the Class B Notes on account of interest equal to the product of (i)
the Aggregate Outstanding Amount of the Class B Notes with respect to the
related Interest Accrual Period, (ii) 90 (or, with respect to the initial
Payment Date, 49) divided by 360 and (iii) the Class B Rate.
 
“Class B Loss Differential”: At any time, the rate calculated by subtracting the
Class B Scenario Loss Rate from the Class B Break-Even Loss Rate at such time.
 
“Class B Notes”: Each of the Class B Second Priority Fixed Rate Term Notes, Due
2040, issued by the Issuer and the Co-Issuer pursuant to this Indenture.
 
“Class B Rate”: With respect to any Class B Note, the per annum fixed rate at
which interest accrues on such Secured Note for any Interest Accrual Period,
which shall be equal to 5.036% per annum.
 
“Class B Redemption Price”: The Redemption Price for the Class B Notes as
specified under the definition of “Redemption Price.”
 
“Class B Scenario Loss Rate”: At any time, an estimate of the cumulative default
rate for the Current Portfolio or the Proposed Portfolio, as applicable,
consistent with a rating of “AA” of the Class B Notes by S&P, determined by
application of the S&P CDO Monitor at such time.
 
“Class C Break-Even Loss Rate”: At any time, the maximum percentage of defaults
that the Assumed Portfolio should be able to sustain, which after giving effect
to S&P’s assumptions on recoveries and timing and to the Priority of Payments,
will result in sufficient funds remaining for the ultimate payment of interest
and principal of the Class C Notes.
 
“Class C Capitalized Interest”: The meaning specified in Section 2.7(c) hereof.
 
“Class C Coverage Tests”: The Class C Overcollateralization Test and the Class C
Interest Coverage Test.
 
“Class C Defaulted Interest Amount”: On or after any Payment Date on which no
Class A Notes or Class B Notes are Outstanding, any interest on the Class C
Notes (other than Class C Capitalized Interest) that is due and payable but is
not punctually paid or duly provided for on or prior to the due date therefor
and which remains unpaid, together with interest accrued thereon (to the extent
lawful) at the Class C Rate.
 
“Class C Interest Coverage Ratio”: As specified in the definition of “Interest
Coverage Ratio.”
 
“Class C Interest Coverage Test”: The test that is met on any Measurement Date
on which any Class C Notes remain Outstanding if the Class C Interest Coverage
Ratio as of such Measurement Date is equal to or greater than 122.0%.
 
“Class C Interest Distribution Amount”: On each Payment Date, the amount due to
Holders of the Class C Notes on account of interest equal to the product of (i)
the Aggregate Outstanding Amount (plus any Class C Capitalized Interest) of the
Class C Notes with respect to the related Interest Accrual Period, (ii) 90 (or,
with respect to the initial Payment Date, 49) divided by 360 and (iii) the
Class C Rate.
 
“Class C Loss Differential”: At any time, the rate calculated by subtracting the
Class C Scenario Loss Rate from the Class C Break-Even Loss Rate at such time.
 
“Class C Notes”: Each of the Class C Third Priority Fixed Rate Term Notes, Due
2040, issued by the Issuer and the Co-Issuer pursuant to this Indenture.
 
“Class C Overcollateralization Ratio”: As of any Measurement Date, the number
(expressed as a percentage) calculated by dividing (a) the Net Outstanding
Portfolio Balance on such Measurement Date by (b) the sum of the Aggregate
Outstanding Amount (plus any Class C Capitalized Interest) of the Class A Notes,
the Class B Notes and the Class C Notes and any unreimbursed Interest Advances.
 
“Class C Overcollateralization Test”: The test that is met on any Measurement
Date on which any Class C Notes remain Outstanding if the Class C
Overcollateralization Ratio on such Measurement Date is equal to or greater than
104.30%.
 
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“Class C Rate”: With respect to any Class C Note, the per annum fixed rate at
which interest accrues on such Secured Note for any Interest Accrual Period,
which shall be equal to 5.406% per annum.
 
“Class C Redemption Price”: The Redemption Price for the Class C Notes as
specified under the definition of “Redemption Price.”
 
“Class C Scenario Loss Rate”: At any time, an estimate of the cumulative default
rate for the Current Portfolio or the Proposed Portfolio, as applicable,
consistent with a rating of “A-” of the Class C Notes by S&P, determined by
application of the S&P CDO Monitor at such time.
 
“Class D Break-Even Loss Rate”: At any time, the maximum percentage of defaults
that the Assumed Portfolio should be able to sustain, which after giving effect
to S&P’s assumptions on recoveries and timing and to the Priority of Payments,
will result in sufficient funds remaining for the ultimate payment of interest
and principal of the Class D Notes.
 
“Class D Capitalized Interest”: The meaning specified in Section 2.7(d) hereof.
 
“Class D Coverage Tests”: The Class D Overcollateralization Test and the Class D
Interest Coverage Test.
 
“Class D Defaulted Interest Amount”: On or after any Payment Date on which no
Class A Notes, Class B Notes or Class C Notes are Outstanding, any interest on
the Class D Notes (other than Class D Capitalized Interest) that is due and
payable but is not punctually paid or duly provided for on or prior to the due
date therefor and which remains unpaid, together with interest accrued thereon
(to the extent lawful) at the Class D Rate.
 
“Class D Interest Coverage Ratio”: As specified in the definition of “Interest
Coverage Ratio.”
 
“Class D Interest Coverage Test”: The test that is met on any Measurement Date
on which any Class D Notes remain outstanding, if the Class D Interest Coverage
Ratio as of such Measurement Date is equal to or greater than 120.0%.
 
“Class D Interest Distribution Amount”: On each Payment Date, the amount due to
Holders of the Class D Notes on account of interest equal to the product of (i)
the Aggregate Outstanding Amount (plus any Class D Capitalized Interest) of the
Class D Notes with respect to the related Interest Accrual Period, (ii) 90 (or,
with respect to the initial Payment Date, 49) divided by 360 and (iii) the
Class D Rate.
 
“Class D Loss Differential”: At any time, the rate calculated by subtracting the
Class D Scenario Loss Rate from the Class D Break-Even Loss Rate at such time.
 
“Class D Notes”: Each of the Class D Fourth Priority Fixed Rate Term Notes, Due
2040, issued by the Issuer and the Co-Issuer pursuant to this Indenture.
 
“Class D Overcollateralization Ratio”: As of any Measurement Date, the number
(expressed as a percentage) calculated by dividing (a) the Net Outstanding
Portfolio Balance on such Measurement Date by (b) the sum of the Aggregate
Outstanding Amount (plus any Class C Capitalized Interest or Class D Capitalized
Interest) of the Class A Notes, the Class B Notes, the Class C Notes and the
Class D Notes and any unreimbursed Interest Advances.
 
“Class D Overcollateralization Test”: The test that is met on any Measurement
Date on which any Class D Notes remain outstanding if the Class D
Overcollateralization Ratio on such Measurement Date is equal to or greater than
103.60%.
 
“Class D Rate”: With respect to any Class D Note, the per annum fixed rate at
which interest accrues on such Secured Note for any Interest Accrual Period,
which shall be equal to 6.206% per annum.
 
“Class D Redemption Price”: The Redemption Price for the Class D Notes as
specified under the definition of “Redemption Price.”
 
“Class D Scenario Loss Rate”: At any time, an estimate of the cumulative default
rate for the Current Portfolio or the Proposed Portfolio, as applicable,
consistent with a rating of “BBB” of the Class D Notes by S&P, determined by
application of the S&P CDO Monitor at such time.
 
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“Class E Break-Even Loss Rate”: At any time, the maximum percentage of defaults
that the Assumed Portfolio should be able to sustain, which after giving effect
to S&P’s assumptions on recoveries and timing and to the Priority of Payments,
will result in sufficient funds remaining for the ultimate payment of interest
and principal of the Class E Notes.
 
“Class E Capitalized Interest”: The meaning specified in Section 2.7(e) hereof.
 
“Class E Coverage Tests”: The Class E Overcollateralization Test and the Class E
Interest Coverage Test.
 
“Class E Defaulted Interest Amount”: On or after any Payment Date on which no
Secured Notes are Outstanding, any interest on the Class E Notes (other than
Class E Capitalized Interest) that is due and payable but is not punctually paid
or duly provided for on or prior to the due date therefor and which remains
unpaid, together with interest accrued thereon (to the extent lawful) at the
Class E Rate.
 
“Class E Interest Coverage Ratio”: As specified in the definition of “Interest
Coverage Ratio.”
 
“Class E Interest Coverage Test”: The test that is met on any Measurement Date
on which any Class E Notes remain outstanding, if the Class E Interest Coverage
Ratio on such Measurement Date is equal to or greater than 118.0%.
 
“Class E Interest Distribution Amount”: On each Payment Date, the amount due to
Holders of the Class E Notes on account of interest equal to the product of (i)
the Aggregate Outstanding Amount (plus any Class E Capitalized Interest) of the
Class E Notes with respect to the related Interest Accrual Period, (ii) 90 (or,
with respect to the initial Payment Date, 49) divided by 360 and (iii) the
Class E Rate.
 
“Class E Loss Differential”: At any time, the rate calculated by subtracting the
Class E Scenario Loss Rate from the Class E Break-Even Loss Rate at such time.
 
“Class E Notes”: Each of the Class E Fifth Priority Fixed Rate Term Notes, Due
2040, issued by the Issuer and the Co-Issuer pursuant to this Indenture.
 
“Class E Overcollateralization Ratio”: As of any Measurement Date, the number
(expressed as a percentage) calculated by dividing (a) the Net Outstanding
Portfolio Balance on such Measurement Date by (b) the sum of the Aggregate
Outstanding Amount (plus any Class C Capitalized Interest, Class D Capitalized
Interest or Class E Capitalized Interest) of the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes and the Class E Notes and any
unreimbursed Interest Advances.
 
“Class E Overcollateralization Test”: The test that is met on any Measurement
Date on which any Class E Notes remain outstanding if the Class E
Overcollateralization Ratio on such Measurement Date is equal to or greater than
103.50%.
 
“Class E Rate”: With respect to any Class E Note, the per annum fixed rate at
which interest accrues on such Secured Note for any Interest Accrual Period,
which shall be equal to 6.606% per annum.
 
“Class E Redemption Price”: The Redemption Price for the Class E Notes as
specified under the definition of “Redemption Price.”
 
“Class E Scenario Loss Rate”: At any time, an estimate of the cumulative default
rate for the Current Portfolio or the Proposed Portfolio, as applicable,
consistent with a rating of “BBB-” of the Class E Notes by S&P, determined by
application of the S&P CDO Monitor at such time.
 
“Clean-up Call”: The meaning specified in Section 9.1(a) hereof.
 
“Clean-up Call Date”: The meaning specified in Section 9.1(a) hereof.
 
“Clearing Agency”: An organization registered as a “clearing agency” pursuant to
Section 17A of the Exchange Act.
 
“Clearing Corporation Security”: A security subject to book-entry transfers and
pledges deposited with the Clearing Agency.
 
“Clearstream, Luxembourg”: Clearstream Banking, société anonyme, a limited
liability company organized under the laws of the Grand Duchy of Luxembourg.
 
“Closing”: The transfer of any Security to the initial registered Holder of such
Security.
 
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“Closing Date”: March 10, 2005.
 
“Closing Date Swap Agreement”: The ISDA Master Agreement (together with related
schedules, confirmations and related credit support documents) entered into
between the Issuer and Wachovia Bank, National Association, a national banking
association, as amended, modified or terminated (in whole or in part) from time
to time.
 
“Closing Date Swap Counterparty:” Wachovia Bank, National Association, a
national banking association, together with any permitted assignee(s) or
successor(s) under the Closing Date Swap Agreement.
 
“CMBS Conduit Securities”: 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 Large Loan Securities”: 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 Security”: CMBS Conduit Security or a CMBS Large Loan Security, as the
case may be.
 
“Co-Issuer”: CapLease CDO 2005-1 Corp., a corporation formed under the laws of
Delaware, until a successor Person shall have become the Co-Issuer pursuant to
the applicable provisions of this Indenture, and thereafter “Co-Issuer” shall
mean such successor Person.
 
“Co-Issuers”: The Issuer and the Co-Issuer.
 
“Code”: The United States Internal Revenue Code of 1986, as amended.
 
“Collateral Management Agreement”: The Collateral Management Agreement, dated as
of the Closing Date, by and between the Issuer and the Collateral Manager, as
amended from time to time in accordance with the terms thereof.
 
“Collateral Manager”: CapLease LLC, each of its permitted successors and assigns
or any successor Person that shall have become the Collateral Manager pursuant
to the provisions of the Collateral Management Agreement and thereafter
“Collateral Manager” shall mean such successor Person.
 
“Collateral Manager Servicing Standard”: With respect to the Collateral Manager,
the higher of the following standards of care: (A) the same manner in which, and
with the same care, skill, prudence and diligence with which, the Collateral
Manager manages securities comparable to the Pledged Collateral Securities, with
similar borrowers and comparable underlying properties for other third-party
portfolios (giving due consideration to the customary and usual standards of
practice of prudent institutional commercial mortgage lenders servicing their
own mortgage loans and REO properties), and (B) the same manner in which, and
with the same care, skill, prudence and diligence with which, the Collateral
Manager manages comparable securities owned by the Collateral Manager in either
case exercising reasonable business judgment and acting in accordance with
applicable law, the terms of this Indenture, the Collateral Management Agreement
and the terms of the related Collateral Security and Underlying Instruments. The
foregoing shall be without regard to (A) any relationship, other than as
Collateral Manager, that the Collateral Manager or any Affiliate of the
Collateral Manager, may have with the underlying borrower, or any Affiliate of
the borrower, or any other party to this Indenture (or any agreements relating
to this Indenture); (B) the ability of the Collateral Manager to make Cure
Advances; (C) the right of the Collateral Manager or any Affiliate thereof, to
receive compensation or reimbursement of costs hereunder generally or with
respect to any particular transaction (including, without limitation, any
transaction related to the Collateral Management Agreement); and (D) the
ownership, servicing or management for others of any security not subject to
this Indenture by the Collateral Manager or any Affiliate thereof or the
obligation of any Affiliate of the Collateral Manager to repurchase the
Collateral Security.
 
“Collateral Purchase Agreement”: The Collateral Purchase Agreement, dated as of
the Closing Date, by and between the Issuer and Caplease, LP, as amended from
time to time in accordance with the terms thereof.
 
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“Collateral Quality Test”: The test that is satisfied if, as of any Measurement
Date, in the aggregate, the Collateral Securities purchased or irrevocably
committed to be purchased (and not sold) comply with all of the requirements set
forth below:
 
(i) (a) the Aggregate Principal Balance of Collateral Securities with a Moody’s
Rating lower than “Ba3” does not exceed the greater of (x) an amount equal to
10% of the Aggregate Collateral Balance and (y) $30,000,000, and (b) no
Collateral Security has a Moody’s Rating below “B2”;
 
(ii) (A) the Aggregate Principal Balance of CMBS Securities, CRE CDO Securities
or REIT Debt Securities that are not rated or shadowed by Moody’s does not
exceed the greater of (x) an amount equal to 20% of the Aggregate Collateral
Balance and (y) $60,000,000; and (B) the Aggregate Principal Balance of CMBS
Securities, CRE CDO Securities or REIT Debt Securities that are not rated or
shadowed by S&P does not exceed the greater of (x) an amount equal to 20% of the
Aggregate Collateral Balance and (y) $60,000,000;
 
(iii) the Aggregate Principal Balance (on a look-through basis to the underlying
loans backing the Collateral Securities, weighted on the basis of the par amount
of the Collateral Securities) of Collateral Securities (other than CMBS
Securities, CRE CDO Securities and REIT Debt Securities) backed or otherwise
invested in properties located in any single U.S. state, does not exceed the
greater of (x) an amount equal to 20% of the Aggregate Collateral Balance and
(y) $60,000,000, except that the greater of (x) an amount equal to 35% of the
Aggregate Collateral Balance and (y) $105,000,000, may consist of Collateral
Securities (other than CMBS Securities, CRE CDO Securities and REIT Debt
Securities) backed or otherwise invested in properties located in Illinois;
 
(iv) the Aggregate Principal Balance of Collateral Securities issued by a single
issuer or tenant or which is guaranteed by any single guarantor does not exceed
the greater of (x) an amount equal to 15% of the Aggregate Collateral Balance
and (y) $45,000,000; provided that at any given time there must be a minimum of
at least 15 distinct issuers, tenants and/or guarantors;
 
(v) the Aggregate Principal Balance (on a look-through basis to the underlying
loans backing the Collateral Securities, weighted on the basis of the par amount
of the Collateral Securities) of Collateral Securities (other than CMBS
Securities, CRE CDO Securities and REIT Debt Securities) that are collateralized
or backed by interests on any Hospitality Properties or Healthcare Properties
does not exceed the greater of (x) 5% of the Aggregate Collateral Balance or (y)
$15,000,000;
 
(vi) (a) the Aggregate Principal Balance of Floating Rate Securities does not
exceed the greater of (x) an amount equal to 5% of the Aggregate Collateral
Balance and (y) $15,000,000 and (b) the aggregate Principal Balance of Covered
Floating Rate Securities does not exceed the greater of (x) an amount equal to
10% of the Aggregate Collateral Balance and (y) $30,000,000;
 
(vii) the Aggregate Principal Balance of CMBS Securities does not exceed the
greater of (x) an amount equal to 25% of the Aggregate Collateral Balance and
(y) $75,000,000;
 
(viii) the Aggregate Principal Balance of CMBS Securities issued, originated or
entered into in any single calendar year does not exceed an amount equal to 80%
of the CMBS Securities that are Collateral Securities unless the Rating Agency
Condition with respect to Moody’s has been satisfied;
 
(ix) (a) the aggregate Principal Balance of CRE CDO Securities does not exceed
the greater of (x) an amount equal to 2% of the Aggregate Collateral Balance and
(y) $6,000,000, (b) the aggregate principal balance of REIT Debt Securities does
not exceed the greater of (x) an amount equal to 5% of the Aggregate Collateral
Balance and (y) $15,000,000 and (c) the aggregate Principal Balance of CRE CDO
Securities and REIT Debt Securities combined does not exceed the greater of
(x) an amount equal to 5% of the Aggregate Collateral Balance and (y)
$15,000,000; provided, that such CRE CDO Securities and REIT Debt Securities be
assigned a rating by Moody’s and S&P of at least “Baa3” and “BBB-,”
respectively;
 
(x) the aggregate Principal Balance of B-Notes does not exceed the greater of
(x) an amount equal to 10% of the Aggregate Collateral Balance and (y)
$30,000,000;
 
(xi) the aggregate Principal Balance of Corporate Credit Notes does not exceed
the greater of (x) an amount equal to 30% of the Aggregate Collateral Balance
and (y) $90,000,000;
 
(xii) if the Collateral Security is a Principal Only Security or a Interest Only
Security, the Aggregate Amortized Cost (which accreted cost shall not exceed
par) of all such Principal Only Securities or Interest Only Securities does not
exceed the greater of (x) an amount equal to 5% of the Aggregate Collateral
Balance and (y) $15,000,000, respectively; provided, that such Principal Only
Security or Interest Only Security must have a shadow rating from Moody’s;
 
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(xiii) the Maximum Moody’s Rating Factor Test is satisfied;
 
(xiv) the Diversity Test is satisfied;
 
(xv) the Minimum Weighted Average Coupon Test is satisfied;
 
(xvi) the Minimum Weighted Average Spread Test is satisfied;
 
(xvii) the Weighted Average Life Test is satisfied;
 
(xviii) the S&P CDO Monitor Test is satisfied;
 
(xix) the Moody’s Recovery Test is satisfied; and
 
(xx) the S&P Recovery Test is satisfied.
 
During the Reinvestment Period, the dollar amount limitation set forth in each
Collateral Quality Test will be disregarded both for the purposes of any reports
to be prepared under the Indenture and for the purposes of the Reinvestment
Criteria and, after the Reinvestment Period, such dollar amount limitation will
be considered only for the purposes of any reports to be issued under the
Indenture.
 
“Collateral Security” and “Collateral Securities”: Any Specified Type of asset
owned by the Issuer that complies with the Eligibility Criteria (other than
Eligible Investments) on the date of acquisition.
 
“Collection Accounts”: The trust accounts so designated and established pursuant
to Section 10.2(a) hereto.
 
“Collection Period”: With respect to any Payment Date, the period commencing on
the day immediately succeeding the second preceding Determination Date (or in
the case of the Collection Period relating to the first Payment Date, on the
Closing Date) and ending on and including the Determination Date immediately
preceding such Payment Date.
 
“Commercial Mortgage-Backed Security” or “CMBS”: Any securities (other than
Loans) backed by obligations (including certificates of participation in
obligations) that are principally secured by mortgages on real property or
interests therein having a commercial use, such as regional malls, retail space,
office buildings, warehouse or industrial properties, nursing homes and senior
living centers.
 
“Company Administrative Expenses”: Amounts due or accrued with respect to any
Payment Date and payable by the Issuer or the Co-Issuer to (i) the Trustee
pursuant to this Indenture (or the Trustee Fee Proposal) and the Custodial
Agreement (as Custodian) or any co-trustee appointed pursuant to this Indenture
(including amounts payable by the Issuer as indemnification pursuant to this
Indenture), (ii)  to provide for the costs of liquidating the Issuer following
redemption of the Securities, (iii) the Independent accountants, agents and
counsel of the Issuer for reasonable fees and expenses (including amounts
payable in connection with the preparation of tax forms on behalf of the Issuer
and the Co-Issuer) and any registered office fees, (iv) the Rating Agencies for
fees and expenses in connection with any rating (including the annual fee
payable with respect to the monitoring of any rating) of the Secured Notes,
including fees and expenses due or accrued in connection with any credit
estimate or rating of the Collateral Securities, (v) the Collateral Manager
under this Indenture and the Collateral Management Agreement (including amounts
payable by the Issuer as indemnification pursuant to the Collateral Management
Agreement), (vi) the Preferred Share Paying and Transfer Agent pursuant to the
Paying and Transfer Agency Agreement (including amounts payable by the Issuer as
indemnification pursuant to the Paying and Transfer Agency Agreement), (vii) any
other person in respect of any governmental fee, charge or tax in relation to
the Issuer or the Co-Issuer (in each case as certified by an Authorized Officer
of the Issuer or the Co-Issuer to the Trustee) and (viii) any other person in
respect of any other fees or expenses (including indemnifications) permitted
under this Indenture, the Paying and Transfer Agency Agreement and the documents
delivered pursuant to or in connection with this Indenture, the Paying and
Transfer Agency Agreement and the Securities; provided, that Company
Administrative Expenses shall not include (a) amounts payable in respect of the
Securities, (b) amounts payable under any Hedge Agreement and (c) any Collateral
Management Fee payable pursuant to the Collateral Management Agreement.
 
“Controlling Class”: The Class A Notes, so long as any Class A Notes are
Outstanding (provided that, in the case of an Event of Default specified in
Section 5.1(a), the Class  A Notes and the Class  B Notes together will be the
Controlling Class so long as any Class  A Notes or Class  B Notes are
Outstanding), then the Class B Notes, so long as Class B Notes are Outstanding,
then the Class C Notes, so long as any Class C Notes are Outstanding, 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.
 
“Corporate Credit Note”: One of two promissory notes that are secured by a
single assignment of the related Credit Tenant Lease and a single first mortgage
on related real property. Pursuant to the related Intercreditor Agreement, the
right of the holder of a Corporate Credit Note to receive payment of interest,
principal and other expenses with respect to such Corporate Credit Note (other
than in respect of Defaulted Lease Claims) is subordinated to the right of the
holder of the related Real Estate Note to receive payment of interest, principal
and other expenses with respect to such Real Estate Note; provided, that upon
the occurrence and during a continuation of a default under the related Credit
Tenant Lease, the holder of the Corporate Credit Note will have a right to
receive payment of interest, principal and other expenses with respect to
Defaulted Lease Claims that is senior to the right of the holder of the related
Real Estate Note. The Corporate Credit Note is secured by the same single first
mortgage and single assignment of the related Credit Tenant Lease as the Real
Estate Note.
 
“Corporate Trust Office”: The principal corporate trust office of the Trustee,
currently located at 135 South LaSalle Street, Suite 1511, Chicago, IL 60603,
Attention: CDO Trust Services Group, CapLease CDO 2005-1, Ltd., or such other
address as the Trustee may designate from time to time by notice to the
Noteholders, the Collateral Manager, the Rating Agencies, the Issuer and each
Hedge Counterparty or the principal corporate trust office of any successor
Trustee.
 
“Coverage Tests”: The Class A/B Coverage Tests, the Class C Coverage Tests, the
Class D Coverage Tests and the Class E Coverage Tests.
 
“Covered Floating Rate Security”: Any Floating Rate Security for which the
Issuer has entered into one or more Form-Approved Interest Rate Swap Agreements
(either individually or together with other Collateral Securities), which is a
market rate swap that does not require the related Hedge Counterparty to make
any upfront payments the term of which is at least as long as the expected
maturity of such Floating Rate Security, pursuant to which the related
counterparty is obligated to make fixed rate payments to the Issuer and the
Issuer is obligated to make floating rate payments based on the related notional
amount based on the London interbank offered rate (plus a spread, if applicable)
for U.S. Dollar deposits in Europe to the counterparty; provided, that any
Floating Rate Security that is included in the pool as of the Closing Date may
not be a Covered Floating Rate Security.
 
“CRE CDO Securities”: Collateralized debt obligations, collateralized bond
obligations or collateralized loan obligations (including, without limitation,
any synthetic collateralized debt obligations or synthetic collateralized loan
obligations) 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 CRE CDO Securities) on the cash flow
from (and not the market value of) a portfolio of commercial mortgage loans,
CMBS Securities, REIT Debt Securities or CRE CDO Securities related to
commercial mortgage property.
 
“Credit Improved Security”: Any Collateral Security which, in the Collateral
Manager’s reasonable business judgment, has significantly improved in credit
quality.
 
“Credit Risk Security”: Any Collateral Security which in the Collateral
Manager’s reasonable business judgment has a significant risk of declining in
credit quality or, with a lapse of time, becoming a Defaulted Security.
 
“Credit Tenant”: A tenant under a Credit Tenant Lease.
 
“Credit Tenant Lease”: A lease related to and securing a commercial mortgage
loan that is dependent principally on the payment by the related tenant or
guarantor, if any, of lease or rental payments and other payments due under the
terms of such lease and therefore the performance of the related tenant.
 
“Credit Tenant Lease Loan”: A commercial loan that is secured by a first lien on
commercial real estate and an assignment of lease or rental payments and other
payments due from tenants under the terms of the related Credit Tenant Lease.
 
“Cure Advance”: An advance by the Collateral Manager, in connection with the
exercise of a cure right by the Issuer, as controlling holder or directing
holder or other similar function, with respect to a Collateral Security.
 
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“Cure Collateral Security”: The meaning specified in Section 17.2(a) hereof.
 
“Current Portfolio”: The portfolio of Collateral Securities and Eligible
Investments prior to giving effect to a proposed reinvestment in a Substitute
Collateral Security.
 
“Custodial Agreement”: The Custodial Agreement, dated as of the Closing Date, by
and between the Issuer and the Custodian, as amended from time to time in
accordance with the terms thereof.
 
“Custodial Securities Intermediary”: The meaning specified in Section 3.3(a)
hereof.
 
“Custodian”: LaSalle Bank National Association, as custodian under the Custodial
Agreement, and each of its permitted successors and assigns or any successor
Person that shall have become the Custodian pursuant to the provisions of the
Custodial Agreement and thereafter “Custodian” shall mean such successor Person.
 
“Default”: With respect to the Secured Notes, any Event of Default or any
occurrence that is, or with notice or the lapse of time or both would become, an
Event of Default.
 
“Default Exception”: Any Loan for which a default exists as a result of any
bankruptcy, insolvency or receivership proceeding being initiated against the
related obligor or, in the case of a Corporate Credit Note, B-Note or
Participation the underlying obligor with respect to the underlying mortgage
loan, (i) the obligor is current on all payments of interest and principal
pursuant to such Loan, (ii) an order issued by a court of appropriate
jurisdiction in such proceeding has approved all prior payments, all current
payments and all scheduled future payments under the terms of such Loan or with
respect to a Participation, Corporate Credit Note or B-Note, the underlying term
loan, (iii) the Collateral Manager provides the Trustee and each Rating Agency,
with an officer’s certificate stating that the Collateral Manager reasonably
believes there will be a full recovery of amounts outstanding on such Loan and
(iv) the Collateral Manager receives an Appraisal (as defined in the related
Servicing Agreement or the related Underlying Instrument) conducted since the
initiation of the proceeding indicating that the fair market value of the
underlying mortgage property is not less than 125% of the outstanding balance of
the Loan, or in the case of a Participation, B-Note or Corporate Credit Note,
not less than 125% of the outstanding balance of such Loan; provided, that such
Loans to which such exception shall apply shall not individually exceed 5% of
the Collateral Securities or in the aggregate 15% of the of the Collateral
Securities as of the date of determination.
 
“Defaulted Lease Claim”: Any claim for accelerated future rent under a Credit
Tenant Lease following a default thereunder, after taking into account any
reduction thereof resulting from (a) mitigation of damages after a re-leasing of
the related mortgaged property or (b) any limitation thereof arising under
Section 502(b)(6) of the U.S. Bankruptcy Code, as amended from time to time, in
any bankruptcy proceeding involving the tenant under such Credit Tenant Lease.
 
“Defaulted Security”: Any Collateral Security or any other security included in
the Assets:
 
(1) other than a Loan (i) as to which there has occurred and is continuing a
default in the payment of principal or interest (without giving effect to any
applicable grace period or waiver) or (ii) with respect to which there is known
to the Issuer or the Collateral Manager a default (other than any payment
default) which default entitles the holders thereof to accelerate the maturity
of all or a portion of the principal amount of such obligation; provided,
however, in each case, if such default is cured or waived then such asset shall
no longer be a Defaulted Security or (iii) with respect to which there is known
to the Collateral Manager (A) any bankruptcy, insolvency or receivership
proceeding has been initiated in connection with the issuer of such Collateral
Security, or (B) there has been proposed or effected any distressed exchange or
other debt re-structuring where the issuer of such Collateral Security has
offered the debt holders a new security or package of securities that either (x)
amounts to a diminished financial obligation or (y) has the purpose of helping
the issuer to avoid default, or (iv) that has been rated “CC”, “D” or “SD” or
below by S&P (or to which S&P has withdrawn its rating) or “Ca” or “C” by
Moody’s or with respect to REIT Debt Securities, the issuer of which has a
credit rating of “D” or “SD” or to which S&P has withdrawn its rating or
(v) there is known to the Collateral Manager that the issuer thereof is 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 Security, except that a Collateral Security will not constitute
a “Defaulted Security” under this clause (v) if each of the Rating Agencies has
confirmed in writing that such event shall not result in the reduction,
qualification or withdrawal of any rating of the Secured Notes or (vi) with
respect to a CRE CDO Security, if interest on a CRE CDO Security has been
capitalized for a period of one year; or
 
(2) with respect to a Loan, (i) if a foreclosure or default (whether or not
declared) (other than a default in a payment of interest) with respect to the
related commercial mortgage loan has occurred, provided, that a Loan will not be
a “Defaulted Security” under this clause (2) if the Default Exception is met,
(ii)(a) in respect of which there has been a failure to pay interest in whole or
in part for the lesser of (A) six months or (B) three payment periods (if such
Collateral Security is rated (or privately rated) below “Baa3” by Moody’s);
provided, however, that if the Rating Agency Condition for such Collateral
Security is satisfied with respect to Moody’s, the Collateral Manager may choose
not to treat such a Collateral Security as a Defaulted Security, or (b) in
respect of which there has been a failure to pay interest in whole or in part
for the lesser of (A) one year or (B) six consecutive payment periods (if such
Collateral Security is rated (or privately rated) “Baa3” or higher by Moody’s),
in each case even if by its terms the Collateral Security provides for the
deferral and capitalization of interest thereon or (iii) that has been rated
“CC”, “D” or “SD” or below by S&P (or to which S&P has withdrawn its rating) or
“Ca” or “C” by Moody’s; provided, however, that with respect to clause (iii)
above, if a Tenant Bankruptcy occurs with respect any such Loan that is a Credit
Tenant Lease Loan or Corporate Credit Note and the related borrower protects
such Loan, then the Collateral Manager may request that the rating assigned by
each Rating Agency to such Loan be revised to reflect the protection provided by
such borrower;
 
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provided, that any Collateral Security which has sustained a write-down of
principal balance in accordance with its terms will not necessarily be
considered a Defaulted Security solely due to such writedown; provided, further,
that for purposes of the Overcollateralization Ratios, any Collateral Security
that has sustained an implied reduction of principal balance due to an appraisal
reduction will not necessarily be considered a Defaulted Security solely due to
such implied reduction.
 
“Definitive Securities”: The meaning specified in Section 2.2(d) hereof.
 
“Deposit Accounts”: The meaning specified in Section 3.3(f)(xii) hereof.
 
“Depository”: The Depository Trust Company, its nominees, and their respective
successors.
 
“Determination Date”: With respect to each Payment Date, the fourth Business Day
prior to such Payment Date.
 
“Discount Rate”: The rate which, when compounded monthly, is equivalent to the
Treasury Rate for the related Class when compounded semiannually.
 
“Disqualified Transferee”: The meaning specified in Section 2.5(l) hereof.
 
“Diversity Test”: A test that will be satisfied if on any Measurement Date the
Diversity Score for the Collateral Securities is greater than 17.
 
“Diversity Score”: A single number that indicates collateral concentration in
terms of both issuer and industry concentration based on asset classification.
 
“Dollar,” “U.S. $” or “$”: A U.S. dollar or other equivalent unit in Cash.
 
“Due Date”: Each date on which a Scheduled Distribution is due on a Pledged
Obligation.
 
“Eligibility Criteria”: The criteria set forth below, which if satisfied by a
Collateral Security at the time it is purchased, as evidenced by an Officer’s
Certificate of the Collateral Manager delivered to the Trustee as of the date of
such acquisition, will make such Collateral Security eligible for purchase by
the Issuer:
 
(i) the borrower thereon, or issuer thereof (other than a Credit Tenant or
guarantor of the obligation of a Credit Tenant under a Credit Tenant Lease), is
incorporated or organized under the laws of the United States or a commonwealth,
territory or possession of the United States, except that issuers of CRE CDO
Securities may be incorporated or organized under the laws of the Cayman
Islands, Bahamas, Bermuda, the Channel Islands, Ireland or Netherland Antilles;
 
(ii) with respect to each CMBS Security, substantially all the loans backing
such Collateral Security are secured by collateral substantially all of which is
located in the United States or a commonwealth, territory or possession of the
United States; with respect to each Loan, the whole loan or underlying term loan
is secured by collateral located in the United States or a commonwealth,
territory or possession of the United States; and, with respect to each REIT
Debt Security, the issuer of such Collateral Security is incorporated or
organized under the laws of the United States or a commonwealth, territory or
possession of the United States;
 
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(iii) it provides for periodic payments of interest no less frequently than
semi-annually;
 
(iv) it has an S&P Rating and, unless otherwise agreed by S&P, the S&P Rating of
such security does not include the subscript “p”, “pi”, “q”, “r” or “t”;
 
(v) it has a Moody’s Rating;
 
(vi) any of (I) the ownership of such security will not subject the Issuer to
net income tax or cause the Issuer to be treated as engaged in a trade or
business within the United States for U.S. federal income tax purposes, (II) the
Issuer has received advice of counsel to the effect that such security will or
should be treated as debt for U.S. federal income tax purposes, (III) the Issuer
has been provided a copy of a tax opinion rendered at the time of issuance of
such security to the effect that such security will or should be treated as debt
for U.S. federal income tax purposes, (IV) the Issuer has received documents
pursuant to which such security was offered, if any, that include or refer to an
opinion of counsel to the effect that such security will or should be treated as
debt for U.S. federal income tax purposes or (V) the security is a certificate
of beneficial interest in a trust treated as a grantor trust for purposes of the
Code, all the assets of which (a) satisfy any of clauses (I) through (IV) or are
regular interests in an entity that is a REMIC or FASIT within the meaning of
the Code (as evidenced by an opinion of counsel or reference to an opinion of
counsel in offering documents) or (b) are interest rate swaps, caps or other
notional principal contracts (within the meaning of Treasury Regulations)
designed to hedge interest rate risk with respect to such assets of or the
regular interests in such REMIC or FASIT; provided that (x) in the case of
subclause (III) and (IV) of this clause (vi), there has been no change in the
terms of such security prior to the date of its acquisition by the Issuer, (y)
this clause (vi) will not apply to any Interest-Only Security and (z) for
purposes of this clause (vi), an opinion of counsel that the issuer of such
security will be treated as a REMIC or FASIT within the meaning of the Code will
be treated as an opinion of counsel that such security will be treated as debt
for U.S. federal income tax purposes (unless such security is the residual
interest in the REMIC or the ownership interest in the FASIT within the meaning
of the Code);
 
(vii) 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;
 
(viii) if a REIT or one or more of its affiliates that are qualified REIT
subsidiaries (within the meaning of Section 856(i)(2) of the Code) no longer is
the registered holder of 100% of the Preferred Shares or 100% of the ordinary
shares of the Issuer, it is Registered for U.S. federal income tax purposes and
was 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
shall not satisfy this clause (viii) unless each of the obligations or
securities held by the trust was issued after that date;
 
(ix) its acquisition would not cause the Issuer, the Co-Issuer or the pool of
Pledged Obligations to be required to register as an investment company under
the 1940 Act; and if the issuer of such Collateral Security is excepted from the
definition of an “investment company” solely by reason of Section 3(c)(1) of the
1940 Act, then either (x) such Collateral Security does not constitute a “voting
security” for purposes of the 1940 Act or (y) the aggregate amount of such
Collateral Security held by the Issuer is less than 10% of the entire issue of
such Collateral Security;
 
(x) (A) if it is a Loan (other than a B-Note) with an initial principal balance
less than $25,000,000, it does not have a maturity date (including any extension
option) later than 3 years prior to the Stated Maturity of the Class A Notes;
(B) if it is a Loan (other than a B-Note) with an initial principal balance
equal to or greater than $25,000,000, it does not have a maturity date
(including any extension option) later than 5 years prior to the Stated Maturity
of the Class A Notes; (C) if it is a B-Note, it does not have a maturity date
(including any extension option) later than 8 years prior to the Stated Maturity
of the Class A Notes; (D) if it is a CMBS Security with a rated final maturity
past the Stated Maturity of the Class A Notes, no commercial mortgage loan
underlying, securing or constituting such Collateral Security has a maturity
date (including any extension option) that is later than 5 years prior to the
Stated Maturity of the Class A Notes; (E) if it is a REIT Debt Security, it does
not have a stated final maturity later than 8 years prior to the Stated Maturity
of the Class A Notes; and (F) if it is a CRE CDO Security, it does not have a
stated maturity later than the Stated Maturity of the Class A Notes; provided,
that up to greater of (x) 2% of the Aggregate Collateral Balance and (y)
$6,000,000 may consist of CRE CDO Securities with a stated maturity no more than
5 years after the Stated Maturity of the Class A Notes;
 
(xi) it is eligible under its Underlying Instruments to be purchased by the
Issuer and pledged to the Trustee;
 
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(xii) it is not, and does not provide for conversion or exchange into, “margin
stock” (as defined under Regulations T, U or X by the Board of Governors of the
Federal Reserve System) at any time over its life;
 
(xiii) it is not the subject of any Offer and has not been called for
redemption;
 
(xiv) it is not an Equity Security, Market Value Collateralized Debt Obligation
security or any security the repayment of which is subject to substantial
non-credit related risk, as determined by the Collateral Manager in its
reasonable business judgment;
 
(xv) 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;
 
(xvi) it is not a financing by a debtor-in-possession in any insolvency
proceeding;
 
(xvii) after the acquisition of such Collateral Security, it will not require
the Issuer to make any future payments or advances to the issuer thereof;
 
(xviii) (a) it is not a Defaulted Security (as determined by the Collateral
Manager after reasonable inquiry) and (b) it is not a security that, in the
Collateral Manager's reasonable business judgment, is a Credit Risk Security;
 
(xix) if it is a Corporate Credit Note, (a) it is a real estate related
Corporate Credit Note, (b) either (i) the related Real Estate Note has been
included in a transaction that would be classified as a CMBS Conduit Security or
a CMBS Large Loan Security or (ii) the Corporate Credit Note is serviced by an
Approved Servicer pursuant to a commercial mortgage servicing arrangement, which
includes the servicing provisions generally found in CMBS Securities
transactions, (c) the requirements set forth in the Indenture regarding the
representations and warranties with respect to the underlying term loan, the
underlying mortgaged property and the Corporate Credit Note have been met and
(d) the terms of the Underlying Instruments are generally consistent with the
terms of similar Underlying Instruments in the CMBS Securities industry;
 
(xx) if it is a Participation, (a) it is a real estate related Participation,
(b) either (i) the Underlying Term Loan or the related Pari Passu Interest has
been included in a transaction that would be classified as a CMBS Conduit
Security or a CMBS Large Loan Security and the Underlying Instrument requires
that if the Underlying Term Loan or related Pari Passu Interest ceases to be
included in such transaction, the Underlying Term Loan must be serviced by an
Approved Servicer pursuant to a commercial mortgage servicing arrangement, which
includes the servicing provisions generally found in CMBS Securities
transactions, or (ii) the Underlying Term Loan is serviced by an Approved
Servicer pursuant to a commercial mortgage servicing arrangement, which includes
the servicing provisions generally found in CMBS Securities transactions, (c)
the requirements regarding the representations and warranties with respect to
the Underlying Term Loan, the Underlying Mortgage Property and the Participation
set forth in Section 17.4 have been met, (d) the terms of the Underlying
Instruments are generally consistent with the terms of similar Underlying
Instruments in the CMBS Securities industry (including, but not limited to,
customary terms providing for current payment of interest and pro rata payment
of principal prior to an event of default on the Underlying Term Loan as well as
cure rights) and (e) the Participating Institution is either a special purpose
vehicle or qualifies as a qualified institutional lender as typically defined in
the Underlying Instruments related to Participations;
 
(xxi) if it is a B-Note, (a) it is a real estate related B-Note, (b) either
(i) the related A-Note has been included in a transaction that would be
classified as a CMBS Conduit Security or a CMBS Large Loan Security and the
Underlying Instruments require that if the A-Note ceases to be included in such
a transaction, the Underlying Term Loan must be serviced by an Approved Servicer
pursuant to a commercial mortgage servicing arrangement which includes the
standard servicing provisions found in CMBS Securities transactions or (ii) the
B-Note is serviced pursuant to a commercial mortgage servicing arrangement,
which includes the servicing provisions generally found in CMBS Securities
transactions, (c) the requirements regarding the representations and warranties
with respect to the Underlying Term Loan, the Underlying Mortgage Property and
the B-Note set forth in Section 17.4 have been met and (d) the terms of the
Underlying Instruments are generally consistent with the terms of similar
Underlying Instruments in the CMBS Securities industry (including, but not
limited to, customary terms providing for current payment of interest and pro
rata payment of principal to the holder of such B-Note prior to an event of
default on the Underlying Term Loan as well as cure rights);
 
(xxii) if it is a Credit Tenant Lease Loan, (a) it is serviced by an Approved
Servicer pursuant to a commercial mortgage servicing arrangement, which includes
the servicing provisions generally found in CMBS Securities transactions, or it
is serviced pursuant to the Servicing Agreement and (b) the requirements set
forth in the Indenture regarding the representations and warranties with respect
to the Credit Tenant Lease Loan and the underlying mortgaged property have been
met; provided, that Fully Bondable Lease Loans shall not require servicing;
 
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(xxiii) it is U.S. Dollar denominated and may not be converted into a security
payable in any other currencies;
 
(xxiv) it does not include, as one of its rights or components, the right to
distributions from excess proceeds after required fixed payments are made on
other classes of securities;
 
(xxv) it is one of the Specified Types;
 
(xxvi) if it is a Loan, the principal balance of the Loan has not been reduced
by a realized loss, appraisal event, or similar item since initial issuance;
 
(xxvii) if it is a Loan that is a Floating Rate Security or has a corresponding
interest rate swap agreement, such Loan or swap agreement bears interest based
upon the London interbank offered rate for U.S. Dollar deposits in Europe;
 
(xxviii) the requirements relating to opinions set forth in Section 17.5 have
been satisfied, to the extent applicable to such Collateral Security;
 
(xxix) if it is a Collateral Security with payments less frequently than
quarterly, it is covered by a Cash Flow Swap Agreement obtained by the
Collateral Manager for the Issuer;
 
(xxx) if such Collateral Security is an Interest-Only Security, the Rating
Agency Condition has been satisfied with respect to the acquisition of such
Interest-Only Security;
 
(xxxi) if the Collateral Security is a Principal Only Security, the Rating
Agency Condition has been satisfied with respect to the acquisition of such
Principal Only Security; and
 
(xxxii) is not a PIK Bond that is currently deferring payments of interest or as
to which any payment due has been deferred and not paid in full.
 
In addition, the Issuer will not purchase, acquire or hold (whether as part of a
“unit” with a Collateral Security, in exchange for a Collateral Security or
otherwise) (i) any asset that is or could be treated for U.S. federal income tax
purposes as an equity interest in an entity that is treated as a “resident
partnership” under Treasury Regulation Section 301.7701-5 unless the Issuer has
received advice from a nationally recognized law firm to the effect that the
ownership of such assets will not subject the Issuer to net income tax or cause
the Issuer to be treated as engaged in a trade or business in the United States
for U.S. federal income tax purposes, (ii) any asset the ownership of which
could reasonably be expected to cause the Issuer to be subject to net income tax
in any jurisdiction outside the United States, unless the Issuer has received an
opinion of counsel to the effect that ownership of such asset will not subject
the Issuer to net income tax in such jurisdiction or (iii) 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.
 
“Eligible Investments”: Any Dollar-denominated investment that, at the time it
is Granted to the Trustee (directly or through a Securities Intermediary or
bailee), is Registered and is one or more of the following obligations or
securities:
 
(a) direct obligations of, and 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 expressly backed by the full faith and credit of the
United States of America;
 
(b) demand and time deposits in, certificates of deposit of, bankers’
acceptances issued by, or federal funds sold by, any depository institution or
trust company incorporated under the laws of the United States of America or any
state thereof or the District of Columbia (including the Trustee or the
commercial department of any successor Trustee, as the case may be; provided,
that such successor otherwise meets the criteria specified herein) and subject
to supervision and examination by federal and/or state banking authorities so
long as the commercial paper and/or the debt obligations of such depositary
institution or trust company (or, in the case of the principal depositary
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 not
less than “A1” by Moody’s and “A+” by S&P, in the case of long-term debt
obligations, and “P-1” by Moody’s and “A-1” by S&P or “A-1” by S&P for Eligible
Investments which have a maturity of 30 days or less;
 
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(c) unleveraged repurchase or forward purchase obligations with respect to (i)
any security described in clause (a) above or (ii) any other security issued or
guaranteed by an agency or instrumentality of the United States of America, in
either case entered into with a depository institution or trust company (acting
as principal) described in clause (b) above (including LaSalle Bank National
Association or the commercial department of any successor Trustee, as the case
may be; provided, that such person otherwise meets the criteria specified
herein) or entered into with a corporation (acting as principal) whose long-term
rating is not less than “Aa2” by Moody’s and whose short-term credit rating is
“P-1” by Moody’s, and whose long-term rating is not less than “AAA” by S&P (for
so long as any Secured Notes rated by S&P are Outstanding) or whose short-term
credit rating is “A-1+” by S&P for Eligible Investments which have a maturity of
30 days or less (for so long as any Secured Notes rated by S&P are Outstanding);
provided, that the issuer thereof must also have at the time of such investment
a long-term credit rating of not less than “Aa2” by Moody’s and “AAA” by S&P
(for so long as any Secured Notes rated by S&P are Outstanding);
 
(d) registered securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or any
state thereof or the District of Columbia that has a credit rating of not less
than “Aa2” by Moody’s and “AAA” by S&P (for so long as any Secured Notes rated
by S&P are Outstanding) at the time of such investment or contractual commitment
providing for such investment;
 
(e) commercial paper or other similar short-term obligations (including that of
the Trustee or the commercial department of any successor Trustee, as the case
may be, or any affiliate thereof; provided, that such person otherwise meets the
criteria specified herein) having at the time of such investment a credit rating
of “P-1” by Moody’s and “A-1+” by S&P or “A-1” by S&P for Eligible Investments
which have a maturity of 30 days or less (for so long as any Secured Notes rated
by S&P are Outstanding); provided, that the issuer thereof must also have at the
time of such investment a senior long-term debt rating of not less than “Aa3” by
Moody’s and “AA” by S&P (for so long as any Secured Notes rated by S&P are
Outstanding);
 
(f) a reinvestment agreement issued by any bank (if treated as a deposit by such
bank), or a Registered guaranteed investment or reinvestment agreement issued by
an insurance company or other corporation or entity, in each case that has a
credit rating of not less than “P-1” by Moody’s and “A-1+” by S&P or “A-1” by
S&P for Eligible Investments which have a maturity of 30 days or less (for so
long as any Secured Notes rated by S&P are Outstanding); provided, that the
issuer thereof must also have at the time of such investment a long-term credit
rating of not less than “Aa2” by Moody’s and “AAA” by S&P (for so long as any
Secured Notes rated by S&P are Outstanding);
 
(g) any other investment similar to those described in clauses (a) through (f)
above that (1) each Rating Agency has confirmed may be included in the portfolio
of Pledged Obligations as an Eligible Investment without adversely affecting its
then-current ratings on the Secured Notes and (2) has a long-term credit rating
of not less than “Aa2” by Moody’s and “AAA” by S&P (for so long as any Secured
Notes rated by S&P are Outstanding) or a credit rating of not less than “P-1” by
Moody’s and “A-1+” by S&P or “A-1” by S&P for Eligible Investments which have a
maturity of 30 days or less (for so long as any Secured Notes rated by S&P are
Outstanding);
 
provided, that mortgage-backed securities and Interest-Only Securities shall not
constitute Eligible Investments; and provided, further, that (i) Eligible
Investments acquired with funds in the Collection Accounts shall include only
such obligations or securities as mature no later than the Business Day prior to
the next Payment Date succeeding the acquisition of such obligations or
securities, (ii) Eligible Investments shall not include obligations bearing
interest at inverse floating rates, (iii) Eligible Investments shall not include
obligations the purchase of which would cause the Issuer to be engaged in a
trade or business within the United States, shall not have payments subject to
foreign or United States withholding tax, shall not be purchased for a price in
excess of par, shall not have an S&P rating which contains a subscript “r”, “t”,
“p”, “pi” or “q” and (iv) Eligible Investments shall not include Margin Stock.
 
“Eligible Substitute Collateral Securities”: The meaning specified in Section
12.2(a).
 
“Entitlement Holder”: The meaning specified in Section 8-102(a)(7) of the UCC.
 
17

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“Equity Security”: Any equity security or any other security which is not
eligible for purchase by the Issuer as a Collateral Security; provided, that the
term “Equity Security” will not include any asset-backed security structured as
a certificate or other form of beneficial interest.
 
“ERISA”: The United States Employee Retirement Income Security Act of 1974, as
amended.
 
“Euroclear”: Euroclear Bank S.A./N.V., as operator of the Euroclear system.
 
“Event of Default”: The meaning specified in Section 5.1 hereof.
 
“Excepted Assets”: The U.S. $250 of capital contributed by the holder of the
ordinary shares of the Issuer, U.S. $250 representing a profit fee to the
Issuer, and the bank account in which such monies are held and the Preferred
Shares Collection Account and all funds and other property from time to time
deposited in or credited to such account.
 
“Exchange Act”: The Securities Exchange Act of 1934, as amended.
 
“Expense Account”: The account established pursuant to Section 10.4(a) hereof.
 
“Expense Cap Amount”: The meaning specified in Section 11.1(a)(i)(3).
 
“EVA LLC”: EVA LLC, a Delaware limited liability company, or its successors and
assigns.
 
“Financial Asset”: The meaning specified in Section 8-102(a)(9) of the UCC.
 
“Financing Statements”: Financing statements relating to the Assets naming the
Issuer as debtor and the Trustee on behalf of the Noteholders and each Hedge
Counterparty as secured party.
 
“Fitch”: Fitch, Inc.
 
“Fixed Rate Excess”: 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 Coupon for such Measurement
Date over 6.30% and (b) the Aggregate Principal Balance of all Collateral
Securities that are Fixed Rate Securities (excluding all Defaulted Securities
and Written Down Securities) and the denominator of which is the Aggregate
Principal Balance of all Collateral Securities that are Floating Rate Securities
(excluding all Defaulted Securities and Written Down Securities), multiplying
the resulting figure by 360 and then dividing by 365.
 
“Fixed Rate Securities”: Any Collateral Security (other than a Floating Rate
Security) and any Covered Floating Rate Security.
 
“Floating Rate Securities”: Any Collateral Security which bears interest based
upon a floating rate index, other than a Covered Floating Rate Security.
 
“Form-Approved Cash Flow Swap Agreement”: A Cash Flow Swap Agreement entered
into with respect to a Floating Rate Security (a) the documentation of which
conforms (but for the amount and timing of periodic payments, the notional
amount, the effective date, the termination date and other similarly necessary
changes) to a form for which satisfaction of the Rating Agency Condition was
previously received hereunder (as certified to the Trustee and the applicable
Hedge Counterparty by the Collateral Manager); provided, that any Rating Agency
may withdraw its approval of a form at any time; provided, further, that such
withdrawal will not affect existing Hedge Agreements which prior to such
withdrawal were Form-Approved Cash Flow Swap Agreements, which were in effect as
of the Closing Date or as to which the Rating Agency Condition had previously
been satisfied, and (b) for which the Issuer has provided each Rating Agency
with written notice of the purchase of the related Collateral Security within
five Business Days after such purchase.
 
“Form-Approved Interest Rate Swap Agreement”: An Interest Rate Swap Agreement
entered into with respect to a Floating Rate Security (a) the documentation of
which conforms (but for the amount and timing of periodic payments, the notional
amount, the effective date, the termination date and other similarly necessary
changes) to a form for which satisfaction of the Rating Agency Condition was
previously received hereunder (as certified to the Trustee and the applicable
Hedge Counterparty by the Collateral Manager); provided, that any Rating Agency
may withdraw its approval of a form at any time; provided, further, that such
withdrawal will not affect existing Hedge Agreements which prior to such
withdrawal were Form-Approved Interest Rate Swap Agreements, which were in
effect as of the Closing Date or as to which the Rating Agency Condition had
previously been satisfied, and (b) for which the Issuer has provided each Rating
Agency with written notice of the purchase of the related Collateral Security
within five Business Days after such purchase.
 
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“Fully Bondable Lease Loan”: A type of Credit Tenant Lease Loan with respect to
which (i) the related Credit Tenant Lease is a Bond-Type Lease, (ii) is fully
amortizing or it has a balloon balance covered by a Residual Value Insurance
Policy from an insurance provider with a rating at least as high as that of the
tenant on the related Credit Tenant Lease, (iii) the tenant on the related
Credit Tenant Lease has a long-term unsecured debt rating by both Moody’s and
S&P, (iv) the term of the related Credit Tenant Lease is at least co-terminus
the maturity of such Loan and (v) the tenant on the related Credit Tenant Lease
has no rights to offset or abate rent or terminate the lease whatsoever, except
upon the payment of a stipulated loss amount sufficient to repay such Loan in
full.
 
“Global Secured Notes”: The Rule 144A Global Secured Notes and the Regulation S
Global Secured Notes.
 
“Governing Documents”: With respect to (i) the Issuer, the memorandum and
articles of association and certificate of incorporation and (ii) all other
Persons, the articles of incorporation, certificate of incorporation, by-laws
certificate of limited partnership, limited partnership agreement, limited
liability company agreement, certificate of formation, articles of association
and similar charter documents, as applicable to any such Person.
 
“Government Items”: A security (other than a security issued by the Government
National Mortgage Association) issued or guaranteed by the United States of
America or an agency or instrumentality thereof representing a full faith and
credit obligation of the United States of America and, with respect to each of
the foregoing, that is maintained in book-entry on the records of a Federal
Reserve Bank.
 
“Grant”: 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 Obligations or of any other security or instrument shall include all
rights, powers and options (but none of the obligations) of the granting party
thereunder, including without limitation the immediate continuing right to
claim, collect, receive and take receipt for principal and interest payments in
respect of the Pledged Obligations (or any other security or instrument), and
all other Monies 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”: Any of the Closing Date Swap Agreements and one or more
interest rate cap agreements, interest rate floor agreements, Interest Rate Swap
Agreements, Cash Flow Swap Agreements or similar agreements entered into between
the Issuer and one or more Hedge Counterparties from time to time and any
additional or replacement swap agreements or other agreements that address
interest rate exposure, basis risk or payment frequency exposure entered into
from time to time between the Issuer and each Hedge Counterparty in accordance
with the terms hereof, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
 
“Hedge Collateral Account”: The trust account established pursuant to Section
16.1(e) hereof.
 
“Hedge Counterparty”: Any institution or institutions with whom the Issuer
enters into interest rate cap agreements, interest rate floor agreements, Cash
Flow Swap Agreements, Interest Rate Swap Agreements (including the Closing Date
Swap Agreement), or other similar agreements that address interest rate
exposure, basis risk or payment frequency exposure or any permitted assignees or
successors of such institutions under any Hedge Agreements.
 
“Hedge Counterparty Credit Support”: With respect to each Hedge Agreement, the
agreement to provide collateral, if necessary, substantially in the form of the
ISDA Credit Support Annex attached to such Hedge Agreement.
 
“Hedge Counterparty Credit Support Provider”: The meaning specified in Section
16.1(a) hereof.
 
“Hedge Counterparty Required Rating”: (a) with respect to a Person as an issuer
or with respect to long-term senior unsecured debt of such Person, (x) “A1” by
Moody’s to the extent such Person has a long-term rating only (for so long as
any Class of Secured Notes are Outstanding under this Indenture and are rated by
Moody’s); or (y) “A2” by Moody’s to the extent such Person has both a long-term
and short-term rating and the short-term rating is “P-1” (for so long as any
Class of Secured Notes are Outstanding under this Indenture and are rated by
Moody’s ); and (b) with respect to a Person as an issuer or with respect to
long-term senior unsecured debt of such Person, “BBB-” by S&P or a short-term
debt rating of “A-3” by S&P (for so long as any Class of Secured Notes are
Outstanding under this Indenture and are rated by S&P); provided that should a
Rating Agency effect an overall downward adjustment of its short-term or
long-term ratings, then the applicable Hedge Counterparty Required Rating shall
be downwardly adjusted accordingly; provided further, that any adjustment to a
rating shall be subject to the prior written consent of the applicable Rating
Agency.
 
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“Hedge Counterparty Threshold Rating”: (a) with respect to a Person as an issuer
or with respect to the long-term senior unsecured debt of such Person, “A1” and
not on “Watch For Downgrade” (and the short-term debt of such Person is rated
“P-1” and not on “Watch For Downgrade”) or “Aa3” and not on “Watch For
Downgrade” (if only the long-term debt obligations of such Person are rated by
Moody’s) or such Person or such debt has such ratings but is on “Watch for
Downgrade” with respect to any of such ratings by Moody’s (for so long as any
Class of Secured Notes is outstanding hereunder and rated by Moody’s); and (b) a
short-term debt rating of “A-1” by S&P, or, if such person does not have a
short-term debt rating, with respect to such Person or as an issuer with respect
to the long-term senior unsecured debt of such Person, “A+” by S&P (for so long
as any Class of Secured Notes is Outstanding hereunder and is rated by S&P);
provided that should a Rating Agency effect an overall downward adjustment of
its short-term or long-term ratings, then the applicable Hedge Counterparty
Threshold Rating shall be downwardly adjusted accordingly; provided further,
that any adjustment to a rating shall be subject to the prior written consent of
the applicable Rating Agency.
 
“Hedge Due Amount”: With respect to each Hedge Agreement, the amount of any
payment then due and payable thereunder by the Issuer to each Hedge
Counterparty, including without limitation any payments due and payable upon a
termination of such Hedge Agreement.
 
“Hedge Termination Account”: The trust account established pursuant to
Section 16.1(g) hereof.
 
