Exhibit 10.1


 


Execution Copy


 


 


SECURITY AGREEMENT


 


dated as of August 21, 2003


 


among


 


N-STAR REAL ESTATE CDO I LTD,


as Issuer,


 


LASALLE BANK NATIONAL ASSOCIATION,


as Trustee,


 


and


 


LASALLE BANK NATIONAL ASSOCIATION,


as Collateral Agent and as Accountholder


 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  I 

  	
  DEFINITIONS

  	
  1

  
	
  Section 1.01.

  	
   

  	
  Definitions

  	
  1

  
	
  Section 1.02.

  	
   

  	
  Assumptions
  as to Collateral Debt Securities

  	
  2

  
	
  Section 1.03.

  	
   

  	
  Generic
  Terms

  	
  3

  
	
  Section 1.04.

  	
   

  	
  Times

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II 

  	
  THE
  COLLATERAL

  	
  3

  
	
  Section 2.01.

  	
   

  	
  Security
  Interests

  	
  3

  
	
  Section 2.02.

  	
   

  	
  Creation
  of Security Interest; Transfer of Control

  	
  7

  
	
  Section 2.03.

  	
   

  	
  Termination
  of Security Interests

  	
  7

  
	
  Section 2.04.

  	
   

  	
  Priority
  of Payments

  	
  7

  
	
  Section 2.05.

  	
   

  	
  Representations
  Regarding Collateral

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III 

  	
  CLOSING
  DATE ACTIONS

  	
  9

  
	
  Section 3.01.

  	
   

  	
  Closing
  Date Requirements

  	
  9

  
	
  Section 3.02.

  	
   

  	
  Closing
  Date Actions

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV 

  	
  ACCOUNTS,
  ACCOUNTINGS AND RELEASES

  	
  10

  
	
  Section 4.01.

  	
   

  	
  Collection
  of Money

  	
  10

  
	
  Section 4.02.

  	
   

  	
  Collection
  Account

  	
  10

  
	
  Section 4.03.

  	
   

  	
  Interest
  Reserve Account

  	
  11

  
	
  Section 4.04.

  	
   

  	
  Expense
  Reserve Account

  	
  12

  
	
  Section 4.05.

  	
   

  	
  Collateral
  Account

  	
  14

  
	
  Section 4.06.

  	
   

  	
  Reports
  by Collateral Agent

  	
  14

  
	
  Section 4.07.

  	
   

  	
  Accountings

  	
  15

  
	
  Section 4.08.

  	
   

  	
  Release
  of Securities

  	
  21

  
	
  Section 4.09.

  	
   

  	
  Reports
  by Independent Accountants

  	
  22

  
	
  Section 4.10.

  	
   

  	
  Reports
  to Rating Agencies

  	
  22

  
	
  Section 4.11.

  	
   

  	
  Notices
  of Noteworthy Events

  	
  22

  
	
  Section 4.12.

  	
   

  	
  Amendments
  to the Transaction Documents

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V 

  	
  PRIORITY
  OF PAYMENTS

  	
  23

  
	
  Section 5.01.

  	
   

  	
  Disbursements
  of Money from Collection Account

  	
  23

  
	
  Section 5.02.

  	
   

  	
  Additional
  Provisions

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI 

  	
  SALE
  OF COLLATERAL DEBT SECURITIES

  	
  29

  
	
  Section 6.01.

  	
   

  	
  Sale
  of Collateral Debt Securities

  	
  29

  
	
  Section 6.02.

  	
   

  	
  Conditions
  Applicable to all Transactions

  	
  29

  



 


i

















 


TABLE OF CONTENTS


(continued)


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII 

  	
  SUBORDINATION

  	
  30

  
	
  Section 7.01.

  	
   

  	
  Subordination

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII 

  	
  HEDGE
  AGREEMENTS, INITIAL HEDGE AGREEMENT

  	
  33

  
	
  Section 8.01.

  	
   

  	
  Hedge
  Agreement Provisions

  	
  33

  
	
  Section 8.02.

  	
   

  	
  Initial
  Hedge Agreement

  	
  36

  
	
  Section 8.03.

  	
   

  	
  Acknowledgement
  of Custodian

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IX 

  	
  THE
  COLLATERAL AGENT

  	
  37

  
	
  Section 9.01.

  	
   

  	
  Appointment
  and Powers

  	
  37

  
	
  Section 9.02.

  	
   

  	
  Performance
  of Duties

  	
  37

  
	
  Section 9.03.

  	
   

  	
  Reliance
  Upon Documents

  	
  38

  
	
  Section 9.04.

  	
   

  	
  Eligibility
  of Collateral Agent

  	
  39

  
	
  Section 9.05.

  	
   

  	
  Successor
  Collateral Agent

  	
  39

  
	
  Section 9.06.

  	
   

  	
  Indemnification

  	
  40

  
	
  Section 9.07.

  	
   

  	
  Compensation
  and Reimbursement

  	
  40

  
	
  Section 9.08.

  	
   

  	
  Representations
  and Warranties of the Collateral Agent

  	
  41

  
	
  Section 9.09.

  	
   

  	
  Accounts

  	
  41

  
	
  Section 9.10.

  	
   

  	
  Waiver
  of Setoffs

  	
  41

  
	
  Section 9.11.

  	
   

  	
  Provision
  of Information

  	
  42

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  X 

  	
  COVENANTS
  OF THE ISSUER

  	
  42

  
	
  Section 10.01.

  	
   

  	
  Preservation
  of Collateral

  	
  42

  
	
  Section 10.02.

  	
   

  	
  Opinions
  as to Collateral

  	
  42

  
	
  Section 10.03.

  	
   

  	
  Non-Interference;
  etc.

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XI 

  	
  MISCELLANEOUS

  	
  43

  
	
  Section 11.01.

  	
   

  	
  Amendments

  	
  43

  
	
  Section 11.02.

  	
   

  	
  Notices

  	
  44

  
	
  Section 11.03.

  	
   

  	
  Severability

  	
  45

  
	
  Section 11.04.

  	
   

  	
  Term
  of This Agreement

  	
  45

  
	
  Section 11.05.

  	
   

  	
  Assignments

  	
  45

  
	
  Section 11.06.

  	
   

  	
  Non-Petition
  Agreement

  	
  45

  
	
  Section 11.07.

  	
   

  	
  Trial
  by Jury Waived

  	
  46

  
	
  Section 11.08.

  	
   

  	
  Governing
  Law

  	
  46

  
	
  Section 11.09.

  	
   

  	
  Consents
  to Jurisdiction

  	
  46

  
	
  Section 11.10.

  	
   

  	
  Service
  of Process

  	
  46

  
	
  Section 11.11.

  	
   

  	
  Time
  of Essence

  	
  47

  



 


ii

















 


TABLE OF CONTENTS


(continued)


 


	
   

  	
   

  	
  Page

  
	
  Section 11.12. 

  	
  Counterparts

  	
  47

  
	
  Section 11.13. 

  	
  Integration

  	
  47

  
	
  Section 11.14. 

  	
  Headings

  	
  47

  
	
  Section 11.15. 

  	
  Limited
  Recourse

  	
  47

  
	
  Section 11.16. 

  	
  Payments
  in Accordance with the Priority of Payments

  	
  47

  
	
  Section 11.17. 

  	
  Collateral
  Agent and Its Affiliates

  	
  47

  
	
  Section 11.18. 

  	
  Judgment
  Currency

  	
  48

  
	
   

  	
   

  	
   

  	
   

  
	
  ANNEX
  A

  	
  Steps
  Required For Delivery

  	
   

  	
  Annex A-l

  
	
  ANNEX
  B

  	
  Glossary
  of Certain Defined Terms

  	
   

  	
  Annex B-l

  
	
  ANNEX
  C

  	
  Specified
  Types

  	
   

  	
  Annex C-l

  
	
  SCHEDULE
  A

  	
  Collateral
  Debt Securities as of the Closing Date

  	
   

  	
  Schedule A-l

  
	
  SCHEDULE
  B

  	
  Moody’s
  Recovery Rate Matrix

  	
   

  	
  Schedule B-l

  
	
  SCHEDULE
  C

  	
  Fitch
  Recovery Rate Matrix

  	
   

  	
  Schedule C-l

  
	
  SCHEDULE
  D

  	
  S&P
  Recovery Rate Matrix

  	
   

  	
  Schedule D-l

  
	
  SCHEDULE
  E

  	
  Auction
  Procedures

  	
   

  	
  Schedule E-l

  
	
  SCHEDULE
  F

  	
  Diversity
  Score

  	
   

  	
  Schedule F-l

  
	
  SCHEDULE
  G

  	
  Fitch
  Sectors and Subsectors

  	
   

  	
  Schedule G-l

  
	
  SCHEDULE
  H

  	
  S&P
  Industry Classification Group

  	
   

  	
  Schedule H-l

  
	
  SCHEDULE
  I

  	
  S&P
  Structured Finance Sectors

  	
   

  	
  Schedule I-l

  
	
  SCHEDULE
  J

  	
  S&P
  Notching Criteria I

  	
   

  	
  Schedule J-l

  
	
  SCHEDULE
  K

  	
  S&P
  Notching Criteria II

  	
   

  	
  Schedule K-l

  
	
  SCHEDULE
  L

  	
  Moody’s
  Notching Criteria

  	
   

  	
  Schedule L-l

  
	
  SCHEDULE
  M

  	
  Moody’s
  Industry Classification Groups

  	
   

  	
  Schedule M-l

  
	
  SCHEDULE
  N

  	
  Fitch
  Report

  	
   

  	
  Schedule N-l

  
	
  SCHEDULE
  O

  	
  Fitch
  Industry Classification Groups

  	
   

  	
  Schedule O-l

  
					



 


iii

















 


This
SECURITY AGREEMENT (as amended from time to time, this “Agreement”) is
made as of August 21, 2003 by and among N-Star Real Estate CDO I Ltd, a
company incorporated under the laws of the Cayman Islands, as issuer (the “Issuer”),
LaSalle Bank National Association, a national banking association, as trustee
under the Trust Deed (in such capacity, the “Trustee”), as collateral
agent for and on behalf of the Secured Parties (in such capacity, the “Collateral
Agent”) and as securities intermediary and depositary bank (in such
capacity, the “Accountholder”).


 


RECITALS


 


1.                                       The Issuer intends to purchase for investment
Collateral Debt Securities primarily consisting of CMBS Securities and REIT
Debt Securities.


 


2.                                       In order to obtain funds for its purchases of
the Collateral Debt Securities, the Issuer together with N-Star Real Estate CDO
I Corp., a company organized under the laws of the State of Delaware (the “Co-Issuer”,
and together with the Issuer, the “Co-Issuers”), intend to issue on the
date hereof (a) U.S.$250,000,000 aggregate principal amount of
Class A-1 Floating Rate Senior Notes Due 2038, (b) U.S.$45,000,000
aggregate principal amount of Class A-2A Floating Rate Senior Notes Due
2038, (c) U.S.$15,000,000 aggregate principal amount of Class A-2B
Fixed Rate Senior Notes Due 2038, (d) U.S.$15,000,000 aggregate principal
amount of Class B-1 Floating Rate Senior Subordinate Notes Due 2038,
(e) U.S.$10,000,000 aggregate principal amount of Class B-2 Floating
Rate Senior Subordinate Notes Due 2038, (f) U.S.$5,000,000 aggregate
principal amount of Class C-lA Floating Rate Subordinate Notes Due 2038,
(g) U.S.$5,000,000 aggregate principal amount of Class C-1B Fixed
Rate Subordinate Notes Due 2038, (h) U.S.$24,000,000 aggregate principal
amount of Class C-2 Fixed Rate Subordinate Notes Due 2038,
(i) U.S.$10,000,000 aggregate principal amount of Class D-1A Floating
Rate Subordinate Notes Due 2038 and (j) U.S.$4,000,000 aggregate principal
amount of Class D-1B Fixed Rate Subordinate Notes Due 2038 pursuant to the
Trust Deed, and the Issuer intends to issue on the date hereof 19,000 Preferred
Shares pursuant to the Articles.


 


3.                                       In order to provide security for the
performance by each of the Co-Issuers of all of their obligations to pay to the
Secured Parties amounts payable in respect of such Notes in accordance with
their terms and the terms of the Note Agency Agreement, the Trust Deed and the
other Transaction Documents, the Issuer has agreed to Grant to the Collateral
Agent, on behalf and for the benefit of the Secured Parties, a security
interest in the Collateral in the manner set forth in this Agreement.


 


AGREEMENTS


 


In
consideration of the premises and of the agreements herein contained, and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, each of the Issuer, the Trustee, the Collateral Agent and
the Accountholder hereby agree as follows:


 


ARTICLE I


 


DEFINITIONS


 


Section 1.01.                                  Definitions. Capitalized terms used herein and not defined herein shall have the
meanings set forth in the Glossary of Certain Defined Terms attached as Annex
B hereto (the “Glossary”).


 

















 


Section 1.02.                                  Assumptions as to Collateral Debt Securities.


 


(a)                                  In connection with all calculations required
to be made pursuant to this Agreement with respect to Scheduled Distributions
on any Collateral Debt 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 Collateral Debt Securities and on any other
amounts that may be received for deposit in the Collection Account, the
provisions set forth in this Section 1.02 shall be applied.


 


(b)                                 All calculations by or on behalf of the
Trustee or the Issuer with respect to Scheduled Distributions on the Collateral
Debt Securities shall be made on the basis of information as to the terms of
each such Collateral Debt Security and upon report of payments, if any,
received on such Collateral Debt Security that are furnished by or on behalf of
the issuer of such Collateral Debt Security and, to the extent they are not
manifestly in error, such information or report may be conclusively relied upon
in making such calculations.


 


(c)                                  Each Scheduled Distribution receivable with
respect to a Collateral Debt 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 Investment Rate; provided, however, that if the nominal due
date for any payment on any Collateral Debt Security or Eligible Investment
occurs on a day during a Due Period that is not a business day under the
applicable Underlying Instrument and as a result such payment is paid and
received in the following Due Period, then such payment shall be deemed to have
been received during the Due Period in which such nominal due date falls if
such payment is timely made in accordance with the related Underlying
Instrument. 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 Note Payment Account and application, in accordance with
the terms hereof, of the Notes and of the Trust Deed, to payments on the Notes
or other amounts payable pursuant to this Agreement.


 


(d)                                 For accounting and reporting purposes only,
for each Collateral Debt Security that bears interest based on a floating rate
index, all calculations involving such floating rate index for the then-current
period shall be assumed to be equal to the then-current rate as had been set in
accordance with the terms of the Collateral Debt Security and all calculations
involving such floating rate index for future periods shall be assumed to be
equal to the applicable floating rate on the relevant Measurement Date.


 


(e)                                  For purposes of calculating the Class A
Interest Coverage Ratio, the Class B Interest Coverage Ratio, the
Class C Interest Coverage Ratio and the Class D Interest Coverage
Ratio, the expected interest income on floating rate Collateral Debt Securities
and the expected interest payable on the Notes will be calculated using the then-current
interest rates applicable thereto and expected interest earned on the Eligible
Investments will be calculated using the then-current interest rate applicable
thereto.


 


(f)                                    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 Scheduled Distribution thereon shall, for
purposes of the Coverage Tests, be deemed to be payable net of such withholding
tax unless the issuer thereof or obligor thereon is required to make additional
payments to fully compensate the Issuer for such withholding taxes (including
in respect of any such additional payments). On any date of determination, the
amount of any Scheduled Distribution due on any future date shall be assumed to
be made net of any such uncompensated withholding tax based upon withholding
tax rates in effect on such date of determination.


 


2

















 


(g)                            Unless otherwise provided herein, test
calculations that evaluate to a percentage shall be rounded to the nearest
ten-thousandth and test calculations that evaluate to a number or decimal will
be rounded to the nearest one-hundredth.


 


Section 1.03.                             Generic Terms. The terms “hereof”, “herein” or
“hereunder”, unless otherwise modified by more specific reference, shall refer
to this Agreement in its entirety. Unless otherwise indicated in context, the
terms “Article”, “Section”, “Appendix”, “Exhibit” or “Annex” shall refer to an
Article or Section of, or Appendix, Exhibit or Annex to, this
Agreement. The definition of a term shall include the singular, the plural, the
past, the present, the future, the active and the passive forms of such term.
The words “include”, “including” and “included” shall be illustrative and shall
not imply any limitation or exclusion unless the context clearly indicates
otherwise.


 


Section 1.04.                                  Times. All times referred to herein shall be to times in The City of New
York, unless otherwise expressly stated herein.


 


ARTICLE II


 


THE COLLATERAL


 


Section 2.01.                                  Security Interests.


 


(a)                             Grant to the Collateral Agent on behalf and
for the benefit of the Secured Parties. In order to secure the full and punctual payment, and the performance
by the Issuer, of all of the Issuer’s obligations with respect to the Notes,
this Agreement, the Note Agency Agreement, the Trust Deed and each Hedge
Agreement and to secure the performance of all obligations of the Issuer under
this Agreement and the other Transaction Documents in favor of (i) the
Trustee for itself and on behalf of the Noteholders, (ii) the Collateral
Advisor and (iii) each Hedge Counterparty (collectively, the “Secured
Parties”), the Issuer hereby Grants to the Collateral Agent on behalf and
for the benefit of the Secured Parties, as their respective interests may
appear, subject to the provisions of this Agreement, a continuing first
priority Lien on, and first priority security interest in, all of its right,
title and interest in, to and under all of the assets of the Issuer, whether
now owned and existing or hereafter acquired or arising and wherever located,
but excluding all of the Issuer’s right, title and interest in and to
(A) the Ordinary Shares Account and any amounts on deposit therein, which
will equal the sum of $2,000, representing (1) the paid up share capital
of the Issuer resulting from the issuance of the Ordinary Shares ($1,000) under
the Articles and (2) the fee paid to the Issuer for issuing the Notes
($1,000) and (B) the Preferred Share Distribution Account and any amounts
on deposit therein (all non-excluded assets being collectively referred to as
the “Collateral”); provided that
the Collateral shall include, without limitation, the following:


 


(i)                                          the Collateral Account, including all
Collateral Debt Securities (listed, as of the Closing Date, in Schedule A)
which the Issuer causes to be delivered to the Collateral Agent for the benefit
and on behalf of the Secured Parties (directly or through a Securities
Intermediary or bailee) and all payments thereon or with respect thereto, and
all Collateral Debt Securities that are delivered to the Collateral Agent in
the future pursuant to the terms hereof and all payments thereon or with
respect thereto;


 


(ii)                                       the Note Payment Account, the Interest
Reserve Account, the Expense Reserve Account, the Hedge Termination Receipts
Account, the Hedge Replacement Account and the Collection Account (collectively
with the Collateral Account, the “Accounts”);


 


3

















 


(iii)                                    Eligible Investments purchased with funds on
deposit in any Account and all funds on deposit in any Account and all income
from the investments of funds in any Account;


 


(iv)                                   all Cash or Money delivered to the Collateral
Agent for the benefit of the Trustee (directly or through a Securities Intermediary
or bailee);


 


(v)                                      all the Issuer’s rights under each Hedge
Agreement (including any collateral pledged for the benefit of the Issuer
thereunder) and all payments thereunder or with respect thereto;


 


(vi)                                   all the Issuer’s rights under the Collateral Advisory
Agreement and the Collateral Administration Agreement;


 


(vii)                                all Securities, Security Entitlements,
Instruments, Money and Investment Property and other property of any type or
nature in which the Issuer has an interest, including any part thereof which
consists of General Intangibles; and


 


(viii)                             all proceeds, accessions, profits, income,
substitutions and replacements, whether voluntary or involuntary, of and to any
property in which the Issuer has granted such security interest.


 


Such
Grants are made, however, in trust to secure the Notes equally and ratably
without prejudice, priority or distinction, except as expressly provided in
this Agreement, between any Note and any other Note by reason of difference in
time of issuance or otherwise, and to secure in accordance with the priorities
set forth in this Agreement (i) the payment of all amounts due on the
Notes in accordance with their terms, (ii) the payment of all other sums
payable under this Agreement and all amounts payable to the Collateral Advisor
under the Collateral Advisory Agreement and each Hedge Counterparty under a
Hedge Agreement and (iii) compliance with the provisions of this
Agreement, the Collateral Advisory Agreement and each Hedge Agreement, all as
provided in this Agreement. The Collateral Agent, on behalf of the Secured
Parties, acknowledges such Grant, accepts the trusts hereunder and agrees to
perform the duties herein in accordance with the provisions hereof.


 


(b)                                 Priorities. The Issuer intends, and the Collateral Agent agrees, that the
security interests in the Collateral securing the Issuer’s obligations with
respect to the Notes and performance of all its obligations under this
Agreement in favor of the Collateral Agent for the benefit of the Secured
Parties shall rank pari passu with
each other, shall be prior to all other Liens in respect of the Collateral,
subject to the terms of this Agreement, and shall be subject to the Priority of
Payments. The Issuer shall take all actions necessary to obtain and maintain,
in favor of the Collateral Agent for the benefit of the Secured Parties, a
first priority Lien on and a first priority perfected security interest in the
Collateral, subject to no other Liens.


