Exhibit 10.2


 


EXECUTION COPY


 


SECURITY AGREEMENT


 


dated as of July 1, 2004


 


between


 


N-STAR REAL ESTATE CDO II
LTD.,

as Issuer,


 


and


 


LaSALLE BANK NATIONAL
ASSOCIATION,

as Trustee and as
Accountholder


 

















 


TABLE OF CONTENTS


 


	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  I            DEFINITIONS

  	
   

  	
  2

  
	
  Section 1.01.   Definitions

  	
   

  	
  2

  
	
  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          RAMP-UP PERIOD PURCHASES
  AND EFFECTIVE DATE ACTIONS

  	
   

  	
  9

  
	
  Section 3.01.   Closing Date
  Requirements

  	
   

  	
  9

  
	
  Section 3.02.   Ramp-Up Period
  Purchases

  	
   

  	
  9

  
	
  Section 3.03.   Effective Date
  Actions

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV          ACCOUNTS, ACCOUNTINGS AND
  RELEASES

  	
   

  	
  11

  
	
  Section 4.01.   Collection of Money

  	
   

  	
  11

  
	
  Section 4.02.   Collection Account

  	
   

  	
  11

  
	
  Section 4.03.   Interest Reserve
  Account

  	
   

  	
  13

  
	
  Section 4.04.   Expense Reserve
  Account

  	
   

  	
  14

  
	
  Section 4.05.   Collateral Account

  	
   

  	
  15

  
	
  Section 4.06.   Reports by Trustee

  	
   

  	
  16

  
	
  Section 4.07.   Accountings

  	
   

  	
  16

  
	
  Section 4.08.   Release of
  Securities

  	
   

  	
  21

  
	
  Section 4.09.   Reports by
  Independent Accountants

  	
   

  	
  22

  
	
  Section 4.10.   Reports to Rating
  Agencies

  	
   

  	
  23

  
	
  Section 4.11.   Notices of
  Noteworthy Events

  	
   

  	
  23

  
	
  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          PURCHASE, SALE AND
  REINVESTMENT OF COLLATERAL DEBT SECURITIES

  	
   

  	
  29

  



 


i

















 


TABLE
OF CONTENTS


(continued)


 


	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 6.01.   Sale of Collateral
  Debt Securities

  	
   

  	
  29

  
	
  Section 6.02.   Eligibility
  Criteria, Ramp-Up Criteria and Replacement Criteria

  	
   

  	
  31

  
	
  Section 6.03.   Conditions
  Applicable to all Transactions

  	
   

  	
  35

  
	
  Section 6.04.   Collateral Quality
  Tests

  	
   

  	
  36

  
	
  Section 6.05.   Coverage Tests

  	
   

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII        SUBORDINATION

  	
   

  	
  39

  
	
  Section 7.01.   Subordination

  	
   

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII       HEDGE AGREEMENTS, INITIAL
  HEDGE AGREEMENT

  	
   

  	
  42

  
	
  Section 8.01.   Hedge Agreement
  Provisions

  	
   

  	
  42

  
	
  Section 8.02.   Initial Hedge
  Agreement

  	
   

  	
  45

  
	
  Section 8.03.   Acknowledgement of
  Custodian

  	
   

  	
  45

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IX         THE TRUSTEE AND ACCOUNTHOLDER

  	
   

  	
  45

  
	
  Section 9.01.   Appointment and
  Powers

  	
   

  	
  45

  
	
  Section 9.02.   Performance of
  Duties

  	
   

  	
  45

  
	
  Section 9.03.   Reliance Upon
  Documents

  	
   

  	
  46

  
	
  Section 9.04.   [Intentionally
  Omitted]

  	
   

  	
  47

  
	
  Section 9.05.   [Intentionally
  Omitted]

  	
   

  	
  45

  
	
  Section 9.06.   Indemnification

  	
   

  	
  45

  
	
  Section 9.07.   Compensation and
  Reimbursement

  	
   

  	
  48

  
	
  Section 9.08.   [Intentionally
  Omitted]

  	
   

  	
  48

  
	
  Section 9.09.   Accounts

  	
   

  	
  48

  
	
  Section 9.10.   Waiver of Setoffs

  	
   

  	
  48

  
	
  Section 9.11.   Provision of
  Information

  	
   

  	
  49

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  X           COVENANTS OF THE ISSUER

  	
   

  	
  49

  
	
  Section 10.01.   Preservation of
  Collateral

  	
   

  	
  49

  
	
  Section 10.02.   Opinions as to
  Collateral

  	
   

  	
  49

  
	
  Section 10.03.   Non-Interference;
  etc.

  	
   

  	
  50

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XI         MISCELLANEOUS

  	
   

  	
  50

  
	
  Section 11.01.   Amendments

  	
   

  	
  50

  
	
  Section 11.02.   Notices

  	
   

  	
  51

  
	
  Section 11.03.   Severability

  	
   

  	
  51

  
	
  Section 11.04.   Term of This
  Agreement

  	
   

  	
  52

  
	
  Section 11.05.   Assignments

  	
   

  	
  52

  
	
  Section 11.06.   Non-Petition
  Agreement

  	
   

  	
  52

  



 


ii

















 


TABLE
OF CONTENTS


(continued)


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 11.07.   Trial by Jury
  Waived

  	
   

  	
  52

  
	
  Section 11.08.   Governing Law

  	
   

  	
  53

  
	
  Section 11.09.   Consents to
  Jurisdiction

  	
   

  	
  53

  
	
  Section 11.10.   Service of Process

  	
   

  	
  53

  
	
  Section 11.11.   Time of Essence

  	
   

  	
  53

  
	
  Section 11.12.   Counterparts

  	
   

  	
  53

  
	
  Section 11.13.   Integration

  	
   

  	
  54

  
	
  Section 11.14.   Headings

  	
   

  	
  54

  
	
  Section 11.15.   Limited Recourse

  	
   

  	
  54

  
	
  Section 11.16.   Payments in Accordance
  with the Priority of Payments

  	
   

  	
  54

  
	
  Section 11.17.   Trustee and Its
  Affiliates

  	
   

  	
  54

  
	
  Section 11.18.   Judgment Currency

  	
   

  	
  54

  
	
   

  	
   

  	
   

  
	
  ANNEX
  A

  	
   

  	
  Steps
  Required For Delivery

  	
   

  	
  Annex A-1

  
	
  ANNEX
  B

  	
   

  	
  Glossary
  of Certain Defined Terms

  	
   

  	
  Annex B-1

  
	
  ANNEX
  C

  	
   

  	
  Specified
  Types

  	
   

  	
  Annex C-1

  
	
  SCHEDULE
  A

  	
   

  	
  Collateral
  Debt Securities as of the Closing Date

  	
   

  	
  Schedule A-1

  
	
  SCHEDULE
  B

  	
   

  	
  Temporary
  Ramp-Up Securities as of the Closing Date

  	
   

  	
  Schedule B-1

  
	
  SCHEDULE
  C

  	
   

  	
  Auction
  Procedures

  	
   

  	
  Schedule C-1

  
	
  SCHEDULE
  D

  	
   

  	
  S&P
  Recovery Rate Matrix

  	
   

  	
  Schedule D-1

  
	
  SCHEDULE
  E

  	
   

  	
  S&P
  Industry Classification Group

  	
   

  	
  Schedule E-1

  
	
  SCHEDULE
  F

  	
   

  	
  S&P
  Notching Criteria I

  	
   

  	
  Schedule F-1

  
	
  SCHEDULE
  G

  	
   

  	
  S&P
  Notching Criteria II

  	
   

  	
  Schedule G-1

  
	
  SCHEDULE
  H

  	
   

  	
  Moody’s
  Diversity Score

  	
   

  	
  Schedule H-1

  
	
  SCHEDULE
  I

  	
   

  	
  Moody’s
  Recovery Rate Matrix

  	
   

  	
  Schedule I-1

  
	
  SCHEDULE
  J

  	
   

  	
  Moody’s
  Notching Criteria

  	
   

  	
  Schedule J-1

  
	
  SCHEDULE
  K

  	
   

  	
  Moody’s
  Industry Classification Groups

  	
   

  	
  Schedule K-1

  
	
  SCHEDULE
  L

  	
   

  	
  Fitch
  Report

  	
   

  	
  Schedule L-1

  
	
  SCHEDULE
  M

  	
   

  	
  Fitch
  Industry Classification Groups

  	
   

  	
  Schedule M-1

  



 


iii

















 


This SECURITY AGREEMENT (as amended from time to time, this “Agreement”)
is made as of July 1, 2004 by and among N-Star Real Estate CDO II Ltd., a
company incorporated under the laws of the Cayman Islands, as issuer (the “Issuer”),
LaSalle Bank National Association, a national banking association (“LaSalle”),
as trustee under the Trust Deed for and on behalf of the Secured Parties (in
such capacity, the “Trustee”), and LaSalle 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, REIT Debt Securities and Real Estate CDO Securities.


 


2.             In order to obtain
funds for its purchases of the Collateral Debt Securities, the Issuer intends
to issue on the date hereof (a) U.S.$236,000,000 aggregate principal
amount of Class A-1 Floating Rate Senior Notes Due 2039 (the “Class A-1
Notes”), (b) U.S.$42,000,000 aggregate principal amount of
Class A-2A Floating Rate Senior Notes Due 2039 (the “Class A-2A
Notes”), (c) U.S.$15,000,000 aggregate principal amount of
Class A-2B Fixed Rate Senior Notes Due 2039 (the “Class A-2B Notes”,
and together with the Class A-2A Notes, the “Class A-2 Notes”,
and together with the Class A-1 Notes and the Class A-2A Notes, the “Class A
Notes”), (d) U.S.$12,000,000 aggregate principal amount of
Class B-1 Floating Rate Senior Subordinate Notes Due 2039 (the “Class B-1
Notes”), (e) U.S.$14,000,000 aggregate principal amount of
Class B-2 Floating Rate Senior Subordinate Notes Due 2039 (the “Class B-2
Notes”, and together with the Class B-1 Notes, the “Class B
Notes”), (f) U.S.$24,000,000 aggregate principal amount of
Class C-1 Floating Rate Subordinate Notes Due 2039 (the “Class C-1
Notes”), (g) U.S.$6,000,000 aggregate principal amount of
Class C-2A Floating Rate Subordinate Notes Due 2039 (the “Class C-2A
Notes”), (h) U.S.$16,000,000 aggregate principal amount of
Class C-2B Fixed Rate Subordinate Notes Due 2039 (the “Class C-2B
Notes”, and together with the Class C-2A Notes, the “Class C-2
Notes”, and together with the Class C-1 Notes and the Class C-2A
Notes, the “Class C Notes”) (i) U.S.$15,000,000 aggregate
principal amount of Class D Fixed Rate Subordinate Notes Due 2039 (the “Class D
Notes”), and (j) U.S.$20,000,000 aggregate principal amount of
Class E Subordinate Income Notes Due 2039 (the “Class E
Subordinate Income Notes”) pursuant to the Trust Deed.


