Exhibit 10.17


 


EXECUTION COPY


 


Dated as of June 22, 2006


 


 


N-STAR REAL ESTATE CDO VII LTD.,

as Issuer


 


 


LASALLE BANK NATIONAL ASSOCIATION,

as Trustee


 


 






	
   

  
	
  INDENTURE

  



 






 

















 


TABLE OF
CONTENTS


 


	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  
	
  PRELIMINARY
  STATEMENT

  	
  1

  
	
   

  	
   

  
	
  GRANTING
  CLAUSES

  	
  1

  
	
   

  	
   

  
	
  ARTICLE
  I  Definitions and Interpretation

  	
  2

  
	
   

  	
  1.1.

  	
  Definitions

  	
  2

  
	
   

  	
  1.2.

  	
  Assumptions
  as to Collateral Debt Securities, Fees, Etc.

  	
  57

  
	
   

  	
  1.3.

  	
  Rules of
  Construction

  	
  59

  
	
   

  	
   

  
	
  ARTICLE
  II  The Rated Notes

  	
  60

  
	
   

  	
  2.1.

  	
  Forms
  Generally

  	
  60

  
	
   

  	
  2.2.

  	
  Authorized
  Amount; Applicable Periodic Interest Rate; Stated

  	
   

  
	
   

  	
   

  	
  Maturity
  Date; Denominations

  	
  61

  
	
   

  	
  2.3.

  	
  Execution,
  Authentication, Delivery and Dating

  	
  62

  
	
   

  	
  2.4.

  	
  Registration,
  Transfer and Exchange of Rated Notes

  	
  62

  
	
   

  	
  2.5.

  	
  Mutilated,
  Defaced, Destroyed, Lost or Stolen Rated Notes

  	
  70

  
	
   

  	
  2.6.

  	
  Payment
  of Principal and Interest; Rights Preserved

  	
  71

  
	
   

  	
   

  
	
  ARTICLE
  III  Conditions Precedent

  	
  75

  
	
   

  	
  3.1.

  	
  General
  Provisions

  	
  75

  
	
   

  	
  3.2.

  	
  Security
  for the Rated Notes

  	
  76

  
	
   

  	
  3.3.

  	
  Custodianship;
  Transfer of Collateral Debt Securities and Eligible

  	
   

  
	
   

  	
   

  	
  Investments

  	
  78

  
	
   

  	
   

  
	
  ARTICLE
  IV  Satisfaction and Discharge

  	
  81

  
	
   

  	
  4.1.

  	
  Satisfaction
  and Discharge of Indenture

  	
  81

  
	
   

  	
  4.2.

  	
  Application
  of Trust Money

  	
  82

  
	
   

  	
  4.3.

  	
  Repayment
  of Funds Held by Note Paying Agent

  	
  83

  
	
   

  	
   

  
	
  ARTICLE
  V  Events of Default; Remedies

  	
  83

  
	
   

  	
  5.1.

  	
  Events
  of Default

  	
  83

  
	
   

  	
  5.2.

  	
  Acceleration
  of Maturity; Rescission and Annulment

  	
  84

  
	
   

  	
  5.3.

  	
  Collection
  of Indebtedness and Suits for Enforcement by Trustee

  	
  85

  
	
   

  	
  5.4.

  	
  Remedies

  	
  87

  
	
   

  	
  5.5.

  	
  Preservation
  of Collateral

  	
  89

  
	
   

  	
  5.6.

  	
  Trustee
  May Enforce Claims Without Possession

  	
  91

  
	
   

  	
  5.7.

  	
  Application
  of Funds Collected

  	
  91

  
	
   

  	
  5.8.

  	
  Limitation
  on Suits

  	
  91

  
	
   

  	
  5.9.

  	
  Unconditional
  Rights of Rated Noteholders to Receive Principal and

  	
   

  
	
   

  	
   

  	
  Interest

  	
  92

  
	
   

  	
  5.10.
  

  	
  Restoration
  of Rights and Remedies

  	
  92

  
	
   

  	
  5.11.
  

  	
  Rights
  and Remedies Cumulative

  	
  92

  
	
   

  	
  5.12.
  

  	
  Delay
  or Omission Not Waiver

  	
  92

  
	
   

  	
  5.13.
  

  	
  Control
  by Controlling Class

  	
  93

  
	
   

  	
  5.14.
  

  	
  Waiver
  of Past Defaults

  	
  93

  
	
   

  	
  5.15.
  

  	
  Undertaking
  for Costs

  	
  94

  
	
   

  	
  5.16.
  

  	
  Waiver
  of Stay or Extension Laws

  	
  94

  
	
   

  	
  5.17.
  

  	
  Sale
  of Collateral

  	
  94

  
	
   

  	
  5.18.
  

  	
  Action
  on the Rated Notes

  	
  95

  
					



 


i

















 


TABLE OF CONTENTS


(continued)


 


	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VI  The Trustee

  	
  95

  
	
   

  	
  6.1.

  	
  Certain
  Duties and Responsibilities

  	
  95

  
	
   

  	
  6.2.

  	
  Notice
  of Default

  	
  97

  
	
   

  	
  6.3.

  	
  Certain
  Rights of Trustee

  	
  97

  
	
   

  	
  6.4.

  	
  Authenticating
  Agents

  	
  99

  
	
   

  	
  6.5.

  	
  Not
  Responsible for Recitals or Issuance of Rated Notes

  	
  99

  
	
   

  	
  6.6.

  	
  May Hold
  Rated Notes

  	
  100

  
	
   

  	
  6.7.

  	
  Funds
  Held in Trust

  	
  100

  
	
   

  	
  6.8.

  	
  Compensation
  and Reimbursement

  	
  100

  
	
   

  	
  6.9.

  	
  Corporate
  Trustee Required; Eligibility

  	
  101

  
	
   

  	
  6.10.
  

  	
  Resignation
  and Removal; Appointment of Successor

  	
  102

  
	
   

  	
  6.11.
  

  	
  Acceptance
  of Appointment by Successor

  	
  103

  
	
   

  	
  6.12.
  

  	
  Merger,
  Conversion, Consolidation or Succession to Business of

  	
   

  
	
   

  	
   

  	
  Trustee

  	
  103

  
	
   

  	
  6.13.

  	
  Co-Trustees

  	
  103

  
	
   

  	
  6.14.
  

  	
  Certain
  Duties Related to Delayed Payment of Proceeds; Other

  	
   

  
	
   

  	
   

  	
  Notices

  	
  104

  
	
   

  	
  6.15.

  	
  Representations
  and Warranties of the Bank

  	
  105

  
	
   

  	
  6.16.
  

  	
  Exchange
  Offers, Proposed Amendments etc.

  	
  105

  
	
   

  	
  6.17.

  	
  Fiduciary
  for Rated Noteholders Only; Agent For Other Secured

  	
   

  
	
   

  	
   

  	
  Parties

  	
  106

  
	
   

  	
  6.18.
  

  	
  Withholding

  	
  106

  
	
   

  	
   

  
	
  ARTICLE
  VII  Covenants

  	
  107

  
	
   

  	
  7.1.

  	
  Payment
  of Principal and Interest

  	
  107

  
	
   

  	
  7.2.

  	
  Maintenance
  of Office or Agency

  	
  107

  
	
   

  	
  7.3.

  	
  Funds
  for Rated Note Payments to be Held in Trust

  	
  108

  
	
   

  	
  7.4.

  	
  Existence
  of Issuer

  	
  109

  
	
   

  	
  7.5.

  	
  Protection
  of Collateral

  	
  110

  
	
   

  	
  7.6.

  	
  Opinions
  as to Collateral

  	
  111

  
	
   

  	
  7.7.

  	
  Performance
  of Obligations

  	
  111

  
	
   

  	
  7.8.

  	
  Negative
  Covenants

  	
  113

  
	
   

  	
  7.9.

  	
  Statement
  as to Compliance

  	
  114

  
	
   

  	
  7.10.
  

  	
  Issuer
  May Consolidate, Etc., Only on Certain Terms

  	
  114

  
	
   

  	
  7.11.
  

  	
  Successor
  Substituted

  	
  116

  
	
   

  	
  7.12.
  

  	
  No
  Other Business

  	
  116

  
	
   

  	
  7.13.
  

  	
  Change
  or Withdrawal of Rating

  	
  117

  
	
   

  	
  7.14.
  

  	
  Reporting

  	
  117

  
	
   

  	
  7.15.
  

  	
  Rated
  Note Calculation Agent

  	
  117

  
	
   

  	
  7.16.

  	
  Listing

  	
  118

  
	
   

  	
  7.17.
  

  	
  Amendment
  of Certain Documents

  	
  118

  
	
   

  	
  7.18.
  

  	
  Purchase
  of Collateral; Information Regarding Collateral; Rating

  	
   

  
	
   

  	
   

  	
  Confirmation

  	
  118

  
	
   

  	
   

  
	
  ARTICLE
  VIII  Supplemental Indentures

  	
  120

  
	
   

  	
  8.1.

  	
  Supplemental
  Indentures Without Consent of Rated Noteholders

  	
  120

  
	
   

  	
  8.2.

  	
  Supplemental
  Indentures with Consent of Rated Noteholders

  	
  122

  
	
   

  	
  8.3.

  	
  Execution
  of Supplemental Indentures

  	
  124

  
	
   

  	
  8.4.

  	
  Effect
  of Supplemental Indentures

  	
  125

  
	
   

  	
  8.5.

  	
  Reference
  in Rated Notes to Supplemental Indentures

  	
  125

  
						



 


ii

















 


TABLE OF CONTENTS


(continued)


 


	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  IX  Redemption of Rated Notes

  	
  125

  
	
   

  	
  9.1.

  	
  Redemption
  of Rated Notes

  	
  125

  
	
   

  	
  9.2.

  	
  Redemption
  Procedures; Auction

  	
  126

  
	
   

  	
  9.3.

  	
  Record
  Date; Notice to Trustee of Redemption

  	
  127

  
	
   

  	
  9.4.

  	
  Notice
  of Redemption

  	
  128

  
	
   

  	
  9.5.

  	
  Notice
  of Withdrawal

  	
  128

  
	
   

  	
  9.6.

  	
  Rated
  Notes Payable on Redemption Date

  	
  129

  
	
   

  	
  9.7.

  	
  Special
  Amortization

  	
  129

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  X  Accounts, Accountings and Releases

  	
  130

  
	
   

  	
  10.1.
  

  	
  Collection
  of Funds

  	
  130

  
	
   

  	
  10.2.
  

  	
  General
  Provisions Applicable to Accounts

  	
  130

  
	
   

  	
  10.3.
  

  	
  Collateral
  Account

  	
  131

  
	
   

  	
  10.4.
  

  	
  Uninvested
  Proceeds Account

  	
  131

  
	
   

  	
  10.5.
  

  	
  Collection
  Account

  	
  132

  
	
   

  	
  10.6.
  

  	
  Expense
  Reserve Account

  	
  132

  
	
   

  	
  10.7.
  

  	
  Non-Monthly
  Pay Asset Interest Reserve Account

  	
  133

  
	
   

  	
  10.8.
  

  	
  Ramp-Up
  Interest Reserve Account

  	
  133

  
	
   

  	
  10.9.
  

  	
  Payment
  Account

  	
  133

  
	
   

  	
  10.10.
  

  	
  Derivative
  Contract Counterparty Accounts

  	
  134

  
	
   

  	
  10.11.
  

  	
  Derivative
  Contract Issuer Account

  	
  135

  
	
   

  	
  10.12.
  

  	
  Reports
  by Trustee

  	
  136

  
	
   

  	
  10.13.
  

  	
  Accountings

  	
  136

  
	
   

  	
  10.14.
  

  	
  Release
  of Securities

  	
  141

  
	
   

  	
  10.15.
  

  	
  Reports
  by Independent Accountants

  	
  142

  
	
   

  	
  10.16.
  

  	
  Reports
  to Rating Agencies

  	
  143

  
	
   

  	
  10.17.
  

  	
  Tax
  Matters

  	
  143

  
	
   

  	
  10.18.
  

  	
  Tax
  Information

  	
  143

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  XI  Application of Monies

  	
  144

  
	
   

  	
  11.1. 

  	
  Disbursements of Funds from Payment Account; Priority of Payments

  	
  144

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  XII  Purchase and Sale of Collateral Debt Securities

  	
  154

  
	
   

  	
  12.1.
  

  	
  Sale
  of Collateral Debt Securities

  	
  154

  
	
   

  	
  12.2.
  

  	
  Portfolio
  Characteristics

  	
  156

  
	
   

  	
  12.3.
  

  	
  Conditions
  Applicable to all Transactions Involving Sale or Grant

  	
  159

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  XIII  Secured Parties’ Relations

  	
  160

  
	
   

  	
  13.1.
  

  	
  Subordination

  	
  160

  
	
   

  	
  13.2.
  

  	
  Standard
  of Conduct

  	
  164

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  XIV  Miscellaneous

  	
  164

  
	
   

  	
  14.1.
  

  	
  Form of
  Documents Delivered to Trustee

  	
  164

  
	
   

  	
  14.2.
  

  	
  Acts
  of Rated Noteholders

  	
  165

  
	
   

  	
  14.3.
  

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

  	
  165

  
	
   

  	
  14.4.
  

  	
  Notices
  and Reports to Rated Noteholders; Waiver

  	
  167

  
	
   

  	
  14.5.
  

  	
  Effect
  of Headings and Table of Contents

  	
  167

  
	
   

  	
  14.6.
  

  	
  Successors
  and Assigns

  	
  167

  
	
   

  	
  14.7.
  

  	
  Severability

  	
  168

  
	
   

  	
  14.8.
  

  	
  Benefits
  of Indenture

  	
  168

  
					



 


iii

















 


TABLE OF CONTENTS


(continued)


 


	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.9.

  	
  Governing
  Law

  	
  168

  
	
   

  	
  14.10.

  	
  Submission
  to Jurisdiction

  	
  168

  
	
   

  	
  14.11.

  	
  Counterparts

  	
  168

  
	
   

  	
  14.12.

  	
  Waiver
  of Jury Trial

  	
  168

  
	
   

  	
  14.13.

  	
  Judgment
  Currency

  	
  169

  
	
   

  	
  14.14.

  	
  Confidential
  Treatment of Documents

  	
  169

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  XV  Assignment of Agreements, Etc.

  	
  169

  
	
   

  	
  15.1.

  	
  Assignment

  	
  169

  
	
   

  	
  15.2.

  	
  No
  Impairment

  	
  170

  
	
   

  	
  15.3.

  	
  Termination,
  Etc.

  	
  170

  
	
   

  	
  15.4.

  	
  Issuer
  Agreements, Etc.

  	
  170

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  XVI  Hedge Agreement

  	
  170

  
	
   

  	
  16.1.

  	
   Hedge Agreements

  	
  170

  
					



 


	
  Schedules

  	
   

  
	
  Schedule
  A

  	
  Schedule
  of Collateral Debt Securities as of the Closing Date

  
	
  Schedule
  B

  	
  LIBOR
  Formula

  
	
  Schedule
  C

  	
  Schedule
  of Temporary Ramp-Up Securities

  
	
  Schedule
  D-1

  	
  S&P’s
  Recovery Rate Matrix

  
	
  Schedule
  D-2

  	
  Moody’s
  Recovery Rate Matrix

  
	
  Schedule
  E

  	
  Auction
  Procedures

  
	
  Schedule
  F

  	
  S&P’s
  Notching Criteria

  
	
  Schedule
  G

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

  
	
  Schedule
  H

  	
  S&P’s
  Industry Classification Groups

  
	
  Schedule
  I

  	
  Fitch
  Industry Classification Groups

  
	
   

  	
   

  
	
  Exhibits

  	
   

  
	
  Exhibit A-1

  	
  Form of
  Regulation S Global Note

  
	
  Exhibit A-2

  	
  Form of
  Rule 144A Global Note

  
	
  Exhibit B-1

  	
  Form of
  Definitive Class E Note

  
	
  Exhibit C-1

  	
  Form of
  Rule 144A Transfer Certificate

  
	
  Exhibit C-2

  	
  Form of
  Regulation S Transfer Certificate

  
	
  Exhibit C-3

  	
  Form of
  Definitive Class E Transfer Certificate

  
	
  Exhibit D

  	
  Form of
  Funding Certificate

  
	
  Exhibit E-1

  	
  Form of
  Opinion of Clifford Chance US LLP

  
	
  Exhibit E-2

  	
  Form of
  Opinion of Walkers

  
	
  Exhibit F

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

  
	
  Exhibit G

  	
  Form of
  Opinion of Thacher Proffitt & Wood LLP

  
	
  Exhibit H

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

  
	
  Exhibit I

  	
  Rated
  Noteholder’s Certificate

  



 


iv














 


THIS
INDENTURE dated as of
June 22, 2006 among:


 


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


 


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


 


PRELIMINARY
STATEMENT


 


The Issuer is duly authorized to execute and
deliver this Indenture to provide for the issuance of the Rated Notes as
provided in this Indenture. All covenants and agreements made by the Issuer
herein are for the benefit and security of the Secured Parties. The Issuer is
entering into this Indenture, and the Trustee is accepting the trusts created
hereby, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged.


 


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


 


GRANTING
CLAUSES


 


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


 


Except to the extent otherwise provided in
this Indenture, the Issuer does hereby constitute and irrevocably appoint the
Trustee the true and lawful attorney of the Issuer, with full power (in the
name of the Issuer or otherwise), to exercise all rights of the Issuer with
respect to the Collateral held for the benefit and security of the Secured
Parties and to ask, require, demand, receive, settle, compromise, compound and
give acquittance for any and all moneys and claims for moneys due and to become
due


 

















 


under or arising out of any of the Collateral
held for the benefit and security of the Secured Parties, to endorse any checks
or other instruments or orders in connection therewith and to file any claims
or take any action or institute any proceedings which the Trustee may deem to
be necessary or advisable in the premises. The power of attorney granted
pursuant to this Indenture and all authority hereby conferred are granted and
conferred solely to protect the Trustee’s interest in the Collateral held for
the benefit and security of the Secured Parties and shall not impose any duty
upon the Trustee to exercise any power. This power of attorney shall be
irrevocable as one coupled with an interest prior to the payment in full of all
the obligations secured hereby.


 


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


 


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


 


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


 


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


 


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


 


ARTICLE I


 


DEFINITIONS
AND INTERPRETATION


 


1.1.                       DEFINITIONS


 


Except as otherwise
specified herein or as the context may otherwise require, the following terms
have the respective meanings set forth below for all purposes of this
Indenture. Whenever any reference is made to an amount the determination of
which is governed by Section 1.2, the provisions of Section 1.2


 


2

















 


shall be applicable to such determination or
calculation, whether or not reference is specifically made to Section 1.2,
unless some other method of calculation or determination is expressly specified
in the particular provision. In addition, terms defined in Article 9 of
the UCC and used but not capitalized herein have the meanings assigned thereto
in Article 9 of the UCC.


 


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


 


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


 


Accountants’ Report means a report of a firm of Independent certified public accountants of
recognized national reputation appointed by the Issuer (or the Collateral
Manager on its behalf) on the Closing Date pursuant to Section 10.14(a),
which may be the firm of Independent accountants that reviews or performs
procedures with respect to the financial reports prepared by the Issuer.


 


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


 


Act has
the meanings specified in Section 14.2.


 


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


 


Administrative Expenses means amounts (including any applicable indemnities) due from, or
accrued for, the account of the Issuer with respect to any Payment Date to (i) the
Trustee for Trustee Expenses; (ii) the Income Note Paying Agent pursuant
to the Income Note Paying Agency Agreement; (iii) the Collateral
Administrator pursuant to the Collateral Administration Agreement; (iv) the
independent accountants, agents and counsel of the Issuer for fees and expenses
(including, without limitation, tax reports); (v) the Rating Agencies for
fees and expenses in connection with any Class of Notes rated by each such
Rating Agency (including, without limitation, expenses for credit estimates and
ongoing surveillance of the ratings of the Notes); (vi) the Administrator
pursuant to the Corporate Services Agreement; (vii) the Collateral Manager
and its counsel for fees, expenses and indemnities under the Transaction
Documents to the extent set forth therein (including, without limitation,
amounts payable under the Collateral Management Agreement but excluding the
Collateral Management Fee); (viii) any other Person in respect of any
governmental fee, charge or tax (including all filing, registration and annual
return fees payable to the Cayman Islands’ government and registered office
fees); and (ix) any other Person in respect of any other fees or expenses
permitted under the Indenture and the documents delivered pursuant to or in connection
with this Indenture, the Income Note Paying Agency Agreement, the Collateral
Management Agreement and the Notes; provided that
Administrative Expenses may not include any amounts due or accrued with respect
to the actions taken on, or prior to, the Closing Date.


 


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


 


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


 


3

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Asset-Backed Securities are debt securities that entitle the holders
thereof to receive payments that depend primarily on the cash flow from (i) a
specified pool of financial assets, either fixed or revolving, that by their
terms convert into cash within a finite time period, together with rights or
other assets


 


4

















 


designed to assure the
servicing or timely distribution of proceeds to holders of such securities
(including, for the avoidance of doubt, leases) or (ii) real estate
mortgages, either fixed or revolving, together with rights or other assets
designed to assure the servicing or timely distribution of proceeds to the
holders of such securities.


 


Assumed
Reinvestment Rate  means, with respect to any Account or fund
securing the Rated Notes, the greater of (i) LIBOR minus 0.50% and (ii) zero.


 


Auction  has the meaning
specified in Section 9.2.


 


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


 


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


 


Auction
Procedures  has the meaning specified in Section 9.2.


 


Auction
Purchase Agreement  has the meaning specified in Schedule E.


 


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


 


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


 


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


 


Average Life  means, on any
Calculation Date with respect to any Collateral Debt Security (other than any
Trust Preferred Security), the quotient obtained by the Collateral Manager by
dividing (i) the sum of the products of (a) the number of years
(rounded to the nearest one tenth thereof) from such Calculation Date to the
respective dates of each successive distribution of principal of such
Collateral Debt Security (assuming that (1) no Collateral Debt Securities
default or are sold, (2) any optional redemption of the Collateral Debt
Securities occurs in accordance with their respective terms and (3) any
extension of the Real Estate Interests is exercised) and (b) the
respective amounts of principal of such scheduled distributions by (ii) the
sum of all successive scheduled distributions of principal on such Collateral
Debt Security. The Average Life of any Trust Preferred Security on any
Calculation Date occurring on or after the Closing Date, to and including the
Payment Date in June 2018, shall be the call date of such Trust Preferred
Security or, in the event the call is not exercised on or prior to such call
date, the excess of 20 years over the period of time from the Closing Date of
such Trust Preferred Security to the date such


 


5

















 


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


 


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


 


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


 


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


 


BAS means Banc of America Securities LLC.


 


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


 


Benefit Plan Investor means (i) an “employee benefit plan” (as
defined in Section 3(3) of ERISA), whether or not subject to Title I  of ERISA, including without limitation governmental plans, foreign
plans and church plans, (ii) a “plan” (as defined in Section 4975(e)(1) of
the Code), whether or not subject to Section 4975 of the Code, including,
without limitation, individual retirement accounts and Keogh plans or (iii) an
entity whose underlying assets include plan assets by reason of such an
employee benefit plan’s or plan’s investment in such entity, including, without
limitation, as applicable, an insurance company general account.


 


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


 


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


 


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


 


6

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Class A
Note Interest Rate  means
the Class A-1 Note Interest Rate, the Class A-2 Note Interest Rate or
the Class A-3 Note Interest Rate, as applicable.


 


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


 


Class A
Notes  means
the Class A-1 Notes, the Class A-2 Notes and the Class A-3
Notes.


 


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


 


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


 


7

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Class B  Note
Interest Rate  means
LIBOR plus 0.38%.


 


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


 


8

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Class C
Note Interest Rate  means LIBOR plus 0.60%.


 


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


 


Class C
Notes  means the U.S.$22,000,000 aggregate principal
amount of Class C Deferrable Floating Rate Notes due 2051.


 


9














 


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


 


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


 


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


 


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


 


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


 


Class D-FL Note
Interest Rate means
LIBOR plus 1.40%. 


 


Class D-FX Note
Interest Rate means
6.913%.


 


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


 


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


 


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


 


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


 


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


 


10

















 


after
giving effect to S&P’s assumptions on recoveries, defaults and timing and
to the Priority of Payments such that sufficient funds will remain for the
payment of principal of the Class D Notes in full by their Stated Maturity
Date and the ultimate payment of interest on such Class D Notes.


 


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


 


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


 


Class D Notes  means collectively the Class D-FL Notes
and the Class D-FX Notes.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


11

















 


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


 


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


 


Class E Note Interest Rate  means 8.232%.


 


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


 


Class E Notes  means the U.S.$16,200,000 aggregate principal
amount of Class E Deferrable Fixed Rate Notes due 2051.


 


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


 


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


 


Clearing Agency  means DTC, Euroclear or Clearstream.


 


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


 


Clearstream means Clearstream
Banking, société anonyme.


 


Closing Date means June 22, 2006.


 


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


 


CMBS Credit Tenant Lease Securities  means Commercial Mortgage Backed Securities
(other than CMBS Large Loan Securities and CMBS Conduit Securities) that
entitle the holders thereof to receive payments that depend on the cash flow
from a pool of commercial mortgage loans made to finance the acquisition,
construction and improvement of properties leased to corporate tenants (or on
the cash flow from such leases); provided that
such dependence may in addition be conditioned upon rights or additional assets
designed to assure the servicing or timely distribution of proceeds to holders
of the CMBS Securities such as a financial guaranty insurance policy.


 


12

















 


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


 


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


 


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


 


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


 


CMBS Single Borrower Securities  means CMBS Securities (other than CMBS Large
Loan Securities and CMBS Credit Tenant Lease Securities) that entitle the
holders thereof to receive payments that depend on the cash flow from one or
more loans with a single borrower or group of affiliated borrowers secured by
one or more properties; provided that such
dependence may in addition be conditioned upon rights or additional assets
designed to assure the servicing or timely distribution of proceeds to holders
of the CMBS Securities such as a financial guaranty insurance policy.


 


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


 


Collateral  has
the meaning specified in the Granting Clauses.


 


Collateral Administration Agreement  means the Collateral Administration
Agreement, dated June 22, 2006, by and among the Issuer, the Collateral
Manager and the Collateral Administrator, as the same may be amended and
modified from time to time in accordance with its terms.


 


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


 


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


 


13

















 


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


 


(i)                                   General Limitations


 


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


 


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


 


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


 


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


 


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


 


(ii)                                Collateral Debt Security
Type Limitations


 


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


 


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


 


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


 


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


 


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


 


14

















 


(iii)                             Ratings Limitations


 


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


 


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


 


(iv)                            Single Issue Limitations


 


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


 


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


 


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


 


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


 


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


 


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


 


15

















 


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


 


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


 


Collateral Interest
Collections means,
with respect to any Due Period and the related Payment Date, without
duplication, the sum of (i) (a) all cash payments of interest with
respect to any Collateral Debt Securities and Eligible Investments included in
the Collateral (including any Sale Proceeds of a Collateral Debt Security sold
at a price greater than or equal to its Principal Balance representing unpaid
interest accrued thereon to the date of the sale thereof to the extent not
treated as Collateral Principal Collections at the option of the Collateral
Manager and (b) all Synthetic Security Periodic Payments payable to the
Issuer under a Synthetic Security, net, in the case of a Derivative Contract,
of any Synthetic Security Periodic Payments payable by the Issuer to the
Derivative Contract Counterparty during the related Collection Period, but
excluding in the case of the foregoing clauses (a) and (b) all funds
received on a Defaulted Security (including any unpaid interest) and any unpaid
interest accrued on a Deferred Interest PIK Bond or a Written Down Security to
the date of sale) which are received during the related Due Period, (ii) all
payments on Eligible Investments purchased with Collateral Interest
Collections, (iii) payments received or scheduled to be received from a
Hedge Counterparty under any Hedge Agreement (including the Initial Hedge
Agreement) on the related Payment Date, excluding any payments received from a
Hedge Counterparty upon reduction of the notional amount and any termination
payments (provided that so long as the Notes are
Outstanding, any termination payments received from a Hedge Counterparty will
be used to enter into a substitute Hedge Agreement to the extent required to
maintain the then-current rating of the Notes by each Rating Agency), (iv) all
amendment and waiver fees, all late payment fees and all other fees and
commissions received during the related Due Period (other than fees and
commissions received in connection with the sale, restructuring, workout or
default of Collateral Debt Securities or in connection with Defaulted Securities
or Written Down Securities) (excluding any payments representing exit fees,
extension fees or prepayment premiums paid in connection with Real Estate
Interests), (v) the Principal Balance of any Eligible Investments
purchased with Collateral Interest Collections, (vi) all interest accrued
on the Closing Date on Collateral Debt Securities included in the Collateral, (vii) any
amounts on deposit in the Non-Monthly Pay Asset Interest Reserve Account, (viii) any
amounts in the Ramp-Up Interest Reserve Account that are transferred to the
Payment Account, (ix) after the Effective Date, at the option of the
Collateral Manager, any amount on deposit in the Expense Reserve Account in
excess of U.S.$25,000, (x) all income received during the related Due
Period on any Eligible Investments then in any Derivative Contract Counterparty
Accounts, to the extent transferred to the Collection Account pursuant to and
in accordance with Section 10.9 and (xi) all proceeds from the foregoing; provided, however, that Collateral Interest Collections
shall not include (i) the funds and other property (including, without
limitation, the paid-up share capital of the Issuer) with respect to the Income
Notes and the bank account in which such funds and the proceeds thereof are held,
(ii) principal of any Collateral Debt Security representing capitalized
interest after the date of purchase thereof by the Issuer, (iii) Purchased
Accrued Interest or (iv) any amounts contributed by the Income Noteholders
as capital contributions pursuant to Section 4.5 of the Income Note Paying
Agency Agreement.


 


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


 


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


 


16

















 


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


 


Collateral Principal
Collections means,
with respect to any Due Period and the related Payment Date, all amounts
received by the Issuer during such Due Period that do not constitute Collateral
Interest Collections. Collateral Principal Collections shall include, without
limitation, (A) principal of any Collateral Debt Security representing
capitalized interest after the date of purchase thereof by the Issuer, (B) any
Uninvested Proceeds which have not been invested on or prior to the Effective
Date and (C) any amounts contributed by the Income Noteholders as capital
contributions pursuant to Section 4.5 of the Income Note Paying Agency
Agreement.


 


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


 


Collateral Principal
Payments means
Collateral Principal Collections excluding Sale Proceeds and any amounts
received in respect of Eligible Investments.


 


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


 


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


 


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


 


(3)                                  the Weighted Average Life Test is satisfied;


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


17

















 


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


 


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


 


Commercial Mortgage Backed Security  means securities backed by obligations
(including certificates of participations in obligations) that are principally
secured by mortgages on real property or interests therein having a multifamily
or commercial use, such as regional malls, retail space, office buildings,
warehouse or industrial properties, hotels, nursing homes and senior living
centers.


 


Commission  means
the United States Securities and Exchange Commission.


 


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


 


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


 


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


 


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


 


Corporate Trust Office  means the designated corporate trust office
of the Trustee, currently located at 181 West Madison Street, 32nd Floor,
Chicago, Illinois 60602, Attention: CDO Trust Services Group — N-Star Real
Estate CDO VII Ltd., telephone number 312-904-4047, fax number 312-602-3935, or
such other address as the Trustee may designate from time to time by notice to
the Rated Noteholders, the Income Noteholders, the Collateral Manager and the
Issuer or the principal corporate trust office of any successor Trustee.


 


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


 


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


 


18

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Deemed Floating Asset Hedge  means, with respect to a Fixed Rate
Collateral Debt Security, an interest rate swap having (i) a notional
schedule equal to the Principal Balance as it is reduced by expected
amortization of such Fixed Rate Collateral Debt Security over time and (ii) payment
dates identical to the Payment Dates of the Issuer under the Indenture; provided that, (w) at the time of entry into the Deemed
Floating Asset Hedge, (i) the expected principal payments on the Fixed
Rate Collateral Debt Security comprising a Deemed Floating Rate Collateral Debt
Security will not extend beyond the Stated Maturity Date and (ii) the
scheduled notional amount of such Deemed Floating Asset Hedge at any time is
equal to the expected principal amount of the related Fixed Rate Collateral
Debt Security (as calculated at such time), (x) the Rating Agencies and
the Trustee are notified prior to the Issuer’s entry into a Deemed Floating
Asset Hedge, and each will be provided with the identity of the proposed hedge
counterparty and copies of the hedge documentation and notional schedule, (y) such
Deemed Floating Asset Hedge will require Rating Agency Confirmation from
S&P to the extent the applicable master agreement or schedule attached
thereto is not a hedge agreement with respect to which the documentation
thereof conforms in all material respects to a form in respect of which Rating
Agency Confirmation was previously obtained by the Issuer and (z) such
Deemed Floating Asset Hedge is priced at then-current market rates.


 


19














 


Deemed Floating Rate
Collateral Debt Security means a Fixed Rate Collateral Debt Security the interest rate of which
is hedged into a Floating Rate Collateral Debt Security using a Deemed Floating
Asset Hedge; provided that at the time of entry into the Deemed Floating Asset
Hedge the Average Life of such Deemed Floating Rate Collateral Debt Security
would not increase or decrease by more than one year from its expected average
life if it were to prepay at either 50% or 150% of its pricing speed. Pursuant to
this Indenture, a Deemed Floating Rate Collateral Debt Security will be deemed
a Floating Rate Collateral Debt Security with a spread over LIBOR equal to the
related Deemed Floating Spread.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


20

















 


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


 


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


 


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


 


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


 


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


 


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


 


21

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


22

















 


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


 


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


 


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


 


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


 


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


 


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


 


DTC means The Depository Trust Company, and its
nominees and their respective successors.


 


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


 


Due Period means, with respect to each Payment Date, the
period beginning on the day following the last day of the preceding Due Period
relating to the preceding Payment Date (or, in the case of the Due Period that
is applicable to the first Payment Date, beginning on the Closing Date) and
ending at the later of (i) the close of business on the fourth Business
Day preceding such Payment Date and (ii) the close of business on the
fourth Business Day following the 11th day of the same calendar month as such
Payment Date, or if the 11th day of such calendar month is not a Business Day,
the fifth Business Day following the 11th day of such calendar month.


 


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


 


23

















 


Eligibility Criteria  has the meaning specified in Section 12.2.