 


(c)                                  Holding of Collateral. The Collateral Agent, for the benefit and
on behalf of the Secured Parties, acknowledges the Grant of the security
interests under this Agreement in accordance with the provisions of this
Agreement. The Collateral in the form of Securities, Security Entitlements,
Instruments and Money shall be held by the Accountholder for the Collateral
Agent for the benefit and on behalf of the Secured Parties pursuant to the
Account Control Agreement and the Accountholder shall comply with any
instruction given by the Collateral Agent. If so directed in writing by the
Issuer, the Collateral Agent shall, and in any event shall cause the
Accountholder to, hold, and perfect the security interest in, the Collateral.
Except as provided herein, no Collateral may be withdrawn from the Accounts.


 


4

















 


(d)                                 Delivery of Portfolio Collateral. Collateral Debt Securities acquired prior
to or on the Closing Date shall be delivered by, or at the direction of, the
Issuer to the Collateral Agent on or before the Closing Date in accordance with
Annex A hereto, and the 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 shall be delivered by, or at the
direction of, the Issuer to the Collateral Agent when acquired in accordance
with Annex A hereto. The Issuer shall Grant pursuant to Section 2.01(a) all
of the Issuer’s right, title and interest in and to the Collateral Debt
Securities and deliver the Collateral Debt Securities in accordance with the
requirements set forth in Annex A hereto in order to perfect a first
priority security interest in favor of the Collateral Agent on behalf and for
the benefit of the Secured Parties. If any such Collateral Debt Securities are
held through the Accountholder, delivery shall be deemed to have occurred upon
receipt of evidence satisfactory to the Collateral Agent that such Collateral
Debt Securities have been credited to the Collateral Account in accordance with
Annex A hereto.


 


(e)                                  Financing Statements. The Issuer shall cause a UCC financing
statement describing the Collateral and naming the Issuer as debtor and the
Collateral Agent as secured party to be filed, by or on behalf of the Issuer,
in the District of Columbia within ten (10) Business Days of the Closing
Date. The Issuer shall take all actions necessary to maintain the effectiveness
of such financing statement and shall notify the Collateral Agent in writing
not less than thirty (30) days prior to any change in the Issuer’s name, identity,
corporate structure, jurisdiction of incorporation or jurisdiction of its chief
executive office. The Issuer hereby authorizes the Collateral Agent to, and the
Collateral Agent shall upon receipt of an Opinion of Counsel as to the
necessity of such filing, file such additional financing statement or any other
financing statement, amendment, assignment or continuation statement that the
Issuer shall deem necessary or advisable in connection with the security
interest Granted hereunder, including, without limitation, financing statements
describing the Collateral. The Issuer agrees that it will from time to time
cause to be filed financing statements and continuation statements required to
be made, it being understood that the Collateral Agent shall be entitled to
rely upon an Opinion of Counsel as to the need to file such financing
statements and continuation statements, the dates by which such filings are
required to be made and the jurisdictions in which such filings are required to
be made. The Issuer shall not without the written consent of the Collateral
Agent (which consent shall not be unreasonably withheld or delayed) authorize
the filing of any financing statements naming it as debtor other than financing
statements in favor of the Collateral Agent.


 


(f)                                    Pledge Notices. Concurrently with the execution and
delivery by the Issuer of the Transaction Documents, the Issuer shall deliver
to each of the Accountholder, the Collateral Agent, the Trustee, each Paying
Agent, each Hedge Counterparty and the Collateral Advisor, a notice in form and
substance satisfactory to the Collateral Agent informing such Persons of the
Collateral Agent’s charge over, and security interest in, the Hedge Agreements
and all of the Issuer’s right, title and interest in, to and under the
Collateral Advisory Agreement and the Collateral Administration Agreement. Each
Hedge Counterparty shall, by entering into such agreement, acknowledge that the
Lien of this Agreement extends to such agreement.


 


(g)                                 No Transfer of Duties. The security interests are Granted as
security only and shall not (i) transfer or in any way affect or modify,
or relieve the Issuer from any obligation to perform or satisfy, any term,
covenant, condition or agreement to be performed or satisfied by the Issuer under
or in connection with this Agreement or any other Transaction Document to which
it is a party or (ii) impose any obligation on the Trustee, the Collateral
Agent, the Collateral Advisor or the Accountholder to perform or observe any
such term, covenant, condition or agreement or impose any liability on the
Trustee, the Collateral Agent, the Collateral Advisor or the Accountholder for
any act or omission on the part of the Issuer relative thereto or for any
breach of any representation or warranty on the part of the Issuer contained
therein or made in connection therewith.


 


5

















 


(h)                            Representative of Noteholders Only; Agent for
All Other Secured Parties.
With respect to the security interests created hereunder, the pledge of any
item of Collateral to the Collateral Agent is made to the Collateral Agent
(i) for the benefit of the Trustee as representative of the Noteholders
and (ii) as agent for each of the other Secured Parties; in furtherance of
the foregoing, the possession by the Collateral Agent of any item of
Collateral, the endorsement to or registration in the name of the Collateral
Agent of any item of Collateral (including as entitlement holder of the
Collateral Account) are all undertaken by the Collateral Agent for the benefit
of the Trustee as representative of the Noteholders and as agent for each of
the other Secured Parties. The Collateral Agent shall have no fiduciary duties
to any Hedge Counterparty or the Collateral Advisor; provided that the foregoing shall not limit any of the
express obligations of the Collateral Agent under this Agreement.


 


(i)                                The Issuer hereby agrees, and hereby
undertakes to obtain the agreement of the Collateral Advisor, in the Collateral
Advisory Agreement to the following:


 


(i)                                          The Collateral Advisor consents to, and
agrees to perform, the provisions of this Agreement and the other Transaction
Documents applicable to the Collateral Advisor.


 


(ii)                                       The Collateral Advisor acknowledges that the
Issuer is assigning all of its right, title and interest in, to and under the
Collateral Advisory Agreement to the Collateral Agent on behalf and for the
benefit of the Secured Parties, and the Collateral Advisor agrees that all of
the representations, covenants and agreements made by the Collateral Advisor in
the Collateral Advisory Agreement are also for the benefit of the Secured
Parties.


 


(iii)                                    Neither the Issuer nor the Collateral Advisor
will enter into any agreement amending, modifying or terminating the Collateral
Advisory Agreement (other than in respect of an amendment or modification of
the type that may be made to this Agreement and the Trust Deed without
Noteholder consent) or selecting or consenting to a successor collateral
advisor, without prior written notice to the Requisite Noteholders and Rating
Agency Confirmation.


 


(iv)                                   Except as otherwise set forth in the
Collateral Advisory Agreement, the Collateral Advisor shall continue to serve
as Collateral Advisor under the Collateral Advisory Agreement notwithstanding
that the Collateral Advisor shall not have received amounts due it under the
Collateral Advisory Agreement because sufficient funds were not then available
to pay such amounts and the Collateral Advisor agrees not to cause the filing
of a petition in bankruptcy against the Issuer for the non-payment to the
Collateral Advisor until the later of (A) payment in full of all Notes
issued under the Trust Deed and the payment of the amounts, if any, to the
Preferred Share Fiscal and Paying Agent for payment of dividends and other
distributions on the Preferred Shares pursuant to the Preferred Share
Documents, in accordance with the Priority of Payments plus
ten (10) days following such payment, and (B) the expiration
of a period equal to the applicable preference period under any applicable
bankruptcy law; provided that
nothing in this clause (B) shall preclude, or be deemed to estop,
the Collateral Advisor (1) from taking any action prior to the expiration
of the ten (10) days following such payment or, if longer, the applicable
preference period then in effect, in (x) any case or proceeding
voluntarily filed or commenced by the Issuer or the Co-Issuer, as the case may
be, or (y) any involuntary insolvency proceeding filed or commenced
against the Issuer or the Co-Issuer, as the case may be, by a Person other than
the Collateral Advisor or (2) from commencing against the Issuer or the
Co-Issuer or any properties of the Issuer or the Co-Issuer any legal action
that is not a bankruptcy, reorganization, arrangement, insolvency, moratorium
or liquidation proceeding; and provided,
further, that the obligations of the Issuer hereunder shall be
payable solely from the Collateral in accordance with the Priority of Payments.


 


(j)                                Collateral Agent as Attorney-In-Fact. Without imposing any obligations on the
Collateral Agent with respect thereto (other than as set forth in this
Agreement), the Issuer hereby


 


6

















 


appoints
the Collateral Agent as its attorney-in-fact for the specific purpose of filing
any financing statements and continuation statements with respect to the
security interests provided for herein.


 


Section 2.02.                                  Creation of Security Interest; Transfer of
Control. The Issuer hereby
agrees to (a) create in each item of Collateral in favor of the Collateral
Agent on behalf and for the benefit of the Secured Parties a first priority
Lien on the Collateral Granted pursuant to Section 2.01(a) and
(b) give Control over each item of the Collateral constituting a
Financial Asset to the Collateral Agent. The obligation in the preceding
sentence shall be an obligation of the Issuer and not an obligation of the
Collateral Agent or the Accountholder. All procedures regarding the transfer,
relinquishment or maintenance of Control by the Collateral Agent over the
Collateral shall be governed by the Account Control Agreement and Annex A
hereto. The parties hereto agree that, following the occurrence of any Event of
Default, the Trustee shall be entitled to give all instructions to the
Collateral Agent on behalf of the Secured Parties as described in Section 9.01.


 


Section 2.03.                                  Termination of Security Interests. On the Final Termination Date, the security
interests and the rights, remedies, powers, duties, authority and obligations
conferred upon the Collateral Agent for the benefit and on behalf of the
Secured Parties and the Accountholder pursuant to this Agreement shall
terminate and be of no further force and effect and all rights, remedies,
powers, duties, authority and obligations of each of the Collateral Agent, the
Accountholder and the Trustee with respect to the Collateral shall be
automatically released in favor of the Issuer; provided,
however, that each of the Collateral Agent, the Accountholder and
the Trustee, if requested in writing by the Issuer, shall execute and deliver
such instruments of release in favor of the Issuer as the Issuer may reasonably
request to effectuate such release, and any such instruments so executed and
delivered shall be fully binding on each of the Trustee, the Collateral Agent
and the Accountholder.


 


Section 2.04.                                  Priority of Payments. All amounts received in respect of the
Collateral (whether by payments or by sale or other disposition) that are
available for distribution shall be distributed in accordance with the Priority
of Payments set forth herein.


 


Section 2.05.                                  Representations Regarding Collateral. The Issuer, as of the date hereof (and, as
of the date of each acquisition of any Collateral), represents and warrants to
the following:


 


(a)                                  This Agreement creates a valid and continuing
security interest (as defined in the applicable UCC) in the Collateral in favor
of the Collateral Agent 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 in accordance with the
requirements set forth in Annex A hereto and filing of the appropriate
financing statements in the appropriate filing offices, the Lien and security
interest created by this Agreement shall be a perfected first priority security
interest in favor of the Collateral Agent for the benefit of the Secured
Parties.


 


(b)                                 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 Agreement 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.


 


(c)                                  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


 


7

















 


Date
committed to purchase but which will not have settled on or before the Closing
Date, in good faith without notice of any adverse claim, except as described in
paragraph (b) above.


 


(d)                                 The Issuer (i) 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, to the Collateral Agent in
accordance with Annex A hereto and (ii) 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
Agreement;


 


(e)                                  The Issuer has full right to Grant all
security interests Granted herein.


 


(f)                                  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 UCC.


 


(g)                               Each of the Accounts, and all subaccounts
thereof, constitute Securities Accounts.


 


(h)                                 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 UCC.


 


(i)                                     Other than the security interest Granted to
the Collateral Agent on behalf and for the benefit of the Secured Parties
pursuant to this Agreement, 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 Collateral Agent 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 Corp. lien or tax lien filings against it.


 


(j)                                     The Issuer has caused or will have caused,
within ten (10) days of the Closing Date, the filing of all appropriate
financing statements in the proper filing office in the appropriate
jurisdictions under applicable law in order to perfect the security interest in
the Collateral Granted to the Collateral Agent 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 UCC, if
any.


 


(k)                                  The Collateral Agent 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 Collateral Agent 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 Collateral Agent 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
Collateral Agent on behalf and for the benefit of (A) the Trustee, for the
benefit of the Noteholders, (B) the Collateral Advisor and (C) each
Hedge Counterparty.”


 


8














 


(l)                           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 Collateral Agent on
behalf and for the benefit of the Secured Parties.


 


(m)                          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 Collateral Agent on behalf and for the benefit of the
Secured Parties of its interest and rights in the Collateral hereunder.


 


(n)                            The Issuer has delivered to the Trustee a
fully executed agreement pursuant to which the Collateral Agent and the
Accountholder have agreed to comply with all instructions originated by the
Trustee relating to the Accounts without further consent by the Issuer.


 


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


 


(p)                            Notwithstanding any other provision of this
Agreement or any other related Transaction Document, the representations in
this Section 2.05 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 Agreement, the Trust Deed,
the Note Agency Agreement and the Notes have been finally and fully paid and
performed.


 


(q)                            The parties to this Agreement (i) shall
not, without obtaining a Rating Agency Confirmation, waive any of the
representations in this Section 2.05; (ii) shall provide each
of the Rating Agencies with prompt written notice of any breach of the
representations contained in this Section 2.05 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 2.05.


 


ARTICLE III


 


CLOSING DATE ACTIONS


 


Section 3.01.                             Closing Date Requirements. The Issuer hereby represents and warrants
to the Collateral Agent on behalf and for the benefit of the Secured Parties
that as of the Closing Date it will have acquired Collateral Debt Securities
and Eligible Investments in an aggregate Principal Balance representing at
least U.S.$402.1 million.


 


Section 3.02.                             Closing Date Actions. Within fifteen (15) Business Days after the
Closing Date, (i) the Issuer, or the Collateral Advisor on the Issuer’s
behalf, shall be required to obtain and deliver to the Trustee an accountants’
certificate from the Independent Accountants of national reputation
(a) confirming the information with respect to each Collateral Debt Security
set forth on Schedule A hereto, as of the Closing Date and the
information provided by the Issuer with respect to every other asset included
in the Collateral, by reference to such sources as will be specified therein,
(b) certifying as of the Closing Date the procedures applied and the
associated findings with respect to the Coverage Tests and (c) the
procedures undertaken by them to review data and computations relating to the
foregoing statement, (ii) the Trustee shall be required to run the S&P
CDO Monitor and (iii) the Trustee will be required to report the S&P
scenario default and break-even default rate for each Class of Notes.


 


9

















 


ARTICLE IV


 


ACCOUNTS, ACCOUNTINGS AND RELEASES


 


Section 4.01.                             Collection of Money. The Accounts established by the Collateral
Agent pursuant to Section 8.01 and this Article IV may
include any number of sub-accounts requested by the Collateral Advisor for
convenience in administering Collateral Debt Securities. In addition, all Cash
deposited in the Accounts established pursuant to this Article IV
shall be invested in Eligible Investments in accordance with the procedures set
forth in this Article IV and any restrictions applicable to such
Accounts.


 


Section 4.02.                             Collection Account.


 


(a)                             The Collateral Agent shall, prior to the
Closing Date, establish a single, segregated trust account in the United States
which shall be designated as the “Collection Account”, which shall be
held in the name of the Collateral Agent for the benefit and on behalf of the
Secured Parties and over which the Collateral Agent shall have exclusive
Control and the sole right of withdrawal, into which the Collateral Agent shall
from time to time deposit, in addition to the deposits required pursuant to Sections
4.03(d) and 4.04(d), (i) all distributions on the
Collateral Debt Securities and (ii) all proceeds received from the
disposition of any Collateral Debt Securities (unless simultaneously reinvested
in Eligible Investments) and (iii) all Collections. Funds in the
Collection Account shall not be commingled with any other Money. The Collateral
Agent shall give to the Issuer, the Collateral Advisor and the Trustee prompt
notice if the Collection Account or any funds on deposit therein, or otherwise
to the credit thereof, shall become subject to any writ, order, judgment,
warranty of attachment, execution or similar process. The Issuer shall not have
any legal, equitable or beneficial interest in the Collection Account other
than in accordance with the Priority of Payments. In addition, (x) the
Issuer may, but under no circumstances shall be required to, deposit or cause
to be deposited from time to time such Moneys in the Collection Account as it
deems, in its sole discretion, to be advisable and by notice to the Collateral
Agent and (y) the Collateral Advisor may designate such Money to be
treated as Collateral Principal Collections or Collateral Interest Collections
hereunder at its discretion. All Money deposited from time to time in the Collection
Account pursuant to this Agreement shall be held by the Collateral Agent as
part of the Collateral and shall be applied in accordance with the terms hereof
and to the purposes herein provided. The Collection Account shall remain at all
times with a financial institution having a long-term debt rating of at least
“BBB+” by S&P, at least “Baal” by Moody’s and, at least “BBB+” by Fitch and
a short-term debt rating of at least “A-1” by S&P, at least “P-1” by
Moody’s and, at least “F-1” by Fitch.


 


(b)                            All Distributions, any deposit required
pursuant to Section 4.02(c) and any net proceeds from the sale
or disposition of a Collateral Debt Security received by the Collateral Agent
shall be immediately deposited into the Collection Account. All such property,
together with any securities in which funds included in such property are or
will be invested or reinvested during the term of this Agreement, and any
income or other gain realized from such investments, shall be held by the
Collateral Agent in the Collection Account as part of the Collateral subject to
disbursement and withdrawal as provided in this Section 4.02. By
Issuer Order (which may be in the form of standing instructions), the Issuer
(or the Collateral Advisor on behalf of the Issuer) may at any time direct the
Collateral Agent to, and upon receipt of such Issuer Order the Collateral Agent
shall, invest all funds received into the Collection Account during a Due
Period, and amounts received in prior Due Periods and retained in the
Collection Account, as so directed in Eligible Investments maturing no later
than the Business Day immediately preceding the next Payment Date. The
Collateral Agent shall, within one (1) Business Day after receipt of any
Distribution or other proceeds which is not Cash, so notify the Issuer and the
Issuer (or the Collateral Advisor on behalf of the Issuer) shall, within thirty
(30) Business Days after receipt of


 


10

















 


such
notice from the Collateral Agent, sell such Distribution or other proceeds for
Cash in an arm’s-length transaction to a Person which is not an Affiliate
(other than a Permitted Affiliate, subject to the Investment Advisers Act) of
the Issuer or the Collateral Advisor and deposit the proceeds thereof in the
Collection Account for investment pursuant to this Section 4.02; provided, however, that the Issuer (or
the Collateral Advisor on behalf of the Issuer) need not sell such
Distributions or other proceeds if it delivers an Officer’s certificate to the
Collateral Agent certifying that such Distributions or other proceeds
constitute Collateral Debt Securities or Eligible Investments.


 


(c)                             If, prior to the occurrence of an Event of
Default, the Issuer shall not have given any investment directions pursuant to Section 4.02(b),
the Collateral Agent shall seek instructions from the Collateral Advisor within
three (3) Business Days after transfer of such funds to the Collection
Account. If the Collateral Agent does not thereupon receive written
instructions from the Issuer (or the Collateral Advisor on behalf of the
Issuer) within thirty (30) Business Days after transfer of such funds to the
Collection Account, it shall invest and reinvest the funds held in the
Collection Account, as fully as practicable, but only in one or more Eligible
Investments described in clause (iii) of the definition of Eligible
Investments of its selection maturing no later than the Business Day
immediately preceding the next Payment Date. If, after the occurrence of an
Event of Default, the Issuer shall not have given investment directions to the
Collateral Agent pursuant to Section 4.02(b) for three
(3) consecutive days, the Collateral Agent shall invest and reinvest such
Money as fully as practicable in Eligible Investments as described in clause (iii) of
the definition of Eligible Investments of its selection maturing not later than
the Business Day immediately preceding the next Payment Date. All interest and
other income from such investments shall be deposited in the Collection
Account, any gain realized from such investments shall be credited to the
Collection Account and any loss resulting from such investments shall be
charged to the Collection Account. The Collateral Agent shall not in any way be
held liable by reason of any insufficiency of such Collection Account resulting
from any loss relating to any such Eligible Investment, except with respect to
investments in obligations of the Collateral Agent or any Affiliate thereof.


 


(d)                            Collateral Principal Collections and Sale
Proceeds shall be used to redeem the Notes in accordance with the Priority of
Payments in an amount equal to the lesser of (i) the Collateral Principal
Collections and (ii) the amount of Available Funds remaining in the
Collection Account.


 


Section 4.03.                             Interest Reserve Account.


 


(a)                        The Collateral Agent shall, prior to the
Closing Date, establish a single, segregated trust account which shall be
designated as the “Interest Reserve Account”, which shall be held in the
name of the Collateral Agent for the benefit and on behalf of the Secured
Parties and over which the Collateral Agent shall have exclusive Control and
the sole right of withdrawal, into which the Collateral Agent shall deposit on
each Payment Date, the Interest Reserve Amount, if any, in accordance with Section 5.01(a)(vii).
Funds in the Interest Reserve Account shall not be commingled with any other
Money. The Collateral Agent shall give to the Issuer, the Collateral Advisor
and the Trustee prompt notice if the Interest Reserve Account or any funds on
deposit therein, or otherwise to the credit of the Interest Reserve Account,
shall become subject to any writ, order, judgment, warranty of attachment,
execution or similar process. All Money deposited from time to time in the
Interest Reserve Account pursuant to this Agreement shall be held by the
Collateral Agent as part of the Collateral and shall be applied in accordance
with the terms hereof and to the purposes herein provided. The Issuer shall not
have any legal, equitable or beneficial interest in the Interest Reserve
Account other than in accordance with the Priority of Payments. The Interest
Reserve Account shall remain at all times with a financial institution having a
long-term debt rating of at least “BBB+” by S&P, at least “Baa1” by Moody’s
and, at least “BBB+” by Fitch and a short-term debt rating of at least “A-1” by
S&P, at least “P-1” by Moody’s and, at least “F-1” by Fitch.