 


3.             N-Star Real Estate
CDO II Corp., a company organized under the laws of the State of Delaware (the “Co-Issuer”,
and together with the Issuer, the “Co-Issuers”) will co-issue the
Class A Notes, the Class B Notes and the Class C Notes. The
Class D Notes and the Class E Subordinate Income Notes will be
obligations of the Issuer only.


 


4.             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 Trustee, on behalf and for the benefit of the Secured
Parties, a security interest in the Collateral (as defined herein) 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 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 an index, all calculations involving such 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, and for purposes of the Replacement Criteria and the
Ramp-Up Criteria, 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


 


 


2

















 


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


 


(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.


 


(h)           All calculations
required to be made and all reports which are to be prepared pursuant to this
Security Agreement with respect to the Collateral Debt Securities, shall be
made on the basis of the date on which the Issuer makes a commitment to
purchase or sell an asset (the “trade date”), not the settlement date


 


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
Trustee 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 Trustee 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 the Ordinary Shares Account and any amounts on deposit
therein, which will equal the sum of U.S.$2,000, representing (1) the paid
up share capital of the Issuer resulting from the issuance of the Ordinary
Shares (U.S.$1,000) under the Articles and (2) the fee paid to the Issuer
for issuing the Notes (U.S.$1,000) (all non-excluded assets being collectively
referred to as the “Collateral”);
provided that the Collateral shall include, without limitation, the
following:


 


3

















 


(i)              the Collateral
Account, including all Collateral Debt Securities (listed, as of the Closing
Date, in Schedule A (including Temporary Ramp-Up Securities listed in Schedule
B) and, as of the Effective Date, in a schedule to be provided by the
Issuer to the Trustee) which the Issuer causes to be delivered to the Trustee
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 Trustee
in the future pursuant to the terms hereof and all payments thereon or with
respect thereto;


 


(ii)             the 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”);


 


(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 Trustee 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 Trustee, 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 Trustee 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 Trustee
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 Trustee 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.


 


4

















 


(c)           Holding of
Collateral. The Trustee, 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 Trustee 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 Trustee. If so directed in writing by
the Issuer, the Trustee 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.


 


(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 Trustee 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, and any additional Collateral Debt Securities or
Substitute Collateral Debt Securities acquired by the Issuer after the Closing
Date, shall be delivered by, or at the direction of, the Issuer to the Trustee
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 Trustee 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 Trustee
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 Trustee 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 Trustee 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 Trustee to, and the Trustee 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
Trustee 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 Trustee (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 Trustee.


 


(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, Trustee, each
Paying Agent, each Hedge Counterparty and the Collateral Advisor, a notice in
form and substance satisfactory to the Trustee informing such Persons of the
Trustee’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


 


5

















 


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 Advisor or the Accountholder to perform or
observe any such term, covenant, condition or agreement or impose any liability
on the Trustee, 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.


 


(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 Trustee is made to the Trustee (i) for the benefit of itself 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 Trustee
of any item of Collateral, the endorsement to or registration in the name of
the Trustee of any item of Collateral (including as entitlement holder of the
Collateral Account) are all undertaken by the Trustee for the benefit of itself
as representative of the Noteholders and as agent for each of the other Secured
Parties. The Trustee 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 Trustee
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 Trustee 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, 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,


 


6

















 


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)            Trustee as
Attorney-In-Fact. Without imposing any obligations on the Trustee with
respect thereto (other than as set forth in this Agreement), the Issuer hereby
appoints the Trustee 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 Trustee 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
Trustee. The obligation in the preceding sentence shall be an obligation of the
Issuer and not an obligation of the Trustee or the Accountholder. All
procedures regarding the transfer, relinquishment or maintenance of Control by
the Trustee 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 take
all appropriate actions 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 Trustee 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 the Trustee and the Accountholder with respect to the
Collateral shall be automatically released in favor of the Issuer; provided, however, that each of the
Trustee and the Accountholder, 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 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 Trustee on behalf and for the benefit of
the Secured Parties, which security interest is prior to all other Liens and
security interests, and is enforceable as such as against creditors of and
purchasers from the Issuer and, upon delivery of the Collateral Debt Securities
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 Trustee 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.


 


7














 


(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 Date committed to
purchase but which will not have settled on or before the Closing Date or any
additional Collateral Debt Securities or Substitute Collateral Debt Securities
acquired by the Issuer after the Closing Date, in good faith without notice of
any adverse claim, except as described in 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 or any additional
Collateral Debt Securities or Substitute Collateral Debt Securities acquired by
the Issuer after the Closing Date, to the Trustee 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 Trustee 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 Trustee on behalf and for the benefit of the Secured Parties hereunder or
that has been terminated. The Issuer is not aware of any judgment, Pension
Benefit Guarantee Corporation lien or tax lien filings against it.


 


(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 Trustee on behalf and for the benefit of the
Secured Parties hereunder that constitutes chattel paper, instruments,
accounts, securities entitlements or general intangibles under the applicable
UCC, if any.


 


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


 


8

















 


described
in this financing statement will violate the rights of the Trustee on behalf
and for the benefit of (A) itself and for the benefit of the Noteholders,
(B) the Collateral Advisor and (C) each Hedge Counterparty.”


 


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


 


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


 


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


 


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


 


(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


 


RAMP-UP PERIOD PURCHASES AND EFFECTIVE DATE
ACTIONS


 


Section 3.01.                             Closing Date Requirements. The Issuer hereby represents and warrants
to the Trustee on behalf and for the benefit of the Secured Parties that as of
the Closing Date (i) it will comply with the Collateral Quality Tests and
the Coverage Tests and (ii) it will have acquired Collateral Debt
Securities in an aggregate Principal Balance representing at least
U.S.$350,000,000 million.


 


Section 3.02.                             Ramp-Up Period Purchases.


 


(a)                                  Any portion of the net proceeds of the
issuance of the Notes that are not applied to pay for (or reserved to pay for)
the purchase of all Collateral Debt Securities on the Closing Date and the
Issuer’s organizational expenses and expenses related to the issuance of the
Notes will be deposited in the Collection Account on the Closing Date for the
purchase of additional Collateral Debt Securities 


 


9

















 


during
the Ramp-Up Period. The Issuer is required to use reasonable efforts to
purchase, or to enter into binding agreements to purchase, Collateral Debt
Securities such that the aggregate Principal Balance of all Collateral Debt
Securities purchased by the Issuer by the end of the Ramp-Up Period is at least
U.S.$400 million. Any portion of the net proceeds of the issuance of the Notes
that are not applied to the purchase of Collateral Debt Securities on the
Closing Date or during the Ramp-Up Period, shall be Collateral Principal
Collections and shall be applied by the Issuer to the making of payments on the
Notes, subject to and in accordance with the Priority of Payments, on the
Payment Date immediately following the Effective Date.


 


(b)                                 During the Ramp-Up Period, subject to the
requirements of Article VI, the Issuer is required to use reasonable
efforts to purchase Collateral Debt Securities that, at the time of purchase
will each satisfy the Ramp-Up Criteria, and as of the end of the Ramp-Up
Period, will, in the aggregate (with all Collateral Debt Securities previously
acquired by the Issuer), satisfy the Collateral Quality Tests and the Coverage
Tests.


 


(c)                                  The Issuer hereby covenants to the Trustee,
on behalf and for the benefit of the Secured Parties, that during the Ramp-Up
Period, it will not invest in any additional Collateral Debt Securities unless
such additional Collateral Debt Security satisfies the Ramp-Up Criteria and
unless such acquisition will not result in the failure to satisfy the Coverage
Tests.


 


Section 3.03.                             Effective Date Actions.


 


(a)                                  The Issuer (or the Collateral Advisor on
behalf of the Issuer) shall cause to be delivered to the Trustee on the
Effective Date an amended schedule of Collateral Debt Securities listing all
Collateral Debt Securities Granted to the Trustee pursuant to Section 2.01
on or before the Effective Date, which schedule shall supersede any prior schedule
of Collateral Debt Securities delivered to the Trustee. In addition, on the
Effective Date and on each Calculation Date thereafter, the Trustee shall be
required to provide to S&P the Electronic Default Model Input File; provided that the Trustee shall not
disclose any S&P confidential private credit assessments used in preparing
the Electronic Default Model Input File to any third party.


 


(b)                                 In the case of an Effective Date specified in
clause (i) or (ii) of the definition of “Effective Date,” the Issuer
(or the Collateral Advisor on behalf of the Issuer) shall request each Rating
Agency rating a Class of Notes to confirm in writing, within thirty (30)
Business Days after such Effective Date, or such later date as such Rating
Agency may determine, that it has not reduced or withdrawn the rating it
assigned to such Class of Notes on the Closing Date. In the event of a
Ratings Confirmation Failure, on the next and succeeding Payment Dates, the
Issuer is required to pay principal, to the extent of Available Funds in the
Collection Account and subject to the Priority of Payments, on the
Class A-1 Notes, 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, in that order, in the amounts necessary for each Rating
Agency to confirm its respective ratings of the Notes assigned on the Closing
Date or until each Class of Notes is paid in full. Such request by the
Issuer to the Rating Agencies shall be accompanied by an accountant’s certificate
as provided in Section 3.03(c).


 


(c)                                  Within fifteen (15) Business Days after the
Effective 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 (A) confirming the
information with respect to each Collateral Debt Security set forth on the
amended schedule of Collateral Debt Securities delivered pursuant to Section 3.03(a) as
of the end of the Ramp-Up Period, 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 end of
the Ramp-Up Period the procedures applied and the


 


10

















 


associated
findings with respect to (1) the Coverage Tests and (2) the
Collateral Quality Tests and (C) specifying 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
report to S&P whether or not the S&P CDO Monitor Test has been
satisfied and (iii) the Trustee will be required to report the S&P
scenario default and break-even default rate for each Class of Notes.


