Document:

Exhibit 10.23

 

EXECUTION COPY

 

Dated as of December 7,
2006

 

 

N-STAR REL CDO
VIII LTD.,

as Issuer

 

N-STAR REL CDO
VIII LLC,

as Co-Issuer

 

NS ADVISORS,
LLC,

as Advancing Agent

 

and

 

WELLS FARGO
BANK, NATIONAL ASSOCIATION

as Trustee

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  INDENTURE

  	
   

  
	
   

  	
   

  	
   

  

 

 

TABLE OF
CONTENTS

 

	
  Section

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  PRELIMINARY STATEMENT

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  GRANTING CLAUSES

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE I                                   Definitions and Interpretation

  	
   

  	
  4

  
	
  1.1.                                Definitions

  	
   

  	
  4

  
	
  1.2.                              Assumptions as to Collateral Interests, Fees, Etc.

  	
   

  	
  69

  
	
  1.3.                              Rules of Construction

  	
   

  	
  73

  
	
   

  	
   

  	
   

  
	
  ARTICLE II                                 The Indenture Issued Notes

  	
   

  	
  73

  
	
  2.1.                                Forms Generally

  	
   

  	
  73

  
	
  2.2.                              Authorized Amount; Applicable Periodic Interest
  Rate; Stated Maturity Date; Denominations

  	
   

  	
  75

  
	
  2.3.                              Execution, Authentication, Delivery and Dating

  	
   

  	
  76

  
	
  2.4.                              Registration, Transfer and Exchange of Indenture
  Issued Notes

  	
   

  	
  77

  
	
  2.5.                              Mutilated, Defaced, Destroyed, Lost or Stolen
  Indenture Issued Notes

  	
   

  	
  90

  
	
  2.6.                                Payment of Principal and Interest; Rights
  Preserved

  	
   

  	
  91

  
	
   

  	
   

  	
   

  
	
  ARTICLE III                           Conditions Precedent

  	
   

  	
  102

  
	
  3.1.                              General Provisions

  	
   

  	
  102

  
	
  3.2.                              Security for the Indenture Issued Notes

  	
   

  	
  105

  
	
  3.3.                              Custodianship; Transfer of Collateral Interests
  and Eligible Investments

  	
   

  	
  107

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV                           Satisfaction and Discharge

  	
   

  	
  110

  
	
  4.1.                              Satisfaction and Discharge of Indenture

  	
   

  	
  110

  
	
  4.2.                              Application of Trust Money

  	
   

  	
  112

  
	
  4.3.                              Repayment of Funds Held by Note Paying Agent

  	
   

  	
  112

  
	
   

  	
   

  	
   

  
	
  ARTICLE V                               Events of Default; Remedies

  	
   

  	
  112

  
	
  5.1.                              Events of Default

  	
   

  	
  112

  
	
  5.2.                              Acceleration of Maturity; Rescission and
  Annulment

  	
   

  	
  115

  
	
  5.3.                              Collection of Indebtedness and Suits for
  Enforcement by Trustee

  	
   

  	
  116

  
	
  5.4.                              Remedies

  	
   

  	
  120

  
	
  5.5.                              Preservation of Collateral

  	
   

  	
  122

  
	
  5.6.                              Trustee May Enforce Claims Without
  Possession

  	
   

  	
  124

  
	
  5.7.                              Application of Funds Collected

  	
   

  	
  124

  
	
  5.8.                              Limitation on Suits

  	
   

  	
  125

  
	
  5.9.                               Unconditional Rights of Rated Noteholders (other
  than the Class N Noteholders)
  to Receive Principal and Interest

  	
   

  	
  125

  
	
  5.10.                      Restoration of Rights and Remedies

  	
   

  	
  126

  
	
  5.11.                      Rights and Remedies Cumulative

  	
   

  	
  126

  
	
  5.12.                      Delay or Omission Not Waiver

  	
   

  	
  126

  
	
  5.13.                      Control by the Controlling Party

  	
   

  	
  126

  
	
  5.14.                      Waiver of Past Defaults

  	
   

  	
  127

  

 

 

TABLE OF
CONTENTS

(continued)

 

	
  Section

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  5.15.                      Undertaking for Costs

  	
   

  	
  128

  
	
  5.16.                      Waiver of Stay or Extension Laws

  	
   

  	
  128

  
	
  5.17.                      Sale of Collateral

  	
   

  	
  128

  
	
  5.18.                      Action on the Rated Notes

  	
   

  	
  129

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI                           The Trustee

  	
   

  	
  129

  
	
  6.1.                              Certain Duties and Responsibilities

  	
   

  	
  129

  
	
  6.2.                              Notice of Default

  	
   

  	
  132

  
	
  6.3.                              Certain Rights of Trustee

  	
   

  	
  132

  
	
  6.4.                              Authenticating Agents

  	
   

  	
  134

  
	
  6.5.                              Not Responsible for Recitals or Issuance of Rated
  Notes

  	
   

  	
  135

  
	
  6.6.                              May Hold Rated Notes

  	
   

  	
  135

  
	
  6.7.                              Funds Held in Trust

  	
   

  	
  135

  
	
  6.8.                              Compensation and Reimbursement

  	
   

  	
  135

  
	
  6.9.                              Corporate Trustee Required; Eligibility

  	
   

  	
  137

  
	
  6.10.                      Resignation and Removal; Appointment of Successor

  	
   

  	
  137

  
	
  6.11.                      Acceptance of Appointment by Successor

  	
   

  	
  139

  
	
  6.12.                      Merger, Conversion, Consolidation or Succession
  to Business of Trustee

  	
   

  	
  139

  
	
  6.13.                      Co-Trustees

  	
   

  	
  140

  
	
  6.14.                      Certain Duties Related to Delayed Payment of
  Proceeds; Other Notices

  	
   

  	
  141

  
	
  6.15.                      Representations and Warranties of the Bank

  	
   

  	
  141

  
	
  6.16.                      Exchange Offers, Proposed Amendments etc.

  	
   

  	
  142

  
	
  6.17.                      Fiduciary for Rated Noteholders Only; Agent For
  Other Secured Parties

  	
   

  	
  143

  
	
  6.18.                      Withholding

  	
   

  	
  143

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII                       Covenants

  	
   

  	
  143

  
	
  7.1.                              Payment of Principal and Interest

  	
   

  	
  143

  
	
  7.2.                              Maintenance of Office or Agency

  	
   

  	
  144

  
	
  7.3.                              Funds for Rated Note Payments to be Held in Trust

  	
   

  	
  145

  
	
  7.4.                              Existence of Co-Issuers

  	
   

  	
  146

  
	
  7.5.                              Protection of Collateral

  	
   

  	
  147

  
	
  7.6.                              Opinions as to Collateral

  	
   

  	
  149

  
	
  7.7.                              Performance of Obligations

  	
   

  	
  149

  
	
  7.8.                              Negative Covenants

  	
   

  	
  151

  
	
  7.9.                              Statement as to Compliance

  	
   

  	
  152

  
	
  7.10.                      Co-Issuers May Consolidate, Etc., Only on
  Certain Terms

  	
   

  	
  152

  
	
  7.11.                      Successor Substituted

  	
   

  	
  156

  
	
  7.12.                      No Other Business

  	
   

  	
  156

  
	
  7.13.                      Change or Withdrawal of Rating

  	
   

  	
  157

  
	
  7.14.                      Reporting

  	
   

  	
  157

  
	
  7.15.                      Rated Note Calculation Agent

  	
   

  	
  157

  
	
  7.16.                      Listing

  	
   

  	
  158

  
	
  7.17.                      Amendment of Certain Documents

  	
   

  	
  158

  
	
  7.18.                      Purchase of Collateral; Information Regarding
  Collateral; Rating Confirmation

  	
   

  	
  158

  
	
  7.19.                      Liquidity Tests

  	
   

  	
  161

  

 

ii

 

TABLE OF
CONTENTS

(continued)

	
  Section

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII                   Supplemental Indentures

  	
   

  	
  162

  
	
  8.1.                                Supplemental Indentures Without Consent of Rated
  Noteholders

  	
   

  	
  162

  
	
  8.2.                              Supplemental Indentures with Consent of Rated
  Noteholders

  	
   

  	
  165

  
	
  8.3.                              Execution of Supplemental Indentures

  	
   

  	
  168

  
	
  8.4.                              Effect of Supplemental Indentures

  	
   

  	
  168

  
	
  8.5.                              Reference in Indenture Issued Notes to
  Supplemental Indentures

  	
   

  	
  168

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX                          Redemption of Rated Notes

  	
   

  	
  169

  
	
  9.1.                              Redemption of Rated Notes

  	
   

  	
  169

  
	
  9.2.                              Redemption Procedures; Auction

  	
   

  	
  169

  
	
  9.3.                              Record Date; Notice to Trustee of Redemption

  	
   

  	
  171

  
	
  9.4.                              Notice of Redemption

  	
   

  	
  172

  
	
  9.5.                              Notice of Withdrawal

  	
   

  	
  172

  
	
  9.6.                              Rated Notes Payable on Redemption Date

  	
   

  	
  173

  
	
  9.7.                              Special Amortization

  	
   

  	
  173

  
	
   

  	
   

  	
   

  
	
  ARTICLE X                              Accounts, Accountings and Releases

  	
   

  	
  174

  
	
  10.1.                      Collection of Funds

  	
   

  	
  174

  
	
  10.2.                      General Provisions Applicable to Accounts

  	
   

  	
  175

  
	
  10.3.                      Collateral Account

  	
   

  	
  176

  
	
  10.4.                      Uninvested Proceeds Account

  	
   

  	
  176

  
	
  10.5.                      Collection Account

  	
   

  	
  176

  
	
  10.6.                      Expense Reserve Account

  	
   

  	
  178

  
	
  10.7.                      Interest Reserve Account

  	
   

  	
  178

  
	
  10.8.                      Future Funding Asset Account

  	
   

  	
  179

  
	
  10.9.                      Payment Account

  	
   

  	
  180

  
	
  10.10.                Reports by Trustee

  	
   

  	
  180

  
	
  10.11.                Accountings

  	
   

  	
  181

  
	
  10.12.                  Release of Securities

  	
   

  	
  187

  
	
  10.13.                Reports by Independent Accountants

  	
   

  	
  187

  
	
  10.14.                Reports to Rating Agencies

  	
   

  	
  189

  
	
  10.15.                Tax Matters

  	
   

  	
  189

  
	
  10.16.                [Reserved]

  	
   

  	
  190

  
	
  10.17.                Interest Advances

  	
   

  	
  190

  
	
  10.18.                Cure Advances

  	
   

  	
  194

  
	
  10.19.                Future Funding Reserve Account

  	
   

  	
  194

  
	
  10.20.                Suspense Account

  	
   

  	
  195

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI                            Application of Monies

  	
   

  	
  195

  
	
  11.1.                      Disbursements of Funds from Payment Account;
  Priority of Payments

  	
   

  	
  195

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII                      Purchase and Sale of Collateral Interests

  	
   

  	
  212

  
	
  12.1.                      Sale of Collateral Interests

  	
   

  	
  212

  
	
  12.2.                      Portfolio Characteristics

  	
   

  	
  216

  
	
  12.3.                      Conditions Applicable to all Transactions
  Involving Sale or Grant

  	
   

  	
  222

  

 

iii

 

TABLE OF
CONTENTS

(continued)

 

	
  Section

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII                  Secured Parties’ Relations

  	
   

  	
  223

  
	
  13.1.                      Subordination

  	
   

  	
  223

  
	
  13.2.                      Standard of Conduct

  	
   

  	
  232

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV                  Miscellaneous

  	
   

  	
  233

  
	
  14.1.                      Form of Documents Delivered to Trustee

  	
   

  	
  233

  
	
  14.2.                      Acts of Rated Noteholders

  	
   

  	
  234

  
	
  14.3.                      Notices, Etc., to Trustee, the Co-Issuers and the
  Rating Agencies

  	
   

  	
  234

  
	
  14.4.                      Notices and Reports to Rated Noteholders; Waiver

  	
   

  	
  236

  
	
  14.5.                      Effect of Headings and Table of Contents

  	
   

  	
  237

  
	
  14.6.                      Successors and Assigns

  	
   

  	
  237

  
	
  14.7.                      Severability

  	
   

  	
  237

  
	
  14.8.                      Benefits of Indenture

  	
   

  	
  237

  
	
  14.9.                      Governing Law

  	
   

  	
  238

  
	
  14.10.                Submission to Jurisdiction

  	
   

  	
  238

  
	
  14.11.                Counterparts

  	
   

  	
  238

  
	
  14.12.                Waiver of Jury Trial

  	
   

  	
  238

  
	
  14.13.                Judgment Currency

  	
   

  	
  238

  
	
  14.14.                Confidential Treatment of Documents

  	
   

  	
  239

  
	
   

  	
   

  	
   

  
	
  ARTICLE XV                      Assignment of Agreements, Etc.

  	
   

  	
  239

  
	
  15.1.                      Assignment

  	
   

  	
  239

  
	
  15.2.                      No Impairment

  	
   

  	
  240

  
	
  15.3.                      Termination, Etc.

  	
   

  	
  240

  
	
  15.4.                      Issuer Agreements, Etc.

  	
   

  	
  240

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVI                  Hedge Agreements

  	
   

  	
  240

  
	
  16.1.                      Hedge Agreements

  	
   

  	
  240

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVII      Class A-R
  Notes

  	
   

  	
  243

  
	
  17.1.                      Draws on the Class A-R Notes and
  Class A-R Commitment

  	
   

  	
  243

  
	
  17.2.                      Class A-R Interest and Class A-R
  Commitment Fee

  	
   

  	
  244

  
	
  17.3.                      Prepayments of Class A-R Notes

  	
   

  	
  245

  
	
  17.4.                      Class A-R Rating Criteria

  	
   

  	
  246

  
	
  17.5.                      Class A-R Holder Collateral Account

  	
   

  	
  246

  

 

iv

 

	
  Schedules

  	
   

  	
   

  
	
  Schedule A

  	
   

  	
  Schedule of Collateral Interests as of the
  Closing Date

  
	
  Schedule B

  	
   

  	
  LIBOR Formula

  	 

	
  Schedule C

  	
   

  	
  Moody’s Recovery Rate Matrix

  
	
  Schedule D

  	
   

  	
  Auction Procedures

  
	
  Schedule E-1

  	
   

  	
  Form of representations, warranties
  and covenants Mortgage Loan Interests, Subordinate Mortgage Loan Interests
  and Mezzanine Loans

  
	
  Schedule E-2 

  	
   

  	
  Form of representations, warranties
  and covenants for Credit Lease Loans and Tenant Lease Loan Interests

  
	
  Schedule E-3 

  	
   

  	
  Form of representations, warranties
  and covenants for Preferred Equity Securities

  
	
   

  	
   

  	
   

  
	
  Exhibits

  	
   

  	
   

  
	
  Exhibit A-1

  	
   

  	
  Form of Regulation S Global Note

  
	
  Exhibit A-2

  	
   

  	
  Form of Rule 144A Global Note

  
	
  Exhibit B

  	
   

  	
  Form of Certificated Note

  
	
  Exhibit C-1

  	
   

  	
  Form of Rule 144A Transfer Certificate

  
	
  Exhibit C-2

  	
   

  	
  Form of Regulation S Transfer
  Certificate

  
	
  Exhibit C-3

  	
   

  	
  Form of Certificated Note Transfer
  Certificate

  
	
  Exhibit C-4

  	
   

  	
  Form of ERISA Restriction Certificate

  
	
  Exhibit D

  	
   

  	
  Form of Funding Certificate

  
	
  Exhibit E- 1

  	
   

  	
  Form of Opinion of Thacher
  Proffitt & Wood LLP

  
	
  Exhibit E-2

  	
   

  	
  Form of Opinion of Walkers

  
	
  Exhibit F

  	
   

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

  
	
  Exhibit G

  	
   

  	
  Form of Opinion of Thacher
  Proffitt & Wood LLP

  
	
  Exhibit H

  	
   

  	
  Rated Noteholder’s Certificate

  
	
  Exhibit I

  	
   

  	
  Form of Class L Note or
  Class M Note Tax Transfer Certificate

  

 

v

 

THIS INDENTURE dated as of December 7, 2006 among:

 

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

 

N-STAR REL CDO VIII
LLC, a limited
liability company organized and existing under the law of the State of
Delaware;

 

NS ADVISORS, LLC a limited liability company organized and existing
under the law of the State of Delaware; and

 

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

 

PRELIMINARY
STATEMENT

 

The Co-Issuers (in the case of the Indenture
Issued Notes other than the Class L Notes and the Class M Notes) and
the Issuer (in the case of the Class L Notes and the Class M Notes)
are duly authorized to execute and deliver this Indenture to provide for the
issuance of the Indenture Issued Notes as provided in this Indenture. All
covenants and agreements made by the Co-Issuers herein are for the benefit and
security of the Secured Parties. The Co-Issuers are entering into this
Indenture, and the Trustee is accepting the trusts created hereby, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.

 

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

 

GRANTING CLAUSES

 

The Issuer hereby Grants to the Trustee, for
the benefit and security of the Secured Parties, all of its right, title and
interest in, to and under, in each case, whether now owned or existing, or
hereafter acquired or arising, the following property (other than the Excepted
Property): (a) the Collateral Interests listed on Schedule A, the
Collateral Interests acquired after the Closing Date and any Equity Interests
which, in each case, are delivered to the Trustee (directly or through a
Securities Intermediary) after the Closing Date pursuant to the terms hereof
and all payments thereon or with respect thereto, (b) the Collection
Account (including each Sub-Account established therein), the Interest Reserve
Account, the Payment Account, the Expense Reserve Account, the Collateral
Account, the Uninvested Proceeds Account, the Future Funding Asset Account, the
Class A-R Holder Collateral Account, all amounts credited to such
accounts, and Eligible Investments purchased with funds credited to such
accounts and all income from the investment of funds therein, (c) the
rights of the Issuer under each of the Transaction Documents to which the
Issuer is a party and all payments to the Issuer thereunder or with respect
thereto, (d) all Cash or other property delivered to the Trustee (directly
or through a Securities Intermediary) and (e) all proceeds, whether
voluntary or involuntary, of and to any of the property of the Issuer described
in the preceding clauses (collectively, the Collateral); provided, that such
security interest shall not extend to (i) any property, cash or other
amounts specifically released from the lien of this Indenture or otherwise to
be paid to the Issuer in accordance with the terms hereof or (ii) any
Retained Rights. Such Grants are made to the Trustee to hold in

 

 

trust, to secure the Indenture Issued Notes
equally and ratably without prejudice, priority or distinction between any such
Indenture Issued Note and any other such Indenture Issued Note by reason of
difference in time of issuance or otherwise, except as expressly provided in
this Indenture, and to secure (i) the payment of all amounts due on the
Indenture Issued Notes and under any Hedge Agreement and the Collateral Management
Agreement in accordance with their respective terms, (ii) the payment of
all other sums payable under this Indenture and (iii) compliance with the
provisions of this Indenture, any Hedge Agreement, the Class A-R Note
Purchase Agreement and the Collateral Management Agreement, all as provided in
this Indenture (collectively, the Secured Obligations). For the avoidance of
doubt, amounts on deposit in the Future Funding Reserve Account and the
Suspense Account will not be included in the Collateral.

 

Except to the extent otherwise provided in
this Indenture, the Issuer does hereby constitute and irrevocably appoint the
Trustee as the true and lawful attorney of the Issuer, with full power (in the
name of the Issuer or otherwise), to exercise all rights of the Issuer with
respect to the Collateral held for the benefit and security of the Secured
Parties and to ask, require, demand, receive, settle, compromise, compound and
give acquittance for any and all moneys and claims for moneys due and to become
due under or arising out of any of the Collateral held for the benefit and
security of the Secured Parties, to endorse any checks or other instruments or
orders in connection therewith and to file any claims or take any action or
institute any proceedings which the Trustee may deem to be necessary or
advisable in the premises. The power of attorney granted pursuant to this
Indenture and all authority hereby conferred are granted and conferred solely
to protect the Trustee’s interest in the Collateral held for the benefit and
security of the Secured Parties and shall not impose any duty upon the Trustee
to exercise any power. This power of attorney shall be irrevocable as one
coupled with an interest prior to the payment in full of all the obligations
secured hereby.

 

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

 

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

 

2

 

any action to collect or enforce the payment
of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.

 

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

 

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

 

Each of the Secured Parties hereby agrees and
acknowledges that it shall not have any claim on the funds and property from
time to time deposited in or credited to the Income Note Distribution Account
and the proceeds thereof (unless funds are deposited or credited to such
Account in error or in violation of this Indenture).

 

3

 

ARTICLE I

 

DEFINITIONS
AND INTERPRETATION

 

1.1.                          DEFINITIONS

 

Except as otherwise specified herein or as
the context may otherwise require, the following terms have the respective
meanings set forth below for all purposes of this Indenture. Whenever any
reference is made to an amount the determination of which is governed by Section 1.2,
the provisions of Section 1.2 shall be applicable to such determination or
calculation, whether or not reference is specifically made to Section 1.2,
unless some other method of calculation or determination is expressly specified
in the particular provision. In the case of Preferred Equity Securities,
whenever any reference is made to payments of interest with respect to a
Collateral Interest, payments of dividends or other distributions not
attributable to the return of capital by the related Underlying Instruments,
shall be applicable to such determination or calculation. In the case of
Preferred Equity Securities, whenever any reference is made to payments of
principal with respect to a Collateral Interest, distributions attributable to
the return of capital by their Underlying Instruments shall be applicable to
such determination or calculation. In addition, terms defined in Article 9
of the UCC and used but not capitalized herein have the meanings assigned
thereto in Article 9 of the UCC.

 

Account means any of the Collection Account (including
each Collateral Sub-Account established therein), the Collateral Account, the
Uninvested Proceeds Account, the Payment Account, the Interest Reserve Account,
the Future Funding Asset Account, the Class A-R Holder Collateral Account
and the Expense Reserve Account (including each Collateral Sub-Account
established therein).

 

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

 

Accountant’s
Report means a
report of a firm of Independent certified public accountants of recognized
national reputation appointed by the Issuer (or the Collateral Manager on its
behalf) on the Closing Date pursuant to Section 10.13(a), which may be the
firm of Independent accountants that reviews or performs procedures with
respect to the financial reports prepared by the Issuer.

 

Act has the meanings specified in Section 14.2.

 

Administrative
Expenses means
amounts (including any applicable indemnities) due from or accrued for the
account of the Co-Issuers with respect to any Payment Date to (i) the
Trustee and the Underlying Trustee pursuant to this Indenture and the Master
Trust Agreement, respectively; (ii) the PAA Issued Note Paying Agent
pursuant to the Paying Agency Agreement; (iii) the Collateral
Administrator pursuant to the Collateral Administration Agreement; (iv) the
independent accountants, agents and counsel of the Co-Issuers for fees and
expenses (including, without limitation, tax reports); (v) the Rating
Agencies for fees and expenses in connection with any Class of Notes rated
by each such Rating Agency (including, without limitation, expenses

 

4

 

for credit estimates and ongoing surveillance
of the ratings of the Notes); (vi) the Administrator pursuant to the
Corporate Services Agreement; (vii) the Collateral Manager and its counsel
for fees, expenses and indemnities under the Transaction Documents to the
extent set forth therein (including, without limitation, amounts payable under
the Collateral Management Agreement but excluding the Collateral Management
Fee); (viii) any Servicer pursuant to the Servicing Agreements for
expenses and indemnities set forth therein and any servicing fees or other
servicing fees not paid out of collections received pursuant to the terms of
the related Servicing Agreement, (ix) any other Person in respect of any
governmental fee, charge or tax (including all filing, registration, and annual
return fees payable to the Cayman Islands’ government and registered office
fees, (x) to the Advancing Agent for the Advancing Agent Fee pursuant to
the Indenture, (xi) the Class A-R Note Agent pursuant to the Class A-R
Note Purchase Agreement and (xii) any other Person in respect of any other fees
or expenses permitted under this Indenture and the documents delivered pursuant
to or in connection with this Indenture, the Paying Agency Agreement, the
Collateral Management Agreement and the Notes; provided that Administrative
Expenses may not include (i) any amounts due or accrued with respect to
the actions taken on or prior to the Closing Date and any Class A-R
Commitment Fees, Class A-R Increased Costs or Class A-R Breakage
Costs, (ii) any amounts due as reimbursement for Interest Advances,
servicing advances or Cure Advances, or (iii) any indemnities, servicing
fees or other fees or expenses actually paid in accordance with any Servicing
Agreement.

 

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

 

Advancing
Agent means NS
Advisors, LLC and any successor or successors thereto.

 

Advancing
Agent Fee means,
a per annum fee payable to the Advancing Agent on each Payment Date in
accordance with the Priority of Payments equal to 0.00125% of the outstanding
principal amount of the Class A Notes (assuming for the purposes of this
calculation that the Class A-R Notes are fully drawn), the Class B
Notes, the Class C Notes and the Class D immediately prior to such
Payment Date.

 

Affected
Party has the
meaning given to such term in the standard form 1992 ISDA Master Agreement
(Multicurrency-Cross Border).

 

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

 

Agency
MBS Security
means obligations of (A) the Federal National Mortgage Association, (B) the
Federal Home Loan Mortgage Corporation or (C) the Government National
Mortgage Association, in each case with a stated maturity that does not exceed
the Stated Maturity Date.

 

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

 

5

 

Aggregate
Class A-R Undrawn Amount means at any time, the excess, if any, of the aggregate
amount of the Class A-R Commitments over the Aggregate Outstanding Amount
of the Class A-R Notes.

 

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

 

Aggregate
Non-Transitional Asset Base means an amount, calculated as of the most recent Quarterly Measurement
Date, equal to the aggregate, with respect to each Other Loan that is a
Non-Transitional Asset, of 50% of the lesser of

 

(a)                                  the greater of

 

(1)                                  the product of

 

(A)                              the quotient of

 

(i)             the aggregate outstanding amounts and remaining
unfunded commitments of such Other Loans, its Related Future Advance Loan and
any other components of the related financing divided by

 

(ii)          the Moody’s Stressed LTV Percentage with respect to
such credit facility and

 

(B)                                the Moody’s Stressed LTV Percentage of such
financing minus 75% and

 

(2)                                  zero and

 

(b)                                 the aggregate remaining unfunded commitments of
such Other Loans and Related Future
Advance Loan.

 

For purposes of this definition, the Moody’s
Stressed LTV Percentage of any credit facility related to a Related Future
Advance Loan that is a Non-Transitional Asset shall be the percentage assigned
thereto by Moody’s upon request by the Collateral Manager on behalf of the
Issuer. Until Moody’s responds to such request, the Moody’s Stressed LTV
Percentage for any

 

6

 

Other Loan that is a Non-Transitional Asset
shall be deemed to equal 75% until Moody’s provides the Collateral Manager
notice of an alternative.

 

Aggregate
Outstanding Amount means, when used with respect to any of the Rated Notes (other than the Class A-R
Notes) at any time, the aggregate principal amount of such Rated Notes
Outstanding at such time and, with respect to the Class A-R Notes, the
Average Drawn Class A-R Note Portion of the Class A-R Notes with
respect to the related Interest Period; provided, that with respect to any
action, consent, vote or waiver by any Class or Classes of Noteholders,
the Aggregate Outstanding Amount of the Class A-R Notes shall include any
unfunded Class A-R Commitments (except as provided in the foregoing
sentence and as otherwise provided herein, the Aggregate Outstanding Amount of
the Notes at any time shall not include any unfunded Class A-R
Commitments). Except as otherwise provided herein, (i) the Aggregate
Outstanding Amount of any Class E Notes at any time shall include the Class E
Cumulative Applicable Periodic Interest Shortfall Amount with respect to such Class E
Notes at such time, (ii) the Aggregate Outstanding Amount of any Class F
Notes at any time shall include the Class F Cumulative Applicable Periodic
Interest Shortfall Amount with respect to such Class F Notes at such time,
(iii) the Aggregate Outstanding Amount of any Class G Notes at any
time shall include the Class G Cumulative Applicable Periodic Interest
Shortfall Amount with respect to such Class G Notes at such time, (iv) the
Aggregate Outstanding Amount of any Class H Notes at any time shall
include the Class H Cumulative Applicable Periodic Interest Shortfall
Amount with respect to such Class H Notes at such time, (v) the
Aggregate Outstanding Amount of any Class J Notes at any time shall
include the Class J Cumulative Applicable Periodic Interest Shortfall
Amount with respect to such Class J Notes at such time, (vi) the
Aggregate Outstanding Amount of any Class K Notes at any time shall
include the Class K Cumulative Applicable Periodic Interest Shortfall
Amount with respect to such Class K Notes at such time, (vii) the
Aggregate Outstanding Amount of any Class L Notes at any time shall
include the Class L Cumulative Applicable Periodic Interest Shortfall
Amount with respect to such Class L Notes at such time, (viii) the
Aggregate Outstanding Amount of any Class M Notes at any time shall
include the Class M Cumulative Applicable Periodic Interest Shortfall
Amount with respect to such Class M Notes at such time and (ix) the
Aggregate Outstanding Amount of any Class N Notes at any time shall
include the Class N Cumulative Applicable Periodic Interest Shortfall
Amount with respect to such Class N Notes at such time.

 

Applicable
Periodic Interest Rate means, for any Interest Period, (i) with respect to the Class A-1
Notes, the applicable Class A-1 Note Interest Rate, (ii) with respect
to the Class A-R Notes, the applicable Class A-R Note Interest Rate, (iii) with
respect to the Class A-2 Notes, the applicable Class A-2 Note
Interest Rate, (iv) with respect to the Class B Notes, the applicable
Class B Note Interest Rate, (v) with respect to the Class C
Notes, the applicable Class C Note Interest Rate, (vi) with respect
to the Class D Notes, the applicable Class D Note Interest Rate, (vii) with
respect to the Class E Notes, the applicable Class E Note Interest
Rate, (viii) with respect to the Class F Notes, the applicable Class F
Note Interest Rate, (ix) with respect to the Class G Notes, the
applicable Class G Note Interest Rate, (x) with respect to the Class H
Notes, the applicable Class H Note Interest Rate, (xi) with respect to the
Class J Notes, the applicable Class J Note Interest Rate, (xii) with
respect to the Class K Notes, the applicable Class K Note Interest
Rate, (xiii) with respect to the Class L Notes, the applicable Class L
Note Interest Rate, (xiv) with respect to the Class M Notes, the
applicable Class M Note Interest Rate and (xv) with respect to the Class N
Notes, the applicable Class N Note Interest Rate.

 

7

 

Applicable
Recovery Rate
means, with respect to any Collateral Interest on any Measurement Date, the
lesser of the Moody’s Recovery Rate and the Fitch Recovery Rate applicable to
such Collateral Interest on such date.

 

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

 

Approved
Lender has the
meaning specified in Section 12.2(y).

 

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

 

Asset-Backed
Securities are
debt securities that entitle the holders thereof to receive payments that
depend primarily on the cash flow from (i) a specified pool of financial
assets, either static or revolving, that by their terms convert into cash
within a finite time period, together with rights or other assets designed to
assure the servicing or timely distribution of proceeds to holders of such
securities (including, for the avoidance of doubt, leases) or (ii) real
estate mortgages, either fixed or revolving, together with rights or other
assets designed to assure the servicing or timely distribution of proceeds to
the holders of such securities.

 

Asset
Transfer Agreement means either Asset Transfer Agreement, dated as of December 7,
2006, as the same may be amended or supplemented from time to time, among the
related Seller, the Depositor and NorthStar Realty Finance Corp.

 

Assumed
Reinvestment Rate
means, with respect to any Account or fund securing the Indenture Issued Notes,
the greater of (i) LIBOR minus 1.0% and (ii) zero.

 

Auction has the meaning specified in Section 9.2.

 

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

 

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

 

Auction
Procedures has
the meaning specified in Section 9.2.

 

Auction
Purchase Agreement has the meaning specified in Schedule D.

 

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

 

Authorized
Officer means (i) with
respect to the Issuer, any Officer of the Issuer who is authorized to act for
the Issuer in matters relating to, and binding upon, the Issuer or any duly appointed
attorney-in-fact of the Issuer, (ii) with respect to the Co-Issuer, any
Officer who is

 

8

 

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

 

Available
Aggregate Class A-R Undrawn Amount means, as of any date, the (i) the Aggregate Class A-R
Undrawn Amount, less (ii) the Total Unfunded Future Advance Amount, plus (iii) the
amount on deposit in the Future Funding Asset Account.

 

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

 

Average
Drawn Class A-R Note Portion means, with respect to any Payment Date or Class A-R
Prepayment Date, the average daily Aggregate Outstanding Amount of the Class A-R
Notes during the related Interest Period.

 

Average
Life means, on
any Calculation Date with respect to any Collateral Interest, the quotient
obtained by the Collateral Manager by dividing (i) the sum of the products
of (a) the number of years (rounded to the nearest one tenth thereof) from
such Calculation Date to the respective dates of each successive distribution
of principal of such Collateral Interest (assuming that (1) no Collateral
Interests default or are sold and (2) any optional redemption of the
Collateral Interests occurs in accordance with their respective terms) and (b) the
respective amounts of principal of such scheduled distributions by (ii) the
sum of all successive scheduled distributions of principal on such Collateral
Interest.

 

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

 

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

 

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

 

9

 

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

 

Benefit
Plan Investor
means (i) an “employee benefit plan” (as defined in Section 3(3) of
ERISA), subject to Title I of ERISA, (ii) a “plan” (as defined in Section 4975(e)(1) of
the Code), subject to Section 4975 of the Code, including, without
limitation, individual retirement accounts and Keogh plans or (iii) an
entity whose underlying assets include plan assets by reason of such an
employee benefit plan’s or plan’s investment in such entity, including, without
limitation, as applicable, an insurance company general account.

 

Bill
of Sale means
that certain Bill of Sale, dated as of December 7, 2006, as the same may
be amended or supplemented from time to time, between the Depositor and the
Issuer.

 

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

 

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

 

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

 

Buy/Sell
Interest means a
Collateral Interest for which one of the participants has exercised its right
to purchase its corresponding participant’s interest, or sell its interest to
such corresponding participant for the same price, in accordance with the
related Underlying Instrument

 

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

 

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

 

10

 

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

 

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

 

Certificated
Class A -K Note has the meaning specified in Section 2.1(c).

 

Certificated
Class L Note
has the meaning specified in Section 2.1(d).

 

Certificated
Class L Note Transfer Certificate has the meaning specified in Section 2.4(c)(1).

 

Certificated
Class M Note
has the meaning specified in Section 2.1(d).

 

Certificated
Class M Note Transfer Certificate has the meaning specified in Section 2.4(c)(1).

 

Certificated
Note means any
Rated Note or Income Note issued in the form of physical certificates in
certificated, fully registered form.

 

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

 

Class means any class of the Notes, consisting of the Class A-1
Notes, Class A-R Notes, Class A-2 Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes, Class J Notes, Class K Notes, Class L
Notes, Class M Notes, Class N Notes and Income Notes.

 

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

 

Class A
Principal Coverage Ratio means a percentage based on the ratio of (x) to (y), where (x) is
the Principal Coverage Amount as of such Measurement Date and (y) is the
sum of the aggregate principal amount of the then Outstanding Class A
Notes (assuming for purposes of this calculation that the Class A-R
Commitments are fully drawn) as of such Measurement Date.

 

Class A
Senior Notes
means the Class A-1 Notes and the Class A-R Notes.

 

Class A
Senior Pro Rata Allocation means, with respect to any Payment Date, the allocation based on the
Aggregate Outstanding Amount of the Class A-1 Notes and the aggregate
principal amount of the Class A-R Commitments as of the related
Measurement Date, and in the case of a Redemption of the Notes in full or the
acceleration of the Notes following an Event of Default, the allocation based
on the Aggregate Outstanding Amount of the Class A-1 Notes and the
Aggregate Outstanding Amount of the Class A-R Notes as of the related
Calculation Date.

 

Class A/B/C/D
Coverage Tests
means the Interest Coverage Test and the Principal Coverage Test applied with
respect to the Class A Notes, Class B Notes, Class C Notes and Class D
Notes taken together.

 

Class A-1
Note Interest Rate means LIBOR plus 0.290%.

 

11

 

Class A-1
Notes means the
U.S.$100,000,000 aggregate principal amount of Class A-1 Floating Rate
Notes due 2041.

 

Class A-2
Note Interest Rate means LIBOR plus 0.360%.

 

Class A-2
Notes means the U.S.$103,050,000
aggregate principal amount of Class A-2 Floating Rate Notes due 2041.

 

Class A-R
Breakage Costs
means, with respect to any Due Period, the amount of “breakage costs” as set
forth in a certificate of a Class A-R Noteholder delivered to the Issuer
and the Trustee on or prior to the related Calculation Date, if any, incurred
by Class A-R Noteholders as a result of (a) a prepayment of amounts
under the Class A-R Notes on a day other than a Payment Date and
calculated as provided in the Class A-R Note Purchase Agreement or (b) a
failure by the Issuer to effect a Class A-R Draw on the scheduled date
therefor after having submitted a request for a Class A-R Draw to the Class A-R
Note Agent in accordance with the provisions of the Class A-R Note Purchase
Agreement.

 

Class A-R
Commitment
means, the maximum aggregate outstanding principal amount of advances (whether
at the time funded or unfunded) that the Holder of such Class A-R Note (or
the related Liquidity Provider) is obligated to make to the Issuer from time to
time under the Class A-R Note Purchase Agreement.

 

Class A-R
Commitment Fee
means, in respect of the Class A-R Noteholders and an Interest Period, the
fee payable to such Class A-R Noteholder in arrears, on each Payment Date,
being the amount accrued in respect of that Interest Period at a rate per annum
equal to 0.220% (calculated on the average daily Aggregate Class A-R
Undrawn Amount during such Interest Period on the basis of a 360-day year and
the actual number of days elapsed).

 

Class A-R
Defaulted Interest Amount means, with respect to the Class A-R Notes as of each Payment Date,
the accrued and unpaid amount due to Holders of the Class A-R Notes on
account of any shortfalls in the payment of the related Periodic Interest with
respect to any preceding Payment Date or Payment Dates, together with interest
accrued thereon (to the extent lawful).

 

Class A-R
Draw means an
advance by a Holder of a Class A-R Note made in accordance with Section 17.1(a) hereof.

 

Class A-R
Draw Date has
the meaning specified in Section 17.1(a) hereof.

 

Class A-R
Eligible Investments has the meaning specified in Section 17.5(f) hereof.

 

Class A-R
Holder Collateral Account means the Securities Account designated the “Class A-R Holder
Collateral Account” and established in the name of the Trustee pursuant to Section 17.5.

 

Class A-R
Increased Costs
means, with respect to any Payment Date, the amount as set forth in a
certificate of a Class A-R Noteholder delivered to the Issuer and the
Trustee on or prior to the Calculation Date of the related Payment Date,
necessary to compensate such Noteholder or any Funding Entity for (a) any
increase in cost to a Funding Entity of making or maintaining any loan or asset
purchase under the Class A-R Note Purchase Agreement or such Liquidity
Facility

 

12

 

(or maintaining its obligation to make any
such loan or asset purchase) resulting from a change in law applicable to such
Funding Entity, (b) any reduction in any amount received or receivable by
a Funding Entity under the Class A-R Note Purchase Agreement or such
Liquidity Facility resulting from a change in law applicable to such Funding
Entity or (c) any reduction in the rate of return on the capital of a
Funding Entity or its parent/holding company resulting from a change in law
applicable to such Funding Entity or parent/holding company to a level below
that which such Funding Entity or parent/holding company could have achieved
but for such change in law. The Class A-R Note Agent, the Issuer, the
Trustee and the Collateral Manager shall in each instance be entitled to rely
conclusively (in the absence of manifest error) on any such certificate and all
calculations and data therein (and the Class A-R Note Agent, the Issuer,
the Trustee and the Collateral Manager shall have no duty or obligation to
investigate, verify or recalculate any information or conclusion set forth
therein).

 

Class A-R
Interest Allocation Percentage means, for each Interest Period and with respect
to each Holder of Class A-R Notes, a fraction, expressed as a percentage, (i) the
numerator of which is the Average Drawn Class A-R Note Portion of such
Holder and (ii) the denominator of which is the Average Drawn Class A-R
Note Portion of all of the Class A-R Noteholders.

 

Class A-R
Note Agent means
Wells Fargo Bank, National Association, and any successors or assigns.

 

Class A-R
Note Agent Fee
means $10,000 per annum.

 

Class A-R
Note Draw Date
has the meaning specified in Section 17.1(a) hereof.

 

Class A-R
Note Interest Rate means LIBOR plus 0.320%.

 

Class A-R
Note Purchase Agreement means the agreement to be dated December 7, 2006, entered into
among the Issuer, the Co-Issuer, the Class A-R Note Agent and the Holders
from time to time of the Class A-R Notes, as amended, supplemented or
otherwise modified from time to time in accordance with its terms.

 

Class A-R
Note Rating Criteria means the criteria set forth below, which if satisfied with respect to
any Holder of Class A-R Notes (or prospective transferee) at the time such
Class A-R Notes are purchased (or transferred), will make such Holder (or
prospective transferee) eligible to purchase (or receive) such Class A-R
Notes, will be satisfied on any date with respect to any Holder of Class A-R
Notes (or prospective transferee) if:

 

(i)                                     either (x) the long-term and short-term debt,
deposit or similar obligations of such
Class A-R Noteholder (or prospective transferee) are rated “A1” and “P-1”,
respectively, by Moody’s (other than the Initial Class A-R Noteholder, who
is not required to maintain a long-term Moody’s Rating) or (y) if such
long-term and short-term debt, deposit or similar obligations of such Class A-R
Noteholder (or prospective transferee) are not rated by Moody’s, the long-term
debt, deposit or similar obligations of such Class A-R Noteholder (or
prospective transferee) are rated “Aa3” by Moody’s;

 

13

 

(ii)                                  the obligations of such Class A-R Noteholder
(or prospective transferee) under the Class A-R Note Purchase Agreement
are guaranteed by an entity meeting the Class A-R Rating Criteria set
forth in (i) above; or

 

(iii)                               such Class A-R Noteholder (or prospective
transferee) is then entitled under a Liquidity Facility to borrow from, or sell
an interest in assets or assign its obligations (as described in the Class A-R
Note Purchase Agreement), to a Liquidity Provider so long as:

 

(1)                                  either (x) long-term and the short-term debt,
deposit or similar obligations of each such Liquidity Provider are on such date
rated “A1” and “P1”, respectively, by Moody’s, at least “F1” by Fitch or (y) if
such long-term and short-term debt, deposit or similar obligations of each such
Liquidity Provider are not rated by Moody’s or Fitch, the long-term debt,
deposit or similar obligations of each such Liquidity Provider are rated “Aa3”
by Moody’s, at least “A+” by Fitch, as applicable; and

 

(2)                                  the aggregate amount of commitments to make loans
or purchase interests in assets under such Liquidity Facility are held by
Liquidity Providers whose either (x) long-term and short-term debt,
deposit or similar obligations are on such date rated “A1” and “P-1”,
respectively by Moody’s and at least “F1” by Fitch or (y) if such
short-term debt, deposit or similar obligations are not rated by Moody’s or
Fitch, the long-term debt, deposit or similar obligations are on such date
rated “Aa3” by Moody’s or at least “A+” by Fitch, as applicable, and such
amounts are not less than the Class A R Commitment in respect of the Class A-R
Notes held by such Class A-R Noteholder (or prospective transferee).

 

Class A-R
Notes means the
up to U.S.$260,000,000 aggregate principal amount of Class A-R Revolving
Floating Rate Notes due 2041.

 

Class A-R
Prepayment means
any payment of principal of the Class A-R Notes prior to the Stated
Maturity Date of the Class A-R Notes.

 

Class A-R
Prepayment Date
means the date of any Class A-R Prepayment.

 

Class A-R
Proportion is
equal to the percentage based on the ratio of (x) the initial aggregate
principal amount of the Class A-R Notes (assuming for purposes of this
calculation that the Class A-R Commitments are fully drawn) to (y) the
initial aggregate principal amount of the Class A-1 Notes.

 

Class B
Note Interest Rate means LIBOR plus 0.420%.

 

Class B
Notes means the
U.S.$60,300,000 aggregate principal amount of Class B Floating Rate Notes
Due 2041.

 

Class C
Note Interest Rate means LIBOR plus 0.470%.

 

14

 

Class C
Notes means the
U.S.$24,300,000 aggregate principal amount of Class C Floating Rate Notes
Due 2041.

 

Class D
Note Interest Rate means LIBOR plus 0.550%.

 

Class D
Notes means the
U.S.$17,100,000 aggregate principal amount of Class D Floating Rate Notes
Due 2041.

 

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

 

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

 

Class E
Note Interest Rate means LIBOR plus 0.750%.

 

Class E
Notes means the
U.S.$22,050,000 aggregate principal amount of Class E Floating Rate
Deferrable Interest Notes Due 2041.

 

Class E/F/G
Coverage Tests
means the Interest Coverage Test and the Principal Coverage Test applied to the
Class E Notes, Class F Notes and Class G Notes, taken together.

 

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

 

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

 

Class F
Note Interest Rate means LIBOR plus 0.850%.

 

Class F
Notes means the
U.S.$25,200,000 aggregate principal amount of Class F Floating Rate
Deferrable Interest Notes Due 2041.

 

Class G
Applicable Periodic Interest Shortfall Amount means, with respect to any Interest Period, the
amount of unpaid interest for such Interest Period that will be added to the
principal amount of the Class G Notes and paid thereafter in accordance
with the Priority of Payments in

 

15

 

the event that any Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes or Class F
Notes are Outstanding and funds are not available in accordance with the
Priority of Payments on any Payment Date to pay the full amount of Periodic
Interest on the Class G Notes.

 

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

 

Class G
Note Interest Rate means LIBOR plus 0.950%.

 

Class G
Notes means the
U.S.$26,100,000 aggregate principal amount of Class G Floating Rate
Deferrable Interest Notes Due 2041.

 

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

 

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

 

Class H
Note Interest Rate means LIBOR plus 1.330%.

 

Class H
Notes means the
U.S.$20,700,000 aggregate principal amount of Class H Floating Rate
Deferrable Interest Notes due 2041.

 

Class H/J/K
Coverage Tests
means the Interest Coverage Test and the Principal Coverage Test applied to the
Class H Notes, Class J Notes and Class K Notes, taken together.

 

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

 

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

 

16

 

Class J
Note Interest Rate means LIBOR plus 1.650%.

 

Class J
Notes means the
U.S.$26,100,000 aggregate principal amount of Class J Floating Rate
Deferrable Interest Notes due 2041.

 

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

 

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

 

Class K
Note Interest Rate means LIBOR plus 1.950%.

 

Class K
Notes means the
U.S.$18,900,000 aggregate principal amount of Class K Floating Rate
Deferrable Interest Notes due 2041.

 

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

 

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

 

Class L
Note Interest Rate means LIBOR plus 3.250%.

 

Class L
Note Tax Transfer Certificate has the meaning specified in Section 2.4(c)(3).

 

Class L
Notes means the
U.S.$22,050,000 aggregate principal amount of Class L Floating Rate
Subordinated Deferrable Interest Notes due 2041.

 

Class M
Applicable Periodic Interest Shortfall Amount means, with respect to any Interest Period, the
amount of unpaid interest for such Interest Period that will be added to the
principal amount of the Class M Notes and paid thereafter in accordance
with the Priority of Payments in the event that any Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes, Class K
Notes or Class L Notes are

 

17

 

Outstanding and funds are not available in
accordance with the Priority of Payments on any Payment Date to pay the full
amount of Periodic Interest on the Class M Notes.

 

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

 

Class M
Note Interest Rate means LIBOR plus 3.750%.

 

Class M
Note Tax Transfer Certificate has the meaning specified in Section 2.4(c)(3).

 

Class M
Notes means the
U.S.$14,850,000 aggregate principal amount of Class M Floating Rate
Subordinated Deferrable Interest Notes due 2041.

 

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

 

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

 

Class N
Note Interest Rate means LIBOR plus 4.250%.

 

Class N
Notes means the
U.S.$22,500,000 aggregate principal amount of Class N Floating Rate
Subordinated Deferrable Interest Notes due 2041.

 

Clean-up
Call has the
meaning specified in Section 9.1(b) hereof.

 

Clearing
Agency means
DTC, Euroclear or Clearstream.

 

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

 

Clearstream means Clearstream Banking, société anonyme.

 

Closing
Date means December 7,
2006.

 

CMBS means commercial mortgage-backed securities issued
pursuant to a transaction in which one or more classes of such securities have
been (and are) rated “AAA” or its equivalent by one or more of S&P, Moody’s
or Fitch (unless Rating Confirmation is received), which securities are backed
by obligations (including certificates of participations in obligations) that
are

 

18

 

principally secured by mortgages on real
property or interests therein having a multifamily or commercial use.

 

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

 

Co-Issuer means N-Star REL CDO VIII LLC, a limited liability
company organized under the law of the State of Delaware, unless a successor
Person shall have become the Co-Issuer pursuant to the applicable provisions of
this Indenture, and thereafter Co-Issuer shall mean such successor Person.

 

Co-Issuers means the Issuer and Co-Issuer.

 

Collateral has the meaning specified in the Granting Clauses.

 

Collateral
Administration Agreement means the Collateral Administration Agreement, dated as of December 7,
2006, by and among the Issuer, the Collateral Manager and the Collateral
Administrator, as the same may be amended and modified from time to time in
accordance with its terms.

 

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

 

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

 

Collateral
Interest Collections means, with respect to any Due Period and the related Payment Date,
without duplication, the sum of (i) all cash payments of interest or
dividends and other distributions (but excluding distributions on Preferred
Equity Securities attributable to the return of capital by governing documents)
with respect to any Collateral Interests and Eligible Investments included in
the Collateral ((A) including any Sale Proceeds of a Collateral Interest
representing unpaid interest (or dividends or other distributions) accrued
thereon to the date of the sale thereof to the extent not treated as Collateral
Principal Collections at the option of the Collateral Manager, but (B) excluding
all funds received on an Impaired Interest (including any unpaid interest) and
any unpaid interest accrued on a Deferred Interest PIK Bond or a Written Down
Interest to the date of sale) which are received during the related Due Period
(excluding any Purchased Accrued Interest) and (C) excluding any servicing
fees and other fees, expenses or indemnities paid to any Servicer pursuant to
any Servicing Agreement and any other amounts paid out of collections of
interest pursuant to any Servicing Agreement to reimburse the related Servicer
for servicing advances made by it thereunder) which are received during the
related Due Period, (ii) all payments on Eligible Investments purchased
with Collateral Interest Collections, (iii) payments received or scheduled
to be received from a Hedge Counterparty under any Hedge Agreement on the
related Payment Date, excluding any payments received from a Hedge Counterparty
upon reduction of the notional amount and any termination payments (provided that so long as the Notes are
Outstanding, any termination payments received from a Hedge Counterparty will
be used to enter into a substitute Hedge Agreement to the extent required to

 

19

 

maintain the then-current rating of the Notes
by each Rating Agency), (iv) all amendment and waiver fees, all late
payment fees and all other fees and commissions received during the related Due
Period (other than fees and commissions received in connection with the sale,
restructuring, workout or default of Collateral Interests or in connection with
Impaired Interests or Written Down Interests) (provided, further,
that Collateral Interest Collections shall not include any other proceeds
related to any Retained Rights), (v) the Principal Balance of any Eligible
Investments purchased with Collateral Interest Collections, (vi) all
interest (or dividends or other distributions) accrued on the Closing Date on
Collateral Interests included in the Collateral, (vii) any amounts on
deposit in the Interest Reserve Account, (viii) at the option of the
Collateral Manager, any amount on deposit in the Expense Reserve Account in
excess of U.S.$50,000, (ix) commitment fees on unfunded amounts and other
similar fees (in each case, net of applicable withholding taxes) actually
received by the Issuer during the related Due Period in respect of any Future
Funding Assets, (x) any Uninvested Proceeds remaining on deposit in the
Uninvested Proceeds Account on the Effective Date, provided that a Rating Confirmation Failure has not occurred
and (xi) all proceeds from the foregoing; provided, however, that Collateral
Interest Collections shall not include the funds and other property (including,
without limitation, the paid-up share capital of the Issuer) with respect to the
Income Notes and the bank account in which such funds and the proceeds thereof
are held); provided, further, that Collateral Interest
Collections shall not include principal of any Collateral Interest representing
capitalized interest after the date of purchase thereof by the Issuer.

 

Collateral
Interest Principal Balance means, prior to the Effective Date, U.S.$900,000,000 and thereafter, the
aggregate Principal Balance of the sum of (i) Collateral Interests
included in the Collateral (including any Collateral Interests that have become
Impaired Interests or Written Down Interests), (ii) Eligible Investments,
in each case, purchased with the proceeds of the issuance of the Notes or
thereafter with Collateral Principal Collections, (iii) Eligible Investments
held in the Future Funding Asset Account (without duplication) and (iv) the
Aggregate Class A-R Undrawn Amount (without duplication).

 

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

 

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

 

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

 

Collateral
Principal Collections means, (i) with respect to any Due Period and the related Payment
Date, all amounts received by the Issuer during such Due Period that do not
constitute Collateral Interest Collections (including all distributions on
Preferred Equity Securities attributable to the return of capital by their
governing documents) (provided,
that Collateral Principal Collections shall not include any other proceeds
related to any Retained Rights) minus (ii) any amounts paid out of
collections of principal pursuant to any Servicing Agreement to

 

20

 

reimburse the related Servicer for servicing
advances made by it and other amounts due to any Servicer and not paid out of
Collateral Interest Collections; provided,
however, that Collateral Principal
Collections shall include principal of any Collateral Interest representing
capitalized interest after the date of purchase thereof by the Issuer and any
Uninvested Proceeds which have not been invested or treated as Collateral
Interest Collections on or prior to the Effective Date.

 

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

 

Collateral
Principal Payments means, with respect to any Due Period and the related Payment Date,
Collateral Principal Collections other than Sale Proceeds and any amounts
received in respect of Eligible Investments.

 

Collateral
Quality Tests
will be satisfied after the Effective Date if, as of any Measurement Date, the
Collateral Interests comply, in the aggregate, with all of the requirements set
forth below (collectively, the Collateral Quality Tests):

 

(1)                                  the aggregate Principal Balance of all Collateral
Interests that are CMBS (other than Rake Bonds) does not exceed the greater of (A) 15%
of the Collateral Interest Principal Balance and (B) $135,000,000; provided that (i) the aggregate
Principal Balance, by single Issue of Collateral Interests that are CMBS that
are rated below “BBB” shall not exceed 2% of the Collateral Interest Principal
Balance and (ii) the aggregate Principal Balance, by single Issue, of
Collateral Interests that are CMBS that are rated “BBB” or above shall not
exceed 3% of the Collateral Interest Principal Balance;

 

(2)                                  the aggregate Principal Balance of all Collateral
Interests that are Real Estate CDO Securities does not exceed the greater of (A) 15%
of the Collateral Interest Principal Balance and (B) $135,000,000; provided that the aggregate Principal
Balance of all Collateral Interests that are Real Estate CDO Securities managed
by the Collateral Manager or any of its Affiliates does not exceed the greater
of (A) 7.5% of the Collateral Interest Principal Balance and (B) $67,500,000.

 

(3)                                  the maximum property concentration limits for
Collateral Interests (on a look-through basis), other than Real Estate CDO
Securities and REIT Debt Securities, are as follows:

 

(i)                                     the aggregate Principal Balance of such Collateral
Interests which relate to Mortgaged Properties which are office properties may
not exceed the greater of (A) 65% of the Collateral Interest Principal
Balance and (B) $585,000,000;

 

(ii)                                  the aggregate Principal Balance of such Collateral
Interests which relate to Mortgaged Properties which are each of retail,
multifamily, industrial and hospitality properties may not exceed the greater
of (A) 45% of the Collateral Interest Principal Balance and (B) $405,000,000;

 

21

 

(iii)                          the aggregate Principal Balance of such Collateral
Interests which relate to Mortgaged Properties which are condominium conversion
properties may not exceed the greater of (A) 20% of the Collateral Interest
Principal Balance and (B) $180,000,000;

 

(iv)                         the aggregate Principal Balance of such Collateral
Interests which relate to Mortgaged Properties which are self-storage
properties may not exceed the greater of (A) 15% of the Collateral Interest
Principal Balance and (B) $135,000,000;

 

(v)                            the aggregate Principal Balance of such Collateral
Interests which relate to Mortgaged Properties which are healthcare properties
may not exceed the greater of (A) 15% of the Collateral Interest Principal
Balance and (B) $135,000,000; and

 

(vi)                         the aggregate Principal Balance of such Collateral
Interests which relate to Mortgaged Properties which in the aggregate are any
property type other than those specified in clauses (i) through (vi) above may
not exceed the greater of (A) 10% of the Collateral Interest Principal Balance
and (B) $90,000,000.

 

(4)                             the aggregate Principal Balance of all Collateral
Interests (on a look-through basis), other than Real Estate CDO Securities and
REIT Debt Securities, backed or otherwise invested in Mortgaged Properties
located in any single U.S. state does not exceed the greater of (A) 25% of the
Collateral Interest Principal Balance and (B) $225,000,000, except that (i) up
to the greater of (A) 60% of the Collateral Interest Principal Balance and (B) $540,000,000
may consist of Collateral Interests backed or otherwise invested in Mortgaged
Properties located in California, (ii) up to the greater of (A) 60% of the
Collateral Interest Principal Balance and (B) $540,000,000 may consist of
Collateral Interests backed or otherwise invested in Mortgaged Properties
located in New York, (iii) up to the greater of (A) 50% of the Collateral
Interest Principal Balance and (B) $450,000,000 may
consist of Collateral Interests backed or otherwise invested in Mortgaged
Properties located in Texas, (iv) up to the greater of (A) 40% of the
Collateral Interest Principal Balance and (B) $360,000,000 may consist of
Collateral Interests backed or otherwise invested in Mortgaged Properties
located in Florida and (v) up to the greater of (A) 35% of the Collateral
Interest Principal Balance and (B) $315,000,000 may consist of Collateral
Interests backed or otherwise invested in Mortgaged Properties located in
Washington D.C.;

 

(5)                             (i) the aggregate Principal Balance of all
Collateral Interests that are Mortgage Loan Interests does not exceed the
greater of (A) 13.5% of the Collateral Interest Principal Balance and (B) 121,500,000
and (ii) the aggregate Principal Balance of all Collateral Interests (other
Mortgage Loan Interests, CMBS or Real Estate Securities) that represent
obligations of any single obligor or group of affiliated obligors does not
exceed the greater of (A) 10% of the Collateral Interest Principal Balance and (B)
$90,000,000;

 

22

 

(6)                             the aggregate Principal Balance of all Collateral
Interests that are REIT Debt Securities does not exceed the greater of (A) 7.5%
of the Collateral Interest Principal Balance and (B) $67,500,000;

 

(7)                             the aggregate Principal Balance of all Fixed Rate
Collateral Interests does not exceed the greater of (A) 5% of the Collateral
Interest Principal Balance and (B) $45,000,000; provided that no more than the greater of (A) 40% of the
Collateral Interests and (B) $360,000,000 shall consist of Fixed Rate
Collateral Interests if (i) the Issuer enters into corresponding Deemed
Floating Asset Hedges or (ii) Rating Confirmation is obtained with respect to
an additional Fixed Rate Collateral Interest acquired without a corresponding
Deemed Floating Asset Hedge;

 

(8)                             the aggregate Principal Balance of all Collateral
Interests that provide for the payment of interest less frequently than
quarterly does not exceed the greater of (A) 20% of the Collateral Interest
Principal Balance and (B) $180,000,000;

 

(9)                             the aggregate Principal Balance of all Collateral
Interests that have a stated maturity later than the Stated Maturity Date does
not exceed the greater of (A) 5% of the Collateral Interest Principal Balance
and (B) $45,000,000; provided that
such 5% limitation may be increased after the Closing Date if the Rating
Confirmation has been obtained with respect thereto;

 

(10)                       the aggregate Principal Balance of all Collateral
Interests that are Undeveloped Real Estate Collateral Interests does not exceed
the greater of (A) 15% of the Collateral Interest Principal Balance and (B) $135,000,000;

 

(11)                       the aggregate Principal Balance of Collateral
Interests which relate to Mortgaged Properties which are construction
properties does not exceed the greater of (A) 25% of the Collateral Interest
Principal Balance and (B) $225,000,000;
provided that the aggregate Principal Balance of all Collateral
Interests described in clauses (10) (11) and (3)(iii) of this definition does
not exceed 45% of the Collateral Interest Principal Balance and (B) $405,000,000;

 

(12)                       the aggregate Principal Balance of Collateral
Interests that are Credit Tenant Leases does not exceed the greater of (A) 10%
of the Collateral Interest Principal Balance and (B) $90,000,000; provided that Credit Tenant Leases rated
below BBB- by Moody’s or Fitch may not exceed the greater of (A) 7.5% or (B) $67,500,000
of the Collateral Interest Principal Balance;

 

(13)                       the aggregate Principal Balance of Collateral
Interests that are CRE Debt Obligations does not exceed the greater of (A) 15%
of the Collateral Interest Principal Balance and (B) $135,000,000;

 

(14)                       the aggregate Principal Balance of Collateral
Interests primarily backed by or otherwise primarily invested in Mortgaged
Properties located in any Qualifying Foreign Jurisdiction does not exceed the
greater of (A) 10% of the Collateral Interest Principal Balance and (B) $90,000,000;
provided that such Mortgaged
Properties may

 

23

 

only comprise office properties, retail
properties, multi-family properties, industrial properties or hospitality
properties;

 

(15)                       the Moody’s Maximum Weighted Average Rating Factor
Test is satisfied;

 

(16)                       (i) the Weighted Average Fixed Rate Coupon as of
such date equals or exceeds 6% and (ii) the Weighted Average Spread Test is
satisfied;

 

(17)                       the Herfindahl Score of the Collateral Interests is
at least 22;

 

(18)                       the Moody’s Weighted Average Initial Maturity Test
is satisfied;

 

(19)                       the Moody’s Weighted Average Extended Maturity Test
is satisfied;

 

(20)                       the Fitch Loan Diversity Index Test is satisfied;

 

(21)                       the Fitch Poolwide Expected Loss Test is satisfied;
and

 

(22)                       the Moody’s Minimum Average Recovery Rate Test is
satisfied.

 

At all times, the dollar amount limitation
set forth in any individual Collateral Quality Test will be disregarded for the
purposes of the Reinvestment Criteria, but each such dollar amount limitation
will be taken into account solely for purposes of any reports to be prepared
pursuant to this Indenture.

 

Collateral
Sub-Account
means any sub-account established within a Collection Account.

 

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

 

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

 

Commission means the United States Securities and Exchange
Commission.