 


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


 


(i)                                     cash;


 


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


 


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


 


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


 


(b)                                 in the case of commercial paper and
short-term debt obligations including time deposits, “P-1” by Moody’s, “A-1+”
by S&P and “Fl” if rated by Fitch (provided that,
in the case of commercial paper and short-term debt obligations with a maturity
of longer than 91 days, the issuer thereof must also have at the time of such
investment a long-term credit rating of not less than “AA+” by S&P and a
short- and long-term credit rating of not less than “F1+” and “AA”,
respectively, if rated by Fitch; provided, however,
that (1) so long as LaSalle Bank National Association is rated at least
“A-1” by S&P and not on negative watch and (2) LaSalle Bank National
Association is the Trustee, overnight time deposits with LaSalle Bank National
Association shall be an Eligible Investment);


 


(iv)                            Registered securities other than
mortgage-backed securities bearing interest or sold at a discount issued by any
corporation under the laws of the United States of America or any state thereof
that have a credit rating of “Aa2” by Moody’s, “AA+” by S&P and “AA” if
rated by Fitch at the time of such investment or contractual commitment
providing for such investment;


 


(v)                                 unleveraged repurchase obligations (if
treated as debt for tax purposes by the issuer) with respect to any security
described in clause (ii) above, entered into with a depository institution
or trust company (acting as principal) described in clause (iii) or
entered into with broker-dealers registered with the Commission (acting as
principal) whose short-term debt has a credit rating of “P-1” by Moody’s, “A-1+” by S&P and “F1+” if
rated by Fitch at the time of such investment in the case of any repurchase
obligation for a security having a maturity not more than 183 days from the
date of its issuance or whose long-term debt has a credit rating of at least
“Aa2” by Moody’s, “AA+” by S&P and “AA” if rated by Fitch at the time of
such investment in the case of any repurchase obligation for a security having
a maturity more than 183 days from the date of its issuance;


 


24

















 


(vi)                            commercial paper or other short-term
obligations having at the time of such investment a credit rating of (a) (1)“F1”
by Fitch and that have a maturity of not more than 30 days from its date of
issuance or (2) “F1+” by Fitch and that have a maturity of more than 30
days but less than one year from its date of issuance and (b) “P-1” by
Moody’s and “A-1+” by S&P that are registered and are either bearing
interest or are sold at a discount from the face amount thereof and that have a
maturity of not more than 183 days from its date of issuance; provided that in the case of commercial paper with a
maturity of longer than 91 days, the issuer of such commercial paper (or, in
the case of a principal depository institution in a holding company system, the
holding company of such system), if rated by the Rating Agencies, must have at
the time of such investment a long-term credit rating of at least “Aa2” by
Moody’s, “AA+” by S&P and “AA” if rated by Fitch;


 


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


 


(viii)                     any other investments approved in writing by
the Rating Agencies;


 


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


 


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


 


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


 


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


 


25

















 


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


 


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


 


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


 


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


 


Event of Default has the meaning specified in Section 5.1.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


26

















 


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


 


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


 


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


 


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


 


	
  Fitch Rating

  	
   

  	
  Fitch Rating Factor

  	
   

  	
  Fitch Rating

  	
   

  	
  Fitch Rating Factor

  
	
  AAA

  	
   

  	
  .019

  	
   

  	
  BB

  	
   

  	
  13.53

  
	
  AA+

  	
   

  	
  .057

  	
   

  	
  BB-

  	
   

  	
  18.46

  
	
  AA

  	
   

  	
  .089

  	
   

  	
  B+

  	
   

  	
  22.84

  
	
  AA-

  	
   

  	
  1.15

  	
   

  	
  B

  	
   

  	
  27.67

  
	
  A+

  	
   

  	
  1.65

  	
   

  	
  B-

  	
   

  	
  34.98

  
	
  A

  	
   

  	
  1.85

  	
   

  	
  CCC+

  	
   

  	
  43.36

  
	
  A-

  	
   

  	
  2.44

  	
   

  	
  CCC

  	
   

  	
  48.52

  
	
  BBB+

  	
   

  	
  3.13

  	
   

  	
  CC

  	
   

  	
  77.00

  
	
  BBB

  	
   

  	
  3.74

  	
   

  	
  C

  	
   

  	
  95.00

  
	
  BBB-

  	
   

  	
  7.26

  	
   

  	
  DDD-D

  	
   

  	
  100.00

  
	
  BB+

  	
   

  	
  10.18

  	
   

  	
   

  	
   

  	
   

  



 


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


 


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


 


27

















 


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


 


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


 


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


 


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


 


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


 


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


 


Form-Approved Hedge Agreement means a Hedge Agreement relating to a
specific Hedge Counterparty with respect to which (a) the related
Collateral Debt Security could be purchased by the Issuer without any required
action by the Rating Agencies and (b) the documentation of which conforms
in all material respects to a form for such Hedge Counterparty which does not
require Rating Agency Confirmation (as certified to the Trustee by the
Collateral Manager, following receipt of confirmation by the Collateral Manager
from the Hedge Counterparty and the Rating Agencies); provided that (i) such Form-Approved Hedge
Agreement shall not provide for any upfront payments to be made to any Hedge
Counterparty (other than the Initial Hedge Counterparty), (ii) any revised
Form-Approved Hedge Agreement with respect to a particular Hedge Counterparty
shall be approved by each of the Rating Agencies at least ten days prior to the
initial use thereof, (iii) any Rating Agency may withdraw its consent to
the use of a particular Form-Approved Hedge Agreement by written notice to the
Trustee, the Collateral Manager and the relevant Hedge Counterparty (provided that such withdrawal of consent shall not affect any existing Hedge
Agreement entered into with such Hedge Counterparty) and (iv) the Issuer
(or the Collateral Manager on its behalf) shall deliver to the Trustee and each
Rating Agency a copy of each Form-Approved Hedge Agreement specifying the Hedge
Counterparty to which it relates upon receipt of Rating Agency Confirmation
with respect thereto, and the Trustee’s records (when taken together with any
correspondence received from the Rating Agencies pursuant to clause (ii)) shall
be conclusive evidence of such form.


 


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


 


28

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


29














 


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


 


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


 


Herfindahl Index means an index calculated by the Collateral
Manager by dividing (i) one by (ii) the sum of, with respect to each
Collateral Debt Security, (x) the aggregate Principal Balance of all
Collateral Debt Securities issued by a single obligor divided by (y) the CDS
Principal Balance, raised to the second power. For purposes of calculating the
Herfindahl Index, each U.S.$ 500,000 increment of cash in any Account shall be
treated as a single Collateral Debt Security.


 


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


 


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


 


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


 


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


 


Income Note Excess Funds means all remaining Collateral Interest
Collections and Collateral Principal Collections as set forth in
Section 11.1(a)(23) and 11.1(b)(19).


 


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


 


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


 


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


 


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


 


30

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Interest Coverage Amount means, as of any Measurement Date, an amount
equal to (i) the amount received or scheduled to be received as Collateral
Interest Collections during the related Due Period, less (ii) (a) the
amount payable as Aggregate Fees and Expenses on the related Payment Date,
(b) any amounts paid or scheduled to be paid to the Hedge Counterparty on
the related Payment Date (excluding any termination payments) and (c) for
purposes of calculating the Class A/B Interest Coverage Ratio, the
Class C Interest Coverage Ratio, the Class D Interest Coverage Ratio
and the Class E Interest Coverage


 


31

















 


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


 


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


 


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


 


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


 


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


 


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


 


Irish Listing Agent means NCB Stockbrokers Limited.


 


Irish Paying Agent means NCB Stockbrokers Limited.


 


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


 


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


 


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


 


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


 


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


 


32

















 


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


 


LIBOR means, with respect to each Interest Period
(other than the first Interest Period), a floating rate equal to the London
interbank offered rate for one-month U.S. Dollar deposits determined in the
manner described in Schedule B. LIBOR for the first Interest Period will be
determined on the second London Banking Day prior to the Closing Date.


 


LIBOR Calculation Date has the meaning specified in Schedule B.


 


Listed Bidders has the meaning specified in Schedule E.


 


London Banking Day has the meaning specified in Schedule B.


 


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


 


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


 


Market Value means, on any date of determination, the
average of three or more bid-side prices expressed as a percentage of the par
amount, obtained from independent, nationally recognized financial institutions
in the relevant market for one or more Collateral Debt Securities, each
unaffiliated with each other and the Collateral Manager, as certified by the
Collateral Manager (to the extent that such bid-side prices may be obtained by
the Collateral Manager using its commercially reasonable efforts and
commercially reasonable business judgment). If three or more bid-side prices
cannot be so obtained, then the Market Value on such date of determination will
be the lower of two bid-side prices, if two bid-side prices are obtained in the
manner described above, and the sole bid-side price if only one bid-side price
is obtained in the manner described above. If no bids can be obtained in the
manner described above, the Market Value will be (1) in respect of an
amount equal to but not greater than 7.5% of the Principal Balance of the
Proposed Portfolio, the price, expressed as a percentage of the par amount, as
determined by the Collateral Manager in its commercially reasonable judgment or
(2) the S&P Recovery Rate with respect to such Collateral Debt
Security, to the extent not calculated pursuant to clause (1) above.


 


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


 


33

















 


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


 


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


 


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


 


Moody’s  means
Moody’s Investors Service, Inc.


 


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


 


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


 


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


 


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


 


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


 


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


 


34

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


35

















 


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


 


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


 


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


 


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


 


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


 


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


 


	
   

  	
   

  	
   

  	
  Moody’s Rating

  	
   

  	
   

  	
   

  	
  Moody’s Rating

  	
   

  
	
   

  	
  Moody’s Rating

  	
   

  	
  Factor

  	
   

  	
  Moody’s Rating

  	
   

  	
  Factor

  	
   

  
	
   

  	
  Aaa

  	
   

  	
  1

  	
   

  	
  Bal

  	
   

  	
  940

  	
   

  
	
   

  	
  Aal

  	
   

  	
  10

  	
   

  	
  Ba2

  	
   

  	
  1,350

  	
   

  
	
   

  	
  Aa2

  	
   

  	
  20

  	
   

  	
  Ba3

  	
   

  	
  1,766

  	
   

  
	
   

  	
  Aa3

  	
   

  	
  40

  	
   

  	
  B1

  	
   

  	
  2,220

  	
   

  
	
   

  	
  Al

  	
   

  	
  70

  	
   

  	
  B2

  	
   

  	
  2,720

  	
   

  
	
   

  	
  A2

  	
   

  	
  120

  	
   

  	
  B3

  	
   

  	
  3,490

  	
   

  
	
   

  	
  A3

  	
   

  	
  180

  	
   

  	
  Caal

  	
   

  	
  4,770

  	
   

  
	
   

  	
  Baal

  	
   

  	
  260

  	
   

  	
  Caa2

  	
   

  	
  6,500

  	
   

  
	
   

  	
  Baa2

  	
   

  	
  360

  	
   

  	
  Caa3

  	
   

  	
  8,070

  	
   

  
	
   

  	
  Baa3

  	
   

  	
  610

  	
   

  	
  Ca or lower

  	
   

  	
  10,000

  	
   

  



 


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


 


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


 


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


 


36

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Note Valuation Report has the meaning specified in
Section 10.12(a).


 


Notes means, collectively, the Rated Notes and the
Income Notes.


 


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


 


Offering means the offering of the Rated Notes and the
Income Notes under the Offering Circular.


 


Offering Circular means the Offering Circular, prepared and delivered
on or prior to the Closing Date in connection with the offer and sale of the
Rated Notes and the Income Notes, as amended or supplemented from time to time.


 


37

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


38

















 


by
(a) for the first Interest Period, 33 days, and (b) for every other
Interest Period, 30 days, dividing by 360 and rounding the resulting figure to
the nearest U.S.$0.01 (U.S.$0.005 being rounded upwards).


 


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


 


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


 


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


 


Placement Agent means Banc of America Securities LLC.


 


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


 


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


 


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


 


Pledgee Counterparty has the meaning specified in Section 10.9.


 


Pledgor Counterparty has the meaning specified in
Section 10.10.


 


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


 


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


 


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


 


39














 


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


 


(iii)          the Defaulted Securities Amount;


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Principal Prepayments  means, following any failure of any Coverage
Test as of any Calculation Date, amounts that would otherwise be used (i) for
payments of Income Note Excess Funds, (ii) for the purchase of additional
Collateral Debt Securities, (iii) for the payment of certain fees and
expenses, (iv) in the case of a failure to satisfy either the Class A/B
Interest Coverage Test or the Class A/B Principal


 


40

















 


Coverage
Test, for interest payments on the Class C Notes, the Class D Notes
and the Class E Notes, (v) in the case of a failure to satisfy either
the Class C Interest Coverage Test or the Class C Principal Coverage
Test, for interest payments on the Class D Notes and the Class E
Notes, (vi) in the case of a failure to satisfy either the Class D
Interest Coverage Test or the Class D Principal Coverage Test, for
interest payments on the Class E Notes, and (vii) in the case of a
failure to satisfy either the Class E Interest Coverage Test or the Class E
Principal Coverage Test, for payments of Income Note Excess Funds, that are
instead applied on the related Payment Date, in each case to the extent
necessary to satisfy such Coverage Test as of the related Calculation Date, to
principal payments on each Class of Notes, starting with the most senior Class of
Notes then Outstanding, until such Coverage Test is satisfied as of the related
Calculation Date or the Notes are paid in full.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


41

















 


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


 


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


 


Quarterly Pay Security Interest Reserve Amount  means, with respect to each Collateral Debt
Security that is a Quarterly Pay Security and not entitled to the benefit of a
Cashflow Hedge Agreement, as of any Calculation Date, the amount equal to (i) the
amount of interest received by the Issuer on the most recent payment date with
respect to such Quarterly Pay Security multiplied by (ii) (A) three
minus the number of months since the most recent payment date with respect to
such Quarterly Pay Security (rounded up to the nearest whole number) divided by
(B) three; provided that for any Quarterly
Pay Security with respect to which no scheduled interest payments remain, the
Quarterly Pay Security Interest Reserve Amount shall be zero.


 


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


 


Ramp-Up Interest Reserve Account  means the account established by the Trustee,
held in the name of the Trustee for the benefit and on behalf of the Secured
Parties and into which the Trustee will deposit the Ramp-Up Interest Reserve
Amount on the Closing Date.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Rating Agency Confirmation  means, with respect to any specified action
or determination, for so long as any of the Rated Notes are Outstanding and
rated by Moody’s, S&P or Fitch, respectively, the receipt of


 


42

















 


written
confirmation by Moody’s, S&P and Fitch, that such specified action or determination
will not result in the reduction or withdrawal or other adverse action with
respect to their then-current ratings on the Rated Notes (including any private
or confidential rating) unless Rating Agency Confirmation is specified herein
to be required by only Moody’s, S&P or Fitch, in which case such Rating
Agency Confirmation will be sufficient. For the purposes of this definition,
“Rating Agencies” will be deemed to not include Fitch except with respect to
the Effective Date; provided that notification will be made to Fitch within 30
days of any instance in which Rating Agency Confirmation is required by either
Moody’s or S&P.


 


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


 


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


 


Real Estate CDO Securities means securities that entitle the holders
thereof to receive payments that depend on the cash flow from or the credit
exposure to a portfolio consisting primarily of (i) REIT Debt Securities, (ii) CMBS
Securities, (iii) other Specified Types or (iv) a combination of the
foregoing; provided that such dependence may in addition be conditioned upon rights or
additional assets designed to assure the servicing or timely distribution of
proceeds to holders of the Real Estate CDO Securities such as a financial
guaranty insurance policy; provided, that a Real Estate CDO Security shall not
include a CMBS Re-REMIC Security.


 


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


 


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


 


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


 


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


 


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


 


43

















 


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


 


Redemption Premium  means the premium payable to Holders of each Class of
Fixed Rate Notes in connection with an Optional Redemption of each Class of
Fixed Rate Notes in an amount equal to the excess, if any, of (i) the
present value (discounted to the applicable Redemption Date using the
Reinvestment Yield on a monthly basis using a 360-day year of twelve 30-day
months as the discount rate) of the remaining payments of interest and
principal due on such Class of Fixed Rate Notes, assuming that the entire
outstanding principal amount of such Class of Fixed Rate Notes will be
paid on the Payment Date occurring in June 2018 and that each intervening
payment of interest on such Class of Fixed Rate Notes will be made on the
related Payment Date in its entirety (and therefore there is no Defaulted
Interest on such Class of Fixed Rate Notes) over (ii) the outstanding
principal amount of such Class of Fixed Rate Notes on the applicable
Redemption Date.


 


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


 


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


 


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


 


Reference Banks  has the meaning specified in Schedule B.


 


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


 


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


 


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


 


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


 


Regulation  S  means Regulation S under the Securities Act.


 


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


 


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


 


44

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Reinvestment Yield  means with respect to either class of the
Fixed Rate Notes, the rate equal to the sum of the Redemption Spread with
respect to such Fixed Rate Note and the applicable yield to maturity implied by
(i) the yields reported as of 10:00 a.m. (New York City time) on the
tenth Business Day preceding the related Optional Redemption Date on the
display page designated as “Page 678” on the Telerate Service (or
such other display as may replace Page 678 on the Telerate Service) for
actively traded U.S. Treasury securities having a maturity as nearly as
practicable equal to the Payment Date occurring in June 2011 or (ii) if
such yields are not reported as of such time or the yields reported as of such
time are not ascertainable, the Treasury Constant Maturity Series Yields
reported, for the latest day for which such yields have been so reported as of
the tenth Business Day preceding the Optional Redemption Date, in Federal
Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having a constant
maturity as nearly as practicable equal to the Payment Date occurring in June 2018.


 


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


 


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


 


45

















 


REIT Debt Securities—Diversified means Collateral Debt Securities issued by a
real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of a portfolio of diverse real property
interests; provided that any Collateral Debt
Security falling within any other ABS REIT Debt Security description set forth
herein will be excluded from this definition.


 


REIT Debt Securities—Health Care means Collateral Debt Securities issued by a
real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of a portfolio of properties including
hospitals, clinics, sport clubs, spas and other health care facilities and
other similar real property interests used in one or more similar businesses.


 


REIT Debt Securities—Hotel means Collateral Debt Securities issued by a
real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of a portfolio of properties including
hotels, motels, youth hostels, bed and breakfasts and other similar real
property interests used in one or more similar businesses.


 


REIT Debt Securities—Industrial means Collateral Debt Securities issued by a
real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of a portfolio of properties including
warehouse, industrial and distribution facilities, factories, refinery plants,
breweries and other similar real property interests used in one or more similar
businesses.


 


REIT Debt Securities—Mortgage means Collateral Debt Securities issued by a
real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of mortgages, commercial mortgage-backed
securities, collateralized mortgage obligations and other similar
mortgage-related securities (including Collateral Debt Securities issued by a
hybrid form of such trust that invests in both commercial real estate and
commercial mortgages).


 


REIT Debt Securities—Multi-Family means Collateral Debt Securities issued by a
real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of a portfolio of properties including
multi-family dwellings such as apartment blocks, condominiums and co-operative
owned buildings.


 


REIT Debt Securities—Office means Collateral Debt Securities issued by a
real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of a portfolio of properties including
office buildings, conference facilities and other similar real property
interests used in the commercial real estate business.


 


REIT Debt Securities—Residential means Collateral Debt Securities issued by a
real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of residential mortgages (other than
multi-family dwellings) and other similar real property interests.


 


46

















 


REIT Debt
Securities—Retail means
Collateral Debt Securities issued by a real estate investment trust (as defined
in Section 856 of the Code or any successor provision) whose assets
consist (except for rights or other assets designed to assure the servicing or
timely distribution of proceeds to holders of the Collateral Debt Securities)
of regional malls, neighborhood shopping centers, big box centers, retail
stores, restaurants, bookstores, clothing stores and other similar real
property interests used in one or more similar businesses.


 


REIT Debt Securities—Storage
means Collateral
Debt Securities issued by a real estate investment trust (as defined in Section 856
of the Code or any successor provision) whose assets consist (except for rights
or other assets designed to assure the servicing or timely distribution of
proceeds to holders of the Collateral Debt Securities) a portfolio of
properties including storage facilities and other similar real property
interests used in one or more similar businesses.


 


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


 


Relevant Jurisdiction means, as to any obligor on any Collateral
Debt Security, any jurisdiction (a) in which the obligor is incorporated,
organized, managed and controlled or considered to have its seat, (b) where
an office through which the obligor is acting for purposes of the relevant
Collateral Debt Security is located, (c) in which the obligor executes
Underlying Instruments or (d) in relation to any payment, from or through
which such payment is made.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


47

















 


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


 


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


 


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


 


S&P CDO Monitor
Test means the test
which is satisfied, as of any Calculation Date, if each of the Class A
Note Default Differential, the Class B Note Default Differential, the Class C
Note Default Differential, the Class D Note Default Differential and the Class E
Note Default Differential of the Current Portfolio or the Proposed Portfolio,
as applicable, is positive. The S&P CDO Monitor Test will be considered to
be improved if the Class A Note Default Differential of the Proposed
Portfolio is greater than the Class A Note Default Differential of the
Current Portfolio, the Class B Note Default Differential of the Proposed
Portfolio is greater than the Class B Note Default Differential of the
Current Portfolio, the Class C Note Default Differential of the Proposed
Portfolio is greater than the Class C Note Default Differential of the
Current Portfolio, the Class D Note Default Differential of the Proposed
Portfolio is greater than the Class D Note Default Differential of the
Current Portfolio and the Class E Note Default Differential of the
Proposed Portfolio is greater than the Class E Note Default Differential
of the Current Portfolio.


 


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


 


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


 


S&P Minimum
Weighted Average Recovery Rate Test means a test that will be satisfied as of any
Measurement Date if the S&P Minimum Average Recovery Rate is greater than
or equal to (i) 39.50% with respect to the Class A Notes, (ii) 43.25%
with respect to the Class B Notes, (iii) 47.00% with respect to the Class C
Notes, (iv) 49.75% with respect to the Class D Notes and (v) 53.00%
with respect to the Class E Notes.


 


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


 


48

















 


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


 


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


 


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


 


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


 


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


 


49














 


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


 


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


 


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


 


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


 


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


 


Schedule of Collateral
Debt Securities means
the list of Collateral Debt Securities securing the Rated Notes that is
attached as Schedule A.


 


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


 


Second Currency has the meaning specified in Section 14.13.


 


Secured Parties means the Trustee, for the benefit of the
Rated Noteholders, the Collateral Manager and each Hedge Counterparty.


 


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


 


Securities Act means the United States Securities Act of
1933, as amended.


 


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


 


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


 


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


 


50

















 


Semi-Annual Pay Security Interest Reserve
Amount means,
with respect to each Collateral Debt Security that is a Semi-Annual Pay
Security and not entitled to the benefit of a Cashflow Hedge Agreement, as of
any Calculation Date, the amount equal to (i) the amount of interest
received by the Issuer on the most recent payment date with respect to such
Semi-Annual Pay Security multiplied by (ii) (A) six minus the number
of months since the most recent payment date with respect to such Semi-Annual
Pay Security (rounded up to the nearest whole number) divided by (B) six; provided that for any Semi-Annual Pay Security with
respect to which no scheduled interest payments remain, the Semi-Annual Pay
Security Interest Reserve Amount shall be zero.


 


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


 


Senior Collateral Management Fee means with respect to each Payment Date, a
senior fee equal to the sum of (a) the Monitoring Fee and (b) the
Senior Structuring Fee payable to the Collateral Manager pursuant to the
Collateral Management Agreement; provided that the Senior Collateral Management Fee will be payable on each Payment
Date only to the extent of funds available for such purpose in accordance with
the Priority of Payments. Any unpaid Senior Collateral Management Fee will be
deferred and paid on the next succeeding Payment Date to the extent funds are
available for such purpose. Any unpaid Senior Collateral Management Fee that is
deferred due to the operation of the Priority of Payments will not accrue
interest. Any Senior Collateral Management Fee accrued but not paid prior to
the resignation or removal of the Collateral Manager shall continue to be
payable to the Collateral Manager on the Payment Date immediately following the
effectiveness of such resignation or removal.


 


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


 


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


 


(A)                              (I) the aggregate CDS Principal Balance as of the related Calculation Date
is at least equal to 50% of the aggregate CDS Principal Balance on the
Effective Date, (II) the Collateral Quality Tests are satisfied, (III) no
Principal Coverage Test is failing as of such Payment Date and (IV) no
Principal Coverage Test has previously failed for two or more Calculation Dates
unless, as of the related Payment Date, the Principal Coverage Ratio related to
such Principal Coverage Test equals or exceeds the related Principal Coverage
Ratio in existence on the Effective Date; or


 


(B)                                if clause (A) above is not satisfied,
Rating Agency Confirmation has been provided by S&P and Moody’s with
respect to the pro rata payment of principal of the Rated Notes.


 


Specified Currency has the meaning specified in Section 14.13.


 


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


 


Specified Place has the meaning specified in Section 14.13.


 


Specified Types means CMBS Securities, REIT Debt Securities,
Real Estate CDO Securities, CRE Debt Obligations, Trust Preferred Securities
and Real Estate Interests.


 


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


 


51

















 


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


 


Stated Maturity Date means June 22, 2051.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


52

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Tax Event  means
a new, or change in any, U.S. or foreign tax statute, treaty, regulation, rule,
ruling, practice, procedure or judicial decision or interpretation, occurring
in each case after the Closing Date, which results in (i) any portion of
any payment due from any issuer or obligor under any Collateral Debt Security
becoming properly subject to the imposition of U.S. or foreign withholding tax,
which withholding tax is not compensated for by a “gross up” provision under
the terms of the related Collateral Debt Security, (ii) any jurisdiction
imposing net income, profits, or similar tax on the Issuer, (iii) the
Issuer being required to deduct or withhold from any payment under a Hedge
Agreement for or on account of any tax and the Issuer being obligated to make a
gross up payment (or otherwise pay additional amounts) to a Hedge Counterparty,
or (iv) a Hedge Counterparty being required to deduct or withhold from any
payment under a Hedge Agreement for or on account of any tax for whatever
reason if such Hedge Counterparty is not required to pay to the Issuer such
additional amount as is necessary to ensure that the net amount actually
received by the Issuer (free and clear of taxes, whether assessed against such
obligor or the Issuer) will equal the full amount that the Issuer would have
received had no such


 


53

















 


deduction or withholding been required, and where the sum of the amount
of (i) such a tax or taxes imposed on the Issuer or withheld from payments
to the Issuer to the extent the Issuer receives less than the full amount that
the Issuer would have received had no such deduction occurred, and (ii) such
gross up payments required to be made by the Issuer to the extent they exceed
the amounts that the Issuer would have been required to pay had no deduction or
withholding been required, in the aggregate, equals 10% or more of the amount
of aggregate interest payments on all of the related Collateral Debt Securities
during the related Due Period.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Trustee Expenses means,
with respect to any Payment Date, an amount equal to the sum of all expenses or
indemnities incurred by or otherwise owing to the Trustee during the preceding
Due Period in


 


54

















 


accordance
with the Indenture, other than the Trustee Fee, including, without limitation,
any expenses or indemnities incurred by the Trustee and the Bank in its
capacities as Collateral Administrator, Calculation Agent, Note Paying Agent, Income
Note Paying Agent and Registrar.


 


Trustee Fee  means,
with respect to any Payment Date, the fee payable to the Trustee in an
aggregate amount equal to 0.015% per annum of the CDS Principal Balance as of
the first day of the related Due Period; provided that
so long as any Class of Rated Notes remain Outstanding, such fee shall in
no event be an annual amount less than U.S.$25,000.


 


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


 


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


 


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


 


Uninvested Proceeds Account  has the meaning specified in Section 10.4.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Weighted Average Life  means, on any Calculation Date with respect
to all Collateral Debt Securities (excluding any Defaulted Securities), the
number obtained by the Collateral Manager by (i) summing the products
obtained by multiplying (a) the Average Life at such time of each
Collateral Debt Security by


 


55

















 


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


 


Weighted Average Life
Test means a test
that shall be satisfied as of any Measurement Date during any period set forth
below if the Weighted Average Life of all Collateral Debt Securities as of such
Measurement Date is less than or equal to the number of years set forth in the
table below:


 




	
  As of any Calculation Date

  	
   

  	
  Weighted Average Life

  	
   

  
	
  Occurring During the Period Below

  	
   

  	
  (in Years)

  	
   

  
	
  Closing Date
  – <1.0 year

  	
   

  	
  10.0 years

  	
   

  
	
  >1.0 year – <2.0 years

  	
   

  	
  9.0 years

  	
   

  
	
  >2.0 years – <3.0 years

  	
   

  	
  8.0 years

  	
   

  
	
  >3.0 years – <4.0 years

  	
   

  	
  7.0 years

  	
   

  
	
  >4.0 years – <5.0 years

  	
   

  	
  6.0 years

  	
   

  
	
  >5.0 years – Stated Maturity Date

  	
   

  	
  5.0 years

  	
   

  






 


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


 


(a)                                  the number obtained by (i) summing the
products obtained by multiplying (A) for each Floating Rate Collateral
Debt Security (other than any Defaulted Security, Written Down Security or
Deferred Interest PIK Bond), the stated spread above LIBOR at which interest
accrues on such Collateral Debt Security as of such date and, for each Deemed
Floating Rate Collateral Debt Security (other than any Defaulted Security,
Written Down Security or Deferred Interest PIK Bond), the Deemed Floating
Spread by (B) the Principal Balance of such Collateral Debt Security as of
such date and (ii) dividing such sum by the aggregate Principal Balance of
all Floating Rate Collateral Debt Securities and all Deemed Floating Rate
Collateral Debt Securities; provided that
for purposes of calculating the Weighted Average Spread, Collateral Debt
Securities that are Defaulted Securities, the Written Down Amount with respect
to Written Down Securities and Equity Securities will be excluded, except for
those Defaulted Securities that at the time of such calculation have fully
become current on all past due interest and scheduled principal and are paying
full current interest in cash pursuant to the terms of their respective
Underlying Instrument; plus


 


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


 


Withholding Tax
Security means a
Collateral Debt Security if:


 


(i)                                    any payments thereon to the Issuer are
subject to withholding tax imposed by any jurisdiction (other than U.S. backup
withholding tax or other similar withholding tax); and


 


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


 


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


 


56

















 


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


 


1.2.          ASSUMPTIONS AS TO COLLATERAL
DEBT SECURITIES, FEES, ETC.


 


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


 


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


 


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


 


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


 


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


 


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


 


57

















 


(c)                                  For
each Due Period, the Scheduled Distribution on any Pledged Security (other than
(i) a Defaulted Security, (ii) a Deferred Interest PIK Bond or (iii) an
Equity Security, which, in each case except as otherwise provided herein, shall
be assumed to have a Scheduled Distribution of zero and with respect to any
Written Down Security, the Interest Coverage Amount shall exclude any interest
accrued on any Written Down Amount) shall be the sum of (x) the total
amount of payments and collections in respect of such Pledged Security
(including the proceeds of the sale of such Pledged Security received during
the Due Period) that, if paid as scheduled, will be available in the Collection
Account at the end of the Due Period for payment on the Rated Notes or other
amounts payable pursuant to this Indenture and of certain expenses of the
Issuer plus (y) any
such amounts received in prior Due Periods that were not disbursed on a
previous Payment Date (provided that such sum shall be computed without regard to any amounts
excluded from the determination of compliance with the Coverage Tests pursuant
to Section 1.2(b)).


 


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


 


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


 


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


 


(g)                                 Any
reference in the definition of “Senior Collateral Management Fee” or
“Subordinate Collateral Management Fee” in Section 1.1(a) to an
amount calculated with respect to a period at a per annum rate shall be
computed on the basis of a 360 day year and the actual number of days elapsed
during the applicable Due Period.


 


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


 


58

















 


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


 


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


 


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


 


1.3.                             RULES OF CONSTRUCTION


 


Unless
the context otherwise clearly requires:


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


59














 


ARTICLE II


 


THE RATED NOTES


 


2.1.                              FORMS GENERALLY


 


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


 


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


 


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


 


(d)           The Class E Notes offered or sold in the
United States or to U.S. Persons pursuant to Rule 144A or another
applicable exemption from registration under the Securities Act shall be issued
in the form of physical certificates in definitive fully Registered form
without interest coupons substantially in the form of the certificated note
attached as Exhibit B-1 (each, a Definitive Class E Note), as the case may be, with such legends as may be applicable thereto,
which shall be duly executed by the Issuer and authenticated by the Trustee or
the Authenticating Agent as hereinafter provided.


 


(e)           The Issuer in issuing the Rated Notes may use
“CUSIP” or “private placement” numbers (if then generally in use), and, if so,
the Trustee will indicate the “CUSIP” or “private placement” numbers of the
Rated Notes in notices of redemption and related materials as a convenience to
Holders; provided that
any such notice may state that no representation


 


60

















 


is
made as to the correctness of such numbers either as printed on the Rated Notes
or as contained in any notice of redemption and related materials.


 


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


 


(a)           The aggregate principal amount of Rated Notes
which may be issued under this Indenture may not exceed U.S.$527,000,000,
excluding Rated Notes issued upon registration of, transfer of, or in exchange
for, or in lieu of, other Rated Notes pursuant to Section 2.4, 2.5 or 8.5.


 


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


 


	
  Designation

  	
   

  	
  Original Principal 

  Amount

  	
   

  	
  Applicable

  Periodic Interest

  Rate

  	
   

  	
  Rated Note Stated

  Maturity Date

  	
   

  
	
  Class A-1
  Notes

  	
   

  	
  U.S.$338,250,000

  	
   

  	
  LIBOR + 0.27%

  	
   

  	
  June 2051

  	
   

  
	
  Class A-2
  Notes

  	
   

  	
  U.S.$54,250,000

  	
   

  	
  LIBOR + 0.32%

  	
   

  	
  June 2051

  	
   

  
	
  Class A-3
  Notes

  	
   

  	
  U.S.$50,000,000

  	
   

  	
  LIBOR + 0.33%

  	
   

  	
  June 2051

  	
   

  
	
  Class B
  Notes

  	
   

  	
  U.S.$30,300,000

  	
   

  	
  LIBOR + 0.38%

  	
   

  	
  June 2051

  	
   

  
	
  Class C
  Notes

  	
   

  	
  U.S.$22,000,000

  	
   

  	
  LIBOR + 0.60%

  	
   

  	
  June 2051

  	
   

  
	
  Class D-FL
  Notes

  	
   

  	
  U.S.$14,000,000

  	
   

  	
  LIBOR + 1.40%

  	
   

  	
  June 2051

  	
   

  
	
  Class D-FX
  Notes

  	
   

  	
  U.S.$2,000,000

  	
   

  	
  6.913%

  	
   

  	
  June 2051

  	
   

  
	
  Class E
  Notes

  	
   

  	
  U.S.$16,200,000

  	
   

  	
  8.232%

  	
   

  	
  June 2051

  	
   

  



 


The
Rated Notes will be issuable in minimum denominations of U.S.$250,000 and, in
each case, only in integral multiples of U.S.$1,000 in excess of such minimum
denominations. After issuance, (x) a Rated Note may fail to be in
compliance with the minimum denomination requirement as a result of the
repayment of principal thereon in accordance with the Priority of Payments and (y) the
Class B Notes, the Class C Notes, the Class D Notes or the Class E
Notes may fail to be in an amount which is an integral multiple of U.S.$1,000
due to the addition to the principal amount thereof of deferred interest.


 


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


 


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


 


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


 


61

















 


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


 


2.3.          EXECUTION, AUTHENTICATION,
DELIVERY AND DATING


 


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


 


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


 


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


 


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


 


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


 


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


 


2.4.                              REGISTRATION, TRANSFER AND
EXCHANGE OF RATED NOTES


 


(a)                                  Registration of Rated Notes.
The Trustee is hereby appointed as the registrar hereunder (the Note Registrar). The Trustee is hereby appointed
as a transfer agent with respect to the Rated Notes (the Note Transfer Agent). The Note Registrar shall (acting
solely for this purpose as agent for the Issuer) keep a register (the Note Register)  at the Corporate


 


62

















 


Trust Office in which, subject to such reasonable regulations as it may
prescribe, the Note Registrar shall provide for the registration of Rated Notes
and the registration of transfers of Rated Notes. Upon any resignation or
removal of the Note Registrar, the Issuer (after consultation with the
Collateral Manager) shall propose a replacement for approval by the Holders of
a Majority of the then Aggregate Outstanding Amount of the Notes of the
Controlling Class. The Issuer may not terminate the appointment of the Note
Registrar or any Note Transfer Agent without the consent of each Holder of
Rated Notes.


 


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


 


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


 


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


 


Every Rated Note presented or surrendered for registration of transfer
or exchange shall be duly endorsed, or be accompanied by a written instrument
of transfer in form satisfactory to the Issuer and the Note Registrar duly
executed, by the Holder thereof or his attorney duly authorized in writing.


 


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


 


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


 


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


 


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


 


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


 


63

















 


to  nominees
of the Depositary or to a successor of the Depositary or such successor’s
nominee.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


64

















 


Definitive
A-D Note for a beneficial interest in a Global Note, each as provided herein,
the Trustee shall approve the instruction at the Depositary to adjust the
principal amount of such Global Note on its records to evidence the date of
such exchange or transfer and the change in the principal amount of such Global
Note.


 


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


 


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


 


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


 


65

















 


such Global Note shall be surrendered by the Depositary, or its custodian
on its behalf, to the Corporate Trust Office or to the Note Transfer Agent
located in Chicago, Illinois and the Trustee shall authenticate and deliver
without charge, upon such transfer of interests in such Global Note, an equal
aggregate principal amount of Definitive Notes of authorized denominations. The
Definitive Class A-D Notes transferred pursuant to this Section 2.4
shall be executed, authenticated and delivered only in the denominations
specified in Section 2.2(b) and registered in such names as the
Depositary shall direct in writing.


 


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


 


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


 


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


 


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


 


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


 


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


 


(d)                                 Transfers of Class E
Notes.


 


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


 


66

















 


and deliver one or more Definitive Class E Notes bearing the same
designation as the Definitive Class E Notes endorsed for transfer,
registered in the names specified in the assignment described in clause (A) above,
in principal amounts designated by the transferee (the Class and the
aggregate of such amounts being the same as the beneficial interest in the
Definitive Class E Notes surrendered by the transferor), and in the
minimum denominations and integral multiples in excess thereof. In addition,
the Note Registrar shall not register any transfer of Definitive Class E
Notes to a proposed transferee of Definitive Class E Notes that has
represented that it is a Benefit Plan Investor or a Controlling Person if the
transfer would result in Benefit Plan Investors owning 25% or more of the value
of the outstanding Definitive Class E Notes (as determined without regard
to interests held by Controlling Persons, and otherwise contemplated by the
applicable regulations under ERISA) immediately after such transfer, based on
assurances received from investors. Without limiting the generality of the
forgoing, the Note Registrar shall not register any transfer of Definitive Class E
Notes represented by Regulation S Notes to a proposed transferee of such
Definitive Class E Notes that has represented that it is or may become a
Benefit Plan Investor or a Controlling Person. Without limiting the generality
of the foregoing, a transfer of beneficial interests in a Definitive Class E
Note will not be permitted unless an ERISA Restriction Letter is obtained from
each transferee of a Definitive Class E Note, for the benefit of the
Issuer, the Trustee and the Placement Agent, (i) in the case of a
Defmitive Class E Note not represented by a Regulation S Note, regarding
whether it is, or is not and will not be, a Benefit Plan Investor or
Controlling Person, or (ii) in the case of a Definitive Class E Note
represented by a Regulation S Note, to the effect that it is not and will not
be a Benefit Plan Investor or Controlling Person. Any purported transfer in
violation of the foregoing requirements shall be null and void ab initio, and
the Note Registrar shall not register any such purported transfer and shall not
authenticate and deliver such Definitive Class E Notes.