 


ARTICLE IV


 


ACCOUNTS, ACCOUNTINGS AND RELEASES


 


Section 4.01.                             Collection of Money. The Accounts established by the Trustee
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 Trustee 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 Trustee for the benefit and on behalf of the Secured Parties and
over which the Trustee shall have exclusive Control and the sole right of
withdrawal, into which the Trustee shall from time to time deposit, in addition
to the deposits required pursuant to Section 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 additional Collateral Debt Securities or
Substitute Collateral Debt Securities, subject to the Replacement Criteria
(other than with respect to proceeds received from the disposition of any
Temporary Ramp-Up Securities), or in Eligible Investments) and (iii) all
Collections. Funds in the Collection Account shall not be commingled with any
other Money. The Trustee shall give to the Issuer and the Collateral Advisor
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 Trustee 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 Trustee 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 Trustee 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 Trustee 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


 


11

















 


Collateral
Advisor on behalf of the Issuer) may at any time direct the Trustee to, and upon
receipt of such Issuer Order the Trustee 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 Trustee 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
Trustee, 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 Trustee
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 Trustee shall seek instructions from the Collateral Advisor within three
(3) Business Days after transfer of such funds to the Collection Account.
If the Trustee 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 Trustee pursuant to Section 4.02(b) for
three (3) consecutive days, the Trustee 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 Trustee 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 Trustee or any Affiliate thereof.


 


(d)                                 Upon Issuer Order executed by the Issuer (or
the Collateral Advisor on behalf of the Issuer) and subject to the requirements
of Section 3.02, between the Closing Date and the close of business
on the Effective Date only, all or a portion of any deposit and any
reinvestment income thereon shall be released from the Collection Account and
applied by the Trustee in accordance with such Issuer Order in payment for
Collateral Debt Securities purchased in accordance with Section 3.02
and Granted to the Trustee for and on behalf of the Secured Parties.


 


(e)                                  During the Ramp-Up Period, the Collateral
Advisor may reinvest Collateral Principal Collections (including Sale Proceeds)
in Substitute Collateral Debt Securities as permitted under and in accordance
with the requirements of Article VI or temporarily reinvest such
amounts in Eligible Investments pursuant to Section 4.02(b) pending
reinvestment in Substitute Collateral Debt Securities. After the Ramp-Up
Period, the Collateral Advisor may reinvest Prepaid Collateral Principal
Collections in Substitute Collateral Principal Collections as permitted under
and in accordance with the requirements of Article VI or
temporarily reinvest such amounts as Eligible Investments pursuant to Section 4.02(b)
pending reinvestment in Substitute Collateral Debt Securities. If the
Collateral Advisor does not reinvest such Collateral Principal Collections
(including Sale Proceeds) in accordance with the requirements of Article VI,
such amounts shall be used to redeem the Notes in accordance with the Priority
of Payments


 


12

















 


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 Trustee 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 Trustee for the benefit
and on behalf of the Secured Parties and over which the Trustee shall have
exclusive Control and the sole right of withdrawal, into which the Trustee
shall deposit on each Payment Date, the Interest Reserve Amount, if any, in
accordance with Section 5.01(a)(ix). Funds in the Interest Reserve
Account shall not be commingled with any other Money. The Trustee shall give to
the Issuer and the Collateral Advisor 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 Trustee 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 “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 4.03(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
Trustee 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
Trustee to, and upon receipt of such Issuer Order the Trustee 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 Trustee 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 Trustee, 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
Trustee 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 Trustee shall seek instructions from the Collateral Advisor within three
(3) Business Days after transfer of such funds to the Interest Reserve
Account. If the Trustee does not thereupon receive written instructions from
the Issuer (or the Collateral Advisor on behalf of the Issuer) within three
(3) 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


 


13

















 


Default,
the Issuer (or the Collateral Advisor on behalf of the Issuer) shall not have
given investment directions to the Trustee pursuant to Section 4.03(b) for
three (3) consecutive days, the Trustee 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 Trustee 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 Trustee or
any Affiliate thereof.


 


(d)                                 On the Business Day immediately preceding
each Payment Date, the Trustee shall deposit into the Collection Account the
balance of the Interest Reserve Account for distribution in accordance with the
Priority of Payments on the related Payment Date.


 


Section 4.04.                             Expense Reserve Account.


 


(a)                                  The Trustee 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 Trustee for the
benefit and on behalf of the Secured Parties and over which the Trustee shall
have exclusive Control and the sole right of withdrawal, into which the Trustee
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 Trustee shall give to the Issuer and the Collateral Advisor 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 Trustee 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 “Al”- 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
Trustee 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 Trustee
to, and upon receipt of such Issuer Order the Trustee 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 Trustee 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 Trustee, 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


 


14

















 


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
Trustee 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 Trustee shall seek instructions from the Collateral Advisor within three
(3) Business Days after transfer of such funds to the Expense Reserve
Account. If the Trustee 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 definition 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 Trustee pursuant to Section 4.04(b) for three
(3) consecutive days, the Trustee 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 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 Trustee 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 Trustee or
any Affiliate thereof.


 


(d)                                 On the Business Day prior to each Payment
Date, the Trustee 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 Trustee 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 Trustee 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 Trustee 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 Trustee for the benefit and on behalf of
the Secured Parties and over which the Trustee 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 Trustee 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 Trustee agrees to give the Issuer 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.


 


15

















 


Section 4.06.                             Reports by Trustee. The Trustee shall supply, in a timely
fashion, to the Co-Issuers, each Hedge Counterparty, the Principal 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 Trustee 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 Trustee and is reasonably needed to verify
information contained in the Note Report. Additionally, the Trustee shall
promptly provide any other information reasonably available to the Trustee by
reason of its acting as Trustee 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 Trustee 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 Trustee 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 Reports. Commencing on the Payment Date in
September 2004, not later than the Business Day prior to each Payment Date
and after the reconciliation process described in this Section 4.07(a),
the Issuer (or the Collateral Administrator on its behalf) shall make available
on the Collateral Administrator’s website, initially located at www.cdotrustee.net
and deliver by electronic mail to S&P and otherwise upon request, an
account of the amounts that will be paid in accordance with the Priority of
Payments (each, a “Payment Report”). Each Payment Report shall be
delivered to the Collateral Advisor, the Trustee, the Principal 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 Depository
(accompanied by a request that it be transmitted to the Holders of Notes on the
books of the Depository). Not later than the close of business on each Payment
Date commencing on the Payment Date in September 2004, the Collateral
Administrator (on behalf of the Issuer) shall make available on the Collateral
Administrator’s website, initially located at www.cdotrustee.net and deliver by
email to S&P and otherwise upon request, an accounting (each, a “Note
Report”), determined as of the preceding Calculation Date, and deliver the
Note Reports, after the reconciliation process described in this
Section 4.07(a), to the Collateral Advisor, the Issuer, the Trustee, the
Principal Paying Agent, each Hedge Counterparty and the Depository (accompanied
by a request that it be transmitted to the Holders of Notes on the books of the
Depository). The Collateral Advisor shall provide any information reasonably
requested by or on behalf of the Issuer for preparation of a Payment Report or
Note Report in accordance with this Section 4.07(a). Upon receipt of each
Payment Report and each Note 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 outstanding amount of the Notes of
each Class after giving effect to the principal payments, if any, on the
next Payment Date. The Note Report shall contain the following information:


 


(i)                                     the calculation showing compliance with each
of the Coverage Tests, accompanied by a list setting forth the applicable
maximum or minimum value, percentage or ratio which must be maintained pursuant
to this Agreement with respect to each of the Coverage Tests and a list setting
forth the results of the calculation of each of the Coverage Tests with respect
to the Collateral Debt Securities, the calculation showing whether the S&P
CDO Monitor Test is satisfied (including the weighted average rating, the
default measure, variability measure and correlation measure, the scenario
default rate and/or such other information required to be computed with respect
to the S&P CDO Monitor


 


16

















 


Test),
and the calculation showing the Weighted Average Moody’s Rating Factor, the
Fitch Weighted Average Rating Factor, the Weighted Average Fixed Rate Coupon,
the Moody’s Diversity Score, the Weighted Average Life, the Moody’s Recovery
Rate and the S&P Minimum Average Recovery Rate;


 


(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;


 


(B)                                the nature and source of any Collections in
the Collection Account, including Collections received since the date of the
last Note Report;


 


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


 


(D)                               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,


 


17

















 


(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 Class E Subordinate Income Notes 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)                            such other information as the Collateral
Advisor, the Initial Purchasers, the Trustee, S&P, Moody’s or any Hedge
Counterparty may reasonably request;


 


(xvi)                         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 issuer, the country in
which the issuer is incorporated or organized, the Moody’s Industry
Classification Group, the S&P Industry Classification Group, the Fitch
Industry Classification Group, the S&P Recovery Rate, the Moody’s Recovery
Rate, the S&P Weighted Average Recovery Rate for each Class of Notes,
the Moody’s Rating, the S&P Rating and the Fitch Rating (provided that if any Moody’s Rating,
S&P Rating or Fitch Rating for any Collateral Debt Security is an
“estimated” or “shadow” rating, such rating shall be identified as “estimated”
or “shadow rated”, shall be disclosed with an asterisk in the place of the
applicable estimated or shadow rating and shall include the date as of which
such rating was first provided by Moody’s, S&P or Fitch, as the case may
be, to the Issuer);


 


(xvii)                      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;


 


(xviii)                   (A) the identity and Principal Balance
of each Collateral Debt Security that became a Credit Risk Security, a
Defaulted Security, an Equity Security, a Written Down Security, a Withholding
Tax Security, a Deferred Interest PIK Bond or, except with respect to Defaulted
Securities, a Collateral Debt Security whose Moody’s Rating has been reduced
below “Ba3” since the last Note Report, (B) the date, as provided by the
Collateral Advisor, on which any Collateral Debt Security became a Credit Risk
Security, a Defaulted Security, an Equity Security, a Written Down Security or
a Withholding Tax Security, (C) the date by which the Issuer or the
Collateral Advisor is required to declare its intention to sell or to hold such
Collateral Debt Security, (D) whether the Collateral Advisor has directed
the Issuer to sell or not to sell such Collateral Debt Security, and
(E) the date by which any such sale must occur;


 


18














 


(xix)                                the identity of each Collateral Debt Security
that was upgraded or downgraded or placed on watch for upgrade or downgrade by
any Rating Agency since the date of the last Note Report; provided that the identity of each
Collateral Debt Security that was upgraded or downgraded for purposes of this
clause 4.07(a)(xix) 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;


 


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


 


(xxi)                                the identity and Principal Balance of each
Collateral Debt Security that was a Credit Risk Security, a Defaulted Security,
an Equity Security, a Written Down Security, a Withholding Tax Security or a
Deferred Interest PIK Bond or, except with respect to Defaulted Securities, a
Collateral Debt Security whose Moody’s Rating was below “Ba3” as of the last
Note Report and that remains a Credit Risk Security, 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;


 


(xxii)                             the purchase price of each Pledged Security
Granted and the sale price of each Pledged Security subject to a sale since the
date of the last Note Report; and whether such Pledged Security is a Collateral
Debt Security, an Eligible Investment or proceeds in the Collection Account;


 


(xxiii)                          the amount of Purchased Accrued Interest;


 


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


 


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


 


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


 


(xxvii)                      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


 


(xxviii)                   with respect to the Collateral Debt
Securities in the aggregate, the aggregate principal amount of the Collateral
Debt Securities, the Weighted Average Life, the Weighted Average Fixed Rate
Coupon, the Weighted Average Spread, the S&P Weighted Average Recovery Rate
for each Class of Notes, the Moody’s Diversity Score, the Moody’s Weighted
Average Recovery Rate, the Fitch Weighted Average Rating Factor, the Weighted
Average Moody’s Rating Factor.