“Highest Auction Price”: The meaning specified in Section 12.5(b)(iv) hereof.
 
“Holder” or “Noteholder”: With respect to any Secured Note, the Person in whose
name such Secured Note is registered in the Notes Register.
 
“Indenture”: This instrument as originally executed 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”: 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
or an investment bank 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, and (ii) is not
connected with such Person as an Officer, employee, promoter, underwriter,
voting trustee, partner, director or Person performing similar functions.
“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.
 
Whenever any Independent Person’s opinion or certificate is to be furnished to
the Trustee such opinion or certificate shall state that the signer has read
this definition and that the signer is Independent within the meaning hereof.
 
“Initial Issued Amount”: The initial issued amount of $15,000,000 of the
Preferred Shares.
 
“Initial Loan”: Any Loan set forth on Schedule 4 hereto.
 
“Initial Purchaser”: Wachovia Capital Markets, LLC, as initial purchaser of the
Class A Notes and the Class B Notes.
 
“Instrument”: The meaning specified in Section 9-102(47) of the UCC.
 
“Intercreditor Agreement”: The underlying instrument, with respect to each
Corporate Credit Note, consisting of a master intercreditor agreement and the
related supplements entered into between Caplease, LP or its predecessors in
interest and the purchaser of the related Real Estate Note.
 
“Interest Accrual Period”: With respect to the first Payment Date, the period
from and including the Closing Date to but excluding the Payment Date in April
2005, and with respect to each successive Payment Date, the period from and
including the immediately preceding Payment Date to but excluding such Payment
Date.
 
“Interest Advance”: The meaning specified in Section 10.5(a).
 
“Interest Collection Account”: The trust account established pursuant to Section
10.2(a) hereof.
 
“Interest Coverage Ratio”: With respect to the Class A Notes and the Class B
Notes (the “Class A/B Interest Coverage Ratio”), the Class C Notes (the “Class C
Interest Coverage Ratio”), the Class D Notes (the “Class D Interest Coverage
Ratio”) and the Class E Notes (the “Class E Interest Coverage Ratio”) as of any
Measurement Date, the ratio calculated by dividing:
 
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(1)
(i) the sum of (A) the Scheduled Distributions of interest due (in each case
regardless of whether the due date for any such interest payment has yet
occurred) in the Collection Period in which such Measurement Date occurs on (x)
the Collateral Securities (excluding accrued and unpaid interest on Defaulted
Securities); provided, that no interest will be included with respect to any
Collateral Security to the extent that such Collateral Security, although not a
Defaulted Security, does not provide for the scheduled payment of interest in
Cash and (y) the Eligible Investments held in the Payment Account, the
Collection Accounts and the Expense Account (whether purchased with Interest
Proceeds or Principal Proceeds) plus (B) any amount (other than any termination
payments) scheduled to be received by the Issuer from each Hedge Counterparty
under the related Hedge Agreement on or before the following Payment Date, plus
(C) Interest Advances, if any, advanced by the Advancing Agent or the Trustee
with respect to the related Payment Date, minus (ii) all amounts required to be
distributed by the Trustee pursuant to Section 11.1(a)(i)(1) through (5); by

 

 
(2)
(i) in the case of the Class A/B Interest Coverage Ratio, the sum of (a) the
Class A Interest Distribution Amount (plus any Class A Defaulted Interest Amount
thereon and any accrued interest on such Class A Defaulted Interest Amount)
payable on the Payment Date immediately following such Measurement Date and (b)
the Class B Interest Distribution Amount (plus any Class B Defaulted Interest
Amount and any accrued interest on such Class B Defaulted Interest Amount)
payable on the Payment Date immediately following such Measurement Date, (ii) in
the case of the Class C Interest Coverage Ratio, the amount determined by the
foregoing clause (i) plus the Class C Interest Distribution Amount (plus any
Class C Defaulted Interest Amount and any accrued interest on such Class C
Defaulted Interest Amount) payable on the Payment Date immediately following
such Measurement Date plus, without duplication, interest on the Class C
Capitalized Interest, if any, payable on the Payment Date immediately following
such Measurement Date, (iii) in the case of the Class D Interest Coverage Ratio,
the amount determined by the foregoing clause (ii) plus the Class D Interest
Distribution Amount (plus any Class D Defaulted Interest Amount and any accrued
interest on such Class D Defaulted Interest Amount) payable on the Payment Date
immediately following such Measurement Date plus, without duplication, interest
on the Class D Capitalized Interest, if any, payable on the Payment Date
immediately following such Measurement Date or (iv) in the case of the Class E
Interest Coverage Ratio, the amount determined by the foregoing clause (iii)
plus the sum of the Class E Interest Distribution Amount (plus any Class E
Defaulted Interest Amount and any accrued interest on such Class E Defaulted
Interest Amount) payable on the Payment Date immediately following such
Measurement Date plus, without duplication, interest on the Class E Capitalized
Interest, if any, payable on the Payment Date immediately following such
Measurement Date.

 
“Interest Distribution Amount”: Each of the Class A Interest Distribution
Amount, Class B Interest Distribution Amount, Class C Interest Distribution
Amount, Class D Interest Distribution Amount and Class E Interest Distribution
Amount.
 
“Interest-Only Security”: Any security that by its terms provides for periodic
payments of interest on a notional amount and does not provide for the repayment
of a principal.
 
“Interest Proceeds”: With respect to any Payment Date, the sum (without
duplication) of (1) all Cash payments of interest (including any amount
representing the accreted portion of a discount from the face amount of an
Eligible Investment) or dividends received in cash during the related Collection
Period on the Collateral Securities (excluding Defaulted Securities) and
Eligible Investments, including, in the Collateral Manager’s commercially
reasonable discretion (exercised as of the trade date), the accrued interest
received in connection with a sale of such Collateral Securities or Eligible
Investments (to the extent such accrued interest was not applied to the purchase
of Substitute Collateral Securities), in each case, excluding any accrued
interest included in Principal Proceeds pursuant to clause (3), (4) or (6) of
the definition of Principal Proceeds, (2) all make whole premiums or any
interest amount paid in excess of the stated interest amount of a Collateral
Security received in cash during the related Collection Period, (3) all
amendment and waiver fees, all late payment fees, all commitment fees and all
other fees and commissions received in cash during such Collection Period in
connection with such Collateral Securities and Eligible Investments (other than
fees and commissions received in connection with the restructuring or default of
Collateral Securities and Eligible Investments), (4) all payments pursuant to
each Hedge Agreement for the Payment Date immediately following such Collection
Period (excluding any amounts payable upon a termination under any Hedge
Agreement during such Collection Period), (5) at the Collateral Manager’s sole
discretion all payments described in item (9) of the definition of “Principal
Proceeds,” (6) funds remaining on deposit in the Expense Account upon redemption
of the Secured Notes in whole or as designated by the Collateral Manager as
Interest Proceeds, pursuant to Section 10.4(a), (7) all payments of principal on
Eligible Investments purchased with proceeds of items (1), (2), (3), (4) and (5)
of this definition and (8) any Interest Advances received for the related
Payment Date; provided, that Interest Proceeds will in no event include (a) any
payment or proceeds specifically defined as “Principal Proceeds” in the
definition thereof, (b) any proceeds from the Excepted Assets, (c) any amounts
reimbursed to the Collateral Manager pursuant to Section 17.2, or (d) amounts
otherwise constituting Interest Proceeds retained by the Servicer to pay its
fees, to reimburse itself and with respect to other amounts, each as permitted
under Section 3.12 of the Servicing Agreement.
 
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“Interest Rate Swap Agreement”: An interest rate swap agreement, including any
related ISDA Master Agreement (together with related schedules, confirmations
and related credit support documents), for purposes of managing the Issuer’s
interest rate exposure related to the variable rate of interest applicable to
any Collateral Securities that are Floating Rate Securities.
 
“Interest Shortfall”: The meaning set forth in Section 10.5(a).
 
“Investment Company Act”: The Investment Company Act of 1940, as amended.
 
“Irish Exchange Fees”: The fees that will be payable to The Irish Stock Exchange
Limited if the listing of the Secured Notes on the Irish Stock Exchange is
obtained.
 
“Irish Paying Agency Agreement”: The agreement between the Issuer and J&E Davy
that will be entered into in the event that the listing of the Secured Notes on
the Irish Stock Exchange is obtained.
 
“Irish Paying Agent”: J&E Davy, or any successor Irish Paying Agent under the
Irish Paying Agency Agreement.
 
“ISDA”: The International Swaps and Derivatives Association, Inc.
 
“Issuer”: CapLease CDO 2005-1, Ltd., an exempted company incorporated with
limited liability under the laws of the Cayman Islands, until 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”: A written order or request (which may be in
the form of a standing order or request) dated and signed in the name of the
Issuer and the Co-Issuer by an Authorized Officer of each of the Issuer and the
Co-Issuer, or by an Authorized Officer of the Collateral Manager.
 
“LIBOR”: The meaning set forth in Schedule 2 attached hereto.
 
“LIBOR Determination Date”: The meaning set forth in Schedule 2 attached hereto.
 
“List”: The meaning specified in Section 12.5(a)(ii) hereof.
 
“Listed Bidders”: The meaning specified in Section 12.5(a)(ii) hereof.
 
“Loan”: Any U.S. Dollar-denominated interest in a Credit Tenant Lease Loan, a
Corporate Credit Note, a Participation or a B-Note which is acquired by way of
assignment; provided, that no such loan requires any future advances to be made
by the Issuer.
 
“London Banking Day”: The meaning set forth in Schedule 2 attached hereto.
 
“Maintenance Termination or Abatement Rights”: Provisions in a Credit Tenant
Lease that allow the tenant to exercise certain remedies provided for under the
Credit Tenant Lease, including self-help and offset, if a borrower defaults in
the performance of its obligations under the Credit Tenant Lease to maintain,
repair or replace the related mortgaged property or the related common areas, if
any.
 
“Majority”: With respect to any Class of Secured Notes, the Holders of more than
50% of the Aggregate Outstanding Amount of the Secured Notes of such Class. With
respect to the Preferred Shares, the holders of more than 50% of the par value
of the Preferred Shares.
 
“Majority Shareholder”: Holder of a Majority of the Preferred Shares.
 
“Mandatory Redemption”: The meaning specified in Section 9.6 hereof.
 
“Margin Stock”: As defined under Regulation U issued by the Board of Governors
of the Federal Reserve System.
 
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“Market Value”: The value of a Collateral Security determined by the Collateral
Manager, which shall be the lowest of the bids obtained from at least two
recognized dealers in the related asset type (Independent of the Collateral
Manager and its Affiliates).
 
“Market Value Collateralized Debt Obligation”: Any collateralized debt
obligation that is valued on the basis of the market value of the underlying
debt obligations rather than the cash flow related to the underlying debt
obligations.
 
“Master Agreement”: The 1992 International Swaps and Derivatives Association,
Inc. Master Agreement (Multicurrency-Cross Border) and related schedule and
credit support annex thereto by and the among the Issuer and the applicable
Hedge Counterparty.
 
“Maturity”: With respect to any Secured Note, the date on which the unpaid
principal of such Secured Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration or
otherwise.
 
“Maximum Moody’s Rating Factor Test”: The test that will be satisfied if on any
Measurement Date the Weighted Average Moody’s Rating Factor does not exceed 625.
 
“Measurement Date”: Any of the following: (i) the Closing Date; (ii) the date of
acquisition or disposition of any Collateral Security; (iii) any date on which a
Collateral Security becomes a Defaulted Security; (iv) each Determination Date;
(v) the last Business Day of each calendar month (other than any calendar month
in which a Determination Date occurs); and (vi) with reasonable notice to the
Issuer and the Trustee, any other Business Day that any Rating Agency or the
Holders of at least 66-2/3% of the Aggregate Outstanding Amount of any Class of
Secured Notes requests 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 immediately preceding Business Day.
 
“Minimum Weighted Average Coupon Test”: A test that will be satisfied on any
Measurement Date if the Weighted Average Coupon for Collateral Securities is
greater than or equal to 6.30% per annum.
 
“Minimum Weighted Average Spread Test”: A test that will be satisfied as of any
Measurement Date if the Weighted Average Spread as of such Measurement Date for
Collateral Securities is greater than or equal to the per annum spread indicated
below for the applicable year in which the Measurement Date occurs:
 
Year
 
Spread
 
2005
   
2.50%
 
2006
   
2.25%
 
2007 and
thereafter
   
2.00%

 

 
“Money”: The meaning specified in Section 1-201(24) of the UCC.
 
“Monthly Report”: The meaning specified in Section 10.7(c) hereof.
 
“Moody’s”: Moody’s Investors Service, Inc., and its successors in interest.
 
“Moody’s Rating”: Of any Collateral Security will be determined as follows:
 
(i) (x) if such Collateral Security is publicly rated by Moody’s, the Moody’s
Rating will be such rating or (y) if such Collateral Security is not publicly
rated by Moody’s, but the Issuer has requested that Moody’s assign a rating to
such Collateral Security, the Moody’s Rating will be the rating so assigned by
Moody’s;
 
(ii) with respect to a CMBS Security or REIT Debt Security, if such CMBS
Security or REIT Debt Security is not rated by Moody’s, then the Moody’s Rating
of such CMBS Security or REIT Debt Security may be determined using any one of
the methods below:
 

 
(A)
with respect to any REIT Debt Security not publicly rated by Moody’s that is
publicly rated by S&P, then the Moody’s Rating thereof will be (1) one
subcategory below the Moody’s equivalent rating assigned by S&P if the rating
assigned by S&P is “BBB-” or greater and (2) two rating subcategories below the
Moody’s equivalent rating assigned by S&P if the rating assigned by S&P is below
“BBB-;”

 
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(B)
with respect to any CMBS Conduit Security not publicly rated by Moody’s, (x) if
Moody’s has rated a tranche or class of CMBS Conduit 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 for purposes of determining the Moody’s Rating Factor 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, 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; and

 

 
(C)
with respect to any other type of CMBS Security or REIT Debt Securities of a
Specified Type not referred to in clauses (A) through (B) above will be
determined pursuant to subclause (y) of clause (i) above;

 
(iii) with respect to corporate guarantees on REIT Debt Securities, 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 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 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 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 “B1” 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 “Ba1” 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 “B1” 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
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;”

 
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(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
“Ba1” 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; or

 
(iv) if such Collateral Security is a Loan or a CRE CDO Security, no notching is
permitted and the Moody’s Rating will be the rating so assigned by Moody’s;
 
provided, that (x) the rating of either Rating Agency used to determine the
Moody’s Rating pursuant to any of clauses (ii) or (iii) above will be (a) a
public rating that addresses the obligation of the obligor (or guarantor, where
applicable) to pay principal of and interest on the relevant Collateral Security
in full and is monitored on an ongoing basis by the relevant Rating Agency or
(b) if no such public rating is available, a rating determined pursuant to a
method determined by Moody’s on a case-by-case basis and (y) the Aggregate
Principal Balance of Collateral Securities the Moody’s Rating of which is based
on an S&P rating or a Fitch rating may not exceed 20% of the Aggregate Principal
Balance of all Collateral Securities; provided, further, that for the Moody’s
Rating of any Collateral Security will be reduced one subcategory to the extent
it is on credit watch with negative implications and increased one subcategory
to the extent it is on credit watch with positive implications; provided,
further, that, with respect to any Collateral Security that is a Credit Tenant
Lease Loan or Corporate Credit Note, if the senior unsecured or other applicable
public rating assigned by Moody’s to the related Credit Tenant has changed, then
the rating assigned by Moody’s may be revised by Moody’s at any time or upon the
request of the Collateral Manager.
 
“Moody’s Rating Factor”: Relating to any Collateral Security is the number set
forth in the table below opposite the Moody’s Rating of such Collateral
Security:
 
Moody’s
Rating
 
Moody’s
Rating Factor
 
Moody’s
Rating
 
Moody’s
Rating Factor
 
Aaa
   
1
   
Ba1
   
940
 
Aa1
   
10
   
Ba2
   
1,350
 
Aa2
   
20
   
Ba3
   
1,766
 
Aa3
   
40
   
B1
   
2,220
 
A1
   
70
   
B2
   
2,720
 
A2
   
120
   
B3
   
3,490
 
A3
   
180
   
Caa1
   
4,770
 
Baa1
   
260
   
Caa2
   
6,500
 
Baa2
   
360
   
Caa3
   
8,070
 
Baa3
   
610
   
Ca or lower
   
10,000
                       

 
“Moody’s Recovery Rate”: With respect to any Collateral Security on any
Measurement Date, an amount equal to (A) if the Specified Type of Collateral
Security is included in the table set forth in Schedule 6 (the Moody’s Loss
Scenario Matrix) hereto, the percentage for such Collateral Security set forth
in Schedule 6 (the Moody’s Loss Scenario Matrix) hereto in (x) the table
corresponding to the relevant Specified Type of Collateral Security, (y) the
column in such table setting forth the Moody’s Rating of such Collateral
Security on the date such Collateral Security was acquired by the Issuer and (z)
the row in such table opposite the percentage of the issue of which such
Collateral Security is a part relative to the total capitalization of (including
both debt and equity securities issued by) the relevant issuer of or obligor on
such Collateral Security determined on the date on which such Collateral
Security was originally issued or (B) if the Specified Type of Collateral
Security is not included in the table set forth in Schedule 6 (the Moody’s Loss
Scenario Matrix) hereto, the Recovery Rate set forth following such table with
respect to the applicable Specified Type.
 
“Moody’s Recovery Test”: A test that will be satisfied as of any Measurement
Date, if the Moody’s Weighted Average Recovery Rate is greater than or equal to
40.5%.
 
“Moody’s Weighted Average Recovery Rate”: The number obtained by summing the
products obtained by multiplying the Principal Balance of each Collateral
Security (other than a Defaulted Security) by its Moody’s Recovery Rate,
dividing such sum by the Aggregate Principal Balance of all such Collateral
Securities.
 
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“Net Outstanding Portfolio Balance”: On any Measurement Date, the sum of:
 
(i) the Aggregate Principal Balance on such Measurement Date of the Collateral
Securities (other than Defaulted Securities);
 
(ii) the aggregate principal balance of all Principal Proceeds held as Cash and
Eligible Investments; and
 
(iii) with respect to each Defaulted Security, the Calculation Amount of such
Defaulted Security;
 
provided, that for purposes of calculating the Overcollateralization Ratio, if
Collateral Securities with an S&P Rating of “CCC+” or below collectively
represent more than 5% of the Aggregate Principal Balance, the Net Outstanding
Portfolio Collateral Balance shall be reduced by an amount equal to the product
of (i) the Aggregate Principal Balance of the Collateral Securities in excess of
5% of the Aggregate Principal Balance with an S&P Rating of “CCC+” or below and
(ii) 0.30.
 
“Non-Permitted Holder”: The meaning specified in Section 2.13(b) hereof.
 
“Nonrecoverable Interest Advance”: Any Interest Advance made, or proposed to be
made, that the Advancing Agent or the Trustee, as applicable, determines in its
sole discretion, exercised in good faith, that the amount so advanced or to be
advanced, plus interest accrued or expected to accrue thereon, may not be
recoverable from subsequent payments or collections with respect to the Assets,
including all Collateral Securities and Eligible Investments.
 
“Nonrecoverable Cure Advance”: Any advance previously made or proposed to be
made pursuant to Section 17.2 hereof with respect to any Collateral Security
that is a B-Note, which the Collateral Manager determines in its sole
discretion, exercised in good faith and in accordance with the Collateral
Manager Servicing Standard, that the amount so advanced or to be advanced, plus
interest accrued or expected to accrue thereon, may not be ultimately
recoverable from collections from such Collateral Security.
 
“Note”: See the definition of “Secured Note.”
 
“Noteholder”: See the definition of “Holder.”
 
“Note Interest Rate”: With respect to the Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes and the Class E Notes, the Class A Rate,
Class B Rate, Class C Rate, Class D Rate and Class E Rate, respectively.
 
“Notes Register” and “Notes Registrar”: The respective meanings specified in
Section 2.5(a) hereof.
 
“Notes Valuation Report”: The meaning specified in Section 10.7(e) hereof.
 
“Offer”: With respect to any security, (i) any offer by the issuer of such
security or by any other person or entity 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 (ii) any solicitation by the
issuer of such security or any other person or entity to amend, modify or waive
any provision of such security or any related Underlying Instrument.
 
“Officer”: With respect to any corporation or limited liability company,
including the Issuer, the Co-Issuer and the Collateral Manager, any Director,
the Chairman of the Board of Directors, the President, any Senior Vice President
any Vice President, the Secretary, an Assistant Secretary, the Treasurer or an
Assistant Treasurer of such entity; and with respect to the Trustee, any Trust
Officer.
 
“Officer’s Certificate”: With respect to the Issuer, the Co-Issuer and the
Collateral Manager any certificate executed by an Officer thereof, which in the
case of a certification related to the purchase of a Collateral Security may
take the form of a trade ticket, executed by any Officer of the Collateral
Manager.
 
“Opinion of Counsel”: A written opinion addressed to the Trustee and each Rating
Agency in form and substance reasonably satisfactory to the Trustee, each Rating
Agency (and each Hedge Counterparty, if applicable, pursuant to the provisions
below) 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
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 the Trustee and each Rating Agency or
shall state that the Trustee and each Rating Agency shall be entitled to rely
thereon; provided, however, that such Opinion of Counsel shall be addressed to
each Hedge Counterparty (or each Hedge Counterparty may rely on such Opinion of
Counsel) to the extent that such Opinion of Counsel relates to or affects the
interests of each Hedge Counterparty.
 
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“Optional Redemption”: The meaning specified in Section 9.1(c).
 
“Outstanding”: With respect to the Secured Notes, as of any date of
determination, all of the Secured Notes or any Class of Secured Notes, as the
case may be, theretofore authenticated and delivered under this Indenture
except:
 

 
(1)
Secured Notes theretofore canceled by the Notes Registrar or delivered to the
Notes Registrar for cancellation;

 

 
(2)
Secured Notes or portions thereof for whose payment or redemption funds in the
necessary amount have been theretofore irrevocably deposited with the Trustee or
the Paying Agent in trust for the Holders of such Secured Notes pursuant to
Section 4.1(a)(ii); provided, that, if such Secured Notes or portions thereof
are to be redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has been made;

 

 
(3)
Secured Notes in exchange for or in lieu of which other Secured Notes have been
authenticated and delivered pursuant to this Indenture, unless proof
satisfactory to the Trustee is presented that any such Secured Notes are held by
a holder in due course; and

 

 
(4)
Secured Notes alleged to have been mutilated, destroyed, lost or stolen for
which replacement Secured Notes have been issued as provided in Section 2.6;

 
provided, that in determining whether the Holders of the requisite Aggregate
Outstanding Amount have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, (i) Secured Notes owned by the Issuer, the
Co-Issuer or any Affiliate thereof shall be disregarded and deemed not to be
Outstanding and (ii) in relation to any amendment or other modification of, or
assignment or termination of, any of the express rights or obligations of the
Collateral Manager under the Collateral Management Agreement or this Indenture
(including the exercise of any rights to remove the Collateral Manager or
terminate the Collateral Management Agreement or approve or object to a
replacement for the Collateral Manager) or any request, demand, authorization,
direction, notice, consent or waiver pursuant to Article 5 hereunder, Secured
Notes owned by the Collateral Manager or any of its Affiliates, or by any
accounts managed by them, shall be disregarded and deemed not to be Outstanding.
In determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Secured Notes that the Trustee knows to be so owned shall be so disregarded.
Secured Notes so owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee’s right so to act with respect to such Secured Notes and that the
pledgee is not the Issuer, the Collateral Manager or any other obligor upon the
Secured Notes or any Affiliate of the Issuer, the Collateral Manager or such
other obligor.
 
“Overcollateralization Ratio”: Each of the Class A/B Overcollateralization
Ratio, the Class C Overcollateralization Ratio, the Class D
Overcollateralization Ratio and the Class E Overcollateralization Ratio.
 
“Pari Passu Interest”: One or more interests in part of a Credit Tenant Lease
Loan representing an economic interest of the holder of such Pari Passu
Interest, as set forth in the related Participation Agreement.
 
“Participating Institution”: An entity that creates a Participation.
 
“Participation”: One or more interests in part of a Credit Tenant Lease Loan
representing legal ownership of such Credit Tenant Lease Loan and the net
economic interest of the holder of such Participation after giving effect to the
related Pari Passu Interest in such Credit Tenant Lease Loan, as set forth in
the related Participation Agreement.
 
“Participation Agreement”: Any participation agreement that is the Underlying
Instrument with respect to a Participation and the related Pari Passu Interest.
 
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“Paying Agent”: Any Person authorized by the Issuer and the Co-Issuer to pay the
principal of or interest on any Secured Notes on behalf of the Issuer and the
Co-Issuer as specified in Section 7.2 hereof.
 
“Paying and Transfer Agency Agreement”: The Paying and Transfer Agency
Agreement, dated as of the Closing Date, by and between the Issuer and LaSalle
Bank National Association, in its capacity as Preferred Share Paying and
Transfer Agent and Share Registrar, as amended from time to time in accordance
with the terms thereof.
 
“Payment Account”: The payment account of the Trustee in respect of the Secured
Notes established pursuant to Section 10.3 hereof.
 
“Payment Date”: With respect to each Class of Secured Notes and the Preferred
Shares, April 29, 2005, and thereafter quarterly on each July 29, October 29,
January 29 and April 29 (or if such day is not a Business Day, the next
succeeding Business Day) to and including the Stated Maturity related to such
Class or the Preferred Redemption Date, as applicable, unless redeemed or repaid
prior thereto.
 
“Person”: An individual, corporation (including a business trust), partnership,
limited liability company, joint venture, association, joint stock company,
trust (including any beneficiary thereof), unincorporated association or
government or any agency or political subdivision thereof.
 
“PIK Bond”: Any Collateral Security that pursuant to the terms of the related
Underlying Instruments permits the payment of interest thereon to be deferred
and capitalized as additional principal thereof or that issues identical
securities in place of payments of interest in Cash.
 
“Plan Assets”: The meaning specified in Section 2.5(h)(vi).
 
“Pledged Collateral Security”: On any date of determination, any Collateral
Security that has been Granted to the Trustee and not been released from the
lien of this Indenture pursuant to Section 10.8 hereof. Pledged Collateral
Securities are also referred to in this Indenture as Collateral Securities.
 
“Pledged Obligations”: On any date of determination, any Pledged Collateral
Securities and the Eligible Investments that have been Granted to the Trustee
for the benefit of the Noteholders and each Hedge Counterparty and which form
part of the Assets.
 
“Preferred Redemption Date”: The meaning set forth under the Paying and Transfer
Agency Agreement.
 
“Preferred Share Paying and Transfer Agent”: LaSalle Bank National Association,
a national banking association organized and existing under the laws of the
United States of America, as paying and transfer agent with respect to the
Preferred Shares unless a successor Person shall have become the Preferred Share
Paying and Transfer Agent pursuant to the applicable provisions of the Paying
and Transfer Agency Agreement, and thereafter “Preferred Share Paying and
Transfer Agent” shall mean such successor Person.
 
“Preferred Shareholder”: Means a Preferred Shareholder as defined in the Paying
and Transfer Agency Agreement.
 
“Preferred Shares”: Each of the preferred shares with a par value of U.S. $0.001
per share issued on the Closing Date by the Issuer pursuant to the Issuer’s
Governing Documents, the Paying and Transfer Agency Agreement and certain board
resolutions of the Issuer passed prior to the issue of the Preferred Shares.
 
“Preferred Shares Collection Account”: The account established pursuant to
Section 2(b) of the Paying and Transfer Agency Agreement.
 
“Principal Balance” or “par”: With respect to any Collateral Security or
Eligible Investment, as of any date of determination, the outstanding principal
amount of such Collateral Security or Eligible Investment; provided, that
 
(1) the Principal Balance of a Collateral Security received upon acceptance of
an Offer for another Collateral Security, which Offer expressly states that
failure to accept such Offer may result in a default under the Underlying
Instruments, will be deemed to be the Calculation Amount of such other
Collateral Security until such time as Interest Proceeds and Principal Proceeds,
as applicable, are received when due with respect to such other Collateral
Security;
 
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(2) the Principal Balance of any PIK Bond (including any Collateral Security
which by its terms it provides for the deferral and capitalization of interest)
will be equal to the outstanding principal amount thereof (exclusive of any
principal thereof representing deferred or capitalized interest);
 
(3) the Principal Balance of any Eligible Investment that does not pay Cash
interest on a current basis will be the accreted value thereof;
 
(4) the Principal Balance of any Written Down Security will exclude any portion
of the principal balance of such security that (i) has been written down as a
result of a “realized loss,” “collateral support deficit,” “additional trust
fund expense” or other event that under the terms of such security results in a
write-down of principal balance or (ii) would be affected by an appraisal
reduction;
 
(5) the Principal Balance of a Step-Up Security will be the accreted value
thereof;
 
(6) the Principal Balance of a Principal Only Security will be the Aggregate
Amortized Cost; and
 
(7)  the Principal Balance of an Interest-Only Security will be deemed to be
zero.
 
“Principal Collection Account”: The trust account established pursuant to
Section 10.2(a) hereof.
 
“Principal Only Security”: Any Collateral Security (other than a Step-Up
Security) that does not provide for payment of interest or provides that all
payments of interest will be deferred until the final maturity thereof.
 
“Principal Proceeds”: With respect to any Payment Date, the sum (without
duplication) of (1) all principal payments (including prepayments and
Unscheduled Principal Payments) received in cash during the related Collection
Period (excluding those previously reinvested or designated by the Collateral
Manager for reinvestment in Collateral Securities) on (a) Eligible Investments
(other than Eligible Investments purchased with Interest Proceeds, Eligible
Investments in the Expense Account and any amount representing the accreted
portion of a discount from the face amount of an Eligible Investment) and (b)
Collateral Securities as a result of (i) a maturity, scheduled amortization,
mandatory prepayment or mandatory sinking fund payment on a Collateral Security,
(ii) optional redemptions, prepayments, exchange offers or tender offers made at
the option of the issuer thereof, (iii) recoveries on Defaulted Securities or
(iv) any other principal payments with respect to Collateral Securities (not
included in Sale Proceeds), (2) all fees and commissions received during such
Collection Period in connection with Defaulted Securities and Eligible
Investments and the restructuring or default of such Collateral Securities and
Eligible Investments, (3) any interest received in cash during such Collection
Period on such Collateral Securities or Eligible Investments to the extent such
interest constitutes proceeds from accrued interest purchased with Principal
Proceeds other than accrued interest purchased by the Issuer on or prior to the
Closing Date and interest included in clause (1) of the definition of Interest
Proceeds, (4) Sale Proceeds received during such Collection Period in respect of
sales (excluding those previously reinvested or currently being reinvested in
Collateral Securities in accordance with the Transaction Documents and excluding
accrued interest included in Sale Proceeds (unless such accrued interest was
purchased with Principal Proceeds) that are designated by the Collateral Manager
as Interest Proceeds in accordance with clause (1) of the definition of Interest
Proceeds), (5) all Cash payments of interest or dividends received during such
Collection Period on Defaulted Securities, (6) any interest received in cash
during such Collection Period on a Written Down Security to the extent such
interest constitutes accrued interest on the excess of the principal amount of
such Written Down Security over the Principal Balance of such Written Down
Security, (7) any proceeds resulting from (a) the termination (in whole or in
part) of any Hedge Agreement during such Collection Period to the extent such
proceeds are received in cash from the related Hedge Counterparty and, to the
extent such proceeds exceed the cost of entering into a replacement Hedge
Agreement in accordance with the requirements set forth in Section 16.1(a)
hereof, (b) payments received from a replacement Hedge Counterparty to the
extent such proceeds exceed the amount owed to a previous Hedge Counterparty in
connection with the termination of the related Hedge Agreement and (c) all
amounts transferred from each Hedge Termination Account pursuant to Section
16.1(g) hereof; (8) during the Reinvestment Period, the Special Amortization
Amount, if any; (9) unless at the Collateral Manager’s sole discretion such
amounts are designated Interest Proceeds, all payments received in cash by the
Issuer during such Collection Period that represent call, prepayment or
redemption premiums; and (10) all other payments received in connection with the
Collateral Securities and Eligible Investments that are not included in Interest
Proceeds; provided, that in no event will Principal Proceeds include (a) any
proceeds from the Excepted Assets, (b) any amounts reimbursed to the Collateral
Manager pursuant to Section 17.2(b) or (c) amounts otherwise constituting
Principal Proceeds retained by the Servicer to pay its fees, to reimburse itself
for and with respect to other amounts, each as permitted under Section 3.12 of
the Servicing Agreement.
 
“Priority of Payments”: The meaning specified in Section 11.1(a) hereof.
 
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“Proceeding”: Any suit in equity, action at law or other judicial or
administrative proceeding.
 
“Prohibited Obligation”: Means (i) any asset that is treated for U.S. Federal
income tax purposes as an equity interest in a partnership or the ownership of
which would otherwise cause the Issuer to be subject to income tax on a net
income basis in any jurisdiction or (ii) any asset the gain from the disposition
of which would be subject to U.S. Federal income or withholding tax under
Section 897 or Section 1445, respectively, of the Code and the Treasury
Regulations promulgated thereunder or the income in respect of which would be
subject to withholding under Section 1441 or 1446 of the Code and the Treasury
Regulations promulgated thereunder.
 
“Property Type”: Each of the following types of property:
 

 
(i)
“Diversified Properties” means properties used by businesses for diverse
purposes and other similar property interests;

 

 
(ii)
“Healthcare Properties” means hospitals, clinics, sports clubs, spas and other
health care facilities and other similar real property interests used in one or
more similar businesses (but not including medical offices used primarily as
doctors offices);

 

 
(iii)
“Hospitality Properties” means hotels, motels, youth hostels, bed and breakfasts
and other similar real property interests used in one or more similar
businesses;

 

 
(iv)
“Industrial Properties” means factories, refinery plants, breweries and other
similar real property interests used in one or more similar businesses;

 

 
(v)
“Mixed Use Properties” means real estate property used by businesses for diverse
business purposes and any similar property interests;

 

 
(vi)
“Retail Properties” means retail stores, restaurants, bookstores, clothing
stores and other similar real property interests used in one or more similar
businesses;

 

 
(vii)
“Self-Storage Properties” means self-storage facilities and other similar real
property interests used in one or more similar businesses;

 

 
(viii)
“Suburban Office Properties” means office buildings, conference facilities and
other similar real property interests used in the commercial real estate
business in suburban areas;

 

 
(ix)
“Urban Office Properties” means office buildings, conference facilities and
other similar real property interests used in the commercial real estate
business in urban areas;

 

 
(x)
“Warehouse Properties” means warehouse facilities and other similar real
property interests; and

 

 
(xi)
“Other Properties” means any other property other than Diversified Properties,
Hospitality Properties, Industrial Properties, Urban Office Properties, Suburban
Office Properties, Retail Properties, Self-Storage Properties, Healthcare
Properties, Mixed Use Properties or Warehouse Properties.

 
“Proposed Portfolio”: The portfolio of Collateral Securities and Eligible
Investments resulting from the disposition of a Collateral Security or a
proposed reinvestment of Principal Proceeds in a Substitute Collateral Security,
as the case may be.
 
“Purchase Agreement”: The purchase agreement relating to the Class A Notes and
the Class B Notes dated on or about the Closing Date by and among the Issuer,
the Co-Issuer and the Initial Purchaser, as amended from time to time in
accordance with the terms thereof.
 
“PTCE”: The meaning specified in Section 2.5(h)(vi).
 
“QIB”: A qualified institutional buyer within the meaning of Rule 144A.
 
“Qualified Financial Institution”: A financial institution whose long-term
rating is at least equal to, “Baa2” by Moody’s and “BBB+” by S&P, or a
short-term debt rating at least equal to “A-1” or “P-1,” as applicable, and
which has capital and surplus of at least $200,000,000.
 
“Qualified Hedge Party”: A party that:
 
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(a) (i) at the time it becomes a Hedge Counterparty, will have ratings with
respect to itself as an issuer or with respect to its debt obligations by
Moody’s and S&P of at least equal to the requirements set forth in the
definition of “Hedge Counterparty Threshold Rating” for each of Moody’s and S&P
and thereafter will maintain ratings with respect to itself as an issuer or with
respect to its debt obligations;
 
(ii) legally and effectively accepts the rights and obligations of a Hedge
Counterparty in respect of the Hedge Agreement pursuant to a written agreement
reasonably acceptable to the Issuer and the Trustee; and
 
(iii) is a recognized dealer in interest rate swaps organized under the laws of
the United States of America or a jurisdiction located in the United States of
America (or another jurisdiction reasonably acceptable to the Issuer and the
Trustee); or
 
(b) has, with respect to becoming a Hedge Counterparty, satisfied the Rating
Agency Condition.
 
“Qualified Purchaser”: The meaning specified in Section 2(a)(51) of the
Investment Company Act.
 
“Quarterly Asset Amount”: With respect to any Payment Date, an amount equal to
the sum of (a) the Aggregate Principal Balance of all Collateral Securities plus
(b) all amounts in the Principal Collection Account on the day immediately
following the preceding Payment Date.
 
“Rating Agency”: Each of Moody’s and S&P and any successor thereto, or, with
respect to Pledged Obligations generally, if at any time Moody’s or S&P or any
such successor ceases to provide rating services with respect to the Secured
Notes or certificates similar to the Secured Notes any other nationally
recognized investment rating agency selected by the Issuer and reasonably
satisfactory to each Hedge Counterparty and a Majority of the Secured Notes
voting as a single Class.
 
“Rating Agency Condition”: With respect to any proposed action or matter, the
receipt by the Trustee (and receipt by the Servicer of a copy thereof with
respect to any proposed action or matter under or in connection with the
Servicing Agreement) of confirmation in writing from the applicable Rating
Agencies that the then current ratings on the Secured Notes, as applicable,
shall not be reduced, qualified or withdrawn as a result of such action or
matter.
 
“Real Estate Note”: One of two promissory notes that are secured by a single
assignment of the related Credit Tenant Lease and a single first mortgage on
related real property. Pursuant to the related Intercreditor Agreement, the
right of the holder of a Real Estate Note to receive payment of interest,
principal and other expenses with respect to such Corporate Credit Note (other
than in respect of Defaulted Lease Claims) is senior to the right of the holder
of the related Corporate Credit Note to receive payment of interest, principal
and other expenses with respect to such Corporate Credit Note; provided, that
upon the occurrence and during a continuation of a default under the related
Credit Tenant Lease, the holder of the Real Estate Note will have a right to
receive payment of interest, principal and other expenses with respect to
Defaulted Lease Claims that is subordinate to the right of the holder of the
related Corporate Credit Note. The Real Estate Note is secured by the same
single first mortgage and single assignment of the related Credit Tenant Lease
as the Corporate Credit Note.
 
“Record Date”: The date on which the Holders of Secured Notes entitled to
receive a payment in respect of principal or interest on the succeeding Payment
Date are determined, such date as to any Payment Date being the 15th day
(whether or not a Business Day) prior to the applicable Payment Date.
 
“Redemption Date”: Any Payment Date specified for a redemption of the Secured
Notes pursuant to Sections 9.1 or 9.2 hereof.
 
“Redemption Date Statement”: The meaning specified in Section 10.7(j) hereof.
 
“Redemption Price”: The Redemption Price of the Securities will be calculated as
follows:
 
Class A Notes. The redemption price of the Class A Notes will be calculated on
the related Determination Date and will be equal to (A) the Aggregate
Outstanding Amount of the Class A Notes, plus any Class A Defaulted Interest
Amount plus the Class A Interest Distribution Amount for the related Redemption
Date or (B) only in the case of an Optional Redemption, the greater of (i) the
Aggregate Outstanding Amount of the Class A Notes, plus any Class A Defaulted
Interest Amount plus the Class A Interest Distribution Amount for the related
Redemption Date and (ii) the present value of the remaining payments of
principal and interest (including, without limitation, any Class A Defaulted
Interest Amount) on the Class A Notes for the Assumed Weighted Average Life of
the Class A Notes, discounted quarterly at a rate equal to the Discount Rate for
such Class;
 
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Class B Notes. The redemption price of the Class B Notes will be calculated on
the related Determination Date and will be equal to (A) the Aggregate
Outstanding Amount of the Class B Notes, plus any Class B Defaulted Interest
Amount plus the Class B Interest Distribution Amount for the related Redemption
Date or (B) only in the case of an Optional Redemption, the greater of (i) the
Aggregate Outstanding Amount of the Class B Notes, plus any Class B Defaulted
Interest Amount plus the Class B Interest Distribution Amount for the related
Redemption Date and (ii) the present value of the remaining payments of
principal and interest (including, without limitation, any Class B Defaulted
Interest Amount) on the Class B Notes for the Assumed Weighted Average Life of
the Class B Notes, discounted quarterly at a rate equal to the Discount Rate for
such Class;
 
Class C Notes. The redemption price of the Class C Notes will be calculated on
the related Determination Date and will be equal to (A) the Aggregate
Outstanding Amount of the Class C Notes, plus any Class C Capitalized Interest
and any Class C Defaulted Interest Amount plus the Class C Interest Distribution
Amount for the related Redemption Date or (B) only in the case of an Optional
Redemption, the greater of (i) the Aggregate Outstanding Amount of the Class C
Notes, plus any Class C Capitalized Interest and any Class C Defaulted Interest
Amount plus the Class C Interest Distribution Amount for the related Redemption
Date and (ii) the present value of the remaining payments of principal and
interest (including, without limitation, any Class C Capitalized Interest and
Class C Defaulted Interest Amount) on the Class C Notes for the Assumed Weighted
Average Life of the Class C Notes, discounted quarterly at a rate equal to the
Discount Rate for such Class;
 
Class D Notes. The redemption price of the Class D Notes will be calculated on
the related Determination Date and will be equal to (A) the Aggregate
Outstanding Amount of the Class D Notes, plus any Class D Capitalized Interest
and any Class D Defaulted Interest Amount plus the Class D Interest Distribution
Amount for the related Redemption Date or (B) only in the case of an Optional
Redemption, the greater of (i) the Aggregate Outstanding Amount of the Class D
Notes, plus any Class D Capitalized Interest and any Class D Defaulted Interest
Amount plus the Class D Interest Distribution Amount for the related Redemption
Date and (ii) the present value of the remaining payments of principal and
interest (including, without limitation, any Class D Capitalized Interest and
Class D Defaulted Interest Amount) on the Class D Notes for the Assumed Weighted
Average Life of the Class D Notes, discounted quarterly at a rate equal to the
Discount Rate for such Class;
 
Class E Notes. The redemption price of the Class E Notes will be calculated on
the related Determination Date and will be equal to (A) the Aggregate
Outstanding Amount of the Class E Notes, plus any Class E Capitalized Interest
and any Class E Defaulted Interest Amount plus the Class E Interest Distribution
Amount for the related Redemption Date or (B) only in the case of an Optional
Redemption, the greater of (i) the Aggregate Outstanding Amount of the Class E
Notes, plus any Class E Capitalized Interest and any Class E Defaulted Interest
Amount plus the Class E Interest Distribution Amount for the related Redemption
Date and (ii) the present value of the remaining payments of principal and
interest (including, without limitation, any Class E Capitalized Interest and
Class E Defaulted Interest Amount) on the Class E Notes for the Assumed Weighted
Average Life of the Class E Notes, discounted quarterly at a rate equal to the
Discount Rate for such Class;
 
Preferred Shares. The redemption price for the Preferred Shares with respect to
(A) an Optional Redemption or a Tax Redemption or on a Preferred Redemption
Date, will be equal to any available amounts remaining after redemption of the
Secured Notes and payments of all amounts and expenses described under clauses
(1) through (5), (18), (19)(b), (20) and (21) of Section 11.1(a)(i) hereunder;
and (B) a Clean-up Call or an Auction Call Redemption, will be such amount that
will provide the Preferred Shares with an internal rate of return of at least
16% (after giving effect to all other distributions made in respect of the
Preferred Shares).
 
For purposes of calculating the redemption price for the Secured Notes, the
remaining payments of principal and interest on such Secured Notes will be
calculated based on the assumptions that (i) there will be no delinquencies or
defaults on any Collateral Security and (ii) there will be no prepayments on any
Collateral Security.
 
“Reference Banks”: The meaning set forth in Schedule 2 attached hereto.
 
“Registered”: With respect to any debt obligation, a debt obligation that is
issued after July 18, 1984, and that is in registered form for purposes of the
Code.
 
“Regulation S”: Regulation S under the Securities Act.
 
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“Regulation S Global Secured Note”: The meaning specified in Section 2.2(b)(ii)
hereof.
 
“Reimbursement Interest”: Interest accrued on the amount of any Interest Advance
made by the Advancing Agent or the Trustee, as applicable, for so long as it is
outstanding, at a rate per annum equal to the “prime rate” as published in the
“Money Rates” section of the Wall Street Journal, as such “prime rate” may
change from time to time. If the Wall Street Journal ceases to publish the prime
rate, then the Advancing Agent shall select an equivalent publication that
publishes such “prime rate”; and if such “prime rate” is no longer generally
published or is limited, regulated or administered by a governmental or
quasi-governmental body, then the Advancing Agent shall select a comparable
interest rate index. In either case, such selection shall be made by the
Advancing Agent or the Trustee, as applicable, in its sole discretion.
 
“Reinvestment Period”: The period beginning on the Closing Date and ending on
and including the earlier to occur of: (i) the Determination Date related to the
Payment Date in October 2009; (ii) the Determination Date related to the Payment
Date on which all of the Secured Notes are redeemed as described herein under
Sections 9.1(a) and 9.1(b); and (iii) the occurrence of an Event of Default
which is neither cured nor waived.
 
“REIT”: A real estate investment trust, as defined in Section 856 of the Code or
any successor provision.
 
“REIT Debt Securities”: Any unsecured debt securities issued by real estate
investment trusts (as defined in Section 856 of the Code or any successor
provision).
 
“Repository”: 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.”
 
“Repurchase Price”: The meaning specified in the Collateral Purchase Agreement
or a Substitute Collateral Securities Purchase Agreement, as applicable.
 
“Rule 144A”: Rule 144A under the Securities Act.
 
“Rule 144A Global Secured Note”: The meaning specified in Section 2.2(b)(i)
hereof.
 
“Rule 144A Information”: The meaning specified in Section 7.13 hereof.
 
“Sale”: The meaning specified in Section 5.17(a) hereof.
 
“Sale Proceeds”: On any date, the balance of (a) all proceeds (excluding accrued
interest) which are not otherwise included in the definition of Interest
Proceeds received during the related Collection Period in U.S. dollars with
respect to the Assets as a result of sales or other dispositions of the Assets
less (b) any reasonable amounts expended by the Collateral Manager or the
Trustee (other than amounts payable as Company Administrative Expenses) in
connection with such sales or other dispositions.
 
“S&P”: Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and its successors in interest.
 
“S&P CDO Monitor”: A dynamic, analytical computer model provided prior to the
Closing Date by S&P to the Collateral Manager and the Trustee, with written
instructions and assumptions to be applied when running such computer model, for
the purpose of estimating the default risk of a pool of Collateral Securities.
 
“S&P CDO Monitor Test”: A test that will (a) be deemed satisfied on any date
prior to receipt by the Collateral Manager of an S&P CDO Monitor from S&P and
(b) thereafter will be satisfied if, after giving effect to the sale of a
Collateral Security or the purchase of a Substitute Collateral Security, as the
case may be (or both), the Class A Loss Differential, the Class B Loss
Differential, the Class C Loss Differential, the Class D Loss Differential and
the Class E Loss Differential of the Proposed Portfolio are each greater than or
equal to zero. The S&P CDO Monitor Test will be considered to be improved if (a)
the Class A Loss Differential of the Proposed Portfolio is greater than the
Class A Loss Differential of the Current Portfolio, (b) the Class B Loss
Differential of the Proposed Portfolio is greater than the Class B Loss
Differential of the Current Portfolio, (c) the Class C Loss Differential of the
Proposed Portfolio is greater than the Class C Loss Differential of the Current
Portfolio, (d) the Class D Loss Differential of the Proposed Portfolio is
greater than the Class D Loss Differential of the Current Portfolio or (e) the
Class E Loss Differential of the Proposed Portfolio is greater than the Class E
Loss Differential of the Current Portfolio.
 
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“S&P Rating”: Of any Collateral Security will be determined as follows:
 
(a) if S&P has assigned a rating to such Collateral Security either publicly or
privately (in the case of a private rating, with the appropriate consents for
the use of such private rating), the S&P Rating shall be the rating assigned
thereto by S&P (or, in the case of a REIT Debt Security, the issuer credit
rating assigned by S&P), provided, that, notwithstanding the foregoing, if any
Collateral Security shall, at the time of its purchase by the Issuer, be listed
for a possible upgrade or downgrade on S&P’s then current credit rating watch
list, then the S&P Rating of such Collateral 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 Security is removed from such list
at any time, it shall be deemed to have its actual rating by S&P;
 
(b) if such Collateral 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 Security, the S&P Rating shall be the rating so
assigned by S&P; provided, that pending receipt from S&P of such rating, if such
Collateral Security is of a type listed on Schedule 8 hereto or is not eligible
for notching in accordance with Schedule 9 hereto, such Collateral Security
shall have an S&P Rating of “CCC-”, otherwise such S&P Rating shall be the
rating assigned according to Schedule D hereto until such time as S&P shall have
assigned a rating thereto; or
 
(c) if any Collateral Security is a Collateral Security that has not been
assigned a rating by S&P and is not a Collateral Security listed in Schedule 8
hereto, as identified by the Collateral Manager, the S&P Rating shall be the
rating assigned according to Schedule 9 hereto; provided, that if any Collateral
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 Security shall be one
subcategory above or below, respectively, the rating then assigned to such item
in accordance with Schedule 9 hereto; provided, further, that the Aggregate
Principal Balance that may be given a rating based on this paragraph (c) may not
exceed 20% of the Aggregate Principal Balance of all Collateral Securities;
 
provided, however, that, with respect to any Collateral Security that is a
Credit Tenant Lease Loan or Corporate Credit Note, if the senior unsecured or
other applicable public rating assigned by S&P to the related Credit Tenant has
changed, then the rating assigned by S&P may be revised by S&P at any time or
upon the request of the Collateral Manager.
 
“S&P Recovery Rate”: With respect to any Collateral Security on any Measurement
Date, an amount equal to the percentage for such Collateral Security set forth
in Schedule 7 (the S&P Recovery Matrix) hereto based on the S&P Rating at the
time of origination of such Collateral Security and the rating of the most
senior Class of Secured Notes outstanding on such Measurement Date.
 
“S&P Recovery Test”: Means a test that will be satisfied on any Measurement
Date, if the S&P Weighted Average Recovery Rate based upon the Principal Balance
of the Collateral Securities is equal or greater than (a) 41.6%, with respect to
the Class A Notes, (b) 42.0%, with respect to the Class B Notes, (c) 42.3%, with
respect to the Class C Notes, (d) 43.4%, with respect to the Class D Notes and
(e) 43.4%, with respect to the Class E Notes.
 
“S&P Weighted Average Recovery Rate”: With respect to the Collateral Securities,
as of any Measurement Date, the number obtained by summing the products obtained
by multiplying the Principal Balance of each Collateral Security, other than a
Defaulted Security, by its S&P Recovery Rate, dividing such sum by the Aggregate
Principal Balance of all such Collateral Securities and rounding up to the first
decimal place.
 
“Schedule of Collateral Securities”: The Collateral Securities listed on
Schedule 1 hereto, which shall include the following items for each Collateral
Security:
 

 
(a)
the issuer and the class of securities;

 

 
(b)
the Bloomberg identification or the CUSIP number, if applicable;

 

 
(c)
the Principal Balance or notional balance (as of the Closing Date);

 

 
(d)
the coupon rate or spread and relevant floating reference rate;

 

 
(e)
the legal maturity; and

 

 
(f)
the Moody’s Rating and the S&P Rating (provided, that if such S&P Rating is not
a public rating, such S&P Rating shall not be included);

 
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as amended from time to time to reflect the release of Collateral Securities
pursuant to Article 10 hereof.
 
“Scheduled Distribution”: With respect to any Pledged Obligation, for each Due
Date, the scheduled payment of principal, interest or fee or any dividend or
premium payment due on such Due Date or any other distribution with respect to
such Pledged Obligation, determined in accordance with the assumptions specified
in Section 1.2.
 
“Secured Notes” or “Notes”: The Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes and the Class E Notes, collectively, authorized by, and
authenticated and delivered under, this Indenture or any supplemental indenture.
 
“Secured Note Liquidation Event”: The meaning specified in Section 12.1(e).
 
“Securities”: The Secured Notes and the Preferred Shares, collectively.
 
“Securities Account”: The meaning specified in Section 3.3(a) herein.
 
“Securities Act”: The Securities Act of 1933, as amended.
 
“Securities Intermediary”: The meaning specified in Section 8-102(a)(14) of the
UCC.
 
“Security Entitlement”: The meaning specified in Section 8-102(a)(17) of the
UCC.
 
“Securityholder”: A holder of Secured Notes under the Indenture or Preferred
Shares under the Paying and Transfer Agency Agreement, as the case may be.
 
“Seller”: Caplease, LP, as the seller under the Collateral Purchase Agreement.
 
“Senior Collateral Management Fee”: The fee payable quarterly in arrears on each
Payment Date to the Collateral Manager pursuant to this Indenture and the
Collateral Management Agreement, equal to 0.10% per annum of the Quarterly Asset
Amount for such Payment Date, to the extent funds are available for such purpose
in accordance with the Priority of Payments.
 
“Senior Securitization”: The securitization transaction, if any, in which the
Senior Interest related to Collateral Securities that are Loans have been
included.
 
“Senior Interest”: With respect to a Corporate Credit Note, the related Real
Estate Note and, with respect to a B-Note, the related A-Note.
 
“Servicer”: Wachovia Bank, National Association, as servicer under the Servicing
Agreement, and each of its permitted successors and assigns, or any successor
Person that shall have become the Servicer pursuant to the provisions of the
Servicing Agreement and thereafter “Servicer ” shall mean such successor Person.
 
“Servicing Agreement”: The Servicing Agreement, dated as of the Closing Date,
between the Issuer and Wachovia Bank, as servicer, as amended from time to time
in accordance with the terms thereof.
 
“Similar Law”: The meaning specified in Section 2.5(h)(vi).
 
“Special Amortization”: The meaning specified in Section 9.7.
 
“Special Amortization Amount”: The meaning specified in Section 9.7.
 
“Special Amortization Pro Rata Condition”: Means with respect to any Payment
Date that either:
 
(A) (I)(x) the Aggregate Principal Balance of the Collateral Securities as of
the related Determination Date is at least equal to 50% of the Aggregate
Principal Balance of the Collateral Securities on the Closing Date and (y) the
S&P CDO Monitor Test has been satisfied and (II) the Collateral Quality Test
(except the items specified in clauses (xv), (xvi) and (xviii) of the definition
thereof) is satisfied, or
 
(B) (I) if clause (A)(I) above is not satisfied, the Rating Agency Condition has
been satisfied with respect to S&P and (II) if clause (A)(II) above is not
satisfied, the Rating Agency Condition has been satisfied with respect to
Moody’s, in each case, with respect to the pro rata payment of principal of the
Secured Notes.
 
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“Specified Person”: The meaning specified in Section 2.6 hereof.
 
“Specified Type”: A Loan, CMBS Security, REIT Debt Security or CRE CDO Security.
 
“Spread Excess”: 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
Measurement Date over the percentage indicated below for the applicable year in
which the Measurement Date occurs and (b) the Aggregate Principal Balance of all
Collateral Securities that are Floating Rate Securities (excluding all Defaulted
Securities and Written Down Securities) and the denominator of which is the
Aggregate Principal Balance of all Collateral Securities that are Fixed Rate
Securities (excluding all Defaulted Securities and Written Down Securities),
multiplying the resulting figure by 365 and then dividing by 360:
 
Year
Percentage
2005
2.50%
2006
2.25%
2007 and
thereafter
2.00%
 

 
“Stated Maturity”: With respect to any Collateral Security, the maturity date
specified in such security or applicable Underlying Instrument; with respect to
the Secured Notes, the Payment Date in January 2040.
 
“Step-Down Bond”: A security which by the terms of the related Underlying
Instruments provides for a decrease, in the case of a Fixed Rate Security, in
the per annum interest rate on such security or, in the case of a Floating Rate
Security, in the spread over the applicable index or benchmark rate, solely as a
function of the passage of time; provided, that a Step-Down Bond shall not
include any such security providing for payment of a constant rate of interest
at all times after the date of acquisition by the Issuer. In calculating any
Collateral Quality Test by reference to the spread (in the case of a floating
rate Step-Down Bond) or coupon (in the case of a fixed rate Step-Down Bond) of a
Step-Down Bond, the spread or coupon on any date shall be deemed to be the
lowest spread or coupon, respectively, scheduled to apply to such Step-Down Bond
on or after such date.
 
“Step-Up Security”: A security with a current interest rate of zero percent per
annum at the time of purchase but which increases to predetermined levels on
specific dates.
 
“Subordinate Collateral Management Fee”: The fee payable quarterly in arrears on
each Payment Date, to the Collateral Manager pursuant to this Indenture and the
Collateral Management Agreement, equal to 0.10% per annum of the Quarterly Asset
Amount for such Payment Date, to the extent funds are available for such purpose
in accordance with the Priority of Payments.
 
“Subordinate Interests”: Each of the Class B Subordinate Interests, the Class C
Subordinate Interests, the Class D Subordinate Interests and the Class E
Subordinate Interests, as specified in Section 13.1(a), (b), (c) or (d) hereof,
respectively.
 
“Subpool”: The meaning specified in Section 12.5(a)(ii) hereof.
 
“Subscription Agreement”: The subscription agreement relating to the Class C
Notes, the Class D Notes, the Class E Notes and the Preferred Shares dated on or
about the Closing Date by and among the Issuer, the Co-Issuer and EVA LLC, a
Delaware limited liability company, as amended from time to time in accordance
with the terms thereof.
 
“Subsequent Loan”: Any Loan that is not an Initial Loan.
 
“Substitute Collateral Securities”: A Collateral Security that is acquired in
substitution for Collateral Securities previously pledged to the Trustee in
accordance herewith.
 
“Substitute Collateral Securities Purchase Agreement”: Any purchase agreement
entered into between the Issuer and a seller from time to time during the
Reinvestment Period with respect to the purchase of Eligible Substitute
Collateral Securities by the Issuer from such seller, as amended from time to
time in accordance with the terms thereof, which terms are substantially similar
to the terms of the Collateral Purchase Agreement with respect to
representations, warranties and covenants, remedies and Rating Agency Condition
requirements.
 
“Successful Auction”: An Auction which is conducted in accordance with Section
9.2(b).
 
“Tax Materiality Condition”: The condition that will be satisfied if the
aggregate amount deducted or withheld by all obligors from any payment under any
Collateral Securities during any 12-month period (net of any gross-up payment
made by such obligor to the Issuer) exceeds U.S. $1,000,000.
 
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“Tax Redemption”: The meaning specified in Section 9.1(b) hereof.
 
“Tenant Bankruptcy”: Either (i) the entry of a decree or order by a court having
competent jurisdiction adjudging a tenant with respect to a Credit Tenant Lease
as bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of such
person under the Bankruptcy Code or any other applicable law, or appointing a
receiver, liquidator, assignee, or sequestrator (or other similar official) of
such person or of any substantial part of its property, respectively, or
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 60 consecutive
days or (ii) the institution by such person 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 such person 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 such
person in furtherance of any such action.
 
“Total Redemption Price”: The amount equal to funds sufficient pay all amounts
and expenses described under clauses (1) through (5), (18), (19)(b), (20) and
(21) of Section 11.1(a)(i) and to redeem all Secured Notes and the Preferred
Shares at their applicable Redemption Prices.
 
“Transaction Documents”: This Indenture, the Collateral Management Agreement,
the Collateral Purchase Agreement, the Servicing Agreement, the Custodial
Agreement, the Purchase Agreement, the Subscription Agreement, the Paying and
Transfer Agency Agreement, the Substitute Collateral Securities Purchase
Agreements (if any) and the Hedge Agreements.
 
“Transfer Agent”: The Person or Persons, which may be the Issuer, authorized by
the Issuer to exchange or register the transfer of Secured Notes.
 