 

Commitment
Termination Time
means the date on which any of the following first occurs: (i) the date on
which the Future Advance Amounts are reduced to zero and the Collateral Manager
has notified the Trustee in writing that it will not cause the Issuer to
acquire any further Future Funding Assets; (ii) the date on which the aggregate
principal amount of the Class A-1 Notes and the Class A-R Notes have been paid
in full; (iii) the Mandatory Class A-R Draw Date; (iv) the occurrence of an
Event of Default specified in clause (d), (g) or (h) of the definition thereof
or (v) the Redemption Date.

 

Controlling
Class means the Class
A Senior Notes voting as a single Class, so long as any Class A Senior Notes
are Outstanding, then the Class A-2 Notes, so long as any Class A-2 Notes are Outstanding,
then the Class B Notes, so long as any Class B Notes are Outstanding, then the

 

24

 

Class C Notes voting as a single Class, so
long as any Class C Notes are Outstanding, then the Class D Notes, so long as
any Class D Notes are Outstanding, then the Class E Notes, so long as any Class
E Notes are Outstanding, then the Class F Notes, so long as any Class F Notes
are Outstanding, then the Class G Notes, so long as any Class G Notes are
Outstanding, then the Class H Notes, so long as any Class H Notes are
Outstanding, then the Class J Notes, so long as any Class J Notes are
Outstanding, and then the Class K Notes, so long as any Class K Notes are
Outstanding, then the Class L Notes, so long as any Class L Notes are
Outstanding, then the Class M Notes, so long as any Class M Notes are
Outstanding, and then the Class N Notes, so long as any Class N Notes are
Outstanding, in each case, based on the aggregate principal amount thereof.

 

Controlling
Party means MBIA
with the right to exercise the rights of the Controlling Party unless (i) MBIA
or each of the Class A Senior Noteholders gives written notice to the Trustee
and MBIA and the Issuer that MBIA is no longer providing credit enhancement
with respect to any of the Class A Senior Notes, whether in the form of a
negative basis swap, a standby letter of credit, a surety bond, an insurance
policy, a credit default swap or any other form of credit insurance or risk
management product or instrument or (ii) a Protection Provider Default has
occurred and is continuing with respect to MBIA. Following delivery of any such
notice by MBIA or each of the Class A Senior Noteholders, the Controlling Party
will be 66 2/3% of the aggregate principal amount of the Outstanding Notes of
the Controlling Class; provided, however, if an alternative percentage of
the Noteholders of the Controlling Class is specified in connection with any
action in this Indenture or any other Transaction Document, then such
alternative percentage shall govern.

 

Controlling
Party Objection
means written notice to the Collateral Manager by the Controlling Party
objecting in their reasonable discretion to a proposed replacement Key Manager.

 

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

 

Corporate
Services Agreement means that certain Corporate Services Agreement, dated as of December 6,
2006, as the same may be amended or supplemented from time to time, between the
Issuer and the Administrator.

 

Corporate
Trust Office
means the designated corporate trust office of the Trustee, currently located
at: (i) for note transfer purposes, Wells Fargo Center, Sixth Street and
Marquette Avenue, Minneapolis, Minnesota 55479, Attention: CDO Trust Services —
N-Star REL CDO VIII and (ii) for all other purposes, 9062 Old Annapolis Road,
Columbia, Maryland 21045. Attention: CDO Trust Services — N-Star REL CDO VIII,
telephone number 410-884-2000, fax number 410-715-3748, or such other address
as the Trustee may designate from time to time by notice to the Rated
Noteholders, the Income Noteholders, the Collateral Manager, each Hedge
Counterparty and the Co-Issuers or the principal corporate trust office of any
successor Trustee.

 

Coverage
Tests means the Class
A/B/C/D Coverage Tests, the Class E/F/G Coverage Tests and the Class H/J/K
Coverage Tests.

 

25

 

CRE
Debt Obligations
means interests in a secured or unsecured, senior or senior subordinated term
bank or non-bank loans or other debt obligations, whether in loan or security
form, or participations (senior or subordinate) therein, that are obligations
(direct or by way of guarantee) of corporations, partnerships or other entities
organized under the laws of the United States (or any State thereof) whose
business is significantly related to real estate, real estate management and/or
real estate ownership; provided that no Mortgage Loan Interests, Mezzanine
Loans, Subordinate Mortgage Loan Interests, CMBS, Real Estate CDO Securities,
Credit Lease Loans, Tenant Lease Loans, Preferred Equity Securities or REIT
Debt Securities shall constitute CRE Debt Obligations.

 

Credit
Improved Interest
means any Collateral Interest that, in the Collateral Manager’s reasonable
business judgment, has significantly improved in credit quality or value.

 

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

 

Credit
Risk Interest
means any Collateral Interest which, in the Collateral Manager’s reasonable
business judgment, has a significant risk of declining in credit quality or
over time may become an Impaired Interest.

 

Cumulative
Applicable Periodic Interest Shortfall Amount means Class E Cumulative Applicable Periodic
Interest Shortfall Amount, Class F Cumulative Applicable Periodic Interest
Shortfall Amount, Class G Cumulative Applicable Periodic Interest Shortfall
Amount, Class H Cumulative Applicable Periodic Interest Shortfall Amount, Class
J Cumulative Applicable Periodic Interest Shortfall Amount, Class K Cumulative
Applicable Periodic Interest Shortfall Amount, Class L Cumulative Applicable
Periodic Interest Shortfall Amount, Class M Cumulative Applicable Periodic
Interest Shortfall Amount and Class N Cumulative Applicable Periodic Interest
Shortfall Amount.

 

Cure
Advance means,
amounts advanced by a Holder of Income Notes pursuant to the Paying Agency
Agreement to permit the Issuer to exercise its right to cure payment defaults
with respect to any Senior Loan related to a Collateral Interest in accordance
with the applicable Underlying Instrument.

 

Current
Pay Future Advance Amount means as of any Calculation Date, an amount equal to the Total Unfunded
Future Advance Amounts related to the Future Funding Assets held by the Issuer
that are currently due and payable, or which the applicable servicer has
notified the Collateral Manager and the Trustee in writing that it believes
will be payable within one month of the related Payment Date, and which the
Collateral Manager has notified the Trustee in writing that the Issuer will
fund such Future Advance Amounts.

 

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

 

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

 

26

 

Deemed
Floating Asset Hedge means, with respect to a Fixed Rate Collateral Interest, an interest
rate swap having (i) a notional schedule equal to the Principal Balance as it
is reduced by expected amortization of such Fixed Rate Collateral Interest over
time and (ii) payment dates, with respect to termination payments only,
identical to the Payment Dates of the Issuer under this Indenture; provided that, (x) at the time of entry
into the Deemed Floating Asset Hedge, (i) the expected principal payments on
the Fixed Rate Collateral Interest comprising a Deemed Floating Rate Collateral
Interest will not extend beyond 10 years after the effective date of such
Deemed Floating Asset Hedge and (ii) the scheduled notional amount of such
Deemed Floating Asset Hedge at any time is equal to the expected principal
amount of the related Fixed Rate Collateral Interest (as calculated at such
time), (y) the Rating Agencies and the Trustee are notified prior to the
Issuer’s entry into a Deemed Floating Asset Hedge, and each will be provided
with the identity of the proposed hedge counterparty and copies of the hedge
documentation and notional schedule and (z) such Deemed Floating Asset Hedge is
priced at then-current market rates; provided,
however, with respect to Agency
MBS Securities, Deemed Floating Asset Hedges may also include put agreements or
other investments that require the related Agency MBS Securities to be
purchased at par plus accrued interest, as provided therein. In the event any
Deemed Floating Asset Hedge is not a Form-Approved Hedge Agreement, the
Collateral Manager will provide prior written notice to Fitch of the Issuer’s
entry into such Deemed Floating Asset Hedge.

 

Deemed
Floating Rate Agency MBS Security means a fixed-rate Agency MBS Security, the
interest rate of which is hedged into a floating rate Agency MBS Security using
a Deemed Floating Asset Hedge; provided
that, at the time of entry into the related Deemed Floating Asset Hedge, the
Average Life of such Deemed Floating Rate Agency MBS Security would not
increase or decrease by more than one year from its expected average life if it
were to prepay at either 50% or 150% of its pricing speed.

 

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

 

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

 

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

 

Defaulting
Party has the
meaning given to such term in the standard form 1992 ISDA Master Agreement
(Multicurrency —Cross Border).

 

27

 

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

 

Deferred
Interest PIK Bond
means a PIK Bond with respect to which interest has been deferred or
capitalized or does not pay interest when scheduled (other than an Impaired
Interest) for each consecutive payment date occurring over a period of (a) the
lesser of (i) six months or (ii) three consecutive payment dates (if such
Deferred Interest PIK Bond is rated (or privately rated for purposes of the
issuance of the Notes) below “Baa3” by Moody’s or “BBB-” by Fitch) or (b) the
lesser of (i) one year or (ii) six consecutive payment dates (if such Deferred
Interest PIK Bond is rated (or privately rated for purposes of the issuance of
the Notes) “Baa3” or higher by Moody’s, and “BBB-” or higher by Fitch), but
only until such time as payment of interest on such PIK Bond has resumed and
all capitalized and deferred interest and any interest thereon has been paid in
cash in accordance with the terms of the Underlying Instruments.

 

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

 

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

 

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

 

Depositor means N-Star REL CDO Depositor Corp. and any
successors or assigns, in its capacity as depositor under the Master Trust
Agreement.

 

Discretionary
Sale has the
meaning specified in Section 12.1(a)(7).

 

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

 

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

 

28

 

DTC means The Depository Trust Company, a New York
corporation, and its nominees and their respective successors.

 

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

 

Due
Period means,
with respect to each Payment Date, the period beginning on the day following
the last day of the preceding Due Period relating to the preceding Payment Date
(or, in the case of the Due Period that is applicable to the first Payment
Date, beginning on the Closing Date) and ending at the close of business on the
fourth (4th) Business Day preceding such Payment Date.

 

Effective
Date means the date
that is the earliest of (i) the 270th day following the Closing Date, (ii) the
date on which the Issuer has purchased, with amounts on deposit in the
Uninvested Proceeds Account, Collateral Interests having an aggregate Principal
Balance (calculated on the respective purchase date for each such Collateral
Interest) equal to U.S.$900,000,000 (which amount includes all Future Funding
Obligations with respect to Future Funding Assets) or (iii) such earlier date
(if any) that is designated by the Collateral Manager by notice to the Trustee
pursuant to this Indenture; provided
that the Collateral Manager has received Rating Confirmation within 30 Business
Days after the Effective Date; provided,
further, that in the event that
such day does not fall on a Business Day, the Effective Date shall be the next
succeeding Business Day.

 

Eligibility
Criteria has the
meaning specified in Section 12.2.

 

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

 

(i)                                   cash;

 

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

 

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

 

29

 

(a)                                  in the case of long-term debt obligations, not less
than “Aa2” by Moody’s or “AA” by Fitch; or

 

(b)                                 in the case of commercial paper and short-term debt
obligations including time deposits, P-1 by Moody’s or “F1+” by Fitch (provided that, in the case of commercial
paper and short-term debt obligations with a maturity of longer than 91 days,
the issuer thereof must also have at the time of such investment a long-term
credit rating and a short- and long-term credit rating of not less than “F1+”
and “AA”, respectively, by Fitch and “P-1” and “Aa2”, respectively, by
Moody’s);

 

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

 

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

 

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

 

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

 

(viii)                       prior to the Effective Date, Agency MBS Securities,
and on or after the Effective Date, Deemed Floating Rate Agency MBS Securities;
and

 

30

 

(ix)                                any
other investments for which Rating Confirmation is received;

 

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

 

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

 

Emerging
Market Issuer
means a sovereign or non-sovereign issuer located in a country that is in Latin
America, Asia, Africa, Eastern Europe or the Caribbean or in a country the
dollar-denominated sovereign debt obligations of which are rated lower than
“Aa2” by Moody’s; provided that an
issuer of Asset-Backed Securities located in any Eligible SPV Jurisdiction
shall not be an Emerging Market Issuer for purposes hereof if the underlying
collateral of such Asset-Backed Securities consists primarily of obligations of
obligors located in the United States and Qualifying Foreign Obligors.

 

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

 

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

 

Equity
Interest means
any security that does not entitle the holder thereof to receive periodic
payments of interest and one or more installments of principal acquired by the
Issuer as a result of the exercise or conversion of Collateral Interests, in
conjunction with the purchase of Collateral Interests or in exchange for a
Collateral Interest; provided that
the term “Equity Interest” will not include any Preferred Equity Security or
any asset-backed security structured as a certificate or other form of
beneficial interest.

 

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

 

ERISA
Restriction Certificate means the ERISA Restriction Certificate substantially in the form set
forth in Exhibit C-4 hereto.

 

31

 

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

 

Event
of Default has
the meaning specified in Section 5.1.

 

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

 

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

 

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

 

Extended
Maturity Date
means, with respect to any Collateral Interest, the maturity date of such
Collateral Interest, assuming the exercise of all extension options (if any)
that are exercisable at the option of the related borrower under the terms of
such Collateral Interest.

 

Extended
Weighted Average Maturity means, as of any Measurement Date with respect to the Collateral
Interests (other than Impaired Interests), the number obtained by (i) summing
the products obtained by multiplying (a) the remaining term to maturity (in
years, rounded to the nearest one tenth thereof, and based on the Extended
Maturity Date) of each Collateral Interest (other than Impaired Interests) by (b)
the outstanding Principal Balance at such time of such Collateral Interest and (ii)
dividing the sum by the aggregate Principal Balance at such time of all
Collateral Interests (other than Impaired Interests).

 

Fee
Basis Amount
means an amount equal, for any Payment Date, to the average of the aggregate
Collateral Interest Principal Balance (including the aggregate Principal
Balance of Impaired Interests) on the first day of the related Due Period and
the aggregate Collateral Interest Principal Balance (including the aggregate
Principal Balance of Impaired Interests) on the last day of such Due Period.

 

Fitch means Fitch Ratings, Inc., Fitch Ratings, Ltd. and
their subsidiaries including Derivative Fitch, Inc. and Derivative Fitch Ltd
and any successor or successors thereto.

 

Fitch
Loan Diversity Index Score means the amount determined by the Collateral Manager on any Measurement
Date, by the sum of the series of products obtained for each Collateral
Interest, by squaring the quotient of (x) the Principal Balance on such
Measurement Date of each such Collateral Interest and (y) the aggregate
Principal Balance of all Collateral Interests on such Measurement Date,
multiplied by 10,000. In the event that cash has been received in respect of
principal proceeds since the immediately preceding Measurement Date but has not
been reinvested in additional Collateral Interests as of the current
Measurement Date, the aggregate amount then held in cash shall be divided into
one or more “Cash Security Exposures.” Each Cash Security Exposure will be
sized in an amount equal to the result obtained by averaging the Principal
Balance of all Collateral Interests on such Measurement Date; provided that if the cash position as of
such Measurement Date is less than such average, or if there is cash remaining
in an amount less than such average, the Cash Security Exposure, or the
additional Cash Security Exposure, as applicable, represented thereby will be
sized in the actual amount of such cash position. The Fitch Loan Diversity
Index Score will then mean the amount determined by the

 

32

 

Collateral Manager on any Measurement Date,
by the sum of the series of products obtained for each Collateral Interest, by
squaring the quotient of (x) the Principal Balance on such Measurement Date of
each such Collateral Interest and each Cash Security Exposure and (y) the
aggregate Principal Balance of all Collateral Interests and all Cash Security
Exposures on such Measurement Date, multiplied by 10,000.

 

Fitch
Loan Diversity Index Test means a test that will be satisfied if on any Measurement Date the Fitch
Loan Diversity Index Score for the Collateral Interests is less than 455.

 

Fitch
Poolwide Expected Loss means the output generated using Fitch’s modified CMBS multi- borrower
model (as applied to all Collateral Interests that are Mortgage Loan Interests,
Subordinate Mortgage Loan Interests, Mezzanine Loans, Participation Interests
and Preferred Equity Securities).

 

Fitch
Poolwide Expected Loss Test means a test that will be satisfied on any Calculation Date if the Fitch
Poolwide Expected Loss of the Collateral Interests is equal to or less than
46.375%.

 

Fitch Rating of any Collateral Interest will
be determined as follows:

 

(i)              if such Collateral Interest is rated by Fitch, the
Fitch Rating shall be such rating;

 

(ii)             if such Collateral Interest is not rated by Fitch
and a rating is published by both S&P and Moody’s, the Fitch Rating shall
be the lower of such ratings; and if a rating is published by only one of
S&P and Moody’s, the Fitch Rating shall be that published rating by S&P
or Moody’s, as the case may be; and

 

(iii)            if the Fitch Rating cannot be assigned in
accordance with clauses (i) and (ii) above, the Issuer (or the Collateral Manager
on behalf of the Issuer) shall apply to Fitch for a credit assessment which
thereafter will be the Fitch Rating.

 

provided that (x) if such Collateral Interest has been put
on rating watch negative for possible downgrade by any Rating Agency, then the
rating used to determine the Fitch Rating under either of clauses (i) or (ii) above
shall be one rating subcategory below such rating by that Rating Agency, and (y)
if such Collateral Interest has been put on rating watch positive for possible
upgrade by any Rating Agency, then the rating used to determine the Fitch
Rating under either of clauses (i) or (ii) above shall be one rating
subcategory above such rating by that Rating Agency, and (z) notwithstanding
the rating definition described above, Fitch reserves the right to issue a
rating estimate for any Collateral Interest at any time which may differ from
the one determined pursuant to this definition and such rating estimate shall
be the Fitch Rating of such Collateral Interest.

 

Fitch
Recovery Rate means,
(i) with respect to any Collateral Interest that is a Mortgage Loan Interest on
any Measurement Date, the Market Value thereof and (ii) with respect to any
Collateral Interest that is a CMBS or a Real Estate CDO Security on any
Measurement Date, an amount equal to the percentage corresponding to the
domicile, original rating, seniority, and tranche thickness of such Collateral
Interest, as applicable, as currently set forth in the Fitch Recovery Rate
matrix available in the latest version of Fitch’s Default Vector model that can
be

 

33

 

downloaded from www.derivativefitch.com.
Fitch may, from time to time, modify or replace this criteria and Fitch may
apply the current criteria which may have modified or replaced this report.

 

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

 

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

 

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

 

Floating
Rate Collateral Interest means any Collateral Interest that bears interest based upon a floating
rate index.

 

Floating
Rate Notes means,
collectively, the Class A-1 Notes, Class A-R Notes, Class A-2 Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes, Class J Notes, Class K Notes, Class L Notes, Class M
Notes and Class N Notes.

 

Form-Approved
Hedge Agreement
means a Hedge Agreement relating to a specific Hedge Counterparty with respect
to which (a) the related Collateral Interest could be purchased by the Issuer
without any required action by the Rating Agencies and (b) the documentation of
which conforms in all material respects to a form for which Rating Confirmation
was previously obtained (as certified to the Trustee by the Collateral Manager)
for use of such form by the Issuer; provided
that (i) such Form-Approved Hedge Agreement shall not provide for any upfront
payments to be made to any Hedge Counterparty, (ii) any revised Form-Approved
Hedge Agreement with respect to a particular Hedge Counterparty shall be
approved by each of the Rating Agencies at least 10 days prior to the initial
use thereof as evidenced by Rating Confirmation, (iii) any Rating Agency may
withdraw its consent to the use of a particular Form-Approved Hedge Agreement
by written notice to the Trustee, the Collateral Manager and the relevant Hedge
Counterparty (provided that such
withdrawal of consent shall not affect any existing Hedge Agreement entered
into with such Hedge Counterparty) and (iv) the Issuer (or the Collateral
Manager on its behalf) shall deliver to the Trustee and each Rating Agency a
copy of each Form-Approved Hedge Agreement specifying the Hedge Counterparty to
which it relates upon receipt of Rating Confirmation with respect thereto, and
the Trustee’s records (when taken together with any correspondence received
from the Rating Agencies pursuant to clause (ii)) shall be conclusive evidence
of such form.

 

Four-Month
Period means, at
any time during the Reinvestment Period, the period of four months following
the earliest date as of which the number of Key Managers that are employed on a
substantially full-time basis in the position of managing director or other
management-level employee by the Collateral Manager (or any of its successors
or assigns permitted pursuant to Section 16 of the Collateral Management
Agreement) becomes less than one.

 

Funding
Entity means,
with respect to any Class A-R Noteholder, any Liquidity Provider party to a
Liquidity Facility entered into by such Holder in connection with the Class A-R
Note Purchase Agreement or a guarantor of such Liquidity Provider.

 

34

 

Future
Advance means,
with respect to any Future Funding Asset, the requirement of the Issuer to make
one or more future advances to the obligor under the Underlying Instruments
relating thereto, subject to satisfaction of conditions precedent specified
therein.

 

Future
Advance Amount
means, an amount equal to (1) the sum of (A) amounts on deposit in any Future
Funding Reserve Account and the Suspense Account, (B) the Future Funding Letter
of Credit Amount, (C) amounts on deposit in a subaccount of the Uninvested
Proceeds Account and (D) the Aggregate Class A-R Undrawn Amount and (2) such
lesser amount for which Rating Confirmation is received.

 

Future
Advance Holder
has the meaning specified in Section 12.2(y).

 

Future
Funding Asset
means, a Collateral Interest that (a) requires the Issuer to make one or more
future advances to the obligor under the Underlying Instruments relating
thereto, subject to satisfaction of conditions precedent therein, (b) specifies
a maximum amount that can be borrowed on one or more fixed borrowing dates and (c)
does not permit the re-borrowing of any amount previously repaid by the obligor
thereof; provided, however, that any such Future Funding Asset
will be an Future Funding Asset only until all commitments by the Issuer to
make advances to the obligor thereof expire or are terminated or reduced to
zero.

 

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

 

Future
Funding Interest
means a Collateral Interest that is a Future Funding Asset, and (i) any Class A-R
Noteholder defaults in its obligation to fund any portion of a Class A-R Draw
and, if applicable, the Liquidity Provider also fails to fund the relevant
portion of a Class A-R Draw, (ii) such Class A-R Noteholder and Liquidity
Provider, if applicable, is no longer required to fund the relevant portion of
a Class A-R Draw or (iii) the Collateral Manager determines that the Issuer’s
ownership of such Future Funding Asset is not in the best interests of the
Issuer or the Noteholders.

 

Future
Funding Letter of Credit Amount means the aggregate amount of all Qualifying
Letters of Credit in favor of the Issuer or, subject to certain conditions set
forth in the Indenture, any Future Advance Holder and related to the additional
funding obligations of Future Advance Holders or other entities in respect of
Other Loans or indemnification for losses.

 

Future
Funding Reserve Amount means an amount equal to (1) the sum of (A) amounts on deposit in any
Future Funding Reserve Account and the Suspense Account, (B) the Future Funding
Letter of Credit Amount, (C) amounts on deposit in a subaccount of the
Uninvested Proceeds Account and (D) the Aggregate Class A-R Undrawn Amount and (2)
such lesser amount for which Rating Confirmation is received.

 

Future
Funding Reserve Test means a test that is satisfied on any date if the Future Funding Reserve
Amount is equal to or greater than the Required Future Funding Reserve Amount.

 

Future
Funding Reserve Test Failure means a failure of the Future Funding Reserve
Test.

 

35

 

Future
Funding Obligation means, with respect to any Future Funding Asset, the obligation to make
one or more Future Advances retained by the Issuer.

 

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

 

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

 

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

 

Hedge
Agreement means
the interest rate protection agreement, as amended from time to time, together
with any replacement hedge agreement on substantially identical terms (or that
otherwise satisfies the conditions of Section 16.1), entered into pursuant to Section
16.1 or a Deemed Floating Asset Hedge. The Hedge Agreement shall provide that
any amount payable to the Hedge Counterparty thereunder shall be subject to the
Priority of Payments and that any amount payable upon the early termination or
liquidation thereof shall be payable only on a Payment Date in accordance with
the Priority of Payments.

 

Hedge
Counterparty
means (a) any hedge counterparty (or any permitted assignee or successor) under
a Hedge Agreement that satisfies the Hedge Counterparty Ratings Requirement and
(b) any substitute or additional parties therefore appointed in accordance with
Section 16.1.

 

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

 

Hedge
Counterparty Ratings Requirement means, with respect to any Hedge Ratings
Determining Party: (a) (x) a rating on the short-term unsecured, unsubordinated
debt obligations of the Hedge Ratings Determining Party of “P-1” by Moody’s and
a rating on the long-term unsecured, unsubordinated debt obligations of the
Hedge Ratings Determining Party of at least “A1” by Moody’s or (y) if there is
no short-term rating by Moody’s, a rating on the long-term unsecured,
unsubordinated debt obligations of the Hedge Ratings Determining Party of at
least “Aa3” by Moody’s; provided, that any rating shall be reduced by one
subcategory to the extent it is on credit watch with negative implications by
Moody’s and (b) the short-term credit rating of such Hedge Counterparty is at
least “F1” by Fitch and the long-term credit rating of such Hedge Counterparty
is at least “A” by Fitch, provided that, if the credit rating falls below any
such applicable ratings, then the Hedge Counterparty shall within 30 days, at
its sole option and expense, either (x) cause an entity whose credit ratings
equal or exceed the above criteria to issue

 

36

 

in favor of the Issuer a guaranty acceptable
in form and substance to the applicable Rating Agency; (y) cause an entity with
a credit rating that equals or exceeds the requisite criteria to enter a
replacement Hedge Agreement; or (z) shall post collateral in accordance with
the Hedge Agreement. If the credit rating of the then current Hedge
Counterparty should fall below (a) (x) “A2” or “P-1” by Moody’s, or (y) if
there is no short-term rating by Moody’s, “A1” by “Moody’s”, or (b) “F2”
(short-term) or “BBB+” (long-term) by Fitch, then the Hedge Counterparty shall
within 30 days, at its sole expense cause an entity with a credit rating that
equals or exceeds the requisite criteria to enter a replacement Hedge
Agreement.

 

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

 

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

 

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

 

Herfindahl
Index means an
index calculated by the Collateral Manager by dividing (i) one by (ii) the sum
of the series of products obtained for each Collateral Interest, by squaring
the quotient of (x) the principal balance on such Calculation Date of each such
Collateral Interest and (y) the aggregate Principal Balance of all Collateral
Interests on such Calculation Date. For purposes of calculating the Herfindahl
Index, all Collateral Interests from a single issue of CMBS shall be treated as
a single Collateral Interest and each $6,000,000 increment of Cash in any
Account and each $6,000,000 increment of the Aggregate Class A-R Undrawn Amount
shall each be treated as a single Collateral Interest.

 

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

 

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

 

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

 

Holder
Sub-Account has
the meaning specified in Section 17.5(a) hereof.

 

37

 

Impaired
Interest means
any Collateral Interest or any other security included in the Collateral:

 

(i)            with respect to a Preferred Equity Security, (1) with
respect to which there has occurred and is continuing a payment default (after
giving effect to any applicable grace period but without giving effect to any
waiver); provided, however, that notwithstanding the
foregoing, a Preferred Equity Security shall not be deemed to be an Impaired
Interest as a result of (A) the related issuer’s failure to pay dividends or
distributions on the initial due date therefor, if the Collateral Manager or
the Issuer consents to extend the due date when such dividend or distribution
is due and payable, and such dividend or distribution is paid on or before such
extended due date (provided that
such dividend or distribution is paid not more than 60 days (or if the due date
for such dividend or distribution was previously so extended, not more than 30
days) after the initial date that it was due), or (B) the failure of the issuer
or affiliate of the issuer of the Preferred Equity Security to redeem or
purchase such Preferred Equity Security on the date when such redemption or
purchase is required pursuant to the terms of the agreement setting forth the
rights of the holder of that Preferred Equity Security (after giving effect to
all extensions of such redemption or purchase date that the issuer or affiliate
of the issuer of the Preferred Equity Security had the right to elect and did
elect under the terms of the agreement setting forth the rights of the holder of
that Preferred Equity Security), if the Collateral Manager or the Issuer
consents to extend such redemption or purchase date, provided that such consent does not extend the redemption or
purchase date by more than two years after the redemption or purchase date
required under such agreement (that is, the original redemption or purchase
date under such agreement as extended by all extensions of such date that the
issuer or affiliate of the issuer of the Preferred Equity Security had the
right to elect and did elect under the terms of such agreement) and the amount
required to be paid in connection with such redemption or purchase is paid on
or before such ext ended redemption or purchase date, or (2) with respect to
which there is known to the Issuer or the Collateral Manager a default (other
than any payment default) which default entitles the holders thereof to
accelerate the maturity of all or a portion of the principal amount of such
obligation and such holders have actually accelerated such obligation; provided, however,
in each case, if such default is cured or waived then such asset shall no
longer be an Impaired Interest or (3) with respect to which there is known to
the Collateral Manager (A) any bankruptcy, insolvency or receivership
proceeding has been initiated in connection with the issuer of such Collateral
Interest, or (B) there has been proposed or effected any distressed exchange or
other debt restructuring where the issuer of such Collateral Interest has
offered the debt holders a new security or package of securities that either (x)
amounts to a diminished financial obligation or (y) has the purpose of helping
the issuer to avoid default, or (4) that has been rated “CC” or below from
Fitch or (5) there is known to the Collateral Manager that the issuer thereof
is in default (after giving effect to any applicable grace period or waiver) as
to payment of principal and/or interest on another obligation (and such default
has not been cured or waived) which is senior or pari passu in right of payment
to such Collateral Interest, except that a Collateral Interest will not
constitute an “Impaired Interest” under this clause (5) if each of the Rating
Agencies has confirmed in writing that such event shall not result in the
reduction, qualification or withdrawal of any rating of the Notes;

 

38

 

(ii)           with respect to a Mortgage Loan Interest,
Subordinate Mortgage Loan Interest, Mezzanine Loan, Participation Interest,
Credit Lease Loan or Tenant Lease Loan, if a foreclosure or default (whether or
not declared) with respect such Mortgage Loan Interest or otherwise in the case
of the related Mortgage Loan Interest has occurred and is continuing for sixty
days; provided, however, that notwithstanding the
foregoing, a Mortgage Loan Interest, Subordinate Mortgage Loan Interest,
Mezzanine Loan, Participation Interest, Credit Lease Loan or Tenant Lease Loan
shall not be deemed to be an Impaired Interest as a result of (1) the related
borrower’s failure to pay interest on such Mortgage Loan Interest, Subordinate
Mortgage Loan Interest, Mezzanine Loan, Participation Interest, Credit Lease
Loan or Tenant Lease Loan or on the related commercial mortgage loan on the
initial due date therefor, if the related lender or holder of such Mortgage
Loan Interest, Subordinate Mortgage Loan Interest, Mezzanine Loan,
Participation Interest, Credit Lease Loan or Tenant Lease Loan or the related
commercial mortgage loan consents to extend the due date when such interest is
due and payable, and such interest is paid on or before such extended due date
(provided that such interest is
paid not more than 60 days (or if the due date for such interest was previously
so extended, not more than 30 days) after the initial date that it was due), or
(2) the related borrower’s failure to pay principal on such Mortgage Loan
Interest, Subordinate Mortgage Loan Interest, Mezzanine Loan, Participation
Interest, Credit Lease Loan or Tenant Lease Loan or the related commercial
mortgage loan on the original maturity date thereof (as defined below), if the
related lender or holder of such Mortgage Loan Interest, Subordinate Mortgage
Loan Interest, Mezzanine Loan, Participation Interest, Credit Lease Loan or
Tenant Lease Loan or the related commercial mortgage loan consents to extend
such maturity date (so long as the Maturity Extension Requirements are met) and
such principal is paid on or before such extended maturity date, or (3) the
occurrence of any default other than a payment default with respect to such Mortgage
Loan Interest, Subordinate Mortgage Loan Interest, Mezzanine Loan,
Participation Interest, Credit Lease Loan or Tenant Lease Loan or the related
commercial mortgage loan, unless and until the earlier of (A) declaration of
default and acceleration of the maturity of the Mortgage Loan Interest,
Subordinate Mortgage Loan Interest, Mezzanine Loan, Participation Interest,
Credit Lease Loan or Tenant Lease Loan by the lender or holder thereof and (B) the
continuance of such default uncured for 60 days after such default became known
to the Issuer or the Collateral Manager or, upon receipt of Rating
Confirmation, such longer period as the Collateral Manager determines. As used
herein, the term “original maturity date” means the maturity date of a Mortgage
Loan Interest, Subordinate Mortgage Loan Interest, Mezzanine Loan,
Participation Interest, Credit Lease Loan or Tenant Lease Loan or the related
commercial mortgage loan as extended by all extensions thereof which the
related borrower had the right to elect and did elect under the terms of the
instruments and agreements relating to such Mortgage Loan Interest, Subordinate
Mortgage Loan Interest, Mezzanine Loan, Participation Interest, Credit Lease
Loan or Tenant Lease Loan or the related commercial mortgage loan, but before
taking into account any additional extensions thereof that are consented to by
the lender or holder of such Mortgage Loan Interest, Subordinate Mortgage Loan
Interest, Mezzanine Loan, Participation Interest, Credit Lease Loan or Tenant
Lease Loan or the related commercial mortgage loan; and

 

39

 

(iii)          with respect to a CMBS, Real Estate CDO Security or
REIT Debt Security (1) as to which there has occurred and is continuing a
principal payment default (after giving effect to any applicable grace period
or waiver) or (2) as to which there is known to the Issuer or the Collateral
Manager a default (other than any payment default) which default entitles the
holders thereof to accelerate the maturity of all or a portion of the principal
amount of such obligation and such holders have actually accelerated such
obligation; provided, however, in the case of clause (1) or (2),
if such default is cured or waived then such asset shall no longer be an Impaired
Interest or (3) as to which there is known to the Collateral Manager (A) any
bankruptcy, insolvency or receivership proceeding has been initiated in
connection with the issuer of such CMBS, Real Estate CDO Security or REIT Debt
Security, or (B) there has been proposed or effected any distressed exchange or
other debt re-structuring where the issuer of such CMBS, Real Estate CDO
Security or REIT Debt Security has offered the debt holders a new security or
package of securities that either (x) amounts to a diminished financial
obligation or (y) has the purpose of helping the issuer to avoid default, or (4)
that has been rated “Ca” or “C” by Moody’s or “CC” or below from Fitch, or; or (5)
as to which there is known to the Collateral Manager that the issuer thereof is
in default (after giving effect to any applicable grace period or waiver) as to
payment of principal and/or interest on another obligation (and such default
has not been cured or waived) which is senior or pari passu in right of payment
to such CMBS, Real Estate CDO Security or REIT Debt Security; provided,
however, upon receipt of Rating Confirmation for such CMBS, Real Estate CDO
Security or REIT Debt Security, the Collateral Manager may choose not to treat
such a CMBS, Real Estate CDO Security or REIT Debt Security as an “Impaired
Interest” under this clause (iii) or (B) as to which there has been a failure
to pay interest in whole or in part for the lesser of (x) one year or (y) six
consecutive payment periods (if such CMBS, Real Estate CDO Security or REIT
Debt Security is rated (or privately rated for purposes of the issuance of the
Notes) “BBB” by Fitch or “Baa3” or higher by Moody’s) even if by its terms it
provides for the deferral and capitalization of interest thereon;

 

provided that, for the avoidance of doubt, any Collateral
Interest which has sustained a write down of principal balance in accordance
with its terms will not necessarily be considered an Impaired Interest solely
due to such write-down.

 

For purposes of calculating the Interest
Coverage Ratio and Principal Coverage Ratio, an appraisal reduction of a
Collateral Interest will be assumed to result in an implied reduction of
principal balance for such Collateral Interest only if such appraisal reduction
is intended to reduce the interest payable on such Collateral Interest and only
in proportion to such interest reduction. For purposes of the Interest Coverage
Ratio and Principal Coverage Ratio, any Collateral Interest that has sustained
an implied reduction of principal balance due to an appraisal reduction will
not be considered an Impaired Interest solely due to such implied reduction.
The Collateral Manager will notify the Trustee of any appraisal reductions of
Collateral Interests if the Collateral Manager has actual knowledge thereof.

 

For purposes of this definition of “Impaired
Interest,” the Maturity Extension
Requirements will be satisfied with respect to any extension if the
maturity date is extended in the case of Mortgage Loan Interests, Subordinate
Mortgage Loan Interests, Mezzanine Loans, Participation Interests, Credit Lease
Loans and Tenant Lease Loans, to a new maturity date that is (A) not

 

40

 

more than two years after the original
maturity date and (B) not less than 10 years prior to the Stated Maturity Date;
provided, however, that notwithstanding the foregoing
requirements, “Maturity Extension Requirements” will be deemed satisfied with
respect to any extensions as to which Rating Confirmation has been received.

 

Impaired
Interests Amount
means the sum, with respect to each Impaired Interest in the Collateral, of the
lesser of (i) the product of (A) the Principal Balance of such Impaired
Interest and (B) the Applicable Recovery Rate of such Impaired Interest and (ii)
the product of (A) the Principal Balance of such Impaired Interest and (B) the
Market Value of such Impaired Interest.

 

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

 

Income
Note Excess Funds
means all remaining Collateral Interest Collections and Collateral Principal
Collections as set forth in Section 11.1(a)(38) and 11.1(b)(31).

 

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

 

Income
Notes means the
U.S. $136,800,000 Income Notes Due 2041.

 

Income
Note Redemption Approval Condition means, in connection with a Tax Redemption at the
direction of the Controlling Party and an Auction Call Redemption, the
requirement that, unless and to the extent the Holders of not less than 662/3%
of the aggregate principal amount of the Outstanding Income Notes have waived
payment in full of the Income Notes Stated Amount, the Income Noteholders
receive in connection with such Tax Redemption or Auction Call Redemption an
amount equal to (x) the Income Notes Stated Amount minus (y) the aggregate
amount of all cash distributions on the Income Notes (whether in respect of
distributions or redemption payments made to the Income Note Paying Agent for
distribution to the Income Noteholders) on or prior to the relevant Auction
Date.

 

Income
Notes Stated Amount means U.S.$136,800,000.

 

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

 

Indenture
Issued Notes
means, collectively, the Class A Notes, Class B Notes, Class C Notes, Class D
Notes, Class E Notes, Class F Notes, Class G Notes, Class H Notes, Class J
Notes, Class K Notes, Class L Notes and Class M Notes.

 

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

 

41

 

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

 

Initial
Class A-R Noteholder means Variable Funding Capital Company LLC.

 

Initial
Hedge Counterparty means Wachovia Bank, National Association.

 

Initial
Maturity Date
means, with respect to any Collateral Interest, the maturity date of such
Collateral Interest without giving effect to any extension options available
under the terms of such Collateral Interest.

 

Initial
Payment Date
means the Payment Date occurring in February 2007.

 

Initial
Purchaser means
Wachovia Capital Markets, LLC as initial purchaser of the Class A-1 Notes, Class
A-2 Notes, Class B Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes and Class K Notes.

 

Initial
Weighted Average Maturity means, as of any Measurement Date with respect to the Collateral
Interests (other than Impaired Interests), the number obtained by (i) summing
the products obtained by multiplying (a) the remaining term to maturity (in
years, rounded to the nearest one tenth thereof, and based on the Initial
Maturity Date) of each Collateral Interest (other than Impaired Interests) by (b)
the outstanding Principal Balance of such Collateral Interest and (ii) dividing
the sum by the aggregate Principal Balance at such time of all Collateral
Interests (other than Impaired Interests).

 

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

 

Interest
Advance has the
meaning specified in Section 10.17(a).

 

Interest
Coverage Amount
means, as of any Measurement Date, an amount equal to (i) the amount received
or scheduled to be received as Collateral Interest Collections during the
related Due Period, less (ii) the amounts scheduled to be paid on the related
Payment Date pursuant to Section 11.1(a)(1) through (3) and, for purposes of
calculating the Interest Coverage Ratios, any amounts scheduled to be paid to
the Interest Reserve Account on the related Payment Date pursuant to Section 11.1(a)(9);
provided that (a) following the date on which a Collateral Interest becomes an
Impaired Interest, scheduled Collateral Interest Collections shall not include
any amount scheduled to be received on Impaired Interests or any amount
scheduled to be received on securities that are currently deferring interest until
(1) such amounts are actually received in

 

42

 

Cash or (2) the cumulative aggregate amounts
actually received on an Impaired Interest exceed the Principal Balance of such
Impaired Interest, (b) the expected interest income on Floating Rate Collateral
Interests and Eligible Investments shall be calculated using the then-current
interest rate applicable thereto and (c) with respect to any Written Down
Interest, the Interest Coverage Amount shall exclude any interest accrued on
any Written Down Amount.

 

Interest
Coverage Ratio
means, on any Measurement Date for any Class of Notes, the ratio (expressed as
a percentage) of (x) to (y), where (x) is equal to the Interest Coverage Amount
as of such Measurement Date and where (y) is (1) in the case of the Class A/B/C/D
Coverage Test, the sum of the Class A-R Commitment Fee and the Periodic
Interest for the Class A Notes, Class B Notes, Class C Notes and Class D Notes
for the Payment Date immediately following such Measurement Date (plus any Defaulted Interest and interest
thereon), (2) in the case of the Class E/F/G Coverage Test, the amount
determined by the foregoing clause (1) plus
the sum of the Periodic Interest for the Class E Notes, Class F Notes and Class
G Notes for the Payment Date immediately following such Measurement Date (plus any Defaulted Interest and interest
thereon) or (3) in the case of the Class H/J/K Coverage Test, the amount
determined by the foregoing clause (2) plus
the sum of the Periodic Interest for the Class H Notes, Class J Notes and Class
K Notes for the Payment Date immediately following such Measurement Date (plus
any Defaulted Interest and interest thereon); provided,
however, that the Interest
Coverage Amount above shall be calculated after giving effect to any scheduled
payment to the Interest Reserve Account for the Payment Date immediately
following such Measurement Date.

 

Interest
Coverage Test
means, for any Class of Notes Outstanding, a test that is satisfied as of any
Measurement Date when the applicable Interest Coverage Ratio is equal to or
greater than the applicable Required Coverage Rates.

 

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

 

Interest
Period means (i)
with respect to the Notes other than the Class A-R Notes, (a) with respect to
the Initial Payment Date, the period from and including the Closing Date to but
excluding the Initial Payment Date and (b) thereafter with respect to each
Payment Date, the period beginning on the first day following the end of the
preceding Interest Period and ending on (and including) the day before the next
Payment Date and (ii) with respect to the Class A-R Notes and any Class A-R
Draw, (a) initially the period from and including the date of any Class A-R
Draw to but excluding the earlier of (1) the first Payment Date immediately
following such Class A-R Draw and (2) the Class A-R Prepayment Date in respect
of such Class A-R Draw and (b) thereafter, each period from and including the
immediately preceding Payment Date to but excluding the earlier of (1) the
immediately succeeding Payment Date and (2) the Class A-R Prepayment Date

 

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

 

43

 

Interest
Reserve Amount
means, as of any Calculation Date, the sum of (i) the aggregate Quarterly Pay
Security Interest Reserve Amounts and (ii) the aggregate amount of Semi-Annual
Pay Security Interest Reserve Amounts.

 

Interim
Payment Date
means a Business Day which is not a Payment Date on which the Class A-R Notes
may be prepaid (in whole or in part) in accordance with Section 17.3 hereof.

 

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

 

Investment
Company Act
means the U.S. Investment Company Act of 1940, as amended, and the rules thereunder.

 

Investment
Guidelines Event
means the earlier of (i) the date the Issuer or the Collateral Manager has
actual knowledge of (A) the Owner REIT’s intent to no longer qualify as a REIT
or (B) other event that would cause the circumstances described in the
following clause (ii) of this definition and (ii) the date on which the
Collateral Manager has actual knowledge that the Issuer has ceased to be
disregarded as an entity separate from the Owner REIT for U.S. federal income
tax purposes.

 

Issue means Collateral Interests issued by
the same issuer secured by the same collateral pool.

 

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

 

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

 

Key
Manager means
any of David T. Hamamoto, Daniel R. Gilbert or any such other additional person
as may be appointed “Key Managers” in accordance with the Collateral Management
Agreement (or if David T. Hamamoto, Daniel R. Gilbert or any such additional
Key Managers have been replaced with one or more Approved Replacement Persons,
such Approved Replacement Persons).

 

Key
Manager Event
means any of the following: (a) the failure by the Collateral Manager to
propose a replacement Key Manager within the applicable Four-Month Period, (b) the
failure by the Collateral Manager, within the Four-Month Period, to propose a
different replacement Key Manager following receipt of a Controlling Party
Objection or (c) the receipt of another Controlling Party Objection within ten
Business Days after delivery of such a proposal for a different replacement Key
Manager to the Controlling Party.

 

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

 

44

 

LIBOR
Calculation Date
has the meaning specified in Schedule B.

 

Liquidity means, as of any date of determination, an amount
equal to the sum of (i) the cash and cash equivalents of the Future Advance
Holders (on a consolidated basis) on such date of determination, (ii) the
amounts on deposit in the Suspense Account and the Future Advance Reserve
Account, (iii) the total amount of capacity available to the Future Advance
Holders under any unsecured facility in effect on such date of determination
(determined in accordance with the relevant provisions of each such facility)
and (iv) the excess, if any, of (A) the total amount available to be drawn by
all Approved Lenders under all Warehouse Facilities over (B) the total amount
actually drawn by all Approved Lenders under all Warehouse Facilities, in each
case, on such date of determination and in accordance with the terms of such
Warehouse Facilities.

 

Liquidity
Facility means a
liquidity loan agreement, credit facility and/or purchase agreement providing
for the several commitments of the Liquidity Providers party thereto in the
aggregate to make loans to, or acquire interests in the assets of, a Holder of Class
A-R Notes in an aggregate principal amount at any one time outstanding at least
equal to the Class A-R Commitments of such Holder.

 

Liquidity
Provider means a
bank or other institution or entity that a Holder of a Class A-R Note (or
prospective transferee) is entitled under a Liquidity Facility to borrow from,
or sell an interest in assets to.

 

Liquidity
Test has the
meaning specified in Section 7.18(a).

 

Liquidity
Test Failure has
the meaning specified in Section 7.18(a).

 

Listed
Bidders has the
meaning specified in Schedule D.

 

London
Banking Day has
the meaning specified in Schedule B.

 

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

 

Mandatory
Class A-R Draw Date means the earliest to occur of (i) the last day of the Reinvestment
Period, or (ii) the date of an acceleration of the Notes following the
occurrence and continuance of an Event of Default (other than an Event of
Default specified in Section 5.1(d), (g) or (h)).

 

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

 

Market
Value means, on
any date of determination, the average of three or more bid-side prices
expressed as a percentage of the par amount, obtained from independent,
nationally recognized financial institutions in the relevant market for one or
more Collateral Interests, each unaffiliated with each other and the Collateral
Manager, as certified by the Collateral Manager (to the extent

 

45

 

that such bid-side prices may be obtained by
the Collateral Manager using its commercially reasonable efforts and
commercially reasonable business judgment). If three or more bid-side prices
cannot be so obtained, then the Market Value on such date of determination will
be the lower of two bid-side prices, if two bid-side prices are obtained in the
manner described above, and the sole bid-side price if only one bid-side price
is obtained in the manner described above. If no bids can be obtained in the
manner described above, the Market Value will be the price, expressed as a
percentage of the par amount, determined by the Collateral Manager in its
commercially reasonable judgment.

 

Master
Trust Agreement
means that certain Master Trust Agreement, dated as of December 7, 2006, as the
same may be amended or supplemented from time to time, between the Depositor
and the Underlying Trustee.

 

Maximum
Class A-R Commitment means U.S.$260,000,000.

 

MBIA means MBIA Insurance Corporation or any successor
or assigns thereto.

 

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

 

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

 

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

 

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

 

Moody’s means Moody’s Investors Service, Inc. and any
successor or successors thereto.

 

Moody’s
Estimated Rating
has the meanings specified in Section 12.2(c).

 

Moody’s
Maximum Weighted Average Rating Factor Test means a test that will be satisfied on any
Measurement Date if the Moody’s Tranched Weighted Average Rating Factor of the Collateral
Interests is equal to or less than the number set forth in the row entitled
“Maximum

 

46

 

WARF” in the Rating Factor/Weighted Average
Spread/Weighted Average Recovery Rate Matrix based on the scenario chosen by
the Collateral Manager as currently applicable to the applicable Collateral
Quality Tests and the Collateral Interests in accordance with this Indenture.

 

Moody’s
Minimum Average Recovery Rate means, as of any date or determination, a rate
expressed as a percentage equal to the number obtained by (i) summing the
products obtained by multiplying the Principal Balance of each Collateral
Interest by its Moody’s Recovery Rate and (ii) dividing such sum by the
Collateral Interest Principal Balance less cash and Eligible Investments
representing Collateral Principal Collections and (iii) rounding up to the
first decimal place.

 

Moody’s
Minimum Average Recovery Rate Test means a test that will be satisfied as of any
Measurement Date if the Moody’s Minimum Average Recovery Rate is greater than
or equal to the number set forth in the row entitled “Minimum Weighted Average
Recovery Rate” in the Rating Factor/Weighted Average Spread/Weighted Average
Recovery Rate Matrix based on the scenario chosen by the Collateral Manager as
currently applicable to the applicable Collateral Quality Tests and the
Collateral Interests in accordance with Section 1.2(l).

 

Moody’s
Post-Acquisition Compliance Test means the test that is satisfied if the Moody’s
Maximum Weighted Average Rating Factor Test, calculated incorporating any
provided Moody’s Estimated Rating, is satisfied, or, if the Moody’s Maximum
Weighted Average Rating Factor Test was not satisfied prior to the purchase of
the related Substitute Collateral Interest, the Moody’s Maximum Weighted
Average Rating Factor Test will be maintained or improved immediately following
such purchase.

 

Moody’s
Post-Acquisition Compliance Test Failure has the meanings specified in Section 12.1(c).

 

Moody’s
Post Acquisition Compliance Test Failure Suspension has the meaning specified in Section 12.1(c).

 

Moody’s
Rating means,
with respect to any Collateral Interest:

 

(i)                                        if such Collateral Interest is rated by Moody’s,
such rating;

 

(ii)                                     if such Collateral Interest does not otherwise have
a Moody’s Rating in accordance with clauses (i), (iii) or (iv) of this
definition, then the Moody’s Rating of such Collateral Interest shall be deemed
to be the rating thereof as may be assigned by Moody’s upon the request of the
Issuer or the Collateral Administrator; provided
that, so long as Moody’s Post Acquisition Compliance Test Failure Suspension is
not in effect pursuant to Section 12.1(c) the Collateral Administrator may,
consistent with Moody’s published criteria for underwriting and tranching of
commercial real estate loans, use its estimated tranched ratings for Collateral
Interests represented by Mortgage Loan Interests, Subordinate Mortgage Loan
Interests, Preferred Equity Securities, and Mezzanine Loans (other than such
Collateral Interests that are Non-Transitional Assets) representing up to 20%
of the Collateral Interest Principal Balance; provided
that with respect to such Collateral Interests having estimated ratings (A) no
more than

 

47

 

10% of the Collateral Interest Principal
Balance may represent a single Collateral Interest of the type described in
clauses (i) through (v), inclusive, of clause (3) of the definition of
Collateral Quality Test and (B) no more than 5% of the Collateral Interest
Principal Balance may represent a single Collateral Interest of the type
described in clause (vi) of clause (3) of the definition of Collateral Quality
Test and/or which is not an Undeveloped Real Estate Collateral Interest; provided  further
that the Collateral Manager shall submit such Collateral Interests to the
Collateral Administrator for a Moody’s estimated rating within 10 Business Days
of acquisition;

 

(iii)                              with respect to the CMBS that are CMBS conduit
securities (i.e., CMBS representing interests in a pool of commercial mortgage
loans), if such Collateral Interest is not rated by Moody’s, and no other security
or obligation of the issuer or the obligor is rated by Moody’s and neither the
Issuer nor the Collateral Administrator obtains a Moody’s Rating for such
Collateral Interest pursuant to clause (ii) above, then the Moody’s Rating of
such Collateral Interest may be determined using any one of the following
methods:

 

(a)                                      if such Collateral Interest is rated by both
S&P and Fitch or if such Collateral Interest is only rated by either
S&P or Fitch but Moody’s has rated other classes in the same transaction
then the Moody’s Rating will be 2 subcategories lower than the lowest Moody’s
equivalent rating then outstanding on the Collateral Interest; or

 

(b)                                     if such Collateral Interest is only rated by one
other Rating Agency, then the Issuer or the Collateral Administrator on behalf
of the Issuer may request that Moody’s assign a rating for such Collateral
Interest, which shall be such Collateral Interest’s Moody’s Rating.

 

(iv)                             with respect to the Collateral Interests that are
REIT Debt Securities or other corporate debt securities, if such Collateral
Interest is not rated by Moody’s, and no other security or obligation of the
issuer or the obligor is rated by Moody’s and neither the Issuer nor the
Collateral Administrator obtains a Moody’s Rating for such Collateral Interest
pursuant to clause (ii) above, then the Moody’s Rating of such Collateral
Interest may be determined using any one of the following methods:

 

(a)                                      if such Collateral Interest is rated at least “BBB”
by S&P, then the Moody’s Rating of such Collateral Interest will be one
subcategory below the Moody’s equivalent of the rating assigned by S&P; or

 

(b)                                     if such Collateral Interest is rated “BB+” or below
by S&P, then the Moody’s Rating of such Collateral Interest will be two
subcategories below the Moody’s equivalent of the rating assigned by S&P.

 

Notwithstanding the foregoing, Collateral
Interests representing no more that 20% of the Collateral Interest Principal
Balance may be rated pursuant to clauses (iii) and (iv) above and no

 

48

 

single Collateral Interest Principal Balance
that represents more than 5% of the Collateral Interest Principal Balance can
be rated pursuant to clause (iii) or (iv) above.

 

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

 

	
   

  	
   

  	
  Moody’s Rating

  	
   

  	
  Moody’s

  	
   

  	
  Moody’s Rating

  	
   

  
	
  Moody’s Rating

  	
   

  	
  Factor

  	
   

  	
  Rating

  	
   

  	
  Factor

  	
   

  
	
  Aaa

  	
   

  	
  1

  	
   

  	
  Ba1

  	
   

  	
  940

  	
   

  
	
  Aa1

  	
   

  	
  10

  	
   

  	
  Ba2

  	
   

  	
  1,350

  	
   

  
	
  Aa2

  	
   

  	
  20

  	
   

  	
  Ba3

  	
   

  	
  1,766

  	
   

  
	
  Aa3

  	
   

  	
  40

  	
   

  	
  B1

  	
   

  	
  2,220

  	
   

  
	
  A1

  	
   

  	
  70

  	
   

  	
  B2

  	
   

  	
  2,720

  	
   

  
	
  A2

  	
   

  	
  120

  	
   

  	
  B3

  	
   

  	
  3,490

  	
   

  
	
  A3

  	
   

  	
  180

  	
   

  	
  Caa1

  	
   

  	
  4,770

  	
   

  
	
  Baa1

  	
   

  	
  260

  	
   

  	
  Caa2

  	
   

  	
  6,500

  	
   

  
	
  Baa2

  	
   

  	
  360

  	
   

  	
  Caa3

  	
   

  	
  8,070

  	
   

  
	
  Baa3

  	
   

  	
  610

  	
   

  	
  Ca or lower

  	
   

  	
  10,000

  	
   

  

 

For purposes of calculating the “Moody’s
Tranched Weighted Average Rating Factor Test,” the Rating Factor of cash
invested as an “Eligible Investment” and the Aggregate Class A-R Undrawn Amount
shall be treated as having a Moody’s Rating of “Aaa” (Moody’s Rating Factor of
1).

 

Moody’s
Recovery Rate
means, with respect to a Collateral Interest on any Measurement Date, an amount
equal to the percentage for such Collateral Interest set forth in the Moody’s
Recovery Rate Matrix attached as Schedule C hereto) in (x) the applicable table
and (y) the row in such table opposite the Moody’s Rating (determined in
accordance with procedures prescribed by Moody’s for such Collateral Interest
on the date of its purchase by the Issuer or, in the case of an Impaired
Interest, the Moody’s Rating immediately prior to default).

 

Moody’s
Tranched Weighted Average Rating Factor means, on any Measurement Date the number obtained
by dividing (i) the sum of the series of products obtained for any Collateral
Interest that by multiplying (a) the tranched principal balance on such
Measurement Date of each such Collateral Interest by (b) its respective Moody’s
Rating Factor on such Measurement Date by (ii) the aggregate tranched principal
balance on such Measurement Date of all Collateral Interests and rounding the
result up to the nearest whole number. For purposes of calculating the “Moody’s
Tranched Weighted Average Rating Factor Test,” the Rating Factor of cash
invested as an “Eligible Investment” and the Aggregate Class A-R Undrawn Amount
shall be treated as having a Moody’s Rating of “Aaa” (Moody’s Rating Factor of
1).

 

Moody’s
Weighted Average Extended Maturity Test means a test that will be satisfied on any
Measurement Date if the Extended Weighted Average Maturity of the Collateral
Interests as of such Measurement Date is (i) 5.6 years up to February 2011 and (ii)
4.1 years thereafter.

 

Moody’s
Weighted Average Initial Maturity Test means a test that will be satisfied on any
Measurement Date if the Extended Weighted Average Maturity of the Collateral
Interests as of such Measurement Date is (i) 5.6 years prior to February 2011
and (ii) 4.1 years thereafter.

 

49

 

Mortgage
Loan Interest
means whole commercial mortgage loans or participation interests (including
senior and pari passu participation interests).

 

Mortgaged
Property means
the multifamily or commercial property or properties securing the Commercial
Mortgage Loans.

 

Nonrecoverable
Advance means
any Interest Advance previously made or proposed to be made which, in the
judgment of the Advancing Agent or the Trustee, as applicable, will not be
ultimately recoverable from subsequent payments or collections with respect to
the Collateral Interests. Any determination of recoverability by the Advancing
Agent or the Trustee, as applicable, shall be subject to the standard set forth
in Section 10.17.

 

Nonrecoverable
Cure Advance
means a Cure Advance made or proposed to be made that the Collateral Manager
has determined in its sole discretion, exercised in good faith, that the amount
so advanced or proposed to be advanced will not be recoverable from subsequent
collections from the specific Collateral Interest with respect to which such
Cure Advance was made or proposed to be made.

 

Non-Transitional
Asset means any
Future Funding Asset or Other Loan for which the unfunded portion of such loan
as of the origination date of the related financing represents more than 35% of
the sum of (a) the then outstanding amount of such Future Funding Asset or
Other Loan and (b) the remaining amount required to be funded to the borrower
pursuant to the terms of such Future Funding Asset or Other Loan; provided,
that a Future Funding Asset or Other Loan shall not be classified as a
Non-Transitional Asset if Rating Confirmation to such effect is received.

 

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

 

Note
Payment Sequence
means the application of Collections to pay principal of the Rated Notes in the
following order, in each case until paid in full: (i) Class A Senior Notes, pro rata, (ii) Class A-2 Notes, (iii) Class
B Notes, (iv) Class C Notes, (v) Class D Notes, (vi) Class E Notes, (vii) Class
F Notes, (viii) Class G Notes, (ix) Class H Notes, (x) Class J Notes, (xi) Class
K Notes, (xii) Class L Notes, (xiii) Class M Notes and (xiv) Class N Notes.

 

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

 

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

 

Note
Valuation Report
has the meaning specified in Section 10.11(a).

 

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

 

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

 

50

 

Person to amend, modify or waive any
provision of such security or any related Underlying Instrument.

 

Offered
Notes means,
collectively, the Class A Notes, Class B Notes, Class C Notes, Class D Notes, Class
E Notes, Class F Notes, Class G Notes, Class H Notes, Class J Notes and Class K
Notes.

 

Offering means the offering of the Rated Notes (other than
the Class L Notes, Class M Notes and Class N Notes) under the Offering
Circular.

 

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

 

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

 

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

 

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

 

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

 

Other
Loan shall have
the meaning set forth in the definition of “Related Future Advance Loan.”

 

Outstanding means with respect to the Notes as of any
Measurement Date, any and all Notes theretofore authenticated and delivered
under this Indenture and the Paying Agency Agreement other than Notes
cancelled, redeemed, exchanged or replaced in accordance with the terms of this
Indenture or the Paying Agency Agreement, as applicable; provided that in determining whether the
Holders of the requisite percentage of Notes have given any direction, notice,
consent, approval or objection, (A) any Notes held or beneficially owned by the
Collateral Manager or any of its Affiliates or by an account or fund for which
the Collateral Manager or any of its Affiliates acts as the investment advisor
with discretionary authority will be disregarded with respect to any vote or
consent relating to the removal or termination of the

 

51

 

Collateral Manager or the assignment by the
Collateral Manager of its rights and obligations under the Collateral
Management Agreement, except for any assignments or transfers by the Collateral
Manager of its rights and obligations to Affiliates of the Collateral Manager,
subject to any applicable requirements under the Investment Advisers Act and (B)
the Class A-R Notes will be assumed to be fully drawn.

 

Owner
REIT means an
entity which qualifies as a REIT for U.S. federal income tax purposes and which
owns, directly or indirectly, through one or more Qualified REIT Subsidiaries
thereof or one or more entities disregarded as entities separate from such REIT
or its Qualified REIT Subsidiaries, 100% of the Class L Notes, the Class M
Notes, the Class N Notes, the Income Notes and the Ordinary Shares (other than
any Class L Notes, Class M Notes or Class N Notes with respect to which the
Issuer has received an Opinion of Counsel rendered by nationally recognized
U.S. tax counsel experienced in such matters to the effect that the Class L
Notes, Class M Notes or Class N Notes, as applicable, will be treated as
indebtedness for U.S. federal income tax purposes).

 

PAA
Issued Note Paying Agent means Wells Fargo Bank, National Association, and any successors or
assigns in its capacity as PAA Issued Note Paying Agent under the Paying Agency
Agreement.

 

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

 

PAA
Issued Note Paying Agent Fee means, with respect to any Payment Date, for so
long as any Class N Notes or Income Notes remain Outstanding, the fee payable
to the PAA Issued Note Paying Agent in an aggregate amount equal to U.S.$10,000
per annum.

 

PAA
Issued Note Register means, with respect to the Income Notes and Class N Notes, the note
register maintained by the PAA Issued Note Registrar.

 

PAA
Issued Note Registrar means Wells Fargo Bank, National Association, and any successors or
assigns in its capacity as PAA Issued Note Registrar under the Paying Agency
Agreement.

 

PAA
Issued Notes
means, together, the Class N Notes and Income Notes.

 

Participation
Interests means
pari passu participation interests in commercial mortgage loans, Subordinate
Mortgage Loan Interests and Mezzanine Loans.

 

Paying
Agency Agreement
means that certain Paying Agency Agreement, dated as of December 7, 2006, as
the same may be amended or supplemented from time to time, between the Issuer
and the PAA Issued Note Paying Agent.