 


Upon receipt of each Note Report, the Trustee and the Collateral
Advisor shall compare the information contained therein to the information
contained in their respective records with respect to


 


19

















 


the
Collateral and shall, within two (2) Business Days after receipt of such
Note 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 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 recognized international reputation to review
such Note 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 Report or the Trustee’s or the Collateral Advisor’s records, the Note
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.


 


Subject to the terms of this Agreement, the Trustee shall be entitled
to rely on the information supplied by the Collateral Advisor in relation to
the preparation of the Note Report and shall not be liable for the accuracy or
completeness of such information or the lack thereof.


 


(b)                                 Each Note Report sent to any Holder or
beneficial owner of any Note 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 (“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.”


 


(c)                                  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 M, 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:


 


20

















 


(i)                                          within thirty (30) days of the Closing Date
for such Collateral Debt Securities held by the Issuer as of the Closing Date,
and within ten (10) Business Days of purchase for all Collateral Debt
Securities purchased subsequent to the Closing Date, the prospectus, prospectus
supplement, offering circular or offering memoranda, as applicable, and the
most recent remittance reports for all such Collateral Debt Securities; 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.


 


(d)                                 Payment Date Instructions. The Issuer (or the Collateral Advisor on
behalf of the Issuer) shall by Issuer Order instruct the Trustee to withdraw on
the related Payment Date from the Collection Account, and to pay or transfer,
the amounts set forth in such Note 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
Report.


 


(e)                                  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 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 Paying Agent:


 


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


 


(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 Trustee at least two (2) Business Days prior to the
settlement date for any sale of a security certifying that (i) 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


 


21

















 


Issuer
(or the Collateral Advisor on behalf of the Issuer) has directed the Trustee to
sell such security pursuant to Section 6.01(a), (ii) the
Collateral Advisor on the Issuer’s behalf has directed the Trustee to sell such
security pursuant to Section 6.01(b), or (iii) the Collateral
Advisor on the Issuer’s behalf has directed the Trustee to sell such security
pursuant to Section 6.01(f), direct the Trustee to release such
security and, upon receipt of such Issuer Order, the Trustee 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 Trustee 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 Trustee
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 Trustee or at the Trustee’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 Trustee
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 Trustee, or at the Trustee’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.


 


(d)                                 The Trustee 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 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 Trustee 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


 


22

















 


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 or before each of the
Closing Date and the Effective 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 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 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
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 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 or a Payment Date following the occurrence and continuation of an
acceleration of the Rated Notes in connection with an


 


23

















 


Event
of Default, in accordance with the Payment Report prepared by the Collateral
Administrator 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, will be applied by the
Trustee in the following order of priority (the “Priority of Payments”); provided that with
respect to clauses (i) through (xxv) (excluding clause (xxii)) below, such
application will be made, first, from Collateral Interest Collections and then,
to the extent Collateral Interest Collections are not sufficient for such
payments, from Collateral Principal Collections (subject to the limitations
described herein); provided,
further, that Collateral Principal Collections so applied will
exclude (i) Sale Proceeds in connection with the sale of any Temporary
Ramp-Up Securities reinvested in Fixed Rate Collateral Debt Securities, or up
to U.S.$500,000 of such Sale Proceeds reinvested in other Substitute Collateral
Debt Securities, during the Ramp-Up Period and (ii) and aggregate amount,
not to exceed 10% of the CDS Principal Balance as of the Effective Date,
consisting of (A) Collateral Principal Collections received during the
Ramp-Up Period, (B) Prepaid Collateral Principal Collections received on
or prior to the third anniversary of the Effective Date and (C) Sale
Proceeds in connection with the sale of any Defaulted Securities, Equity
Securities, Credit Risk Securities, Written Down Securities and Withholding Tax
Securities, in each case that are reinvested in Substitute Collateral Debt
Securities in accordance with the Security Agreement during the applicable
periods within which any such Collateral Principal Collections and Sale
Proceeds are eligible for such reinvestment:


 


(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, the amount of any due and unpaid
fees to the Administrator; and then, (c) the amount of any due and unpaid
Trustee Expenses and, then, (d) the amount of any due and unpaid fees and
expenses of the Rating Agencies, and, then, (e) the amount of any due and
unpaid Collateral Administrator Expenses and, then, (f) the amount of any
due and unpaid expenses of the Administrator and any due and unpaid
Administrative Expenses not included in (c), (d) and (e) above,
including amounts payable to the Collateral Advisor under the Collateral
Advisory Agreement; and then, (g) 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) through
(g) (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.$235,000 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;


 


(iii)                                    to pay any Hedge Counterparty, any amounts
due to such Hedge Counterparty under any Hedge Agreement, pro rata, including
any termination payments other than any termination payments payable under
clause (xxi) below;


 


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


 


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


 


24

















 


(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 principal of the Class A-2 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
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 Periodic Interest on the
Class B-1 Notes and any Defaulted Interest on the Class B-1 Notes and
any interest thereon;


 


(viii)                             if a Ratings Confirmation Failure occurs, on
each Payment Date commencing with the Payment Date immediately following the
Effective Date, to pay principal on the Class A-1 Notes, 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, in
that order, in the amounts necessary for each Rating Agency to confirm its
respective ratings of the Notes assigned on the Closing Date or until each
Class of Notes is paid in full;


 


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


 


(x)                                        to pay Periodic Interest on the
Class B-2 Notes and, if no Class A Notes and no Class B-1 Notes
are Outstanding, any Defaulted Interest on the Class B-2 Notes and any
interest thereon; provided
that if any Class A Notes or Class B-1 Notes are
Outstanding, no Collateral Principal Collections shall be applied pursuant to
this clause (x);


 


(xi)                                     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 and (b) any Collateral Principal
Collections to be applied to the Notes pursuant to this clause (x) on the
related Payment Date; and provided,
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;


 


25

















 


(xii)                                  to pay the Class B-2 Cumulative
Applicable Periodic Interest Shortfall Amount, if any; provided that if any
Class A Notes or Class B-1 Notes are Outstanding, no Collateral
Principal Collections shall be applied pursuant to this clause (xii);


 


(xiii)                               to pay Periodic Interest on the
Class C-1 Notes and, if no Class A Notes and no Class B Notes
are Outstanding, any Defaulted Interest on the Class C-1 Notes and any
interest thereon; provided
that if any Class A Notes or Class B Notes are
Outstanding, no Collateral Principal Collections shall be applied pursuant to
this clause (xiii);


 


(xiv)                              to pay Periodic Interest on the
Class C-2 Notes and, if no Class A Notes, no Class B Notes and
no Class C-1 Notes are Outstanding, any Defaulted Interest on the
Class C-2 Notes and any interest thereon; provided that if any Class A Notes,
Class B Notes or Class C-1 Notes are Outstanding, no Collateral
Principal Collections shall be applied pursuant to this clause (xiv);


 


(xv)                                 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, Class C-1 Cumulative Applicable Periodic Interest Shortfall Amount
or Class C-2 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), (vii) 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 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 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; (b) the Class C-1 Notes,
payment of principal not constituting 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 Class C-2 Cumulative Applicable Periodic Interest Shortfall
Amount shall be paid before principal constituting Class C-2 Cumulative
Applicable Periodic Interest Shortfall Amount, if any;


 


(xvi)                              to pay the Class C-1 Cumulative
Applicable Periodic Interest Shortfall Amount, if any; provided that if any
Class A Notes or Class B Notes are Outstanding, no Collateral
Principal Collections shall be applied pursuant to this clause (xvi);


 


(xvii)                           to pay the Class C-2 Cumulative Applicable
Periodic Interest Shortfall Amount, if any; provided that if any Class A Notes,
Class B Notes or Class C-1 Notes are Outstanding, no Collateral
Principal Collections shall be applied pursuant to this clause (xvii);


 


(xviii)                        to pay Periodic Interest on the Class D
Notes and, if no Class A Notes, no Class B Notes and no Class C
Notes are Outstanding, any Defaulted Interest on the Class D Notes and any
interest thereon; provided
that if any Class A Notes, Class B Notes or Class C
Notes are Outstanding, no Collateral Principal Collections shall be applied
pursuant to this clause (xviii);


 


26














 


(xix)                                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-1 Cumulative Applicable Periodic Interest Shortfall
Amount, Class C-2 Cumulative Applicable Periodic Interest Shortfall Amount
or Class D Cumulative Applicable Periodic Interest Shortfall Amount, as
applicable) of the most senior Class of Notes then Outstanding until such
Class D Coverage Test is satisfied as of such Calculation Date or until
such most senior Class of Notes is paid in full, and then to pay principal
of the next most senior Class of Notes Outstanding until such Class D
Coverage Test is satisfied as of such Calculation Date or until such next most
senior Class of Notes is paid in full and so on, until such Class D
Coverage Test is satisfied or until the Class D Notes are paid in full; 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),
(vii) (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 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 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;


 


(xx)                                   to pay the Class D Cumulative Applicable
Periodic Interest Shortfall Amount, if any; provided
that if any Class A Notes, Class B Notes or Class C
Notes are Outstanding, no Collateral Principal Collections shall be applied
pursuant to this clause (xx);


 


(xxi)                                to pay, in the following order, (a) the principal
of the Class A-1 Notes until paid in full and then (b) the principal
of the Class A-2 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) the principal
of the Class C-1 Notes until paid in full and then (f) the principal
of the Class C-2 Notes until paid in full and then (g) the principal
of the Class D Notes until paid in full; provided that 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;


 


(xxii)                             to pay termination payments payable to any
Hedge Counterparty upon the termination of the related Hedge Agreement, pro rata, if such termination occurred
solely as the result of an event of default or a termination event with respect
to the Hedge Counterparty as Defaulting Party or sole Affected Party, as the
case may be;


 


(xxiii)                          to pay, in the following order, (a) any
due and unpaid Trustee Fee, Trustee Expenses and Collateral Administrator
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 paid in full under
clause (i) above, and (b) on a pro rata basis, any


 


27

















 


due
and unpaid expenses and other liabilities of the Co-Issuers to the extent not
paid under clause (i) above, whether as a result of an amount limitation
imposed thereunder or otherwise;


 


(xxiv)                         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;


 


(xxv)                            after the Payment Date occurring in
June 2016, 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


 


(xxvi)                         all Excess Funds for payment to the Holders
of the Class E Subordinate Income Notes.