“Treasury Rate”: With respect to a Class of Secured Notes, a yield per annum
equal to the sum of (i) the yield to maturity of the comparable treasury
security based on the remaining Assumed Weighted Average Life of such Class plus
(ii) the Treasury Spread for such Class.
 
“Treasury Regulations”: Temporary or final regulations promulgated under the
Code by the United States Treasury Department.
 
“Treasury Security”: A U.S. Treasury security, which may or may not bear
interest.
 
“Treasury Spread”: With respect to each Class of Secured Notes, 0.25%.
 
“Trust Officer”: When used with respect to the Trustee, any officer within the
CDO Trust Services Group of the Corporate Trust Office (or any successor group
of the Trustee) including any vice president, assistant vice president or
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 his knowledge of and familiarity
with the particular subject.
 
“Trustee”: LaSalle Bank National Association, a national banking association
organized and existing under the laws of the United States of America, unless a
successor Person shall have become the Trustee pursuant to the applicable
provisions of this Indenture, and thereafter “Trustee” shall mean such successor
Person.
 
“Trustee Fee Proposal”: The letter dated as of January 3, 2005, from the Trustee
and the Preferred Share Paying and Transfer Agent to Wachovia Securities.
 
“UCC”: The applicable Uniform Commercial Code.
 
“Uncertificated Security”: An “uncertificated security” as defined in Section
8-102(a)(18) of the UCC.
 
“Underlying Instruments”: The indenture, pooling and servicing agreement,
intercreditor agreement, participation agreement or other agreement pursuant to
which a Collateral Security or Eligible Investment has been issued or created
and each other agreement that governs the terms of or secures the obligations
represented by such Collateral Security or Eligible Investment or of which
holders of such Collateral Security or Eligible Investment are the
beneficiaries.
 
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“Underlying Mortgage Property”: The commercial mortgage property or properties
securing a Loan or the commercial mortgage property or properties securing the
Underlying Term Loan, as applicable.
 
“Underlying Series”: With respect to each Collateral Security that is a CMBS,
the related series of commercial mortgage-backed certificates of which the CMBS
is a part.
 
“Underlying Term Loan”: A Loan or an underlying commercial mortgage loan, as
applicable.
 
“United States”: The United States of America, including any state and any
territory or possession administered thereby.
 
“Unregistered Securities”: The meaning specified in Section 5.17(c) hereof.
 
“Unscheduled Principal Payments”: Any proceeds received in cash by the Issuer
from an unscheduled prepayment or redemption (in whole but not in part) by the
obligor of a Loan or REIT Debt Security prior to the stated maturity date of
such Collateral Security.
 
“U.S. Person”: A “U.S. person” as defined in Rule 902 of Regulation S.
 
“Wachovia Bank”: Wachovia Bank, National Association or its successors and
assigns.
 
“Wachovia Securities”: Wachovia Capital Markets, LLC or its successors and
assigns.
 
“Weighted Average Coupon”: As of any Measurement Date, (a) the number obtained
(rounded up to the next 0.01%) by (i) summing the products obtained by
multiplying (x) the current interest rate on each Collateral Security that is a
Fixed Rate Security (excluding all Defaulted Securities and Written Down
Securities) by (y) the Principal Balance of each such Collateral Security and
(ii) dividing such sum by the Aggregate Principal Balance of all Collateral
Securities that are Fixed Rate Securities (excluding all Defaulted Securities
and Written Down Securities) plus (b) if the amount obtained pursuant to clause
(a) is less than 6.30%, the Spread Excess, if any, as of such Measurement Date.
 
“Weighted Average Life”: As of any Measurement Date with respect to the
Collateral Securities (other than Defaulted Securities), the number obtained by
(i) summing the products obtained by multiplying (a) the Average Life at such
time of each Collateral Security (other than Defaulted Securities) by (b) the
outstanding Principal Balance of such Collateral Security and (ii) dividing such
sum by the Aggregate Principal Balance at such time of all Collateral Securities
(other than Defaulted Securities).
 
“Weighted Average Life Test”: With respect to the Collateral Securities, a test
that will be satisfied as of any Measurement Date (a) during any period during
the Reinvestment Period if the Weighted Average Life of such Collateral
Securities as of such Measurement Date is less than or equal to an amount,
starting in the first year of the Reinvestment Period, equal to 14 years and
decreasing by 0.6 years for each subsequent year of the Reinvestment Period and
(b) during the period after the Reinvestment Period, if the Weighted Average
Life of such Collateral Securities as of such Measurement Date is less than or
equal to 11 years.
 
“Weighted Average Moody’s Rating Factor”: The amount determined by summing the
products obtained by multiplying the Principal Balance of each Collateral
Security (excluding Defaulted Securities) by its Moody’s Rating Factor, dividing
such sum by the Aggregate Principal Balance of all such obligations and rounding
the result up to the nearest whole number.
 
“Weighted Average Spread”: As of any Measurement Date, (a) the number obtained
(rounded up to the next 0.01%), by (i) summing the products obtained by
multiplying (x) the stated spread above LIBOR at which interest accrues on each
Collateral Security that is a Floating Rate Security (other than a Defaulted
Security or Written Down Security) as of such date by (y) the Principal Balance
of such Collateral Security as of such date, and (ii) dividing such sum by the
Aggregate Principal Balance of all Collateral Securities that are Floating Rate
Securities (excluding all Defaulted Securities and Written Down Securities) plus
(b) if the amount obtained pursuant to clause (a) is less than the percentage
indicated below for the applicable year in which the Measurement Date occurs,
the Fixed Rate Excess, if any, as of such Measurement Date:
 
Year
Percentage
2005
2.50%
2006
2.25%
2007 and
thereafter
2.00%
 

 
“Withholding Tax Event”: A new, or a change in any, U.S. or foreign tax statute,
treaty, regulation, rule, ruling, practice, procedure or judicial decision or
interpretation which results in any portion of any payment due from any issuer
under any Collateral 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 Securities, and
such a tax or taxes amount, in the aggregate, to three percent or more of the
aggregate interest payments received on all of the Collateral Securities during
the related Collection Period.
 
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“Written Down Security”: As of any date of determination, any Collateral
Security as to which the aggregate par amount of the entire issue of such
Collateral Security and all other securities secured by the same pool of
collateral and that rank senior in priority of payment to such issue exceeds the
aggregate par amount of all collateral (giving effect to any appraisal
reductions) securing such issue (excluding defaulted collateral).
 
Section 1.2. Assumptions as to Pledged Obligations.
 
(a) In connection with all calculations required to be made pursuant to this
Indenture with respect to Scheduled Distributions on any Pledged Obligation, or
any payments on any other assets included in the Assets, and with respect to the
income that can be earned on Scheduled Distributions on such Pledged Obligations
and on any other amounts that may be received for deposit in the applicable
Collection Account, the provisions set forth in this Section 1.2 shall be
applied.
 
(b) All calculations with respect to Scheduled Distributions on the Pledged
Obligations securing the Secured Notes shall be made on the basis of information
as to the terms of each such Pledged Obligation and upon report of payments, if
any, received on such Pledged Obligation that are furnished by or on behalf of
the issuer of such Pledged Obligation and, to the extent they are not manifestly
in error, such information or report may be conclusively relied upon in making
such calculations.
 
(c) For each Collection Period, the Scheduled Distribution on any Pledged
Obligation (other than a Defaulted Security, which, except as otherwise provided
herein, shall be assumed to have a Scheduled Distribution of zero) shall be the
sum of (i) the total amount of payments and collections in respect of such
Pledged Obligation (including all Sales Proceeds received during the Collection
Period and not reinvested in Substitute Collateral Securities or retained in the
Principal Collection Account for subsequent reinvestment) that, if paid as
scheduled, will be available in the Collection Accounts at the end of such
Collection Period for payment on the Secured Notes and of expenses of the Issuer
and the Co-Issuer pursuant to the Priority of Payments and (ii) any such amounts
received in prior Collection Periods that were not disbursed on a previous
Payment Date and do not constitute amounts which have been used as reimbursement
with respect to a prior Interest Advance pursuant to the terms of this
Indenture.
 
(d) With respect to any Collateral Security as to which any interest or other
payment thereon is subject to withholding tax of any relevant jurisdiction, each
Scheduled Distribution thereon shall, for purposes of the Coverage Tests and the
Collateral Quality Tests, be deemed to be payable net of such withholding tax
unless the issuer thereof or obligor thereon is required to make additional
payments to fully compensate the Issuer for such withholding taxes (including in
respect of any such additional payments). 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.
 
(e) For purposes of calculating any Interest Coverage Ratio, the expected
interest income on floating rate Collateral Securities and Eligible Investments
and under each Hedge Agreement and the expected interest payable on the Secured
Notes shall be calculated using the (i) interest rates applicable thereto on the
applicable Measurement Date and (ii) accrued original issue discount on Eligible
Investments shall be deemed to be Scheduled Distributions of interest due on the
date such original issue discount is scheduled to be paid. Notwithstanding the
foregoing, for the purposes of calculating any Interest Coverage Ratio, there
shall be excluded all scheduled or deferred payments of interest on or principal
of Collateral Securities and any payment, including any amount payable to the
Issuer by each Hedge Counterparty, as to which the Collateral Manager has
determined in its reasonable judgment shall not be made in cash or received when
due.
 
(f) Each Scheduled Distribution receivable with respect to a Pledged Obligation
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
applicable Collection Account except to the extent the Collateral Manager has a
reasonable expectation that such Scheduled Distribution will not be received on
the applicable Due Date. All such funds shall be assumed to continue to earn
interest until the date on which they are required to be available in the
applicable Collection Account for transfer to the Payment Account for
application, in accordance with the terms hereof, to payments of principal of or
interest on the Secured Notes or other amounts payable pursuant to this
Indenture.
 
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(g) All calculations required to be made and all reports which are to be
prepared pursuant to this Indenture with respect to the Pledged Obligations,
shall be made on the basis of the date on which the Issuer makes a commitment to
purchase or sell an asset (the “trade date”), not the settlement date.
 
(h) For the purpose of determining any payment to be made on any Payment Date
pursuant to any applicable paragraph of Section 11.1(a), any Coverage Test
referred to in such paragraph shall be calculated as of the relevant Payment
Date after giving effect to all payments to be made on such Payment Date prior
to such payment in accordance with Section 11.1(a). In addition, for purposes of
determining whether any Interest Coverage Test is satisfied pursuant to Section
11.1(a)(i), if a payment of principal on any Class of Secured Notes is to be
made at the same level or at a more senior level in the priority of payments set
forth in Section 11.1(a)(ii), then the related Interest Coverage Ratio shall be
calculated on a pro forma basis on the assumption that (i) such payment of
principal had been made on the immediately preceding Payment Date and (ii) the
Interest Distributable Amount for such Class of Secured Notes for the current
Payment Date was correspondingly reduced to reflect the lower Aggregate
Outstanding Amount of such Class of Secured Notes.
 
(i) For purposes of calculating the Overcollateralization Ratio, an appraisal
reduction of a Collateral Security will be assumed to result in an implied
reduction of principal balance for such Collateral Security only if such
appraisal reduction is intended to reduce the interest payable on such
Collateral Security and only in proportion to such interest reduction. For
purposes of the Overcollateralization Ratio, any Collateral Security that has
sustained an implied reduction of principal balance due to an appraisal
reduction will not be considered a Defaulted Security solely due to such implied
reduction. The Collateral Manager will notify the Trustee and S&P of any
appraisal reductions of Collateral Securities if the Collateral Manager has
actual knowledge thereof.
 
Section 1.3. Interest Calculation Convention.
 
All calculations of interest hereunder that are made with respect to the Secured
Notes shall be made on the basis of a 360-day year of twelve 30-day months.
 
Section 1.4. Rounding Convention.
 
Unless otherwise specified herein, test calculations that evaluate to a
percentage will be rounded to the nearest hundredth of a percentage point  and
test calculations that evaluate to a number or decimal will be rounded to the
nearest one hundredth of a percentage point.
 
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ARTICLE 2

 
THE SECURED NOTES
 
Section 2.1. Forms Generally.
 
The Secured Notes and the Trustee’s or Authenticating Agent’s certificate of
authentication thereon (the “Certificate of Authentication”) shall be in
substantially the forms required by this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon, as may be
consistent herewith, determined by the Authorized Officers of the Issuer and the
Co-Issuer executing such Secured Notes as evidenced by their execution of such
Secured Notes. Any portion of the text of any Secured Note may be set forth on
the reverse thereof, with an appropriate reference thereto on the face of the
Secured Note.
 
Section 2.2. Forms of Secured Notes and Certificate of Authentication.
 
(a) Form. The form of each of the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes and the Class E Notes, including the Certificate of
Authentication, shall be substantially as set forth in Exhibits A, B, C, D and E
hereto.
 
(b) Global Securities.
 
(i) Rule 144A Global Secured Notes. The Secured Notes offered and sold to U.S.
Persons (that are QIBs and Qualified Purchasers) in reliance on the exemption
from registration under Rule 144A under the Securities Act (except for any sale
directly from the Issuer) shall be issued initially in the form of one or more
permanent global notes in definitive, fully registered form without interest
coupons with the applicable legends set forth in Exhibits A, B, C, D and E
hereto, as applicable, added to the form of such Secured Notes (each, a “Rule
144A Global Secured Note”), which shall be registered in the name of the nominee
of the Depository and deposited with the Trustee, at its Corporate Trust Office,
as custodian for the Depository, duly executed by the Issuer and the Co-Issuer
and authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of the Rule 144A Global Secured Notes may from time to time be
increased or decreased by adjustments made on the records of the Trustee or the
Depository or its nominee, as the case may be, as hereinafter provided.
 
(ii) Regulation S Global Secured Notes. The Secured Notes sold in offshore
transactions in reliance on Regulation S under the Securities Act shall be
issued initially in the form of one or more permanent global notes in
definitive, fully registered form without interest coupons with the applicable
legends set forth in Exhibits A, B, C, D and E hereto, as applicable, added to
the form of such Secured Notes (each, a “Regulation S Global Secured Note”),
which shall be deposited on behalf of the subscribers for such Secured Notes
represented thereby with the Trustee as custodian for the Depository and
registered in the name of a nominee of the Depository for the respective
accounts of Euroclear and Clearstream, Luxembourg or their respective
depositories, duly executed by the Issuer and the Co-Issuer and authenticated by
the Trustee as hereinafter provided. The aggregate principal amount of the
Regulation S Global Secured Notes may from time to time be increased or
decreased by adjustments made on the records of the Trustee or the Depository or
its nominee, as the case may be, as hereinafter provided.
 
(c) Book-Entry Provisions. This Section 2.2(c) shall apply only to Global
Securities deposited with or on behalf of the Depository.
 
Each of the Issuer and Co-Issuer shall execute and the Trustee shall, in
accordance with this Section 2.2(c), authenticate and deliver initially one or
more Global Securities that (i) shall be registered in the name of the nominee
of the Depository for such Global Security or Global Securities and (ii) shall
be delivered by the Trustee to such Depository or pursuant to such Depository’s
instructions or held by the Trustee’s agent as custodian for the Depository.
 
Agent Members shall have no rights under this Indenture with respect to any
Global Security held on their behalf by the Trustee, as custodian for the
Depository or under the Global Security, and the Depository may be treated by
the Issuer, the Co-Issuer, the Trustee, and any agent of the Issuer, the
Co-Issuer or the Trustee as the absolute owner of such Global Secured Note for
all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Issuer, the Co-Issuer, the Trustee, or any agent of the Issuer, the
Co-Issuer or the Trustee, from giving effect to any written certification, proxy
or other authorization furnished by the Depository or impair, as between the
Depository and its Agent Members, the operation of customary practices governing
the exercise of the rights of a holder of any Global Security.
 
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(d) Delivery of Secured Notes in the form of a Definitive Security in lieu of
Global Securities. Except as provided in Section 2.10 hereof, owners of
beneficial interests in a Class of Global Securities shall not be entitled to
receive physical delivery of a Secured Note in the form of a definitive, fully
registered security in physical form without interest coupons (“Definitive
Securities”) representing such Class of Global Securities.
 
Section 2.3. Authorized Amount; Stated Maturity; and Denominations.
 
The aggregate principal amount of Secured Notes that may be authenticated and
delivered under this Indenture is limited to $285,000,000, except for Secured
Notes authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Secured Notes pursuant to Sections 2.5, 2.6
or 8.5 hereof.
 
Such Secured Notes shall be divided into 5 Classes having designations and
original principal amounts as follows:
 
Designation
 
Original Principal Amount
 
Class A Senior Secured Fixed Rate
Term Notes, Due 2040
 
$
252,000,000
 
Class B Second Priority Fixed Rate
Term Notes, Due 2040
 
$
16,500,000
 
Class C Third Priority Fixed Rate
Term Notes, Due 2040
 
$
9,000,000
 
Class D Fourth Priority Fixed Rate
Term Notes, Due 2040
 
$
4,500,000
 
Class E Fifth Priority Fixed Rate
Term Notes, Due 2040
 
$
3,000,000
 

The Secured Notes shall be issuable in minimum denominations of $150,000 and
integral multiples of $1,000 in excess thereof (plus any residual amount).
 
Section 2.4. Execution, Authentication, Delivery and Dating.
 
The Secured Notes shall be executed on behalf of the Issuer and the Co-Issuer by
an Authorized Officer of the Issuer and the Co-Issuer, respectively. The
signature of such Authorized Officers on the Secured Notes may be manual or
facsimile.
 
Secured Notes bearing the manual or facsimile signatures of individuals who were
at any time the Authorized Officers of the Issuer or the Co-Issuer shall bind
the Issuer or the Co-Issuer, as the case may be, notwithstanding the fact that
such individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Secured Notes or did not hold such offices
at the date of issuance of such Secured Notes.
 
At any time and from time to time after the execution and delivery of this
Indenture, the Issuer and the Co-Issuer may deliver Secured Notes executed by
the Issuer and the Co-Issuer to the Trustee or the Authenticating Agent for
authentication and the Trustee or the Authenticating Agent, upon Issuer Order,
shall authenticate and deliver such Secured Notes as provided in this Indenture
and not otherwise.
 
Each Secured Note authenticated and delivered by the Trustee or the
Authenticating Agent upon Issuer Order on the Closing Date shall be dated as of
the Closing Date. All other Secured Notes that are authenticated after the
Closing Date for any other purpose under this Indenture shall be dated the date
of their authentication.
 
Secured Notes issued upon transfer, exchange or replacement of other Secured
Notes shall be issued in authorized denominations reflecting the original
aggregate principal amount of the Secured Notes so transferred, exchanged or
replaced, but shall represent only the current outstanding principal amount of
the Secured Notes so transferred, exchanged or replaced. In the event that any
Secured Note is divided into more than one Secured Note in accordance with this
Article 2, the original principal amount of such Secured Note shall be
proportionately divided among the Secured Notes delivered in exchange therefor
and shall be deemed to be the original aggregate principal amount of such
subsequently issued Secured Notes.
 
No Secured Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Secured Note a
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 Secured Note
shall be conclusive evidence, and the only evidence, that such Secured Note has
been duly authenticated and delivered hereunder.
 
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Section 2.5. Registration, Registration of Transfer and Exchange.
 
(a) The Issuer and the Co-Issuer shall cause to be kept a register (the “Notes
Register”) in which, subject to such reasonable regulations as it may prescribe,
the Issuer and the Co-Issuer shall provide for the registration of Secured Notes
and the registration of transfers of Secured Notes. The Trustee is hereby
initially appointed “Notes Registrar” for the purpose of registering Secured
Notes and transfers of such Secured Notes with respect to any duplicate copy of
the Notes Register kept in the United States as herein provided. Upon any
resignation or removal of the Notes Registrar, the Issuer and the Co-Issuer
shall promptly appoint a successor or, in the absence of such appointment,
assume the duties of Notes Registrar.
 
If a Person other than the Trustee is appointed by the Issuer and the Co-Issuer
as Notes Registrar, the Issuer and the Co-Issuer shall give the Trustee prompt
written notice of the appointment of a Notes Registrar and of the location, and
any change in the location, of the Notes Registrar, and the Trustee shall have
the right to inspect the Notes Register at all reasonable times and to obtain
copies thereof and the Trustee shall have the right to rely upon a certificate
executed on behalf of the Notes Registrar by an Officer thereof as to the names
and addresses of the Holders of the Secured Notes and the principal amounts and
numbers of such Secured Notes.
 
Subject to this Section 2.5, upon surrender for registration of transfer of any
Secured Notes at the office or agency of the Issuer to be maintained as provided
in Section 7.2, the Issuer and the Co-Issuer shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Secured Notes of any authorized denomination and of
a like aggregate principal amount.
 
At the option of the Holder, Secured Notes may be exchanged for Secured Notes of
like terms, in any authorized denominations and of like aggregate principal
amount, upon surrender of the Secured Notes to be exchanged at such office or
agency. Whenever any Secured Note is surrendered for exchange, the Issuer and
the Co-Issuer shall execute, and the Trustee shall authenticate and deliver, the
Secured Notes that the Noteholder making the exchange is entitled to receive.
 
All Secured Notes issued and authenticated upon any registration of transfer or
exchange of Secured Notes shall be the valid obligations of the Issuer and the
Co-Issuer, evidencing the same debt, and entitled to the same benefits under
this Indenture, as the Secured Notes surrendered upon such registration of
transfer or exchange.
 
Every Secured 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 Notes 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 Secured Notes, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
 
None of the Notes Registrar, the Issuer or the Co-Issuer shall be required (i)
to issue, register the transfer of or exchange any Secured Note during a period
beginning at the opening of business 15 days before any selection of Secured
Notes to be redeemed and ending at the close of business on the day of the
mailing of the relevant notice of redemption, or (ii) to register the transfer
of or exchange any Secured Note so selected for redemption.
 
(b) No Secured Note may be sold or transferred (including, without limitation,
by pledge or hypothecation) unless such sale or transfer is exempt from the
registration requirements of the Securities Act and is exempt from the
registration requirements under applicable state securities laws.
 
(c) No Secured Note may be offered, sold, resold or delivered, within the United
States or to, or for the benefit of, U.S. Persons except in accordance with
Section 2.5(f) below and in accordance with Rule 144A to QIBs who are Qualified
Purchasers purchasing for their own account or for the accounts of one or more
QIBs who are Qualified Purchasers, for which the purchaser is acting as
fiduciary or agent. The Secured Notes may be offered, sold, resold or delivered,
as the case may be, in offshore transactions to non-U.S. Persons in reliance on
Regulation S under the Securities Act. None of the Issuer, the Co-Issuer, the
Trustee or any other Person may register the Secured Notes under the Securities
Act or any state securities laws.
 
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(d) [Reserved].
 
(e) Upon final payment due on the Stated Maturity of a Secured Note, the Holder
thereof shall present and surrender such Secured Note at the Corporate Trust
Office of the Trustee or at the office of the Paying Agent (outside the United
States if then required by applicable law in the case of a note in definitive
form issued in exchange for a beneficial interest in a Regulation S Global
Secured Note pursuant to Sections 2.5 and 2.10).
 
(f) Transfers of Global Secured Notes. Notwithstanding any provision to the
contrary herein, so long as a Global Secured Note remains outstanding and is
held by or on behalf of the Depository, transfers of a Global Secured Note, in
whole or in part, shall only be made in accordance with Section 2.2(c) and this
Section 2.5(f) and the other applicable provisions of Section 2.5.
 
(i) Subject to clauses (ii) through (iv) of this Section 2.5(f), transfers of a
Global Secured Note shall be limited to transfers of such Global Secured Note in
whole, but not in part, to nominees of the Depository or to a successor of the
Depository or such successor’s nominee.
 
(ii) Regulation S Global Secured Note to Rule 144A Global Secured Note. If a
holder of a beneficial interest in a Regulation S Global Secured Note wishes to
transfer all or a part of its interest in such Regulation S Global Secured Note
to a Person who wishes to take delivery thereof in the form of a Rule 144A
Global Secured Note, such holder may, subject to the terms hereof and the rules
and procedures of Euroclear, Clearstream, Luxembourg or the Depository, as the
case may be, exchange or cause the exchange of such interest for an equivalent
beneficial interest in a Rule 144A Global Secured Note of the same Class. Upon
receipt by the Trustee, as Notes Registrar, of (A) instructions from Euroclear,
Clearstream, Luxembourg or the Depository, as the case may be, directing the
Trustee, as Notes Registrar, to cause such Rule 144A Global Secured Note to be
increased by an amount equal to such beneficial interest in such Regulation S
Global Secured Note but not less than the minimum denomination applicable to the
related Class of Secured Notes, and (B) a certificate substantially in the form
of Exhibit G hereto given by the prospective transferee of such beneficial
interest and stating, among other things, that such transferee acquiring such
interest in a Rule 144A Global Secured Note is a QIB and a Qualified Purchaser,
is obtaining such beneficial interest in a transaction pursuant to Rule 144A and
in accordance with any applicable securities laws of any state of the United
States or any other applicable jurisdiction, then Euroclear, Clearstream,
Luxembourg or the Trustee, as Notes Registrar, as the case may be, shall approve
the instruction at the Depository to reduce such Regulation S Global Secured
Note by the aggregate principal amount of the interest in such Regulation S
Global Secured Note to be transferred and increase the Rule 144A Global Secured
Note specified in such instructions by an Aggregate Outstanding Amount equal to
such reduction in such principal amount of the Regulation S Global Secured Note.
 
(iii) Rule 144A Global Secured Note to Regulation S Global Secured Note. If a
holder of a beneficial interest in a Rule 144A Global Secured Note wishes to
transfer all or a part of its interest in such Rule 144A Global Secured Note to
a Person who wishes to take delivery thereof in the form of a Regulation S
Global Secured Note, such holder may, subject to the terms hereof and the rules
and procedures of Euroclear, Clearstream, Luxembourg or the Depository, as the
case may be, exchange or cause the exchange of such interest for an equivalent
beneficial interest in a Regulation S Global Secured Note of the same Class.
Upon receipt by the Trustee, as Notes Registrar, of (A) instructions from
Euroclear, Clearstream, Luxembourg or the Depository, as the case may be,
directing the Trustee, as Notes Registrar, to cause such Regulation S Global
Secured Note to be increased by an amount equal to the beneficial interest in
such Rule 144A Global Secured Note but not less than the minimum denomination
applicable to the related Class of Secured Notes to be exchanged, and (B) a
certificate substantially in the form of Exhibit F hereto given by the
prospective transferee of such beneficial interest and stating, among other
things, that such transferee acquiring such interest in a Regulation S Global
Secured Note is a not a U.S. Person and that such transfer is being made
pursuant to Rule 903 or 904 under Regulation S of the Securities Act, then
Euroclear, Clearstream, Luxembourg or the Trustee, as Notes Registrar, as the
case may be, shall approve the instruction at the Depository to reduce such Rule
144A Global Secured Note by the aggregate principal amount of the interest in
such Rule 144A Global Secured Note to be transferred and increase the Regulation
S Global Secured Note specified in such instructions by an Aggregate Outstanding
Amount equal to such reduction in the principal amount of the Rule 144A Global
Secured Note.
 
(iv) Other Exchanges. In the event that, pursuant to Section 2.10 hereof, a
Global Secured Note is exchanged for Secured Notes in definitive form, such
Secured Notes may be exchanged for one another only in accordance with such
procedures as are substantially consistent with the provisions above (including
certification requirements intended to ensure that such transfers are to a QIB
who is also a Qualified Purchaser or are to a non-U.S. Person, or otherwise
comply with Rule 144A or Regulation S or Regulation D under the Securities Act,
as the case may be) and as may be from time to time adopted by the Issuer, the
Co-Issuer and the Trustee.
 
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(g) If Secured Notes are issued upon the transfer, exchange or replacement of
Secured Notes bearing the applicable legends set forth in Exhibits A, B, C, D
and E hereto, and if a request is made to remove such applicable legend on such
Secured Notes, the Secured Notes so issued shall bear such applicable legend, or
such applicable legend shall not be removed, as the case may be, unless there is
delivered to the Issuer and the Co-Issuer such satisfactory evidence, which may
include an Opinion of Counsel licensed to practice law in the State of New York
(and addressed to the Issuer and the Trustee), as may be reasonably required by
the Issuer and the Co-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 Regulation S under
the Securities Act, as applicable, the Investment Company Act or ERISA. So long
as the Issuer or the Co-Issuer is relying on an exemption under or promulgated
pursuant to the Investment Company Act, the Issuer or the Co-Issuer shall not
remove that portion of the legend required to maintain an exemption under or
promulgated pursuant to the Investment Company Act. Upon provision of such
satisfactory evidence, as confirmed in writing by the Issuer and the Co-Issuer,
to the Trustee, the Trustee, at the directions of the Issuer and the Co-Issuer,
shall authenticate and deliver Secured Notes that do not bear such applicable
legend.
 
(h) Each beneficial owner of Rule 144A Global Secured Notes shall be deemed to
represent and agree as follows (terms used in this paragraph that are defined in
Rule 144A under the Securities Act are used herein as defined therein):
 
(i) In the case of a Rule 144A Global Secured Note, the owner is (1) a QIB and a
Qualified Purchaser, (2) is aware that the sale of the Secured Notes to it
(other than the initial sale by the Issuer and the Co-Issuer) is being made in
reliance on the exemption from registration provided by Rule 144A under the
Securities Act, and (3) is acquiring the Secured Notes for its own account or
for one or more accounts, each of which is a QIB and a Qualified Purchaser, and
as to each of which the owner exercises sole investment discretion, (4) in a
principal amount of not less than $100,000, for each such account.
 
(ii) The owner understands that the Secured Notes are being offered only in a
transaction not involving any public offering in the United States within the
meaning of the Securities Act, the Secured Notes have not been and shall not be
registered under the Securities Act, and, if in the future the owner decides to
offer, resell, pledge or otherwise transfer the Secured Notes, such Secured
Notes may only be offered, resold, pledged or otherwise transferred in
accordance with this Indenture and the applicable legend on such Secured Notes
set forth in Exhibits A, B, C, D and E, as applicable. The owner acknowledges
that no representation is made by the Issuer, the Co-Issuer, or the Initial
Purchaser, as the case may be, as to the availability of any exemption under the
Securities Act or any state securities laws for resale of the Secured Notes.
 
(iii) The owner is not purchasing the Secured Notes with a view to the resale,
distribution or other disposition thereof in violation of the Securities Act.
The owner understands that an investment in the Secured Notes involves certain
risks, including the risk of loss of all or a substantial part of its investment
under certain circumstances. The owner has had access to such financial and
other information concerning the Issuer, the Co-Issuer and the Secured Notes as
it deemed necessary or appropriate in order to make an informed investment
decision with respect to its purchase of the Secured Notes, including an
opportunity to ask questions of and request information from the Collateral
Manager, the Issuer and the Co-Issuer.
 
(iv) In connection with the purchase of the Secured Notes (A) none of the
Issuer, the Co-Issuer, the Initial Purchaser, the Collateral Manager or the
Trustee is acting as a fiduciary or financial or investment adviser for the
owner; (B) the owner is not relying (for purposes of making any investment
decision or otherwise) upon any advice, counsel or representations (whether
written or oral) of the Issuer, the Co-Issuer, the Initial Purchaser, the
Collateral Manager or the Trustee other than in a current offering memorandum
for such Secured Notes and any representations expressly set forth in a written
agreement with such party; (C) none of the Issuer, the Co-Issuer, the Initial
Purchaser, the Collateral Manager or the Trustee has given to the owner
(directly or indirectly through any other person) any assurance, guarantee, or
representation whatsoever as to the expected or projected success,
profitability, return, performance, result, effect, consequence, or benefit
(including legal, regulatory, tax, financial, accounting, or otherwise) of its
purchase, (D) the owner has consulted with its own legal, regulatory, tax,
business, investment, financial, and accounting advisers to the extent it has
deemed necessary, and it has made its own investment decisions (including
decisions regarding the suitability of any transaction pursuant to this
Indenture) based upon its own judgment and upon any advice from such advisers as
it has deemed necessary and not upon any view expressed by the Issuer, the
Co-Issuer, the Initial Purchaser, the Collateral Manager or the Trustee; and (E)
the owner is purchasing the Secured Notes with a full understanding of all of
the terms, conditions and risks thereof (economic and otherwise), and is capable
of assuming and willing to assume (financially and otherwise) these risks.
 
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(v) The owner understands that the Secured Notes shall bear the applicable
legend set forth in Exhibits A, B, C, D and E, as applicable. The Rule 144A
Global Secured Notes may not at any time be held by or on behalf of any U.S.
Person that is not a QIB who is a Qualified Purchaser. The owner must inform a
prospective transferee of the transfer restrictions.
 
(vi) Unless a prospective Holder of a Secured Note otherwise provides another
representation acceptable to the Trustee, the Collateral Manager, the Issuer and
the Co-Issuer, each Holder of a Global Secured Note, by its acquisition thereof,
shall be deemed to have represented to the Issuer, the Co-Issuer, the Collateral
Manager and the Trustee that either (a) no part of the funds being used to pay
the purchase price for such Secured Notes constitutes an asset of any “employee
benefit plan” (as defined in Section 3(3) of ERISA) that is subject to ERISA or
“plan” (as defined in Section 4975(e)(1) of the Code) that is subject to Section
4975 of the Code or any other plan which is subject to any federal, state or
local law (“Similar Law”) that is substantially similar to Section 406 of ERISA
or Section 4975 of the Code (each a “Benefit Plan” and funds of such a Benefit
Plan, “Plan Assets”), or an entity whose underlying assets include Plan Assets
of any such Benefit Plan, or (b) if the funds being used to pay the purchase
price for such Secured Notes include Plan Assets of any Benefit Plan, its
purchase and holding of the Secured Notes are eligible for the exemptive relief
from the prohibited transaction rules granted by Prohibited Transaction Class
Exemption (“PTCE”) 84-14, PTCE 90-1, PTCE 91-38, PTCE 95-60, PTCE 96-23, or a
similar exemption; or in the case of any Benefit Plan subject to Similar Law, do
not result in an non-exempt violation of Similar Law.
 
(vii) The owner shall not, at any time, offer to buy or offer to sell the
Secured Notes by any form of general solicitation or advertising, including, but
not limited to, any advertisement, article, notice or other communication
published in any newspaper, magazine or similar medium or broadcast over
television or radio or at a seminar or meeting whose attendees have been invited
by general solicitations or advertising.
 
(viii) The owner shall not, at any time, make an offer or invitation to
subscribe to the public in the Cayman Islands, within the meaning of Section 194
of the Cayman Islands Companies Law (2004 Revision), unless the Secured Notes
have been listed on the Cayman Islands Stock Exchange.
 
(i) Each beneficial owner of Regulation S Global Secured Notes shall be deemed
to have made the representations set forth in clauses (ii), (iii), (iv), (vi),
(vii) and (viii) of Section 2.5(h) and shall be deemed to have further
represented and agreed as follows:
 
(i) The owner is aware that the sale of such Secured Notes to it is being made
in reliance on the exemption from registration provided by Regulation S and
understands that the Secured Notes offered in reliance on Regulation S under the
Securities Act will bear the appropriate legend set forth in Exhibits A, B, C, D
and E, as applicable, and be represented by one or more Regulation S Global
Secured Notes. The Secured Notes so represented may not at any time be held by
or on behalf of U.S. Persons. Each of the owner and the related Holder is not,
and shall not be, a U.S. Person. Before any interest in a Regulation S Global
Secured Note may be offered, resold, pledged or otherwise transferred to a
person who takes delivery in the form of a Rule 144A Global Secured Note, the
transferee shall be required to provide the Trustee with a written certification
substantially in the form of Exhibit G hereto as to compliance with the transfer
restrictions. The owner must inform a prospective transferee of the transfer
restrictions.
 
(j) Any purported transfer of a Secured Note not in accordance with this Section
2.5 shall be null and void and shall not be given effect for any purpose
hereunder.
 
(k) Notwithstanding anything contained in this Indenture to the contrary,
neither the Trustee nor the Notes Registrar (nor any other Transfer Agent) shall
be responsible or liable for compliance with applicable federal or state
securities laws (including, without limitation, the Securities Act or Rule 144A
or Regulation S promulgated thereunder), the Investment Company Act, ERISA or
the Code (or any applicable regulations thereunder); provided, however, that if
a specified transfer certificate or Opinion of Counsel is required by the
express terms of this Section 2.5 to be delivered to the Trustee or Notes
Registrar prior to registration of transfer of a Secured Note, the Trustee
and/or Notes Registrar, as applicable, is required to request, as a condition
for registering the transfer of the Secured Note, such certificate or Opinion of
Counsel and to examine the same to determine whether it conforms on its face to
the requirements hereof (and the Trustee or Notes Registrar, as the case may be,
shall promptly notify the party delivering the same if it determines that such
certificate or Opinion of Counsel does not so conform).
 
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(l) If the Trustee determines or is notified by the Issuer, Co-Issuer or the
Collateral Manager that (i) a transfer or attempted or purported transfer of any
interest in any Secured Note was consummated in compliance with the provisions
of this Section 2.5 on the basis of a materially incorrect certification from
the transferee or purported transferee, (ii) a transferee failed to deliver to
the Trustee any certification required to be delivered hereunder or (iii) the
holder of any interest in a Secured Note is in breach of any representation or
agreement set forth in any certification or any deemed representation or
agreement of such holder, the Trustee shall not register such attempted or
purported transfer and if a transfer has been registered, such transfer shall be
absolutely null and void ab initio and shall vest no rights in the purported
transferee (such purported transferee, a “Disqualified Transferee”) and the last
preceding holder of such interest in such Secured Note that was not a
Disqualified Transferee shall be restored to all rights as a Holder thereof
retroactively to the date of transfer of such Secured Note by such Holder.
 
In addition, the Trustee may require that the interest in the Secured Note
referred to in (i), (ii) or (iii) in the preceding paragraph be transferred to
any person designated by the Issuer or the Collateral Manager at a price
determined by the Issuer or the Collateral Manager, as applicable, based upon
its estimation of the prevailing price of such interest and each Holder, by
acceptance of an interest in a Secured Note, authorizes the Trustee to take such
action. In any case, the Trustee shall not be held responsible for any losses
that may be incurred as a result of any required transfer under this Section
2.5(l).
 
Section 2.6. Mutilated, Defaced, Destroyed, Lost or Stolen Secured Note.
 
If (a) any mutilated or defaced Secured Note is surrendered to a Transfer Agent,
or if there shall be delivered to the Issuer, the Co-Issuer, the Trustee and the
relevant Transfer Agent (each a “Specified Person”) evidence to their reasonable
satisfaction of the destruction, loss or theft of any Secured Note, and (b)
there is delivered to the Specified Person such security or indemnity as may be
required by each Specified Person to save each of them and any agent of any of
them harmless (an unsecured indemnity agreement delivered to the Trustee by an
institutional investor with a net worth of at least $200,000,000 being deemed
sufficient to satisfy such security or indemnity requirement), then, in the
absence of notice to the Specified Persons that such Secured Note has been
acquired by a bona fide purchaser, the Issuer and the Co-Issuer shall execute
and, upon Issuer Request, the Trustee shall authenticate and deliver, in lieu of
any such mutilated, defaced, destroyed, lost or stolen Secured Note, a new
Secured 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 Secured Note and bearing a
number not contemporaneously outstanding.
 
If, after delivery of such new Secured Note, a bona fide purchaser of the
predecessor Secured Note presents for payment, transfer or exchange such
predecessor Secured Note, any Specified Person shall be entitled to recover such
new Secured Note from the Person to whom it was delivered or any Person taking
therefrom, and each Specified Person shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by such Specified Person in connection therewith.
 
In case any such mutilated, defaced, destroyed, lost or stolen Secured Note has
become due and payable, the Issuer and the Co-Issuer in their discretion may,
instead of issuing a new Secured Note, pay such Secured Note without requiring
surrender thereof except that any mutilated or defaced Secured Note shall be
surrendered.
 
Upon the issuance of any new Secured Note under this Section 2.6, the Issuer and
the Co-Issuer 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 Secured Note issued pursuant to this Section 2.6 in lieu of any
mutilated, defaced, destroyed, lost or stolen Secured Note shall constitute an
original additional contractual obligation of the Issuer and the Co-Issuer, and
such new Secured Note shall be entitled, subject to the second paragraph of this
Section 2.6, to all the benefits of this Indenture equally and proportionately
with any and all other Secured Notes duly issued hereunder.
 
The provisions of this Section 2.6 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 Secured Notes.
 
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Section 2.7. Payment of Principal and Interest and Other Amounts; Principal and
Interest Rights Preserved.
 
(a) The Class A Notes shall accrue interest during each Interest Accrual Period
at the applicable Class A Rate. Interest on each Class A Note shall be due and
payable on each Payment Date immediately following the related Interest Accrual
Period in the proportion that the outstanding principal amount of such Class A
Note bears to the Aggregate Outstanding Amount of all Class A Notes.
 
(b) The Class B Notes shall accrue interest during each Interest Accrual Period
at the applicable Class B Rate. Interest on each Class B Note shall be due and
payable on each Payment Date immediately following the related Interest Accrual
Period in the proportion that the outstanding principal amount of such Class B
Note bears to the Aggregate Outstanding Amount of all Class B Notes; provided,
however, that payment of interest on the Class B Notes is subordinated to the
payment on each Payment Date of the Class A Defaulted Interest Amount, if any,
and the Class A Interest Distribution Amount and other amounts in accordance
with the Priority of Payments.
 
(c) The Class C Notes shall accrue interest during each Interest Accrual Period
at the applicable Class C Rate. Interest on each Class C Note shall be due and
payable on each Payment Date immediately following the related Interest Accrual
Period in the proportion that the outstanding principal amount of such Class C
Note bears to the Aggregate Outstanding Amount of all Class C Notes; provided,
however, that payment of interest on the Class C Notes is subordinated to the
payment on each Payment Date of the interest due and payable on the Class A
Notes and the Class B Notes (including any Class A Defaulted Interest Amount and
Class B Defaulted Interest Amount) and other amounts in accordance with the
Priority of Payments.
 
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For so long as any Class B Notes are Outstanding, any payment of interest due on
the Class C Notes which is not available to be paid (the “Class C Capitalized
Interest”) in accordance with the Priority of Payments on any Payment Date shall
not be considered “due and payable” for the purpose of Section 5.1(a) hereof
(and the failure to pay such Class C Capitalized Interest shall not be an Event
of Default) until the Payment Date on which funds are available to pay all or
any portion of such Class C Capitalized Interest in accordance with the Priority
of Payments. On or after such Payment Date, only such portion of any payment of
Class C Capitalized Interest for which funds are available shall be considered
“due and payable” and the failure to pay such portion of Class C Capitalized
Interest shall be an Event of Default. Class C Capitalized Interest shall be
added to the principal amount of the Class C Notes, shall bear interest
thereafter at the Class C Rate (to the extent lawful) and shall be payable on
the first Payment Date on which funds are permitted to be used for such purpose
in accordance with the Priority of Payments. On or after the Payment Date on
which the Class B Notes are no longer Outstanding, to the extent interest is due
(excluding any previously deferred Class C Capitalized Interest) but not paid on
the Class C Notes, the failure to pay such interest shall constitute an Event of
Default hereunder.
 
(d) The Class D Notes shall accrue interest during each Interest Accrual Period
at the applicable Class D Rate. Interest on each Class D Note shall be due and
payable on each Payment Date immediately following the related Interest Accrual
Period in the proportion that the outstanding principal amount of such Class D
Note bears to the Aggregate Outstanding Amount of all Class D Notes; provided,
however, that payment of interest on the Class D Notes is subordinated to the
payment on each Payment Date of the interest due and payable on the Class A
Notes, the Class B Notes and the Class C Notes (including any Class A Defaulted
Interest Amount, Class B Defaulted Interest Amount, Class C Defaulted Interest
Amount and Class C Capitalized Interest) and other amounts in accordance with
the Priority of Payments.
 
For so long as any Class C Notes are Outstanding, any payment of interest due on
the Class D Notes which is not available to be paid (the “Class D Capitalized
Interest”) in accordance with the Priority of Payments on any Payment Date shall
not be considered “due and payable” for the purpose of Section 5.1(a) hereof
(and the failure to pay such Class D Capitalized Interest shall not be an Event
of Default) until the Payment Date on which funds are available to pay all or
any portion of such Class D Capitalized Interest in accordance with the Priority
of Payments. On or after such Payment Date, only such portion of any payment of
Class D Capitalized Interest for which funds are available shall be considered
“due and payable” and the failure to pay such portion of Class D Capitalized
Interest shall be an Event of Default. Class D Capitalized Interest shall be
added to the principal amount of the Class D Notes, shall bear interest
thereafter at the Class D Rate (to the extent lawful) and shall be payable on
the first Payment Date on which funds are permitted to be used for such purpose
in accordance with the Priority of Payments. On or after the Payment Date on
which the Class C Notes are no longer Outstanding, to the extent interest is due
(excluding any previously deferred Class D Capitalized Interest) but not paid on
the Class D Notes, the failure to pay such interest shall constitute an Event of
Default hereunder.
 
(e) The Class E Notes shall accrue interest during each Interest Accrual Period
at the applicable Class E Rate. Interest on each Class E Note shall be due and
payable on each Payment Date immediately following the related Interest Accrual
Period in the proportion that the outstanding principal amount of such Class E
Note bears to the Aggregate Outstanding Amount of all Class E Notes; provided,
however, that payment of interest on the Class E Notes is subordinated to the
payment on each Payment Date of the interest due and payable on the Class A
Notes, the Class B Notes, the Class C Notes and the Class D Notes (including any
Class A Defaulted Interest Amount, Class B Defaulted Interest Amount, Class C
Defaulted Interest Amount, Class C Capitalized Interest, Class D Defaulted
Interest Amount and Class D Capitalized Interest) and other amounts in
accordance with the Priority of Payments.
 
For so long as any Class D Notes are Outstanding, any payment of interest due on
the Class E Notes which is not available to be paid (the “Class E Capitalized
Interest”) in accordance with the Priority of Payments on any Payment Date shall
not be considered “due and payable” for the purpose of Section 5.1(a) hereof
(and the failure to pay such Class E Capitalized Interest shall not be an Event
of Default) until the Payment Date on which funds are available to pay all or
any portion of such Class E Capitalized Interest in accordance with the Priority
of Payments. On or after such Payment Date, only such portion of any payment of
Class E Capitalized Interest for which funds are available shall be considered
“due and payable” and the failure to pay such portion of Class E Capitalized
Interest shall be an Event of Default. Class E Capitalized Interest shall be
added to the principal amount of the Class E Notes, shall bear interest
thereafter at the Class E Rate (to the extent lawful) and shall be payable on
the first Payment Date on which funds are permitted to be used for such purpose
in accordance with the Priority of Payments. On or after the Payment Date on
which the Secured Notes are no longer Outstanding, to the extent interest is due
(excluding any previously deferred Class E Capitalized Interest) but not paid on
the Class E Notes, the failure to pay such interest shall constitute an Event of
Default hereunder.
 
(f) Interest shall cease to accrue on each Class of Secured Note, or in the case
of a partial repayment, on such part, from the date of repayment or Stated
Maturity unless payment of principal is improperly withheld or unless a Default
has occurred with respect to such payments of principal.
 
(g) The principal of each Class of Secured Notes matures at par and is due and
payable on the Stated Maturity, unless the unpaid principal of such Class of
Secured Note becomes due and payable at an earlier date by declaration of
acceleration, call for redemption or otherwise; provided, however, that the
payment of principal of the Class B Notes (other than the payment of principal
pursuant to Section 9.7 and Section 11.1(a)(ii)(9)) may only occur after the
principal of the Class A Notes has been paid in full and is subordinated to the
payment on each Payment Date of the principal and interest due and payable on
the Class A Notes and other amounts in accordance with the Priority of Payments
and any payment of principal of the Class B Notes which is not paid, in
accordance with the Priority of Payments, on any Payment Date, shall not be
considered “due and payable” for purposes of Section 5.1(b) until the Payment
Date on which such principal may be paid in accordance with the Priority of
Payments or all of the Class A Notes have been paid in full; provided further,
that the payment of principal of the Class C Notes (other than payment of the
amounts constituting Class C Capitalized Interest, notwithstanding that such
Class C Capitalized Interest may be deemed to constitute additions to principal,
and other than the payment of principal pursuant to Section 9.7 and Section
11.1(a)(ii)(9)) may only occur after the principal of the Class A Notes and the
Class B Notes has been paid in full and is 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 other amounts in accordance with the Priority of Payments
and any payment of principal of the Class C Notes which is not paid, in
accordance with the Priority of Payments, on any Payment Date, shall not be
considered “due and payable” for purposes of Section 5.1(b) until the Payment
Date on which such principal may be paid in accordance with the Priority of
Payments or all of the Class A Notes and the Class B Notes have been paid in
full; provided further, that the payment of principal of the Class D Notes
(other than payment of the amounts constituting Class D Capitalized Interest,
notwithstanding that such Class D Capitalized Interest may be deemed to
constitute additions to principal, and other than the payment of principal
pursuant to Section 9.7 and Section 11.1(a)(ii)(9)) may only occur after the
principal of the Class A Notes, the Class B Notes and the Class C Notes has been
paid in full and is 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,
Class C Notes and other amounts in accordance with the Priority of Payments and
any payment of principal of the Class D Notes which is not paid, in accordance
with the Priority of Payments, on any Payment Date, shall not be considered “due
and payable” for purposes of Section 5.1(b) until the Payment Date on which such
principal may be paid in accordance with the Priority of Payments or all of the
Class A Notes, the Class B Notes and the Class C Notes have been paid in full;
provided further, that the payment of principal of the Class E Notes (other than
payment of the amounts constituting Class E Capitalized Interest,
notwithstanding that such Class E Capitalized Interest may be deemed to
constitute additions to principal, and other than the payment of principal
pursuant to Section 9.7 and Section 11.1(a)(ii)(9)) may only occur after the
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 is 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, Class C Notes, Class D Notes and other amounts in accordance
with the Priority of Payments and any payment of principal of the Class E Notes
which is not paid, in accordance with the Priority of Payments, on any Payment
Date, shall not be considered “due and payable” for purposes of Section 5.1(b)
until the Payment Date on which such principal may be paid in accordance with
the Priority of Payments or all of the Class A Notes, the Class B Notes, the
Class C Notes and the Class D Notes have been paid in full.
 
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(h) As a condition to the payment of principal of and interest on any Secured
Note without the imposition of U.S. withholding tax, the Issuer shall require
certification acceptable to it to enable the Issuer, the Co-Issuer, the Trustee,
and the Paying Agent to determine their duties and liabilities with respect to
any taxes or other charges that they may be required to deduct or withhold from
payments in respect of such Secured Note under any present or future law or
regulation of 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.
 
(i) Payments in respect of interest on and principal of the Secured Notes shall
be payable by wire transfer in immediately available funds to a Dollar account
maintained by the Holder or its nominee; provided, that the Holder has provided
wiring instructions to the Trustee on or before the related Record Date or, if
wire transfer cannot be effected, by a Dollar check drawn on a bank in the
United States of America, or by a Dollar check mailed to the Holder at its
address in the Notes Register. The Issuer expects that the Depository or its
nominee, upon receipt of any payment of principal or interest in respect of a
Global Secured Note held by the Depository or its nominee, shall immediately
credit the applicable Agent Members’ accounts with payments in amounts
proportionate to the respective beneficial interests in such Global Secured Note
as shown on the records of the Depository or its nominee. The Issuer also
expects that payments by Agent Members to owners of beneficial interests in such
Global Secured Note held through Agent Members will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers registered in the names of nominees for such
customers. Such payments will be the responsibility of the Agent Members. Upon
final payment due on the Maturity of a Secured Note, the Holder thereof shall
present and surrender such Secured Note at the Corporate Trust Office of the
Trustee or at the office of the Paying Agent (outside of the United States if
then required by applicable law in the case of a Definitive Security issued in
exchange for a beneficial interest in the Regulation S Global Secured Note) on
or prior to such Maturity. None of the Issuer, the Co-Issuer, the Trustee or the
Paying Agent will have any responsibility or liability with respect to any
records maintained by the Holder of any Secured Note with respect to the
beneficial holders thereof or payments made thereby on account of beneficial
interests held therein. In the case where any final payment of principal and
interest is to be made on any Secured Note (other than on the Stated Maturity
thereof) the Issuer or, upon Issuer Request, the Trustee, in the name and at the
expense of the Issuer shall, not more than 30 nor fewer than five (5) Business
Days prior to the date on which such payment is to be made, mail to the Persons
entitled thereto at their addresses appearing on the Notes Register, a notice
which shall state the date on which such payment will be made and the amount of
such payment per $1,000 initial principal amount of Secured Notes and shall
specify the place where such Secured Notes may be presented and surrendered for
such payment.
 
(j) Subject to the provisions of Sections 2.7(a) through (h) hereof, Holders of
Secured Notes as of the Record Date in respect of a Payment Date shall be
entitled to the interest accrued and payable in accordance with the Priority of
Payments and principal payable in accordance with the Priority of Payments on
such Payment Date. All such payments that are mailed or wired and returned to
the Paying Agent shall be held for payment as herein provided at the office or
agency of the Issuer and the Co-Issuer to be maintained as provided in Section
7.2 (or returned to the Trustee).
 
(k) Interest on any Secured Note which is payable, and is punctually paid or
duly provided for, on any Payment Date shall be paid to the Person in whose name
that Secured Note (or one or more predecessor Secured Notes) is registered at
the close of business on the Record Date for such interest.
 
(l) Payments of principal to Holders of the Secured Notes of each Class shall be
made in the proportion that the Aggregate Outstanding Amount of the Secured
Notes of such Class registered in the name of each such Holder on such Record
Date bears to the Aggregate Outstanding Amount of all Secured Notes of such
Class on such Record Date.
 
(m) Interest accrued with respect to the Secured Notes shall be calculated as
described in the applicable form of Secured Note attached hereto.
 
(n) All reductions in the principal amount of a Secured Note (or one or more
predecessor Secured Notes) effected by payments of installments of principal
made on any Payment Date, Redemption Date or upon Maturity shall be binding upon
all future Holders of such Secured Note and of any Secured 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 Secured Note.
 
(o) Notwithstanding anything contained in this Indenture to the contrary, the
obligations of the Issuer and the Co-Issuer under the Secured Notes and this
Indenture are non-recourse obligations of the Issuer and the Co-Issuer payable
solely from the Assets and following realization of the Assets, any claims of
the Noteholders or the Trustee shall be extinguished. No recourse shall be had
for the payment of any amount owing in respect of the Secured Notes against any
Officer, director, employee, shareholder, limited partner or incorporator of the
Issuer, the Co-Issuer or any of their respective successors or assigns for any
amounts payable under the Secured Notes or this Indenture. It is understood that
the foregoing provisions of this paragraph shall not (i) prevent recourse to the
Assets for the sums due or to become due under any security, instrument or
agreement which is part of the Assets or (ii) constitute a waiver, release or
discharge of any indebtedness or obligation evidenced by the Secured Notes or
secured by this Indenture (to the extent it relates to the obligation to make
payments on the Secured Notes) until such Assets have been realized, whereupon
any outstanding indebtedness or obligation in respect of the Secured Notes shall
be extinguished. It is further understood that the foregoing provisions of this
paragraph shall not limit the right of any Person to name the Issuer or the
Co-Issuer as a party defendant in any Proceeding or in the exercise of any other
remedy under the Secured 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.
 
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(p) Subject to the foregoing provisions of this Section 2.7, each Secured Note
delivered under this Indenture and upon registration of transfer of or in
exchange for or in lieu of any other Secured Note shall carry the rights of
unpaid interest and principal that were carried by such other Secured Note.
 
(q) Notwithstanding any of the foregoing provisions with respect to payments of
principal of and interest on the Secured Notes (but subject to Section 2.7(o)),
if the Secured Notes have become or been declared due and payable following an
Event of Default and such acceleration of Maturity and its consequences have not
been rescinded and annulled and the provisions of Section 5.5 are not
applicable, then payments of principal of and interest on such Secured Notes
shall be made in accordance with Section 5.7 hereof.
 
Section 2.8. Persons Deemed Owners.
 
The Issuer, the Co-Issuer, the Trustee, and any agent of the Issuer, the
Co-Issuer or the Trustee may treat as the owner of a Secured Note the Person in
whose name such Secured Note is registered on the Notes Register on the
applicable Record Date for the purpose of receiving payments of principal of and
interest and other amounts on such Secured Note and on any other date for all
other purposes whatsoever (whether or not such Secured Note is overdue), and
none of the Issuer, the Co-Issuer or the Trustee nor any agent of the Issuer,
the Co-Issuer or the Trustee shall be affected by notice to the contrary;
provided, however, that the Depository, or its nominee, shall be deemed the
owner of the Global Secured Notes, and owners of beneficial interests in Global
Secured Notes will not be considered the owners of any Secured Notes for the
purpose of receiving notices.
 
Section 2.9. Cancellation.
 
All Secured Notes surrendered for payment, registration of transfer, exchange or
redemption, or deemed lost or stolen, shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee, and shall be promptly canceled by
the Trustee and may not be reissued or resold. No Secured Notes shall be
authenticated in lieu of or in exchange for any Secured Notes canceled as
provided in this Section 2.9, except as expressly permitted by this Indenture.
All canceled Secured Notes held by the Trustee shall be destroyed or held by the
Trustee in accordance with its standard retention policy unless the Issuer and
the Co-Issuer shall direct by an Issuer Order that they be returned to them.
 
Section 2.10. Global Secured Notes; Temporary Notes.
 
(a) In the event that the Depository notifies the Issuer and the Co-Issuer that
it is unwilling or unable to continue as Depository for a Global Secured Note or
if at any time such Depository ceases to be a “Clearing Agency” registered under
the Exchange Act and a successor depository is not appointed by the Issuer
within 90 days of such notice, the Global Secured Notes deposited with the
Depository pursuant to Section 2.2 hereof shall be transferred to the beneficial
owners thereof subject to the procedures and conditions set forth in this
Section 2.10.
 
(b) Any Global Secured Note that is transferable to the beneficial owners
thereof pursuant to Section 2.10(a) above shall be surrendered by the Depository
to the Trustee’s Corporate Trust Office together with necessary instruction for
the registration and delivery of Secured Notes in definitive registered form
without interest coupons to the beneficial owners (or such owner’s nominee)
holding the ownership interests in such Global Secured Note. Any such transfer
shall be made, without charge, and the Trustee shall authenticate and deliver,
upon such transfer of each portion of such Global Secured Note, an equal
aggregate principal amount of Definitive Securities of the same Class and
authorized denominations. Any Definitive Securities delivered in exchange for an
interest in a Global Secured Note shall, except as otherwise provided by Section
2.5, bear the applicable legend set forth in Exhibits A, B, C, D and E, as
applicable, and shall be subject to the transfer restrictions referred to in
such applicable legends. The holder of such a registered individual Global
Secured Note may transfer such Global Secured Note by surrendering it at the
Corporate Trust Office of the Trustee, or at the office of the Paying Agent or
Irish Paying Agent.
 
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(c) Subject to the provisions of Section 2.10(b) above, the registered Holder of
a Global Secured Note may grant proxies and otherwise authorize any Person,
including Agent Members and Persons that may hold interests through Agent
Members, to take any action which a Holder is entitled to take under this
Indenture or the Secured Notes.
 
(d) In the event of the occurrence of either of the events specified in Section
2.10(a) above, the Issuer and the Co-Issuer shall promptly make available to the
Trustee a reasonable supply of Definitive Securities.
 
Pending the preparation of Definitive Securities pursuant to this Section 2.10,
the Issuer and the Co-Issuer may execute and, upon Issuer Order, the Trustee
shall authenticate and deliver, temporary Secured Notes that are printed,
lithographed, typewritten, mimeographed or otherwise reproduced, in any
authorized denomination, substantially of the tenor of the Definitive Securities
in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the Officers executing such
Definitive Securities may determine, as conclusively evidenced by their
execution of such Definitive Securities.
 
If temporary Definitive Securities are issued, the Issuer and the Co-Issuer
shall cause permanent Definitive Securities to be prepared without unreasonable
delay. The Definitive Securities shall be printed, lithographed, typewritten or
otherwise reproduced, or provided by any combination thereof, or in any other
manner permitted by the rules and regulations of any applicable notes exchange,
all as determined by the Officers executing such Definitive Securities. After
the preparation of Definitive Securities, the temporary Secured Notes shall be
exchangeable for Definitive Securities upon surrender of the applicable
temporary Secured Notes at the office or agency maintained by the Issuer and the
Co-Issuer for such purpose, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Secured Notes, the Issuer and the
Co-Issuer shall execute, and the Trustee shall authenticate and deliver, in
exchange therefor the same aggregate principal amount of Definitive Securities
of authorized denominations. Until so exchanged, the temporary Secured Notes
shall in all respects be entitled to the same benefits under this Indenture as
Definitive Securities.
 