 

Paying
Agents means,
together, the Note Paying Agent and the PAA Issued Note Paying Agent.

 

Payment
Account means
the Securities Account designated the “Payment Account” and established in the
name of the Trustee pursuant to Section 10.9.

 

52

 

Payment Date
means the 1st day of each month, or if such day is not a Business Day, the next
succeeding Business Day, commencing in February 2007 and ending on the
applicable Stated Maturity Date (or in the case of the Class A-R Notes,
the related repayment date, if sooner).

 

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

 

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

 

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

 

Plan Asset
Regulation means the U.S. Department of Labor regulation
at 29 C.F.R. Section 2510.3-101.

 

Placement Agent
means Wachovia Capital Markets, LLC in its capacity as placement agent of the
Class A-R Notes.

 

Pledged Collateral
Interest means as of any date of determination,
any Collateral Interest that has been Granted to the Trustee and has not been
released from the lien of this Indenture pursuant to Section 10.12.

 

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

 

Preferred Equity
Security means a security, providing for regular
payments of dividends or other distributions, representing an equity interest
in an entity (including, without limitation, a partnership or a limited
liability company) that is a borrower under a mortgage loan secured by
commercial properties (or in an entity operating or controlling, directly or
through affiliates, such commercial properties), which is generally senior with
respect to the payments of dividends and other distributions, redemption rights
and rights upon liquidation to such entity’s common equity.

 

Principal Balance
means, with respect to any Collateral Interest or Eligible Investment, as of
any date of determination, the outstanding principal amount of such Collateral
Interest or Eligible Investment; provided
that the Principal Balance of (i) any Collateral Interest which

 

53

 

permits the deferral or capitalization of interest will not include any
outstanding balance of the deferred and/or capitalized interest except in the
case of Future Funding Assets that provide for a Future Advance Amount with
respect to debt service, if the amount has been capitalized prior to the
acquisition by the Issuer and provided the amount did not exceed the amount
available for debt service or other Future Advance Amounts, (ii) any
Equity Interest will be zero, (iii) any putable Collateral Interest which
matures after the Stated Maturity Date will be the lower of the put price and the
outstanding principal amount, (iv) any Collateral Interest or Eligible
Investment in which the Trustee does not have a first priority perfected
security interest shall be deemed to be zero, (v) the Principal Balance of
an Future Funding Asset will be the outstanding principal balance of such
Future Funding Asset, plus any Future Funding Obligations that have not been
irrevocably reduced with respect to such Future Funding Asset and (vi) any
Preferred Equity Security will be equal to the component of the liquidation
price that is not attributable to the return of capital by its governing
documents; provided, further, that for purposes of calculating
the Principal Coverage Amount, an appraisal reduction of a Collateral Interest
will be assumed to result in an implied reduction of Principal Balance for such
Collateral Interest only if such appraisal reduction is intended to reduce the
interest payable on such Collateral Interest and only in proportion to such
interest reduction.

 

Principal Coverage
Amount means, on any Measurement Date, an amount
equal to (i) the aggregate Principal Balance of all Collateral Interests
(other than Impaired Interests, Written Down Interests and Deferred Interest
PIK Bonds) included in the Collateral on such date, plus (ii) the aggregate Principal Balance of the Eligible
Investments in the Collateral Account on such date that represent Collateral
Principal Collections, plus
(iii) the Impaired Interests Amount, plus
(iv) with respect to Written Down Interests, the Reduced Principal
Balance, plus (v) the
Deferred Interest PIK Bond Amount, plus
(vi) the Aggregate Class A-R Undrawn Amount (without duplication).
For purposes of calculating the Principal Coverage Amount, any Collateral
Interest that has sustained an implied reduction of Principal Balance due to an
appraisal reduction will not be considered an Impaired Interest solely due to
such implied reduction.

 

Principal Coverage
Ratio means, on any Measurement Date for any
Class of Notes, the ratio (expressed as a percentage) based on the ratio
of (x) to (y), where (x) is the Principal Coverage Amount as of such
Measurement Date and (y) is (1) in the case of the Class A/B/C/D
Coverage Test, the sum of the aggregate principal amount of the then
Outstanding Class A Notes, Class B Notes, Class C Note and
Class D Notes (assuming for purposes of this calculation that the
Class A-R Commitments are fully drawn) as of such Measurement Date,
(2) in the case of the Class E/F/G Coverage Test, the amount
determined by the foregoing clause (1) plus
the sum of the aggregate principal amount (including any Cumulative Applicable
Periodic Interest Shortfall Amount and any interest accrued on such amount)
then Outstanding of the Class E Notes, Class F Notes and Class G
Notes as of such Measurement Date or (3) in the case of the
Class H/J/K Coverage Test, the amount determined by the foregoing clause
(2) plus the sum of the
aggregate principal amount (including any Cumulative Applicable Periodic
Interest Shortfall Amount and any interest accrued on such amount) then
Outstanding of the Class H Notes, Class J Notes and Class K
Notes as of such Measurement Date.

 

Principal Coverage
Test means, for any Class of Notes
Outstanding, a test satisfied on any Measurement Date if the applicable
Principal Coverage Ratio as of such Measurement Date is equal to or greater
than the applicable Required Coverage Ratio.

 

54

 

Priority of Payments
means, collectively, the priority of payments specified in
Section 11.1(a), (b) and (c).

 

Pro Rata Principal
Coverage Ratio means, as of any Measurement Date,
the ratio (expressed as a percentage) based on the ratio of (x) to (y),
where (x) is the Principal Coverage Amount as of such Measurement Date and
(y) is the sum of the aggregate principal amount then Outstanding of the
Class A Notes and Class B Notes (assuming for purposes of this
calculation that the Class A-R Commitments are fully drawn) as of such
Measurement Date.

 

Pro Rata Principal
Coverage Test will be met as of any Measurement
Date if the Pro Rata Principal Coverage Ratio as of such Measurement Date is
equal to or greater than or equal to 144.61%.

 

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

 

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

 

Protection Provider
Default means that one of the following events
shall have occurred and is continuing: (a) MBIA shall have failed to make
a required payment when due under any credit protection arrangement it provides
to any Holder of a Class A Senior Note or (b) an event of the type
described in Section 5.1(g) or (h) shall have occurred and be
continuing with respect to MBIA.

 

Purchase and
Placement Agreement means the agreement, dated as
of the Closing Date, among the Co-Issuers, the Dealers and the Placement Agent
relating to the purchase and placement of the Offered Notes.

 

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

 

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

 

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

 

55

 

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

 

Qualified
Institutional Lender means a qualified
institutional lender of the type typically permitted to acquire subordinate
interests in commercial mortgage loans (all or a portion of which will be
included in a CMBS transaction) pursuant to the documents creating such
interests.

 

Qualified Letter of
Credit means a letter of credit issued by a
domestic bank or the U.S. agency or branch of a foreign bank with a long-term
unsecured debt rating of at least “A3” by Moody’s that is irrevocable and
unconditional to the extent usual and customary for such instruments.

 

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

 

Qualified REIT
Subsidiary means a “Qualified REIT Subsidiary”
within the meaning of Section 856(i)(2) of the Code.

 

Qualifying Foreign
Obligor means a corporation, partnership or other
entity organized or incorporated under the law of any of Australia, Canada,
France, Germany, Ireland, Italy, Mexico, New Zealand, Sweden, Switzerland or
the United Kingdom, so long as the unguaranteed, unsecured and otherwise
unsupported long-term Dollar sovereign debt obligations of such country are
rated “Aa2” or better by Moody’s.

 

Qualifying Foreign
Jurisdiction means Australia, the Bahamas,
Bermuda, Canada, the Cayman Islands, the Channel Islands, Japan, Mexico, the
Netherlands Antilles, New Zealand, Switzerland or any Member State of the
European Union.

 

Quarterly
Measurement Date means (i) in the case of the
first Quarterly Measurement Date, the date designated by the Collateral Manager
on or prior to the purchase of the initial Related Future Funding Loan by the
Issuer (but not more than three months prior thereto), (ii) the third
Calculation Date following any previous Quarterly Measurement Date so long as
the Issuer owns any Related Future Funding Loan and (iii) in the case of a
Related Future Funding Loan purchased following any suspension of Quarterly
Measurement Date calculations pursuant to clause (ii) of this definition,
the date designated by the CM on or prior to the purchase of such Related
Future Funding Loan (but not more than three months prior thereto).

 

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

 

Quarterly Pay
Security Interest Reserve Amount means with
respect to each Collateral Interest that is a Quarterly Pay Security, as of any
Calculation Date, the amount equal to (i) the amount of interest paid by
the obligor on the most recent payment date (or, if no payment date has
occurred, the estimated interest payment due on the first payment date) with
respect to such Quarterly Pay Security multiplied by (ii) (A) the
number of months until the next payment date with respect to such Quarterly Pay
Security minus one (rounded up to the nearest whole number)

 

56

 

divided by (B) three; provided that for any Quarterly Pay Security
with respect to which no scheduled interest payments remain, the Quarterly Pay
Security Interest Reserve Amount shall be zero.

 

Rake Bond
means a CMBS backed solely by a single promissory note secured by a mortgaged
property, which promissory note is subordinate in right of payment to one or
more separate promissory notes secured by the same mortgaged property.

 

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

 

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

 

Rated Notes
means, collectively, the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes, Class J Notes, Class K Notes, Class L
Notes, Class M Notes and Class N Notes.

 

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

 

Rating
means, as the context requires, a Fitch Rating or a Moody’s Rating.

 

Rating Agency
means each of (i) Moody’s, for so long as any of the Outstanding Rated Notes
are rated by Moody’s (including any private or confidential rating) and
(ii) Fitch, for so long as any of the Outstanding Rated Notes are rated by
Fitch (including any private or confidential rating), or, with respect to
Pledged Securities generally, if at any time Moody’s or Fitch ceases to provide
rating services, any other nationally recognized investment rating agency
selected by the Issuer (upon consultation with the Collateral Manager) and
reasonably satisfactory to a Majority of each Class of Rated Notes. In the
event that at any time Moody’s ceases to be a Rating Agency, references to
rating categories of Moody’s in this Indenture shall be deemed instead to be
references to the equivalent categories of such other rating agency as of the
most recent date on which such other rating agency and Moody’s published
ratings for the type of security in respect of which such alternative rating
agency is used.

 

Rating Confirmation
means, with respect to any specified action or determination, for so long as
any of the Rated Notes are Outstanding and rated by Moody’s or Fitch, the
receipt of written confirmation by each Rating Agency rating any Rated Notes,
that such specified action or determination will not result in the reduction or
withdrawal or other adverse action with respect to their then-current ratings
on the Rated Notes (including any private or confidential rating) unless Rating
Confirmation is specified herein to be required by only Moody’s or Fitch, in
which case such Rating Confirmation will be sufficient.

 

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

 

57

 

Rating
Factor/Weighted Average Spread/Weighted Average Recovery Rate Matrix
means the following table relating to the Moody’s Maximum Weighted Average
Rating Factor Test, the Weighted Average Spread Test and the Moody’s Minimum
Average Recovery Rate Test:

 

	
  Scenario

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  
	
  Maximum WARF

  	
   

  	
  5,500

  	
   

  	
  5,465

  	
   

  	
  5,435

  	
   

  	
  5,400

  	
   

  	
  5,500

  	
   

  
	
  Minimum Weighted Average Spread

  	
   

  	
  2.3500

  	
  %

  	
  2.4875

  	
  %

  	
  2.6250

  	
  %

  	
  2.7625

  	
  %

  	
  2.9000

  	
  %

  
	
  Minimum Weighted Average Recovery Rate

  	
   

  	
  40.00

  	
  %

  	
  37.50

  	
  %

  	
  35.00

  	
  %

  	
  32.50

  	
  %

  	
  30.00

  	
  %

  

 

Real Estate CDO
Securities means securities that entitle the
holders thereof to receive payments that depend on the cash flow from or the
credit exposure to a portfolio consisting primarily of (i) REIT Debt
Securities, (ii) commercial mortgage backed securities,
(iii) commercial mortgage loans or interests therein or (iv) a
combination of the foregoing; provided
that such dependence may in addition be conditioned upon rights or additional
assets designed to assure the servicing or timely distribution of proceeds to
holders of the Real Estate CDO Securities such as a financial guaranty
insurance policy.

 

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

 

Redemption
means an Optional Redemption, a Clean-Up Call, an Auction Call Redemption or a
Tax Redemption.

 

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

 

Redemption Date
Statement has the meaning specified in
Section 10.11(b).

 

Redemption Price
means, (i) with respect to each Class of Rated Notes, (a) their
then-outstanding aggregate principal amount plus
(b) accrued interest thereon to the date of redemption to the extent not
already paid (including, without limitation, any Cumulative Applicable Periodic
Interest Shortfall Amount together with interest thereon) plus (c) unreimbursed Interest
Advances plus (d) any
unreimbursed Cure Advances plus
(e) with respect to the Class A-R Notes, any accrued and unpaid
Class A-R Breakage Costs, Class A-R Increased Costs and
Class A-R Commitment Fee and (ii) if the Income Notes are redeemed,
the “Redemption Price” for the Income Notes, means an amount equal to the
aggregate of any residual amounts distributable on the Income Notes in respect
of such redemption pursuant to Section 11.1(a) and (b).

 

58

 

Reduced Principal Balance
means, with respect to each Written Down Interest, the original Principal Balance
of such Written Down Interest minus the
Written Down Amount as notified by or on behalf of the related issuer or
trustee to the holders of such Written Down Interest (including appraisal
reductions on CMBS).

 

Reference Banks
has the meaning specified in Schedule B.

 

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

 

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

 

Regulation S
means Regulation S under the Securities Act.

 

Regulation S
Certificated Note has the meaning specified in
Section 2.4(b)(1)(vi).

 

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

 

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

 

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

 

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

 

Reimbursement Rate
means a per annum rate equal to the “prime rate” as published in the “Money
Rates” section of the Wall Street Journal, as such “prime rate” may change from
time to time.

 

Reinvestment Asset
Information has the meaning specific in
Section 12.2(c).

 

Reinvestment
Criteria means, with respect to any reinvestment
of Collateral Principal Payments, Sale Proceeds, Class A-R Draws and
amounts on deposit in the Future Funding Asset Account, the following criteria:

 

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

 

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

 

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

 

59

 

Reinvestment Period
means the period beginning on the Closing Date and ending on and including the
Payment Date in February 2012; provided,
however that if
(i) (A) a Key Manager Event occurs and (B) the Controlling Party
directs in writing that the Trustee terminate the Reinvestment Period or
(ii) (A) the Collateral Manager shall resign or be removed and
(B) the Controlling Party appoints a Static Portfolio Collateral Manager,
then the Reinvestment Period shall instead end upon the Trustee’s issuance of
written notice of such termination to the Collateral Manager and the Rating
Agencies.

 

REIT
means a “real estate investment trust” as defined in Section 856 of the
Code.

 

REIT Debt Securities
means securities issued by a real estate investment trust (as defined in
Section 856 of the Code or any successor provision) whose assets consist
(except for rights or other assets designed to assure the servicing or timely
distribution of proceeds to holders of such securities) of a portfolio of real
property interests.

 

Related Future
Advance Loan means any Collateral Interest
acquired by the Issuer by purchase (referred to solely for purposes of this
definition as the “Issuer’s Loan”) with respect to which, at the time of such
acquisition and for so long as the Issuer owns such loan, there is outstanding
and owned by a Person other than the Issuer one or more loans to the same
borrower that was made by the maker of the Issuer’s Loan (each an “Other Loan”)
if with respect to the Other Loan each of the following criteria are satisfied:
(i) either it (A) is secured by the same mortgage or deed of trust on
the same underlying mortgaged property as the Issuer’s Loan or (B) if the
Issuer’s Loan is a participation interest in a Mezzanine Loan, is secured by
the same pledged collateral, (ii) there exists a continuing obligation on
the part of the holder of the Other Loan after the Closing Date to provide
additional funding to the related borrower, (iii) the long-term unsecured
debt rating by Moody’s of the holder of such Other Loan is below “A3”,
(iv) the holder of such Other Loan is not a collateralized debt obligation
issuer and (v) any rating assigned to such Collateral Interest by any
Rating Agency shall be on a “stabilized,” rather than an “as is,” basis. For
the avoidance of doubt, (a) to the extent there is only one Other Loan
related to a Collateral Interest and such Other Loan does not satisfy each of
the criteria set forth in clauses (i) through (v) of the preceding
sentence, such Collateral Interest will not be deemed to be a Related Future
Advance Loan and (b) to the extent there is more than one Other Loan
related to a Collateral Interest and each Other Loan does not satisfy each of
the criteria set forth in clauses (i) through (v) of the preceding
sentence, such Collateral Interest will be deemed a Related Future Advance Loan
but only such Other Loans that do satisfy each of such criteria will be subject
to the clause (xxii) of the Eligibility Criteria related thereto.

 

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

 

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

 

60

 

Required Coverage
Ratio means, with respect to the specified Classes
of Notes and the related Interest Coverage Test or Principal Coverage Test, as
the case may be, as of any Calculation Date, the applicable percentage
indicated below opposite such specified Classes:

 

	
  Class

  	
   

  	
  Principal Coverage Test

  	
   

  	
  Interest Coverage Test

  	
   

  
	
  Class A/B/C/D

  	
   

  	
  145.36

  	
  %

  	
  145.36

  	
  %

  
	
  Class E/F/G

  	
   

  	
  132.04

  	
  %

  	
  132.04

  	
  %

  
	
  Class H/J/K

  	
   

  	
  121.88

  	
  %

  	
  121.88

  	
  %

  

 

Required Future
Funding Reserve Amount means an amount, calculated
as of the most recent Quarterly Measurement Date, equal to the greater of

 

(a)                                  the
sum of

 

(1)                                  the
projected future funding amount for the next succeeding four calendar months
for all Other Loans which are Transitional Loans plus

 

(2)                                  50%
of the projected future funding amount for the next succeeding 12 calendar
months for all Other Loans which are Non-Transitional Loans and

 

(b)                                 Aggregate
Non-Transitional Asset Base.

 

Requisite
Noteholders means the Controlling Party.

 

Reserved Matters
has the meaning specified in Section 8.2.

 

Retained Rights
means with respect to each Initial Collateral Interest that is a Subordinate
Mortgage Loan Interest, Preferred Equity Security, Mortgage Loan Interest,
Mezzanine Loan, Participation Interest, CRE Debt Obligation, Credit Lease Loan
or Tenant Lease Loan Interest, any right of the holder thereof to receive any
exit fees, extension fees or prepayment premiums paid in connection with,
comprising or underlying the Collateral Interests.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

61

 

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

 

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

 

Schedule of
Collateral Interests means the list of Collateral
Interests securing the Indenture Issued Notes that is attached as Schedule A.

 

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

 

Second Currency
has the meaning specified in Section 14.13.

 

Secured Parties
means the Trustee, for the benefit of the Rated Noteholders (other than the
Class N Noteholders), each Hedge Counterparty and the Collateral Manager.

 

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

 

Securities Act
means the U.S. Securities Act of 1933, as amended.

 

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

 

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

 

Seller or Sellers
means individually or together, NRFC WA Holdings, LLC, NRFC WA Holdings II,
LLC, NRFC WA Holdings III, LLC, NRFC WA Holdings IV, LLC and NRFC WA Holdings
V, LLC and other Affiliates as individual sellers and their successors or
assigns, in their capacity as sellers under the Asset Transfer Agreements or
any other seller of Collateral Interests acquired by the Issuer or the
Underlying Trustee after the Closing Date.

 

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

 

Semi-Annual Pay
Security Interest Reserve Amount means, with
respect to each Collateral Interest that is a Semi-Annual Pay Security, as of
any Calculation Date, the amount equal to (i) the amount of interest paid
by the obligor on the most recent payment date (or if no payment date has
occurred, the estimated interest payment due on the first payment date) with
respect to such Semi-Annual Pay Security multiplied
by (ii) (A) the number of months until the next payment date with
respect to such Semi-Annual Pay Security minus
one (rounded up to the nearest whole number) divided
by (B) six; provided that for
any Semi-Annual Pay Security with respect to which no scheduled interest
payments remain, the Semi-Annual Pay Security Interest Reserve Amount shall be
zero.

 

62

 

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

 

Senior
Interests means
the interests in a commercial mortgage loan which rank senior in priority to
the Subordinate Mortgage Loan Interests in the same commercial mortgage loan.

 

Senior
Loans means the
debt in a commercial mortgage loan which rank senior in priority to the Subordinate
Mortgage Loan Interests in the same commercial mortgage loan.

 

Senior
Notes means,
with respect any Class of Notes (other than the Class A Senior
Notes), the Class or Classes of Notes with a prior alphabetical
designation.

 

Senior
Structuring Fee
means, with respect to each Payment Date, an amount equal to 0.04875% per annum
of the Fee Basis Amount payable to the Collateral Manager pursuant to the
Collateral Management Agreement.

 

Servicers means, Wachovia Bank and/or one or more additional
servicers or special servicers, each servicing as a servicer or special
servicer pursuant to the Servicing Agreement.

 

Servicing
Agreement means
a certain Servicing Agreement, dated as of December 7, 2006, as the same
may be amended or supplemented from time to time, among the Issuer, and the
Servicers, each as a servicer.

 

Special
Amortization Pro Rata Condition means a condition that will be satisfied with
respect to any Payment Date if either:

 

(i) (a) either (1) the Pro
Rata Principal Coverage Test has been satisfied on the related and each prior
Calculation Date, or (2) if the Pro Rata Principal Coverage Test has
failed to be satisfied on any previous Calculation Date, subsequent to such
failure, (x) the Pro Rata Principal Coverage Ratio as of the related
Calculation Date equals or exceeds the Pro Rata Principal Coverage Ratio in
existence on the Effective Date or (y) the Pro Rata Principal Coverage
Test is satisfied as of the related Calculation Date without applying
Collateral Principal Collections on any previous Payment Date, (b) either (1) the
Herfindahl Score is equal to 22 and each of the Coverage Tests are satisfied as
of the related Calculation Date or (2) if the Herfindahl Score fails to be
equal to 22 then Rating Agency Confirmation and the consent of the Controlling
Party is obtained, (c) the aggregate balance of the Collateral Interests
as of the related Calculation Date is greater than an amount equal to 50% of
the aggregate Principal Balance of the Collateral Interests on the Effective
Date, (d) the Moody’s Maximum Weighted Average Rating Factor Test is
satisfied as of the related Calculation Date, (e) Moody’s Minimum Average
Recovery

 

63

 

Rate Test is satisfied as of the related
Calculation Date, (f) the Moody’s Weighted Average Extended Maturity Test
is satisfied as of the related Calculation Date, (g) no Event of Default
has occurred and is continuing, and (h) the Interest Coverage Test for
each Class of Offered Notes is satisfied; or

 

(ii) a Rating Confirmation has been
provided by Moody’s and the Controlling Party has given its consent.

 

Specified
Currency has the
meaning specified in Section 14.13.

 

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

 

Specified
Place has the
meaning specified in Section 14.13.

 

Specified
Types means any
Trust Certificate, CMBS, Real Estate CDO Security, CRE Debt Obligations, REIT
Debt Security or Collateral Interest related to (x) developed or
undeveloped commercial real estate or (y) undeveloped real estate intended
to be developed into residential property; provided
that no loan shall be secured by an individual residential property.

 

Stated
Maturity Date
means the Payment Date occurring in February 2041.

 

Subordinate
Collateral Management Fee means the subordinated fee payable to the Collateral Manager at a per
annum rate in arrears on each Payment Date pursuant to the Collateral
Management Agreement, in an amount (as certified by the Collateral Manager to
the Trustee) equal to 0.25000% of the Fee Basis Amount for such Payment Date; provided that the Subordinate Collateral
Management Fee will be payable on each Payment Date only to the extent of funds
available for such purpose in accordance with the Priority of Payments. Any
unpaid Subordinate Collateral Management Fee will be deferred and paid on the
next succeeding Payment Date to the extent funds are available for such
purpose. Any unpaid Subordinate Collateral Management Fee that is deferred due
to the operation of the Priority of Payments will not accrue interest. Any
Subordinate Collateral Management Fee accrued but not paid prior to the
resignation or removal of the Collateral Manager shall continue to be payable
to the Collateral Manager on the Payment Date immediately following the
effectiveness of such resignation or removal.

 

Subordinate
Mortgage Loan Interests means subordinate interests in commercial mortgage loans (including
subordinate participation interests in commercial mortgage loans) and
subordinate commercial mortgage loans.

 

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

 

Substitute
Collateral Interest means a debt obligation meeting the Eligibility Criteria acquired by or
on behalf of the Issuer with Collateral Principal Collections, Sale Proceeds or
Class A-R Draws that are reinvested in accordance with the provisions of
this Indenture.

 

64

 

Suspense
Account means
the Securities Account designated the “Suspense Account” and established in the
name of the Trustee pursuant to Section 10.12.

 

Synthetic
Security means
any swap transaction, debt security, security issued by a trust or similar
vehicle or other investment, the returns on which (as determined by the
Collateral Manager) are linked to the credit performance of a reference
obligation, but which may provide for a different maturity, payment date,
interest rate, credit exposure or other credit or non-credit related
characteristics from such reference obligation.

 

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

 

Tax
Event means an
event that will occur if (x)(1)(i) any obligor or withholding agent is, or
on the next scheduled payment date under any Collateral Interest, will be,
required to deduct or withhold from any payment under any Collateral Interest
to the Issuer (other than any commitment fee with respect to the unfunded
portion of any Future Funding Assets) for or on account of any tax for whatever
reason and such obligor or withholding agent is not required to pay to the
Issuer such additional amount as is necessary to ensure that the net amount
actually received by the Issuer (free and clear of taxes, whether assessed
against such obligor or the Issuer) will equal the full amount that the Issuer
would have received had no such deduction or withholding been required, (ii) any
jurisdiction imposes net income, profits, or similar tax on the Issuer, (iii) the
Issuer is required to deduct or withhold from any payment under any Hedge
Agreement for or on account of any tax and the Issuer is obligated to make a
gross up payment (or otherwise pay additional amounts) to any Hedge
Counterparty or (iv) any Hedge Counterparty is required to deduct or
withhold from any payment under any Hedge Agreement for or on account of any
tax for whatever reason and such Hedge Counterparty is not required to pay to
the Issuer such additional amount as is necessary to ensure that the net amount
actually received by the Issuer (free and clear of taxes, whether assessed
against such obligor or the Issuer) will equal the full amount that the Issuer
would have received had no such deduction or withholding been required and (2) the
sum of the amount of (i) such a tax or taxes imposed on the Issuer or
withheld from payments to the Issuer to the extent the Issuer receives less
than the full amount that the Issuer would have received had no such deduction
occurred and (ii) such gross up payments required to be made by the Issuer
to the extent they exceed the amounts that the Issuer would have been required to
pay had no deduction or withholding been required, in the aggregate, equals ten
percent (10%) or more of the amount of aggregate interest payments on all of
the related Collateral Interests during the related Due Period or (y) the
Issuer fails to maintain its status as a Qualified REIT Subsidiary and has not
received an opinion of counsel to the effect that the Issuer not a foreign
corporation engaged in trade or business for U.S. Income Tax purposes.

 

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

 

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

 

Taxed
Collateral Interest means any Collateral Interest (including, without limitation, a Preferred
Equity Security) the ownership of which could result in the Issuer being or
becoming

 

65

 

subject to U.S. tax on a net income basis or
being or becoming subject to the U.S. branch profits tax.

 

Taxed
Property means
any property other than a Collateral Interest but including, without limitation,
property acquired or to be acquired in respect of a Collateral Interest, the
ownership of which could result in the Issuer being or becoming subject to U.S.
tax on a net income basis or being or becoming subject to the U.S. branch
profits tax.

 

Tenant
Lease Loan Interests means commercial mortgage-backed securities that entitle the holders
thereof to receive payments that depend on the cash flow from a pool of
commercial mortgage loans made to finance the acquisition, construction and
improvement of properties primarily leased to tenants engaged in a business (or
on the cash flow from such leases), the underwriting of which is dependent
primarily on the creditworthiness of the related tenants; provided that such dependence may in
addition be conditioned upon rights or additional assets designed to assure the
servicing or timely distribution of proceeds to holders of the commercial
mortgage-backed securities such as a financial guaranty insurance policy.

 

Total
Net Unfunded Future Advance Amount means, as of any date, the excess, if any, of (i) the
then outstanding Total Unfunded Future Advance Amount over (ii) the amount
then on deposit in the Future Funding Asset Account.

 

Total
Unfunded Future Advance Amount means for all Future Funding Assets, the aggregate
amount of the Unfunded Future Advance Amounts.

 

Transaction
Documents means
this Indenture, the Collateral Management Agreement, the Account Control
Agreement, the Corporate Services Agreement, the Collateral Administration
Agreement, any Hedge Agreement, the Paying Agency Agreement, the Class A-R
Note Purchase Agreement and the Purchase and Placement Agreement.

 

Transitional
Asset means any
Future Funding Asset or Other Loan for which the unfunded portion of such loan
as of the origination date of the related financing represents 35% or less of
the sum of (a) the then outstanding amount of such loan and (b) the
remaining amount required to be funded to the borrower pursuant to the terms of
such loan; provided, that an
Future Funding Asset or Other Loan shall not be classified as a
Non-Transitional Asset if Rating Confirmation to such effect is received.

 

Trust
Certificate
means one or more trust certificates each of which represents an ownership
interest in the Underlying Trust created pursuant to the Master Trust
Agreement, which are secured by Subordinate Mortgage Loan Interests, Mezzanine
Loans, Participation Interests, Mortgage Loan Interests, Credit Lease Loans,
Preferred Equity Securities and/or Tenant Lease Loan Interests.

 

Trust
Officer means,
when used with respect to the Trustee, any Officer within the Corporate Trust
Office working on the transaction described in this Indenture and (or any
successor group of the Trustee) authorized to act for and on behalf of the
Trustee, including any vice president, assistant vice president or other
Officer of the Trustee customarily performing functions similar to those
performed by the persons who at the time shall be such Officers, respectively,
or to

 

66

 

whom any corporate trust matter is referred
at the Corporate Trust Office because of such person’s knowledge of and
familiarity with the particular subject.

 

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

 

Trustee
Expenses means,
with respect to any Payment Date, an amount equal to the sum of all expenses or
indemnities incurred by or otherwise owing to the Trustee during the preceding
Due Period in accordance with this Indenture, other than the Trustee Fee,
including, without limitation, any expenses or indemnities incurred by the
Trustee (and the Bank) in any of its capacities (including in its capacity as
Collateral Administrator, Calculation Agent, Note Paying Agent, Class A-R
Note Agent, PAA Issued Note Paying Agent and Registrar).

 

Trustee
Fee means, with
respect to any Payment Date, the fee payable to the Trustee in an aggregate
amount equal to 0.011% per annum of the Collateral Interest Principal Balance
as of the first day of the related Due Period; provided that in no event shall, so long as any Class of
Rated Notes remains Outstanding, such fee be an annual amount less than
U.S.$25,000.

 

Trustee
Interest Advance Fee means, a per annum fee payable to the Trustee in accordance with the
Priority of Payments on each Payment Date equal to 0.00125% of the outstanding
principal amount of the Class A Notes (assuming for the purposes of this
calculation that the Class A-R Notes are fully drawn) the Class B
Notes, the Class C Notes and the Class D Notes immediately prior to
such Payment Date.

 

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

 

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

 

Underlying
Trust means the
newly formed trust established pursuant to the Master Trust Agreement.

 

Underlying
Trust Expenses
means, all reasonable expenses, disbursements and advances incurred or made by
the Underlying Trustee in accordance with any provision of the Master Trust
Agreement or in the administration or the enforcement of any provision thereof
(including the reasonable compensation, expenses and disbursements of its
agents and counsel) including, without limitation, any amounts in respect of
indemnification owed to the Underlying Trustee pursuant to Section 6.04 of
the Master Trust Agreement, but excluding any overhead or employee expenses of
the Underlying Trustee.

 

Underlying
Trustee means
Wells Fargo Bank, National Association, in its capacity as underlying trustee
pursuant to the Master Trust Agreement, and any successor or successors
thereto.

 

Undeveloped
Real Estate Collateral Interest means a Collateral Interest related to undeveloped
real estate intended to be developed into residential or commercial property.

 

67

 

Unfunded
Future Advance Amount means, with respect to any Future Funding Asset and any Calculation
Date, any Future Advance Amount not yet funded (by the Issuer or any other
entity) pursuant to the terms of the Future Funding Asset.

 

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

 

Uninvested
Proceeds Account
has the meaning specified in Section 10.4.

 

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

 

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

 

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

 

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

 

Wachovia
Bank means
Wachovia Bank, National Association and/or its affiliates.

 

Warehouse
Facility has the
meaning specified in Section 12.2(y).

 

Weighted
Average Fixed Rate Coupon means, as of any Measurement Date, the sum (rounded up to the next 0.001%)
of the number obtained by (i) multiplying the Principal Balance of each
Fixed Rate Collateral Interest (except Collateral Interests that are currently
deferring interest) held in the portfolio as of such date by the then-current
interest rate, (ii) summing the amounts determined pursuant to clause (i) for
all Fixed Rate Collateral Interests held in the portfolio as of such date and (iii) dividing
such sum by the aggregate Principal Balance of all Fixed Rate Collateral
Interests held in the portfolio as of such date; provided that for purposes of calculating the Weighted Average
Fixed Rate Coupon of Collateral Interests that are Impaired Interests, the
Written Down Amount with respect to Written Down Interests and Equity Interests
will be excluded, except for those Impaired Interests that at the time of such
calculation have fully become current on all past due interest and scheduled
principal and are paying full current interest in cash pursuant to the terms of
their respective Underlying Instrument.

 

Weighted
Average Spread
means, as of any Measurement Date, the sum (rounded up to the next 0.001%) of
the number obtained by (i) summing the products obtained by multiplying (A) for
each Floating Rate Collateral Interest (other than any Impaired Interest,
Written Down Amount with respect to a Written Down Interest or Deferred
Interest PIK Bond), the stated spread above LIBOR at which interest accrues on
such Collateral Interest as of such date and, for each Deemed Floating Rate
Collateral Interest (other than any Impaired Interest, Written Down Amount with
respect to a Written Down Interest or Deferred Interest PIK Bond), the Deemed
Floating Spread by (B) the Principal Balance of such Collateral Interest
as of such date and (ii) dividing such sum by the aggregate Principal
Balance of all Floating Rate Collateral Interests and all Deemed Floating Rate
Collateral Interests (excluding, in each case, all Impaired Interests, Written
Down Amounts with respect to Written Down Interests and Deferred Interest PIK

 

68

 

Bonds, except for those Impaired Interests
that at the time of such calculation have fully become current on all past due
interest and scheduled principal and are paying full current interest in cash
pursuant to the terms of their respective Underlying Instrument); provided, that for purposes of calculating
the Weighted Average Spread, each Future Funding Asset will be deemed to be two
separate Floating Rate Collateral Interests: (I) one with an outstanding
principal balance equal to the funded portion thereof and a stated interest
rate spread equal to the funded spread on such Future Funding Asset and (II) the
other with an outstanding principal balance equal to the unfunded portion
thereof and an assumed stated interest rate spread equal to the commitment fee
of such Future Funding Asset, less any withholding tax on such commitment fee.

 

Weighted
Average Spread Test means the test that shall be satisfied as of any Measurement Date if the
Weighted Average Spread is greater than or equal to the number set forth in the
row entitled “Minimum Weighted Average Spread” in the Rating Factor/Weighted
Average Spread/Weighted Average Recovery Rate Matrix based on the scenario
chosen by the Collateral Manager as currently applicable to the applicable
Collateral Quality Tests and the Collateral Interests.

 

Withholding
Tax Interest
means a Collateral Interest if:

 

	
  (i)

  	
  any payments thereon to the Issuer (other
  than any commitment fee with respect to the unfunded portion of any Future
  Funding Assets) are subject to withholding tax imposed by any jurisdiction
  (other than U.S. backup withholding tax or other similar withholding tax);
  and

  
	
   

  	
   

  
	
  (ii)

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

  

 

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

 

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

 

1.2.                            ASSUMPTIONS AS TO COLLATERAL INTERESTS, FEES, ETC.

 

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

 

69

 

Pledged Securities and on any other amounts
that may be received for deposit in the Collection Account.

 

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

 

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

 

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

 

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

 

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

 

(c)                                  For each Due Period, the Scheduled Distribution on
any Pledged Security (other than (i) an Impaired Interest, (ii) a
Deferred Interest PIK Bond or (iii) an Equity Interest, which, in each
case except as otherwise provided

 

70

 

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

 

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

 

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

 

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

 

(g)                                 Any reference in the definition of “Trustee Fee,”
“Senior Collateral Management Fee” or “Subordinate Collateral Management Fee”
in

 

71

 

Section 1.1(a) to an amount
calculated with respect to a period at a per annum rate shall be computed on
the basis of a 360 day year of twelve 30-day periods.

 

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

 

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

 

(j)                                     For the purpose of determining fees constituting
Administrative Expenses payable under the Priority of Payments hereunder,
periods longer or shorter than a 30-day period shall be prorated based on the
number of days in such period.

 

(k)                                  With respect to any Collateral Interest that is a
Preferred Equity Security, (i) payments of interest shall mean payments of
dividends or other distributions not attributable to the return of capital by
the related Underlying Instruments and (ii) payments of principal shall
mean distributions attributable to the return of capital by the Underlying
Instruments.

 

(l)                                     On and after the Effective Date, the Collateral
Manager will have the option to elect which of the scenarios set forth in the
Rating Factor/Weighted Average Spread/Weighted Average Recovery Rate Matrix
shall apply for purposes of the Moody’s Maximum Weighted Average Rating Factor
Test, the Weighted Average Spread Test and the Moody’s Minimum Average Recovery
Rate Test going forward. On the Effective Date, the Collateral Manager will be
required to elect which scenario shall initially apply. Thereafter, on ten
Business Days’ notice to the Trustee and Moody’s, the Collateral Manager may
elect to have a different scenario apply, so long as that the Collateral
Quality Tests are satisfied after such election. In no event will the
Collateral Manager be obligated to elect to have a different scenario apply.

 

(m)                               For purposes of calculating the Collateral Quality
Tests in clause (3) of the definition thereof (A) the Collateral
Interests that are included in the Collateral Quality Tests described in
clauses (10) and (11) of the definition thereof shall not be included and
(B) a Collateral Interest that is secured by a Mortgaged Property that is
a mixed use property shall be allocated among the property types described in
subclause (i) through (vi)

 

72

 

of that test based on the
relative square footage allocated to such use (as determined by the Collateral
Manager).

 

1.3.                            RULES OF CONSTRUCTION

 

Unless the context otherwise clearly
requires:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE II

 

THE INDENTURE ISSUED NOTES

 

2.1.                            FORMS GENERALLY

 

(a)                                  The Class A Notes (other than the Class A-R
Notes), Class B Notes, Class C Notes, Class D Notes, Class E
Notes, Class F Notes, Class G Notes, Class H Notes, Class J
Notes and Class K Notes offered and sold in reliance on Regulation S
(each, a Regulation S
Note) shall be issued in fully Registered form without interest
coupons substantially in the form of

 

73

 

the note attached as
Exhibit A-1 (each, a Regulation
S Global Note) with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and such legends as may be applicable thereto, which shall be
deposited with the Trustee at its Corporate Trust Office in Minneapolis,
Minnesota, as custodian for DTC and registered in the name of DTC or a nominee
of DTC, duly executed by the Co-Issuers and authenticated by the Trustee or the
Authenticating Agent as hereinafter provided. The Aggregate Outstanding Amount
of each Regulation S Global Note may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for
DTC or its nominee, as the case may be.

 

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

 

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

 

(d)                                 The Class A-R Notes, the Class L Notes or
Class M Notes offered or sold in the United States or to U.S. Persons
pursuant to Rule 144A or another applicable exemption from registration
under the Securities Act shall be issued in the form of physical certificates
in definitive fully Registered form without interest coupons substantially in
the form of the certificated note attached as Exhibit B (each, a Certificated Class A-R Note,
or a Certificated
Class L Note, or a Certificated Class M Note, and
together, the Certificated Notes) with such legends as may be applicable
thereto,

 

74

 

which shall be duly executed by
the Issuer and authenticated by the Trustee or the Authenticating Agent as
hereinafter provided.

 

(e)                                  The Co-Issuers (in the case of the Indenture Issued
Notes other than the Class L Notes and the Class M Notes) and the
Issuer (in the case of the Class L Notes and the Class M Notes) in
issuing the Indenture Issued Notes may use “CUSIP” or “private placement”
numbers (if then generally in use), and, if so, the Trustee will indicate the
“CUSIP” or “private placement” numbers of the Indenture Issued Notes in notices
of redemption and related materials as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such numbers either as
printed on the Indenture Issued Notes or as contained in any notice of
redemption and related materials.

 

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

 

(a)                                  The aggregate principal amount of Indenture Issued
Notes which may be issued under this Indenture may not exceed U.S.$740,700,000,
excluding Indenture Issued Notes issued upon registration of, transfer of, or
in exchange for, or in lieu of, other Indenture Issued Notes pursuant to Section 2.4,
2.5 or 8.5.

 

(b)           The Rated Notes shall be divided into
fifteen Classes having designations, original principal amounts, original
Applicable Periodic Interest Rates and Stated Maturity Dates as follows:

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Indenture Issued

  	
   

  
	
   

  	
   

  	
  Original Principal

  	
   

  	
  Applicable Periodic

  	
   

  	
  Note Stated Maturity

  	
   

  
	
  Designation

  	
   

  	
  Amount

  	
   

  	
  Interest Rate

  	
   

  	
  Date

  	
   

  
	
  Class A-R Notes

  	
   

  	
  U.S.$260,000,000

  	
   

  	
  LIBOR +0.320%

  	
   

  	
  February 1, 2041

  	
   

  
	
  Class A-1 Notes

  	
   

  	
  U.S.$100,000,000

  	
   

  	
  LIBOR + 0.290%

  	
   

  	
  February 1, 2041

  	
   

  
	
  Class A-2 Notes

  	
   

  	
  U.S.$103,050,000

  	
   

  	
  LIBOR + 0.360%

  	
   

  	
  February 1, 2041

  	
   

  
	
  Class B Notes

  	
   

  	
  U.S.$60,300,000

  	
   

  	
  LIBOR + 0.420%

  	
   

  	
  February 1, 2041

  	
   

  
	
  Class C Notes

  	
   

  	
  U.S.$24,300,000

  	
   

  	
  LIBOR + 0.470%

  	
   

  	
  February 1, 2041

  	
   

  
	
  Class D Notes

  	
   

  	
  U.S.$17,100,000

  	
   

  	
  LIBOR + 0.550%

  	
   

  	
  February 1, 2041

  	
   

  
	
  Class E Notes

  	
   

  	
  U.S.$22,050,000

  	
   

  	
  LIBOR + 0.750%

  	
   

  	
  February 1, 2041

  	
   

  
	
  Class F Notes

  	
   

  	
  U.S.$25,200,000

  	
   

  	
  LIBOR + 0.850%

  	
   

  	
  February 1, 2041

  	
   

  
	
  Class G Notes

  	
   

  	
  U.S.$26,100,000

  	
   

  	
  LIBOR + 0.950%

  	
   

  	
  February 1, 2041

  	
   

  
	
  Class H Notes

  	
   

  	
  U.S.$20,700,000

  	
   

  	
  LIBOR + 1.330%

  	
   

  	
  February 1, 2041

  	
   

  
	
  Class J Notes

  	
   

  	
  U.S.$26,100,000

  	
   

  	
  LIBOR + 1.650%

  	
   

  	
  February 1, 2041

  	
   

  
	
  Class K Notes

  	
   

  	
  U.S.$18,900,000

  	
   

  	
  LIBOR + 1.950%

  	
   

  	
  February 1, 2041

  	
   

  
	
  Class L Notes

  	
   

  	
  U.S.$22,050,000

  	
   

  	
  LIBOR + 3.250%

  	
   

  	
  February 1, 2041

  	
   

  
	
  Class M Notes

  	
   

  	
  U.S.$14,850,000

  	
   

  	
  LIBOR + 3.750%

  	
   

  	
  February 1, 2041

  	
   

  
	
  Class N Notes

  	
   

  	
  U.S.$22,500,000

  	
   

  	
  LIBOR + 4.250%

  	
   

  	
  February 1, 2041

  	
   

  

 

The Indenture Issued Notes will be issuable
in minimum denominations of U.S.$500,000 and, in each case, only in integral
multiples of U.S.$1,000 in excess of such minimum denominations. After
issuance, (x) an Indenture Issued Note may fail to be in compliance with
the minimum denomination requirement as a

 

75

 

result of the repayment of principal thereon
in accordance with the Priority of Payments and (y) the Class E
Notes, Class F Notes, Class G Notes, Class H Notes, Class J
Notes, Class K Notes, Class L Notes, Class M Notes or Class N
Notes may fail to be in an amount which is an integral multiple of U.S.$1,000
due to the addition to the principal amount thereof of deferred interest.

 

(c)                                  Interest shall accrue on the Aggregate Outstanding
Amount of each Class of Indenture Issued Notes (determined as of the first
day of each Interest Period and after giving effect to any payment of principal
occurring on such day) from the Closing Date (or in the case of the Class A-R
Notes, from the relevant funding date) and will be payable in arrears on each
Payment Date. In addition, interest with respect to any Class A-R Notes
may also be paid on any Interim Payment Date in connection with a Class A-R
Prepayment. Interest on each Class of Indenture Issued Notes and interest
on Defaulted Interest will be calculated in accordance with the definition of
Periodic Interest.

 

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

 

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

 

(f)                                    The Indenture Issued Notes shall be numbered,
lettered or otherwise distinguished in such manner as may be consistent
herewith, determined by the Authorized Officers of the Co-Issuers (in the case
of the Indenture Issued Notes other than the Class L Notes and the Class M
Notes) and the Issuer (in the case of the Class L Notes and the Class M
Notes) executing such Indenture Issued Notes as evidenced by their execution of
such Indenture Issued Notes.

 

2.3.                            EXECUTION, AUTHENTICATION, DELIVERY AND DATING

 

(a)                                  The Indenture Issued Notes (other than the Class L
Notes and the Class M Notes) shall be executed on behalf of the Co-Issuers
by an Authorized Officer of each of the Co-Issuers. The Class L Notes and
the Class M Notes shall be executed on behalf of the Issuer by an
Authorized Officer of the Issuer. The signatures of such Authorized Officers on
the Indenture Issued Notes may be manual or facsimile (including in
counterparts).

 

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

 

(c)                                  At any time and from time to time after the
execution and delivery of this Indenture, the Co-Issuers may deliver Indenture
Issued Notes (other than the Class L Notes and the Class M Notes) executed
by the Co-Issuers and

 

76

 

the Issuer may deliver the Class L Notes
and the Class M Notes executed by the Issuer, to the Trustee or the
Authenticating Agent for authentication, and the Trustee or the Authenticating
Agent, upon Issuer Order, shall authenticate and deliver such Indenture Issued
Notes as provided in this Indenture and not otherwise.

 

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

 

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

 

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

 

2.4.                            REGISTRATION, TRANSFER AND EXCHANGE OF INDENTURE ISSUED NOTES

 

(a)                                  Registration of Indenture Issued Notes. The Trustee is hereby appointed as the registrar
hereunder (the Note Registrar). The Trustee is hereby appointed as a transfer
agent with respect to the Indenture Issued Notes, other than the Class A-R
Note, (the Note Transfer Agent), and with respect to the Class A-R Notes,
the Class A-R Note Agent (the Class A-R Note Agent). The Note
Registrar shall (acting solely for this purpose as agent for the Issuer) keep a
register (the Note Register) at the Corporate Trust Office in which, subject to
such reasonable regulations as it may prescribe, the Note Registrar shall
provide for the registration of Indenture Issued Notes and the registration of
transfers of Indenture Issued Notes.

 

77

 

Upon any resignation or removal of the Note
Registrar, the Issuer (after consultation with the Collateral Manager) shall
propose a replacement for approval by the Holders of a Majority of the then
Aggregate Outstanding Amount of the Notes. The Co-Issuers may not terminate the
appointment of the Note Registrar or any Note Transfer Agent without the
consent of each Holder of Indenture Issued Notes.

 

Subject to this Section 2.4, upon
surrender for registration of transfer of any Indenture Issued Notes (other
than the Class L Notes and the Class M Notes) at the office or agency
of the Co-Issuers (or in the case of the Class L Notes and the Class M
Notes, the Issuer) to be maintained as provided in Section 7.2, the
Co-Issuers (in the case of the Indenture Issued Notes other than the Class L
Notes and the Class M Notes) or the Issuer (in the case of the Class L
Notes and the Class M Notes) shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Indenture Issued Notes of any authorized
denomination and of a like aggregate principal amount.

 

At the option of the Holder, Indenture Issued
Notes may be exchanged for Indenture Issued Notes of like terms, in any
authorized denominations and of like aggregate principal amount, upon surrender
of the Indenture Issued Notes to be exchanged at such office or agency.
Whenever any Indenture Issued Note is surrendered for exchange, the Co-Issuers
(in the case of the Indenture Issued Notes other than the Class L Notes
and the Class M Notes) or the Issuer (in the case of the Class L
Notes and the Class M Notes) shall execute and the Trustee shall
authenticate and deliver the Indenture Issued Notes that the Indenture Issued
Noteholder making the exchange is entitled to receive.

 

All Indenture Issued Notes issued and
authenticated upon any registration of transfer or exchange of Indenture Issued
Notes shall be the valid obligations of the Co-Issuers (in the case of the
Indenture Issued Notes other than the Class L Notes and the Class M
Notes) or the Issuer (in the case of the Class L Notes and the Class M
Notes), evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Indenture Issued Notes surrendered upon such registration of
transfer or exchange.

 

Every Indenture Issued Note presented or
surrendered for registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer in form satisfactory to the
Co-Issuers (in the case of the Indenture Issued Notes other than the Class L
Notes and the Class M Notes) or the Issuer (in the case of the Class L
Notes and the Class M Notes) and the Note Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.

 

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

 

78

 

(b)                                 Transfers of Class A Notes (other than the Class A-R
Notes), Class B Notes, Class C Notes, Class D Notes, Class E
Notes, Class F Notes, Class G Notes, Class H Notes, Class J
Notes and Class K Notes

 

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

 

(i)                                     Subject to Section 2.4(b)(1)(ii) through
(vi), transfers of a Global Note shall be limited to transfers of such Global
Note in whole, but not in part, to nominees of the Depositary or to a successor
of the Depositary or such successor’s nominee.

 

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

 

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

 

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

 

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

 

79

 

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

 

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

 

(3)                                  Upon acceptance for exchange or transfer of a
beneficial interest in a Global Note for a Certificated A-K Note, or upon acceptance
for exchange or transfer of a Certificated A-K Note for a beneficial interest
in a Global Note, each as provided herein, the Trustee shall approve the
instruction at the Depositary to adjust the principal amount of such Global
Note on its records to evidence the date of such exchange or transfer and the
change in the principal amount of such Global Note.

 

(4)                                  Subject to the restrictions on transfer and
exchange set forth in this Section 2.4 and to any additional restrictions
on transfer or exchange specified in the Certificated Class A-K Notes, the
Holder of any Certificated A-K Note may transfer or exchange the same in whole
or in part (in a principal amount equal to the minimum authorized denomination
or any larger authorized amount) by surrendering such Certificated A-K Note at
the Corporate Trust Office or at the office of any Note Transfer Agent,
together with (x) in the case of any transfer, an executed instrument of
assignment and (y) in the case of any exchange, a written request for
exchange. Following a proper request for transfer or exchange, the Trustee
shall (provided it has available
in its possession an inventory of Certificated Class A-K Notes), within
five Business Days of such request if made at such Corporate Trust Office, or
within ten Business Days if made at the office of a Note Transfer Agent (other
than the Trustee), authenticate and make available at such Corporate Trust
Office or at the office of such Note Transfer Agent, as the case may be, to the
transferee (in the case of transfer) or Indenture Issued Noteholder (in the
case of exchange) or send by first class mail (at the risk of the transferee in
the case of transfer or Indenture Issued Noteholder in the case of exchange) to
such address as the transferee or Indenture Issued Noteholder, as applicable,
may request, a Certificated A-K Note or Notes, as the case

 

80

 

may require, for a like aggregate principal
amount and in such authorized denomination or denominations as may be requested.
The presentation for transfer or exchange of any Certificated Note shall not be
valid unless made at the Corporate Trust Office or at the office of a Note
Transfer Agent or by a duly authorized attorney-in-fact. Beneficial interests
in Global Notes shall be exchangeable for Certificated Class A-K Notes
only under the limited circumstances described in Section 2.4(b)(5).

 

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

 

(6)                                  If interests in any Global Note are to be
transferred to the Beneficial Owners thereof in the form of Certificated Class A-K
Notes pursuant to Section 2.4(b)(5), such Global Note shall be surrendered
by the Depositary, or its custodian on its behalf, to the Corporate Trust
Office or to the Note Transfer Agent located in Minneapolis, Minnesota and the Trustee
shall authenticate and deliver without charge, upon such transfer of interests
in such Global Note, an equal aggregate principal amount of Certificated Notes
of authorized denominations. The Certificated Class A-K Notes transferred
pursuant to this Section 2.4 shall be executed, authenticated and
delivered only in the denominations specified in Section 2.2(b) and
registered in such names as the Depositary shall direct in writing.

 

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

 

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

 

81

 

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

 

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

 

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

 

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

 

(8)                                  Each holder of a Class A Note, Class B
Note, Class C Note, Class D Note, Class E Note, Class F
Note, Class G Note, Class H Note, Class J Note and Class K
Note (in each case, or an interest therein) shall represent or shall be deemed
to represent that either (A) it is not, and it is not acquiring such Note
or interest therein on behalf of or with “plan assets” (within the meaning of
Plan Asset Regulation) of, any employee benefit plan (within the meaning of Section 3(3) of
the ERISA) or plan (within the meaning of Section 4975 of the Code)
subject to ERISA or Section 4975 of the Code (or any materially similar
applicable law (a Similar
Law)), including certain insurance company general accounts
(each, a Plan),
or (B)(I) such Note is rated investment grade or better as of the date of
acquisition, (II) the holder believes that the Note is properly treated as
indebtedness without substantial equity features for purposes of the Plan Asset
Regulation and agrees to so treat such Note and (III) the holder’s
acquisition, holding and disposition of such Note will not constitute or result
in a non-exempt prohibited transaction under ERISA or Section 4975 of the
Code (or Similar Law).

 

(c)                                  Transfers of Class A-R Notes, Class L
Notes and Class M Notes.

 

(1)                                  If a holder of a beneficial interest in a
Certificated Class A-R Note, Certificated Class L Note or
Certificated Class M Note wishes at any time to transfer its interest in
such Certificated Note such holder may transfer or

 

82

 

cause the transfer of such interest for an
equivalent beneficial interest in one or more such Certificated Notes, as
provided below. Upon receipt by the Issuer and the Note Registrar of (A) such
holder’s Certificated Class A-R Note, Certificated Class L Note or
Certificated Class M Note, as applicable, properly endorsed for assignment
to the transferee and (B) a certificate in the form of Exhibit C-3 (a
Certificated Class A-R
Note Transfer Certificate, Certificated Class L Note Transfer Certificate
or Certificated Class M Note Transfer Certificate, as
applicable) given by the transferee of such beneficial interest, the Note
Registrar shall cancel such Certificated Note, record the transfer in the Note
Register and authenticate and deliver one or more Certificated Class A-R
Notes, Certificated Class L Notes or Certificated Class M Notes, as
applicable, bearing the same designation as the related Certificated Notes
endorsed for transfer, registered in the names specified in the assignment
described in clause (A) above, in principal amounts designated by the
transferee (the aggregate of such amounts being the same as the beneficial
interest in the related Certificated Notes surrendered by the transferor) and
in the minimum denominations and integral multiples in excess thereof. In
addition, the Note Registrar shall not register any transfer of any Certificated
Class L Notes or Certificated Class M Notes to a proposed transferee
that has represented that it is a Benefit Plan Investor or a Controlling Person
if the transfer would result in Benefit Plan Investors owning 25% or more of
the value of the related Certificated Notes outstanding (as determined without
regard to interests held by Controlling Persons, and otherwise contemplated by
the applicable regulations under ERISA) immediately after such transfer, based
on assurances received from investors. Without limiting the generality of the
forgoing, the Note Registrar shall not register any transfer of Certificated Class L
Notes or Certificated Class M Notes represented by Regulation S Notes to a
proposed transferee of such Certificated Notes that has represented that it is
or may become a Benefit Plan Investor or a Controlling Person. Without limiting
the generality of the foregoing, a transfer of beneficial interests in a
Certificated Class L Note or Certificated Class M Note will not be
permitted unless an ERISA Restriction Certificate substantially in the form set
forth in Exhibit C-4 is obtained from each transferee of the related
Certificated Note, for the benefit of the Issuer, the Trustee and the Initial
Purchaser, (i) in the case of a Certificated Class L Note or
Certificated Class M Note not represented by a Regulation S Note,
regarding whether it is, or is not and will not be, a Benefit Plan Investor or
Controlling Person, or (ii) in the case of a Certificated Class L
Note or Certificated Class M Note or represented by a Regulation S Note,
to the effect that it is not and will not be a Benefit Plan Investor or
Controlling Person. Any purported transfer in violation of the foregoing
requirements shall be null and void ab initio,
and the Note Registrar shall not register any such purported transfer and shall
not authenticate and deliver such

 

83

 

Certificated Class A-R Notes,
Certificated Class L Notes or Certificated Class M Notes, as
applicable.

 

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

 

(3)                                  Notwithstanding anything to the contrary herein,
for so long as any Indenture Issued Notes other than the Class L Notes or
the Class M Notes remain outstanding, the Note Registrar shall not
register transfer of any Class L Notes or Class M Notes, as
applicable, unless (i) the proposed transferee shall have delivered to the
Trustee and the Note Registrar an Opinion of Counsel rendered by nationally
recognized U.S. tax counsel experienced in such matters to the effect that the Class H
Notes or the Class J Notes, as applicable, will be treated as indebtedness
for U.S. federal income tax purposes, (ii) the proposed transferee shall
have delivered to the Trustee and the Note Registrar a certificate in the form
of Exhibit I (a Class L
Note Tax Transfer Certificate or a Class M Note Tax Transfer Certificate,
as applicable), or (iii) the proposed transferee shall have delivered to
the Collateral Manager and the Trustee an Opinion of Counsel described in Section 7(e) of
the Collateral Management Agreement; provided,
however, that the Class L Notes and Class M Notes may be
pledged to secure indebtedness and may be the subject of repurchase agreements
treated by the Issuer as secured indebtedness for

 

84

 

U.S. federal income tax purposes, and may be
transferred following a default under such indebtedness or repurchase
transaction without regard to the foregoing limitations (provided that the
Issuer gives notice to the Trustee of the occurrence of such event).

 

(4)                                  Upon the transfer, exchange or replacement of a Class A-R
Certificated Note bearing a legend, or upon specific request for removal of the
legend on such Class A-R Certificated Note, the Issuer and the Co-Issuer
will deliver only Class A-R Certificated Notes that bear the legend, or
will refuse to remove the legend, as the case may be, unless there is delivered
to the Issuer and Co- Issuer satisfactory evidence, which may include an
opinion of counsel, as may reasonably be required by the Issuer and the
Co-Issuer that neither the legend nor the restrictions on transfer set forth
therein are required to ensure compliance with the provisions of the Securities
Act or the Investment Company Act.

 

(5)                                  Each person who becomes a beneficial owner of the
Certificated Class A-R Notes will be required to represent and agree, among
other things, as follows:

 

(i)                                     the owner is one of the following:

 

(A)                              (I) a Qualified Purchaser, (II) a
Qualified Institutional Buyer, (III) is aware that the sale of the
Certificated Class A-R Notes to it is being made in reliance on the
exemption from registration provided by Rule 144A under the Securities
Act, (IV) is acquiring the Certificated Class A-R Notes for its own
account or for one or more accounts, each of which is a Qualified Institutional
Buyer who is a Qualified Purchaser, and as to each of which the owner exercises
sole investment discretion, and (V) is acquiring the Certificated Class A-R
Notes in a minimum principal amount of not less than $500,000 for each such
account; or

 

(B)                                (I) is not a U.S. Person, (II) is aware
that the sale of the Certificated Class A-R Notes to it is being made in
reliance on the exemption from registration provided by Regulation S and (III) understands
that the Certificated Class A-R Notes offered in reliance on Regulation S
under the Securities Act will bear the legend set forth above;

 

(ii)                                  and in each case the owner has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of its investment in the Certificated Class A-R Notes and
the owner and any accounts for which it is acting are each able to bear the
economic risk of the investment.

 

85

 

(d)                                 Denominations; Qualified Purchaser Status. No Person may hold a beneficial interest in any
Indenture Issued Note (other than the Class-A-R Notes) except in a denomination
authorized for the Indenture Issued Notes of such Class under Section 2.2(b).
In addition, no transfer of an Indenture Issued Note (other than the Class-A-R
Notes) or any interest therein, may be made to any Person that is a U.S. Person
unless such Person is (A) a Qualified Institutional Buyer and (B) a
Qualified Purchaser. In addition, no transfer of an Indenture Issued Note
(other than the Class-A-R Notes) or any interest therein may be made to any
Person that is a U.S. Person unless such Person (A) was not formed for the
purpose of investing in either of the Co-Issuers (except when each beneficial owner
of the purchaser is a Qualified Purchaser, (B) has received the necessary
consent from its beneficial owners if it is a private investment company formed
before April 30, 1996, (C) is not a broker- dealer that owns and
invests on a discretionary basis less than U.S.$25,000,000 in securities of
unaffiliated issuers, (D) is not a pension, profit, sharing or other
retirement trust fund or plan in which the partners, beneficiaries or
participants, as applicable, may designate the particular investments to be
made, and in a transaction that may be effected without loss of any applicable
Investment Company Act exemption, (E) will provide notice to any
subsequent transferee of the transfer restrictions provided in the legend, (F) will
hold and transfer in a principal amount of not less than U.S.$500,000, for it
or for each account for which it is acting and (G) will provide the Issuer
from time to time such information as it may reasonably request in order to
ascertain compliance with the foregoing. Any purported transfer that is not in
compliance with this Section 2.4 or the legends on the Indenture Issued
Notes will be void ab initio, and will not operate to transfer any rights to
the transferee, notwithstanding any instructions to the contrary to the
Co-Issuers (in the case of the Indenture Issued Notes other than the Class L
Notes and the Class M Notes) or the Issuer (in the case of the Class L
Notes and the Class M Notes), the Trustee or any intermediary. If any
purported transfer of Indenture Issued Notes (other than the Class-A-R Notes)
or any beneficial interest therein to a purported transferee does not comply
with the requirements set forth in this Section 2.4 or the legends on the
Indenture Issued Notes, then the purported transferor of such Indenture Issued
Notes (other than the Class-A-R Notes) or beneficial interest therein shall be
required to cause the purported transferee to surrender the Indenture Issued
Notes (other than the Class-A-R Notes) or any beneficial interest therein in
return for a refund of the consideration paid therefor by such transferee
(together with interest thereon) or to cause the purported transferee to
dispose of such Indenture Issued Notes (other than the Class-A-R Notes) or
beneficial interest promptly in one or more open market sales to one or more
persons each of whom satisfies the requirements of this Section 2.4 and
the legends on the Indenture Issued Notes (other than the Class-A-R Notes) and
such purported transferor shall take, and shall

 

86

 

cause such transferee to take, all further
action necessary or desirable, in the judgment of the Trustee, to ensure that
such Indenture Issued Notes (other than the Class-A-R Notes) or any beneficial
interest therein are held by persons in compliance therewith.