 


11

















 


(b)                            Any deposit required pursuant to Section 4.03(c) shall
be immediately deposited into the Interest Reserve Account. All such property,
together with any securities in which funds included in such property are or
will be invested or reinvested during the term of this Agreement, and any
income or other gain realized from such investments, shall be held by the
Collateral Agent in the Interest Reserve Account as part of the Collateral
subject to disbursement and withdrawal as provided in this Section 4.03.
By Issuer Order (which may be in the form of standing instructions), the Issuer
(or the Collateral Advisor on behalf of the Issuer) may at any time direct the
Collateral Agent to, and upon receipt of such Issuer Order the Collateral Agent
shall, invest all funds received into the Interest Reserve Account during a Due
Period, and amounts received in prior Due Periods and retained in the Interest
Reserve Account, as so directed in Eligible Investments maturing no later than
the Business Day immediately preceding the next Payment Date. The Collateral
Agent shall, within one (1) Business Day after receipt of any Distribution
or other proceeds which is not Cash, so notify the Issuer and the Issuer (or
the Collateral Advisor on behalf of the Issuer) shall, within thirty (30)
Business Days after receipt of such notice from the Collateral Agent, sell such
Distribution or other proceeds for Cash in an arm’s-length transaction to a
Person which is not an Affiliate (other than a Permitted Affiliate, subject to
the Investment Advisers Act) of the Issuer or the Collateral Advisor and
deposit the proceeds thereof in the Interest Reserve Account for investment
pursuant to this Section 4.03;
provided, however, that the Issuer (or the Collateral Advisor on
behalf of the Issuer) need not sell such Distributions or other proceeds if it
delivers an Officer’s certificate to the Collateral Agent certifying that such
Distributions or other proceeds constitute Collateral Debt Securities or
Eligible Investments.


 


(c)                             If, prior to the occurrence of an Event of
Default, the Issuer (or the Collateral Advisor on behalf of the Issuer) shall
not have given any investment directions pursuant to Section 4.03(b),
the Collateral Agent shall seek instructions from the Collateral Advisor within
three (3) Business Days after transfer of such funds to the Interest
Reserve Account. If the Collateral Agent does not thereupon receive written
instructions from the Issuer (or the Collateral Advisor on behalf of the
Issuer) within thirty (30) Business Days after transfer of such funds to the
Interest Reserve Account, it shall invest and reinvest the funds held in the
Interest Reserve Account, as fully as practicable, but only in one or more
Eligible Investments in clause (iii) of the definition of Eligible
Investments of its selection maturing no later than the Business Day immediately
preceding the next Payment Date. If, after the occurrence of an Event of
Default, the Issuer (or the Collateral Advisor on behalf of the Issuer) shall
not have given investment directions to the Collateral Agent pursuant to Section 4.03(b) for
three (3) consecutive days, the Collateral Agent shall invest and reinvest
such Money as fully as practicable in Eligible Investments as described in
clause (iii) of the definition of Eligible Investments of its selection
maturing not later than the Business Day immediately preceding the next Payment
Date. All interest and other income from such investments shall be deposited in
the Interest Reserve Account, any gain realized from such investments shall be
credited to the Interest Reserve Account and any loss resulting from such
investments shall be charged to the Interest Reserve Account. The Collateral
Agent shall not in any way be held liable by reason of any insufficiency of
such Interest Reserve Account resulting from any loss relating to any such
Eligible Investment, except with respect to investments in obligations of the
Collateral Agent or any Affiliate thereof.


 


(d)                            On the Business Day prior to each Payment
Date, the Collateral Agent shall deposit into the Collection Account the
balance of the Interest Reserve Account (including reinvestment income) for
distribution in accordance with the Priority of Payments on the related Payment
Date.


 


Section 4.04.                             Expense Reserve Account.


 


(a)                             The Collateral Agent shall, prior to the
Closing Date, establish a single, segregated trust account which shall be
designated as the “Expense Reserve Account”, which shall be held in the
name of the Collateral Agent for the benefit and on behalf of the Secured
Parties and over


 


12

















 


which
the Collateral Agent shall have exclusive Control and the sole right of
withdrawal, into which the Collateral Agent shall deposit, on the Closing Date,
an amount equal to U.S.$25,000 and, on each Payment Date, an amount in
accordance with Section 5.01(a)(i). Funds in the Expense Reserve
Account shall not be commingled with any other Money. The Collateral Agent
shall give to the Issuer, the Collateral Advisor and the Trustee prompt notice
if the Expense Reserve Account or any funds on deposit therein, or otherwise to
the credit of the Expense Reserve Account, shall become subject to any writ,
order, judgment, warranty of attachment, execution or similar process. All
Money deposited from time to time in the Expense Reserve Account pursuant to
this Agreement shall be held by the Collateral Agent as part of the Collateral
and shall be applied in accordance with the terms hereof and to the purposes
herein provided. The Issuer shall not have any legal, equitable or beneficial
interest in the Expense Reserve Account other than in accordance with this
Agreement. The Expense Reserve Account shall remain at all times with a
financial institution having a long-term debt rating of at least “BBB+” by
S&P, at least “Baal” by Moody’s and, at least “BBB+” by Fitch and a short-term
debt rating of at least “A-1” by S&P, at least “P-1” by Moody’s and, at
least “F-1” by Fitch.


 


(b)                            Any deposit required pursuant to Section 4.04(c) shall
be immediately deposited into the Expense Reserve Account. All such property,
together with any securities in which funds included in such property are or
will be invested or reinvested during the term of this Agreement, and any
income or other gain realized from such investments, shall be held by the
Collateral Agent in the Expense Reserve Account as part of the Collateral
subject to disbursement and withdrawal as provided in this Section 4.04.
By Issuer Order (which may be in the form of standing instructions), the Issuer
(or the Collateral Advisor on behalf of the Issuer) may at any time direct the
Collateral Agent to, and upon receipt of such Issuer Order the Collateral Agent
shall, invest all funds received into the Expense Reserve Account during a Due
Period, and amounts received in prior Due Periods and retained in the Expense
Reserve Account, as so directed in Eligible Investments maturing not later than
the second (2nd) Business Day immediately preceding the next
Payment Date unless such Eligible Investments are investments of the type
described in clause (i) or (iii) of the definition of “Eligible
Investments”, in which event such Eligible Investments may mature on the
Business Day immediately preceding such Payment Date. The Collateral Agent
shall, within one (1) Business Day after receipt of any Distribution or
other proceeds which is not Cash, so notify the Issuer and the Issuer (or the
Collateral Advisor on behalf of the Issuer) shall, within thirty (30) Business
Days after receipt of such notice from the Collateral Agent, sell such
Distribution or other proceeds for Cash in an arm’s-length transaction to a
Person that is not an Affiliate (other than a Permitted Affiliate, subject to
the Investment Advisers Act) of the Issuer or the Collateral Advisor and
deposit the proceeds thereof in the Expense Reserve Account for investment
pursuant to this Section 4.04;
provided, however, that the Issuer (or the Collateral Advisor on
behalf of the Issuer) need not sell such Distributions or other proceeds if it
delivers an Officer’s certificate to the Collateral Agent certifying that such
Distributions or other proceeds constitute Collateral Debt Securities or
Eligible Investments.


 


(c)                             If, prior to the occurrence of an Event of
Default, the Issuer shall not have given any investment directions pursuant to Section 4.04(b),
the Collateral Agent shall seek instructions from the Collateral Advisor within
three (3) Business Days after transfer of such funds to the Expense
Reserve Account. If the Collateral Agent does not thereupon receive written
instructions from the Issuer (or the Collateral Advisor on behalf of the
Issuer) within thirty (30) Business Days after transfer of such funds to the
Expense Reserve Account, it shall invest and reinvest the funds held in the
Expense Reserve Account, as fully as practicable, but only in Eligible
Investments of the type described in clause (iii) of the defmition of
“Eligible Investments”, maturing the Business Day immediately preceding such
Payment Date. If, after the occurrence of an Event of Default, the Issuer shall
not have given investment directions to the Collateral Agent pursuant to Section 4.04(b) for
three (3) consecutive days, the Collateral Agent shall invest and reinvest
such Money as fully as practicable, but only in Eligible Investments of its
selection of the type described in clause (iii) of the definition of
“Eligible Investments”, maturing on the


 


13

















 


Business
Day immediately preceding such Payment Date. All interest and other income from
such investments shall be deposited in the Expense Reserve Account, any gain
realized from such investments shall be credited to the Expense Reserve Account
and any loss resulting from such investments shall be charged to the Expense
Reserve Account. The Collateral Agent shall not in any way be held liable by
reason of any insufficiency of such Expense Reserve Account resulting from any
loss relating to any such Eligible Investment, except with respect to
investments in obligations of the Collateral Agent or any Affiliate thereof.


 


(d)                       On the Business Day prior to each Payment
Date, the Collateral Agent shall deposit into the Collection Account the
balance of the Expense Reserve Account (including reinvestment income) for
distribution in accordance with the Priority of Payments on the related Payment
Date.


 


(e)                        The Collateral Agent may, from time to time
and at any time, withdraw amounts from the Expense Reserve Account to pay
accrued and unpaid administrative expenses of the Co-Issuers. All amounts
remaining on deposit in the Expense Reserve Account at the time when substantially
all of the Issuer’s assets have been sold or otherwise disposed of will be
deposited by the Collateral Agent into the Collection Account (including
reinvestment income) as Collateral Interest Collections for distribution in
accordance with the Priority of Payments on the immediately succeeding Payment
Date.


 


Section 4.05.                             Collateral Account. The Collateral Agent shall, prior to the
Closing Date, establish a single, segregated trust account (or a subaccount of
the Collection Account) which shall be designated as the “Collateral Account”,
which shall be held in the name of the Collateral Agent for the benefit and on
behalf of the Secured Parties and over which the Collateral Agent shall have
exclusive Control and the sole right of withdrawal. Any and all assets or
securities at any time on deposit in, or otherwise to the credit of, the
Collateral Account shall be held in trust by the Collateral Agent for the
benefit and on behalf of the Secured Parties. The only permitted withdrawals
from the Collateral Account shall be in accordance with this Agreement. The
Collateral Agent agrees to give the Issuer and the Trustee prompt notice if the
Collateral Account or any funds on deposit therein, or otherwise to the credit
of the Collateral Account, shall become subject to any writ, order, judgment,
warrant of attachment, execution or similar process. The Issuer shall not have
any legal, equitable or beneficial interest in the Collateral Account other
than in accordance with this Agreement. The Collateral Account shall remain at
all times with a financial institution located in the United States having a
long-term debt rating of at least “BBB+” by S&P, at least “Baal” by Moody’s
and at least “BBB+” by Fitch and a short-term debt rating of at least “A-1” by
S&P, at least “P-1” by Moody’s and, at least “F-1” by Fitch.


 


Section 4.06.                             Reports by Collateral Agent. The Collateral Agent shall supply, in a
timely fashion, to the Co-Issuers, the Trustee, each Hedge Counterparty, the
Principal Note Paying Agent, the Preferred Share Fiscal and Paying Agent, each
Rating Agency (so long as any Notes are rated by such Rating Agency), the
Initial Purchasers and the Collateral Advisor any information regularly
maintained by the Collateral Agent that each such party may from time to time
request with respect to the Collateral Debt Securities, any Hedge Agreement,
the Collection Account and the Collateral Account and such other information as
is regularly maintained by the Collateral Agent and is reasonably needed to
verify information contained in the Note Valuation Report. Additionally, the
Collateral Agent shall promptly provide any other information reasonably
available to the Collateral Agent by reason of its acting as Collateral Agent
hereunder and required to be provided by Section 4.07 or to permit
the Collateral Advisor to perform its obligations under the Collateral Advisory
Agreement. The Collateral Agent shall forward to the Collateral Advisor copies
of all 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, without limitation, notices of
calls and redemptions of securities) as well as all periodic financial reports
received from such issuer and Clearing Agencies with respect to such issuer.
The


 


14

















 


Collateral
Agent shall also cause the amount of interest paid on the Notes on each Payment
Date to be communicated to Euroclear, Clearstream and the Irish Stock Exchange
(as long as any of the Notes are listed thereon) on or prior to such Payment
Date.


 


Section 4.07.                             Accountings.


 


(a)                             Payment Date Accounting; Note Valuation
Reports. The Collateral
Agent on behalf of the Issuer shall prepare or cause to be prepared an
accounting (the “Note Valuation Report”), determined as of each
Determination Date, and make available or cause to be made available on its
website, initially located at www.cdotrustee.net and deliver by e-mail to
S&P and otherwise upon request, the Note Valuation Report, after the
reconciliation process described in this Section 4.07(a), to the
Collateral Advisor, the Trustee, the Principal Note Paying Agent, the Preferred
Share Fiscal and Paying Agent, each Hedge Counterparty, if any, each Rating
Agency (so long as any Notes are rated by such Rating Agency), the Initial
Purchasers and the Depositary (accompanied by a request that it be transmitted
to the Holders of Notes on the books of the Depositary) by no later than the
close of business on the Business Day preceding the related Payment Date. The
Collateral Advisor shall provide any information reasonably requested by the
Issuer or on the Issuer’s behalf for preparation of the Note Valuation Report
in accordance with this Section 4.07(a). Upon receipt of each Note
Valuation Report, the Trustee, in the name and at the expense of the
Co-Issuers, shall notify the Irish Paying Agent, so long as any Notes are
listed thereon, of the aggregate principal amount of the Notes of each
Class after giving effect to the principal payments, if any, on the next
Payment Date. The Note Valuation Report shall contain the following
information:


 


(i)                                a calculation in reasonable detail necessary
to determine compliance with each of the Coverage Tests;


 


(ii)                             the estimated remaining average life (on each
asset and on an aggregate basis) of all Collateral Debt Securities;


 


(iii)                          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);


 


(iv)                         the amount (if any) payable to each Hedge
Counterparty pursuant to the related Hedge Agreement;


 


(v)                            the amount (if any) payable by each Hedge
Counterparty pursuant to the related Hedge Agreement;


 


(vi)                         the Aggregate Fees and Expenses payable on
the next Payment Date on an itemized basis;


 


(vii)                      the Aggregate Fees and Expenses paid during a
period of twelve (12) months ending on the next Payment Date on an itemized
basis;


 


(viii)                   for the Collection Account:


 


(A)                    the Balance on deposit in the Collection Account at the end of the
related Due Period;


 


15

















 


(B)                      the amounts payable from the Collection Account pursuant to each
priority in the Priority of Payments on the next Payment Date; and


 


(C)                      the Balance remaining in the Collection Account immediately after all
payments and deposits to be made on such Payment Date;


 


(ix)                                     for the Interest Reserve Account:


 


(A)                    the Balance on deposit in the Interest Reserve Account at the end of
the related Due Period;


 


(B)                      the amount payable from the Interest Reserve Account pursuant to the
Priority of Payments on the next Payment Date;


 


(C)                      the Interest Reserve Amount to be paid into the Interest Reserve
Account on the next Payment Date; and


 


(D)                     the Balance remaining in the Interest Reserve Account immediately after
all payments and deposits to be made on such Payment Date;


 


(x)                                             for the Expense Reserve Account,


 


(A)                    the amount to be paid into the Expense Reserve Account on the next
Payment Date; and


 


(B)                      the Balance remaining in the Expense Reserve Account immediately after
all payments and deposits to be made on such Payment Date;


 


(xi)                                          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 under the Priority of Payments;


 


(xii)                                        the amount of Excess Funds to be paid to the
Holders of the Preferred Shares on the related Payment Date;


 


(xiii)                                    the amount of the Senior Collateral Advisory
Fee and the amount of the Subordinate Collateral Advisory Fee;


 


(xiv)                                 the amount of the Deferred Subordinate
Collateral Advisory Fee (including the amounts of the Monitoring Fee and the
Senior Structuring Fee);


 


(xv)                                      any information required to be included in a
Monthly Report as set forth in Section 4.07(b);


 


(xvi)                                   such other information as the Collateral
Advisor, the Initial Purchasers, the Trustee, S&P, Moody’s or any Hedge
Counterparty may reasonably request; and


 


(xvii)                                the aggregate principal amount of the
Collateral Debt Securities and, 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 payments, the amount of principal
payments


 


16

















 


received,
the maturity date, the Weighted Average Life, the issuer, the country in which
the issuer is incorporated or organized, the Weighted Average Fixed Rate
Coupon, the Weighted Average Spread, the Moody’s Industry Classification
Weighted Average Group, the S&P Industry Classification Group, the Fitch
Industry Classification Group, the S&P Recovery Rate for each Class of
Notes, the Fitch Sector Score, the Moody’s Recovery Rate, the Moody’s Diversity
Score, the Moody’s Weighted Average Recovery Rate, the Fitch Weighted Average
Recovery Rate for each class of Notes, the Fitch Weighted Average Rating
Factor, the Weighted Average Moody’s Rating Factor, the Moody’s Rating, the
S&P Rating and the Fitch Rating of such Collateral Debt Security (provided that if any Moody’s Rating,
S&P Rating or Fitch Rating for any Collateral Debt Security is set forth in
any Note Valuation Report and such rating is an “estimated” or “shadow” rating,
such rating shall be identified as “estimated” or “shadow rated”, shall be
disclosed with an asterisk in the place of the applicable estimated or shadow
rating and shall include the date as of which such rating was first provided by
Moody’s, S&P or Fitch, as the case may be, to the Issuer).


 


Upon
receipt of each Note Valuation Report, the Trustee and the Collateral Advisor
shall compare the information contained therein to the information contained in
their respective records with respect to the Collateral and shall, within two
(2) Business Days after receipt of such Note Valuation Report, notify each
of the Issuer, each Hedge Counterparty, the Collateral Advisor, the Trustee,
Moody’s and S&P if the information contained in the Note Valuation Report
does not conform to the information maintained by the Trustee or the Collateral
Advisor 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 Advisor shall attempt to promptly resolve the
discrepancy. If such discrepancy cannot be promptly resolved, the Trustee shall
within five (5) Business Days after discovery of such discrepancy cause
the Independent Accountants of national reputation to review such Note
Valuation Report and the Trustee’s and the Collateral Advisor’s records to
determine the cause of such discrepancy. If such review reveals an error in the
Note Valuation Report or the Trustee’s or the Collateral Advisor’s records, the
Note Valuation Report or Trustee’s and the Collateral Advisor’s records, as the
case may be, shall be revised accordingly and, as so revised, shall be utilized
in making further calculations.