Section 2.11. US Tax Treatment of Secured Notes.
 
(a) Each of the Issuer and the Co-Issuer intends that, for U.S. federal income
tax purposes, the Secured Notes be treated as debt. Each prospective purchaser
and any subsequent transferee of a Secured Note or any interest therein shall,
by virtue of its purchase or other acquisition of such Secured Note or interest
therein, be deemed to have agreed to treat such Secured Note as debt for U.S.
federal income tax purposes.
 
(b) If any Secured Notes are deemed equity for U.S. federal income tax purposes
by the Internal Revenue Service (the “IRS”), and the Holder of such Secured Note
so requests, the Issuer agrees to provide each Holder of such a Secured Note
with a PFIC Annual Information Statement, signed by the Issuer or its authorized
representative, on an annual basis that contains the following information as
required under Treasury Regulation Section 1.1295-1(g)(i):
 
(i) the first and last days of the taxable year of the Issuer to which the PFIC
Annual Information Statement applies;
 
(ii) sufficient information to enable each Holder of such Secured Notes to
calculate its pro rata share of the Issuer’s ordinary earnings and net capital
gain for that taxable year;
 
(iii) the amount of cash and the fair market value of other property distributed
or deemed distributed to such Holder to such Secured Notes during the taxable
year of the Issuer to which the PFIC Annual Information Statement pertains; and
 
(iv) a statement that the Issuer shall permit the Holder of any such Secured
Notes to inspect and copy the Issuer’s permanent books of account, records and
such other documents as may be maintained by the Issuer to establish that the
Issuer’s ordinary earnings and net capital gain are computed in accordance with
U.S. federal income tax principles and to verify these amounts and the Holder’s
pro rata interest thereof.
 
Notwithstanding the foregoing, if the Holder of such Secured Note so requests
within 30 days of the end of the Issuer’s taxable year, and such Holder informs
the Issuer or its authorized representative of the par value of each Class of
Notes held by such Holder during such taxable year (including, if any Notes were
acquired or sold during such taxable year, the date such Notes were acquired or
sold, and par value of such Notes), the Issuer or its authorized representative
will inform such Holder of its pro rata share of the Issuer’s ordinary earnings
and net capital gain.

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(c) The Issuer and the Co-Issuer shall account for the aforementioned Secured
Notes and prepare any reports to Noteholders and tax authorities, including
without limitation the report specified in Section 2.11(b) above, consistent
with the intentions expressed in Section 2.11(a) above.
 
(d) Each Holder shall timely furnish to the Issuer, the Co-Issuer or its agents
any U.S. federal income tax form or certification (such as IRS Form W-8BEN
(Certification of Foreign Status of Beneficial Owner) (with Part III marked),
Form W-8IMY (Certification of Foreign Intermediary Status), IRS Form W-9
(Request for Taxpayer Identification Number and Certification), or IRS Form
W-8ECI (Certification of Foreign Person’s Claim for Exemption from Withholding
on Income Effectively Connected with Conduct of a U.S. Trade or Business) or any
successors to such IRS forms that the Issuer, the Co-Issuer or its agents may
reasonably request and shall update or replace such forms or certification in
accordance with its terms or its subsequent amendments.
 
Section 2.12. Authenticating Agents.
 
Upon the request of the Issuer and the Co-Issuer, the Trustee shall, and if the
Trustee so chooses the Trustee may pursuant to this Indenture, appoint one or
more Authenticating Agents with power to act on its behalf and subject to its
direction in the authentication of Secured Notes in connection with issuance,
transfers and exchanges under Sections 2.4, 2.5, 2.6 and 8.5 hereof, as fully to
all intents and purposes as though each such Authenticating Agent had been
expressly authorized by such Sections to authenticate such Secured Notes. For
all purposes of this Indenture, the authentication of Secured Notes by an
Authenticating Agent pursuant to this Section 2.12 shall be deemed to be the
authentication of Secured Notes by the Trustee.
 
Any corporation or banking association into which any Authenticating Agent may
be merged or converted or with which it may be consolidated, or any corporation
or banking association resulting from any merger, consolidation or conversion to
which any Authenticating Agent shall be a party, or any corporation 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 corporation. Any Authenticating Agent may
at any time resign by giving written notice of resignation to the Trustee, the
Issuer and the Co-Issuer. The Trustee may at any time terminate the agency of
any Authenticating Agent by giving written notice of termination to such
Authenticating Agent, the Issuer and the Co-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 Trustee agrees to pay to each Authenticating Agent appointed by it from time
to time reasonable compensation for its services, and reimbursement for its
reasonable expenses relating thereto and the Trustee shall be entitled to be
reimbursed for such payments, subject to Section 6.7 hereof. The provisions of
Sections 2.9, 6.4 and 6.5 hereof shall be applicable to any Authenticating
Agent.
 
Section 2.13. Forced Sale on Failure to Comply with Restrictions.
 
(a) Notwithstanding anything to the contrary elsewhere in this Indenture, any
transfer of a Secured Note or interest therein to a U.S. Person who is
determined not to have been both a QIB and a Qualified Purchaser at the time of
acquisition of the Secured Note or interest therein shall be null and void and
any such proposed transfer of which the Issuer, the Co-Issuer or the Trustee
shall have notice may be disregarded by the Issuer, the Co-Issuer and the
Trustee for all purposes.
 
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(b) If the Issuer determines that any Holder of a Secured Note has not satisfied
the applicable requirement described in Section 2.13(a) above (any such person a
“Non-Permitted Holder”), then the Issuer shall promptly after discovery that
such Person is a Non-Permitted Holder by the Issuer, the Co-Issuer or the
Trustee (and notice by the Trustee or the Co-Issuer to the Issuer, if either of
them makes the discovery), send notice to such Non-Permitted Holder demanding
that such Non-Permitted Holder transfer its interest to a Person that is not a
Non-Permitted Holder within 30 days of the date of such notice. If such
Non-Permitted Holder fails to so transfer its Secured Note or interest therein,
the Issuer shall have the right, without further notice to the Non-Permitted
Holder, to sell such Secured Note or interest therein to a purchaser selected by
the Issuer that is not a Non-Permitted Holder on such terms as the Issuer may
choose. The Issuer, or the Trustee acting on behalf of the Issuer, may select
the purchaser by soliciting one or more bids from one or more brokers or other
market professionals that regularly deal in securities similar to the Secured
Note, and selling such Secured Note to the highest such bidder. However, the
Issuer or the Trustee may select a purchaser by any other means determined by it
in its sole discretion. The Holder of such Secured Note, the Non-Permitted
Holder and each other Person in the chain of title from the Holder to the
Non-Permitted Holder, by its acceptance of an interest in the Secured Note,
agrees to cooperate with the Issuer and the Trustee to effect such transfers.
The proceeds of such sale, net of any commissions, expenses and taxes due in
connection with such sale shall be remitted to the Non-Permitted Holder. The
terms and conditions of any sale under this Section 2.13(b) shall be determined
in the sole discretion of the Issuer, and the Issuer shall not be liable to any
Person having an interest in the Secured Note sold as a result of any such sale
of exercise of such discretion.
 
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ARTICLE 3
 
CONDITIONS PRECEDENT
 
Section 3.1. General Provisions.
 
The Secured Notes to be issued on the Closing Date shall be executed by the
Issuer and the Co-Issuer upon compliance with Section 3.2 and shall be delivered
to the Trustee for authentication and thereupon the same shall be authenticated
and delivered by the Trustee upon Issuer Request and upon receipt by the Trustee
of the items described below:
 
(a) an Officer’s Certificate of the Issuer (A) evidencing the authorization by
Board Resolution of the execution and delivery of this Indenture, the Collateral
Purchase Agreement, the Collateral Management Agreement, each Hedge Agreement,
the Paying and Transfer Agency Agreement, the Servicing Agreement, the Custodial
Agreement and related documents, the execution, authentication and delivery of
the Secured Notes and the authorization and issuance of the Preferred Shares and
specifying the Stated Maturity of each Class of Secured Notes, the principal
amount of each Class of Secured Notes and the applicable Note Interest Rate of
each Class of Secured Notes to be authenticated and delivered, and (B)
certifying that (1) the attached copy of the 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 Directors
authorized to execute and deliver such documents hold the offices and have the
signatures indicated thereon;
 
(b) an Officer’s Certificate of the Co-Issuer (A) evidencing the authorization
by Board Resolution of the execution and delivery of this Indenture and related
documents, the execution, authentication and delivery of the Secured Notes and
specifying the Stated Maturity of each Class of Secured Notes, the principal
amount of each Class of Secured Notes and the applicable Note Interest Rate of
each Class of Secured Notes to be authenticated and delivered, and (B)
certifying that (1) the attached copy of the 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;
 
(c) (A) either (1) certificates 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 of the Issuer that no other authorization, approval or
consent of any governmental body is required for the valid issuance of such
Securities or (2) an Opinion of Counsel of the Issuer reasonably satisfactory in
form and substance to the Trustee that no such authorization, approval or
consent of any governmental body is required for the valid issuance of such
Securities except as may have been given;
 
(B) either (1) certificates of the Co-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 of the Co-Issuer that no other authorization, approval or
consent of any governmental body is required for the valid issuance of such
Securities or (2) an Opinion of Counsel of the Co-Issuer reasonably satisfactory
in form and substance to the Trustee that no such authorization, approval or
consent of any governmental body is required for the valid issuance of such
Securities except as may have been given;
 
(d) opinions of Sidley Austin Brown & Wood llp, special U.S. counsel to the
Issuer and the Co-Issuer (which opinions may be limited to the laws of the State
of New York and the federal law of the United States and may assume, among other
things, the correctness of the representations and warranties made or deemed
made by the owners of Secured Notes pursuant to Sections 2.5(j) and (k)) dated
the Closing Date, substantially in the form of Exhibit H attached hereto;
 
(e) an opinion of Maples and Calder, Cayman Islands counsel to the Issuer (which
opinion shall be limited to the laws of the Cayman Islands), dated the Closing
Date, substantially in the form of Exhibit I attached hereto;
 
(f) an Officer’s Certificate, given on behalf of the Issuer and without personal
liability, stating that the Issuer is not in Default under this Indenture and
that the issuance of the Securities will not result in a breach of any of the
terms, conditions or provisions of, or constitute a Default under, the Governing
Documents of the Issuer, 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 all conditions
precedent provided in this Indenture relating to the authentication and delivery
of the Secured Notes applied for have been complied with;
 
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(g) an Officer’s Certificate stating that the Co-Issuer is not in Default under
this Indenture and that the issuance of the Secured Notes will not result in a
breach of any of the terms, conditions or provisions of, or constitute a Default
under, the Governing Documents of the Co-Issuer, any indenture or other
agreement or instrument to which the Co-Issuer is a party or by which it is
bound, or any order of any court or administrative agency entered in any
Proceeding to which the Co-Issuer is a party or by which it may be bound or to
which it may be subject; that all conditions precedent provided in this
Indenture relating to the authentication and delivery of the Secured Notes
applied for have been complied with; and that all expenses due or accrued with
respect to the offering or relating to actions taken on or in connection with
the Closing Date have been paid;
 
(h) an executed counterpart of the Collateral Purchase Agreement, the Collateral
Management Agreement, the Paying and Transfer Agency Agreement, the Servicing
Agreement and the Custodial Agreement;
 
(i) an executed copy of each Hedge Agreement;
 
(j) an opinion of counsel to (i) each Hedge Counterparty, (ii) the Collateral
Manager and the Advancing Agent, (iii) the Trustee and the Preferred Share
Paying and Transfer Agent, and (iv) the Seller, each dated the Closing Date, and
each substantially in the form attached hereto as Exhibit J;
 
(k) an Accountants’ Report confirming the following information as of the
Closing Date: (i) the information (other than the Principal Balance and the
Purchase Price) with respect to each Collateral Security set forth on the
Schedule of Closing Date Collateral Securities attached hereto as Schedule 1 by
reference to such sources as shall be specified therein; (ii) compliance as of
the Closing Date with each of the Collateral Quality Tests; and (iii) specifying
the procedures undertaken by the accountants to review data and computations
relating to the foregoing;
 
(l) an Officer’s Certificate from the Collateral Manager (i) confirming that,
based on information available to the Collateral Manager, each Collateral
Security set forth on the Schedule 1 attached hereto meets the Eligibility
Criteria and that Schedule 1 correctly lists the Collateral Securities to be
Granted to the Trustee on the Closing Date and (ii) stating the Aggregate
Principal Amount of the Collateral Securities;
 
(m) evidence of preparation for filing at the appropriate filing office in the
District of Columbia of a financing statement executed on behalf of the Issuer
relating to the perfection of the lien of this Indenture;
 
(n) an Issuer Order executed by the Issuer and the Co-Issuer directing the
Trustee to (i) authenticate the Secured Notes specified therein, in the amounts
set forth therein and registered in the name(s) set forth therein and (ii)
deliver the authenticated Secured Notes as directed by the Issuer and the
Co-Issuer; and
 
(o) such other documents as the Trustee may reasonably require.
 
Section 3.2. Security for Secured Notes.
 
Prior to the issuance of the Secured Notes on the Closing Date, the Issuer shall
cause the following conditions to be satisfied:
 
(a) Grant of Security Interest; Delivery of Collateral 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 Assets and the transfer of all Collateral
Securities acquired in connection therewith and purchased by the Issuer on the
Closing Date (as set forth in the Schedule of Closing Date Collateral
Securities) to the Trustee in the manner provided in Section 3.3(b).
 
(b) Certificate of the Issuer. A certificate of an Authorized Officer of the
Issuer given on behalf of the Issuer and without personal liability, dated as of
the Closing Date, delivered to the Trustee, to the effect that, in the case of
each Collateral Security pledged to the Trustee for inclusion in the Assets on
the Closing Date and immediately prior to the delivery thereof on the Closing
Date:
 
(i) the Issuer is the owner of such Collateral 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;
 
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(ii) the Issuer has acquired its ownership in such Collateral Security in good
faith without notice of any adverse claim, except as described in paragraph (i)
above;
 
(iii) the Issuer has not assigned, pledged or otherwise encumbered any interest
in such Collateral 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;
 
(iv) the Underlying Instrument with respect to such Collateral Security does not
prohibit the Issuer from Granting a security interest in and assigning and
pledging such Collateral Security to the Trustee;
 
(v) the information set forth with respect to such Collateral Security in the
Schedule of Collateral Securities is correct;
 
(vi) the Collateral Securities included in the Assets satisfy the requirements
of the definition of Eligibility Criteria and the requirements of Section
3.2(a); and
 
(vii) the Grant pursuant to the Granting Clauses of this Indenture shall result
in a first priority security interest in favor of the Trustee for the benefit of
the Holders of the Secured Notes and each Hedge Counterparty in all of the
Issuer’s right, title and interest in and to the Collateral Securities pledged
to the Trustee for inclusion in the Assets on the Closing Date.
 
(c) Rating Letters. The Trustee’s receipt of a letter signed by each Rating
Agency and confirming that (i) the Class A Notes have been rated “Aaa” by
Moody’s and “AAA” by S&P, (ii) the Class B Notes have been rated at least “Aa2”
by Moody’s and “AA” by S&P, (iii) the Class C Notes have been rated at least
“A2” by Moody’s and “A-” by S&P, (iv) the Class D Notes have been rated at least
“Baa2” by Moody’s and “BBB” by S&P and (v) the Class E Notes have been rated at
least “Baa3” by Moody’s and “BBB-” by S&P and that such ratings are in full
force and effect on the Closing Date.
 
(d) Accounts. Evidence of the establishment of the Payment Account, the
Collection Account, the Interest Collection Account, the Principal Collection
Account, the Expense Account, each Hedge Collateral Account, each Hedge
Termination Account and the Securities Account (which may be a subaccount of the
Collection Account).
 
(e) Purchases. The delivery to the Trustee of evidence that the Issuer 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 Securities having an Aggregate Principal
Balance of not less than $300,000,000.
 
(f) Deposit to Accounts.
 
(i) On the Closing Date, the Issuer shall deposit into the Expense Account from
the gross proceeds of the offering of the Securities an initial amount which
shall be sufficient to pay any outstanding initial fees and expenses of the
Issuer and the Co-Issuer with respect to the offering of the Securities which
are not paid on the Closing Date; provided, however, in the event that any
amounts remain in the Expense Account after the payment of all such expenses,
such amounts shall be transferred to the Interest Collection Account.
 
(ii) On the Closing Date, the Issuer shall deposit into the Principal Collection
Account, the proceeds (other than the organizational and structuring fees and
expenses of the Issuer and the Co-Issuer (including the legal fees and expenses
of counsel to the Issuers, the Initial Purchaser and the Collateral Manager))
received by the Issuer on the Closing Date from the issuance of the Securities,
to the extent such proceeds have not been deposited in the Expense Account in
accordance with Section 3.2(f)(i) or used to purchase Collateral Securities on
or prior to the Closing Date.
 
Section 3.3. Transfer of Collateral Securities and Eligible Investments.
 
(a) The Issuer hereby appoints LaSalle Bank National Association as Securities
Intermediary (the “Custodial Securities Intermediary”). Any successor Custodial
Securities Intermediary shall be a U.S. state or national bank or trust company
which is not an Affiliate of the Issuer and is a Qualified Financial
Institution. On or before the Closing Date, the Custodial Securities
Intermediary shall create a “securities account” within the meaning specified in
Section 8-501(a) of the UCC to which Financial Assets may be credited (the
“Securities Account”) as to which the Trustee is the sole Entitlement Holder.
The Custodial Securities Intermediary hereby agrees that each item of property
(whether investment property, financial asset, security, instrument or Cash)
credited to the Securities Account shall be treated as a “financial asset”
within the meaning of Section 8-102(a)(9) of the UCC being maintained on behalf
of the Trustee. The securities intermediary jurisdiction, as defined in Section
8-110(e) of the UCC, shall be New York. If at any time the Custodial Securities
Intermediary shall receive any “entitlement order” (as defined in Section
8-102(a)(8) of the UCC) from the Trustee directing the transfer or redemption of
any financial asset relating to the Securities Account, the Custodial Securities
Intermediary shall comply with such entitlement order without further consent by
the Issuer or any other person.
 
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(b) Each Collateral Security and each Eligible Investment relating thereto or
made with funds of the Issuer shall be delivered to the Trustee by causing the
Custodial Securities Intermediary to create a Security Entitlement in the
Securities Account in favor of the Trustee with respect to such Collateral
Security or Eligible Investment by indicating by book-entry that such Collateral
Security or Eligible Investment has been credited to the Securities Account.
 
(c) The Issuer shall cause each Collateral Security or Eligible Investment to be
delivered to the Trustee or to the Custodial Securities Intermediary for the
benefit of the Trustee as described below and the Issuer shall cause the Trustee
to take any and all other actions necessary to create in favor of the Trustee a
valid, perfected, first-priority security interest in each Collateral Security
or Eligible Investment Granted in accordance with this Indenture under laws and
regulations, including Articles 8 and 9 of the UCC and regulations of the U.S.
Department of the Treasury governing transfers of interests in Government Items
in effect at the time of such delivery:
 
(i) in the case of each Certificated Security or Instrument (other than a
Certificated Security or Instrument which is to be credited to the Securities
Account), (A) causing the delivery to the Custodial Securities Intermediary (for
the benefit of the Trustee) in the State of Illinois of the original executed
certificate or other writing that constitutes or evidences such Certificated
Security or Instrument, registered in the name of the Custodial Securities
Intermediary (for the benefit of the Trustee) or its affiliated nominee or
endorsed to the Custodial Securities Intermediary (for the benefit of the
Trustee) or in blank by an effective endorsement (unless such Certificated
Security or Instrument is in bearer form in which case delivery alone shall
suffice), (B) causing the Custodial Securities Intermediary to acknowledge in
writing that it is holding such Certificated Security or Instrument solely as
agent of the Trustee and (C) causing the Custodial Securities Intermediary (on
behalf of the Trustee) to maintain continuous possession of such Certificated
Security or Instrument in the State of Illinois;
 
(ii) in the case of each Uncertificated Security (other than an Uncertificated
Security covered by clause (iii) below or which is to be credited to the
Securities Account), (A) causing such Uncertificated Security to be continuously
registered on the books of the issuer thereof to the Custodial Securities
Intermediary (for the benefit of the Trustee) and (B) causing the Custodial
Securities Intermediary to continuously identify on its books and records that
such Uncertificated Security is credited to the Securities Account (for the
benefit of the Trustee);
 
(iii) in the case of an Uncertificated Security registered in the name of the
Issuer, causing the issuer of such Uncertificated Security to agree that it will
comply with all instructions originated by the Trustee without further consent
by the Issuer;
 
(iv) in the case of each general intangible (other than a general intangible
which is to be credited to the Securities Account), (A) causing a UCC financing
statement describing the Assets and naming the Issuer as debtor and the Trustee
as secured party to be filed by or on behalf of the Issuer in the District of
Columbia within 10 Business Days of the Closing Date and (B) causing the
registration of this Indenture in the Register of Mortgages and Charges of the
Issuer at the Issuer’s registered office in the Cayman Islands;
 
(v) in the case of each Collateral Security, Eligible Investment or other
financial asset not covered by the foregoing clauses (i) through (iv), (A)
causing the transfer of such financial asset to the Custodial Securities
Intermediary in accordance with the terms of the Underlying Instrument and
applicable law and regulation and (B) causing the Custodial Securities
Intermediary to create a Security Entitlement with respect to such financial
asset by crediting such financial asset to the Securities Account for the
benefit of the Trustee; and
 
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(vi) in the case of any “deposit account” within the meaning of the UCC (A)
establishing such deposit account in the name of, and under the sole dominion
and control of, the Trustee and (B) causing the bank maintaining such deposit
account to agree in writing that it will comply with instructions from the
Trustee directing the disposition of funds in such deposit account without
further consent by the Issuer.
 
(d) Without limiting the foregoing, the Issuer and the Trustee on behalf of the
Bank agree, and the Bank shall cause the Custodial Securities Intermediary, to
take such different or additional action as the Trustee may reasonably request
in order to maintain the perfection and priority of the security interest of the
Trustee in the event of any change in applicable law or regulation, including
Articles 8 and 9 of the UCC and regulations of the U.S. Department of the
Treasury governing transfers of interests in Government Items (it being
understood that the Trustee shall be entitled to rely upon an Opinion of
Counsel, including an Opinion of Counsel delivered in accordance with Section
3.1(d), as to the need to file any financing statements or continuation
statements, the dates by which such filings are required to be made and the
jurisdictions in which such filings are required to be made).
 
(e) In addition to the foregoing, the Issuer shall cause a copy of the
Underlying Instruments with respect to each Collateral Security, to the extent
in the possession of the Issuer, to be delivered to the Trustee promptly after
the Grant thereof.
 
(f) As of the Closing Date (with respect to the Assets) and each date on which
an Asset is acquired (only with respect to the Asset so acquired) the Issuer
represents and warrants as follows, which representations and warranties shall
not be waived:
 
(i) this Indenture creates a valid and continuing security interest (as defined
in the UCC) in the Assets in favor of the Trustee, which security interest is
prior to all other liens, and is enforceable as such against creditors of and
purchasers from the Issuer;
 
(ii) the Issuer owns and has good and marketable title to such Assets free and
clear of any lien, claim or encumbrance of any person;
 
(iii) in the case of each Asset, the Issuer has acquired its ownership in such
Asset in good faith without notice of any adverse claim as defined in Section
8-102(a)(1) of the UCC as in effect on the date hereof;
 
(iv) other than the security interest granted to the Trustee pursuant to this
Indenture, the Issuer has not, pledged, assigned, sold, granted a security
interest in, or otherwise conveyed any of the Assets;
 
(v) 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 Assets other than any financing statement relating to the security
interest granted to the Trustee hereunder or that has been terminated; the
Issuer is not aware of any judgment or Pension Benefit Guarantee Corporation
lien and tax lien filings against the Issuer;
 
(vi) the Issuer has received all consents and approvals required by the terms of
each Asset and the Underlying Instruments to grant to the Trustee its interest
and rights in such Asset hereunder;
 
(vii) the Issuer has caused or will have caused, within 10 days, 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 Assets granted to the Trustee hereunder;
 
(viii) each Asset is an “instrument” within the meaning of the UCC, a “general
intangible” within the meaning of the UCC or a “deposit account” within the
meaning of the UCC or has been and will have been credited to the Securities
Account;
 
(ix) the Custodial Securities Intermediary has agreed to treat all assets
credited to the Securities Account as “financial assets” within the UCC;
 
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(x) the Issuer has delivered a fully executed agreement pursuant to which the
Custodial Securities Intermediary has agreed to comply with all instructions
originated by the Trustee relating to the Securities Account without further
consent of the Issuer; the Securities Account is not in the name of any person
other than the Issuer or the Trustee; the Issuer has not consented to the
securities intermediary of the Securities Account to comply with entitlement
orders of any person other than the Trustee;
 
(xi) (A) all original executed copies of each promissory note or other writings
that constitute or evidence any pledged obligation that constitutes
“instruments” within the meaning of the UCC have been delivered to the Custodial
Securities Intermediary for the benefit of the Trustee, (B) the Issuer has
received a written acknowledgement from the Custodial Securities Intermediary
that the Custodial Securities Intermediary is acting solely as agent of the
Trustee and (C) none of the promissory notes or other writings that constitute
or evidence such collateral has any marks or notations indicating that they have
been pledged, assigned or otherwise conveyed to any person other than the
Trustee;
 
(xii) (A) the Collection Accounts, each Hedge Termination Account, each Hedge
Collateral Account, the Expense Account and the Payment Account (collectively,
the “Deposit Accounts”) constitute “deposit accounts” within the meaning of the
UCC, (B) the Issuer has taken all steps necessary to cause the Trustee to become
the account holder of the Deposit Accounts, (C) other than the security interest
granted to the Trustee pursuant to this Indenture, the Issuer has not pledged,
assigned, sold, granted a security interest in, or otherwise conveyed any of the
Deposit Accounts, and (D) the Deposit Accounts are not in the name of any person
other than the Issuer or the Trustee. The Issuer has not consented to the bank
maintaining the Deposit Accounts to comply with the instructions of any person
other than the Trustee; and
 
(xiii) The Issuer has established procedures such that any Eligible Investments
purchased with funds withdrawn from the Deposit Accounts will be either (i)
credited to a “securities account” (within the meaning of the UCC) over which
the Trustee will have a first priority perfected security interest, (ii)
purchased in the name of the Trustee or (iii) held in another manner sufficient
to establish the Trustee’s first priority perfected security interest over such
Eligible Investments.
 
(g) The Trustee shall only invest in Eligible Investments which the applicable
Custodial Securities Intermediary agrees to credit to the applicable account. To
the extent any Eligible Investment shall not be delivered to the Trustee by
causing the Custodial Securities Intermediary to create a Security Entitlement
in the Securities Account in favor of the Trustee, the Issuer shall deliver an
Opinion of Counsel to the Trustee to the effect that any other delivery will
effect a first priority security interest in favor of the Trustee in such
Eligible Instrument.
 
(h) The Issuer hereby authorizes the filing of UCC financing statements naming
the Issuer as debtor and the Trustee as secured party and describing as
collateral covered thereby “all property and assets in which the debtor has an
interest, wherever located and whether now owned or existing or hereafter
acquired or arising” or words to that effect, including any applicable
limitations on that collateral description, notwithstanding that such collateral
description may be broader in scope that the Assets described in this Indenture.
 
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ARTICLE 4

 
 
SATISFACTION AND DISCHARGE
 
Section 4.1. Satisfaction and Discharge of Indenture.
 
This Indenture shall be discharged and shall cease to be of further effect with
respect to the Assets securing the Secured Notes and the Issuer’s obligations
under each Hedge Agreement except as to (i) rights of registration of transfer
and exchange, (ii) substitution of mutilated, defaced, destroyed, lost or stolen
Secured Notes, (iii) rights of Noteholders to receive payments of principal
thereof and interest thereon as provided herein, (iv) the rights, obligations
and immunities of the Trustee on their behalf hereunder, (v) the rights of
Noteholders as beneficiaries hereof with respect to the property deposited with
the Trustee on their behalf 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:
 
(i) all Secured Notes theretofore authenticated and delivered (other than (A)
Secured Notes which have been mutilated, defaced, destroyed, lost or stolen and
which have been replaced or paid as provided in Section 2.6 and (B) Secured
Notes for whose payment Money has 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
 
(ii) all Secured 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 within one year, or (C) are to be called for redemption pursuant
to Section 9.1 or Section 9.2 under an arrangement satisfactory to the Trustee
for the giving of notice of redemption by the Issuer and the Co-Issuer pursuant
to Section 9.4 and the Issuer or the Co-Issuer, in the case of clauses (A), (B)
or (C) of this subsection (ii), 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 of America; provided, that the
obligations are entitled to the full faith and credit of the United States of
America or are debt obligations which are rated “Aaa” by Moody’s and “AAA” by
S&P in an amount sufficient, as verified by a firm of certified public
accountants which are nationally recognized, to pay and discharge the entire
indebtedness (including, in the case of a redemption pursuant to Section 9.1 or
Section 9.2, the Redemption Price) on such Secured Notes not theretofore
delivered to the Trustee for cancellation, for principal and interest to the
date of such deposit (in the case of Secured Notes which have become due and
payable), or to the Stated Maturity or the Redemption Date, as the case may be
(and in each case in respect of the Secured Notes, subject to the Priority of
Payments); provided, further, that any such deposit of funds with the Trustee in
satisfaction of this Indenture shall be subject to the Rating Agency Condition;
provided, however, that in the case of the Secured Notes, this subsection (ii)
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 or provided for (to the
satisfaction of the Person entitled thereto) all other sums payable hereunder
and under the Collateral Management Agreement, the Servicing Agreement and all
Hedge Agreements then in effect have been terminated and Issuer has paid all
amounts, including payments due and payable in connection with such termination
and has paid all other outstanding amounts, including any outstanding payments
due and payable for any previously terminated Hedge Agreement; and
 
(c) Each of the Issuer and the Co-Issuer has delivered to the Trustee an
Officer’s Certificate 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 Co-Issuer, the Trustee, and, if applicable, the
Noteholders, as the case may be, under Sections 2.7, 4.2, 5.4(d), 5.9, 5.18,
6.7, 7.1 and 7.3 hereof shall survive.
 
Section 4.2. Application of Trust Money.
 
All Monies deposited with the Trustee pursuant to Section 4.1 shall be held in
trust and applied by it in accordance with the provisions of the Secured Notes
and this Indenture to the payment of the principal and interest, either directly
or through the Paying Agent, as the Trustee may determine, to the Person
entitled thereto of the principal and interest for whose payment such Money has
been deposited with the Trustee; but such Money need not be segregated from
other funds except to the extent required herein or when commingling of funds is
prohibited by law.
 

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Section 4.3. Repayment of Monies Held by Paying Agent.
 
In connection with the satisfaction and discharge of this Indenture with respect
to the Secured Notes, all Monies then held by the Paying Agent other than the
Trustee under the provisions of this Indenture shall, upon demand of the Issuer
and the Co-Issuer, be paid to the Trustee to be held and applied pursuant to
Section 7.3 hereof and, in the case of Monies payable on the Secured Notes, in
accordance with the Priority of Payments and thereupon such Paying Agent shall
be released from all further liability with respect to such Monies.
 
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ARTICLE 5

REMEDIES
 
Section 5.1. Events of Default.
 
“Event of Default,” wherever used herein, means any one of the following events
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
 
(a) a default in the payment 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 C Notes Outstanding, on any Class D Note,
or if there are no Class D Notes Outstanding, on any Class E Note when the same
becomes due and payable, which default continues for a period of three Business
Days or, in the case of a default in payment due to an administrative error or
omission by the Trustee or Paying Agent, which default continues for five
Business Days;
 
(b) a default in the payment of principal (or the related Redemption Price, if
applicable) of any Class A Note when the same becomes due and payable, at its
Stated Maturity or any Redemption Date, or if there are no Class A Notes
Outstanding, a default in the payment of principal (or the related Redemption
Price, if applicable) of any Class B Note when the same becomes due and payable
at its Stated Maturity or any Redemption Date, or if there are no Class B Notes
Outstanding, a default in the payment of principal (or the related Redemption
Price, if applicable) of any Class C Note (including any Class C Capitalized
Interest) when the same becomes due and payable at its Stated Maturity or any
Redemption Date, or if there are no Class C Notes Outstanding, a default in the
payment of principal (or the related Redemption Price, if applicable) of any
Class D Note (including any Class D Capitalized Interest) when the same becomes
due and payable at its Stated Maturity or any Redemption Date, or if there are
no Class D Notes Outstanding, a default in the payment of principal (or the
related Redemption Price, if applicable) of any Class E Note (including any
Class E Capitalized Interest) when the same becomes due and payable at its
Stated Maturity or any Redemption Date;
 
(c) the failure on any Payment Date to disburse amounts available in the Payment
Account in accordance with the Priority of Payments set forth under Section
11.1(a) (other than a default in payment described in clause (a) or (b) above),
which failure continues for a period of three Business Days or, in the case of a
failure to disburse such amounts due to an administrative error or omission by
the Trustee or Paying Agent, which failure continues for five Business Days;
 
(d) either the Issuer, the Co-Issuer or the pool of Assets becomes an investment
company required to be registered under the Investment Company Act;
 
(e) a default in the performance, or breach, of any other covenant or other
agreement (other than the covenant to meet the Coverage Tests or the Collateral
Quality Test) of the Issuer or the Co-Issuer hereunder or any representation or
warranty of the Issuer or the Co-Issuer hereunder or in any certificate or other
writing delivered pursuant hereto or in connection therewith proves to be
incorrect in any material respect when made, and the continuation of such
default or breach continues for a period of 30 days (or, if such default, breach
or failure has an adverse effect on the validity, perfection or priority of the
security interest granted hereunder, 15 days) after either the Issuer, the
Co-Issuer or the Collateral Manager has actual knowledge thereof or after notice
thereof to the Issuer, the Co-Issuer and the Collateral Manager by the Trustee
or to the Issuer, the Co-Issuer, the Collateral Manager and the Trustee by
Holders of at least 25% in Aggregate Outstanding Amount of Secured Notes of the
Controlling Class; provided that a default in the performance by the Issuer of
the obligations imposed on it by this Indenture in connection with the entry
into a replacement Hedge Agreement upon the early termination of a Hedge
Agreement shall not be an Event of Default if the Rating Agency Condition has
been satisfied;
 
(f) the entry of a decree or order by a court having competent jurisdiction
adjudging the Issuer or the Co-Issuer as bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Issuer or the Co-Issuer under the Bankruptcy
Code or any other applicable law, or appointing a receiver, liquidator,
assignee, or sequestrator (or other similar official) of the Issuer or the
Co-Issuer or of any substantial part of its property, respectively, or 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 60 consecutive days;
 
(g) the institution by the Issuer or the Co-Issuer of proceedings to be
adjudicated as bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under the
Bankruptcy Code or any other similar applicable law, or the consent by it to the
filing of any such petition or to the appointment of a receiver, liquidator,
assignee, trustee or sequestrator (or other similar official) of the Issuer or
the Co-Issuer or of any substantial part of its property, respectively, or the
making by it of an assignment for the benefit of creditors, or the admission by
it in writing of its inability to pay its debts generally as they become due, or
the taking of any action by the Issuer in furtherance of any such action; or
 
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(h) one or more final judgments being rendered against the Issuer or the
Co-Issuer which exceed, in the aggregate, U.S. $1,000,000 (or such lesser amount
as any Rating Agency may specify) and which remain unstayed, undischarged and
unsatisfied for 30 days after such judgment(s) becomes nonappealable, unless
adequate funds have been reserved or set aside for the payment thereof, and
unless (except as otherwise specified in writing by each Rating Agency) the
Rating Agency Condition shall have been satisfied.
 
Upon the occurrence of an Event of Default, the Issuer shall promptly notify the
Trustee, the Collateral Manager, the Preferred Share Paying and Transfer Agent,
the Noteholders, each holder of the Preferred Shares, each Rating Agency, each
Hedge Counterparty and, for so long as any Secured Notes are listed on the Irish
Stock Exchange, the Irish Paying Agent in writing. If the Collateral Manager has
actual knowledge of the occurrence of an Event of Default, the Issuer shall
cause the Collateral Manager to promptly notify, in writing, the Trustee, the
Preferred Share Paying and Transfer Agent, the Noteholders, each holder of the
Preferred Shares, each Rating Agency and each Hedge Counterparty of the
occurrence of such Event of Default.
 
Section 5.2. Acceleration of Maturity; Rescission and Annulment.
 
(a) If an Event of Default shall occur and be continuing (other than the Events
of Default specified in Section 5.1(f) or 5.1(g)), the Trustee may (and shall at
the direction of a Majority of each Class of Secured Notes, voting as a separate
Class) declare the principal of and accrued and unpaid interest on all the
Secured Notes to be immediately due and payable. If an Event of Default
described in Section 5.1(f) or (g) above occurs, such an acceleration shall
occur automatically and without any further action. Upon any such acceleration,
the Trustee shall promptly notify each Hedge Counterparty of such acceleration
upon Trustee’s knowledge of such acceleration. If the Secured Notes are
accelerated, payments shall be made in the order and priority set forth in
Section 11.1(a)(i) and Section 11.1(a)(ii) hereof following the termination of
each Hedge Agreement; except that prior to any payments on the Class B Notes,
the Class A Notes shall be paid in full.
 
(b) At any time after such a declaration of acceleration of Maturity of the
Secured Notes has been made and before a judgment or decree for payment of the
Money due has been obtained by the Trustee as hereinafter provided in this
Article 5, a Majority of each Class of Secured Notes, voting as a separate
Class, by written notice to the Issuer and the Co-Issuer and the Trustee (and
the Trustee shall notify each Hedge Counterparty), may rescind and annul such
declaration and its consequences if:
 
(i) the Issuer or the Co-Issuer has paid or deposited with the Trustee a sum
sufficient to pay:
 
(A) all unpaid installments of interest on and principal of the Secured Notes
that would be due and payable hereunder if the Event of Default giving rise to
such acceleration had not occurred;
 
(B) to the extent that payment of such interest is lawful, interest on the Class
C Capitalized Interest at the Class C Rate, interest on the Class D Capitalized
Interest at the Class D Rate, and interest on the Class E Capitalized Interest
at the Class E Rate;
 
(C) all unpaid taxes of the Issuer and the Co-Issuer, Company Administrative
Expenses and other sums paid or advanced by or otherwise due and payable to the
Trustee and the Preferred Share Paying and Transfer Agent hereunder and under
the Paying and Transfer Agency Agreement;
 
(D) with respect to each Hedge Agreement, any Hedge Due Amount then due;
 
(E) any amounts due and payable to the Advancing Agent or the Trustee in respect
of unreimbursed Nonrecoverable Interest Advances, the Advancing Agent Fee (or
any fees accrued and unpaid to the Trustee as back-up advancing agent) or
Reimbursement Interest;
 
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(F) any fees due and payable to the Servicer under the Servicing Agreement; and
 
(G) with respect to the Collateral Management Agreement, any Senior Collateral
Management Fee then due and any Company Administrative Expense due and payable
to the Collateral Manager thereunder;
 
(ii) if any Hedge Agreement has been reduced or terminated, the Rating Agency
Condition has been satisfied with respect to such reduction or termination; and
 
(iii) the Trustee has determined that all Events of Default of which it has
actual knowledge, other than the non-payment of the interest and principal on
the Secured Notes that have become due solely by such acceleration, have been
cured and a Majority of each Class of Secured Notes, voting as a separate Class,
by written notice to the Trustee has agreed with such determination (which
agreement shall not be unreasonably withheld) or waived as provided in
Section 5.14.
 
At any such time the Trustee shall rescind and annul such declaration and its
consequences if the Trustee is required to preserve the Assets in accordance
with the provisions of Section 5.5 with respect to the Event of Default that
gave rise to such declaration; provided, however, that if such preservation of
the Assets is rescinded pursuant to Section 5.5, the Secured Notes may be
accelerated pursuant to the first paragraph of this Section 5.2, notwithstanding
any such previous rescission and annulment of a declaration of acceleration
pursuant to this paragraph.
 
No such rescission shall affect any subsequent Default or impair any right
consequent thereon. In addition, no such rescission shall affect any Hedge
Agreement if it has been terminated in accordance with its terms.
 
(c) Subject to Sections 5.4 and 5.5, a Majority of the Controlling Class shall
have the right to direct the Trustee in the conduct of any proceedings for any
remedy available to the Trustee; provided, that (i) such direction will not
conflict with any rule of law or this Indenture; (ii) the Trustee may take any
other action not inconsistent with such direction; (iii) the Trustee has been
provided with an indemnity satisfactory to it (and the Trustee need not take any
action that it determines might involve it in liability unless it has received
such indemnity against such liability); and (iv) any direction to undertake a
sale of the Asset may be made only as described in Section 5.17.
 
(d) As security for the payment by the Issuer of the compensation and expenses
of the Trustee and any sums the Trustee may be entitled to receive as
indemnification by the Issuer, the Issuer hereby grants the Trustee a lien on
the Assets, which lien is senior to the lien of the Noteholders. The Trustee’s
lien shall be subject to the Priority of Payments and exercisable by the Trustee
only if the Secured Notes have been declared due and payable following an Event
of Default and such acceleration has not been rescinded or annulled.
 
(e) A Majority of each Class of Secured Notes, voting as a separate Class, may,
prior to the time a judgment or decree for the payment of money due has been
obtained by the Trustee, waive any past Default on behalf of the holders of all
the Secured Notes and its consequences in accordance with Section 5.14.
 
(f) In determining whether the holders of the requisite percentage of Secured
Notes have given any direction, notice or consent hereunder, (i) Secured Notes
owned by the Issuer, the Co-Issuer, the Seller or any Affiliate thereof shall be
disregarded and deemed not to be outstanding and (ii) in relation to any
amendment or other modification of, or assignment or termination of, any of the
express rights or obligations of the Collateral Manager under the Collateral
Management Agreement or this Indenture (including the exercise of any rights to
remove the Collateral Manager or terminate the Collateral Management Agreement
or approve or object to a replacement for the Collateral Manager) or in relation
to any request, demand, authorization, direction, notice, consent or waiver
pursuant to Article 5 hereunder, Secured Notes owned by the Collateral Manager
or any of its Affiliates, or by any accounts managed by them, shall be
disregarded and deemed not to be outstanding. The Collateral Manager and its
Affiliates shall be entitled to vote Secured Notes held by them, and by accounts
managed by them, with respect to all other matters other than those described in
clause (ii).
 
Section 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 interest on any Class A Note, the payment of principal on any Class A Note
(but only after interest with respect to the Class A Notes and any amounts
payable pursuant to Section 11.1(a) having a higher priority have been paid in
full), the payment of interest on any Class B Note (but only after interest with
respect to the Class A Notes and any amounts payable pursuant to Section 11.1(a)
having a higher priority have been paid in full), the payment of principal on
any Class B Note (but only after interest and principal with respect to the
Class A Notes and interest with respect to the Class B Notes and any amounts
payable pursuant to Section 11.1(a) having a higher priority have been paid in
full), the payment of interest on any Class C Note (but only after interest with
respect to the Class A Notes and the Class B Notes and any amounts payable
pursuant to Section 11.1(a) hereof having a higher priority have been paid in
full), the payment of principal on any Class C Note (but only after interest and
principal with respect to the Class A Notes and the Class B Notes and interest
with respect to the Class C Notes and any amounts payable pursuant to Section
11.1(a) having a higher priority have been paid in full), the payment of
interest on any Class D Note (but only after interest with respect to the
Class A Notes, the Class B Notes and the Class C Notes and any amounts payable
pursuant to Section 11.1(a) hereof having a higher priority have been paid in
full) or the payment of principal on any Class D Note (but only after interest
and principal with respect to the Class A Notes, the Class B Notes and the
Class C Notes and interest with respect to the Class D Notes and any amounts
payable pursuant to Section 11.1(a) having a higher priority have been paid in
full), the payment of interest on any Class E Note (but only after interest with
respect to the Class A Notes, the Class B Notes, the Class C Notes and the
Class D Notes and any amounts payable pursuant to Section 11.1(a) hereof having
a higher priority have been paid in full) or the payment of principal on any
Class E Note (but only after interest and principal with respect to the Class A
Notes, the Class B Notes, the Class C Notes and the Class D Notes and interest
with respect to the Class E Notes and any amounts payable pursuant to Section
11.1(a) having a higher priority have been paid in full)), the Issuer and
Co-Issuer shall, upon demand of the Trustee or any affected Noteholder, pay to
the Trustee, for the benefit of the Holder of such Secured Note, the whole
amount, if any, then due and payable on such Secured Note for principal and
interest or other payment with interest on the overdue principal and, to the
extent that payments of such interest shall be legally enforceable, upon overdue
installments of interest, at the applicable 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 Noteholder and their
respective agents and counsel.
 
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If the Issuer or the Co-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
prosecute such Proceeding to judgment or final decree, and may enforce the same
against the Issuer and the Co-Issuer or any other obligor upon the Secured Notes
and collect the Monies adjudged or decreed to be payable in the manner provided
by law out of the Assets.
 
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
Noteholders by such appropriate Proceedings as the Trustee shall deem most
effectual (if no direction by a Majority of the Controlling Class is received by
the Trustee), or the Trustee shall proceed to protect and enforce its rights and
the rights of the Noteholders by such Proceedings as the Trustee may be directed
by Majority of the Controlling Class, 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.
 
In case there shall be pending Proceedings relative to the Issuer or the
Co-Issuer 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 the Co-Issuer, or
their respective property, or in case of any other comparable Proceedings
relative to the Issuer or the Co-Issuer, or the creditors or property of the
Issuer or the Co-Issuer, the Trustee, regardless of whether the principal of any
Secured Notes shall then be due and payable as therein expressed or by
declaration or otherwise and regardless of whether the Trustee shall have made
any demand pursuant to the provisions of this Section 5.3, shall be entitled and
empowered, by intervention in such Proceedings or otherwise:
 
(a) to file and prove a claim or claims for the whole amount of principal and
interest owing and unpaid in respect of the Secured Notes 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, except as a result
of negligence or bad faith) and of the Noteholders allowed in any Proceedings
relative to the Issuer, the Co-Issuer or other obligor upon the Secured Notes or
to the creditors or property of the Issuer, the Co-Issuer or such other obligor;
 
(b) unless prohibited by applicable law and regulations, to vote on behalf of
the Holders of the Secured Notes 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
 
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(c) to collect and receive any Monies or other property payable to or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of the Noteholders and of the Trustee on their behalf; and
any trustee, receiver or liquidator, custodian or other similar official is
hereby authorized by each of the Noteholders to make payments to the Trustee,
and, in the event that the Trustee shall consent to the making of payments
directly to the 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 its own 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 Noteholder, any
plan of reorganization, arrangement, adjustment or composition affecting the
Secured Notes or the rights of any Holder thereof, or to authorize the Trustee
to vote in respect of the claim of any Noteholder in any such Proceeding except,
as aforesaid, to vote for the election of a trustee in bankruptcy or similar
person.
 
All rights of action and of asserting claims under this Indenture, or under any
of the Secured Notes, may be enforced by the Trustee without the possession of
any of the Secured 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, shall be applied as set forth in Section 5.7.
 
In any Proceedings brought by the Trustee on behalf of the Holders, the Trustee
shall be held to represent all the Holders of the Secured Notes.
 
Notwithstanding anything in this Section 5.3 to the contrary, the Trustee may
not sell or liquidate the Assets or institute Proceedings in furtherance thereof
pursuant to this Section 5.3 unless the conditions specified in Section 5.5(a)
are met and such sale is in accordance with Section 5.17.
 
Section 5.4. Remedies.
 
(a) If an Event of Default shall have occurred and be continuing, and the
Secured Notes have been declared due and payable and such declaration and its
consequences have not been rescinded and annulled, the Issuer and the Co-Issuer
agree that the Trustee may, after notice to the Noteholders, with notice to each
Hedge Counterparty, and shall, upon direction by a Majority of the Controlling
Class, with notice to each Hedge Counterparty, to the extent permitted by
applicable law, exercise one or more of the following rights, privileges and
remedies:
 
(i) institute Proceedings for the collection of all amounts then payable on the
Secured Notes or otherwise payable under this Indenture, whether by declaration
or otherwise, enforce any judgment obtained, and collect from the Assets any
Monies adjudged due;
 
(ii) sell all or a portion of the Assets or rights of interest therein, at one
or more public or private sales called and conducted in any manner permitted by
law and in accordance with Section 5.17 hereof;
 
(iii) institute Proceedings from time to time for the complete or partial
foreclosure of this Indenture with respect to the Assets;
 
(iv) 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 Trustee
and the Holders of the Secured Notes hereunder; and
 
(v) exercise any other rights and remedies that may be available at law or in
equity;
 
provided, however, that the Trustee may not sell or liquidate the Assets or
institute Proceedings in furtherance thereof pursuant to this Section 5.4 unless
either of the conditions specified in Section 5.5(a) is met and any such sale is
in accordance with Section 5.17.
 
The Trustee may, but need not, obtain and rely upon an opinion of an Independent
investment banking firm of national reputation with demonstrated capabilities in
structuring and distributing notes or certificates similar to the Secured Notes
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 Assets to make the required payments of principal
of and interest on the Secured Notes and other amounts payable hereunder, which
opinion shall be conclusive evidence as to such feasibility or sufficiency.
 
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(b) If an Event of Default as described in Section 5.1(e) hereof shall have
occurred and be continuing, the Trustee may, and at the request of the Holders
of not less than 25% of the Aggregate Outstanding Amount 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.
 
(c) Upon any Sale, whether made under the power of sale hereby given or by
virtue of judicial proceedings, any Noteholder or Noteholders may bid for and
purchase the Assets 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; and any purchaser at any such Sale may,
in paying the purchase Money, turn in any of the Secured Notes in lieu of Cash
equal to the amount which shall, upon distribution of the net proceeds of such
sale, be payable on the Secured Notes so turned in by such Holder (taking into
account the Class of such Secured Notes). Such Secured Notes, in case the
amounts so payable thereon shall be less than the amount due thereon, shall be
returned to the Holders thereof after proper notation has been made thereon to
show partial payment.
 
Upon any Sale, 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 Money 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 Co-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 Secured Notes,
institute against, or join any other Person in instituting against, the Issuer
or the Co-Issuer any bankruptcy, reorganization, arrangement, insolvency,
moratorium or liquidation proceedings, or other proceedings under federal or
State bankruptcy or similar laws. 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 (or, if longer, the
applicable preference period then in effect) period in (A) any case or
proceeding voluntarily filed or commenced by the Issuer or the Co-Issuer or
(B) any involuntary insolvency proceeding filed or commenced by a Person other
than the Trustee or (ii) from commencing against the Issuer or the Co-Issuer or
any of their respective properties any legal action which is not a bankruptcy,
reorganization, arrangement, insolvency, moratorium or liquidation proceeding.
 
Section 5.5. Preservation of Assets.
 
(a) Notwithstanding anything to the contrary herein, if an Event of Default and
an acceleration of the Secured Notes shall have occurred and be continuing when
any of the Secured Notes are Outstanding, the Trustee shall retain the Assets
securing the Secured Notes, collect and cause the collection of the proceeds
thereof and make and apply all payments and deposits and maintain all accounts
in respect of the Assets and the Secured Notes in accordance with the Priority
of Payments and the provisions of Articles 10, 11, 12 and 13 (except that prior
to any payments of interest on the Class B Notes, payments in respect of
interest of and, to the extent required in Section 11(a)(i)(8)(A) or
11(a)(i)(8)(C) hereof and Section 11.1(a)(ii)(2)(A) or 11(a)(ii)(2)(C) hereof,
principal on the Class A Notes will be paid in full) unless either:
 
(i) the Trustee, pursuant to Section 5.5(c), determines that the anticipated
proceeds of a sale or liquidation of the Assets (after deducting the reasonable
expenses of such sale or liquidation) would be sufficient to discharge in full
the amounts then due and unpaid on the Secured Notes, Company Administrative
Expenses due and payable pursuant to sub-clauses (2)(d), (2)(e), (3)(a) and (18)
of Section 11.1(a)(i) and sub-clauses (1) and (11) of Section 11.1(a)(ii), the
Senior Collateral Management Fees due and payable pursuant to subclause (5) of
Section 11.1(a)(i), the Subordinate Collateral Management Fees due and payable
pursuant to subclauses (19)(b) and (20) of Section 11.1(a)(i), any amounts due
and payable to each Hedge Counterparty, including without limitation, any
payments (however described) due and payable (or that will become due and
payable) by the Issuer under each Hedge Agreement upon a termination of such
Hedge Agreement (including any interest that may accrue thereon), and any
amounts due and payable to the Advancing Agent or the Trustee in respect of
unreimbursed Interest Advances, the Advancing Agent Fee (or any fee accrued and
unpaid to the Trustee as back-up advancing agent) or Reimbursement Interest
pursuant to subclauses (2)(a), (2)(b) and (2)(c) of Section 11.1(a)(i), and a
Majority of the Controlling Class agrees with such determination; or
 
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(ii) the Holders of not less than 66-2/3% in Aggregate Outstanding Amount of
each Class of the Secured Notes (each voting as a separate Class) (and each
Hedge Counterparty, unless each shall be paid in full the amounts due and
unpaid, including, without limitation, any payments (however described) due and
payable (or that will become due and payable) by the Issuer under each Hedge
Agreement upon a termination of such Hedge Agreement (including any interest
that may accrue thereon)), or if no Secured Notes are Outstanding, 100% of the
Preferred Shares, direct, subject to the provisions of this Indenture, the sale
and liquidation of the Assets.
 
For the purposes of this Section 5.5, in determining whether holders of the
requisite percentage of Secured Notes and Preferred Shares have given direction
hereunder, Secured Notes owned by the Seller, the Collateral Manager or any of
their respective Affiliates shall be disregarded. In making such determination,
the Trustee shall be entitled to receive and may conclusively rely upon a
certification from the Seller as to whether any Secured Notes are owned by the
Seller or any of its Affiliates.
 
The Trustee shall give written notice of the retention of the Assets to the
Issuer, the Co-Issuer, the Collateral Manager, each Hedge Counterparty, the
Rating Agencies and the holders of Preferred Shares. 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 (i) or (ii) above
exist.
 
(b) Nothing contained in Section 5.5(a) shall be construed to require the
Trustee to sell the Assets securing the Secured Notes if the conditions set
forth in Section 5.5(a) are not satisfied. Nothing contained in Section 5.5(a)
shall be construed to require the Trustee to preserve the Assets securing the
Secured Notes if prohibited by applicable law.
 
(c) In determining whether the condition specified in Section 5.5(a)(i) exists,
the Trustee shall obtain a bid price from two or more dealers (Independent of
the Collateral Manager and any of its Affiliates) for each Pledged Collateral
Security contained in the Assets. Such dealers with respect to each Pledged
Collateral Security shall be specified by the Collateral Manager in writing, to
be making a market in such Pledged Collateral Security. The Trustee shall
compute the anticipated proceeds of sale or liquidation on the basis of the
lowest of such bid prices for each such Pledged Collateral Security. In
addition, for the purposes of determining issues relating to the Market Value of
the Pledged Collateral Security and the execution of a sale or other liquidation
thereof, the Trustee may, but need not, retain at the expense of the Issuer and
rely on an opinion of an Independent investment banking firm of national
reputation in connection with a determination (notwithstanding that such opinion
will not be the basis for such determination) as to whether the condition
specified in Section 5.5(a)(i) exists.
 
The Trustee shall promptly deliver to the Noteholders and each Hedge
Counterparty a report stating the results of any determination required to be
made pursuant to Section 5.5(a)(i). The Trustee shall make the determinations
required by Section 5.5(a)(i) within 30 days after an Event of Default if
requested by a Majority of the Controlling Class.
 
Section 5.6. Trustee May Enforce Claims Without Possession of Secured Notes.
 
All rights of action and claims under this Indenture or under any of the Secured
Notes may be prosecuted and enforced by the Trustee without the possession of
any of the Secured Notes or the production thereof in any trial or other
Proceeding relating thereto, and any such action or Proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust. Any
recovery of judgment in respect of the Secured Notes shall be applied as set
forth in Section 5.7 hereof.
 
In any Proceedings brought by the Trustee (and any Proceedings involving the
interpretation of any provision of this Indenture to which the Trustee shall be
a party), in respect of the Secured Notes, the Trustee shall be held to
represent all the Holders of the Secured Notes.
 
Section 5.7. Application of Money Collected.
 
Any Money collected by the Trustee with respect to the Secured Notes pursuant to
this Article 5 and any Money that may then be held or thereafter received by the
Trustee with respect to the Secured Notes hereunder shall be applied subject to
Section 13.1 hereof and in accordance with the Priority of Payments set forth in
Section 11.1 hereof, at the date or dates fixed by the Trustee (except that
prior to any payments of interest on the Class B Notes, payments in respect of
interest of and, to the extent required in Section 11.1(a)(i)(8)(A) or
11.1(a)(i)(8)(C) hereof and Section 11.1(a)(ii)(2)(A) or 11.1(a)(ii)(2)(C)
hereof, principal on the Class A Notes will be paid in full); provided, however,
that in no event shall the Trustee fix any such date or dates until after each
Hedge Agreement has been terminated in accordance with its terms.
 
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Section 5.8. Limitation on Suits.
 
No Holder of any Secured Notes shall have any right to institute any
Proceedings, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
 
(a) such Holder has previously given to the Trustee written notice of an Event
of Default;
 
(b) except as otherwise provided in Section 5.9 hereof, the Holders of at least
25% of the then Aggregate Outstanding Amount of the Secured Notes of the
Controlling Class shall have made 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 a Majority of the Controlling Class; it
being understood and intended that no one or more Holders of Secured 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 Secured Notes of the same Class or to obtain or to seek to
obtain priority or preference over any other Holders of the Secured 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
Secured Notes of the same Class subject to and in accordance with Section 13.1
hereof and the Priority of Payments.
 
In the event the Trustee shall receive conflicting or inconsistent requests and
indemnity from two or more groups of Holders of the Controlling Class, each
representing less than a Majority of the Controlling Class, the Trustee in its
sole discretion may determine what action, if any, shall be taken,
notwithstanding any other provisions of this Indenture.
 
Section 5.9. Unconditional Rights of Noteholders to Receive Principal and
Interest.
 
Notwithstanding any other provision in this Indenture (except for Section
2.7(n)), the Holder of any Class of Secured Note shall have the right, which is
absolute and unconditional, to receive payment of the principal of and interest
on such Class of Secured Note as such principal, interest and other amounts
become due and payable in accordance with the Priority of Payments and Section
13.1, 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; provided, however, that the right of such
Holder to institute proceedings for the enforcement of any such payment shall
not be subject to the 25% threshold requirement set forth in Section 5.8(b).
 
Section 5.10. Restoration of Rights and Remedies.
 
If the Trustee or any Noteholder has instituted any Proceeding to enforce any
right or remedy under this Indenture and such Proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee, or
to such Noteholder, then and in every such case the Issuer, the Co-Issuer, the
Trustee, and the 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 Trustee, and the
Noteholders shall continue as though no such Proceeding had been instituted.
 
Section 5.11. Rights and Remedies Cumulative.
 
No right or remedy herein conferred upon or reserved to the Trustee, or to the
Noteholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
 
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Section 5.12. Delay or Omission Not Waiver.
 
No delay or omission of the Trustee, or of any Noteholder 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 or a waiver of a subsequent Event of Default. Every right and remedy
given by this Article 5 or by law to the Trustee, or to the Noteholders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee, or by the Noteholders, as the case may be.
 
Section 5.13. Control by the Controlling Class.
 
Notwithstanding any other provision of this Indenture, if an Event of Default
shall have occurred and be continuing when any of the Secured Notes are
Outstanding, a Majority 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 for exercising any trust,
right, remedy or power conferred on the Trustee in respect of the Secured Notes;
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 the Trustee that is
not inconsistent with such direction; provided, however, 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 satisfactory indemnity
against such liability as set forth below);
 
(c) the Trustee shall have been provided with indemnity satisfactory to it; and
 
(d) any direction to the Trustee to undertake a Sale of the Assets shall be by
the Holders of Secured Notes secured thereby representing the percentage of the
Aggregate Outstanding Amount of Secured Notes specified in Section 5.5(a).
 