 

(e)                                  Requirement to Sell.

 

(1)                                  If, notwithstanding the restrictions set forth in
this Section 2.4, either of the Co-Issuers (in the case of the Indenture
Issued Notes other than the Class L Notes and the Class M Notes) or
the Issuer (in the case of the Class L Notes and the Class M Notes)
determines that any beneficial owner of a Rule 144A Note (A) is a
U.S. Person and (B) is not a Qualified Institutional Buyer and also a
Qualified Purchaser, either of the Co-Issuers or the Issuer, as applicable, may
require, by notice to such beneficial owner that such beneficial owner sell all
of its right, title and interest to such Indenture Issued Note (or interest
therein) to a Person that is both (1) a Qualified Institutional Buyer and (2) a
Qualified Purchaser, with such sale to be effected within 30 days after notice
of such sale requirement is given. If such beneficial owner fails to effect the
transfer required within such 30-day period, (x) upon written direction
from the Issuer, the Trustee shall, and is hereby irrevocably authorized by
such beneficial owner to cause its interest in such Indenture Issued Note to be
transferred in a commercially reasonable sale (conducted by the Trustee in
accordance with Sections 9-610 and 9-611 of the UCC as applied to securities
that are customarily sold on a recognized market or that may decline speedily
in value) to a Person that certifies to the Trustee, in connection with such
transfer, that such Person is both (1) a Qualified Institutional Buyer and
(2) a Qualified Purchaser and (y) pending such transfer, no further
payments will be made in respect of such Indenture Issued Note (or beneficial
interest therein) held by such beneficial owner.

 

(2)                                  If, notwithstanding the restrictions set forth in
this Section 2.4, either of the Co-Issuers (in the case of the Indenture
Issued Notes other than the Class L Notes and the Class M Notes) or
the Issuer (in the case of the Class L Notes and the Class M Notes)
determines that any beneficial owner of a Regulation S Note is (A) a U.S.
Person or (B) a Benefit Plan Investor or a Controlling Person (for the
purposes of ERISA), either of the Co-Issuers (in the case of the Indenture
Issued Notes other than the Class L Notes and the Class M Notes) or
the Issuer (in the case of the Class L Notes and the Class M Notes)
may require, by notice to such beneficial owner that such beneficial owner sell
all of its right, title and interest to such Indenture Issued Note (or interest
therein) to a Person that is not (1) a U.S. Person or (2) a Benefit
Plan Investor or a Controlling Person (for the purposes of ERISA), with such
sale to be effected within 30 days after notice of such sale requirement is
given. If such beneficial owner fails to effect the transfer required within
such 30-day period, (x) upon written direction from the Issuer, the
Trustee shall, and is hereby irrevocably

 

87

 

authorized by such beneficial owner to cause
its interest in such Indenture Issued Note to be transferred in a commercially
reasonable sale (conducted by the Trustee in accordance with Sections 9-610 and
9-611 of the UCC as applied to securities that are customarily sold on a
recognized market or that may decline speedily in value) to a Person that certifies
to the Trustee, in connection with such transfer, that such Person is neither (1) a
U.S. Person nor (2) a Benefit Plan Investor or a Controlling Person (for
the purposes of ERISA) and (y) pending such transfer, no further payments
will be made in respect of such Indenture Issued Note (or beneficial interest
therein) held by such beneficial owner.

 

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

 

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

 

88

 

(h)                                 Surrender upon Final Payment. Upon final payment due on the date on which all
outstanding unpaid principal of a Indenture Issued Note becomes due and payable
as therein or herein provided, whether at the Stated Maturity Date or by
declaration of acceleration, call for redemption or otherwise, the Holder
thereof shall present and surrender such Indenture Issued Note at the Corporate
Trust Office of the Trustee in Minneapolis, Minnesota.

 

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

 

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

 

(k)                                  Physical Indenture Issued Notes. The Issuer will promptly make available to the
Trustee without charge a reasonable supply of Certificated Notes in definitive,
fully Registered Form, without interest coupons.

 

89

 

2.5.                            MUTILATED, DEFACED, DESTROYED, LOST OR STOLEN INDENTURE ISSUED NOTES

 

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

 

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

 

In case any such mutilated, defaced,
destroyed, lost or stolen Indenture Issued Note has become due and payable, the
Co-Issuers (in the case of the Indenture Issued Notes other than the Class L
Notes and the Class M Notes) and the Issuer (in the case of the Class L
Notes and the Class M Notes) in their or its (as applicable) discretion
may, instead of issuing a new Indenture Issued Note, pay such Indenture Issued
Note without requiring surrender thereof except that any mutilated Indenture
Issued Note shall be surrendered.

 

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

 

Every new Indenture Issued Note issued
pursuant to this Section 2.5 in lieu of any mutilated, defaced, destroyed,
lost or stolen Indenture Issued Note, shall constitute an original additional
contractual obligation of the Co-Issuers (in the case of the Indenture Issued
Notes other than the Class L Notes and the Class M Notes) and the
Issuer (in the case of the Class L Notes and the Class M Notes) and
such new Indenture Issued Note shall be entitled, subject to

 

90

 

the second paragraph of this Section 2.5,
to all the benefits of this Indenture equally and proportionately with any and
all other Indenture Issued Notes duly issued hereunder.

 

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

 

2.6. PAYMENT OF
PRINCIPAL AND INTEREST; RIGHTS PRESERVED

 

(a)                                  Each Class of Rated Notes shall accrue
interest during each Interest Period applicable to such Class in the
manner and at the Applicable Periodic Interest Rate specified in Section 2.2.
Interest on each Class of Rated Notes shall be due and payable on each
Payment Date; provided that (i) interest
on the Class A-2 Notes is subordinated in right of payment to the prior
payment in full on each Payment Date of the interest due and payable on the Class A
Senior Notes (together with any Defaulted Interest thereon) (ii) interest
on the Class B Notes is subordinated in right of payment to the prior
payment in full on each Payment Date of the interest due and payable on the Class A
Notes (together with any Defaulted Interest thereon), (iii) interest on
the Class C Notes is subordinated in right of payment to the prior payment
in full on each Payment Date of the interest due and payable on the Class A
Notes (together with any Defaulted Interest thereon) and on the Class B
Notes (together with any Defaulted Interest thereon), (iv) interest on the
Class D Notes is subordinated in right of payment to the prior payment in
full on each Payment Date of the interest due and payable on the Class A
Notes (together with any Defaulted Interest thereon), on the Class B Notes
(together with any Defaulted Interest thereon) and on the Class C Notes
(together with any Defaulted Interest thereon), (v) interest on the Class E
Notes is subordinated in right of payment to the prior payment in full on each
Payment Date of the interest due and payable on the Class A Notes
(together with any Defaulted Interest thereon), on the Class B Notes
(together with any Defaulted Interest thereon), on the Class C Notes
(together with any Defaulted Interest thereon) and on the Class D Notes
(together with any Defaulted Interest thereon), (vi) interest on the Class F
Notes is subordinated in right of payment to the prior payment in full on each
Payment Date of the interest due and payable on the Class A Notes
(together with any Defaulted Interest thereon), on the Class B Notes
(together with any Defaulted Interest thereon), on the Class C Notes
(together with any Defaulted Interest thereon), on the Class D Notes
(together with any Defaulted Interest thereon) and on the Class E Notes
(together with any Defaulted Interest thereon), (vii) interest on the Class G
Notes is subordinated in right of payment to the prior payment in full on each
Payment Date of the interest due and payable on the Class A Notes
(together with any Defaulted Interest thereon), on the Class B Notes
(together with any Defaulted Interest thereon), on the Class C Notes
(together with any Defaulted Interest thereon), on the Class D Notes

 

91

 

(together with any Defaulted Interest
thereon), on the Class E Notes (together with any Defaulted Interest
thereon) and on the Class F Notes (together with any Defaulted Interest
thereon), (viii) interest on the Class H Notes is subordinated in
right of payment to the prior payment in full on each Payment Date of the
interest due and payable on the Class A Notes (together with any Defaulted
Interest thereon), on the Class B Notes (together with any Defaulted
Interest thereon), on the Class C Notes (together with any Defaulted
Interest thereon), on the Class D Notes (together with any Defaulted
Interest thereon), on the Class E Notes (together with any Defaulted
Interest thereon), on the Class F Notes (together with any Defaulted
Interest thereon) and on the Class G Notes (together with any Defaulted
Interest thereon), (ix) interest on the Class J Notes is subordinated
in right of payment to the prior payment in full on each Payment Date of the
interest due and payable on the Class A Notes (together with any Defaulted
Interest thereon), on the Class B Notes (together with any Defaulted
Interest thereon), on the Class C Notes (together with any Defaulted
Interest thereon), on the Class D Notes (together with any Defaulted
Interest thereon), on the Class E Notes (together with any Defaulted
Interest thereon), on the Class F Notes (together with any Defaulted
Interest thereon), on the Class G Notes (together with any Defaulted
Interest thereon) and on the Class H Notes (together with any Defaulted
Interest thereon), (x) interest on the Class K Notes is subordinated
in right of payment to the prior payment in full on each Payment Date of the
interest due and payable on the Class A Notes (together with any Defaulted
Interest thereon), on the Class B Notes (together with any Defaulted
Interest thereon), on the Class C Notes (together with any Defaulted
Interest thereon), on the Class D Notes (together with any Defaulted
Interest thereon), on the Class E Notes (together with any Defaulted
Interest thereon), on the Class F Notes (together with any Defaulted
Interest thereon), on the Class G Notes (together with any Defaulted
Interest thereon), on the Class H Notes (together with any Defaulted
Interest thereon) and on the Class J Notes (together with any Defaulted
Interest thereon), (xi) interest on the Class L Notes is subordinated in
right of payment to the prior payment in full on each Payment Date of the
interest due and payable on the Class A Notes (together with any Defaulted
Interest thereon), on the Class B Notes (together with any Defaulted
Interest thereon), on the Class C Notes (together with any Defaulted
Interest thereon), on the Class D Notes (together with any Defaulted
Interest thereon), on the Class E Notes (together with any Defaulted
Interest thereon), on the Class F Notes (together with any Defaulted
Interest thereon), on the Class G Notes (together with any Defaulted
Interest thereon), on the Class H Notes (together with any Defaulted
Interest thereon), on the Class J Notes (together with any Defaulted
Interest thereon) and on the Class K Notes (together with any Defaulted
Interest thereon), (xii) interest on the Class M Notes is subordinated in
right of payment to the prior payment in full

 

92

 

on each Payment Date of the interest due and
payable on the Class A Notes (together with any Defaulted Interest
thereon), on the Class B Notes (together with any Defaulted Interest
thereon), on the Class C Notes (together with any Defaulted Interest
thereon), on the Class D Notes (together with any Defaulted Interest
thereon), on the Class E Notes (together with any Defaulted Interest
thereon), on the Class F Notes (together with any Defaulted Interest
thereon), on the Class G Notes (together with any Defaulted Interest
thereon), on the Class H Notes (together with any Defaulted Interest thereon),
on the Class J Notes (together with any Defaulted Interest thereon), on
the Class K Notes (together with any Defaulted Interest thereon) and on
the Class L Notes (together with any Defaulted Interest thereon), (xiii)
interest on the Class N Notes is subordinated in right of payment to the
prior payment in full on each Payment Date of the interest due and payable on
the Class A Notes (together with any Defaulted Interest thereon), on the Class B
Notes (together with any Defaulted Interest thereon), on the Class C Notes
(together with any Defaulted Interest thereon), on the Class D Notes
(together with any Defaulted Interest thereon), on the Class E Notes
(together with any Defaulted Interest thereon), on the Class F Notes
(together with any Defaulted Interest thereon), on the Class G Notes
(together with any Defaulted Interest thereon), on the Class H Notes
(together with any Defaulted Interest thereon), on the Class J Notes
(together with any Defaulted Interest thereon), on the Class K Notes
(together with any Defaulted Interest thereon), on the Class L Notes
(together with any Defaulted Interest thereon) and on the Class M Notes
(together with any Defaulted Interest thereon) and (xiv) interest on all Rated
Notes is subordinated in right of payment to the prior payment in full on each
Payment Date of other amounts in accordance with Section 11.1. Payments of
interest on the Class A Senior Notes (including any Defaulted Interest)
and Class A-R Commitment Fee will be paid on a pro rata basis between the Class A-1 Notes and the Class A-R
Notes based on amount due. Except as provided in Section 5.5, no payment
shall be made by the Co-Issuers hereunder other than on a Payment Date.

 

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

 

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

 

93

 

pay such Class F Applicable Periodic
Interest Shortfall Amount in accordance with Section 11.1.

 

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

 

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

 

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

 

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

 

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

 

So long as any Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes, Class

 

94

 

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

 

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

 

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

 

(1)                                  so long as any Class A Senior Notes are
Outstanding, except as provided in Article 9 and Section 11.1(b)(24),
the payment of principal of the Class A-2 Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes, Class J Notes, Class K Notes, Class L
Notes, Class M Notes and Class N Notes (to the PAA Issued Note Paying
Agent for payment on the Class N Notes in accordance with the Paying
Agency Agreement) (x) may only occur after principal of the Class A
Senior Notes have been paid in full and (y) shall be subordinated to the
payment on each Payment Date of the principal and interest due and payable on
the Class A Senior Notes and other amounts payable in accordance with Section 11.1;

 

(2)                                  so long as any Class A Notes are Outstanding,
except as provided in Article 9 and Section 11.1(b)(24), the payment
of principal of the Class B Notes, Class C Notes, Class D Notes,
Class E Notes, Class F Notes, Class G Notes, Class H Notes,
Class J Notes, Class K Notes, Class L Notes, Class M Notes
and Class N Notes (to the PAA Issued Note Paying Agent for payment on the Class N
Notes in accordance with the Paying Agency Agreement) (x) may only occur
after principal of the Class A Notes has been paid in full and (y) shall
be subordinated to the payment on each Payment Date of the principal and
interest due and payable on the Class A Notes and other amounts payable in
accordance with Section 11.1;

 

(3)                                  so long as any Class A Notes or Class B
Notes are Outstanding, except as provided in Article 9 and Section 11.1(b)(24),
the payment of principal of the Class C Notes, Class D Notes, Class E
Notes, Class F Notes, Class G

 

95

 

Notes, Class H Notes, Class J
Notes, Class K Notes, Class L Notes, Class M Notes and Class N
Notes (to the PAA Issued Note Paying Agent for payment on the Class N
Notes in accordance with the Paying Agency Agreement) (x) may only occur
after principal of the Class A Notes and Class B Notes has been paid
in full and (y) shall be subordinated to the payment on each Payment Date
of the principal and interest due and payable on the Class A Notes and Class B
Notes and other amounts payable in accordance with Section 11.1;

 

(4)                                  so long as any Class A Notes, Class B
Notes or Class C Notes are Outstanding, except as provided in Section 11.1(b)(24),
the payment of principal of the Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes, Class K
Notes, Class L Notes, Class M Notes and Class N Notes (to the
PAA Issued Note Paying Agent for payment on the Class N Notes in
accordance with the Paying Agency Agreement) (x) may only occur after
principal of the Class A Notes, Class B Notes and Class C Notes
has been paid in full and (y) shall be subordinated to the payment on each
Payment Date of the principal and interest due and payable on the Class A
Notes, Class B Notes and Class C Notes and other amounts payable in
accordance with Section 11.1;

 

(5)                                  so long as any Class A Notes, Class B
Notes, Class C Notes or Class D Notes are Outstanding, except as
provided in Section 11.1(b)(24), the payment of principal of the Class E
Notes, Class F Notes, Class G Notes, Class H Notes, Class J
Notes, Class K Notes, Class L Notes, Class M Notes and Class N
Notes (to the PAA Issued Note Paying Agent for payment on the Class N
Notes in accordance with the Paying Agency Agreement) (x) may only occur
after principal of the Class A Notes, Class B Notes, Class C
Notes and Class D Notes has been paid in full and (y) shall be subordinated
to the payment on each Payment Date of the principal and interest due and
payable on the Class A Notes, Class B Notes, Class C Notes and Class D
Notes and other amounts payable in accordance with Section 11.1;

 

(6)                                  so long as any Class A Notes, Class B
Notes, Class C Notes, Class D Notes or Class E Notes are
Outstanding, except as provided in Section 11.1(b)(24), the payment of
principal of the Class F Notes, Class G Notes, Class H Notes, Class J
Notes, Class K Notes, Class L Notes, Class M Notes and Class N
Notes (to the PAA Issued Note Paying Agent for payment on the Class N
Notes in accordance with the Paying Agency Agreement) (x) may only occur
after principal of the Class A Notes, Class B Notes, Class C
Notes, Class D Notes and Class E Notes has been paid in full and (y) shall
be subordinated to the payment on each Payment Date of the principal and
interest due and payable on the Class A Notes, Class B Notes, Class C
Notes, Class D Notes and Class E Notes and other amounts payable in
accordance with Section 11.1;

 

96

 

(7)                                  so long as any Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes or Class F
Notes are Outstanding, except as provided in Section 11.1(b)(24), the
payment of principal of the Class G Notes, Class H Notes, Class J
Notes, Class K Notes, Class L Notes, Class M Notes and Class N
Notes (to the PAA Issued Note Paying Agent for payment on the Class N
Notes in accordance with the Paying Agency Agreement) (x) may only occur
after principal of the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes and Class F Notes has been
paid in full and (y) shall be subordinated to the payment on each Payment
Date of the principal and interest due and payable on the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes and Class F
Notes and other amounts payable in accordance with Section 11.1;

 

(8)                                  so long as any Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes or Class G Notes are Outstanding, except as provided in Section 11.1(b)(24),
the payment of principal of the Class H Notes, Class J Notes, Class K
Notes, Class L Notes, Class M Notes and Class N Notes (to the
PAA Issued Note Paying Agent for payment on the Class N Notes in
accordance with the Paying Agency Agreement) (x) may only occur after
principal of the Class A Notes, Class B Notes, Class C Notes, Class D
Notes, Class E Notes, Class F Notes and Class G Notes has been
paid in full and (y) shall be subordinated to the payment on each Payment
Date of the principal and interest due and payable on the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes and Class G Notes and other amounts payable in accordance with Section 11.1;
and

 

(9)                                  so long as any Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes or Class H Notes are Outstanding, except as
provided in Section 11.1(b)(24), the payment of principal of the Class J
Notes, Class K Notes, Class L Notes, Class M Notes and Class N
Notes (to the PAA Issued Note Paying Agent for payment on the Class N
Notes in accordance with the Paying Agency Agreement) (x) may only occur
after principal of the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes and Class H Notes has been paid in full and (y) shall be
subordinated to the payment on each Payment Date of the principal and interest
due and payable on the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes and Class H Notes and other amounts payable in accordance with Section 11.1.

 

(10)                            so long as any Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes or Class J Notes are
Outstanding, except as provided in Section 11.1(b)(24), the payment of
principal of the Class K Notes, Class L Notes, Class M Notes and
Class N Notes (to the PAA Issued Note Paying Agent for

 

97

 

payment on the Class N Notes in
accordance with the Paying Agency Agreement) (x) may only occur after
principal of the Class A Notes, Class B Notes, Class C Notes, Class D
Notes, Class E Notes, Class F Notes, Class G Notes, Class H
Notes and Class J Notes has been paid in full and (y) shall be
subordinated to the payment on each Payment Date of the principal and interest
due and payable on the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes and Class J Notes and other amounts payable in
accordance with Section 11.1.

 

(11)                            so long as any Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes or Class K
Notes are Outstanding, except as provided in Section 11.1(b)(24), the
payment of principal of the Class L Notes, Class M Notes and Class N
Notes (to the PAA Issued Note Paying Agent for payment on the Class N
Notes in accordance with the Paying Agency Agreement) (x) may only occur
after principal of the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes, Class J Notes and Class K Notes has been
paid in full and (y) shall be subordinated to the payment on each Payment
Date of the principal and interest due and payable on the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes and Class K
Notes other amounts payable in accordance with Section 11.1.

 

(12)                            so long as any Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes, Class K
Notes or Class L Notes are Outstanding, except as provided in Section 11.1(b)(24),
the payment of principal of the Class M Notes and Class N Notes (to
the PAA Issued Note Paying Agent for payment on the Class N Notes in
accordance with the Paying Agency Agreement) (x) may only occur after
principal of the Class A Notes, Class B Notes, Class C Notes, Class D
Notes, Class E Notes, Class F Notes, Class G Notes, Class H
Notes, Class J Notes, Class K Notes and Class L Notes has been
paid in full and (y) shall be subordinated to the payment on each Payment
Date of the principal and interest due and payable on the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes, Class K
Notes and Class L Notes and other amounts payable in accordance with Section 11.1.

 

(13)                            so long as any Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes, Class K
Notes, Class L Notes or Class M Notes are Outstanding, except as
provided in Section 11.1(b)(24), the payment of principal of the Class N
Notes (to the PAA Issued Note Paying Agent for payment on the Class N
Notes in accordance with the Paying Agency Agreement) (x) may

 

98

 

only occur after principal of the Class A
Notes, Class B Notes, Class C Notes, Class D Notes, Class E
Notes, Class F Notes, Class G Notes, Class H Notes, Class J
Notes, Class K Notes, Class L Notes and Class M Notes has been
paid in full and (y) shall be subordinated to the payment on each Payment
Date of the principal and interest due and payable on the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes, Class K
Notes, Class L Notes and Class M Notes and other amounts payable in
accordance with Section 11.1.

 

Provided that, payments of principal of the Class A
Senior Notes will be made pro rata
based on their respective outstanding principal amounts; however, during the
Reinvestment Period, the draws under Class A-R Notes may be prepaid prior
to any payments of principal of the Class A-1 Notes. No payments of
principal will be distributable in respect of any Class of Notes junior to
the Class A-R Notes so long as any Class A-R Commitments remain outstanding,
except to the extent described herein in connection with a Special Amortization
as provided in Section 11.1(b)(24).

 

(c)                                  So long as the Coverage Tests are satisfied,
principal will not be payable on any Class of Rated Notes except (i) upon
the occurrence of a Redemption, (ii) if a Rating Confirmation Failure
occurs, (iii) in the case of any Class E Notes, Class F Notes, Class G
Notes, Class H Notes, Class J Notes. Class K Notes, Class L
Notes, Class M Notes and Class N Notes to pay amounts in respect of
the Class E Cumulative Applicable Periodic Interest Shortfall Amount, the Class F
Cumulative Applicable Periodic Interest Shortfall Amount, the Class G
Cumulative Applicable Periodic Interest Shortfall Amount, the Class H
Cumulative Applicable Periodic Interest Shortfall Amount, the Class J
Cumulative Applicable Periodic Interest Shortfall Amount, the Class K
Cumulative Applicable Periodic Interest Shortfall Amount, Class L
Cumulative Applicable Periodic Interest Shortfall Amount, the Class M
Cumulative Applicable Periodic Interest Shortfall Amount or the Class N
Cumulative Applicable Periodic Interest Shortfall Amount, as the case may be,
in accordance with Section 11.1 and (iv) on each Payment Date, in
accordance with Section 11.1.

 

(d)                                 As a condition to the payment of any principal of
or interest on any Rated Note without the imposition of withholding tax, any
Note Paying Agent shall require the previous delivery of properly completed and
signed applicable U.S. federal income tax certifications (generally, an
Internal Revenue Service Form W-9 (or applicable successor form) in the
case of a person that is a “United States person” within the meaning of Section 7701(a)(30)
of the Code or the applicable Internal Revenue Service Form W-8 (or
applicable successor form) in the case of a person that is not a “United States
person” within the meaning of Section 7701(a)(30) of the Code) or other
certification acceptable to it to

 

99

 

enable the Co-Issuers (in the case of the
Indenture Issued Notes other than the Class L Notes and the Class M
Notes) or the Issuer (in the case of the Class L Notes and the Class M
Notes), the Trustee and any Note Paying Agent to determine their duties and
liabilities with respect to any taxes or other charges that they may be
required to pay, deduct or withhold in respect of such Rated Note or the Holder
of such Rated Note under any present or future law or regulation of the Cayman
Islands or the United States or any present or future law or regulation of any
political subdivision thereof or taxing authority therein or to comply with any
reporting or other requirements under any such law or regulation.

 

(e)                                  All payments made by the Issuer under the Rated
Notes will be made without any deduction or withholding for or on the account
of any tax unless such deduction or withholding is required by applicable law,
as modified by the practice of any relevant governmental authority, then in
effect. If the Issuer is so required to deduct or withhold, then neither the
Issuer nor the Co-Issuer will be obligated to pay any additional amounts in
respect of such withholding or deduction.

 

(f)                                    Payments in respect of principal of and interest on
the Rated Notes shall be payable by wire transfer in immediately Available
Funds to a Dollar account maintained or specified by the Rated Noteholders in
accordance with wire transfer instructions received by any Note Paying Agent on
or before the Record Date or, if no wire transfer instructions are received by
a Note Paying Agent, by a Dollar check drawn on a bank in the United States
mailed to the address of such Rated Noteholder as it appears on the Note
Register at the close of business on the Record Date for such payment. Such
wire instructions may direct that any such payments may be paid to a Dollar
account of an assignee or designee of any Rated Noteholder and may be
irrevocable to the effect set forth therein.

 

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

 

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

 

100

 

payment bears to the Aggregate Outstanding
Amount of all Rated Notes of such Class on such Record Date.

 

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

 

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

 

(j)                                     Notwithstanding anything to the contrary herein,
the obligations of the Co-Issuers under the Rated Notes (other than the Class L
Notes, Class M Notes and Class N Notes), the Issuer under the Class L
Notes, Class M Notes and Class N Notes or the Co-Issuers under this
Indenture or arising in connection herewith are limited recourse obligations of
the Co-Issuers or the Issuer, as the case may be, payable solely from the
Collateral and following realization of the Collateral, all obligations of and
all claims against the Co-Issuers or the Issuer, as the case may be, hereunder
or arising in connection herewith shall be extinguished and shall not
thereafter revive. No recourse shall be had against any Officer, member,
director, employee, security holder or incorporator of the Co-Issuers (in the
case of the Rated Notes other than the Class L Notes, Class M Notes
and Class N Notes) or the Issuer (in the case of the Class L Notes, Class M
Notes and Class N Notes) or their respective successors or assigns for the
payment of any amounts payable under the Rated Notes or this Indenture. It is
understood that the foregoing provisions of this Section 2.6(j) shall
not (i) prevent recourse to the Collateral for the sums due or to become
due under any security, instrument or agreement which is part of the Collateral
or (ii) constitute a waiver, release or discharge of any indebtedness or
obligation evidenced by the Rated Notes or secured by this Indenture until such
Collateral has been realized, whereupon any outstanding indebtedness or
obligation shall be extinguished. It is further understood that the foregoing
provisions of this Section 2.6(j) shall not limit the right of any
Person to name either of the Co-Issuers (in the case of the Rated Notes other
than the Class L Notes, Class M Notes and Class N Notes) or the
Issuer (in the case of the Class L Notes, Class M Notes and Class N
Notes) as a party defendant in any action or suit or in the exercise of any
other remedy under the Rated Notes or this Indenture, so long as no judgment in
the nature of a deficiency judgment or seeking personal liability shall be
asked for or (if obtained) enforced against any such Person or entity.

 

101

 

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

 

ARTICLE III

 

CONDITIONS
PRECEDENT

 

3.1.                            GENERAL PROVISIONS

 

The Indenture Issued Notes (other than the Class L
Notes and the Class M Notes) may be executed by the Co-Issuers, or the
Issuer in the case of the Class L Notes and the Class M Notes, and
delivered to the Trustee for authentication and thereupon the same shall be
authenticated and delivered by the Trustee (or an Authenticating Agent on its
behalf) upon Issuer Request, upon receipt by the Trustee of the following:

 

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

 

(2)                                  a certificate of the Co-Issuer (A) evidencing
the authorization by the Co-Issuer by action by written consent of the limited
liability company manager of the execution and delivery of, and the performance
of the Co-Issuer’s obligations under, this Indenture, as may be amended on or
prior to, and as in effect on, the Closing Date, and the execution, authentication
and delivery of the Indenture Issued Notes (other than the Class L Notes
and the Class M Notes) and specifying the Stated Maturity Date, the
principal amount and the Applicable Periodic Interest Rate of each Class of
Indenture Issued Notes (other than the Class L Notes and the Class M
Notes) to be authenticated and delivered, and (B) certifying that (1) the
attached copy of such consent of the limited liability company manager is a
true and complete copy thereof, (2) such resolutions have not been
rescinded and are in full force and effect on and as of the Closing Date and (3) the
Officers authorized to execute and deliver such documents hold the offices and
have the signatures indicated thereon;

 

102

 

(b)                                 (1)                                  either (A) a certificate of the Issuer, or
other official document evidencing the due authorization, approval or consent
of any governmental body or bodies, at the time having jurisdiction in the
premises, together with an Opinion of Counsel to the Issuer satisfactory in
form and substance to the Trustee on which the Trustee is entitled to rely to
the effect that no other authorization, approval or consent of any governmental
body is required for the valid issuance of the Indenture Issued Notes, or (B) an
Opinion of Counsel to the Issuer satisfactory in form and substance to the
Trustee to the effect that no such authorization, approval or consent of any
governmental body is required for the valid issuance of the Indenture Issued
Notes except as may have been given; and

 

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

 

(c)                                  (1)                                  an opinion of Thacher Proffitt & Wood llp,
special New York counsel to the Co-Issuers, dated the Closing Date,
substantially in the form of Exhibit E- 1;

 

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

 

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

 

(4)                                  an opinion of Thacher Proffitt & Wood llp,
counsel to the Collateral Manager, dated the Closing Date, substantially in the
form of Exhibit G;

 

(5)                                  an opinion of Hunton & Williams LLP,
special counsel to NorthStar Realty Finance Corp., substantially in the form of
Exhibit J;

 

(d)                                 an Officer’s certificate of the Issuer, stating
that the Issuer is not in Default under this Indenture and that the issuance of
the Indenture Issued Notes will not result in a breach of any of the terms,
conditions or provisions of,

 

103

 

or constitute a Default under, the Articles,
any indenture or other agreement or instrument to which the Issuer is a party
or by which it is bound, or any order of any court or administrative agency
entered in any Proceeding to which the Issuer is a party or by which it may be
bound or to which it may be subject; that no Event of Default shall have
occurred and be continuing; that all of the representations and warranties
contained herein are true and correct as of the Closing Date; that all
conditions precedent provided in this Indenture relating to the authentication
and delivery of the Indenture Issued Notes applied for (including in Section 3.2)
have been complied with; and that all expenses due or accrued with respect to
the Offering or relating to actions taken on or in connection with the Closing
Date have been paid;

 

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

 

(f)                                    an Accountant’s Report (A) confirming the
information with respect to each Collateral Interest (other than its price) set
forth on a schedule setting forth each Collateral Interest and the information
provided by the Issuer with respect to every other asset forming part of the
Collateral, by reference to such sources as shall be specified therein, (B) confirming
that, on the Closing Date, the Collateral Interests set forth on Schedule A
meet the Collateral Quality Tests, (C) calculating each of the Coverage
Tests as of the Closing Date and (D) specifying the procedures undertaken
by them to review data and computations relating to the foregoing statement;

 

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

 

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

 

104

 

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

 

3.2.                            SECURITY FOR THE INDENTURE ISSUED NOTES

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(5)                                  the information set forth with respect to such
Collateral Interest on Schedule A is correct and each such Collateral Interest
is transferred to the

 

105

 

Trustee as required by Section 3.2(a) (or,
if any such Collateral Interest is not so transferred to the Trustee on the
Closing Date, the Issuer has entered into a binding agreement to purchase such
Collateral Interest for settlement within 10 days after the Closing Date);

 

(6)                                  each such Collateral Interest satisfies the
requirements of the definition of “Collateral Interest” and is not an Impaired
Interest; and

 

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

 

(c)                                  Rating Letters. The delivery to the Trustee of an Officer’s
certificate of the Issuer, to the effect that (A) a letter signed by
Moody’s confirming that the Class A-1 Notes have been rated “Aaa”, Class A-R
Notes have been rated “Aaa”, Class A-2 Notes have been rated “Aaa”, the Class B
Notes have been rated at least “Aa1”, the Class C Notes have been rated at
least “Aa2”, the Class D Notes have been rated at least “Aa3”, the Class E
Notes have been rated at least “A1”, the Class F Notes have been rated at
least “A2”, the Class G Notes have been rated at least “A3”, the Class H
Notes have been rated at least “Baa1”, the Class J Notes have been rated
at least “Baa2”, the Class K Notes have been rated at least “Baa3”, the Class L
Notes have been rated at least “Ba1”, the Class M Notes have been rated at
least “Ba2”, the Class N Notes have been rated at least “Ba3” by Moody’s
and (B) a letter signed by Fitch confirming that the Class A-1 Notes
have been rated “AAA”, Class A-R Notes have been rated “AAA”, Class A-2
Notes have been rated “AAA”, the Class B Notes have been rated at least
“AA+”, the Class C Notes have been rated at least “AA”, the Class D
Notes have been rated at least “AA-”, the Class E Notes have been rated at
least “A+”, the Class F Notes have been rated at least “A”, the Class G
Notes have been rated at least “A-”, the Class H Notes have been rated at
least “BBB+”, the Class J Notes have been rated at least “BBB”, the Class K
Notes have been rated at least “BBB-”, the Class L Notes have been rated
at least “BB+”, the Class M Notes have been rated at least “BB” and the Class N
Notes have been rated at least “BB-”by Fitch and (ii) each such rating is
in full force and effect on the Closing Date.

 

(d)                                 Accounts. The delivery by the Trustee of evidence of the
establishment of the Payment Account, the Collection Account (including each
Collateral Sub-Account established therein), the Expense Reserve Account, the
Interest Reserve Account, the Collateral Account, the Future Funding Asset
Account, the Class A-R Holder Collateral Account and the Uninvested
Proceeds Account and, to be established on the Closing Date.

 

106

 

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

 

(f)                                         Purchases. The delivery to the Trustee of a certification of
the Issuer that it shall have purchased Collateral Interests having an
aggregate Principal Balance as of the related Reference Dates of not less than
U.S.$628,959,632.

 

3.3.                            CUSTODIANSHIP; TRANSFER OF COLLATERAL INTERESTS AND ELIGIBLE INVESTMENTS

 

(a)                                       The Trustee shall hold all Certificated Securities
and Instruments in physical form at the office of a custodian appointed by it
in Minnesota (together with any successor, the Custodian). Initially, such Custodian
shall be Wells Fargo Bank, National Association with its address at Wells Fargo
Center, Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479,
Attention: CDO Trust Services—N-Star REL CDO VIII.

 

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

 

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

 

(1)                                       This Indenture creates a valid and continuing
security interest (as defined in the applicable Uniform Commercial Code) in the
Collateral in favor of the Trustee on behalf and for the benefit of the Secured
Parties, which

 

107

 

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 Interests and
filing of the appropriate financing statements in the appropriate filing
offices, the lien and security interest created by this Indenture shall be a
perfected first priority security interest in favor of the Trustee for the
benefit of the Secured Parties.

 

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

 

(3)                                       The Issuer has acquired its ownership in each such
Collateral Interest, or will acquire in the case of any Collateral Interests
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 Interests or Substitute Collateral Interests acquired by the Issuer
after the Closing Date, in good faith without notice of any adverse claim,
except as described in clause (2) above.

 

(4)                                       The Issuer (a) has delivered each such Collateral
Interest, or will deliver any Collateral Interests 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 Interests or
Substitute Collateral Interests acquired by the Issuer after the Closing Date,
to the Trustee and (b) has not assigned, pledged, sold, granted a security
interest in or otherwise encumbered any interest in such Collateral Interest
other than interests granted pursuant to this Indenture.

 

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

 

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

 

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

 

(8)                                       All items of the Collateral that constitute security
entitlements have been and will have been credited to one of the securities
accounts. The securities intermediary for each of the Accounts has agreed to
treat all

 

108

 

assets credited to the securities accounts as
financial assets under the applicable Uniform Commercial Code.

 

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

 

(10)                                 The Issuer has caused or will have caused, within
ten (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 Uniform Commercial
Code, if any.

 

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

 

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

 

(13)                                 The Issuer has received or will receive all
consents and approvals required by the terms of the underlying loan agreement,
indenture or other underlying documentation, if any, relating to the Collateral
to the transfer

 

109

 

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

 

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

 

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

 

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

 

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

 

ARTICLE IV

 

SATISFACTION
AND DISCHARGE

 

4.1.                            SATISFACTION AND DISCHARGE OF INDENTURE

 

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

 

110

 

(a)                                  either:

 

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

 

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

 

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

 

111

 

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

 

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

 

4.2.                            APPLICATION OF TRUST MONEY

 

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

 

4.3.                            REPAYMENT OF FUNDS HELD BY NOTE PAYING AGENT

 

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

 

ARTICLE V

 

EVENTS OF DEFAULT; REMEDIES

 

5.1.                            EVENTS OF DEFAULT

 

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

 

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

 

112

 

Class A Notes, Class B Notes, Class C
Notes, Class D Notes or Class E Notes Outstanding, of any interest on
any Class F Note, or if there are no Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes or Class F
Notes Outstanding, of any interest on any Class G Note, or if there are no
Class A Notes, Class B Notes, Class C Notes, Class D Notes,
Class E Notes, Class F Notes or Class G Notes Outstanding, of
any interest on any Class H Note, or if there are no Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes or Class H Notes Outstanding, of any interest on
any Class J Note, or if there are no Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, or Class J Notes
Outstanding, of any interest on any Class K Note, or if there are no Class A
Notes, Class B Notes, Class C Notes, Class D Notes, Class E
Notes, Class F Notes, Class G Notes, Class H Notes, Class J
Notes or Class K Notes Outstanding, of any interest on any Class L
Note, or if there are no Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes, Class J Notes, Class K Notes or Class L
Notes Outstanding, of any interest on any Class M Note, or if there are no
Class A Notes, Class B Notes, Class C Notes, Class D Notes,
Class E Notes, Class F Notes, Class G Notes, Class H Notes,
Class J Notes, Class K Notes, Class L Notes or Class M
Notes Outstanding, of any interest on any Class N Note;

 

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

 

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

 

(d)                                      the event that either of the Co-Issuers or the pool
of Collateral becomes an investment company required to be registered under the
Investment Company Act;

 

(e)                                       a default in the performance, or breach, of any
other covenant (it being understood that non-compliance with any of the
Coverage Tests or the Collateral Quality Tests will not constitute a default or
breach) or of any representation or warranty of either of the Co-Issuers under
this Indenture, or if any certificate or writing delivered pursuant thereto
proves to be

 

113

 

incorrect when made, which default or breach
has a material adverse effect on the Rated Noteholders and continues for a
period of thirty (30) days (or, in the case of a default, breach or failure of
a representation or warranty regarding the Collateral, fifteen days) of the
earlier of knowledge by the Co-Issuers or the Collateral Manager or notice to
the Co-Issuers and the Collateral Manager by the Trustee or to the Co-Issuers
and the Collateral Manager by the Holders of at least 25%, of the then
Aggregate Outstanding Amount of the Rated Notes of any Class, specifying such
default, breach or failure and requiring it to be remedied and stating that
such notice is a “Notice of Default” under this Indenture;

 

(f)                                         the Issuer is not treated as a Qualified REIT
Subsidiary, unless (A) the Issuer has received an opinion of tax counsel
of nationally recognized standing in the United States experienced in such
matters to the effect that (i) notwithstanding the Issuer’s loss of Qualified
REIT Subsidiary status, the Issuer is not, and has not been, an association (or
publicly traded partnership) taxable as a corporation, or is not, and has not
been, and will not be treated as a foreign corporation that is engaged in a
trade or business in the United States or is otherwise subject to U.S. federal
income tax on a net basis, (ii) payments of interest on the Collateral
Interests will not be subject to withholding or other taxes, fees or
assessments and (iii) the Holders of the Notes are not otherwise
materially adversely affected by the loss of Qualified REIT Subsidiary status, (B) on
or before the Measurement Date related to each Payment Date after the Issuer is
not treated as a Qualified REIT Subsidiary, the Issuer receives an amount from
the Income Noteholders sufficient to discharge in full any amounts (including
any resulting taxes) and expenses of the Issuer that are caused by the Issuer
not being treated as a Qualified REIT Subsidiary and are due on or before the
Payment Date following such Measurement Date or (C) all Classes of the
Notes are subject to a Tax Redemption announced by the Issuer in compliance
with this Indenture, and such redemption has not been rescinded;

 

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

 

(h)                                      the institution by the Issuer or the Co-Issuer of
proceedings to be adjudicated as bankrupt or insolvent, or the consent by it to
the institution of bankruptcy or insolvency proceedings against it, or the
filing by it of a

 

114

 

petition or answer or consent seeking
reorganization or relief under the Bankruptcy Code or any other similar
applicable law, or the consent by it to the filing of any such petition or to
the appointment of a receiver, liquidator, assignee, trustee or sequestrator
(or other similar official) of the Issuer or the Co-Issuer or of any
substantial part of its property, respectively, or the making by it of an
assignment for the benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become due, or the passing of
a special resolution for the voluntary winding up of the Issuer by its
shareholders, the taking of any action by the Issuer or the Co-Issuer in
furtherance of any such action; or

 

(i)                                          on any Measurement Date, the Class A Principal
Coverage Ratio is less than 89%.

 

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

 

5.2.                            ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT

 

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

 

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

 

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

 

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

 

(i)                                     all overdue installments of principal of and
interest and Class A-R Commitment Fee on the Notes (including interest
upon the Class E Cumulative Applicable Periodic Interest Shortfall Amount,
the Class F Cumulative Applicable Periodic Interest Shortfall Amount, the Class G
Cumulative Applicable Periodic Interest Shortfall Amount, the Class H
Cumulative Applicable Periodic Interest Shortfall Amount, the Class J
Cumulative Applicable Periodic

 

115

 

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

 

(ii)           any accrued and unpaid amounts and Class A-R
Commitment Fee, Class A-R Increased Costs or Class A-R Breakage Costs
(including termination payments, if any) payable by the Issuer pursuant to any
Hedge Agreement or the Class A-R Note Purchase Agreement;

 

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

 

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

 

(3)           any Hedge Agreement in effect immediately prior to
such acceleration shall remain in effect.

 

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

 

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

 

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

 

5.3.         COLLECTION OF INDEBTEDNESS
AND SUITS FOR ENFORCEMENT BY TRUSTEE

 

The Co-Issuers (or, with respect to the Class L
Notes, Class M Notes and Class N Notes, the Issuer only) covenant
that if a Default shall occur in respect of the payment of any principal of or
interest on any Class A Senior Note, the payment of principal of or
interest on any Class A-2

 

116

 

Note (but with respect to interest, only
after the Class A Senior Notes and all interest accrued thereon have been
paid in full), the payment of principal of or interest on any Class B Note
(but with respect to interest, only after the Class A Notes and all
interest accrued thereon have been paid in full), the payment of principal of
or interest on any Class C Note (but with respect to interest, only after
the Class A Notes and Class B Notes and all interest accrued thereon
have been paid in full), the payment of principal of or interest on any Class D
Note (but with respect to interest, only after the Class A Notes, Class B
Notes and Class C Notes and all interest accrued thereon have been paid in
full), the payment of principal of or interest on any Class E Note (but
with respect to interest, only after the Class A Notes, Class B
Notes, Class C Notes and Class D Notes and all interest accrued
thereon have been paid in full), the payment of principal of or interest on any
Class F Note (but with respect to interest, only after the Class A
Notes, Class B Notes, Class C Notes, Class D Notes and Class E
Notes and all interest accrued thereon have been paid in full), the payment of
principal of or interest on any Class G Note (but with respect to
interest, only after the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes and Class F Notes and all
interest accrued thereon have been paid in full), the payment of principal of
or interest on any Class H Note (but with respect to interest, only after
the Class A Notes, Class B Notes, Class C Notes, Class D
Notes, Class E Notes, Class F Notes and Class G Notes and all
interest accrued thereon have been paid in full), the payment of principal of
or interest on any Class J Note (but with respect to interest, only after
the Class A Notes, Class B Notes, Class C Notes, Class D
Notes, Class E Notes, Class F Notes, Class G Notes and Class H
Notes and all interest accrued thereon have been paid in full), the payment of
principal of or interest on any Class K Note (but with respect to
interest, only after the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes and Class J Notes and all interest accrued
thereon have been paid in full), the payment of principal of or interest on any
Class L Note (but with respect to interest, only after the Class A
Notes, Class B Notes, Class C Notes, Class D Notes, Class E
Notes, Class F Notes, Class G Notes, Class H Notes, Class J
Notes and Class K Notes and all interest accrued thereon have been paid in
full), the payment of principal of or interest on any Class M Note (but
with respect to interest, only after the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes and Class K
Notes and all interest accrued thereon have been paid in full) or the payment
of principal of or interest on any Class N Note (but with respect to
interest, only after the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes, Class J Notes, Class K Notes, Class L
Notes and Class M Notes and all interest accrued thereon have been paid in
full) the Co-Issuers (or, with respect to the Class L Notes, Class M
Notes and Class N Notes, the Issuer only) will, upon demand of the Trustee
or any affected Rated Noteholder, pay to the Trustee, for the benefit of the
Holder of such Rated Note, the whole amount, if any, then due and payable on
such Rated Note for principal and interest, with interest upon the overdue
principal and, to the extent that payments of such interest shall be legally
enforceable, upon overdue installments of interest, at the Applicable Periodic
Interest Rate and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee
and such Rated Noteholder and their respective agents and counsel.

 

If either of the Co-Issuers (or, in the case
of the Class L Notes, Class M Notes and Class N Notes, the Issuer
only), fails to pay such amounts forthwith upon such demand, the Trustee, in
its own name and as trustee of an express trust, may institute a Proceeding for
the collection of

 

117

 

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

 

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

 

The Controlling Party or, if MBIA is no
longer the Controlling Party, the Holders of a Majority of the then Aggregate
Outstanding Amount or the Notes may (with the consent of the Initial Hedge
Counterparty), in certain cases, waive any default with respect to such Notes,
except (i) a default for more than five (5) Business Days in the
payment, when due and payable, of any interest on any Note, (ii) a default
in the payment of principal on any Note at its Stated Maturity Date or
Redemption Date, (iii) the failure on any Payment Date to disburse amounts
available in the Collection Account in accordance with Section 11.1 and
continuation of such failure for a period of three (3) Business Days, (iv) certain
events of bankruptcy or insolvency with respect to the Co-Issuers (or, in the
case of the Class L Notes, Class M Notes and Class N Notes, the
Issuer only) or (v) a default in respect of any provision of this
Indenture that cannot be modified or amended without the waiver or consent of
the Holder of each Outstanding Note adversely affected thereby.

 

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

 

118

 

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

 

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

 

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

 

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

 

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

 

119

 

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

 

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

 

5.4.         REMEDIES

 

(a)           If an Event of Default shall have occurred and be continuing,
and the Notes have been declared due and payable and such declaration and its
consequences have not been rescinded and annulled, the Co-Issuers agree that,
in addition to the requirements of Section 5.5(a), the Trustee may, after
giving notice to the Noteholders, the Collateral Manager, each Hedge
Counterparty and each Rating Agency, and with the consent of the Controlling
Party, and shall, upon written direction by the Controlling Party, to the
extent permitted by applicable law, exercise one or more of the following
rights, privileges and remedies:

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)           If an Event of Default as described in Section 5.1(e) shall
have occurred and be continuing, the Trustee may, and at the request of at
least 25% of

 

120

 

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

 

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

 

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

 

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

 

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

 

121

 

reorganization, arrangement, insolvency,
moratorium, liquidation or similar proceeding.

 

5.5.         PRESERVATION OF COLLATERAL

 

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

 

(1)           the Trustee, pursuant to Section 5.5(c),
determines (such determinations may be based upon a certificate from the
Collateral Manager) that the anticipated proceeds of a sale or liquidation of
the Collateral (after deducting reasonable expenses relating to such sale or
liquidation) would be sufficient to discharge in full the Redemption Prices
then due on the Rated Notes (including the Class A-R Commitment Fees, Class A-R
Increased Costs and Class A-R Breakage Costs), any amounts required to be
paid under any Hedge Agreement, all unreimbursed Interest Advances together
with interest thereon, all unreimbursed Cure Advances, all unpaid
Administrative Expenses and any accrued and unpaid Senior Collateral Management
Fee (to the extent not waived by the Collateral Manager) and the Controlling
Party agrees with such determination; or

 

(2)           in the case of an Event of Default described in
clauses (a), (b), (g), (h) or (i) in the definition thereof, the
Controlling Party (and, unless it will be paid in full all amounts owing to it
by the Issuer, the Initial Hedge Counterparty), subject to the provisions
hereof, and subject to the Trustee determining that such action will not
involve the Trustee incurring any liability, (unless the Trustee is indemnified
to its satisfaction against any such liability) direct the sale and liquidation
of the Collateral.

 

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

 

122

 

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

 

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

 

The Trustee shall deliver to the Noteholders,
each Hedge Counterparty, the Rating Agencies and the Co-Issuers a report
stating the results of any determination required pursuant to Section 5.5(a)(1) no
later than ten (10) days after making such determination but in any event
prior to the sale or liquidation of the Collateral. The Trustee shall make the
determinations required by Section 5.5(a)(1) within thirty (30) days
after an Event of Default and at the request of the Controlling Party at any
time during which the Trustee retains the Collateral pursuant to Section 5.5(a)(1).
In the case of each calculation made by the Trustee pursuant to Section 5.5(a)(1),
the Trustee shall obtain a letter of an Independent certified public accountant
confirming the accuracy of the computations of the Trustee and certifying their
conformity to the requirements of this Indenture. In determining whether the
Controlling Party or the Holders of the requisite percentage of any Class of
Rated Notes have given any direction or notice or have agreed pursuant to Section 5.5(a),
any Holder of a Rated Note of a Class or Income Notes who is also a Holder
of Rated Notes of another Class or of Income Notes or any Affiliate of any
such Holder shall be counted as a Holder of each such Rated Note and/or Income
Note for all purposes.

 

(d)           If an Event of Default shall have occurred and be
continuing at a time when no Rated Note is Outstanding, the Trustee shall
retain the Collateral securing the Indenture Issued Notes and any Hedge
Agreement intact, collect and cause the collection of the proceeds thereof and
make and apply all payments and deposits and maintain all accounts in respect of
the Collateral and the Rated Notes in accordance with Section 11.1 and the
provisions of Section 10 and Section 12 unless a Majority of the
Income Noteholders direct the sale and liquidation of the Collateral.

 

123

 

(e)           If an Event of Default occurs and is continuing and
prior to the Mandatory Class A-R Draw Date, no Class A-R Draw may be
made except with respect to Class A-R Draws to be applied to fund Future
Advance Amounts related to Future Funding Assets; provided, however, if an
Event of Default specified in clauses Sections 5.1(d), (g) or (h) above
occurs, the undrawn Class A-R Commitments will terminate automatically
without need for further action.

 

(f)            On the Mandatory Class A-R Draw Date, the
Issuer (or the Collateral Manager on behalf of the Issuer) will draw on the Class A-R
Notes, in an amount equal to the lesser of (x) the Aggregate Class A-R
Undrawn Amount and (y) the Total Net Future Unfunded Amount, and will
deposit such amount into the Future Funding Asset Account in accordance with Section 17.1(c).
Immediately following such draw, the Class A-R Commitments will terminate.
The amounts on deposit in the Future Funding Asset Account may only be applied
to fund Future Advance Amounts or on the date on which the Notes are redeemed
in full, shall be transferred to the Collateral Principal Collection
sub-account of the Collection Account and distributed pursuant to the Priority
of Payments; provided, that to the extent that the amounts then on deposit in
the Future Funding Asset Account exceed the Total Unfunded Future Advance
Amount, the Collateral Manager may direct the Trustee to transfer such excess
to the Collection Account as Collateral Principal Collections in accordance
with the Priority of Payments.

 

5.6.                            TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION

 

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

 

5.7.                            APPLICATION OF FUNDS COLLECTED

 

Any funds collected by the Trustee with
respect to any Hedge Agreement or the Rated Notes pursuant to this Section 5
and any funds that may then be held or thereafter received by the Trustee with
respect to any Hedge Agreements or the Rated Notes hereunder shall be applied
subject to Section 13.1 and in accordance with the provisions of Section 11.1(c),
at the date or dates fixed by the Trustee.

 

124

 

5.8.                            LIMITATION ON SUITS

 

Only the Trustee may pursue remedies
available hereunder and no Holder of any Note shall have any right to institute
any Proceedings, judicial or otherwise, with respect to this Indenture, or its
Note or otherwise, for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:

 

(a)                                       such Holder has previously given to the Trustee
written notice of an Event of Default;

 

(b)                                      except in the case of a default in the payment of
principal or interest, the Controlling Party or, if MBIA is no longer the
Controlling Party, the Holders of at least 25% of the then Aggregate
Outstanding Amount of the Notes of the Controlling Class shall have made a
written request to the Trustee to institute Proceedings in respect of such
Event of Default in its own name as Trustee hereunder and such Holder or
Holders have offered to the Trustee reasonable indemnity against the costs,
expenses and liabilities to be incurred in compliance with such request;

 

(c)                                       the Trustee for thirty (30) days after its receipt
of such notice, request and offer of indemnity has failed to institute any such
Proceeding; and

 

(d)                                      no direction inconsistent with such written request
has been given to the Trustee during such 30-day period by the Controlling Party;

 

it being understood and intended that no one
or more Holders of Rated Notes shall have any right in any manner whatever by
virtue of, or by availing of, any provision of this Indenture to affect,
disturb or prejudice the rights of any other Holders of Notes or to obtain or
to seek to obtain priority or preference over any other Holders of the Notes of
the same Class or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the Holders
of Notes of the same Class. In addition, any action taken by any one or more of
the Holders of Notes shall be subject to and in accordance with Sections 13.1
and 11.1(d).

 

Notwithstanding any other provisions of this
Indenture but subject to Section 5.8(d), if the Trustee shall receive
conflicting or inconsistent requests and indemnity from two or more groups of
Holders of the Rated Notes, each representing less than a Majority of the then
Aggregate Outstanding Amount of Rated Notes, the Trustee shall follow the
instructions of the group representing the higher percentage of aggregate
principal amount of Outstanding Rated Notes.

 

5.9.                            UNCONDITIONAL RIGHTS OF RATED NOTEHOLDERS (OTHER
THAN THE CLASS N  NOTEHOLDERS) TO RECEIVE PRINCIPAL
AND INTEREST

 

Notwithstanding any other provision in this
Indenture (other than Section 2.6(i)), the Holder of any Indenture Issued
Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest (if any) on such Indenture Issued Note
as such principal and/or interest become due and payable in accordance with
Sections 13.1 and

 

125

 

11.1(c) and, subject to the provisions
of Section 5.8, to institute proceedings for the enforcement of any such
payment, and such right shall not be impaired without the consent of such
Holder. Holders of the Class B Notes, Class C Notes, Class D
Notes, Class E Notes, Class F Notes, Class G Notes, Class H
Notes, Class J Notes, Class K Notes, Class L Notes and Class M
Notes shall have no right to institute proceedings for the enforcement of any
payment until such time as no Class of Rated Note that is senior to such Class of
them remains Outstanding, which right shall be subject to the provisions of Section 5.8,
and shall not be impaired without the consent of any such Holder.

 

5.10.                     RESTORATION OF RIGHTS AND REMEDIES

 

If the Trustee or any Rated Noteholder has
instituted any Proceeding to enforce any right or remedy under this Indenture
and such Proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee or to such Rated Noteholder, then and
in every such case the Co-Issuers, the Trustee and the Rated Noteholder shall,
subject to any determination in such Proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Secured Parties shall continue as though no such Proceeding had
been instituted.

 

5.11.                     RIGHTS AND REMEDIES CUMULATIVE

 

No right or remedy herein conferred upon or
reserved to the Trustee or to the Rated Noteholders is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing by law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other appropriate
right or remedy.

 

5.12.                     DELAY OR OMISSION NOT WAIVER

 

No delay or omission of the Trustee, any
Rated Noteholder or the Initial Hedge Counterparty to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or remedy
or constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Section 5 or by law to the Trustee,
the Rated Noteholders or the Initial Hedge Counterparty may be exercised from
time to time, and as often as may be deemed expedient, by the Trustee, the
Rated Noteholders or the Initial Hedge Counterparty, as the case may be.

 

5.13.                     CONTROL BY THE CONTROLLING PARTY

 

Notwithstanding any other provision of this
Indenture (but subject to the proviso in the definition of “Outstanding” in Section 1.1(a)),
the Controlling Party or the Holders of a Majority of the then Aggregate
Outstanding Amount of Rated Notes shall have the right to cause the institution
of and direct the time, method and place of conducting any Proceeding for any
remedy available to the Trustee, or of any sale of the Collateral, in whole or
in part, provided that:

 

(a)                                  such direction shall not conflict with any rule of
law or with this Indenture;

 

126

 

(b)                                      the Trustee may take any other action deemed proper
by it that is not inconsistent with such direction; provided that, subject to Section 6.1,
the Trustee need not take any action that it determines might involve it in
liability (unless the Trustee has received an indemnity reasonably satisfactory
to it against such liability as set forth below);

 

(c)                                       the Trustee shall have been provided with an
indemnity reasonably satisfactory to it; and

 

(d)                                      any direction to the Trustee to undertake a Sale of
the Collateral shall be made only pursuant to, and in accordance with, Sections
5.4 and 5.5.

 

5.14.                     WAIVER OF PAST DEFAULTS

 

The Controlling Party or the Holders of a
Majority of the then Aggregate Outstanding Amount of Rated Notes may (with the
consent of the Initial Hedge Counterparty), in certain cases waive any past
Default and its consequences, except:

 

(a)                                       a Default for more than five (5) Business Days
in the payment, when due and payable, of any interest on any Note; or

 

(b)                                      a Default in the payment of principal on any Note
at its Stated Maturity Date or Redemption Date; or

 

(c)                                       the failure on any Payment Date to disburse amounts
available in the Collection Account in accordance with Section 11.1 and
the continuation of such failure for a period of three (3) Business Days;
or

 

(d)                                      a Default arising under Section 5.1(g) or
5.1(h); or

 

(e)                                       a Default in respect of any provision of this
Indenture that under Section 8.2 cannot be modified or amended without the
waiver or consent of the Holder of each Outstanding Note adversely affected
thereby.

 

In the case of any such waiver, (i) the
Co-Issuers, the Trustee and the Holders of the Notes shall be restored to their
former positions and rights hereunder, respectively, but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereto, and (ii) the Trustee shall promptly give written notice of any
such waiver to the Collateral Manager, each Hedge Counterparty and each Holder
of Rated Notes. The Rating Agencies shall be notified by the Issuer of any such
waiver.

 

Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured for every purpose of this Indenture, but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereto.

 

127

 

5.15.                     UNDERTAKING FOR COSTS

 

All parties to this Indenture agree, and each
Holder of any Rated Note by its acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken, or omitted by it as Trustee, the filing by
any party litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys’ fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made
by such party litigant; but the provisions of this Section 5.15 shall not
apply to any suit instituted by the Trustee, to any suit instituted by any
Rated Noteholder, or group of Rated Noteholders, holding in the aggregate more
than 10% in Aggregate Outstanding Amount of the Rated Notes, or to any suit
instituted by any Rated Noteholder for the enforcement of the payment of the
principal of or interest on any Rated Note on or after the Stated Maturity Date
expressed in such Rated Note (or, in the case of redemption, on or after the
applicable Redemption Date).

 

5.16.                     WAIVER OF STAY OR EXTENSION LAWS

 

The Co-Issuers covenant (to the extent that
they may lawfully do so) that they will not at any time insist upon, or plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay
or extension law wherever enacted, now or at any time hereafter in force
(including but not limited to filing a voluntary petition under Chapter 11 of
the Bankruptcy Code and by the voluntary commencement of a proceeding or the
filing of a petition seeking winding up, liquidation, reorganization or other
relief under any bankruptcy, insolvency, receivership or similar law now or
hereafter in effect), which may affect the covenants, the performance of or any
remedies under this Indenture; and the Co-Issuers (to the extent that they may
lawfully do so) hereby expressly waive all benefit or advantage of any such
law, and covenant that they will not hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.

 

5.17.                     SALE OF COLLATERAL

 

(a)                                  The power to effect any sale (a Sale) of any portion
of the Collateral pursuant to Sections 5.4 and 5.5 shall not be exhausted by
any one or more Sales as to any portion of such Collateral remaining unsold,
but shall continue unimpaired until the entire Collateral shall have been sold
or all amounts secured by the Collateral shall have been paid. The Trustee
hereby expressly waives its rights to any amount fixed by law as compensation
for any Sale; provided that the
Trustee shall be authorized to deduct the reasonable costs, charges and
expenses incurred by it in connection with such Sale from the proceeds thereof
notwithstanding the provisions of Section 6.7.

 

(b)                                 The Trustee may bid for and acquire any portion of
the Collateral in connection with a public Sale thereof, by crediting all or
part of the net proceeds of such Sale after deducting the reasonable costs,
charges and expenses incurred by the Trustee in connection with such Sale

 

128

 

notwithstanding the provisions of Section 6.7.
The Rated Notes and any Hedge Agreement need not be produced in order to
complete any such Sale, or in order for the net proceeds of such Sale to be
credited against amounts owing on the Rated Notes. The Trustee may hold, lease,
operate, manage or otherwise deal with any property so acquired in any manner
permitted by law in accordance with this Indenture.

 

(c)                                  If any portion of the Collateral consists of
securities not registered under the Securities Act (Unregistered Securities),
the Trustee may, but shall not be required to, seek an Opinion of Counsel, or,
if no such Opinion of Counsel can be obtained, with the consent of a Majority
of the then Aggregate Outstanding Amount of Rated Notes seek, a no-action
position from the Commission or any other relevant federal or state regulatory
authorities, regarding the legality of a public or private sale of such
Unregistered Securities. In no event will the Trustee be required to register
Unregistered Securities under the Securities Act.