 


(b)                                 Monthly Report. Not later than the fifth (5th) Business Day after the last Business Day of each month (excluding the
months in which a Payment Date occurs), commencing in October, 2003, the Issuer
shall compile and make available, or cause to be compiled and made available on
the Trustee’s website initially located at www.cdotrurstee.net and to be
delivered by e-mail to S&P and otherwise upon request, to the Trustee, each
Hedge Counterparty, the Collateral Advisor, the Preferred Share Fiscal and
Paying Agent, the Initial Purchasers and each Rating Agency (so long as any
Notes are rated by such Rating Agency), and, upon written request, accompanied
by a note owner certificate, to any Holder of a Note, a monthly report (the “Monthly
Report”), which shall contain the following information and instructions
with respect to the Collateral Debt Securities (individually and collectively),
determined as of the last Business Day of such month:


 


(i)                           the aggregate principal amount of the
Collateral Debt Securities and, 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 payments, the amount of principal
payments received, the maturity date, the Weighted Average Life, the issuer,
the country in which the issuer is incorporated or organized, the Weighted
Average Fixed Rate Coupon, the Weighted Average Spread, the Moody’s Industry
Classification Group, the S&P Industry Classification Group, the Fitch
Industry Classification Group, the S&P Recovery Rate, the Fitch Sector Score,
the Moody’s Recovery Rate, the S&P Weighted Average Recovery Rate for each
Class of Notes, the Moody’s Weighted Average Recovery Rate, the Fitch
Weighted Average Recovery Rate, the Fitch Weighted Average Rating Factor, the
Weighted Average Moody’s Rating Factor, the Moody’s Rating, the S&P Rating
and the Fitch Rating of such Collateral Debt Security (provided that if any Moody’s Rating,
S&P Rating or Fitch Rating for


 


17

















 


any
Collateral Debt Security is set forth in any Monthly Report and such rating is
an “estimated” or “shadow” rating, such rating shall be identified as
“estimated” or “shadow rated”, shall be disclosed with an asterisk in the place
of the applicable estimated or shadow rating and shall include the date as of
which such rating was first provided by Moody’s, S&P or Fitch, as the case
may be, to the Issuer);


 


(ii)                        the Principal Balance, the annual interest
rate, the maturity date, the Moody’s Rating, the S&P Rating, the Fitch
Rating and the issuer of each Eligible Investment included in the Collateral;


 


(iii)                     the nature, source and amount of any
Collections in the Collection Account, including Collections received since the
date of the later of the last Monthly Report and the last Note Valuation
Report;


 


(iv)                    the Principal Balance and identity of each
Collateral Debt Security that was released for sale indicating the reason for
such sale;


 


(v)                       the identity and Principal Balance of each
Collateral Debt Security that became a Defaulted Security, an Equity Security,
a Written Down Security, a Withholding Tax Security, a Deferred Interest PIK
Bond or, except with respect to Defaulted Securities, a Collateral Debt
Security whose Moody’s Rating has been reduced below “Ba3” since the later to
occur of the last Monthly Report and the last Note Valuation Report, and the
identity and Principal Balance of each Collateral Debt Security that was a
Defaulted Security, an Equity Security, a Written Down Security, a Withholding
Tax Security or a Deferred Interest PIK Bond or, except with respect to
Defaulted Securities, a Collateral Debt Security whose Moody’s Rating was below
“Ba3” as of the last Monthly Report or the last Note Valuation Report and that
remains a Defaulted Security, an Equity Security, a Written Down Security, a
Deferred Interest PIK Bond or a Collateral Debt Security (other than a
Defaulted Security) with a Moody’s Rating below “Ba3” and the Market Value of
each Defaulted Security;


 


(vi)                    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 later of the last Monthly Report and the last Note Valuation
Report; and whether such Pledged Security is a Collateral Debt Security, an
Eligible Investment or proceeds in the Collection Account;


 


(vii)                 the calculation showing compliance with each
of the Coverage Tests and the Collateral Quality Tests (including, with respect
to the S&P CDO Monitor Test, the weighted average rating, the default
measure, variability measure and correlation measure, the scenario loss rate
and/or such other information required to be computed with respect to the
S&P CDO Monitor Test), 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; provided that
each Monthly Report shall provide that the foregoing calculations are reflected
for informational purposes only and are not binding upon the Issuer;


 


(viii)              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 later of the last Monthly Report and
the last Note Valuation Report; provided that
the identity of each Collateral Debt Security that was upgraded or downgraded
for purposes of this clause (viii) shall not be obtained from Bloomberg
Financial Markets On-Line Data Retrieval Service or a similar service and must
be obtained from information provided directly by the Rating Agencies;


 


(ix)                      the amount of Purchased Accrued Interest;


 


18

















 


(x)                         a description of any transactions with the
Collateral Advisor, the Issuer, the Collateral Administrator and the Collateral
Agent and any Affiliates thereof;


 


(xi)                      the Class A-1 Note Break-Even Loss Rate,
the Class A-2 Note Break-Even Loss Rate, the Class B-1 Note
Break-Even Loss Rate, the Class B-2 Note Break-Even Loss Rate, the
Class C-1 Note Break-Even Loss Rate, the Class C-2 Note Break-Even
Loss Rate and the Class D Note Break-Even Loss Rate;


 


(xii)                   the Class A-1 Note Loss Differential,
the Class A-2 Note Loss Differential, the Class B-1 Note Loss
Differential, the Class B-2 Note Loss Differential, the Class C-1
Note Loss Differential, the Class C-2 Note Loss Differential and the
Class D Note Loss Differential;


 


(xiii)                the Class A-1 Note Scenario Default
Rate, the Class A-2 Note Scenario Default Rate, the Class B-1 Note
Scenario Default Rate, the Class B-2 Note Scenario Default Rate, the
Class C-1 Note Scenario Default Rate, the Class C-2 Note Scenario
Default Rate and the Class D Note Scenario Default Rate; and


 


(xiv)               such other information as the Trustee,
S&P or the Initial Purchasers may reasonably request.


 


Upon
receipt of each Monthly Report, the Trustee and the Collateral Advisor shall
compare the information contained therein to the information contained in their
respective records with respect to the Collateral and shall, within two
(2) Business Days after receipt of such Monthly Report, notify each of the
Issuer, each Hedge Counterparty and the Collateral Advisor if the information contained
in the Monthly Report does not conform to the information maintained by the
Trustee or the Collateral Advisor with respect to the Collateral, and detail
any discrepancies. In the event that any discrepancy exists, the Trustee and
the Issuer, or the Collateral Advisor on behalf of the Issuer, shall attempt to
promptly resolve the discrepancy. If such discrepancy cannot be promptly
resolved, the Trustee shall within five (5) Business Days after discovery
of such discrepancy cause the Independent Accountants of national reputation to
review such Monthly Report and the Trustee’s or the Collateral Agent’s records
to determine the cause of such discrepancy. If such review reveals an error in
the Monthly Report or the Trustee’s or the Collateral Agent’s records, the
Monthly Report or Trustee’s or the Collateral Agent’s records, as the case may
be, shall be revised accordingly and, as so revised, shall be utilized in
making further calculations.


 


Subject
to the terms of this Agreement, the Collateral Agent shall rely on the
information supplied to it by the Collateral Advisor in relation to the
preparation of the Monthly Report and shall not be liable for the accuracy or
completeness of such information.


 


(c)                                            Each Note Valuation Report or Monthly Report
sent to any Holder or beneficial owner of any Note or Preferred Share shall
contain, or be accompanied by, the following notice:


 


“The
Notes have not been and will not be registered under the United States
Securities Act of 1933, as amended (the “Securities Act”), and the
Co-Issuers have not been 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 (i) a “qualified institutional buyer” as
defined in Rule 144A under the Securities Act


 


19

















 


(“Qualified
Institutional Buyer”) and (ii) a “qualified purchaser” (“Qualified
Purchaser”) within the meaning of Section 2(a)(51) of the 1940 Act
that can make all of the representations in the Trust Deed and the Note Agency
Agreement applicable to a holder that is a U.S. Person. The beneficial interest
in the Notes may only be transferred to a transferee that is a Qualified
Institutional Buyer and a Qualified Purchaser that can make all of the
representations in the Trust Deed and the Note Agency Agreement applicable to a
holder that is a U.S. Person, except that in the case of any such transfer in
reliance on Regulation S, 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 Trust Deed and the Note Agency
Agreement to sell its interest in the Notes, or may sell such interest on
behalf of such owner, pursuant to the Trust Deed and the Note Agency Agreement.”


 


(d)                                 Additional Reporting Requirements. The Collateral Advisor on behalf of the
Issuer shall provide or cause to be provided to Fitch the current portfolio of
all Collateral Debt Securities in electronic and modifiable form with the
fields listed in Schedule N, no later than the Fifteenth (15th) day of each month.


 


For
all Collateral Debt Securities which are not rated by Fitch, the Issuer shall
provide, or cause to be provided to, Fitch with the following:


 


(i)                                     within thirty (30) days of the Closing Date,
the offering memoranda and the most recent remittance reports for such
Collateral Debt Securities held by the Issuer as of the Closing Date; and


 


(ii)                                  ongoing remittance reports for such
Collateral Debt Securities within ten (10) days of receipt of the remittance
report.


 


The
information referenced above shall be sent via e-mail to reporting.abscdo@fitchratings.com
or hardcopy to Fitch Ratings, One State Street Plaza, New York, New York 10004,
Attention: Credit Products Surveillance – Additional Reporting.


 


(e)                                  Payment Date Instructions. The Issuer (or the Collateral Advisor on
behalf of the Issuer) shall by Issuer Order instruct the Collateral Agent to
withdraw on the related Payment Date from the Collection Account, and to pay or
transfer, the amounts set forth in such Note Valuation Report in the manner
specified in, and in accordance with, the Priority of Payments. The Issuer will
be deemed to have given such instructions upon the Collateral Advisor’s
approval of the Note Valuation Report.


 


(f)                                    Redemption Date Instructions. Not later than five (5) Business Days
after receiving an Issuer Request (executed by the Issuer or the Collateral
Advisor on behalf of the Issuer) requesting information regarding a redemption
of the Notes of a Class as of a proposed Redemption Date set forth in such
Issuer Request, the Collateral Advisor on behalf of the Issuer shall cause to
be computed the following information and the Issuer shall provide such
information in a statement made available to the Co-Issuers, the Collateral
Advisor, the Trustee, the Initial Hedge Counterparty, the Principal Note Paying
Agent, the Preferred Share Fiscal and Paying Agent, and delivered by e-mail to
each Rating Agency and, so long as the Notes are listed on the Irish Stock
Exchange, the Irish Stock Exchange:


 


(i)                                     the aggregate principal amount of the Notes
of the Class or Classes to be redeemed as of such Redemption Date;


 


20














 


(ii)        the amount of accrued interest due on
such Notes as of the last day of the Periodic Interest Accrual Period
immediately preceding such Redemption Date;


 


(iii)       the amount due and payable to the Initial
Hedge Counterparty pursuant to the Initial Hedge Agreement;


 


(iv)       the amount due and payable to any other
Hedge Counterparty pursuant to the applicable Hedge Agreement (other than the
Initial Hedge Agreement); and


 


(v)        the amount in the Collection Account
available for application to the redemption of such Notes.


 


Section 4.08.          Release of Securities.


 


(a)          Subject to Article VI, the
Issuer (or the Collateral Advisor on behalf of the Issuer) may, by Issuer Order
delivered to the Collateral Agent at least two (2) Business Days prior to
the settlement date for any sale of a security certifying that the Issuer (or
the Collateral Advisor on behalf of the Issuer) has determined that a
Collateral Debt Security has become a Credit Risk Security (which certification
shall contain a short statement of the reason for such determination), a
Withholding Tax Security, a Written Down Security, a Defaulted Security or an
Equity Security and, in each case, that the Issuer (or the Collateral Advisor
on behalf of the Issuer) has directed the Collateral Agent to sell such security
pursuant to Section 6.01(a), direct the Collateral Agent to release
such security and, upon receipt of such Issuer Order, the Collateral Agent
shall release any such security from the Lien of this Agreement and deliver any
such security, if in physical form, duly endorsed to the broker or purchaser
designated in such Issuer Order or, if such security is a Clearing Corporation
Security, cause an appropriate transfer thereof to be made, in each case
against receipt of the sales price therefor as set forth in such Issuer Order; provided, however, that the Collateral
Agent may deliver any such security in physical form for examination in
accordance with street delivery custom.


 


(b)         If no Event of Default has occurred and
is continuing and subject to Article VI, the Issuer (or the
Collateral Advisor on behalf of the Issuer) may, by Issuer Order delivered to
the Collateral Agent at least two (2) Business Days prior to the date set
for redemption or payment in full of a Collateral Debt Security and certifying
that such security is being redeemed or paid in full, direct the Collateral
Agent, or at the Collateral Agent’s instructions, the Accountholder, to release
any such security from the Lien of this Agreement and 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)          If no Event of Default has occurred
and is continuing and subject to Article VI, the Issuer (or the
Collateral Advisor on behalf of the Issuer) may, by Issuer Order delivered to
the Collateral Agent at least two (2) Business Days prior to the date set
for an exchange, tender or sale, certifying that a Collateral Debt Security is
subject to an Offer and setting forth in reasonable detail the procedure for
response to such Offer, direct the Collateral Agent or, at the Collateral
Agent’s instructions, the Accountholder, to release any such security from the
Lien of this Agreement and deliver such security, if in physical form, duly
endorsed, or, if such security is a Clearing Corporation Security, to cause it
to be delivered, in accordance with such Issuer Order, in each case against
receipt of payment therefor.


 


21

















 


(d)        The Collateral Agent shall, upon receipt
of an Issuer Order at such time as there are no Notes Outstanding and all
obligations of the Co-Issuers to the Secured Parties have been satisfied,
release the Collateral from the Lien of this Agreement.


 


Section 4.09.        Reports by Independent Accountants.


 


(a)          On the Closing Date, the Issuer (or
the Collateral Advisor on behalf of the Issuer) shall appoint a firm of
Independent certified public accountants of recognized international reputation
for purposes of preparing and delivering the reports or certificates of such
accountants required by this Agreement. Upon any removal of or resignation by
such firm, the Issuer (or the Collateral Advisor on behalf of the Issuer) shall
promptly appoint by Issuer Order delivered to the Collateral Agent, the
Trustee, each Hedge Counterparty and each Rating Agency, a successor thereto
that shall also be a firm of Independent certified public accountants of
recognized international reputation. If the Issuer (or the Collateral Advisor
on behalf of the Issuer ) shall fail to appoint a successor to a firm of
Independent certified public accountants which has resigned within thirty (30)
days after such resignation, the Issuer (or the Collateral Advisor on behalf of
the Issuer ) shall promptly notify each of the Trustee and each Hedge
Counterparty of such failure. If the Issuer (or the Collateral Advisor on behalf
of the Issuer ) shall not have appointed a successor within ten (10) days
thereafter, the Collateral Agent shall promptly appoint a successor firm of
Independent certified public accountants of recognized international
reputation. The fees of such Independent certified public accountants and its
successor shall be payable by the Issuer in accordance with the Priority of
Payments. Any engagement letter appointing such Independent certified
accountants shall contain appropriate limited recourse and non-petition
language as against the Issuer equivalent to that contained in this Agreement.


 


(b)         No later than five (5) Business
Days after the Closing Date, the Issuer shall deliver to each Rating Agency an
agreed upon procedures letter from an Independent certified public accountant
appointed by the Issuer in relation to the Issuer’s compliance with its
obligations under this Agreement and the Trust Deed. On the Closing Date, the
Issuer shall cause such Independent certified public accountant to deliver to each
Rating Agency a report containing (i) a statement that the agreed upon
procedures have been completed and (ii) such accountant’s findings with
respect to the Issuer’s compliance with its obligations under this Agreement
and the Trust Deed. All expenses relating to the engagement of Independent
certified public accountants for the performance of services set forth in this Section 4.09(b) shall
be borne by the Issuer.


 


Section 4.10.          Reports to Rating Agencies. In
addition to the information and reports specifically required to be provided to
S&P, Moody’s and Fitch pursuant to the terms of this Agreement, the Issuer
(or the Collateral Advisor on behalf of the Issuer) shall provide S&P,
Moody’s and Fitch with all information or reports delivered to the Collateral
Agent and the Trustee hereunder, and such additional information as any Rating
Agency may from time to time reasonably request in order to maintain its then-
current rating of the Notes and the Issuer determines in its reasonable
discretion may be obtained and provided without unreasonable burden or expense.
The Issuer (or the Collateral Advisor on behalf of the Issuer) shall promptly
notify the Trustee in writing if the rating on any Class of Notes has
been, or it is known by the Issuer that such rating will be, changed or
withdrawn. Upon receipt of such notice, the Trustee, in the name and at the
expense of the Co-Issuers, shall notify the Irish Paying Agent, so long as any
Notes are listed thereon, of any reduction or withdrawal in the rating of such Notes.


 


Section 4.11.          Notices of Noteworthy Events.
The Issuer shall provide each Rating Agency notice of the following events:
(a) removal of the Collateral Advisor pursuant to the terms of the
Collateral Advisory Agreement, the Collateral Agent pursuant to the terms of
this Agreement and the Trustee pursuant to the terms of the Trust Deed,
(b) appointment of any successor investment adviser pursuant to the terms
of the Collateral Advisory Agreement, any successor collateral agent pursuant
to the


 


22

















 


terms
of this Agreement and any successor trustee pursuant to the terms of the Trust
Deed, (c) any delegation of duties by the Collateral Advisor under the
Collateral Advisory Agreement, by the Collateral Agent under this Agreement and
by the Trustee under the Trust Deed, (d) any modification of, or amendment
to, the organizational documents of the Issuer and the Co-Issuer, (e) any
other event of a similar nature as set forth in clauses (a), (b),
(c) and (d) of this Section 4.11, (f) any
redemption of any Class of Notes and (g) any termination of any party
to a Transaction Document.


 


Section 4.12.          Amendments to the Transaction
Documents. The Issuer shall only consent to any modification of any
Transaction Document in accordance with the amendment provisions of such
Transaction Document and shall only consent to a modification of any
organizational document of the Issuer or the Co-Issuer after it has received a
Rating Agency Confirmation with respect to such modification of such
organizational document. The Issuer shall not amend this Agreement or any
related defined terms in the Glossary pursuant to Section 11.01
until after it has received Rating Agency Confirmation with respect to such
amendment.


 


ARTICLE V


 


PRIORITY OF PAYMENTS


 


Section 5.01.          Disbursements of Money from
Collection Account.


 


(a)        On any Payment Date that is not a
Redemption Date, in accordance with a Note Valuation Report prepared by the
Collateral Advisor as of the last day of the Due Period preceding such Payment
Date, Collateral Interest Collections, and Collateral Principal Collections, to
the extent of Available Funds in the Collection Account, shall be applied by
the Collateral Agent in the following order of priority (the “Priority of
Payments”); provided, however, that
with respect to clauses (i) through (xxiv) (excluding clause
(xx)) below, such application shall be made, first, from Collateral
Interest Collections and then, except for clause (vii) and (xxiv),
to the extent Collateral Interest Collections are not sufficient for such
payments, from Collateral Principal Collections (subject to any limitations
described herein): 


 


(i)         to
pay, in the following order, (A) taxes and filing fees and registration
fees (including, without limitation, annual return fees) payable by the
Co-Issuers, if any; and then (B) the amount of any due and unpaid Trustee
Fee and then (C) the amount of any due and unpaid Trustee Expenses,
Collateral Agent Expenses and Collateral Administrator Expenses and the amount
of any due and unpaid expenses of the Preferred Share Fiscal and Paying Agent
and then the amount of any due and unpaid expenses of the Administrator and any
Administrative Expenses, including amounts payable to the Collateral Advisor
under the Collateral Advisory Agreement; and then (D) 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 Advisor directs that a lesser
amount be deposited to the Expense Reserve Account); provided that the cumulative amount paid under (C) and
(D) (excluding any Administrative Expenses due or accrued with respect to
the actions taken on or prior to the Closing Date and accounting fees that the
Trustee is required to pay (other than certain accountants’ fees related to
annual reviews) and fees the Trustee pays in connection with any Events of
Default and any default of the Collateral Debt Securities) may not exceed
U.S.$215,000 in the aggregate in any consecutive 12-month period;


 


(ii)        to
pay the Senior Collateral Advisory Fee with respect to such Payment Date and
any Senior Collateral Advisory Fee with respect to a previous Payment Date that
was not paid on a previous Payment Date;


 


23

















 


(iii)       to
pay any Hedge Counterparty any amounts due to such Hedge Counterparty under any
Hedge Agreement, not including any termination payments payable under clause
(xxi) below;


 


(iv)       to
pay Periodic Interest on the Class A-1 Notes (including Defaulted Interest
and any interest thereon);


 


(v)        to
pay, pari passu, Periodic Interest on the Class A-2A Notes and the
Class A-2B Notes (including Defaulted Interest and any interest thereon);


 


(vi)       if
either of the Class A Coverage Tests is not satisfied as of the preceding
Calculation Date, to pay principal of the Class A-1 Notes then Outstanding
until such Class A Coverage Test is satisfied as of such Calculation Date
or until the Class A-1 Notes are paid in full, and then to pay, pari
passu, principal of the Class A-2A Notes and the Class A-2B Notes
then Outstanding until such Class A Coverage Test is satisfied as of such
Calculation Date or until the Class A-2 Notes are paid in full; provided that for purposes of determining
if the Class A Principal Coverage Test is satisfied, the denominator of
the Class A Principal Coverage Ratio shall be calculated after giving
effect to any payments of principal on the Class A Notes to be made
pursuant to this clause (vi);
provided, further, that for purposes of determining if the
Class A Principal Coverage Test is satisfied, the numerator of the
Class A Principal Coverage Ratio shall be calculated after giving effect
to (A) any Collateral Principal Collections to be applied pursuant to clauses
(i) through (v) above and (B) any Collateral Principal
Collections to be applied pursuant to this clause (vi);


 


(vii)      to
pay, from Collateral Interest Collections (if any), an amount equal to the
Interest Reserve Amount for deposit into the Interest Reserve Account;


 


(viii)     to
pay Periodic Interest on the Class B-1 Notes, based on the amount of
interest due on the Class B-1 Notes (including, any Defaulted Interest on
the Class B-1 Notes and any interest thereon);


 


(ix)       to
pay Periodic Interest on the Class B-2 Notes, based on the amount of
interest due on the Class B-2 Notes (including, if no Class A Notes
or Class B-1 Notes are Outstanding, any Defaulted Interest on the
Class B-2 Notes and any interest thereon);


 


(x)        if either of the Class B
Coverage Tests is not satisfied as of the preceding Calculation Date, to pay
principal (including any Class B-2 Cumulative Applicable Periodic Interest
Shortfall Amount) of the most senior Class of Notes then Outstanding until
such Class 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 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 B
Coverage Test is satisfied or until the Class B-1 Notes and then the
Class B-2 Notes, in that order, are paid in full; provided that for purposes of determining
if the Class B Principal Coverage Test is satisfied, the denominator of the
Class B Principal Coverage Ratio shall be calculated after giving effect
to any payments of principal on the Notes made pursuant to clause (vi) above
and pursuant to this clause (x) on the related Payment Date; provided, further, that for purposes of determining
if the Class B Principal Coverage Test is satisfied, the numerator of the
Class B Principal Coverage Ratio shall be calculated after giving effect
to (A) any Collateral Principal Collections to be applied pursuant to clauses
(i) through (ix) above (excluding clause (vii)) and
(B) any Collateral Principal Collections to be applied to the Notes
pursuant to this clause (x) on the related Payment Date; and provided,


 