Section 5.14. Waiver of Past Defaults.
 
Prior to the time a judgment or decree for payment of the Money due has been
obtained by the Trustee, as provided in this Article 5, a Majority of each Class
of Secured Notes, voting as a separate Class, may on behalf of the Holders of
all the Secured Notes waive any past Default in respect of the Secured Notes and
its consequences, so long as any such waiver does not waive a material adverse
effect on any Hedge Agreement or any Hedge Counterparty’s rights thereunder,
except a Default:
 
(a) in the payment of interest on or principal of any Secured Note;
 
(b) in respect of a covenant or provision hereof that under Section 8.2 cannot
be modified or amended without the waiver or consent of the Holder of each
Outstanding Secured Note adversely affected thereby; or
 
(c) in respect of any covenant or provision hereof for the individual protection
or benefit of the Trustee (without the Trustee’s express written consent
thereto).
 
In the case of any such waiver, the Issuer, the Co-Issuer, the Trustee, and the
Holders of the Secured 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. The Trustee
shall promptly give written notice of any such waiver to the Collateral Manager,
each Hedge Counterparty and each Noteholder.
 
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.
 
Section 5.15. Undertaking for Costs.
 
All parties to this Indenture agree, and each Holder of any Secured 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 Noteholder, or group of Noteholders,
holding in the aggregate more than 10% in Aggregate Outstanding Amount of the
Controlling Class, or to any suit instituted by any Noteholder for the
enforcement of the payment of the principal of or interest on any Secured Note
or any other amount payable hereunder on or after the Stated Maturity (or, in
the case of redemption, on or after the applicable Redemption Date).
 
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Section 5.16. Waiver of Stay or Extension Laws.
 
Each of the Issuer and the Co-Issuer covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants, the performance of or any remedies under this Indenture;
and each of the Issuer and the Co-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.
 
Section 5.17. Sale of Assets.
 
(a) The power to effect any sale (a “Sale”) of any portion of the Assets
pursuant to Sections 5.4 and 5.5 hereof shall not be exhausted by any one or
more Sales as to any portion of such Assets remaining unsold, but shall continue
unimpaired until all amounts secured by the Assets shall have been paid or if
there are insufficient proceeds to pay such amount until the entire Assets shall
have been sold. The Trustee may upon notice to the Noteholders, each Hedge
Counterparty, and shall, upon direction of a Majority of the Controlling Class,
from time to time postpone any Sale by public announcement made at the time and
place of such Sale; provided, however, that if the Sale is rescheduled for a
date more than three Business Days after the date of the determination by the
Trustee pursuant to Section 5.5 hereof, such Sale shall not occur unless and
until the Trustee has again made the determination required by Section 5.5
hereof. 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 hereof.
 
(b) The Trustee may bid for and acquire any portion of the Assets in connection
with a public Sale thereof, and may pay all or part of the purchase price by
crediting against amounts owing on the Secured Notes or other amounts secured by
the Assets, 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 hereof. The Secured
Notes 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
Secured 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 Assets consists of securities issued without
registration under the Securities Act (“Unregistered Securities”), the Trustee
may seek an Opinion of Counsel, or, if no such Opinion of Counsel can be
obtained and with the consent of a Majority of the Controlling Class, seek a
no-action position from the Securities and Exchange 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 shall 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 Assets 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 Assets 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
Monies.
 
(e) In the event of any Sale of the Assets pursuant to Section 5.4 or Section
5.5, payments shall be made in accordance with Section 5.7 and in the order and
priority set forth in Section 11.1(a)(i) and Section 11.1(a)(ii) in the same
manner as if the Secured Notes had been accelerated, except that prior to any
payments on the Class B Notes, the Class A Notes shall be paid in full.
 
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Section 5.18. Action on the Secured Notes.
 
The Trustee’s right to seek and recover judgment on the Secured 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 Trustee, or
the Noteholders shall be impaired by the recovery of any judgment by the Trustee
against the Issuer or the Co-Issuer or by the levy of any execution under such
judgment upon any portion of the Assets or upon any of the assets of the Issuer
or the Co-Issuer.
 
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ARTICLE 6

 
THE TRUSTEE
 
Section 6.1. Certain Duties and Responsibilities.
 
(a) Except during the continuance of an Event of Default:
 
(i) the Trustee undertakes to perform such duties and only such duties as are
set forth in this Indenture, and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and
 
(ii) in the absence of manifest error, or 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,
however, 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 Collateral Manager, 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 so notify the Noteholders and
the holders of the Preferred Shares.
 
(b) In case an Event of Default 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 (or other Noteholders to the extent provided
in Article 5 hereof), exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person’s own affairs.
 
(c) If, in performing its duties under this Agreement, the Trustee is required
to decide between alternative courses of action, the Trustee may request written
instructions from the Collateral Manager as to courses of action desired by it.
If the Trustee does not receive such instructions within two Business Days after
it has requested them, it may, but shall be under no duty to, take or refrain
from taking such action. The Trustee shall act in accordance with instructions
received after such two-Business Day period except to the extent it has already
taken, or committed itself to take, action inconsistent with such instructions.
The Trustee shall be entitled to rely on the advice of legal counsel and
Independent accountants in performing its duties hereunder and be deemed to have
acted in good faith if it acts in accordance with such advice.
 
(d) 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:
 
(i) this subsection shall not be construed to limit the effect of subsection (a)
of this Section 6.1;
 
(ii) 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;
 
(iii) 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 the Controlling Class relating
to the time, method and place of conducting any Proceeding for any remedy
available to the Trustee in respect of any Secured Note or exercising any trust
or power conferred upon the Trustee under this Indenture;
 
(iv) 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)(i)(2) and Section 11.1(a)(i)(3) net of the amounts specified in Section
6.7(a)(i), the Trustee shall be deemed to be reasonably assured of such
repayment) unless such risk or liability relates to its ordinary services, under
this Indenture, except where this Indenture provides otherwise; and
 
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(v) the Trustee shall not be liable to the Noteholders for any action taken or
omitted by it at the direction of the Issuer, the Co-Issuer, the Collateral
Manager, the Controlling Class and/or a Noteholder under circumstances in which
such direction is required or permitted by the terms of this Indenture.
 
(e) 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(d),
5.1(f), 5.1(g) or 5.1(h) or any Default described in Section 5.1(e) 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 Default is received by the Trustee at the Corporate Trust
Office, and such notice references, as applicable, the Secured Notes generally,
the Issuer, the Assets or this Indenture. 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 a Default, such reference shall be
construed to refer only to such an Event of Default or Default of which the
Trustee is deemed to have notice as described in this Section 6.1.
 
(f) 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 Section 6.1(a),
(b), (c), (d) and (e).
 
(g) The Trustee shall, upon reasonable prior written notice to the Trustee,
permit the Issuer, the Co-Issuer, the Collateral Manager or the Rating Agencies,
during the Trustee’s normal business hours, to examine all books of account,
records, reports and other papers of the Trustee relating to the Secured Notes,
to make copies and extracts therefrom (the reasonable out-of-pocket expenses
incurred in making any such copies or extracts to be reimbursed to the Trustee
by such Person) and to discuss the Trustee’s actions, as such actions relate to
the Trustee’s duties with respect to the Secured Notes, with the Trustee’s
officers and employees responsible for carrying out the Trustee’s duties with
respect to the Secured Notes.
 
(h) The Trustee shall notify (in writing) the Preferred Share Paying and
Transfer Agent immediately upon the payment in full or redemption of all the
Secured Notes and the payment in full or discharge of all the other liabilities
of the Issuer and the Co-Issuer hereunder.
 
Section 6.2. Notice of Default.
 
Promptly (and in no event later than three Business Days) after the occurrence
of any Default known to the Trustee or after any declaration of acceleration has
been made or delivered to the Trustee pursuant to Section 5.2, the Trustee shall
transmit by mail to the Collateral Manager, the Irish Paying Agent (for so long
as any Secured Notes are listed on the Irish Stock Exchange), the Preferred
Share Paying and Transfer Agent, each Hedge Counterparty and each Rating Agency
(for so long as any Class of Secured Notes is Outstanding and rated by such
Rating Agency), to all Holders of Secured Notes as their names and addresses
appear on the Notes Register and to all holders of the Preferred Shares, notice
of all Defaults hereunder known to the Trustee, unless such Default shall have
been cured or waived.
 
Section 6.3. Certain Rights of Trustee.
 
Except as otherwise provided in Section 6.1:
 
(a) the Trustee may rely and shall be protected in acting or refraining from
acting upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, note or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
 
(b) any request or direction of the Issuer or the Co-Issuer mentioned herein
shall be sufficiently evidenced by an Issuer Request or Issuer Order, as the
case may be;
 
(c) whenever in the administration of this Indenture the Trustee shall (i) deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
an Officer’s Certificate or (ii) be required to determine the value of any
Assets or funds hereunder or the cash flows projected to be received therefrom,
the Trustee may, in the absence of bad faith on its part, rely on reports of
nationally recognized accountants, investment bankers or other persons qualified
to provide the information required to make such determination, including
nationally recognized dealers in securities of the type being valued and
securities quotation services;
 
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(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 Noteholders pursuant to this Indenture, unless such 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, note or other paper
documents, but the Trustee, in its discretion, may and, upon the written
direction of a Majority of the Controlling Class or of a 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 shall have received indemnification
reasonably acceptable to the Trustee, and, the Trustee shall be entitled, on
reasonable prior notice to the Issuer, the Co-Issuer and the Collateral Manager,
to examine the books and records relating to the Secured Notes and the Assets,
as applicable, at the premises of the Issuer, the Co-Issuer and the Collateral
Manager, personally or by agent or attorney during the Issuer’s, the Co-Issuer’s
or the Collateral Manager’s normal business hours upon not less than three
Business Days’ prior written notice; 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)
except 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 remain primarily responsible for the actions or omissions
of any agent appointed and supervised, or attorney appointed, 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 prudently believes to be authorized or within
its rights or powers hereunder;
 
(i) the Trustee shall not be responsible for the accuracy of the books or
records of, or for any acts or omissions of, the Depository, any Transfer Agent
(other than the Trustee itself acting in that capacity), Clearstream,
Luxembourg, Euroclear, any Calculation Agent (other than the Trustee itself
acting in that capacity) or any Paying Agent (other than the Trustee itself
acting in that capacity); and
 
(j) the Trustee shall not be liable for the actions or omissions of the
Collateral Manager; and without limiting the foregoing, the Trustee shall not
(except to the extent, if at all, otherwise expressly stated in this Indenture)
be under any obligation to monitor, evaluate or verify compliance by the
Collateral Manager with the terms hereof or the Collateral Management Agreement,
or to verify or independently determine the accuracy of information received by
it from the Collateral Manager (or from any selling institution, agent bank,
trustee or similar source) with respect to the Collateral Securities.
 
Section 6.4. Not Responsible for Recitals or Issuance of Secured Notes.
 
The recitals contained herein and in the Secured Notes, other than the
Certificate of Authentication thereon, shall be taken as the statements of the
Issuer and the Co-Issuer, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representation as to the validity or
sufficiency of this Indenture (except as may be made with respect to the
validity of the Trustee’s obligations hereunder), the Assets or the Secured
Notes. The Trustee shall not be accountable for the use or application by the
Issuer or the Co-Issuer of the Secured Notes or the proceeds thereof or any
Money paid to the Issuer or the Co-Issuer pursuant to the provisions hereof.
 
Section 6.5. May Hold Secured Notes.
 
The Trustee, the Paying Agent, the Notes Registrar or any other agent of the
Issuer or the Co-Issuer, in its individual or any other capacity, may become the
owner or pledgee of Secured Notes and may otherwise deal with the Issuer and the
Co-Issuer with the same rights it would have if it were not Trustee, Paying
Agent, Notes Registrar or such other agent.
 
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Section 6.6. Money Held in Trust.
 
Money 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
Money 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.
 
Section 6.7. Compensation and Reimbursement.
 
(a) The Issuer agrees:
 
(i) to pay the Trustee on each Payment Date the fee specified in the Trustee Fee
Proposal as compensation for all 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);
 
(ii) 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 (including securities transaction charges to the extent not
waived due to the Trustee’s receipt of payments from a financial institution
with respect to certain Eligible Investments, as specified by the Collateral
Manager 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 5.4, 5.5 or 10.7 hereof, except any
such expense, disbursement or advance as may be attributable to its negligence,
willful misconduct or bad faith);
 
(iii) to indemnify the Trustee and its Officers, directors, employees and agents
for, and to hold them harmless against, any loss, liability or expense incurred
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 costs and expenses of defending themselves against any claim or
liability in connection with the exercise or performance of any of their powers
or duties hereunder; and
 
(iv) to pay the Trustee reasonable additional compensation together with its
expenses (including reasonable counsel fees) for any collection action taken
pursuant to Section 6.13 hereof.
 
(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 Monies on deposit in the Payment Account in
accordance with the Priority of Payments.
 
(c) The Trustee in its capacity as Trustee, Paying Agent, Calculation Agent,
Transfer Agent, Custodial Securities Intermediary and Notes Registrar, hereby
agrees not to cause the filing of a petition in bankruptcy against the Issuer or
the Co-Issuer for the non-payment to the Trustee, in any such capacity, of any
amounts provided by this Section 6.7 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 Secured Notes issued under this Indenture.
 
(d) The Trustee agrees that the payment of all amounts to which it is entitled
pursuant to sub-sections 6.7(a)(i), (a)(ii), (a)(iii) and (a)(iv) shall be
subject to the Priority of Payments, shall be payable only to the extent funds
are available in accordance with such Priority of Payments, shall be payable
solely from the Assets and following realization of the Assets, any such claims
of the Trustee against the Issuer shall be extinguished. The Trustee will have a
lien upon the Assets to secure the payment of such payments to it in accordance
with the Priority of Payments; provided, that the Trustee shall not institute
any proceeding for enforcement of such lien except in connection with an action
taken pursuant to Section 5.3 hereof for enforcement of the lien of this
Indenture for the benefit of the Noteholders.
 
Fees shall be accrued on the actual number of days in the related Interest
Accrual Period. The Trustee shall receive amounts pursuant to this Section 6.7
and Sections 11.1(a)(i) and (ii) only to the extent that such payment is made in
accordance with the Priority of Payments and the failure to pay such amounts to
the Trustee will not, by itself, constitute an Event of Default. Subject to
Section 6.9, 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. No direction by a Majority of the Controlling Class shall affect the
right of the Trustee to collect amounts owed to it under this Indenture.
 
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If on any Payment Date when any amount shall be payable to the Trustee pursuant
to this Indenture is not paid because there are insufficient funds available for
the payment thereof, all or any portion of such amount not so paid shall be
deferred and payable on any later Payment Date on which a fee shall be payable
and sufficient funds are available therefor in accordance with the Priority of
Payments.
 
Section 6.8. Corporate Trustee Required; Eligibility.
 
There shall at all times be a Trustee hereunder which shall be a corporation or
banking association organized and doing business under the laws of the United
States of America or of any State thereof, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $200,000,000, subject to supervision or examination by federal or State
authority, having a rating of at least “Baa2” by Moody’s or “BBB+” by S&P and
having an office within the United States. If such corporation or banking
association 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 6.8, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
6.8, it shall resign immediately in the manner and with the effect hereinafter
specified in this Article 6.
 
Section 6.9. Resignation and Removal; Appointment of Successor.
 
(a) No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article 6 shall become effective until the acceptance
of appointment by the successor Trustee under Section 6.10.
 
(b) The Trustee may resign at any time by giving written notice thereof to the
Issuer, the Co-Issuer, the Collateral Manager, the Preferred Share Paying and
Transfer Agent, each Hedge Counterparty, the Noteholders, the holders of the
Preferred Shares and each Rating Agency. Upon receiving such notice of
resignation, the Issuer and the Co-Issuer shall promptly appoint a successor
trustee or trustees by written instrument, in duplicate, executed by an
Authorized Officer of the Issuer and an Authorized Officer of the Co-Issuer, one
copy of which shall be delivered to the Trustee so resigning and one copy to the
successor Trustee or Trustees, together with a copy to each Noteholder, each
holder of the Preferred Shares, each Hedge Counterparty, the Preferred Share
Paying and Transfer Agent and the Collateral Manager; provided, that such
successor Trustee shall be appointed only upon the written consent of a Majority
of the Secured Notes or, at any time when an Event of Default shall have
occurred and be continuing or when a successor Trustee has been appointed
pursuant to Section 6.10, by Act of the Controlling Class. 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, the Controlling
Class of Secured Notes or any Holder of a Secured Note, on behalf of himself and
all others similarly situated, may petition any court of competent jurisdiction
for the appointment of a successor Trustee.
 
(c) The Trustee may be removed at any time by Act of Holders of 66-2/3% of the
Aggregate Outstanding Amount of the Secured Notes or at any time when an Event
of Default shall have occurred and be continuing or when a successor Trustee has
been appointed pursuant to Section 6.10 by Act of a Majority of the Controlling
Class, upon written notice delivered to the Trustee and to the Issuer and the
Co-Issuer.
 
(d) If at any time:
 
(i) the Trustee shall cease to be eligible under Section 6.8 and shall fail to
resign after written request therefor by the Issuer, the Co-Issuer, or by any
Holder; or
 
(ii) the Trustee shall become incapable of acting or there shall be instituted
any proceeding pursuant to which it could 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;
 
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then, in any such case (subject to Section 6.9(a)), (a) the Issuer or the
Co-Issuer, by Issuer Order, subject to the written consent of each Hedge
Counterparty, may remove the Trustee or (b) subject to Section 5.15, a Majority
of the Controlling Class or any Holder may, on behalf of himself 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) If the Trustee shall resign, be removed or become incapable of acting, or if
a vacancy shall occur in the office of the Trustee for any reason, the Issuer
and the Co-Issuer, by Issuer Order, subject to the written consent of each Hedge
Counterparty and the Collateral Manager, shall promptly appoint a successor
Trustee. If the Issuer and the Co-Issuer shall fail to appoint a successor
Trustee within 60 days after such resignation, removal or incapability or the
occurrence of such vacancy, a successor Trustee may be appointed by Act of a
Majority of the Controlling Class delivered to the Issuer, the Co-Issuer, the
Collateral Manager and the retiring Trustee. The successor Trustee so appointed
shall, forthwith upon its acceptance of such appointment, become the successor
Trustee and supersede any successor Trustee proposed by the Issuer and the
Co-Issuer. If no successor Trustee shall have been so appointed by the Issuer
and the Co-Issuer or a Majority of the Controlling Class and shall have accepted
appointment in the manner hereinafter provided, subject to Section 5.15, each
Hedge Counterparty, the Controlling Class or any Holder may, on behalf of itself
or himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
 
(f) The Issuer and the Co-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, each Hedge Counterparty and to the Holders of the Secured
Notes as their names and addresses appear in the Notes Register. Each notice
shall include the name of the successor Trustee and the address of its Corporate
Trust Office. If the Issuer or the Co-Issuer fail to mail such notice within ten
days after acceptance of appointment by the successor Trustee, the successor
Trustee shall cause such notice to be given at the expense of the Issuer or the
Co-Issuer, as the case may be.
 
(g) No resignation or removal of the Trustee and no appointment of a Successor
Trustee shall become effective until the acceptance of appointment by the
Successor Trustee.
 
Section 6.10. Acceptance of Appointment by Successor.
 
Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Issuer, the Co-Issuer, each Hedge Counterparty, the Collateral
Manager and the retiring Trustee 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 further
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 and the Co-Issuer or a Majority of the Controlling Class or the
Collateral Manager or the successor Trustee, such retiring Trustee shall, upon
payment of its charges 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 Money held by such retiring Trustee hereunder, subject
nevertheless to its lien, if any, provided for in Section 6.7(d). Upon request
of any such successor Trustee, the Issuer and the Co-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 at the time of such
acceptance such successor shall be qualified and eligible under this Article 6
and (a) such successor shall have long term debt rated within the four highest
rating categories by each Rating Agency and (b) each Rating Agency has confirmed
in writing that the employment of such successor would not adversely affect the
rating on the Secured Notes.
 
Section 6.11. Merger, Conversion, Consolidation or Succession to Business of
Trustee.
 
Any corporation or banking association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or banking
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or substantially
all of the corporate trust business of the Trustee, shall be the successor of
the Trustee hereunder, provided such corporation shall be otherwise qualified
and eligible under this Article 6, without the execution or filing of any paper
or any further act on the part of any of the parties hereto. In case any of the
Secured 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 Secured
Notes so authenticated with the same effect as if such successor Trustee had
itself authenticated such Secured Notes.
 
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Section 6.12. Co-Trustees and Separate Trustee.
 
At any time or times, including for the purpose of meeting the legal
requirements of any jurisdiction in which any part of the Assets may at the time
be located, the Issuer, the Co-Issuer and 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 Assets, with the power to file such proofs of claim and
take such other actions pursuant to Section 5.6 herein and to make such claims
and enforce such rights of action on behalf of the Holders of the Secured Notes
as such Holders themselves may have the right to do, subject to the other
provisions of this Section 6.12.
 
The Issuer and the Co-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 and the Co-Issuer do not join in such
appointment within 15 days after the receipt by them of a request to do so, the
Trustee shall have power to make such appointment.
 
Should any written instrument from the Issuer or the Co-Issuer be required by
any co-trustee, so appointed, 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 or the Co-Issuer, as the
case may be. The Issuer agrees to pay (but only from and to the extent of the
Assets) to the extent funds are available therefor under subclauses (2), (3) and
(19) of Section 11.1(a)(i), 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 Secured Notes shall be authenticated and delivered and all rights,
powers, duties and obligations hereunder in respect of the custody of
securities, Cash 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 in the case of the
appointment of a co-trustee 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, with
the concurrence of the Issuer and the Co-Issuer evidenced by an Issuer Order,
may accept the resignation of or remove any co-trustee appointed under this
Section 6.12, and in case an Event of Default has occurred and is continuing,
the Trustee shall have the power to accept the resignation of, or remove, any
such co-trustee without the concurrence of the Issuer or the Co-Issuer. A
successor to any co-trustee so resigned or removed may be appointed in the
manner provided in this Section 6.12;
 
(d) no co-trustee hereunder shall be personally liable by reason of any act or
omission of the Trustee hereunder;
 
(e) the Trustee shall not be liable by reason of any act or omission of a
co-trustee; and
 
(f) any Act of Noteholders delivered to the Trustee shall be deemed to have been
delivered to each co-trustee.
 
Section 6.13. Certain Duties of Trustee Related to Delayed Payment of Proceeds.
 
In the event that in any month the Trustee shall not have received a Scheduled
Distribution, (a) the Trustee shall promptly notify the Issuer and the
Collateral Manager in writing and (b) unless within three Business Days (or the
end of the applicable grace period for such payment, if longer) after such
notice such payment shall have been received by the Trustee, or the Issuer, in
its absolute discretion (but only to the extent permitted by Section 10.2(a)),
shall have made provision for such payment satisfactory to the Trustee in
accordance with Section 10.2(a), the Trustee shall request the obligor of such
Pledged Obligation, 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 clause (iv) of Section 6.1(d), shall take such action as the
Collateral Manager reasonably shall direct in writing. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture. In the event that the Issuer or the Collateral Manager requests a
release of a Pledged Obligation in connection with any such action under the
Collateral Management Agreement, such release shall be subject to Section 10.8
and Article 12 of this Indenture, as the case may be. Notwithstanding any other
provision hereof, the Trustee shall deliver to the Issuer or its designee any
payment with respect to any Pledged Obligation received after the Due Date
thereof to the extent the Issuer previously made provisions for such payment
satisfactory to the Trustee in accordance with this Section 6.13 and such
payment shall not be deemed part of the Assets.
 
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Section 6.14. Representations and Warranties of the Trustee.
 
The Trustee represents and warrants that:
 
(a) the Trustee is a national banking association with trust powers, duly and
validly existing under the laws of the United States of America, with corporate
power and authority to execute, deliver and perform its obligations under this
Indenture, and is duly eligible and qualified to act as trustee under this
Indenture;
 
(b) this Indenture has been duly authorized, executed and delivered by the
Trustee and constitutes the valid and binding obligation of the Trustee,
enforceable against it in accordance with its terms except (i) as limited by
bankruptcy, fraudulent conveyance, fraudulent transfer, insolvency,
reorganization, liquidation, receivership, moratorium or other similar laws now
or hereafter in effect relating to creditors’ rights generally and by general
equitable principles, regardless of whether considered in a proceeding in equity
or at law and (ii) that the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought;
 
(c) neither the execution or delivery by the Trustee of this Indenture nor the
performance by the Trustee of its obligations under this Indenture requires the
consent or approval of, the giving of notice to or the registration or filing
with, any governmental authority or agency under any existing law of the United
States of America governing the banking or trust powers of the Trustee;
 
(d) 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 Trustee to obtain any consent, authorization,
approval or registration under, any law, statute, rule, regulation, or any
judgment, order, writ, injunction or decree that is binding upon the Trustee or
any of its properties or assets, (ii) will violate the provisions of the
Articles of Association or Bylaws of the Trustee or (iii) 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 material agreement to which the Trustee is a party or by
which it or any of its property is bound, the violation of which would have a
material adverse effect on the Trustee or its property; and
 
(e) there are no proceedings pending or, to the best knowledge of the Trustee,
threatened against the Trustee before any Federal, state or other governmental
agency, authority, administrator or regulatory body, arbitrator, court or other
tribunal, foreign or domestic, which could have a material adverse effect on the
Pledged Obligations or the performance by the Trustee of its obligations under
this Indenture.
 
Section 6.15. Requests for Consents.
 
In the event that the Trustee receives written notice of any proposed amendment,
consent or waiver under the Underlying Instruments of any Collateral Security
(before or after any default) or in the event any action is required to be taken
in respect to an Underlying Instrument, the Trustee shall promptly contact 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 which a Collateral Security as to which a consent or
wavier under the Underlying Instruments of such Collateral Security (before or
after any default) has been proposed or with respect to action required to be
taken in respect of an Underlying Instrument, give consent, grant a waiver, vote
or exercise any or all other rights or remedies with respect to any such
Collateral Security in accordance with such Issuer Order. In the absence of any
instruction from the Collateral Manager, the Trustee shall not engage in any
vote or take any action with respect to such a Collateral Security.
 
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ARTICLE 7

 
COVENANTS
 
Section 7.1. Payment of Principal and Interest.
 
The Issuer and Co-Issuer shall duly and punctually pay the principal of and
interest on each Class of Secured Notes in accordance with the terms of such
Secured Notes and this Indenture. The Issuer shall duly and punctually make
payments on the Preferred Shares in accordance with the terms thereof, this
Indenture and the Paying and Transfer Agency Agreement. Amounts properly
withheld under the Code or other applicable law by any Person from a payment to
any Noteholder of interest and/or principal shall be considered as having been
paid by the Issuer and the Co-Issuer to such 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 Noteholder of any such withholding
requirement no later than ten days prior to the related Payment Date from which
amounts are required (as directed by the Issuer or the Collateral Manager on
behalf of the Issuer) 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 and the Co-Issuer as
provided above.
 
Section 7.2. Maintenance of Office or Agency.
 
The Issuer and the Co-Issuer hereby appoint the Trustee as a Paying Agent for
the payment of principal of and interest on the Secured Notes and where Secured
Notes may be surrendered for registration of transfer or exchange and the Issuer
and the Co-Issuer hereby appoint CT Corporation System, 111 Eighth Avenue, 13th
Floor, New York, New York 10011, as their agent where notices and demands to or
upon the Issuer and the Co-Issuer in respect of the Secured Notes or this
Indenture may be served.
 
The Issuer and the Co-Issuer hereby appoint the Irish Paying Agent as a Paying
Agent for the payment of principal of and interest on the Secured Notes and to
act as their agent where notices and demands to or upon the Issuer and the
Co-Issuer in respect of the Secured Notes or this Indenture may be served and
where Secured Notes may be surrendered for registration of transfer or exchange.
 
The Issuer or the Co-Issuer may at any time and from time to time vary or
terminate the appointment of any such agent or appoint any additional agents for
any or all of such purposes; provided, however, that the Issuer and the
Co-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 and the
Co-Issuer in respect of the Secured Notes and this Indenture may be served and,
subject to any laws or regulations applicable thereto, an office or agency
outside of the United States where Secured Notes may be presented and
surrendered for payment; provided, further, that no paying agent shall be
appointed in a jurisdiction which subjects payments on the Secured Notes to
withholding tax. The Issuer or the Co-Issuer, as the case may be, shall give
prompt written notice to the Trustee, each Rating Agency and the 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 and the Co-Issuer shall fail to maintain any such
required office or agency in the Borough of Manhattan, The City of New York, or
outside the United States, or shall fail to furnish the Trustee with the address
thereof, presentations and surrenders may be made (subject to the limitations
described in the preceding paragraph) at and notices and demands may be served
on the Issuer and the Co-Issuer, and Secured Notes may be presented and
surrendered for payment to the appropriate Paying Agent at its main office and
the Issuer and the Co-Issuer hereby appoint the same as their agent to receive
such respective presentations, surrenders, notices and demands.
 
Section 7.3. Money for Note Payments to be Held in Trust.
 
All payments of amounts due and payable with respect to any Secured Notes that
are to be made from amounts withdrawn from the Payment Account shall be made on
behalf of the Issuer and the Co-Issuer by the Trustee or a Paying Agent (in each
case, from and to the extent of available funds in the Payment Account and
subject to the Priority of Payments) with respect to payments on the Secured
Notes.
 
When the Paying Agent is not also the Notes Registrar, the Issuer and the
Co-Issuer shall furnish, or cause the Notes Registrar to furnish, no later than
the fifth calendar day after each Record Date a list, if necessary, in such form
as such Paying Agent may reasonably request, of the names and addresses of the
Holders and of the certificate numbers of individual Secured Notes held by each
such Holder.
 
Whenever the Paying Agent is not also the Trustee, the Issuer, the Co-Issuer,
and such Paying Agent shall, on or before the Business Day next preceding each
Payment Date or Redemption Date, as the case may be, direct the Trustee to
deposit on such Payment Date with such Paying Agent, if necessary, an aggregate
sum sufficient to pay the amounts then becoming due (to the extent funds are
then available for such purpose in the Payment Account, and subject to the
Priority of Payments), such sum to be held for the benefit of the Persons
entitled thereto and (unless such Paying Agent is the Trustee) the Issuer and
the Co-Issuer shall promptly notify the Trustee of its action or failure so to
act. Any Monies deposited with a Paying Agent (other than the Trustee) in excess
of an amount sufficient to pay the amounts then becoming due on the Secured
Notes with respect to which such deposit was made shall be paid over by such
Paying Agent to the Trustee for application in accordance with Article 11. Any
such Paying Agent shall be deemed to agree by assuming such role not to cause
the filing of a petition in bankruptcy against the Issuer or the Co-Issuer for
the non-payment to the Paying Agent of any amounts payable thereto 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 Secured Notes issued under this
Indenture.
 
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The initial Paying Agent shall be as set forth in Section 7.2. Any additional or
successor Paying Agents shall be appointed by Issuer Order of the Issuer and
Issuer Order of the Co-Issuer with written notice thereof to the Trustee;
provided, however, that so long as any Class of the Secured Notes are rated by a
Rating Agency and with respect to any additional or successor Paying Agent for
the Secured Notes, either (i) such Paying Agent has a long-term debt rating of
“Aa3” or higher by Moody’s and “AA-” or higher by S&P or a short-term debt
rating of “P-1” by Moody’s and “A1+” by S&P or (ii) each Rating Agency confirms
that employing such Paying Agent shall not adversely affect the then-current
ratings of the Secured Notes. In the event that such successor Paying Agent
ceases to have a long-term debt rating of “Aa3” or higher by Moody’s and “AA-”
or higher by S&P or a short-term debt rating of at least “P-1” by Moody’s and
“A-1+” by S&P, the Issuer and the Co-Issuer shall promptly remove such Paying
Agent and appoint a successor Paying Agent. The Issuer and the Co-Issuer shall
not appoint any Paying Agent that is not, at the time of such appointment, a
U.S. depository institution or U.S. trust company subject to supervision and
examination by federal and/or state and/or national banking authorities. The
Issuer and the Co-Issuer shall cause the Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee (and if the Trustee acts as Paying Agent, it hereby
so agrees), subject to the provisions of this Section 7.3, that such Paying
Agent will:
 
(a) allocate all sums received for payment to the Holders of Secured Notes for
which it acts as Paying Agent on each Payment Date and Redemption Date among
such Holders in the proportion specified in the applicable report or Redemption
Date Statement, as the case may be, in each case to the extent permitted by
applicable law;
 
(b) hold all sums held by it for the payment of amounts due with respect to the
Secured Notes 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 Paying Agent is not the Trustee, immediately resign as a Paying
Agent and forthwith pay to the Trustee all sums held by it for the payment of
Secured Notes if at any time it ceases to meet the standards set forth above
required to be met by a Paying Agent at the time of its appointment;
 
(d) if such Paying Agent is not the Trustee, immediately give the Trustee notice
of any Default by the Issuer or the Co-Issuer (or any other obligor upon the
Secured Notes) in the making of any payment required to be made; and
 
(e) if such 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 sums so held by such Paying Agent.
 
The Issuer or the Co-Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Issuer Order direct the Paying Agent to pay, to the Trustee all sums held by
the Issuer or the Co-Issuer or held by the Paying Agent for payment of the
Secured Notes, such sums to be held by the Trustee in trust for the same
Noteholders as those upon which such sums were held by the Issuer, the Co-Issuer
or the Paying Agent; and, upon such payment by the Paying Agent to the Trustee,
the Paying Agent shall be released from all further liability with respect to
such Money.
 
Except as otherwise required by applicable law, any Money deposited with the
Trustee in trust or deposited with the Paying Agent for the payment of the
principal of or interest on any Secured Note and remaining unclaimed for two
years after such principal or interest has become due and payable shall be paid
to the Issuer; and the Holder of such Secured 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 the Paying Agent with respect to such Money
(but only to the extent of the amounts so paid to the Issuer or the Co-Issuer,
as applicable) shall thereupon cease; provided, however, that the Irish Paying
Agent, before being required to make any such payment, shall at the expense of
the Issuer cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in Dublin, Ireland, notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than thirty (30) days from the
date of such publication, any unclaimed balance of such money then remaining
shall be repaid to the Issuer. The Trustee or the 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 or the Co-Issuer, as the case may
be, any reasonable means of notification of such release of payment, including,
but not limited to, mailing notice of such release to Holders whose Secured
Notes have been called but have not been surrendered for redemption or whose
right to or interest in Monies due and payable but not claimed is determinable
from the records of the Paying Agent, at the last address of record of each such
Holder.
 
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Section 7.4. Existence of the Issuer and Co-Issuer.
 
(a) The Issuer shall maintain in full force and effect its existence and rights
as an exempted company incorporated with limited liability under the laws of the
Cayman Islands and shall obtain and preserve its qualification to do business as
a foreign limited liability company in each jurisdiction in which such
qualifications are or shall be necessary to protect the validity and
enforceability of this Indenture, the Secured Notes or any of the Assets;
provided, however, that the Issuer shall be entitled to change its jurisdiction
of registration from the Cayman Islands to any other jurisdiction reasonably
selected by the Issuer so long as (i) such change is not disadvantageous in any
material respect to the Holders, to the holders of the Preferred Shares or any
Hedge Counterparty, (ii) written notice of such change shall have been given by
the Trustee to the Holders, the holders of the Preferred Shares, each Hedge
Counterparty and each Rating Agency fifteen Business Days prior to such change
and (iii) on or prior to the 15th Business Day following such notice the Trustee
shall not have received written notice from a Majority of the Controlling Class
or a Majority of the Preferred Shares objecting to such change. The Issuer will
maintain at all times at least one director who is Independent of the Collateral
Manager and its Affiliates.
 
(b) The Co-Issuer shall maintain in full force and effect its existence and
rights as a company organized under the laws of Delaware and shall obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualifications are or shall be necessary to protect
the validity and enforceability of this Indenture or the Secured Notes;
provided, however, that the Co-Issuer shall be entitled to change its
jurisdiction of incorporation from Delaware to any other jurisdiction reasonably
selected by the Co-Issuer so long as (i) no Secured Notes remain Outstanding or
(ii) (A) such change is not disadvantageous in any material respect to the
Holders or to the holders of the Preferred Shares, (B) written notice of such
change shall have been given by the Trustee to the Holders, the holders of the
Preferred Shares and each Rating Agency fifteen Business Days prior to such
change and (C) on or prior to the 15th Business Day following such notice the
Trustee shall not have received written notice from a Majority of the
Controlling Class objecting to such change. The Co-Issuer shall maintain at all
times at least one director who is Independent of the Collateral Manager and its
Affiliates.
 
(c) The Issuer shall ensure that all corporate or other formalities regarding
its existence are followed (including correcting any known misunderstanding
regarding its separate existence). 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 its assets and liabilities being substantively
consolidated with any other Person in a bankruptcy, reorganization or other
insolvency proceeding. The Issuer shall maintain and implement administrative
and operating procedures reasonably necessary in the performance of the Issuer's
obligations hereunder, and the Issuer shall at all times keep and maintain, or
cause to be kept and maintained, separate books, records, accounts and other
information customarily maintained for the performance of the Issuer's
obligations hereunder. Without limiting the foregoing, (i) the Issuer shall (A)
pay its own liabilities only out of its own funds and (B) use separate
stationery, invoices and checks, (ii) the Issuer shall not have any subsidiaries
and (iii) the Issuer shall not (A) have any employees, (B) engage in any
transaction with any shareholder that would constitute a conflict of interest
(it being acknowledged and agreed that none of the Transaction Documents nor any
transactions between the Issuer and any shareholder permitted under the
Transaction Documents shall be deemed to constitute a conflict of interest), (C)
pay dividends other than in accordance with the terms of this Indenture, and
with regard to its Preferred Shares, its organizational documents and the Paying
and Transfer Agency Agreement or (D) conduct business under an assumed name
(i.e. no DBAs).
 
(d) The Co-Issuer shall ensure that all corporate or other formalities regarding
its existence (including holding regular board of directors’ and shareholders’
meetings) are followed, as well as correcting any known misunderstanding
regarding its separate existence. The Co-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 its assets and liabilities being substantively
consolidated with any other Person in a bankruptcy, reorganization or other
insolvency proceeding. The Co-Issuer shall maintain and implement administrative
and operating procedures reasonably necessary in the performance of the
Co-Issuer's obligations hereunder, and the Co-Issuer shall at all times keep and
maintain, or cause to be kept and maintained, books, records, accounts and other
information customarily maintained for the performance of the Co-Issuer's
obligations hereunder. Without limiting the foregoing, (i) the Co-Issuer shall
not have any subsidiaries and (ii) the Co-Issuer shall not (A) have any
employees (other than its directors), (B) join in any transaction with any
shareholder that would constitute a conflict of interest or (C) pay dividends
other than in accordance with the terms of this Indenture.
 
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Section 7.5. Protection of Assets.
 
(a) The Trustee, on behalf of the Issuer, pursuant to any Opinion of Counsel
received pursuant to Section 7.5(d), shall execute and deliver 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 Holders
hereunder and to:
 
(i) Grant more effectively all or any portion of the Assets;
 
(ii) maintain or preserve the lien (and the priority thereof) of this Indenture
or to carry out more effectively the purposes hereof;
 
(iii) perfect, publish notice of or protect the validity of any Grant made or to
be made by this Indenture (including, without limitation, any and all actions
necessary or desirable as a result of changes in law or regulations);
 
(iv) enforce any of the Pledged Obligations or other instruments or property
included in the Assets;
 
(v) preserve and defend title to the Assets and the rights of the Trustee, the
Holders of the Secured Notes and each Hedge Counterparty in the Assets against
the claims of all persons and parties; and
 
(vi) pay or cause to be paid any and all taxes levied or assessed upon all or
any part of the Assets.
 
The Issuer hereby designates the Trustee, its agent and attorney-in-fact to
execute any Financing Statement, continuation statement or other instrument
required pursuant to this Section 7.5. The Trustee agrees that it will from time
to time execute and cause to be filed Financing Statements and continuation
statements (it being understood that the Trustee shall be entitled to obtain and
rely upon an Opinion of Counsel described in Section 7.5(d), at the expense of
the Issuer, as to the need to file such Financing Statements and continuation
statements, the dates by which such filings are required to be made and the
jurisdictions in which such filings are required to be made).
 
(b) The Trustee shall not (i) except in accordance with Section 10.8(a), (b) or
(c) and except for payments, deliveries and distributions otherwise expressly
permitted under this Indenture, remove any portion of the Assets 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 as described in the Opinion of
Counsel delivered at the Closing Date pursuant to Section 3.1(d) or (B) from the
possession of the Person who held it on such date or (ii) cause or permit the
Securities Account or the Custodial Securities Intermediary to be located in a
different jurisdiction from the jurisdiction in which such securities accounts
and Custodial Securities Intermediary were located on the Closing 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 Obligations that secure
the Secured Notes.
 
(d) For so long as the Secured Notes are Outstanding, (i) on January 1, 2010 and
(ii) every 60 months after such date, the Issuer (or the Collateral Manager on
behalf of the Issuer) shall deliver to the Trustee for the benefit of the
Trustee, the Collateral Manager, each Hedge Counterparty and each Rating Agency,
at the expense of the Issuer, an Opinion of Counsel stating what is required, in
the opinion of such counsel, as of the date of such opinion, to maintain the
lien and security interest created by this Indenture with respect to the Assets,
and confirming the matters set forth in the Opinion of Counsel, furnished
pursuant to Section 3.1(d), with regard to the perfection and priority of such
security interest (and such Opinion may likewise be subject to qualifications
and assumptions similar to those set forth in the Opinion delivered pursuant to
Section 3.1(d)).
 
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Section 7.6. Notice of Any Amendments.
 
Each of the Issuer and the Co-Issuer shall give notice to the Rating Agencies
of, and satisfy the Rating Agency Condition with respect to, any amendments to
its Governing Documents.
 
Section 7.7. Performance of Obligations.
 
(a) Each of the Issuer and the Co-Issuer shall not take any action, and will use
its best effort not to permit any action to be taken by others, that would
release any Person from any of such Person’s covenants or obligations under any
instrument included in the Assets, except in the case of enforcement action
taken with respect to any Defaulted Security in accordance with the provisions
hereof and as otherwise required hereby.
 
(b) The Issuer or the Co-Issuer may, with the prior written consent of the
Majority of the Secured Notes (other than in the case of the Collateral
Management Agreement), contract with other Persons, including the Collateral
Manager or the Trustee, for the performance of actions and obligations to be
performed by the Issuer or the Co-Issuer, as the case may be, hereunder by such
Persons and the performance of the actions and other obligations with respect to
the Assets of the nature set forth in the Collateral Management Agreement by the
Collateral Manager. Notwithstanding any such arrangement, the Issuer or the
Co-Issuer, as the case may be, shall remain primarily liable with respect
thereto. In the event of such contract, the performance of such actions and
obligations by such Persons shall be deemed to be performance of such actions
and obligations by the Issuer or the Co-Issuer; and the Issuer or the Co-Issuer
shall punctually perform, and use its best efforts to cause the Collateral
Manager or such other Person to perform, all of their obligations and agreements
contained in the Collateral Management Agreement or such other agreement.
 
Section 7.8. Negative Covenants.
 
(a) The Issuer and Co-Issuer shall not:
 
(i) 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 Assets, except as expressly permitted by
this Indenture and the Collateral Management Agreement;
 
(ii) claim any credit on, make any deduction from, or dispute the enforceability
of, the payment of the principal or interest payable in respect of the Secured
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 Noteholder, by reason of the
payment of any taxes levied or assessed upon any part of the Assets;
 
(iii) (A) incur or assume any indebtedness other than pursuant to this
Indenture, or incur or assume or guarantee any indebtedness, other than the
Secured Notes or each Hedge Agreement or (B)(1) issue any additional Class of
Secured Notes, (2) issue any additional Preferred Shares or (3) issue any
additional shares or classes of stock other than the ordinary shares of the
Issuer or the Co-Issuer, as applicable;
 
(iv) (A) permit the validity or effectiveness of this Indenture or any Grant
hereunder to be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any Person to be
released from any covenants or obligations with respect to this Indenture or the
Secured Notes, except as may be expressly permitted hereby, or by the Collateral
Management Agreement, (B) permit any lien, charge, adverse claim, security
interest, mortgage or other encumbrance (other than the lien of this Indenture)
to be created on or extend to or otherwise arise upon or burden the Assets or
any part thereof, any interest therein or the proceeds thereof, except as may be
expressly permitted hereby; or (C) take any action that would permit the lien of
this Indenture not to constitute a valid first priority security interest in the
Assets, except as may be expressly permitted hereby;
 
(v) commingle its funds with the funds of any other Person, except as expressly
permitted by this Indenture;
 
(vi) exercise any warrant received by the Issuer (it being understood that the
Issuer may sell such warrant in accordance with Article 12);
 
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(vii) amend the Collateral Management Agreement except pursuant to Article 15;
 
(viii) dissolve or liquidate in whole or in part, except as permitted hereunder;
 
(ix) make or incur any capital expenditures, except as reasonably required to
perform its functions in accordance with the terms of this Indenture;
 
(x) become liable in any way, whether directly or by assignment or as a
guarantor or other surety, for the obligations of the lessee under any lease,
hire any employees or pay any dividends to its shareholders (other than in
accordance with the Priority of Payments);
 
(xi) maintain any bank accounts other than the Accounts and the bank account in
the Cayman Islands in which (inter alia) the proceeds of the Issuer’s issued
share capital and the transaction fees paid to the Issuer for agreeing to issue
the Securities will be kept;
 
(xii) conduct business under an assumed name, or change its name without first
delivering at least 30 days’ prior written notice to the Trustee, the
Noteholders and the Rating Agencies and an Opinion of Counsel to the effect that
such name change will not adversely affect the security interest hereunder of
the Trustee;
 
(xiii) for so long as any of the Secured Notes are Outstanding, register any
transfer of ordinary shares of the Issuer to U.S. Persons that are not Qualified
Purchasers;
 
(xiv) if it is neither a REIT nor one or more of its Affiliates that are
qualified REIT subsidiaries (within the meaning of Section 856(i)(2) of the
Code), establish or maintain an office or fixed place of business in the United
States or engage in any activity that would cause the Issuer to be subject to
U.S. Federal, state or local income or franchise tax;
 
(xv) except for any agreements involving the purchase and sale of Collateral
Securities having customary purchases or sale terms and documented with
customary loan trading documentation, enter into any agreements unless such
agreements contain “non-petition” and “limited recourse” provisions; and
 
(xvi) fail to maintain an arm’s length relationship with its Affiliates or the
Collateral Manager.
 
(b) Neither the Issuer nor the Trustee shall sell, transfer, exchange or
otherwise dispose of Assets, or enter into or engage in any business with
respect to any part of the Assets except as expressly permitted or required by
this Indenture and the Collateral Management Agreement.
 
(c) The Co-Issuer shall not invest any of its assets in “securities” (as such
term is defined in the Investment Company Act) and shall keep all of the
Co-Issuer’s assets in Cash.
 
(d) For so long as any of the Secured Notes are Outstanding, neither of the
Co-Issuers shall issue, or permit the transfer of, any Preferred Shares,
ordinary shares of the Issuer or capital stock of the Co-Issuer, as applicable,
to any Person other than a REIT or a qualified REIT subsidiary (within the
meaning of Section 856(i)(2) of the Code) thereof, as evidenced by a
representation therefrom; provided, that any transfer of ordinary shares of the
Issuer permitted under this Section 7.8(d) shall be subject to satisfaction of
the Rating Agency Condition.
 
(e) The Issuer shall not enter into any material new agreements (other than any
Hedge Agreement, Collateral Security, Collateral Security Purchase Agreement or
other agreement specifically contemplated by this Indenture) without the prior
written consent of Holders of a Majority of the Secured Notes and a Majority of
the par value of the Preferred Shares and shall provide notice of all new
agreements (other than any Hedge Agreement, Collateral Security, Collateral
Security Purchase Agreement or other agreement specifically contemplated by this
Indenture) to the Holders of the Secured Notes. The foregoing notwithstanding,
the Issuer may agree to any new agreements; provided that (i) the Issuer, or the
Collateral Manager on behalf of the Issuer, determines that such new agreements
would not, upon or after becoming effective, adversely affect the rights or
interests of any Class or Classes of Noteholders or the Preferred Shareholders
and (ii) subject to satisfaction of the Rating Agency Condition.
 
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(f) Notwithstanding anything to the contrary contained herein, the Collateral
Manager shall not cause the Issuer to purchase or acquire (whether in exchange
for a Collateral Security, or otherwise) a security which it has knowledge is a
Prohibited Obligation.
 
Section 7.9. Statement as to Compliance.
 
On or before January 31, in each calendar year, commencing in 2006 or
immediately if there has been a Default in the fulfillment of an obligation
under this Indenture, the Issuer shall deliver to the Trustee (which will
deliver a copy to each Hedge Counterparty and each Rating Agency) an Officer’s
Certificate given on behalf of the Issuer and without personal liability
stating, as to each signer thereof, that, since the date of the last certificate
or, in the case of the first certificate, the Closing Date, to the best of the
knowledge, information and belief of such Officer, the Issuer has fulfilled all
of its obligations under this Indenture or, if there has been a Default in the
fulfillment of any such obligation, specifying each such Default known to them
and the nature and status thereof.
 
Section 7.10. Issuer and Co-Issuer May Consolidate or Merge 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 the Governing Documents and Cayman Islands law and unless:
 
(i) 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 shall
be an entity organized and existing under the laws of the Cayman Islands or such
other jurisdiction approved by a Majority of (A) each Class of the Secured Notes
(each voting as a separate Class), (B) the holders of the Preferred Shares and
(C) each Hedge Counterparty; provided, that no such approval shall be required
in connection with any such transaction undertaken solely to effect a change in
the jurisdiction of registration pursuant to Section 7.4 hereof; and provided,
further, that the surviving entity shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, the Preferred Share
Paying and Transfer Agent, each Noteholder and each holder of a Preferred Share,
the due and punctual payment of the principal of and interest on all Secured
Notes, the due and punctual payment with respect to the Preferred Shares and
other amounts payable hereunder and under each Hedge Agreement, the Servicing
Agreement and the Collateral Management Agreement and the performance and
observance of every covenant of this Indenture and under each Hedge Agreement,
the Servicing Agreement and the Collateral Management Agreement on the part of
the Issuer to be performed or observed, all as provided herein;
 
(ii) each Rating Agency shall have been notified in writing of each proposed
consolidation or merger of the Issuer and the Trustee shall have received
written confirmation from each Rating Agency that the ratings issued with
respect to each Class of Secured Notes and the Preferred Shares, as applicable,
shall not be reduced or withdrawn as a result of the consummation of such
transaction;
 
(iii) 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 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 Assets or all or substantially all of its assets to any other Person
except in accordance with the provisions of this Section 7.10;
 
(iv) 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 shall have
delivered to the Trustee, the Preferred Share Paying and Transfer Agent, each
Hedge Counterparty, the Collateral Manager and each Rating Agency an Officer’s
Certificate and an Opinion of Counsel each stating that such Person is duly
organized, validly existing and 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 subsection (i) 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
Assets securing, in the case of a consolidation or merger of the Issuer, all of
the Secured Notes or, in the case of any transfer or conveyance of the Assets
securing any of the Secured Notes, such Secured Notes, (B) the Trustee continues
to have a valid perfected first priority security interest in the Assets
securing, in the case of a consolidation or merger of the Issuer, all of the
Secured Notes, or, in the case of any transfer or conveyance of the Assets
securing any of the Secured Notes, such Secured Notes and (C) such other matters
as the Trustee, each Hedge Counterparty, the Collateral Manager or any
Noteholder may reasonably require;
 
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(v) immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing;
 
(vi) the Issuer shall have delivered to the Trustee, the Preferred Share Paying
and Transfer Agent, each Hedge Counterparty, the Collateral Manager each
Noteholder and each holder of the Preferred Shares, 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 Article 7 and that
all conditions precedent in this Article 7 provided for relating to such
transaction have been complied with and that no adverse tax consequences will
result therefrom to the Holders of the Secured Notes or the holders of the
Preferred Shares;
 
(vii) after giving effect to such transaction, the Issuer shall not be required
to register as an investment company under the Investment Company Act; and
 
(viii) after giving effect to such transaction, the outstanding common stock of
the Issuer shall not be beneficially owned within the meaning of the Investment
Company Act by any U.S. Person that is not a Qualified Purchaser.
 
(b) The Co-Issuer shall not consolidate or merge with or into any other Person
or transfer or convey all or substantially all of its assets to any Person,
unless no Secured Notes remain Outstanding or:
 
(i) the Co-Issuer shall be the surviving corporation, or the Person (if other
than the Co-Issuer) formed by such consolidation or into which the Co-Issuer is
merged or to which all or substantially all of the assets of the Co-Issuer are
transferred shall be a company organized and existing under the laws of Delaware
or such other jurisdiction approved by a Majority of the Controlling Class;
provided, that no such approval shall be required in connection with any such
transaction undertaken solely to effect a change in the jurisdiction of
incorporation pursuant to Section 7.4; and provided, further, that the surviving
corporation shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, the Preferred Share Paying and Transfer
Agent, each Noteholder and each holder of the Preferred Shares, the due and
punctual payment of the principal of and interest on all Secured Notes and the
performance and observance of every covenant of this Indenture on the part of
the Co-Issuer to be performed or observed, all as provided herein;
 
(ii) each Rating Agency shall have been notified in writing of each proposed
consolidation or merger of the Co-Issuer and the Trustee shall have received
written confirmation from each Rating Agency that the ratings issued with
respect to each Class of Secured Notes and the Preferred Shares, as applicable,
shall not be reduced or withdrawn as a result of the consummation of such
transaction;
 
(iii) if the Co-Issuer is not the surviving corporation, the Person formed by
such consolidation or into which the Co-Issuer is merged or to which all or
substantially all of the assets of the Co-Issuer are transferred shall have
agreed with the Trustee (A) to observe the same legal requirements for the
recognition of such formed or surviving corporation as a legal entity separate
and apart from any of its Affiliates as are applicable to the Co-Issuer with
respect to its Affiliates and (B) not to consolidate or merge with or into any
other Person or transfer or convey the Assets or all or substantially all of its
assets to any other Person except in accordance with the provisions of this
Section 7.10;
 
(iv) if the Co-Issuer is not the surviving corporation, the Person formed by
such consolidation or into which the Co-Issuer is merged or to which all or
substantially all of the assets of the Co-Issuer are transferred shall have
delivered to the Trustee and each Rating Agency an Officer’s Certificate and an
Opinion of Counsel each stating that such Person is duly organized, validly
existing and 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 subsection (i) 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); such other matters as the Trustee or any Noteholder may
reasonably require;
 
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(v) immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing;
 
(vi) the Co-Issuer shall have delivered to the Trustee and each 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 Article 7 and that all conditions precedent in this Article 7
provided for relating to such transaction have been complied with and that no
adverse tax consequences will result therefrom to the Holders of the Secured
Notes or the holders of the Preferred Shares;
 
(vii) after giving effect to such transaction, the Co-Issuer shall not be
required to register as an investment company under the Investment Company Act;
and
 
(viii) after giving effect to such transaction, the outstanding stock of the
Co-Issuer shall not be beneficially owned within the meaning of the Investment
Company Act by any U.S. Person that is not a Qualified Purchaser.
 
Section 7.11. Successor Substituted.
 
Upon any consolidation or merger, or transfer or conveyance of all or
substantially all of the assets of the Issuer or the Co-Issuer, in accordance
with Section 7.10 hereof, the Person formed by or surviving such consolidation
or merger (if other than the Issuer or the Co-Issuer), or the Person to which
such consolidation, merger, transfer or conveyance is made, shall succeed to,
and be substituted for, and may exercise every right and power of, the Issuer or
the Co-Issuer, as the case may be, under this Indenture with the same effect as
if such Person had been named as the Issuer or the Co-Issuer, as the case may
be, herein. In the event of any such consolidation, merger, transfer or
conveyance, the Person named as the “Issuer” or the “Co-Issuer” in the first
paragraph of this Indenture or any successor which shall theretofore have become
such in the manner prescribed in this Article 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 Secured Notes and from its
obligations under this Indenture.
 
Section 7.12. No Other Business.
 
The Issuer shall not engage in any business or activity other than issuing and
selling the Secured Notes pursuant to this Indenture and any supplements
thereto, issuing the Preferred Shares pursuant to its Governing Documents,
entering into any Hedge Agreement, the Collateral Management Agreement and
acquiring, owning, holding and pledging the Assets in connection with the
Secured Notes and such other activities which are necessary, suitable or
convenient to accomplish the foregoing or are incidental thereto or connected
therewith. The Co-Issuer shall not engage in any business or activity other than
issuing and selling the Secured Notes pursuant to this Indenture and any
supplements thereto and such other activities which are necessary, suitable or
convenient to accomplish the foregoing or are incidental thereto or connected
therewith. The Issuer and the Co-Issuer shall not amend their respective
Governing Documents without prior confirmation that such amendment would not
result in the rating of any Class of Secured Notes or Preferred Shares, as
applicable, being reduced, qualified or withdrawn by any Rating Agency, which
confirmation from S&P will be in writing.
 
Section 7.13. Reporting.
 
At any time when the Issuer and/or the Co-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 Secured Note, the Issuer and/or the Co-Issuer shall promptly furnish
or cause to be furnished “Rule 144A Information” (as defined below) to such
holder or beneficial owner, to a prospective purchaser of such Security
designated by such holder or beneficial owner or to the Trustee for delivery to
such holder or beneficial owner or a prospective purchaser designated by such
holder or beneficial owner, as the case may be, in order to permit compliance by
such holder or beneficial owner with Rule 144A under the Securities Act in
connection with the resale of such Security by such holder or beneficial owner.
“Rule 144A Information” shall be such information as is specified pursuant to
Rule 144A(d)(4) under the Securities Act (or any successor provision thereto).
The Trustee shall reasonably cooperate with the Issuer and/or the Co-Issuer in
mailing or otherwise distributing (at the Issuer’s expense) to such Noteholders
or prospective purchasers, at and pursuant to the Issuer’s and/or the
Co-Issuer’s written direction the foregoing materials prepared by or on behalf
of the Issuer and/or the Co-Issuer; provided, however, that the Trustee shall be
entitled to prepare and affix thereto or enclose therewith reasonable
disclaimers to the effect that such Rule 144A Information was not assembled by
the Trustee, that the Trustee has not reviewed or verified the accuracy thereof,
and that it makes no representation as to such accuracy or as to the sufficiency
of such information under the requirements of Rule 144A or for any other
purpose.
 
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Section 7.14. Certain Tax Matters.
 
(a) The Issuer will not elect to be treated as a partnership for U.S. federal
income tax purposes.
 
(b) The Issuer will provide, upon request of any Holder of any other Class of
Notes deemed equity for U.S. federal income tax purposes, any information that
such Holder with regard to any filing requirements such Holder may have as a
result of the Issuer being classified as a “passive foreign investment company”
or a “controlled foreign corporation” (as applicable) for U.S. federal income
tax purposes.
 
(c) If a REIT or one or more of its Affiliates that are qualified REIT
subsidiaries (within the meaning of Section 856(i)(2) of the Code) no longer is
the registered owner of 100% of the Preferred Shares or 100% of the ordinary
shares of the Issuer, (i) the Issuer shall not become the owner of any asset if
the ownership or disposition of such asset (without regard to the other
activities of the Issuer) would cause the Issuer to be engaged, or be deemed to
be engaged, in a trade or business within the United States for U.S. federal
income tax purposes and (ii) the Issuer shall not engage in any other activity
if such activity would cause the Issuer to be engaged, or be deemed to be
engaged, in a trade or business within the United States for U.S. federal income
tax purposes.
 
Section 7.15. Maintenance of Listing.
 
For so long as any of the Secured Notes remain Outstanding, the Issuer and
Co-Issuer shall use all reasonable efforts to arrange and maintain the listing
of the Secured Notes on the Irish Stock Exchange.
 
Section 7.16. Ratings.
 