 


(b)                                 Notwithstanding the foregoing, on any
Redemption Date or Auction Call Redemption Date, the Trustee 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 (xxiv)
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 and 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 and 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 and any Defaulted Interest on the Class B-2 Notes and then principal
on the Class B-2 Notes until paid in full, (v) the Periodic Interest
on the Class C-1 Notes and 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 and any
Defaulted Interest on the Class C-2 Notes and then principal on the
Class C-2 Notes and Class C-2 Cumulative Applicable Periodic Interest
Shortfall Amount, if any) until paid in full, (vii) the Periodic Interest
on the Class D Notes and 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 any) until paid in full,
(viii) amounts corresponding to the amounts set forth in clauses (xx)
through (xxiv) of the Priority of Payments and (viii) any remaining
amounts to the Holders of the Class E Subordinate Income Notes.


 


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 Trustee in writing
to (and the Trustee 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


 


28

















 


liquidation
and all available Cash, after the payment of the amounts referred to in clauses
(i) through (xxv) of the Priority of Payments in the order set
forth therein, shall be distributed to the Holders of the Class E
Subordinate Income Notes.


 


(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 Trustee
in writing to (and the Trustee 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
Trustee 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 Trustee
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 Trustee shall give notice to the Collateral Advisor, S&P and the Issuer
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 Trustee on such Hedge
Counterparty, and shall take such action with respect to such continuing
failure directed to be taken by the Collateral Advisor on behalf of the Issuer.


 


(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
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 beneficial owner of
the Notes.


 


ARTICLE VI


 


PURCHASE, SALE AND REINVESTMENT 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 Trustee to sell any Temporary Ramp-Up Security, Defaulted
Security, Equity Security, Credit Risk Security, Written Down Security or
Withholding Tax Security, the Trustee


 


29

















 


shall
sell in the manner directed by the Collateral Advisor, any Temporary Ramp-Up
Security, Defaulted Security, Equity Security, Credit Risk Security, Written
Down Security or Withholding Tax Security.


 


(b)                                 During the Ramp-Up Period, and in any event,
no later than the Effective Date, the Collateral Advisor shall direct the
Issuer to sell or otherwise dispose of all Temporary Ramp-Up Securities. Sale
Proceeds received with respect to Temporary Ramp-Up Securities shall be
reinvested only in Ramp-Up Collateral Debt Securities that are Fixed Rate
Collateral Debt Securities, provided that any Sale Proceeds received with
respect to Temporary Ramp-Up Securities that are not reinvested in Fixed Rate
Collateral Debt Securities, other than not more than U.S.$500,000 of such Sale
Proceeds that may be reinvested in Substitute Collateral Debt Securities that
are not Fixed Rate Collateral Debt Securities, shall be treated as Collateral
Principal Collections and shall be applied by the Issuer to the making of
payments on the Notes, subject to and in accordance with the Priority of
Payments, on the Payment Date immediately following the Effective Date.


 


(c)                                  The Collateral Advisor shall direct the
Issuer to sell or otherwise dispose of any Collateral Debt Security that is an
Equity Security as soon as practicable after such Collateral Debt Security
becomes an Equity Security. The Collateral Advisor may direct the Issuer to
sell or otherwise dispose of all or a portion of any Collateral Debt Security
that is a Defaulted Security, a Written Down Security or a Withholding Tax
Security; provided that the
Collateral Advisor shall have (i) certified that such Collateral Debt
Security is a Defaulted Security, a Written Down Security or a Withholding Tax
Security and (ii) declared within five (5) Business Days following
such Collateral Debt Security becoming a Defaulted Security, a Written Down
Security or a Withholding Tax Security whether it has elected to direct the
Issuer to sell or otherwise dispose of all or a specified portion of such
Collateral Debt Security. No such sale or other disposition is permitted for
the primary purpose of recognizing gains or decreasing losses resulting from
market value changes, or if the Issuer or the Collateral Advisor believes that
any such sale or other disposition would not result in the reduction or
withdrawal of the then-current rating on any Class of Rated Notes by any
Rating Agency. If the Collateral Advisor elects to direct the Issuer to sell or
otherwise dispose of any Defaulted Security, Written Down Security or
Withholding Tax Security as described above, such Collateral Debt Security (or
specified portion thereof) is required to be sold or otherwise disposed of
within twelve (12) months following such election. If the Collateral Advisor
does not elect within such five (5) Business Days to direct the Issuer to
sell or otherwise dispose of any Defaulted Security, Written Down Security or
Withholding Tax Security, such Collateral Debt Security shall not be sold or
otherwise disposed of and shall remain part of the Collateral. Any decision by
the Collateral Advisor to sell or not to sell any Collateral Debt Security
within five (5) Business Days of such Collateral Debt Security first
becoming either a Defaulted Security or a Written Down Security or a
Withholding Tax Security shall not thereafter be changed by the Collateral
Advisor or the Issuer for any reason.


 


(d)                                 The Collateral Advisor may direct the Issuer
to sell or otherwise dispose of all or any portion of any Collateral Debt
Security that is a Credit Risk Security; provided
that the Collateral Advisor shall have (i) certified that a
Credit Risk Event has occurred and (ii) declared within five
(5) Business Days following the occurrence of any such Credit Risk Event
that it has elected to direct the Issuer to sell or otherwise dispose of all or
a portion of such Collateral Debt Security. No such sale or other disposition
is permitted for the primary purpose of recognizing gains or decreasing losses
resulting from market value changes, or if the Issuer or the Collateral Advisor
believes that any such sale or other disposition would result in the reduction
or withdrawal of the then-current rating on any Class of Rated Notes by
any Rating Agency. If the Collateral Advisor elects to direct the Issuer to
sell or otherwise dispose of any Credit Risk Security as described above, such
Collateral Debt Security is required to be sold or otherwise disposed of as
soon as reasonably practicable and in any event within 30 days following such
election. If the Collateral Advisor does not elect within such five
(5) Business Days following any Credit Risk Event to direct the Issuer to
sell or otherwise dispose of any Collateral Debt Security, such


 


30

















 


Credit
Risk Security shall not be sold or otherwise disposed of and shall remain part
of the Collateral, unless a subsequent Credit Risk Event occurs with respect to
such Collateral Debt Security and the Collateral Advisor shall have made the
certifications and declarations described above.


 


(e)                                  In the event of a Redemption or Auction Call
Redemption, the Collateral Advisor shall direct the Trustee 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 but not in part, the Notes at the applicable
Redemption Prices; and provided,
further, that such Sale Proceeds are used to make such a Redemption
or Auction Call Redemption.


 


(f)                                    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.


 


(g)                                 Any Sale Proceeds not reinvested in
accordance with Article VI shall be Collateral Principal Collections and
shall be applied by the Issuer to the making of payments on the Notes, subject
to and in accordance with the Priority of Payments.


 


Section 6.02.                             Eligibility Criteria, Ramp-Up Criteria and
Replacement Criteria.


 


(a)                                  Eligibility Criteria. Except as provided below, a Collateral Debt
Security shall be eligible for purchase by the Issuer and pledged to the
Trustee if it meets the following eligibility criteria (collectively, the “Eligibility
Criteria”):


 


(i)                                     it is issued by an issuer incorporated or
organized under the laws of the United States, the Bahamas, Bermuda, the Cayman
Islands, the British Virgin Islands, the Netherlands Antilles, Jersey, Guernsey
or Luxembourg or, it is issued by a Qualifying Foreign Obligor;


 


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


 


(iii)                               it is one of the Specified Types of
Collateral Debt Securities;


 


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


 


(v)                                 the acquisition, ownership, enforcement and
disposition of such security will not cause the Issuer to be treated as engaged
in a U.S. trade or business for U.S. federal income tax purposes or otherwise
to be subject to tax on a net income basis in any jurisdiction outside the
Issuer’s jurisdiction of incorporation;


 


(vi)                              the payments on such security are not subject
to withholding tax unless the issuer thereof or the obligor thereon is required
to make additional payments sufficient to cover any withholding tax imposed at
any time on payments made to the Issuer with respect thereto;


 


(vii)                           its acquisition would not cause the Issuer or
the pool of Collateral to be required to register as an investment company
under the Investment Company Act;


 


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


 


31

















 


(ix)                                     it is not an insurance-linked debt instrument
containing a provision pursuant to which the issuer’s obligation to pay
interest or principal is deferred or forgiven in the event of loss due to
certain natural catastrophes specified in the Underlying Instruments;


 


(x)                                        it provides for the payment of principal at
not less than par upon maturity;


 


(xi)                                     its Underlying Instruments do not obligate
the Issuer to make any future advances or any other payment except the purchase
price thereof;


 


(xii)                                  it is not a security with respect to which,
in the reasonable judgment of the Collateral Advisor, the timely repayment of
principal and interest is subject to substantial non-credit related risks;


 


(xiii)                               it is not an Interest Only Security;


 


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


 


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


 


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


 


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


 


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


 


(A)                         it is not a security issued by an issuer
located in a country that imposes foreign exchange controls that effectively
limit the availability or use of U.S. Dollars to make when due the scheduled
payments of principal of and interest on such security;


 


(B)                           it is not, and does not provide for
conversion or exchange into, Margin Stock at any time over its life;


 


(C)                           it is not an obligation which (1) was
incurred in connection with a merger, acquisition, consolidation or sale of all
or substantially all of the assets of a person or entity or similar transaction
and (2) by its terms is required to be repaid within one year of the
incurrence thereof with proceeds from additional borrowings or other
refinancing;


 


(D)                          it is not the subject of (1) any offer
by the issuer of such security or by any other person made to all of the
holders of such security to purchase or otherwise acquire such security (other
than pursuant to any redemption in accordance with the terms of the related
underlying instruments) or to convert or exchange such security into or for
cash, securities or any other type of consideration or (2) any
solicitation by an issuer of such security or any other person to amend, modify
or waive any provision of such security or any related underlying instrument,
and has not been called for redemption; 


 


(E)                            it is not an Equity Security;


 


32

















 


(F)                            it is not a security that by the terms of its
underlying instruments provides for conversion or exchange (whether mandatory
or at the option of the issuer or the holder thereof) into equity capital at
any time prior to its maturity;


 


(G)                           it is not a financing by a
debtor-in-possession in any insolvency proceeding;


 


(H)                          it is not a first loss tranche of any
securitization that does not have an S&P Rating or a Moody’s Rating (as
defined in clause (i) of the defmition of S&P Rating and in clause
(i) of the definition of Moody’s Rating) that addresses the obligation of
the obligor (or guarantor, if applicable) to pay principal of and interest on
the relevant Collateral Debt Security in full, which ratings are monitored on
an ongoing basis by the relevant Rating Agency; and


 


(I)                               it is not a security that provides for the
payment of interest less frequently than semi-annually;


 


provided that notwithstanding anything to the contrary
herein, the Issuer shall not purchase, acquire or hold (whether as part of a
“unit” with a Collateral Debt Security, in exchange for a Collateral Debt
Security or otherwise) any asset the gain from the disposition of which will be
subject to U.S. federal income or withholding tax under Section 897 or
Section 1445 of the Code and the Treasury Regulations promulgated
thereunder.