24

















 


further, that with respect to the Class B-2 Notes, payment of principal not
constituting Class B-2 Cumulative Applicable Periodic Interest Shortfall
Amount shall be paid before principal constituting Class B-2 Cumulative
Applicable Periodic Interest Shortfall Amount, if any, for the Class B-2
Notes;


 


(xi)       to
pay the Class B-2 Cumulative Applicable Periodic Interest Shortfall
Amount, if any;


 


(xii)      to
pay, pari passu, Periodic Interest on the Class C-1A Notes and the
Class C-1B Notes, based on the amount of interest due on the
Class C-1 Notes (including, if no Class A Notes or Class B Notes
are Outstanding, any Defaulted Interest on the Class C-1 Notes and any
interest thereon);


 


(xiii)     to
pay Periodic Interest on the Class C-2 Notes, based on the amount of
interest due on the Class C-2 Notes (including, if no Class A Notes,
Class B Notes or Class C-1 Notes are Outstanding, any Defaulted
Interest on the Class C-2 Notes and any interest thereon);


 


(xiv)     if
either of the Class C Coverage Tests is not satisfied as of the preceding
Calculation Date, to pay principal (including any Class B-2 Cumulative
Applicable Periodic Interest Shortfall Amount or Class C Cumulative
Applicable Periodic Interest Shortfall Amount, as applicable) of the most
senior Class of Notes then Outstanding until such Class C Coverage
Test is satisfied as of such Calculation Date or until such most senior
Class of Notes is paid in full, and then to pay principal of the next most
senior Class of Notes Outstanding until such Class C Coverage Test is
satisfied as of such Calculation Date or until such next most senior
Class of Notes is paid in full and so on, until such Class C Coverage
Test is satisfied or until the Class C-1 Notes and then the Class C-2
Notes, in that order, are paid in full; provided
that for purposes of determining if the Class C Principal
Coverage Test is satisfied, 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 clauses (vi) and .(x) above and
pursuant to this clause (xiv) on the related Payment Date; 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 (A) any Collateral Principal Collections to be
applied pursuant to clauses (i) through (xiii) above
(excluding clause (vii) and (B) any Collateral Principal
Collections to be applied to the Notes pursuant to this clause (xiv) on
the related Payment Date; and provided,
further, that with respect to (A) the Class B-2 Notes,
payment of principal not constituting the Class B-2 Cumulative Applicable
Periodic Interest Shortfall Amount shall be paid before principal constituting
the Class B-2 Cumulative Applicable Periodic Interest Shortfall Amount, if
any; (B) the Class C-1 Notes, payment of principal not constituting
the Class C-1 Cumulative Applicable Periodic Interest Shortfall Amount
shall be paid before principal constituting the Class C-1 Cumulative
Applicable Periodic Interest Shortfall Amount, if any; and (C) the
Class C-2 Notes, payment of principal not constituting the Class C-2
Cumulative Applicable Periodic Interest Shortfall Amount shall be paid before
principal constituting the Class C-2 Cumulative Applicable Periodic
Interest Shortfall Amount, if any;


 


(xv)      to
pay the Class C-1 Cumulative Applicable Periodic Interest Shortfall
Amount, if any;


 


(xvi)     to
pay the Class C-2 Cumulative Applicable Periodic Interest Shortfall
Amount, if any;


 


25

















 


(xvii)    to
pay, pari passu, Periodic Interest on the Class D-1A Notes and the
Class D-1B Notes, based on the amount of interest due on the Class D
Notes (including, if no Class A Notes, Class B Notes or Class C
Notes are Outstanding, any Defaulted Interest on the Class D Notes and any
interest thereon);


 


(xviii)   if
either of the Class D Coverage Tests is not satisfied as of the preceding
Calculation Date, to pay principal (including any Class B-2 Cumulative
Applicable Periodic Interest Shortfall Amount, Class C Cumulative
Applicable Periodic Interest Shortfall Amount or Class D Cumulative
Applicable Periodic Interest Shortfall Amount, as applicable) of the most
senior Class of Notes then Outstanding until such Class D Coverage
Test is satisfied as of such Calculation Date or until such most senior
Class of Notes is paid in full, and then to pay principal of the next most
senior Class of Notes Outstanding until such Class D Coverage Test is
satisfied as of such Calculation Date or until such next most senior
Class of Notes is paid in full and so on, until such Class D
Principal 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,
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 clauses (vi),  (x) and (xiv) above and pursuant
to this clause (xviii) on the related Payment Date; 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 (A) any Collateral Principal Collections to be
applied pursuant to clauses (i) through (xvii) above (excluding clause
(vii)) and (B) any Collateral Principal
Collections to be applied to the Notes pursuant to this clause (xviii) on
the related Payment Date; and provided,
further, that with respect to (A) the Class B-2 Notes,
payment of principal not constituting the Class B-2 Cumulative Applicable
Periodic Interest Shortfall Amount shall be paid before principal constituting
the Class B-2 Cumulative Applicable Periodic Interest Shortfall Amount, if
any; (B) the Class C-1 Notes, payment of principal not constituting
the Class C-1 Cumulative Applicable Periodic Interest Shortfall Amount
shall be paid before principal constituting the Class C-1 Cumulative
Applicable Periodic Interest Shortfall Amount, if any; (C) the
Class C-2 Notes, payment of principal not constituting the Class C-2
Cumulative Applicable Periodic Interest Shortfall Amount shall be paid before
principal constituting the Class C-2 Cumulative Applicable Periodic
Interest Shortfall Amount, if any; and (D) 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;


 


(xix)      to
pay the Class D Cumulative Applicable Periodic Interest Shortfall Amount,
if any;


 


(xx)       to
pay, in the following order, (A) the principal of the Class A-1 Notes
until paid in full, and then (B) pari passu, the principal of
the Class A-2A Notes and the Class A-2B Notes until paid in full, and
then (C) the principal of the Class B-1 Notes until paid in full, and
then (D) the principal of the Class B-2 Notes until paid in full, and
then (E) pari passu, the principal of the Class C-lA Notes and the
Class C-1B Notes until paid in full, and then (F) the principal of
the Class C-2 Notes until paid in full, and then (G) pari passu, the
principal of the Class D-1A Notes and the Class D-1B Notes until paid
in full; provided that the
foregoing items (A) through (G) shall be payable in an aggregate
amount equal on any Payment Date to the lesser of (1) the amount of
Collateral Principal Collections received during the related Due Period and
(2) the amount of Available Funds then remaining in the Collection Account;


 


(xxi)      to
pay termination payments payable to any Hedge Counterparty upon the termination
of the related Hedge Agreement, if such termination occurred solely as the
result


 


26

















 


of an event of default or a termination event with respect to the Hedge
Counterparty as Defaulting Party or sole Affected Party, as the case may be;


 


(xxii)      to
pay, in the following order, (A) any due and unpaid Trustee Fee, Trustee
Expenses, Collateral Agent Expenses and Collateral Administrator Expenses,
Preferred Share Fiscal and Paying Agent Expenses or Administrative Expenses,
including amounts payable to the Collateral Advisor under the Collateral
Advisory Agreement, in each case, in the same order of priority as provided in clause
(i) above and to the extent not previously paid in full under clause
(i) above, and (B) on a pro
rata basis, any due and unpaid expenses and other liabilities of the
Co-Issuers to the extent not previously paid under clause (i) above,
in each case, whether as a result of an amount limitation imposed thereunder or
otherwise;


 


(xxiii)     to
pay the Subordinate Collateral Advisory Fee with respect to such Payment Date
and any due and unpaid Subordinate Collateral Advisory Fee with respect to a
previous Payment Date that was not paid on a previous Payment Date;


 


(xxiv)     after
the Payment Date occurring in August 2015, to pay from remaining
Collateral Interest Collections on any Payment Date the principal on the
Class D Notes, until paid in full, then the principal on the
Class C-2 Notes, until paid in full, then the principal of the
Class C-1 Notes, until paid in full, then the principal on the
Class B-2 Notes, until paid in full, then the principal on the
Class B-1 Notes, until paid in full, then the principal on the
Class A-2 Notes until paid in full and then the principal on the
Class A-1 Notes until paid in full; and


 


(xxv)      all
Excess Funds to the Preferred Share Fiscal and Paying Agent, on behalf of the
Issuer for the payment of dividends or distributions on the Preferred Shares in
accordance with the Preferred Share Documents.


 


(b)         Notwithstanding the foregoing, on any
Redemption Date or Auction Call Redemption Date, the Collateral Agent shall
pay, from the Collection Account, in the following order: (i) the amounts
set forth in clauses (i), (ii) and (iii) of the
Priority of Payments, (ii) the Redemption Price of each Class of
Notes in accordance with the Priority of Payments and (iii) the amounts
set forth in clauses (xxi) through (xxv) of the Priority of Payments.


 


(c)          Notwithstanding Section 5.01(a),
if an acceleration of maturity has occurred and is continuing in connection
with an Event of Default, on the date or dates determined by the Trustee, the
Trustee shall pay, from all collections from, and proceeds of the sale or
liquidation of, the Collateral, in the following order: (i) amounts
corresponding to the amounts set forth in clauses (i),  (ii) and (iii) of
the Priority of Payments, (ii) the Periodic Interest on the Class A-1
Notes and then on the Class A-2 Notes (including any Defaulted Interest on
such Class A Notes) and then principal on the Class A-1 Notes until
paid in full and then principal on the Class A-2 Notes until paid in full,
(iii) the Periodic Interest on the Class B-1 Notes (including any Defaulted
Interest on the Class B-1 Notes) and then principal on the Class B-1
Notes until paid in full, (iv) the Periodic Interest on the Class B-2
Notes (including any Defaulted Interest on the Class B-2 Notes) and then
principal on the Class B-2 Notes (including Class B-2 Cumulative
Applicable Periodic Interest Shortfall Amount, if any) until paid in full,
(v) the Periodic Interest on the Class C-1 Notes (including any
Defaulted Interest on the Class C-1 Notes) and then principal on the
Class C-1 Notes (including Class C-1 Cumulative Applicable Periodic
Interest Shortfall Amount, if any) until paid in full, (vi) the Periodic
Interest on the Class C-2 Notes (including any Defaulted Interest on the
Class C-2 Notes) and then principal on the Class C-2 Notes (including
Class C-2 Cumulative Applicable Periodic Interest Shortfall Amount, if
any) until paid in full, (vii) the Periodic Interest on the Class D
Notes (including any Defaulted Interest on the Class D Notes) and then
principal on the Class D Notes (including Class D Cumulative
Applicable Periodic Interest Shortfall Amount, if


 


27

















 


any)
until paid in full, (viii) amounts corresponding to the amounts set forth
in clauses (xxi) through (xxiii) of the Priority of Payments and
(viii) any remaining amounts to the Preferred Share Fiscal and Paying
Agent, for payment of dividends or distributions on the Preferred Shares.


 


Section 5.02.          Additional Provisions.


 


(a)          (1)           On
the applicable Stated Maturity Date of the Notes, the Issuer (or the Collateral
Advisor acting pursuant to the Collateral Advisory Agreement on behalf of the
Issuer) shall direct the Collateral Agent in writing to (and the Collateral
Agent shall, in the manner so directed by the Collateral Advisor on behalf of
the Issuer) liquidate any remaining Collateral Debt Securities and any Hedge
Agreements (for value on the applicable Stated Maturity Date of the Notes) and
deposit the proceeds thereof, if any, in the Collection Account. On the
applicable Stated Maturity Date of the Notes, all net proceeds from such
liquidation and all available Cash, after the payment of the amounts referred
to in clauses (i) through (xxiii) of the Priority of
Payments in the order set forth therein, shall be distributed to the Holders of
the Preferred Shares, whereupon all of the Preferred Shares will be redeemed
pursuant to the Issuer’s Articles.


 


(2)          Upon any Redemption or Auction Call
Redemption, the Issuer (or the Collateral Advisor acting pursuant to the
Collateral Advisory Agreement on behalf of the Issuer) shall direct the
Collateral Agent in writing to (and the Collateral Agent shall, in the manner
so directed by the Collateral Advisor) liquidate any remaining Collateral Debt
Securities and any Hedge Agreements (for value on the date of such Redemption
or Auction Call Redemption, as the case may be) and deposit the proceeds
thereof, if any, in the Collection Account.


 


(b)         If on any Payment Date the amount
available in the Collection 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 4.07(a),
the Collateral Agent shall make the disbursements called for in the order and
according to the Priority of Payments set forth under Section 5.01(a),
subject to Section 7.01, to the extent funds are available
therefor.


 


(c)          In the event that any Hedge
Counterparty defaults in the payment of its obligations to the Issuer under the
relevant Hedge Agreement on any date when such amount was due and payable, the
Collateral Agent shall make a demand on such Hedge Counterparty or any
guarantor, if applicable, demanding payment by 12:30 p.m. on the Business
Day following such date. The Collateral Agent shall give notice to the
Collateral Advisor, S&P and the Trustee and the Trustee shall deliver such
notice to the Noteholders upon the continuing failure by such Hedge
Counterparty to perform its obligations during the same Business Day following
a demand made by the Collateral Agent on such Hedge Counterparty, and shall
take such action with respect to such continuing failure directed to be taken
by the Trustee.


 


(d)         Notwithstanding any provision to the
contrary contained herein, the provisions of Articles II and VII
and the other provisions hereof are subject to the Priority of Payments
specified in this Article V, and, in the event of any inconsistency
between the provisions of Article II, Article VII or
the other provisions hereof and the Priority of Payments, the Priority of
Payments will control.


 


(e)          As a condition to the payment of
principal and interest on any Note without U.S. federal back-up withholding,
the Issuer shall require the 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-8BEN
(or applicable successor


 


28

















 


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) from each Noteholder.


 


ARTICLE VI


 


SALE OF COLLATERAL DEBT SECURITIES


 


Section 6.01.
         Sale of Collateral Debt
Securities.


 


(a)          Subject to the satisfaction of the
conditions specified in Section 4.08 as applicable, if the
Collateral Advisor, on behalf of the Issuer, pursuant to this Section 6.01
and Section 6.02, shall direct the Collateral Agent to sell any
Defaulted Security, Equity Security, Credit Risk Security, Written Down
Security or Withholding Tax Security, the Collateral Agent shall sell in the
manner directed by the Collateral Advisor, any Defaulted Security, Equity
Security, Credit Risk Security, Written Down Security or Withholding Tax
Security.


 


(b)         A Defaulted Security, a Credit Risk
Security, a Written Down Security, a Withholding Tax Security or an Equity
Security may be sold at any time. In addition, if a Collateral Debt Security
that is a Defaulted Security is not sold within one year of such Collateral
Debt Security becoming a Defaulted Security, the Collateral Advisor, on behalf
of the Issuer, shall use its best efforts to effect the sale of such Collateral
Debt Security on such later date as such Collateral Debt Security may first be
sold in accordance with its terms and with applicable law; provided, however, that the Collateral
Advisor may hold Defaulted Securities up to three (3) years after such securities
become Defaulted Securities as long as the total amount of such securities does
not exceed 5% of the CDS Principal Balance and any amount over such 5% limit
shall be sold within one (1) year.


 


(c)          Any Equity Security must be sold
within ninety (90) days after receipt and any Equity Security which constitutes
Margin Stock must be sold within forty-five (45) days after receipt.
Notwithstanding the foregoing, Equity Securities that are received upon the
exercise of convertible bonds must be sold within five (5) Business Days
of receipt (or within five (5) Business Days of such later date as such
Equity Security may first be sold in accordance with its terms and applicable
law).


 


(d)         In the event of a Redemption or Auction
Call Redemption, the Collateral Advisor shall direct the Collateral Agent to
sell Collateral Debt Securities without regard to the foregoing limitations; provided that the Sale Proceeds therefrom
and other amounts available therefor will be at least sufficient to pay certain
expenses, including all amounts due under any Hedge Agreements, and redeem in
whole the Notes at the applicable Redemption Prices; and provided, further, that such Sale Proceeds
are used to make such a Redemption or Auction Call Redemption.


 


(e)          The Collateral Advisor shall sell any
Collateral Debt Security pursuant to this Section 6.01 only at a
price that, in its judgment, is not substantially less than the market value of
such Collateral Debt Security at the time of such sale.


 


Section 6.02.
         Conditions Applicable to all
Transactions.


 


(a)        Any transaction effected under this Article VI
shall be conducted on an arm’s-length basis, and, if effected with a Person
affiliated with the Collateral Advisor, the Issuer or the Collateral Agent,
shall be effected in a primary or secondary market transaction on terms as
favorable to the Issuer as would be the case if such Person were not so
affiliated; provided, however, that
after the Closing Date, the Collateral Advisor and its Affiliates may, as
principals or for their own accounts, sell Collateral Debt Securities or enter
into any Hedge Agreements with the Issuer if and to the extent such


 


29

















 


transactions
comply with the Investment Advisers Act; provided,
further, that the Collateral Advisor may, on behalf of the Issuer,
sell Collateral Debt Securities or enter into Hedge Agreements with other
entities for which it, or an Affiliate, acts as an investment advisor; provided, further, that the Collateral
Advisor will be permitted to acquire an obligation on behalf of the Issuer to
be included in the Collateral from its Permitted Affiliates as principal or as
agent or to sell an obligation to its Permitted Affiliates as principal or
agent subject to the Investment Advisers Act; and provided, further, that the Collateral Advisor may acquire
an obligation on behalf of the Issuer to be included in the Collateral from
itself or from any of its Affiliates that are not Permitted Affiliates, or from
funds or accounts for which the Collateral Advisor or any of its Affiliates
acts as investment adviser or sell an obligation on behalf of the Issuer to
itself, or to any of its Affiliates that are not Permitted Affiliates or to
funds or accounts for which the Collateral Advisor or any of its Affiliates
acts as an investment adviser; provided,
however, that any such acquisition or disposition must be approved
by the board of directors of the Issuer.


 


Notwithstanding
the foregoing, prior to selling any Collateral Debt Securities to any Person
affiliated with the Collateral Advisor (other than a Permitted Affiliate), the
Collateral Advisor shall use its reasonable efforts to solicit bids from two
non-affiliated Persons; provided that
transactions with Permitted Affiliates shall be conducted as arm’s-length
transactions; and provided, further, that
in the event that the Collateral Advisor is unable, in its good faith
determination, to obtain two bids from non-affiliated Persons, the Collateral
Advisor shall use its reasonable efforts to solicit bids from a non-affiliated
Person; and provided, further, that
in the event that the Collateral Advisor in its good faith determination is
unable to obtain a bid from a non-affiliated Person, it shall use its
reasonable efforts to obtain an appraisal from a non-affiliated Person; and provided, further, that such Collateral
Debt Securities shall be sold to such Person affiliated with the Collateral
Advisor at the highest of the bids or the appraisal value so obtained.


 


ARTICLE VII


 


SUBORDINATION


 


Section 7.01.
         Subordination.


 


(a)        Notwithstanding anything in this
Agreement, the Trust Deed, the Notes or any other Transaction Document to the
contrary, the Issuer, the Holders of the Class A-2 Notes, the
Class B-1 Notes, the Class B-2 Notes, the Class C-1 Notes, the
C-2 Notes and the Class D Notes and the Holders of the Preferred Shares
and the Ordinary Shares, by virtue of the respective ownership of such
securities, agree for the benefit of the Holders of the Class A-1 Notes
that the Class A-2 Notes, the Class B-1 Notes, the Class B-2
Notes, the Class C-1 Notes, the Class C-2 Notes, the Class D
Notes, the Preferred Shares, the Ordinary Shares and the Issuer’s rights in and
to the Collateral (the “Class A-1 Subordinate Interests”) shall be
subordinate and junior to the Class A-1 Notes to the extent and in the
manner set forth in this Agreement including as set forth in Section 5.01(a) and
hereinafter provided. If any Event of Default has occurred and has not been
cured or waived and acceleration occurs in accordance with the Conditions and
the Trust Deed, the Class A-1 Notes, to the extent set forth in Section 5.01(c),
shall be paid in full in Cash or, to the extent that the Holders of 662/3% of the outstanding principal amount of the
Class A-1 Notes consent, other than in Cash, before any further payment or
distribution is made on account of the Class A-1 Subordinate Interests.
The Holders of the Class A-2 Notes, the Class B-1 Notes, the
Class B-2 Notes, the Class C-1 Notes, the Class C-2 Notes and
the Class D Notes have agreed in the Trust Deed, the Holders of the
Preferred Shares have agreed in the Preferred Share Fiscal and Paying Agency
Agreement and the holders of the Ordinary Shares have agreed in the Declaration
of Trust 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 or the
Co-Issuer for failure to pay to them amounts due under the Class A-2
Notes, the Class B-1 Notes, the Class B-2 Notes, the Class C-1
Notes, the Class C-2 Notes, the Class D Notes, the Preferred Shares
and


 


30














 


the
Ordinary Shares or hereunder until the payment in full of the Class A-1
Notes and not before one (1) year and one (1) day have elapsed since
such payment or, if longer, the applicable preference period then in effect,
including any preference period established pursuant to the laws of the Cayman
Islands.