So long as any of the Secured Notes remain Outstanding, on or before the Payment
Date occurring in January of each year commencing in 2006, the Issuer (or the
Collateral Manager on behalf of the Issuer) shall obtain and the Issuer shall
pay for an annual review of the ratings of the Secured Notes by S&P and Moody’s.
The Issuer (or the Collateral Manager on behalf of the Issuer) shall promptly
notify the Trustee (which shall promptly notify the Noteholders in its next
Notes Valuation Report or Monthly Report) and any Hedge Counterparty if at any
time the applicable ratings on any of the Secured Notes have been, or are known
to be, changed or withdrawn.
 
Section 7.17. Calculation Agent.
 
(a) The Issuer and the Co-Issuer hereby agree that for so long as any Senior
Collateral Management Fee shall be paid pursuant to the Collateral Management
Agreement or the Issuer is party to any Interest Rate Swap Agreement there shall
at all times be an agent appointed to calculate LIBOR in respect of each
Interest Accrual Period in accordance with the terms of Schedule 2 hereto (the
“Calculation Agent”). The Issuer and the Co-Issuer have initially appointed the
Trustee as Calculation Agent for purposes of determining LIBOR for each Interest
Accrual Period. The Calculation Agent may be removed by the Issuer and the
Co-Issuer at any time. The Calculation Agent may resign at any time by giving
written notice thereof to the Issuer, the Co-Issuer, the Collateral Manager,
each Hedge Counterparty, the Noteholders and each Rating Agency. If the
Calculation Agent is unable or unwilling to act as such or is removed by the
Issuer and the Co-Issuer in respect of any Interest Accrual Period, the Issuer
and the Co-Issuer shall, with the prior written consent of each Hedge
Counterparty, promptly appoint as a replacement Calculation Agent a leading bank
which is engaged in transactions in Eurodollar deposits in the international
Eurodollar market and which does not control or is not controlled by or under
common control with the Issuer or the Co-Issuer. The Calculation Agent may not
resign its duties without a successor having been duly appointed, and shall
promptly inform each Hedge Counterparty of any such appointment. If no successor
Calculation Agent shall have been appointed within 30 days after giving of a
notice of resignation, the resigning Calculation Agent, each Hedge Counterparty,
a Majority of the Secured Notes or any Holder of a Secured Note, on behalf of
himself and all others similarly situated, may petition a court of competent
jurisdiction for the appointment of a successor Calculation Agent.
 
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(b) The Calculation Agent agrees that, as soon as practicable after 11:00 a.m.
(London time) on each LIBOR Determination Date (as defined in Schedule 2
hereto), but in no event later than 11:00 a.m. (New York time) on the London
Banking Day immediately following each LIBOR Determination Date, the Calculation
Agent shall calculate LIBOR for the next Interest Accrual Period and will
communicate such rates and amounts to the Issuer, the Co-Issuer, the Trustee,
the Collateral Manager, the Paying Agent, each Hedge Counterparty. The
Calculation Agent shall also specify to the Issuer and the Co-Issuer the
quotations upon which LIBOR is based, and in any event the Calculation Agent
shall notify the Issuer and the Co-Issuer before 5:00 p.m. (New York time) on
each LIBOR Determination Date if it has not determined and is not in the process
of determining LIBOR, together with the reasons therefor.
 
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ARTICLE 8

 
SUPPLEMENTAL INDENTURES
 
Section 8.1. Supplemental Indentures Without Consent of Noteholders.
 
Without the consent of the Holders of any Secured Notes, the Issuer, the
Co-Issuer, when authorized by Board Resolutions, and the Trustee, with the
written consent of each Hedge Counterparty delivered to the Issuer, the
Co-Issuer and the Trustee, and, in the case of Sections 8.1(b) and (i) below,
with written notice to the holders of the Preferred Shares, 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 Secured Notes, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:
 
(a) to evidence the succession of another Person to the Issuer or the Co-Issuer
and the assumption by any such successor Person of the covenants of the Issuer
or the Co-Issuer herein and in the Secured Notes;
 
(b) to add to the covenants of the Issuer, the Co-Issuer or the Trustee for the
benefit of the Holders of the Secured Notes and each Hedge Counterparty or to
surrender any right or power herein conferred upon the Issuer or the Co-Issuer;
 
(c) to convey, transfer, assign, mortgage or pledge any property to or with the
Trustee, or add to the conditions, limitations or restrictions on the authorized
amount, terms and purposes of the issue, authentication and delivery of the
Secured Notes;
 
(d) to evidence and provide for the acceptance of appointment hereunder by a
successor Trustee and to add to or change any of the provisions of this
Indenture as shall be necessary to facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Sections
6.9, 6.10 and 6.12 hereof;
 
(e) to 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, without limitation, 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;
 
(f) to modify the restrictions on and procedures for resales and other transfers
of Secured Notes to reflect any changes in applicable law or regulation (or the
interpretation thereof) or to enable the Issuer and the Co-Issuer to rely upon
any exemption from registration under the Securities Act or the Investment
Company Act or to remove restrictions on resale and transfer to the extent not
required thereunder;
 
(g) to accommodate the issuance, if any, of Secured Notes in global or
book-entry form through the facilities of the Depository Trust Company or
otherwise;
 
(h) enable the Issuer and the Trustee to rely upon any exemption from
registration under the Exchange Act or the Investment Company Act or to remove
certain existing restrictions to the extent not required under such exemption;
 
(i) otherwise to correct any inconsistency or cure any ambiguity or mistake;
 
(j) to take any action commercially reasonably necessary or advisable to prevent
the Issuer, the Co-Issuer or the Trustee from being subject to withholding or
other taxes, fees or assessments or to prevent the Issuer from being treated as
engaged in a U.S. trade or business or otherwise subject to U.S. federal, state
or local income or franchise tax on a net income tax basis; and
 
(k) conform this Indenture to the provisions described in the Offering
Memorandum dated as of March 9, 2005 (or any supplement thereto).
 
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 immunities under this Indenture or
otherwise, except to the extent required by law.
 
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If any Class of Secured Notes is Outstanding and rated by a Rating Agency, the
Trustee shall not enter into any such supplemental indenture if, as a result of
such supplemental indenture, such Rating Agency would cause the rating of any
such Secured Notes to be reduced or withdrawn. At the cost of the Issuer, the
Trustee shall provide to the Noteholders and each Hedge Counterparty a copy of
any proposed supplemental indenture at least 15 days prior to the execution
thereof by the Trustee and a copy of the executed supplemental indenture after
its execution. At the cost of the Issuer, for so long as any Class of Secured
Notes shall remain Outstanding and is rated by a Rating Agency, the Trustee
shall provide to such Rating Agency a copy of any proposed supplemental
indenture (including without limitation any amendment to Section 3.3(f)) at
least 15 days prior to the execution thereof by the Trustee, and, for so long as
such Secured Notes are Outstanding and so rated, request written confirmation
that such Rating Agency will not, as a result of such supplemental indenture,
cause the rating of any such Class of Secured Notes to be reduced or withdrawn,
and, as soon as practicable after the execution by the Trustee, the Issuer and
the Co-Issuer of any such supplemental indenture, provide to such Rating Agency
a copy of the executed supplemental indenture.
 
Section 8.2. Supplemental Indentures with Consent of Noteholders.
 
With the written consent of each Hedge Counterparty and a Majority of each Class
of Secured Notes adversely affected thereby, by Act of said Holders of Secured
Notes delivered to the Trustee, the Issuer and the Co-Issuer, the Trustee, the
Issuer and the Co-Issuer may enter into one or more indentures supplemental
hereto to add any provisions to, or change in any manner or eliminate any of the
provisions of, this Indenture or modify in any manner the rights of the Holders
of the Secured Notes of such Class under this Indenture; provided, however, that
notwithstanding anything in this Indenture to the contrary, no such supplemental
indenture shall, without the consent of each Holder of each Outstanding Secured
Note of each Class adversely affected thereby to:
 
(a) change the Stated Maturity of the principal of or the due date of any
installment of interest on any Secured Note, reduce the principal amount thereof
or the Note Interest Rate thereon or the Redemption Price with respect to any
Secured Note, or change the earliest date on which any Secured Note may be
redeemed at the option of the Issuer, change the provisions of this Indenture
that apply the proceeds of any Assets to the payment of principal of or interest
on Secured Notes or change any place where, or the coin or currency in which,
any Secured Note 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 thereof (or, in the case of redemption, on or after
the applicable Redemption Date);
 
(b) reduce the percentage of the Aggregate Outstanding Amount of Holders of
Secured Notes of each Class whose consent is required for the authorization of
any such supplemental indenture or for any waiver of compliance with certain
provisions of this Indenture or certain Defaults hereunder or their consequences
provided for in this Indenture;
 
(c) impair or adversely affect the Assets except as otherwise permitted in this
Indenture;
 
(d) permit the creation of any lien ranking prior to or on a parity with the
lien of this Indenture with respect to any part of the Assets or terminate such
lien on any property at any time subject hereto or deprive the Holder of any
Secured Note of the security afforded to such Holder by the lien of this
Indenture;
 
(e) reduce the percentage of the Aggregate Outstanding Amount of Holders of
Secured Notes of each Class whose consent is required to request the Trustee to
preserve the Assets or rescind the Trustee’s election to preserve the Assets
pursuant to Section 5.5 or to sell or liquidate the Assets pursuant to Section
5.4 or 5.5 hereof;
 
(f) modify any of the provisions of this Section 8.2, except to increase any
such percentage or to provide that certain other provisions of this Indenture
cannot be modified or waived without the consent of the Holder of each
outstanding Secured Note affected thereby;
 
(g) modify the definition of the term “Outstanding” or the provisions of Section
13.1 hereof;
 
(h) modify the Priority of Payments set forth in Section 11.1(a);
 
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(i) modify or amend any of the non-petition and non-recourse provisions set
forth herein or in any of the related Transaction Documents; or
 
(j) modify any of the provisions of this Indenture in such a manner as to affect
the calculation of the amount of any payment of interest or principal on any
Secured Note on any Payment Date or to affect the rights of the Holders of
Secured Notes to the benefit of any provisions for the redemption of such
Secured Notes contained herein;
 
provided, however, that no supplemental indenture may reduce the permitted
minimum denominations of the Secured Notes or modify any provisions regarding
limited recourse or non-petition covenants with respect to the Issuer and the
Co-Issuer; and provided, further, that the Issuer shall comply with the
provisions of Section 16(d) of the Paying and Transfer Agency Agreement.
 
If any Class of Secured Notes are Outstanding and rated by a Rating Agency, the
Trustee shall not enter into any such supplemental indenture if, as a result of
such supplemental indenture, such Rating Agency would cause the rating of any
such Secured Notes to be immediately reduced or withdrawn (unless 100% of the
Holders of the Outstanding Secured Notes of each Class of Secured Notes consent
in writing to such supplemental indenture). At the cost of the Issuer, for so
long as any Class of Secured Notes shall remain Outstanding and is rated by a
Rating Agency, the Trustee shall provide to such Rating Agency a copy of any
proposed supplemental indenture at least 15 days prior to the execution thereof
by the Trustee, and, for so long as such Secured Notes are Outstanding and so
rated, request written confirmation that such Rating Agency will not, as a
result of such supplemental indenture, cause the rating of any such Class of
Secured Notes to be reduced or withdrawn. Notwithstanding anything herein to the
contrary, if 100% of the Holders of all of the Outstanding Secured Note of each
Class consent in writing to any such supplemental indenture then such written
confirmation from such Rating Agency shall not be required.
 
The Trustee shall be entitled to rely upon an Opinion of Counsel provided by and
at the expense of the party requesting such supplemental indenture in
determining whether or not the Holders of Secured Notes would be adversely
affected by such change (after giving notice of such change to the Holders of
Secured Notes) or whether or not the Issuer has complied with the provisions of
Section 16(d) of the Paying and Transfer Agency Agreement and provide notice of
such determination to the Preferred Share Paying and Transfer Agent and all the
holders of the Preferred Shares. Such determination shall be conclusive and
binding on all present and future Holders. The Trustee shall not be liable for
any such determination made in good faith and in reliance upon an Opinion of
Counsel delivered to the Trustee as described in Section 8.3 hereof.
 
It shall not be necessary for any Act of Noteholders under this Section 8.2 to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
 
Promptly after the execution by the Issuer, the Co-Issuer and the Trustee of any
supplemental indenture pursuant to this Section 8.2, the Trustee, at the expense
of the Issuer, shall mail to the Holders, the holders of the Preferred Shares,
each Hedge Counterparty, the Preferred Share Paying and Transfer Agent, the
Collateral Manager, and, so long as the Secured Notes are Outstanding and so
rated, each Rating Agency a copy thereof based on an outstanding rating. 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.
 
Section 8.3. Execution of Supplemental Indentures.
 
In executing or accepting the additional trusts created by any supplemental
indenture permitted by this Article 8 or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and shall
be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture and that all conditions precedent thereto have been satisfied. The
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture which affects the Trustee’s own rights, duties or immunities under
this Indenture or otherwise. The Collateral Manager will be bound to follow any
amendment or supplement to this Indenture of which it has received written
notice at least ten Business Days prior to the execution and delivery of such
amendment or supplement; provided, however, that with respect to any amendment
or supplement to this Indenture which may, in the judgment of the Collateral
Manager, adversely affect the Collateral Manager, the Collateral Manager shall
not be bound (and the Issuer agrees that it will not permit any such amendment
to become effective) unless the Collateral Manager gives written consent to the
Trustee and the Issuer to such amendment. The Issuer and the Trustee shall give
written notice to the Collateral Manager of any amendment made to this Indenture
pursuant to its terms. In addition, the Collateral Manager’s written consent
shall be required prior to any amendment to this Indenture by which it is
affected.
 
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Section 8.4. Effect of Supplemental Indentures.
 
Upon the execution of any supplemental indenture under this Article 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 Secured Notes theretofore and thereafter authenticated and delivered
hereunder shall be bound thereby.
 
Section 8.5. Reference in Secured Notes to Supplemental Indentures.
 
Secured Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article 8 may, and if required by the
Trustee shall, bear a notice in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Issuer and the Co-Issuer
shall so determine, new Secured Notes, so modified as to conform in the opinion
of the Trustee and the Issuer and the Co-Issuer to any such supplemental
indenture, may be prepared and executed by the Issuer and the Co-Issuer and
authenticated and delivered by the Trustee in exchange for Outstanding Secured
Notes.
 
Section 8.6. Delivery of Supplemental Indentures to Repository.
 
As promptly as possible following the execution of any supplemental indenture or
other modification under this Article 8, the Trustee shall deliver or make
available on its website a copy of such supplemental indenture or other
modification to the Repository for posting on the Repository in the manner
described in Section 10.12.
 
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ARTICLE 9

 
REDEMPTION OF SECURED NOTES; REDEMPTION PROCEDURES
 
Section 9.1. Clean-up Call; Tax Redemption and Optional Redemption.
 
(a) The Secured Notes may be redeemed at the option of and at the direction of
the Collateral Manager, in whole but not in part, on any Payment Date (the
“Clean-up Call Date”), on or after the Payment Date on which the Aggregate
Outstanding Amount of the Secured Notes has been reduced to 10% of the Aggregate
Outstanding Amount of the Secured Notes on the Closing Date, at a price equal to
the applicable Redemption Price (such redemption, a “Clean-up Call”); provided,
that any payments due and payable upon a termination of each Hedge Agreement
will be made on the Clean-up Call Date in accordance with the terms thereof and
this Indenture; and provided further, the funds available to be used for such
Clean-up Call will be sufficient to pay the Total Redemption Price. Upon a
Clean-up Call, the Preferred Shares shall be redeemed at their Redemption Price
subject to the terms of the Preferred Share Paying and Transfer Agency
Agreement.
 
(b) The Secured Notes shall be redeemable, in whole but not in part, at the
direction of holders of at least a Majority of the Preferred Shares on the
Payment Date (the “Tax Redemption Date”) following the occurrence of a
Withholding Tax Event and satisfaction of the Tax Materiality Condition at a
price equal to the applicable Redemption Price (such redemption, a “Tax
Redemption”); provided, that any payments due and payable upon a termination of
each Hedge Agreement will be made in accordance with the terms thereof and this
Indenture; and provided further, the funds available to be used for such Tax
Redemption will be sufficient to pay the Total Redemption Price. Upon a Tax
Redemption, the Preferred Shares shall be redeemed at their Redemption Price
subject to the terms of the Preferred Share Paying and Transfer Agency
Agreement. Upon the occurrence of a Withholding Tax Event, the Issuer and the
Co-Issuer, at the direction of the Collateral Manager shall provide written
notice thereof to the Trustee, the Irish Paying Agent (for so long as any
Secured Notes are listed on the Irish Stock Exchange), each Hedge Counterparty,
the holders of the Preferred Shares and each Rating Agency.
 
(c) The Secured Notes shall be redeemed, in whole but not in part, at a price
equal to the applicable Redemption Price, on any Payment Date on or after the
Payment Date occurring in January 2008 (such redemption, an “Optional
Redemption”) at the direction of holders of at least a Majority of the Preferred
Shares delivered to the Trustee; provided, however, that any payments due and
payable upon a termination of each Hedge Agreement will be made in accordance
with the terms thereof and this Indenture; and provided further, the funds
available to be used for such Optional Redemption will be sufficient to pay the
Total Redemption Price. Upon an Optional Redemption, the Preferred Shares shall
be redeemed at their Redemption Price subject to the terms of the Preferred
Share Paying and Transfer Agency Agreement.
 
(d) The election by the Collateral Manager to redeem the Securities pursuant to
a Clean-up Call shall be evidenced by an Officer’s Certificate from the
Collateral Manager directing the Trustee to make the payment to the Paying Agent
of the applicable Redemption Price of all of the Securities to be redeemed from
funds in the Payment Account in accordance with the Priority of Payments. In
connection with a Tax Redemption, the occurrence of a Withholding Tax Event and
satisfaction of the Tax Materiality Condition shall be evidenced by an Issuer
Order from the Issuer or from the Collateral Manager on behalf of the Issuer
certifying that the conditions for a Tax Redemption have occurred. The Trustee
on behalf of the Issuer and the Co-Issuer (or, in the case of the Preferred
Shares, on behalf of the Issuer) shall set the applicable Redemption Date and
give notice thereof to the Collateral Manager pursuant to Section 9.3 hereof.
 
(e) A redemption pursuant to Sections 9.1(a), 9.1(b) or 9.1(c) shall not occur
unless (1) (i) at least six Business Days before the scheduled Redemption Date,
the Collateral Manager shall have certified to the Trustee that the Collateral
Manager on behalf of the Issuer has entered into a binding agreement or
agreements, with one or more financial institutions 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 each
Rating Agency of at least equal to the highest rating of any Securities then
Outstanding or whose short-term unsecured debt obligations have a credit rating
of “P-1” by Moody’s as long as the term of such agreement is ninety (90) day or
less and “A-1” by S&P, to sell all or part of the Pledged Obligations, not later
than the Business Day immediately preceding the scheduled Redemption Date or
(ii) the Trustee shall have received written confirmation that the method of
redemption satisfies the Rating Agency Condition and (2) the related Sale
Proceeds (in immediately available funds), together with all other available
funds (including proceeds from the sale of the Assets, Eligible Investments
maturing on or prior to the scheduled Redemption Date, all amounts in the
Collection Accounts and available Cash), shall be an aggregate amount sufficient
to pay all amounts, payments, fees and expenses in accordance with the Priority
of Payments due and owing on such Redemption Date.
 
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Section 9.2. Auction Call Redemption.
 
(a) During the period from and including the Payment Date occurring in January
2015 and to but not including the first Payment Date on which the Clean-up Call
may be exercised (the “Auction Call Period”), the Secured Notes will be redeemed
in whole but not in part, if a Successful Auction is completed (such redemption,
an “Auction Call Redemption”), at their applicable Redemption Prices; provided,
that any payments due and payable upon a termination of each Hedge Agreement
will be made on the Auction Call Redemption Date in accordance with the terms
thereof and this Indenture; and provided, further, the funds available to be
used for such Auction Call Redemption will be sufficient to pay the Total
Redemption Price. An Auction Call Redemption may only occur on a Payment Date
occurring in January or July during the Auction Call Period (such Payment Date,
the “Auction Call Redemption Date”). Upon an Auction Call Redemption, the
Preferred Shares shall be redeemed at their Redemption Price subject to the
terms of the Preferred Share Paying and Transfer Agency Agreement.
 
(b) The Trustee shall sell and transfer the Collateral Securities to the highest
bidder (or to the highest bidder for each Subpool), at the Auction, as long as:
 
(i) the Auction has been conducted in accordance with the Auction Procedures, as
evidenced by a certification of the Auction Agent;
 
(ii) at least one bidder delivers to the Auction Agent a bid (which bid may be
based upon a fixed spread above or below a generally recognized price index) for
(x) the purchase of the Collateral Securities or (y) the purchase of each
Subpool;
 
(iii) based on the Auction Agent’s certification to the Trustee of the amount of
the cash purchase price of each bid, the Trustee, in consultation with the
Collateral Manager, determines that the Highest Auction Price would result in a
cash purchase price for the Collateral Securities which, together with the
balance of all Eligible Investments and Cash in the Collection Accounts, the
Payment Account and the Expense Account, will be at least equal to the Total
Redemption Price; and
 
(iv) each bidder who offered the Highest Auction Price for the Collateral
Securities or for one or more of the Subpools enters into a written agreement
with the Issuer (which the Issuer shall execute if the conditions set forth in
clauses (i) through (iii) above are satisfied) obligating the highest bidder (or
the highest bidder for each Subpool) to purchase all of the Collateral
Securities with the closing of such purchase (and full payment in Cash to the
Trustee) to occur on or before the tenth Business Day prior to the scheduled
Redemption Date.
 
(c) If any of the foregoing conditions is not met with respect to any Auction,
or if the highest bidder or the Collateral Manager, as the case may be, fails to
pay the purchase price on or before the sixth Business Day following the
relevant Auction Date, (a) the Auction Call Redemption shall not occur on the
Payment Date following the relevant Auction Date, (b) the Trustee shall give
notice of the withdrawal pursuant to Section 9.3(c), (c) subject to clause (d)
below, the Trustee shall decline to consummate such sale and shall not solicit
any further bids or otherwise negotiate any further sale of Collateral
Securities in relation to such Auction and (d) unless the Secured Notes are
redeemed in full prior to the next succeeding Auction Date, or the Collateral
Manager notifies the Trustee that market conditions are such that such Auction
is not likely to be successful, the Trustee shall conduct another Auction on the
next succeeding Auction Date.
 
Section 9.3. Notice of Redemption.
 
(a) Upon the occurrence of a Withholding Tax Event, the Issuer and the Co-Issuer
or, in the case of the Preferred Shares, the Issuer, at the direction of the
Collateral Manager shall provide written notice thereof to the Trustee, the
Preferred Share Paying and Transfer Agent, the Irish Paying Agent (for so long
as any Secured Notes are listed on the Irish Stock Exchange), each Hedge
Counterparty and each Rating Agency.
 
(b) In connection with an Optional Redemption, a Clean-up Call or a Tax
Redemption pursuant to Section 9.1 or an Auction Call Redemption pursuant to
Section 9.2, the Trustee on behalf of the Issuer and the Co-Issuer shall, at
least 45 days prior to the proposed Redemption Date, notify the Collateral
Manager, the Preferred Share Paying and Transfer Agent, each Hedge Counterparty
and the Rating Agencies of such proposed Redemption Date, the applicable Record
Date, the principal amount of Securities to be redeemed on such Redemption Date
and the Redemption Price of such Securities in accordance with Section 9.1 or
Section 9.2. The Redemption Price shall be determined no earlier than 60 days
prior to the proposed Redemption Date.
 
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(c) Any such notice of an Auction Call Redemption, an Optional Redemption, a
Clean-up Call or a Tax Redemption may be withdrawn by the Issuer and the
Co-Issuer (or, in the case of the Preferred Shares, by the Issuer) at the
direction of the Collateral Manager (i) up to the fourth Business Day prior to
the scheduled Redemption Date by written notice to the Trustee, the Preferred
Share Paying and Transfer Agent, the Irish Paying Agent (for so long as any
Secured Notes are listed on the Irish Stock Exchange), each Hedge Counterparty,
to each Holder of Secured Notes to be redeemed, each holder of the Preferred
Shares and the Collateral Manager only if (A) in the case of an Optional
Redemption, a Clean-up Call or a Tax Redemption the Collateral Manager is unable
to deliver the sale agreement or agreements or certifications referred to in
Section 9.1(e), as the case may be or (B) in the case of an Auction Call
Redemption, the Auction is unable to be consummated pursuant to the Auction
Procedures or (ii) up to the fifth Business Day prior to the scheduled
Redemption Date by written notice to the Trustee, the Preferred Share Paying and
Transfer Agent, the Irish Paying Agent (for so long as any Secured Notes are
listed on the Irish Stock Exchange), each Hedge Counterparty and the Collateral
Manager only if the Issuer or the Co-Issuer receives written direction to
withdraw the notice of such redemption from the Collateral Manager and, in the
case of an Optional Redemption, the Collateral Manager has directed such
Optional Redemption. The Collateral Manager shall not have the right to withdraw
a Tax Redemption. No such withdrawal of an Auction Call Redemption, an Optional
Redemption, a Clean-up Call or a Tax Redemption shall occur if any Hedge
Agreement has been reduced or terminated, in either case, in anticipation of
such redemptions, unless the Issuer has satisfied the Rating Agency Condition
with respect to such withdrawal and in no event will such a withdrawal affect
any Hedge Agreement if it has been reduced or terminated in accordance with its
terms, as applicable.
 
Section 9.4. Notice of Redemption or Maturity by the Issuer.
 
Notice of redemption pursuant to Section 9.1, Section 9.2 or the Maturity of any
Securities shall be given by first class mail, postage prepaid, mailed not less
than ten Business Days (or four Business Days where the notice of an Auction
Call Redemption, an Optional Redemption, a Clean-up Call or a Tax Redemption is
withdrawn pursuant to clause (i) or (ii) of Section 9.3(c)) prior to the
applicable Redemption Date or Maturity, to each Holder of Securities to be
redeemed, at its address in the Notes Register.
 
All notices of redemption shall state:
 
(a) the applicable Redemption Date;
 
(b) the applicable Redemption Price;
 
(c) that all the Securities are being paid in full, and that interest on the
Secured Notes shall cease to accrue on the Redemption Date specified in the
notice; and
 
(d) the place or places where such Securities to be redeemed in whole are to be
surrendered for payment of the Redemption Price which shall be the office or
agency of the Paying Agent as provided in Section 7.2.
 
Notice of redemption shall be given by the Issuer and Co-Issuer (or, in the case
of the Preferred Shares, by the Issuer), or at their request, by the Trustee in
their names and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Security shall not
impair or affect the validity of the redemption of any other Securities.
 
Section 9.5. Securities Payable on Redemption Date.
 
Notice of redemption having been given as aforesaid, the Securities 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 and accrued
interest) the Secured Notes shall cease to bear interest on the Redemption Date.
Upon final payment on a Security to be redeemed, the Holder shall present and
surrender such Security at the place specified in the notice of redemption on or
prior to such Redemption Date; provided, however, that if there is delivered to
the Issuer, the Co-Issuer and the Trustee such security or indemnity as may be
required by them to save each of them harmless (an unsecured indemnity agreement
delivered to the Issuer, the Co-Issuer and the Trustee by an institutional
investor with a net worth of at least $200,000,000 being deemed to satisfy such
security or indemnity requirement) and an undertaking thereafter to surrender
such Security, then, in the absence of notice to the Issuer, the Co-Issuer and
the Trustee that the applicable Security has been acquired by a bona fide
purchaser, such final payment shall be made without presentation or surrender.
Payments of interest on Secured Notes of a Class so to be redeemed whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Secured Notes, or one or more predecessor Secured Notes, registered as
such at the close of business on the relevant Record Date according to the terms
and provisions of Section 2.7(i).
 
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If any Secured 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 Note Interest Rate for each
successive Interest Accrual Period the Secured Note remains Outstanding.
 
Section 9.6. Mandatory Redemption.
 
On any Payment Date on which any of the Coverage Tests applicable to any Class
of Secured Notes is not met on the most recent Measurement Date, the Secured
Notes shall be redeemed (a “Mandatory Redemption”), first from Interest
Proceeds, net of amounts set forth in Section 11.1(a)(i)(1) through (7), and
then from Principal Proceeds, net of amounts set forth in clause (1) of Section
11.1(a)(ii), in an amount necessary, and only to the extent necessary, to cause
each of the Coverage Tests to be satisfied. Further, each Hedge Agreement will
be terminated in part in accordance with the terms thereof and any payments due
and payable on the Hedge Agreement in connection with the termination of the
Hedge Agreement will be made on such Payment Date in accordance with the terms
thereof and this Indenture, including satisfaction of the Rating Agency
Condition. Such Principal Proceeds and Interest Proceeds shall be applied to
each of the outstanding Classes of Secured Notes in accordance with its relative
seniority in accordance with the Priority of Payments. On or promptly after such
Mandatory Redemption, the Issuer and the Co-Issuer shall certify or cause to be
certified to each of the Rating Agencies and the Trustee that the Coverage Tests
have been met.
 
Section 9.7. Special Amortization.
 
The Secured Notes may be amortized in part by the Issuer and the Co-Issuer if,
at any time during the Reinvestment Period, the Collateral Manager has been
unable to identify Substitute Collateral Securities that it determines would be
appropriate and would meet the Eligibility Criteria in sufficient amounts to
permit the reinvestment of all or a portion of the Principal Proceeds then on
deposit in the Principal Collection Account. Further, each Hedge Agreement will
be terminated in part in accordance with the terms thereof and any payments due
and payable on the Hedge Agreement in connection with the termination of the
Hedge Agreement will be made on such Payment Date in accordance with the terms
thereof and this Indenture, including satisfaction of the Rating Agency
Condition. The Collateral Manager shall notify the Trustee and each Hedge
Counterparty of such event (a “Special Amortization”) and the amount to be
amortized (such amount, the “Special Amortization Amount.”). On the first
Payment Date following the date on which such notice is given, the Special
Amortization Amount will be applied as Principal Proceeds to the extent
available in accordance with the Priority of Payments to redeem the Secured
Notes, and may be applied pro rata among the Secured Notes if the Special
Amortization Pro Rata Condition is met.
 
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ARTICLE 10
 
ACCOUNTS, ACCOUNTINGS AND RELEASES
 
Section 10.1. Collection of Money.
 
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 Money and other
property payable to or receivable by the Trustee pursuant to this Indenture,
including all payments due on the Pledged Obligations in accordance with the
terms and conditions of such Pledged Obligations. The Trustee shall segregate
and hold all such Money and property received by it in trust for the Holders of
the Secured Notes and each Hedge Counterparty, and shall apply it as provided in
this Indenture.
 
Section 10.2. Collection Accounts.
 
(a) The Trustee shall, prior to the Closing Date, establish a segregated trust
account which shall be designated as the “Collection Account” and will consist
of two subaccounts, the “Interest Collection Account” and the “Principal
Collection Account” (collectively, the “Collection Accounts”), which shall be
held in trust in the name of the Trustee for the benefit of the Noteholders and
each Hedge Counterparty, into which Collection Accounts, as applicable, the
Trustee shall from time to time deposit (i) all amounts, if any, received by the
Issuer pursuant to the Hedge Agreements (other than amounts received by the
Issuer by reason of an event of default or termination event (each as defined in
the related Hedge Agreement) or other comparable events that are required,
pursuant to Section 16.1(g) to be used for the purchase by the Issuer of a
replacement Hedge Agreement and amounts held in each Hedge Termination Account
pursuant to Section 16.1(g)), (ii) all Sale Proceeds (unless simultaneously
reinvested in Substitute Collateral Securities, subject to the Reinvestment
Criteria) and (iii) all Interest Proceeds and all Principal Proceeds. In
addition, the Issuer may, but under no circumstances shall be required to,
deposit from time to time such Monies in the Collection Accounts as it deems, in
its sole discretion, to be advisable. All Monies deposited from time to time in
the Collection Accounts pursuant to this Indenture shall be held by the Trustee
as part of the Assets and shall be applied to the purposes herein provided. The
Collection Accounts shall remain at all times with the Corporate Trust Office or
a Qualified Financial Institution.
 
(b) All distributions of principal or interest received in respect of the
Assets, and any Sale Proceeds from the sale or disposition of a Collateral
Security or other Assets received by the Trustee in Dollars shall be immediately
deposited into the Interest Collection Account or the Principal Collection
Account, as Interest Proceeds or Principal Proceeds, respectively (unless, in
the case of proceeds received from the sale or disposition of any Assets, such
proceeds are simultaneously reinvested pursuant to Section 10.2(d) in Substitute
Collateral Securities, subject to the Reinvestment Criteria, or in Eligible
Investments). Subject to Sections 10.2(d), 10.2(e) and 11.2, all such property,
together with any securities in which funds included in such property are or
will be invested or reinvested during the term of this Indenture, and any income
or other gain realized from such investments, shall be held by the Trustee in
the Collection Accounts as part of the Assets subject to disbursement and
withdrawal as provided in this Section 10.2. Subject to Section 10.2(d), by
Issuer Order (which may be in the form of standing instructions), the Issuer or
the Collateral Manager, on behalf of the Issuer, shall at all times direct the
Trustee to, and, upon receipt of such Issuer Order, the Trustee shall, invest
all funds received into the Collection Accounts during a Collection Period, and
amounts received in prior Collection Periods and retained in the Collection
Accounts, as so directed in Eligible Investments having stated maturities no
later than the Business Day immediately preceding the next Payment Date. The
Trustee, within one Business Day after receipt of any Scheduled Distribution or
other proceeds in respect of the Assets which is not Cash, shall so notify the
Issuer and the Collateral Manager and the Issuer, or the Collateral Manager on
behalf of the Issuer, shall, within five Business Days of receipt of such notice
from the Trustee, sell such Scheduled Distribution or other non-Cash proceeds
for Cash in an arm’s length transaction to a Person which is not an Affiliate of
the Issuer or the Collateral Manager and deposit the proceeds thereof in the
applicable Collection Account for investment pursuant to this Section 10.2;
provided, however, that the Issuer, or the Collateral Manager on behalf of the
Issuer, need not sell such Scheduled Distributions or other non-Cash proceeds if
it delivers an Officer’s Certificate to the Trustee certifying that such
Scheduled Distributions or other proceeds constitute Collateral Securities or
Eligible Investments.
 
(c) If prior to the occurrence of an Event of Default, the Issuer, or the
Collateral Manager on behalf of the Issuer, shall not have given any investment
directions pursuant to Section 10.2(b), the Trustee shall seek instructions from
the Issuer, or the Collateral Manager on behalf of the Issuer, within three
Business Days after transfer of such funds to the applicable Collection Account.
If the Trustee does not thereupon receive written instructions from the Issuer,
or the Collateral Manager on behalf of the Issuer, within five Business Days
after transfer of such funds to the applicable Collection Account, it shall
invest and reinvest the funds held in the applicable Collection Account in one
or more Eligible Investments described in clause (b) of the definition of
Eligible Investments maturing no later than the Business Day immediately
preceding the next Payment Date. If after the occurrence of an Event of Default,
the Issuer, or the Collateral Manager on behalf of the Issuer, shall not have
given investment directions to the Trustee pursuant to Section 10.2(b) for three
consecutive days, the Trustee shall invest and reinvest such Monies as fully as
practicable in Eligible Investments described in clause (b) 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. All interest and other income from such investments shall be
deposited in the applicable Collection Account, any gain realized from such
investments shall be credited to the applicable Collection Account, and any loss
resulting from such investments shall be charged to the applicable Collection
Account. The Trustee shall not in any way be held liable (except as a result of
negligence, willful misconduct or bad faith) by reason of any insufficiency of
such applicable Collection Account resulting from any loss relating to any such
investment, except with respect to investments in obligations of the Trustee or
any Affiliate thereof.
 
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(d) During the Reinvestment Period (and thereafter to the extent necessary to
acquire Collateral Securities pursuant to contracts entered into during the
Reinvestment Period), the Collateral Manager on behalf of the Issuer may by
Issuer Order direct the Trustee to, and upon receipt of such Issuer Order the
Trustee shall, reinvest Principal Proceeds in Collateral Securities selected by
the Collateral Manager as permitted under and in accordance with the
requirements of Article 12 and such Issuer Order.
 
(e) 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 Notes Valuation Report prepared by the Trustee on behalf of the
Issuer pursuant to this Section 10.7(e), on or prior to the Business Day prior
to each Payment Date, any amounts then held in the Collection Accounts other
than (i) Interest Proceeds or Principal Proceeds received after the end of the
Collection Period with respect to such Payment Date and (ii) amounts that the
Issuer is entitled to reinvest in accordance with Section 12.2 and which the
Issuer so elects to reinvest in accordance with the terms of this Indenture.
 
Section 10.3. Payment Account.
 
The Trustee shall, prior to the Closing Date, establish a single, segregated
trust account which shall be designated as the “Payment Account,” which shall be
held in trust for the benefit of the Noteholders and each Hedge Counterparty and
over which the Trustee shall have exclusive control and the sole right of
withdrawal. Any and all funds at any time on deposit in, or otherwise to the
credit of, the Payment Account shall be held in trust by the Trustee for the
benefit of the Noteholders. Except as provided in Sections 11.1 and 11.2, the
only permitted withdrawal from or application of funds on deposit in, or
otherwise to the credit of, the Payment Account shall be (i) to pay the interest
on and the principal of the Secured Notes, make payments in respect of the
Preferred Shares and make other payments in respect of the Secured Notes in
accordance with their terms and the provisions of this Indenture, (ii) upon
Issuer Order, to pay other amounts specified therein and (iii) otherwise to pay
amounts payable pursuant to and in accordance with the terms of this Indenture,
each in accordance with the Priority of Payments. The Trustee agrees to give the
Issuer and the Co-Issuer immediate notice if it becomes aware that the Payment
Account or any funds on deposit therein, or otherwise to the credit of the
Payment Account, shall become subject to any writ, order, judgment, warrant of
attachment, execution or similar process. Neither the Issuer nor the Co-Issuer
shall have any legal, equitable or beneficial interest in the Payment Account
other than in accordance with the Priority of Payments. The Payment Account
shall remain at all times with the Corporate Trust Office or a Qualified
Financial Institution. Amounts in the Payment Account shall not be invested.
 
Section 10.4. Expense Account.
 
(a) The Trustee shall prior to the Closing Date establish a single, segregated
trust account which shall be designated as the “Expense Account” which shall be
held in trust in the name of the Trustee for the benefit of the Noteholders and
each Hedge Counterparty. The only permitted withdrawal from or application of
funds on deposit in, or otherwise standing to the credit of, the Expense Account
shall be to pay (on any day other than a Payment Date) accrued and unpaid
Company Administrative Expenses of the Issuer and the Co-Issuer (other than
accrued and unpaid expenses and indemnities payable to the Collateral Manager
under the Collateral Management Agreement). On the Closing Date, the Trustee
shall deposit the amount received from the Issuer pursuant to Section 3.2(f)
into the Expense Account, which amounts shall be used for the payment of fees
and expenses of the Issuer related to the offering of the Securities accrued as
of the Closing Date. Amounts on deposit in the Expense Account may be applied on
or prior to the Determination Date preceding the first Payment Date to pay
amounts due in connection with the offering of the Secured Notes from amounts
deposited in accordance with Section 3.2(f). Funds in the Expense Account shall
be replenished on each Payment Date to the extent available and subject to the
Priority of Payments. If on any Determination Date, the amount on deposit in the
Expense Account exceeds $100,000, the amount of such excess, may, at the option
of the Collateral Manager, be designated as Interest Proceeds and applied in
accordance with the Priority of Payments. On the date on which substantially all
of the Issuer’s assets have been sold or otherwise disposed of, the Issuer by
Issuer Order executed by an Authorized Officer of the Collateral Manager shall
direct the Trustee to, and, upon receipt of such Issuer Order, the Trustee
shall, transfer all amounts on deposit in the Expense Account to the Interest
Collection Account for application pursuant to Section 11.1(a)(i) as Interest
Proceeds.
 
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(b) The Trustee agrees to give the Issuer immediate notice if it becomes aware
that the Expense Account or any funds on deposit therein, or otherwise to the
credit of the Expense Account, shall become subject to any writ, order,
judgment, warrant of attachment, execution or similar process. The Issuer shall
not have any legal, equitable or beneficial interest in the Expense Account. The
Expense Account shall remain at all times with the Corporate Trust Office or a
Qualified Financial Institution.
 
(c) The Collateral Manager on behalf of the Issuer may direct the Trustee to,
and upon such direction the Trustee shall, invest all funds in the Expense
Account in Eligible Investments designated by the Collateral Manager. All
interest and other income from such investments shall be deposited in the
Expense Account, any gain realized from such investments shall be credited to
the Expense Account, and any loss resulting from such investments shall be
charged to the Expense Account. The Trustee shall not in any way be held liable
(except as a result of negligence, willful misconduct or bad faith) by reason of
any insufficiency of such Expense Account resulting from any loss relating to
any such investment, except with respect to investments in obligations of the
Trustee or any Affiliate thereof. If the Trustee does not receive investment
instructions from an Authorized Officer of the Collateral Manager, the Trustee
may invest funds received in the Expense Account in Eligible Investments of the
type described in clause (ii) of the definition thereto.
 
Section 10.5. Interest Advances.
 
(a) With respect to each Determination Date for which (i) the sum of Interest
Proceeds (not including Interest Advances) and Principal Proceeds collected
during the related Due Period are insufficient to remit the interest due and
payable with respect to the Class A Notes and the Class B Notes on the following
Payment Date (the amount of such insufficiency, an “Interest Shortfall”) and
(ii) such Interest Shortfall results in whole or in part from shortfalls in
interest collections on the Advance Collateral Securities, the Trustee shall
provide the Advancing Agent with written notice of such Interest Shortfall and
the amount of interest shortfalls on the Advance Collateral Securities no later
than the close of business on the Business Day following such Determination
Date. The Trustee shall provide the Advancing Agent with written notice in an
electronic format, prior to any funding of an Interest Advance by the Advancing
Agent, of any additional interest remittances received by the Trustee after
delivery of such initial notice that reduce such Interest Shortfall specifying
the amount of any such reductions that result from interest collections on the
Advance Collateral Securities. No later than 5:00 p.m. (New York time) on the
Business Day immediately preceding the related Payment Date (but in any event no
earlier than one Business Day following the Advancing Agent’s receipt of notice
of such Interest Shortfall), the Advancing Agent shall advance the lesser of (i)
the updated Interest Shortfall and (ii) the updated shortfall in interest
collections on the Advance Collateral Securities (each such advance, an
“Interest Advance”) by remitting to the Trustee for deposit of an amount equal
to such Interest Advance in the Payment Account, subject to a determination of
recoverability by the Advancing Agent as described in Section 10.5(b).
Shortfalls in interest collections on the Advance Collateral Securities shall
not include shortfalls resulting from any reduced scheduled payments in
connection with a bankruptcy or similar proceeding or a modification, waiver or
amendment granted or agreed to by the related servicer under the Underlying
Instrument. Any Interest Advance made by the Advancing Agent with respect to a
Payment Date that is in excess of the actual Interest Shortfall for such Payment
Date shall be refunded to the Advancing Agent by the Trustee on the same
Business Day that such Interest Advance was made (or, if such Interest Advance
is made prior to final determination by the Trustee of such Interest Shortfall,
on the Business Day of such final determination). The Advancing Agent shall
provide the Trustee written notice of a determination by the Advancing Agent
that a proposed Interest Advance would constitute a Nonrecoverable Interest
Advance no later than the close of business on the Business Day immediately
preceding the related Payment Date (or, in the event that the Advancing Agent
did not receive notice of the related Interest Shortfall on the Business Day
following the related Determination Date, no later than the close of business on
the Business Day immediately following the Advancing Agent’s receipt of notice
of such Interest Shortfall). If the Advancing Agent shall fail to make any
required Interest Advance at or prior to the time at which distributions are to
be made pursuant to Section 11.1(a), the Trustee shall be required to make such
Interest Advance, subject to a determination of recoverability by the Trustee as
described in Section 10.5(b). The Trustee shall be entitled to conclusively rely
on any determination by the Advancing Agent that an Interest Advance, if made,
would constitute a Nonrecoverable Interest Advance. Based upon available
information at the time, the Advancing Agent will provide fifteen (15) days
prior notice to each Rating Agency if recovery of a Nonrecoverable Interest
Advance would result in an Interest Shortfall on the next succeeding Payment
Date. No later than the close of business on the Determination Date related to a
Payment Date on which the recovery of a Nonrecoverable Interest Advance would
result in an Interest Shortfall, the Trustee will provide each Rating Agency
notice of such recovery.
 
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(b) Notwithstanding anything herein to the contrary, (a) neither the Advancing
Agent nor the Trustee shall be required to make any Interest Advance if such
Interest Advance would constitute a Nonrecoverable Interest Advance or the
Advancing Agent or the Trustee, as applicable, has determined in its reasonable
judgment that the recovery of any Interest Advance would result in an Interest
Shortfall and (b) neither the Advancing Agent nor the Trustee may make any
Interest Advance if as of the most recent Measurement Date, the Aggregate
Collateral Balance is less than the Aggregate Outstanding Amount of the Class A
and Class B Notes. In determining whether any proposed Interest Advance will be,
or whether any Interest Advance previously made is, a Nonrecoverable Interest
Advance, the Advancing Agent or the Trustee, as applicable, will take into
account, among other things, with respect to Loans:
 
(i) amounts that may be realized on each Underlying Mortgage Property in its “as
is” or then current condition and occupancy;
 
(ii) that the related Senior Interests of any Collateral Security may be
required to be fully paid and any advances (and interest thereon) made in
respect of such Senior Interests may be required to be fully reimbursed, prior
to any amounts recovered in respect of the Underlying Mortgage Properties are
allocated or otherwise made available to the Collateral Securities;
 
(iii) the possibility and effects of future adverse change with respect to the
Underlying Mortgage Properties, the potential length of time before such
Interest Advance may be reimbursed and the resulting degree of uncertainty with
respect to such reimbursement; and
 
(iv) the fact that Interest Advances are intended to provide liquidity only and
not credit support to the Class A Noteholders and the Class B Noteholders.
 
For purposes of any such determination of whether an Interest Advance
constitutes or would constitute a Nonrecoverable Interest Advance, an Interest
Advance will be deemed to be nonrecoverable if the Advancing Agent or the
Trustee, as applicable, determines that future Interest Proceeds and Principal
Proceeds may be insufficient to fully reimburse such Interest Advance, plus
Reimbursement Interest within a reasonable period of time. Absent bad faith, the
determination by the Advancing Agent or the Trustee, as applicable, as to the
nonrecoverability of any Interest Advance shall be conclusive and binding on the
Holders. If the Advancing Agent has determined that an Interest Advance would
constitute a Nonrecoverable Interest Advance, the Trustee will not be required
to make a further determination of non-recoverability.
 
(c) The Advancing Agent and the Trustee will be each entitled to recover any
previously unreimbursed Interest Advance made by it (including any
Nonrecoverable Interest Advance), together with Reimbursement Interest, in
accordance with the priorities set forth in Section 11.1(a)(i) and Section
11.1(a)(ii) from the date made, to but not including the date of reimbursement
of such Interest Advance; provided, that unless the Advancing Agent or the
Trustee, as applicable, has determined that an unreimbursed Interest Advance is
a Nonrecoverable Interest Advance, such unreimbursed Interest Advance may only
be reimbursed from late collections on the related Advanced Collateral Security.
 
(d) The Advancing Agent and the Trustee will be each entitled with respect to
any Interest Advance made by it (including Nonrecoverable Interest Advances) to
Reimbursement Interest.
 
(e) The Advancing Agent and the Trustee’s obligations to make Interest Advances
in respect of the Collateral Securities will continue through the Stated
Maturity of the Class A Notes and the Class B Notes, unless the Class A Notes
and the Class B Notes are previously redeemed or repaid in full.
 
(f) In no event will the Advancing Agent or the Trustee be required to advance
(i) any payments in respect of principal, (ii) any amounts with respect to any
Class of Notes other than the Class A Notes and the Class B Notes or (iii) any
amounts with respect to any other Collateral Securities other than the Advance
Collateral Securities.
 
(g) In consideration of the performance of its obligations hereunder, the
Advancing Agent shall be entitled to receive, at the times set forth herein and
subject to the conditions and the priority of distribution provisions hereof, to
the extent funds are available therefor, the Advancing Agent Fee.
 
(h) The determination by the Advancing Agent or the Trustee, as applicable, (i)
that it has made a Nonrecoverable Interest Advance or (ii) that any proposed
Interest Advance, if made, would constitute a Nonrecoverable Interest Advance,
shall be evidenced by an Officer’s Certificate delivered as soon as reasonably
practicable after making such determination to the Trustee (or, if applicable,
retained thereby), the Issuer, S&P and Moody’s, setting forth the basis for such
determination; provided, that failure to give such notice, or any defect
therein, shall not impair or affect the validity of, or the Advancing Agent or
the Trustee’s entitlement to reimbursement with respect to, any Interest
Advance.
 
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If a Scheduled Distribution on any Advance Collateral Security is not paid to
the Trustee on the Due Date therefore, the Trustee shall provide the Advancing
Agent with notice of such default on the Business Day immediately following such
default. In addition, upon request, the Trustee shall provide the Advancing
Agent (either electronically or in hard-copy format), with copies of all reports
received from any trustee, trust administrator, master servicer or similar
administrative entity with respect to such Advance Collateral Securities and the
Trustee shall promptly make available to the Advancing Agent any other
information reasonably available to the Trustee by reason of its acting as
Trustee hereunder to permit the Advancing Agent to make a determination of
recoverability with respect to any Interest Advance and to otherwise perform its
advancing functions under this Indenture.
 
Section 10.6. Reports by Parties.
 
The Trustee shall supply, in a timely fashion, to the Issuer, the Co-Issuer and
the Collateral Manager any information regularly maintained by the Trustee that
the Issuer, the Co-Issuer or the Collateral Manager may from time to time
request with respect to the Pledged Obligations or the Accounts and provide any
other information reasonably available to the Trustee by reason of its acting as
Trustee hereunder and required to be provided by Section 10.7 or to permit the
Collateral Manager to perform its obligations under the Collateral Management
Agreement. The Trustee shall forward to the Advancing Agent, the Collateral
Manager and each Hedge Counterparty copies of notices and other writings
received by it from the issuer of any Collateral Security or from any Clearing
Agency with respect to any Collateral Security advising the holders of such
security of any rights that the holders might have with respect thereto
(including, without limitation, 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. Each of the Issuer and Collateral Manager
shall promptly forward to the Trustee any information in their possession or
reasonably available to them concerning any of the Pledged Obligations that the
Trustee reasonably may request or that reasonably may be necessary to enable the
Trustee to prepare any report or perform any duty or function on its part to be
performed under the terms of this Indenture.
 
Section 10.7. Reports; Accountings.
 
(a) The Trustee shall monitor the Assets on an ongoing basis to the extent
provided in Section 10.7(b) below and provide access to the information
maintained by the Trustee to, and upon reasonable request of the Collateral
Manager, shall assist the Collateral Manager in performing its duties under the
Collateral Management Agreement, each in accordance with this Indenture.
 
(b) The Trustee shall perform the following functions during the term of this
Agreement:
 
(i) Create and maintain a database with respect to the Collateral Securities
(the “Database”) tracking the following information for each Pledged Collateral
Security: the initial and current Principal Balance; the coupon rate or spread;
the Stated Maturity and the initial and current rating from Moody’s or S&P, as
applicable;
 
(ii) Permit access to the information contained in the Database by the
Collateral Manager and the Issuer;
 
(iii) On a monthly basis monitor and update the Database for ratings changes;
 
(iv) Update the Database for Collateral Securities or Eligible Investments
acquired or sold or otherwise disposed of;
 
(v) Prepare and make available to each Rating Agency, the Collateral Manager,
the Preferred Share Paying and Transfer Agent, each Hedge Counterparty, the
Initial Purchaser, and upon request therefor, any Holder of a Note shown on the
Note Registrar, and, for so long as any Secured Notes are listed on the Irish
Stock Exchange, the Irish Paying Agent of the Monthly Reports;
 
(vi) Prepare and make available to the Collateral Manager, each Hedge
Counterparty, any Noteholder or any holder of the Preferred Shares that has
submitted a written request therefor, the firm of Independent certified public
accountants appointed pursuant to Section 10.9(a) hereof, each Rating Agency,
the Depository (with instructions to forward it to each of its participants who
are holders of any Secured Notes) and, for so long as any Secured Notes are
listed on the Irish Stock Exchange, the Irish Paying Agent, of the Notes
Valuation Report;
 
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(vii) Assist in preparation and arrange for the delivery to the Collateral
Manager and each Hedge Counterparty of the Redemption Date Statement;
 
(viii) Arrange for the delivery to each Rating Agency of all information or
reports required under this Indenture, including, but not limited to, providing
S&P and Moody’s with (A) written notice of (1) any breaches under any of the
Transaction Documents and (2) the termination or change of any parties to the
Transaction Documents, in each case, for which the Trustee has received prior
written notice pursuant to the terms of the Transaction Document and (B) the
information contained in each Monthly Report in Excel spreadsheet format; and
 
(ix) Assist the Independent certified public accountants in the preparation of
those reports required under Section 10.9 hereof by providing access to the
information contained in the Database.
 
(c) The Trustee, on behalf of the Issuer, shall compile and provide or make
available on its website initially located at www.cdotrustee.net to each Rating
Agency, the Collateral Manager, each Hedge Counterparty, the Initial Purchaser,
the Advancing Agent, for so long as any Secured Notes are listed on the Irish
Stock Exchange, the Irish Stock Exchange, and upon request therefor, any Holder
of a Note shown on the Note Registrar, not later than the fifth Business Day
after the first day of each month (other than a month in which a Note Valuation
Report is required to be delivered pursuant to Section 10.7(e)) commencing in
April 2005 (or solely in the case of the first Monthly Report, the fifteenth
Business Day), determined as of the last Business Day of the preceding month, a
monthly report (the “Monthly Report”). The Monthly Report shall contain the
following information and instructions with respect to the Pledged Obligations
included in the Assets based in part on information provided by the Collateral
Manager:
 
(i)(1) (x) the Aggregate Principal Balance of all Collateral Securities,
together with a calculation, in reasonable detail, of the sum of (A) the
Aggregate Principal Balance of all Collateral Securities (other than Defaulted
Securities and Written Down Securities) plus (B) the Principal Balance of each
Pledged Obligation which is Written Down Security and (C) the Principal Balance
of each Pledged Obligation which is a Defaulted Security;
 
(ii) the balance of all Eligible Investments and Cash in each of the Interest
Collection Account, the Principal Collection Account and the Expense Account;
 
(iii) the nature, source and amount of any proceeds in the Collection Accounts,
including Interest Proceeds, Principal Proceeds, Unscheduled Principal Payments
and Sale Proceeds, received since the date of determination of the last Monthly
Report;
 
(iv) with respect to each Collateral Security and each Eligible Investment that
is part of the Assets, its Principal Balance, annual interest rate, average
life, issuer, Moody’s Rating and S&P Rating;
 
(v) the identity of each Collateral Security that was sold or disposed of
pursuant to Section 12.1 (indicating whether such Collateral Security is a
Defaulted Security, Credit Risk Security, Credit Improved Security or otherwise
(in each case, as reported in writing to the Issuer by the Collateral Manager)
and whether such Collateral Security was sold pursuant to Section 12.1(a)(i),
(ii), (iii) or (iv)) or Granted to the Collateral Agent since the date of
determination of the most recent Monthly Report;
 
(vi) the identity of each Collateral Security which became a Defaulted Security,
Credit Risk Security, Credit Improved Security or a Written Down Security since
the date of determination of the last Monthly Report;
 
(vii) the identity of each Collateral Security that has been upgraded or
downgraded by one or more Rating Agencies;
 
(viii) the Aggregate Principal Balance of all Fixed Rate Securities;
 
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(ix) the Aggregate Principal Balance of all Floating Rate Securities;
 
(x) based on information provided by the Collateral Manager, the Aggregate
Principal Balance of all Fixed Rate Securities that are Covered Floating Rate
Securities;
 
(xi) the Aggregate Principal Balance of all Collateral Securities that are
guaranteed as to ultimate or timely payment of principal or interest;
 
(xii) with respect to each Specified Type of Collateral Security, the Aggregate
Principal Balance of all Collateral Securities consisting of such Specified Type
of Collateral Securities;
 
(xiii) the Aggregate Principal Balance of all Collateral Securities with a
Moody’s Rating lower than “Ba3”;
 
(xiv) the Aggregate Principal Balance of all Collateral Securities with a
Moody’s Rating of “B2” or below;
 
(xv) the Aggregate Principal Balance of all Collateral Securities with an S&P
rating of “CCC+” or below;
 
(xvi) the Aggregate Principal Balance of all Collateral Securities consisting of
CMBS Securities or REIT Debt Securities that are not rated or shadow rated by
Moody’s;
 
(xvii) the Aggregate Principal Balance of all Collateral Securities consisting
of CMBS Securities or REIT Debt Securities that are not rated or shadow rated by
S&P;
 
(xviii) based on information provided by the Collateral Manager, the identity
of, and the Aggregate Principal Balance of all Collateral Securities whose
Moody’s Rating is determined as provided in each clause of the definition of
“Moody’s Rating” and the identity of, and the Aggregate Principal Balance of all
Collateral Securities whose S&P Rating is determined as provided in each of
clauses of the definition of “S&P Rating,” based on information provided by the
Collateral Manager;
 
(xix) with respect to each Collateral Security, the Aggregate Principal Balance
of all Collateral Securities that are part of the same issuance;
 
(xx) the Aggregate Principal Balance of all Collateral Securities that are
securities that provide for periodic payments of interest less frequently than
quarterly;
 
(xxi) based upon the information supplied by the Collateral Manager, the
Aggregate Principal Balance of all Collateral Securities issued by any single
issuer or guaranteed by any single guarantor;
 
(xxii) based upon the information supplied by the Collateral Manager, the
Aggregate Collateral Balance of the Collateral Securities that are CMBS
Securities issued, originated or entered into in any single calendar year (for
the purposes of the foregoing, Participations shall be deemed to have been
entered into in the year in which the commercial mortgage loan underlying such
Participation was originated);
 
(xxiii) the Aggregate Principal Balance of all Collateral Securities backed by
each single Property Type based on information provided by the Collateral
Manager;
 
(xxiv) the Aggregate Principal Balance of all Collateral Securities that are
backed or otherwise invested in properties located in any single U.S. State (for
each such U.S. State) based on information provided by the Collateral Manager;
 
(xxv) the Aggregate Principal Balance and the accreted cost of all Collateral
Securities that are Principal Only Securities;
 
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(xxvi) the Aggregate Principal Balance and the Aggregate Amortized Cost of all
Collateral Securities that are Interest-Only Securities;
 
(xxvii) the Class A/B Overcollateralization Ratio, the Class A/B Interest
Coverage Ratio, the Class C Overcollateralization Ratio, the Class C Interest
Coverage Ratio, the Class D Overcollateralization Ratio, the Class D Interest
Coverage Ratio, the Class E Overcollateralization Ratio and the Class E Interest
Coverage Ratio, and a statement as to whether the Interest Coverage Test is
satisfied;
 
(xxviii) the Weighted Average Moody’s Rating Factor and a statement as to
whether the Maximum Moody’s Rating Factor Test is satisfied;
 
(xxix) the Diversity Score and a statement as to whether the Diversity Test is
satisfied;
 
(xxx) the Weighted Average Coupon and a statement as to whether the Minimum
Weighted Average Coupon Test is satisfied;
 
(xxxi) the Weighted Average Spread and a statement as to whether the Minimum
Weighted Average Spread Test is satisfied;
 
(xxxii) based upon information supplied by the Collateral Manager, the Average
Life of each Collateral Security, the Weighted Average Life and a statement as
to whether the Weighted Average Life Test is satisfied;
 
(xxxiii) the Class A Loss Differential, the Class B Loss Differential, the Class
C Loss Differential, the Class D Loss Differential and the Class E Loss
Differential of the Current Portfolio and a statement as to whether the S&P CDO
Monitor Test is satisfied;
 
(xxxiv) the Moody’s Weighted Average Recovery Rate and a statement as to whether
the Moody’s Recovery Test is satisfied;
 
(xxxv) the S&P Weighted Average Recovery Rate and a statement as to whether the
S&P Recovery Test is satisfied;
 
(xxxvi) a calculation in reasonable detail necessary to determine compliance
with each of the other Collateral Quality Tests;
 
(xxxvii) the Principal Balance of each Collateral Security that is on credit
watch with negative implications;
 
(xxxviii) the Principal Balance of each Collateral Security that is on credit
watch with positive implications;
 
(xxxix) the amount of the current portion and the unpaid portion, if any, of the
Senior Collateral Management Fee and the Subordinated Collateral Management Fee
with respect to the related Payment Date;
 
(xl) based upon information supplied by the Collateral Manager, the current
ratings of any Hedge Counterparty and the credit support provider of any Hedge
Counterparty; and
 
(xli) such other information as the Collateral Manager, the Trustee or any Hedge
Counterparty may reasonably request.
 