 

(d)                                 The Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any portion
of the Collateral in connection with a sale thereof. In addition, the Trustee
is hereby irrevocably appointed the agent and attorney-in-fact of the Issuer to
transfer and convey its interest in any portion of the Collateral in connection
with a sale thereof, and to take all action necessary to effect such sale. No
purchaser or transferee at such a sale shall be bound to ascertain the
Trustee’s authority, to inquire into the satisfaction of any conditions precedent
or see to the application of any funds.

 

5.18.                     ACTION ON THE RATED NOTES

 

The Trustee’s right to seek and recover
judgment on the Rated Notes or under this Indenture shall not be affected by
the seeking or obtaining of or application for any other relief under or with
respect to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of the Secured Parties shall be impaired by the recovery of any
judgment by the Trustee against the Issuer or by the levy of any execution
under such judgment upon any portion of the Collateral or upon any of the
assets of the Issuer or the Co-Issuer.

 

ARTICLE VI

 

THE TRUSTEE

 

6.1.                            CERTAIN DUTIES AND RESPONSIBILITIES

 

(a)                                  Except during the continuance of an Event of
Default:

 

(1)                                  the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture against the
Trustee; and

 

129

 

(2)                                 in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture; provided that, in the case of any such
certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they substantially conform to the
requirements of this Indenture and shall promptly, but in any event within
three Business Days in the case of an Officer’s certificate furnished by the
Issuer, notify the party delivering the same if such certificate or opinion does
not conform. If a corrected form shall not have been delivered to the Trustee
within 15 days after such notice from the Trustee, the Trustee shall promptly
notify the Rated Noteholders and the Hedge Counterparties.

 

(b)                                In case an Event of Default actually known to the
Trustee has occurred and is continuing, the Trustee shall, prior to the receipt
of directions, if any, from the Controlling Party, exercise such of the rights
and powers vested in it by this Indenture, and use the same degree of care and skill
in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person’s own affairs.

 

(c)                                 No provision of this Indenture shall be construed
to relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:

 

(1)                                 This Section 6.1(c) shall not be
construed to limit the effect of Section 6.1(a);

 

(2)                                 the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it shall be proven that
the Trustee was negligent in ascertaining the pertinent facts;

 

(3)                                 the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Issuer or the Co-Issuer in accordance with this Indenture
and/or the Controlling Party or a Majority (or such other percentage as may be
required by the terms hereof) of the Aggregate Outstanding Amount of the
Controlling Class (or other Class if required or permitted by the
terms hereof) relating to the time, method and place of conducting any
Proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Indenture;

 

(4)                                 no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers contemplated hereunder, if it shall have reasonable
grounds for

 

130

 

believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it (if the amount of such funds or risk or liability does not exceed the amount
payable to the Trustee pursuant to Section 11.1(a)(1) net of the
amounts specified in Section 6.8(a)(1), the Trustee shall be deemed to be
reasonably assured of such repayment) unless such risk or liability relates to
performance of its ordinary services, including under Section 5, under
this Indenture; and

 

(5)           the Trustee shall not be liable to the Rated Noteholders for any action taken
or omitted by it at the direction of the Co-Issuers (in the case of the Rated
Notes other than the Class L Notes, Class M Notes and Class N
Notes), the Issuer (in the case of the Class L Notes, Class M Notes
and Class N Notes), the Collateral Manager and/or the Holders of the Rated
Notes under the circumstances in which such direction is required or permitted
by the terms of this Indenture.

 

(d)                                For all purposes under this Indenture, the Trustee
shall not be deemed to have notice or knowledge of any Protection Provider
Default or Event of Default described in Section 5.1(d), 5.1(e), 5.1(f),
5.1(g) or 5.1(h) unless a Trust Officer assigned to and working in
the Corporate Trust Office has actual knowledge thereof or unless written
notice of any event which is in fact such a Protection Provider Default, Event
of Default or such a Default, as the case may be, is received by the Trustee at
the Corporate Trust Office. For purposes of determining the Trustee’s
responsibility and liability hereunder, whenever reference is made in this
Indenture to such an Event of Default or such a Default, as the case may be,
such reference shall be construed to refer only to such an Event of Default or
such a Default, as the case may be, of which the Trustee is deemed to have
notice as described in this Section 6.1(d).

 

(e)                                 Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section 6.

 

(f)                                   The Trustee shall, upon receipt of reasonable (but
no less than three Business Days’) prior written notice, permit any
representative of a Holder of a Rated Note or a Hedge Counterparty, during the
Trustee’s normal business hours, to examine all books of account, records,
reports and other papers of the Trustee relating to the Rated Notes, to make
copies and extracts therefrom (the reasonable out-of-pocket expenses incurred
in making any such copies or extracts to be reimbursed to the Trustee by such
Holder) and to discuss the Trustee’s actions, as such actions relate to the
Trustee’s duties with respect to the Rated Notes, with the Trustee’s officers
and employees responsible for carrying out the Trustee’s duties with respect to
the Rated Notes; provided that
under no circumstances shall a Hedge Counterparty be permitted to review any
documentation

 

131

 

containing the names or other indicia of
identity of any of the Noteholders unless any such information (including the
number of shares held by such Noteholder) has been redacted from such documentation.

 

(g)                                 With respect to the security interests created
hereunder, the Trustee acts as a fiduciary for the Rated Noteholders only, and
serves as a collateral agent for the other Secured Parties.

 

6.2.                            NOTICE OF DEFAULT

 

Promptly (and in no event later than three
Business Days) after the occurrence of any Default actually known to a Trust
Officer of the Trustee or after acceleration has been made pursuant to Section 5.2,
the Trustee shall send to the Issuer, the PAA Issued Note Paying Agent, each
Rating Agency, (for so long as any Class of Rated Notes is Outstanding),
the Collateral Manager, each Hedge Counterparty and to all Holders of Rated
Notes, as their names and addresses appear on the Note Register, notice of all
Defaults hereunder known to the Trustee, unless such Default shall have been
cured or waived.

 

6.3.                            CERTAIN RIGHTS OF TRUSTEE

 

Except as otherwise provided in Sections 6.1
and 8:

 

(a)                                  the Trustee may rely and shall be protected in
acting or refraining from acting in good faith and in reliance upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, note or other paper or document
reasonably believed by it to be genuine and to have been signed or presented by
the proper party or parties;

 

(b)                                 any request or direction of the Issuer or the
Co-Issuer mentioned herein shall be sufficiently evidenced by an Issuer Request
or Issuer Order, as the case may be;

 

(c)                                  whenever in the administration of this Indenture
the Trustee shall (i) deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, rely upon an Officer’s certificate or (ii) be
required to determine the value of any Collateral or funds hereunder or the
cashflows projected to be received therefrom, the Trustee may, in the absence
of bad faith on its part, rely on reports of nationally recognized accountants,
investment bankers or other Persons qualified to provide the information
required to make such determination, including nationally recognized dealers in
securities of the type being valued and securities quotation services;

 

(d)                                 as a condition to the taking or omitting of any
action by it hereunder, the Trustee may consult with counsel and the advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection

 

132

 

in respect of any action taken or omitted by
it hereunder in good faith and in reliance thereon;

 

(e)                                  the Trustee shall be under no obligation to
exercise or to honor any of the rights or powers vested in it by this Indenture
at the request or direction of any of the Rated Noteholders pursuant to this
Indenture, unless such Rated Noteholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which might reasonably be incurred by it in compliance with such request or
direction;

 

(f)                                    the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, note or other paper documents, but the Trustee, in its discretion,
may and, upon the written direction of the Holders of a Majority of the then
Aggregate Outstanding Amount of the Notes of any Class, the Initial Hedge
Counterparty or any Rating Agency shall make such further inquiry or
investigation into such facts or matters as it may see fit or as it shall be
directed, and, the Trustee shall be entitled, on reasonable prior notice to the
Co-Issuers, to examine the books and records of the Co-Issuers or the Collateral
Manager relating to the Rated Notes and the Collateral, personally or by agent
or attorney at a time acceptable to the Co-Issuers or the Collateral Manager in
their reasonable judgment during normal business hours; provided that the Trustee shall, and shall
cause its agents, to hold in confidence all such information, except (i) to
the extent disclosure may be required by law by any regulatory authority and (ii) to
the extent that the Trustee, in its sole judgment, may determine that such
disclosure is consistent with its obligations hereunder;

 

(g)                                 the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys; provided that
the Trustee shall not be responsible for any misconduct or negligence on the
part of any agent (other than any Affiliate of the Trustee) appointed and
supervised, or attorney appointed, with due care by it hereunder;

 

(h)                                 the Trustee shall not be liable for any action it
takes or omits to take in good faith that it reasonably and, after the
occurrence and during the continuance of an Event of Default, prudently
believes to be authorized or within its rights or powers hereunder;

 

(i)                                     nothing herein shall be construed to impose an
obligation on the part of the Trustee to recalculate, evaluate or verify any
report, certificate or information received from the Issuer or Collateral
Manager (unless and except to the extent otherwise expressly set forth herein
or upon the request of the Initial Hedge Counterparty, a Rating Agency or a
Majority of the then Aggregate Outstanding Amount of the Rated Notes);

 

133

 

(j)            the Trustee shall not be responsible or liable for
the actions or omissions of, or any inaccuracies in the records of, any
non-Affiliated custodian, clearing agency, common depository, Euroclear or
Clearstream or for the acts or omissions of the Collateral Manager or either
Co-Issuer;

 

(k)           to the extent any defined term hereunder, or any calculation required to
be made or determined by the Trustee hereunder, is dependent upon or defined by
reference to generally accepted accounting principles in the United States (GAAP), the Trustee
shall be entitled to request and receive (and rely upon) instruction from the
Issuer or the accountants appointed pursuant to 10.14 as to the application of
GAAP in such connection, in any instance;

 

(l)            to the extent permitted by law, the Trustee shall
not be required to give any bond or surety in respect of the execution of this
Indenture or otherwise; and

 

(m)          the permissive right of the Trustee to take or refrain from taking any
actions enumerated in this Indenture shall not be construed as a duty.

 

(n)                                The Trustee shall be entitled to conclusively rely
upon the Collateral Manager’s determination that the representations and
warranties provided in connection with the acquisition of a Mezzanine Loan, a
Subordinate Mortgage Loan Interest, a Credit Lease Loan, a Tenant Lease Loan
Interest, a Participation Interest or a Commercial Mortgage Loan comply with
the requirements of Sections 12.2(u) and (v).

 

6.4.                            AUTHENTICATING AGENTS

 

If the Trustee so chooses the Trustee may
appoint one or more Authenticating Agents with power to act on its behalf and
subject to its direction in the authentication of Indenture Issued Notes in
connection with issuance, transfers and exchanges under Sections 2.4, 2.5 and
8.5, as fully to all intents and purposes as though each such Authenticating
Agent had been expressly authorized by those Sections to authenticate such
Indenture Issued Notes. For all purposes of this Indenture, the authentication
of Indenture Issued Notes by an Authenticating Agent pursuant to this Section 6.4
shall be deemed to be the authentication of Indenture Issued Notes “by the
Trustee.”

 

Any entity into which any Authenticating
Agent may be merged or converted or with which it may be consolidated, or any
entity resulting from any merger, consolidation or conversion to which any
Authenticating Agent shall be a party, or any entity succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
such Authenticating Agent hereunder, without the execution or filing of any
further act on the part of the parties hereto or such Authenticating Agent or
such successor entity.

 

Any Authenticating Agent may at any time
resign by giving written notice of resignation to the Trustee and the Issuer.
The Trustee may at any time terminate the agency of any Authenticating Agent by
giving written notice of termination to such Authenticating Agent and

 

134

 

the Co-Issuers. Upon receiving such notice of
resignation or upon such a termination, the Trustee shall promptly appoint a
successor Authenticating Agent and shall give written notice of such
appointment to the Co-Issuers.

 

The Issuer agrees to pay to each
Authenticating Agent from time to time reasonable compensation for its services
(provided, however, that, so long as an Authenticating
Agent is the Trustee, or an Affiliate thereof, such compensation shall be
payable by the Trustee, rather than by the Issuer), and reimbursement for its
reasonable expenses relating thereto and the Trustee shall be entitled to be
reimbursed for such payments, subject to Section 6.8. The provisions of
Sections 2.8, 6.5 and 6.6 shall be applicable to any Authenticating Agent.

 

6.5.                            NOT RESPONSIBLE FOR RECITALS
OR ISSUANCE
OF RATED NOTES

 

The recitals contained herein and in the
Rated Notes, other than the Certificate of Authentication thereon, shall be
taken as the statements of the Co-Issuers (with respect to the Rated Notes
other than the Class L Notes, Class M Notes and Class N Notes)
and the Issuer (with respect to the Class L Notes, Class M Notes and Class N
Notes), and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representation as to the validity or sufficiency of this
Indenture (except as may be made with respect to the validity of the Trustee’s
obligations hereunder), of the Collateral or of the Rated Notes. The Trustee
shall not be accountable for the use or application by the Co-Issuers of the
Rated Notes (other than the Class L Notes, Class M Notes or the Class N
Notes), by the Issuer of the Class L Notes, Class M Notes or the Class N
Notes or the proceeds thereof or any amounts paid to either of the Co-Issuers
pursuant to the provisions hereof.

 

6.6.                            MAY HOLD RATED NOTES

 

The Trustee, any Note Paying Agent, the Note
Registrar or any other agent of the Co-Issuers, in its individual or any other
capacity, may become the owner or pledgee of Rated Notes and, may otherwise
deal with the Co-Issuers or any of their Affiliates, with the same rights it
would have if it were not Trustee, Note Paying Agent, Note Registrar or such
other agent.

 

6.7.                            FUNDS HELD IN TRUST

 

Funds held by the Trustee hereunder shall be
held in trust to the extent required herein. The Trustee shall be under no
liability for interest on any funds received by it hereunder except as
otherwise agreed upon with the Issuer and except to the extent of income or
other gain on investments which are deposits in or certificates of deposit of
the Trustee in its commercial capacity and income or other gain actually
received by the Trustee on Eligible Investments.

 

6.8.                            COMPENSATION AND REIMBURSEMENT

 

(a)                                  The Issuer agrees:

 

(1)                                  to pay the Trustee on each Payment Date the Trustee
Fee, the PAA Issued Note Paying Agent Fee and reasonable compensation for all
other services, including custodial services, rendered by it hereunder (which

 

135

 

compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);

 

(2)           except as otherwise expressly provided herein, to reimburse the Trustee
(subject to any written agreement between the Issuer and the Trustee) in a
timely manner upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision of
this Indenture or in the enforcement of any provision hereof and expenses
related to the maintenance and administration of the Collateral (including
securities transaction charges and the reasonable compensation and expenses and
disbursements of its agents and legal counsel and of any accounting firm or
investment banking firm employed by the Trustee pursuant to Section 5.2,
5.4, 5.5, 6.3(c), 6.3(k), 10.12 or 10.14, except any such expense, disbursement
or advance as may be attributable to its negligence, willful misconduct or bad
faith but only to the extent any such securities transaction charges have not
been waived during a Due Period due to the Trustee’s receipt of a payment from
a financial institution with respect to certain Eligible Investments);

 

(3)           to indemnify the Trustee and its Officers, directors, employees and
agents for, and to hold them harmless against, any loss, liability or expense
incurred by it without negligence, willful misconduct or bad faith on their
part, arising out of or in connection with the acceptance or administration of
this trust, including the reasonable costs and expenses (including reasonable
counsel fees) of defending themselves against any claim or liability in
connection with the exercise or performance of any of their powers or duties
hereunder; and

 

(4)           to pay the Trustee reasonable additional compensation together with its
expenses (including reasonable counsel fees) for any collection action taken
pursuant to Section 6.14.

 

(b)                                The Issuer may remit payment for such fees and
expenses to the Trustee or, in the absence thereof, the Trustee may from time
to time deduct payment of its fees and expenses hereunder from funds on deposit
in the Expense Account pursuant to Section 11.1.

 

(c)                                 The Trustee hereby agrees not to cause the filing
of a petition in bankruptcy against the Issuer for the non-payment to the
Trustee of any amounts provided by this Section 6.8 until at least one
year and one day, or if longer the applicable preference period then in effect,
after the payment in full of all Rated Notes.

 

(d)                                The amounts payable to the Trustee pursuant to
Sections 6.8(a)(2) through (4) (other than amounts received by the
Trustee from financial institutions under Section 6.8(a)(2) above)
shall not, except as provided by Section 11.1(a)(34) or Section 11.1(b)(28),
exceed on any Payment Date

 

136

 

the limitation described in Section 11.1(a)(1) for
such Payment Date; provided that (A) the Trustee shall not institute any
proceeding for enforcement of such lien except in connection with an action
pursuant to Section 5.3 or 5.4 for the enforcement of the lien of this
Indenture for the benefit of the Secured Parties and (B) the Trustee may
only enforce such a lien in conjunction with the enforcement of the rights of
the Secured Parties in the manner set forth in Section 5.4.

 

The Trustee shall, subject to the Priority of
Payments, receive amounts pursuant to this Section 6.8 and Section 11.1
only to the extent that the payment thereof will not result in an Event of
Default and the failure to pay such amounts to the Trustee will not, by itself,
constitute an Event of Default. Subject to Section 6.10, the Trustee shall
continue to serve as Trustee under this Indenture notwithstanding the fact that
the Trustee shall not have received amounts due it hereunder and hereby agrees
not to cause the filing of a petition in bankruptcy against the Co-Issuers for
the nonpayment to the Trustee of any amounts provided by this Section 6.8
until at least one year and one day, or, if longer, the applicable preference
period then in effect, after the payment in full of all Rated Notes. No
direction by the Holders of a Majority of the then Aggregate Outstanding Amount
of the Rated Notes shall affect the right of the Trustee t o collect amounts
owed to it under this Indenture.

 

The indemnifications in favor of the Trustee
in this Section 6.8 shall (i) survive any resignation or removal of
any Person acting as Trustee (to the extent of any indemnified liabilities,
costs, expenses and other amounts arising or incurred prior to, or arising out
of actions or omissions occurring prior to, such resignation or removal) and (ii) apply
to the Trustee in its capacities as Custodian, Note Paying Agent, Rated Note
Calculation Agent and Authenticating Agent.

 

6.9.                            CORPORATE TRUSTEE REQUIRED; ELIGIBILITY

 

There shall at all times be a Trustee
hereunder which shall be a bank, corporation or trust company organized and doing
business under the laws of the United States or of any State thereof,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least U.S.$100,000,000, subject to
supervision or examination by federal or state banking authorities, and insured
by the Federal Deposit Insurance Corporation, an entity with respect to which
Rating Confirmation has been received. If such entity publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this Section 6.9,
the combined capital and surplus of such entity shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 6.9, it shall resign
immediately in the manner and with the effect hereinafter specified in this Section 6.

 

6.10.                     RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR

 

(a)                                  No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Section 6 shall become
effective until

 

137

 

the acceptance of appointment by the
successor Trustee under Section 6.11.

 

(b)                                 The Trustee may resign at any time by giving 90
days prior written notice thereof to the Co-Issuers, the Rated Noteholders, the
Collateral Manager, each Hedge Counterparty and each Rating Agency. Upon receiving
such notice of resignation, or if the Trustee is removed or becomes incapable
of acting, or if a vacancy shall occur in the office of the Trustee for any
reason, the Issuer shall (after consultation with the Collateral Manager)
promptly propose a successor trustee for approval by the Holders of 662/3% of the then Aggregate Outstanding Amount of the
Notes of each Class of Rated Notes. A proposed successor trustee approved
in accordance with the preceding sentence shall be appointed by the Co-Issuers
as successor trustee by written instrument, in duplicate, executed by an
Authorized Officer of the Issuer and an Authorized Officer of the Co-Issuer,
one copy of which shall be delivered to the Trustee so resigning and one copy
to the successor trustee or trustees, together with a copy to each Rated
Noteholder. If no successor trustee shall have been appointed and an instrument
of acceptance by a successor Trustee shall not have been delivered to the
Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee or any Holder of a Rated Note or any Hedge Counterparty on
behalf of itself and all others similarly situated, subject to Section 5.15,
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.

 

(c)                                  The Trustee may be removed at any time by an Act of
the Holders of at least 662/3% of the then
Aggregate Outstanding Amount of the Notes of each Class of Rated Notes
delivered to the Trustee and to the Co-Issuers.

 

(d)                                 If at any time:

 

(1)                                  the Trustee shall cease to be eligible under Section 6.9
and shall fail to resign after written request therefor by any Holder; or

 

(2)                                  the Trustee shall become incapable of acting or
shall be adjudged as bankrupt or insolvent or a receiver or liquidator of the
Trustee or of its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation,

 

then, in any such case (subject to Section 6.10(a)),
(A) the Co-Issuers, by Issuer Order shall remove the Trustee, or (B) subject
to Section 5.15, any Holder or any Hedge Counterparty may, on behalf of
itself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.

 

138

 

(e)                                  The Co-Issuers shall give prompt notice of each
resignation and each removal of the Trustee and each appointment of a successor
Trustee by mailing written notice of such event by first class mail, postage
prepaid, to each Rating Agency, each Hedge Counterparty, the Collateral Manager
and the Holders as their names and addresses appear in the Note Register. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office. If the Co-Issuers fail to mail such notice within ten
days after acceptance of appointment by the successor Trustee, the successor
Trustee shall cause such notice to be given at the expense of the Co-Issuers.

 

6.11.                     ACCEPTANCE OF APPOINTMENT BY SUCCESSOR

 

Every successor Trustee appointed hereunder
shall execute, acknowledge and deliver to the Co-Issuers and the retiring
Trustee (with copies to the Collateral Manager) an instrument accepting such
appointment. Upon delivery of the required instruments, the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any other act, deed or conveyance, shall become vested with
all the rights, powers, trusts, duties and obligations of the retiring Trustee;
but, on request of the Co-Issuers or a Majority of the then Aggregate
Outstanding Amount of the Notes of any Class of Notes or the successor
Trustee, such retiring Trustee shall, upon payment of its charges, fees,
indemnities and expenses then unpaid, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee, and shall duly assign, transfer and deliver to such successor
Trustee all property and funds held by such retiring Trustee hereunder, subject
nevertheless to its lien, if any, provided for in Section 6.8(d). Upon
request of any such successor Trustee, the Co-Issuers shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts.

 

No successor Trustee shall accept its
appointment unless (a) at the time of such acceptance such successor shall
be qualified and eligible under Section 6.9 and the other provisions of
this Section 6 and (b) a Rating Confirmation shall have been obtained
with respect to the appointment of such successor Trustee shall have been
satisfied. No appointment of a successor Trustee shall become effective unless
approved by the Holders of not less than 66 2/3% of the Aggregate Outstanding
Amount of the Notes; and no appointment of a successor Trustee shall become
effective until the date ten days after notice of such appointment has been
given to each Rated Noteholder and each Rating Agency.

 

6.12.                     MERGER, CONVERSION, CONSOLIDATION
OR SUCCESSION
TO BUSINESS
OF TRUSTEE

 

Any Person into which the Trustee may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any Person succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder; provided such Person
shall be otherwise qualified and eligible under this Section 6, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto. The successor Trustee will notify each Rating Agency of any
such merger, conversion or consolidation. In case any of the Indenture Issued
Notes have been authenticated, but not delivered, by the Trustee then in
office,

 

139

 

any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication and
deliver the Indenture Issued Notes so authenticated with the same effect as if
such successor Trustee had itself authenticated such Indenture Issued Notes.

 

6.13.                     CO-TRUSTEES

 

At any time or times, for the purpose of
meeting the legal requirements of any jurisdiction in which any part of the
Collateral may at the time be located, the Trustee shall have power to appoint
one or more Persons to act as Co-trustee, jointly with the Trustee of all or
any part of the Collateral, with the power to file such proofs of claim and
take such other actions pursuant to Section 5.6 and to make such claims
and enforce such rights of action on behalf of the Holders of the Rated Notes
subject to the other provisions of this Section 6.13.

 

The Co-Issuers shall join with the Trustee in
the execution, delivery and performance of all instruments and agreements
necessary or proper to appoint a Co-trustee. If the Co-Issuers do not join in
such appointment within 15 days after the receipt by them of a request to do
so, the Trustee shall have power to make such appointment.

 

Should any written instrument from the
Co-Issuers be required by any Co-trustee so appointed for more fully confirming
to such Co-trustee such property, title, right or power, any and all such instruments
shall, on request, be executed, acknowledged and delivered by the Co-Issuers.
The Co-Issuers agree to pay (subject to the Priority of Payments) for any
reasonable fees and expenses in connection with such appointment.

 

Every Co-trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the
following terms:

 

(a)                                  the Indenture Issued Notes shall be authenticated
and delivered and all rights, powers, duties and obligations hereunder in
respect of the custody of securities, funds and other personal property held
by, or required to be deposited or pledged with, the Trustee hereunder, shall
be exercised solely by the Trustee;

 

(b)                                 the rights, powers, duties and obligations hereby
conferred or imposed upon the Trustee in respect of any property covered by the
appointment of a Co-trustee shall be conferred or imposed upon and exercised or
performed by the Trustee or by the Trustee and such Co-trustee jointly, as
shall be provided in the instrument appointing such Co-trustee, except to the
extent that under any law of any jurisdiction in which any particular act is to
be performed, the Trustee shall be incompetent or unqualified to perform such
act, in which event such rights, powers, duties and obligations shall be exercised
and performed by a Co-trustee;

 

(c)                                  the Trustee at any time, by an instrument in
writing executed by it, may accept the resignation of or remove any Co-trustee
appointed under this Section 6.13. A successor to any Co-trustee so
resigned or removed may be appointed in the manner provided in this Section 6.13;

 

140

 

(d)                                 no Co-trustee hereunder shall be personally liable
by reason of any act or omission of the Trustee or any other Co-trustee
hereunder;

 

(e)                                  the Trustee shall not be liable by reason of any
act or omission of a Co-trustee;

 

(f)                                    any Act of Rated Noteholders delivered to the
Trustee shall be deemed to have been delivered to each Co-trustee; and

 

(g)                                 each Co-trustee hereunder shall at the time of such
acceptance satisfy the qualification required of a Trustee under Section 6.9
and the other provisions of this Section 6.

 

6.14.                     CERTAIN DUTIES RELATED TO DELAYED PAYMENT OF PROCEEDS; OTHER NOTICES

 

In the event that the Trustee shall not have
received a payment with respect to any Pledged Security within two Business
Days after its Due Date, the Trustee shall (i) notify the Issuer and
Collateral Manager in writing and (ii) promptly request the issuer of such
Pledged Security, the trustee under the related Underlying Instrument or paying
agent designated by either of them, as the case may be, to make such payment as
soon as practicable after such request but in no event later than three
Business Days after the date of such request. In the event that such payment is
not made within such time period, the Trustee, subject to the provisions of Section 6.1(c)(4),
shall, subject to the restrictions on the sale of Collateral Interests set
forth in Section 12.1, take such action as the Collateral Manager shall
direct in writing. Any such action shall be without prejudice to any right to
claim a Default under this Indenture. The Trustee will promptly notify the
Issuer if the Collateral Manager has determined that (i) any Collateral
Interest has become an Impaired Interest, a Deferred Interest PIK Bond, a
Credit Risk Interest, a Credit Improved Interest, a Future Funding Interest or
a Written Down Interest or (ii) the Trustee has received an Equity
Interest in connection with any Collateral Interest.

 

6.15.                     REPRESENTATIONS AND WARRANTIES OF THE BANK

 

(a)                                  Organization. The Bank has been duly organized and is validly
existing as a national banking association under the laws of the United States
and has the power to conduct its business and affairs as a trustee.

 

(b)                                 Authorization; Binding Obligations. The Bank has the power and authority to perform
the duties and obligations of Trustee, Note Registrar and Note Transfer Agent
or any other capacity to which it is appointed under this Indenture. The Bank
has taken all necessary action to authorize the execution, delivery and
performance of this Indenture, and all of the documents required to be executed
by the Bank pursuant hereto. This Indenture has been duly executed and
delivered by the Bank. Upon execution and delivery by the Co-Issuers, this
Indenture will constitute the legal, valid and binding obligation of the Bank
enforceable in accordance with its terms.

 

141

 

(c)                                  Eligibility. The Bank is eligible under Section 6.9 to serve
as Trustee hereunder.

 

(d)           No Conflict. Neither the execution, delivery and performance
of this Indenture, nor the consummation of the transactions contemplated by
this Indenture, (i) is prohibited by, or requires the Bank to obtain any
consent, authorization, approval or registration under, any law, statute, rule,
regulation, judgment, order, writ, injunction or decree that is binding upon
the Bank or any of its properties or assets, or (ii) will violate any
provision of, result in any default or acceleration of any obligations under,
result in the creation or imposition of any lien pursuant to, or require any
consent under, any agreement to which the Bank is a party or by which it or any
of its property is bound.

 

(e)           No Proceedings. There are no proceedings pending, or to the best
knowledge of the Bank, threatened against the Bank before any federal, state or
other governmental agency, authority, administrator or regulatory body,
arbitrator, court or other tribunal, foreign or domestic, that could have a
material adverse effect on the Collateral or any action taken or to be taken by
the Bank under this Indenture.

 

6.16.                     EXCHANGE OFFERS, PROPOSED AMENDMENTS
ETC.

 

The Collateral Manager may, on behalf of the
Issuer, instruct the Trustee pursuant to an Issuer Order to, and the Trustee
shall, take any of the following actions with respect to a Collateral Interest
or Equity Interest as to which an Offer has been made or as to which any
consent, waiver, vote or exercise has been requested: (i) exchange such instrument
for other securities or a mixture of securities and other consideration
pursuant to such Offer (and in making a determination whether or not to
exchange any security, none of the restrictions set forth in Section 12
shall be applicable); and (ii) give consent, grant waiver, vote or
exercise any or all other rights or remedies with respect to any such
Collateral Interest or Equity Interest. In the event that the Trustee does not
receive instruction from the Collateral Manager, the Trustee shall have no
obligation to take action with respect to such exchange or such request for
consent, waiver, vote or exercise. In the event that the Trustee receives
written notice of any proposed amendment, consent or waiver under the
Underlying Instruments of any Collateral Interests (before or after any
default), the Trustee shall promptly deliver copies of such notice to the
Issuer and the Collateral Manager. The Collateral Manager may, on behalf of the
Issuer, instruct the Trustee pursuant to an Issuer Order to, and the Trustee
shall, with respect to a Collateral Interest as to which a consent or waiver
under the Underlying Instruments of such Collateral Interest (before or after
any default) has been proposed, give consent, grant waiver, vote or exercise
any or all other rights or remedies with respect to any such Collateral
Interest only in accordance with such Issuer Order. In the absence of any
instruction from the Collateral Manager, the Trustee shall not engage in any
vote with respect to such Collateral Interest.

 

142

 

6.17.       FIDUCIARY FOR RATED NOTEHOLDERS ONLY; AGENT FOR OTHER SECURED PARTIES

 

With respect to the security interests
created hereunder, the pledge of any portion of the Collateral to the Trustee
is to the Trustee as representative of the Rated Noteholders and agent for
other Secured Parties. In furtherance of the foregoing, the possession by the
Trustee of any portion of the Collateral and the endorsement to or registration
in the name of the Trustee of any portion of the Collateral (including without
limitation as entitlement holder of the Collateral Account) are all undertaken
by the Trustee in its capacity as representative of the Rated Noteholders and
as agent for the other Secured Parties. The Trustee shall not by reason of this
Indenture be deemed to be acting as fiduciary for any Hedge Counterparty or the
Collateral Manager, provided that
the foregoing shall not limit any of the express obligations of the Trustee
under this Indenture.

 

6.18.       WITHHOLDING

 

If any withholding tax is imposed on the
Issuer’s payment (or allocations of income) under the Rated Notes to any Rated
Noteholder, such tax shall reduce the amount otherwise distributable to such
Rated Noteholder. The Trustee is hereby authorized and directed to retain from
amounts otherwise distributable to any Rated Noteholder sufficient funds for
the payment of any tax that is required to be withheld or deducted by the
Issuer (but such authorization shall not prevent the Trustee from contesting
any such tax in appropriate proceedings and withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings). The amount of any
withholding tax imposed with respect to any Rated Noteholder shall be treated
as Cash distributed to such Rated Noteholder at the time it is withheld by the
Trustee and remitted to the appropriate taxing authority. If there is a
possibility that withholding tax is payable with respect to a distribution, the
Trustee may in its sole discretion withhold such amounts in accordance with
this Section 6.18. If any Rated Noteholder wishes to apply for a refund of
any such withholding tax, the Trustee shall reasonably cooperate with such
Rated Noteholder in making such claim so long as such Rated Noteholder agrees
to reimburse the Trustee for any out-of-pocket expenses incurred. Nothing
herein shall impose an obligation on the part of the Trustee to determine the
amount of any tax or withholding obligation on the part of the Issuer or in
respect of the Income Notes.

 

ARTICLE VII

 

COVENANTS

 

7.1.         PAYMENT OF PRINCIPAL AND INTEREST

 

The Co-Issuers will duly and punctually pay
all principal (including the Class E Cumulative Periodic Interest
Shortfall Amount, the Class F Cumulative Periodic Interest Shortfall
Amount and the Class G Cumulative Periodic Interest Shortfall Amount, the Class H
Cumulative Periodic Interest Shortfall Amount, the Class J Cumulative
Periodic Interest Shortfall Amount and the Class K Cumulative Periodic
Interest Shortfall Amount), interest (including Defaulted Interest and interest
thereon, if any) in accordance with the terms of the Rated Notes (other than
the Class L Notes, Class M Notes and Class N Notes) and this
Indenture and amounts due under any Hedge Agreement in accordance with this
Indenture. The Issuer will

 

143

 

duly and punctually pay all principal
(including the Class L Cumulative Periodic Interest Shortfall Amount, the Class M
Cumulative Periodic Interest Shortfall Amount and the Class N Cumulative
Periodic Interest Shortfall Amount), interest (including Defaulted Interest and
interest thereon, if any) in accordance with the terms of the Class L
Notes, Class M Notes and Class N Notes and this Indenture and amounts
due under any Hedge Agreement in accordance with this Indenture. Amounts
properly withheld under the Code or other applicable law by any Person from a
payment to any Rated Noteholder of principal and/or interest shall be
considered as having been paid by the Co-Issuers (in the case of Rated Notes
other than the Class L Notes, Class M Notes and Class N Notes)
or the Issuer (in the case of the Class L Notes, the Class M Notes or
the Class N Notes) to such Rated Noteholder for all purposes of this
Indenture.

 

The Trustee shall, unless prevented from
doing so for reasons beyond its reasonable control, give notice to each Rated
Noteholder and each Rating Agency of any such withholding requirement no later
than ten days prior to the date of the payment from which amounts are required
to be withheld; provided that despite the failure of the Trustee to give such
notice, amounts withheld pursuant to applicable tax laws shall be considered as
having been paid by the Co-Issuers or the Issuer as provided above.

 

7.2.         MAINTENANCE OF OFFICE OR AGENCY

 

The Co-Issuers hereby appoint the Trustee as
Note Paying Agent for the payment of principal of and interest on the Rated
Notes. The Co-Issuers hereby appoint Wells Fargo Bank, National Association
with an address at 9062 Old Annapolis Road, Columbia, Maryland 21045, Attn: CDO
Trust Services—N-Star REL CDO VIII, as the Co-Issuers’ agent where notices and
demands to or upon the Co-Issuers in respect of the Rated Notes or this
Indenture (except service of any and all process in any action or proceeding)
may be served. Rated Notes may be surrendered for registration of transfer or
exchange at the Corporate Trust Office of the Trustee in Minnesota.

 

The Co-Issuers may at any time and from time
to time, terminate the appointment of any such agent or appoint any additional
agents for any or all of such purposes; provided
that (A) the Co-Issuers will maintain in the Borough of Manhattan, The
City of New York, an office or agency where notices and demands to or upon the
Co-Issuers in respect of the Rated Notes and this Indenture may be served, (B) no
Note Paying Agent shall be appointed in a jurisdiction which subjects payments
on the Rated Notes to withholding tax and (C) the Co-Issuers may not
terminate the appointment of any Note Paying Agent without the consent of each
Income Noteholder. The Co-Issuers shall give prompt written notice to the
Trustee, each Hedge Counterparty and each Rating Agency and the Rated
Noteholders of the appointment or termination of any such agent and of the
location and any change in the location of any such office or agency.

 

If at any time the Co-Issuers shall fail to
maintain any such required office or agency in the Borough of Manhattan, The
City of New York or shall fail to furnish the Trustee with the address thereof,
presentations and surrenders may be made at and notices and demands may be
served on the Co-Issuers and Rated Notes may be presented and surrendered for
payment to the Note Paying Agent at its office in Minnesota (and the Co-Issuers
hereby appoint the same as their agent to receive such respective presentations,
surrenders, notices and demands).

 

144

 

 

7.3.         FUNDS FOR RATED NOTE PAYMENTS
TO BE HELD IN TRUST

 

All payments of amounts due and payable with
respect to any Rated Notes that are to be made from amounts withdrawn from the
Payment Account shall be made on behalf of the Co-Issuers or the Issuer, as
applicable, by the Trustee or a Note Paying Agent with respect to payments on
the Rated Notes.

 

When the Co-Issuers shall have a Note Paying
Agent that is not also the Note Registrar, they shall direct the Note Registrar
to furnish, no later than the fifth calendar day after each Record Date a list,
if necessary, in such form as such Note Paying Agent may reasonably request, of
the names and addresses of the Holders and of the certificate numbers of
individual Rated Notes held by each such Holder.

 

The initial Note Paying Agent shall be as set
forth in Section 7.2. Any additional or successor Paying Agents shall be
appointed by Issuer Order with written notice thereof to the Trustee and the
Rating Agencies. The Co-Issuers shall cause each Note Paying Agent other than
the Trustee to execute and deliver to the Trustee an instrument in which such
Note Paying Agent shall agree with the Trustee (and if the Trustee acts as Note
Paying Agent, it hereby so agrees), subject to the provisions of this Section 7.3,
that such Note Paying Agent will:

 

(a)             allocate all sums received for payment to the
Holders of Rated Notes for which it acts as Note Paying Agent on each Payment
Date and Redemption Date among such Holders in the proportion specified in the
instructions set forth in the applicable Note Valuation Report or Redemption
Date Statement or as otherwise provided herein, in each case to the extent
permitted by applicable law;

 

(b)             hold all amounts held by it for the payment of
amounts due with respect to the Rated Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such Persons as
herein provided;

 

(c)             if such Note Paying Agent is not the Trustee,
immediately resign as a Note Paying Agent and forthwith pay to the Trustee all
amounts held by it in trust for the payment of Rated Notes if at any time it
ceases to meet the standards set forth above required to be met by a Note
Paying Agent at the time of its appointment;

 

(d)             if such Note Paying Agent is not the Trustee,
immediately give the Trustee notice of any Default by the Issuer or the
Co-Issuer (or any other obligor upon the Rated Notes) in the making of any
payment required to be made; and

 

(e)             if such Note Paying Agent is not the Trustee at any
time during the continuance of any such Default, upon the written request of
the Trustee, forthwith pay to the Trustee all amounts so held in trust by such
Note Paying Agent.

 

145

 

If the Co-Issuers shall have appointed a Note
Paying Agent other than the Trustee, the Trustee shall deposit on or prior to
the Business Day next preceding each Payment Date or Redemption Date, as the
case may be, with such Note Paying Agent, if necessary, an aggregate amount
sufficient to pay the amounts then becoming due (to the extent funds are then
available for such purpose in the Collection Account, as the case may be), such
amount to be held in trust for the benefit of the Persons entitled thereto. Any
funds deposited with a Note Paying Agent (other than the Trustee) in excess of
an amount sufficient to pay the amounts then becoming due on the Rated Notes
with respect to which such deposit was made shall be paid over by such Note
Paying Agent to the Trustee for application in accordance with Section 11.

 

The Co-Issuers may at any time, for the
purpose of obtaining the satisfaction and discharge of this Indenture or for
any other purpose, direct any Note Paying Agent to pay, to the Trustee all
amounts held in trust by such Note Paying Agent, such amounts to be held by the
Trustee upon the same trusts as those upon which such amounts were held by such
Note Paying Agent; and, upon such payment by any Note Paying Agent to the
Trustee, such Note Paying Agent shall be released from all further liability
with respect to such amounts.

 

Except as otherwise required by applicable
law, any funds deposited with the Trustee or any Note Paying Agent in trust for
the payment of the principal of or interest on any Rated Note and remaining
unclaimed for two years after the same has become due and payable shall be paid
to the Co-Issuers on Issuer Request; and the Holder of such Rated Note shall
thereafter, as an unsecured general creditor, look only to the Co-Issuers (in
the case of the Rated Notes other than the Class L Notes, Class M
Notes and Class N Notes) or the Issuer (in the case of the Class L
Notes, the Class M Notes or the Class N Notes) for payment of such
amounts and all liability of the Trustee or such Note Paying Agent with respect
to such trust funds (but only to the extent of the amounts so paid to the
Co-Issuers) shall thereupon cease. The Trustee or such Note Paying Agent,
before being required to make any such release of payment, may, but shall not
be required to, adopt and employ, at the expense of the Co-Issuers, any
reasonable means of notification of such release of payment, including mailing
notice of such release to Holders whose Rated Notes have been called but have
not been surrendered for redemption or whose right to or interest in amounts
due and payable but not claimed is determinable from the records of any Note
Paying Agent, at the last address of record of each such Holder.

 

7.4.        EXISTENCE
OF CO-ISSUERS

 

The Issuer and the Co-Issuer shall (to the
extent they are able) maintain in full force and effect their existence and
rights as an exempted company incorporated and registered under the laws of the
Cayman Islands and as a limited liability company formed under the laws of the
State of Delaware, respectively, and shall obtain and preserve their
qualification to do business in each jurisdiction in which such qualifications
are or shall be necessary to protect the validity and enforceability of this
Indenture, the Rated Notes (in the case of the Issuer), the Rated Notes other
than the Class L Notes, Class M Notes and Class N Notes (in the
case of the Co-Issuer) or any of the Collateral.

 

The Issuer and the Co-Issuer shall ensure
that all corporate or other formalities regarding their respective existences
(including holding regular board of directors’, members’ and shareholders’, or
other similar, meetings) or registrations are followed. Neither the Issuer nor
the

 

146

 

Co-Issuer shall take any action, or conduct
its affairs in a manner, that is likely to result in its separate existence
being ignored or in its assets and liabilities being substantively consolidated
with any other Person in a bankruptcy, reorganization or other insolvency
proceeding. At least one director of the Issuer and at least one member of the
Co-Issuer shall be Independent of other parties to the Transaction Documents.
Without limiting the foregoing, (a) the Issuer shall not have any
subsidiaries (other than the Co-Issuer and any Tax Subsidiary), (b) the
Co-Issuer shall not have any subsidiaries and (c) the Issuer and the
Co-Issuer shall not (i) have any employees, (ii) engage in any
transaction with any shareholder that would constitute a conflict of interest
or (iii) pay dividends, provided
that the foregoing shall not prohibit the Issuer from entering into the
transactions contemplated by the Corporate Services Agreement with the
Administrator.

 

7.5.         PROTECTION OF COLLATERAL

 

(a)           The Issuer shall from time to time, execute and
deliver all such supplements and amendments hereto and all such Financing
Statements, continuation statements, instruments of further assurance and other
instruments, and shall take such other action as may be necessary or advisable
or desirable to secure the rights and remedies of the Secured Parties hereunder
and to:

 

(1)           Grant more effectively all or any portion of the
Collateral;

 

(2)           maintain, preserve and perfect the lien (and the
first priority nature thereof) of this Indenture or to carry out more
effectively the purposes hereof;

 

(3)           perfect, publish notice of or protect the validity
of any Grant made or to be made by this Indenture (including any and all
actions necessary or desirable as a result of changes in law or regulations);

 

(4)           enforce any of the Pledged Securities or other
instruments or property included in the Collateral;

 

(5)           preserve and defend title to the Collateral and the
rights therein of the Trustee and the Holders of the Rated Notes against the
claims of all Persons and parties; or

 

(6)           pay or cause to be paid any and all taxes levied or
assessed upon all or any part of the Collateral.

 

The Issuer hereby designates the Trustee its
agent and attorney-in-fact to file any Financing Statement, continuation
statement or other instrument delivered to it pursuant to this Section 7.5,
and the Trustee, as agent of the Issuer, agrees to file such continuation
statements as are necessary to maintain perfection of the Collateral perfected
by the filing of Financing Statements, provided
that the Issuer retains ultimate responsibility to maintain the perfection of
the Collateral perfected by the filing of Financing Statements and any failure
of the Trustee to file continuation statements pursuant to this undertaking
shall not result in any

 

147

 

liability of the Trustee and the Trustee
shall be entitled to indemnification pursuant to Section 6.8(a) with
respect to any claim, loss, liability or expense incurred by the Trustee with
respect to the filing of such continuation statements. The Trustee agrees that
it will from time to time, at the direction of any Secured Party, cause to be
filed Financing Statements and continuation statements. The Issuer shall
otherwise cause the perfection and priority of the security interest in the
Collateral and the maintenance of such security interest at all times.
Notwithstanding anything to the contrary herein, the right of a Secured Party
to provide direction to the Trustee shall not impose upon the Trustee, as
Secured Party, any obligation to provide any such direction. The Issuer agrees
that a carbon, photographic, photostatic or other reproduction of this
Indenture or of a Financing Statement is sufficient as an Indenture or a
Financing Statement as the case may be.

 

(b)           The Trustee shall not (i) except in accordance
with Section 10.12(a) or (b), as applicable, remove any portion of
the Collateral that consists of Cash or is evidenced by an Instrument,
certificate or other writing (A) from the jurisdiction in which it was
held at the date the most recent Opinion of Counsel was delivered pursuant to Section 7.6
(or from the jurisdiction in which it was held as described in the Opinion of
Counsel delivered at the Closing Date pursuant to Section 3.1(c), if no
Opinion of Counsel has yet been delivered pursuant to Section 7.6) or (B) from
the possession of the Person who held it on such date or (ii) cause or
permit ownership or the pledge of any portion of the Collateral that consists
of book-entry securities to be recorded on the books of a Person (A) located
in a different jurisdiction from the jurisdiction in which such ownership or
pledge was recorded at such date or (B) other than the Person on whose
books such ownership or pledge was recorded at such date, unless the Trustee
shall have first received an Opinion of Counsel to the effect that the lien and
security interest created by this Indenture with respect to such property will
continue to be maintained after giving effect to such action or actions.

 

(c)           The Issuer shall pay or cause to be paid taxes, if
any, levied on account of the beneficial ownership by the Issuer of any Pledged
Securities that secure the Rated Notes; provided
that the Issuer shall not be required to pay or discharge or cause to be paid
or discharged any such tax whose amount, applicability or validity is being
contested in good faith by appropriate proceedings and for which disputed
amounts or adequate reserves have been made or the failure of which to pay or
discharge could not reasonably be expected to have a material adverse effect
upon the ability of the Issuer to timely and fully perform any of its payment
or other material obligations under this Indenture or upon the interests of the
Rated Noteholders in the Collateral.

 

(d)           The Issuer shall enforce all of its material rights
and remedies under the Transaction Documents to which it is a party.

 

148

 

(e)           Without at least thirty (30) days’ prior written
notice to the Trustee, the Issuer shall not change its name, or the name under
which it does business, from the name shown on the signature pages hereto,
reincorporate or reorganize under the laws of another jurisdiction, or
establish an office in the United States.

 

7.6.         OPINIONS AS TO COLLATERAL

 

On or before February 28, 2011 and on or
before the fifth anniversary of such date thereafter, the Issuer shall furnish
to the Trustee, each Hedge Counterparty and each Rating Agency an Opinion of
Counsel (which shall include assumptions and qualifications substantially
similar to those set forth in Exhibit E-1) stating that, in the opinion of
such counsel, as of the date of such opinion, the lien and security interest
created by this Indenture with respect to the Collateral remains a valid and
perfected first priority lien and describing the manner in which such security
interest shall remain perfected.

 

7.7.         PERFORMANCE OF OBLIGATIONS

 

(a)           The Trustee shall notify the Issuer, each Hedge
Counterparty and each Rated Noteholder of any request for an amendment, waiver
or supplement to any Underlying Instrument included in the Collateral or of any
other notice of a vote in respect of any Collateral Interest included in the
Collateral. The Issuer may only enter into any such amendment, waiver or
supplement to any such Underlying Instrument if such amendment, supplement or
waiver:

 

(1)           is required by the provisions of any Underlying
Instrument or by applicable law (other than pursuant to an Underlying
Instrument);

 

(2)           is necessary to cure any ambiguity, inconsistency
or formal defect or omission in such Underlying Instrument; or

 

(3)           (x) is deemed necessary by the Issuer or the
Collateral Manager and does not materially and adversely affect the Secured
Parties or (y) is effected pursuant to Section 6.16.

 

The Issuer shall be entitled to rely on an
Opinion of Counsel or Officer’s certificate of the Collateral Manager as to
material adverse effect and as to whether the entry into an amendment,
supplement or waiver is permitted pursuant to this Indenture.

 

(b)           The Issuer or the Co-Issuer may, with the prior
written consent of the Holders of a Majority of the then Aggregate Outstanding
Amount of the Notes of each Class of Rated Notes and the Holders of not
less than 662/3% of the
aggregate principal amount of the Outstanding Income Notes and the Initial
Hedge Counterparty, contract with other Persons, including the Collateral
Administrator, the Collateral Manager and the Bank, for the performance of
actions and obligations to be performed by the Issuer or

 

149

 

the Co-Issuer hereunder by such Persons.
Notwithstanding any such arrangement, the Issuer or the Co-Issuer, as the case
may be, shall remain liable for all such actions and obligations. In the event
of such contract, the performance of such actions and obligations by such
Persons shall be deemed to be performance of such actions and obligations by
the Issuer or the Co-Issuer, as the case may be; and the Issuer or Co-Issuer,
as the case may be, will punctually perform, and use its best efforts to cause
such other Person to perform, all of their obligations and agreements contained
in related agreement.

 

(c)           The Co-Issuers shall treat all acquisitions of
Collateral Interests as a “purchase” for tax, accounting and reporting
purposes.

 

(d)           Each of the Co-Issuers shall file, or cause to be
filed, any tax returns, including information tax returns, required by any
governmental authority.

 

(e)           If the Issuer ceases to be disregarded as an entity
separate from the Owner REIT, in the event that (i) a Collateral Interest
would become a Taxed Collateral Interest or property acquired in respect of a
Collateral Interest would become Taxed Property (in either case excluding, for
the avoidance of doubt, any Taxed Collateral Interests or Taxed Property
required to be disposed of as described in Section 12.1(a)(2)), and (ii) the
Issuer does not sell or otherwise dispose of all or a portion of such Taxed
Collateral Interest or Taxed Property in accordance with the provisions of Section 12.1
(a)(3), the Collateral Manager on behalf of the Issuer shall, prior to such
Collateral Interest becoming a Taxed Collateral Interest or such property
becoming a Taxed Property, (a) set up a special purpose subsidiary meeting
the then current published rating agency criteria for bankruptcy remote special
purpose entities (a Tax
Subsidiary) to receive and hold any such Taxed Collateral
Interest or Taxed Property and transfer such Taxed Collateral Interest or Taxed
Property to the Tax Subsidiary or (b) contribute such Taxed Collateral
Interest or Taxed Property to a REMIC or other pass-through entity, unless the
Issuer has received an Opinion of Counsel rendered by nationally recognized tax
counsel that the Issuer can hold such Taxed Collateral Interest or Taxed
Property directly without causing the Issuer to be treated as engaged in a
trade or business in the United States for U.S. federal income tax purposes.
The Issuer shall cause the purposes and permitted activities of any such Tax
Subsidiary to be restricted solely to the acquisition, holding and disposition
of such Taxed Collateral Interest or Taxed Property and shall require such
subsidiary to distribute 100% of any payments or distributions received with
respect to such taxed Collateral Interest, together with the proceeds of any
sale of such Taxed Collateral Interest or Taxed Property, net of any tax
liabilities, to the Issuer.

 

150

 

7.8.         NEGATIVE COVENANTS

 

(a)           The Issuer will not and, with respect to Section 7.8(a)(3), (4), (5) and
(9), the Co-Issuer will not:

 

(1)           intentionally operate so as to be subject to U.S. federal income taxes on
its net income;

 

(2)           sell, assign, participate, transfer, exchange or
otherwise dispose of, or pledge, mortgage, hypothecate or otherwise encumber
(or permit such to occur or suffer such to exist), any part of the Collateral,
except as expressly permitted by this Indenture;

 

(3)           claim any credit on, make any deduction from, or
dispute the enforceability of, the payment of the principal or interest (or any
other amount) payable in respect of the Rated Notes (other than amounts
required to be paid, deducted or withheld in accordance with any applicable law
or regulation of any governmental authority) or assert any claim against any
present or future Rated Noteholder by reason of the payment of any taxes levied
or assessed upon any part of the Collateral;

 

(4)           (A) incur or assume or guarantee any indebtedness,
other than the Rated Notes and this Indenture and the transactions contemplated
hereby; (B) issue any additional class of securities other than the Income
Notes; or (C) issue any
additional shares of stock;

 

(5)           (A) take any action that would impair the
validity or effectiveness of this Indenture or any Grant hereunder or the lien
of this Indenture, amend hypothecate, subordinate, terminate, discharge or
release any Person from any covenants or obligations with respect to this
Indenture or the Rated Notes, except as may be permitted hereby, (B) create
or extend any lien, charge, adverse claim, security interest, mortgage or other
encumbrance (other than the lien of this Indenture) on or to the Collateral or
any part thereof, any interest therein or the proceeds thereof, or (C) take
any action that would cause the lien of this Indenture not to constitute a
valid first priority security interest in the Collateral;

 

(6)           use any of the proceeds of the Rated Notes issued
hereunder (A) to extend “purpose credit” within the meaning given to such
term in Regulation U or (B) to purchase or otherwise acquire any Margin
Stock;

 

(7)           permit the aggregate book value of all Margin Stock
held by the Issuer on any date to exceed the net worth of the Issuer on such
date (excluding any unrealized gains and losses) on such date;

 

(8)           dissolve or liquidate in whole or in part, except as permitted hereunder;
or

 

151

 

(9)           except for any agreements involving the purchase
and sale of Collateral Interests having customary purchase or sale terms and
documents with customary loan trading documentation (but not excepting any
Hedge Agreement), enter into any agreements unless such agreements contain
“non-petition” and “limited recourse” provisions with respect to the Issuer.

 

(b)           Except as permitted by this Indenture, the Issuer
will not do business under any other name other than the name set forth in the
Articles and neither the Issuer nor the Trustee shall acquire any Collateral after
the Closing Date, sell, transfer, exchange or otherwise dispose of Collateral,
or enter into or engage in any business with respect to any part of the
Collateral.

 

7.9.          STATEMENT AS TO COMPLIANCE

 

On or before February 28 in each
calendar year commencing in 2008, or immediately if there has been a Default in
the fulfillment of an obligation under this Indenture, the Issuer shall deliver
to the Trustee, the PAA Issued Note Paying Agent, each Rated Noteholder making
a written request therefor, the Initial Hedge Counterparty, the Collateral
Manager and each Rating Agency a certificate of the Issuer stating, as to each
signer thereof, that:

 

(a)           the Officer executing such certificate has
conducted a review of the activities of the Issuer and of the Issuer’s performance
under this Indenture during the 12-month period ending on December 31 of
such year (or from the Closing Date until December 31, 2007, in the case
of the first such certificate) based on reports and other information delivered
to such Officer by the Trustee, the Collateral Manager and the Collateral
Administrator and a review of the Accountant’s Reports prepared pursuant to Section 10.11
and such other materials as such Officer deems appropriate; and

 

(b)           to the best of knowledge of the Issuer, based on
such review, the Issuer has fulfilled all of its material obligations under
this Indenture throughout the period, or, if there has been a Default in the
fulfillment of any such obligation, specifying each such Default known to such
Officer and the nature and status thereof, including actions undertaken to
remedy the same.

 

7.10.       CO-ISSUERS MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS

 

(a)           The Issuer shall not consolidate or merge with or
into any other Person or transfer or convey all or substantially all of its
assets to any Person, unless permitted by Cayman Islands law and unless:

 

(1)           the Issuer shall be the surviving entity, or the
Person (if other than the Issuer) formed by such consolidation or into which
the Issuer is merged or to which all or substantially all of the assets of the
Issuer are transferred or conveyed shall be an exempted limited liability
company organized and

 

152

 

existing under the laws of the Cayman Islands
or such other jurisdiction outside the United States as may be approved by a
Majority of each Class and each Hedge Counterparty, and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Trustee, each Hedge Counterparty and each Rated Noteholder, the due and
punctual payment of the principal of and interest on all Rated Notes and the
performance of every covenant of this Indenture and any Hedge Agreement on the
part of the Issuer to be performed or observed, all as provided herein;

 

(2)           each Rating Agency and each Hedge Counterparty
shall have received written notification from the Issuer of such consolidation,
merger, transfer or conveyance and the identity of the surviving entity and a
Rating Confirmation shall have been obtained with respect to the consummation
of such transaction;

 

(3)           if the Issuer is not the surviving entity, the
Person formed by such consolidation or into which the Issuer is merged or to
which all or substantially all of the assets of the Issuer are transferred or
conveyed shall have agreed with the Trustee (A) to observe the same legal
requirements for the recognition of such formed or surviving entity as a legal
entity separate and apart from any of its Affiliates as are applicable to the
Issuer with respect to its Affiliates and (B) not to consolidate or merge
with or into any other Person or transfer or convey the Collateral or all or
substantially all of its assets to any other Person except in accordance with
the provisions of this Section 7.10;

 

(4)           if the Issuer is not the surviving entity, the
Person formed by such consolidation or into which the Issuer is merged or to
which all or substantially all of the assets of the Issuer are transferred or
conveyed shall have delivered to the Trustee, each Hedge Counterparty and each
Rating Agency an Officer’s certificate and an Opinion of Counsel each stating
that such Person shall be duly organized, validly existing and (if applicable)
in good standing in the jurisdiction in which such Person is organized; that
such Person has sufficient power and authority to assume the obligations set
forth in Section 7.10(a)(1) above and to execute and deliver an
indenture supplemental hereto for the purpose of assuming such obligations;
that such Person has duly authorized the execution, delivery and performance of
an indenture supplemental hereto for the purpose of assuming such obligations
and that such supplemental indenture is a valid, legal and binding obligation
of such Person, enforceable in accordance with its terms, subject only to
bankruptcy, reorganization, insolvency, moratorium and other laws affecting the
enforcement of creditors’ rights generally and to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law); that, immediately following the event which causes such
Person to become the successor to the Issuer, (A) such Person has good and
marketable title, free and clear of any lien, security interest or charge,
other than the lien and

 

153

 

security interest of this Indenture, to the
Collateral; (B) the Trustee continues to have a valid perfected first
priority security interest in the Collateral securing all of the Rated Notes; (C) such
Person has received an Opinion of Counsel to the effect that (i) (x) such
Person has been organized in conformity with the requirements for qualification
as a real estate investment trust under the Code, and such Person’s actual
method of operation has (for the time period specified in such Opinion of
Counsel) enabled, and its proposed method of operation will enable, such Person
to satisfy the requirements for qualification and taxation as a real estate
investment trust under the Code or (y) such Person will not be subject to
net income tax or be treated as engaged in a trade or business within the
United States for U.S. federal income tax purposes and (ii) such other
matters as the Trustee, the Initial Hedge Counterparty or any Rated Noteholder
may reasonably require;

 

(5)           immediately after giving effect to such
transaction, no Default shall have occurred and be continuing;

 

(6)           the Issuer shall have delivered to the Trustee,
each Hedge Counterparty and each Rated Noteholder an Officer’s certificate and
an Opinion of Counsel each stating that such consolidation, merger, transfer or
conveyance and such supplemental indenture comply with this Section 7,
that all conditions precedent in this Section 7 provided for relating to
such transaction have been complied with and that no adverse tax consequences
will result therefrom to any Rated Noteholder or any Hedge Counterparty; and

 

(7)           the Issuer shall have delivered to the Trustee an
Opinion of Counsel stating that after giving effect to such transaction,
neither of the Co-Issuers will be required to register as an investment company
under the Investment Company Act.

 

(b)           The Co-Issuer shall not consolidate or merge with
or into any other Person or transfer or convey all or substantially all of its
assets to any Person, unless:

 

(1)           the Co-Issuer shall be the surviving entity, or the
Person (if other than the Co-Issuer) formed by such consolidation or into which
the Co-Issuer is merged or to which all or substantially all of the assets of
the Co-Issuer are transferred or conveyed shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, the due
and punctual payment of the principal of and interest on all Rated Notes and
the performance of every covenant of this Indenture on the part of the Co-Issuer
to be performed or observed, all as provided herein;

 

(2)           each Rating Agency shall have received written
notification from the Co-Issuer of such consolidation, merger, transfer or
conveyance and the

 

154

 

identity of the surviving entity and a Rating
Confirmation shall have been obtained with respect to the consummation of such
transaction;

 

(3)           if the Co-Issuer is not the surviving entity, the
Person formed by such consolidation or into which the Co-Issuer is merged or to
which all or substantially all of the assets of the Co-Issuer are transferred
or conveyed shall have agreed with the Trustee (A) to observe the same
legal requirements for the recognition of such formed or surviving corporation
as a legal entity separate and apart from any of its Affiliates as are
applicable to the Co-Issuer with respect to its Affiliates and (B) not to
consolidate or merge with or into any other Person or transfer or convey all or
substantially all of its assets to any other Person except in accordance with
the provisions of this Section 7.10;

 

(4)           if the Co-Issuer is not the surviving entity, the
Person formed by such consolidation or into which the Co-Issuer is merged or to
which all or substantially all of the assets of the Co-Issuer are transferred
or conveyed shall have delivered to the Trustee and each Rating Agency an
Officer’s certificate and an Opinion of Counsel each stating that such Person
shall be duly organized, validly existing and (if applicable) in good standing
in the jurisdiction in which such Person is organized; that such Person has
sufficient power and authority to assume the obligations set forth in Section 7.10(b)(1) above
and to execute and deliver an indenture supplemental hereto for the purpose of
assuming such obligations; that such Person has duly authorized the execution,
delivery and performance of an indenture supplemental hereto for the purpose of
assuming such obligations and that such supplemental indenture is a valid,
legal and binding obligation of such Person, enforceable in accordance with its
terms, subject only to bankruptcy, reorganization, insolvency, moratorium and
other laws affecting the enforcement of creditors’ rights generally and to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law); and such other matters as the
Trustee or any Rated Noteholder may reasonably require;

 

(5)           immediately after giving effect to such
transaction, no Default shall have occurred and be continuing;

 

(6)           the Co-Issuer shall have delivered to the Trustee
and each Rated Noteholder an Officer’s certificate and an Opinion of Counsel
each stating that such consolidation, merger, conveyance or transfer and such
supplemental indenture comply with this Section 7 and that all conditions
precedent in this Section 7 provided for relating to such transaction have
been complied with and that no adverse tax consequences will result therefrom
to any Rated Noteholder;

 

155

 

(7)           after giving effect to such transaction, neither of
the Co-Issuers will be required to register as an investment company under the
Investment Company Act; and

 

(8)           after giving effect to such transaction, the
outstanding membership interest in the Co-Issuer will not be beneficially owned
by any Person other than the Issuer.