 


(b)             Notwithstanding
anything in this Agreement, the Trust Deed, the Notes or any other Transaction
Document to the contrary, the Issuer, the Holders of the Class B-1 Notes,
the Class B-2 Notes, the Class C-1 Notes, the Class C-2 Notes,
the Class D Notes and the Preferred Shares and the holders of the Ordinary
Shares, by virtue of the respective ownership of such securities, agree for the
benefit of the Holders of the Class A-2 Notes that the Class B-1 Notes,
the Class B-2 Notes, the Class C-1 Notes, the Class C-2 Notes,
the Class D Notes, the Preferred Shares, the Ordinary Shares and the
Issuer’s rights in and to the Collateral (the “Class A-2
Subordinate Interests”) shall be subordinate and junior to the
Class A-2 Notes to the extent and in the manner set forth in this
Agreement including as set forth in Section 5.01(a) and hereinafter provided. If any Event
of Default has occurred and has not been cured or waived and acceleration
occurs in accordance with the Conditions and the Trust Deed, the Class A-2
Notes shall be paid in full in Cash or, to the extent 662/3% of the outstanding principal amount of the
Class A-2 Notes consent, other than in Cash, before any further payment or
distribution is made on account of the Class A-2 Subordinate Interests.
The Holders of the Class B-1 Notes, the Class B-2 Notes, the
Class C-1 Notes, the Class C-2 Notes and the Class D Notes have
agreed in the Trust Deed, the Holders of the Preferred Shares have agreed in
the Preferred Share Fiscal and Paying Agency Agreement and the holders of the
Ordinary Shares have agreed in the Declaration of Trust for the benefit of the
Holders of the Class A-2 Notes, not to cause the filing of a petition in
bankruptcy against the Issuer or the Co-Issuer for failure to pay to them
amounts due under the Class B-1 Notes, the Class B-2 Notes, the
Class C-1 Notes, the Class C-2 Notes, the Class D Notes, the
Preferred Shares and the Ordinary Shares or hereunder until the payment in full
of the Class A-2 Notes and not before one (1) year and one
(1) day have elapsed since such payment or, if longer, the applicable
preference period then in effect, including any preference period established
pursuant to the laws of the Cayman Islands.


 


(c)             Notwithstanding
anything in this Agreement, the Trust Deed, the Notes or any other Transaction
Document to the contrary, the Issuer, the Holders of the Class B-2 Notes,
the Class C-1 Notes, the Class C-2 Notes, the Class D Notes and
the Preferred Shares and the holders of the Ordinary Shares, by virtue of the
respective ownership of such securities, agree for the benefit of the Holders
of the Class B-1 Notes that the Class B-2 Notes, the Class C-1
Notes, the Class C-2 Notes, the Class D Notes, the Preferred Shares, the
Ordinary Shares and the Issuer’s rights in and to the Collateral (the “Class B-1 Subordinate Interests”)
shall be subordinate and junior to the Class B-1 Notes to the extent and
in the manner set forth in this Agreement including as set forth in Section 5.01(a) and hereinafter provided. If any Event
of Default occurred and has not been cured or waived and acceleration occurs in
accordance with the Conditions and the Trust Deed, the Class B-1 Notes
shall be paid in full in Cash or, to the extent 662/3% of the outstanding principal amount of the
Class B-1 Notes consent, other than in Cash, before any further payment or
distribution is made on account of the Class B-1 Subordinate Interests.
The Holders of the Class B-2 Notes, the Class C-1 Notes, the
Class C-2 Notes and the Class D Notes have agreed in the Trust Deed,
the Holders of the Preferred Shares have agreed in the Preferred Share Fiscal
and Paying Agency Agreement and the holders of the Ordinary Shares have agreed
in the Declaration of Trust for the benefit of the Holders of the
Class B-1 Notes, not to cause the filing of a petition in bankruptcy
against the Issuer or the Co-Issuer for failure to pay to them amounts due
under the Class B-2 Notes, the Class C-1 Notes, the Class C-2
Notes, the Class D Notes, the Preferred Shares and the Ordinary Shares or
hereunder until the payment in full of the Class B-1 Notes and not before
one (1) year and one (1) day have elapsed since such payment or, if
longer, the applicable preference period then in effect, including any
preference period established pursuant to the laws of the Cayman Islands.


 


(d)             Notwithstanding
anything in this Agreement, the Trust Deed, the Notes or any other Transaction
Document to the contrary, the Issuer, the Holders of the Class C-1 Notes,
the Class C-2


 


31

















 


Notes,
the Class D Notes and the Preferred Shares and the holders of the Ordinary
Shares, by virtue of the respective ownership of such securities, agree for the
benefit of the Holders of the Class B-2 Notes that the Class C-1
Notes, the Class C-2 Notes, the Class D Notes, the Preferred Shares,
the Ordinary Shares and the Issuer’s rights in and to the Collateral (the “Class B-2
Subordinate Interests”) shall be subordinate and junior to the
Class B-2 Notes to the extent and in the manner set forth in this
Agreement including as set forth in Section 5.01(a) and
hereinafter provided. If any Event of Default has occurred and has not been
cured or waived and acceleration occurs in accordance with the Conditions and
the Trust Deed, the Class B-2 Notes shall be paid in full in Cash or, to
the extent 662/3% of the
outstanding principal amount of the Class B-2 Notes consent, other than in
Cash, before any further payment or distribution is made on account of the
Class B-2 Subordinate Interests. The Holders of the Class C-1 Notes,
the Class C-2 Notes and the Class D Notes have agreed in the Trust
Deed, the Holders of the Preferred Shares have agreed in the Preferred Share
Fiscal and Paying Agency Agreement and the holders of the Ordinary Shares have
agreed in the Declaration of Trust for the benefit of the Holders of the
Class B-2 Notes, not to cause the filing of a petition in bankruptcy
against the Issuer or the Co-Issuer for failure to pay to them amounts due under  the Class C-1 Notes, the
Class C-2 Notes, the Class D Notes, the Preferred Shares and the
Ordinary Shares or hereunder until the payment in full of the Class B-2
Notes and not before one (1) year and one (1) day have elapsed since
such payment or, if longer, the applicable preference period then in effect,
including any preference period established pursuant to the laws of the Cayman
Islands.


 


(e)           Notwithstanding
anything in this Agreement, the Trust Deed, the Notes or any other Transaction
Document to the contrary, the Issuer, the Holders of the Class C-2 Notes,
the Class D Notes and the Preferred Shares and the holders of the Ordinary
Shares, by virtue of the respective ownership of such securities, agree for the
benefit of the Holders of the Class C-1 Notes that the Class C-2
Notes, the Class D Notes, the Preferred Shares, the Ordinary Shares and
the Issuer’s rights in and to the Collateral (the “Class C-1
Subordinate Interests”) shall be subordinate and junior to the
Class C-1 Notes to the extent and in the manner set forth in this
Agreement including as set forth in Section 5.01(a) and
hereinafter provided. If any Event of Default has occurred and has not been
cured or waived and acceleration occurs in accordance with the Conditions and
the Trust Deed, the Class C-1 Notes shall be paid in full in Cash or, to
the extent 662/3% of the
outstanding principal amount of the Class C-1 Notes consent, other than in
Cash, before any further payment or distribution is made on account of the
Class C-1 Subordinate Interests. The Holders of the Class C-2 Notes
and the Class D Notes have agreed in the Trust Deed, the Holders of the
Preferred Shares have agreed in the Preferred Share Fiscal and Paying Agency
Agreement and the holders of the Ordinary Shares have agreed in the Declaration
of Trust for the benefit of the Holders of the Class C-1 Notes, not to
cause the filing of a petition in bankruptcy against the Issuer or the
Co-Issuer for failure to pay to them amounts due under the Class C-2
Notes, the Class D Notes, the Preferred Shares and the Ordinary Shares or
hereunder until the payment in full of the Class C-1 Notes and not before
one (1) year and one (1) day have elapsed since such payment or, if
longer, the applicable preference period then in effect, including any
preference period established pursuant to the laws of the Cayman Islands.


 


(f)            Notwithstanding
anything in this Agreement, the Trust Deed, the Notes or any other Transaction
Document to the contrary, the Issuer, the Holders of the Class D Notes and
the Preferred Shares and the holders of the Ordinary Shares, by virtue of the
respective ownership of such securities, agree for the benefit of the Holders
of the Class C-2 Notes that the Class D Notes, the Preferred Shares,
the Ordinary Shares and the Issuer’s rights in and to the Collateral (the “Class C-2
Subordinate Interests”) shall be subordinate and junior to the
Class C-2 Notes to the extent and in the manner set forth in this
Agreement including as set forth in Section 5.01(a) and hereinafter
provided. If any Event of Default has occurred and has not been cured or waived
and acceleration occurs in accordance with the Conditions and the Trust Deed,
the Class C-2 Notes shall be paid in full in Cash or, to the extent 662/3% of the outstanding principal amount of the
Class C-2 Notes consent, other than in Cash, before any further payment or
distribution is made on account of the Class C-2 Subordinate Interests.
The Holders of the


 


32

















 


Class D
Notes have agreed in the Trust Deed, the Holders of the Preferred Shares have
agreed in the Preferred Share Fiscal and Paying Agency Agreement and the
holders of the Ordinary Shares have agreed in the Declaration of Trust for the
benefit of the Holders of the Class C-2 Notes, not to cause the filing of
a petition in bankruptcy against the Issuer or the Co-Issuer for failure to pay
to them amounts due under the Class D Notes, the Preferred Shares and the
Ordinary Shares or hereunder until the payment in full of the Class C-2
Notes and not before one (1) year and one (1) day have elapsed since
such payment or, if longer, the applicable preference period then in effect,
including any preference period established pursuant to the laws of the Cayman
Islands.


 


(g)           Notwithstanding
anything in this Agreement, the Trust Deed, the Notes or any other Transaction
Document to the contrary, the Issuer, the Holders of the Preferred Shares and
the holders of the Ordinary Shares, by virtue of the respective ownership of
such securities, agree for the benefit of the Holders of the Class D Notes
that the Preferred Shares, the Ordinary Shares and the Issuer’s rights in and
to the Collateral (the “Class D Subordinate Interests”) shall be
subordinate and junior to the Class D Notes to the extent and in the
manner set forth in this Agreement including as set forth in Section 5.01(a) and
hereinafter provided. If any Event of Default has occurred and has not been
cured or waived and acceleration occurs in accordance with the Conditions and
the Trust Deed, the Class D Notes shall be paid in full in Cash or, to the
extent 662/3% of the outstanding principal amount of the Class D Notes
consent, other than in Cash, before any further payment or distribution is made
on account of the Class D Subordinate Interests. The Holders of the
Preferred Shares have agreed in the Preferred Share Fiscal and Paying Agency
Agreement and the holders of the Ordinary Shares have agreed in the Declaration
of Trust for the benefit of the Holders of the Class D Notes, not to cause
the filing of a petition in bankruptcy against the Issuer or the Co-Issuer for
failure to pay to them amounts due under the Preferred Shares and the Ordinary
Shares or hereunder until the payment in full of the Class D Notes and not
before one (1) year and one (1) day have elapsed since such payment
or, if longer, the applicable preference period then in effect, including any
preference period established pursuant to the laws of the Cayman Islands.


 


(h)           Notwithstanding
anything in this Agreement, the Trust Deed, the Notes or any other Transaction
Document to the contrary, the Issuer and the Holders of the Notes agree for the
benefit of any Hedge Counterparty that the Notes and the Issuer’s rights in and
to the Collateral (the “Hedge Counterparty Subordinate Interests”) shall
be subordinate and junior to the rights of any Hedge Counterparty with respect
to payments to be made to any Hedge Counterparty pursuant to a Hedge Agreement
to the extent and in the manner set forth in Section 5.01(a) and
as hereinafter provided. If any Event of Default has occurred and has not been
cured or waived and acceleration occurs in accordance with Condition 13 (Events of Default), including as a result
of an Event of Default specified in clause (g) or (h) of Condition 13
(Events of Default), all amounts
payable to any Hedge Counterparty pursuant to Section 5.01(a)(iii) shall
be paid in Cash or, to the extent any Hedge Counterparty consents, other than
in Cash, before any further payment or distribution is made on account of the
Hedge Counterparty Subordinate Interests.


 


ARTICLE VIII


 


HEDGE AGREEMENTS, INITIAL HEDGE AGREEMENT


 


Section 8.01.
         Hedge Agreement Provisions.


 


(a)           [Intentionally
Omitted.]


 


(b)           The Issuer may from
time to time enter into one or more other Hedge Agreements (other than the
Initial Hedge Agreement), with respect to which Rating Agency Confirmation from
each Rating Agency shall have been obtained. The Issuer (or the Collateral
Advisor on behalf of the


 


33

















 


Issuer)
may, from time to time, enter into, subject to the remainder of this Section 8.01,
one or more replacement Hedge Agreements in the event that any Hedge Agreement
is terminated prior to its scheduled expiration, and the Collateral Agent may
release funds in the Collection Account in accordance with the Priority of
Payments for such purpose; provided,
however, that such released funds shall not exceed the amount of any
termination payment received in respect of a terminated Hedge Agreement; and provided, further, that
Rating Agency Confirmation shall have been received. The notional amounts of
the Hedge Agreements may be reduced from time to time by the Issuer; provided that Rating
Agency Confirmation shall have been received. The Collateral Advisor shall not
cause the occurrence of a Notional Balance Reduction (as defined in the Hedge
Agreements) unless a Rating Agency Confirmation shall have been received. At
least five (5) Business Days before the effective date of any amendment to
a Hedge Agreement, the Issuer (or the Collateral Advisor on behalf of the
Issuer) shall provide each Rating Agency with a copy of such amendment. The
Issuer shall obtain Rating Agency Confirmation from Fitch, S&P and Moody’s
prior to entering into any such amendment.


 


(c)           In the event of any
early termination of a Hedge Agreement with respect to which the Hedge
Counterparty is the sole Defaulting Party or Affected Party (as defined in the
Hedge Agreements), (i) any termination payment paid by the Hedge Counterparty
to the Issuer will be deposited in a single, segregated account held in the
United States in the name of the Collateral Agent (the “Hedge Termination
Receipts Account”) for the benefit of the Collateral Agent for and on
behalf of the Trustee for and on behalf of the Noteholders (other than the
Hedge Counterparty) under this Agreement and (ii) any Hedge Replacement
Proceeds received from a replacement counterparty will be deposited in a
single, segregated account held in the United States in the name of the
Collateral Agent (the “Hedge Replacement Account”) for the benefit of
the Hedge Counterparty under the terminated Hedge Agreement.


 


(d)           The Collateral
Advisor will use its best efforts to cause the Issuer, promptly following the
early termination of a Hedge Agreement (other than on a Redemption Date) and to
the extent possible through application of funds available in the Hedge
Termination Receipts Account and the Hedge Replacement Account, to enter into a
replacement hedge agreement (a “Replacement Hedge”); provided that Rating
Agency Confirmation has been received.


 


(i)        If (A) the funds
available in the Hedge Termination Receipts Account exceed the costs of
entering into a Replacement Hedge, (B) the Collateral Advisor determines
not to replace the terminated Hedge Agreement and Rating Agency Confirmation is
received or (C) the termination is occurring on a Redemption Date, then
amounts in the Hedge Termination Receipts Account (after providing for the
costs of entering into a Replacement Hedge, if any) shall become part of
Collateral Principal Collections and be distributed in accordance with the
Priority of Payments on the next following Payment Date (or on such Redemption
Date, in the event that the Notes are optionally redeemed thereon).


 


(ii)       If the termination of
the applicable Hedge Agreement occurred as a result of a credit rating failure
described in Section 8.01(f) in respect of such Hedge
Counterparty and a Hedge Shortfall Amount exists, the Collateral Agent shall
demand that the applicable Hedge Counterparty pay to the Issuer such Hedge
Shortfall Amount, and upon receipt such payment shall become part of Collateral
Principal Collections. If the termination of the applicable Hedge Agreement
occurred for any other reason, the Hedge Shortfall Amount shall become part of
the Hedge Payment Amount to be paid in accordance with the Priority of Payments
on the next following Payment Date (or on such Redemption Date, in the event
that the Notes are optionally redeemed thereon).


 


(e)           The amounts in the
Hedge Replacement Account will be applied directly to the payment of Defaulted
Hedge Termination Payments, if any, payable by the Issuer to the Hedge


 


34

















 


Counterparty.
To the extent not fully paid from Hedge Replacement Proceeds, a Defaulted Hedge
Termination Payment shall be payable to the Hedge Counterparty on the next
Payment Date in accordance with the Priority of Payments. To the extent that
the funds available in the Hedge Replacement Account exceed any such Defaulted
Hedge Termination Payments (or if there are no Defaulted Hedge Termination
Payments), the amounts in the Hedge Replacement Account shall become part of
Collateral Principal Collections and shall be transferred to the Note Payment
Account and distributed in accordance with the Priority of Payments on the
following Payment Date.


 


(f)            The Collateral
Agent shall, upon receiving written notice from the Collateral Advisor of the
exposure calculated under the Credit Support Annex (as defined below) to the
Hedge Agreement, make a demand to the Hedge Counterparty and its credit support
provider, if applicable, for securities having a value under such Credit
Support Annex equal to the required credit support amount.


 


If
at any time the short-term rating of the Hedge Counterparty or its guarantor
from Moody’s is lower than “P-1” or is “P-1” and has been placed on and is
remaining on credit watch with negative implications by Moody’s or the
long-term rating of the Hedge Counterparty or its guarantor from Moody’s is
lower than “Al” or is “Al” and has been placed on and is remaining on credit
watch with negative implications by Moody’s or, if no short-term rating is
available, the long-term rating of the Hedge Counterparty or its guarantor from
Moody’s is withdrawn, suspended or downgraded below “Aa3” or is “Aa3” and has
been placed on and is remaining on credit watch with negative implications by
Moody’s, or the short-term rating of the Hedge Counterparty or its guarantor
from Fitch is lower than “F-1” or the long-term rating of the Hedge
Counterparty or its guarantor from Fitch is lower than “A” (each, a “Collateralization
Event”), the Issuer and the Hedge Counterparty shall amend the Hedge
Agreement, solely at the expense of the Hedge Counterparty, by incorporating
provisions in the form of the ISDA Credit Support Annex attached as an annex to
the Hedge Agreement (the “Credit Support Annex”) which shall require
that the Hedge Counterparty maintain collateral sufficient to prevent a
downgrade or withdrawal by Moody’s or Fitch, as the case may be (as confirmed
at such time by Moody’s or Fitch, as the case may be, in writing), of its
then-current rating on the Notes; provided that
if the Hedge Counterparty has not within five (5) days following a
Collateralization Event incorporated the Credit Support Annex and provided
sufficient collateral, a Substitution Event (as defined below) shall be deemed
to have occurred and the Hedge Counterparty shall be required to take the
remedial action specified thereunder. In the event that (i) so long as any
Notes are Outstanding and rated by S&P, the short-term rating of the Hedge
Counterparty or its guarantor from S&P is withdrawn, suspended or
downgraded below “A-1” or, if no short-term rating is available, the long-term
rating of the Hedge Counterparty or its guarantor from S&P is withdrawn,
suspended or downgraded below “A+”, (ii) so long as any Notes are
Outstanding and rated by Fitch, the short-term rating of the Hedge Counterparty
or its guarantor from Fitch is withdrawn, suspended or downgraded below “F-1”
or, if no short-term rating is available, the long-term rating of the Hedge
Counterparty or its guarantor from Fitch is withdrawn, suspended or downgraded
below “A” or (iii) the short-term rating of the Hedge Counterparty or its
guarantor from Moody’s is “P-2” or lower or the long-term rating of the Hedge
Counterparty or its guarantor from Moody’s is “A3” or lower or, if no
short-term rating is available, the long-term rating of the Hedge Counterparty
or its guarantor from Moody’s is “A2” or lower (each, a “Substitution Event”),
the Hedge Counterparty will be required, within thirty (30) days following such
Substitution Event, while it continues in good faith to search for an eligible
Substitute Party (as defined below), to 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 (i) whose short-term rating
by Moody’s is not lower than “P-1” and is not “P-1” and has been placed on and
is remaining on credit watch with negative implications and whose long-term
rating by Moody’s is not lower than “Al” or is not “Al” and has been placed on
and is remaining on credit watch with negative implications by Moody’s or, if
no short-term rating is available, whose long-term rating by Moody’s is at
least “Aa3” and is not “Aa3” or has been placed on and is remaining on credit
watch with negative implications by Moody’s, (ii) whose short-term rating
by S&P is


 


35

















 


not
lower than “A-1” or, if no short-term rating is available, whose long-term
rating by S&P is not lower than “A+” and who is not on credit watch with
negative implications by S&P and (iii) whose short-term rating by
Fitch is not lower than “F-1” or, if no short-term rating is available, whose
long-term rating by Fitch is not lower than “A” and who is not on credit watch
with negative implications by Fitch, and with respect to which each Rating
Agency has confirmed in writing that its then-current ratings on any
Class of Notes rated by such Rating Agency will not be adversely affected;
provided that
such right shall be subject to the assumption by the Substitute Party of 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 thirty (30) days following such Substitution Event, the Hedge
Counterparty and the Issuer shall, on or before such thirtieth (30th) day, have amended the Hedge Agreement, solely at the expense of the
Hedge Counterparty, to incorporate the Credit Support Annex, which shall
require that the Hedge Counterparty pledge and assign to the Trustee collateral
consisting of cash and/or eligible investments in an amount sufficient to
maintain the then-current rating of the Notes by each Rating Agency (as
confirmed in writing by each Rating Agency). Any costs attributable to pledging
and assigning any collateral and finding a suitable Substitute Party shall be
borne solely by the Hedge Counterparty and nothing in this paragraph shall
relieve the Hedge Counterparty from its obligations to assign its rights and
obligations under the Hedge Agreement to a Substitute Party in accordance
herewith or the terms of the Hedge Agreement.