(d) The Trustee, on behalf of the Issuer, shall perform the following functions
and report to the Issuer, the Co-Issuer, the Preferred Share Paying and Transfer
Agent and the Collateral Manager on each Measurement Date:
 
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(i) Calculate the Class A/B Overcollateralization Ratio and the Class A/B
Interest Coverage Ratio and indicate whether the Class A/B Overcollateralization
Test and the Class A/B Interest Coverage Test are met;
 
(ii) Calculate the Class C Overcollateralization Ratio and the Class C Interest
Coverage Ratio and indicate whether the Class C Overcollateralization Test and
the Class C Interest Coverage Test are met;
 
(iii) Calculate the Class D Overcollateralization Ratio and the Class D Interest
Coverage Ratio and indicate whether the Class D Overcollateralization Test and
the Class D Interest Coverage Test are met; and
 
(iv) Calculate the Class E Overcollateralization Ratio and the Class E Interest
Coverage Ratio and indicate whether the Class E Overcollateralization Test and
the Class E Interest Coverage Test are met.
 
(e) The Trustee, on behalf of the Issuer, shall perform the following functions
and prepare a report thereof relating to the most recently ended Collection
Period determined as of each Determination Date not later than the Payment Date
(the “Notes Valuation Report”), which shall contain the information set forth
under Section 10.7(c), determined as of such Determination Date, and the
following information, based in part on information provided by the Collateral
Manager:
 
(i) Calculate the percentage (based on the outstanding Aggregate Principal
Balances of the Pledged Collateral Securities) of the Pledged Collateral
Securities which have a Stated Maturity occurring on or prior to each Payment
Date;
 
(ii) Identify the Principal Proceeds and Interest Proceeds;
 
(iii) Determine the Net Outstanding Portfolio Balance and the Quarterly Asset
Amount as of the close of business on the last Business Day of each Collection
Period after giving effect to the Principal Proceeds as of the last Business Day
of such Collection Period, principal collections received from Collateral
Securities in the related Collection Period, the reinvestment of such proceeds
in Eligible Investments during such Collection Period and the Collateral
Securities that were released during such Collection Period;
 
(iv) Determine the Aggregate Outstanding Amount of the Secured Notes of each
Class at the beginning of the Collection Period and such Aggregate Outstanding
Amount as a percentage of the original Aggregate Outstanding Amount of the
Secured Notes of such Class, the amount of principal payments to be made on the
Secured Notes of each Class on the next Payment Date, the amount of any Class C
Capitalized Interest on the Class C Notes, the amount of any Class D Capitalized
Interest on the Class D Notes, the amount of any Class E Capitalized Interest on
the Class E Notes, the Aggregate Outstanding Amount of the Secured Notes of each
Class after giving effect to the payment of principal (and with respect to the
Class C Notes, the Class D Notes and the Class E Notes, Class C Capitalized
Interest, Class D Capitalized Interest or Class E Capitalized Interest, as
applicable), on the related Payment Date and such Aggregate Outstanding Amount
as a percentage of the original Aggregate Outstanding Amount of the Secured
Notes of such Class;
 
(v) Calculate the Class A Interest Distribution Amount, the Class B Interest
Distribution Amount, the Class C Interest Distribution, the Class D Interest
Distribution Amount and the Class E Interest Distribution Amount for the related
Payment Date and any payments to be made from the Interest Proceeds and the
Principal Proceeds in respect of Excess Cash Flow payable to the Preferred
Shares for the related Payment Date and the aggregate amount paid for all prior
Payment Dates in respect of such amounts;
 
(vi) With the assistance of the Collateral Manager, the Preferred Share Paying
and Transfer Agent, determine the Company Administrative Expenses, the Senior
Collateral Management Fee and the Subordinate Collateral Management Fee, if any,
payable by the Issuer on the related Payment Date on an itemized basis;
 
(vii) With the assistance of the Collateral Manager as set forth in Section
10.7(f), determine (A) the balance on deposit in the Interest Collection Account
and the Principal Collection Account at the end of the related Collection
Period, (B) the amounts payable from the Collection Accounts to the Payment
Account in order to make payments pursuant to Section 11.1(a)(i) and Section
11.1(a)(ii) on the related Payment Date (the amounts payable pursuant to such
clause to be set forth and identified separately) and (C) the balance of
Principal Proceeds and the balance of Interest Proceeds remaining in the
Collection Accounts immediately after all payments and deposits to be made on
the related Payment Date;
 
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(viii) Calculate the amount to be paid to each Hedge Counterparty and the amount
to be paid by each Hedge Counterparty in each case, specifying (a) the amount to
be paid under each Hedge Agreement (other than any payments due and payable upon
a termination of the related Hedge Agreement) and (b) the amount owing as a
result of a termination with respect to each Hedge Agreement;
 
(ix) Calculate the amount to be paid to the Advancing Agent as reimbursement of
Interest Advances and Reimbursement Interest and calculate the amount of the
Nonrecoverable Interest Advances to be paid to the Advancing Agent;
 
(x) Calculate the amount on deposit in the Expense Account, any Hedge Collateral
Account and any Hedge Termination Account;
 
(xi) Identify the nature, source and amount of any proceeds in the Collection
Accounts, including Interest Proceeds, Principal Proceeds, Unscheduled Principal
Payments and Sale Proceeds, received since the date of determination of the last
Monthly Report;
 
(xii) With respect to each Collateral Security and each Eligible Investment that
is part of the Assets, identify its Principal Balance, annual interest rate,
average life, issuer, Moody’s Rating and S&P Rating;
 
(xiii) Identify each Collateral Security that was sold or disposed of pursuant
to Section 12.1 (indicating whether such Collateral Security is a Defaulted
Security, Credit Risk Security or otherwise (in each case, as reported in
writing to the Issuer by the Collateral Manager) and whether such Collateral
Security was sold pursuant to Section 12.1(a)(i), (ii), (iii) or (iv), or
otherwise) or Granted to the Collateral Agent since the date of determination of
the most recent Monthly Report;
 
(xiv) Identify each Collateral Security and the related Principal Balance and
Market Value thereof, based upon information provided by the Collateral Manager,
that has become, during any previous Collection Period, a Defaulted Security,
Credit Risk Security or a Written Down Security; and
 
(xv) Calculate the Aggregate Outstanding Amount of the Preferred Shares.
 
(f) Upon receipt of each Monthly Report, each Notes Valuation Report and each
Redemption Date Statement, the Collateral Manager shall compare the information
contained in its records with respect to the Pledged Obligations and shall,
within one Business Day after receipt of each such Monthly Report, such Notes
Valuation Report or such Redemption Date Statement, notify the Issuer and the
Trustee whether such information contained in the Monthly Report, the Notes
Valuation Report or the Redemption Date Statement, as the case may be, conforms
to the information maintained by the Collateral Manager with respect to the
Pledged Obligations, or detail any discrepancies. If any discrepancy exists, the
Issuer and the Collateral Manager shall attempt to resolve the discrepancy. If
such discrepancy cannot be promptly resolved, the Trustee shall cause the firm
of Independent certified public accountants appointed by the Issuer pursuant to
Section 10.7(f) hereof to review such Monthly Report, Notes Valuation Report or
Redemption Date Statement, as the case may be, and the Collateral Manager’s
records and the Trustee’s records to determine the cause of such discrepancy. If
such review reveals an error in the Monthly Report, Notes Valuation Report or
Redemption Date Statement, as the case may be, or the records, the Monthly
Report, Notes Valuation Report or Redemption Date Statement, as the case may be,
or the Trustee’s or the Collateral Manager’s records shall be revised
accordingly and, as so revised, shall be utilized in making all calculations
pursuant to this Indenture. Each Rating Agency (in each case only so long as any
Class of Secured Notes is rated), the Initial Purchaser and the Collateral
Manager shall be notified in writing of any such revisions by the Trustee on
behalf of the Issuer.
 
(g) The Trustee shall prepare the Notes Valuation Report and shall deliver or
make available on its website initially located at www.cdotrustee.net such Notes
Valuation Report to the Collateral Manager, each Hedge Counterparty, the
Preferred Share Paying and Transfer Agent, the Advancing Agent, any Noteholder
or holder of the Preferred Shares which has submitted a written request
therefor, the firm of Independent certified public accountants appointed
pursuant to Section 10.7(f) hereof, each Rating Agency, the Depository (with
instructions to forward it to each of its participants who are holders of any
Secured Notes) and, for so long as any Secured Notes are listed on the Irish
Stock Exchange, the Irish Paying Agent not later than the related Payment Date.
The Notes Valuation Report shall have attached to it (with the exception of the
first Notes Valuation Report) the most recent Monthly Report.
 
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The Notes Valuation Report shall also contain the following statements:
 
“Instruction to Participant: Please send this to the beneficial owners of the
Secured Notes
 
Reminder to Owners of each Class of Secured Notes:
 
Each owner or beneficial owner of Secured Notes must be either a U.S. Person who
is a qualified institutional buyer as defined in Rule 144A under the Securities
Act of 1933 and a Qualified Purchaser as defined by the Investment Company Act
of 1940 or not a U.S. Person, and if a U.S. Person, can represent as follows:
 
(i) it is not a broker-dealer which owns and invests on a discretionary basis
less than $25 million in securities of unaffiliated issuers;
 
(ii) it is not a participant-directed employee plan such as a 401(k) plan;
 
(iii) it is acting for its own account or for the account of another who is a
qualified institutional buyer and a qualified purchaser that is not included in
(i) or (ii) above;
 
(iv) it is not formed for the purpose of investing in the Secured Notes;
 
(v) it, and each account for which it holds the Secured Notes, shall hold at
least the minimum denomination therefor; and
 
(vi) it will provide notice of these transfer restrictions to any transferee
from it.”
 
(h) S&P Private Ratings. Reports prepared by the Trustee shall not include the
S&P Rating of any Collateral Security for which the S&P Rating is not a public
rating.
 
(i) Payment Date Instructions. Each Notes Valuation Report shall constitute
instructions from the Collateral Manager, on behalf of the Issuer, to the
Trustee to transfer funds from the Collection Accounts to the Payment Account
pursuant to Section 10.2(e) and to withdraw on the related Payment Date from the
Payment Account and pay or transfer the amounts set forth in the Notes Valuation
Report, as applicable, in the manner specified, and in accordance with the
priorities established, in Section 11.1 hereof. Notwithstanding the foregoing,
the Collateral Manager shall have no obligations with respect to such Notes
Valuation Report except as set forth in Section 10.7(f) hereof and such
obligations shall in any event be subject to the standard of care and limits on
limits on liability set forth in the Collateral Management Agreement.
 
(j) Redemption Date Instructions. Not more than five Business Days after
receiving an Issuer Request requesting information regarding a redemption of the
Secured Notes of a Class as of a proposed Redemption Date set forth in such
Issuer Request, the Trustee shall compute the following information and provide
such information in a statement (the “Redemption Date Statement”) delivered to
the Collateral Manager (which shall review such statement in the manner provided
for in Section 10.7(f)) and each Hedge Counterparty:
 
(i) the Aggregate Outstanding Amount of the Secured Notes of the Class or
Classes to be redeemed as of such Redemption Date;
 
(ii) the amount of accrued interest due on such Secured Notes as of the last day
of the Interest Accrual Period immediately preceding such Redemption Date;
 
(iii) the Redemption Price;
 
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(iv)the sum of all amounts due and unpaid under Sections 11.1(a) (other than
amounts payable on the Secured Notes being redeemed or to the Noteholders
thereof);
 
(v) the amount due and payable to each Hedge Counterparty pursuant to the
applicable Hedge Agreement; and
 
(vi) the amount in the Accounts, available for application to the redemption of
such Secured Notes.
 
Notwithstanding the foregoing, the Collateral Manager shall have no obligations
with respect to such Redemption Date Statement except as set forth in Section
10.7(f) hereof and such obligations shall in any event be subject to the
standard of care and limits on limits on liability set forth in the Collateral
Management Agreement.
 
(k) The Trustee shall make available on its website, initially located at
www.cdotrustee.net, to S&P, together with each Monthly Report, any reports
received by the Trustee with respect to the Loans no later than five Business
Days prior to the delivery of such Monthly Report and not previously delivered
to S&P.
 
Section 10.8. Release of Pledged Collateral Securities; Release of Assets.
 
(a) If no Event of Default has occurred and is continuing and subject to Article
12 hereof, the Issuer may, by Issuer Order delivered to the Trustee at least two
Business Days prior to the settlement date for any sale of a Pledged Collateral
Security certifying that (i) it has sold such Pledged Collateral Security
pursuant to and in compliance with Article 12 or (ii) in the case of a
redemption pursuant to Section 9.1 or Section 9.2 the proceeds from any such
sale of Pledged Collateral Securities are sufficient to redeem the Secured Notes
pursuant to Section 9.1 or Section 9.2, direct the Trustee to release such
Pledged Collateral Security and, upon receipt of such Issuer Order, the Trustee
shall deliver any such Pledged Collateral Security, if in physical form, duly
endorsed to the broker or purchaser designated in such Issuer Order or, if such
Pledged Collateral Security is represented by a Security Entitlement, cause an
appropriate transfer thereof to be made, in each case against receipt of the
sales price therefor as set forth in such Issuer Order; provided, however, that
the Trustee may deliver any such Pledged Collateral Security in physical form
for examination (prior to receipt of the sales proceeds) in accordance with
street delivery custom.
 
(b) The Issuer may, by Issuer Order, delivered to the Trustee at least three
Business Days prior to the date set for redemption or payment in full of a
Pledged Collateral Security, certifying that such Pledged Collateral Security is
being redeemed or paid in full, direct the Trustee, or at the Trustee’s
instructions, the Custodial Securities Intermediary, to deliver such Pledged
Collateral Security, if in physical form, duly endorsed, or, if such Pledged
Collateral 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 applicable
redemption price or payment in full thereof.
 
(c) If no Event of Default has occurred and is continuing and subject to Article
12, the Issuer may, by Issuer Order delivered to the Trustee at least two
Business Days prior to the date set for an exchange, tender or sale, certifying
that a Collateral Security is subject to an Offer and setting forth in
reasonable detail the procedure for response to such Offer, direct the Trustee
or at the Trustee’s instructions, the Custodial Securities Intermediary, to
deliver such security, if in physical form, duly endorsed, or, if such security
is a Clearing Corporation Security, to cause it to be delivered, in accordance
with such Issuer Order, in each case against receipt of payment therefor.
 
(d) The Trustee shall deposit any proceeds received by it from the disposition
of a Pledged Collateral Security in the Principal Collection Account unless
simultaneously applied to the purchase of Substitute Collateral Securities,
subject to the Reinvestment Criteria, or Eligible Investments or payment of
principal of the Secured Notes as permitted under and in accordance with the
requirements of Article 11, Article 12 and this Article 10. Neither the Trustee
nor the Custodial Securities Intermediary shall be responsible for any loss
resulting from delivery or transfer of any security prior to receipt of payment
in accordance herewith.
 
(e) The Trustee shall, upon receipt of an Issuer Order at such time as there are
no Secured Notes Outstanding and all obligations of the Issuer hereunder have
been satisfied, release the Assets from the lien of this Indenture.
 
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Section 10.9. Reports by Independent Accountants.
 
(a) On or about the Closing Date, the Issuer shall appoint a firm of Independent
certified public accountants of recognized national reputation for the purpose
of preparing and delivering the reports or certificates of such accountants
required by this Indenture. The Collateral Manager, on behalf of the Issuer,
shall have the right to remove such firm or any successor firm. Upon any
resignation by or removal of such firm, the Collateral Manager, on behalf of the
Issuer, shall promptly appoint, by Issuer Order delivered to the Trustee, the
Preferred Share Paying and Transfer Agent, each Hedge Counterparty and each
Rating Agency, a successor thereto that shall also be a firm of Independent
certified public accountants of recognized national reputation. If the
Collateral Manager, on behalf of the Issuer, shall fail to appoint a successor
to a firm of Independent certified public accountants which has resigned or been
removed, within 30 days after such resignation or removal, the Issuer shall
promptly notify the Trustee of such failure in writing. If the Collateral
Manager, on behalf of the Issuer, shall not have appointed a successor within
ten days thereafter, the Trustee shall promptly appoint a successor firm of
Independent certified public accountants of recognized national reputation. The
fees of such Independent certified public accountants and its successor shall be
payable by the Issuer as provided in the Priority of Payments.
 
(b) Within 60 days after December 31 of each year (commencing with December 31,
2005), the Issuer shall cause to be delivered to the Trustee, the Collateral
Manager, the Preferred Share Paying and Transfer Agent and each Rating Agency an
Accountants’ Report specifying the procedures applied and the associated
findings with respect to the Notes Valuation Reports and any Redemption Date
Statements prepared in the year ending on such date. At least 60 days prior to
the Payment Date in January 2006 (and, if at any time a successor firm of
Independent certified public accountants is appointed, to the Payment Date
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 make available a copy
of such Accountant’s Report to the Collateral Manager and each Holder of Secured
Notes of the Controlling Class, at the address shown on the Note Register. The
Issuer shall not approve the institution of such procedures if a Majority of the
Aggregate Outstanding Amount of Secured Notes of the Controlling Class, by
written notice to the Issuer and the Trustee within 30 days after the date of
the related notice to the Trustee, object thereto.
 
(c) If any Hedge Counterparty is required to post collateral pursuant to the
related Hedge Agreement during any Collection Period, then on or prior to the
Payment Date following such Collection Period and on or prior to each
anniversary of such Payment Date the Issuer shall cause a firm of Independent
certified public accountants to review and verify that the value of collateral
posted is in accordance with the applicable provisions of the related Hedge
Agreement.
 
(d) With respect to each Payment Date, the Issuer shall cause to be delivered to
the Trustee and the Collateral Manager an Accountants' Report specifying the
procedures applied and associated findings with respect to the application
pursuant to the Priority of Payments of the Principal Proceeds and Interest
Proceeds reported in the related Notes Valuation Report.
 
Section 10.10. Reports to Rating Agencies.
 
(a) In addition to the information and reports specifically required to be
provided to each Rating Agency pursuant to the terms of this Indenture, the
Trustee shall provide each Rating Agency and each Hedge Counterparty with all
information or reports delivered by the Trustee hereunder, and such additional
information as each Rating Agency may from time to time reasonably request and
the Trustee determines in its sole discretion may be obtained and provided
without unreasonable burden or expense. The Issuer shall promptly notify the
Trustee and each Hedge Counterparty if a Rating Agency’s rating of any Class of
Secured Notes has been, or it is known by the Issuer that such rating will be,
reduced, or qualified or withdrawn.
 
(b) All additional reports to be sent to the Rating Agencies pursuant to clause
(b) above shall be reviewed prior to such transmission by the Collateral Manager
and the Initial Purchaser.
 
(c) The Trustee shall provide the Preferred Share Paying and Transfer Agent with
copies of all reports the Trustee is required to provide under this Section
10.10.
 
Section 10.11. United States Federal Income Tax Reporting.
 
(a) If any Secured Notes are deemed equity for U.S. federal income tax purposes,
the Trustee shall provide information as it may possess necessary for a Holder
of such Secured Notes to make an election to treat the Issuer as a Qualified
Electing Fund under Section 1295 of the Code, and for such Holder to file
returns consistent with such election.
 
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(b) The Issuer shall provide the Trustee with such information as is required
for the Trustee to perform its obligations under this Section 10.11.
 
Section 10.12. Posting of Reports on Repository.
 
Each of the Issuer and the Trustee acknowledges and agrees that each Monthly
Report and Notes Valuation Report shall be posted to the Repository for use in
the manner provided in the Repository. In connection therewith, the Trustee
agrees to deliver or otherwise make available each Monthly Report and Notes
Valuation Report to the operator of the Repository for posting on the
Repository.
 
Section 10.13. Posting of Documents on Repository.
 
(a) Any document required to be delivered to the Repository by the Trustee
pursuant to this Indenture shall be delivered to the Repository by electronic
mail as a pdf (portable document format) file to the following address (or such
other address as may be provided in writing from time to time by the operator of
the Repository to the Trustee):
 
CDO Library
c/o The Bond Market Association
360 Madison Avenue (18th Floor)
New York, NY 10017
Electronic mail address: admin@cdolibrary.com
 
The Trustee shall identify the full legal name of Issuer in the electronic mail
message that accompanies the delivery of any document. The Trustee shall also
follow the following instructions in converting the document to a pdf file:
 
(i) the pdf file shall be made from the original document by printing directly
from the application in which the document was created (Microsoft Word, Crystal
Reports, Quark Xpress, etc.) or by using Adobe Acrobat Distiller;
 
(ii) all fonts shall be embedded when converting the original document to a pdf
file; and
 
(iii) the pdf file shall not be made from scanned pages (because making the pdf
file from a scanned page would result in a much larger file size than printing
directly from the application in which the original document was created).
 
(b) Any document required to be made available to the operator of the Repository
by the Trustee shall be made available by providing the operator of the
Repository with access to a website containing such report in a format that
permits the user to download the document as a pdf file.
 
Section 10.14. Consent to Posting of Documents on Repository.
 
The Issuer hereby consents to (a) the posting of the final offering document,
the Transaction Documents and the periodic reports to be delivered pursuant to
the Transaction Documents and any amendments or other modifications thereto on
the Repository for use in the manner provided in the Repository and (b) the
display of its name on the Repository in connection therewith.
 
Section 10.15. Certain Procedures.
 
(a) For so long as the Secured Notes may be transferred only in accordance with
Rule 144A or another exemption from registration under the Securities Act, the
Issuer (or the Collateral Manager on behalf of the Issuer) will ensure that any
Bloomberg screen containing information about the Rule 144A Global Notes
includes the following (or similar) language:
 
(i)the “Note Box” on the bottom of the “Security Display” page describing the
Rule 144A Global Notes will state: “Iss’d Under 144A/3c7”;
 
(ii)the “Security Display” page will have the flashing red indicator “See Other
Available Information”; and
 
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(iii)the indicator will link to the “Additional Security Information” page,
which will state that the Secured Notes “are being offered in reliance on the
exemption from registration under Rule 144A of the Securities Act to persons who
are both (i) qualified institutional buyers (as defined in Rule 144A under the
Securities Act) and (ii) qualified purchasers (as defined under Section 3(c)(7)
under the Investment Company Act of 1940).
 
(b) For so long as the Rule 144A Global Notes are registered in the name of DTC
or its nominee, the Issuer (or the Collateral Manager on behalf of the Issuer)
will instruct DTC to take these or similar steps with respect to the Rule 144A
Global Notes:
 
(i)the DTC 20-character security descriptor and 48-character additional
descriptor will indicate with marker “3c7” that sales are limited to (i) QIBs
and (ii) Qualified Purchasers;
 
(ii)where the DTC deliver order ticket sent to purchasers by DTC after
settlement is physical, it will have the 20-character security descriptor
printed on it. Where the DTC deliver order ticket is electronic, it will have a
“3c7” indicator and a related user manual for participants, which will contain a
description of the relevant restriction; and
 
(iii) DTC will send an “Important Notice” outlining the 3(c)(7) restrictions
applicable to the Rule 144A Global Notes to all DTC participants in connection
with the initial offering of Secured Notes by the issuers.
 
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ARTICLE 11
 
APPLICATION OF MONIES
 
Section 11.1. Disbursements of Monies from Payment Account.
 
(a) Notwithstanding any other provision in this Indenture, but subject to the
other subsections of this Section 11.1 and Section 13.1 hereof, on each Payment
Date, or Redemption Date the Trustee shall disburse amounts transferred to the
Payment Account from the Interest Collection Account and the Principal
Collection Account pursuant to Section 10.2 hereof in accordance with the
following priorities (the “Priority of Payments”):
 
(i) Interest Proceeds. On each Payment Date or Redemption Date, (except
otherwise provided in Section 11.1(f)) Interest Proceeds with respect to the
related Collection Period shall be distributed in the following order of
priority:
 

 
(1)
to the payment of taxes and filing fees (including any registered office fees)
owed by the Issuer, if any;

 

 
(2)
to (a) first, to the extent not previously reimbursed, to the Advancing Agent or
the Trustee, as applicable, the aggregate amount of any Nonrecoverable Interest
Advances due and payable, (b) second, to the Advancing Agent, the Advancing
Agent Fee and any previously due but unpaid Advancing Agent Fees, (c) third, to
the Advancing Agent or the Trustee, as applicable, (i) to the extent due and
payable to such party, Reimbursement Interest and (ii) subject to Section
10.5(c), reimbursement of any outstanding Interest Advances not (in the case of
this clause (ii) only) to exceed an amount that would result in an Interest
Shortfall with respect to such Payment Date, (d) fourth, to the payment, of
accrued and unpaid fees of the Trustee (including accrued and unpaid fees to the
Trustee as back-up advancing agent), the Preferred Share Paying and Transfer
Agent, the Calculation Agent, the Paying Agent and the Custodian, in an amount
not to exceed the greater of 0.02% per annum of the Aggregate Collateral Balance
and U.S. $25,000 per annum and the payment of accrued and unpaid fees of the
Trustee as back-up advancing agent and (e) fifth, to the payment of any other
accrued and unpaid Company Administrative Expenses of the Trustee, the Preferred
Share Paying and Transfer Agent, the Calculation Agent, the Paying Agent and the
Custodian, all such amounts in this clause (e) in an amount not to exceed
U.S.$10,000 per annum;

 

 
(3)
first, pro rata, to the persons entitled thereto, (x) to the payment of any
remaining accrued and unpaid Company Administrative Expenses (other than
indemnity payments included in the definition of Company Administrative
Expenses) and to the Collateral Manager, the payment of ordinary expenses, if
any, incurred by the Collateral Manager on behalf of the Issuer under the
Collateral Management Agreement, and (y) to the payment of any indemnity
payments included in the definition of Company Administrative Expenses, in such
order and priority, all such amounts included in clauses (x) and (y) above not
to exceed the greater of 0.036% per annum of the Aggregate Collateral Balance
and $100,000 per annum (the “Expense Cap Amount”);

 

 
(4)
pro rata on the basis of amounts payable to each Hedge Counterparty, to the
payment of any amounts scheduled to be paid to each Hedge Counterparty, if any,
pursuant to each Hedge Agreement, along with any payments (however described)
due and payable by the Issuer under each Hedge Agreement in connection with a
termination (in whole or in part) of any Hedge Agreement (including any interest
that may accrue thereon), other than by reason of an Event of Default (as
defined in the related Hedge Agreement) or Termination Event (other than
Illegality or Tax Event) (each, as defined in the related Hedge Agreement) in
each case, with respect to which the related Hedge Counterparty is the
Defaulting Party or the sole Affected Party (as defined in the related Hedge
Agreement);

 
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(5)
to the payment of the Senior Collateral Management Fee, any previously due but
unpaid Senior Collateral Management Fees and any accrued interest thereon;

 

 
(6)
to the payment of the Class A Interest Distribution Amount, plus, if applicable,
any Class A Defaulted Interest Amount;

 

 
(7)
to the payment of the Class B Interest Distribution Amount, plus, if applicable,
any Class B Defaulted Interest Amount;

 

 
(8)
as long as any of the Class A Notes or Class B Notes are Outstanding, to the
payment of the following amounts:

 
(A) in the event that the Class A Notes become due and payable (x) as a result
of an acceleration following an Event of Default, to the payment in full of
principal of the Class A Notes; (y) pursuant to an Auction Call Redemption, an
Optional Redemption, a Clean-up Call or a Tax Redemption, to the payment in full
of principal of the Class A Notes; and (z) upon the Stated Maturity of the Class
A Notes, to the payment in full of principal of the Class A Notes; or
 
(B) in the event that the Class B Notes become due and payable (x) as a result
of an acceleration following an Event of Default, (y) pursuant to an Auction
Call Redemption, an Optional Redemption, a Clean-up Call or a Tax Redemption or
(z) upon Stated Maturity of the Class B Notes, to the payment in full of
principal of first, the Class A Notes, and second, the Class B Notes; or
 
(C) in the event of a Mandatory Redemption of the Class A Notes or the Class B
Notes, first, to the payment of principal of the Class A Notes, and second, to
the payment of principal of the Class B Notes, to the extent necessary to cause
each of the Class A/B Coverage Tests to be satisfied;
 

 
(9)
to the payment of the Class C Interest Distribution Amount, plus, if applicable,
any Class C Defaulted Interest Amount;

 

 
(10)
to the payment of the Class C Capitalized Interest (if any);

 

 
(11)
as long as any of the Class C Notes are Outstanding, to the payment of the
following amounts:

 
(A) in the event that the Class C Notes become due and payable (x) as a result
of an acceleration following an Event of Default, (y) pursuant to an Auction
Call Redemption, an Optional Redemption, a Clean-up Call or a Tax Redemption or
(z) upon Stated Maturity of the Class C Notes, to the payment in full of
principal of first, the Class A Notes, second, the Class B Notes, and third, the
Class C Notes; or
 
(B) in the event of a Mandatory Redemption of the Class C Notes, first, to the
payment of principal of the Class A Notes, second, to the payment of principal
of the Class B Notes, and third, to the payment of principal of the Class C
Notes, to the extent necessary to cause each of the Class C Coverage Tests to be
satisfied;
 

 
(12)
to the payment of the Class D Interest Distribution Amount, plus, if applicable,
any Class D Defaulted Interest Amount;

 

 
(13)
to the payment of the Class D Capitalized Interest (if any);

 
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(14)
as long as any of the Class D Notes are Outstanding, to the payment of the
following amounts:

 
(A) in the event that the Class D Notes become due and payable (x) as a result
of an acceleration following an Event of Default, (y) pursuant to an Auction
Call Redemption, an Optional Redemption, a Clean-up Call or a Tax Redemption or
(z) upon Stated Maturity of the Class D Notes, to the payment in full of
principal of first, the Class A Notes, second, the Class B Notes, third, the
Class C Notes, and fourth, the Class D Notes; or
 
(B) in the event of a Mandatory Redemption of the Class D Notes, first to the
payment of principal of the Class A Notes, second, to the payment of principal
of the Class B Notes, third, to the payment of principal of the Class C Notes,
and fourth, to the payment of principal of the Class D Notes, to the extent
necessary to cause each of the Class D Coverage Tests to be satisfied;
 

 
(15)
to the payment of the Class E Interest Distribution Amount, plus, if applicable,
any Class E Defaulted Interest Amount;

 

 
(16)
to the payment of the Class E Capitalized Interest (if any);

 

 
(17)
as long as any of the Class E Notes are Outstanding, to the payment of the
following amounts:

 
(A) in the event that the Class E Notes become due and payable (x) as a result
of an acceleration following an Event of Default, (y) pursuant to an Auction
Call Redemption, an Optional Redemption, a Clean-up Call or a Tax Redemption or
(z) upon Stated Maturity of the Class E Notes, to the payment in full of
principal of first, the Class A Notes, second, the Class B Notes, third, the
Class C Notes, fourth, the Class D Notes, and fifth, the Class E Notes;
 
(B) in the event of a Mandatory Redemption of the Class E Notes, first, to the
payment of principal of the Class A Notes, second, to the payment of principal
of the Class B Notes, third, to the payment of principal of the Class C Notes,
fourth, to the payment of principal of the Class D Notes, and fifth, to the
payment of principal of the Class E Notes, to the extent necessary to cause each
of the Class E Coverage Tests to be satisfied;
 

 
(18)
to the payment of any Company Administrative Expenses not paid pursuant to
paragraphs (2) and (3) above and any indemnity payments included in the
definition of Company Administrative Expenses and not paid pursuant to
paragraphs (2) and (3) above, in that order;

 

 
(19)
pro rata, (a) to the Expense Account in the amount necessary to maintain $75,000
on deposit therein and (b) the payment of the Subordinate Collateral Management
Fee;

 

 
(20)
to the payment of any previously due but unpaid Subordinate Collateral
Management Fees and any accrued interest thereon;

 

 
(21)
pro rata on the basis of amounts payable to each Hedge Counterparty, to the
payment of any amounts (including any interest accrued thereon) payable by the
Issuer to the related Hedge Counterparty under the related Hedge Agreement
following an Event of Default or Termination Event (other than Illegality or Tax
Event) (each, as defined in the related Hedge Agreement) with respect to which
such Hedge Counterparty is the Defaulting Party or the sole Affected Party (as
defined in the related Hedge Agreement);

 

 
(22)
if such Payment Date is on or prior to the last day of the Reinvestment Period,
pro rata to the payment of principal of each of the Class C Notes, Class D Notes
and Class E Notes in an aggregate amount equal to the lesser of (i) the amount
set forth in Schedule 5 hereof for such Payment Date and (ii) any remaining
Interest Proceeds;

 
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(23)
if such Payment Date is in or after January 2018, to the payment of principal of
(i) first, the Class A Notes until the Class A Notes have been paid in full,
(ii) second, the Class B Notes until the Class B Notes have been paid in full,
(iii) third, the Class C Notes until the Class C Notes have been paid in full,
(iv) fourth, the Class D Notes until the Class D Notes have been paid in full,
and (v) fifth, the Class E Notes until the Class E Notes have been paid in full;
and

 

 
(24)
to the payment of any remaining Interest Proceeds to the Preferred Share Paying
and Transfer Agent for deposit to the Preferred Shares Collection Account for
distribution to the holders of the Preferred Shares pursuant to the Paying and
Transfer Agency Agreement.

 
(ii) Principal Proceeds. On each Payment Date or Redemption Date, Principal
Proceeds with respect to the related Collection Period shall be distributed in
the following order of priority:
 

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

 

 
(2)
to the extent that the amounts paid pursuant to sub-clause (8) of Section
11.1(a)(i) are insufficient to pay such amounts in full thereunder and any
Class A Notes or Class B Notes are Outstanding, to the payment of the following
amounts:

 
(A) in the event that the Class A Notes become due and payable (x) as a result
of an acceleration following an Event of Default, to the payment in full of
principal of the Class A Notes; (y) pursuant to an Auction Call Redemption, an
Optional Redemption, a Clean-up Call or a Tax Redemption, to the payment in full
of principal of the Class A Notes; and (z) upon the Stated Maturity of the Class
A Notes, to the payment in full of principal of the Class A Notes;
 
(B) in the event that the Class B Notes become due and payable (x) as a result
of an acceleration following an Event of Default, (y) pursuant to an Auction
Call Redemption, an Optional Redemption, a Clean-up Call or a Tax Redemption or
(z) upon Stated Maturity of the Class B Notes, to the payment in full of
principal of first, the Class A Notes, and second, the Class B Notes; or
 
(C) in the event of a Mandatory Redemption of the Class A Notes or the Class B
Notes, first, to the payment of principal of the Class A Notes, and second, to
the payment of principal of the Class B Notes, to the extent necessary to cause
each of the Class A/B Coverage Tests to be satisfied;
 

 
(3)
if the Class A Notes and the Class B Notes are no longer outstanding, to the
payment of first, the amounts referred to in sub-clause (9) of Section
11.1(a)(i) and second, the amounts referred to in sub-clause (10) of Section
11.1(a)(i), but only to the extent not paid in full thereunder;

 

 
(4)
to the extent that the amounts paid pursuant to sub-clause (11) of Section
11.1(a)(i) are insufficient to pay such amounts in full thereunder and any
Class C Notes are Outstanding, to the payment of the following amounts:

 
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(A) in the event that the Class C Notes become due and payable (x) as a result
of an acceleration following an Event of Default, (y) pursuant to an Auction
Call Redemption, an Optional Redemption, a Clean-up Call or a Tax Redemption or
(z) upon Stated Maturity of the Class C Notes, to the payment in full of
principal of first, the Class A Notes, second, the Class B Notes, and third, the
Class C Notes; or
 
(B) in the event of a Mandatory Redemption of the Class C Notes, first, to the
payment of principal of the Class A Notes, second, to the payment of principal
of the Class B Notes, and third, to the payment of principal of the Class C
Notes, to the extent necessary to cause each of the Class C Coverage Tests to be
satisfied;
 

 
(5)
if the Class A Notes, Class B Notes and Class C Notes are no longer outstanding,
to the payment of first, the amounts referred to in sub-clause (12) of
Section 11.1(a)(i) and second, the amounts referred to in sub-clause (13) of
Section 11.1(a)(i), but only to the extent not paid in full thereunder;

 

 
(6)
to the extent that the amounts paid pursuant to sub-clause (14) of Section
11.1(a)(i) above are insufficient to pay such amounts in full thereunder and any
Class D Notes are Outstanding, to the payment of the following amounts:

 
(A) in the event that the Class D Notes become due and payable (x) as a result
of an acceleration following an Event of Default, (y) pursuant to an Auction
Call Redemption, an Optional Redemption, a Clean-up Call or a Tax Redemption or
(z) upon Stated Maturity of the Class D Notes, to the payment in full of
principal of first, the Class A Notes, second, the Class B Notes, third, the
Class C Notes, and fourth, the Class D Notes; or
 
(B) in the event of a Mandatory Redemption of the Class D Notes, first, to the
payment of principal of the Class A Notes, second, to the payment of principal
of the Class B Notes, third, to the payment of principal of the Class C Notes,
and fourth, to the payment of principal of the Class D Notes, to the extent
necessary to cause each of the Class D Coverage Tests to be satisfied;
 

 
(7)
if the Class A Notes, the Class B Notes, Class C Notes and Class D Notes are no
longer Outstanding, to the payment of first, the amounts referred to in
sub-clause (15) of Section 11.1(a)(i) and second, the amounts referred to in
sub-clause (16) of Section 11.1(a)(i), but only to the extent not paid in full
thereunder;

 

 
(8)
to the extent that the amounts paid pursuant to sub-clause (17) of Section
11.1(a)(i) are insufficient to pay such amounts in full thereunder and any
Class E Notes are Outstanding, to the payment of the following amounts:

 
(A) in the event that the Class E Notes become due and payable (x) as a result
of an acceleration following an Event of Default, (y) pursuant to an Auction
Call Redemption, an Optional Redemption, a Clean-up Call or a Tax Redemption or
(z) upon Stated Maturity of the Class E Notes, to the payment in full of
principal of first, the Class A Notes, second, the Class B Notes, third, the
Class C Notes, fourth, the Class D Notes, and fifth, the Class E Notes; or
 
(B) in the event of a Mandatory Redemption of the Class E Notes, first, to the
payment of principal of the Class A Notes, second, to the payment of principal
of the Class B Notes, third, to the payment of principal of the Class C Notes,
fourth, to the payment of principal of the Class D Notes, and fifth, to the
payment of principal of the Class E Notes, to the extent necessary to cause each
of the Class E Coverage Tests to be satisfied;
 

 
(9)
on or prior to the last day of the Reinvestment Period, (a) to investment in
Eligible Investments and reinvestment in Substitute Collateral Securities
subject to the Reinvestment Criteria or, (b) if determined by the Collateral
Manager, to pay the Special Amortization Amount to each Class of Secured Notes,
(i) if the Special Amortization Pro Rata Condition has been met, pro rata, until
each Class of Secured Notes has been paid in full; or (ii) otherwise, first, to
the Class A Notes until the Class A Notes have been paid in full, second, to the
Class B Notes until the Class B Notes have been paid in full, third, to the
Class C Notes until the Class C Notes have been paid in full, fourth, to the
Class D Notes until the Class D Notes have been paid in full, and fifth, to the
Class E Notes until the Class E Notes have been paid in full;

 
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(10)
after the Reinvestment Period (X) on each Payment Date that is not also a
Redemption Date or the Stated Maturity and (Y) in the absence of an acceleration
following an Event of Default, to the payment of principal of (i) first, the
Class A Notes until the Class A Notes have been paid in full, (ii) second, the
Class B Notes until the Class B Notes have been paid in full, (iii) third, the
Class C Notes until the Class C Notes have been paid in full, (iv) fourth, the
Class D Notes until the Class D Notes have been paid in full and (v) fifth, the
Class E Notes until the Class E Notes have been paid in full;

 

 
(11)
to the payment of amounts referred to in sub-clause (18) of Section 11.1(a)(i)
to the extent not paid thereunder;

 

 
(12)
to the payment of amounts referred to in sub-clause (19) of Section 11.1(a)(i)
to the extent not paid thereunder;

 

 
(13)
to the payment of amounts referred to in sub-clause (20) of Section 11.1(a)(i)
to the extent not paid thereunder;

 

 
(14)
to the payment of amounts referred to in sub-clause (21) of Section 11.1(a)(i)
to the extent not paid thereunder; and

 

 
(15)
any remaining Principal Proceeds to the Preferred Share Paying and Transfer
Agent for deposit to the Preferred Shares Collection Account for distribution to
the holders of the Preferred Shares pursuant to the Paying and Transfer Agency
Agreement as a redemption of the Preferred Shares.

 
(b) No later than 11:00 a.m. (New York City) on the Determination Date, the
Collateral Manager shall notify the Trustee of (i) the extent to which amounts
that would otherwise constitute Principal Proceeds under clause (9) of the
definition of Principal Proceeds are distributed as Interest Proceeds and (ii)
the amount of the Special Amortization Amount to be applied pursuant to Section
11.1(a)(ii)(9).
 
(c) On or before the Business Day prior to each Payment Date, the Issuer shall,
pursuant to Section 10.2(e), 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) required to be paid on such Payment Date.
 
(d) If on any Payment Date the amount available in the Payment Account from
amounts received in the related Collection Period is insufficient to make the
full amount of the disbursements required by the statements furnished by the
Trustee pursuant to Section 10.7(c) hereof, the Trustee shall make the
disbursements called for in the order and according to the priority set forth
under Section 11.1(a) above, subject to Section 13.1 hereof, to the extent funds
are available therefor.
 
(e) In connection with the application of funds to pay Company Administrative
Expenses of the Issuer, in accordance with sub-clauses (2), (3) and (18) of
clause (i) of Section 11.1(a) and sub-clauses (1) and (11) of clause (ii) of
Section 11.1(a), the Trustee shall remit such funds, to the extent available, to
the Issuer (or as the Issuer may otherwise direct), as directed by the Issuer to
the Trustee or otherwise set forth in the written instructions delivered to the
Trustee by the Issuer (net of amounts payable to the Trustee) no later than the
Business Day prior to the applicable Payment Date. All such payments shall be
made pursuant to the Priority of Payments.
 
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(f) In connection with the payment to each Hedge Counterparty pursuant to each
Hedge Agreement of any amount scheduled to be paid from time to time between
Payment Dates from amounts received with respect to the Collateral Securities,
such amounts shall be distributed to each Hedge Counterparty pursuant to the
related Hedge Agreement.
 
Section 11.2. Trust Accounts.
 
All Monies held by, or deposited with the Trustee in the Collection Accounts,
the Payment Account or the Expense Account pursuant to the provisions of this
Indenture, and not invested in Eligible Investments as herein provided, shall be
deposited in one or more trust accounts, maintained at the Corporate Trust
Office or at a Qualified Financial Institution to be held in trust for the
benefit of the Noteholders. Except with respect to amounts on deposit in the
Payment Account, to the extent Monies deposited in such trust account exceed
amounts insured by the Bank Insurance Fund or Savings Association Insurance Fund
administered by the Federal Deposit Insurance Corporation, or any agencies
succeeding to the insurance functions thereof, and are not fully collateralized
by direct obligations of the United States of America, such excess shall be
invested in Eligible Investments as directed by Issuer Order.
 
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ARTICLE 12
 
SALE OF COLLATERAL SECURITIES; REPURCHASE OF COLLATERAL SECURITIES
 
Section 12.1. Sales of Collateral Securities.
 
(a) Except as otherwise expressly permitted or required by this Indenture, the
Issuer shall not sell or otherwise dispose of any Collateral Security, provided
that, subject to satisfaction of any applicable conditions in Section 10.8, so
long as (A) no Event of Default has occurred and is continuing and (B) on or
prior to the trade date for such sale the Collateral Manager has certified to
the Trustee that each of the conditions applicable to such sale set forth below
has been satisfied, the Collateral Manager on behalf of the Issuer acting
pursuant to the Collateral Management Agreement may direct the Trustee in
writing to sell, and the Trustee shall sell in the manner directed by the
Collateral Manager in writing (which writing shall specify whether such security
is a Defaulted Security, Credit Risk Security or Credit Improved Security, if
applicable, or whether such security is otherwise permitted to be sold pursuant
to this Section 12.1(a)):
 
(i)any Defaulted Security at any time;
 
(ii)any Credit Risk Security at any time; provided, that the Collateral Manager
may not direct the Trustee to sell a Credit Risk Security during the
Reinvestment Period unless the Collateral Manager uses commercially reasonable
efforts to, no later than 15 Business Days after the sale of such Credit Risk
Security, purchase one or more Substitute Collateral Securities having an
Aggregate Principal Balance no less than the Sale Proceeds (excluding accrued
interest) from such sale, and after giving effect to such sale and to the
purchase of Substitute Collateral Securities with Sale Proceeds therefrom, the
Reinvestment Criteria will be met.
 
(iii)a Credit Improved Security at any time during the Reinvestment Period;
provided, that the Collateral Manager may not direct the Trustee to sell a
Credit Improved Security unless, in the reasonable commercial judgment of the
Collateral Manager, the Collateral Manager believes such security constitutes a
Credit Improved Security, and in the reasonable commercial judgment of the
Collateral Manager, Sale Proceeds of such Credit Improved Security can be
reinvested within 15 Business Days of the sale of such Credit Improved Security
in one or more Substitute Collateral Securities having an Aggregate Principal
Balance at least equal to 100% of the Principal Balance of such Credit Improved
Security in compliance with the Reinvestment Criteria.
 
(iv)without limiting the foregoing, provided each of the Coverage Tests are
satisfied, any Collateral Security that is a CMBS Security, a REIT Debt Security
or a CRE CDO Security and is not a Defaulted Security, a Credit Risk Security or
Credit Improved Security may be sold during the Reinvestment Period, if (a) the
Aggregate Principal Balance of Collateral Securities sold pursuant to this
paragraph for a given calendar year does not exceed 10% of the Aggregate
Collateral Balance at the beginning of that year, (b) the Collateral Manager
believes in good faith that proceeds from the sale of such Collateral Security
can be reinvested after the trade date on which such Collateral Security is sold
in one or more Substitute Collateral Securities having an Aggregate Principal
Balance of not less than 100% of the Principal Balance of the Collateral
Security being sold and (c) after giving effect to such sale and to the purchase
of Substitute Collateral with the Sale Proceeds thereof, the Reinvestment
Criteria will be met.
 
(b) If a Collateral Security that is a Defaulted Security is not sold within
three (3) years of such Collateral Security becoming a Defaulted Security, the
Collateral Manager, on behalf of the Issuer, shall use commercially reasonable
efforts to sell such Collateral Security as soon as commercially practicable
thereafter.
 
(c) After the Issuer has notified the Trustee of an Optional Redemption, a
Clean-Up Call or a Tax Redemption in accordance with Section 9.1 or an Auction
Call Redemption in accordance with Section 9.2, the Collateral Manager on behalf
of the Issuer acting pursuant to the Collateral Management Agreement may at any
time direct the Trustee in writing to sell, and the Trustee shall sell in the
manner directed by the Collateral Manager in writing, any Collateral Security
without regard to the foregoing limitations in clause (a) of this Section 12.1,
provided that:
 
(i)the Sale Proceeds therefrom must be used to pay certain expenses and redeem
all of the Secured Notes in whole but not in part pursuant to Sections 9.1 and
9.2, and upon any such sale the Trustee shall release such Collateral Security
pursuant to Section 10.8;
 
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(ii)the Issuer may not direct the Trustee to sell (and the Trustee shall not be
required to release) a Collateral Security pursuant to this Section 12.1(c)
unless:
 
(1)the Collateral Manager provides an Officer’s Certificate to the Trustee
stating that (x) in the Collateral Manager’s reasonable business judgment based
on calculations included in the certification (which shall include the sales
prices of the Collateral Securities), the Sale Proceeds from the sale of one or
more of the Collateral Securities and all Cash and proceeds from Eligible
Investments will be at least equal to the Total Redemption Price and (y) an
Independent bond pricing service (which shall be one or more broker-dealers
selected by the Collateral Manager which are rated at least “P-1” by Moody’s and
at least “A-1” by Standard & Poor’s and which make a market in the applicable
Collateral Securities) has confirmed (which confirmation may be in the form of a
firm bid) the sales prices contained in the certification in clause (x) above
(and attaching a copy of such confirmation); and
 
(2)the Independent accountants appointed by the Issuer pursuant to Section 10.9
shall confirm in writing the calculations made in clause (1)(x) above;
 
(iii)in connection with an Optional Redemption, an Auction Call Redemption, a
Clean-up Call or a Tax Redemption, all the Collateral Securities to be sold
pursuant to this Section 12.1(c) must be sold in accordance with the
requirements set forth in Section 9.1(e) and Section 9.2, as applicable.
 
(d) In the event that any Collateral Security becomes the subject of a
conversion, exchange, redemption or offer, whether voluntary or involuntary, the
Issuer (or the Collateral Manager acting on behalf of the Issuer) shall take no
action to acquire the asset or instrument into which such Collateral Security is
convertible or exchangeable unless such asset or instrument would qualify as a
Substitute Collateral Security. In the event of an involuntary exchange or
conversion of a Collateral Security, if the resulting asset or instrument would
not qualify as a Substitute Collateral Security, the Issuer (or the Collateral
Manager acting on behalf of the Issuer) shall use its best efforts to sell such
Collateral Security prior to conversion or exchange and, in any event, shall
refuse to accept, and shall not acquire or hold, the asset or instrument offered
in exchange.
 
(e) In the event that any Secured Notes remain Outstanding as of the Payment
Date occurring six months prior to the Stated Maturity of the Class A Notes, the
Collateral Manager will be required to determine whether the expected proceeds
of the Assets to be received prior to the Stated Maturity of the Class A Notes
will be sufficient to pay in full the principal amount of (and accrued interest
on) the Secured Notes on the Stated Maturity of the Class A Notes. If the
Collateral Manager determines, in its sole discretion, that such proceeds will
not be sufficient to pay the outstanding principal amount of and accrued
interest on the Secured Notes on the Stated Maturity of the Class A Notes (a
“Secured Note Liquidation Event”), the Issuer will, at the direction of the
Collateral Manager, be obligated to liquidate the portion of Collateral
Securities sufficient to pay the remaining principal amount of and interest on
the Secured Notes on or before the Stated Maturity of the Class A Notes. The
Collateral Securities to be liquidated by the Issuer will be selected by the
Collateral Manager.
 
Section 12.2. Reinvestment Criteria and Trading Restrictions.
 
(a) Except as provided in Section 12.3(c), during the Reinvestment Period,
Unscheduled Principal Payments, Sale Proceeds and other Principal Proceeds will
be reinvested in Substitute Collateral Securities (which shall be, and hereby
are, Granted to the Trustee pursuant to the Granting Clause of this Agreement)
meeting the Eligibility Criteria (“Eligible Substitute Collateral Securities”)
only if after giving effect to such reinvestment, the following criteria (the
“Reinvestment Criteria”) are satisfied, as evidenced by an Officer’s Certificate
of the Issuer or the Collateral Manager delivered to the Trustee, as of the date
of the commitment to purchase Eligible Substitute Collateral Securities:
 
(i)the Collateral Quality Tests are satisfied, or, if any Collateral Quality
Test was not satisfied immediately prior to such investments, such Collateral
Quality Test will be maintained or improved following such reinvestment;
 
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(ii)the Coverage Tests are satisfied or if any Coverage Test was not satisfied
immediately prior to such investment, such Coverage Test will be maintained or
improved following such reinvestment; and
 
(iii)no Event of Default has occurred and is continuing.
 
(b) If the Issuer has previously entered into a commitment to acquire an
obligation or security to be Granted to the Trustee for inclusion in the Assets
as a Collateral Security, then the Issuer need not comply with any of the
Reinvestment Criteria on the date of such Grant if the Issuer complied with each
of the Reinvestment Criteria on the date on which the Issuer entered into such
commitment. Notwithstanding the foregoing, the Issuer may only enter into
commitments to acquire securities for inclusion in the Assets as Collateral
Securities if such commitments to acquire securities do not extend beyond a
45-day period.
 
(c) Notwithstanding the foregoing provisions, (i) Cash on deposit in the
Collection Accounts may be invested in Eligible Investments, pending investment
in Eligible Substitute Collateral Securities and (ii) if an Event of Default
shall have occurred and be continuing, no Eligible Substitute Collateral
Security may be acquired unless it was the subject of a commitment entered into
by the Issuer prior to the occurrence of such Event of Default.
 
Section 12.3. Conditions Applicable to all Transactions Involving Sale or Grant.
 
(a) Any transaction effected after the Closing Date under this Article 12 or
Section 10.8 shall be conducted on an arm’s-length basis based on fair market
value and in accordance with the requirements of the Collateral Management
Agreement and, if effected with the Collateral Manager, the Trustee or any
Affiliate of any of the foregoing, shall be effected in a secondary market
transaction on terms at least as favorable to the Issuer as would be the case if
such Person were not so Affiliated, provided that, (1) the Collateral Manager
shall not direct the Trustee to acquire any Eligible Substitute Collateral
Security for inclusion in the Assets from the Collateral Manager or any of its
Affiliates as principal or to sell any Collateral Security from the Assets to
the Collateral Manager or any of its Affiliates as principal unless the
transaction is effected in accordance with the Collateral Management Agreement
and (2) the Collateral Manager shall not direct the Trustee to acquire any
Eligible Substitute Collateral Security for inclusion in the Assets from any
account or portfolio for which the Collateral Manager serves as investment
adviser or direct the Trustee to sell any Collateral Security to any account or
portfolio for which the Collateral Manager serves as investment adviser unless
such transactions comply with the requirements of any applicable laws. The
Trustee shall have no responsibility to oversee compliance with this clause by
the other parties, provided, further, that the Issuer may not purchase any
collateralized debt obligations, collateralized loan obligations or similar
securities issued by a single issuer, the Assets securing which is managed by
the Collateral Manager or an Affiliate of the Collateral Manager, unless (i) in
the case of the purchase of such securities in a primary offering (x) the
securities to be purchased do not constitute the entire class of which such
securities are a part and (y) such securities will be purchased at a price at or
below the offering price or (ii) in all other cases, (x) the Collateral Manager
shall obtain at least two bid quotations from persons that are not Affiliates of
the Collateral Manager for an amount of such securities equal to the amount of
such securities to be purchased and (y) such securities will be purchased at a
price equal to or less than the highest of such quotations.
 
(b) Upon any Grant pursuant to this Article 12, all of the Issuer’s right, title
and interest to the Pledged Obligation shall be Granted to the Trustee pursuant
to this Indenture, such Pledged Obligation shall be registered in the name of
the Trustee, and, if applicable, the Trustee shall receive such Pledged
Collateral Security. The Trustee shall also receive, not later than the date of
delivery of any Collateral Security delivered after the Closing Date, an
Officer’s Certificate of the Collateral Manager certifying that, as of the date
of such Grant, such Grant complies with the applicable conditions of and is
permitted by this Article 12 (and setting forth, to the extent appropriate,
calculations in reasonable detail necessary to determine such compliance) and
containing the statements set forth in Section 3.1(l).
 
(c) Notwithstanding anything contained in this Article 12 to the contrary, the
Issuer shall, subject to this Section 12.3(c), have the right to effect any
transaction which has been consented to by the Holders of Secured Notes
evidencing 100% of the Aggregate Outstanding Amount of each Class of Secured
Notes, the holders of 100% of the Preferred Shares and each Hedge Counterparty
and of which each Rating Agency has been notified.
 
Section 12.4. Purchase and Sale of Collateral Securities.
 
(a) Upon discovery or receipt of written notice from the Collateral Manager of a
breach by the Seller of any representation, warranty or covenant under Section
4(b), 4(f) or 4(g) of the Collateral Purchase Agreement (or, with respect to any
Substitute Collateral Security, such similar warranty, representation or
covenant in the related Substitute Collateral Securities Purchase Agreement)
which materially and adversely affects the value of any Collateral Security, or
of the interest therein of the Noteholders or any Hedge Counterparty, the
Trustee shall promptly notify the Seller and the Issuer in writing of such
breach and request that the Seller cure such breach within 90 days from the date
the Seller was notified of such breach, and if the Seller does not cure such
breach in all material respects during such period, the Trustee shall cause the
Seller to repurchase such Collateral Security from the Issuer at the Repurchase
Price on or prior to the Payment Date following the expiration of such 90-day
period. The Repurchase Price for the repurchased Collateral Security shall be
deposited in the Principal Collection Account and the Interest Collection
Account, as applicable, and the Trustee, upon receipt of written certification
from the Seller of such deposit, shall release to the Seller the related
Collateral Security and shall execute and deliver such instruments of transfer
or assignment, in each case without recourse, as the Seller shall furnish to it
and as shall be necessary to vest in the Seller any Collateral Security released
pursuant hereto and the Trustee shall have no further responsibility with regard
to such Collateral Security.
 
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(b) Notwithstanding anything to the contrary contained herein, no recourse shall
be had, whether by levy or execution or otherwise, for the payment of the
principal of or interest or premium (if any) on the Collateral Securities, or
for any claim based on payments due thereon, against the Seller or any of its
affiliates, stockholders, directors, officers, agents or employees under any
rule of law, statute or constitution, or by the enforcement of any assessment or
penalty, or otherwise, nor shall any defenses or judgment based thereon or with
respect thereto; provided, that it is understood and agreed that the obligation
of such Seller to cure or to repurchase any Collateral Security as to which a
breach has occurred and is continuing shall constitute the sole remedy against
such Seller respecting such breach available to the Trustee on behalf of the
Noteholders.
 
Section 12.5. Sale of Collateral Securities with respect to an Auction Call
Redemption.
 
(a) Pre-Auction Process.
 
(i) Each Auction will occur on the Business Day that is at least 13 Business
Days prior to the proposed Auction Call Redemption Date (such date, the “Auction
Date”).
 
(ii) The Auction Agent will initiate the Auction Procedures at least 24 Business
Days before the proposed Auction Call Redemption Date by: (a) preparing a list
of Collateral Securities (including CUSIP Number, if any, par amount and issuer
name for each Collateral Security), and placing each Collateral Security into up
to six subpools of Collateral Securities for which bidders may tender a separate
bid in the Auction (each a “Subpool” of Collateral Securities); (b) deriving a
list of not less than three qualified bidders (the “Listed Bidders”) and
requesting from each Listed Bidder bids by the applicable Auction Date; and (c)
notifying the Trustee of the list of Listed Bidders (the “List”) and the
Subpools.
 
(iii) The Auction Agent will deliver a general solicitation package to the
Listed Bidders consisting of: (a) a form of a purchase agreement (“Auction
Purchase Agreement”) provided to the Trustee by the Auction Agent (which shall
provide that (I) upon satisfaction of all conditions precedent therein, the
purchaser is irrevocably obligated to purchase, and the Issuer is irrevocably
obligated to sell, the Collateral Securities on the date and on the terms stated
therein, (II) each bidder may tender a separate bid for each Subpool in an
Auction, (III) if the Subpools are to be sold to different bidders, that the
consummation of the purchase of all Subpools must occur simultaneously and that
the closing of each purchase is conditional on the closing of the other
purchases, (IV) if for any reason whatsoever the Trustee has not received, by a
specified Business Day (which shall be more than ten Business Days before the
proposed Auction Call Redemption Date), payment in full in immediately available
funds of the purchase price for all Subpools, the obligations of the parties
shall terminate and the Issuer shall have no obligation or liability whatsoever
and (V) any prospective purchasers will be subject to the “limited recourse” and
“non-petition” provisions set forth in this Indenture), (b) the minimum
aggregate Cash purchase price (which shall be determined by the Auction Agent as
the Total Redemption Price less the balance of all Eligible Investments and Cash
in the Collection Accounts, the Payment Account, each Hedge Termination Account
and the Expense Account); (c) the list of Collateral Securities in each Subpool;
(d) a formal bid sheet (which will permit a bidder to bid for all of the
Collateral Securities or separately for any of the Subpools and will include a
representation from the bidder that it is eligible to purchase all of the
Collateral Securities or any of the Subpools) to be provided to the Trustee by
the Auction Agent; (e) a detailed timetable; and (f) copies of all transfer
documents provided to the Trustee by the Collateral Manager (including transfer
certificates and subscription agreements which a bidder must execute pursuant to
the underlying instruments and a list of the requirements which the bidder must
satisfy under the underlying instruments (i.e., Qualified Institutional Buyer
status, Qualified Purchaser status, etc.)).
 