 


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


 


67














 


(e)           Denominations; Qualified
Purchaser Status. No Person
may hold a beneficial interest in
any Rated Note except in a denomination authorized for the Rated Notes of such Class under
Section 2.2(b). In addition, no transfer of a Rated Note (or any interest
therein) may be made to any Person that is a U.S. Person unless such Person is (A) a
Qualified Institutional Buyer (or, with respect to the Class E Notes, an
Institutional Accredited Investor) or an NS Purchaser and (B) a Qualified
Purchaser. In addition, no transfer of a Rated Note (or any interest therein)
may be made to any Person that is a U.S. Person unless such Person (A) was
not formed for the purpose of investing in the Issuer (except when each
beneficial owner of the purchaser is a Qualified Purchaser, (B) has
received the necessary consent from its beneficial owners if it is a private
investment company formed before April 30, 1996, (C) is not a
broker-dealer that owns and invests on a discretionary basis less than
U.S.$25,000,000 in securities of unaffiliated issuers, (D) is not a pension, profit, sharing or other
retirement trust fund or plan in which the partners, beneficiaries or
participants, as applicable, may designate the particular investments to be
made, and in a transaction that may be effected without loss of any applicable
Investment Company Act exemption, (E) will provide notice to any
subsequent transferee of the transfer restrictions provided in the legend, (F) will
hold and transfer in a principal amount of not less than U.S. $250,000, for it
or for each account for which it is acting and (G) will provide the Issuer
from time to time such information as it may reasonably request in order to
ascertain compliance with the foregoing. Any purported transfer that is not in
compliance with this Section 2.4 or the legends on the Rated Notes will be
void ab initio,  and will not operate to transfer any rights
to the transferee, notwithstanding any instructions to the contrary to the
Issuer, the Trustee or any intermediary. If any purported transfer of Rated
Notes or any beneficial interest therein to a purported transferee does not
comply with the requirements set forth in this Section 2.4 or the legends
on the Rated Notes, then the purported transferor of such Rated Notes or
beneficial interest therein shall be required to cause the purported transferee
to surrender the Rated Notes or any beneficial interest therein in return for a
refund of the consideration paid therefor by such transferee (together with
interest thereon) or to cause the purported transferee to dispose of such Rated
Notes or beneficial interest promptly in one or more open market sales to one
or more persons each of whom satisfies the requirements of this Section 2.4
and the legends on the Rated Notes and such purported transferor shall take,
and shall cause such transferee to take, all further action necessary or
desirable, in the judgment of the Trustee, to ensure that such Rated Notes or
any beneficial interest therein are held by persons in compliance therewith.


 


(f)            Requirement to Sell.


 


(1)           If, notwithstanding the restrictions set
forth in this Section 2.4, the Issuer determines that any beneficial owner
of a Rule 144A Note (A) is a U.S. Person and (B) is not a
Qualified Institutional Buyer and also a Qualified Purchaser, the Issuer may
require, by notice to such beneficial owner that such beneficial owner sell all
of its right, title and interest to such Rated Note (or interest therein) to a
Person that is both (1) a Qualified Institutional Buyer and (2) a
Qualified Purchaser, with such sale to be effected within 30 days after notice
of such sale requirement is given. If such beneficial owner fails to effect the
transfer required within such 30-day period, (x) upon written direction
from the Issuer, the Trustee shall, and is hereby irrevocably authorized by
such beneficial owner to cause its interest in such Rated Note to be
transferred in a commercially reasonable sale (conducted by the Trustee in
accordance with Sections 9-610 and 9-611 of the UCC as applied to securities that
are customarily sold on a recognized market or


 


68

















 


that
may decline speedily in value) to a Person that certifies to the Trustee, in
connection with such transfer, that such Person is both (1) a Qualified
Institutional Buyer and (2) a Qualified Purchaser and (y) pending
such transfer, no further payments will be made in respect of such Rated Note
(or beneficial interest therein) held by such beneficial owner.


 


(2)           If, notwithstanding the restrictions set forth in this Section 2.4,
the Issuer determines that any beneficial owner of a Regulation S Note is (A) a
U.S. Person or (B) a Benefit Plan Investor or a Controlling Person (for
the purposes of ERISA), the Issuer may require, by notice to such beneficial
owner that such beneficial owner sell all of its right, title and interest to
such Rated Note (or interest therein) to a Person that is not (1) a U.S.
Person or (2) a Benefit Plan Investor or a Controlling Person (for the
purposes of ERISA), with such sale to be effected within 30 days after notice
of such sale requirement is given. If such beneficial owner fails to effect the
transfer required within such 30-day period, (x) upon written direction
from the Issuer, the Trustee shall, and is hereby irrevocably authorized by
such beneficial owner to cause its interest in such Rated Note to be
transferred in a commercially reasonable sale (conducted by the Trustee in
accordance with Sections 9-610 and 9-611 of the UCC as applied to securities
that are customarily sold on a recognized market or that may decline speedily
in value) to a Person that certifies to the Trustee, in connection with such
transfer, that such Person is neither (1) a U.S. Person nor (2) a
Benefit Plan Investor or a Controlling Person (for the purposes of ERISA) and (y) pending
such transfer, no further payments will be made in respect of such Rated Note
(or beneficial interest therein) held by such beneficial owner.


 


	
   

  	
  (g)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (h)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (i)

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

  



 


69

















 


	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (j)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (k)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (1)

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

  



 


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


 


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


 


If
after delivery of such new Rated Note, a bona fide purchaser of the predecessor
Rated Note presents for payment, transfer or exchange such predecessor Rated
Note, the Specified Persons shall be entitled to recover such new Rated Note
from the Person to whom it was delivered or any Person taking therefrom, and
shall be entitled to recover upon the security or indemnity provided therefor
to the extent of any loss, damage, cost or expense incurred by the Specified
Persons in connection therewith.


 


70

















 


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


 


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


 


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


 


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


 


2.6.          PAYMENT OF PRINCIPAL AND INTEREST; RIGHTS PRESERVED


 


	
   

  	
  (a)

  	
  Each
  Class of Rated Notes shall accrue interest during each Interest Period
  applicable to such Class in the manner and at the Applicable Periodic
  Interest Rate specified in Section 2.2. Interest on each Class of
  Rated Notes shall be due and payable on each Payment Date; provided that (i) interest on the
  Class A-2 Notes is subordinated in right of payment to the prior payment
  in full on each Payment Date of the interest due and payable on the
  Class A-1 Notes (together with any Defaulted Interest thereon),
  (ii) interest on the Class A-3 Notes is subordinated in right of
  payment to the prior payment in full on each Payment Date of the interest due
  and payable on the Class A-1 Notes and the Class A-2 Notes
  (together with any Defaulted Interest thereon), (iii) interest on the
  Class B Notes is subordinated in right of payment to the prior payment
  in full on each Payment Date of the interest due and payable on the
  Class A Notes (together with any Defaulted Interest thereon),
  (iv) interest on the Class C Notes is subordinated in right of
  payment to the prior payment in full on each Payment Date of the interest due
  and payable on the Class A Notes (together with any Defaulted Interest
  thereon) and on the Class B Notes (together with any Defaulted Interest
  thereon), (v) interest on the Class D Notes is subordinated in
  right of payment to the prior payment in full on each Payment Date of the
  interest due and payable on the Class A Notes (together with any
  Defaulted Interest thereon), on the Class B Notes (together with any
  Defaulted Interest thereon) and on the Class C Notes (together with any
  Defaulted Interest thereon), (vi) interest on the Class E Notes is
  subordinated in right of payment to the prior payment in full on each Payment
  Date of the interest due and payable on the Class A Notes (together with
  any Defaulted Interest thereon), on the Class B Notes (together with any
  Defaulted Interest thereon), on the Class C Notes (together with any
  Defaulted Interest thereon) and the Class D Notes (together with any
  Defaulted Interest thereon), and (vii) interest on all Rated Notes is
  subordinated in right of payment to the prior payment in full on each Payment
  Date of other amounts in accordance with Section 11.1.  Except as provided in Section 5.5, no payment shall be made by
  the Issuer hereunder other than on a Payment Date.

  



 


71

















 


	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (1)

  	
  so long as any Class A-1 Notes are Outstanding, except as provided in
  Section 9, the payment of principal of the Class A-2 Notes, the Class A-3
  Notes, the B Notes, the Class C Notes, the Class D Notes and the Class E
  Notes (x) may only occur after principal of the Class A-1 Notes has been paid
  in full and (y) shall be subordinated to the payment on each Payment Date of
  the principal and interest due and payable on the Class A Notes and other
  amounts payable in accordance with Section 11.1;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (2)

  	
  so
  long as any Class A-1 Notes or Class A-2 Notes are Outstanding, except as provided
  in Section 9, the payment of principal of the Class A-3 Notes, the B Notes, the
  Class C Notes, the Class D Notes and the Class E Notes (x) may only occur after
  principal of the Class A-1 Notes and Class A-2 Notes has been paid in full and
  (y) shall be subordinated to the payment on each Payment Date of the principal
  and interest due and payable on the Class A-1 Notes and Class A-2 Notes and other
  amounts payable in accordance with Section 11.1;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (3)

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (4)

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

  



 


72

















 


	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (5)

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (6)

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

  



 


	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  So
  long as the Coverage Tests are satisfied, principal will not be payable on
  any Class of Rated Notes except (i) upon the occurrence of a
  Redemption, (ii) in the case of any Class B Notes, Class C
  Notes, Class D Notes or Class E Notes, to pay amounts in respect of
  the Class C Cumulative Applicable Periodic Interest Shortfall Amount,
  the Class D Cumulative Applicable Periodic Interest Shortfall Amount or
  the Class E Cumulative Applicable Periodic Interest Shortfall Amount, as
  the case may be, in accordance with Section 11.1 and (iii) on each
  Payment Date, in accordance with Section 11.1.

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  All
  payments made by the Issuer under the Rated Notes will be made without any
  deduction or withholding for or on the account of any tax unless such
  deduction or withholding is required by applicable law, as modified by the
  practice of any relevant governmental authority, then in effect. If the
  Issuer is so required to deduct or withhold,

  



 


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  then
  the Issuer will not be obligated to pay any additional amounts in respect of
  such withholding or deduction.

  
	
   

  	
   

  	
   

  
	
   

  	
  (f)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (g)

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (h)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (i)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (j)

  	
  Notwithstanding
  anything to the contrary herein, the obligations of the Issuer under the
  Rated Notes or this Indenture or arising in connection herewith are limited
  recourse obligations of the Issuer payable solely from the Collateral and
  following realization of the Collateral, all obligations of and all claims
  against the Issuer hereunder or arising in connection herewith shall be
  extinguished and shall not thereafter revive. No recourse shall be had
  against any Officer, member, director, employee, security holder or
  incorporator of the Issuer or its respective successors or assigns for the
  payment of any amounts payable under the Rated Notes or this Indenture. It is
  understood that the foregoing provisions of this
  Section 2.6(j) shall not (i) prevent recourse to the
  Collateral for the sums due or to become due under any security, instrument
  or agreement which is part of the Collateral or (ii) constitute a
  waiver, release or discharge of any indebtedness or obligation evidenced by
  the Rated Notes or secured by this Indenture until such Collateral has been
  realized, whereupon any outstanding indebtedness or obligation shall be
  extinguished. It is further understood that the foregoing provisions of this
  Section 2.6(j) shall not limit the right of any Person to name the
  Issuer as a party

  



 


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  defendant
  in any action or suit or in the exercise of any other remedy under the Rated
  Notes or this Indenture, so long as no judgment in the nature of a deficiency
  judgment or seeking personal liability shall be asked for or (if obtained)
  enforced against any such Person or entity.

  
	
   

  	
   

  	
   

  
	
   

  	
  (k)

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

  



 


ARTICLE III


 


CONDITIONS PRECEDENT


 


3.1.        GENERAL PROVISIONS


 


The
Rated Notes may be executed by the Issuer and delivered to the Trustee for
authentication and thereupon the same shall be authenticated and delivered by
the Trustee (or an Authenticating Agent on its behalf) upon Issuer Request,
upon receipt by the Trustee of the following:


 


	
   

  	
  (a)

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
   

  	
  (1)

  	
  an
  opinion of Clifford Chance US LLP, special New York counsel to the Issuer,
  dated the Closing Date, substantially in the form of Exhibit E-1;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (2)

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (3)

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

  



 


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  (4)

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (5)

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

  



 


	
   

  	
   

  	
  (d)

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (e)

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (f)

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (g)

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (h)

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

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

  



 


3.2.          SECURITY FOR THE RATED NOTES


 


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


 


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


 


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


 


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


 


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


 


(3)          the Issuer has not assigned,
pledged or otherwise encumbered any interest in such Collateral Debt Security
(or, if any such interest has been assigned, pledged or otherwise encumbered,
it has been released) other than interests Granted pursuant to this Indenture;


 


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


 


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


 


(6)          each such Collateral Debt
Security satisfies the requirements of the definition of “Collateral Debt
Security” and is not a Defaulted Security; and


 


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


 


(c)           Rating
Letters. The delivery to the Trustee of an Officer’s
certificate of the Issuer, to the effect that (i) attached thereto are
true and correct copies of (A) a letter signed by Fitch confirming that
the Class A-1 Notes have been rated “AAA”, the Class A-2 Notes have
been rated “AAA”, the Class A-3 Notes have been rated “AAA”, the Class B
Notes have been rated at least “AA”, the Class C Notes have been rated at
least “A”, the Class D Notes have been rated at least “BBB” and the Class E
Notes have been rated at least


 


77

















 


“BB”,
(B) a letter signed by Moody’s confirming that the Class A-1 Notes
have been rated “Aaa”, the Class A-2 Notes have been rated “Aaa”, the Class A-3
Notes have been rated “Aaa”, the Class B Notes have been rated at least “Aa2”,
the Class C Notes have been rated at least “A2”, the Class D Notes
have been rated at least “Baa2” and the Class E Notes have been rated at
least “Ba2” and (C) a letter signed by S&P confirming that the Class A-1
Notes have been rated “AAA”, the Class A-2 Notes have been rated “AAA”,
the Class A-3 Notes have been rated “AAA”, the Class B Notes have
been rated at least “AA”, the Class C Notes have been rated at least “A”,
the Class D Notes have been rated at least “BBB” and the Class E
Notes have been rated at least “BB” and (ii) each such rating is in full
force and effect on the Closing Date.


 


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


 


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


 


(f)          Purchases. The delivery to the Trustee
of a certification of the Issuer that it shall have entered into one or more
agreements to purchase, for settlement on or following the Closing Date in
accordance with customary settlement procedures in the relevant markets,
Collateral Debt Securities having an aggregate Principal Balance of not less
than U.S.$467,500,000.


 


3.3.          CUSTODIANSHIP; TRANSFER OF
COLLATERAL DEBT SECURITIES AND ELIGIBLE INVESTMENTS


 


(a)           The Trustee shall hold all
Certificated Securities and Instruments in physical form at the office of a
custodian appointed by it in Illinois (together with any successor, the Custodian) Initially, such
Custodian shall be LaSalle Bank National Association with its address 181 West
Madison Street, 32nd Floor,
Chicago, Illinois 60602, Attention: CDO Trust Services Group – N-Star Real
Estate CDO VII Ltd. Any successor custodian shall be a state or national bank
or trust company that is not an Affiliate of the Issuer, has a long-term debt
rating of at least “BBB+” by S&P and has a combined capital and surplus of
at least U.S.$250,000,000.


 


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


 


78

















 


continue
in the Collateral Debt Security, Equity Security or Eligible Investment so
acquired, including all rights of the Issuer in and to any contracts related to
and proceeds of such Collateral Debt Security, Equity Security or Eligible
Investment.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


79

















 


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


 


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


 


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


 


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


 


(11)        The Trustee or the
Accountholder has in its possession all original copies of the instruments that
constitute or evidence the Collateral, if any. The instruments, loan agreements
and leases that constitute or evidence the Collateral do not have any marks or
notations indicating that they have been pledged, assigned or otherwise
conveyed to any Person other than the Trustee on behalf and for the benefit of
the Secured Parties. All financing statements filed or to be filed against the
Issuer in favor of the Trustee on behalf and for the benefit of the Secured
Parties in connection herewith describing the Collateral contain a statement to
the following effect: “A purchase of or security interest in any collateral
described in this financing statement will violate the rights of the Trustee on
behalf and for the benefit of (A) itself and for the benefit of the
Noteholders, (B) the Collateral Manager and (C) each Hedge
Counterparty.”


 


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


 


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


 


80

















 


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


 


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


 


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


 


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


 


ARTICLE IV


 


SATISFACTION AND DISCHARGE


 


4.1.          SATISFACTION AND DISCHARGE OF
INDENTURE


 


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


 


(a)          either:


 


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


 


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


 


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


 


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


 


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


 


4.2.        APPLICATION OF TRUST MONEY


 


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


 


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4.3.        REPAYMENT OF FUNDS HELD BY NOTE PAYING AGENT


 


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


 


ARTICLE V


 


EVENTS OF DEFAULT; REMEDIES


 


5.1.          EVENTS OF DEFAULT


 


Event of Default,
is defined as any one of the following wherever used herein, means any
one of the following events as set forth in Section 5.1(a) through (h) (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):


 


(a)           a default for five Business
Days in the payment, when due and payable, of any interest on any Class A
Note or Class B Note or, if there are no Class A Notes or Class B
Notes Outstanding, on any Class C Note or, if there are no Class A
Notes, Class B Notes or Class C Notes Outstanding, on any Class D
Note or, if there are no Class A Notes, Class B Notes, Class C
Notes or Class D Notes Outstanding, on any Class E Note;


 


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


 


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


 


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


 


(e)           the Issuer or the pool of
Collateral becomes an investment company required to be registered under the
Investment Company Act;


 


(f)            a default in the
performance, or breach, of any other covenant (it being understood that
non-compliance with any of the Coverage Tests, the Collateral Concentration
Limitations or the Collateral Quality Tests will not constitute a default or
breach) or of any representation or warranty of the Issuer under the Indenture
of any representation or if any certificate or writing delivered pursuant
thereto proves to be incorrect when made, which default or breach has a
material adverse effect on the Rated Noteholders and continues for a period of
30 days (or, in the case of a default, breach or failure of a representation or
warranty regarding the Collateral, 15 days) of the earlier of knowledge


 


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by
the Issuer or the Collateral Manager or notice to the Issuer and the Collateral
Manager by the Trustee or to the Issuer and the Collateral Manager by the
Holders of at least 25%, of the then Aggregate Outstanding Amount of the Rated
Notes of any Class, specifying such default, breach or failure and requiring it
to be remedied and stating that such notice is a “Notice of Default” under this
Indenture;


 


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


 


(h)           the institution by the
Issuer of proceedings to be adjudicated as bankrupt or insolvent, or the
consent by it to the institution of bankruptcy or insolvency proceedings against
it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under the Bankruptcy Code or any other similar
applicable law, or the consent by it to the filing of any such petition or to
the appointment of a receiver, liquidator, assignee, trustee or sequestrator
(or other similar official) of the Issuer or of any substantial part of its
property, respectively, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its debts
generally as they become due, or the taking of any action by the Issuer in
furtherance of any such action.


 


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


 


5.2.
         ACCELERATION
OF MATURITY; RESCISSION AND ANNULMENT


 


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


 


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


 


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


 


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


 


(i)         all overdue installments of principal of and
interest on the Notes (including interest upon the Class C Cumulative
Applicable Periodic


 


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Interest
Shortfall Amount, the Class D Cumulative Applicable Periodic Interest
Shortfall Amount and the Class E Cumulative Applicable Periodic Interest
Shortfall Amount, respectively, at the Applicable Periodic Interest Rate and,
to the extent that payment of such interest is lawful, upon Defaulted Interest
at the Applicable Periodic Interest Rate);


 


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


 


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


 


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


 


(3)           the Hedge Agreement in
effect immediately prior to such acceleration shall remain in effect,


 


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


 


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


 


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


 


5.3.        COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE


 


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


 


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the
Trustee or any affected Rated Noteholder, pay to the Trustee, for the benefit
of the Holder of such Rated Note, the whole amount, if any, then due and
payable on such Rated Note for principal and interest, with interest upon the
overdue principal and, to the extent that payments of such interest shall be
legally enforceable, upon overdue installments of interest, at the Applicable
Periodic Interest Rate and, in addition thereto, such further amount as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee
and such Rated Noteholder and their respective agents and counsel.


 


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


 


If
an Event of Default occurs and is continuing, the Trustee may in its discretion
proceed to protect and enforce its rights and the rights of the Secured Parties
by such appropriate Proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy or legal or
equitable right vested in the Trustee by this Indenture or by law.


 


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


 


In
case there shall be pending Proceedings relative to the Issuer or any other
obligor upon the Rated Notes or Hedge Agreement under the Bankruptcy Code or
any other applicable bankruptcy, insolvency or other similar law, or in case a
receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator
or similar official shall have been appointed for or taken possession of the
Issuer or its respective property or such other obligor or its property, or in
case of any other comparable Proceedings relative to the Issuer or other
obligor upon the Rated Notes or Hedge Agreement, or the creditors or property
of the Issuer or such other obligor, the Trustee, regardless of whether the
principal of any Rated Notes or Hedge Agreement shall then be due and payable
as therein expressed or by declaration or otherwise and regardless of whether
the Trustee shall have made any demand pursuant to


 


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the
provisions of this Section 5.3, shall be entitled and empowered, by
intervention in such Proceedings or otherwise:


 


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


 


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


 


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


 


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


 


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


 


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


 


5.4.         REMEDIES


 


(a)          If an Event of Default shall
have occurred and be continuing, and the Notes have been declared due and
payable and such declaration and its consequences have not been rescinded and
annulled, the Issuer agrees that, in addition to the requirements of Section 5.5(a),
the Trustee may, after giving notice to the Noteholders, the Collateral


 


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Manager,
the Initial Hedge Counterparty and each Rating Agency, and with the consent of
the Holders of a Majority of the then Aggregate Outstanding Amount of the Notes
of the Controlling Class, and shall, upon written direction by the Holders of a
Majority of the then Aggregate Outstanding Amount of the Notes of the Controlling
Class, to the extent permitted by applicable law, exercise one or more of the
following rights, privileges and remedies:


 


(1)          institute Proceedings for
the collection of all amounts then payable on the Notes or otherwise payable
under this Indenture, whether by declaration or otherwise, enforce any judgment
obtained, and collect from the Collateral any amounts adjudged due;


 


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


 


(3)          exercise any remedies of a
secured party under the UCC and take any other appropriate action to protect
and enforce the rights and remedies of the Secured Parties hereunder; and


 


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


 


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


 


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


 


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


 


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


 


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


 


Any
such sale, whether under any power of sale hereby given or by virtue of
judicial proceedings, shall bind the Issuer, the Trustee and the Noteholders,
shall operate to divest all right, title and interest whatsoever, either at law
or in equity, of each of them in and to the property sold, and shall be a
perpetual bar, both at law and in equity, against each of them and their
successors and assigns, and against any and all Persons claiming through or
under them.


 


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


 


5.5.          PRESERVATION OF COLLATERAL


 


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


 


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


 


(2)           the Holders of at least 662/3% of the Aggregate Outstanding Amount of the
Rated Notes of the Controlling Class (and, unless it will be paid in full all
amounts owing to it by the Issuer, the Initial Hedge Counterparty), subject to
the provisions hereof, and subject to the Trustee determining that such action
will not


 


89

















 


involve the Trustee incurring any liability, (unless the Trustee is
indemnified to its satisfaction against any such liability) direct the sale and
liquidation of the Collateral.


 


For purposes of Section 5.5(a)(2), if the Initial Hedge
Counterparty shall fail to vote to direct the sale and liquidation of the
Collateral within three Business Days after written notice from the Issuer or
the Trustee requesting a vote pursuant to such Section 5.5(a)(2), the
Initial Hedge Counterparty shall not be entitled to participate in the vote
requested by such notice. The Trustee shall give written notice of the
retention of the Collateral to the Issuer with a copy to each Holder of the
Controlling Class of Notes and the Initial Hedge Counterparty. So long as
such Event of Default is continuing, any such retention pursuant to this
Section 5.5(a) may be rescinded at any time when the conditions
specified in clause Section 5.5(a)(1) or (2) exist.


 


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


 


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


 


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


 


(d)           If an Event of Default
shall have occurred and be continuing at a time when no Rated Note is
Outstanding, the Trustee shall retain the Collateral securing the Hedge
Agreements and the Rated Notes intact, collect and cause the collection of the
proceeds


 


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thereof
and make and apply all payments and deposits and maintain all accounts in
respect of the Collateral and the Rated Notes in accordance with
Section 11.1 and the provisions of Section 10 and Section 12
unless a Majority of the Income Noteholders direct the sale and liquidation of
the Collateral.


 


5.6.          TRUSTEE
MAY ENFORCE CLAIMS WITHOUT POSSESSION


 


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


 


5.7.          APPLICATION
OF FUNDS COLLECTED


 


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


 


5.8.          LIMITATION ON SUITS


 


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


 


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


 


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


 


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


 


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


 


it
being understood and intended that no one or more Holders of Rated Notes shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Notes or to obtain or to seek to obtain priority or preference
over any other Holders of the Notes of the same Class or to enforce any
right under this Indenture, except in the manner herein provided and for the
equal and ratable benefit of all the Holders of Notes of the same


 


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Class.
In addition, any action taken by any one or more of the Holders of Notes shall
be subject to and in accordance with Sections 13.1 and 11.1(d).


 


Notwithstanding
any other provisions of this Indenture but subject to Section 5.8(d), if
the Trustee shall receive conflicting or inconsistent requests and indemnity
from two or more groups of Holders of the Notes of the Controlling Class, each
representing less than a Majority of the then Aggregate Outstanding Amount of
Notes of this Controlling Class, the Trustee shall follow the instructions of
the group representing the higher percentage of aggregate principal amount of
Outstanding Notes of the Controlling Class.


 


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


 


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


 


5.10.        RESTORATION OF
RIGHTS AND REMEDIES


 


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


 


5.11.        RIGHTS AND REMEDIES CUMULATIVE


 


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


 


5.12.        DELAY OR OMISSION NOT WAIVER


 


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


 


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5.13.        CONTROL BY CONTROLLING CLASS


 


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


 


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


 


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


 


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


 


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


 


5.14.        WAIVER OF PAST DEFAULTS


 


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


 


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


 


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


 


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


 


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


 


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


 


In
the case of any such waiver, (i) the Issuer, the Trustee and the Holders
of the Notes shall be restored to their former positions and rights hereunder,
respectively, but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereto, and (ii) the Trustee shall
promptly give written notice of any such waiver to the Collateral Manager and
each Holder of Rated Notes. The Rating Agencies shall be notified by the Issuer
of any such waiver.


 


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


 


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5.15.        UNDERTAKING
FOR COSTS


 


All
parties to this Indenture agree, and each Holder of any Rated Note by its
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
or omitted by it as Trustee, the filing by any party litigant in such suit of
an undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys’ fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.15 shall not apply to any suit instituted by
the Trustee, to any suit instituted by any Rated Noteholder, or group of Rated
Noteholders, holding in the aggregate more than 10% in Aggregate Outstanding
Amount of the Controlling Class, or to any suit instituted by any Rated Noteholder
for the enforcement of the payment of the principal of or interest on any Rated
Note on or after the Stated Maturity Date expressed in such Rated Note (or, in
the case of redemption, on or after the applicable Redemption Date).


 


5.16.        WAIVER OF STAY OR EXTENSION LAWS


 


The
Issuer covenants (to the extent that they may lawfully do so) that it will not
at any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law wherever enacted, now or
at any time hereafter in force (including but not limited to filing a voluntary
petition under Chapter 11 of the Bankruptcy Code and by the voluntary
commencement of a proceeding or the filing of a petition seeking winding up,
liquidation, reorganization or other relief under any bankruptcy, insolvency,
receivership or similar law now or hereafter in effect), which may affect the
covenants, the performance of or any remedies under this Indenture; and the
Issuer (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.


 


5.17.        SALE
OF COLLATERAL


 


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


 


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


 


(c)           If any portion of the Collateral consists of securities not registered
under the Securities Act (Unregistered
Securities),  the Trustee may, but shall not be required
to, seek an


 


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Opinion
of Counsel, or, if no such Opinion of Counsel can be obtained, with the consent
of a Majority of the Controlling Class seek, a no-action position from the
Commission or any other relevant federal or state regulatory authorities,
regarding the legality of a public or private sale of such Unregistered
Securities. In no event will the Trustee be required to register Unregistered
Securities under the Securities Act.


 


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


 


5.18.        ACTION ON THE RATED NOTES


 


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


 


ARTICLE VI


 


THE TRUSTEE


 


6.1.          CERTAIN DUTIES AND
RESPONSIBILITIES


 


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


 


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


 


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


 


(b)           In case an Event of Default actually known to the Trustee has occurred
and is continuing, the Trustee shall, prior to the receipt of directions, if
any, from a Majority of the Controlling Class, exercise such of the rights and
powers vested in it by this Indenture,


 


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and
use the same degree of care and skill in its exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person’s own
affairs.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(f)                               The Trustee shall, upon receipt of reasonable
(but no less than three Business Days) prior written notice, permit any
representative of a Holder of a Rated Note or the Initial Hedge Counterparty,
during the Trustee’s normal business hours, to examine all books of account, records,
reports and other papers of the Trustee relating to the Rated Notes or the
Hedge Agreement, to make copies and extracts therefrom (the reasonable out-of-pocket
expenses incurred in making any such copies or extracts to be reimbursed to the
Trustee by such Holder) and to discuss the Trustee’s actions, as such actions
relate to the Trustee’s duties with respect to the Rated Notes or the Hedge
Agreement, with the Trustee’s officers and employees responsible for carrying
out the Trustee’s duties with respect to the Rated Notes; provided that under no circumstances shall the Initial
Hedge Counterparty be permitted to review any documentation containing the
names or other indicia of identity of any of the Noteholders unless any such
information (including the number of shares held by such Noteholder) has been
redacted from such documentation.


 


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


 


6.2.                      NOTICE OF DEFAULT


 


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


 


6.3.                      CERTAIN RIGHTS OF TRUSTEE


 


Except
as otherwise provided in Sections 6.1 and 8:


 


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


 


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


 


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


 


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qualified to
provide the information required to make such determination, including
nationally recognized dealers in securities of the type being valued and
securities quotation services;


 


(d)                            as a condition to the
taking or omitting of any action by it hereunder, the Trustee may consult with
counsel and the advice of such counsel or any Opinion of Counsel shall be full
and complete authorization and protection in respect of any action taken or
omitted by it hereunder in good faith and in reliance thereon;


 


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


 


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


 


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


 


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


 


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


 


(j)                                the Trustee shall not
be responsible or liable for the actions or omissions of, or any inaccuracies
in the records of, any non-Affiliated custodian, clearing agency, common


 


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depository, Euroclear or
Clearstream or for the acts or omissions of the Collateral Manager or the
Issuer;


 


(k)                             to the extent any defined term hereunder, or
any calculation required to be made or determined by the Trustee hereunder, is
dependent upon or defined by reference to generally accepted accounting
principles in the United States (GAAP),  the Trustee shall be entitled to request and receive (and rely upon)
instruction from the Issuer or the accountants appointed pursuant to 10.13 as
to the application of GAAP in such connection, in any instance;


 


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


 


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


 


6.4.                         AUTHENTICATING AGENTS


 


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


 


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


 


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


 


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


 


6.5.                         NOT RESPONSIBLE FOR RECITALS OR
ISSUANCE OF RATED NOTES


 


The recitals contained
herein and in the Rated Notes, other than the Certificate of Authentication
thereon, shall be taken as the statements of the Issuer, and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representation as to the validity or sufficiency of this Indenture


 


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(except as may be made with respect to the
validity of the Trustee’s obligations hereunder), of the Collateral or of the
Rated Notes. The Trustee shall not be accountable for the use or application by
the Issuer of the Rated Notes or the proceeds thereof or any amounts paid to
the Issuer pursuant to the provisions hereof.


 


6.6.                         MAY HOLD RATED NOTES


 


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


 


6.7.                         FUNDS HELD IN TRUST


 


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


 


6.8.                         COMPENSATION AND REIMBURSEMENT


 


(a)                                       The Issuer agrees:


 


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


 


(2)                             except as otherwise expressly provided
herein, to reimburse the Trustee (subject to any written agreement between the
Issuer and the Trustee) in a timely manner upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture or in the enforcement of any
provision hereof and expenses related to the maintenance and administration of
the Collateral (including securities transaction charges and the reasonable
compensation and expenses and disbursements of its agents and legal counsel and
of any accounting firm or investment banking firm employed by the Trustee
pursuant to Section 5.2, 5.4, 5.5, 6.3(c), 6.3(k), 10.11 or 10.13, except
any such expense, disbursement or advance as may be attributable to its
negligence, willful misconduct or bad faith but only to the extent any such
securities transaction charges have not been waived during a Due Period due to
the Trustee’s receipt of a payment from a financial institution with respect to
certain Eligible Investments);


 


(3)                             to indemnify the Trustee and its Officers,
directors, employees and agents for, and to hold them harmless against, any
loss, liability or expense incurred by it without negligence, willful
misconduct or bad faith on their part, arising out of or in connection with the
acceptance or administration of this trust, including the reasonable costs and
expenses (including reasonable counsel fees) of defending themselves against
any claim or liability in connection with the exercise or performance of any of
their powers or duties hereunder; and


 


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


 


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


 


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


 


(d)                                 The amounts payable to
the Trustee pursuant to Sections 6.8(a)(2) through (4) (other than
amounts received by the Trustee from financial institutions under Section 6.8(a)(2) above)
shall not, except as provided by Section 11.1(a)(21), exceed on any Payment Date
the limitation described in Section 11.1(a)(1) for such Payment Date;
provided that (A) the Trustee
shall not institute any proceeding for enforcement of such lien except in
connection with an action pursuant to Section 5.3 or 5.4 for the
enforcement of the lien of this Indenture for the benefit of the Secured
Parties and (B) the Trustee may only enforce such a lien in conjunction
with the enforcement of the rights of the Secured Parties in the manner set
forth in Section 5.4.


 


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


 


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


 


6.9.                         CORPORATE TRUSTEE REQUIRED; ELIGIBILITY


 


There shall at
all times be a Trustee hereunder which shall be a bank, corporation or trust
company organized and doing business under the laws of the United States or of
any State thereof, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least U.S.$250,000,000, subject to
supervision or examination by federal or state banking authorities, having a
rating of at least “BBB+” by S&P and having an office within the United
States. If such entity publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section 6.9, the
combined capital and


 


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surplus of such entity shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section 6.9, it shall resign
immediately in the manner and with the effect hereinafter specified in this Section 6.


 


6.10.                   RESIGNATION AND REMOVAL;
APPOINTMENT OF SUCCESSOR


 


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


 


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


 


(c)                             The Trustee may be removed at any time by an
Act of the Holders of at least 662/3% of the then Aggregate Outstanding Amount of the Notes of each Class of
Rated Notes delivered to the Trustee and to the Issuer.


 


(d)                            If at any time:


 


(1)                             the Trustee shall cease to be eligible under Section 6.9
and shall fail to resign after written request therefor by any Holder; or


 


(2)                             the Trustee shall become incapable of acting
or shall be adjudged as bankrupt or insolvent or a receiver or liquidator of
the Trustee or of its property shall be appointed or any public officer shall
take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,


 


then, in any such case
(subject to Section 6.10(a)), (A) the Issuer, by Issuer Order shall
remove the Trustee, or (B) subject to Section 5.15, any Holder or the
Initial Hedge Counterparty may, on behalf of itself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.


 


(e)                             The Issuer shall give prompt notice of each
resignation and each removal of the Trustee and each appointment of a successor
Trustee by mailing written notice of such event by first class mail, postage
prepaid, to each Rating Agency, the Initial Hedge Counterparty,


 


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the Collateral Manager and
the Holders as their names and addresses appear in the Note Register. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office. If the Issuer fails to mail such notice within ten days
after acceptance of appointment by the successor Trustee, the successor Trustee
shall cause such notice to be given at the expense of the Issuer.