 


(b)                                 Ramp-Up Criteria. Each additional Collateral Debt Security
selected by the Collateral Advisor for purchase by the Issuer and pledged to
the Trustee during the Ramp-Up Period (a “Ramp-Up Collateral Debt Security”)
will be eligible for purchase by the Issuer if it meets the following criteria (collectively,
the “Ramp-Up Criteria”):


 


(i)                                          such Ramp-Up Collateral Debt Security is not
a Real Estate CDO Security;


 


(ii)                                       no more than U.S.$21 million in aggregate
Principal Balance of Ramp-Up Collateral Debt Securities is rated “Bal” or lower
by Moody’s, “BB+” or lower by S&P or “BB+” or lower by Fitch;


 


(iii)                                    no more than U.S.$10 million in aggregate
Principal Balance of Ramp-Up Collateral Debt Securities is rated “B1” or lower
by Moody’s, “B+” or lower by S&P or “B+” or lower by Fitch;


 


(iv)                                   such Ramp-Up Collateral Debt Security is not
rated below “B3” by Moody’s, “B-” by S&P or “B-” by Fitch;


 


(v)                                      no more than U.S.$10 million in aggregate
Principal Balance of Ramp-Up Collateral Debt Securities is issued by a single
issuer;


 


(vi)                                   such Ramp-Up Collateral Debt Security is not
on the “credit watch negative” watchlist of S&P or on the “under review for
possible downgrade” watchlist of Moody’s; and


 


(vii)                                such Ramp-Up Collateral Debt Security is
denominated in U.S. dollars and all cash flows are to be paid in U.S. Dollars.


 


33

















 


(c)                                  Replacement
Criteria.                                Following
the receipt of (i) Collateral Principal Collections during the Ramp-Up
Period (other than with respect to proceeds received from the disposition of
any Temporary Ramp-Up Securities), (ii) Prepaid Collateral Principal
Collections received prior to the third anniversary of the Effective Date or
(iii) Sale Proceeds received after the Ramp-Up Period on Collateral Debt
Securities that are Defaulted Securities, Equity Securities, Credit Risk
Securities, Written Down Securities or Withholding Tax Securities, the
Collateral Advisor may but will have no obligation to purchase, no later than
sixty (60) calendar days after receipt of such proceeds, Substitute Collateral
Debt Securities satisfying the Eligibility Criteria, and in the case of
Collateral Principal Collections during the Ramp-Up Period (other than with
respect to proceeds received from the disposition of any Temporary Ramp-Up
Securities), the Ramp-Up Criteria, with an aggregate purchase price no less
than such Collateral Principal Collections (including such Sale Proceeds) from
such sale in compliance with the Replacement Criteria described below; provided that the
cumulative amount reinvested in Substitute Collateral Debt Securities shall not
exceed 10% of the CDS Principal Balance as of the Effective Date; provided further, that
(i) any such acquisition is not for the primary purpose of recognizing
gains or decreasing losses resulting from market value changes and
(ii) neither the Issuer nor the Collateral Advisor believes that any such
acquisition will result in a reduction or withdrawal of the then-current rating
on any Class of Rated Notes by any Rating Agency; provided, further, that
no Substitute Collateral Debt Securities may be acquired by or on behalf of the
Issuer at any time during which the rating by any Rating Agency, with respect
to (i) the Class A Notes is one or more notches below the rating
assigned to the Class A Notes by such Rating Agency on the Closing Date or
(ii) any other Class of Rated Notes, is two or more notches below the
rating assigned to such Class of Notes by such Rating Agency on the
Closing Date. Such Collateral Principal Collections shall be eligible to be reinvested
in Substitute Collateral Debt Securities by the Issuer and pledged to the
Trustee if such Substitute Collateral Debt Securities meet the following
criteria (collectively, the “Replacement Criteria”):


 


(i)                                     If the Collateral Debt Security being
replaced was a REIT Debt Security, then the Substitute Collateral Debt Security
must be a REIT Debt Security;


 


(ii)                                  If the Collateral Debt Security being
replaced was a CMBS Security, then the Substitute Collateral Debt Security must
be a CMBS Security;


 


(iii)                               If the Collateral Debt Security being
replaced was a Real Estate CDO Security, then the Substitute Collateral Debt
Security must be either a CMBS Security or a REIT Debt Security;


 


(iv)                              The lowest explicit rating of the Substitute
Collateral Debt Security must be as good or better than the lowest explicit
rating at purchase by the Issuer of the Collateral Debt Security being
replaced;


 


(v)                                 If the Collateral Debt Security being
replaced was a Fixed Rate Collateral Debt Security, the Substitute Collateral
Debt Security must be a Fixed Rate Collateral Debt Security;


 


(vi)                              If the Collateral Debt Security being
replaced was a Floating Rate Collateral Debt Security, the Substitute
Collateral Debt Security must be a Floating Rate Collateral Debt Security;


 


(vii)                           The price of the Substitute Collateral Debt
Security must be between 90% and 110% of the original issue price of such
Substitute Collateral Debt Security (as determined by the Collateral Advisor),
as adjusted to reflect the accretion of any original issue discount or the amortization
of any original issue premium calculated on a yield-to-maturity basis;


 


34

















 


(viii)                             The legal final maturity date of the
Substitute Collateral Debt Security must be earlier than that of the Collateral
Debt Security being replaced; and


 


(ix)                                     The average life of the Substitute Collateral
Debt Security must be the same or lower than that of the Collateral Debt
Security being replaced.


 


If all such Collateral Principal Collections (including Sale Proceeds
related to the sale of any Defaulted Securities, Equity Securities, Credit Risk
Securities, Written Down Securities or Withholding Tax Securities) are not
reinvested in Substitute Collateral Debt Securities as described above for any
reason within sixty (60) calendar days of receipt of such Collateral Principal
Collections, such Collateral Principal Collections shall be reinvested in
Eligible Investments until the next succeeding Payment Date when the Issuer
shall distribute such Collections in accordance with the Priority of Payments.


 


Section 6.03.                             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 Trustee, 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, enter into agreements to buy or sell Collateral Debt Securities
or enter into any Hedge Agreements with the Issuer if and to the extent such
transactions comply with the Investment Advisers Act; provided, further, that the Collateral
Advisor may, on behalf of the Issuer, buy or 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, subject to the Eligibility Criteria and, during the
Ramp-Up Period, the Ramp-Up Criteria, 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, subject to the Eligibility Criteria and, during the
Ramp-Up Period, the Ramp-Up Criteria, 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.


 


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.


 


(b)                                 Upon any substitution pursuant to this Article VI,
all of the Issuer’s right, title and interest to the Collateral Debt Security
or Collateral Debt Securities shall be Granted to the Trustee pursuant to this
Agreement, such Collateral Debt Securities shall be Delivered to the Trustee as


 


35

















 


Accountholder,
and, if applicable, the Issuer shall receive the Collateral Debt Security or
Collateral Debt Securities for which the Collateral Debt Security or Collateral
Debt Securities were substituted. The Trustee shall also receive, not later
than the Subsequent Delivery Date, an officer’s certificate of the Collateral
Advisor demonstrating compliance with the provisions of this Article VI.


 


Section 6.04.                                  Collateral Quality Tests. The Collateral Quality Tests will be
satisfied if, as of the Closing Date and the Effective Date, in the aggregate,
the Collateral Debt Securities comply with all of the requirements set forth
below (collectively, the “Collateral Quality Tests”):


 


(i)                                          the aggregate Principal Balance of all
Collateral Debt Securities with a Moody’s Rating of below “Baa3” and above “B1”
does not exceed 30% of the CDS Principal Balance;


 


(ii)                                       the aggregate Principal Balance of all
Collateral Debt Securities with a Moody’s Rating of lower than “Ba3” does not
exceed 15% of the CDS Principal Balance;


 


(iii)                                    the aggregate Principal Balance of all
Collateral Debt Securities with a S&P Rating lower than “BBB-” and above
“B+” does not exceed 30% of the CDS Principal Balance;


 


(iv)                                   the aggregate Principal Balance of all
Collateral Debt Securities with an S&P Rating of lower than “BB-” does not
exceed 15% of the CDS Principal Balance;


 


(v)                                 (v) the aggregate Principal Balance of
all Collateral Debt Securities that are not publicly rated by Moody’s but
derived in accordance with clauses (i) and (ii) of the definition of
“Moody’s Rating” does not exceed 35% of the CDS Principal Balance;


 


(vi)                              the aggregate Principal Balance of all
Collateral Debt Securities that are PIK Bonds does not exceed 5.5% of the CDS
Principal Balance;


 


(vii)                           the aggregate Principal Balance of all
Collateral Debt Securities that are CMBS Securities does not exceed 80% of the
CDS Principal Balance; provided
that no more than17.5% of the CDS Principal Balance shall consist of
CMBS Large Loan Securities, no more than 5% of the CDS Principal Balance shall
consist of CMBS Credit Tenant Lease Securities;


 


(viii)                        the aggregate Principal Balance of all
Collateral Debt Securities that are REIT Debt Securities does not exceed 26% of
the CDS Principal Balance;


 


(ix)                                the aggregate Principal Balance of all
Collateral Debt Securities that are Real Estate CDO Securities does not exceed
5.5% of the CDS Principal Balance;


 