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(iv) The Auction Agent will send solicitation packages to all Listed Bidders on
the List at least 20 Business Days before the proposed Auction Call Redemption
Date. The Listed Bidders will be required to submit any due diligence questions
(or comments on the draft purchase agreement) in writing to the Auction Agent by
a date specified in the solicitation package. The Collateral Manager will be
required to answer all reasonable and relevant questions by the date specified
in the solicitation package and the Auction Agent will distribute the questions
and answers and the revised final Auction Purchase Agreement to all Listed
Bidders (with a copy to the Issuer and the Trustee).
 
(b) Auction Process.
 
(i) LaSalle Bank National Association or its Affiliates may, but shall not be
required to, bid at the Auction.
 
(ii) On the Second Business Day prior to the Auction Date (the “Auction Bid
Date”), all bids will be due by facsimile at the offices of the Trustee by 11:00
a.m. New York City time, with the winning bidder or bidders to be notified by
2:00 p.m. New York City time. All bids from Listed Bidders on the List will be
due on the bid sheet contained in the solicitation package. Each bid shall be
for the purchase and delivery to one purchaser (i) of all (but not less than
all) of the Collateral Securities or (ii) of all (but not less than all) of one
or more Subpools.
 
(iii) Unless the Trustee receives at least one bid from a Listed Bidder to
purchase all of the Collateral Securities or receives bids from one or more
Listed Bidders to purchase each Subpool, the Trustee will decline to consummate
the sale.
 
(iv) Subject to clause (iii) above, with the advice of the Auction Agent, the
Trustee shall select the bid or bids which result in the Highest Auction Price
from one or more Listed Bidders (in excess of the specified minimum purchase
price). “Highest Auction Price” means the higher of (i) the highest price bid by
any Listed Bidder for all of the Collateral Securities or (ii) the sum of the
highest prices bid by one or more Listed Bidders for each Subpool. In each case,
the price bid by a Listed Bidder will be the dollar amount which the Auction
Agent certifies to the Trustee based on the Auction Agent’s review of the bids,
which certification shall be binding and conclusive.
 
(v) Upon notification to the winning bidder or bidders, the winning bidder (or,
if the Highest Auction Price requires the sale of the Subpools to more than one
bidder, each winning bidder) will be required to deliver to the Trustee a signed
counterpart of the Auction Purchase Agreement no later than 4:00 p.m. New York
City time on the Auction Date. The winning bidder (or, if the Highest Auction
Price requires the sale of the Subpools to more than one bidder, each winning
bidder) will make payment in full of the purchase price on the Business Day (the
“Auction Purchase Closing Date”) specified in the general solicitation package
(which will be no later than ten Business Days prior to the proposed Auction
Call Redemption Date). If a winning bidder so requests, the Trustee and the
Issuer will enter into a bailee letter in the form agreed upon by the Trustee
and the Collateral Manager to this Indenture (a “Bailee Letter”) with each
winning bidder and its designated bank (which bank will be subject to approval
by the Issuer or the Collateral Manager on behalf of the Issuer), provided that
such bank enters into an account control agreement with the Trustee and the
Issuer and has a long term debt rating of at least “BBB+” by Standard & Poor’s
and (if rated by Moody’s) at least “Baa1” by Moody’s. If the above requirements
are satisfied, the Trustee will deliver the Collateral Securities (to be sold to
such bidder) pursuant thereto to the bailee bank at least one Business Day prior
to the closing on the sale of the Collateral Securities and accept payment of
the purchase price pursuant thereto. If payment in full of the purchase price is
not made by the Auction Purchase Closing Date for any reason whatsoever (or, if
the Subpools are to be sold to more than one bidder, if any bidder fails to make
payment in full of the purchase price by the Auction Purchase Closing Date for
any reason whatsoever), the Issuer will decline to consummate the sale of all
Collateral Securities, the Trustee and the Issuer will direct the bailee bank to
return the Collateral Securities to the Trustee, and (if notice of redemption
has been given by the Trustee) the Trustee will give notice (in accordance with
the terms of this Indenture) that the Auction Call Redemption will not occur.
 
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ARTICLE 13
 
NOTEHOLDERS’ RELATIONS
 
Section 13.1. Subordination.
 
(a) Anything in this Indenture or the Secured 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 and each Hedge Counterparty that the Class B Notes,
the Class C Notes, the Class D Notes, the Class E Notes and the Issuer’s rights
in and to the Assets (the “Class B 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 has not been cured or waived and acceleration
occurs in accordance with Article 5, including as a result of an Event of
Default specified in Section 5.1(f) or (g), the Class A Notes shall be paid in
full before any further payment or distribution is made on account of the
Class B Subordinate Interests. 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 and each Hedge Counterparty, not to cause the
filing of a petition in bankruptcy against the Issuer for failure to pay to them
amounts due under the Class B Notes, the Class C Notes, the Class D Notes and
the Class E Notes or hereunder until the payment in full of the Class A Notes
and not before one year and one day, or, if longer, the applicable preference
period then in effect, has elapsed since such payment.
 
(b) Anything in this Indenture or the Secured 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, the Class B Notes and each Hedge Counterparty that the Class C Notes, the
Class D Notes, the Class E Notes and the Issuer’s rights in and to the Assets
(the “Class C 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 has not been cured or waived and acceleration
occurs in accordance with Article 5, including as a result of an Event of
Default specified in Section 5.1(f) or (g), the Class A Notes and the Class B
Notes shall be paid in full before any further payment or distribution is made
on account of the Class C Subordinate Interests. 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 and each Hedge Counterparty,
not to cause the filing of a petition in bankruptcy against the Issuer for
failure to pay to them amounts due under the Class C Notes, the Class D Notes
and the Class E Notes hereunder until the payment in full of the Class A Notes
and the Class B Notes and not before one year and one day, or, if longer, the
applicable preference period then in effect, have elapsed since such payment.
 
(c) Anything in this Indenture or the Secured 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, the Class C Notes and each Hedge Counterparty that the Class D Notes, the
Class E Notes and the Issuer’s rights in and to the Assets (the “Class D
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 has not been cured or waived and
acceleration occurs in accordance with Article 5, including as a result of an
Event of Default specified in Section 5.1(f) or (g), the Class A Notes, Class B
Notes and Class C Notes shall be paid in full before any further payment or
distribution is made on account of the Class D Subordinate Interests. 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 and each
Hedge Counterparty, not to cause the filing of a petition in bankruptcy against
the Issuer for failure to pay to them amounts due under the Class D Notes and
the Class E Notes 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, or, if
longer, the applicable preference period then in effect, have elapsed since such
payment.
 
(d) Anything in this Indenture or the Secured 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, the Class D Notes and each Hedge Counterparty that the Class E Notes and
the Issuer’s rights in and to the Assets (the “Class E 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 has not been cured or waived and acceleration
occurs in accordance with Article 5, including as a result of an Event of
Default specified in Section 5.1(f) or (g), the Class A Notes, Class B Notes,
Class C Notes and the Class D Notes shall be paid in full before any further
payment or distribution is made on account of the Class E Subordinate Interests.
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, the Class D Notes and each
Hedge Counterparty, not to cause the filing of a petition in bankruptcy against
the Issuer for failure to pay to them amounts due under the Class E Notes
hereunder until the payment in full of the Class A Notes, the Class B Notes, the
Class C Notes and Class D Notes and not before one year and one day, or, if
longer, the applicable preference period then in effect, have elapsed since such
payment.
 
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(e) 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 the Class A Notes, the Class B Notes,
the Class C Notes, the Class D Notes and the Class E Notes, as the case may be,
shall have been paid in full 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 the Holders of the Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes and the Class E Notes, as the case may be, in
accordance with this Indenture.
 
(f) Each Holder of Subordinate Interests agrees with 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, however, that after 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 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.
 
Section 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 Noteholder under this Indenture, subject to the terms and
conditions of this Indenture, including, without limitation, Section 5.9, a
Noteholder or Noteholders or a Preferred Shareholder or Preferred Shareholders
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 Noteholder, the
Issuer, or any other Person, except for any liability to which such Noteholder
may be subject to the extent the same results from such Noteholder’s taking or
directing an action, or failing to take or direct an action, in bad faith or in
violation of the express terms of this Indenture.
 
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ARTICLE 14
 
MISCELLANEOUS
 
Section 14.1. Form of Documents Delivered to the 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
Co-Issuer 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 Co-Issuer or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, the Issuer, the Co-Issuer, the
Collateral Manager or any other Person, stating that the information with
respect to such factual matters is in the possession of the Issuer, the
Co-Issuer, the Collateral Manager or such other Person, unless such Authorized
Officer of the Issuer or the Co-Issuer 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 Co-Issuer, stating that the information
with respect to such matters is in the possession of the Issuer or the
Co-Issuer, 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 or Event of Default is a condition precedent to the
taking of any action by the Trustee at the request or direction of the Issuer or
the Co-Issuer, then notwithstanding that the satisfaction of such condition is a
condition precedent to the Issuer's or the Co-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 knowledge of the occurrence
and continuation of such Default or Event of Default as provided in Section
5.1(e).
 
Section 14.2. Acts of Noteholders.
 
(a) Any request, demand, authorization, direction, notice, consent, waiver or
other action provided by this Indenture to be given or taken by Noteholders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Noteholders in person or by 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 and/or the
Co-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 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, the Issuer and the Co-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 Secured Notes held by any
Person, and the date of his holding the same, shall be proved by the Notes
Register.
 
(d) Any request, demand, authorization, direction, notice, consent, waiver or
other action by the Holder of any Secured Notes shall bind the Holder (and any
transferee thereof) of such Secured Note and of every Secured 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, the Issuer or
the Co-Issuer in reliance thereon, whether or not notation of such action is
made upon such Secured Note.
 
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Section 14.3. Notices, etc., to the Trustee, the Issuer, the Co-Issuer, the
Collateral Manager, the Preferred Share Paying and Transfer Agent, the Initial
Purchaser, each Hedge Counterparty and each Rating Agency.
 
Any request, demand, authorization, direction, notice, consent, waiver or Act of
Noteholders or other documents provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with:
 
(a) the Trustee by any Noteholder or by the Issuer or the Co-Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to and mailed, by certified mail, return receipt requested, hand
delivered, sent by electronic mail, sent by overnight courier service
guaranteeing next day delivery or by telecopy in legible form, to the Trustee
addressed to it at 135 South LaSalle Street, Suite 1511, Chicago, Illinois
60603, Attention: CDO Trust Services Group - CapLease CDO 2005-1, Facsimile
Number: (312) 904-0524, email address: jose.manuel.rodriguez@abnamro.com, or at
any other address previously furnished in writing to the Issuer, the Co-Issuer
or Noteholders by the Trustee;
 
(b) the Issuer by the Trustee or by any 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 telecopy in legible form, to the Issuer addressed to it c/o
CapLease CDO 2005-1, Ltd. at M&C Corporate Services Limited, P.O. Box 309GT,
Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands,
telecopy no. (345) 949-8080, Attention: The Directors, or at any other address
previously furnished in writing to the Trustee by the Issuer with a copy to the
Collateral Manager at its address set forth below;
 
(c) the Co-Issuer by the Trustee or by any 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 telecopy in legible form, to the Co-Issuer
addressed to it in c/o CT Corporation, 1209 Orange Street, Wilmington, DE 19801,
Attention: The Directors, or at any other address previously furnished in
writing to the Trustee by the Co-Issuer;
 
(d) the Collateral Manager by the Issuer, the Co-Issuer or the Trustee shall be
sufficient for every purpose hereunder if in writing and mailed, first class
postage prepaid, hand delivered, sent by overnight courier service or by
telecopy in legible form, to the Collateral Manager addressed to it at 110
Maiden Lane, 36th Floor, New York, New York 10005, telecopy no.: (212) 217-6301,
Attention: Paul C. Hughes, Esquire, or at any other address previously furnished
in writing to the Issuer, the Co-Issuer or the Trustee;
 
(e) each Rating Agency, as applicable, by the Issuer, the Co-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, to each Rating Agency addressed to it at
Standard & Poor’s, Structured Finance Ratings, 55 Water Street, 41st Floor, New
York, New York 10041-0003, telecopy no. (212) 438-2664, Attention: CBO/CLO
Surveillance (and by electronic mail at cdosurveillance@standardandpoors.com;
provided, that all reports and notices required to be submitted to S&P pursuant
to this Indenture shall be provided in electronic form to such e-mail address);
and Moody’s Investor Services, Inc., 99 Church Street, New York, New York 10007,
telecopy no.: (212) 553-4170, Attention: CBO/CLO Monitoring (or by electronic
mail at cdomonitoring@moodys.com) or such other address that a Rating Agency
shall designate in the future; reports made available via the Trustee’s website
initially located at www.cdotrustee.net pursuant to Sections 10.7(c), 10.7(g),
10.7(k) shall also be e-mailed to the foregoing e-mail addresses;
 
(f) each Hedge Counterparty by the Issuer, the Co-Issuer, the Collateral Manager
or the Trustee shall be sufficient for every purpose hereunder if in writing and
mailed, first class postage prepaid, hand delivered, sent by overnight courier
service or by telecopy in legible form, to each Hedge Counterparty addressed to
it at the address specified in the related Hedge Agreement or at any other
address previously furnished in writing to the Issuer, the Co-Issuer, the
Collateral Manager and the Trustee by each Hedge Counterparty;
 
(g) the Initial Purchaser by the Issuer, the Co-Issuer, the Trustee or the
Collateral Manager shall be sufficient for every purpose hereunder if in writing
and mailed, first class postage prepaid, hand delivered, sent by overnight
courier service or by telecopy in legible form to the Initial Purchaser at 12
East 49th Street, 45th Floor, New York, New York 10017, Attention: Dash
Robinson, facsimile no.: (212) 909-0047; and
 
(h) the Preferred Share Paying and Transfer Agent by the Issuer, the Co-Issuer,
the Trustee or the Collateral Manager shall be sufficient for every purpose
hereunder if in writing and mailed, first class postage prepaid, hand delivered,
sent by overnight courier service or by telecopy in legible form, to the
Preferred Share Paying and Transfer Agent addressed to it at its Corporate Trust
Office, 135 South LaSalle Street, Suite 1511, Chicago, Illinois 60603,
Attention: CDO Trust Services Group - CapLease CDO 2005-1, Facsimile Number:
(312) 904-0524, or at any other address previously furnished in writing to the
Issuer, the Co-Issuer, the Trustee or the Collateral Manager.
 
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(i) Advancing Agent by the Issuer, the Co-Issuer, the Collateral Manager or the
Trustee, shall be sufficient for every purpose hereunder if in writing and
mailed, first class postage prepaid, hand delivered, sent by overnight courier
service or by telecopy in legible form, CapLease Investment Management, LLC,
110 Maiden Lane, 36th Floor, New York, New York 10005, Attention: Paul C.
Hughes, Esquire, Telecopy (212) 217-6301.
 
Section 14.4. Notices to Noteholders; Waiver.
 
Except as otherwise expressly provided herein, where this Indenture provides for
notice to Holders of Secured Notes of any event:
 
(a) such notice shall be sufficiently given to Holders of Secured Notes if in
writing and mailed, first class postage prepaid, to each Holder of a Security
affected by such event, at the Address of such Holder as it appears in the Notes
Register, not earlier than the earliest date and not later than the latest date,
prescribed for the giving of such notice;
 
(b) such notice shall be in the English language; and
 
(c) such notice shall also be provided to the Irish Paying Agent (for so long as
any Secured Notes are listed on the Irish Stock Exchange).
 
Notwithstanding clause (a) above, a Holder of Secured Notes may give the Trustee
a written notice that it is requesting that notices to it be given by facsimile
transmissions and stating the telecopy number for such transmission. Thereafter,
the Trustee shall give notices to such Holder by facsimile transmission;
provided, that if such notice also requests that notices be given by mail, then
such notice shall also be given by mail in accordance with clause (a) above.
 
The Trustee shall deliver to the Holders of the Secured Notes any information or
notice requested to be so delivered by at least 25% of the Holders of any Class
of Secured Notes.
 
Neither the failure to mail any notice, nor any defect in any notice so mailed,
to any particular Holder of a Security shall affect the sufficiency of such
notice with respect to other Holders of Secured Notes. In case by reason of the
suspension of regular mail service or by reason of any other cause it shall be
impracticable to give such notice by mail, then such notification to Holders of
Secured Notes as shall be made with the approval of the Trustee shall constitute
a sufficient notification to such Holders for every purpose hereunder.
 
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Noteholders shall be filed with the 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 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.
 
For so long as any Secured Notes are listed on the Irish Stock Exchange and the
rules of such exchange so require, all notices to Noteholders of such Secured
Notes will be published in the Daily Official List of the Irish Stock Exchange.
 
Section 14.5. Effect of Headings and Table of Contents.
 
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
 
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Section 14.6. Successors and Assigns.
 
All covenants and agreements in this Indenture by the Issuer and the Co-Issuer
shall bind their respective successors and assigns, whether so expressed or not.
 
Section 14.7. Separability.
 
In case any provision in this Indenture or in the Secured Notes shall be
invalid, illegal or unenforceable, the validity, legality, and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
 
Section 14.8. Benefits of Indenture.
 
Nothing in this Indenture or in the Secured Notes, expressed or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, each Hedge Counterparty (which shall be an express third party
beneficiary hereunder) and the Noteholders, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
 
Section 14.9. Governing Law.
 
THIS INDENTURE AND EACH SECURED NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED THEREIN WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
 
Section 14.10. Submission to Jurisdiction.
 
Each of the Issuer and the Co-Issuer hereby irrevocably submits to the
non-exclusive jurisdiction of any New York State or federal court sitting in the
Borough of Manhattan in The City of New York in any action or proceeding arising
out of or relating to the Secured Notes or this Indenture, and each of the
Issuer and the Co-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. Each of the Issuer and the Co-Issuer hereby irrevocably waives,
to the fullest extent that they may legally do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding. Each of the
Issuer and the Co-Issuer irrevocably consents to the service of any and all
process in any action or proceeding by the mailing or delivery of copies of such
process to it at the office of the Issuer’s and the Co-Issuer’s agent set forth
in Section 7.2. Each of the Issuer and the Co-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.
 
Section 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.
 
Section 14.12. Liability of Co-Issuers.
 
Notwithstanding any other terms of this Indenture, the Secured Notes or any
other agreement entered into between, inter alia, the Issuer and the Co-Issuer
or otherwise, neither the Issuer nor the Co-Issuer shall have any liability
whatsoever to the Co-Issuer or the Issuer, respectively, under this Indenture,
the Secured Notes, any such agreement or otherwise and, without prejudice to the
generality of the foregoing, neither the Issuer nor the Co-Issuer shall be
entitled to take any steps to enforce, or bring any action or proceeding, in
respect of this Indenture, the Secured Notes, any such agreement or otherwise
against the other Co-Issuer or the Issuer, respectively. In particular, neither
the Issuer nor the Co-Issuer shall be entitled to petition or take any other
steps for the winding up or bankruptcy of the Co-Issuer or the Issuer,
respectively or shall have any claim in respect of any assets of the Co-Issuer
or the Issuer, respectively.
 
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ARTICLE 15
 
ASSIGNMENT OF CERTAIN AGREEMENTS
 
Section 15.1. Assignment of Certain Agreements.
 
(a) The Issuer, in furtherance of the covenants of this Indenture and as
security for the Secured Notes and amounts payable to the Noteholders hereunder
and the performance and observance of the provisions hereof, hereby collaterally
assigns, transfers, conveys and sets over to the Trustee, for the benefit of the
Noteholders and each Hedge Counterparty, all of the Issuer’s estate, right,
title and interest in, to and under the Collateral Purchase Agreement, any
Substitute Collateral Securities Purchase Agreement (now or hereafter entered
into), the Servicing Agreement, the Custodial Agreement and the Collateral
Management Agreement (each, an “Article 15 Agreement”), including, without
limitation, (i) the right to give all notices, consents and releases thereunder,
(ii) the right to give all notices of termination and to take any legal action
upon the breach of an obligation of the Seller, seller of Substitute Collateral
Securities, Servicer, Custodian or Collateral Manager thereunder, including the
commencement, conduct and consummation of proceedings at law or in equity, (iii)
the right to receive all notices, accountings, consents, releases and statements
thereunder and (iv) the right to do any and all other things whatsoever that the
Issuer is or may be entitled to do thereunder; provided, however, the Trustee
hereby grants the Issuer a license to exercise all of the Issuer’s rights
pursuant to the Article 15 Agreements without notice to or the consent of the
Trustee (except as otherwise expressly required by this Indenture, including,
without limitation, as set forth in subsection (f) of this Section 15.1) which
license shall be and is hereby deemed to be automatically revoked upon the
occurrence of an Event of Default hereunder until such time, if any, as such
Event of Default is cured or waived.
 
(b) 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 each of the Article 15
Agreements, nor shall any of the obligations contained in each of the Article 15
Agreements be imposed on the Trustee.
 
(c) Upon the retirement of the Secured Notes, the payment by the Issuer of all
amounts payable under each Hedge Agreement and the release of the Assets from
the lien of this Indenture, this assignment and all rights herein assigned to
the Trustee for the benefit of the Noteholders and each Hedge Counterparty shall
cease and terminate and all the estate, right, title and interest of the Trustee
in, to and under each of the Article 15 Agreements shall revert to the Issuer
and no further instrument or act shall be necessary to evidence such termination
and reversion.
 
(d) The Issuer represents that it has not executed any assignment of any of the
Article 15 Agreements other than this collateral assignment.
 
(e) The Issuer agrees that this assignment is irrevocable, and that it shall not
take any action which is inconsistent with this assignment or make any other
assignment inconsistent herewith. The Issuer shall, 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
specify.
 
(f) The Issuer hereby agrees, and hereby undertakes to obtain the agreement and
consent of the Seller, the seller of Substitute Collateral Securities, the
Servicer, the Custodian and the Collateral Manager, as applicable, in the
Collateral Purchase Agreement, the Substitute Collateral Securities Purchase
Agreements, the Servicing Agreement, the Custodial Agreement and the Collateral
Management Agreement, as applicable, to the following:
 
(i) each of the Seller, the seller of Substitute Collateral Securities, the
Servicer, the Custodian and the Collateral Manager consents to the provisions of
this collateral assignment and agrees to perform any provisions of this
Indenture made expressly applicable to each of the Seller, the Servicer and the
Collateral Manager pursuant to the applicable Article 15 Agreement.
 
(ii) each of the Seller, the seller of Substitute Collateral Securities, the
Servicer, the Custodian and the Collateral Manager, as applicable, acknowledges
that the Issuer is collaterally assigning all of its right, title and interest
in, to and under the Collateral Purchase Agreement, the Substitute Collateral
Securities Agreements, the Servicing Agreement, the Custodial Agreement and the
Collateral Management Agreement, as applicable, to the Trustee for the benefit
of the Noteholders and each Hedge Counterparty, and each of the Seller, the
seller of Substitute Collateral Securities, the Servicer, the Custodian and the
Collateral Manager, as applicable, agrees that all of the representations,
covenants and agreements made by each of the Seller, the seller of Substitute
Collateral Securities, the Servicer, the Custodian and the Collateral Manager,
as applicable, in the applicable Article 15 Agreement are also for the benefit
of, and enforceable by, the Trustee, the Noteholders and each Hedge
Counterparty.
 
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(iii) each of the Seller, the seller of Substitute Collateral Securities, the
Servicer, the Custodian and the Collateral Manager, as applicable, shall deliver
to the Trustee duplicate original copies of all notices, statements,
communications and instruments delivered or required to be delivered to the
Issuer pursuant to the applicable Article 15 Agreement.
 
(iv) none of the Issuer, the Seller, the seller of Substitute Collateral
Securities, the Servicer, the Custodian or the Collateral Manager shall enter
into any agreement amending, modifying or terminating the applicable Article 15
Agreement, (other than in respect of an amendment or modification to cure any
inconsistency, ambiguity or manifest error) or selecting or consenting to a
successor manager, without notifying each Rating Agency and without the prior
written consent and written confirmation of each Rating Agency that such
amendment, modification or termination will not cause the rating of the Secured
Notes to be reduced.
 
(v) except as otherwise set forth herein and therein (including, without
limitation, pursuant to Sections 12 and 13 of the Collateral Management
Agreement and Section 7.06 of the Servicing Agreement), the Collateral Manager
shall continue to serve as Collateral Manager under the Collateral Management
Agreement notwithstanding that the Collateral Manager shall not have received
amounts due it under the Collateral Management Agreement because sufficient
funds were not then available hereunder to pay such amounts pursuant to the
Priority of Payments. The Collateral Manager, the Servicer and the Custodian
each agrees not to cause the filing of a petition in bankruptcy against the
Issuer for the nonpayment of the fees or other amounts payable to the Collateral
Manager, the Servicer and the Custodian, as applicable, under the Collateral
Management Agreement, the Servicing Agreement and the Custodial Agreement, as
applicable, until one year and one day, or, if longer, the applicable preference
period then in effect after the payment in full of all Secured Notes.
 
(vi) each of the Collateral Manager, the Servicer and the Custodian irrevocably
submits to the non-exclusive jurisdiction of any New York State or federal court
sitting in the Borough of Manhattan in The City of New York in any action or
proceeding arising out of or relating to the Secured Notes or this Indenture,
and each of the Collateral Manager, the Servicer and Custodian 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. Each of the Collateral
Manager, the Servicer and Custodian irrevocably waives, to the fullest extent it
may legally do so, the defense of an inconvenient forum to the maintenance of
such action or proceeding. Each of the Collateral Manager, the Servicer and
Custodian irrevocably consents to the service of any and all process in any
action or Proceeding by the mailing by certified mail, return receipt requested,
or delivery requiring signature and proof of delivery of copies of such initial
process to it at (A) CapLease Investment Management, LLC, 110 Maiden Lane, 36th
Floor, New York, New York 10005, Attention: Paul C. Hughes, Esquire,
(B) Wachovia Bank, National Association, NC 1075, 8739 Research Drive URP4,
Charlotte, North Carolina 28288-1075, Attention:  CapLease CDO 2005-1 Servicing
Agreement, and (C) LaSalle Bank National Association, 135 South LaSalle, Suite
1640, Chicago, Illinois 60603, Attention: Marcia Moore-Allen. Each of the
Collateral Manager, the Servicer and Custodian agrees that a final and
non-appealable judgment by a court of competent jurisdiction 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.
 
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ARTICLE 16

HEDGE AGREEMENT
 
Section 16.1. Issuer’s Obligations under Hedge Agreement.
 
(a) On the Closing Date and thereafter, and on and after any date on which the
Issuer enters into any additional or replacement Hedge Agreements (including any
related Hedge Counterparty Credit Support), the Issuer as directed by the
Collateral Manager shall (i) require that each Hedge Counterparty thereto (or
each third party that (A) shall have absolutely and unconditionally guaranteed
the obligations of the Hedge Counterparty under the related Hedge Agreement
(with such form of guaranty satisfactory to each Rating Agency, for so long as
the Secured Notes are Outstanding hereunder and are rated by each Rating
Agency), (B) shall have entered into credit intermediation arrangements in
respect of the obligations of the Hedge Counterparty under the related Hedge
Agreement in a form which, at the time of entering into such credit support,
meets the then current criteria with respect to such type of credit support of
each Rating Agency then rating any of the Secured Notes and for which each such
Rating Agency confirms in writing that such credit support will not cause the
reduction or withdrawal of its then current rating of any outstanding class of
Secured Notes, (C) shall be the issuing bank on one or more letters of credit
supporting the obligations of the Hedge Counterparty under the related Hedge
Agreement in a form which, at the time of entering into such credit support,
meets the then current criteria with respect to such type of credit support of
each Rating Agency then rating any of the Secured Notes and for which each such
Rating Agency confirms in writing that such credit support will not cause the
reduction or withdrawal of its then current rating of any outstanding class of
Secured Notes or (D) shall have provided any other additional credit support and
such inclusion of additional credit support shall have satisfied the Rating
Agency Condition (any such third party, a “Hedge Counterparty Credit Support
Provider”)), maintain (at the Hedge Counterparty’s or the Hedge Counterparty’s
Credit Support Provider’s expense), with respect to itself as an issuer or with
respect to its indebtedness, credit ratings at least equal to the Hedge
Counterparty Required Ratings, if any, by each relevant Rating Agency, (ii)
except with respect to a Form-Approved Interest Rate Swap Agreement and a
Form-Approved Cash Flow Swap Agreement, obtain a written confirmation from each
Rating Agency that any additional or replacement Hedge Agreement and the related
Hedge Counterparty would not cause such Rating Agency’s then-current rating on
any Class of Secured Notes to be adversely qualified, reduced, suspended or
withdrawn and (iii) assign and grant a security interest in such Hedge Agreement
to the Trustee pursuant to this Indenture. An “additional or replacement Hedge
Agreement” shall be a hedge agreement similar to the Closing Date Swap
Agreement, an Interest Rate Swap Agreement or a Cash Flow Swap Agreement which
pertains to the same type of risk contemplated under the Closing Date Swap
Agreement, an Interest Rate Swap Agreement or a Cash Flow Swap Agreement. Each
Hedge Agreement will provide that, no amendment, modification, or waiver in
respect of such will be effective unless (A) evidenced by a writing executed by
each party thereto, (B) the Trustee has acknowledged its consent thereto in
writing and (C) each Rating Agency confirms that the amendment, modification or
waiver will not cause the reduction or withdrawal of its then current rating on
any Class of Secured Notes.
 
(b) The Trustee shall, on behalf of the Issuer, pay amounts due to each Hedge
Counterparty under the related Hedge Agreements in accordance with the Priority
of Payments and Section 16.1(g) hereof.
 
(c) The notional amount of each Hedge Agreement providing for fixed rate
payments to the Issuer with respect to a Floating Rate Security will be
calculated as a percentage of the principal amount of such Floating Rate
Security originally anticipated to be outstanding from time to time based on
certain assumptions. In accordance with the terms of each Hedge Agreement, such
notional amount will be reduced by the Issuer (or the Collateral Manager on
behalf of the Issuer) or each Hedge Counterparty from time to time to the extent
that the outstanding principal amount of such Floating Rate Security is less
than the scheduled aggregate notional amount of the related Hedge Agreements at
such time; provided, that if any Secured Notes are then Outstanding, the Trustee
shall first have received written evidence that the Rating Agency Condition has
been satisfied with respect to such reduction other than as scheduled.
Additionally, subject to satisfaction of the Rating Agency Condition, a
termination in part of a Hedge Agreement and a corresponding reduction in the
notional amount of the Hedge Agreement may occur in the event of a Mandatory
Redemption or Special Amortization of the Secured Notes. The Issuer’s remaining
obligations in accordance with the Priority of Payments will not be affected by
any such reduction. Notwithstanding any right of the Issuer to terminate each
Hedge Agreement or related Hedge Counterparty Credit Support upon the occurrence
of a Termination Event or an Event of Default (each as defined in each Hedge
Agreement) or otherwise pursuant to a Hedge Agreement, the Issuer shall not
terminate any Hedge Agreement or Hedge Counterparty Credit Support unless the
Issuer obtains a written confirmation from each relevant Rating Agency that such
termination would not cause such Rating Agency’s then-current rating on any
Class of Secured Notes, as applicable, to be adversely qualified, reduced,
suspended or withdrawn.
 
(d) Each Hedge Agreement shall provide for termination, and (i) shall be capable
of being terminated by or on behalf of the Issuer upon the failure of the
related Hedge Counterparty to post collateral under a Hedge Counterparty Credit
Support within the time period specified in the related Hedge Agreement, provide
other alternate credit enhancement in accordance with the related Hedge
Agreement, or upon the failure of the related Hedge Counterparty to transfer (at
the Hedge Counterparty’s sole cost and expense) all of its rights and
obligations under the related Hedge Agreement to a Qualified Hedge Party within
the time period specified in the related Hedge Agreement, after the failure of
the related Hedge Counterparty (or any Hedge Counterparty Credit Support
Provider) to have the Hedge Counterparty Threshold Ratings, (ii) shall be
capable of being terminated by or on behalf of the Issuer upon the failure of
the related Hedge Counterparty to transfer (at the related Hedge Counterparty’s
sole cost and expense) all of its rights and obligations under the related Hedge
Agreement to a Qualified Hedge Party within the time period specified in the
related Hedge Agreement after the failure of the related Hedge Counterparty (or
any Hedge Counterparty Credit Support Provider) to have the Hedge Counterparty
Required Ratings (provided, however, that the related Hedge Counterparty shall
continue to post collateral and use its best efforts to find a replacement
pursuant to the related Hedge Agreement until the earlier to occur of
termination of the related Hedge Agreement by or on behalf of the Issuer or
consummation of a Permitted Transfer (as defined in and in accordance with the
terms of the related Hedge Agreement)) unless the Issuer has received written
confirmation from each Rating Agency that such failure would not cause such
Rating Agency’s then-current rating on any Class of Secured Notes to be
adversely qualified, reduced, suspended or withdrawn, (iii) shall be capable of
being terminated by the related Hedge Counterparty, upon the failure of the
Issuer to make, when due, any scheduled periodic payments under the related
Hedge Agreement, (iv) shall be capable of being terminated, in whole or in part
as provided in the related Hedge Agreement, upon the final sale of the Assets,
an Auction Call Redemption, an Optional Redemption, a Clean-up Call or a Tax
Redemption, (v) shall be capable of being terminated, in part as provided in the
related Hedge Agreement, subject to satisfaction of the Rating Agency Condition,
upon a Mandatory Redemption or a Special Amortization, (vi) shall be capable of
being terminated by the related Hedge Counterparty upon any declaration by the
Trustee that the Secured Notes have become due and payable for any reason and
such declaration is (or becomes) unrescindable or irrevocable or (vii) as
otherwise expressly provided for in the related Hedge Agreement. Each Hedge
Agreement will further require a Hedge Counterparty, under the conditions
described in clause (ii) of the preceding sentence, to provide Hedge
Counterparty Credit Support, although the provision of Hedge Counterparty Credit
Support will not satisfy or discharge each Hedge Counterparty’s obligation to
transfer all of its rights and obligations under the related Hedge Agreement to
a Qualified Hedge Party.
 
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(e) The Trustee shall, prior to the Closing Date, establish a single, segregated
trust account in the name of the Trustee, which shall be designated as the
“Hedge Collateral Account,” (with subaccounts for each Hedge Counterparty) which
shall be held in trust for the benefit of the Noteholders, over which the
Trustee shall have exclusive control and the sole right of withdrawal, and in
which no Person other than the Trustee and the Noteholders and the applicable
Hedge Counterparty shall have any legal or beneficial interest. The Trustee
shall deposit all collateral received from the applicable Hedge Counterparty
under the related Hedge Agreement in the Hedge Collateral Account. Any and all
funds at any time on deposit in, or otherwise to the credit of, the Hedge
Collateral Account shall be held in trust by the Trustee for the benefit of the
Noteholders. The only permitted withdrawal from or application of funds on
deposit in, or otherwise to the credit of, the Hedge Collateral Account shall be
(i) for application to obligations of the applicable Hedge Counterparty to the
Issuer under the related Hedge Agreement in accordance with the terms of such
Hedge Agreement or (ii) to return collateral to the applicable Hedge
Counterparty when and as required by the related Hedge Agreement, which the
Trustee shall return to the applicable Hedge Counterparty in accordance with the
related Hedge Agreement. The Hedge Collateral Account shall remain at all times
with the Corporate Trust Office or a Qualified Financial Institution.
 
(f) Upon the default by a Hedge Counterparty in the payment when due of its
obligations to the Issuer under the related Hedge Agreement (following the
expiration of any applicable grace period), the Trustee or the Collateral
Manager shall forthwith provide facsimile notice thereof to the Issuer, each of
the Rating Agencies and, if applicable, any Hedge Counterparty Credit Support
Provider. When the Trustee becomes aware of such default, the Trustee shall make
a demand on the applicable Hedge Counterparty, or any Hedge Counterparty Credit
Support Provider, if applicable, demanding payment forthwith. The Trustee shall
give notice to the Noteholders and further notice to the Collateral Manager upon
the continuing failure by such Hedge Counterparty or any Hedge Counterparty
Credit Support Provider to perform its obligations during the two Business Days
following a demand made by the Trustee on such Hedge Counterparty or any such
Hedge Counterparty Credit Support Provider.
 
(g) Upon the termination or partial termination of each Hedge Agreement, the
Issuer at the direction of the Collateral Manager and the Trustee shall take
such commercially reasonable actions (following the expiration of any applicable
grace period and after the expiration of the applicable time period set forth in
the related Hedge Agreement) to enforce the rights of the Issuer and the Trustee
thereunder as may be permitted by the terms of the related Hedge Agreement and
consistent with the terms hereof, and shall apply the proceeds of any such
actions (including, without limitation, the proceeds of the liquidation of any
collateral pledged by or on behalf of each Hedge Counterparty) to enter into an
additional or replacement Hedge Agreements within 30 days of the expiration of
any such grace period and such applicable time period as set forth in the
related Hedge Agreement on substantially similar terms or on such other terms as
required by the related Hedge Counterparty to any such additional or replacement
Hedge Agreement as each Rating Agency may confirm in writing would not cause
such Rating Agency’s then-current rating of any Class of Secured Notes, as
applicable, to be adversely qualified, reduced, suspended or withdrawn. The
Trustee will, promptly after the Closing Date, establish a single segregated
trust account in the name of the Trustee, designated the “Hedge Termination
Account,” with respect to each Hedge Agreement, which shall be held in trust for
the benefit of the Noteholders and the related Hedge Counterparty and over which
the Trustee will have exclusive control and the sole right of withdrawal, and in
which no person other than the Trustee, the Noteholders and the Hedge
Counterparty will have any legal or beneficial interest. The Hedge Termination
Account shall remain at all times with the Corporate Trust Office or a Qualified
Financial Institution. Notwithstanding anything contained herein to the
contrary, any payments (other than payments relating to past-due scheduled
payments on a Hedge Agreement) received by the Issuer or Trustee in connection
with either (x) the termination (in whole or in part) of any Hedge Agreement or
(y) the execution of any additional or replacement Hedge Agreements shall be
immediately transferred to the Trustee for deposit into the related Hedge
Termination Account. Any costs attributable to entering into an additional or
replacement Hedge Agreements (other than in connection with a Permitted Transfer
as provided for and defined in the related Hedge Agreement) shall be paid from
the Hedge Termination Account, and any such amounts which are payable but exceed
the balance in such Hedge Termination Account shall be borne solely by the
Issuer and shall constitute expenses payable under subclause (4) of Section
11.1(a)(i) hereof. Additionally, any amounts that are due and payable to a Hedge
Counterparty upon a termination of a Hedge Agreement shall be paid from any
amounts on deposit in the related Hedge Termination Account, and, to the extent
the amounts on deposit in the related Hedge Termination Account are insufficient
to pay all such amounts, then such amounts will be payable to the Hedge
Counterparty in accordance with Sections 11.1(a)(i) and (ii) hereof. Any amounts
remaining on deposit following payment of the related Hedge Counterparty shall
be transferred to the Principal Collection Account and shall constitute
Principal Proceeds. If determining the amount payable under the terminated Hedge
Agreement, the Issuer or the Collateral Manager on behalf of the Issuer shall
seek quotations in accordance with the terms of the related Hedge Agreement from
reference market-makers who satisfy the definition of Qualified Hedge Party
herein. Each Hedge Agreement may provide that the applicable Hedge Counterparty
is responsible for determining the amounts payable in certain circumstances. In
addition, the Issuer or the Collateral Manager on behalf of the Issuer shall use
commercially reasonable efforts to cause the termination of the related Hedge
Agreement to become effective simultaneously with the effectiveness of a
replacement thereto, described as aforesaid.
 
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ARTICLE 17

 
REPRESENTATIONS AND WARRANTIES
 
Section 17.1. Collateral Purchase Agreements.
 
Following the Closing Date, unless the Collateral Purchase Agreement is
necessary to comply with the provisions of this Indenture, the Issuer may
acquire Collateral Securities in accordance with customary settlement procedures
in the relevant markets. In any event, the Issuer shall obtain from any seller
of a Loan, all Underlying Instruments with respect to each Collateral Security,
and all Underlying Instruments related to any related Senior Interest that
govern, directly or indirectly, the rights and obligations of the owner of the
Collateral Security with respect to the Underlying Term Loan, the Underlying
Mortgage Property and the Collateral Security and any certificate evidencing the
Collateral Security.
 
Section 17.2. Cure Rights.
 
(a) If the Issuer, as holder of a Corporate Credit Note, B-Note or any other
Loan, in each case not subject to the Servicing Agreement, has the right
pursuant to the related Underlying Instruments to cure an event of default on
the Underlying Term Loan, the Collateral Manager may, in accordance with the
Collateral Manager Servicing Standard, but is not obligated to, advance from its
own funds with respect to such Corporate Credit Note, B-Note or other Loan as a
reimbursable Cure Advance, all such amounts as are necessary to effect the
timely cure of such event of default pursuant to the terms of the related
Underlying Instruments; provided, that the particular advance would not, if
made, constitute a Nonrecoverable Cure Advance. Neither the Collateral Manager
nor any of its Affiliates, is obligated to make any such Cure Advance, and no
Cure Advance will be made with respect to any Collateral Security owned by the
Issuer (including without limitation any default in payments of interest and
principal on the Collateral Securities owned by the Issuer). The determination
by the Collateral Manager that it has made a Nonrecoverable Cure Advance or that
any proposed Cure Advance, if made, would constitute a Nonrecoverable Cure
Advance shall be made by the Collateral Manager in its reasonable, good faith
judgment in accordance with the Collateral Manager Servicing Standard and shall
be evidenced by an Officer's Certificate delivered promptly to the Trustee,
setting forth the basis for such determination, accompanied by an appraisal, if
available, or an independent broker’s opinion of the value of the Underlying
Mortgage Property and any information that the Collateral Manager may have
obtained and that supports such determination. All such advances shall be
reimbursable only from subsequent collections from the specific Collateral
Security (the “Cure Collateral Security”) with respect to which the Cure Advance
was made, in the manner specified in Section 17.2(b).
 
(b) No later than 11:00 a.m. on the Business Day preceding each Determination
Date, the Collateral Manager may request by Officer’s Certificate delivered to
the Trustee, reimbursement for any Cure Advance made pursuant to Section
17.2(a), from amounts received with respect to the related Collateral Security
as follows: (i) amounts that represent payments made by the underlying obligor
to cover the item for which such Cure Advance was made to the extent allocable
to such Collateral Security; (ii) amounts that represent payments received with
respect to such Collateral Security that represent liquidation proceeds
(including any insurance proceeds to the extent allocable to such Collateral
Security) and (iii) to the extent the Collateral Manager has determined that
such Cure Advance is a Nonrecoverable Cure Advance in accordance with Section
17.2(a), from general collections on such Collateral Security. No later than the
Payment Date related to the Determination Date for which the Collateral Manager
has delivered an Officer’s Certificate requesting reimbursement of a Cure
Advance, the Trustee shall transfer to Collateral Manager, by wire transfer to
an account identified to the Trustee in writing, the amount of such Cure
Advance.
 
Section 17.3. Purchase Right; Majority Shareholders.
 
If the Issuer, as holder of a Loan, has the right pursuant to the related
Underlying Instruments to purchase any related Senior Interest(s), at the
request of and on behalf of the Majority Shareholder, the Issuer may exercise
such right, if the Collateral Manager determines based on the Collateral Manager
Servicing Standard that the exercise of the option would be in the best interest
of the Securityholders, but may not exercise such right if the Collateral
Manager determines otherwise. The Collateral Manager shall deliver to the
Trustee an Officer’s Certificate certifying such determination, accompanied by
an Act of the Majority Shareholder directing the Issuer to exercise such right.
In connection with the purchase of any such Senior Interest(s), the Issuer shall
assign to the Majority Shareholder or its designee all of its right, title and
interest in such Senior Interest(s) in exchange for a purchase price of the
Senior Interest(s), which amount shall be delivered by the Majority Shareholder
from its own funds to or upon the instruction of the Collateral Manager in
accordance with terms of the Underlying Instruments related to the acquisition
of such Senior Interest(s). The Trustee or the Issuer shall execute and deliver
at the Majority Shareholder’s direction such instruments of transfer or
assignment prepared by the Majority Shareholder, in each case without recourse,
as shall be necessary to transfer title to the Majority Shareholder or its
designee of the Senior Interest(s) and the Trustee shall have no responsibility
with regard to such Senior Interest(s).
 
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Section 17.4. Representations and Warranties Related to Loans.
 
(a) If a Collateral Security is an Initial Loan, the representations and
warranties with respect to such Loan shall be contained in the Collateral
Purchase Agreement.
 
(b) If the Collateral Security is a Subsequent Loan, upon the acquisition of
such Subsequent Loan by the Issuer, the Loan seller shall have made, pursuant to
a collateral purchase agreement, the following:
 
(i) representations and warranties in form and substance substantially similar
to the “representations and warranties” contained in the Collateral Purchase
Agreement;
 
(ii) representations and warranties regarding good title, no liens, no
modifications, no defaults and valid assignment with respect to the Loan itself;
and
 
(iii) with respect to any Subsequent Loan that is a B Note, representations and
warranties in form and substance substantially similar to the “mortgage loan
representations and warranties” in the S&P U.S. CMBS Legal and Structured
Finance Criteria with respect to the Underlying Term Loan and the Underlying
Mortgage Property.
 
(c) The representations and warranties in Section 17.4(b) with respect to the
acquisition of a Subsequent Loan may be subject to any modification, exception,
limitation or qualification that the Collateral Manager determines to be
acceptable in accordance with the Collateral Manager Servicing Standard;
provided that the Collateral Manager will provide each Rating Agency with a
report attached to each Monthly Report including all representations and
warranties and any related exceptions, limitations or qualifications received
with respect to the acquisition of any Subsequent Loan during the period covered
by the Monthly Report, which report may contain explanations by the Collateral
Manager as to its determinations.
 
(d) If the representations and warranties received with respect to this Section
17.4 were made more than one month prior to the date such Loan is transferred to
the Issuer, the Collateral Manager shall obtain from the Person making such
representations and warranties or an intervening owner of such Loan, bring-down
representations and warranties made as of the date such Loan is transferred to
the Issuer pursuant to the terms hereof or, in its capacity as Collateral
Manager, shall make as of the date such Loan is transferred to the Issuer
pursuant to the terms hereof, representations and warranties to the effect that
it has no actual knowledge that the representations and warranties are
inaccurate.
 
(e) Pursuant to the Collateral Purchase Agreement or any Substitute Collateral
Securities Purchase Agreement, the Issuer shall obtain a covenant from the
Person making any representation or warranty to the Issuer pursuant to
Section 17.4(a), 17.4(b) or 17.4(d) of the Collateral Purchase Agreement (or
such similar representation or warranty in the applicable Substitute Collateral
Securities Purchase Agreement) that such Person shall substitute another Loan
meeting the Eligibility Criteria (and subject to the Reinvestment Criteria and
the terms and provisions of the Collateral Purchase Agreement or such Substitute
Collateral Securities Purchase Agreement, as applicable) or repurchase the
related Loan if the breach of such representation or warranty (after expiration
of any cure periods) or any defect related to the Underlying Instruments
required to be delivered to the Issuer, materially and adversely affects the
value of the Loan, or interest of the Issuer in such Loan; provided that
notwithstanding the foregoing, with respect to B-Notes and Corporate Credit
Notes, the Issuer will not be required to obtain such a covenant if the Rating
Agencies no longer require such covenants with respect to similar CDO
transactions as evidenced by satisfaction of the Rating Agency Condition from
S&P. The Collateral Purchase Agreement or the applicable Substitute Collateral
Securities Purchase Agreement, will provide that the purchase price for any Loan
repurchased shall be a price equal to the repurchase price specified in such
agreement, together with accrued and unpaid interest on such Loan, any
unreimbursed advances, accrued and unpaid interest on advances on the Loan and
any reasonable costs and expenses, including, but not limited to, the cost of
any enforcement action, incurred by the Issuer or the Trustee in connection with
any such purchase by a seller. In connection with any substitution of a Loan,
the Reinvestment Criteria must be maintained after giving effect to the
substitution. The Person making such representations and warranties shall agree
that such repurchase may be exercised directly by the Issuer or the Collateral
Manager on its behalf.
 
Section 17.5. Opinions Related to Certain Sales by the Collateral Manager and
any Affiliates.
 
Following the Closing Date, neither the Collateral Manager nor any of its
Affiliates shall transfer any Collateral Security to the Issuer if the
Collateral Manager or any of its Affiliates has held such Collateral Security on
its balance sheet for a period in excess of three months, unless the Collateral
Manager or such Affiliate provides to the Issuer and the Trustee a “true sale”
opinion with respect to such transfer in a form and substance substantially
similar to the opinion provided under Section 3.1(j); provided, that such a
“true sale” opinion shall be required with respect to all sales of Credit Tenant
Lease Loans regardless of how long such Credit Tenant Lease Loan has been held
on the balance sheet of any Person.
 
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Section 17.6. Operating Advisor; Additional Debt.
 
If the Issuer, as holder of a Corporate Credit Note or B-Note has the right
pursuant to the related Underlying Instruments to appoint the operating advisor,
directing holder or Person serving a similar function under the Underlying
Instruments, each of the Issuer, the Trustee and the Collateral Manager shall
take such actions as are reasonably necessary to appoint the Collateral Manager
to such position, or such other Person as the Collateral Manager may appoint,
provided, that such Person regularly invests in Corporate Credit Notes or
B-Notes in the CMBS market. If the Issuer, as holder of a Corporate Credit Note
or B-Note has the right pursuant to the related Underlying Instruments to
consent to the related borrower incurring any additional debt, the Collateral
Manager will exercise such right in accordance with the Collateral Manager
Servicing Standard and such consent will be subject to satisfaction of the
Rating Agency Condition; except that if such consent relates to (x) refinancing
senior debt to protect the Corporate Credit Note or B-Note in a manner that does
not increase the principal balance of or aggregate debt service on such senior
debt or (y) subordinate debt used to improve the property, then such consent
will not be subject to satisfaction of the Rating Agency Condition but the
Collateral Manager will provide each Rating Agency notice thereof.
 
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ARTICLE 18

ADVANCING AGENT
 
Section 18.1. Liability of the Advancing Agent.
 
(a) The Advancing Agent shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by the
Advancing Agent. In consideration of the performance of its obligations
hereunder, the Advancing Agent shall be entitled to receive, at the times set
forth herein and subject to the conditions and the priority of distribution
provisions hereof, to the extent funds are available therefor, the Advancing
Agent Fee.
 
Section 18.2. Merger or Consolidation of the Advancing Agent.
 
(a) The Advancing Agent will keep in full effect its existence, rights and
franchises as a national banking association under the laws of the jurisdiction
in which it was formed, and will obtain and preserve its qualification to do
business as a national banking association in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture to perform its duties under this Indenture.
 
(b) Any Person into which the Advancing Agent may be merged or consolidated, or
any corporation resulting from any merger or consolidation to which the
Advancing Agent shall be a party, or any Person succeeding to the business of
the Advancing Agent shall be the successor of the Advancing Agent, hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided that the Trustee’s obligations under Section 10.5 are not affected
thereby.
 
Section 18.3. Limitation on Liability of the Advancing Agent and Others.
 
None of the Advancing Agent or any of its affiliates, directors, officers,
employees or agents shall be under any liability for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Indenture, or for errors in judgment; provided, however, that this provision
shall not protect the Advancing Agent or any such person against liability to
the Issuer or Securityholders for any breach of warranties or representations
made herein or any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or gross negligence in the performance of duties
or by reason of negligent disregard of obligations and duties hereunder. The
Advancing Agent and any director, officer, employee or agent of the Advancing
Agent may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Advancing Agent and any director, officer, employee or agent of the
Advancing Agent shall be indemnified by the Issuer pursuant to the priorities
set forth in Section 11.1(a) and held harmless against any loss, liability or
expense incurred in connection with any legal action relating to this Indenture
or the Secured Notes, other than any loss, liability or expense (i) specifically
required to be borne thereby pursuant to the terms hereof or otherwise
incidental to the performance of obligations and duties hereunder (except as any
such loss, liability or expense shall be otherwise reimbursable pursuant to this
Indenture) or (ii) incurred by reason of any breach of a representation,
warranty or covenant made herein, any misfeasance, bad faith or negligence in
the performance of or negligent disregard of, obligations or duties hereunder or
any violation of any state or federal securities law.
 
Section 18.4. Representations and Warranties of the Advancing Agent.
 
The Advancing Agent represents and warrants that:
 
(a) the Advancing Agent (i) has been duly organized, is validly existing and is
in compliance with the laws of the United States of America, (ii) has full power
and authority to own the Advancing Agent’s assets and to transact the business
in which it is currently engaged, and (iii) is duly qualified and in good
standing under the laws of each jurisdiction where the Advancing Agent’s
ownership or lease of property or the conduct of the Advancing Agent’s business
requires, or the performance of this Indenture would require, such
qualification, except for failures to be so qualified that would not in the
aggregate have a material adverse effect on the business, operations, assets or
financial condition of the Advancing Agent or the ability of the Advancing Agent
to perform its obligations under, or on the validity or enforceability of, the
provisions of this Indenture applicable to the Advancing Agent;
 
(b) the Advancing Agent has full power and authority to execute, deliver and
perform this Indenture; this Indenture has been duly authorized, executed and
delivered by the Advancing Agent and constitutes a legal, valid and binding
agreement of the Advancing Agent, enforceable against it in accordance with the
terms hereof, except that the enforceability hereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors’ rights and (ii) general principles of
equity (regardless of whether such enforcement is considered in a proceeding in
equity or at law);
 
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(c) neither the execution and delivery of this Indenture nor the performance by
the Advancing Agent of its duties hereunder conflicts with or will violate or
result in a breach or violation of any of the terms or provisions of, or
constitutes a default under: (i) the articles of association or by-laws of the
Advancing Agent, (ii) the terms of any indenture, contract, lease, mortgage,
deed of trust, note agreement or other evidence of indebtedness or other
agreement, obligation, condition, covenant or instrument to which the Advancing
Agent is a party or is bound or (iii) any law, decree, order, rule or regulation
applicable to the Advancing Agent of any court or regulatory, administrative or
governmental agency, body or authority or arbitrator having jurisdiction over
the Advancing Agent or its properties, and which would have, in the case of any
of (i), (ii) or (iii) of this subsection (c), either individually or in the
aggregate, a material adverse effect on the business, operations, assets or
financial condition of the Advancing Agent or the ability of the Advancing Agent
to perform its obligations under this Indenture;
 
(d) no litigation is pending or, to the best of the Advancing Agent’s knowledge,
threatened, against the Advancing Agent that would materially and adversely
affect the execution, delivery or enforceability of this Indenture or the
ability of the Advancing Agent to perform any of its obligations under this
Indenture in accordance with the terms hereof; and
 
(e) no consent, approval, authorization or order of or declaration or filing
with any government, governmental instrumentality or court or other person is
required for the performance by the Advancing Agent of its duties hereunder,
except such as have been duly made or obtained.
 
Section 18.5. Resignation and Removal; Appointment of Successor.
 
(a) No resignation or removal of the Advancing Agent and no appointment of a
successor Advancing Agent pursuant to this Article 18 shall become effective
until the acceptance of appointment by the successor Advancing Agent under
Section 18.6.
 
(b) The Advancing Agent may resign at any time by giving written notice thereof
to the Issuer, the Co-Issuer, the Trustee, the Collateral Manager, each Hedge
Counterparty, the Securityholders and each Rating Agency.
 
(c) The Advancing Agent may be removed at any time by holders of 66-2/3% of the
par value of the Preferred Shares upon written notice delivered to the Trustee,
the Advancing Agent and to the Issuer and the Co-Issuer, and must be removed by
the Collateral Manager if at any time the long term debt obligations of both the
Advancing Agent and the Trustee is rated less than “A” by S&P; provided, that if
an entity rated at least “A” by S&P agrees to assume the obligations of the
back-up advancing agent hereunder, then the Collateral Manager shall not be
obligated to remove the Advancing Agent. In addition, the Advancing Agent may be
removed at any time by the Trustee if the Advancing Agent fails to make any
Interest Advance it is required to make pursuant to Section 10.5 hereof.
 
(d) If the Advancing Agent shall resign or be removed, upon receiving such
notice of resignation or removal, the Issuer and the Co-Issuer shall promptly
appoint a successor advancing agent by written instrument, in duplicate,
executed by an Authorized Officer of the Issuer and an Authorized Officer of the
Co-Issuer, one copy of which shall be delivered to the Advancing Agent so
resigning and one copy to the successor Advancing Agent, together with a copy to
each Securityholder, the Trustee, each Hedge Counterparty and the Collateral
Manager; provided, that such successor Advancing Agent shall be appointed only
subject to satisfaction of the Rating Agency Condition and upon the written
consent of a Majority of the Preferred Shares. If no successor Advancing Agent
shall have been appointed and an instrument of acceptance by a successor
Advancing Agent shall not have been delivered to the Advancing Agent within 30
days after the giving of such notice of resignation, the resigning Advancing
Agent, the Trustee or any Holder of a Preferred Share, on behalf of himself and
all others similarly situated, may petition any court of competent jurisdiction
for the appointment of a successor Advancing Agent. Notwithstanding the
foregoing, if the Advancing Agent is removed by the Trustee pursuant to the last
sentence of Section 18.5(c) above, the Trustee shall promptly appoint a
successor advancing agent; provided, that such successor Advancing Agent shall
be appointed subject to the satisfaction of the Rating Agency Condition.
 
(e) The Issuer and the Co-Issuer shall give prompt notice of each resignation
and each removal of the Advancing Agent and each appointment of a successor
Advancing Agent by mailing written notice of such event by first class mail,
postage prepaid, to each Rating Agency, each Hedge Counterparty and to the
Holders of the Secured Notes as their names and addresses appear in the Notes
Register.
 
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(f) No resignation or removal of the Advancing Agent and no appointment of a
Successor Advancing Agent shall become effective until the acceptance of
appointment by the Successor Advancing Agent.
 
Section 18.6. Acceptance of Appointment by Successor Advancing Agent.
 
(a) Every successor Advancing Agent appointed hereunder shall execute,
acknowledge and deliver to the Issuer, the Co-Issuer, each Hedge Counterparty,
the Collateral Manager, the Trustee and the retiring Advancing Agent an
instrument accepting such appointment. Upon delivery of the required
instruments, the resignation or removal of the retiring Advancing Agent shall
become effective and such successor Advancing Agent, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts,
duties and obligations of the retiring Advancing Agent.
 
(b) No appointment of a successor Advancing Agent shall become effective unless
each Rating Agency has confirmed in writing that the employment of such
successor would not adversely affect the rating on the Secured Notes.
 
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Indenture as of the day and year first above written.
 

  Executed as a Deed
 
CAPLEASE CDO 2005-1, LTD., as Issuer
 
By     /s/Michael J. Heneghan                      
Name: Michael J. Heneghan
Title: Senior Vice President
 
Witness:
 
/s/ Todd Gately   
 
CAPLEASE CDO 2005-1 CORP.,
as Co-Issuer
 
By: /s/ Donald J. Puglisi                             
Name: Donald J. Puglisi
Title: President
 
CAPLEASE INVESTMENT MANAGEMENT, LLC,
as Advancing Agent
 
By: /s/ Michael J. Heneghan  
Name: Michael J. Heneghan
Title: Senior Vice President
 
LASALLE BANK NATIONAL ASSOCIATION,
 
solely as Trustee, Paying Agent, Calculation Agent, Transfer Agent, Custodial
Securities Intermediary and Notes Registrar and not in its individual capacity

By: /s/ Koren Sumser   
Name: Koren Sumser
Title: First Vice President

 

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