 


(g)           The Issuer (or the
Collateral Advisor on behalf of the Issuer) shall enter into Hedge Agreements
solely for the purpose of managing interest rate and other risks in connection
with the Issuer’s issuance of, and payments on, the Notes and the Issuer’s
ownership and disposition of the Collateral Debt Securities.


 


(h)           The amounts payable
to the Hedge Counterparties shall be limited to the amounts payable under the
Priority of Payments and the claims of each Hedge Counterparty (if there is
more than one) shall rank equally.


 


(i)            The Collateral
Advisor and the Rating Agencies shall be notified by the Issuer of any
amendments to and modifications of the Hedge Agreements.


 


(j)            Each Hedge
Agreement will provide with respect to the Issuer for provisions substantially
similar to Sections 10.06 and 10.15.


 


Section 8.02.
         Initial Hedge Agreement.
On or prior to the Closing Date, the Issuer shall enter into an interest rate
hedge agreement (the “Initial Hedge Agreement”), dated as of the Closing
Date, with the Initial Hedge Counterparty. Under the Initial Hedge Agreement,
on each Payment Date, the Issuer will pay an amount equal to the Issuer Initial
Hedge Payment Amount and, on the Business Day preceding each of the Payment
Dates, the Initial Hedge Counterparty will pay an amount equal to the Initial
Hedge Counterparty Payment Amount. Upon receipt of each Initial Hedge
Counterparty Payment Amount, such Initial Hedge Counterparty Payment Amount
shall be deposited in the Collection Account by the Collateral Agent on the
Business Day preceding each of the Payment Dates, commencing on the first
Payment Date following the Due Period in which such payments are received.


 


Section 8.03.
         Acknowledgement of Custodian.
Subject to a mutual agreement with respect to a custodial arrangement, LaSalle
Bank National Association will act as the custodian of the Issuer under the
Initial Hedge Agreement and will comply with the Issuer’s instructions with respect
to any collateral posted pursuant to such Initial Hedge Agreement.


 


36

















 


ARTICLE IX


 


THE COLLATERAL AGENT


 


Section 9.01.            Appointment and Powers. Subject
to the terms and conditions hereof, the Issuer hereby appoints LaSalle Bank
National Association as the Collateral Agent and LaSalle Bank National
Association hereby accepts such appointment and agrees to act as Collateral
Agent for and on behalf of the Secured Parties to maintain custody and
possession of the Collateral and to perform the other duties of the Collateral
Agent in accordance with the provisions of this Agreement. The Trustee hereby
authorizes (and the other Secured Parties shall be deemed to have authorized)
the Collateral Agent to take such action on its behalf and to exercise such
rights, remedies, powers and privileges hereunder as are specifically
authorized to be exercised by the Collateral Agent by the terms hereof,
together with such rights, remedies, powers and privileges as are reasonably
incidental thereto. Notwithstanding any provision to the contrary contained in
this Agreement, if an Event of Default has occurred and is continuing, the
Collateral Agent shall act upon and in compliance with written instructions of
the Trustee delivered pursuant to and in accordance with this Agreement with
respect to any and all matters upon which the Trustee is permitted to act
pursuant to this Agreement or the Trust Deed and any such action taken by the
Collateral Agent in compliance with any such instruction shall be binding upon
all of the Secured Parties.


 


Section 9.02.
         Performance of Duties.


 


(a)           The Collateral Agent
may perform any of its duties hereunder directly or by or through agents or
employees and shall be entitled to consult with counsel and to act in reliance
upon the advice of such counsel concerning matters pertaining to the agencies
created hereby and its duties hereunder, and shall not be liable for any action
taken or omitted to be taken by it in good faith and in reasonable reliance
upon and in accordance with the advice of counsel selected by it. The
Collateral Agent undertakes to perform only such duties as are expressly set
forth herein, and no implied covenants or obligations shall be read into this
Agreement against the Collateral Agent. No provision hereof shall be construed
to relieve the Collateral Agent from liability to the Trustee or the Issuer for
its own gross negligence, bad faith or willful misconduct; provided that
(i) the Collateral Agent shall not be liable with respect to any action
taken, suffered or omitted by it in good faith (A) reasonably believed by
it to be authorized or within the discretion or rights or powers conferred on
it by this Agreement or (B) in accordance with any written direction or
request of the Issuer or the Collateral Advisor (prior to the occurrence of an
Event of Default) or the Trustee (other than those that require the consent of
other parties and such consent has been withheld), unless in either case the
Collateral Agent was grossly negligent, acted in bad faith or committed willful
misconduct in ascertaining the pertinent facts or was grossly negligent, acted
in bad faith or committed willful misconduct in determining the requirements
imposed by this Agreement or such written direction or request; and
(ii) the Collateral Agent shall not be liable for any error of judgment
made in good faith by any of its officers or employees, unless the Collateral
Agent was grossly negligent, acted in bad faith or committed willful misconduct
in ascertaining the pertinent facts or in determining the requirements imposed
by this Agreement. Whenever in this Agreement it is provided that the absence
of the occurrence and continuation of an Event of Default is a condition
precedent to the taking of any action by the Collateral Agent at the request of
the Issuer, then notwithstanding that the satisfaction of such condition is a
condition precedent to the Issuer’s right to make such request or direction,
the Collateral Agent shall not be liable for acting in accordance with such
request or direction if it does not have knowledge of the occurrence and
continuance of such Event of Default.


 


(b)           Anything in this
Agreement to the contrary notwithstanding, in no event shall the Collateral
Agent be liable under or in connection with this Agreement for indirect,
special, incidental,


 


37

















 


punitive
or consequential losses or damages of any kind whatsoever, including, but not
limited to, lost profits, even if the Collateral Agent has been advised of the
possibility thereof and regardless of the form of action in which such damages
are sought.


 


(c)           In respect of the
Collateral credited to and deposited in an account with respect to which the
Collateral Agent acts as Accountholder, the Collateral Agent shall act in
accordance with the terms of this Agreement and the instructions of the
Trustee.


 


(d)           The Collateral Agent
shall not be required to take notice or be deemed to have notice or knowledge
of any Potential Event of Default or Event of Default under the Transaction
Documents unless an Authorized Officer of the Collateral Agent shall have
received written notice thereof. In the absence of receipt of such notice, the
Collateral Agent may conclusively assume that there is no default or event of
default under the Transaction Documents.


 


Section 9.03.
         Reliance Upon Documents.


 


(a)             In the absence of
bad faith on its part, the Collateral Agent (i) may conclusively rely, as
to the truth of the statements and the correctness of the opinions expressed
therein, upon any note, notice, resolution, consent, certificate, affidavit,
letter, telegram, teletype message, statement, order or other document or
instrument reasonably believed by it to be genuine and correct and to have been
signed or sent by the proper Person or Persons, (ii) shall not be
obligated to make any investigation into facts or matters stated in any such
document or instrument and (iii) shall have no liability in acting, or in
omitting to act, where such action or omission to act is in reliance upon any
statement or opinion contained in any such document or instrument. The
Collateral Agent assumes no responsibility for the correctness of the recitals
to this Agreement or for the validity, effectiveness, value, sufficiency or
enforceability of this Agreement against the other parties hereto, of the other
Transaction Documents against the parties thereto or of the other Collateral
(or any part thereof) against any parties thereto. The Collateral Agent shall
have no responsibility for maintaining the value of the Collateral or ensuring
that any Collateral is properly delivered to it; provided that the Collateral Agent shall be responsible for
holding the Collateral in accordance with the provisions hereof. The Issuer
shall take or cause to be taken all action specified in Annex A hereto
or recommended pursuant to any Opinion of Counsel received by the Issuer
pursuant to Section 10.02 as may be necessary or appropriate to
perfect and protect the security interests Granted hereby. In the event that
any item of Collateral is not of the type specified in Annex A hereto,
then the Issuer shall take such actions as are necessary to cause such item of
Collateral to be subject to a valid perfected security interest in accordance
with Section 2.01.


 


(b)             Notwithstanding
any provision to the contrary contained in Article V, in performing
its obligations to transfer amounts and make payments to any Person in
accordance with Article V, the Collateral Agent is entitled to rely
upon the information furnished to it by the Issuer (or the Collateral Advisor
on behalf of the Issuer) pursuant to Article IV. If the Collateral Agent has been given
notice that a transfer or payment by the Collateral Agent under Article V
is required to be made on a specified date and on such specified date the
Collateral Agent shall not have received all information necessary for the
making of such transfer or payment, then the Collateral Agent shall promptly
give notice to the Issuer, the Collateral Advisor and the Administrator,
specifying, to the extent reasonably within the knowledge of the Collateral
Agent, such absence of information or any inability to confirm information
necessary for the making of such transfer or payment. In the absence of
information required to be furnished by the Issuer under Article IV,
the Collateral Agent shall act in accordance with written instructions
furnished to the Collateral Agent by the Issuer. If the Collateral Agent has
been given notice that a transfer or payment by the Collateral Agent under Article V
is required to be made on a specified date and on such specified date any
information necessary for the making of such transfer or payment is not
furnished by the Issuer and instructions necessary for the making of such
transfer or payment are not


 


38

















 


received
from the Issuer in sufficient time to effect such transfer or payment, then
upon notice by the Collateral Agent to the Issuer, the Collateral Agent’s
obligations with respect to such transfer or payment shall be suspended and the
Collateral Agent shall not be liable for the failure to make such transfer or
payment. Notwithstanding the foregoing, the Collateral Agent may carry out
transfers and payments of amounts specified in Article V without
specific instructions from the Collateral Advisor or the Issuer if the
Collateral Agent has actual knowledge of the information required for the
making of such transfer and payments. For the avoidance of doubt, the parties
hereto confirm that the Collateral Agent shall be entitled to indemnification
pursuant to Section 9.06 with respect to any actions taken by it
pursuant to the preceding sentence.


 


Section 9.04.
         Eligibility of Collateral
Agent. Any Collateral Agent shall be a bank or trust company
(i) having its principal office in Chicago, Illinois, or such other
jurisdiction as the Issuer, the Administrator and the Trustee may approve,
(ii) having, and maintaining at all times, capital and surplus of at least
$200,000,000 (or its equivalent in another currency) as of the effective date
of appointment and (iii) that has, and maintains at all times, a long-term
unsecured debt rating of at least “Baal” by Moody’s, “BBB+” by S&P and, if
rated by Fitch, “BBB+” by Fitch. If at any time the Collateral Agent shall
cease to be eligible in accordance with the provisions of this Section 9.04,
it shall resign immediately in the manner and with the effect specified in this
Article IX.


 


Section 9.05.          Successor Collateral Agent.


 


(a)           Merger. Any
Person into which the Collateral Agent may be converted or merged, or with
which it may be consolidated, or to which it may sell or transfer its corporate
trust business and assets as a whole or substantially as a whole, or any Person
resulting from any such conversion, merger, consolidation, sale or transfer to
which the Collateral Agent is a party, shall (provided that it is otherwise qualified to
serve as the Collateral Agent hereunder) be and become a successor collateral
agent hereunder and be vested with all of the title to the Collateral and all
of the trusts, powers, discretions, immunities, privileges, estates,
properties, rights, duties and obligations as was its predecessor without the
execution or filing of any instrument or any further act, deed or conveyance on
the part of any of the parties hereto or any other Person, anything herein to
the contrary notwithstanding.


 


(b)           Resignation.
The Collateral Agent and any successor collateral agent may at any time resign
by giving ninety (90) days’ written notice by registered, certified or express
mail to the Trustee, the Issuer and each Rating Agency; provided that such
resignation shall take effect only upon the date which is the later of
(i) the effective date of the appointment of a successor collateral agent
reasonably acceptable to the Trustee and (ii) the acceptance in writing by
such successor collateral agent of such appointment and of its obligation to
perform its duties hereunder in accordance with the provisions hereof.
Notwithstanding the preceding sentence, if on the ninetieth (90th) day after written notice of resignation is given by the resigning
Collateral Agent as described above the appointment of a successor collateral
agent or temporary successor collateral agent has not yet become effective in
accordance herewith, the resigning Collateral Agent may petition a court of
competent jurisdiction in The City of New York for the appointment of a
successor.


 


(c)           Removal. The
Collateral Agent may be removed by the Holders of 662/3% of the aggregate principal amount of the Outstanding Notes at any
time prior to the Final Termination Date, with or without cause, by an
instrument or concurrent instruments in writing delivered to the Collateral
Advisor, the Administrator, the Trustee and each Rating Agency. A temporary
successor may be removed at any time to allow a successor collateral agent
acceptable to the Trustee to be appointed pursuant to Section 9.05(d).
Any removal pursuant to the provisions of this Section 9.05(c) shall
take effect only upon the date which is the latest of the effective date of the
appointment of a successor collateral agent acceptable to the Trustee and the
acceptance in writing by such successor collateral agent


 


39

















 


of
such appointment and of its obligation to perform its duties hereunder in
accordance with the provisions hereof.


 


(d)           Acceptance of
Successor. The Issuer shall have the sole right to appoint each successor
collateral agent, subject only to the requirements set forth in Section 9.04
and to the approval of the Trustee, which approval shall not be unreasonably
withheld. If the Issuer and the Trustee shall not have agreed within ten
(10) days as to the selection of a successor collateral agent, the Issuer
shall have the right to appoint a temporary successor to act as the Collateral
Agent; provided that such
temporary successor meets the requirements set forth in Section 9.04.
If by the ninetieth (90th) day after appointment of such temporary
successor collateral agent, the Trustee and the Issuer shall have remained
unable to agree as to the selection of a successor collateral agent, such
temporary successor shall automatically become the successor collateral agent
hereunder. Every temporary or permanent successor collateral agent appointed
hereunder shall execute, acknowledge and deliver to its predecessor and to the
Trustee and the Issuer an instrument in writing accepting such appointment
hereunder and the relevant predecessor shall execute, acknowledge and deliver
such other documents and instruments as will effectuate such appointment,
whereupon such successor, without any further act, deed or conveyance, shall
become fully vested with all the trusts, powers, discretions, immunities,
privileges, estates, properties, rights, duties and obligations of its
predecessors.


 


Section 9.06.          Indemnification. The Issuer
shall indemnify, defend and hold the Collateral Agent and its directors,
officers, employees and agents (collectively with the Collateral Agent, the “Indemnitees”)
harmless from and against every loss, liability or expense, including, without
limitation, damages, fines, suits, actions, demands, penalties, costs,
out-of-pocket or incidental expenses, legal fees and expenses, the allocated
costs and expenses of in-house counsel and legal staff and the costs and
expenses of defending or preparing to defend against any claim (collectively, “Losses”),
that may be imposed on, incurred by, or asserted against, any Indemnitee for or
in respect of the Collateral Agent’s (a) execution and delivery of this
Agreement, (b) compliance or attempted compliance with or reliance upon
any instruction or other direction upon which the Collateral Agent is
authorized to rely pursuant to the terms of this Agreement and
(c) performance under this Agreement, except in the case of such
performance only and with respect to any Indemnitee to the extent that the Loss
resulted from such Indemnitee’s gross negligence, willful misconduct, bad faith
or default. The obligation of the Issuer under this Section 9.06
shall be subject to the Priority of Payments and shall survive the termination
of this Agreement and the resignation or removal of the Collateral Agent. Each
of the Issuer and the Trustee agrees that the Collateral Agent shall not be
liable as a result of the Collateral Agent’s following, in good faith and in
accordance with this Agreement, the written instructions given to it by the
Issuer or the Collateral Advisor. None of the Secured Parties shall have any
liability under this Section 9.06.


 


In
the absence of a written request from the Issuer to return unclaimed funds to
the Issuer, the Collateral Agent shall from time to time deliver all unclaimed
funds to or as directed by applicable escheat authorities, as determined by the
Collateral Agent, in its sole discretion, in accordance with the customary
practices and procedures of the Collateral Agent. Any unclaimed funds held by
the Collateral Agent pursuant to this Section 9.06 shall be held
uninvested and without any liability for interest.


 


Section 9.07.          Compensation and Reimbursement.
Each of the Co-Issuers agrees (a) to pay to the Collateral Agent from time
to time reasonable compensation for all services rendered by it hereunder and
(b) to reimburse the Collateral Agent upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Collateral Agent
in accordance with any provision of, or carrying out its duties and obligations
under, this Agreement (including reasonable compensation and fees and the
expenses and disbursements of its agents, any Independent certified public
accountants and Independent counsel), except any expense, disbursement or
advance as may be attributable to gross negligence, bad faith or willful
misconduct on the part of the Collateral Agent. The compensation and
reimbursement to


 


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the
Collateral Agent under this Section 9.07 shall be an Administrative
Expense and the obligation of each of the Co-Issuers under this Section 9.07
shall survive the termination of this Agreement and the resignation or removal
of the Collateral Agent. None of the Hedge Counterparties, the Principal Note
Paying Agent, the other Note Paying Agents, the Preferred Share Fiscal and
Paying Agent, the Trustee, the Initial Purchasers, the Placement Agent, the
Collateral Advisor and the Noteholders shall have any liability under this Section 9.07.


 


Section 9.08.                            Representations and Warranties of the
Collateral Agent. The
Collateral Agent represents and warrants to the Issuer and to the Trustee as
follows:


 


(a)           Due Organization. The Collateral Agent is a national banking
association, duly organized and validly existing under the laws of the United
States and is duly authorized and licensed under applicable law to conduct its
business as presently conducted


 


(b)           Corporate Power. The Collateral Agent has all requisite
right, power and authority to execute and deliver this Agreement and to perform
all of its duties as Collateral Agent hereunder.


 


(c)           Due Authorization. The execution and delivery of this
Agreement by the Collateral Agent, and the performance by the Collateral Agent
of its duties hereunder, have been duly authorized by all necessary corporate
proceedings and no further approvals or filings, including any governmental
approvals, are required for the valid execution and delivery by the Collateral
Agent, or the performance by the Collateral Agent, of this Agreement.


 


(d)           Valid and Binding Agreement. The Collateral Agent has duly executed and
delivered this Agreement, and this Agreement constitutes the legal, valid and
binding obligation of the Collateral Agent, enforceable against the Collateral
Agent in accordance with its terms, except as (i) such enforceability may
be limited by bankruptcy, insolvency, reorganization and similar laws relating
to or affecting the enforcement of creditors’ rights generally and
(ii) rights of acceleration and the availability of equitable remedies may
be limited by equitable principles of general applicability.


 


Section 9.09.                           Accounts. Notwithstanding anything else contained herein, the Collateral Agent
agrees that with respect to each of the Accounts constituting: (a) a
Securities Account, it will cause each Accountholder establishing such Accounts
to enter into an agreement whereby each such Accountholder agrees that it will
(i) comply with Entitlement Orders (i.e.,
orders directing the transfer or redemption of any Financial Assets
credited to such Accounts) relating to such Account issued by the Collateral
Agent without further consent by the Issuer; (ii) credit all Collateral to
the applicable Account; (iii) treat each item of property credited to such
Account as a Financial Asset; (iv) not enter into any agreement with any
other Person relating to any Account pursuant to orders made by such Person;
(v) not accept for credit to any Account any Collateral which is registered
in the name of, or payable to, any Person other than the Accountholder unless
it has been endorsed to such Accountholder or is endorsed in blank and
(vi) such Accountholder has agreed that it will waive any right of set-off
unrelated to its fees for such account; and (b) a Deposit Account (if
any), it will cause each Accountholder establishing such Accounts to enter into
an agreement with the depository bank that will provide that (i) the
Accountholder is the customer with respect to such Deposit Account; (ii) the
Deposit Account is not in the name of any person other than the Accountholder
and (iii) the Accountholder has not consented to the depository bank
complying with instructions from any person other than the Accountholder.


 


Section 9.10.                           Waiver of Setoffs. The Collateral Agent hereby expressly
waives any and all rights of setoff that the Collateral Agent may otherwise at
any time have under applicable law with respect to any Account and agrees that
amounts in the Collateral Account, the Collection Account, the


 


41

















 


Hedge
Termination Receipt Account or the Hedge Replacement Account and the amounts
withdrawn under the Initial Hedge Agreement shall at all times be held and
applied in accordance with the provisions of Article V or otherwise
as expressly contemplated by this Agreement and the Account Control Agreement.


 


Section 9.11.         Provision of Information. Upon written request by the Independent
certified public accountants, the Collateral Agent shall provide to such
Independent certified public accountants such information contained in the Note
Register as is requested by them.


 


ARTICLE X


 


COVENANTS OF THE ISSUER 


 


Section 10.01.       Preservation of Collateral.