 


6.11.                 ACCEPTANCE OF APPOINTMENT BY
SUCCESSOR


 


Every successor Trustee
appointed hereunder shall execute, acknowledge and deliver to the Issuer and
the retiring Trustee (with copies to the Initial Hedge Counterparty and the
Collateral Manager) an instrument accepting such appointment. Upon delivery of
the required instruments, the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any other act, deed
or conveyance, shall become vested with all the rights, powers, trusts, duties
and obligations of the retiring Trustee; but, on request of the Issuer or a
Majority of the then Aggregate Outstanding Amount of the Notes of any Class of
Notes, the Initial Hedge Counterparty or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, fees, indemnities and expenses then
unpaid, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee, and shall
duly assign, transfer and deliver to such successor Trustee all property and
funds held by such retiring Trustee hereunder, subject nevertheless to its
lien, if any, provided for in Section 6.8(d). Upon request of any such
successor Trustee, the Issuer shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts.


 


No successor Trustee shall
accept its appointment unless (a) at the time of such acceptance such
successor shall be qualified and eligible under Section 6.9 and the other
provisions of this Section 6 and (b) a Rating Agency Confirmation
shall have been obtained with respect to the appointment of such successor Trustee
shall have been satisfied. No appointment of a successor Trustee shall become
effective if the Holders of a Majority of the then Aggregate Outstanding Amount
of the Notes of the Controlling Class objects to such appointment; and no
appointment of a successor Trustee shall become effective until the date ten
days after notice of such appointment has been given to each Rated Noteholder
and each Rating Agency.


 


6.12.                   MERGER, CONVERSION, CONSOLIDATION
OR SUCCESSION TO BUSINESS OF TRUSTEE


 


Any Person into which the
Trustee may be merged or converted or with which it may be consolidated, or any
Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Person succeeding to all or substantially all
of the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder; provided such Person shall be otherwise qualified and
eligible under this Section 6, without the execution or filing of any
paper or any further act on the part of any of the parties hereto. The
successor Trustee will notify each Rating Agency of any such merger, conversion
or consolidation. In case any of the Rated Notes have been authenticated, but
not delivered, by the Trustee then in office, any successor by merger, conversion
or consolidation to such authenticating Trustee may adopt such authentication
and deliver the Rated Notes so authenticated with the same effect as if such
successor Trustee had itself authenticated such Rated Notes.


 


6.13.                 CO-TRUSTEES


 


At any time or times, for
the purpose of meeting the legal requirements of any jurisdiction in which any
part of the Collateral may at the time be located, the Trustee shall have power
to appoint one or more Persons to act as Co-trustee, jointly with the Trustee
of all or any part of the Collateral, with the power to file such proofs of
claim and take such other actions pursuant to Section 5.6 and to make such


 


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claims and enforce such rights of action on
behalf of the Holders of the Rated Notes subject to the other provisions of
this Section 6.13.


 


The Issuer shall join with
the Trustee in the execution, delivery and performance of all instruments and
agreements necessary or proper to appoint a Co-trustee. If the Issuer does not
join in such appointment within 15 days after the receipt by them of a request
to do so, the Trustee shall have power to make such appointment.


 


Should any written
instrument from the Issuer be required by any Co-trustee so appointed for more
fully confirming to such Co-trustee such property, title, right or power, any
and all such instruments shall, on request, be executed, acknowledged and
delivered by the Issuer. The Issuer agrees to pay (subject to the Priority of
Payments) for any reasonable fees and expenses in connection with such
appointment.


 


Every Co-trustee shall, to
the extent permitted by law, but to such extent only, be appointed subject to
the following terms:


 


(a)                             the Rated Notes shall be authenticated and
delivered and all rights, powers, duties and obligations hereunder in respect
of the custody of securities, funds and other personal property held by, or
required to be deposited or pledged with, the Trustee hereunder, shall be
exercised solely by the Trustee;


 


(b)                            the rights, powers, duties and obligations
hereby conferred or imposed upon the Trustee in respect of any property covered
by the appointment of a Co-trustee shall be conferred or imposed upon and
exercised or performed by the Trustee or by the Trustee and such Co-trustee
jointly, as shall be provided in the instrument appointing such Co-trustee,
except to the extent that under any law of any jurisdiction in which any
particular act is to be performed, the Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers, duties and
obligations shall be exercised and performed by a Co-trustee;


 


(c)                             the Trustee at any time, by an instrument in
writing executed by it, may accept the resignation of or remove any Co-trustee
appointed under this Section 6.13. A successor to any Co-trustee so
resigned or removed may be appointed in the manner provided in this Section 6.13;


 


(d)                            no Co-trustee hereunder shall be personally
liable by reason of any act or omission of the Trustee or any other Co-trustee
hereunder;


 


(e)                             the Trustee shall not be liable by reason of
any act or omission of a Co-trustee;


 


(f)                               any Act of Rated Noteholders delivered to the
Trustee shall be deemed to have been delivered to each Co-trustee; and


 


(g)                            each Co-trustee hereunder shall at the time
of such acceptance satisfy the qualification required of a Trustee under Section 6.9
and the other provisions of this Section 6.


 


6.14.                 CERTAIN DUTIES RELATED TO DELAYED
PAYMENT OF PROCEEDS; OTHER NOTICES


 


In the event that the
Trustee shall not have received a payment with respect to any Pledged Security
within two Business Days after its Due Date, the Trustee shall (i) notify
the Issuer and Collateral


 


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Manager in writing and (ii) promptly
request the issuer of such Pledged Security, the trustee under the related
Underlying Instrument or paying agent designated by either of them, as the case
may be, to make such payment as soon as practicable after such request but in
no event later than three Business Days after the date of such request. In the
event that such payment is not made within such time period, the Trustee,
subject to the provisions of Section 6.1(c)(4), shall, subject to the
restrictions on the sale of Collateral Debt Securities set forth in Section 12.1,
take such action as the Collateral Manager shall direct in writing. Any such
action shall be without prejudice to any right to claim a Default under this
Indenture. The Trustee will promptly notify the Issuer if the Collateral Manager
has determined that (i) any Collateral Debt Security has become a
Defaulted Security, a Deferred Interest PIK Bond, a Credit Risk Security or a
Written Down Security or (ii) the Trustee has received an Equity Security
in connection with any Collateral Debt Security.


 


6.15.                   REPRESENTATIONS AND WARRANTIES OF
THE BANK


 


(a)                                  Organization. The
Bank has been duly organized and is validly existing as a national banking
association under the laws of the United States and has the power to conduct
its business and affairs as a trustee.


 


(b)                                 Authorization; Binding
Obligations. The Bank has the power and authority to
perform the duties and obligations of Trustee, Note Registrar and Note Transfer
Agent or any other capacity to which it is appointed under this Indenture. The
Bank has taken all necessary action to authorize the execution, delivery and
performance of this Indenture, and all of the documents required to be executed
by the Bank pursuant hereto. This Indenture has been duly executed and
delivered by the Bank. Upon execution and delivery by the Issuer, this
Indenture will constitute the legal, valid and binding obligation of the Bank
enforceable in accordance with its terms.


 


(c)                                  Eligibility. The
Bank is eligible under Section 6.9 to serve as Trustee hereunder.


 


(d)                                 No Conflict. Neither
the execution, delivery and performance of this Indenture, nor the consummation
of the transactions contemplated by this Indenture, (i) is prohibited by,
or requires the Bank to obtain any consent, authorization, approval or registration
under, any law, statute, rule, regulation, judgment, order, writ, injunction or
decree that is binding upon the Bank or any of its properties or assets, or (ii) will
violate any provision of, result in any default or acceleration of any obligations
under, result in the creation or imposition of any lien pursuant to, or require
any consent under, any agreement to which the Bank is a party or by which it or
any of its property is bound.


 


(e)                                  No Proceedings. There are no proceedings pending, or to the best knowledge of the Bank,
threatened against the Bank before any federal, state or other governmental
agency, authority, administrator or regulatory body, arbitrator, court or other
tribunal, foreign or domestic, that could have a material adverse effect on the
Collateral or any action taken or to be taken by the Bank under this Indenture.


 


6.16.                   EXCHANGE OFFERS, PROPOSED
AMENDMENTS ETC.


 


The Collateral Manager may,
on behalf of the Issuer, instruct the Trustee pursuant to an Issuer Order to,
and the Trustee shall, take any of the following actions with respect to a
Collateral Debt Security or Equity Security as to which an Offer has been made
or as to which any consent, waiver, vote or exercise has been requested: (i) exchange
such instrument for other securities or a mixture of securities and other
consideration pursuant to such Offer (and in making a determination whether or
not to exchange


 


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any security, none of the restrictions set
forth in Section 12 shall be applicable); and (ii) give consent,
grant waiver, vote or exercise any or all other rights or remedies with respect
to any such Collateral Debt Security or Equity Security. In the event that the
Trustee does not receive instruction from the Collateral Manager, the Trustee
shall have no obligation to take action with respect to such exchange or such
request for consent, waiver, vote or exercise. In the event that the Trustee
receives written notice of any proposed amendment, consent or waiver under the
Underlying Instruments of any Collateral Debt Securities (before or after any
default), the Trustee shall promptly deliver copies of such notice to the
Issuer and the Collateral Manager. The Collateral Manager may, on behalf of the
Issuer, instruct the Trustee pursuant to an Issuer Order to, and the Trustee
shall, with respect to a Collateral Debt Security as to which a consent or
waiver under the Underlying Instruments of such Collateral Debt Security
(before or after any default) has been proposed, give consent, grant waiver,
vote or exercise any or all other rights or remedies with respect to any such
Collateral Debt Security only in accordance with such Issuer Order. In the
absence of any instruction from the Collateral Manager, the Trustee shall not
engage in any vote with respect to such Collateral Debt Security.


 


6.17.                 FIDUCIARY FOR RATED NOTEHOLDERS
ONLY; AGENT FOR OTHER SECURED PARTIES


 


With respect to the security
interests created hereunder, the pledge of any portion of the Collateral to the
Trustee is to the Trustee as representative of the Rated Noteholders and agent
for other Secured Parties. In furtherance of the foregoing, the possession by
the Trustee of any portion of the Collateral and the endorsement to or
registration in the name of the Trustee of any portion of the Collateral
(including without limitation as entitlement holder of the Collateral Account)
are all undertaken by the Trustee in its capacity as representative of the
Rated Noteholders and as agent for the other Secured Parties. The Trustee shall
not by reason of this Indenture be deemed to be acting as fiduciary for the
Initial Hedge Counterparty or the Collateral Manager, provided that the
foregoing shall not limit any of the express obligations of the Trustee under this
Indenture.


 


6.18.                 WITHHOLDING


 


If any withholding tax is
imposed on the Issuer’s payment (or allocations of income) under the Rated
Notes to any Rated Noteholder, such tax shall reduce the amount otherwise
distributable to such Rated Noteholder. The Trustee is hereby authorized and
directed to retain from amounts otherwise distributable to any Rated Noteholder
sufficient funds for the payment of any tax that is required to be withheld or
deducted by the Issuer (but such authorization shall not prevent the Trustee
from contesting any such tax in appropriate proceedings and withholding payment
of such tax, if permitted by law, pending the outcome of such proceedings). The
amount of any withholding tax imposed with respect to any Rated Noteholder
shall be treated as Cash distributed to such Rated Noteholder at the time it is
withheld by the Trustee and remitted to the appropriate taxing authority. If
there is a possibility that withholding tax is payable with respect to a
distribution, the Trustee may in its sole discretion withhold such amounts in
accordance with this Section 6.18. If any Rated Noteholder wishes to apply
for a refund of any such withholding tax, the Trustee shall reasonably
cooperate with such Rated Noteholder in making such claim so long as such Rated
Noteholder agrees to reimburse the Trustee for any out-of-pocket expenses
incurred. Nothing herein shall impose an obligation on the part of the Trustee
to determine the amount of any tax or withholding obligation on the part of the
Issuer or in respect of the Income Notes.


 


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ARTICLE VII


 


COVENANTS


 


7.1.                       PAYMENT OF PRINCIPAL AND INTEREST


 


The
Issuer will duly and punctually pay all principal (including the Class C
Cumulative Periodic Interest Shortfall Amount, the Class D Cumulative
Periodic Interest Shortfall Amount and the Class E Cumulative Periodic
Interest Shortfall Amount, interest (including Defaulted Interest and interest
thereon, if any) in accordance with the terms of the Rated Notes and this
Indenture and amounts due under the Hedge Agreement in accordance with this Indenture.
Amounts properly withheld under the Code or other applicable law by any Person
from a payment to any Rated Noteholder of principal and/or interest shall be
considered as having been paid by the Issuer to such Rated Noteholder for all
purposes of this Indenture.


 


The
Trustee shall, unless prevented from doing so for reasons beyond its reasonable
control, give notice to each Rated Noteholder and each Rating Agency of any
such withholding requirement no later than ten days prior to the date of the payment
from which amounts are required to be withheld; provided that despite the failure of the Trustee to give such
notice, amounts withheld pursuant to applicable tax laws shall be considered as
having been paid by the Issuer as provided above.


 


7.2.                       MAINTENANCE OF OFFICE OR AGENCY


 


The
Issuer hereby appoints the Trustee as Note Paying Agent for the payment of
principal of and interest on the Rated Notes. Rated Notes may be surrendered
for registration of transfer or exchange at the Corporate Trust Office. The
Issuer hereby appoints NCB Stockbroker Limited, 3 George’s Dock, Dublin 1,
Ireland, as offshore Note Paying Agent and as the Issuer’s agent where notices
and demands to or upon the Issuer in respect of any Rated Notes listed on the
Irish Stock Exchange may be served and where such Rated Notes may be
surrendered for registration of transfer or exchange.


 


The
Issuer may at any time and from time to time, terminate the appointment of any
such agent or appoint any additional agents for any or all of such purposes; provided that (A) the Issuer will
maintain in the Borough of Manhattan, The City of New York, an office or
agency where notices and demands to or upon the Issuer in respect of the Rated
Notes and this Indenture may be served, (B) no Note Paying Agent shall be
appointed in a jurisdiction which subjects payments on the Rated Notes to
withholding tax and (C) the Issuer may not terminate the appointment of
any Note Paying Agent without the consent of each Income Noteholder. The Issuer
shall give prompt written notice to the Trustee and each Rating Agency and the
Rated Noteholders of the appointment or termination of any such agent and of
the location and any change in the location of any such office or agency.


 


If
at any time the Issuer shall fail to maintain any such required office or
agency in the Borough of Manhattan, The City of New York or shall fail to
furnish the Trustee with the address thereof, presentations and surrenders may
be made at and notices and demands may be served on the Issuer and Rated Notes
may be presented and surrendered for payment to the Note Paying Agent at its
office in Illinois (and the Issuer hereby appoints the same as its agent to
receive such respective presentations, surrenders, notices and demands).


 


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


 


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7.3.                       FUNDS FOR RATED NOTE PAYMENTS TO
BE HELD IN TRUST


 


All
payments of amounts due and payable with respect to any Rated Notes that are to
be made from amounts withdrawn from the Payment Account shall be made on behalf
of the Issuer by the Trustee or a Note Paying Agent with respect to payments on
the Rated Notes.


 


When
the Issuer shall have a Note Paying Agent that is not also the Note Registrar,
it shall direct the Note Registrar to furnish, no later than the fifth calendar
day after each Record Date a list, if necessary, in such form as such Note
Paying Agent may reasonably request, of the names and addresses of the Holders
and of the certificate numbers of individual Rated Notes held by each such
Holder.


 


The
initial Note Paying Agent shall be as set forth in Section 7.2. Any
additional or successor Paying Agents shall be appointed by Issuer Order with
written notice thereof to the Trustee and the Rating Agencies; provided that so long as any Class of Rated Notes is
rated by the Rating Agencies and with respect to any additional or successor
Note Paying Agent for the Rated Notes, (a) the Note Paying Agent for the
Rated Notes has a rating of not less than “AA-” and not less than “A-1+” by
S&P or (b) a Rating Agency Confirmation from S&P shall have been
obtained with respect to the appointment of such Note Paying Agent. In the
event that (i) the Issuer has actual knowledge that such successor Note
Paying Agent ceases to have a rating of at least “AA-” and of “A-1+” by S&P
or (ii) a Rating Agency Confirmation from S&P shall not have been
obtained with respect to the appointment of such Note Paying Agent, the Issuer
shall promptly remove such Note Paying Agent and appoint a successor Note
Paying Agent. The Issuer shall not appoint any Note Paying Agent (other than an
initial Note Paying Agent) that is not, at the time of such appointment, a
depository institution or trust company subject to supervision and examination
by federal and/or state and/or national banking authorities. The Issuer shall
cause each Note Paying Agent other than the Trustee to execute and deliver to
the Trustee an instrument in which such Note Paying Agent shall agree with the
Trustee (and if the Trustee acts as Note Paying Agent, it hereby so agrees),
subject to the provisions of this Section 7.3, that such Note Paying Agent
will:


 


(a)                             allocate all sums received for payment to the
Holders of Rated Notes for which it acts as Note Paying Agent on each Payment
Date and Redemption Date among such Holders in the proportion specified in the
instructions set forth in the applicable Note Valuation Report or Redemption
Date Statement or as otherwise provided herein, in each case to the extent
permitted by applicable law;


 


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


 


(c)                             if such Note Paying Agent is not the Trustee,
immediately resign as a Note Paying Agent and forthwith pay to the Trustee all
amounts held by it in trust for the payment of Rated Notes if at any time it
ceases to meet the standards set forth above required to be met by a Note
Paying Agent at the time of its appointment;


 


(d)                            if such Note Paying Agent is not the Trustee,
immediately give the Trustee notice of any Default by the Issuer (or any other
obligor upon the Rated Notes) in the making of any payment required to be made;
and


 


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(e)                             if
such Note Paying Agent is not the Trustee at any time during the continuance of
any such Default, upon the written request of the Trustee, forthwith pay to the
Trustee all amounts so held in trust by such Note Paying Agent.


 


If the Issuer shall have appointed a Note Paying Agent other than the
Trustee, the Trustee shall deposit on or prior to the Business Day next
preceding each Payment Date or Redemption Date, as the case may be, with such
Note Paying Agent, if necessary, an aggregate amount sufficient to pay the
amounts then becoming due (to the extent funds are then available for such
purpose in the Collection Account, as the case may be), such amount to be held
in trust for the benefit of the Persons entitled thereto. Any funds deposited
with a Note Paying Agent (other than the Trustee) in excess of an amount
sufficient to pay the amounts then becoming due on the Rated Notes with respect
to which such deposit was made shall be paid over by such Note Paying Agent to
the Trustee for application in accordance with Section 11.


 


The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, direct
any Note Paying Agent to pay to the Trustee all amounts held in trust by such
Note Paying Agent, such amounts to be held by the Trustee upon the same trusts
as those upon which such amounts were held by such Note Paying Agent; and, upon
such payment by any Note Paying Agent to the Trustee, such Note Paying Agent
shall be released from all further liability with respect to such amounts.


 


Except as otherwise required by applicable law, any funds deposited
with the Trustee or any Note Paying Agent in trust for the payment of the
principal of or interest on any Rated Note and remaining unclaimed for two
years after the same has become due and payable shall be paid to the Issuer on
Issuer Request; and the Holder of such Rated Note shall thereafter, as an
unsecured general creditor, look only to the Issuer for payment of such amounts
and all liability of the Trustee or such Note Paying Agent with respect to such
trust funds (but only to the extent of the amounts so paid to the Issuer) shall
thereupon cease. The Trustee or such Note Paying Agent, before being required
to make any such release of payment, may, but shall not be required to, adopt
and employ, at the expense of the Issuer, any reasonable means of notification
of such release of payment, including mailing notice of such release to Holders
whose Rated Notes have been called but have not been surrendered for redemption
or whose right to or interest in amounts due and payable but not claimed is
determinable from the records of any Note Paying Agent, at the last address of
record of each such Holder.


 


7.4.                       EXISTENCE OF ISSUER


 


The Issuer shall maintain in full force and effect its existence and
rights as an exempted company incorporated and registered under the laws of the
Cayman Islands and shall obtain and preserve its qualification to do business
in each jurisdiction in which such qualifications are or shall be necessary to
protect the validity and enforceability of this Indenture, the Rated Notes or
any of the Collateral.


 


The Issuer shall ensure that all corporate or other formalities
regarding its existence (including holding regular board of directors’ and
shareholders’, or other similar, meetings) or registrations are followed. The
Issuer shall not take any action, or conduct its affairs in a manner, that is
likely to result in its separate existence being ignored or in its assets and
liabilities being substantively consolidated with any other Person in a
bankruptcy, reorganization or other insolvency proceeding. At least one
director of the Issuer shall be Independent of other parties to the Transaction
Documents. Without limiting the foregoing, (a) the Issuer shall not have
any subsidiaries (other than any Tax Subsidiary), and (b) the Issuer shall
not (i) have any employees, (ii) engage in any transaction with any
shareholder that would constitute a conflict of interest or (iii) pay
dividends, provided that the foregoing shall
not prohibit the Issuer from entering into the transactions contemplated by the
Corporate Services Agreement with the Administrator.


 


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7.5.                       PROTECTION OF COLLATERAL


 


(a)                             The
Issuer shall from time to time, execute and deliver all such supplements and amendments
hereto and all such Financing Statements, continuation statements, instruments
of further assurance and other instruments, and shall take such other action as
may be necessary or advisable or desirable to secure the rights and remedies of
the Secured Parties hereunder and to:


 


(1)                                  Grant
more effectively all or any portion of the Collateral;


 


(2)                                  maintain,
preserve and perfect the lien (and the first priority nature thereof) of this
Indenture or to carry out more effectively the purposes hereof;


 


(3)                                  perfect,
publish notice of or protect the validity of any Grant made or to be made by
this Indenture (including any and all actions necessary or desirable as a
result of changes in law or regulations);


 


(4)                                  enforce
any of the Pledged Securities or other instruments or property included in the
Collateral;


 


(5)                                  preserve
and defend title to the Collateral and the rights therein of the Trustee, the
Initial Hedge Counterparty and the Holders of the Rated Notes against the
claims of all Persons and parties; or


 


(6)                                  pay
or cause to be paid any and all taxes levied or assessed upon all or any part
of the Collateral.


 


The Issuer hereby designates the Trustee its agent and attorney-in-fact
to execute any Financing Statement, continuation statement or other instrument
delivered to it pursuant to this Section 7.5, and the Trustee, as agent of
the Issuer, agrees to file such continuation statements as are necessary to
maintain perfection of the Collateral perfected by the filing of Financing
Statements, provided that the Issuer retains
ultimate responsibility to maintain the perfection of the Collateral perfected
by the filing of Financing Statements and any failure of the Trustee to file
continuation statements pursuant to this undertaking shall not result in any
liability of the Trustee and the Trustee shall be entitled to indemnification
pursuant to Section 6.8(a) with respect to any claim, loss, liability
or expense incurred by the Trustee with respect to the filing of such
continuation statements. The Trustee agrees that it will from time to time, at
the direction of any Secured Party, execute and cause to be filed Financing
Statements and continuation statements. The Issuer shall otherwise cause the
perfection and priority of the security interest in the Collateral and the
maintenance of such security interest at all times. Notwithstanding anything to
the contrary herein, the right of a Secured Party to provide direction to the
Trustee shall not impose upon the Trustee, as Secured Party, any obligation to
provide any such direction. The Issuer agrees that a carbon, photographic,
photostatic or other reproduction of this Indenture or of a Financing Statement
is sufficient as an Indenture or a Financing Statement as the case may be.


 


(b)                            The
Trustee shall not (i) except in accordance with Section 10.13(a) or
(b), as applicable, remove any portion of the Collateral that consists of Cash
or is evidenced by an Instrument, certificate or other writing (A) from
the jurisdiction in which it was held at the date the most recent Opinion of
Counsel was delivered pursuant to Section 7.6 (or


 


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from
the jurisdiction in which it was held as described in the Opinion of Counsel
delivered at the Closing Date pursuant to Section 3.1(c), if no Opinion of
Counsel has yet been delivered pursuant to Section 7.6) or (B) from
the possession of the Person who held it on such date or (ii) cause or
permit ownership or the pledge of any portion of the Collateral that consists
of book-entry securities to be recorded on the books of a Person (A) located
in a different jurisdiction from the jurisdiction in which such ownership or
pledge was recorded at such date or (B) other than the Person on whose
books such ownership or pledge was recorded at such date, unless the Trustee
shall have first received an Opinion of Counsel to the effect that the lien and
security interest created by this Indenture with respect to such property will
continue to be maintained after giving effect to such action or actions.


 


(c)                             The Issuer shall pay or cause to be paid
taxes, if any, levied on account of the beneficial ownership by the Issuer of
any Pledged Securities that secure the Rated Notes; provided
that the Issuer shall not be required to pay or discharge or cause to be paid
or discharged any such tax whose amount, applicability or validity is being
contested in good faith by appropriate proceedings and for which disputed
amounts or adequate reserves have been made or the failure of which to pay or
discharge could not reasonably be expected to have a material adverse effect
upon the ability of the Issuer to timely and fully perform any of its payment
or other material obligations under this Indenture or upon the interests of the
Rated Noteholders in the Collateral.


 


(d)                            The Issuer shall enforce all of its material
rights and remedies under the Transaction Documents to which it is a party.


 


(e)                             Without at least 30 days’ prior written
notice to the Trustee, the Issuer shall not change its name, or the name under
which it does business, from the name shown on the signature pages hereto.


 


7.6.                       OPINIONS AS TO COLLATERAL


 


On
or before 30 days prior to the Payment Date in June of each calendar year,
commencing in 2007, the Issuer shall furnish to the Trustee and each Rating
Agency (with copies to the Initial Hedge Counterparty) an Opinion of Counsel
(which shall include assumptions and qualifications substantially similar to
those set forth in Exhibit E-1) stating that, in the opinion of such
counsel, as of the date of such opinion, the lien and security interest created
by this Indenture with respect to the Collateral remains a valid and perfected
first priority lien and describing the manner in which such security interest shall
remain perfected.


 


7.7.                       PERFORMANCE OF OBLIGATIONS


 


(a)                             The Trustee shall notify the Issuer, the
Initial Hedge Counterparty and each Rated Noteholder of any request for an
amendment, waiver or supplement to any Underlying Instrument included in the
Collateral or of any other notice of a vote in respect of any Collateral Debt
Security included in the Collateral. The Issuer shall not enter into any such
amendment, waiver or supplement; provided that,
notwithstanding anything in this Section 7.7(a) to the contrary, the
Issuer may enter into any amendment or waiver of or supplement to any such
Underlying Instrument if such amendment, supplement or waiver:


 


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(1)                                  is required by the provisions of any
Underlying Instrument or by applicable law (other than pursuant to an
Underlying Instrument);


 


(2)                                  is necessary to cure any ambiguity,
inconsistency or formal defect or omission in such Underlying Instrument; or


 


(3)                                  (x) is deemed necessary by the Issuer or
the Collateral Manager and does not materially and adversely affect the Secured
Parties or (y) is effected pursuant to Section 6.16.


 


The Issuer shall be entitled to rely on an Opinion of Counsel as to
material adverse effect and as to whether the entry into an amendment,
supplement or waiver is permitted pursuant to this Indenture.


 


(b)                            The Issuer may, with the prior written
consent of the Holders of a Majority of the then Aggregate Outstanding Amount
of the Notes of each Class of Rated Notes and the Holders of not less than
662/3% of the
aggregate principal amount of the Outstanding Income Notes and the Initial
Hedge Counterparty, contract with other Persons, including the Collateral
Administrator, the Collateral Manager and the Bank, for the performance of
actions and obligations to be performed by the Issuer hereunder by such
Persons. Notwithstanding any such arrangement, the Issuer shall remain liable
for all such actions and obligations. In the event of such contract, the
performance of such actions and obligations by such Persons shall be deemed to
be performance of such actions and obligations by the Issuer and the Issuer
will punctually perform, and use its best efforts to cause such other Person to
perform, all of their obligations and agreements contained in related
agreement.


 


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


 


(d)                            The Issuer shall file, or cause to be filed,
any tax returns, including information tax returns, required by any
governmental authority.


 


(e)                             In the event that (i) the ownership of a
Collateral Debt Security or property acquired in respect of a Collateral Debt
Security would result in the Issuer being or becoming subject to U.S. tax on a
net income basis or being or becoming subject to the U.S. branch profits tax
(in either case, such Collateral Debt Security becoming a “Taxed Collateral
Debt Security” and such property becoming a “Taxed Property”), and (ii) the
Issuer does not sell or otherwise dispose of all or a portion of such Taxed
Collateral Debt Security or Taxed Property in accordance with the provisions of
the Indenture, the Collateral Manager on behalf of the Issuer shall, prior to
such Collateral Debt Security becoming a Taxed Collateral Debt Security or such
property becoming a Taxed Property, (a) set up a special purpose
subsidiary meeting S&P’s then current published criteria for bankruptcy
remote special purpose entities (a “Tax Subsidiary”) to receive and hold any
such Taxed Collateral Debt Security or Taxed Property or transfer such Taxed
Collateral Debt Security or Taxed Property to the Tax Subsidiary or (b) contribute
such taxed Collateral Debt Security or Taxed Property to a REMIC or other
pass-through entity, unless the Issuer has received an opinion of nationally
recognized counsel to the effect that the Issuer can hold such Taxed Collateral
Debt Security directly without causing the Issuer to be treated as engaged in a
trade or business in the United States for United States federal income tax
purposes. The Issuer shall cause the purposes and permitted activities of any


 


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


 


7.8.                       NEGATIVE COVENANTS


 


(a)                             The Issuer will not:


 


(1)                                  intentionally operate so as to be subject to
U.S. federal income taxes on its net income;


 


(2)                                  sell, assign, participate, transfer, exchange
or otherwise dispose of, or pledge, mortgage, hypothecate or otherwise encumber
(or permit such to occur or suffer such to exist), any part of the Collateral,
except as expressly permitted by this Indenture;


 


(3)                                  claim any credit on, make any deduction from,
or dispute the enforceability of, the payment of the principal or interest (or
any other amount) payable in respect of the Rated Notes (other than amounts
required to be paid, deducted or withheld in accordance with any applicable law
or regulation of any governmental authority) or assert any claim against any
present or future Rated Noteholder by reason of the payment of any taxes levied
or assessed upon any part of the Collateral;


 


(4)                                  (A) incur or assume or guarantee any
indebtedness, other than the Rated Notes and this Indenture and the
transactions contemplated hereby; (B) issue any additional class of
securities other than the Income Notes; or (C) issue any additional shares
of stock;


 


(5)                                  (A) take any action that would impair
the validity or effectiveness of this Indenture or any Grant hereunder or the
lien of this Indenture, amend hypothecate, subordinate, terminate, discharge or
release any Person from any covenants or obligations with respect to this
Indenture or the Rated Notes, except as may be permitted hereby, (B) create
or extend any lien, charge, adverse claim, security interest, mortgage or other
encumbrance (other than the lien of this Indenture) on or to the Collateral or
any part thereof, any interest therein or the proceeds thereof, or (C) take
any action that would cause the lien of this Indenture not to constitute a
valid first priority security interest in the Collateral;


 


(6)                                  use any of the proceeds of the Rated Notes
issued hereunder (A) to extend “purpose credit” within the meaning given
to such term in Regulation U or (B) to purchase or otherwise acquire any
Margin Stock;


 


(7)                                  permit the aggregate book value of all Margin
Stock held by the Issuer on any date to exceed the net worth of the Issuer on
such date (excluding any unrealized gains and losses) on such date;


 


(8)                                  dissolve or liquidate in whole or in part,
except as permitted hereunder; or


 


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


 


(b)                            Except as permitted by this Indenture, the
Issuer will not do business under any other name other than the name set forth
in the Articles and neither the Issuer nor the Trustee shall acquire any
Collateral after the Closing Date, sell, transfer, exchange or otherwise
dispose of Collateral, or enter into or engage in any business with respect to
any part of the Collateral.


 


7.9.                       STATEMENT AS TO COMPLIANCE


 


On or before the Payment Date in June of each
calendar year commencing in 2007, or immediately if there has been a Default in
the fulfillment of an obligation under this Indenture, the Issuer shall deliver
to the Trustee, the Income Note Paying Agent, each Rated Noteholder making a written
request therefor, the Irish Paying Agent, the Initial Hedge Counterparty, the
Collateral Manager and each Rating Agency a certificate of the Issuer stating,
as to each signer thereof, that:


 


(a)                             the Officer executing such certificate has
conducted a review of the activities of the Issuer and of the Issuer’s
performance under this Indenture during the 12-month period ending on December 31
of such year (or from the Closing Date until December 31, 2006, in the
case of the first such certificate) based on reports and other information
delivered to such Officer by the Trustee, the Collateral Manager and the
Collateral Administrator and a review of the Accountant’s Reports prepared
pursuant to Section 10.12 and such other materials as such Officer deems
appropriate; and


 


(b)                            to the best of knowledge of the Issuer, based
on such review, the Issuer has fulfilled all of its material obligations under
this Indenture throughout the period, or, if there has been a Default in the
fulfillment of any such obligation, specifying each such Default known to such
Officer and the nature and status thereof, including actions undertaken to
remedy the same.


 


7.10.                 ISSUER MAY CONSOLIDATE,
ETC., ONLY ON CERTAIN TERMS


 


(a)                             The Issuer shall not consolidate or merge
with or into any other Person or transfer or convey all or substantially all of
its assets to any Person, unless permitted by Cayman Islands law and unless:


 


(1)                                  the Issuer shall be the surviving entity, or
the Person (if other than the Issuer) formed by such consolidation or into
which the Issuer is merged or to which all or substantially all of the assets
of the Issuer are transferred or conveyed shall be an exempted limited
liability company organized and existing under the laws of the Cayman Islands
or such other jurisdiction outside the United States as may be approved by a
Majority of each Class and the Initial Hedge Counterparty, and shall
expressly assume, by an indenture supplemental hereto, executed and delivered
to the Trustee, the Initial Hedge Counterparty and each Rated Noteholder, the
due and punctual payment of the principal of and interest on all


 


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Rated Notes and the performance of every
covenant of this Indenture and the Hedge Agreement on the part of the Issuer to
be performed or observed, all as provided herein;


 


(2)                                  each
Rating Agency and the Initial Hedge Counterparty shall have received written
notification from the Issuer of such consolidation, merger, transfer or
conveyance and the identity of the surviving entity and a Rating Agency
Confirmation shall have been obtained with respect to the consummation of such
transaction;


 


(3)                                  if
the Issuer is not the surviving entity, the Person formed by such consolidation
or into which the Issuer is merged or to which all or substantially all of the
assets of the Issuer are transferred or conveyed shall have agreed with the
Trustee (A) to observe the same legal requirements for the recognition of
such formed or surviving entity as a legal entity separate and apart from any
of its Affiliates as are applicable to the Issuer with respect to its
Affiliates and (B) not to consolidate or merge with or into any other
Person or transfer or convey the Collateral or all or substantially all of its
assets to any other Person except in accordance with the provisions of this Section 7.10;


 


(4)                                  if
the Issuer is not the surviving entity, the Person formed by such consolidation
or into which the Issuer is merged or to which all or substantially all of the
assets of the Issuer are transferred or conveyed shall have delivered to the
Trustee, the Initial Hedge Counterparty and each Rating Agency an Officer’s
certificate and an Opinion of Counsel each stating that such Person shall be
duly organized, validly existing and (if applicable) in good standing in the
jurisdiction in which such Person is organized; that such Person has sufficient
power and authority to assume the obligations set forth in Section 7.10(a)(1) above
and to execute and deliver an indenture supplemental hereto for the purpose of
assuming such obligations; that such Person has duly authorized the execution,
delivery and performance of an indenture supplemental hereto for the purpose of
assuming such obligations and that such supplemental indenture is a valid,
legal and binding obligation of such Person, enforceable in accordance with its
terms, subject only to bankruptcy, reorganization, insolvency, moratorium and
other laws affecting the enforcement of creditors’ rights generally and to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law); that, immediately following
the event which causes such Person to become the successor to the Issuer, (A) such
Person has good and marketable title, free and clear of any lien, security
interest or charge, other than the lien and security interest of this
Indenture, to the Collateral; (B) the Trustee continues to have a valid
perfected first priority security interest in the Collateral securing all of
the Rated Notes; (C) such Person has received an Opinion of Counsel to the
effect that such Person will not be subject to net income tax or be treated as
engaged in a trade or business within the United States for U.S. federal income
tax purposes and such other matters as the Trustee, the Initial Hedge
Counterparty or any Rated Noteholder may reasonably require;


 


(5)                                  immediately
after giving effect to such transaction, no Default shall have occurred and be
continuing;


 


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(6)                                  the Issuer shall have delivered to the
Trustee, the Initial Hedge Counterparty and each Rated Noteholder an Officer’s
certificate and an Opinion of Counsel each stating that such consolidation,
merger, transfer or conveyance and such supplemental indenture comply with this
Section 7, that all conditions precedent in this Section 7 provided
for relating to such transaction have been complied with and that no adverse
tax consequences will result therefrom to any Rated Noteholder or the Initial
Hedge Counterparty; and


 


(7)                                  the Issuer shall have delivered to the
Trustee an Opinion of Counsel stating that after giving effect to such
transaction, the Issuer will not be required to register as an investment
company under the Investment Company Act.