(x)                                   with respect to the particular issue of the
Collateral Debt Security being acquired, (a) the aggregate Principal
Balance of all Collateral Debt Securities that are part of the same issue does
not exceed 3% of the CDS Principal Balance, (b) the aggregate Principal
Balance of all Collateral Debt Securities that are REIT Debt Securities that
are issued by the same obligor does not exceed 2.75% of the CDS Principal
Balance and (c) the aggregate Principal Balance of all Collateral Debt
Securities that are part of the same issue rated below “Baa3” by Moody’s at
purchase does not exceed 2% of the CDS Principal Balance;


 


(xi)                                with respect to the servicer of the security
being acquired, (a) the aggregate Principal Balance of all Collateral Debt
Securities serviced by such servicer does not exceed 20% of the CDS Principal
Balance, except that the aggregate Principal Balance of all Collateral Debt
Securities serviced by servicers rated “Below Average” by S&P, or if there
is no servicer rating by S&P 


 


36

















 


or
Fitch, having long-term unsecured debt securities rated “BB” or lower, shall
not exceed 5% of the CDS Principal Balance;


 


(xii)                             the aggregate Principal Balance of all
Collateral Debt Securities that mature beyond the Stated Maturity Date does not
exceed 20% of the CDS Principal Balance;


 


(xiii)                          the aggregate Principal Balance of all Fixed
Rate Collateral Debt Securities does not exceed 95% of the CDS Principal
Balance;


 


(xiv)                         the Weighted Average Moody’s Rating Factor
must not exceed 900;


 


(xv)                            the Fitch Weighted Average Rating Factor must
not exceed 7.75;


 


(xvi)                         (i) the Weighted Average Fixed Rate
Coupon as of such date equals or exceeds 6.15% and (ii) the Weighted
Average Spread as of such date equals or exceeds 2.55%;


 


(xvii)                      the Moody’s Diversity Score must be greater
than or equal to 8.5;


 


(xviii)                   the Weighted Average Life must be less than
or equal to 8.2;


 


(xix)                           the Moody’s Recovery Rate must be greater
than or equal to 25.5%;


 


(xx)                              the S&P CDO Monitor Test must be
satisfied;


 


(xxi)                           the S&P Minimum Average Recovery Test
must be satisfied; and


 


(xxii)                        the aggregate Principal Balance of all
Collateral Debt Securities that provide for periodic payments of interest in
Cash less frequently than monthly does not exceed 32% of the CDS Principal
Balance;


 


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


 


Section 6.05.                             Coverage Tests.


 


(a)                                  At any time during which any of the Notes are
Outstanding, if any of the Coverage Tests described below are not satisfied as
of the related Calculation Date, amounts that would otherwise be used
(i) for payments of Excess Funds on the Class E Subordinate Income
Notes, (ii) for the purchase of additional Collateral Debt Securities;
(iii) for the payment of certain fees and expenses; (iii) in the case of a
failure to satisfy either the Class A Interest Coverage Test or the
Class A Principal Coverage Test, for interest payments on the Class B
Notes, the Class C Notes and the Class D Notes; (iv) in the case of a
failure to satisfy either the Class B Interest Coverage Test or the
Class B Principal Coverage Test, for interest payments on the Class C
Notes and the Class D Notes; (v) in the case of a failure to satisfy either
the Class C Interest Coverage Test or Class C Principal Coverage
Test, for interest payments on the Class D Notes; and (vi) in the
case of a failure to satisfy either the Class D Interest Coverage Test or
the Class D Principal Coverage Test, for payments of Excess Funds on the
Class E Subordinate Income Notes shall instead be applied on the related
Payment Date, to the extent necessary to satisfy such Coverage Test as of such
Calculation Date, to Principal Prepayments until such Coverage Test is satisfied
as of such Calculation Date or the Notes are paid in full.


 


37














 


(b)                                 On the Effective Date, the portfolio of
Collateral Debt Securities must meet each of the Coverage Tests. Furthermore,
if any of the Coverage Tests set forth herein are not satisfied prior to or as
a result of any proposed purchase of additional Collateral Debt Securities or
Substitute Collateral Debt Securities after the Effective Date, the Issuer will
not be permitted to make such purchase.


 


(c)                                  The Interest Coverage Test for each Class of
Notes shall be satisfied as of any date of determination when the Interest
Coverage Ratio for each such Class is equal to or exceeds the required
level set forth below:


 


	
  Interest Coverage Test

  	
   

  	
  Required Interest Coverage Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Class A Interest Coverage Test

  	
   

  	
  115

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Class B Interest Coverage Test

  	
   

  	
  110

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Class C Interest Coverage Test

  	
   

  	
  104

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Class D Interest Coverage Test

  	
   

  	
  102

  	
  %

  



 


The respective Interest Coverage Ratio is equal to the percentage based
on the ratio of (x) to (y), where (x) is equal to the Interest
Coverage Amount and where (y) is an amount equal to (i) in the case
of the Class A Interest Coverage Ratio, the Periodic Interest for the Class A
Notes for the Payment Date immediately following such date of determination; (ii) in
the case of the Class B Interest Coverage Ratio, the sum of the Periodic
Interest for the Class A Notes and the Class B Notes for such Payment
Date; (iii) in the case of the Class C Interest Coverage Ratio, the
sum of the Periodic Interest for the Class A Notes, the Class B Notes
and the Class C Notes for such Payment Date; and (iv) in the case of Class D
Interest Coverage Ratio, the sum of the Periodic Interest for the Class A
Notes, the Class B Notes, the Class C Notes and the Class D
Notes for such Payment Date.


 


(d)                                 The Principal Coverage Test for each Class of
Notes shall be satisfied as of any date of determination when the Principal
Coverage Ratio for each such Class is equal to or exceeds the required
level set forth below:


 


	
  Principal Coverage Test

  	
   

  	
  Required Principal Coverage Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Class A Principal Coverage Test

  	
   

  	
  125

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Class B Principal Coverage Test

  	
   

  	
  118

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Class C Principal Coverage Test

  	
   

  	
  105.6

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Class D Principal Coverage Test

  	
   

  	
  103

  	
  %

  



 


The respective Principal Coverage Ratio is equal to the percentage
based on the ratio of (x) to (y), where (x) is the Principal Coverage
Amount as of such date and (y) is an amount equal to (i) in the case
of the Class A Principal Coverage Ratio, the aggregate principal amount of
the Class A Notes then Outstanding; (ii) in the case of the Class B
Principal Coverage Ratio, the sum of the aggregate principal amount of the Class A
Notes and the Class B Notes then Outstanding (including any Class B-2
Cumulative Applicable Periodic Interest Shortfall Amount and any interest
accrued on such amount); (iii) in the case of the Class C Principal
Coverage Ratio, the sum of the aggregate principal amount of the Class A
Notes, the Class B Notes (including any Class B-2 Cumulative
Applicable Periodic Interest Shortfall Amount and any interest accrued on such
amount) and the Class C Notes (including any Class C Cumulative
Applicable Periodic Interest Shortfall Amount and any interest accrued on such
amount) then Outstanding; and (iv) in the case of the Class D
Principal Coverage Ratio, the sum of the aggregate principal amount of the Class A
Notes, the Class B Notes (including any Class B-2 Cumulative
Applicable Periodic Interest Shortfall Amount and any interest accrued on such
amount), the Class C


 


38

















 


Notes
(including any Class C Cumulative Applicable Periodic Interest Shortfall
Amount and any interest accrued on such amount) and the Class D Notes
(including any Class D Cumulative Applicable Periodic Interest Shortfall
Amount and any interest accrued on such amount) then Outstanding.


 


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, the Class D
Notes, the Class E Subordinate Income Notes 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 Class E Subordinate Income Notes, the
Ordinary Shares and the Issuer’s rights in and to the Collateral (collectively,
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, the Class D Notes and the Class E
Subordinate Income Notes have agreed in the Trust Deed, 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 Class E Subordinate Income Notes and 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 Class E Subordinate Income Notes 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 Class E Subordinate Income Notes, the
Ordinary Shares and the Issuer’s rights in and to the Collateral (collectively,
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, the Class D Notes and
the Class E Subordinate Income Notes have agreed in the Trust Deed, 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


 


39

















 


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 Class E
Subordinate Income Notes 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, the Class E Subordinate
Income Notes 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 Class E
Subordinate Income Notes, the Ordinary Shares and the Issuer’s rights in and to
the Collateral (collectively, 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, the Class D Notes and the Class E
Subordinate Income Notes have agreed in the Trust Deed, 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 Class E Subordinate Income Notes 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 Notes,
the Class D Notes, the Class E Subordinate Income Notes 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 Class E Subordinate Income Notes, the Ordinary Shares and the
Issuer’s rights in and to the Collateral (collectively, 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, the Class D Notes and the Class E Subordinate Income Notes
have agreed in the Trust Deed, 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 Class E
Subordinate Income Notes 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.


 


40

















 


(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,
the Class E Subordinate Income Notes 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 Class E Subordinate Income Notes, the
Ordinary Shares and the Issuer’s rights in and to the Collateral (collectively,
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, the Class D Notes and
the Class E Subordinate Income Notes have agreed in the Trust Deed 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
Class E Subordinate Income Notes 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, the Class E Subordinate
Income Notes 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 Class E
Subordinate Income Notes, the Ordinary Shares and the Issuer’s rights in and to
the Collateral (collectively, 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 Class D Notes and the Class E
Subordinate Income Notes have agreed in the Trust Deed 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 and the Class E Subordinate
Income Notes 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 Class E Subordinate Income 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 Class E Subordinate Income, the Ordinary Shares and the Issuer’s
rights in and to the Collateral (collectively, 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


 


41

















 


made
on account of the Class D Subordinate Interests. The Holders of the Class E
Subordinate Income have agreed in the Trust Deed 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 Class E Subordinate Income 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
(collectively, 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)                                  The Issuer may from time to time enter into
one or more Hedge Agreements (other than the Initial Hedge Agreement, but
including Hedge Agreements offsetting other Hedge Agreements previously entered
into), 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 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 Trustee 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.


 


(b)                                 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 Trustee (the “Hedge Termination Receipts Account”) for and on
behalf of the Secured Parties (other than the Hedge


 


42

















 


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 Trustee (the “Hedge Replacement
Account”) for the benefit of the Hedge Counterparty under the terminated
Hedge Agreement.


 


(c)                                  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
Trustee 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).


 


(d)                                 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 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.