 

7.11.       SUCCESSOR SUBSTITUTED

 

Upon any consolidation or merger, or transfer
or conveyance of all or substantially all of the assets of the Issuer or the
Co-Issuer, in accordance with Section 7.10, the Person formed by or
surviving such consolidation or merger (if other than the Issuer or the
Co-Issuer), or, the Person to which such transfer or conveyance is made, shall
succeed to, and be substituted for, and may exercise every right and power of,
and shall be bound by each obligation or covenant of, the Issuer or the
Co-Issuer, as the case may be, under this Indenture with the same effect as if
such Person had been named as the Issuer or the Co-Issuer, as the case may be,
herein. In the event of any such consolidation, merger, transfer or conveyance,
the Person named as the “Issuer” or the “Co-Issuer” in the first paragraph of
this Indenture or any successor which shall theretofore have become such in the
manner prescribed in this Section 7 may be dissolved, wound-up and
liquidated at any time thereafter, and such Person thereafter shall be released
from its liabilities as obligor and maker on all the Rated Notes and from its
obligations under this Indenture.

 

7.12.       NO OTHER BUSINESS

 

The Issuer shall not engage in any business
or activity other than (i) issuing and selling the Indenture Issued Notes
pursuant to this Indenture, (ii) issuing and selling the PAA Issued Notes
in accordance with the Paying Agency Agreement (iii) issuing the Ordinary
Shares pursuant to the Issuer Charter, (iv) acquiring, pledging, holding
and disposing of, solely for its own account, Collateral Interests, Eligible
Investments and other Collateral described in clauses (a) to (e) of
the granting clauses hereof, (v) holding the membership interest in the
Co-Issuer and (vi) such other activities that are incidental thereto and
connected therewith. The Co-Issuer shall not engage in any business or activity
other than issuing and selling the Indenture Issued Notes (other than the Class K
Notes) pursuant to this Indenture and such other activities incidental thereto
or connected therewith. The Issuer shall not hold itself out as a derivatives
dealer willing to enter into either side of, or to offer to enter into, assume,
offset, assign or otherwise terminate positions in (i) interest rate,
currency, equity or commodity swaps or caps or (ii) derivative financial
instruments (including options, forward contracts, short positions and similar
instruments) in any commodity, currency, share of stock, partnership or trust,
note, bond, debenture or other evidence of indebtedness, swap or cap; provided, however,
that the foregoing shall not limit the ability of the Issuer to enter into any
Hedge Agreements. Furthermore, the Issuer shall not hold itself out, whether
through advertising or otherwise, as a bank, insurance company or finance
company, or as originating loans, lending funds, making a market in loans or
other assets or selling loans or other assets to customers. The Issuer will not
amend the Issuer Charter and the Co-Issuer will not amend its Certificate of
Formation or the Limited Liability Company Operating Agreement, if such
amendment would result in the rating (including any

 

156

 

private or confidential rating) of any Class of
Rated Notes being reduced or withdrawn. Except as provided in the Transaction
Documents, at any time at which the Issuer is not a Qualified REIT Subsidiary,
the Issuer shall not engage in any business or activity or hold any asset that
would cause the Issuer to be engaged in a U.S. trade or business for U.S.
federal income tax purposes, except as the result of ownership of Equity
Interests or securities received in an Offer in accordance with the provisions
of this Indenture.

 

7.13.       CHANGE OR WITHDRAWAL OF RATING

 

The Issuer shall promptly notify the Trustee
in writing and upon receipt of such notice the Trustee shall promptly notify
the Rated Noteholders and each Hedge Counterparty if at any time the rating of
any Class of Rated Notes has been, or is known will be, changed or
withdrawn.

 

7.14.       REPORTING

 

At any time when the Co-Issuers are not
subject to Section 13 or 15(d) of the Exchange Act and are not exempt
from reporting pursuant to Rule 12g3-2(b) under the Exchange Act,
upon the request of a Holder or Beneficial Owner of a Rated Note or Income
Note, the Co-Issuers shall promptly furnish or cause to be furnished Rule 144A
Information to such Holder or Beneficial Owner, to a prospective purchaser of
such Rated Note or Income Note designated by such Holder or Beneficial Owner or
to the Trustee for delivery to such Holder or Beneficial Owner or a prospective
purchaser designated by such Holder or Beneficial Owner, as the case may be, in
order to permit compliance by such Holder or Beneficial Owner with Rule 144A
under the Securities Act in connection with the resale of such Rated Note or
Income Note by such Holder or Beneficial Owner.

 

7.15.       RATED NOTE CALCULATION
AGENT

 

(a)           The Issuer hereby agrees that for so long as any of
the Rated Notes remain Outstanding the Issuer will at all times cause there to
be an agent appointed to calculate LIBOR in respect of each Interest Period in
accordance with the terms of Schedule B (the Rated
Note Calculation Agent), which agent shall be a financial
institution, subject to supervision or examination by federal or state
authority, having an office within the United States. Whenever the Rated Note
Calculation Agent is required to act or exercise judgment, it will do so in
good faith and in a commercially reasonable manner. The Issuer has initially
appointed the Trustee as Rated Note Calculation Agent for purposes of
determining LIBOR for each Interest Period. If the Rated Note Calculation Agent
is unable or unwilling to act as such or is removed by the Issuer, the Issuer
(after consultation with the Collateral Manager) will propose a leading bank
which is engaged in transactions in Dollar deposits in the international
Eurodollar market and which does not control or is not controlled by or under
common control with the Co-Issuers or any of their Affiliates as a replacement
Rated Note Calculation Agent for approval by Holders of not less than 662/3% of the
aggregate principal amount of the Outstanding

 

157

 

Income Notes. The Rated Note Calculation
Agent may not resign its duties without a successor having been duly appointed.

 

(b)           As soon as possible after 11:00 a.m. (London
time) on each LIBOR Calculation Date, but in no event later than 11:00 a.m.
(New York time) on the London Banking Day immediately following each LIBOR
Calculation Date, the Rated Note Calculation Agent will calculate LIBOR for the
next Interest Period and the Periodic Interest payable for such Interest Period
in respect of the Outstanding Rated Notes, rounded to the nearest cent, with
half a cent being rounded upward, on the related Payment Date to be given to
the Co-Issuers, the Trustee, the Collateral Manager, the Depositary, Euroclear,
Clearstream and the Note Paying Agent. The Rated Note Calculation Agent will
also specify to the Co-Issuers and the Collateral Manager the quotations upon
which the Applicable Periodic Interest Rate for each Class of Rated Notes
is based, and in any event the Rated Note Calculation Agent must notify the
Co-Issuers and the Collateral Manager before 5:00 p.m. (New York time) on
each applicable LIBOR Calculation Date if it has not determined and is not in
the process of determining LIBOR with respect to the Rated Notes and the
Periodic Interest with respect to each Class of Rated Notes, together with
its reasons for the delay.

 

7.16.       LISTING

 

The Issuer will use its commercially
reasonable efforts to obtain and maintain the listing of each Class of
Rated Notes (other than the Class A-R Notes) on the Cayman Islands Stock
Exchange.

 

7.17.       AMENDMENT OF CERTAIN DOCUMENTS

 

The Issuer will not agree to any amendment to
or modification, substitution or replacement of the Corporate Services
Agreement, the Collateral Management Agreement, the Account Control Agreement
or any Hedge Agreement at any time without obtaining Rating Confirmation with
respect to any such amendment, modification, substitution or replacement and
will not amend, modify or waive any “non-petition” or “limited recourse”
provisions of any Transaction Document to which it is a party without obtaining
a Rating Confirmation with respect to such modification. The Trustee shall
provide each of the Holders of Rated Notes, the Collateral Manager, each Hedge
Counterparty and the Rating Agencies with a copy of any such amendment or
modification within 10 Business Days before effecting such amendment or
modification. Prior to entering into any waiver in respect of the any of the
foregoing agreements, the Issuer will provide to each Rating Agency and the
Trustee with written notice of such waiver.

 

7.18.       PURCHASE OF COLLATERAL; INFORMATION REGARDING COLLATERAL; RATING CONFIRMATION

 

(a)           The Issuer will use reasonable efforts to purchase,
on or before the Effective Date (with amounts on deposit in the Uninvested
Proceeds),

 

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Collateral Interests having an aggregate
Principal Balance of not less than U.S.$ 900,000,000 (which amount includes all
Future Funding Obligations with respect to Future Funding Assets) (assuming,
for these purposes, settlement (in accordance with customary settlement
procedures in the relevant markets) of all agreements entered into by the
Issuer to acquire Collateral Interests scheduled to settle on or following the
Effective Date).

 

(b)           The Issuer (or the Collateral Manager on behalf of
the Issuer) shall cause to be delivered to the Trustee on the Effective Date an
amended Schedule A listing all Collateral Interests purchased on or before the
Effective Date, which schedule will supersede any prior Schedule A delivered to
the Trustee.

 

(c)           On or before the Effective Date, the Issuer (or the
Collateral Manager on its behalf) shall deliver an Officer’s certificate to the
Trustee, the Holders of Rated Notes, each Hedge Counterparty and each Rating
Agency demonstrating compliance by the Issuer with its obligations under Section 7.18(a) and
satisfaction of each applicable Collateral Quality Test, and Coverage Test or,
if on the Effective Date, the Issuer shall be in default in the performance of
its obligations under this Section 7.18 or any of the Collateral Quality
Tests or the specified Coverage Tests shall fail to be satisfied, the Issuer
(or the Collateral Manager on its behalf) shall deliver an Officer’s
certificate to the Trustee, the Holders of Rated Notes, each Hedge Counterparty
and each Rating Agency specifying the details of such default or failure; provided that the failure to satisfy any of
the Collateral Quality Tests or Coverage Tests does not constitute an Event of
Default but such failure may result in a Rating Confirmation Failure.

 

(d)           No later than fifteen (15) Business Days after the
Effective Date, the Issuer (or the Collateral Manager on its behalf) shall
deliver or cause to be delivered to the Trustee an accountant’s certificate
(the Accountant’s
Certificate) (i) confirming the information with respect to
each Collateral Interest set forth on the amended schedule delivered pursuant
to Section 7.18(b) as of the Effective Date, and the information
provided by the Issuer with respect to every other asset included in the
Collateral, (ii) certifying as of the Effective Date the procedures
applied and their associated findings with respect to the Coverage Tests and
the Collateral Quality Tests and (iii) specifying the procedures
undertaken to review data and computations relating to the foregoing clause (ii) held
by the Issuer on the Effective Date.

 

(e)           The Issuer (or the Collateral Manager on its
behalf) shall request in writing that each of the Rating Agencies confirm in
writing (a Rating
Confirmation), within thirty (30) Business Days after the
Effective Date (or, in the case of each Rating Agency, any such later date (in
no event longer than 60 Business Days after the Effective Date) that shall be
acceptable to such Rating Agency), the ratings (including any private or

 

159

 

confidential ratings) assigned by it on the
Closing Date to the Rated Notes. In the event that the Issuer fails to obtain a
Rating Confirmation within thirty (30) days after the Effective Date (a Rating Confirmation Failure),
on the next and succeeding Payment Dates, the Issuer will be required to pay
principal, to the extent of Available Funds in the Collection Account and as
provided in Section 11.1, of the Notes in the order of the Note Payment
Sequence, to the extent necessary for each of the Rating Agencies to provide a
Rating Confirmation or until each Class of Notes is paid in full (and the Class A-R
Commitments are simultaneously reduced in accordance with Section 17.1(e));
provided that, to the extent the
principal amount of the Class A-R Notes is reduced to zero, any remaining
principal payments allocable thereto will be deposited as follows: (i) an
amount up to the Total Net Unfunded Future Advance Amount will be deposited in
the Future Funding Asset Account, and (ii) any remainder will be deposited
in the Collection Account as Collateral Principal Collections.

 

(f)            On each Payment Date on which a Rating Confirmation
Failure occurs, each related Hedge Agreement (other than Deemed Floating Asset
Hedges) will be terminated in part in accordance with the terms and conditions
thereof, and any amounts due and payable pursuant to such Hedge Agreement in
connection with such termination thereof will be paid on such Payment Date in
accordance with Section 11.1.

 

Notwithstanding the foregoing, if (i) the
Issuer (or the Collateral Manager on its behalf) has requested in writing that
each of the Rating Agencies provide Rating Confirmation within five (5) Business
Days after the Effective Date, (ii) the Issuer (or the Collateral Manager
on its behalf) has obtained confirmation by electronic mail, facsimile or
telephone that each of the Rating Agencies has received such request and has
promptly delivered to the applicable Rating Agency any additional information
reasonably requested by such Rating Agency, and (iii) any of the Rating
Agencies fails to respond to such request within thirty (30) Business Days
after the Effective Date, then such failure to respond will not immediately
constitute a Rating Confirmation Failure but shall not constitute receipt of
Rating Confirmation so long as, as of the Effective Date, (x) the
Collateral Interest Principal Balance equals at least $855,000,000 and (y) the
Collateral Quality Tests are satisfied (as evidenced by the Accountant’s
Certificate); provided that Rating
Confirmation Failure shall thereafter occur immediately upon receipt from the
Rating Agencies of an actual notice of Rating Confirmation Failure. If such
response is not received within 60 Business Days after the Effective Date, the
Issuer (or the Collateral Manager on behalf of the Issuer) shall repeat such
request on such 60th Business Day. In addition, if any rating assigned as of
the Closing Date to any Class of Notes has not been confirmed, or is
reduced or withdrawn, within 30 Business Days after the Effective Date by any
Rating Agency, the Collateral Manager may, on behalf of the Issuer, within 10
Business Days provide to such Rating Agency a proposal (a “Proposal”) with
respect to the Collateral Interests. If such Rating Agency accepts the
Proposal, a Rating Confirmation shall

 

160

 

be deemed to have occurred with respect to
such Rating Agency provided the Collateral Manager meets the conditions set
forth in such Proposal within the time requirements set forth in such Proposal.
If the Collateral Manager, on behalf of the Issuer, elects not to submit a
Proposal, if a Proposal is submitted but not accepted or if the Collateral
Manager fails to meet the conditions set forth in the Proposal within the time
requirements set forth in such Proposal then a Rating Confirmation Failure
shall have occurred.

 

7.19.       LIQUIDITY TESTS

 

(a)           So long as the Issuer owns Related Future Advance
Loans with respect to which the related Other Loans are held by Future Advance
Holders, and the aggregate amount of the additional funding commitments related
to such Other Loans is greater than $5,000,000, the Future Advance Holders’
combined Liquidity will be measured on each Quarterly Measurement Date (each
such measurement, a Liquidity
Test). If the Future Advance Holders’ combined Liquidity is less
than $16,000,000 on any Quarterly Measurement Date on which the aggregate
amount of the additional funding commitments related to such Other Loans is
greater than $5,000,000, and the Future Advance Holders do not, within 30
calendar days, (i) increase their combined Liquidity to at least
$16,000,000, (ii) obtain a Qualified Letter of Credit or a guarantee from
an entity rated at least “A3” by Moody’s in an amount at least equal to the
excess, if any, of $16,000,000 over their combined Liquidity, (iii) fund
one or more accounts owned by the relevant Future Advance Holder(s) in an
aggregate amount at least equal to the excess, if any, of $16,000,000 over
their combined Liquidity, the only permitted withdrawals from which will be to
satisfy the additional funding commitments of such Future Advance Holder(s) or
to reimburse the Issuer for losses related to the failure of the Future Advance
Holders to fund future advances in accordance with the terms of the related
Mortgage Loan documents, or (iv) take some other action for which Rating
Confirmation is obtained, a Liquidity Test Failure shall have occurred with respect
to such Quarterly Measurement Date. For the avoidance of doubt, if the Future
Advance Holders collectively take one of the actions described in clause (ii) or
(iii) of the immediately preceding sentence following the occurrence of a
Liquidity Test Failure, they or it, as the case may be, will be permitted to
terminate such Qualified Letter of Credit or guarantee or liquidate such
account, as applicable, at any time thereafter when their combined Liquidity is
at least $16,000,000.

 

(b)           If a Liquidity Test Failure or a Future Funding
Reserve Test Failure is not cured by the following Payment Date, Collateral
Interest Collections available to be distributed to the PAA Issued Notes Paying
Agent for distribution to the holders of the Income Notes instead will be
deposited into the Suspense Account until any and all such failures are cured
in accordance with Section 11.1(b). The Collateral Manager shall notify
the

 

161

 

Rating Agencies if a Liquidity Test Failure
or Future Funding Reserve Test Failure occurs (and in connection therewith
shall report to the Rating Agencies the amount of Liquidity or Future Funding
Reserve Amount as of the date of such failure). In addition, amounts on deposit
in the Suspense Account (or any portion thereof) will be released from the lien
of the Indenture and paid (upon standing order of the Issuer) to the PAA Issued
Note Paying Agent for distribution to the holders of the Income Notes (subject
to and in accordance with the provisions of the Paying Agency Agreement) on any
date on which the Liquidity Test and Future Funding Reserve Test would be
satisfied after such release and payment.

 

ARTICLE VIII

 

SUPPLEMENTAL
INDENTURES

 

8.1.          SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF RATED NOTEHOLDERS

 

Without the consent of the Holders of any
Rated Notes, the Initial Hedge Counterparty (except as specified below) or the
Income Noteholders and with notice to the Controlling Party, the Co-Issuers,
when authorized by Board Resolutions or by action by written consent of the
limited liability company manager, as applicable, and the Trustee, at any time
and from time to time subject to the requirement provided below in this Section 8.1
with respect to the ratings of the Rated Notes and subject to Section 8.3,
may enter into one or more indentures supplemental hereto, in form satisfactory
to the Trustee, for certain limited purposes including, inter alia, to:

 

(a)             evidence the succession of another Person to the
Issuer or the Co-Issuer and the assumption by any such successor Person of the
covenants of the Issuer herein and in the Rated Notes and the assumption by any
such successor Person of the covenants of the Co-Issuer herein and in the Rated
Notes (other than the Class L Notes, Class M Notes and Class N
Notes) pursuant to Section 7.10 or 7.11;

 

(b)             add to the covenants of the Co-Issuers (in the case
of the Rated Notes other than the Class L Notes, Class M Notes or the
Class N Notes) or the Issuer (in the case of the Class L Notes, the Class M
Notes or the Class N Notes) or the Trustee for the benefit of the Holders
of all of the Rated Notes;

 

(c)             pledge any additional property to the Trustee;

 

(d)             add to the conditions, limitations or restrictions
on the authorized amount, terms and purposes of the issue, authentication and
delivery of the Rated Notes;

 

(e)             effect the appointment of a successor;

 

(f)              reduce the permitted minimum denomination of the
Rated Notes;

 

162

 

(g)           take any action necessary or advisable to prevent
the Issuer, any Note Paying Agent or the Trustee from being subject to
withholding or other taxes, fees or assessments, to prevent the Issuer from
failing to qualify as a Qualified REIT Subsidiary or, at any time at which the
Issuer is not a Qualified REIT Subsidiary, to prevent the Issuer from being
treated as engaged in a U.S. trade or business or otherwise being subjected to
U.S. federal, state or local income tax on a net income tax basis; provided
that such action will not cause the Noteholders to experience any material
change to the timing, character or source of income from the Notes and will not
be considered a significant modification resulting in an exchange for purposes
of section 1.1001-3 of the U.S. Treasury regulations;

 

(h)           modify the restrictions on and procedures for
resale and other transfer of the Rated Notes in accordance with any change in
any applicable law or regulation (or the interpretation thereof) or to enable
the Co-Issuers to rely upon any less restrictive exemption from registration
under the Securities Act or the Investment Company Act (in addition to that
provided under Section 3 (c)(7) thereunder) or to remove restrictions
on resale and transfer to the extent not required thereunder;

 

(i)            grant, convey, transfer, assign, mortgage or pledge
any property to or with the Trustee for the benefit of the Secured Parties;

 

(j)            correct or amplify the description of any property
at any time subject to the lien of this Indenture, or to better assure, convey
and confirm unto the Trustee any property subject or required to be subjected
to the lien of this Indenture (including any and all actions necessary or
desirable as a result of changes in law or regulations) or to subject to the
lien of this Indenture any additional property;

 

(k)           make any change required by the stock exchange on
which any Class of Rated Note is listed, if any, in order to permit or
maintain such listing;

 

(l)            correct, amend, cure any manifest error, inconsistency,
defect or ambiguity or correct any typographical error in this Indenture;

 

(m)          modify this Indenture to conform the terms herein
to the terms set forth in the then current Offering Circular;

 

(n)           modify any provision (other than in respect of a
Reserved Matter), with respect to restrictions upon the Issuer’s rights to
acquire and dispose of Collateral Interests and other assets, that the Issuer
or the Collateral Manager determines to be necessary or desirable in order for
the Issuer to maintain any desired exemption from registration of the Issuer
under the Investment Company Act or of the Notes under the Securities Act;

 

(o)           with the consent of the Collateral Manager, modify
the Collateral Quality Tests and Coverage Tests and the definitions applicable
thereto;

 

163

 

(p)             with the consent of the Collateral Manager and the
Controlling Party, to modify the calculation of the Coverage Tests and the
definitions applicable thereto to correspond with published or written changes
in the guidelines, methodology or standards established by the Rating Agencies;
or

 

(q)             agree to any modification of this Indenture or any
other Transaction Document (other than in respect of a Reserved Matter), which
is, in the opinion of the Trustee, proper to make if, in the opinion of the
Trustee (based upon an opinion of counsel), such modification will not have a
material adverse effect on the interests of Holders of any Class or
Classes of Notes or the Initial Hedge Counterparty and which is of a formal,
minor or technical nature or is to correct a manifest error.

 

The Trustee shall not enter into any such
supplemental indenture unless the Trustee has been provided with an Opinion of
Counsel from nationally recognized U.S. tax counsel experienced in such matters
to the effect that either (A) at any time at which the Issuer is a
Qualified REIT Subsidiary the proposed supplemental indenture will not cause
the Issuer to fail to be treated as a Qualified REIT Subsidiary or (B) at
any other time, the proposed supplemental indenture will not otherwise cause
the Issuer to be subject to U.S. federal income tax on a net income basis.

 

In addition, the Trustee may, but is not
obligated to, without the consent of the Rated Noteholders or of the Holders of
any relevant Class or Classes of Rated Notes, agree to any modification of
any other Transaction Document which is of a formal, minor or technical nature
or is to correct a manifest error and which is, in the opinion of the Trustee,
proper to make, in the opinion of the Trustee (based upon an opinion of
counsel); provided such
modification will not have a material adverse effect on the interests of the
Initial Hedge Counterparty or the Holders of any Class or Classes of
Notes. For so long as any Rated Notes are Outstanding, no such supplemental
indenture shall be effective unless and until Rating Confirmation has been
received.

 

The Trustee is hereby authorized to join in
the execution of any such supplemental indenture and to make any further appropriate
agreements and stipulations which may be therein contained, but the Trustee
shall not be obligated to enter into any such supplemental indenture which
affects the Trustee’s own rights, duties, liabilities or indemnities under this
Indenture or otherwise, except to the extent required by law.

 

Without obtaining the requisite consents of
the applicable parties pursuant to this Section 8.1, the Trustee shall not
enter into any such supplemental indenture if, as a result of such supplemental
indenture, the interests of the Initial Hedge Counterparty any Holder of Rated
Notes or of the Income Noteholders would be materially and adversely affected
thereby. Unless notified by (i) a Majority of the then Aggregate
Outstanding Amount of any Class of Rated Notes that such Class will
be materially and adversely affected, (ii) a Majority of the aggregate
principal amount of Income Notes Outstanding that the Income Noteholders will
be materially and adversely affected or (iii) the Initial Hedge
Counterparty that the Initial Hedge Counterparty will be materially and
adversely affected, the Trustee shall be entitled to rely upon an Officer’s

 

164

 

certificate of the Collateral Manager or the
Issuer as to whether the interests of any Holder of Rated Notes or of Income
Notes would be materially and adversely affected by any such supplemental
indenture (after giving notice of such change to the PAA Issued Note Paying
Agent). The Collateral Manager will not be bound by any supplemental indenture
that affects the obligations of the Collateral Manager unless the Collateral
Manager has consented thereto (which consent will not be unreasonably
withheld). The Co-Issuers shall not consent to any supplemental indenture that
would have a material adverse effect on the Initial Hedge Counterparty without
the consent of the Initial Hedge Counterparty.

 

At the cost of the Co-Issuers, the Trustee
shall provide to the Rated Noteholders, the PAA Issued Note Paying Agent, each
Hedge Counterparty and each Rating Agency a copy of any proposed supplemental
indenture at least 10 days prior to the execution thereof by the Trustee and,
for so long as any Rated Notes are Outstanding, request a Rating Confirmation
from each Rating Agency with respect to such supplemental indenture. As soon as
practicable after the execution by the Trustee and the Issuer of any such
supplemental indenture, the Trustee shall provide to the Rated Noteholders, the
PAA Issued Note Paying Agent, each Hedge Counterparty and each Rating Agency a
copy of the executed supplemental indenture. For so long as any Rated Notes are
Outstanding, no supplemental indenture shall be effective unless and until a
Rating Confirmation from each Rating Agency has been received.

 

8.2.          SUPPLEMENTAL INDENTURES WITH CONSENT OF RATED NOTEHOLDERS

 

With the written consent of the Holders of
not less than a majority of the then Aggregate Outstanding Amount of each
adversely affected Class of Rated Notes, the written consent of 66 2/3% of
the Holders of the aggregate principal amount of the Outstanding Income Notes
if materially and adversely affected thereby (which consent shall be evidenced
by an Officer’s certificate of the Issuer certifying that such consent has been
obtained), the Class A-R Note Agent if it is materially and adversely
affected thereby, the prior written consent of the Initial Hedge Counterparty
if it is materially and adversely affected thereby, the written consent of the
Controlling Party (such consent not to be unreasonably withheld and if such
consent is not provided within 10 days of the proposed supplemental indenture
then consent shall be deemed to be given) and Rating Confirmation and, the
Trustee and Co-Issuers may, subject to Section 8.3, enter into one or more
indentures supplemental hereto in order to:

 

(a)           change the applicable Stated Maturity Date of the
Rated Notes or scheduled redemption of the principal of or the due date of any
installment of interest on the Rated Notes or the Class A-R Commitment
Fee, reduce the principal amount thereof or the rate of interest thereon, or
the Redemption Price with respect thereto, or change the earliest date on which
Rated Notes may be redeemed, change the provisions of this Indenture relating
to the application of proceeds of any Collateral to the payment of principal of
or interest on the Rated Notes or change any place where, or the coin or
currency in which, Rated Notes or the principal thereof or interest thereon is
payable, or impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity Date thereof (or, in the case of
redemption, on or after the Redemption Date);

 

165

 

(b)             reduce the percentage, in principal amount, of
Holders of Rated Notes of each Class, or the percentage of Income Noteholders,
whose consent is required for the authorization of any supplemental indenture
or for any waiver of compliance with certain provisions of this Indenture or
certain defaults thereunder or their consequences;

 

(c)             impair or adversely affect the Collateral other
than as permitted by this Indenture;

 

(d)             permit the creation of any security interest
ranking prior to or on a parity with the security interest of this Indenture
with respect to any part of the Collateral or terminate such security interest
on any property at any time subject thereto (other than in accordance with this
Indenture) or deprive the Holder of any Rated Note or the Initial Hedge
Counterparty of the security afforded by the security interest of this
Indenture;

 

(e)             reduce the percentage of the aggregate principal
amount of Holders of Rated Notes of each Class whose consent is required
to request the Trustee to preserve the Collateral or rescind the Trustee’s
election to preserve the Collateral pursuant to Section 5.5 or to sell or
liquidate the Collateral pursuant to Section 5.4 or 5.5;

 

(f)              modify any of the provisions of this Section 8.2,
except to increase the percentage of the aggregate principal amount of
Outstanding Rated Notes of each Class whose Holders’ consent is required
for any such action or to provide that other provisions of this Indenture
cannot be modified or waived without the written consent of the Holders of 66
2/3% of the then Aggregate Outstanding Amount of each affected Class of
Rated Notes Outstanding and the Initial Hedge Counterparty;

 

(g)             modify the definition of the term “Outstanding” or Section 11.1;

 

(h)             modify any of the provisions of this Indenture in
such a manner as to affect the calculation of the amount of any payment of
interest or principal of any Rated Note on any Payment Date or to affect the
right of the Holders of Rated Notes or the Initial Hedge Counterparty to the
benefit of any provisions for the redemption of such Rated Notes contained
therein;

 

(i)              modify provisions related to the bankruptcy or
insolvency of the Co-Issuers; or

 

(j)              modify provisions stating that the obligations of
the Co-Issuers are joint and several limited recourse obligations of the
Co-Issuers payable solely from the Collateral in accordance with the terms of
this Indenture (Section 8.2(a) through (j) collectively, the Reserved Matters);

 

provided that unless notified (after giving 30 Business
Days’ notice of such change to the Controlling Party, the holders of each Class of
Notes, the Holders of the Income Notes and the

 

166

 

Initial Hedge Counterparty) by holders of a
majority in Aggregate Outstanding Amount (excluding any Class E Deferred
Interest Amount, Class F Deferred Interest Amount, Class G Deferred
Interest Amount, Class H Deferred Interest Amount, Class J Deferred
Interest Amount, Class K Deferred Interest Amount and Class L
Deferred Interest Amount, as the case may be) of the Notes of any Class that
such Class of Notes will be materially and adversely affected by the
proposed supplemental indenture, the interests of such Class will be
deemed not to be materially and adversely affected by such proposed
supplemental indenture.

 

The Trustee is hereby authorized to join in
the execution of any such supplemental indenture and to make any further
appropriate agreements and stipulations which may be therein contained, but the
Trustee shall not be obligated to enter into any such supplemental indenture
which affects the Trustee’s own rights, duties, liabilities or indemnities
under this Indenture or otherwise, except to the extent required by law.

 

Not later than 15 Business Days prior to the
execution of any proposed supplemental indenture pursuant to this Section 8.2,
the Trustee, at the expense of the Co-Issuers, shall mail to the Rated
Noteholders, PAA Issued Note Paying Agent, the Class A-R Note Agent, each
Hedge Counterparty, the Collateral Manager and each Rating Agency a copy of
such proposed supplemental indenture (or a description of the substance
thereof) and shall request Rating Confirmation with respect to such
supplemental indenture. If any Class of Rated Notes is then rated by any
Rating Agency, the Trustee shall not enter into any such supplemental indenture
if, as a result of such supplemental indenture, Rating Confirmation would not
be received with respect to such supplemental indenture, unless each Holder of
Rated Notes of each Class whose rating will be reduced or withdrawn has,
after notice that the proposed supplemental indenture would result in such
reduction or withdrawal of the rating of the Class of Rated Notes held by
such Holder, consented to such supplemental indenture.

 

Without having obtained the consent of the
applicable parties pursuant to this Section 8.2, the Trustee shall not
enter into any such supplemental indenture if, as a result of such supplemental
indenture, the interests of any Holder of Rated Notes, the Initial Hedge
Counterparty or of the Income Noteholders would be materially and adversely
affected thereby. Unless notified by (i) the Holders of a Majority of the
then Aggregate Outstanding Amount of any Class of Rated Notes that such Class will
be materially and adversely affected or (ii) the Holders of a Majority of
aggregate principal balance of the Income Notes that the Income Noteholders
will be materially and adversely affected, the Trustee shall be entitled to
rely upon an Officer’s certificate of the Collateral Manager or the Issuer as
to whether the interests of any Holder of Rated Notes or of the Income
Noteholders would be materially and adversely affected by any such supplemental
indenture (after giving notice of such change to the PAA Issued Note Paying
Agent).

 

It shall not be necessary for any Act of
Rated Noteholders or any consent of Income Noteholders under this Section 8.2
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act or consent shall approve the substance thereof.

 

Promptly after the execution by the Co-Issuers
and the Trustee of any supplemental indenture pursuant to this Section 8.2,
the Trustee, at the expense of the Co-Issuers, shall mail or make available to
the Rated Noteholders, each Hedge Counterparty, the PAA Issued Note Paying

 

167

 

Agent (for forwarding to the Income
Noteholders), the Class A-R Note Agent, the Collateral Manager and each
Rating Agency a copy thereof. Any failure of the Trustee to publish or mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplemental indenture. In addition, the Issuer
shall cause to be delivered a copy of the executed supplemental indenture to
the Repository for posting on the Repository in the manner described in Section 14.3.

 

8.3.          EXECUTION OF SUPPLEMENTAL INDENTURES

 

In executing or accepting the additional
trusts created by any supplemental indenture permitted by this Section 8
or the modifications thereby of the trusts created by this Indenture, the Trustee
shall be entitled to receive, and (subject to Sections 6.1 and 6.3) shall be
fully protected in relying in good faith upon an Opinion of Counsel, stating
that the execution of such supplemental indenture is authorized, or permitted
by this Indenture and that all conditions precedent thereto have been complied
with. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee’s own rights, duties or
indemnities under this Indenture or otherwise. Such supplemental indenture will
not be binding on the Collateral Manager to the extent that it reduces the
rights or increases the obligations of the Collateral Manager, unless such
supplemental indenture is consented to in writing by the Collateral Manager.

 

8.4.          EFFECT OF SUPPLEMENTAL INDENTURES

 

Upon the execution of any supplemental
indenture under this Section 8, this Indenture shall be modified in
accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Rated Notes theretofore and
thereafter authenticated and delivered hereunder or under the Paying Agency
Agreement shall be bound thereby.

 

Notwithstanding anything to the contrary
herein, no amendment or modification of or supplement to this Indenture will be
effective until the Collateral Manager has received written notice of such
amendment, modification or supplement and, if such amendment, modification or
supplement affects the rights, obligations or compensation of the Collateral
Manager, the Collateral Manager has consented in writing to the terms of the
proposed amendment. In addition, the consent of any predecessor Collateral
Manager will be required to implement any such amendment, modification or
supplemental that would change any provision of this Indenture entitling such
predecessor Collateral Manager to any fee or other amount payable to it under
this Indenture or to reduce or delay the right of such predecessor to such
payment.

 

8.5.          REFERENCE IN INDENTURE ISSUED NOTES TO SUPPLEMENTAL INDENTURES

 

Indenture Issued Notes authenticated and
delivered after the execution of any supplemental indenture pursuant to this Section 8
may, and if required by the Trustee shall, bear a notation in form approved by
the Trustee as to any matter provided for in such supplemental indenture. If
the Co-Issuers shall so determine, new Indenture Issued Notes, so modified as
to conform in the opinion of the Trustee and the Co-Issuers to any such
supplemental indenture,

 

168

 

may be prepared and executed by the
Co-Issuers and authenticated and delivered by the Trustee in exchange for
Outstanding Indenture Issued Notes.

 

ARTICLE IX

 

REDEMPTION
OF RATED NOTES

 

9.1.          REDEMPTION OF RATED NOTES

 

The Rated Notes will be subject to redemption
in whole but not in part at their respective Redemption Prices, in each case,
in accordance with the procedures, and subject to the satisfaction of the
conditions, in Section 9.2 below, in the following circumstances:

 

(a)             on or after the Payment Date occurring in February 2010
and continuing until the Stated Maturity Date (the Call Period), at the
direction of the Holders of not less than 662/3% of the
aggregate principal amount of the Income Notes Outstanding (an Optional Redemption);

 

(b)             on any Payment Date on which the outstanding
principal amount of the Notes (including the Unfunded Class A-R
Commitment) has been reduced to 10% of the aggregate outstanding principal
amount of the Notes on the Closing Date, at the direction of the Collateral
Manager, in whole but not in part, at a price equal to the applicable
Redemption Price (such a redemption a Clean-Up Call);

 

(c)             on any Payment Date following the occurrence and
during the continuation of a Tax Event, at the direction of the Holders of not
less than 662/3% of the
aggregate principal amount of the Income Notes Outstanding (such a redemption,
a Tax Redemption);
and

 

(d)             automatically and without any direction by any
Person, (i) if the Notes have not been redeemed in full on or after the
Payment Date occurring in February 2019, and (ii) if any of the
conditions set forth in Sections 9.2(a) through (d) below have not
been met or if the highest bidder fails to pay the purchase price within six (6) Business
Days following such Payment Date, the Payment Date thereafter, unless the Notes
are redeemed in full prior to the next Auction Date (such a redemption, an Auction Call Redemption).

 

9.2.          REDEMPTION PROCEDURES; AUCTION

 

In connection with any Redemption, the
Trustee and the Collateral Manager will, in accordance with the procedures set
forth in Schedule D (the Auction
Procedures) and subject to the satisfaction of the Income Note
Redemption Approval Conditions and at the expense of the Issuer, conduct an
auction (an Auction)
of the Collateral Interests included in the Collateral on a date (each such
date, an Auction Date)
occurring no later than ten (10) Business Days prior to any scheduled
Redemption Date. Any of the Initial Purchaser, the Collateral Manager, the

 

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Income Noteholders, the Trustee or their
respective Affiliates may, but will not be required to, bid at the Auction.

 

(a)           Any Redemption will be subject to the satisfaction of each of the following
conditions:

 

(1)             the related Auction has been conducted in
accordance with the Auction Procedures;

 

(2)             the Trustee has received bids for the Collateral
Interests (or for each of the related Subpools) from at least two Qualified
Bidders (including the winning Qualified Bidder, and which may include the
Collateral Manager) identified on a list of qualified bidders provided by the
Collateral Manager to the Trustee;

 

(3)             the Collateral Manager certifies that the Highest
Auction Price would result in the Sale Proceeds from the Collateral Interests
(or the related Subpools) for a purchase price (paid in cash) plus the Balance of all Eligible
Investments and cash held by the Issuer, plus any termination payments payable
by a Hedge Counterparty to the Issuer (in excess of any amounts payable by the
Issuer to a Hedge Counterparty) resulting from the termination of the related
Hedge Agreement pursuant to the Redemption being at least equal to the sum of (i) the
aggregate Redemption Prices of the Notes plus
(ii) any accrued but unpaid fees and expenses of the Issuer pursuant to Section 11.1(b)(1) and
(26) through (31) (including any termination payments payable by the Issuer
resulting from the termination of any Hedge Agreement pursuant to the
Redemption) plus (iii) any
Outstanding Interest Advances, together with interest thereon; and

 

(4)             the bidder(s) who offered the Highest Auction
Price for the Collateral Interests (or the related Subpools) enter(s) into
a written agreement with the Issuer (which the Issuer will execute if the conditions
set forth above and in this Indenture are satisfied, which execution will
constitute certification by the Issuer that such conditions have been
satisfied) that obligates the highest bidder(s) (or the highest bidder for
each Subpool) to purchase all of the Collateral Interests (or the relevant
Subpool) and provides for payment in full (in Cash) of the purchase price to
the Trustee on or prior to the sixth Business Day following the relevant
Auction Date.

 

Provided that all of the conditions set forth in this Section 9.2(a)(1) through
(4) have been met, the Trustee will sell and transfer the Collateral
Interests (or each related Subpool), without representation, warranty or
recourse, to the bidder(s) who offered the Highest Auction Price for the
Collateral Interests (or the related Subpools) in accordance with and upon
completion of the Auction Procedures. If any of the conditions set forth in
this Section 9.2(a)(1) through (4) are not met, (i) the
Redemption will not occur on the Payment Date following the relevant Auction
Date, (ii) the Trustee will give notice of the withdrawal of the
Redemption, (iii) subject to clause (iv) below, the Trustee will
decline to consummate such sale and will not

 

170

 

terminate any Hedge Agreements and may not
solicit any further bids or otherwise negotiate any further sale of Collateral
Interests in relation to such Auction and (iv) unless the Rated Notes are
redeemed in full prior to the next succeeding Auction Date, the Trustee will
conduct another Auction on the next succeeding Auction Date.

 

(b)           In addition, any Optional Redemption requires the occurrence of the following:

 

(1)           at least four (4) Business Days before the
scheduled Redemption Date, the Collateral Manager has furnished to the Trustee
evidence, in form satisfactory to the Trustee, that the Collateral Manager on
behalf of the Issuer has entered into a binding agreement or agreements with an
institution or institutions (or guarantor or guarantors of the obligations): (A) with
regard to which Rating Confirmation has been received; or (B) whose
short-term unsecured debt obligations (other than such obligations whose rating
is based on the credit of a person other than such institution) have a credit
rating from Moody’s, if rated by Moody’s, to sell, not later than the Business
Day immediately preceding the scheduled Redemption Date, in immediately
available funds, all or part of the Collateral Interests at a purchase price
(paid in Cash) which together with the Balance of all Eligible Investments and
Cash held by the Issuer will be at least equal to the sum of (i) the
aggregate Redemption Prices of the Notes plus
(ii) any accrued but unpaid fees and expenses of the Issuer pursuant to Section 11.1(b)(1) and
(26) through (30) (including any termination payments payable by the Issuer
resulting from the termination of any Hedge Agreement pursuant to the
Redemption); or

 

(2)           prior to selling any Collateral Interests or any
other collateral, the Collateral Manager certifies that the expected proceeds
from such sale will, in the aggregate, equal or exceed, in each case, the sum
of (A) any amounts payable in connection with an Optional Redemption
pursuant to Section 9.2 of the Notes plus
(B) all expenses of such redemption and all other administrative fees and
expenses payable on the related Redemption Date.

 

The Trustee will deposit the purchase price
for the Collateral Interests in the Collection Account, and the Rated Notes
and, to the extent funds are available therefor, the Income Notes, will be
redeemed on the Payment Date immediately following the relevant Auction Date in
the order of priorities set forth in Section 11.1. Any Redemption will
only be effected on a Payment Date. Installments of principal and interest due
on or prior to a Redemption Date shall continue to be payable to the Holders of
such Rated Notes as of the relevant Record Dates according to their terms.

 

9.3.          RECORD DATE; NOTICE TO TRUSTEE OF REDEMPTION

 

(a)           The Issuer shall set the Redemption Date and the
applicable Record Date and give notice
thereof to the Trustee pursuant to Section 9.3(b) below and

 

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shall issue an Issuer Request to the Trustee
for the provision of the information necessary for the Issuer to compile the
Redemption Date Statement in accordance with Section 10.11(b).

 

(b)           In the event of any Redemption, the Issuer shall,
at least 45 days (but not more than 90
days) prior to the Redemption Date, notify the Trustee and each Hedge
Counterparty of such Redemption Date, the applicable Record Date, the principal
amount of each Class of Notes to be redeemed on such Redemption Date and
the Redemption Price of such Notes.

 

9.4.         NOTICE OF REDEMPTION

 

Notice of Redemption will be given by
first-class mail, postage prepaid, mailed not less than eight (8) Business
Days prior to the applicable Redemption Date, to each Hedge Counterparty, the Class A-R
Note Agent, each Rating Agency and each Holder of Rated Notes at such Holder’s
address in the Note Register maintained by the Note Registrar in accordance
with the provisions of this Indenture and to the Collateral Manager. Rated
Notes called for Redemption must be surrendered at the office of any Note
Paying Agent appointed pursuant to this Indenture in order to receive the
Redemption Price.

 

All notices of redemption shall state:

 

(a)           the applicable Redemption Date;

 

(b)           the applicable Record Date;

 

(c)           the Redemption Price;

 

(d)           that all the Notes of the relevant Class are
being redeemed in full and that interest on the applicable principal amount of
Notes shall cease to accrue on the date specified in the notice; and

 

(e)           the place or places where such Rated Notes are to
be surrendered for payment of the Redemption Price, which shall be the office
or agency of the Note Paying Agent to be maintained as provided in Section 7.2.

 

Notice of redemption shall be given by the
Co-Issuers or, at the Co-Issuers’ request, by the Trustee in the name and at
the expense of the Co-Issuers. Failure to give notice of redemption, or any
defect therein, to any Holder of any Note selected for redemption shall not
impair or affect the validity of the redemption of any other Notes.

 

9.5.         NOTICE OF WITHDRAWAL

 

With regard to an Optional Redemption or a
Tax Redemption, any notice of redemption may be withdrawn by the Issuer up to
the fourth Business Day prior to the Redemption Date by written notice to the
Trustee, each Hedge Counterparty and the Collateral Manager only if the
Collateral Manager is unable to deliver such sale agreement or agreements or
certifications, as the case may be, in form satisfactory to the Trustee. With
regard to any Redemption, notice of

 

172

 

any withdrawal pursuant to Section 9.2
shall be given by the Trustee to each Holder of Rated Notes at such Holder’s
address in the Note Register maintained by the Note Registrar by overnight
courier guaranteeing next day delivery (or second day delivery outside the
United States) sent not later than the third Business Day prior to such
Redemption Date.

 

9.6.         RATED NOTES PAYABLE ON
REDEMPTION DATE

 

Notice of redemption having been given as
aforesaid, the Notes so to be redeemed shall, on the Redemption Date, become
due and payable at the Redemption Price therein specified, and from and after
the Redemption Date (unless the Issuer shall default in the payment of the
Redemption Price) such Rated Notes shall cease to bear interest. Upon final
payment on a Note to be redeemed, the Holder shall present and surrender such
Note at the place specified in the notice of redemption on or prior to such
Redemption Date; provided that if
there is delivered to the Co-Issuers (i) such security or indemnity as may
be required by them to save each of them harmless and (ii) an undertaking
thereafter to surrender such Note, then, in the absence of notice to the
Co-Issuers that the applicable Note has been acquired by a bona fide purchaser,
such final payment shall be made without presentation or surrender.
Installments of interest on Rated Notes of a Class so to be redeemed whose
Stated Maturity Date is on or prior to the Redemption Date shall be payable to
the Holders of such Rated Notes, or one or more predecessor Rated Notes,
registered as such at the close of business on the relevant Record Date
according to the terms and provisions of Section 2.6(e).

 

If any Rated Note called for redemption shall
not be paid upon surrender thereof for redemption, the principal thereof shall,
until paid, bear interest from the Redemption Date at the Applicable Periodic
Interest Rate for each successive Interest Period the Rated Note remains
Outstanding.

 

9.7.         SPECIAL AMORTIZATION

 

If the Collateral Manager notifies the
Trustee in writing that it has determined, in its sole discretion, that
investments in additional Collateral Interests would either be impractical or
not beneficial, the amount of such Collateral Principal Collections available
pursuant to Section 11.1(b)(24), as determined by the Collateral Manager
(the Special
Amortization Amount) shall be applied to the payment of
principal of the Notes on the next succeeding Payment Date (a Special Amortization)
in accordance with Section 11.1(b)(24)(ii) hereof.

 

Payments of principal of the Notes pursuant
to Section 11.1(b)(24)(ii) shall be made:

 

(a)           if the Special Amortization Pro Rata Condition is
satisfied with respect to the related Payment Date, pro rata to the respective Classes of the Rated Notes (for
purposes of the pro rata allocation to the Class A Senior Notes based on
the Class A Senior Pro Rata Allocation) pursuant to Section 11.1(b)(24)(i) of
the Priority of Principal Payments provided
that a Special Amortization Notice is delivered by the Collateral Manager to
the Issuer and the Trustee; or

 

(b)           if the criteria for either the Special Amortization
Pro Rata Condition are not satisfied, sequentially to the respective Classes of
the Rated Notes

 

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pursuant to Section 11.1(b)(24)(ii)(2) of
the Priority of Principal Payments.

 

If the Collateral Manager elects to initiate
a Special Amortization, the Collateral Manager shall deliver on or prior to the
related Calculation Date, to each of the Trustee and each Rating Agency,
advance written notice (which may be included in the related Note Report)
(each, a Special
Amortization Notice) specifying the identity and principal
amount of each Class of Rated Notes to be paid pursuant to such Special
Amortization and that the Collateral Manager has been unable to identify for
purchase by the Issuer Substitute Collateral Interests that comply with the
Reinvestment Criteria and the other applicable requirements of this Indenture,
and that the other applicable requirements of this Indenture, and that all
other Indenture requirements for such Special Amortization are complied with.

 

On each Payment Date on which a Special
Amortization occurs, each related Hedge Agreement (other than Deemed Floating
Asset Hedges) will be terminated in part in accordance with the terms and
conditions thereof, and any amounts due and payable pursuant to such Hedge
Agreement in connection with such termination thereof will be paid on such
Payment Date in accordance with Section 11.1.

 

ARTICLE X

 

ACCOUNTS, ACCOUNTINGS AND RELEASES

 

10.1.       COLLECTION OF FUNDS

 

(a)           Except as otherwise expressly provided herein, the
Trustee may demand payment or delivery of, and shall receive and collect,
directly and without intervention or assistance of any fiscal agent or other
intermediary, all funds and other property payable to or receivable by the
Trustee pursuant to this Indenture, including all payments due on the Pledged
Securities, in accordance with the terms and conditions of such Pledged
Securities. The Trustee shall segregate and hold all such funds and property
received by it in trust for the Secured Parties and shall apply such funds as
provided in this Indenture.

 

(b)           Each of the parties hereto hereby agrees to cause
the Custodian or any other Securities Intermediary that holds any funds or
other property for the Issuer or the Co-Issuer in an Account to agree with the
parties hereto that (1) each Account is a Securities Account in respect of
which the Trustee is the Entitlement Holder, (2) each Account is held by a
financial institution that has a combined capital and surplus of at least
U.S.$250,000,000 and being subject to supervision or examination by federal or
state banking authority, (3) the Cash, Securities and other property
credited to any Account is to be treated as a Financial Asset under Article 8
of the UCC and (4) the securities intermediary’s jurisdiction (within the
meaning of Section 8-110 of the UCC) for that purpose will be the State of
New York. In no event may any Financial Asset held in any Account be registered
in

 

174

 

the name of, payable to the order of, or
specially Indorsed to, the Issuer unless such Financial Asset has also been
Indorsed in blank or to the Custodian or other Securities Intermediary that
holds such Financial Asset in such Account. Each Account shall be held and
maintained at an office located in Minneapolis, Minnesota or Columbia,
Maryland.

 

10.2.       GENERAL PROVISIONS APPLICABLE TO ACCOUNTS

 

(a)           The Trustee agrees to give the Issuer prompt notice
(with a copy to each Hedge Counterparty, the Collateral Manager, each Rating
Agency, the Class A-R Note Agent and the PAA Issued Note Paying Agent) if
any Account or any funds on deposit therein, or otherwise standing to the
credit of any Account, shall become subject to any writ, order, judgment,
warrant of attachment, execution or similar process.

 

(b)           The Issuer (or the Collateral Manager on behalf of
the Issuer) shall direct the Trustee to invest and reinvest any funds on
deposit in any of the Accounts (other than the Payment Account or the
Collateral Account) in Eligible Investments. In the event that the Collateral
Manager has not delivered investment instructions to the Trustee or after the
occurrence of an Event of Default, the Trustee shall invest and reinvest any
funds on deposit in any Account (other than the Payment Account) as fully as
practicable in investments described in clause (vii) of the definition of
Eligible Investments maturing not later than the earlier of (i) 30 days
after the date of such investment or (ii) the Business Day immediately
preceding the next Payment Date. With respect to each Account, all interest and
other income from Eligible Investments purchased with funds on deposit in such
Account shall be deposited in such Account, any gain realized from such
investments shall be credited to such Account, and any loss resulting from such
investments shall be charged to such Account. Any gain or loss with respect to
an Eligible Investment shall be allocated in such a manner as to increase or
decrease, respectively, Collateral Principal Collections and/or Collateral
Interest Collections in the proportion that the amount of Collateral Principal
Collections and/or Collateral Interest Collections used to acquire such
Eligible Investment bears to the purchase price thereof. The Trustee shall not
in any way be held liable by reason of any insufficiency of any such Account
resulting from any loss relating to any such investment. Nothing herein shall
be deemed to relieve the Bank or its Affiliates from any duties or liabilities
with respect to investments in obligations of the Bank or any Affiliate
thereof.

 

(c)           All funds deposited from time to time in the
Collection Account, the Expense Reserve Account or the Interest Reserve Account
pursuant to this Indenture shall be held by the Trustee as part of the
Collateral and shall be applied to the purposes herein provided.

 

175

 

10.3.       COLLATERAL ACCOUNT

 

The Trustee shall, prior to the Closing Date,
cause the Custodian to establish a Securities Account which shall be designated
as the Collateral
Account, which shall be in the name of the Trustee as
Entitlement Holder in trust for the benefit of the Secured Parties and into
which the Trustee shall from time to time deposit Collateral. All Collateral
from time to time deposited in, or otherwise standing to the credit of, the
Collateral Account pursuant to this Indenture shall be held by the Trustee as
part of the Collateral and shall be applied to the purposes herein provided.
The Co-Issuers shall not have any legal, equitable or beneficial interest in
the Collateral Account other than in accordance with the Priority of Payments.

 

10.4.       UNINVESTED PROCEEDS ACCOUNT

 

The Trustee shall, prior to the Closing Date,
cause to be established a Securities Account which shall be designated as the Uninvested Proceeds Account,
which shall be held in the name of the Trustee as Entitlement Holder in trust
for the benefit of the Secured Parties, into which the Trustee shall deposit
all Uninvested Proceeds (other than the organizational and structuring fees and
expenses of the Co-Issuers (including, without limitation, the legal fees and
expenses of counsel to the Co-Issuers, Wachovia Capital Markets, LLC and the
Collateral Manager), the expenses of offering the Rated Notes and the Income
Notes (including placement fees and structuring fees) and amounts deposited in
the Expense Reserve Account on such date). On or prior to the Effective Date,
the Collateral Manager on behalf of the Issuer may direct the Trustee to, and
upon such direction the Trustee shall, apply funds in the Uninvested Proceeds
Account to purchase additional Collateral Interests and, pending such
investment in additional Collateral Interests, such funds will be invested in
Eligible Investments, as directed by the Collateral Manager, with stated
maturities no later than the Business Day immediately preceding the next
Payment Date; provided, however that during the Ramp-Up Period,
Substitute Collateral Interests shall be purchased with amounts in the
Uninvested Proceeds Account, if sufficient amounts are available in the
Uninvested Proceeds Account, and only if sufficient amounts are not available
in the Uninvested Proceeds Account, with any Collateral Principal Collections.
The Trustee shall transfer any Uninvested Proceeds remaining on deposit in the
Uninvested Proceeds Account on the Effective Date to the Collection Account, at
the direction of the Collateral Manager, to be treated as either (i) Collateral
Interest Collections deposited in the Collateral Interest Collections
Sub-Account, provided that a
Rating Confirmation Failure has not occurred, or (ii) if a Rating
Confirmation Failure occurs, as Collateral Principal Collections deposited in
the Collateral Principal Collections Sub-Account.

 

10.5.       COLLECTION ACCOUNT

 

(a)           Collection Account

 

(1)           The Trustee shall, prior to the Closing Date, cause
to be established a Securities Account which shall be designated as the Collection Account,
which shall be held in the name of the Trustee as Entitlement Holder in trust
for the benefit of the Secured Parties. The Trustee shall cause to be
established two sub-accounts of the Collection Account. The Trustee shall
deposit Collateral Principal Collections into one sub-account (the

 

176

 

Collateral
Principal Collections Sub-Account) and Collateral Interest Collections into the
other sub-account (the Collateral
Interest Collections Sub-Account). At the direction of the
Issuer (or the Collateral Manager on behalf of the Issuer), the Trustee shall
invest all funds on deposit in the Collection Account (including the Collateral
Principal Collection Sub-Account) in Eligible Investments or Substitute
Collateral Interests in accordance with the requirements and limitations
contained in Section 12.1(c).

 

(2)           The Trustee, within one Business Day after receipt
of any Distribution or other proceeds that are not Cash shall so notify the
Issuer and the Issuer shall sell such Distribution or other proceeds for Cash
in accordance with Section 12.1.

 

(3)           The Trustee shall transfer to the Payment Account
for application pursuant to Section 11.1 and in accordance with the
calculations and the instructions contained in the Note Valuation Report
prepared by the Issuer pursuant to Section 10.11(a), on or prior to the
Business Day prior to each Payment Date, funds on deposit in the Collection
Account (including reinvestment income) other than Collections received after
the end of the Due Period with respect to such Payment Date. An Authorized
Officer of the Issuer or the Collateral Manager’s approval of the Note
Valuation Report shall constitute direction to the Trustee to, and upon such
approval, the Trustee shall, transfer to the Payment Account, for application
pursuant to Section 11.1 no later than the Business Day prior to each
Payment Date, all Interest Advances made to or by the Trustee pursuant to Section 10.17
and any amounts then held in the Collection Account other than proceeds
received after the end of the Due Period with respect to such Payment Date.

 

(4)           The Trustee shall withdraw and apply amounts on
deposit in the Collection Account in accordance with any Redemption Date
Statement delivered to the Trustee in connection with the redemption of Rated
Notes pursuant to Section 9.1.

 

(5)           Payments due to any Hedge Counterparty shall be
paid, in accordance with Section 11.1 pro
rata with all other Hedge Agreement payments on the applicable
Payment Date; provided that the
Issuer’s payment obligations under any Deemed Floating Asset Hedges payable on
a date other than a Payment Date shall only be paid to the extent Collateral
Interest Collections are then available in the Collateral Interest Collections
Sub-Account. With respect to Hedge Agreements paid during the related Due
Period, the Trustee, in accordance with this Section 10.5(a)(5), shall
transfer Collateral Interest Collections to the Payment Account for payment to
the related Hedge Counterparty on the payment date required pursuant to the
related Hedge Agreement.

 

177

 

10.6.       EXPENSE RESERVE ACCOUNT

 

The Trustee shall, prior to the Closing Date,
cause to be established a Securities Account which shall be designated as the Expense Reserve Account,
which shall be held in the name of the Trustee as Entitlement Holder in trust
for the benefit of the Secured Parties. Any and all funds at any time on
deposit in, or otherwise standing to the credit of, the Expense Reserve Account
shall be held in trust by the Trustee for the benefit of the Secured Parties.
On the Closing Date, the Trustee shall deposit into the Expense Reserve Account
an amount equal to U.S.$50,000 together with an amount sufficient to pay any
outstanding fees and expenses of the Issuer in relation to the offering of the
Rated Notes and the Income Notes which are not paid on the Closing Date. At the
direction of the Issuer (or the Collateral Manager on behalf of the Issuer),
the Trustee shall invest all funds on deposit in the Expense Reserve Account in
Eligible Investments. Any amounts held in the Expense Reserve Account in excess
of U.S.$50,000 on the day which is 60 days following the Closing Date (or, if
such day is not a Business Day, the next following Business Day) shall be
transferred by the Trustee into the Uninvested Proceeds Account. Thereafter,
the Trustee shall transfer to the Expense Reserve Account from the Payment
Account amounts required to be deposited therein pursuant to Section 11.1(a) and
in accordance with the calculations and the instruction contained in the Note
Valuation Report prepared by the Issuer pursuant to Section 10.11(a).
Except as provided in Section 11.1, the only permitted withdrawal from or
application of funds on deposit in, or otherwise standing to the credit of, the
Expense Reserve Account shall be to pay (on any day other than a Payment Date)
accrued and unpaid Administrative Expenses of the Co-Issuers; provided that the Trustee shall deposit 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 into the Collections Account as Collateral Interest Collections and will be
distributed in accordance with the Section 11 on the immediately
succeeding Payment Date.

 

10.7.       INTEREST RESERVE ACCOUNT

 

The Trustee shall, prior to the Closing Date,
cause to be established a Securities Account which shall be designated as the Interest Reserve Account,
which shall be held in the name of the Trustee as Entitlement Holder in trust
for the benefit of the Secured Parties. Any and all funds at any time on
deposit in, or otherwise standing to the credit of, the Interest Reserve
Account shall be held in trust by the Trustee for the benefit of the Secured
Parties. At the direction of the Issuer (or the Collateral Manager on behalf of
the Issuer), the Trustee shall invest all funds on deposit in the Interest
Reserve Account in Eligible Investments. On each Payment Date, in accordance
with the Priority of Payments, the Trustee will deposit the Interest Reserve
Amount, if any, into the Interest Reserve Account. The only permitted
withdrawal from or application of funds on deposit in, or otherwise standing to
the credit of, the Interest Reserve Account shall be to deposit into the
Payment Account, on the Business Day prior to each Payment Date, the Balance of
the Interest Reserve Account (including reinvestment income) for distribution
as Collateral Interest Collections in accordance with the Priority of Payments
on the related Payment Date.

 

178

 

10.8.       FUTURE FUNDING ASSET ACCOUNT

 

With respect to any Future Funding Asset
except as set forth in the last sentence of this paragraph, the Trustee, if so
directed by the Collateral Manager, at the time of purchase thereof shall
withdraw from the Collateral Principal Collections Sub-Account and deposit into
the Future Funding Asset Account the amount of funds equal to or greater than
the combined aggregate Future Funding Obligations under such Future Funding
Asset included in the Collateral Interests less the amount of any previous
Future Advances, as specified in such direction. Upon initial purchase of an
Future Funding Asset, such Future Funding Obligation shall be treated as part
of the purchase price for such Collateral Interest. A deposit into the Future
Funding Asset Account is not required to be made in connection with the
purchase of an Future Funding Asset to the extent that the Total Unfunded
Future Advance Amounts, including the Unfunded Future Advance Amounts with
respect to such Future Funding Asset, are less than the Available Aggregate Class A-R
Undrawn Amount. The Issuer (at the direction of the Collateral Manager) will
deposit any Class A-R Draws into the Future Funding Asset Account.

 

As directed by the Collateral Manager in
writing and in accordance with this Indenture, amounts on deposit in the Future
Funding Asset Account shall be invested in overnight funds that are Eligible
Investments. On the Business Day immediately preceding each Payment Date, the
income received on amounts contained in the Future Funding Asset Account during
the related Due Period shall be withdrawn from such account and deposited in
the Collection Account as Collateral Interest Collections.