 


7.11.                 SUCCESSOR SUBSTITUTED


 


Upon
any consolidation or merger, or transfer or conveyance of all or substantially
all of the assets of the Issuer or the Issuer, in accordance with Section 7.10,
the Person formed by or surviving such consolidation or merger (if other than
the Issuer), or, the Person to which such transfer or conveyance is made, shall
succeed to, and be substituted for, and may exercise every right and power of,
and shall be bound by each obligation or covenant of, the Issuer under this
Indenture with the same effect as if such Person had been named as the Issuer
herein. In the event of any such consolidation, merger, transfer or conveyance,
the Person named as the “Issuer” in the first paragraph of this Indenture or
any successor which shall theretofore have become such in the manner prescribed
in this Section 7 may be dissolved, wound-up and liquidated at any time
thereafter, and such Person thereafter shall be released from its liabilities
as obligor and maker on all the Rated Notes and from its obligations under this
Indenture.


 


7.12.                 NO OTHER BUSINESS


 


The
Issuer shall not engage in any business or activity other than (i) issuing
and selling the Rated Notes pursuant to this Indenture, (ii) issuing and
selling the Income Notes in accordance with the Income Note Paying Agency
Agreement (iii) issuing the Ordinary Shares pursuant to the Issuer
Charter, (iv) acquiring, pledging, holding and disposing of, solely for its own
account, Collateral Debt Securities, Eligible Investments and other Collateral
described in clauses (a) to (e) of the granting clauses hereof, and (v)
such other activities that are incidental thereto and connected therewith. The
Issuer shall not hold itself out as a derivatives dealer willing to enter into
either side of, or to offer to enter into, assume, offset, assign or otherwise
terminate positions in (i) interest rate, currency, equity or commodity
swaps or caps or (ii) derivative financial instruments (including options,
forward contracts, short positions and similar instruments) in any commodity,
currency, share of stock, partnership or trust, note, bond, debenture or other
evidence of indebtedness, swap or cap. The foregoing shall not limit the
ability of the Issuer to enter into Hedge Agreements. Furthermore, the Issuer
shall not hold itself out, whether through advertising or otherwise, as a bank,
insurance company or finance company, or as originating loans, lending funds,
making a market in loans or other assets or selling loans or other assets to
customers. The Issuer will not amend the Issuer Charter, if such amendment
would result in the rating (including any private or confidential rating) of
any Class of Rated Notes being reduced or withdrawn. The Issuer shall not
engage in any business or activity or hold any asset that would cause the
Issuer to be engaged in a U.S. trade or business for U.S. federal income tax
purposes, except as the result of ownership of Equity Securities or securities
received in an Offer in accordance with the provisions of this Indenture.


 


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7.13.                        CHANGE OR WITHDRAWAL OF RATING


 


The
Issuer shall promptly notify the Trustee in writing and upon receipt of such
notice the Trustee shall promptly notify the Rated Noteholders and the Initial
Hedge Counterparty if at any time the rating of any Class of Rated Notes
has been, or is known will be, changed or withdrawn.


 


7.14.                        REPORTING


 


At
any time when the Issuer is not subject to Section 13 or 15(d) of the
Exchange Act and is not exempt from reporting pursuant to Rule 12g3-2(b) under
the Exchange Act, upon the request of a Holder or Beneficial Owner of a Rated
Note or Income Note, the Issuer shall promptly furnish or cause to be furnished
Rule 144A Information to such Holder or Beneficial Owner, to a prospective
purchaser of such Rated Note or Income Note designated by such Holder or
Beneficial Owner or to the Trustee for delivery to such Holder or Beneficial
Owner or a prospective purchaser designated by such Holder or Beneficial Owner,
as the case may be, in order to permit compliance by such Holder or Beneficial
Owner with Rule 144A in connection with the resale of such Rated Note or
Income Note by such Holder or Beneficial Owner.


 


7.15.                        RATED NOTE CALCULATION AGENT


 


(a)                                  The Issuer hereby agrees that for so long as
any of the Rated Notes remain Outstanding the Issuer will at all times cause
there to be an agent appointed to calculate LIBOR in respect of each Interest
Period in accordance with the terms of Schedule B (the Rated Note Calculation Agent), which agent shall be a financial
institution, subject to supervision or examination by federal or state
authority, having a rating of at least “BBB+” by S&P and having an office
within the United States. Whenever the Note Calculation Agent is required to
act or exercise judgment, it will do so in good faith and in a commercially
reasonable manner. The Issuer has initially appointed the Trustee as Rated Note
Calculation Agent for purposes of determining LIBOR for each Interest Period.
If the Rated Note Calculation Agent is unable or unwilling to act as such or is
removed by the Issuer, the Issuer (after consultation with the Collateral
Manager) will propose a leading bank which is engaged in transactions in Dollar
deposits in the international Eurodollar market and which does not control or
is not controlled by or under common control with the Issuer or any of its
Affiliates as a replacement Rated Note Calculation Agent for approval by
Holders of not less than 662/3% of the
aggregate principal amount of the Outstanding Income Notes. The Rated Note
Calculation Agent may not resign its duties without a successor having been
duly appointed.


 


(b)                                 As soon as possible after 11:00 a.m.
(London time) on each LIBOR Calculation Date, but in no event later than 11:00 a.m.
(New York time) on the Business Day immediately following each LIBOR
Calculation Date, the Rated Note Calculation Agent will calculate LIBOR for the
next Interest Period and the Periodic Interest payable for such Interest Period
in respect of the Outstanding Rated Notes, rounded to the nearest cent, with half
a cent being rounded upward, on the related Payment Date to be given to the
Issuer, the Trustee, the Collateral Manager, the Depositary, Euroclear,
Clearstream, the Note Paying Agent and the Irish Paying Agent. The Rated Note
Calculation Agent will also specify to the Issuer and the Collateral Manager
the quotations upon which the Applicable Periodic Interest Rate for each Class of
Rated Notes is based, and in any event the Rated Note Calculation Agent must
notify the Issuer and the Collateral Manager before 5:00 p.m. (New York
time) on each applicable LIBOR Calculation Date if it has not determined and is
not in the process of determining LIBOR with respect to the Rated Notes and the


 


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Periodic
Interest with respect to each Class of Rated Notes, together with its
reasons for the delay. The Irish Paying Agent also will cause the Applicable
Periodic Interest Rate for each Interest Period for each Class of Rated
Notes listed on the Irish Stock Exchange, the amount of interest payable in
respect of each Class of Rated Notes listed on the Irish Stock Exchange
and each Payment Date to be delivered to the Company Announcements Office of
the Irish Stock Exchange as soon as possible after the Irish Paying Agent has
received notice from the Rated Note Calculation Agent of such Applicable
Periodic Interest Rates and amounts.


 


7.16.                        LISTING


 


The
Issuer will use its commercially reasonable efforts to obtain and maintain the
listing of each Class of Rated Notes on the Irish Stock Exchange.


 


7.17.                        AMENDMENT OF CERTAIN DOCUMENTS


 


The
Issuer will not agree to any amendment to or modification of the Corporate
Services Agreement, the Collateral Management Agreement, the Account Control
Agreement or the Hedge Agreement at any time without obtaining Rating Agency
Confirmation with respect to any such modification and will not amend, modify
or waive any “non-petition” or “limited recourse” provisions of any Transaction
Document to which it is a party without obtaining a Rating Agency Confirmation
with respect to such modification. The Trustee shall provide each of the
Initial Hedge Counterparty, the Holders of Rated Notes of the Controlling
Class, the Collateral Manager and the Rating Agencies with a copy of any such
amendment or modification at least ten Business Days before effecting such
amendment or modification. Prior to entering into any waiver in respect of the
any of the foregoing agreements, the Issuer will provide to each Rating Agency
and the Trustee with written notice of such waiver.


 


7.18.                        PURCHASE OF COLLATERAL;
INFORMATION REGARDING COLLATERAL; RATING CONFIRMATION


 


(a)                                  The Issuer will use reasonable efforts to
purchase or enter into agreements to purchase, on or before the Effective Date,
Collateral Debt Securities having an aggregate Principal Balance, together with
the aggregate Principal Balance of all Eligible Investments purchased with
Collateral Principal Collections, of not less than U.S.$550,000,000 (assuming,
for these purposes, settlement (in accordance with customary settlement
procedures in the relevant markets) of all agreements entered into by the
Issuer to acquire Collateral Debt Securities scheduled to settle on or
following the Effective Date).


 


(b)                                 The Issuer (or the Collateral Manager on
behalf of the Issuer) shall cause to be delivered to the Trustee on the
Effective Date an amended Schedule A listing all Collateral Debt Securities
purchased on or before the Effective Date, which schedule will supersede any
prior Schedule A delivered to the Trustee.


 


(c)                                  On or before the Effective Date, the Issuer
(or the Collateral Manager on its behalf) shall deliver an Officer’s
certificate to the Trustee, the Holders of Rated Notes of the Controlling
Class, the Initial Hedge Counterparty and each Rating Agency (in addition to
any such Officer’s Certificate, the information set forth in such Officer’s
Certificate shall also be provided to S&P in a form that complies with and
includes the information required by S&P’s Preferred Format) demonstrating compliance
by the Issuer with its obligations under Section 7.18(a) and
satisfaction of each applicable Collateral Quality Test (with the exception of
S&P’s CDO Monitor Test), and Coverage Test or, if on the


 


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Effective
Date, the Issuer shall be in default in the performance of its obligations
under this Section 7.18 or any of the Collateral Quality Tests (with the
exception of S&P’s CDO Monitor Test), the Collateral Concentration
Limitations or the specified Coverage Tests shall fail to be satisfied, the
Issuer (or the Collateral Manager on its behalf) shall deliver an Officer’s
certificate to the Trustee, the Holders of Rated Notes of the Controlling
Class, the Initial Hedge Counterparty and each Rating Agency specifying the
details of such default or failure; provided that
the failure to satisfy any of the Collateral Quality Tests, Collateral
Concentration Limitations or Coverage Tests does not constitute an Event of
Default but such failure may result in a Rating Confirmation Failure.


 


(d)                                 No later than 15 Business Days after the
Effective Date, the Issuer (or the Collateral Manager on its behalf) shall
deliver or cause to be delivered to the Trustee an accountant’s certificate
(the Accountant’s
Certificate)  (i) confirming the information with
respect to each Collateral Debt Security set forth on the amended schedule
delivered pursuant to Section 7.18(b) as of the Effective Date, and
the information provided by the Issuer with respect to every other asset
included in the Collateral, (ii) certifying as of the Effective Date the
procedures applied and their associated findings with respect to the Coverage
Tests, the Collateral Concentration Limitations and the Collateral Quality
Tests and (iii) specifying the procedures undertaken to review data and
computations relating to the foregoing clause (ii) held by the Issuer on
the Effective Date.


 


(e)                                  The Issuer (or the Collateral Manager on its
behalf) shall request in writing that each of the Rating Agencies confirm in
writing (a Rating Confirmation),  within 30 Business Days after the Effective
Date (or, in the case of each Rating Agency, any such later date (in no event
longer than 60 Business Days after the Effective Date) that shall be acceptable
to such Rating Agency), the ratings (including any private or confidential
ratings) assigned by it on the Closing Date to the Rated Notes. In the event
that the Issuer fails to obtain a Rating Confirmation within such time period
(a Rating
Confirmation Failure),  Collateral Interest Collections and, to the
extent Collateral Interest Collections are insufficient therefor, Collateral
Principal Collections shall be applied on the next Payment Date and any
succeeding Payment Dates, as applicable as provided in Section 11.1 to the
extent necessary for each of the Rating Agencies to provide a Rating
Confirmation.


 


(f)                                    Notwithstanding the foregoing, if (i) the
Issuer (or the Collateral Manager on its behalf) has requested in writing that
each of the Rating Agencies provide Rating Confirmation within five Business
Days after the Effective Date, (ii) the Issuer (or the Collateral Manager
on its behalf) has obtained confirmation by electronic mail, facsimile or
telephone that each of the Rating Agencies has received such request and has
promptly delivered to the applicable Rating Agency any additional information
reasonably requested by such Rating Agency, and (iii) any of the Rating
Agencies fails to respond to such request within 30 Business Days after the
Effective Date, then such failure to respond will not immediately constitute a
Rating Confirmation Failure but shall not constitute receipt of Rating
Confirmation; provided that Rating Confirmation
Failure shall thereafter occur immediately upon receipt from the Rating
Agencies of an actual notice of Rating Confirmation Failure.


 


(g)                                 No later than 15 Business Days following the
Effective Date, the Trustee shall (i) run the S&P CDO Monitor and
report to S&P whether or not the S&P CDO Monitor Test has been
satisfied and (ii) report the S&P scenario default and break-even
default rate for each Class of Notes.


 


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ARTICLE VIII


 


SUPPLEMENTAL INDENTURES


 


8.1.                              SUPPLEMENTAL INDENTURES WITHOUT
CONSENT OF RATED NOTEHOLDERS


 


Without the consent of the Holders of any Rated Notes, the Initial
Hedge Counterparty (except as specified below) or the Income Noteholders, but
with Rating Agency Confirmation for so long as any Class of Notes are
rated as such time by any Rating Agency, the Issuer, when authorized by Board
Resolutions, and the Trustee, at any time and from time to time subject to the
requirement provided below in this Section 8.1 with respect to the ratings
of the Rated Notes and subject to Section 8.3, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for
certain limited purposes including, inter
alia, to:


 


(a)                                  evidence
the succession of another Person to the Issuer and the assumption by any such
successor Person of the covenants of the Issuer herein and in the Rated Notes
pursuant to Section 7.10 or 7.11;


 


(b)                                 add
to the covenants of the Issuer or the Trustee for the benefit of the Holders of
all of the Rated Notes;


 


(c)                                  pledge
any additional property to the Trustee;


 


(d)                                 add
to the conditions, limitations or restrictions on the authorized amount, terms
and purposes of the issue, authentication and delivery of the Rated Notes;


 


(e)                                  effect
the appointment of a successor;


 


(f)                                    reduce
the permitted minimum denomination of the Rated Notes;


 


(g)                                 take
any action necessary or advisable to prevent the Issuer, any Note Paying Agent
or the Trustee from being subject to withholding or other taxes, fees or
assessments, to prevent the Issuer (without adverse effect to the Issuer) from
failing to qualify as a Qualified REIT Subsidiary or to prevent the Issuer from
being treated as engaged in a U.S. trade or business or otherwise being
subjected to U.S. federal, state or local income tax on a net income tax basis;
provided that such action will not
cause the Noteholders to experience any material change to the timing,
character or source of income from the Notes and will not be considered a
significant modification resulting in an exchange for purposes of section
1.1001-3 of the U.S. Treasury regulations;


 


(h)                                 modify the restrictions
on and procedures for resale and other transfer of the Rated Notes in
accordance with any change in any applicable law or regulation (or the
interpretation thereof) or to enable the Issuer to rely upon any less
restrictive exemption from registration under the Securities Act or the
Investment Company Act (in addition to that provided
under Section 3(c)(7) thereunder) or to remove restrictions on resale
and transfer to the extent not required thereunder;


 


(i)                                     grant,
convey, transfer, assign, mortgage or pledge any property to or with the
Trustee for the benefit of the Secured Parties;


 


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(j)                                     correct
or amplify the description of any property at any time subject to the lien of
this Indenture, or to better assure, convey and confirm unto the Trustee any
property subject or required to be subjected to the lien of this Indenture
(including any and all actions necessary or desirable as a result of changes in
law or regulations) or to subject to the lien of this Indenture any additional
property;


 


(k)                                  make
any change required by the stock exchange on which any Class of Rated Note
is listed, if any, in order to permit or maintain such listing;


 


(l)                                     correct, amend,
cure any manifest error, inconsistency, defect or ambiguity or correct any
typographical error in this Indenture;


 


(m)                               modify
this Indenture to conform the terms herein to the terms set forth in the then
current Offering Circular;


 


(n)                                 modify
any provision (other than in respect of a Reserved Matter), with respect to
restrictions upon the Issuer’s rights to acquire and dispose of Collateral Debt
Securities and other assets, that the Issuer or the Collateral Manager
determines to be necessary or desirable in order for the Issuer to maintain any
desired exemption from registration of the Issuer under the Investment Company
Act or of the Notes under the Securities Act;


 


(o)                                 with
the consent of the Collateral Manager, modify the calculation of the Collateral
Quality Tests and the definitions applicable thereto to correspond with
published or written changes in the guidelines, methodology or standards
established by the Rating Agencies;


 


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


 


(q)                                 agree
to any modification of the Indenture or any other Transaction Document (other
than in respect of a Reserved Matter), which is, in the opinion of the Trustee,
proper to make if, in the opinion of the Trustee (based upon an opinion of
counsel), such modification will not have a material adverse effect on the
interests of Holders of any Class or Classes of Notes or the Initial Hedge
Counterparty and which is of a formal, minor or technical nature or is to
correct a manifest error.


 


In addition, the Trustee may, but is not obligated to, without the
consent of the Rated Noteholders or of the Holders of any relevant Class or
Classes of Rated Notes, agree to any modification of any other Transaction
Document which is of a formal, minor or technical nature or is to correct a
manifest error and which is, in the opinion of the Trustee (based upon an
opinion of counsel as described in Section 8.3), proper to make; provided
such modification will not have a material adverse effect on the interests of
the Initial Hedge Counterparty or the Holders of any Class or Classes of
Notes. For so long as any Rated Notes are Outstanding, no such supplemental
indenture shall be effective unless and until Rating Agency Confirmation has
been received.


 


The Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations which may be therein contained, but the Trustee shall not be
obligated to enter into any such supplemental indenture which affects the
Trustee’s


 


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


 


No
modification to the Indenture will be effective until the Collateral Manager
has received written notice of such amendment and, if such amendment affects
the rights, obligations or compensation of the Collateral Manager, the
Collateral Manager has consented in writing to the terms of the proposed
amendment. In addition, the consent of any predecessor Collateral Manager will
be required to implement any such supplemental indenture that would change any
provision of the Indenture entitling such predecessor Collateral Manager to any
fee or other amount payable to it under the Indenture or to reduce or delay the
right of such predecessor to such payment.


 


Without
obtaining the requisite consents of the applicable parties pursuant to this Section 8.1,
the Trustee shall not enter into any such supplemental indenture if, as a result
of such supplemental indenture, the interests of the Initial Hedge
Counterparty, any Holder of Rated Notes or the Income Notes would be materially
and adversely affected thereby. In determining whether or not the interests of
any Holder of Rated Notes or Income Notes will be materially and adversely
affected, the Trustee shall be entitled to rely upon an Opinion of Counsel or a
certificate of the Issuer or the Collateral Manager as to whether the interests
of any Holder of Rated Notes or of Income Notes would be materially and
adversely affected by any such supplemental indenture (after giving notice of
such change to the Income Note Paying Agent). The Collateral Manager will not
be bound by any supplemental indenture that affects the obligations of the
Collateral Manager unless the Collateral Manager has consented thereto in
writing (which consent will not be unreasonably withheld). The Issuer will not
consent to any supplemental indenture that would have a material adverse effect
on the Initial Hedge Counterparty without the consent of the Initial Hedge
Counterparty.


 


At
the cost of the Issuer, the Trustee shall provide to the Rated Noteholders, the
Collateral Manager, the Income Note Paying Agent, the Initial Hedge
Counterparty and each Rating Agency a copy of any proposed supplemental
indenture at least ten days prior to the execution thereof by the Trustee and,
for so long as any Rated Notes are Outstanding, request a Rating Agency
Confirmation from each Rating Agency with respect to such supplemental
indenture. As soon as practicable after the execution by the Trustee and the
Issuer of any such supplemental indenture, the Trustee shall provide to the
Rated Noteholders, the Collateral Manager, the Income Note Paying Agent, the
Initial Hedge Counterparty and each Rating Agency a copy of the executed
supplemental indenture. For so long as any Rated Notes are Outstanding and
rated by either of the Rating Agencies, no supplemental indenture shall be
effective unless and until a Rating Agency Confirmation from each Rating Agency
has been received.


 


8.2.                         SUPPLEMENTAL INDENTURES WITH CONSENT OF RATED NOTEHOLDERS


 


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


 


With
the written consent of the Holders of not less than 75% of the then Aggregate
Outstanding Amount of each adversely affected Class of Rated Notes and the
written consent of 75% of the Holders of the aggregate principal amount of the
Outstanding Income Notes if materially and adversely affected


 


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thereby (which consent shall be evidenced by an Officer’s certificate
of the Issuer certifying that such consent has been obtained), Rating Agency
Confirmation and the written consent of the Initial Hedge Counterparty (which
shall be required only if the right of the Initial Hedge Counterparty to
payments in accordance with the Priority of Payments is adversely affected),
the Trustee and Issuer may, subject to Section 8.3, enter into one or more
indentures supplemental hereto in order to:


 


(a)                                  change
the applicable Stated Maturity Date of the Rated Notes or scheduled redemption
of the principal of or the due date of any installment of interest on the Rated
Notes, reduce the principal amount thereof or the rate of interest thereon, or
the Redemption Price with respect thereto, or change the earliest date on which
Rated Notes may be redeemed, change the provisions of the Indenture relating to
the application of proceeds of any Collateral to the payment of principal of or
interest on the Rated Notes or change any place where, or the coin or currency
in which, Rated Notes or the principal thereof or interest thereon is payable,
or impair the right to institute suit for the enforcement of any such payment on
or after the Stated Maturity Date thereof (or, in the case of redemption, on or
after the Redemption Date);


 


(b)                                 reduce
the percentage, in principal amount, of Holders of Rated Notes of each Class,
or the percentage of Income Noteholders, whose consent is required for the
authorization of any supplemental indenture or for any waiver of compliance
with certain provisions of the Indenture or certain defaults thereunder or
their consequences;


 


(c)                                  impair
or adversely affect the Collateral other than as permitted by the Indenture;


 


(d)                                 permit
the creation of any security interest ranking prior to or on a parity with the
security interest of the Indenture with respect to any part of the Collateral
or terminate such security interest on any property at any time subject thereto
(other than in accordance with the Indenture) or deprive the Holder of any
Rated Note or the Initial Hedge Counterparty of the security afforded by the
security interest of the Indenture;


 


(e)                                  reduce
the percentage of the aggregate principal amount of Holders of Rated Notes of
each Class whose consent is required to request the Trustee to preserve
the Collateral or rescind the Trustee’s election to preserve the Collateral
pursuant to Section 5.5 or to sell or liquidate the Collateral pursuant to
Section 5.4 or 5.5;


 


(f)                                    modify
any of the provisions of this Section 8.2, except to increase the
percentage of the aggregate principal amount of Outstanding Rated Notes of each
Class whose Holders’ consent is required for any such action or to provide
that other provisions of the Indenture cannot be modified or waived without the
written consent of the Holders of 75% of the then Aggregate Outstanding Amount
of each affected Class of Rated Notes Outstanding or the Initial Hedge
Counterparty;


 


(g)                                 modify
the definition of the term “Outstanding” or Section 11.1;


 


(h)                                 modify
any of the provisions of the Indenture in such a manner as to affect the
calculation of the amount of any payment of interest or principal of any Rated
Note on any Payment Date or to affect the right of the Holders of Rated Notes
or the Initial Hedge Counterparty to the benefit of any provisions for the
redemption of such Rated Notes contained therein;


 


(i)                                     modify
provisions related to the bankruptcy or insolvency of the Issuer; or 


 


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(j)                                modify provisions stating that the
obligations of the Issuer are limited recourse obligations of the Issuer
payable solely from the Collateral in accordance with the terms of the
Indenture (Section 8.2(a) through (j) collectively, the Reserved
Matters).


 


The
Trustee is hereby authorized to join in the execution of any such supplemental
indenture and to make any further appropriate agreements and stipulations which
may be therein contained, but the Trustee shall not be obligated to enter into
any such supplemental indenture which affects the Trustee’s own rights, duties,
liabilities or indemnities under this Indenture or otherwise, except to the
extent required by law.


 


Not
later than 15 Business Days prior to the execution of any proposed supplemental
indenture pursuant to this Section 8.2, the Trustee, at the expense of the
Issuer, shall mail to the Rated Noteholders, Income Note Paying Agent, the
Initial Hedge Counterparty, the Collateral Manager and each Rating Agency a
copy of such proposed supplemental indenture (or a description of the substance
thereof) and shall request Rating Agency Confirmation with respect to such
supplemental indenture. If any Class of Rated Notes is then rated by any
Rating Agency, the Trustee shall not enter into any such supplemental indenture
if, as a result of such supplemental indenture, Rating Agency Confirmation
would not be received with respect to such supplemental indenture, unless each
Holder of Rated Notes of each Class whose rating will be reduced or
withdrawn has, after notice that the proposed supplemental indenture would
result in such reduction or withdrawal of the rating of the Class of Rated
Notes held by such Holder, consented to such supplemental indenture. Without
having obtained the consent of the applicable parties pursuant to this Section 8.2,
the Trustee shall not enter into any such supplemental indenture if, as a
result of such supplemental indenture, the interests of the Initial Hedge
Counterparty, any Holder of Rated Notes or of the Income Noteholders would be
materially and adversely affected thereby. Unless notified by (i) the
Holders of a Majority of the then Aggregate Outstanding Amount of any Class of
Rated Notes that such Class will be materially and adversely affected or (ii) the
Holders of a Majority of aggregate principal amount of the Income Notes that
the Income Noteholders will be materially and adversely affected, the Trustee
shall be entitled to rely upon an Opinion of Counsel or certificate of the
Issuer or the Collateral Manager as to whether the interests of any Holder of
Rated Notes or of the Income Noteholders would be materially and adversely
affected by any such supplemental indenture (after giving notice of such change
to the Income Note Paying Agent).


 


It
shall not be necessary for any Act of Rated Noteholders or any consent of
Income Noteholders under this Section 8.2 to approve the particular form
of any proposed supplemental indenture, but it shall be sufficient if such Act
or consent shall approve the substance thereof.


 


Promptly
after the execution by the Issuer and the Trustee of any supplemental indenture
pursuant to this Section 8.2, the Trustee, at the expense of the Issuer,
shall mail or make available to the Rated Noteholders, the Income Note Paying
Agent (for forwarding to the Income Noteholders), the Initial Hedge
Counterparty, the Collateral Manager and each Rating Agency a copy thereof. Any
failure of the Trustee to publish or mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any such supplemental
indenture. In addition, the Issuer shall cause to be delivered a copy of the
executed supplemental indenture to the Repository for posting on the Repository
in the manner described in Section 14.3.


 


8.3.                              EXECUTION OF SUPPLEMENTAL
INDENTURES


 


In
executing or accepting the additional trusts created by any supplemental
indenture permitted by this Section 8 or the modifications thereby of the
trusts created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Sections 6.1 and 6.3) shall be fully protected in relying in good
faith upon an Opinion of Counsel (which may rely on an Officer’s certificate of
the Issuer or Collateral


 


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Manager),
stating that the execution of such supplemental indenture is authorized, or
permitted by this Indenture and that all conditions precedent thereto have been
complied with. Any such Opinion of Counsel may be supported as to factual
(including financial and capital markets) matters by such relevant certificates
and other documents as may be necessary or advisable in the judgment of counsel
delivering such Opinion of Counsel. The Trustee may, but shall not be obligated
to, enter into any such supplemental indenture which affects the Trustee’s own
rights, duties or indemnities under this Indenture or otherwise. Such
supplemental indenture will not be binding on the Collateral Manager to the
extent that it reduces the rights or increases the obligations of the
Collateral Manager, unless such supplemental indenture is consented to in
writing by the Collateral Manager.


 


8.4.                                EFFECT OF SUPPLEMENTAL
INDENTURES


 


Upon
the execution of any supplemental indenture under this Section 8, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Rated Notes theretofore and thereafter authenticated and delivered
hereunder shall be bound thereby.


 


8.5.
                           REFERENCE IN RATED NOTES TO
SUPPLEMENTAL INDENTURES


 


Rated
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Section 8 may, and if required by the Trustee
shall, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Issuer shall so determine,
new Rated Notes, so modified as to conform in the opinion of the Trustee and
the Issuer to any such supplemental indenture, may be prepared and executed by
the Issuer and authenticated and delivered by the Trustee in exchange for
Outstanding Rated Notes.


 


ARTICLE IX


 


REDEMPTION OF RATED NOTES


 


9.1.                              REDEMPTION OF RATED NOTES


 


The
Rated Notes will be subject to redemption in whole but not in part at their
respective Redemption Prices, in each case, in accordance with the procedures,
and subject to the satisfaction of the conditions, in Section 9.2 below,
in the following circumstances:


 


(a)                                  on or after the Payment Date occurring in June 2011
and continuing until the Stated Maturity Date (the Call  Period),  at the direction of the Holders of not less than 662/3% of the aggregate principal amount of the Outstanding Income Notes (an
Optional
Redemption);


 


(b)                                 on any Payment Date following the occurrence
and during the continuation of a Tax Event, (i) at the direction of the
Holders of not less than 662/3% of the
aggregate principal amount of the Outstanding Income Notes or (ii) subject
to the satisfaction of the Income Note Redemption Approval Condition, at the
direction of the Holders of a Majority of the then Aggregate Outstanding Amount
of the Controlling Class (such a redemption, a  Tax Redemption);  and


 


(c)                                  automatically and without any direction by
any Person, (i) if the Notes have not been redeemed in full on or after
the Payment Date occurring in June 2018, and (ii) if any of the
conditions set forth in Sections 9.2(a) through (d) below have not
been met or if the


 


125

















 


highest
bidder fails to pay the purchase price within six Business Days following such
Payment Date, the Payment Date thereafter, unless the Notes are redeemed in
full prior to the next Auction Date (such a redemption, an Auction Call Redemption).


 


9.2.                               REDEMPTION PROCEDURES; AUCTION


 


In
connection with any Redemption, the Trustee and the Collateral Manager will, in
accordance with the procedures set forth in Schedule E (the Auction Procedures)  and at the expense of the Issuer, conduct an
auction (an Auction)  of the Collateral Debt Securities included in
the Collateral on a date (each such date, an Auction Date)  occurring no later than ten Business Days prior to any scheduled
Redemption Date. Any of the Placement Agents, the Collateral Manager, the
Income Noteholders, the Trustee or their respective Affiliates may, but will
not be required to, bid at the Auction.


 


(a)                                  Any Redemption will be subject to the
satisfaction of each of the following conditions:


 


(1)                             the related Auction has been conducted in
accordance with the Auction Procedures;


 


(2)                             the Trustee has received bids for the
Collateral Debt Securities (or for each of the related Subpools) from at least
two Qualified Bidders (including the winning Qualified Bidder) identified on a
list of qualified bidders provided by the Collateral Manager to the Trustee;


 


(3)                             the Collateral Manager certifies that the
Highest Auction Price would result in the Sale Proceeds from the Collateral
Debt Securities (or the related Subpools) for a purchase price (paid in cash) plus the Balance of all Eligible Investments and cash held
by the Issuer plus any termination payments
payable by a Hedge Counterparty to the Issuer (in excess of any amounts payable
by the Issuer to a Hedge Counterparty) resulting from the termination of the
Hedge Agreement pursuant to the Redemption being at least equal to the sum of (i) the
aggregate Redemption Prices of the Notes plus (ii) any
accrued but unpaid fees and expenses of the Issuer pursuant to Section 11.1(b)(1),
(15) and (16) (including any termination payments payable by the Issuer
resulting from the termination of the Hedge Agreement pursuant to the
Redemption) plus (iii) (a) in
connection with a Tax Redemption at the direction of the Controlling Class and
(b) an Auction Call Redemption, any additional amounts necessary to
satisfy the Income Note Redemption Approval Condition; and


 


(4)                             the bidder(s) who offered the Highest
Auction Price for the Collateral Debt Securities (or the related Subpools)
enter(s) into a written agreement with the Issuer (which the Issuer will execute
if the conditions set forth above and in the Indenture are satisfied, which
execution will constitute certification by the Issuer that such conditions have
been satisfied) that obligates the highest bidder(s) (or the highest
bidder for each Subpool) to purchase all of the Collateral Debt Securities (or
the relevant Subpool) and provides for payment in full (in Cash) of the
purchase price to the Trustee on or prior to the sixth Business Day following
the relevant Auction Date.


 


(b)                                 In addition, any Optional Redemption requires
the occurrence of the following:


 


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(1)           at least four Business Days before the scheduled Redemption Date, the
Collateral Manager has furnished to the Trustee evidence, in form satisfactory
to the Trustee, that the Collateral Manager on behalf of the Issuer has entered
into a binding agreement or agreements with an institution or institutions (or
guarantor or guarantors of the obligations): (A) with regard to which
Rating Agency Confirmation has been received; or (B) whose long-term
unsecured debt obligations (other than such obligations whose rating is based
on the credit of a person other than such institution) have a credit rating
from Moody’s, if rated by Moody’s, of “P-1,” Fitch of “Fl” and of at least
“A-1” from S&P; and in each case, to sell, not later than the Business Day
immediately preceding the scheduled Redemption Date, in immediately available
funds, all or part of the Collateral Debt Securities at an aggregate purchase
price at least equal to an amount sufficient together with the balance of all
Eligible Investments maturing on or prior to the scheduled Redemption Date and
any termination payments received by the Issuer under any Hedge Agreements on
or prior to the scheduled redemption date, to pay all administrative and other
fees and expenses, the Collateral Management Fee and any other amount payable
under Section 11.1(b)(1), (15) and (16), to pay any amounts payable under
each Hedge Agreement, if any, and to redeem all of the Notes on the scheduled
redemption date at the applicable Redemption Price; or


 


(2)           prior to selling any Collateral Debt Securities or any other
collateral, the Collateral Manager certifies that the expected proceeds from
such sale will, in the aggregate, equal or exceed, in each case, the sum of (a) the
Redemption Prices of the Notes plus (b) all
expenses of such redemption and all other administrative fees and expenses
payable on the related Redemption Date.


 


Provided that all of the conditions set forth in Section 9.2(a) through
(d) have been met, the Trustee will sell and transfer the Collateral Debt
Securities (or each related Subpool), without representation, warranty or
recourse, to the bidder(s) who offered the Highest Auction Price for the
Collateral Debt Securities (or the related Subpools) in accordance with and
upon completion of the Auction Procedures. If any of the conditions set forth
in Section 9.2(a) through (d) are not met, (i) the
Redemption will not occur on the Payment Date following the relevant Auction
Date, (ii) the Trustee will give notice of the withdrawal of the
Redemption, (iii) subject to clause (iv) below, the Trustee will
decline to consummate such sale and may not solicit any further bids or
otherwise negotiate any further sale of Collateral Debt Securities in relation
to such Auction and (iv) unless the Rated Notes are redeemed in full prior
to the next succeeding Auction Date, the Trustee will conduct another Auction
on the next succeeding Auction Date.


 


The
Trustee will deposit the purchase price for the Collateral Debt Securities in
the Collection Account, and the Rated Notes and, to the extent funds are
available therefor, the Income Notes, will be redeemed on the Payment Date
immediately following the relevant Auction Date in the order of priorities set
forth in Section 11.1. Any Redemption will only be effected on a Payment Date.
Installments of principal and interest due on or prior to a Redemption Date
shall continue to be payable to the Holders of such Rated Notes as of the
relevant Record Dates according to their terms.


 


9.3.          RECORD DATE; NOTICE TO TRUSTEE OF REDEMPTION


 


(a)           The Issuer shall set the Redemption Date and the applicable Record Date
and give notice thereof to the Trustee pursuant to Section 9.3(b) below
and shall issue an Issuer Request


 


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to
the Trustee for the provision of the information necessary for the Issuer to
compile the Redemption Date Statement in accordance with Section 10.12(b).


 


(b)           In the event of any Redemption, the Issuer shall, at least 45 days (but
not more than 90 days) prior to the Redemption Date, notify the Trustee and the
Initial Hedge Counterparty of such Redemption Date, the applicable Record Date,
the principal amount of each Class of Notes to be redeemed on such
Redemption Date and the Redemption Price of such Notes.


 


9.4.          NOTICE OF REDEMPTION


 


Notice
of Redemption will be given by first-class mail, postage prepaid, mailed not
less than eight Business Days prior to the applicable Redemption Date, to the
Initial Hedge Counterparty, each Rating Agency and each Holder of Rated Notes at
such Holder’s address in the Note Register maintained by the Note Registrar in
accordance with the provisions of this Indenture and to the Collateral Manager.
Rated Notes called for Redemption must be surrendered at the office of any Note
Paying Agent appointed pursuant to this Indenture in order to receive the
Redemption Price. The Issuer will also deliver notice of Redemption to the
Irish Paying Agent if and so long as any Class of Rated Notes to be
redeemed is listed on the Irish Stock Exchange.