 


(e)                                  The Trustee 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 (A) the short-term rating of the Hedge Counterparty
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 from Moody’s is lower than “A1” 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 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


 


43

















 


Counterparty
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” or (B) the
short-term rating of the Hedge Counterparty or its guarantor from S&P is
lower than “A-1” or, if the Hedge Counterparty or its guarantor does not have a
short-term rating from S&P, the long-term rating of such the Hedge
Counterparty or its guarantor is lower than “A+” or is “A+” but has been placed
on and is remaining on credit watch with negative implications by S&P
(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 deliver
collateral sufficient to maintain the then current rating of each Class of
Notes provided that if the Hedge
Counterparty has not within 30 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 long-term rating of the Hedge Counterparty from S&P
is withdrawn, suspended or downgraded below “BBB-” or, if no long-term rating
is available, the short-term rating of the Hedge Counterparty from S&P is
withdrawn, suspended or downgraded below “A-3”, (ii) so long as any Notes
are Outstanding and rated by Fitch, the short-term rating of the Hedge
Counterparty from Fitch is withdrawn, suspended or downgraded below “F-2” 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 “BBB+” or (iii) the short-term rating of the Hedge Counterparty from
Moody’s is “P-2” or lower or the long-term rating of the Hedge Counterparty
from Moody’s is “A3” or lower or, if no short-term rating is available, the
long-term rating of the Hedge Counterparty 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 (in the case of a
Substitution Event referred to in subparagraph (iii) of the definition
thereof above) or within 7 days following such Substitution Event (in the case
of a Substitution Event referred to in subparagraph (i) of the definition
thereof above), 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 that satisfies the Hedge Counterparty Ratings
Requirement 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, (in
the case of a Substitution Event referred to in subparagraph (iii) of the
definition thereof above) or within 7 days following such Substitution Event
(in the case of a Substitution Event referred to in subparagraph (i) of
the definition thereof above); the Hedge Counterparty shall, while it continues
in good faith to search for an eligible Substitute Party, post and maintain, or
continue to maintain, as the case may be, Eligible Collateral in accordance
with the Credit Support Annex and it shall become an Additional Termination
Event pursuant to the Initial Hedge Agreement. 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.


 


(f)                                    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.


 


44

















 


(g)                                 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.


 


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


 


(i)                                     Each Hedge Agreement will provide with
respect to the Issuer for provisions substantially similar to Sections 11.06
and 11.15.


 


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
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.


 


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.


 


ARTICLE IX


 


THE TRUSTEE AND ACCOUNTHOLDER


 


Section 9.01.                             Appointment and Powers. Subject to the terms and conditions hereof,
the Issuer hereby appoints LaSalle as the Accountholder and LaSalle hereby
accepts such appointment and agrees to act as Accountholder for and on behalf
of the Secured Parties to maintain custody and possession of the Collateral and
to perform the other duties of the Accountholder in accordance with the
provisions of this Agreement. The Trustee hereby authorizes (and the other
Secured Parties shall be deemed to have authorized) the Accountholder 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
Accountholder 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 Accountholder 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 Accountholder in compliance with any such
instruction shall be binding upon all of the Secured Parties.


 


Section 9.02.                             Performance of Duties.


 


(a)                                  The Trustee and the Accountholder, as
applicable, 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
Trustee and the Accountholder, as applicable, each undertakes to perform only
such duties as are expressly set forth herein, and no implied covenants or
obligations shall be read into this Agreement


 


45

















 


against
the Trustee or the Accountholder. No provision hereof shall be construed to
relieve the Accountholder from liability to the Trustee or the Issuer, or the
Trustee from liability to the Accountholder or the Issuer, in each case, for
its own gross negligence, bad faith or willful misconduct; provided that (i) the
Trustee or the Accountholder 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 or Accountholder, as applicable, (other than
those that require the consent of other parties and such consent has been
withheld), unless in either case the Accountholder or the Trustee, as the case
may be, 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) neither
the Trustee nor the Accountholder shall be liable for any error of judgment made
in good faith by any of its officers or employees, unless the Trustee or the
Accountholder, as the case may be, 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
Trustee or the Accountholder 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 Trustee or the Accountholder, as
the case may be. 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 Trustee or the Accountholder be liable
under or in connection with this Agreement for indirect, special, incidental,
punitive or consequential losses or damages of any kind whatsoever, including,
but not limited to, lost profits, even if the Trustee or the Accountholder, as
the case may be, 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 Trustee acts as
Accountholder, the Trustee shall act in accordance with the terms of this
Agreement.


 


(d)                                 The Accountholder 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 Accountholder shall have received written notice
thereof. In the absence of receipt of such notice, the Accountholder 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
Trustee or the Accountholder, as applicable, (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. Neither the
Trustee nor the Accountholder assumes 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


 


46

















 


parties
hereto, of the other Transaction Documents against the parties thereto or of
the other Collateral (or any part thereof) against any parties thereto. Neither
the Trustee nor the Accountholder shall have responsibility for maintaining the
value of the Collateral or ensuring that any Collateral is properly delivered
to it; provided that
the Accountholder 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 Accountholder and the Trustee 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 Trustee or the Accountholder
has been given notice that a transfer or payment by the Trustee or the
Accountholder, as applicable, under Article V is required to be
made on a specified date and on such specified date the Trustee or
Accountholder, as the case may be, shall not have received all information
necessary for the making of such transfer or payment, then the Trustee or the
Accountholder, as the case may be, shall promptly give notice to the Issuer,
the Collateral Advisor and the Administrator, specifying, to the extent
reasonably within the knowledge of the Trustee or the Accountholder, 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 Trustee or the
Accountholder shall act in accordance with written instructions furnished to
the Trustee or the Accountholder, as applicable, by the Issuer. If the Trustee
or the Accountholder, as applicable, has been given notice that a transfer or
payment by the Trustee or the Accountholder 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 received from the Issuer in sufficient time to
effect such transfer or payment, then upon notice by the Trustee or the
Accountholder to the Issuer, the Trustee’s or the Accountholder’s obligations
with respect to such transfer or payment shall be suspended and the Trustee or
the Accountholder, as applicable, shall not be liable for the failure to make
such transfer or payment. Notwithstanding the foregoing, the Trustee or the
Accountholder may carry out transfers and payments of amounts specified in Article V
without specific instructions from the Collateral Advisor or the Issuer if the
Trustee or the Accountholder 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 Trustee and the Accountholder 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.                             [Intentionally Omitted].


 


Section 9.05.                             [Intentionally Omitted].


 


Section 9.06.                             Indemnification. The Issuer shall indemnify, defend and hold
the Trustee and its directors, officers, employees and agents (collectively
with the Trustee, 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
Trustee’s (a) execution and delivery of this Agreement, (b) compliance
or attempted compliance with or reliance upon any instruction or other


 


47














 


direction
upon which the Trustee 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 Trustee and the
Accountholder. The Issuer agrees that the Trustee or the Accountholder, as
applicable, shall not be liable as a result of the Trustee’s or the
Accountholder’s following, in good faith and in accordance with this Agreement,
the written instructions given to it by the Issuer or the Collateral Advisor,
as applicable. 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 Trustee shall from time to time deliver all unclaimed
funds to or as directed by applicable escheat authorities, as determined by the
Trustee, in its sole discretion, in accordance with the customary practices and
procedures of the Trustee. Any unclaimed funds held by the Trustee pursuant to
this Section 9.06 shall be held uninvested and without any
liability for interest.


 


Section 9.07.           Compensation and Reimbursement. The Issuer agrees (a) to pay to the
Trustee from time to time reasonable compensation for all services rendered by
it hereunder and (b) to reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
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 Trustee. The compensation and reimbursement to
the Trustee 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 Trustee pursuant to the Trust Deed. None of the Hedge Counterparties,
the Principal Paying Agent, the other Paying Agents, 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.          [Intentionally Omitted].


 


Section 9.09.          Accounts. Notwithstanding anything else contained herein, the Trustee agrees
that with respect to each of the Accounts constituting: (a) a Securities
Account, it will cause the Accountholder to enter into an agreement whereby the
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 Trustee 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 it
as Accountholder or is endorsed in blank and (vi) the 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 the
Accountholder 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 Trustee hereby expressly waives any and
all rights of setoff that the Trustee 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 Hedge Termination


 


48

















 


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 Trustee 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 Trustee 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
Trustee a valid Lien on, and valid and perfected security interest in, the
Collateral so delivered in favor of the Trustee and to deliver or transfer
Control of such Collateral to the Trustee, free and clear of any other Lien,
together with satisfactory assurances thereof, and to pay any reasonable costs
incurred by the Trustee, the Accountholder, 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 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 Trustee 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 and the Collateral Advisor 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 Trustee, 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 Trustee, with respect
to the Collateral, specified in such Opinion of Counsel. Such Opinion of
Counsel shall state the procedures with respect to the delivery of Collateral
which are sufficient for the creation 


 


49

















 


and
maintenance of a perfected, first priority security interest therein in favor
of the Trustee 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 the
Trustee, 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 Trustee’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 Transaction Document,
whether through action or inaction, except as may be expressly directed from
time to time by the Trustee 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
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 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 and the Accountholder
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); 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,
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 S&P, any other party hereto and each Hedge Counterparty (except as may
be specifically provided herein) (i) in order to further effectuate the
Grant of or further perfect any Lien or


 


50

















 


security
interest of the Trustee 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
Securities Act or the Investment Company Act, or to ensure the Issuer’s
exemption thereunder, (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
Accountholder, any 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 Paying Agent, the Trustee, 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
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 Reports) shall also be published in the Irish Stock Exchange’s Daily
Official List at the expense of the Issuer.


 


(c)           Upon receipt of notice of an Event of Default
and acceleration of indebtedness from the Trustee, the Accountholder 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 Accountholder
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


 


51

















 


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 9.06, 9.07, 11.06, 11.07, 11.09
and 11.15 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 Accountholder upon demand by the Trustee
or the Accountholder 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
Accountholder 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, 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 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 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


 


52

















 


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 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 Trustee 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.


 


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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 Trustee 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
Trustee, the Collateral Agent, 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.         Trustee 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 Trustee, 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 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 


 


54

















 


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 and the
Trustee have duly executed this Agreement as of the date first set forth above.


 


	
  ISSUER:

  	
  N-STAR REAL ESTATE CDO II LTD.

  
	
   

  	
  Executed as a Deed

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Derrie Boggess

  
	
   

  	
   

  	
  Name:
  Derrie Boggess

  
	
   

  	
   

  	
  Title: Director

  
	
   

  	
   

  
	
  TRUSTEE:

  	
  LASALLE BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Koren Sumser

  
	
   

  	
   

  	
  Name: Koren Sumser

  
	
   

  	
   

  	
  Title: First Vice President

  
	
   

  	
   

  
	
  ACCOUNTHOLDER:

  	
  LASALLE BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Koren Sumser

  
	
   

  	
   

  	
  Name: Koren Sumser

  
	
   

  	
   

  	
  Title: First Vice President