 

The amounts on deposit in the Future Funding
Asset Account may only be applied to fund Future Advance Amounts or on the date
on which the Notes are redeemed in full, shall be transferred to the Collateral
Principal Collection Sub-Account and distributed pursuant to the Priority of
Payments; provided, that to the extent that the amounts then on deposit in the
Future Funding Asset Account exceed the Total Unfunded Future Advance Amount,
the Collateral Manager may direct the Trustee to transfer such excess to the
Collection Account as Collateral Principal Collections for distribution in
accordance with Section 11.1. After the Commitment Termination Time, the
amounts on deposit in the Future Funding Asset Account will in no event be less
than the Total Unfunded Future Advance Amount.

 

Funds in the Future Funding Asset Account
shall be available for application at the direction of the Collateral Manager (i) to
fund any Future Advance Amounts, (ii) during the Reinvestment Period, to
make Class A-R Prepayments and (iii) to the Collateral Principal
Collection Sub-Account as Collateral Principal Collections for application on
the next Payment Date (provided
that such direction is delivered on or before the related Calculation Date); provided, however,
that the Collateral Manager may elect, rather than to fund such Future Advance
with a withdrawal from the Future Funding Asset Account, to instead fund such
Future Advance with a Class A-R Draw; provided,
further, that no application
pursuant to clause (ii) or (iii) above shall exceed the excess of (a) the
sum of (1) amounts on deposit in the Future Funding Asset Account and (2) the
Available Aggregate Class A-R Undrawn Amount over (b) the Total
Unfunded Future Advance Amount. Upon (i) the sale or maturity of an Future
Funding Asset or (ii) the occurrence of an event of default with respect
to an Future Funding Asset or any other event or circumstance which results in
the irrevocable reduction of the undrawn commitments under such Future Funding
Asset, any funds in the Future Funding Asset Account

 

179

 

in excess of the amount needed to cover any
drawdowns on all remaining Future Funding Assets will be transferred, at the
direction of the Collateral Manager, to the Collection Account as Collateral
Principal Collections and will be distributed in accordance with Section 11.1
on the immediately succeeding Payment Date.

 

10.9.       PAYMENT ACCOUNT

 

The Trustee shall, prior to the Closing Date,
establish a Securities Account which shall be designated as the Payment Account,
which shall be held in the name of the Trustee as Entitlement Holder in trust
for the benefit of the Secured Parties. Any and all funds at any time on
deposit in, or otherwise standing to the credit of, the Payment Account shall
be held in trust by the Trustee for the benefit of the Secured Parties. Except
as provided in Section 11.1, the only permitted withdrawal from or
application of funds on deposit in, or otherwise standing to the credit of, the
Payment Account shall be to pay the interest on and the principal of the Rated
Notes in accordance with their terms and the provisions of this Indenture and,
upon Issuer Order, to pay Administrative Expenses, amounts due to the Advancing
Agent or the Trustee in connection with the reimbursement of Interest Advances,
certain Cure Advances and certain servicing advances made in accordance with
any Servicing Agreement and servicing and other fees paid in accordance with
any Servicing Agreement and interest thereon and other amounts specified
therein, each in accordance with the Priority of Payments. The Co-Issuers shall
not have any legal, equitable or beneficial interest in the Payment Account
other than in accordance with the Priority of Payments.

 

10.10.     REPORTS BY TRUSTEE

 

The Trustee shall supply, in a timely fashion
to each Rating Agency (so long as any Rated Notes are rated by such Rating
Agency), each Hedge Counterparty, the Holders of Rated Notes, the Collateral
Manager, the PAA Issued Note Paying Agent, the Initial Purchaser, the Placement
Agent, the Issuer and the Advancing Agent any information regularly maintained
by the Trustee that each such Person may from time to time request with respect
to the Pledged Securities or the Accounts reasonably needed to complete the
Note Valuation Report or to provide any other information reasonably available
to the Trustee by reason of its acting as Trustee hereunder and required to be
provided by Section 10.11.

 

The Trustee shall forward to the Collateral
Manager, the Controlling Party, the Advancing Agent, or upon request therefor,
any Holder of a Rated Note shown on the Note Register, the Initial Purchaser,
each Hedge Counterparty or the PAA Issued Note Paying Agent, copies of notices
and other writings received by it from the issuer of any Collateral Interest or
from any Clearing Agency with respect to any Collateral Interest advising the
holders of such security of any rights that the holders might have with respect
thereto (including notices of calls and redemptions of securities) as well as
all periodic financial reports received from such issuer and Clearing Agencies
with respect to such issuer.

 

As promptly as possible following the
delivery of each Note Valuation Report to the Trustee pursuant to Section 10.11(a) or
(b), as applicable, the Issuer shall cause a copy of such report to be
delivered the Repository for posting on the Repository in the manner described
in Section 14.3. In connection therewith, each of the Co-Issuers
acknowledges and agrees that each

 

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Note Valuation Report shall be posted to the
Repository for use in the manner described in the section headed “Terms of Use”
on the Repository.

 

In the event that a Distribution on any
Collateral Interest is not paid to the Trustee on the Due Date therefor, the
Trustee shall provide the Advancing Agent with notice of such default on the
Business Day immediately following such default. In addition, (i) the
Trustee shall provide the Advancing Agent (either electronically or in
hard-copy format) with copies of all reports received from any trustee, trust
administrator, master servicer or similar administrative entity with respect to
the Collateral Interests and (ii) upon request, the Trustee shall promptly
make available to the Advancing Agent any other information reasonably
available to the Trustee by reason of its acting as Trustee hereunder to permit
the Advancing Agent to make a determination of recoverability with respect to
any Interest Advance and to otherwise perform its advancing obligations
hereunder.

 

10.11.     ACCOUNTINGS

 

(a)           Accounting. The Issuer shall deliver, not later than the related Payment Date and after the reconciliation process described
in this Section 10.11, an accounting (each, a Remittance Report
and, together with the Monthly Reports, the Note Valuation Reports), determined as
of each Calculation Date, to each Rating Agency, the Trustee, the Collateral
Manager, the Issuer and the Advancing Agent and make available via the Trustee’s
internet website, initially located at www.cdolink.com to the Trustee, each
Hedge Counterparty, the PAA Issued Note Paying Agent, each Note Transfer Agent,
Wachovia Capital Markets, LLC, the Advancing Agent, the Issuer and, upon
written request therefor, any Holder of a Rated Note shown on the Note
Register. The Note Valuation Report shall contain the following information
determined, unless otherwise specified below, as of the related Calculation
Date;

 

(1)           the calculation showing compliance with each of the
Coverage Tests, accompanied by a list setting forth the applicable maximum or
minimum value, percentage or ratio which must be maintained pursuant to this
Indenture 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 Interests, and the calculation showing the Moody’s Maximum
Weighted Average Rating Factor Test, the Weighted Average Fixed Rate Coupon,
the Weighted Average Spread, the Weighted Average Life and the Moody’s Minimum
Average Recovery Rate and, if applicable, the Moody’s Post-Acquisition
Compliance Test;

 

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

 

(3)           the Applicable Periodic Interest Rate in respect of
each Class of Notes and the amount of Periodic Interest payable to the
Holders of the Notes for such Payment Date (in the aggregate and by Class);

 

181

 

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

 

(5)           the amount (if any) payable by each Hedge
Counterparty pursuant to the related Hedge Agreement:

 

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

 

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

 

(8)           for the Collection Account:

 

(i)            the Balance on deposit in the Collection Account
and the Collateral Principal Collections Sub-Account at the end of the related
Due Period;

 

(ii)           the nature and source of any Collections in the
Collection Account and the Collateral Principal Collections Sub-Account,
including Collections received since the date of the last Note Valuation
Report;

 

(iii)          the amounts payable from the Collection Account in
accordance with the priority set forth in Section 11.1 on the next Payment
Date; and

 

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

 

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

 

(9)           for the Interest Reserve Account:

 

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

 

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

 

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

 

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

 

182

 

(10)         for the Expense Reserve Account:

 

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

 

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

 

(11)         for the Future Funding Asset Account:

 

(i)            the balance on deposit in the Future Funding Asset
Account at the end of the related Due Period;

 

(ii)           the amount, if any, payable from the Future Funding
Asset Account;

 

(iii)          the amount, if any, to be paid into the Future
Funding Asset Account on the next Payment Date; and

 

(iv)          the Balance remaining in the Future Funding Asset
Account immediately after all payments and deposits to be made on such Payment
Date;

 

(12)         for the Class A-R Holder Collateral Account,
the Balance remaining in the Class A-R Holder Collateral Account
immediately after all payments and deposits to be made on such Payment Date;

 

(13)         any Hedge Receipt Amount or Hedge Payment Amount
for the related Payment Date, and for each Hedge Agreement (if any), the
outstanding notional amount of such Hedge Agreement and the amounts, if any,
scheduled to be received or paid, as the case may be, by the Issuer pursuant to
such Hedge Agreement for the related Payment Date, separately stating the
portion payable in accordance with Section 11.1;

 

(14)         the aggregate amount of outstanding Interest
Advances and Cure Advances;

 

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

 

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

 

(17)         such other information as the Collateral Manager,
the Initial Purchaser, the Trustee, any Rating Agency or any Hedge Counterparty
may reasonably request;

 

183

 

(18)         with respect to each Collateral Interest, 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 Recovery Rate and the Moody’s Rating (provided that if any Moody’s Rating for any Collateral
Interest is an “estimated” or “shadow” rating, such rating shall be identified
as “estimated” or “shadow rated,” shall be disclosed with an asterisk (or any
such other marking designed to indicate an estimated or shadow rating) 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 to the Issuer).

 

(19)         the Principal Balance, the maturity date, the Moody’s
Rating and the issuer of each Eligible Investment included in the Collateral;

 

(20)         (A) the identity and Principal Balance of each
Collateral Interest that became a Credit Risk Interest, an Impaired Interest,
an Equity Interest, a Written Down Interest, a Withholding Tax Interest, a
Deferred Interest PIK Bond, a Buy/Sell Interest, a Credit Improved Interest, a
Future Funding Interest, a Taxed Collateral Interest or a Taxed Property, (B) the
date, as provided by the Collateral Manager, on which any Collateral Interest
became a Credit Risk Interest, an Impaired Interest, an Equity Interest, a
Written Down Interest, a Buy/Sell Interest, a Withholding Tax Interest, a Taxed
Collateral Interest or a Taxed Property, (C) whether the Collateral
Manager has directed the Issuer to sell or not to sell such Collateral
Interest, and (D) the date by which any such sale occurs;

 

(21)         the identity of each Collateral Interest that was
upgraded or downgraded or placed on watch for upgrade or downgrade by any
Rating Agency since the date of the last Note Valuation Report;

 

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

 

(23)         the identity and Principal Balance of each Collateral
Interest that was a Credit Risk Interest, an Impaired Interest, an Equity
Interest, a Written Down Interest, a Buy/Sell Interest, a Withholding Tax
Interest, a Buy/Sell Interest, a Credit Improved Interest, a Future Funding
Interest, a Deferred Interest PIK Bond, a Taxed Collateral Interest, a Taxed
Property or a Discretionary Sale;

 

(24)         the purchase price of each Pledged Security granted
and the sale price of each Pledged Security subject to a sale since the date of
the last Note

 

184

 

Valuation Report; and whether such Pledged
Security is a Collateral Interest, an Eligible Investment or proceeds in the
Collection Account;

 

(25)         the amount of Purchased Accrued Interest;

 

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

 

(27)         the Herfindahl Score;

 

(28)         the Fitch Recovery for each Class of Notes;

 

(29)         the components of the Fitch Poolwide Expected Loss
Test; and

 

(30)         the amount of any Class A-R Draws, remaining Class A-R
Commitments, the Total Net Unfunded Future Advance Amount, the Total Unfunded
Future Advance Amount and Future Funding Obligations.

 

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

 

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

 

In addition to the foregoing information,
each Note Valuation Report shall include a statement to the following effect:

 

“The Notes have not been and will not be
registered under the United States Securities Act of 1933, as amended (the Securities Act), or
under any state securities laws, and the Co-Issuers have not been and will not
be registered under the United States Investment Company Act of 1940, as
amended (the 1940 Act).
Each Holder of the Notes, other than those Holders that are not “U.S. persons”
(U.S. Person)
within the meaning of Regulation S (Regulation S) under the Securities Act and
have acquired their Notes outside the United States pursuant to Regulation

 

185

 

S, is required to be both (i) (A) with
respect to any Rated Note, a “qualified institutional buyer” as defined in Rule 144A
under the Securities Act (Qualified
Institutional Buyer) or (B) solely with respect to the
Income Notes, any of NS CDO Holdings VIII2, LLC, NS Advisors, LLC or any “affiliate”
thereof within the meaning of Rule 405 under the Securities Act that is an
“accredited investor” within the meaning of Rule 501(A) under the
Securities Act (each of the foregoing, a Permitted NS Purchaser) and (ii) a “qualified purchaser”
(Qualified Purchaser) within the meaning of Section 3(c)(7) of the
1940 Act, purchasing for its own account or for the account of another
Qualified Purchaser, that can make all of the representations in this Indenture
applicable to a holder that is a U.S. Person. The beneficial interest in the
Notes may be transferred only to a transferee that meets both of the criteria
in clauses (i) and (ii) above and can make all of the representations
in this Indenture applicable to a Holder that is a U.S. Person, except that any
such transfer in reliance on Regulation S can be made only to a transferee that
is not a U.S. Person. The Issuer has the right to compel any Holder that does
not meet the qualifications and the transfer restrictions set forth in this
Indenture to sell its interest in the Notes, or may sell such interest on
behalf of such owner, pursuant to the Indenture.”

 

(b)           Redemption Date Instructions. Not less than five Business Days after receiving
an Issuer Request requesting information regarding a redemption pursuant to Section 9.1
of the Rated Notes of a Class as of a proposed Redemption Date set forth
in such Issuer Request, the Trustee shall provide the necessary information (to
the extent it is available to the Trustee) to the Issuer, and the Issuer shall
compute the following information and provide such information in a statement
(the Redemption Date
Statement) delivered to the Trustee:

 

(1)           the Aggregate Outstanding Amount of the Rated Notes
of the Class or Classes to be redeemed as of such Redemption Date;

 

(2)           the amount of accrued interest due on such Rated
Notes as of the last day of the Interest Period immediately preceding such
Redemption Date; and

 

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

 

(c)           If the Trustee shall not have received any
accounting provided for in this Section 10.11 on the first Business Day
after the date on which such accounting is due to the Trustee, the Trustee
shall use reasonable efforts to cause such accounting to be made by the
applicable Payment Date or Redemption Date. To the extent the Trustee is
required to provide any information or reports pursuant to this Section 10.11
as a result of the failure of the Issuer to provide such information or
reports, the Trustee shall be entitled to retain an Independent certified
public accountant in connection therewith and the reasonable costs incurred by
the Trustee for such Independent certified public accountant shall be
reimbursed pursuant to Section 6.8.

 

186

 

The Trustee will make the Note Valuation
Report available via its internet website initially located at www.cdolink.com.
All information made available on the Trustee’s website will be restricted and
the Trustee will only provide access to such reports to those parties entitled
thereto pursuant to this Indenture. In connection with providing access to its
website, the Trustee may require registration and the acceptance of a
disclaimer. Questions regarding the Trustee’s website can be directed to the
Trustee’s customer service desk at phone number 301-815-6600.

 

10.12.              RELEASE OF SECURITIES

 

(a)                                  If no Event of Default has occurred and is
continuing and subject to Section 12, the Issuer shall, in connection with
any sale required pursuant to Section 12.1, by Issuer Order executed by an
Authorized Officer of the Issuer and delivered to the Trustee at least two
Business Days prior to the settlement date for any sale of a security
certifying that the conditions set forth in Section 12.1 are satisfied,
direct the Trustee to release such security from the lien of this Indenture
against receipt of payment therefor.

 

(b)                                 The Issuer shall, if notified that the issuer of
the Pledged Security requires delivery of such Pledged Security as a condition
to redemption or payment in full, by Issuer Order executed by an Authorized
Officer of the Issuer and delivered to the Trustee at least two Business Days
prior to the date set for redemption or payment in full of a Pledged Security,
certifying that such security is being redeemed or paid in full, direct the
Trustee or, at the Trustee’s instructions, the Custodian, to deliver such
security, if in physical form, duly endorsed, or, if such security is a
Clearing Corporation Security, to cause it to be presented, to the appropriate
paying agent therefor on or before the date set for redemption or payment, in
each case against receipt of the redemption price or payment in full thereof.

 

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

 

(d)                                 The Issuer may retain agents (including the
Collateral Manager) to assist the Issuer in preparing any notice or other
report required under Section 10.12 and this Section 10.13.

 

10.13.              REPORTS BY INDEPENDENT ACCOUNTANTS

 

(a)                                  At the Closing Date the Issuer (or the Collateral
Manager on its behalf) shall appoint a firm of Independent certified public
accountants of recognized national reputation for purposes of preparing and
delivering the reports or certificates of such accountants required by this
Indenture. Upon any resignation by such firm, the Issuer shall (after
consultation with

 

187

 

the Collateral Manager) propose a replacement
firm meeting the criteria set forth in the preceding sentence for approval by a
Majority of the Controlling Class. Upon approval by a Majority of the
Controlling Class, the Issuer shall promptly appoint such firm by Issuer Order
delivered to the Trustee, each Hedge Counterparty, the Collateral Manager and
each Rating Agency. If the Issuer shall fail to appoint a successor to a firm
of Independent certified public accountants which has resigned within 30 days
after such resignation, the Issuer shall promptly notify the Trustee of such
failure in writing. The fees of such Independent certified public accountants
and its successor shall be payable by the Issuer as provided in Section 11.1.

 

(b)                                 On or before May 31 of each year (commencing
with May 31, 2008), the Issuer
shall cause to be delivered to the Trustee, the PAA Issued Note Paying Agent
and each Rating Agency an Accountant’s Report specifying the procedures applied
and their associated findings with respect to the Note Valuation Reports and
any Redemption Date Statements prepared in the preceding year. At least 60 days
prior to the Payment Date in May 2008 (and, if at any time a successor
firm of Independent certified public accountants is appointed, prior to the
Payment Date in August following the date of such appointment), the Issuer
shall deliver to the Trustee an Accountant’s Report specifying in advance the
procedures that such firm will apply in making the aforementioned findings throughout
the term of its service as accountants to the Issuer. The Trustee shall
promptly forward a copy of such Accountant’s Report to each Hedge Counterparty,
the Rating Agencies, the PAA Issued Note Paying Agent and each Holder of Class A
Senior Notes (or, if no Class A Senior Notes are Outstanding, each Holder
of Class A-2 Notes or, if no Class A Notes are Outstanding, each
Holder of Class B Notes or, if no Class B Notes are Outstanding, each
Holder of Class C Notes or, if no Class C Notes are Outstanding, each
Holder of Class D Notes or, if no Class D Notes are Outstanding, each
Holder of Class E Notes or, if no Class E Notes are Outstanding, each
Holder of Class F Notes or, if no Class F Notes are Outstanding, each
Holder of Class G Notes or, if no Class G Notes are Outstanding, each
Holder of Class H Notes or, if no Class H Notes are Outstanding, each
Holder of Class J Notes or, if no Class J Notes are Outstanding, each
Holder of Class K Notes, or, if no Class K Notes are Outstanding,
each Holder of Class L Notes or, if no Class L Notes are Outstanding,
each Holder of Class M Notes or, if no Class M Notes are Outstanding,
each Holder of Class N Notes), at the address shown on the Note Register.
The Issuer shall not approve the institution of such procedures if a Majority
of the Controlling Class or the Collateral Manager, by notice to the
Issuer and the Trustee within 30 days after the date of the related notice to
the Trustee, object thereto.

 

188

 

(c)                                  Any statement delivered to the Trustee pursuant to Section 10.13(b) above shall be made available by the Trustee to any
Holder of a Rated Note shown on the Note Register upon written request
therefor.

 

10.14.              REPORTS TO RATING AGENCIES

 

In addition to the information and reports
specifically required to be provided to the Rating Agencies, the PAA Issued
Note Paying Agent, the Holders of Rated Notes and each Hedge Counterparty
pursuant to the terms of this Indenture or the Paying Agency Agreement (as the
case may be), the Issuer shall provide or procure to provide the Rating
Agencies and each Hedge Counterparty with (a) all information or reports
delivered to the Trustee hereunder and (b) such additional information as
the Rating Agencies, each Hedge Counterparty or the PAA Issued Note Paying
Agent may from time to time reasonably request, provided that such information may be obtained and provided
without unreasonable burden or expense. The Issuer shall promptly notify the
Trustee, the PAA Issued Note Paying Agent if the rating of any Class of
Rated Notes has been, or it is known by the Issuer that such rating will be,
changed or withdrawn. The Issuer shall notify each Rating Agency and each Hedge
Counterparty in the case of (i) termination or amendment of any Transaction
Document or organizational document of the Issuer or Co-Issuer, (ii) termination
or change of party to any of the Transaction Documents or (iii) material
breach of any of the Transaction Documents by any party thereto.

 

10.15.              TAX MATTERS

 

The Issuer and the Co-Issuer agree to treat,
and hereby notify the Trustee to treat, and, by accepting a Certificated Class A-K
Note, a Class L Note or Class M Note, each Holder of a Certificated Class A-K
Note, a Class L Note or Class M Note agrees to treat, for U.S.
federal income, state and local income and franchise tax and any other income
tax purposes, for so long as an Owner REIT qualifies for U.S. federal income
tax purposes as a REIT and 100% of the Class L Notes, Class M Notes, Class N
Notes, Income Notes, and Ordinary Shares (other than any Class L Notes, Class M
Notes or Class N Notes with respect to which the Issuer has received an
Opinion of Counsel rendered by nationally recognized U.S. tax counsel
experienced in such matters to the effect that the Class L Notes, Class M
Notes or Class N Notes, as applicable, will be treated as indebtedness for
U.S. federal income tax purposes) are owned by the Owner REIT, directly or
indirectly through one or more Qualified REIT Subsidiaries thereof or one or
more entities disregarded as entities separate from the Owner REIT or its
Qualified REIT Subsidiaries, (i) the Certificated Class A-K Notes as
indebtedness solely of the Owner REIT, and not as indebtedness of the Issuer or
the Co-Issuer, and at any other time, as indebtedness solely of the Issuer and
not the Co-Issuer, (ii) the Class L Notes, Class M Notes, Class N
Notes and Income Notes as indebtedness of the Issuer for legal purposes and for
certain tax purposes, and at any other time, as indebtedness solely of the
Issuer and not the Co-Issuer, and (iii) the Income Notes as not issued or
outstanding for tax purposes, and at any other time, as equity in the Issuer.
The Issuer (and, with respect to the Certificated Class A-K Notes, the
Co-Issuer) agree, and, by accepting a Certificated Class A-K Note, Class L
Note or Class M Note, each Holder of a Certificated Class A-K Note or
Class L Note or Class M Note agrees, to report all income (or loss)
in accordance with such treatment, and not to take any action inconsistent with
such treatment except as otherwise required by any taxing authority under
applicable law. The Issuer agrees that, for purposes of U.S. federal income
taxes, for so long as an Owner REIT qualifies

 

189

 

for U.S. federal income tax purposes as a
REIT and 100% of the Class L Notes, Class M Notes, Class N
Notes, Income Notes, and Ordinary Shares (other than any Class L Notes, Class M
Notes or Class N Notes with respect to which the Issuer has received an
Opinion of Counsel rendered by nationally recognized U.S. tax counsel
experienced in such matters to the effect that the Class L Notes, Class M
Notes or Class N Notes, as applicable, will be treated as indebtedness for
U.S. federal income tax purposes) are owned by the Owner REIT, directly or
indirectly through one or more Qualified REIT Subsidiaries thereof or one or
more entities disregarded as entities separate from the Owner REIT or its
Qualified REIT Subsidiaries, the Issuer will be treated as a Qualified REIT
Subsidiary of the Owner REIT, and at any other time, the Issuer agrees not to
elect to be treated as other than an association taxable as a corporation for
U.S. federal income tax purposes.

 

The Class A-R Commitment Fee will be
includible as ordinary income by a U.S. Holder of a Class A-R Note in
accordance with its regular method of tax accounting.

 

10.16.              [RESERVED]

 

10.17.              INTEREST ADVANCES

 

(a)                                 With respect to each Payment Date for which the sum
of (i) Collateral Interest
Collections collected during the related Due Period and (ii) funds on
deposit in the Collection Account, are insufficient to remit the interest due
and payable with respect to the Class A Notes, Class B Notes, Class C
Notes and Class D Notes on the following Payment Date (the amount of such
insufficiency, an Interest
Shortfall), so long as that no Event of Default is occurring
(except an Event of Default with respect to the nonpayment of interest on the Class A
Notes, the Class B Notes, the Class C Notes or the Class D
Notes), the Trustee shall provide the Advancing Agent with written notice of
such Interest Shortfall no later than 12:00 noon (New York time) on the
Business Day immediately preceding such Payment Date. The Trustee shall provide
the Advancing Agent with notice, prior to any funding of an Interest Advance
(as defined below) by the Advancing Agent, of any additional interest
remittances received by the Trustee after deliver of such initial notice that
reduce such Interest Shortfall. No later than 5:00 p.m. (New York time) on
the Business Day immediately preceding the related Payment Date, the Advancing
Agent shall advance the difference between such amounts (each such advance, an Interest Advance) by
deposit of an amount equal to such Interest Shortfall in the Payment Account,
subject to a determination of recoverability by the Advancing Agent as
described in Section 10.17(b). Any Interest Advance made by the Advancing
Agent with respect to a Payment Date that is in excess of the actual Interest
Shortfall for such Payment Date shall be refunded to the Advancing Agent by the
Trustee on the same Business Day that such Interest Advance was made (or, if
such Interest Advance is made prior to final determination by the Trustee of
such Interest Shortfall, on the Business Day of such final determination). The
Advancing Agent shall provide the Trustee written notice of a

 

190

 

determination by the Advancing Agent that a
proposed Interest Advance would constitute a Nonrecoverable Advance no later
than the close of business on the Business Day immediately preceding the
related Payment Date. If the Advancing Agent does not make any required
Interest Advance at or prior to the time at which distributions are to be made
pursuant to Section 11.1, the Trustee shall be required to make such
Interest Advance, subject to a determination of recoverability by the Trustee
as described in Section 10.17(b). The Trustee shall be entitled to
conclusively rely on any determination by the Advancing Agent that an Interest
Advance, if made, would constitute a Nonrecoverable Advance. Notwithstanding
the foregoing, to the extent the Advancing Agent fails to make an Interest
Advance it was required to make, the Advancing Agent shall not be entitled to
make a recoverability determination affecting the Trustee’s obligation to
provide an Interest Advance and any such determination shall not be binding on
the Trustee.

 

Notwithstanding anything herein to the
contrary, neither the Advancing Agent nor the Trustee shall be required to make
any Interest Advance unless such Person determines, in its sole discretion,
exercised in good faith and, with respect to any such determination made by the
Advancing Agent, in accordance with the Advancing Standards (as defined below),
that such Interest Advance, plus
interest expected to accrue thereon at the Reimbursement Rate, will be
recoverable from subsequent payments or collections with respect to all
Collateral Interests. Such interest on any Interest Advance will be payable to
the Advancing Agent or the Trustee, as the case may be, out of default charges
collected in respect of the Collateral Interests for the related period or, in
connection with the reimbursement of such Interest Advance, out of Collateral
Interest Collections, and to the extent not reimbursed in full by Collateral
Interest Collections, out of Collateral Principal Collections then on deposit
in the Collection Account or any collection account established in favor of the
Underlying Trust (provided that
interest on Nonrecoverable Advances will be payable first from Collateral
Principal Collections, and to the extent not reimbursed in full from Collateral
Principal Collections, from Collateral Interest Collections then on deposit in
the Collection Account or any collection account established in favor of the
Underlying Trust). To the extent interest on any outstanding Interest Advance
cannot be offset by such default charges, such interest accrued on outstanding
Interest Advances made in respect thereof will result in a reduction in amounts
payable on the Collateral Interests. In determining whether any proposed
Interest Advance will be, or whether any Interest Advance previously made is, a
Nonrecoverable Advance, the Advancing Agent or the Trustee, as applicable, will
take into account:

 

(1)                                amounts that may be realized on each Mortgaged
Property in its “as is” or then current condition and occupancy;

 

(2)                                that such Interest Advances, together with interest
accruing thereon, may only be recovered from subsequent payments or collections
on the Collateral Interests, as allocable thereto from recoveries on the
related

 

191

 

Mortgage Properties pursuant to the related
participation agreement, intercreditor agreement or other similar agreement;

 

(3)                                that the related Senior Interests may be required
to be fully paid and any advances (and interest thereon) made in respect of
such Senior Interests may be required to be fully reimbursed, prior to any
amounts recovered in respect of the Mortgaged Properties being allocated or
otherwise made available to the Collateral Interests;

 

(4)                                the possibility and effects of future adverse
change with respect to the Mortgaged Properties, the potential length of time
before such Interest Advance may be reimbursed and the resulting degree of
uncertainty with respect to such reimbursement; and

 

(5)                                the fact that Interest Advances are intended to
provide liquidity only and not credit support to the Noteholders.

 

For purposes of any such determination of
whether an Interest Advance constitutes or would constitute a Nonrecoverable
Advance, an Interest Advance will be deemed to be nonrecoverable if the
Advancing Agent or the Trustee, as applicable, determines that future payments
or collections on the Collateral Interests may be insufficient to fully
reimburse such Interest Advance, plus
interest thereon at the Reimbursement Rate, within a reasonable period of time.
Absent bad faith, the determination by the Advancing Agent or the Trustee, as
applicable, as to the nonrecoverability of any Interest Advance shall be
conclusive and binding on the Noteholders. The Trustee shall be entitled to
conclusively rely on any determination by the Advancing Agent that an Interest
Advance, if made, would constitute a Nonrecoverable Advance. The Collateral
Manager and the Advancing Agent shall provide any information regarding the
Collateral reasonably requested by the Trustee in connection with the Trustee’s
determination of whether any Interest Advance would be recoverable.

 

(b)                                The Advancing Agent and the Trustee will each be
entitled to recover any previously unreimbursed Interest Advance made by it
(including any Nonrecoverable Advance), together with interest thereon, in
accordance with the Section 11.1(k).

 

(c)                                 The Advancing Agent and the Trustee will each be
entitled with respect to any Interest Advance made by it (including
Nonrecoverable Advances) to interest accrued on the amount of such Interest
Advance for so long as it is outstanding at the Reimbursement Rate.

 

(d)                                The Advancing Agent’s obligations to make Interest
Advances in respect of the Class A Notes, Class B Notes, Class C
Notes and Class D Notes will continue through the date on which the
outstanding principal amount of such Notes is paid in full or redeemed.

 

192

 

(e)                                 In no event will the Advancing Agent or the Trustee
be required to advance any payments in respect of interest on any Notes other
than the Class A Notes, Class B Notes, Class C Notes and Class D
Notes or any payments in respect of principal on any Notes.

 

(f)                                   In consideration of the performance of its
obligations hereunder, the Trustee shall be entitled to receive, in its
capacity as backup advancing agent, at the times set forth herein and subject
to the conditions and the priority of distribution provisions hereof, to the
extent funds are available therefor, the Trustee Interest Advance Fee. In
addition, to the extent that the Trustee makes an Interest Advance on any
Payment Date that the Advancing Agent was required, but failed to make, the
Trustee shall be entitled to receive the Advancing Agent Fee (in addition to
the Trustee Interest Advance Fee) for such Payment Date and any future Payment
Dates upon which such Interest Advance remains outstanding.

 

(g)                                In consideration of the performance of its
obligations hereunder, the Advancing Agent shall be entitled to receive, at the
times set forth herein and subject to the conditions and the priority of
distribution provisions hereof, to the extent funds are available therefor, the
Advancing Agent Fee (except to the extent the Advancing Agent Fee is being paid
to the Trustee as described in clause (f), above).

 

(h)                                The determination by the Advancing Agent or the
Trustee, as applicable, (i) that it has made a Nonrecoverable Advance or (ii) that
any proposed Interest Advance, if made, would constitute a Nonrecoverable
Advance, shall be evidenced by an Officer’s certificate delivered promptly to
the Trustee (or, if applicable, retained thereby) and the Issuer, setting forth
the basis for such determination; provided,
that failure to give such notice, or any defect therein, shall not impair or
affect the validity of, or the Advancing Agent’s or the Trustee’s entitlement
to reimbursement with respect to, any Interest Advance.

 

(i)                                    The Advancing Agent, in such capacity, shall act in
the best interests of the Class A Noteholders, the Class B
Noteholders, the Class C Noteholders and the Class D Noteholders
(taking into account the interests of the Class A Noteholders, the Class B
Noteholders Class C Noteholders and the Class D Noteholders
collectively), as determined by the Advancing Agent, in its good faith judgment
and in accordance with this Indenture and applicable law, and in all cases
without regard to: (i) any relationship that the Advancing Agent may have
with any obligor under a Collateral Interest or any Affiliate of such obligor,
any seller or any other parties to this Indenture; (ii) the ownership of
any Note by the Advancing Agent or any of its Affiliates; (iii) the
adequacy of the Advancing Agent’s right to receive compensation for its
services and reimbursement for its costs hereunder; (iv) the ownership or
management of any interests in any mortgage loans, mortgaged properties,
mezzanine loans or Collateral

 

193

 

Interests by the Advancing Agent; (v) any
obligation of the Advancing Agent or any of its Affiliates to cure a breach of
a representation or warranty or document defect with respect to, or repurchase
or substitute for any Collateral Interest; and (vi) any other debt the
Advancing Agent or any of its Affiliates has extended to any obligor under any
Collateral Interest or any of its Affiliates (the criteria specified in this Section 10.17(i),
collectively referred to as the Advancing Standards).

 

10.18.              CURE ADVANCES

 

The Issuer, as holder of a Subordinate
Mortgage Loan Interest or Mezzanine Loan, may have the right to cure certain
payment defaults or other defaults by the borrower of the related commercial
mortgage loan or mezzanine loan, subject to the rights of any junior
participant, junior note holder or mezzanine loan holder. If such a right is
exercisable by the Issuer, then, upon written instruction from the Holders of
at least a Majority of the Income Notes in accordance with the Paying Agency
Agreement, the Collateral Manager may exercise such cure right and make a cash
advance solely out of funds received from the Holders of the majority of the
Income Notes (each such advance, a Cure Advance) to cure the related default,
but only to the extent that the Collateral Manager has determined in its sole
discretion, exercised in good faith, that such cash advance is not a
Nonrecoverable Cure Advance. The Holders of the majority of the Income Notes
will be entitled to reimbursement from any subsequent payments or recoveries on
each Collateral Interest in respect of which it makes a Cure Advance in
accordance with the Priority of Payments; provided that, if at any time the
Collateral Manager determines in its sole discretion, exercised in good faith,
that a Cure Advance previously made is a Nonrecoverable Cure Advance, the
Collateral Manager will be entitled to reimbursement for such Cure Advance from
subsequent payments or collections with respect to all of the Collateral
Interests on any Business Day during any Interest Period prior to the end of
the related Due Period (or on a Payment Date prior to any payment of interest
on or principal of the Notes in accordance with the Priority of Payments).
Reimbursement of such Nonrecoverable Cure Advances will be made first from
Collateral Interest Collections and, then, to the extent Collateral Interest
Collections were insufficient, from Collateral Principal Collections.

 

10.19.              FUTURE FUNDING RESERVE ACCOUNT

 

The Trustee shall, prior to the first
Quarterly Measurement Date on the Collateral Manager’s instruction, establish a
segregated trust account which shall be designated as the Future Funding Reserve Account
for the benefit of the Future Advance Holders. From time to time, the Future
Advance Holders (or one or more other entities on their behalf) may contribute
to the Issuer amounts for deposit into the Future Funding Reserve Account. The
Trustee will deposit into the Future Funding Reserve Account all amounts so
received by the Issuer. At the direction of the Collateral Manager, the Issuer
may by Issuer Order direct the Trustee to, and upon receipt of the Issuer
Order, the Trustee will, transfer all amounts on deposit in the Future Funding
Reserve Account, if any, (A) to the Future Advance Holders to satisfy the
additional commitments in respect of one or more Other Loans or (B) to
reimburse the Issuer for losses related to the failure of any Future Advance
Holder to fund any such Other Loans in accordance

 

194

 

with the related Underlying Instruments. At
the direction of the Collateral Manager, amounts on deposit in the Future
Funding Reserve Account will be invested in certain investments as set forth in
the Indenture (which shall include investments rated “A3” or higher by
Moody’s). Amounts on deposit in the Future Funding Reserve Account (or any
portion thereof) will be released at the direction of the Collateral Manager
and paid to the Future Advance Holders (or their designees) on any date on
which the Future Funding Reserve Test would be satisfied (as calculated by the
Collateral Manager and notified to the Trustee) after such release and payment.
For the avoidance of doubt, amounts on deposit in the Future Funding Reserve
Account will not be included in the Collateral securing the Notes.

 

10.20.              SUSPENSE ACCOUNT

 

The Trustee shall, prior to the first
Quarterly Measurement Date on the Collateral Manager’s instruction establish a
segregated trust account designate as the Suspense Account for the benefit of the
Future Advance Holders. On any Payment Date on which a Liquidity Test Failure
or a Future Funding Reserve Test Failure has occurred and is continuing, the
Trustee, at the direction of the Collateral Manager, will release from the lien
of the Indenture and deposit into the Suspense Account all amounts available
distributed pursuant to Section 11.1(a)(37) until such Liquidity Test
Failure is cured. At the direction of the Collateral Manager, the Issuer may by
Issuer Order direct the Trustee to, and upon receipt of the Issuer Order, the
Trustee will, transfer all amounts on deposit in the Suspense Account, if any, (A) to
the Future Advance Holders to satisfy the additional commitments in respect of
one or more Other Loans or (B) to reimburse the Issuer for losses related
to the failure of any Future Advance Holder to fund any such Other Loans in
accordance with the related Underlying Instruments. At the direction of the
Collateral Manager, amounts on deposit in the Suspense Account will be invested
in certain investments as set forth in the Indenture (which shall include
investments rated “A3” or higher Moody’s). Amounts on deposit in the Suspense
Account (or any portion thereof) will be released and paid (upon standing order
of the Issuer) to the PAA Issued Note Paying Agent for distribution to the
holders of the Income Notes (subject to and in accordance with the provisions
of the Paying Agency Agreement) on any date on which the Liquidity Test would be
satisfied as calculated by the Collateral Manager and notified to the Trustee)
after such release and payment (as notified to the Trustee by the Collateral
Manager). For the avoidance of doubt, amounts on deposit in the Suspense
Account will not be included in the Collateral securing the Notes.

 

ARTICLE XI

 

APPLICATION
OF MONIES

 

11.1.                     DISBURSEMENTS OF FUNDS FROM PAYMENT ACCOUNT; PRIORITY OF PAYMENTS

 

(a)                                 Collateral Interest Collections. On any Payment Date that is not a Redemption Date
or a Payment Date following the occurrence and continuation of an acceleration
of the Rated Notes in connection with an Event of Default, in accordance with a
Note Report prepared by the Collateral Administrator as of the last day of the
Due Period preceding such Payment Date, Collateral Interest Collections, to the
extent of Available Funds in the Payment Account, together with any Interest

 

195

 

Advances applied for such Payment Date, less (i) any
amounts applied to reimburse any outstanding Interest Advances, together with
interest thereon, as described in Section 10.17, (ii) any amounts in
respect of interest applied to reimburse any outstanding Cure Advance (other
than a Nonrecoverable Cure Advance) to the extent of a specific recovery of
such Cure Advance from the proceeds of the Collateral Interest as to which such
Cure Advance was made, as described under Section 10.18, (iii) any
amounts in respect of interest applied to reimburse Nonrecoverable Cure
Advances as described in Section 10.18 and (iv) any amounts applied
to pay any Hedge Counterparties during the applicable Due Period (other than
any termination payments payable under clause (32) below), as described in Section 10.5(a)(5),
will be applied by the Trustee in the following order of priority:

 

(1)                                to pay, in the following order:

 

(i)                                   taxes and filing fees and registration fees
(including, without limitation, annual return fees) payable by the Co-Issuers,
if any; and then,

 

(ii)                                pro rata the amount of any due and unpaid Trustee Fee, Trustee Interest Advance
Fee, Class A-R Note Agent Fee and PAA Issued Note Paying Agent Fee; and
then,

 

(iii)                            the amount of any due and unpaid fees to the Administrator;
and then,

 

(iv)                            pro rata the amount of any due and unpaid Trustee Expenses and Underlying Trust
Expenses; and then,

 

(v)                               the amount of any due and unpaid fees and expenses
of the Rating Agencies; and then,

 

(vi)                            to any accrued and unpaid Class A-R Increased
Costs; provided that the cumulative amount paid under this clause (vi) may
not exceed $180,000 in the aggregate in any consecutive 12-month period; and
then

 

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

 

(viii)                      to deposit to the Expense Reserve Account the
amount needed to bring the amount on deposit therein to U.S.$50,000 (unless the

 

196

 

Collateral Manager directs that a lesser
amount be deposited to the Expense Reserve Account);

 

provided that the cumulative amount paid under (iii), (iv),
(v) and (vii) above (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 Event of Default and any default of the Collateral
Interests) may not exceed U.S.$450,000 in the aggregate in any consecutive 12-month
period;

 

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

 

(3)                                to pay any Hedge Counterparty any amounts due to
such Hedge Counterparty under any Hedge Agreement to the extent not paid during
the related Due Period pursuant to Section 10.5(a)(5), pro rata, including any termination
payments other than any termination payments payable under Section 11.1(a)(32),
below;

 

(4)                                to pay (a) Periodic Interest on the Class A
Senior Notes and any Defaulted Interest on the Class A Senior Notes (and
interest thereon), and (b) the Class A-R Commitment Fee in each case pro rata, based on amounts due and then (c) to
the Class A-R Noteholders, any accrued and unpaid and Class A-R
Breakage Costs;

 

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

 

(6)                                to pay Periodic Interest on the Class B Notes
and any Defaulted Interest on the Class B Notes (and interest thereon);

 

(7)                                to pay Periodic Interest on the Class C Notes
and any Defaulted Interest (and interest thereon);

 

(8)                                to pay Periodic Interest on the Class D Notes
and any Defaulted Interest (and interest thereon);

 

(9)                                to pay an amount equal to the Interest Reserve
Amount for deposit into the Interest Reserve Account;

 

(10)                          if a Rating Confirmation Failure occurs, on each
Payment Date commencing with the Payment Date immediately following the
Effective Date, to pay principal of the Notes in accordance with the Note
Payment Sequence, in the amounts necessary for each Rating Agency to confirm
its

 

197

 

respective ratings of the Notes assigned on
the Closing Date or until each Class of Notes is paid in full;

 

(11)                          if either of the Class A/B/C/D Coverage Tests
is not satisfied as of the preceding Calculation Date, first, to pay principal
of the Class A-1 Notes and Class A-R Notes then Outstanding, pro rata, based on the Class A Senior
Pro Rata Allocation, until such Class A/B/C/D Coverage Test is satisfied
as of such Calculation Date or until the Class A Senior Notes are paid in
full; provided that, to the extent
the principal amount of the Class A-R Notes is reduced to zero, any
remaining principal payments allocable thereto will be deposited as follows: (a) an
amount up to the Total Net Unfunded Future Advance Amount will be deposited in
the Future Funding Asset Account, and (b) any remainder will be deposited
in the Collection Account as Collateral Principal Collections, and then to pay
principal of the next most Senior Class of Notes Outstanding until such Class A/B/C/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 A/B/C/D
Coverage Test is satisfied or until the Class D Notes are paid in full;

 

(12)                          to pay Periodic Interest on the Class E Notes
and, if no Senior Notes are Outstanding, any Defaulted Interest on the Class E
Notes (and interest thereon);

 

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

 

(14)                          to pay Periodic Interest on the Class F Notes
and, if no Senior Notes are Outstanding, any Defaulted Interest on the Class F
Notes (and interest thereon);

 

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

 

(16)                          to pay Periodic Interest on the Class G Notes
and, if no Senior Notes are Outstanding, any Defaulted Interest on the Class G
Notes (and interest thereon);

 

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

 

(18)                          if either of the Class E/F/G Coverage Tests is
not satisfied as of the preceding Calculation Date, to pay principal of the
most Senior Class of Notes then Outstanding, first, with respect to the Class A
Senior Notes, to pay principal of the Class A-1 Notes and Class A-R
Notes then Outstanding, pro rata,
based on the Class A Senior Pro Rata Allocation, until such Class E/F/G
Coverage Test is satisfied as of such Calculation Date or until the Class A
Senior Notes are paid in full; provided
that, to

 

198

 

the extent the principal amount of the Class A-R
Notes is reduced to zero, any remaining principal payments allocable thereto
will be deposited as follows: (a) an amount up to the Total Net Unfunded
Future Advance Amount will be deposited in the Future Funding Asset Account,
and (b) any remainder will be deposited in the Collection Account as
Collateral Principal Collections, and then to pay principal of the next most
Senior Class of Notes Outstanding until such Class E/F/G Coverage
Test is satisfied as of such Calculation Date or until such next most Senior Class of
Notes is paid in full and so on, until such Class E/F/G Coverage Test is
satisfied or until the Class G Notes are paid in full;

 

(19)                          to pay Periodic Interest on the Class H Notes
and, if no Senior Notes are Outstanding, any Defaulted Interest on the Class H
Notes (and interest thereon);

 

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

 

(21)                          to pay Periodic Interest on the Class J Notes
and, if no Senior Notes are Outstanding, any Defaulted Interest on the Class J
Notes (and interest thereon);

 

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

 

(23)                          to pay Periodic Interest on the Class K Notes
and, if no Senior Notes are Outstanding, any Defaulted Interest on the Class K
Notes (and interest thereon), if any;

 

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

 

(25)                          if either of the Class H/J/K Coverage Tests is
not satisfied as of the preceding Calculation Date, to pay principal of the
most Senior Class of Notes then Outstanding, first, with respect to the Class A
Senior Notes, to pay principal of the Class A-1 Notes and Class A-R
Notes then Outstanding, pro rata,
based on the Class A Senior Pro Rata Allocation, until such Class H/J/K
Coverage Test is satisfied as of such Calculation Date or until the Class A
Senior Notes are paid in full; provided
that, to the extent the principal amount of the Class A-R Notes is reduced
to zero, any remaining principal payments allocable thereto will be deposited
as follows: (i) an amount up to the Total Net Unfunded Future Advance
Amount will be deposited in the Future Funding Asset Account, and (ii) any
remainder will be deposited in the Collection Account as Collateral Principal
Collections, and then to pay principal of the next most Senior Class of
Notes Outstanding until such Class H/J/K Coverage Test is satisfied as of
such Calculation Date or until such next most Senior Class

 

199

 

of Notes is paid in full and so on, until
such Class H/J/K Coverage Test is satisfied or until the Class K
Notes are paid in full;

 

(26)                          to pay Periodic Interest on the Class L Notes
and, if no Senior Notes are Outstanding, any Defaulted Interest on the Class L
Notes (and interest thereon);

 

(27)                          to pay the Class L Cumulative Applicable
Periodic Interest Shortfall Amount (and interest thereon);

 

(28)                          to pay Periodic Interest on the Class M Notes
and, if no Senior Notes are Outstanding, any Defaulted Interest on the Class M
Notes (and interest thereon);

 

(29)                          to pay the Class M Cumulative Applicable
Periodic Interest Shortfall Amount (and interest thereon);

 

(30)                          to pay Periodic Interest on the Class N Notes,
if no Senior Notes are Outstanding, any Defaulted Interest on the Class N
Notes (and interest thereon), to the PAA Issued Note Paying Agent for payment
on the Class N Notes in accordance with the Paying Agency Agreement;

 

(31)                          to pay the Class N Cumulative Applicable
Periodic Interest Shortfall Amount (and interest thereon), if any, to the PAA
Issued Note Paying Agent for payment on the Class N Notes in accordance
with the Paying Agency Agreement;

 

(32)                          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 (other than
Illegality or Tax Event, each as defined in the related Hedge Agreement) with
respect to the Hedge Counterparty as Defaulting Party or sole Affected Party,
as the case may be;

 

(33)                          to the Class A-R Noteholders, any accrued and
unpaid Class A-R Increased Costs to the extent not paid in full under Section 11.1(a) (1)(vi) above
without regard to any limitation on any maximum amounts payable on such date
contained therein and, in the event the Collateral Manager requires any Class A-R
Noteholder to transfer or assign its interest in the Class A-R Notes as a
result of such Noteholder claiming any Class A-R Increased Costs, to the
applicable Class A-R Noteholder, any reasonable costs incurred by such
Noteholder in effecting such transfer or assignment;

 

(34)                          to pay, in the following order:

 

(i)                                   to any Servicer, any reimbursements for
nonrecoverable servicing advances not paid out of collections received pursuant
to the terms of the related Servicing Agreement;

 

200

 

(ii)                                any due and unpaid Trustee Fee, Trustee Interest
Advance Fee, Underlying Trust Expenses, Class A-R Note Agent Fee, PAA
Issued Note Paying Agent Fee, Trustee Expenses, Advancing Agent Fee and other
Administrative Expenses, including amounts payable to the Collateral Manager
under the Collateral Management Agreement but excluding the Collateral
Management Fee, in each case, in the same order of priority as provided in Section 11.1(a)(1) above
and to the extent not paid in full under Section 11.1(a)(1) above
without regard to any limitation on any maximum amounts payable on such date
contained therein; and

 

(iii)                             on a pro rata
basis, any due and unpaid expenses and other liabilities of the Co-Issuers to
the extent not paid under Section 11.1(a)(1) above, whether as a
result of an amount limitation imposed thereunder or otherwise;

 

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

 

(36)                          to repay, pro
rata, the amount of any outstanding Cure Advances not previously
reimbursed, if any;

 

(37)                          if a Liquidity Test Failure or Future Funding
Reserve Test Failure has occurred and is continuing, to the Suspense Account in
an amount equal to the amount necessary to cause such Liquidity Test Failure to
be cured; and

 

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

 

Provided, however,
with respect to this Section 11.1(a), for purposes of determining if any
Principal Coverage Test is satisfied after giving effect to payments of
principal, the denominator of such Principal Coverage Test shall be determined
after giving effect to any principal of the Notes paid pursuant to any clauses
prior to such clause and such clause on the related Payment Date

 

(b)                               Collateral Principal Collections. On any Payment Date that is not a Redemption Date
or a Payment Date following the occurrence and continuation of an acceleration
of the Rated Notes in connection with an Event of Default, in accordance with a
Note Valuation Report prepared by the Collateral Administrator as of the last
day of the Due Period preceding such Payment Date, Collateral Principal
Collections, to the extent of Available Funds in the Payment Account, less (i) any
amounts in respect of principal applied to reimburse Interest Advances together
with interest thereon, as described in Section 10.17, (ii) any
amounts in respect of

 

201

 

principal applied to reimburse any
outstanding Cure Advance (other than a Nonrecoverable Cure Advance) to the
extent of a specific recovery of such Cure Advance from the proceeds of the
Collateral Interest as to which such Cure Advance was made, as described Section 10.18
and (iii) any amounts in respect of principal applied to reimburse
Nonrecoverable Cure Advances as described under Section 10.18 will be applied
by the Trustee in the following order of priority:

 

(1)                                to the payment of the amounts referred to in
Sections 11.1(a)(1) through (10), in the same order of priority specified
therein, but only to the extent not paid in full thereunder;

 

(2)                                if either of the Class A/B/C/D Coverage Tests
is not satisfied as of the preceding Calculation Date, and to the extent that
the amounts paid pursuant to clause (11) of the Priority of Payments—Collateral
Interest Collections are insufficient to cause the Class A/B/C/D Coverage
Tests to be satisfied, first, to pay principal of the Class A-1 Senior
Notes and Class A-R Notes then Outstanding, pro rata, based on the Class A Senior Pro Rata
Allocation, until such Class A/B/C/D Coverage Test is satisfied as of such
Calculation Date or until the Class A Senior Notes are paid in full;
provided that, to the extent the principal amount of the Class A-R Notes
is reduced to zero, any remaining principal payments allocable thereto will be
deposited as follows: (a) an amount up to the Total Net Unfunded Future
Advance Amount will be deposited in the Future Funding Asset Account, and (b) any
remainder will be deposited in the Collection Account as Collateral Principal
Collections, and then to pay principal of the next most Senior Class of
Notes Outstanding until such Class A/B/C/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 A/B/C/D Coverage Test is
satisfied or until the Class D Notes are paid in full;

 

(3)                                if the Class A Notes, Class B Notes, Class C
Notes and Class D Notes are no longer Outstanding, to pay Periodic
Interest on the Class E Notes and any Defaulted Interest on the Class E
Notes (and interest thereon), to the extent that the amounts paid pursuant to Section 11.1(a)(12)
are insufficient to pay such amounts in full thereunder;

 

(4)                                if the Class A Notes, Class B Notes, Class C
Notes and Class D Notes are no longer Outstanding, to pay the Class E
Cumulative Applicable Periodic Interest Shortfall Amount (and interest
thereon), to the extent that the amounts paid pursuant to Section 11.1(a)(13)
are insufficient to pay such amounts in full thereunder;

 

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

 

202

 

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

 

(6)                                if the Class A Notes, Class B Notes, Class C
Notes, Class D Notes and Class E Notes are no longer Outstanding, to
pay the Class F Cumulative Applicable Periodic Interest Shortfall Amount
(and interest thereon), to the extent that amounts paid pursuant to Section 11.1(a)(15)
are insufficient to pay such amounts in full thereunder;

 

(7)                                if the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes and Class F Notes are no
longer Outstanding, to pay Periodic Interest on the Class G Notes and any
Defaulted Interest on the Class G Notes (and interest thereon), to the
extent that the amounts paid pursuant to Section 11.1(a)(16) of are
insufficient to pay such amounts in full thereunder;

 

(8)                                if the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes and Class F Notes are no
longer Outstanding, to pay the Class G Cumulative Applicable Periodic
Interest Shortfall Amount (and interest thereon), to the extent that the
amounts paid pursuant to Section 11.1(a)(17) are insufficient to pay such
amounts in full thereunder;

 

(9)                                if either of the Class E/F/G Coverage Tests is
not satisfied as of the preceding Calculation Date, and to the extent that the
amounts paid pursuant to Section 11.1(a)(18) are insufficient to cause the
Class E/F/G Coverage Tests to be satisfied, to pay principal of the most
Senior Class of Notes then Outstanding, first, with respect to the Class A
Senior Notes, to pay principal of the Class A—1 Notes and Class A-R
Notes then Outstanding, pro rata,
based on the Class A Senior Pro Rata Allocation, until such Class E/F/G
Coverage Test is satisfied as of such Calculation Date or until the Class A
Senior Notes are paid in full; provided
that, to the extent the principal amount of the Class A-R Notes is reduced
to zero, any remaining principal payments allocable thereto will be deposited
as follows: (i) an amount up to the Total Net Unfunded Future Advance
Amount will be deposited in the Future Funding Asset Account, and (ii) any
remainder will be deposited in the Collection Account as Collateral Principal
Collections, and then to pay principal of the next most Senior Class of
Notes Outstanding until such Class E/F/G Coverage Test is satisfied as of
such Calculation Date or until such next most Senior Class of Notes is
paid in full and so on, until such Class E/F/G Coverage Test is satisfied
or until the Class G Notes are paid in full;

 

(10)                          if the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes and Class G
Notes are no longer Outstanding, to pay Periodic Interest on the Class H
Notes and any Defaulted Interest on the Class H Notes (and interest
thereon), to the extent that the amounts

 

203

 

paid pursuant to Section 11.1(a)(19) are
insufficient to pay such amounts in full thereunder;

 

(11)                          if the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes and Class G
Notes are no longer Outstanding, to pay the Class H Cumulative Applicable
Periodic Interest Shortfall Amount (and interest thereon), to the extent that
the amounts paid pursuant to Section 11.1(a)(20) are insufficient to pay
such amounts in full thereunder;

 

(12)                          if the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes and Class H Notes are no longer Outstanding, to pay Periodic
Interest on the Class J Notes and any Defaulted Interest on the Class J
Notes (and interest thereon), to the extent that the amounts paid pursuant to Section 11.1(a)(21)
are insufficient to pay such amounts in full thereunder;

 

(13)                          if the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes and Class H Notes are no longer Outstanding, to pay the Class J
Cumulative Applicable Periodic Interest Shortfall Amount (and interest
thereon), to the extent that the amounts paid pursuant to Section 11.1(a)(22)
are insufficient to pay such amounts in full thereunder;

 

(14)                          if the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes and Class J Notes are no longer Outstanding, to
pay Periodic Interest on the Class K Notes and any Defaulted Interest on
the Class K Notes (and interest thereon), to the extent that the amounts
paid pursuant to Section 11.1(a)(23) are insufficient to pay such amounts
in full thereunder;

 

(15)                          if the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes , Class G
Notes, Class H Notes and Class J Notes are no longer Outstanding, to
pay the Class K Cumulative Applicable Periodic Interest Shortfall Amount
(and interest thereon), to the extent that the amounts paid pursuant to Section 11.1(a)(24)
are insufficient to pay such amounts in full thereunder;

 

(16)                          if either of the Class H/J/K Coverage Tests is
not satisfied as of the preceding Calculation Date, and to the extent that the
amounts paid pursuant to Section 11.1(a)(25) are insufficient to cause the
Class H/J/K Coverage Tests to be satisfied, to pay principal of the most
Senior Class of Notes then Outstanding, first, with respect to the Class A
Senior Notes, to pay principal of the Class A-1 Notes and Class A-R
Notes then Outstanding, pro rata,
based on the Class A Senior Pro Rata Allocation, until such Class H/J/K
Coverage Test is satisfied as of such Calculation Date or until the Class A
Senior Notes are paid in full; provided
that, to the extent the principal amount of the Class A-R Notes is reduced
to zero,

 

204

 

any remaining principal payments allocable
thereto will be deposited as follows: (i) an amount up to the Total Net
Unfunded Future Advance Amount will be deposited in the Future Funding Asset
Account, and (ii) any remainder will be deposited in the Collection
Account as Collateral Principal Collections, and then to pay principal of the
next most Senior Class of Notes Outstanding until such Class H/J/K
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 H/J/K
Coverage Test is satisfied or until the Class K Notes are paid in full;

 

(17)                          if the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes, Class J Notes and Class K Notes are no
longer Outstanding, to pay Periodic Interest on the Class L Notes and any
Defaulted Interest on the Class L Notes (and interest thereon), to the
extent that the amounts paid pursuant to Section 11.1(a)(26) are
insufficient to pay such amounts in full thereunder;

 

(18)                          if the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes, Class J Notes and Class K Notes are no
longer Outstanding, to pay the Class L Cumulative Applicable Periodic
Interest Shortfall Amount (and interest thereon), to the extent that the
amounts paid pursuant to Section 11.1(a)(27) are insufficient to pay such
amounts in full thereunder;

 

(19)                          if the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes, Class J Notes, Class K Notes and Class L
Notes are no longer Outstanding, to pay Periodic Interest on the Class M
Notes and any Defaulted Interest on the Class M Notes (and interest
thereon), to the extent that the amounts paid pursuant to Section 11.1(a)(28)
are insufficient to pay such amounts in full thereunder;

 

(20)                          if the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes, Class, J Notes, Class K Notes and Class L
Notes are no longer Outstanding, to pay the Class M Cumulative Applicable
Periodic Interest Shortfall Amount (and interest thereon), to the extent that
the amounts paid pursuant to Section 11.1(a)(29) are insufficient to pay
such amounts in full thereunder;

 

(21)                          he Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes, Class J Notes, Class K Notes, Class L
Notes and Class M Notes are no longer Outstanding, to pay Periodic
Interest on the Class N Notes and any Defaulted Interest on the Class N
Notes (and interest thereon) to the PAA Issued Note Paying Agent for payment on
the Class N Notes in accordance with the Paying Agency Agreement, to the
extent that the amounts paid pursuant to clause Section 11.1(a)(30) are
insufficient to pay such amounts in full thereunder;

 

205

 

(22)                          if the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes, Class J Notes, Class K Notes, Class L
Notes and Class M Notes are no longer Outstanding, to pay the Class N
Cumulative Applicable Periodic Interest Shortfall Amount (and interest thereon)
to the PAA Issued Note Paying Agent for payment on the Class N Notes in
accordance with the Paying Agency Agreement, to the extent that the amounts
paid pursuant to Section 11.1(a)(31) are insufficient to pay such amounts
in full thereunder;

 

(23)                          in such amounts pursuant to written instructions to
the Trustee from the Collateral Manager no later than the related Calculation
Date, in the Collateral Manager’s discretion and in the priority directed by
the Collateral Manager prior to the last day of the Reinvestment Period, (a) to
the Class A-R Notes, as Class A-R Note Prepayments and (b) to
the Future Funding Asset Account, up to the Current Pay Future Advance Amount
(including amounts already on deposit therein);

 

(24)                          on or prior to the last day of the Reinvestment
Period to pay, in the following order:

 

(i)                                   to be retained in the Collection Account (a) to
invest in Eligible Investments pending reinvestment in Substitute Collateral
Interests at a later date, (b) to reinvest in Substitute Collateral
Interests subject to the Reinvestment Criteria and (c) for payment of a
Special Amortization in accordance with clause (ii) below (to the extent
of available Collateral Principal Collections determined by the Collateral
Manager);

 

(ii)                                on each Payment Date through and including the last
Payment Date during the Reinvestment Period, if the Collateral Manager notifies
the Trustee in writing that it has decided to declare a Special Amortization,
the amount of available Collateral Principal Collections determined by the
Collateral Manager, if the Special Amortization Pro Rata Condition is
satisfied, to pay each Class of Rated Notes, pro rata based on their respective aggregate outstanding
principal amounts (for purposes of the pro
rata allocation to the Class A Senior Notes based on the Class A
Senior Pro Rata Allocation; provided
that, to the extent the principal amount of the Class A-R Notes is reduced
to zero, any remaining principal payments allocable thereto will be deposited
as follows: (1) an amount up to the Total Net Unfunded Future Advance
Amount will be deposited in the Future Funding Asset Account, and (2) any
remainder will be deposited in the Collection Account as Collateral Principal
Collections) and (b) if the Special Amortization Pro Rata Condition is not
satisfied, to pay principal of each Class of Rated Notes in accordance
with the Note Payment

 

206

 

Sequence until each such Class of Rated
Notes have been paid in full;

 

(25)                          after the end of the Reinvestment Period, to pay
principal of each Class of Rated Notes in accordance with the Note Payment
Sequence until each such Class of Rated Notes have been paid in full;

 

(26)                          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 (other than
Illegality or Tax Event, each as defined in the related Hedge Agreement) with
respect to the Hedge Counterparty as Defaulting Party or sole Affected Party,
as the case may be, to the extent that the amounts paid pursuant to Section 11.1(a)(32)
are insufficient to pay such amounts in full thereunder;

 

(27)                          to the Class A-R Noteholders, any accrued and
unpaid Class A-R Increased Costs, to the extent not paid in full pursuant
to Section 11.1(a)(33) above without regard to any limitation on any
maximum amounts payable on such date contained therein and, in the event the
Collateral Manager requires any Class A-R Noteholder to transfer or assign
its interest in the Class A-R Notes as a result of such Noteholder
claiming any Class A-R Increased Costs, to the applicable Class A-R
Noteholder, any reasonable costs incurred by such Noteholder in effecting such
transfer or assignment;

 

(28)                          to pay, in the following order:

 

(i)                                   to any Servicer, any reimbursements for
nonrecoverable servicing advances not paid out of collections received pursuant
to the terms of the related Servicing Agreement;

 

(ii)                                any due and unpaid Trustee Fee, Trustee Interest
Advance Fee, Underlying Trust Expenses, Class A-R Note Agent Fee, PAA
Issued Note Paying Agent Fee, Trustee Expenses, Advancing Agent Fee and other
Administrative Expenses, including amounts payable to the Collateral Manager
under the Collateral Management Agreement but excluding the Collateral
Management Fee, in each case, in the same order of priority as provided in Section 11.1(b)(1) above
and to the extent not paid in full under Section 11.1(b)(1) above and
to the extent that the amounts paid pursuant to Section 11.1(a)(1) and
(34) are insufficient to pay such amounts in full thereunder; and

 

(iii)                             on a pro rata
basis, any due and unpaid expenses and other liabilities of the Co-Issuers to
the extent not paid under Section 11.1(b)(1) above and to the extent
that the amounts paid

 

207

 

pursuant to Section 11.1(a)(1) and
(34) are insufficient to pay such amounts in full thereunder, whether as a
result of an amount limitation imposed thereunder or otherwise;

 

(29)                          to pay the Subordinate Collateral Management Fee
with respect to such Payment Date and any due and unpaid Subordinate Collateral
Management Fee with respect to a previous Payment Date that was not paid on a
previous Payment Date, to the extent that the amounts paid pursuant to Section 11.1(a)(35)
are insufficient to pay such amounts in full thereunder;

 

(30)                          to repay, pro
rata, the amount of any outstanding Cure Advances, if any to the
extent that the amounts paid pursuant to clause (36) of the Priority of
Payments—Collateral Interest Collections are insufficient to pay such amounts
in full thereunder; and

 

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

 

Provided, however,
that with respect to clauses (2), (9), (16), (24)(ii) and (25) above, no
principal shall be paid on any Class of Rated Notes if there is any
Periodic Interest, Defaulted Interest, Cumulative Applicable Periodic Shortfall
Amount (or any interest thereon) outstanding on any Senior Notes with respect
to such Class, and any amounts available to pay principal on such junior Class of
Rated Notes shall be redirected to an earlier priority in the Priority of
Payments-Collateral Principal Collections to pay such Periodic Interest,
Defaulted Interest, Cumulative Applicable Periodic Shortfall Amount (or
interest thereon) in full before paying principal on any such junior Class of
Rated Notes; provided, further, that with respect to with respect
to this Section 11.1(b), for purposes of determining if any Principal
Coverage Test is satisfied after giving effect to payments of principal, the
denominator of such Principal Coverage Test shall be determined after giving
effect to any principal of the Notes paid pursuant to any clauses prior to such
clause and such clause on the related Payment Date.