 


All
notices of redemption shall state:


 


(a)           the
applicable Redemption Date;


 


(b)           the applicable Record Date;


 


(c)           the Redemption Price;


 


(d)           that
all the Notes of the relevant Class are being redeemed in full and that
interest on the applicable principal amount of Notes shall cease to accrue on
the date specified in the notice; and


 


(e)           the
place or places where such Rated Notes are to be surrendered for payment of the
Redemption Price, which shall be the office or agency of the Note Paying Agent
to be maintained as provided in Section 7.2.


 


Notice
of redemption shall be given by the Issuer or, at the Issuers’ request, by the
Trustee in the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note selected for
redemption shall not impair or affect the validity of the redemption of any
other Notes.


 


9.5.          NOTICE OF WITHDRAWAL


 


With
regard to an Optional Redemption or a Tax Redemption, any notice of redemption
may be withdrawn by the Issuer up to the fourth Business Day prior to the
Redemption Date by written notice to the Trustee and the Collateral Manager
only if the Collateral Manager is unable to deliver such sale agreement or
agreements or certifications, as the case may be, in form satisfactory to the
Trustee. With regard to any Redemption, notice of any withdrawal pursuant to Section 9.2
shall be given by the Trustee to each Holder of Rated Notes at such Holder’s
address in the Note Register maintained by the Note Registrar by overnight
courier guaranteeing next day delivery (or second day delivery outside the
United States) sent not later than the third Business Day prior to such
Redemption Date. In addition, the Trustee


 


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will,
if any Class of Rated Notes to have been redeemed is listed on the Irish
Stock Exchange, deliver a notice of such withdrawal to the Irish Stock Exchange
not less than three Business Days prior to such Redemption Date.


 


9.6.
         RATED NOTES PAYABLE ON REDEMPTION
DATE


 


Notice
of redemption having been given as aforesaid, the Notes so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified, and from and after the Redemption Date (unless the Issuer
shall default in the payment of the Redemption Price) such Rated Notes shall
cease to bear interest. Upon final payment on a Note to be redeemed, the Holder
shall present and surrender such Note at the place specified in the notice of
redemption on or prior to such Redemption Date; provided
that if there is delivered to the Issuer (i) such security or indemnity as
may be required by it to save it harmless and (ii) an undertaking
thereafter to surrender such Note, then, in the absence of notice to the Issuer
that the applicable Note has been acquired by a bona fide purchaser, such fmal
payment shall be made without presentation or surrender. Installments of
interest on Rated Notes of a Class so to be redeemed whose Stated Maturity
Date is on or prior to the Redemption Date shall be payable to the Holders of
such Rated Notes, or one or more predecessor Rated Notes, registered as such at
the close of business on the relevant Record Date according to the terms and
provisions of Section 2.6(e).


 


If
any Rated Note called for redemption shall not be paid upon surrender thereof
for redemption, the principal thereof shall, until paid, bear interest from the
Redemption Date at the Applicable Periodic Interest Rate for each successive
Interest Period the Rated Note remains Outstanding.


 


9.7.
         SPECIAL AMORTIZATION


 


If
the Collateral Manager notifies the Trustee in writing that it has determined,
in its sole discretion, that investments in additional Collateral Debt
Securities would either be impractical or not beneficial, the amount of such
Collateral Principal Collections available pursuant to Section 11.1(b)(12)(a),
as determined by the Collateral Manager (the Special Amortization Amount),  shall be applied to the payment of principal on the Notes on the next
succeeding Payment Date (a Special Amortization)  in accordance with Section 11.1(b)(12).


 


In
order for amounts to be applied for a Special Amortization on any Payment Date,
the Collateral Manager is required to deliver, to each of the Trustee and each
Rating Agency, advance written notice (which may be included in the related
Note Report) (each, a Special Amortization Notice)  specifying the identity and principal amount of each Class of
Rated Notes to be paid pursuant to such Special Amortization and that the
Collateral Manager has been unable to identify for purchase by the Issuer
Substitute Collateral Debt Securities that comply with the Reinvestment
Criteria and the other applicable requirements of the Indenture.


 


On
each Payment Date on which a Special Amortization occurs, each related Hedge Agreement,
to the extent provided for therein, will be terminated in part in accordance
with the terms and conditions thereof, including compliance with any applicable
requirement that the Issuer receive Rating Agency Confirmation from S&P,
and any amounts due and payable pursuant to such Hedge Agreement in connection
with such termination thereof will be paid on such Payment Date in accordance
with the terms thereof subject to the Indenture.


 


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ARTICLE X


 


ACCOUNTS, ACCOUNTINGS AND RELEASES


 


10.1.        COLLECTION OF FUNDS


 


(a)           Except as otherwise expressly provided herein, the Trustee may demand
payment or delivery of, and shall receive and collect, directly and without
intervention or assistance of any fiscal agent or other intermediary, all funds
and other property payable to or receivable by the Trustee pursuant to this
Indenture, including all payments due on the Pledged Securities, in accordance
with the terms and conditions of such Pledged Securities. The Trustee shall
segregate and hold all such funds and property received by it in trust for the
Secured Parties and shall apply such funds as provided in this Indenture.


 


(b)           Each of the parties hereto hereby agrees to cause the Custodian or any
other Securities Intermediary that holds any funds or other property for the
Issuer in an Account to agree with the parties hereto that (1) each Account is a Securities Account in respect of which the Trustee is
the Entitlement Holder, (2) each Account is held by a financial
institution that has a combined capital and surplus of at least
U.S.$250,000,000 and being subject to supervision or examination by federal or
state banking authority, (3) the Cash, Securities and other property
credited to any Account is to be treated as a Financial Asset under Article 8
of the UCC and (4) the securities intermediary’s jurisdiction  (within the meaning of Section 8-110 of
the UCC) for that purpose will be the State of New York. In no event may any
Financial Asset held in any Account be registered in the name of, payable to
the order of, or specially Indorsed to, the Issuer unless such Financial Asset
has also been Indorsed in blank or to the Custodian or other Securities
Intermediary that holds such Financial Asset in such Account. Each Account
shall be held and maintained at an office located in Chicago, Illinois.


 


10.2.        GENERAL PROVISIONS APPLICABLE TO ACCOUNTS


 


The
Payment Account, Collateral Account, Uninvested Proceeds Account, Collection
Account (including each Collateral Sub-Account therein), Expense Reserve
Account, each Hedge Counterparty Collateral Account, Ramp-Up Interest Reserve
Account and Non-Monthly Pay Asset Interest Reserve Account shall remain at all
times with a fmancial institution having a long-term debt rating of at least
“BBB+” by S&P.


 


(a)           The Trustee agrees to give the Issuer prompt notice (with a copy to the
Hedge Counterparty, the Collateral Manager, each Rating Agency and the Income
Note Paying Agent) if any Account or any funds on deposit therein, or otherwise
standing to the credit of any Account, shall become subject to any writ, order,
judgment, warrant of attachment, execution or similar process.


 


(b)           The Collateral Manager shall direct the Trustee to invest and reinvest
any funds on deposit in any of the Accounts (other than the Payment Account).
In the event that the Collateral Manager has not delivered investment
instructions to the Trustee or after the occurrence of an Event of Default, the
Trustee shall invest and reinvest any funds on deposit in any Account (other
than the Payment Account) as fully as practicable in investments described in
clause (iii) of the definition of Eligible Investments maturing not later
than the earlier of (i) 30 days after the date of such investment or (ii) the
Business Day immediately preceding the next Payment Date. With respect to each


 


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Account,
all interest and other income from Eligible Investments purchased with funds on
deposit in such Account shall be deposited in such Account, any gain realized
from such investments shall be credited to such Account, and any loss resulting
from such investments shall be charged to such Account. Any gain or loss with
respect to an Eligible Investment shall be allocated in such a manner as to
increase or decrease, respectively, Collateral Principal Collections and/or
Collateral Interest Collections in the proportion that the amount of Collateral
Principal Collections and/or Collateral Interest Collections used to acquire
such Eligible Investment bears to the purchase price thereof. The Trustee shall
not in any way be held liable by reason of any insufficiency of any such
Account resulting from any loss relating to any such investment. Nothing herein
shall be deemed to relieve the Bank or its Affiliates from any duties or
liabilities with respect to investments in obligations of the Bank or any
Affiliate thereof.


 


(c)           All
funds deposited from time to time in the Collection Account, the Uninvested Proceeds
Account, the Payment Account, the Expense Reserve Account, the Ramp-Up Interest
Reserve Account or the Non-Monthly Pay Asset Interest Reserve Account pursuant
to this Indenture shall be held by the Trustee as part of the Collateral and
shall be applied to the purposes herein provided.


 


10.3.        COLLATERAL ACCOUNT


 


The
Trustee shall, prior to the Closing Date, cause the Custodian to establish a
Securities Account which shall be designated as the “Collateral Account”, which
shall be in the name of the Trustee as Entitlement Holder in trust for the
benefit of the Secured Parties and into which the Trustee shall from time to
time deposit Collateral. All Collateral from time to time deposited in, or
otherwise standing to the credit of, the Collateral Account pursuant to this
Indenture shall be held by the Trustee as part of the Collateral and shall be
applied to the purposes herein provided. The Issuer shall not have any legal,
equitable or beneficial interest in the Collateral Account other than in
accordance with the Priority of Payments.


 


10.4.        UNINVESTED PROCEEDS ACCOUNT


 


The
Trustee shall, prior to the Closing Date, cause to be established a Securities
Account which shall be designated as the “Uninvested Proceeds Account”, which
shall be held in the name of the Trustee as Entitlement Holder in trust for the
benefit of the Secured Parties, into which the Trustee shall deposit all
Uninvested Proceeds (other than the organizational and structuring fees and
expenses of the Issuer (including, without limitation, the legal fees and
expenses of counsel to the Issuer, the Placement Agents and the Collateral
Manager), the expenses of offering the Rated Notes and the Income Notes and
amounts deposited in the Expense Reserve Account on such date). On or prior to
the Effective Date, the Collateral Manager on behalf of the Issuer may direct
the Trustee to, and upon such direction the Trustee shall, apply funds in the
Uninvested Proceeds Account to purchase additional Collateral Debt Securities
and, pending such investment in additional Collateral Debt Securities, such
funds will be invested in Eligible Investments, as directed by the Collateral
Manager, with stated maturities no later than the Business Day immediately
preceding the next Payment Date. The Trustee shall transfer any Uninvested
Proceeds remaining on deposit in the Uninvested Proceeds Account on the
Effective Date to the Collection Account to be treated as Collateral Principal
Collections on the first Payment Date and distributed in accordance with the
Priority of Payments.


 


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10.5.        COLLECTION ACCOUNT


 


(a)           The Trustee shall,
prior to the Closing Date, cause to be established a Securities Account which
shall be designated as the “Collection Account” (and which may be a sub-account
of the Collateral Account), which shall be held in the name of the Trustee as
Entitlement Holder in trust for the benefit of the Secured Parties. The Trustee
shall cause to be established two sub-accounts of the Collection Account. The
Trustee shall deposit Collateral Principal Collections into one sub-account
(the Collateral
Principal Collections Sub-Account)  and
Collateral Interest Collections into the other sub-account. At the direction of
the Issuer (or the Collateral Manager on behalf of the Issuer), the Trustee
shall invest all funds on deposit in the Collection Account (including the
Collateral Principal Collection Sub-Account) in Eligible Investments or
Substitute Collateral Debt Securities in accordance with the requirements and
limitations contained in Section 12.1(c).


 


(b)           The Trustee, within one
Business Day after receipt of any Distribution or other proceeds that are not
Cash shall so notify the Issuer and the Issuer shall sell such Distribution or
other proceeds for Cash in accordance with Section 12.1.


 


(c)           The Trustee shall
transfer to the Payment Account for application pursuant to Section 11.1(a) and
in accordance with the calculations and the instructions contained in the Note
Valuation Report prepared by the Issuer pursuant to Section 10.12(a), on
or prior to the Business Day prior to each Payment Date, funds on deposit in
the Collection Account (including reinvestment income) other than Collections
received after the end of the Due Period with respect to such Payment Date.


 


(d)           The Trustee shall
withdraw and apply amounts on deposit in the Collection Account in accordance
with any Redemption Date Statement delivered to the Trustee in connection with
the redemption of Rated Notes pursuant to Section 9.1.


 


10.6.        EXPENSE RESERVE ACCOUNT


 


The Trustee shall, prior to the Closing Date, cause to be established a
Securities Account which shall be designated as the “Expense Reserve Account”,
which shall be held in the name of the Trustee as Entitlement Holder in trust
for the benefit of the Secured Parties. Any and all funds at any time on
deposit in, or otherwise standing to the credit of, the Expense Reserve Account
shall be held in trust by the Trustee for the benefit of the Secured Parties.
On the Closing Date, the Trustee shall deposit into the Expense Reserve Account
an amount equal to U.S.$75,000 together with an amount sufficient to pay any
outstanding fees and expenses of the Issuer in relation to the offering of the
Rated Notes and the Income Notes which are not paid on the Closing Date. At the
direction of the Issuer (or the Collateral Manager on behalf of the Issuer),
the Trustee shall invest all funds on deposit in the Expense Reserve Account in
Eligible Investments. Any amounts held in the Expense Reserve Account in excess
of U.S.$25,000 on the day which is subsequent to the Effective Date (or, if
such day is not a Business Day, the next following Business Day) shall be
transferred by the Trustee into the Uninvested Proceeds Account. Thereafter,
the Trustee shall transfer to the Expense Reserve Account from the Payment
Account amounts required to be deposited therein pursuant to Section 11.1(a) and
in accordance with the calculations and the instruction contained in the Note
Valuation Report prepared by the Issuer pursuant to Section 10.12(a).
Except as provided in Section 11.1, the only permitted withdrawal from or
application of funds on deposit in, or otherwise standing to the credit of, the
Expense Reserve Account shall be to pay (on any day other than a Payment Date)
accrued and unpaid Administrative Expenses of the Issuer; provided
that the Trustee shall deposit all amounts remaining on deposit in the Expense
Reserve Account at the time when substantially


 


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all
of the Issuer’s assets have been sold or otherwise disposed of into the
Collections Account for application as Collateral Interest Collections on the
immediately succeeding Payment Date.


 


10.7.        NON-MONTHLY PAY ASSET INTEREST RESERVE ACCOUNT


 


The
Trustee shall, prior to the Closing Date, cause to be established a Securities
Account which shall be designated as the “Non-Monthly Pay Asset Interest
Reserve Account”, which shall be held in the name of the Trustee as Entitlement
Holder in trust for the benefit of the Secured Parties. Any and all funds at any
time on deposit in, or otherwise standing to the credit of, the Non-Monthly Pay
Asset Interest Reserve Account shall be held in trust by the Trustee for the
benefit of the Secured Parties. At the direction of the Issuer (or the
Collateral Manager on behalf of the Issuer), the Trustee shall invest all funds
on deposit in the Non-Monthly Pay Asset Interest Reserve Account in Eligible
Investments. On each Payment Date, in accordance with the Priority of Payments,
the Trustee will deposit the Non-Monthly Pay Asset Interest Reserve Amount into
the Non-Monthly Pay Asset Interest Reserve Account. The only permitted
withdrawal from or application of funds on deposit in, or otherwise standing to
the credit of, the Non-Monthly Pay Asset Interest Reserve Account shall be to
deposit into the Payment Account, on the Business Day prior to each Payment
Date, the Balance of the Non-Monthly Pay Asset Interest Reserve Account with
such amount to be distributed as Collateral Interest Collections in accordance
with the Priority of Payments on the related Payment Date.


 


10.8.        RAMP-UP INTEREST RESERVE ACCOUNT


 


The
Trustee shall, prior to the Closing Date, cause to be established a Securities
Account which shall be designated as the “Ramp-Up Interest Reserve Account”,
which shall be held in the name of the Trustee as Entitlement Holder in trust
for the benefit of the Secured Parties. Any and all funds at any time on
deposit in, or otherwise standing to the credit of, the Ramp-Up Interest
Reserve Account shall be held in trust by the Trustee for the benefit of the
Secured Parties. At the direction of the Issuer (or the Collateral Manager on
behalf of the Issuer), the Trustee shall invest all funds on deposit in the
Ramp-Up Interest Reserve Account in Eligible Investments. On the Closing Date,
the Trustee will deposit the Ramp-Up Interest Reserve Amount into the Ramp-Up
Interest Reserve Account. Prior to the first Payment Date after the Effective
Date, the only permitted withdrawal from or application of funds on deposit in,
or otherwise standing to the credit of, the Ramp-Up Interest Reserve Account
shall be to deposit into the Payment Account, on the Business Day prior to each
Payment Date, an amount, if any, equal to the lesser of (a) the Balance of
the Ramp-Up Interest Reserve Account or (b) the Rated Notes Interest
Shortfall Amount, with such amount to be distributed as Collateral Interest
Collections in accordance with the Priority of Payments on the related Payment
Date. On the first Payment Date after the Effective Date, the Balance of the
Ramp-Up Interest Reserve Account shall be deposited into the Payment Account to
be distributed as Collateral Interest Collections in accordance with the
Priority of Payments on the related Payment Date.


 


10.9.      PAYMENT ACCOUNT


 


The
Trustee shall, prior to the Closing Date, establish a Securities Account which
shall be designated as the “Payment Account”, which shall be held in the name
of the Trustee as Entitlement Holder in trust for the benefit of the Secured
Parties. Any and all funds at any time on deposit in, or otherwise standing to
the credit of, the Payment Account shall be held in trust by the Trustee for
the benefit of the Secured Parties. Except as provided in Section 11.1,
the only permitted withdrawal from or application of funds on deposit in, or
otherwise standing to the credit of, the Payment Account shall be to pay the
interest on and the principal of the Rated Notes in accordance with their terms
and the provisions of this Indenture and, upon Issuer Order, to pay
Administrative Expenses and other amounts specified


 


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


 


10.10.      DERIVATIVE CONTRACT COUNTERPARTY
ACCOUNTS


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


10.11.      DERIVATIVE CONTRACT ISSUER ACCOUNT


 


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


 


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


 


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


 


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


 


10.12.                REPORTS BY TRUSTEE


 


The
Trustee shall supply, in a timely fashion to each Rating Agency (so long as any
Rated Notes are rated by such Rating Agency), the Initial Hedge Counterparty,
the Holders of Rated Notes of the Controlling Class, the Collateral Manager,
the Income Note Paying Agent, the Placement Agents and the Issuer any
information regularly maintained by the Trustee that each such Person may from
time to time request with respect to the Pledged Securities or the Accounts
reasonably needed to complete the Note Valuation Report or to provide any other
information reasonably available to the Trustee by reason of its acting as
Trustee hereunder and required to be provided by Section 10.12.


 


The
Trustee shall forward to the Collateral Manager, the Holders of Rated Notes of
the Controlling Class, or upon request therefor, any Holder of a Rated Note
shown on the Note Register, the Placement Agents, the Initial Hedge
Counterparty or the Income Note Paying Agent, copies of notices and other
writings received by it from the issuer of any Collateral Debt Security or from
any Clearing Agency with respect to any Collateral Debt Security advising the
holders of such security of any rights that the holders might have with respect
thereto (including notices of calls and redemptions of securities) as well as
all periodic financial reports received from such issuer and Clearing Agencies
with respect to such issuer; provided that
the Trustee shall not disclose any unpublished S&P Rating assigned by
S&P with respect to any Collateral Debt Security without the prior consent
of S&P.


 


So
long as any Class of Rated Notes is listed on the Irish Stock Exchange,
the Irish Paying Agent shall notify the Irish Stock Exchange not later than the
Business Day preceding each Payment Date of the amount of principal payments to
be made on the Rated Notes of each Class on such Payment Date, any
Class C Cumulative Periodic Interest Shortfall Amount, any Class D
Cumulative Periodic Interest Shortfall Amount, any Class E Cumulative
Periodic Interest Shortfall Amount and the Aggregate Outstanding Amount of the
Rated Notes of each Class and as a percentage of the original Aggregate
Outstanding Amount of the Rated Notes of such Class after giving effect to
the principal payments, if any, on such Payment Date.


 


As
promptly as possible following the delivery of each Note Valuation Report to
the Trustee pursuant to Section 10.12(a) or (b), as applicable, the
Issuer shall cause a copy of such report to be delivered the Repository for
posting on the Repository in the manner described in Section 14.3. In
connection therewith, the Issuer acknowledges and agrees that each Note Valuation
Report shall be posted to the Repository for use in the manner described in the
section headed “Terms of Use” on the Repository.


 


10.13.                ACCOUNTINGS


 


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


 


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Report shall contain the following information (which shall, in the
case of any Note Valuation Report delivered to S&P, be presented in a form
that complies with and includes the information required by S&P’s Preferred
Format) determined, unless otherwise specified below, as of the related
Calculation Date:


 


(1)                                the
calculation showing compliance with each of the Coverage Tests, accompanied by
a list setting forth the applicable maximum or minimum value, percentage or
ratio which must be maintained pursuant to this Agreement with respect to each
of the Coverage Tests and a list setting forth the results of the calculation of
each of the Coverage Tests with respect to the Collateral Debt Securities, the
calculation showing whether the S&P CDO Monitor Test is satisfied
(including the weighted average rating, the default measure, variability
measure and correlation measure, the scenario default rate and/or such other
information required to be computed with respect to the S&P CDO Monitor
Test), and the calculation showing the Fitch Weighted Average Rating Factor,
the Weighted Average Fixed Rate Coupon, the Weighted Average Spread, the
Weighted Average Life, the S&P Weighted Average Recovery Rate for each
Class of Notes, the Moody’s Recovery Rate Test and the Moody’s WARF Test;


 


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


 


(3)                                the
Applicable Periodic Interest Rate in respect of each Class of Notes and
the amount of Periodic Interest payable to the Holders of the Notes for such
Payment Date (in the aggregate and by Class);


 


(4)                                the
amount (if any) payable to each Hedge Counterparty pursuant to the related
Hedge Agreement;


 


(5)                                the
amount (if any) payable by each Hedge Counterparty pursuant to the related
Hedge Agreement:


 


(6)                                the
Aggregate Fees and Expenses payable on the next Payment Date on an itemized
basis;


 


(7)                                the
Aggregate Fees and Expenses paid during a period of 12 months ending on the
next Payment Date on an itemized basis;


 


(8)                                for
the Collection Account:


 


(i)                                   the
Balance on deposit in the Collection Account and the Collateral Principal
Collections Sub-Account at the end of the related Due Period;


 


(ii)                                the
nature and source of any Collections in the Collection Account and the
Collateral Principal Collections Sub-Account, including Collections received
since the date of the last Note Valuation Report;


 


(iii)                             the
amounts payable from the Collection Account in accordance with the priority set
forth in Section 11.1 on the next Payment Date; and


 


(iv)                            the
Balance remaining in the Collection Account immediately after all payments and
deposits to be made on such Payment Date; and


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(11)                          for the Expense Reserve Account:


 


(i)                                     the amount to be paid into the Expense
Reserve Account on the next Payment Date; and


 


(ii)                                  the Balance remaining in the Expense Reserve
Account immediately after all payments and deposits to be made on such Payment
Date;


 


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


 


(13)                          the Hedge Receipt Amount or the Hedge Payment
Amount for the related Payment Date, and for each Hedge Agreement, the
outstanding notional amount of such Hedge Agreement and the amounts, if any,
scheduled to be received or paid, as the case may be, by the Issuer pursuant to
such Hedge Agreement for the related Payment Date, separately stating the
portion payable in accordance with Section 11.1;


 


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


 


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


 


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


 


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


 


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payments,
the amount of principal payments received, the maturity date, the issuer, the
country in which the issuer is incorporated or organized, the S&P Industry
Classification Group, the Fitch Industry Classification Group, the S&P
Recovery Rate, the S&P Rating and the Fitch Rating (provided
that if any Fitch Rating for any Collateral Debt Security is an “estimated” or
“shadow” rating, such rating shall be identified as “estimated” or “shadow
rated”, shall be disclosed with an asterisk in the place of the applicable
estimated or shadow rating and shall include the date as of which such rating
was first provided by Fitch to the Issuer); and any S&P Rating which is
determined from an implied rating, a credit estimate, a confidential rating or
another non-public rating, shall not be distinguished and shall either
(i) be reported in a single column with the public ratings of S&P
(without distinguishing the source) or (ii) be reported in a separate
column labeled “Non-public and Implied S&P Rating”;


 


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


 


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


 


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


 


(21)                          the identity of each Collateral Debt Security that was upgraded or downgraded or
placed on watch for upgrade or downgrade by any Rating Agency since the date of
the last Note Valuation Report;


 


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


 


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


 


(24)                          the purchase price of each Pledged Security granted and the sale price of each
Pledged Security subject to a sale since the date of the last Note Valuation
Report; and whether such Pledged Security is a Collateral Debt Security, an
Eligible Investment or proceeds in the Collection Account;


 


(25)                          the amount of Purchased Accrued Interest;


 


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


 


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


 


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


 


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


 


Upon receipt of each Note Valuation Report, the Trustee and the
Collateral Manager shall compare the information contained therein to the
information contained in their respective records with respect to the
Collateral and shall, within two Business Days after receipt of such Note
Valuation Report, notify each of the Issuer, the Initial Hedge Counterparty,
the Collateral Manager, the Trustee, Fitch and S&P if the information
contained in the Note Valuation Report does not conform to the information
maintained by the Trustee or the Collateral Manager as applicable, with respect
to the Collateral, and detail any discrepancies. In the event that any
discrepancy exists, the Trustee and the Issuer, or the Collateral Manager shall
attempt to promptly resolve the discrepancy. If such discrepancy cannot be promptly
resolved, the Trustee shall within five Business Days after discovery of such
discrepancy cause the Independent Accountants of recognized international
reputation to review such Note Valuation Report and the Trustee’s and the
Collateral Manager’s records to determine the cause of such discrepancy. If
such review reveals an error in the Note Valuation Report or the records of the
Trustee or the Collateral Manager, as the case may be, such item shall be
revised accordingly and, as so revised, shall be utilized in making further
calculations.


 


Subject to the terms of this Agreement, the
Trustee shall be entitled to rely on the information supplied by the Collateral
Manager in relation to the preparation of the Note Valuation Report and shall
not be liable for the accuracy or completeness of such information or the lack
thereof.


 


In addition to the foregoing information,
each Note Valuation Report shall include a statement to the following effect:


 


“The Notes have not been and will not be
registered under the United States Securities Act of 1933, as amended (the Securities
Act),  or under any state securities laws,
and the Issuer has not been and will not be registered under the United States
Investment Company Act of 1940, as amended (the 1940 Act).  Each
Holder of the Notes, other than those Holders that are not “U.S. persons” (U.S. Person)  within the
meaning of Regulation S (Regulation S)  under the Securities Act and
have acquired their Notes outside the United States pursuant to Regulation S,
is required to be both (i) (A) with respect to any Rated Note, a
“qualified institutional buyer” as defined in Rule 144A under the
Securities Act (Qualified Institutional Buyer),  (B) solely
with respect to the Class E Notes, either (1) an “accredited
investor” as defined in paragraphs (1), (2), (3) or (7) of
Rule 501(A) under the Securities Act (each an Institutional
Accredited Investor)  or
(2) any of NorthStar OS VII, LLC, NS Advisors, LLC or any “affiliate”
thereof within the meaning of Rule 405 under the Securities Act that is an
“accredited investor” within the meaning of Rule 501(A) under the
Securities Act (each of the foregoing, a Permitted NS Purchaser)  or
(C) solely with respect to the Income Notes, a Permitted NS Purchaser and
a “qualified purchaser” (Qualified Purchaser)  within the
meaning of Section 3(c)(7) of the 1940 Act, purchasing for its own


 


140

















 


account or for the account of another Qualified Purchaser, that can
make all of the representations in the Indenture applicable to a holder that is
a U.S. Person. The beneficial interest in the Notes may be transferred only to
a transferee that meets both of the criteria in clauses (i) and
(ii) above and can make all of the representations in the Indenture applicable
to a Holder that is a U.S. Person, except that any such transfer in reliance on
Regulation S can be made only to a transferee that is not a U.S. Person. The
Issuer has the right to compel any Holder that does not meet the qualifications
and the transfer restrictions set forth in the Indenture to sell its interest
in the Notes, or may sell such interest on behalf of such owner, pursuant to
the Indenture.”


 


(b)                                 Redemption Date
Instructions. Not less than five Business Days after receiving an
Issuer Request requesting information regarding a redemption pursuant to
Section 9.1 of the Rated Notes of a Class as of a proposed Redemption
Date set forth in such Issuer Request, the Trustee shall provide the necessary
information (to the extent it is available to the Trustee) to the Issuer, and
the Issuer shall compute the following information and provide such information
in a statement (the Redemption Date Statement)  delivered to the
Trustee:


 


(1)                                 the
Aggregate Outstanding Amount of the Rated Notes of the Class or Classes to
be redeemed as of such Redemption Date;


 


(2)                                 the
amount of accrued interest due on such Rated Notes as of the last day of the
Interest Period immediately preceding such Redemption Date; and


 


(3)                                 the
amount in the Collection Account available for application to the redemption of
such Rated Notes.


 


(c)                                  If
the Trustee shall not have received any accounting provided for in this
Section 10.12 on the first Business Day after the date on which such
accounting is due to the Trustee, the Trustee shall use reasonable efforts to
cause such accounting to be made by the applicable Payment Date or Redemption
Date. To the extent the Trustee is required to provide any information or
reports pursuant to this Section 10.12 as a result of the failure of the
Issuer to provide such information or reports, the Trustee shall be entitled to
retain an Independent certified public accountant in connection therewith and
the reasonable costs incurred by the Trustee for such Independent certified
public accountant shall be reimbursed pursuant to Section 6.8.


 


The Trustee will make the Note Valuation Report available via its
internet website initially located at www.cdotrustee.net. All information made
available on the Trustee’s website will be restricted and the Trustee will only
provide access to such reports to those parties entitled thereto pursuant to
the Indenture. In connection with providing access to its website, the Trustee
may require registration and the acceptance of a disclaimer.


 


10.14.                RELEASE OF
SECURITIES


 


(a)                                  If
no Event of Default has occurred and is continuing and subject to
Section 12, the Issuer shall, in connection with any sale required
pursuant to Section 12.1, by Issuer Order executed by an Authorized
Officer of the Issuer and delivered to the Trustee at least two Business Days
prior to the settlement date for any sale of a security certifying that the
conditions set forth in Section 12.1 are satisfied, direct the Trustee to
release such security from the lien of this Indenture against receipt of payment
therefor.


 


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(b)                                 The Issuer shall, if notified that the issuer of the Pledged Security requires
delivery of such Pledged Security as a condition to redemption or payment in
full, by Issuer Order executed by an Authorized Officer of the Issuer and
delivered to the Trustee at least two Business Days prior to the date set for
redemption or payment in full of a Pledged Security, certifying that such
security is being redeemed or paid in full, direct the Trustee or, at the
Trustee’s instructions, the Custodian, to deliver such security, if in physical
form, duly endorsed, or, if such security is a Clearing Corporation Security,
to cause it to be presented, to the appropriate paying agent therefor on or
before the date set for redemption or payment, in each case against receipt of
the redemption price or payment in full thereof.


 


(c)                                  The Trustee shall deposit any proceeds
received by it from the disposition of a Pledged Security in the Collection
Account.


 


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


 


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


 


10.15.                REPORTS BY INDEPENDENT
ACCOUNTANTS


 


(a)                                  At the Closing Date the Issuer (or the
Collateral Manager on its behalf) shall appoint a firm of Independent certified
public accountants of recognized national reputation for purposes of preparing
and delivering the reports or certificates of such accountants required by this
Indenture. Upon any resignation by such firm, the Issuer shall (after
consultation with the Collateral Manager) propose a replacement firm meeting
the criteria set forth in the preceding sentence for approval by a Majority of
the Controlling Class. Upon approval by a Majority of the Controlling Class,
the Issuer shall promptly appoint such firm by Issuer Order delivered to the
Trustee, the Initial Hedge Counterparty, the Collateral Manager and each Rating
Agency. If the Issuer shall fail to appoint a successor to a firm of
Independent certified public accountants which has resigned within 30 days
after such resignation, the Issuer shall promptly notify the Trustee of such
failure in writing. The fees of such Independent certified public accountants
and its successor shall be payable by the Issuer as provided in Section 11.1.


 


(b)                                 On or before June 25 of each year
(commencing with June 25, 2007), the Issuer shall cause to be delivered to
the Trustee, the Income Note
Paying Agent and each Rating Agency an Accountants’ Report specifying the
procedures applied and their associated findings with respect to the Note
Valuation Reports and any Redemption Date Statements prepared in the preceding
year. At least 60 days prior to the Payment Date in June 2007 (and, if at
any time a successor firm of Independent certified public accountants is
appointed, prior to the Payment Date in May following the date of such
appointment), the Issuer shall deliver to the Trustee an Accountant’s Report
specifying in advance the procedures that such firm will apply in making the
aforementioned findings throughout the term of its service as accountants to
the Issuer. The Trustee shall promptly forward a copy of such Accountant’s
Report to the Initial Hedge Counterparty, the Rating Agencies, the Income Note
Paying Agent and each Holder of Class A Notes (or, if no Class A
Notes are Outstanding, each Holder of Class B Notes or, if no Class B
Notes are Outstanding, each Holder of Class C Notes or, if no Class C
Notes are Outstanding, each Holder of


 


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Class D Notes or, if no Class D Notes are Outstanding, each
Holder of Class E Notes), at the address shown on the Note Register. The Issuer shall not approve the institution of
such procedures if a Majority of the Controlling Class or the Collateral
Manager, by notice to the Issuer and the Trustee within 30 days after the date
of the related notice to the Trustee, object thereto.


 


(c)                                  Any statement delivered to the Trustee
pursuant to Section 10.14(b) above shall be made available by the
Trustee to any Holder of a Rated
Note shown on the Note Register upon written request therefor.


 


10.16.                REPORTS TO RATING AGENCIES


 


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


 


10.17.                TAX MATTERS


 


The
Issuer agrees to treat, and hereby notify the Trustee to treat, and, by
accepting a Rated Note, each Holder of the Rated Notes agrees to treat, the
Rated Notes, for U.S. federal, state and local income tax purposes, as
indebtedness of the Issuer, to report all income (or loss) in accordance with
such treatment and not to take any action inconsistent with such treatment
except as otherwise required by any taxing authority under applicable law. The
Issuer agrees not to elect to be treated as other than a corporation for U.S.
federal income tax purposes.


 


10.18.                TAX INFORMATION


 


The
Issuer shall provide on a timely basis to any holder of a beneficial interest
in Rule 144A Definitive Notes (or its designee), Rule 144A Global
Notes (or its designee) and Definitive Class E Notes (or its designee),
upon written request therefor certifying that it is such a holder, (i) all
information that a U.S. shareholder making a “qualified electing fund” election
(as defined in the Code) is required to obtain for U.S. federal income tax
purposes and (ii) a “PFIC Annual Information Statement” as described in
Treasury Regulation 1.1295-1 (or any successor Internal Revenue Service release
or Treasury


 


143

















 


Regulation), including all representations and statements required by
such statement, and will take any other steps necessary to facilitate such
election by a holder of a beneficial interest in any Rule 144A Definitive
Notes, Rule 144A Global Notes and Definitive Class E Notes. The
Issuer shall also provide, upon request of a Holder of, or a holder of a
beneficial interest in, any Rule 144A Definitive Notes, Rule 144A
Global Notes and Definitive Class E Notes, any information that such
Holder or holder of a beneficial interest reasonably requests to assist such
Holder or holder of a beneficial interest with regard to any filing
requirements the Holder or holder of a beneficial interest may have as a result
of the controlled foreign corporation rules under the Code. The cost and
expense of the preparation and delivery of the PFIC Annual Information
Statement shall be at the expense of the Issuer.