 


(a)                             The Issuer or the Collateral Advisor, on
behalf of the Issuer, shall, at its own expense, take, or cause to be taken,
such action as is necessary and proper with respect to the Collateral in order
to preserve, maintain and service such Collateral and to cause (subject to the
rights of the Trustee) (i) the Accountholder to perform its obligations
with respect to such Collateral as provided in the Account Control Agreement
and (ii) the Collateral Agent to perform its obligations herein. The
Issuer will do, execute, acknowledge and deliver, or cause to be done,
executed, acknowledged and delivered such instruments of transfer, or take such
other steps or actions as may be  necessary, to perfect the security
interests Granted hereunder in the Collateral, to ensure that such security
interests rank prior to all other Liens and to preserve the priority of such
security interests and the validity and enforceability thereof. Upon any
delivery or substitution of Collateral, the Issuer shall be obligated to create
for the benefit of the Collateral Agent a valid Lien on, and valid and
perfected security interest in, the Collateral so delivered in favor of the
Collateral Agent and to deliver or transfer Control of such Collateral to the
Collateral Agent, free and clear of any other Lien, together with satisfactory
assurances thereof, and to pay any reasonable costs incurred by the Trustee,
the Collateral Agent, the Issuer (including its agents) or otherwise in
connection with such delivery.


 


(b)                            The Issuer shall defend the Collateral
against all claims of any kind or nature of all Persons at any time claiming
the same or any interest therein adverse to the interests of the Collateral
Agent or the Trustee, and the Issuer shall not cause, permit or suffer to exist
any Lien upon the Collateral other than the Liens Granted hereby.


 


(c)                             The Collateral Agent shall have the right to
enforce all rights of the Issuer under the Collateral Advisory Agreement, the
Collateral Administration Agreement, the Initial Hedge Agreement and other
Hedge Agreements (other than the Initial Hedge Agreement), if any.


 


Section 10.02.       Opinions as to Collateral. On each anniversary of the Closing Date,
the Issuer shall furnish (at the expense of the Issuer) to the Trustee, each
Rating Agency, the Collateral Advisor and the Collateral Agent an Opinion of
Counsel stating that either (a) in the opinion of such counsel, such
actions have been taken as are necessary to perfect the Lien and security
interest of the Collateral Agent, for and on behalf of the Secured Parties,
with respect to the Collateral including, without limitation, actions with
respect to the recording, filing, rerecording and refiling of this Agreement,
any supplements and any other requisite documents and with respect to the
execution and filing of any financing statements and continuation statements
and reciting the details of such action or (b) in the opinion of such
counsel, no such action is necessary to maintain such perfected Lien and
security interest. Any Opinion of Counsel shall describe each action that will,
in the opinion of such counsel, be required to perfect the Lien and security
interest of the Collateral Agent, with respect to the Collateral, specified in
such Opinion of


 


42

















 


Counsel.
Such Opinion of Counsel shall state the procedures with respect to the delivery
of Collateral which are sufficient for the creation and maintenance of a
perfected, first priority security interest therein in favor of the Collateral
Agent and specifying any additional procedures as shall, in the opinion of such
counsel, be necessary or appropriate for such creation and maintenance.


 


Section 10.03.                     Non-Interference; etc. The Issuer shall not (a) waive, amend,
modify or alter any of its rights or obligations under the Collateral Advisory
Agreement or any Hedge Agreement without the prior written consent of each of
the Trustee and the Collateral Agent, acting at the direction of a majority of
the Holders of the Notes, and unless Rating Agency Confirmation from S&P
has been received; (b) fail to pay any tax, assessment, charge or fee
levied or assessed against the Collateral, or to defend any action, if such
failure to pay or defend may adversely affect the priority or enforceability of
the Issuer’s right, title or interest in and to the Collateral or the
Collateral Agent’s Lien on, and security interest in, the Collateral;
(c) except as provided in clause (d) below, directly or
indirectly avail itself of any right, benefit, power, authority or remedy
conferred on it pursuant to the provisions of any Assigned Document, whether
through action or inaction, except as may be expressly directed from time to
time by the Trustee and the Collateral Agent or (d) take any action, or
fail to take any action, if such action or failure to take action will interfere
with the enforcement of any rights under the Collateral Advisory Agreement and
each Hedge Agreement.


 


ARTICLE XI


 


MISCELLANEOUS


 


Section 11.01.                     Amendments.


 


(a)          Subject to Section 4.12 and Clause 7.3 of the Trust Deed,
this Agreement may be amended, changed, modified or altered only by written
instrument or written instruments signed by the Collateral Agent, the Trustee,
the Accountholder and the Issuer and upon receipt of Rating Agency
Confirmation; provided that to
the extent that such amendment, change, modification or alteration of this
Agreement would have (i) an adverse effect (as evidenced by an Opinion of
Counsel) on the Preferred Shareholders, the Issuer shall not consent to any
such amendment, change, modification or alteration of this Agreement without
the approval of the Holders of a majority of the Outstanding Preferred Shares
in accordance with the Articles and (ii) a material adverse effect (as
evidenced by an Opinion of Counsel) on the obligations of the Collateral
Advisor, the Issuer shall not consent to any such amendment, change,
modification or alteration of this Agreement without the approval of the
Collateral Advisor; provided, further, that
subject to the terms hereof, the consent of the Trustee, the Collateral Agent,
the Accountholder and the Preferred Share Fiscal and Paying Agent shall not be
unreasonably withheld or delayed by any such Person with respect to any
amendment which does not adversely affect such Person (or, in the case of the
Trustee, the Noteholders or, in the case of the Preferred Share Fiscal and
Paying Agent, the Preferred Shareholders); provided,
further, that to the extent that such amendment, change,
modification or alteration of this Agreement would have a material adverse
effect on the rights of any Hedge Counterparty to payments under the Priority
of Payments, no such amendment, change, modification or alteration to this
Agreement shall become effective without the prior written consent of such
Hedge Counterparty.


 


In
executing or accepting any amendment, change, modification or alteration of
this Agreement as permitted by this Article XI, the Trustee shall
be entitled to receive, and (subject to Clause 11.4 of the Trust Deed) shall be
fully protected in relying in good faith upon, an Opinion of Counsel stating
that the execution or acceptance of such amendment, change, modification or
alteration is authorized or permitted by this Agreement and that all conditions
precedent thereto have been complied with. The Trustee may, but shall not be
obligated to, enter into or accept any such amendment, change,


 


43

















 


modification
or alteration which affects the Trustee’s own rights, duties or indemnities
under this Agreement or otherwise.


 


(b)         This Agreement (including, without limitation, Annex A hereto)
may otherwise be amended by the Issuer, with notice to the Rating Agencies and
upon receipt of Rating Agency Confirmation from Fitch and S&P, any other
party hereto, any Hedge Counterparty, the Preferred Share Fiscal and Paying
Agent and the Preferred Shareholders (except as may be specifically provided
herein) (i) in order to further effectuate the Grant of or further perfect
any Lien or security interest of the Collateral Agent in any item of
Collateral, any such amendment that becomes effective as of a specified date
after the Closing Date to be accompanied by an Opinion of Counsel to the Issuer
and a copy of such amendment and the related Opinion of Counsel shall be
provided to the Trustee, (ii) to amend the terms herein for the purpose of
facilitating compliance by the Issuer with any more favorable exemption from
registration under the Investment Company Act, (iii) upon receipt of
Rating Agency Confirmation from Moody’s and S&P, to effect the appointment
of a successor Trustee, (iv) upon receipt of Rating Agency Confirmation
from Moody’s and S&P, to take any action necessary or advisable to prevent
the Issuer, the Collateral Agent, any Note Paying Agent or the Trustee from
being subject to withholding or other taxes, fees or assessments or to prevent
the Issuer from being treated as engaged in a United States trade or business
or otherwise being subjected to United States federal, state or local income
tax on a net income tax basis, (v) to correct or amplify the description
of any property at any time subject to the Grant and Lien of this Agreement, or
to better assure, convey and confirm unto the Trustee any property subject to
the Grant and Lien of this Agreement, (vi) upon receipt of Rating Agency
Confirmation from Moody’s and S&P, to cure ambiguity or correct or
supplement any provision contained in this Agreement which may be defective or
inconsistent with any other provision contained in this Agreement or make any
modification that is of a formal, minor or technical nature or which is made to
correct a manifest error, (vii) upon receipt of Rating Agency Confirmation
from Moody’s and S&P, to correct, modify or supplement any provision which
is inconsistent with the Final Offering Circular; provided that any such correction, modification or
supplement made pursuant to this clause (vii) shall be consistent
with the Final Offering Circular and (viii) to make any change required by
the Irish Stock Exchange (so long as any of the Notes are listed thereon) in
order to permit or maintain the listing of the Notes thereon.


 


(c)          The Issuer shall cause the Administrator to give prior notice to each
Hedge Counterparty, the Collateral Advisor, the Principal Note Paying Agent,
the Preferred Share Fiscal and Paying Agent, the Trustee, the Collateral Agent,
the Accountholder and each Rating Agency of any amendment, change, modification
or alteration of this Agreement and provide copies of such amendment, change,
modification or alteration to the Preferred Share Fiscal and Paying Agent, the Trustee
and each Rating Agency.


 


Section 11.02.                     Notices.


 


(a)          All notices, certificates, directions, reports or other communications
hereunder shall be sufficiently given and shall be deemed given when delivered
in writing, either via facsimile or first class mail postage prepaid addressed
to the appropriate Notice Address. Each party hereto may, by notice given in
accordance herewith to each of the other parties hereto, designate any further
or different address to which subsequent notices, certificates, directions,
reports or other communications shall be sent.


 


(b)         For so long as any of the Securities are listed on the Irish Stock
Exchange and the rules of the Irish Stock Exchange so require, notices to
the Holders of such Securities (excluding the Note Valuation Reports or the
Monthly Reports) shall also be published in the Irish Stock Exchange’s Daily
Official List at the expense of the Issuer.


 


44

















 


(c)          Upon receipt of notice of an Event of Default and acceleration of
indebtedness from the Trustee, the Collateral Agent shall have the right, at
the direction of the Trustee, to exercise any and all rights and remedies
(i) granted to a secured party by the NY UCC or otherwise allowed by
applicable law and (ii) otherwise provided by this Agreement. Upon receipt
of notice of an Event of Default from the Trustee, the Collateral Agent shall
give prompt notice thereof to the Issuer and the Collateral Advisor.


 


Section 11.03.                       Severability. In the event any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof. The parties hereto further agree that the holding by
any court of competent jurisdiction that any right, power, privilege or remedy
pursued by the Trustee hereunder is unavailable or unenforceable shall not
affect in any way the ability of the Trustee to pursue any other right, power,
privilege or remedy available to it.


 


Section 11.04.                     Term of This Agreement. This Agreement shall take effect on the
Closing Date and shall continue in effect until the Final Termination Date. On
the Final Termination Date, this Agreement shall terminate, all obligations of
the parties hereunder shall cease and terminate and the Collateral, if any,
held hereunder and not to be used or applied in discharge of any obligations of
the Issuer in respect of the obligations of the Issuer in respect of the Notes
or otherwise under this Agreement shall be released to and in favor of the
Issuer; provided that the
provisions of Sections 8.06, 8.07, 10.06, 10.07, 10.09
and 10.15 shall survive any termination of this Agreement and the
release of the Collateral upon such termination. Notwithstanding the foregoing,
if (a) after the termination of this Agreement or (b) at any time or
times subsequent to the payment of all or any part of the obligations of the
Issuer in respect of the Notes, the Trustee shall be required to repay any
amounts previously paid by or on behalf of the Issuer in reduction thereof by
virtue of an order of any court having jurisdiction in the premises, including,
without limitation, as a result of an adjudication that such amounts
constituted preferential payments or fraudulent conveyances, then this
Agreement and the obligations of the Issuer hereunder shall be reinstated and
the Issuer unconditionally agrees to pay to the Collateral Agent upon demand by
the Trustee or the Collateral Agent a sum in cash equal to the amount of any
such repayment, together with interest on such amount from the date of such
repayment by the Trustee to the date of payment to the Trustee. In all
instances, the Collateral Agent shall pay any amount received by it as
aforesaid to the Trustee, subject to the Priority of Payments.


 


Section 11.05.                     Assignments. This Agreement shall be a continuing obligation of the Issuer and
shall (a) be binding upon the Issuer and its successors, transferees and
assigns and (b) inure to the benefit of and be enforceable by the Trustee,
the Collateral Advisor, the Collateral Agent and the Accountholder, and by
their respective successors, transferees and assigns. Except as contemplated or
provided herein, the Issuer may not assign this Agreement, or delegate any of
its duties hereunder, without the prior written consent of the Collateral Agent
and the Trustee, and Rating Agency Confirmation from S&P, and any such
attempted assignment shall be null and void. Subject to any restrictions on
transfer or assignment in any Transaction Document, nothing contained herein
shall restrict the Trustee from assigning to any Person any or all of its
rights under this Agreement or with respect to any real or personal property or
other interests pledged to the Trustee, or in which the Trustee has a Lien or
security interest, in connection with the transactions contemplated hereby.


 


Section 11.06.                     Non-Petition Agreement. Each of the parties hereto covenants and
agrees that, so long as any Note is outstanding and for a period of one
(1) year plus one
(1) day (or, if longer, the applicable preference period then in effect)
after payment in full of all amounts payable under or in respect of the
Transaction Documents, it will not institute against, or join any other Person
in instituting against, the Issuer any bankruptcy, reorganization, arrangement,
insolvency or liquidation Proceedings, or other Proceedings under any federal
or state bankruptcy, insolvency or similar law. Nothing in this


 


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Section 11.06 shall preclude, or be deemed to estop, any
of the parties hereto (a) from taking any action prior to the expiration
of the aforementioned one (1) year plus
one (1) day period (or, if longer, the applicable preference
period then in effect) in (i) any case or proceeding voluntarily filed or
commenced by the Issuer or the Co-Issuer or (ii) any involuntary
insolvency proceeding filed or commenced by a Person other than any of the
parties hereto, or (b) from commencing against the Issuer or the Co-Issuer
or any of its properties any legal action which is not a bankruptcy,
reorganization, arrangement, insolvency, moratorium or liquidation proceeding.


 


Section 11.07.                     Trial by Jury Waived. EACH OF THE PARTIES HERETO WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY PROCEEDING ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, ANY OF THE OTHER TRANSACTION DOCUMENTS OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREUNDER OR THEREUNDER. EACH OF THE PARTIES
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF ANY PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER
AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT
AND THE OTHER TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER
THINGS, THIS WAIVER.


 


Section 11.08.                     Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED, IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW
YORK.


 


Section 11.09.                     Consents to Jurisdiction. Each of the parties hereto irrevocably
submits to the jurisdiction of the United States District Court for the
Southern District of New York, any court in the State of New York located in
the borough of Manhattan in the city and county of New York, and any appellate
court from any thereof, in any Proceeding brought against it and related to or
in connection with this Agreement, the other Transaction Documents or the
transactions contemplated hereunder or thereunder or for recognition or
enforcement of any judgment and each of the parties hereto irrevocably and
unconditionally agrees that all claims in respect of any such Proceeding may be
heard or determined in such New York State court or, to the extent permitted by
law, in such federal court. Each of the parties hereto agrees that a final
judgment in any such Proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
applicable law. To the extent permitted by applicable law, each of the parties
hereto hereby waives and agrees not to assert by way of motion, as a defense or
otherwise in any such Proceeding, any claim that it is not personally subject
to the jurisdiction of such courts, that the Proceeding is brought in an
inconvenient forum, that the venue of the Proceeding is improper or that this
Agreement or any of the other Transaction Documents or the subject matter
hereof may not be litigated in or by such courts.


 


Section 11.10.                       Service of Process. The Issuer hereby agrees that service of
process on the Issuer in any such Proceeding brought in the State of New York
may be made upon CT Corporation System (the “Process Agent”) at its
offices at 111 Eighth Avenue, 13th Floor, New York, New York 10011 (or such
other address as may be specified by the Process Agent from time to time) and
the Issuer hereby irrevocably appoints the Process Agent as its authorized
agent to accept such service of process and agrees that the failure of the
Process Agent to give any notice of any such service shall not impair or affect
the validity of such service or any judgment rendered in any Proceeding based
thereon. The Issuer hereby agrees that any such service (a) shall be
deemed in every respect effective service of process upon


 


46

















 


it
in any such Proceeding and (b) shall, to the fullest extent enforceable by
applicable law, be taken and held to be valid personal service upon and
personal delivery to it.


 


Section 11.11.                     Time of Essence. All parties hereto agree that time shall be
of the essence in respect of the performance by the Issuer and the Collateral
Agent of their respective obligations hereunder.


 


Section 11.12.                     Counterparts. This Agreement may be executed in any
number of counterparts by the parties hereto, each of which shall be an
original, and all such counterparts shall constitute one and the same
instrument.


 


Section 11.13.                     Integration. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof.


 


Section 11.14.                     Headings. The headings of Articles, Sections and subsections herein are for
convenience of reference only and shall not affect the interpretation hereof.


 


Section 11.15.                     Limited Recourse. Notwithstanding any provisions of this
Agreement to the contrary, the payment obligations of the Issuer set forth
under this Agreement shall be non-recourse obligations of the Issuer and shall
be payable only from the Collateral or the proceeds thereof, whether held by
the Collateral Agent or any other Person on behalf of the Issuer. No recourse
shall be had for the payment of any amount owing in respect of the Notes
appertaining thereto against any officer, director, employee, stockholder,
director or incorporator of the Co-Issuers or of any Affiliate of the
Co-Issuers, the Collateral Agent, the Trustee, the Collateral Advisor, the
Accountholder or any Affiliate of any of the foregoing, in their respective
capacities as such, or successors or assigns of any of them for any amounts payable
under the Notes or this Agreement. Upon the exhaustion of the Collateral, all
further liability of the Co-Issuers shall be extinguished and no further claims
shall be made against the Co-Issuers in respect thereof.


 


Section 11.16.                     Payments in Accordance with the Priority of
Payments. Notwithstanding
any provision herein to the contrary, the payment of all principal, interest,
fees, expenses, indemnities or other amounts payable by or on behalf of the
Issuer under this Agreement shall be made in accordance with the Priority of
Payments, Section 11.15 and the subordination provisions set forth
in this Agreement. In the event that the Issuer fails to pay any amount on the
date when due under this Agreement solely by reason of the limitation on the
payment of certain expenses set forth under the Priority of Payments under Section 5.01,
the Issuer shall not be deemed to have failed to pay such amount (and a default
shall not have occurred as the result thereof) for purposes of this Agreement
unless it fails to pay such amount on the date (inclusive of any grace periods)
on which it is permitted to be paid under the Priority of Payments.


 


Section 11.17.                       Collateral Agent and Its Affiliates. LaSalle Bank National Association and any
of its Affiliates providing services in connection with the transactions
contemplated in the Transaction Documents shall have only the duties and
responsibilities expressly provided in each capacity and shall not, by virtue
of its or any of its Affiliates acting in any other capacity, be deemed to have
duties or responsibilities or be deemed to be held to a standard of care other
than as expressly provided with respect to each such capacity. LaSalle Bank
National Association (or its Affiliates) in its and their various capacities in
connection with the transactions contemplated in the Transaction Documents,
including as Collateral Agent, may enter into business transactions, including
the acquisition of investment securities as contemplated by the Transaction
Documents, from which it and/or such Affiliates may derive revenues


 


47

















 


and
profits in addition to the fees stated in the various Transaction Documents,
without any duty to account therefor.


 


Section 11.18.                  Judgment Currency. If, for the purposes of obtaining judgment
in any court, it is necessary to convert a sum due under this Agreement in any
currency (the “Original Currency”) into another currency (the “Other
Currency”), the parties hereto agree, to the fullest extent permitted by
law, that the rate of exchange to be used in effecting such conversion shall be
that at which, in accordance with normal banking procedures, the party seeking
such judgment could purchase the Original Currency with the Other Currency on
the Business Day preceding that on which final judgment is given. To the
fullest extent permitted by applicable law, the obligations of a party in
respect of any such amount due in the Original Currency under this Agreement to
another party (the “Recipient”) shall, notwithstanding any judgment in
Other Currency, be discharged only to the extent that on the Business Day
following receipt by the Recipient of any sum adjudged to be so due in the
Other Currency the Recipient may in accordance with normal banking procedures purchase
the Original Currency with the Other Currency. If the amount of the Original
Currency so purchased is less than the sum originally due to the Recipient in
the Original Currency, the party obligated to make such payment agrees, as a
separate obligation and notwithstanding any such judgment, to pay to the
Recipient the amount of such loss.


 


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IN WITNESS WHEREOF, the Issuer, the Collateral Agent, the
Accountholder and the Trustee have duly executed this Agreement as of the date
first set forth above.


 


	
  ISSUER:

  	
  N-STAR REAL ESTATE CDO I LTD

  
	
   

  	
  Executed as a Deed

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Derrie Boggess

  
	
   

  	
   

  	
  Name:  Derrie Boggess

  
	
   

  	
   

  	
  Title:    Director

  
	
   

  	
   

  
	
   

  	
  Witness:

  	
  /s/
  Ruth Yates

  
	
   

  	
                      Ruth
  Yates

  
	
   

  	
   

  
	
  COLLATERAL AGENT:

  	
  LASALLE BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Lora J. Peloquin

  
	
   

  	
   

  	
  Name:  Lora J. Peloquin

  
	
   

  	
   

  	
  Title:    Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
  ACCOUNT HOLDER:

  	
  LASALLE BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Lora J. Peloquin

  
	
   

  	
   

  	
  Name:  Lora J. Peloquin

  
	
   

  	
   

  	
  Title:    Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
  TRUSTEE:

  	
  LASALLE BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Lora J. Peloquin

  
	
   

  	
   

  	
  Name:  Lora J. Peloquin

  
	
   

  	
   

  	
  Title:    Vice President