 


ARTICLE XI


 


APPLICATION OF MONIES


 


11.1.                      DISBURSEMENTS OF FUNDS FROM
PAYMENT ACCOUNT; PRIORITY OF PAYMENTS


 


(a)                                  Collateral Interest
Collections. On any Payment Date that is not a Redemption Date or a
Payment Date following the occurrence and continuation of an acceleration of
the Rated Notes in connection with an Event of Default, in accordance with a
Note Valuation Report prepared by the Collateral Administrator as of the last
day of the Due Period preceding such Payment Date, Collateral Interest
Collections, to the extent of Available Funds in the Collection Account, will
be applied by the Trustee in the following order of priority:


 


(1)                                 to
pay, in the following order:


 


(i)                                    taxes
and filing fees and registration fees (including, without limitation, annual
return fees) payable by the Issuer, if any; and then,


 


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


 


(iii)                              the
amount of any due and unpaid fees to the Administrator; and then,


 


(iv)                             the
amount of any due and unpaid Trustee Expenses; and then,


 


(v)                                the
amount of any due and unpaid fees and expenses of the Rating Agencies; and
then,


 


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


 


(vii)                          to
deposit to the Expense Reserve Account the amount needed to bring the amount on
deposit therein to U.S.$25,000 (unless the Collateral Manager directs that a
lesser amount be deposited to the Expense Reserve Account);


 


provided that the cumulative amount
paid under (iii) through (vii) above (excluding any Administrative
Expenses due or accrued with respect to the


 


144

















 


actions taken on or prior to the Closing Date and accounting fees that
the Trustee is required to pay (other than certain accountants’ fees related to
annual reviews) and fees the Trustee pays in connection with any Event of
Default and any default of the Collateral Debt Securities) may not exceed
U.S.$250,000 in the aggregate in any consecutive 12-month period;


 


(2)                                  to
pay the Senior Collateral Management Fee with respect to such Payment Date and
any Senior Collateral Management Fee with respect to a previous Payment Date
that was not paid on a previous Payment Date (excluding any interest payable on
such Senior Collateral Management Fee);


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


145

















 


Rating
Agency to confirm its respective ratings of the Notes assigned on the Closing
Date or until each Class of Notes is paid in full;


 


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


 


(12)                            if either of the Class C Coverage Tests
is not satisfied as of the preceding Calculation Date to pay principal
(including any Class C Cumulative Applicable Periodic Interest Shortfall
Amount) of the most senior Class of Notes then Outstanding until such Class C
Coverage Test is satisfied as of such Calculation Date or until such most
senior Class of Notes is paid in full, and then to pay principal of the
next most senior Class of Notes Outstanding until such Class C
Coverage Test is satisfied as of such Calculation Date or until such next most
senior Class of Notes is paid in full and so on, until such Class C
Coverage Test is satisfied or until the Class C Notes, are paid in full; provided that for purposes of determining if the
Class C Principal Coverage Test is satisfied after giving effect to any
payments under this Section 11.1(a)(12), the denominator of the
Class C Principal Coverage Ratio shall be determined after giving effect
to any payments of principal on the Notes pursuant to any of the clauses above
and pursuant to this Section 11.1(a)(12) on the related Payment Date; provided, further,  that  with respect to the Class C Notes,
payment of principal constituting the Class C Cumulative Applicable
Periodic Interest Shortfall Amount shall be paid before principal not
constituting the Class C Cumulative Applicable Periodic Interest Shortfall
Amount, if any;


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(21)                            to pay, in the following order:


 


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


 


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Manager under the Collateral Management
Agreement but excluding the Collateral Management Fee, in each case, in the
same order of priority as provided in Section 11.1(a)(1) above and to
the extent not paid in full under Section 11.1(a)(1) above without
regard to any limitation on any maximum amounts payable on such date contained
therein; and


 


(ii)                                on
a pro rata basis,
any due and unpaid expenses and other liabilities of the Issuer to the extent
not paid under clause (1) above, whether as a result of an amount
limitation imposed thereunder or otherwise;


 


(22)                          to pay, first, the
Subordinate Collateral Management Fee with respect to such Payment Date and any
due and unpaid Subordinate Collateral Management Fee with respect to a previous
Payment Date that was not paid on a previous Payment Date, and second, any
accrued and unpaid interest on the then-due and unpaid Collateral Management
Fee; and


 


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


 


(b)                                 Collateral Principal
Collections. On any Payment Date that is not a Redemption Date or a
Payment Date following the occurrence and continuation of an acceleration of
the Rated Notes in connection with an Event of Default, in accordance with a
Note Valuation Report prepared by the Collateral Administrator as of the last
day of the Due Period preceding such Payment Date, Collateral Principal
Collections, to the extent of Available Funds in the Collection Account, will
be applied by the Trustee in the following order of priority:


 


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


 


(2)                                  if
either of the Class A/B Coverage Tests is not satisfied as of the
preceding Calculation Date and to the extent that the amounts paid pursuant to
Section 11.1(a)(8) are insufficient to cause the Class A/B
Coverage Tests to be satisfied, to pay principal of the most senior
Class of Notes then Outstanding until such Class A/B Coverage Test is
satisfied as of such Calculation Date or until such most senior Class of
Notes is paid in full, and then to pay principal of the next most senior
Class of Notes Outstanding until such Class A/B Coverage Test is
satisfied as of such Calculation Date or until such next most senior
Class of Notes is paid in full and so on, until such Class A/B Coverage
Test is satisfied or until the Class B Notes are paid in full; provided that for
purposes of determining if the Class A/B Principal Coverage Test is
satisfied after giving effect to any payments under this
Section 11.1(b)(2), the denominator of the Class A/B Principal
Coverage Ratio shall be calculated after giving effect to any payments of
principal on the Notes made pursuant to any clause or subclause of
Section 11.1(a) on the related Payment Date and pursuant to
Section 11.1(b)(1) above and this clause (2); provided, further,  that the numerator of the
Class A/B Principal Coverage Ratio shall be calculated after giving effect
to any Collateral Principal Collections applied pursuant to any of the clauses
above and pursuant to this Section 11.1(b)(2) on the related Payment
Date;


 


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(3)                                  if
the Class A Notes and the Class B Notes are no longer Outstanding, to
pay Periodic Interest on the Class C Notes and any Defaulted Interest on
the Class C Notes, to the extent that the amounts paid pursuant to Section 11.1(a)(11)
are insufficient to pay such amounts in full thereunder;


 


(4)                                  if
either of the Class C Coverage Tests is not satisfied as of the preceding
Calculation Date and to the extent that the amounts paid pursuant to Section 11.1(a)(12)
are insufficient to cause the Class C Coverage Tests to be satisfied, to
pay principal (including any Class C Cumulative Applicable Periodic
Interest Shortfall Amount) of the most senior Class of Notes then
Outstanding until such Class C Coverage Test is satisfied as of such
Calculation Date or until such most senior Class of Notes is paid in full,
and then to pay principal of the next most senior Class of Notes
Outstanding until such Class C Coverage Test is satisfied as of such
Calculation Date or until such next most senior Class of Notes is paid in
full and so on, until such Class C Coverage Test is satisfied or until the
Class C Notes are paid in full; provided that for purposes of determining if the Class C
Principal Coverage Test is satisfied after giving effect to any payments under
this Section 11.1(b)(4), the denominator of the Class C Principal
Coverage Ratio shall be determined after giving effect to any payments of
principal on the Notes made pursuant to any clause or subclause of Section 11.1(a) on
the related Payment Date and pursuant to any clause above and this Section 11.1(b)(4);
provided, further,  that for purposes of determining if
the Class C Principal Coverage Test is satisfied, the numerator of the Class C
Principal Coverage Ratio shall be calculated after giving effect to any Collateral
Principal Collections to be applied pursuant to any clause above and this Section 11.1(b)(4) on
the related Payment Date; and provided, further, that  with
respect to the Class C Notes, payment of principal constituting Class C
Cumulative Applicable Periodic Interest Shortfall Amount shall be paid before
principal not constituting the Class C Cumulative Applicable Periodic
Interest Shortfall Amount, if any;


 


(5)                                  if
the Class A Notes and the Class B Notes are no longer Outstanding, to
pay the Class C Cumulative Applicable Periodic Interest Shortfall Amount,
to the extent that the amounts paid pursuant to Section 11.1(a)(13) are
insufficient to pay such amounts in full thereunder;


 


(6)                                  if
the Class A Notes, the Class B Notes and the Class C Notes are
no longer Outstanding, to pay Periodic Interest on the Class D Notes and
any Defaulted Interest on the Class D Notes, to the extent that the
amounts paid pursuant to Section 11.1(a)(14) are insufficient to pay such
amounts in full thereunder;


 


(7)                                  if
either of the Class D Coverage Tests is not satisfied as of the preceding
Calculation Date and to the extent that amounts paid pursuant to Section 11.1(a)(15)
are insufficient to cause the Class D Coverage Tests to be satisfied, to
pay principal (including any Class C Cumulative Applicable Periodic
Interest Shortfall Amount or Class D Cumulative Applicable Periodic
Interest Shortfall Amount, as applicable) of the most senior Class of
Notes then Outstanding until such Class D Coverage Test is satisfied as of
such Calculation Date or until such next most senior Class of Notes is
paid in full and so on, until such Class D Coverage Test is satisfied or
until the Class D Notes are paid in full; provided that for
purposes of determining if the Class D Principal Coverage


 


149

















 


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


 


(8)                                  if
the Class A Notes, the Class B Notes, and the Class C Notes are
no longer Outstanding, to pay the Class D Cumulative Applicable Periodic
Interest Shortfall Amount, to the extent that amounts paid pursuant to Section 11.1(a)(16)
are insufficient to pay such amounts in full thereunder;


 


(9)                                  if
the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes are
no longer Outstanding, to pay Periodic Interest on the Class E Notes and
any Defaulted Interest on the Class E Notes, to the extent that the
amounts paid pursuant to Section 11.1(a)(17) are insufficient to pay such
amounts in full thereunder;


 


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


 


150

















 


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


 


(11)                            if the Class A Notes, the Class B
Notes, the Class C Notes and the Class D Notes are no longer
Outstanding, to pay the Class E Cumulative Applicable Periodic Interest Shortfall Amount, to the
extent that amounts paid pursuant to Section 11.1(a)(19) are insufficient to pay such amounts in full
thereunder;


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(i)                                     first, to the Class A-1 Notes, until the Class A-1
Notes have been paid in full;


 


(ii)                                  second, to the Class A-2 Notes, until the Class A-2
Notes have been paid in full;


 


(iii)                               third, to the Class A-3
Notes, until the Class A-3 Notes have been paid in full;


 


(iv)                              fourth, to the Class B
Notes, until the Class B Notes have been paid in full;


 


(v)                                 fifth, to the Class C
Notes, until the Class C Notes have been paid in full;


 


(vi)                              sixth, to the Class D
Notes, until the Class D Notes have been paid in full; and


 


(vii)                           seventh, to the Class E
Notes, until the Class E Notes have been paid in full;


 


(14)                            to
pay, first, termination
payments payable to any Hedge Counterparty upon the termination of the related
Hedge Agreement, if such termination occurred solely as the result of an event
of default or a termination event with respect to any Hedge Counterparty as the
Defaulting Party or the sole Affected Party, as the case may be, to the extent
that the amounts paid pursuant to Section 11.1(a)(20) are insufficient to
pay such amounts in full thereunder, and second, termination payments to any
Synthetic Security Counterparty if such termination occurred solely as a result
of an event of default or a termination event with respect to the Synthetic
Security Counterparty as the Defaulting Party or the sole Affected Party, as
the case may be, to the extent funds in the related Derivative Contract
Counterparty Account are insufficient;


 


(15)                            to pay
any due and unpaid Trustee Fee, Trustee Expenses, and any other unpaid
Administrative Expenses, including amounts payable to the Collateral Manager
under the Collateral Management Agreement but excluding the Collateral
Management Fee, in each case, in the same order of priority as provided in Section 11.1(b)(1) above
and to the extent not paid in full under clause (1) above and to the
extent that the amounts paid pursuant to Section 11.1(a)(1) and (21)
are insufficient to pay such amounts in full thereunder;


 


(16)                            to pay,
first, the
Subordinate Collateral Management Fee with respect to such Payment Date and any
due and unpaid Subordinate Collateral Management Fee with respect to a previous
Payment Date that was not paid on a previous Payment Date, and second, any
accrued and unpaid interest on the then-due and unpaid Collateral Management
Fee, to the extent that the amounts paid pursuant to Section 11.1(a)(22)
are insufficient to pay such amounts in full thereunder; and


 


152

















 


(17)                           all Income Note Excess Funds to the Income
Note Paying Agent, on behalf of the Issuer, for distributions on the Income
Notes in accordance with the Income Note Paying Agency Agreement.


 


(c)                                  If an Event of Default has occurred and is
continuing, on the date or dates determined by the Trustee, the Trustee will
pay, from all collections from, and proceeds of the sale or liquidation of, the
Collateral, in the following order:


 


(1)                                amounts corresponding to the amounts set
forth in clauses Section 11.1(a)(1) through (3), and (to the extent
not covered by Section 11.1(a)(1) through (3)) Section 11.1(b)(1);


 


(2)                                the Periodic Interest on the Class A-1
Notes (including Defaulted Interest on such Class A-1 Notes, if any);


 


(3)                                outstanding principal on the Class A-1
Notes until paid in full;


 


(4)                                the Periodic Interest on the Class A-2
Notes (including Defaulted Interest on such Class A-2 Notes, if any);


 


(5)                                outstanding principal on the Class A-2
Notes until paid in full;


 


(6)                                the Periodic Interest on the Class A-3
Notes (including Defaulted Interest on such Class A-3 Notes, if any);


 


(7)                                outstanding principal on the Class A-3
Notes until paid in full;


 


(8)                                the Periodic Interest on the Class B
Notes (including Defaulted Interest on the Class B Notes, if any) and then
outstanding principal on the Class B Notes until paid in full;


 


(9)                                the Periodic Interest on the Class C
Notes (including Defaulted Interest on the Class C Notes, if any) and then
outstanding principal on the Class C Notes (including Class C
Cumulative Applicable Periodic Interest Shortfall Amount, if any) until paid in
full;


 


(10)                          the Periodic Interest on the Class D
Notes (including Defaulted Interest on the Class D Notes, if any) and then
outstanding principal on the Class D Notes (including Class D Cumulative
Applicable Periodic Interest Shortfall Amount, if any) until paid in full;


 


(11)                          the Periodic Interest on the Class E
Notes (including Defaulted Interest on the Class E Notes, if any) and then
outstanding principal on the Class E Notes (including Class E
Cumulative Applicable Periodic Interest Shortfall Amount, if any) until paid in
full;


 


(12)                          amounts corresponding to the amounts set
forth in Section 11.1(a)(20) through (22), and Section 11.1(b)(12)
and (13); and


 


(13)                          to the Income Note Paying Agent, any
remaining amounts for distributions on the Income Notes as set forth in Section 11.1(a)(23)
and Section 11.1(b)(17).


 


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(d)                                 Not later than 12:00 p.m., New York
time, on or before the Business Day preceding each Payment Date, the Issuer
shall, pursuant to Section 10, remit or cause to be remitted to the
Trustee for deposit in the Payment Account an amount of Cash sufficient to pay
the amounts described in Section 11.1(a) and 11.1(b) required to
be paid on such Payment Date.


 


(e)                                  If, on any Payment Date, the amount available
in the Payment Account from amounts received in the related Due Period is
insufficient to make the full amount of the disbursements required by the
statements furnished by the Issuer pursuant to Section 10.13(b), the
Trustee shall make the disbursements called for in the order and according to
the priority set forth under Section 11.1(a) and 11.1(b), subject to Section 13.1,
to the extent funds are available therefor.


 


(f)                                    Except as otherwise expressly provided in
this Section 11.1, if on any Payment Date the amount of funds is
insufficient to make the full amount of the disbursements required by any
clause or subclause of Section 11.1(a) or 11.1(b) to different
Persons, the Trustee shall make the disbursements called for by such clause or
subclause ratably in accordance with the respective amounts of such
disbursements then due and payable to the extent funds are available therefor.


 


(g)                                 Any amounts to be paid to the Income Note Paying
Agent pursuant to Section 11.1(a)(23) or to Section 11.1(b)(17) will
be released from the lien of this Indenture.


 


(h)                                 No Collateral Principal Collections will be
paid to a Class of Rated Notes in accordance with the Priority of Payments
on a Payment Date if, after giving effect to such payment, any Principal
Coverage Test for a more Senior Class of Rated Notes would have failed.


 


ARTICLE XII


 


PURCHASE AND SALE OF COLLATERAL DEBT SECURITIES


 


12.1.                        SALE OF COLLATERAL DEBT
SECURITIES


 


(a)                                  Sale of Collateral Debt
Securities.


 


(1)                                Subject to the satisfaction of the conditions
specified in Section 10.13 as applicable, if the Collateral Manager, on
behalf of the Issuer, pursuant to this Article 12, shall direct the
Trustee to sell any Temporary Ramp-Up Security, Defaulted Security, Equity
Security, Credit Risk Security, Written Down Security or Withholding Tax
Security, the Trustee shall sell in the manner directed by the Collateral
Manager, any Temporary Ramp-Up Security, Defaulted Security, Equity Security, Credit
Risk Security, Written Down Security or Withholding Tax Security.


 


(2)                                During the Ramp-Up Period, and in any event,
no later than the Effective Date, the Collateral Manager shall direct the
Issuer to sell or otherwise dispose of all Temporary Ramp-Up Securities. Sale
Proceeds received with respect to Temporary Ramp-Up Securities shall be
reinvested only in Ramp-Up Collateral Debt Securities that are Fixed Rate
Collateral Debt Securities, provided that
any Sale Proceeds received with respect to Temporary Ramp-Up Securities that
are not reinvested in Fixed Rate Collateral Debt Securities, other than not
more than


 


154

















 


U.S.$500,000
of such Sale Proceeds that may be reinvested in Substitute Collateral Debt Securities
that are not Fixed Rate Collateral Debt Securities, shall be treated as
Collateral Principal Collections and shall be applied by the Issuer to the
making of payments on the Notes, subject to and in accordance with the Priority
of Payments, on the Payment Date immediately following the Effective Date.


 


(b)                                 Reinvestment Criteria. Following the Closing Date, Sale Proceeds
received at any time on Collateral Debt Securities that are Defaulted
Securities, Equity Securities, Credit Risk Securities, Written Down Securities
or Withholding Tax Securities, as well as Sale Proceeds from Discretionary
Sales and Collateral Principal Payments, are expected to be reinvested in
Substitute Collateral Debt Securities with an aggregate purchase price up to
the amount of the Sale Proceeds from such sale, in each case during the Ramp-Up
Period and thereafter during the Reinvestment Period, subject to complying with
the Eligibility Criteria and the Reinvestment Criteria described below, or
shall be temporarily reinvested in the Eligible Investments pending such
reinvestment in Substitute Collateral Debt Securities in accordance with the
Priority of Payments. Such Sale Proceeds and Collateral Principal Payments will
be eligible to be reinvested in Substitute Collateral Debt Securities by the
Issuer and pledged to the Trustee if such Substitute Collateral Debt Securities
meet each of the Reinvestment Criteria.


 


If
the Collateral Manager determines, in its sole discretion, that investments in
additional Collateral Debt Securities would either be impractical or not
beneficial, an amount of Collateral Principal Collections available for
reinvestment pursuant to the Priority of Payments as determined by the
Collateral Manager will be applied to principal on the Notes in a Special
Amortization. Collateral Principal Collections (including Sale Proceeds) will
not be reinvested following the Reinvestment Period.


 


Notwithstanding
the foregoing restrictions, the Collateral Manager will direct the Trustee to
sell, and, the Trustee will sell in accordance with such direction, all
Collateral Debt Securities in connection with a Redemption of the Notes,
subject to the satisfaction of the conditions set forth in Article 9
herein. During the Reinvestment Period, principal of the Notes will be payable
on any Payment Date in a Special Amortization if the Collateral Manager has
notified the Trustee in writing on or before the related Calculation Date that
it has determined, in its sole discretion, that investments in additional
Collateral Debt Securities would not be practical or beneficial.


 


During
the Ramp-Up Period, Substitute Collateral Debt Securities will be purchased
with Uninvested Proceeds, if sufficient Uninvested Proceeds are available, and
only if sufficient Uninvested Proceeds are not available, with Collateral
Principal Collections.


 


(c)                                  Discretionary Sales. So long as no Event of Default has occurred
and is continuing, the Collateral Manager, on behalf of the Issuer, may, during
the Reinvestment Period, direct the Trustee to sell, and the Trustee will sell
in the manner directed by the Collateral Manager, any Collateral Debt Security
(in addition to sales of any Defaulted Securities, Credit Risk Securities,
Withholding Tax Securities, Equity Securities and Written Down Securities) so long
as each of the following applies:


 


(1)                                  the aggregate Principal Balance of all
Collateral Debt Securities sold pursuant to such Discretionary Sales for a
given calendar year does not exceed 10% of the


 


155

















 


CDS
Principal Balance at the beginning of that year (or, with respect to calendar
year 2006, as of the Closing Date);


 


(2)                                 the Collateral Manager believes in good faith
that Sale Proceeds from such sale can be reinvested within 60 Business Days
after the sale of such Collateral Debt Security in one or more Substitute
Collateral Debt Securities having an aggregate Principal Balance of not less
than 100% of the Principal Balance of the Collateral Debt Security being sold;


 


(3)                                 after giving effect to such sale and to the
purchase of Substitute Collateral Debt Securities with the Sale Proceeds
thereof, the Reinvestment Criteria will be met; and


 


(4)                                 such Collateral Manager has not been removed,
or voted to be removed, for “cause” as set forth in the Collateral Management
Agreement.


 


12.2.                        PORTFOLIO CHARACTERISTICS


 


Except
as provided in Section 12.3(c), a security will be eligible for inclusion
in the Collateral as a Pledged Collateral Debt Security only if, as evidenced
by an Officer’s certificate from the Collateral Manager to the Trustee, each of
the following eligibility criteria is satisfied immediately after the Issuer
Grants such Collateral Debt Security to the Trustee (collectively, the Eligibility
Criteria):


 


(a)                                  it is issued by an issuer incorporated or
organized under the laws of the United States, the Bahamas, Bermuda, the Cayman
Islands, the British Virgin Islands, the Netherlands Antilles, Jersey, Guernsey
or Luxembourg or, it is issued by a Qualifying Foreign Obligor;


 


(b)                                 it is U.S. Dollar-denominated, and it is not
convertible into, or payable in, any other currency;


 


(c)                                  it is one (or in the case of a Synthetic
Security or a CMBS Re-REMIC Security, references at least one of) of the
Specified Types of Collateral Debt Securities;


 


(d)                                 it has an S&P Rating (which rating does
not include a “p”, “pi”, “q”, “t” or “r” subscript), a Moody’s Rating and a
Fitch Rating;


 


(e)                                  the acquisition, ownership, enforcement and
disposition of such security will not cause the Issuer to be treated as engaged
in a U.S. trade or business for U.S. federal income tax purposes or otherwise
to be subject to tax on a net income basis in any jurisdiction outside the
Issuer’s jurisdiction of incorporation (other than as attributable to property
received in connection with a foreclosure, as permitted under the Transaction
Documents);


 


(f)                                    the payments on such security are not subject
to withholding tax unless the issuer thereof or the obligor thereon is required
to make additional payments sufficient to cover any withholding tax imposed at
any time on payments made to the Issuer with respect thereto;


 


(g)                                 its acquisition would not cause the Issuer or
the pool of Collateral to be required to register as an investment company
under the Investment Company Act;


 


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(h)                                 it
is not a security that is ineligible under its Underlying Instruments to be
purchased by the Issuer and pledged to the Trustee;


 


(i)                                     it
is not an insurance-linked debt
instrument containing a provision pursuant to which the issuer’s obligation to
pay interest or principal is deferred or forgiven in the event of loss due to
certain natural catastrophes specified in the Underlying Instruments;


 


(j)                                     it
is not a security that provides for the payment of principal upon maturity at
less than the par amount thereof;


 


(k)                                  unless
it is a Derivative Contract, its
Underlying Instruments do not obligate the Issuer to make any future advances
or any other payment except the purchase price thereof;


 


(l)                                     it
is not a security with respect
to which, in the reasonable judgment of the Collateral Manager, the timely
repayment of principal and interest is subject to substantial non-credit
related risks;


 


(m)                               it
is not an Interest Only
Security;


 


(n)                                 it
is not a security issued by an
Emerging Market Issuer;


 


(o)                                 it is not a security that has an Actual
Rating from Moody’s lower than “B3”, an Actual Rating from S&P lower than
“B-” or an Actual Rating from Fitch lower than “B-” at the time of purchase;


 


(p)                                 it is not a security that has, at the time of
purchase, any deferred or capitalized interest;


 


(q)                                 it is not a security that, at the time it is
purchased, is a Credit Risk Security, a Defaulted Security, a Written Down
Security or a Deferred Interest PIK Bond;


 


(r)                                    (a) if it is a Derivative Contract, the
Derivative Contract Counterparty, at the time of entry into such Derivative
Contract, has a short term rating of at least “A-1+” by S&P (or “A-1” by
S&P if the premium (and any other relevant amount (such as coupon) required
under the related Derivative Contract) to be paid by such Derivative Contract
Counterparty is posted one payment period in advance for the term of the
Derivative Contract) and is not on negative watch or (b) in the case of
any Synthetic Security other than a Derivative Contract, such Synthetic
Security Counterparty has a short term rating of at least “A-1” by S&P or,
if no such short term rating is available, a long term rating of at least “A”
by S&P;


 


(s)                                  it is not a Real Estate Interest with a
loan-to-value ratio of greater than 85% on the underlying collateral; provided that, if such Real Estate Interest is a Mezzanine
Loan, it will have a Rating of at least “B-” (or its equivalent) from a Rating
Agency; provided further that all such
Mezzanine Loans with a Rating of less than “BB-” (or its equivalent) from a
Rating Agency will not exceed 5% of the CDS Principal Balance;


 


(t)                                    it is not a REIT Debt Security that has a
Moody’s Rating lower than “Ba3”, an S&P Rating lower than “BB-” or a Fitch
Rating lower than “BB-” at the time of purchase;


 


(u)                                 it is not a Real Estate CDO Security that has
a Moody’s Rating lower than “Ba3”, an S&P Rating lower than “BB-” or a
Fitch Rating lower than “BB-” at the time of purchase;


 


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(v)           it is not a CMBS Credit
Tenant Lease Security that has a Moody’s Rating lower than “Ba3”, an S&P
Rating lower than “BB-” or a Fitch Rating lower than “BB-” at the time of
purchase;


 


(w)          at the time the security is purchased by the
Issuer:


 


(1)           it is not a security
issued by an issuer located in a country that imposes foreign exchange controls
that effectively limit the availability or use of U.S. Dollars to make when due
the scheduled payments of principal and interest on such security;


 


(2)           it is not, and does not
provide for conversion or exchange into, Margin Stock at any time over its
life;


 


(3)           it is not an obligation
which (1) was incurred in connection with a merger, acquisition,
consolidation or sale of all or substantially all of the assets of a person or
entity or similar transaction and (2) by its terms is required to be
repaid within one year of the incurrence thereof with proceeds from additional
borrowings or other refinancing;


 


(4)           it is not the subject
of (1) any offer by the issuer of such security or by any other person
made to all of the holders of such security to purchase or otherwise acquire
such security (other than pursuant to any redemption in accordance with the
terms of the related underlying instruments) or to convert or exchange such
security into or for cash, securities or any other type of consideration or (2) any
solicitation by an issuer of such security or any other person to amend, modify
or waive any provision of such security or any related underlying instrument,
and has not been called for redemption;


 


(5)           it is not an Equity Security;


 


(6)           it is not a security that by the terms of
its underlying instruments provides for conversion or exchange (whether
mandatory or at the option of the issuer or the holder thereof) into equity
capital at any time prior to its maturity;


 


(7)           it is not a financing by a
debtor-in-possession in any insolvency proceeding;


 


(8)           it is not a first loss tranche of any
securitization that does not have an S&P Rating (as defined in clause (i) of
the definition of S&P Rating) or a Moody’s Rating (as defined in clause (i) of
the definition of Moody’s Rating) that addresses the obligation of the obligor
(or guarantor, if applicable) to pay principal of and interest on the relevant
Collateral Debt Security in full, which ratings are monitored on an ongoing
basis by the relevant Rating Agency;


 


(9)           it is not a security
that provides for the payment of interest (or in the case of a Synthetic
Security which is in the form of a Derivative Contract, the periodic payment of
a floating amount or a fixed amount based on its notional or equivalent amount)
in cash less frequently than semi-annually;


 


(10)         if it is a Mezzanine
Loan, (a) the Mezzanine Loan is subject to servicing, custodial and/or
similar arrangements customary for Mezzanine Loans as


 


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determined by the Collateral Manager in its reasonable discretion, (b) the
requirements set forth in the Indenture regarding the representations and
warranties with respect to the underlying mortgaged property and the Mezzanine
Loan have been met and the terms of the Underlying Instruments are consistent
with the terms of similar Underlying Instruments with respect to Mezzanine
Loans as determined by the Collateral Manager in its reasonable discretion;


 


(11)         if it is a Deemed Floating Rate Collateral Debt Security, the Deemed
Floating Asset Hedge entered into with respect to such Deemed Floating Rate Collateral Debt Security conforms to all requirements
set forth in the definition of “Deemed Floating Asset Hedge”; and


 


(12)         it is not a Prohibited
Asset.


 


provided that notwithstanding anything to the contrary
herein, the Issuer may, while attempting to dispose of property acquired in
foreclosure or similar circumstances, make an election under Section 882(d) of
the Code to treat the income related to real property located in the United
States as income that is effectively connected with a U.S. trade or business; provided
further that except for
property acquired by the Issuer in foreclosure or similar circumstances and for
property expressly permitted to be acquired by the Issuer, the Issuer may not
purchase, acquire or hold (whether as part of a unit with a Collateral Debt
Security, in exchange for a Collateral Debt Security or otherwise) any asset
unless the underlying documents for such asset specify, or the Issuer has
received advice of tax counsel of nationally recognized standing in the United
States experienced in such matters to the effect that, under the relevant facts
and circumstances with respect to such transaction, for U.S. federal income tax
purposes, (i) the obligation or security is indebtedness, (ii) all
obligors and issuers of the assets are classified as corporations (and no
elections have been made to the contrary), (iii) no obligor on or issuer
of the asset is engaged in the conduct of a trade or business within the United
States, or (iv) all obligors and issuers of the assets qualify as “grantor
trusts”, and all of the assets of the obligors and issuers consist of
obligations or securities that the Issuer could have directly acquired and held
as assets (but for restrictions related to withholding taxes) and,
notwithstanding anything to the contrary herein, the Issuer shall not purchase,
acquire or hold any asset the gain from the disposition of which will be
subject to U.S. federal income or withholding tax under Section 897 or Section 1445
of the Code and the Treasury regulations promulgated thereunder other than
United States real property interests that the Issuer acquires in foreclosure
and with respect to which has made a Section 882(d) election.


 


12.3.        CONDITIONS APPLICABLE TO ALL TRANSACTIONS INVOLVING SALE OR GRANT


 


(a)           Any transaction effected under Section 5, Section 9, Section 10.2
or Section 12.1 shall be conducted on an arms’ length basis and if
effected with the Issuer, the Trustee, the Collateral Manager or any Affiliate
of any of the foregoing, shall be effected in a secondary market transaction on
terms at least as favorable to the Rated Noteholders as would be the case if
such Person were not so Affiliated; provided that any disposition of a Collateral Debt
Security in accordance with Section 12.1 shall be deemed to comply with
this Section 12.3(a). The Trustee shall have no responsibility to oversee
compliance with this clause by the other parties.


 


(b)           Upon any purchase or substitution pursuant to this Section 12, all
of the Issuer’s right, title and interest to the Pledged Security or Securities
shall be, and hereby is, Granted to the Trustee pursuant to this Indenture,
such Pledged Security or Securities shall be registered in the name of the
Trustee, and, if applicable, the Trustee shall receive such Pledged Security or
Securities. The Trustee shall receive, not later than the date of


 


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delivery
of any Pledged Security pursuant to a purchase under this Section 12, (a) an
Officer’s Certificate of the Collateral Manager certifying (1) compliance
with the Reinvestment Criteria in accordance with Section 12.1(d), (2) that
the Collateral Debt Security to be sold constitutes an Equity Security, a
Defaulted Security, a Credit Risk Security, a Withholding Tax Security or a
Written Down Security and (3) that any security to be purchased satisfies
the definition of Collateral Debt Security and (b) an Officer’s
Certificate of the Collateral Manager on behalf of the Issuer containing the
statements set forth in Section 3.2(b)(2) through (4), (6) and
(7).


 


(c)          Notwithstanding
anything contained in this Section 12 to the contrary, the Issuer shall,
subject to Section 12.3(d), have the right to effect any transaction to
which the Initial Hedge Counterparty and Holders of Rated Notes evidencing 100%
of the Aggregate Outstanding Amount of each Class of Rated Notes, and each
Income Noteholder has consented, and of which each Rating Agency has been
notified in advance.


 


(d)         Except
as specifically provided in this Indenture, in no event may the Issuer (i) engage
in any business or activity that would cause the Issuer to be treated as
engaged in a U.S. trade or business for U.S. federal income tax purposes or (ii) acquire
or hold any asset that is an equity interest in an entity that is treated as a
partnership engaged in a U.S. trade or business for U.S. federal income tax
purposes or the acquisition or ownership of which otherwise would subject the
Issuer to net income tax in any jurisdiction outside its jurisdiction of
incorporation. The foregoing shall not, however, preclude the Issuer from
holding Equity Securities or securities received in an Offer pending their sale
in accordance with Section 12.1(a)(1).


 


ARTICLE XIII


 


SECURED PARTIES’ RELATIONS


 


13.1.        SUBORDINATION


 


(a)          Anything
in this Indenture or the Rated Notes to the contrary notwithstanding, the Issuer
and the Holders of the Rated Notes agree for the benefit of the Initial Hedge
Counterparty that the Rated Notes and the Issuer’s rights in and to the
Collateral (solely with respect to all amounts payable to such Initial Hedge
Counterparty pursuant to Section 11.1(a)(3)), the Subordinate
Interests)  shall be
subordinate and junior to the rights of such Hedge Counterparty with respect to
payments to be made to such Initial Hedge Counterparty pursuant to the Initial
Hedge Agreement to the extent and in the manner set forth in Section 11.1(a)(3) and
hereinafter provided. If any Event of Default (including an Event of Default
specified in Section 5.1(g) or (h)) has occurred and has not been
cured or waived all amounts payable to the Initial Hedge Counterparty pursuant
to Section 11.1(a)(3) shall be paid in Cash or, to the extent the
Initial Hedge Counterparty consents, other than in Cash, before any further
payment or distribution is made on account of the Subordinate Interests.


 


(b)         Anything
in this Indenture or the Rated Notes to the contrary notwithstanding, the
Issuer and the Holders of the Class A-2 Notes, the Class A-3 Notes,
the Class B Notes, the Class C Notes, the Class D Notes and the Class E
Notes agree for the benefit of the Holders of the Class A-1 Notes that the
Class A-2 Notes, the Class A-3 Notes, the Class B Notes, the Class C
Notes, the Class D Notes and the Class E Notes and the Issuer’s
rights in and to the Collateral (with respect to the Class A-1 Notes, the
Subordinate Interests) shall be


 


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subordinate and junior to the Class A-1 Notes to the extent and in
the manner set forth in this Indenture, including as set forth in Section 11.1(a) and
hereinafter provided. If any Event of Default (including an Event of Default
specified in Section 5.1(g) or (h)) has occurred and has not been
cured or waived, the Class A-1 Notes shall be paid in full in Cash or, to
the extent a Majority of the Class A-1 Notes consent, other than in Cash,
before any further payment or distribution is made on account of the
Subordinate Interests. The Holders of Rated Notes evidencing Subordinate
Interests and the holders of equity in the Issuer agree, for the benefit of the
Holders of the Class A-1 Notes, not to cause the filing of a petition in
bankruptcy against the Issuer for failure to pay to them amounts due under the
Rated Notes evidencing such Subordinate Interests or hereunder until the
payment in full of the Class A-1 Notes and not before one year and one day
has elapsed since such payment or, if longer, the applicable preference period
then in effect, including any period established pursuant to the laws of the
Cayman Islands.


 


(c)          Anything in this
Indenture or the Rated Notes to the contrary notwithstanding, the Issuer and
the Holders of the Class A-3 Notes, the Class B Notes, the Class C
Notes, the Class D Notes and the Class E Notes agree for the benefit
of the Holders of the Class A-1 Notes and the Class A-2 Notes that
the Class A-3 Notes, the Class B Notes, the Class C Notes, the Class D
Notes and the Class E Notes and the Issuer’s rights in and to the
Collateral (with respect to the Class A-1 Notes and the Class A-2
Notes, the Subordinate Interests) shall be subordinate and junior to the Class A-1
Notes and the Class A-2 Notes to the extent and in the manner set forth in
this Indenture, including as set forth in Section 11.1(a) and
hereinafter provided. If any Event of Default (including an Event of Default
specified in Section 5.1(g) or (h)) has occurred and has not been
cured or waived, the Class A-1 Notes and the Class A-2 Notes shall be
paid in full in Cash or, to the extent a Majority of the Class A-1 Notes
and the Class A-2 Notes consent, other than in Cash, before any further
payment or distribution is made on account of the Subordinate Interests. The
Holders of Rated Notes evidencing Subordinate Interests and the holders of
equity in the Issuer agree, for the benefit of the Holders of the Class A-1
Notes and the Class A-2 Notes, not to cause the filing of a petition in
bankruptcy against the Issuer for failure to pay to them amounts due under the
Rated Notes evidencing such Subordinate Interests or hereunder until the
payment in full of the Class A-1 Notes and the Class A-2 Notes and
not before one year and one day has elapsed since such payment or, if longer,
the applicable preference period then in effect, including any period
established pursuant to the laws of the Cayman Islands.


 


(d)         Anything in this
Indenture or the Rated Notes to the contrary notwithstanding, the Issuer and
the Holders of the Class B Notes, the Class C Notes, the Class D
Notes and the Class E Notes agree for the benefit of the Holders of the Class A
Notes that the Class B Notes, the Class C Notes, the Class D
Notes and the Class E Notes and the Issuer’s rights in and to the
Collateral (with respect to the Class A Notes, the Subordinate Interests)
shall be subordinate and junior to the Class A Notes to the extent and in
the manner set forth in this Indenture, including as set forth in Section 11.1(a) and
hereinafter provided. If any Event of Default (including an Event of Default
specified in Section 5.1(g) or (h)) has occurred and has not been
cured or waived, the Class A Notes shall be paid in full in Cash or, to
the extent a Majority of the Class A Notes consent, other than in Cash,
before any further payment or distribution is made on account of the
Subordinate Interests. The Holders of Rated Notes evidencing Subordinate
Interests and the holders of equity in the Issuer agree, for the benefit of the
Holders of the Class A Notes, not to cause the filing of a petition in
bankruptcy against the Issuer for failure to pay to them amounts due under the
Rated Notes evidencing such Subordinate Interests or hereunder until the
payment in


 


161

















 


full of the Class A Notes and not before one year and one day has
elapsed since such payment or, if longer, the applicable preference period then
in effect, including any period established pursuant to the laws of the Cayman
Islands.


 


(e)          Anything in this
Indenture or the Rated Notes to the contrary notwithstanding, the Issuer and
the Holders of the Class C Notes, the Class D Notes and the Class E
Notes agree for the benefit of the Holders of the Class A Notes and the Class B
Notes that the Class C Notes, the Class D Notes and the Class E
Notes and the Issuer’s rights in and to the Collateral (with respect to the Class A
Notes and the Class B Notes, the Subordinate
Interests) shall be
subordinate and junior to the Class A Notes and the Class B Notes to
the extent and in the manner set forth in this Indenture, including as set
forth in Section 11.1(a) and hereinafter provided. If any Event of
Default (including an Event of Default specified in Section 5.1(g) or
(h)) has occurred and has not been cured or waived, the Class A Notes and
the Class B Notes shall be paid in full in Cash or, to the extent a
Majority of the Class A Notes and the Class B Notes consent, other
than in Cash, before any further payment or distribution is made on account of
the Subordinate Interests. The Holders of Rated Notes evidencing Subordinate
Interests and the holders of equity in the Issuer agree, for the benefit of the
Holders of the Class A Notes and the Class B Notes, not to cause the
filing of a petition in bankruptcy against the Issuer for failure to pay to
them amounts due under the Rated Notes evidencing such Subordinate Interests or
hereunder until the payment in full of the Class A Notes and the Class B
Notes and not before one year and one day has elapsed since such payment or, if
longer, the applicable preference period then in effect, including any period
established pursuant to the laws of the Cayman Islands.


 


(f)          Anything in this
Indenture or the Rated Notes to the contrary notwithstanding, the Issuer and
the Holders of the Class D Notes and the Class E Notes agree for the
benefit of the Holders of the Class A Notes, the Class B Notes and
the Class C Notes that the Class D Notes and the Class E Notes
and the Issuer’s rights in and to the Collateral (with respect to the Class A
Notes, the Class B Notes and the Class C Notes, the Subordinate
Interests) shall be subordinate and junior to the Class A Notes, the Class B
Notes and the Class C Notes to the extent and in the manner set forth in
this Indenture including as set forth in Section 11.1(a) and
hereinafter provided. If any Event of Default (including an Event of Default
specified in Section 5.1(g) or (h)) has occurred and has not been
cured or waived the Class A Notes, the Class B Notes and the Class C
Notes shall be paid in full in Cash or, to the extent a Majority of each of the
Class A Notes, the Class B Notes and the Class C Notes consent,
other than in Cash, before any further payment or distribution is made on
account of the Subordinate Interests. The Holders of Rated Notes evidencing
Subordinate Interests and the holders of equity in the Issuer agree, for the
benefit of the Holders of the Class A Notes, the Class B Notes and
the Class C Notes, not to cause the filing of a petition in bankruptcy
against the Issuer for failure to pay to them amounts due under the Rated Notes
evidencing such Subordinate Interests or hereunder until the payment in full of
the Class A Notes, the Class B Notes and the Class C Notes and
not before one year and one day has elapsed since such payment or, if longer,
the applicable preference period then in effect, including any period
established pursuant to the laws of the Cayman Islands.


 


(g)         Anything in this
Indenture or the Rated Notes to the contrary notwithstanding, the Issuer and
the Holders of the Class E Notes agree for the benefit of the Holders of
the Class A Notes, the Class B Notes, the Class C Notes and the Class D
Notes that the Class E Notes and the Issuer’s rights in and to the Collateral
(with respect to the Class A Notes, the


 


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Class B Notes, the Class C Notes and the Class D Notes,
the Subordinate Interests) shall be subordinate and junior to the Class A
Notes, the Class B Notes, the Class C Notes and the Class D
Notes to the extent and in the manner set forth in this Indenture including as
set forth in Section 11.1(a) and hereinafter provided. If any Event
of Default (including an Event of Default specified in Section 5.1(g) or
(h)) has occurred and has not been cured or waived the Class A Notes, the Class B
Notes, the Class C Notes and the Class D Notes shall be paid in full
in Cash or, to the extent a Majority of each of Class A Notes, the Class B
Notes, the Class C Notes and the Class D Notes consent, other than in
Cash, before any further payment or distribution is made on account of the
Subordinate Interests. The Holders of Rated Notes evidencing Subordinate
Interests and the holders of equity in the Issuer agree, for the benefit of the
Holders of the Class A Notes, the Class B Notes, the Class C
Notes and the Class D Notes, not to cause the filing of a petition in
bankruptcy against the Issuer for failure to pay to them amounts due under the
Rated Notes evidencing such Subordinate Interests or hereunder until the
payment in full of the Class A Notes, the Class B Notes, the Class C
Notes and the Class D Notes and not before one year and one day has
elapsed since such payment or, if longer, the applicable preference period then
in effect, including any period established pursuant to the laws of the Cayman
Islands.


 


(h)         In the event that
notwithstanding the provisions of this Indenture, any Holder of any Subordinate
Interests shall have received any payment or distribution in respect of such
Subordinate Interests contrary to the provisions of this Indenture, then,
unless and until all amounts payable to the Initial Hedge Counterparty pursuant
to Section 11.1(a)(3) or to the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes or the Class E
Notes, as the case may be, shall have been paid in full in Cash or, to the
extent the Initial Hedge Counterparty or a Majority of the Class A Notes,
the Class B Notes, the Class C Notes, the Class D Notes or the Class E
Notes, as the case may be, consent, other than in Cash in accordance with this
Indenture, such payment or distribution shall be received and held in trust for
the benefit of, and shall forthwith be paid over and delivered to, the Trustee,
which shall pay and deliver the same to such Initial Hedge Counterparty or the
Holders of the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes or the Class E Notes, as the case may be, in
accordance with this Indenture; provided that,
if any such payment or distribution is made other than in Cash, it shall be
held by the Trustee as part of the Collateral and subject in all respects to
the provisions of this Indenture, including this Section 13.1.


 


(i)           Each Holder of Subordinate Interests
agrees with the Initial Hedge Counterparty and all Holders of the Class A
Notes, the Class B Notes, the Class C Notes, the Class D Notes
or the Class E Notes, as the case may be, that such Holder of Subordinate
Interests shall not demand, accept, or receive any payment or distribution in
respect of such Subordinate Interests in violation of the provisions of this
Indenture including this Section 13.1; provided
that after all amounts payable pursuant to Section 11.1(a)(3) and all
amounts payable in respect of the Class A Notes, the Class B Notes,
the Class C Notes, the Class D Notes or the Class E Notes, as
the case may be, have been paid in full, the Holders of Subordinate Interests
shall be fully subrogated to the rights of the Initial Hedge Counterparty or
the Holders of the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes or the Class E Notes, as the case may be.
Nothing in this Section 13.1 shall affect the obligation of the Issuer to
pay Holders of Subordinate Interests.


 


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13.2.        STANDARD OF CONDUCT


 


In exercising any of its or their voting rights, rights to direct and
consent or any other rights as a Secured Party under this Indenture, subject to
the terms and conditions of this Indenture, including Section 5.9, a
Secured Party or Secured Parties shall not have any obligation or duty to any
Person or to consider or take into account the interests of any Person and
shall not be liable to any Person for any action taken by it or them or at its
or their direction or any failure by it or them to act or to direct that an
action be taken, without regard to whether such action or inaction benefits or
adversely affects any Secured Party, the Issuer, or any other Person.


 


ARTICLE XIV


 


MISCELLANEOUS


 


14.1.        FORM OF
DOCUMENTS DELIVERED TO TRUSTEE


 


In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.


 


Any certificate or opinion of an Authorized Officer of the Issuer or
the Collateral Manager may be based, insofar as it relates to legal matters,
upon a certificate or opinion of, or representations by, counsel, unless such
Authorized Officer knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to the matters
upon which his certificate or opinion is based are erroneous. Any such
certificate of an Authorized Officer of the Issuer or the Collateral Manager or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an Authorized Officer of
the Issuer, the Collateral Manager or any other Person, stating that the
information with respect to such factual matters is in the possession of the
Issuer, the Collateral Manager or such other Person, unless such Authorized
Officer of the Issuer or the Collateral Manager or such counsel knows that the
certificate or opinion or representations with respect to such matters are
erroneous. Any Opinion of Counsel may also be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
Authorized Officer of the Issuer or the Collateral Manager, stating that the
information with respect to such matters is in the possession of the Issuer or
the Collateral Manager, unless such counsel knows that the certificate or
opinion or representations with respect to such matters are erroneous.


 


Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.


 


Whenever in this Indenture it is provided that
the absence of the occurrence and continuation of a Default is a condition
precedent to the taking of any action by the Trustee at the request or
direction of the Issuer, then notwithstanding that the satisfaction of such
condition is a condition precedent to the Issuer’s rights to make such request
or direction, the Trustee shall be protected in acting in accordance with such
request or direction if it does not have actual knowledge of the occurrence and
continuation of such Default as provided in Section 6.1(d).


 


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14.2.        ACTS OF RATED NOTEHOLDERS


 


(a)           Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Rated
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Rated Noteholders in person or by an
agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee, and, where it is hereby expressly
required, to the Issuer. Such instrument or instruments (and the action or
actions embodied therein and evidenced thereby) are herein sometimes referred
to as the Act of
the Rated Noteholders, signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and conclusive in favor
of the Trustee and the Issuer, if made in the manner provided in this Section 14.2.


 


(b)           The fact and date of the execution by any Person of any such instrument
or writing may be proved in any manner which the Trustee deems sufficient.


 


(c)           The principal amount and registered numbers of Rated Notes held by any
Person, and the date of his holding the same, shall be proved by the Note
Register.


 


(d)           Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Rated Notes shall bind the Holder (and any
transferee thereof) of such Rated Note and of every Rated Note issued upon the
registration thereof or in exchange therefor or in lieu thereof, in respect of
anything done, omitted or suffered to be done by the Trustee or the Issuer in
reliance thereon, whether or not notation of such action is made upon such
Rated Note.


 


14.3.        NOTICES, ETC., TO TRUSTEE, THE ISSUER AND THE RATING AGENCIES


 


Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Rated Noteholders or other documents provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with:


 


(a)          the Trustee or the Income Note Paying Agent by any Rated Noteholder or
by the Issuer shall be sufficient for every purpose hereunder if in writing and
sent by facsimile in legible form and confirmed by overnight courier service
guaranteed next day delivery to the Trustee or the Income Note Paying Agent
addressed to it at 181 West Madison Street, 32nd Floor,
Chicago, Illinois 60602, Attention: CDO Trust Services Group — N-Star Real
Estate CDO VII Ltd., telephone number 312-904-4047, fax number 312-602-3935, or
at any other address previously furnished in writing to the Issuer or Rated
Noteholder by the Trustee or Income Note Paying Agent;


 


(b)         the Issuer by the Trustee or by any Rated Noteholder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first class postage prepaid, hand
delivered, sent by overnight courier service or by facsimile in legible form,
to the Issuer addressed to it at c/o Walkers SPV Limited, P.O. Box 908 GT,
Walker House, Mary Street, George Town, Grand Cayman, Cayman Islands,
Attention: The Directors, or at any other address previously furnished in
writing to the Trustee by the Issuer;


 


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(c)           the Rating Agencies by the Issuer or the Trustee shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, hand delivered, sent by
overnight courier service or by facsimile in legible form, (i) in the case
of Fitch, addressed to Fitch Ratings, One State Street Plaza, New York, New
York 10041, facsimile no. 212-558-2618, Attention: CDO Surveillance (e-mail: cdo.surveillance@fitchratings.com);
(ii) in the case of Moody’s, addressed to Moody’s Investors Service, 99
Church Street, New York, New York 10007, facsimile no. (212) 553-0355,
Attention: CDO Monitoring (e-mail: cdomonitoring@moodys.com) and (iii) in
the case of S&P, addressed to S&P, 55 Water Street, 41st Floor, New
York, New York, 10041, Attention: CDO Surveillance and all Note Valuation
Reports shall be sent to S&P electronically at cdo_surveillance@sandp.com;
or


 


(d)           the Initial Hedge Counterparty by the Issuer or the Trustee shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first class postage prepaid, hand delivered
or sent by overnight courier service or by facsimile in legible form to the
Initial Hedge Counterparty addressed to it at the address specified in the
Initial Hedge Agreement or at any other address previously furnished in writing
to the Issuer or the Trustee by the Initial Hedge Counterparty;


 


(e)           the Collateral Manager by the Issuer or by the Trustee or a Majority of
the Controlling Class, or by the Collateral Administrator shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if in
writing and sent by facsimile in legible form and confirmed by overnight
courier service guaranteed next day delivery, or by electronic mail (where
expressly provided herein) to the Collateral Manager addressed to it at the
address specified in the Collateral Management Agreement or at any other
address previously furnished in writing to the Issuer or the Trustee by the
Collateral Manager;


 


(f)            the Income Note Paying Agent by the Trustee
in writing sent by facsimile confirmed by overnight courier guaranteed next day
delivery;


 


(g)           the Placement Agents by the Issuer, the Collateral Manager or the
Trustee shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing and mailed, first-class postage
prepaid, hand delivered, sent by overnight courier service or by telecopy in
legible form, (i) to BAS addressed to Banc of America Securities LLC, 214
North Tryon Street, 14th Floor,
Charlotte, North Carolina 28255, telecopy no. 704-386-0688, Attention: Global
Structured Products and (ii) to Morgan Stanley addressed to Morgan Stanley &
Co. Incorporated, 1585 Broadway, New York, New York 10036, telecopy no.
212-507-4011, Attention: Securitized Products Group; and


 


(h)           to the Repository by the Issuer pursuant to this Indenture shall be
made available to the Repository by electronic mail as a pdf (portable document
format) file to CDO Library, c/o The Bond Market Association, 360 Madison
Avenue (18th Floor), New York, NY 10017; Electronic mail address: admin@cdolibrary.com.


 


Delivery
of any request, demand, authorization, direction, notice, consent, waiver or
Act of Rated Noteholders or other documents made as provided above will be
deemed effective: (i) if in writing and delivered in person or by
overnight courier service, on the date it is delivered; (ii) if sent by
facsimile transmission, on the date that transmission is received by the
recipient in legible form (as evidenced by the sender’s written record of a
telephone call to the recipient in which the recipient acknowledged receipt


 


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of
such facsimile transmission); and (iii) if sent by mail, on the date that
mail is delivered or its delivery is attempted; in each case, unless the date
of that delivery (or attempted delivery) or that receipt, as applicable, is not
a Business Day or that communication is delivered (or attempted) or received,
as applicable, after the close of business on a Business Day, in which case
that communication shall be deemed given and effective on the first following
day that is a Business Day.


 


14.4.
       NOTICES AND REPORTS TO RATED
NOTEHOLDERS; WAIVER


 


Except
as otherwise expressly provided herein, where this Indenture provides for a
report to Holders or for a notice to Holders of Rated Notes of any event, such
notice shall be sufficiently given to Holders of Rated Notes if in writing and
mailed, first-class postage prepaid, to each Holder of a Rated Note affected by
such event, at the address of such Holder as it appears in the Note Register,
not earlier than the earliest date and not later than the latest date, prescribed
for the giving of such report or notice and such report or notice shall be in
the English language. Notwithstanding any provision to the contrary contained
herein or in any agreement or document related hereto, any report, statement or
other information to be provided by the Trustee may be provided by providing
access to the Trustee’s website containing such information. Such reports and
notices will be deemed to have been given on the date of such mailing.


 


The
Trustee will deliver to the Holder of any Rated Note shown on the Note Register
any readily available information or notice requested to be so delivered, at
the expense of the Issuer. In addition, for so long as any Class of Rated
Notes is listed on the Irish Stock Exchange and so long as the rules of
such exchange so require, notices to the Holders of such Rated Notes shall also
be given by the Trustee to the Irish Paying Agent for delivery to the Company
Announcements Office of the Irish Stock Exchange.


 


Neither
the failure to mail any notice, nor any defect in any notice so mailed, to any
particular Holder of a Rated Note shall affect the sufficiency of such notice
with respect to other Holders of Rated Notes.


 


Where
this Indenture provides for notice in any manner, such notice may be waived in
writing by any Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Rated Noteholders shall be filed with the Trustee but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.


 


In
the event that, by reason of the suspension of the regular mail service as a
result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Rated Noteholders when such notice
is required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Trustee shall be
deemed to be a sufficient giving of such notice.


 


14.5.        EFFECT OF HEADINGS AND TABLE OF CONTENTS


 


The
Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.


 


14.6.        SUCCESSORS AND ASSIGNS


 


All
covenants and agreements in this Indenture by the Issuer shall bind its
respective successors and assigns, whether so expressed or not. Written notice
of any assignment shall be promptly provided


 


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by
the Issuer to the Initial Hedge Counterparty, the Holders of Notes of the
Controlling Class and each Rating Agency.


 


14.7.        SEVERABILITY


 


In case any provision in this Indenture or in the Rated Notes shall be
invalid, illegal or unenforceable, the validity, legality, and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.


 


14.8.        BENEFITS OF INDENTURE


 


The Rated Noteholders, the Initial Hedge Counterparty and each Income
Noteholder is an express third-party beneficiary of this Indenture. Nothing in
this Indenture or in the Rated Notes, expressed or implied, shall give to any
Person, other than the parties hereto and their successors hereunder, the Rated
Noteholders, the Initial Hedge Counterparty and each Income Noteholder, any
benefit or any legal or equitable right, remedy or claim under this Indenture.


 


14.9.        GOVERNING LAW


 


This Indenture and each Rated Note shall be governed by, and construed
in accordance with, the law of the State of New York.


 


14.10.      SUBMISSION TO
JURISDICTION


 


The
Issuer hereby irrevocably submits to the non-exclusive jurisdiction of the
Supreme Court of the State of New York sitting in Manhattan and the U.S.
District Court for the Southern District of New York, and any court of appeal
therefrom, in any action or proceeding arising out of or relating to the Rated
Notes or this Indenture, and the Issuer hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in
such New York State or federal court. The Issuer hereby irrevocably waives, to
the fullest extent that it may legally do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding. The Issuer hereby
irrevocably appoints and designates CT Corporation, 111 Eighth Avenue, 13th Floor, New York, New York 10011,
or any other Person having and maintaining a place of business in the State of
New York whom the Issuer may from time to time hereafter designate as the true
and lawful attorney and duly authorized agent for acceptance of service of
legal process of the Issuer. The Issuer agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.


 


14.11.      COUNTERPARTS


 


This
instrument may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.


 


14.12.      WAIVER OF JURY TRIAL


 


EACH
PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDING.
Each party hereby (i) certifies that no representative, agent or attorney
of the other has represented, expressly or otherwise, that the other would not,
in the event of a Proceeding, seek to


 


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enforce
the foregoing waiver and (ii) acknowledges that it has been induced to
enter into this Indenture by, among other things, the mutual waivers and
certifications in this paragraph.


 


14.13.      JUDGMENT CURRENCY


 


This
is an international financing transaction in which the specification of Dollars
(the Specified Currency),  and the specification of the place of
payment, as the case may be (the Specified Place),  is of the essence, and the Specified Currency
shall be the currency of account in all events relating to payments of or on
the Rated Notes. The payment obligations of the Issuer under this Indenture and
the Rated Notes shall not be discharged by an amount paid in another currency
or in another place, whether pursuant to a judgment or otherwise, to the extent
that the amount so paid on conversion to the Specified Currency and transfer to
the Specified Place under normal banking procedures does not yield the amount
of the Specified Currency at the Specified Place. If for the purpose of
obtaining judgment in any court it is necessary to convert a sum due hereunder
or the Rated Notes in the Specified Currency into another currency (the Second Currency),  the rate of exchange which shall be applied shall be that at which in
accordance with normal banking procedures the Trustee could purchase the
Specified Currency with the Second Currency on the Business Day next preceding
that on which such judgment is rendered. The obligation of the Issuer in
respect of any such sum due from the Issuer hereunder shall, notwithstanding
the rate of exchange actually applied in rendering such judgment, be discharged
only to the extent that on the Business Day following receipt by the Trustee of
any sum adjudged to be due hereunder or under the Rated Notes in the Second
Currency the Trustee may in accordance with normal banking procedures purchase
and transfer to the Specified Place the Specified Currency with the amount of
the Second Currency so adjudged to be due; and the Issuer hereby, as a separate
obligation and notwithstanding any such judgment (but subject to the Priority
of Payments as if such separate obligation in respect of each Class of
Rated Notes constituted additional principal owing in respect of such Class of
Rated Notes), agrees to indemnify the Trustee and each Rated Noteholder
against, and to pay the Trustee or such Rated Noteholder, as the case may be,
on demand in the Specified Currency, any difference between the sum originally
due to the Trustee or such Rated Noteholder, as the case may be, in the
Specified Currency and the amount of the Specified Currency so purchased and
transferred.


 


14.14.      CONFIDENTIAL TREATMENT OF DOCUMENTS


 


Except
as otherwise provided in this Indenture or as required by law or as required to
maintain the listing of the Class A Notes, Class B Notes, the Class C
Notes, the Class D Notes and the Class E Notes on the Irish Stock
Exchange, this Indenture and the Hedge Agreement shall be treated by the Trustee
and the Collateral Manager as confidential. The Trustee shall provide a copy of
this Indenture to the Income Note Paying Agent and to any Holder of a
beneficial interest in any Rated Note upon written request therefor certifying
that it is such a Holder.


 


ARTICLE XV


 


ASSIGNMENT OF AGREEMENTS,
ETC.


 


15.1.        ASSIGNMENT


 


The
Issuer, in furtherance of the covenants of this Indenture and as security for
the Rated Notes and amounts payable to the Rated Noteholders hereunder and the
performance and observance of the provisions hereof, hereby assigns, transfers,
conveys and sets over to the Trustee, for the benefit of the Secured Parties,
all of the Issuer’s estate, right, title and interest in, to and under the
Corporate Services Agreement, the Collateral Management Agreement and the Hedge
Agreement, including (i) the right to give all notices, consents and
releases thereunder, (ii) the right to give all notices of termination,
including


 


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the
commencement, conduct and consummation of proceedings at law or in equity, (iii) the
right to receive all notices, accountings, consents, releases and statements
thereunder and (iv) the right to do any and all other things whatsoever
that the Issuer is or may be entitled to do thereunder; provided
that nothing herein shall obligate the Trustee to determine independently
whether “cause” exists for the removal of the Collateral Manager pursuant to
the Collateral Management Agreement. For the avoidance of doubt, in no event shall
the Trustee be required to perform the obligations of the Collateral Manager
under the Collateral Management Agreement.


 


15.2.        NO IMPAIRMENT


 


The
assignment made hereby is executed as collateral security, and the execution
and delivery hereby shall not in any way impair or diminish the obligations of
the Issuer under the provisions of the Corporate Services Agreement, the
Collateral Management Agreement or the Hedge Agreement.


 


15.3.        TERMINATION, ETC.


 


Upon
the redemption and cancellation of the Rated Notes and the payment of all other
Secured Obligations and the release of the Collateral from the lien of this
Indenture, this assignment and all rights herein assigned to the Trustee for
the benefit of the Secured Parties shall cease and terminate and all the
estate, right, title and interest of the Trustee in, to and under the Corporate
Services Agreement, the Collateral Management Agreement and the Hedge Agreement
shall revert to the Issuer and no further instrument or act shall be necessary
to evidence such termination and reversion.


 


15.4.
       ISSUER AGREEMENTS, ETC.


 


The
Issuer represents that it has not executed any other assignment of the
Collateral Administration Agreement, the Collateral Management Agreement or any
Hedge Agreement. The Issuer agrees that this assignment is irrevocable, and
that it will not take any action which is inconsistent with this assignment or
make any other assignment inconsistent herewith. The Issuer will, from time to
time upon the request of the Trustee, execute all instruments of further
assurance and all such supplemental instruments with respect to this assignment
as the Trustee may reasonably specify.


 


ARTICLE XVI


 


HEDGE AGREEMENT


 


16.1.        HEDGE AGREEMENTS


 


The
Issuer will, on or prior to the Closing Date, enter into the Initial Hedge
Agreements with the Initial Hedge Counterparty for the purpose of managing the
Issuer’s interest rate risk exposure relating to the variable rate of interest
applicable to certain Classes of Rated Notes and/or the cashflow timing
mismatch with respect to particular Collateral Debt Securities. On the Closing
Date (or any date on which the Issuer enters into a replacement Hedge
Agreement), (i) the Hedge Counterparty entering into such Hedge Agreement
shall satisfy the Hedge Counterparty Ratings Requirement and (ii) the
Issuer shall assign such Hedge Agreement to the Trustee pursuant to this
Indenture and the Collateral Assignment of Hedge Agreement.


 


(a)          The Trustee shall, on behalf of the Issuer and in accordance with the
Note Valuation Report, pay amounts due to the Hedge Counterparty under the
Hedge Agreement on any Payment Date in accordance with Section 11.1.


 


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(b)         If a Collateralization
Event occurs, the Hedge Counterparty shall within 30 days of the occurrence of
such Collateralization Event either (i) enter into a Credit Support Annex
and post collateral of such types, in such amounts and at such times as are
sufficient to maintain the then-current rating of each Class of Rated
Notes by each Rating Agency, (ii) find a replacement Hedge Counterparty as
permitted under the Hedge Agreement that satisfies the Hedge Counterparty
Ratings Requirement, (iii) obtain a guarantor for the obligations of the
Hedge Counterparty under the Hedge Agreement which satisfies the Hedge
Counterparty Ratings Requirement or (iv) take such other steps as each
Rating Agency that has downgraded the Hedge Counterparty may require (as
confirmed to the Collateral Manager in writing) to ensure that the then-current
ratings on the Rated Notes by either Rating Agency are not reduced or
withdrawn. If the Hedge Counterparty has not, within 30 days of the occurrence
of such Collateralization Event, taken any of the actions required above, an
additional termination event with respect to which the Hedge Counterparty shall
be the sole “affected party” will be deemed to have occurred and the Issuer
shall have the right to terminate the Hedge Agreement (with all costs and
expenses in connection with any such termination to be paid by the Hedge
Counterparty).


 


(c)          If at any time a
Substitution Event has occurred and is continuing, then the Hedge Counterparty
will, (x) in the case of a Substitution Event referred to in sub-clause (i) or
sub-clause (iii) of the definition thereof, within 30 days following such
Substitution Event or (y) in the case of a Substitution Event referred to
in sub-clause (ii) of the definition thereof, within ten Business Days
following such Substitution Event, assign its rights and obligations under the
Hedge Agreement, at no cost to the Issuer, to a party (the Substitute
Party) selected by the Hedge Counterparty that (i) satisfies
the Hedge Counterparty Ratings Requirement, (ii) with respect to which a
Rating Agency Confirmation has been obtained and (iii) that assumes all of
the Hedge Counterparty’s obligations under the Hedge Agreement pursuant to an
agreement satisfactory to the Issuer. If the Hedge Counterparty fails to assign
its rights and obligations under the Hedge Agreement to a Substitute Party
within 30 days following such Substitution Event (in the case of a Substitution
Event referred to in sub-clauses (i) or (iii) of the defmition
thereof) or within ten Business Days following such Substitution Event (in the
case of a Substitution Event referred to in sub-clause (i) of the
definition thereof), then (x) the Hedge Counterparty shall, while it
continues in good faith to search for an eligible Substitute Party, post and
maintain, or continue to maintain, as the case may be, collateral in accordance
with a Credit Support Annex of such types, in such amounts and at such times as
are sufficient to maintain the then-current rating of each Class of Rated
Notes by each Rating Agency, and (y) the Issuer shall have the right to
terminate the Hedge Agreement with all costs of such termination to be paid by
the Hedge Counterparty.


 


(d)         The Issuer may, after the
Closing Date, enter into additional Hedge Agreements (including one or more
Deemed Floating Asset Hedges) with additional Hedge Counterparties as the
Issuer may elect in its sole discretion, in each case (i) subject to
Rating Agency Confirmation, (ii) in the event a proposed additional Hedge
Agreement has an initial notional amount which exceeds U.S.$25,000,000, with
the prior consent of Bank of America, N.A. (so long as it continues to act as
the Initial Hedge Counterparty), and (iii) in the case of additional Hedge
Counterparties, with the delivery to the Issuer of an Opinion of Counsel to the
additional Hedge Counterparty; provided that
the Issuer will not be required to obtain Rating Agency Confirmation in
connection with entering into any Deemed Floating Asset Hedges which are
Form-Approved Hedge Agreements with a Hedge Counterparty that satisfies the
Hedge Counterparty Ratings Requirement.


 


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(e)          The Trustee shall, prior
to the Closing Date in respect of the Initial Hedge Agreement, cause the
Custodian to establish a segregated, non-interest bearing Securities Account
which shall be designated as a “Hedge Counterparty Collateral Account” with
respect to the Hedge Counterparty in respect of which the Trustee shall be the
Entitlement Holder and which the Trustee shall hold in trust for the benefit of
the Secured Parties. The Trustee shall deposit all collateral received from
such Hedge Counterparty under the Hedge Agreement in such Hedge Counterparty
Collateral Account. Any and all funds at any time on deposit in, or otherwise
standing to the credit of, each Hedge Counterparty Collateral Account shall be
held in trust by the Trustee for the benefit of the Secured Parties. The only
permitted withdrawal from or application of funds on deposit in, or otherwise
standing to the credit of, each Hedge Counterparty Collateral Account shall be (i) for
application to obligations of the Hedge Counterparty to the Issuer under the
Hedge Agreement that are not paid when due (whether when scheduled or upon
early termination) or (ii) to return collateral to the Hedge Counterparty
when and as required by the Hedge Agreement in each case upon the direction of
the Issuer pursuant to an Issuer Order. No assets credited to any Hedge
Counterparty Collateral Account shall be considered an asset of the Issuer for
purposes of any of the Coverage Tests unless and until the Issuer or the Trustee
on its behalf is entitled to foreclose on such assets in accordance with the
terms of the Hedge Agreement.


 


(f)          Upon its receipt of
notice that the Hedge Counterparty has defaulted in the payment when due of its
obligations to the Issuer under any Hedge Agreement (or, if earlier, when the
Trustee becomes aware of such default) the Trustee shall make a demand on such
Hedge Counterparty, or any guarantor, if applicable, demanding payment
forthwith. The Trustee shall give notice to the Rated Noteholders and each
Rating Agency upon the continuance of the failure by such Hedge Counterparty to
perform its obligations for two Business Days following a demand made by the
Trustee on such Hedge Counterparty.


 


(g)         If at any time the Hedge
Agreement becomes subject to early termination due to the occurrence of an
“event of default” or a “termination event” (each as defined in the Hedge
Agreement) solely attributable to the Hedge Counterparty or other comparable
event, the Issuer and the Trustee shall take such actions (following the
expiration of any applicable grace period) to enforce the rights of the Issuer
and the Trustee thereunder and under the Collateral Assignment of Hedge
Agreement as may be permitted by the terms of such Hedge Agreement and
consistent with the terms hereof, and shall apply any proceeds of any such
actions (including the proceeds of the liquidation of any collateral pledged by
the Hedge Counterparty) to enter into a replacement Hedge Agreement on
substantially identical terms or on such other terms as to which each Rating
Agency shall have provided a Rating Agency Confirmation with a Substitute Party
with respect to which the Hedge Counterparty Ratings Requirement is satisfied
and each Rating Agency shall have provided a Rating Agency Confirmation. If the
Issuer is the sole non-Affected Party or the sole non-Defaulting Party with
respect to such “event of default” or “termination event”, the Issuer will
(with the assistance of the Collateral Manager) obtain quotations with respect
to such replacement Hedge Agreement from five prospective counterparties
Independent from the Issuer, the Collateral Manager and each other that satisfy
the Hedge Counterparty Ratings Requirement and with respect to which a Rating
Agency Confirmation shall have been obtained and enter into a replacement Hedge
Agreement with the prospective counterparty that provides the lowest quotation
(if the Issuer is required to make a payment to such replacement counterparty)
or the highest quotation (if such replacement counterparty is required to make
a payment to the Issuer).


 


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(h)         The Issuer shall notify each Rating Agency if at any time the Hedge
Counterparty is required to post collateral or assign its rights and
obligations in and under the Hedge Agreement.


 


(i)           The Hedge Agreement may not be amended or modified at any time other
than to effect the appointment of a substitute Hedge Counterparty or to effect
a modification which is of a formal, minor or technical nature or is to correct
a manifest error and which, in the opinion of the Trustee (based upon an
Opinion of Counsel) would not have a material adverse effect on the interests
of Holders of the Rated Notes or of Holders of any Class or Classes of
Rated Notes or the Holders of the Income Notes; provided
that the Issuer has obtained Rating Agency Confirmation with respect to any
such modification. The Trustee shall provide the Collateral Manager and the
Rating Agencies with a copy of any such modification within 10 Business Days
before effecting such modification.


 


(j)           The Issuer shall enter into a Hedge Agreement only if the payments from
the Hedge Counterparty thereunder are not subject to withholding tax or if the
Hedge Counterparty shall be required in accordance with the terms of the Hedge
Agreement to pay additional amounts to the Issuer sufficient to cover any
withholding tax due on payments made by the Hedge Counterparty to the Issuer
under such Hedge Agreement, subject to the Issuer making customary payee tax
representations and providing customary tax documentation. The Issuer shall not
enter into any Hedge Agreement the acquisition (including the manner of
acquisition), ownership, enforcement or disposition of which would subject the
Issuer to tax on a net income basis in any jurisdiction outside the Issuer’s
jurisdiction of incorporation.


 


(k)          The Issuer will not terminate or amend any Hedge Agreement without
receiving Rating Agency Confirmation with respect to such termination or
amendment.


 


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IN WITNESS WHEREOF, we have set our hands as of the date first above written.


 


 


	
  Executed as a Deed by

  	
   

  	
   

  
	
  N-STAR REAL ESTATE CDO VII LTD.,

  	
   

  	
   

  
	
   

  	
  as Issuer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Derrie Boggess

  	
   

  	
  In the presence of:

  	
  /s/ Jesse Hydes

  
	
   

  	
  Name: Derrie Boggess

  	
   

  	
  Witness Name: Jesse Hydes

  
	
   

  	
  Title:   Director

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  LASALLE
  BANK NATIONAL ASSOCIATION,

  	
   

  	
   

  
	
   

  	
  as Trustee

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  



 


[INDENTURE]


 

















 


IN WITNESS WHEREOF, we have set our hands as of the date first above written.


 


 


	
  Executed as a Deed by

  	
   

  	
   

  
	
  N-STAR REAL ESTATE CDO VII LTD.,

  	
   

  	
   

  
	
   

  	
  as Issuer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  LASALLE
  BANK NATIONAL ASSOCIATION,

  	
   

  	
   

  
	
   

  	
  as Trustee

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Thomas O’Connor

  	
   

  	
   

  
	
   

  	
  Name: Thomas O’Connor

  	
   

  	
   

  
	
   

  	
  Title:   Vice President

  	
   

  	
   

  



 


[INDENTURE]