 

(c)                                 If an Event of Default has occurred and is
continuing, on the date or dates determined by the Trustee, the Trustee will
pay, from all collections from, and proceeds of the sale or liquidation of, the
Collateral (excluding any amounts necessary to reimburse any unpaid Interest
Advances, together with interest thereon, any unpaid Nonrecoverable Cure
Advances and any other amounts due under any Servicing Agreement together with
interest thereon), in the following order:

 

(1)                                amounts corresponding to the amounts set forth in clauses
Section 11.1(a)(1) through (3), and (to the extent not covered by Section 11.1(a)(1) through
(3)) Section 11.1(b)(1) (without giving effect to any limitations on
amounts payable set forth therein);

 

208

 

(2)                                the Periodic Interest on the Class A Senior
Notes (including Defaulted Interest on such Class A Notes, if any), Class A-R
Breakage Costs and then outstanding principal of the Class A Senior Notes,
(provided that payments of
interest on the Class A Senior Notes and the Class A-R Commitment Fee
in respect of the Class A-R Notes will be paid pro rata between the Class A-1 Notes and the Class A-R
Notes based on amounts due) and then principal of the Class A Senior Notes
(provided that payments of
principal of the Class A Senior Notes will be made pro rata based on their respective
outstanding principal amounts) until paid in full until paid in full;

 

(3)                                the Periodic Interest on the Class A-2 Notes
(including Defaulted Interest on such Class A-2 Notes, if any) and then
outstanding principal of the Class A-2 Notes until paid in full;

 

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

 

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

 

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

 

(7)                                the Periodic Interest on the Class E Notes
(including Defaulted Interest on the Class E Notes, if any) and then
outstanding principal of the Class E Notes (including Class E
Cumulative Applicable Periodic Interest Shortfall Amount, if any) until paid in
full;

 

(8)                                the Periodic Interest on the Class F Notes
(including Defaulted Interest on the Class F Notes, if any) and then
outstanding principal of the Class F Notes (including Class F
Cumulative Applicable Periodic Interest Shortfall Amount, if any) until paid in
full;

 

(9)                                the Periodic Interest on the Class G Notes
(including Defaulted Interest on the Class G Notes, if any) and then
outstanding principal of the Class G Notes (including Class G
Cumulative Applicable Periodic Interest Shortfall Amount, if any) until paid in
full;

 

(10)                          the Periodic Interest on the Class H Notes
(including Defaulted Interest on the Class H Notes, if any) and then
outstanding principal of the Class H Notes (including Class H
Cumulative Applicable Periodic Interest Shortfall Amount, if any) until paid in
full;

 

209

 

(11)                          the Periodic Interest on the Class J Notes
(including Defaulted Interest on the Class J Notes, if any) and then
outstanding principal of the Class J Notes (including Class J
Cumulative Applicable Periodic Interest Shortfall Amount, if any) until paid in
full;

 

(12)                          the Periodic Interest on the Class K Notes
(including Defaulted Interest on the Class K Notes, if any) and then
outstanding principal of the Class K Notes (including Class K
Cumulative Applicable Periodic Interest Shortfall Amount, if any) until paid in
full;

 

(13)                          the Periodic Interest on the Class L Notes
(including any Defaulted Interest on the Class L Notes) and then principal
of the Class L Notes (including Class L Cumulative Applicable
Periodic Interest Shortfall Amount, if any) until paid in full;

 

(14)                          the Periodic Interest on the Class M Notes
(including any Defaulted Interest on the Class M Notes) and then principal
of the Class M Notes (including Class M Cumulative Applicable
Periodic Interest Shortfall Amount, if any) until paid in full;

 

(15)                          to the PAA Issued Note Paying Agent, the Periodic
Interest on the Class N Notes (including any Defaulted Interest on the Class N
Notes) and then principal of the Class N Notes (including Class N
Cumulative Applicable Periodic Interest Shortfall Amount, if any) until paid in
full;

 

(16)                          amounts corresponding to the amounts set forth in Section 11.1(a)(32)
through (38) and Section 11.1(b)(23) through (31); and

 

(17)                          to the PAA Issued Note Paying Agent, any remaining
amounts for distributions on the Income Notes.

 

(d)                               Not later than 12:00 p.m., New York time, on
or before the Business Day preceding each Payment Date, the Issuer shall,
pursuant to Section 10, remit or cause to be remitted to the Trustee for
deposit in the Payment Account an amount of Cash sufficient to pay the amounts
described in Section 11.1(a) and 11.1(b) required to be paid on
such Payment Date.

 

(e)                                If, on any Payment Date, the amount available in
the Payment Account from amounts received in the related Due Period is
insufficient to make the full amount of the disbursements required by the
statements furnished by the Issuer pursuant to Section 10.12(b), the
Trustee shall make the disbursements called for in the order and according to
the priority set forth under Section 11.1(a) and 11.1(b), subject to Section 13.1,
to the extent funds are available therefor.

 

(f)                                  Except as otherwise expressly provided in this Section 11.1,
if on any Payment Date the amount of funds is insufficient to make the full
amount of the disbursements required by any clause or subclause of

 

210

 

Section 11.1(a) or 11.1(b) to
different Persons, the Trustee shall make the disbursements called for by such
clause or subclause ratably in accordance with the respective amounts of such
disbursements then due and payable to the extent funds are available therefor.

 

(g)                               [Reserved].

 

(h)                               Any amounts to be paid to the PAA Issued Note
Paying Agent pursuant to Section 11.1(a)(30), (31) and (38) or Section 11.1(b)(21),
(22) and (31) will be released from the lien of this Indenture.

 

(i)                                   If directed by the Holder of not less than 100% of
the Income Notes, the Trustee shall withhold distributions to the PAA Issued
Note Paying Agent that would otherwise be paid pursuant to Section 11.1(a)(38)
and Section 11.1(b)(31) in respect of distributions on the Income Notes.
Further, any Holder of Income Notes may elect at any time to make additional
capital contributions to the Issuer, which contributions will be pledged to the
Trustee as Collateral pursuant to this Indenture. Any such retained
distribution or additional capital contribution will be deemed to be Collateral
Principal Collections received in the Due Period following the Due Period
relating to the Payment Date on which the option is exercised. Any Holder who
makes an additional capital contribution will not be entitled to interest or
additional return thereon.

 

(j)                                   The Advancing Agent and the Trustee shall be
entitled to receive the Advancing Agent Fee and the Trustee Interest Advance
Fee, respectively, in each case payable in accordance with the Priority of
Payments. In addition, the Advancing Agent and the Trustee shall each be
entitled on each Payment Date to reimbursement of any previously unreimbursed
Interest Advance made by it, together with interest thereon, from Collateral
Interest Collections, and to the extent not reimbursed in full by Collateral
Interest Collections, from Collateral Principal Collections, prior to
application of Collections in accordance with Section 11.1(a), (b) and
(c); provided that (i) reimbursement
of Interest Advances (other than Nonrecoverable Advances) shall not cause an
additional Interest Shortfall, (ii) reimbursement of Nonrecoverable
Advances, together with interest thereon, will be made first from Collateral
Principal Collections, and to the extent not reimbursed in full from Collateral
Principal Collections, from Collateral Interest Collections and (iii) reimbursement
of Nonrecoverable Advances shall be made regardless of whether such
reimbursement causes an additional Interest Shortfall. Prior to an Interest
Advance becoming a Nonrecoverable Advance, such reimbursement shall not be
payable to the extent it would trigger an additional Interest Shortfall and
shall be junior in priority to the payment of interest due on the Class A
Notes, Class B Notes, Class C Notes and Class D Notes on such
Payment Date, but shall be senior in priority to payment of interest on any
other Class of Notes. For purposes of the foregoing, an Interest Advance
shall

 

211

 

be deemed to be a Nonrecoverable Advance if
the Advancing Agent or the Trustee, as applicable, determines that future
payments or collections on the Collateral Interests could reasonably be
expected to be insufficient to fully reimburse such Interest Advance, plus interest thereon. Amounts used for the
reimbursement of Interest Advances and interest thereon shall not be included
in the Available Funds for any Payment Date. Notwithstanding the foregoing, the
Advancing Agent or the Trustee, as applicable, may opt, in their sole discretion,
to defer the reimbursement for Nonrecoverable Advances to a subsequent Payment
Date or Payment Dates if such reimbursement would trigger an additional
Interest Shortfall. Notwithstanding the foregoing, the Advancing Agent will be
permitted (but not obligated) to defer or otherwise structure the timing of
recoveries of Nonrecoverable Advances in such manner as the Advancing Agent
determines is in the best interest of the holders of the Class A Notes, Class B
Notes, Class C Notes and Class D Notes as a collective whole, which
may include being reimbursed for Nonrecoverable Advances in installments. In
addition, based upon information available at such time, the Advancing Agent or
the Trustee, as applicable, shall provide 15 days prior notice to the Collateral
Manager, the Trustee and each Rating Agency if an Interest Advance is
determined to be a Nonrecoverable Advance and whether or not reimbursement
thereof shall be deferred; provided, that the failure to provide such notice
shall in no way limit the rights of either of the Trustee or the Advancing
Agent to reimburse itself for Nonrecoverable Advances on any Payment Date.

 

ARTICLE XII

 

PURCHASE
AND SALE OF COLLATERAL INTERESTS

 

12.1.                     SALE OF COLLATERAL INTERESTS

 

(a)                                Sale of Collateral Interests.

 

(1)                                Subject to the satisfaction of the conditions
specified in Section 10.12 as applicable, if the Collateral Manager, on
behalf of the Issuer, pursuant to this Article 12, shall direct the
Trustee to sell any Impaired Interest, Credit Risk Interest, Written Down
Interest, Credit Improved Interests, Future Funding Interests, Buy/Sell
Interest, Withholding Tax Interest, CMBS, Real Estate CDO Security, Taxed
Collateral Interest, Taxed Property, REIT Debt Security or Participation
Interest, the Trustee shall sell in the manner directed by the Collateral
Manager, such Impaired Interest, Equity Interest, Credit Risk Interest, Credit
Improved Interests, Future Funding Interests, Written Down Interest, Buy/Sell
Interest, Taxed Collateral Interest, Taxed Property, Withholding Tax Interest,
CMBS, Real Estate CDO Security, Taxed Collateral Interest, Taxed Property, REIT
Debt Security or Participation Interest.

 

212

 

(2)                                Upon the occurrence of an Investment Guidelines
Event, the Collateral Manager shall direct the Issuer to sell any Taxed
Collateral Interest or Taxed Property within 90 days after such Investment
Guidelines Event (or such shorter time period as provided in the Collateral
Management Agreement) in accordance with the provisions of the Collateral
Management Agreement.

 

(3)                                The Collateral Manager may, in its reasonable
discretion, direct the Issuer to sell or otherwise dispose of any Impaired
Interest, Credit Risk Interest, Written Down Interest, Credit Improved Interests,
Future Funding Interests, Buy/Sell Interest, Taxed Collateral Interest, Taxed
Property or Withholding Tax Interest. The Collateral Manager shall direct the
Issuer to sell or otherwise dispose of any Collateral Interest that is an
Equity Interest as soon as practicable after such Collateral Interest becomes
an Equity Interest.

 

(4)                                The Collateral Manager may direct the Issuer to (i) sell
any Buy/Sell Interest at any time if the Sales Proceeds thereof are at least
equal to its Principal Balance (adjusted for any Collateral Principal Payments
received thereon) or (ii) purchase the corresponding pari passu
participation from the related participant at any time, regardless of whether
such purchase would occur during the Reinvestment Period or whether Reinvestment
Criteria would be satisfied thereafter, so long as the Issuer entered into a
binding agreement with the Collateral Manager, any of its Affiliates or any
other person qualified in accordance with this Indenture to purchase such
corresponding pari passu participation from the Issuer at a purchase price
equal to that paid by the Issuer to such participant and such purchaser thereof
either is (A) a Qualified Institutional Lender or (B) such purchase
is permitted under the Underlying Agreements.. In addition, the Collateral
Manager may direct the Issuer to sell any Future Funding Interest at any time
if the Sales Proceeds thereof are at least equal to the greater of its (i) Principal
Balance (adjusted for any Collateral Principal Payments received thereon) and (ii) fair
market value.

 

(5)                                In the event of a Redemption, the Collateral
Manager shall direct the Trustee to sell Collateral Interests 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.

 

(6)                                The Collateral Manager shall sell any Collateral
Interest pursuant to this Section 12 only at a price that, in its
judgment, is not substantially less than the market value of such Collateral
Interest at the time of such sale.

 

213

 

(7)                                So long as no Event of Default has occurred and is
continuing, the Collateral Manager, on behalf of the Issuer, may, at any time
prior to the end of the Reinvestment Period, direct the Trustee to sell, and
the Trustee will sell in the manner directed by the Collateral Manager, any
Collateral Interest not otherwise permitted to be sold pursuant to Section 12.1(a) (each
such sale, a Discretionary
Sale) provided
that: (i) the aggregate principal balance of such Collateral Interests
sold pursuant to such Discretionary Sales for a given calendar year does not
exceed 15% of the Collateral Interest Principal Balance at the beginning of
that year, (ii) the Collateral Manager believes in good faith that Sale
Proceeds from such Discretionary Sale can be reinvested within 30 Business Days
after the sale of such Collateral Interest in one or more Substitute Collateral
Interests having an aggregate Principal Balance of not less than 100% of the
Principal Balance of the Collateral Interest being sold; provided that in the case of a Collateral
Interest that is a Mortgage Loan Interest the Substitute Collateral Interest
can be identified within 30 Business Days after the sale of the original
Collateral Interest and the Collateral Manager has an additional 60 days to
complete the transaction, (iii) after giving effect to such sale and to
the purchase of Substitute Collateral Interests with the Sale Proceeds thereof,
the Reinvestment Criteria will be met and (iv) such Collateral Manager has
not been removed, or voted to be removed, for “cause” as provided under the
Collateral Management Agreement.

 

(b)                               Reinvestment of Sale Proceeds and Replacement of
Collateral Interests. Subject to Section 9.7
above, following the Closing Date and during the Reinvestment Period, subject
to the satisfaction of the Eligibility Criteria and the Reinvestment Criteria,
the Collateral Manager, acting on behalf of the Issuer, shall use reasonable
efforts to cause the Trustee to reinvest Sale Proceeds received at any time
from the sale of Collateral Interests that are Impaired Interests, Equity
Interests, Credit Risk Interests, Credit Improved Interests, Future Funding
Interests, Written Down Interests, Buy/Sell Interests, Taxed Collateral Interests,
Taxed Properties or Withholding Tax Interests in Substitute Collateral
Interests with an aggregate purchase price up to the amount of the Sale
Proceeds, and to reinvest Collateral Principal Payments, transfers from the
Future Funding Asset Account and proceeds of Class A-R Draws in Substitute
Collateral Interests; provided, however, that prior to any such acquisition
of Substitute Collateral Interests by or on behalf of the Issuer in the manner
described above, the Reinvestment Criteria are satisfied on the date of such
acquisition. Under no circumstances shall Collateral Principal Collections
(including Sale Proceeds) be reinvested following the Reinvestment Period, and
amounts on deposit in the Future Funding Asset Account will only be applied to fund
Future Advances and for transfer to the Collateral Principal Collection
Sub-Account in accordance with Section 10.8. During the Reinvestment
Period, Class A-R Draws (and at any time, the amounts on deposit in the
Future Funding Asset

 

214

 

Account) may be applied to fund Future
Advance Amounts prior to making payments on the Notes.

 

(c)                                After the Effective Date, within 10 Business Days
of purchasing any Substitute Collateral Interest that does not have a Moody’s
Rating, the Collateral Manager shall deliver to Moody’s a set of asset and
underwriting materials in form and substance reasonably acceptable to Moody’s
(the Reinvestment Asset Information)
describing such Substitute Collateral Interest. After receiving the
Reinvestment Asset Information, Moody’s may provide an estimated rating (a Moody’s Estimated Rating) to the Collateral
Manager with respect to such Substitute Collateral Interest. If the Collateral
Manager receives a Moody’s Estimated Rating that is worse than the estimated
tranched rating permitted pursuant to clause (ii) of the definition of
Moody’s Rating, then the Collateral Manager shall calculate the Moody’s Maximum
Weighted Average Rating Factor Test using such Moody’s Estimated Rating. For
all other purposes, the Moody’s Maximum Weighted Average Rating Factor Test
will be calculated using the Moody’s Rating.

 

In the event that such calculation (using the
Moody’s Estimated Rating) indicates that the purchase of the related Substitute
Collateral Interest caused the Moody’s Post-Acquisition Compliance Test to not
be satisfied (a Moody’s Post-Acquisition
Compliance Test Failure), the Collateral Manager is permitted to
take any of the following actions to cause the Moody’s Post-Acquisition Compliance
Test to be satisfied: (i) direct the Trustee to sell such Substitute
Collateral Interest (or a Participation Interest therein) that caused the
Moody’s Post-Acquisition Compliance Test Failure, at a price at least equal to
the price paid by the Issuer for the Substitute Collateral Interest, plus any
fees and expenses attributable to such sale, (ii) instruct the Trustee to
sell any other Collateral Interest (or a Participation Interest therein) (provided that such sale price may only be
less than the price paid by the Issuer therefore, plus any fees and expenses
related to such sale, if the aggregate net difference of such amounts for such
sale and all prior sales pursuant to this Section 12.1(c) does not
exceed the aggregate principal balance of the Income Notes and any outstanding Class L
Notes, Class M Notes and Class N Notes) and/or (iii) instruct
the Trustee to purchase additional Substitute Collateral Interests (or a
Participation Interest therein), subject to the Reinvestment Criteria, that
would result in satisfaction of the Moody’s Post-Acquisition Compliance Test.
If the Moody’s Post-Acquisition Compliance Test is not satisfied within 120
days of a finding of a Moody’s Post-Acquisition Compliance Test Failure, then
until such time as the Moody’s Post-Acquisition Compliance Test is satisfied,
the Issuer may only purchase a subsequent Substitute Collateral Interest if it
is rated by Moody’s (a Moody’s Post
Acquisition Test Failure Suspension.). For the avoidance of doubt,
any Collateral Interest sold pursuant to clauses (i) or (ii) above
will not be considered an Impaired Interest, Written Down Interest, Credit
Improved Interest, Future Funding Interest, Withholding Tax Interest, Buy/Sell
Interest, Taxed Collateral Interest, Taxed Property, Credit Risk Interest or
Discretionary Sale.

 

215

 

Notwithstanding anything described in this
Indenture to the contrary, the Issuer will have the right to effect any
transaction which has been consented to in writing by holders of Rated Notes
evidencing 100% of the aggregate outstanding principal amount of each Class of
Notes and of which each Rating Agency has been notified.

 

12.2.                     PORTFOLIO CHARACTERISTICS

 

Except as provided in Section 12.3(c), a
security will be eligible for inclusion in the Collateral as a Pledged
Collateral Interest only if, as evidenced by an Officer’s certificate from the
Collateral Manager to the Trustee, each of the following eligibility criteria
is satisfied immediately after the Issuer Grants such Collateral Interest to
the Trustee (collectively, the Eligibility Criteria):

 

(a)                                  it is issued by an issuer that is a Qualifying
Foreign Obligor;

 

(b)                                 it is U.S. Dollar-denominated and all cash flows
thereunder are to be paid in U.S. Dollars, and it is not convertible into, or
payable in, any other currency; provided,
however, the requirements of this Section (b) will
not be applicable if Rating Confirmation is obtained;

 

(c)                                  it is one of the Specified Types of Collateral
Interests;

 

(d)                                 it has a Moody’s Rating;

 

(e)                                  the Issuer is a Qualified REIT Subsidiary and its
acquisition would not cause the Owner REIT to fail to qualify as a REIT under
the Code (unless the Issuer has previously received an Opinion of Counsel to
the effect that it is not engaged in a U.S. trade or business for U.S. federal
income tax purposes, in which case the acquisition, ownership, enforcement and
disposition of such security will not cause the Issuer to be treated as engaged
in a U.S. trade or business for U.S. federal income tax purposes or otherwise
to be subject to tax on a net income basis in any jurisdiction outside the
Issuer’s jurisdiction of incorporation (other than as attributable to property
received in connection with a foreclosure, as permitted under the Transaction
Documents));

 

(f)                                    the payments on such security are not subject to
withholding tax unless the issuer thereof or the obligor thereon is required to
make additional payments sufficient to cover any withholding tax imposed at any
time on payments made to the Issuer with respect thereto (for the avoidance of
doubt, this clause will not apply to any commitment fees with respect to the
unfunded portion of any Future Funding Assets);

 

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

 

216

 

(h)                               it is not an obligation that is ineligible under
its Underlying Instruments to be purchased by the Issuer and pledged to the
Trustee, and in the case of a Mezzanine Loan, a Subordinate Mortgage Loan
Interest, a Credit Lease Loan, a Tenant Lease Loan Interest, a Participation
Interest, a CRE Debt Obligation or a Mortgage Loan Interest, it is not
ineligible under its Underlying Instruments to be purchased by the Underlying
Trust;

 

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

 

(j)                                   it provides for the payment of principal (or, in
the case of Preferred Equity Securities, distributions attributable to the
return of capital by their governing documents) at not less than par upon
maturity;

 

(k)                                (A) its Underlying Instruments do not obligate
the Issuer to make any future advances or any other payment except the purchase
price thereof (except for obligations to provide for Future Advance Amounts in
the case of Future Funding Assets) and (B) in the case of an Future
Funding Asset, the sum of (1) amounts on deposit in the Future Funding
Asset Account at such time (after giving effect to any deposit by the Issuer
with respect to such Future Funding Asset) and (2) the Aggregate Class A-R
Undrawn Amount shall equal at all times an amount sufficient to meet the Total
Unfunded Future Advance Amount (including the Future Funding Obligations
related to such Future Funding Asset) in full;

 

(l)                                   it is not an obligation with respect to which, in
the reasonable judgment of the Collateral Manager, the timely repayment of
principal and interest is subject to substantial non-credit related risks;

 

(m)                             it is not an Interest Only Security;

 

(n)                               it is not an obligation issued by an Emerging
Market Issuer;

 

(o)                               it is not an obligation that has, at the time of
purchase, any deferred or capitalized interest unless by its terms it was
scheduled to defer or capitalize interest;

 

(p)                               it is not an obligation that, at the time it is
purchased, is a Credit Risk Interest, an Impaired Interest, a Written Down
Interest or a Deferred Interest PIK Bond;

 

(q)                               it is not a Synthetic Security;

 

(r)                                  if it is a Participation Interest in a commercial
mortgage loan, the entity that created such participation interest is either (A) a
Qualified Institutional Lender or (B) a special purpose entity with
respect to which

 

217

 

Rating Confirmation has been received; provided that a securitization trust, a CDO
issuer or a similar securitization vehicle shall be deemed to be a special
purpose entity for purposes of this section (r) of the Eligibility Criteria;

 

(s)                                at the time the obligation is purchased by the
Issuer:

 

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

 

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

 

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

 

(4)                                it is not an Equity Interest;

 

(5)                                except with respect to Preferred Equity Securities,
it is not an obligation 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;

 

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

 

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

 

(8)                                it is not an obligation that provides for the
payment of interest (or, in the case of Preferred Equity Securities, dividends
or other distributions) in cash less frequently than semi-annually;

 

(9)                                (A) if it is a Mortgage Loan Interest, a
Mezzanine Loan, a Subordinate Mortgage Loan Interest, a Credit Lease Loan or a
Tenant Lease Loan

 

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Interest, no commercial mortgage loan
underlying, securing or constituting such Collateral Interest has a maturity
date (including any extension option) that is later than 10 years prior to the
Stated Maturity Date; and (B) if it is a CMBS, such CMBS (without regard
to the maturities of any collateral underlying such CMBS) does not have a rated
final maturity date later than five years after the Stated Maturity Date; provided that, with respect to any such
CMBS that has a stated maturity or a rated final distribution date scheduled to
occur later than the Stated Maturity Date, such CMBS is rated at least “A3” by
Moody’s (and, if rated “A3”, it is not on credit watch with negative
implications); (C) if it is a REIT Debt Security or a CRE Debt Obligation,
such REIT Debt Security or CRE Debt Obligation does not have a rated final
maturity date later than the Stated Maturity Date; (D) if it is a
Preferred Equity Security, the date (after giving effect to all permissible
extensions thereof) by which distributions on such Preferred Equity Security
attributable to the return of capital by its governing documents are required
to be made is not later than the Stated Maturity Date (after giving effect to
all anticipated settlement concerns in connection with such return of capital);
and (E) if it is a Real Estate CDO Security, it does not have a stated
maturity later than five years after the Stated Maturity Date; provided that, with respect to any such
Real Estate CDO Security that has a stated maturity or a rated final
distribution date scheduled to occur later than the Stated Maturity Date, such
Real Estate CDO Security is rated at least “Aa3” by Moody’s (and, if rated
“Aa3”, it is not on credit watch with negative implications); except that, up to 3% of the aggregate
Principal Balance of all initial Collateral Interests may consist of Real
Estate CDO Securities with a Moody’s Rating of below “Aa2” and with a stated
maturity not more than five years after the Stated Maturity Date; and

 

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

 

(t)                                  if it is a (1) Subordinate Mortgage Loan
Interest and the related senior mortgage loan is not otherwise serviced in
connection with a commercial mortgage backed securitization transaction, it is
serviced in accordance with the related participation agreement, intercreditor
agreement or servicing agreement the terms of which are substantially similar
to the terms of servicing agreements entered into in connection with CMBS
transactions or a comparable servicing agreement and (2) Credit Lease
Loan, a Tenant Lease Loan Interest, a Preferred Equity Security, a Mezzanine
Loan or a Mortgage Loan Interest, or a Participation Interest therein, it is
serviced (or in the case of a Mezzanine Loan, a Preferred Equity Security or a
Mortgage Loan Interest acquired by the Issuer on the Closing Date or within 60
days thereafter, will be serviced within 60 days of the Closing Date) in
accordance with and as determined by the

 

219

 

Collateral Manager in its reasonable
discretion, a servicing agreement the terms of which are substantially similar
to the terms of servicing agreements entered into in connection with CMBS
transactions or a comparable servicing agreement;

 

(u)                               if it is a Mezzanine Loan, a Subordinate Mortgage
Loan Interest, a Mortgage Loan Interest (other than a Credit Lease Loan or a
Tenant Lease Loan Interest), or a Participation Interest therein, such
Collateral Interest shall have the benefit of (i) either (A) representations
and warranties made by the related Seller of such Collateral Interest (with
such exceptions, qualifications and omissions as the Collateral Manager shall
reasonably determine) substantially similar to either (x) the
representations and warranties set forth on Schedule E-1 hereto or (y) in
the case of a Mezzanine Loan or a Subordinate Mortgage Loan Interest, the
representations and warranties made by the related Seller of such Collateral
Interest in connection with the CMBS transaction, including the related senior
interest in such Collateral Interest or (B) comparable representations and
warranties, as determined by the Collateral Manager, and (ii) remedies for
the breach of such representations and warranties or the existence of document
defects that are substantially similar to the remedies provided in the Asset
Transfer Agreements or otherwise acceptable to the Collateral Manager;

 

(v)                               if it is a Credit Lease Loan or a Tenant Lease Loan
Interest or a Participation Interest therein, such Collateral Interest shall
have the benefit of (i) either (A) representations and warranties
made by the related Seller of such Collateral Interest (with such exceptions,
qualifications and omissions as the Collateral Manager shall reasonably
determine) substantially similar to the representations and warranties set
forth on Schedule E-1 (to the extent such representations and warranties are applicable
to Credit Lease Loans and Tenant Lease Loan Interests) and Schedule E-2 hereto
or (B) comparable representations and warranties as determined by the
Collateral Manager, and (ii) remedies for the breach of representations
and warranties or the existence of document defects that are substantially
similar to the remedies provided in the Asset Transfer Agreements or otherwise
acceptable to the Collateral Manager;

 

(w)                             if it is a Preferred Equity Security, such
Collateral Interest shall have the benefit of (i) either (A) representations
and warranties made by the related Seller of such Collateral Interest (with
such exceptions, qualifications and omissions as the Collateral Manager shall
reasonably determine) substantially similar to the representations and
warranties set forth on Schedule E-3 hereto or (B) comparable
representations and warranties as determined by the Collateral Manager, and (ii) remedies
for the breach of representations and warranties or the existence of document
defects that are substantially similar to the remedies provided in the Asset
Transfer Agreements or otherwise acceptable to the Collateral Manager;

 

220

 

(x)                                 if it is a Collateral Interest acquired after the
Closing Date, it will be transferred (i) from a Seller to the Depositor
pursuant to an agreement substantially similar to the Asset Transfer Agreements
and (ii) from the Depositor (in the case of a CMBS, Real Estate CDO
Security or REIT Debt Security) or the Underlying Trustee (in the case of a
Trust Certificate) to the Issuer pursuant to an agreement substantially similar
to the Bill of Sale; and

 

(y)                               if it is a Related Future Advance Loan, either (A) (i) the
related additional funding obligation in respect of the related Other Loan is
an obligation of a Seller (or a successor special purpose entity or any similar
special purpose entity that is established as a repurchase agreement seller or
warehouse borrower) (any such entity, the Future Advance Holder) and is not an obligation
of the Issuer; (ii) at the time the Issuer acquired such Related Future
Advance Loan, the Other Loan was owned by the Future Advance Holder and pledged
and/or otherwise financed to or with, as applicable, an entity (x) with a
long-term, unsecured debt rating of “A3” or better from Moody’s, or (y) with
respect to which a Rating Confirmation has been obtained (any entity described
in the preceding clause (x) or clause (y), an Approved Lender)
pursuant to the related repurchase agreement or other warehouse facility, as
applicable (any such agreement or facility, a Warehouse Facility); (iii) at the
time the Issuer acquires such Related Future Advance Loan, (a) there is
sufficient (x) capacity under the related Warehouse Facility to satisfy
the outstanding principal amount of the related Other Loan and (y) Liquidity
to satisfy the not yet financed portion of such Other Loan representing the
additional funding obligation in respect thereof (in accordance with the terms
of the applicable Warehouse Facility) if all conditions under the related
mortgage loan documents and Warehouse Facility documents were satisfied, and (b) the
Approved Lender has approved of the Related Future Advance Loan and is required
to fund the financed portion of such Other Loan (either directly or via an
advance to the Future Advance Holder) provided all conditions under the related
mortgage loan documents and Warehouse Facility documents are satisfied; (iv) the
related issuer or borrower of such Related Future Advance Loan has acknowledged
and/or agreed in writing that it has not, and will not, exercise any right to
offset or defense related to the Other Loan against payment under the Related
Future Advance Loan owned by the Issuer against the Issuer; (v) the Future
Advance Holder has agreed in writing with the Issuer not to transfer the Other
Loan except in connection with the Approved Lender’s rights under the
applicable Warehouse Facility (or in satisfaction or settlement of such rights
currently or in the future) without receipt of a Rating Confirmation unless
such transferee is rated at least “A3” by Moody’s or is otherwise approved by
Moody’s; (vi) the Responsible Party at all times (including upon any
transfer of the Other Loan), has agreed to indemnify the Issuer (for purposes
of this eligibility criterion, the Indemnified Party) for, from and against any
claims, demands, penalties,

 

221

 

fines, liabilities, settlements, damages,
costs and expenses of whatever kind or nature, known or unknown, contingent or
otherwise, whether incurred or imposed within or outside the judicial process,
including, without limitation, reasonable attorneys’ fees and disbursements
imposed upon or incurred by or asserted against the Indemnified Party due to
its ownership of any Related Future Advance Loan for the failure of any Future
Advance Holder to make an advance on any Other Loan required to be made by such
Future Advance Holder; (vii) any related Warehouse Facility has a term
that is scheduled to end no earlier than the date that is 12 months after the
date on which the Issuer acquires such Related Future Advance Loan; (viii) no
Future Funding Reserve Test Failure has occurred and is continuing with respect
to the most recent Quarterly Measurement Date; (ix) no Liquidity Test
Failure has occurred and is continuing with respect to the most recent
Quarterly Measurement Date; or (B) Rating Confirmation has been obtained
with respect to the Issuer’s ownership of such Related Future Advance Loan.

 

provided that notwithstanding anything to the contrary
herein, the Issuer may, while attempting to dispose of property acquired in
foreclosure or similar circumstances, make an election under Section 882(d) of
the Code to treat the income related to real property located in the United
States as income that is effectively connected with a U.S. trade or business;
and provided further that
notwithstanding anything to the contrary herein, with respect to any Collateral
Interest acquired by the Issuer on or prior to the Closing Date, if any of the
Eligibility Criteria above pertains to the subject matter of a representation
and warranty under the related Collateral Interest purchase agreement as to
which an exception has been disclosed in the related exception schedule, such Collateral
Interest shall be deemed to satisfy such criterion notwithstanding such
exception.

 

12.3.                     CONDITIONS APPLICABLE TO ALL TRANSACTIONS INVOLVING SALE OR GRANT

 

(a)                                Any transaction effected under Section 5, Section 9,
Section 10.2 or Section 12.1 shall be conducted on an arm’s length
basis and if effected with the Issuer, the Trustee, the Collateral Manager or
any Affiliate of any of the foregoing, shall be effected in a secondary market
transaction on terms at least as favorable to the Rated Noteholders as would be
the case if such Person were not so Affiliated; provided that any disposition of a Collateral Interest in
accordance with Section 12.1 shall be deemed to comply with this Section 12.3(a).
The Trustee shall have no responsibility to oversee compliance with this clause
by the other parties.

 

(b)                               Upon any purchase or substitution pursuant to this Section 12,
all of the Issuer’s right, title and interest to the Pledged Security or
Securities shall be, and hereby is, Granted to the Trustee pursuant to this
Indenture, such Pledged Security or Securities shall be registered in the name
of the Trustee, and, if applicable, the Trustee shall receive such Pledged
Security or Securities. The Trustee shall receive, not later than the date of
delivery of any Pledged Security pursuant to a purchase under this Section 12,

 

222

 

(a) an Officer’s certificate of the
Collateral Manager certifying (1) compliance with the Reinvestment
Criteria in accordance with Section 12.1(b), (2) that the Collateral
Interest to be sold constitutes an Impaired Interest, Credit Risk Interest,
Credit Improved Interest, Future Funding Interest, Written Down Interest,
Buy/Sell Interest, Taxed Collateral Interest, Taxed Property or Withholding Tax
Interest, or upon the occurrence of an Investment Guidelines Event, Preferred
Equity Security and (3) that any security to be purchased satisfies the
definition of Collateral Interest and (b) an Officer’s certificate of the
Collateral Manager on behalf of the Issuer containing the statements set forth
in Section 3.2(b)(2) through (4), (6) and (7).

 

(c)                                Notwithstanding anything contained in this Section 12
to the contrary, the Issuer shall, subject to Section 12.3(d), have the
right to effect any transaction to which the Initial Hedge Counterparty,
Holders of Rated Notes evidencing 100% of the Aggregate Outstanding Amount of
each Class of Rated Notes, and each Income Noteholder has consented, and
of which each Rating Agency has been notified in advance.

 

(d)                               Except as specifically provided in this Indenture,
at any time at which the Issuer is not a Qualified REIT Subsidiary, the Issuer
may not (i) engage in any business or activity that would cause the Issuer
to be treated as engaged in a U.S. trade or business for U.S. federal income
tax purposes or (ii) acquire or hold any asset that is an equity interest
in an entity that is treated as a partnership engaged in a U.S. trade or
business for U.S. federal income tax purposes or the acquisition or ownership
of which otherwise would subject the Issuer to net income tax in any
jurisdiction outside its jurisdiction of incorporation.

 

ARTICLE XIII

 

SECURED PARTIES’ RELATIONS

 

13.1.                     SUBORDINATION

 

(a)                                Anything in this Indenture or the Rated Notes to
the contrary notwithstanding, the Issuer and the Holders of the Class A-2
Notes, Class B Notes, Class C Notes, Class D Notes, Class E
Notes, Class F Notes, Class G Notes, Class H Notes, Class J
Notes, Class K Notes, Class L Notes, Class M Notes and Class N
Notes agree for the benefit of the Holders of the Class A Senior Notes
that the Class A-2 Notes, Class B Notes, Class C Notes, Class D
Notes, Class E Notes, Class F Notes, Class G Notes, Class H
Notes, Class J Notes, Class K Notes, Class L Notes, Class M
Notes and Class N Notes and the Issuer’s rights in and to the Collateral
(with respect to the Class A Senior Notes, the Subordinate Interests)
shall be subordinate and junior to the Class A Senior Notes to the extent
and in the manner set forth in this Indenture, including as set

 

223

 

forth in Section 11.1(a) and
hereinafter provided. If any Event of Default (including an Event of Default
specified in Section 5.1(f) or (g)) has occurred and has not been
cured or waived, the Class A Senior Notes shall be paid in full in Cash
or, to the extent a Majority of the Class A Senior Notes consent, other
than in Cash, before any further payment or distribution is made on account of
the Subordinate Interests. The Holders of Rated Notes evidencing Subordinate
Interests and the holders of equity in the Issuer and the Co-Issuer agree, for
the benefit of the Holders of the Class A Senior 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 Rated Notes evidencing such Subordinate
Interests or hereunder until the payment in full of the Class A Senior
Notes and not before one year and one day has elapsed since such payment or, if
longer, the applicable preference period then in effect, including any period
established pursuant to the laws of the Cayman Islands.

 

(b)                               Anything in this Indenture or the Rated Notes to
the contrary notwithstanding, the Issuer and the Holders of the Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes, Class K
Notes, Class L Notes, Class M Notes and Class N Notes agree for
the benefit of the Holders of the Class A Notes that the Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes, Class K
Notes, Class L Notes, Class M Notes and Class N Notes and the
Issuer’s rights in and to the Collateral (with respect to the Class A
Notes, the Subordinate
Interests) shall be subordinate and junior to the Class A
Notes to the extent and in the manner set forth in this Indenture, including as
set forth in Section 11.1(a) and hereinafter provided. If any Event
of Default (including an Event of Default specified in Section 5.1(f) or
(g)) has occurred and has not been cured or waived, the Class A Notes
shall be paid in full in Cash or, to the extent a Majority of the Class A
Notes consent, other than in Cash, before any further payment or distribution
is made on account of the Subordinate Interests. The Holders of Rated Notes
evidencing Subordinate Interests and the holders of equity in the Issuer and
the Co-Issuer agree, for the benefit of the Holders of the Class A Notes,
not to cause the filing of a petition in bankruptcy against the Issuer or the
Co-Issuer for failure to pay to them amounts due under the Rated Notes
evidencing such Subordinate Interests or hereunder until the payment in full of
the Class A Notes and not before one year and one day has elapsed since
such payment or, if longer, the applicable preference period then in effect,
including any period established pursuant to the laws of the Cayman Islands.

 

(c)                                Anything in this Indenture or the Rated Notes to
the contrary notwithstanding, the Issuer and the Holders of the Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes, Class J Notes, Class K Notes, Class L
Notes, Class M Notes and Class N Notes

 

224

 

agree for the benefit of the Holders of the Class A
Notes and Class B Notes that the Class C Notes, Class D Notes, Class E
Notes, Class F Notes, Class G Notes, Class H Notes, Class J
Notes, Class K Notes, Class L Notes, Class M Notes and Class N
Notes and the Issuer’s rights in and to the Collateral (with respect to the Class A
Notes and Class B Notes the Subordinate Interests) shall be subordinate
and junior to the Class A Notes and Class B Notes to the extent and
in the manner set forth in this Indenture, including as set forth in Section 11.1(a) and
hereinafter provided. If any Event of Default (including an Event of Default
specified in Section 5.1(f) or (g)) has occurred and has not been
cured or waived, the Class A Notes and Class B Notes shall be paid in
full in Cash or, to the extent a Majority of the Class A Notes and Class B
Notes consent, other than in Cash, before any further payment or distribution
is made on account of the Subordinate Interests. The Holders of Rated Notes
evidencing Subordinate Interests and the holders of equity in the Issuer and
the Co-Issuer agree, for the benefit of the Holders of the Class A Notes
and Class B 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 Rated Notes evidencing such Subordinate Interests or hereunder until the
payment in full of the Class A Notes and Class B Notes and not before
one year and one day has elapsed since such payment or, if longer, the
applicable preference period then in effect, including any period established
pursuant to the laws of the Cayman Islands.

 

(d)                               Anything in this Indenture or the Rated Notes to
the contrary notwithstanding, the Issuer and the Holders of the Class D
Notes, Class E Notes, Class F Notes, Class G Notes, Class H
Notes, Class J Notes, Class K Notes, Class L Notes, Class M
Notes and Class N Notes agree for the benefit of the Holders of the Class A
Notes, Class B Notes and Class C Notes that the Class D Notes, Class E
Notes, Class F Notes, Class G Notes, Class H Notes, Class J
Notes, Class K Notes, Class L Notes, Class M Notes and Class N
Notes and the Issuer’s rights in and to the Collateral (with respect to the Class A
Notes, Class B Notes and Class C Notes, the Subordinate Interests)
shall be subordinate and junior to the Class A Notes, Class B Notes
and Class C Notes to the extent and in the manner set forth in this
Indenture including as set forth in Section 11.1(a) and hereinafter
provided. If any Event of Default (including an Event of Default specified in Section 5.1(f) or
(g)) has occurred and has not been cured or waived the Class A Notes, Class B
Notes and Class C Notes shall be paid in full in Cash or, to the extent a
Majority of the Class A Notes, Class B Notes and Class C Notes
consent, other than in Cash, before any further payment or distribution is made
on account of the Subordinate Interests. The Holders of Rated Notes evidencing
Subordinate Interests and the holders of equity in the Issuer and the Co-Issuer
agree, for the benefit of the Holders of the Class A Notes, Class B
Notes and Class C 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 Rated

 

225

 

Notes evidencing such Subordinate Interests
or hereunder until the payment in full of the Class A Notes, Class B
Notes and Class C Notes and not before one year and one day has elapsed
since such payment or, if longer, the applicable preference period then in
effect, including any period established pursuant to the laws of the Cayman
Islands.

 

(e)                                  Anything in this Indenture or the Rated Notes to
the contrary notwithstanding, the Issuer and the Holders of the Class E
Notes, Class F Notes, Class G Notes, Class H Notes, Class J
Notes, Class K Notes, Class L Notes, Class M Notes and Class N
Notes agree for the benefit of the Holders of the Class A Notes, Class B
Notes, Class C Notes and Class D Notes that the Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes, Class K
Notes, Class L Notes, Class M Notes and Class N Notes and the
Issuer’s rights in and to the Collateral (with respect to the Class A
Notes, Class B Notes, Class C Notes and Class D Notes, the
Subordinate Interests) shall be subordinate and junior to the Class A
Notes, Class B Notes, Class C Notes and Class D Notes to the
extent and in the manner set forth in this Indenture including as set forth in Section 11.1(a) and
hereinafter provided. If any Event of Default (including an Event of Default
specified in Section 5.1(f) or (g)) has occurred and has not been
cured or waived the Class A Notes, Class B Notes, Class C Notes
and Class D Notes shall be paid in full in Cash or, to the extent a
Majority of each of the Class A Notes, Class B Notes, Class C
Notes and Class D Notes consent, other than in Cash, before any further
payment or distribution is made on account of the Subordinate Interests. The
Holders of Rated Notes evidencing Subordinate Interests and the holders of
equity in the Issuer and the Co-Issuer agree, for the benefit of the Holders of
the Class A Notes, Class B Notes, Class C Notes and 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 Rated Notes
evidencing such Subordinate Interests or hereunder until the payment in full of
the Class A Notes, Class B Notes, Class C Notes and Class D
Notes and not before one year and one day has elapsed since such payment or, if
longer, the applicable preference period then in effect, including any period
established pursuant to the laws of the Cayman Islands.

 

(f)                                    Anything in this Indenture or the Rated Notes to
the contrary notwithstanding, the Issuer and the Holders of the Class F
Notes, Class G Notes, Class H Notes, Class J Notes, Class K
Notes, Class L Notes, Class M Notes and Class N Notes agree for the
benefit of the Holders of the Class A Notes, Class B Notes, Class C
Notes, Class D Notes and Class E Notes that the Class F Notes, Class G
Notes, Class H Notes, Class J Notes. Class K Notes, Class L
Notes, Class M Notes and Class N Notes and the Issuer’s rights in and
to the Collateral (with respect to the Class A Notes, Class B Notes, Class C
Notes, Class D Notes and Class E Notes, the Subordinate Interests)
shall be subordinate and junior to the Class A

 

226

 

Notes, Class B Notes, Class C
Notes, Class D Notes and Class E Notes to the extent and in the
manner set forth in this Indenture including as set forth in Section 11.1(a) and
hereinafter provided. If any Event of Default (including an Event of Default
specified in Section 5.1(f) or (g)) has occurred and has not been
cured or waived the Class A Notes, Class B Notes, Class C Notes,
Class D Notes and Class E Notes shall be paid in full in Cash or, to
the extent a Majority of each of Class A Notes, Class B Notes, Class C
Notes, Class D Notes and Class E Notes consent, other than in Cash,
before any further payment or distribution is made on account of the
Subordinate Interests. The Holders of Rated Notes evidencing Subordinate
Interests and the holders of equity in the Issuer and the Co-Issuer agree, for
the benefit of the Holders of the Class A Notes, Class B Notes, Class C
Notes, Class D Notes and Class E 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 Rated Notes evidencing such Subordinate Interests
or hereunder until the payment in full of the Class A Notes, Class B
Notes, Class C Notes, Class D Notes and Class E Notes and not
before one year and one day has elapsed since such payment or, if longer, the
applicable preference period then in effect, including any period established
pursuant to the laws of the Cayman Islands.

 

(g)                                 Anything in this Indenture or the Rated Notes to
the contrary notwithstanding, the Issuer and the Holders of the Class G
Notes, Class H Notes, Class J Notes, Class K Notes, Class L
Notes, Class M Notes and Class N Notes agree for the benefit of the
Holders of the Class A Notes, Class B Notes, Class C Notes, Class D
Notes, Class E Notes and Class F Notes that the Class G Notes, Class H
Notes, Class J Notes, Class K Notes, Class L Notes, Class M
Notes and Class N Notes and the Issuer’s rights in and to the Collateral
(with respect to the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes and Class F Notes, the Subordinate Interests)
shall be subordinate and junior to the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes and Class F Notes to the
extent and in the manner set forth in this Indenture including as set forth in Section 11.1(a) and
hereinafter provided. If any Event of Default (including an Event of Default
specified in Section 5.1(f) or (g)) has occurred and has not been
cured or waived the Class A Notes, Class B Notes, Class C Notes,
Class D Notes, Class E Notes and Class F Notes shall be paid in
full in Cash or, to the extent a Majority of each of the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes and Class F
Notes consent, other than in Cash, before any further payment or distribution
is made on account of the Subordinate Interests. The Holders of Rated Notes
evidencing Subordinate Interests and the holders of equity in the Issuer and
the Co-Issuer agree, for the benefit of the Holders of the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes and Class F
Notes, not to cause the filing of a petition in bankruptcy against the Issuer
or the Co-Issuer for failure to pay

 

227

 

to them amounts due under the Rated Notes
evidencing such Subordinate Interests or hereunder until the payment in full of
the Class A Notes, Class B Notes, Class C Notes, Class D
Notes, Class E Notes and Class F Notes and not before one year and
one day has elapsed since such payment or, if longer, the applicable preference
period then in effect, including any period established pursuant to the laws of
the Cayman Islands.

 

(h)                                 Anything in this Indenture or the Rated Notes to
the contrary notwithstanding, the Issuer and the Holders of the Class H
Notes, Class J Notes, Class K Notes, Class L Notes, Class M
Notes and Class N Notes agree for the benefit of the Holders of the Class A
Notes, Class B Notes, Class C Notes, Class D Notes, Class E
Notes, Class F Notes and Class G Notes that the Class H Notes, Class J
Notes, Class K Notes, Class L Notes, Class M Notes and Class N
Notes and the Issuer’s rights in and to the Collateral (with respect to the Class A
Notes, Class B Notes, Class C Notes, Class D Notes, Class E
Notes, Class F Notes and Class G Notes, the Subordinate Interests)
shall be subordinate and junior to the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes and Class G
Notes to the extent and in the manner set forth in this Indenture including as
set forth in Section 11.1(a) and hereinafter provided. If any Event
of Default (including an Event of Default specified in Section 5.1(f) or
(g)) has occurred and has not been cured or waived the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes and Class G Notes shall be paid in full in Cash or, to the extent a
Majority of each of the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes and Class G
Notes consent, other than in Cash, before any further payment or distribution
is made on account of the Subordinate Interests. The Holders of Rated Notes
evidencing Subordinate Interests and the holders of equity in the Issuer and
the Co-Issuer agree, for the benefit of the Holders of the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes and Class G 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 Rated Notes evidencing such Subordinate Interests or
hereunder until the payment in full of the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes and Class G Notes and not before one year and one day has elapsed
since such payment or, if longer, the applicable preference period then in
effect, including any period established pursuant to the laws of the Cayman
Islands.

 

(i)                                     Anything in this Indenture or the Rated Notes to
the contrary notwithstanding, the Issuer and the Holders of the Class J
Notes, Class K Notes, Class L Notes, Class M Notes and Class N
Notes agree for the benefit of the Holders of the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes and Class H Notes that the Class J Notes,
the Class K Notes, Class L Notes, Class M

 

228

 

Notes and Class N Notes and the Issuer’s
rights in and to the Collateral (with respect to the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes and Class H Notes, the Subordinate Interests)
shall be subordinate and junior to the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes and Class H Notes to the extent and in the manner set forth in this
Indenture including as set forth in Section 11.1(a) and hereinafter
provided. If any Event of Default (including an Event of Default specified in Section 5.1(f) or
(g)) has occurred and has not been cured or waived the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes and Class H Notes shall be paid in full in Cash
or, to the extent a Majority of each of the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes and Class H Notes consent, other than in Cash,
before any further payment or distribution is made on account of the
Subordinate Interests. The Holders of Rated Notes evidencing Subordinate
Interests and the holders of equity in the Issuer and the Co-Issuer agree, for
the benefit of the Holders of the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes and Class H 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 Rated Notes evidencing such Subordinate Interests or
hereunder until the payment in full of the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes and Class H Notes and not before one year and
one day has elapsed since such payment or, if longer, the applicable preference
period then in effect, including any period established pursuant to the laws of
the Cayman Islands.

 

(j)                                     Anything in this Indenture or the Rated Notes to
the contrary notwithstanding, the Issuer and the Holders of the Class K
Notes, Class L Notes, Class M Notes and Class N Notes agree for
the benefit of the Holders of the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes and Class J Notes that the Class K Notes, Class L
Notes, Class M Notes and Class N Notes and the Issuer’s rights in and
to the Collateral (with respect to the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G Notes,
Class H Notes and Class J Notes, the Subordinate Interests) shall be
subordinate and junior to the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes and Class J Notes to the extent and in the
manner set forth in this Indenture including as set forth in Section 11.1(a) and
hereinafter provided. If any Event of Default (including an Event of Default
specified in Section 5.1(f) or (g)) has occurred and has not been
cured or waived the Class A Notes, Class B Notes, Class C Notes,
Class D Notes, Class E Notes, Class F Notes, Class G Notes, Class H
Notes and Class J Notes shall be paid in full in Cash or,

 

229

 

to the extent a Majority of each of the Class A
Notes, Class B Notes, Class C Notes, Class D Notes, Class E
Notes, Class F Notes, Class G Notes, Class H Notes and Class J
Notes consent, other than in Cash, before any further payment or distribution
is made on account of the Subordinate Interests. The Holders of Rated Notes
evidencing Subordinate Interests and the holders of equity in the Issuer and
the Co-Issuer agree, for the benefit of the Holders of the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes and Class J 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 Rated Notes
evidencing such Subordinate Interests or hereunder until the payment in full of
the Class A Notes, Class B Notes, Class C Notes, Class D
Notes, Class E Notes, Class F Notes, Class G Notes, Class H
Notes and Class J Notes and not before one year and one day has elapsed
since such payment or, if longer, the applicable preference period then in
effect, including any period established pursuant to the laws of the Cayman
Islands.

 

(k)                                  Anything in this Indenture or the Rated Notes to
the contrary notwithstanding, the Issuer and the Holders of the Class L
Notes, Class M Notes and Class N Notes agree for the benefit of the
Holders of the Class A Notes, Class B Notes, Class C Notes, Class D
Notes, Class E Notes, Class F Notes, Class G Notes, Class H
Notes, Class J Notes and Class K Notes that the Class L Notes, Class M
Notes and Class N Notes and the Issuer’s rights in and to the Collateral
(with respect to the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes, Class J Notes and Class K Notes, the Subordinate Interests)
shall be subordinate and junior to the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes, Class J Notes and Class K Notes to the
extent and in the manner set forth in this Indenture including as set forth in Section 11.1(a) and
hereinafter provided. If any Event of Default (including an Event of Default
specified in Section 5.1(f) or (g)) has occurred and has not been
cured or waived the Class A Notes, Class B Notes, Class C Notes,
Class D Notes, Class E Notes, Class F Notes, Class G Notes, Class H
Notes, Class J Notes and Class K Notes shall be paid in full in Cash
or, to the extent a Majority of each of the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes, Class J Notes and Class K Notes consent,
other than in Cash, before any further payment or distribution is made on
account of the Subordinate Interests. The Holders of Rated Notes evidencing
Subordinate Interests and the holders of equity in the Issuer and the Co-Issuer
agree, for the benefit of the Holders of the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes and Class K
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 Rated Notes

 

230

 

evidencing such Subordinate Interests or
hereunder until the payment in full of the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes and Class K
Notes and not before one year and one day has elapsed since such payment or, if
longer, the applicable preference period then in effect, including any period
established pursuant to the laws of the Cayman Islands.

 

(l)                                     Anything in this Indenture or the Rated Notes to
the contrary notwithstanding, the Issuer and the Holders of the Class M
Notes and Class N Notes agree for the benefit of the Holders of the Class A
Notes, Class B Notes, Class C Notes, Class D Notes, Class E
Notes, Class F Notes, Class G Notes, Class H Notes, Class J
Notes, Class K Notes and Class L Notes that the Class M Notes
and Class N Notes and the Issuer’s rights in and to the Collateral (with
respect to the Class A Notes, Class B Notes, Class C Notes, Class D
Notes, Class E Notes, Class F Notes, Class G Notes, Class H
Notes, Class J Notes, Class K Notes and Class L Notes, the Subordinate Interests)
shall be subordinate and junior to the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes, Class J Notes, Class K Notes and Class L
Notes to the extent and in the manner set forth in this Indenture including as
set forth in Section 11.1(a) and hereinafter provided. If any Event
of Default (including an Event of Default specified in Section 5.1(f) or
(g)) has occurred and has not been cured or waived the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes, Class K
Notes and Class L Notes shall be paid in full in Cash or, to the extent a
Majority of each of the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes, Class J Notes, Class K Notes and Class L
Notes consent, other than in Cash, before any further payment or distribution
is made on account of the Subordinate Interests. The Holders of Rated Notes
evidencing Subordinate Interests and the holders of equity in the Issuer and
the Co-Issuer agree, for the benefit of the Holders of the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes, Class K
Notes and Class L 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 Rated Notes evidencing such Subordinate Interests or
hereunder until the payment in full of the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes, Class K
Notes and Class L Notes and not before one year and one day has elapsed
since such payment or, if longer, the applicable preference period then in
effect, including any period established pursuant to the laws of the Cayman
Islands.

 

231

 

(m)                               Anything in this Indenture or the Rated Notes to
the contrary notwithstanding, the Issuer and the Holders of the Class N
Notes agree for the benefit of the Holders of the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes, Class K
Notes, Class L Notes and Class M Notes that the Class N Notes
and the Issuer’s rights in and to the Collateral (with respect to the Class A
Notes, Class B Notes, Class C Notes, Class D Notes, Class E
Notes, Class F Notes, Class G Notes, Class H Notes, Class J
Notes, Class K Notes, Class L Notes and Class M Notes, the Subordinate Interests)
shall be subordinate and junior to the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes, Class J Notes, Class K Notes, Class L
Notes and Class M Notes to the extent and in the manner set forth in this
Indenture including as set forth in Section 11.1(a) and hereinafter
provided. If any Event of Default (including an Event of Default specified in Section 5.1(f) or
(g)) has occurred and has not been cured or waived the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes, Class K
Notes, Class L Notes and Class M Notes shall be paid in full in Cash
or, to the extent a Majority of each of the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes, Class K
Notes, Class L Notes and Class M Notes consent, other than in Cash,
before any further payment or distribution is made on account of the
Subordinate Interests. The Holders of Rated Notes evidencing Subordinate
Interests and the holders of equity in the Issuer and the Co-Issuer agree, for
the benefit of the Holders of the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes, Class J Notes, Class K Notes, Class L
Notes and Class M 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 Rated Notes evidencing such Subordinate Interests or
hereunder until the payment in full of the Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes, Class K
Notes, Class L Notes and Class M Notes and not before one year and
one day has elapsed since such payment or, if longer, the applicable preference
period then in effect, including any period established pursuant to the laws of
the Cayman Islands.

 

13.2.                     STANDARD OF CONDUCT

 

In exercising any of its or their voting
rights, rights to direct and consent or any other rights as a Secured Party
under this Indenture, subject to the terms and conditions of this Indenture,
including Section 5.9, a Secured Party or Secured Parties shall not have
any obligation or duty to any Person or to consider or take into account the
interests of any Person and shall not be liable to any Person for any action
taken by it or them or at its or their direction or any failure

 

232

 

by it or them to act or to direct that an
action be taken, without regard to whether such action or inaction benefits or
adversely affects any Secured Party, the Issuer, or any other Person.

 

ARTICLE XIV

 

MISCELLANEOUS

 

14.1.                     FORM OF DOCUMENTS DELIVERED
TO TRUSTEE

 

In any case where several matters are
required to be certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or covered by the
opinion of, only one such Person, or that they be so certified or covered by
only one document, but one such Person may certify or give an opinion with
respect to some matters and one or more other such Persons as to other matters,
and any such Person may certify or give an opinion as to such matters in one or
several documents.

 

Any certificate or opinion of an Authorized
Officer of the Issuer, the Co-Issuer or the Collateral Manager may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such Authorized Officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer
of the Issuer, the Co-Issuer or the Collateral Manager or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an Authorized Officer of the Issuer, the
Co-Issuer, the Collateral Manager or any other Person, stating that the
information with respect to such factual matters is in the possession of the
Issuer, the Co-Issuer, the Collateral Manager or such other Person, unless such
Authorized Officer of the Issuer, the Co-Issuer or the Collateral Manager or
such counsel knows that the certificate or opinion or representations with
respect to such matters are erroneous. Any Opinion of Counsel may also be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an Authorized Officer of the Issuer, the Co-Issuer
or the Collateral Manager, stating that the information with respect to such
matters is in the possession of the Issuer, the Co-Issuer or the Collateral
Manager, unless such counsel knows that the certificate or opinion or
representations with respect to such matters are erroneous.

 

Where any Person is required to make, give or
execute two or more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.

 

Whenever in this Indenture it is provided
that the absence of the occurrence and continuation of a Default is a condition
precedent to the taking of any action by the Trustee at the request or
direction of the Issuer or the Co-Issuer, then notwithstanding that the
satisfaction of such condition is a condition precedent to the Co-Issuers’
rights to make such request or direction, the Trustee shall be protected in
acting in accordance with such request or direction if it does not have actual
knowledge of the occurrence and continuation of such Default as provided in Section 6.1(d).

 

233

 

14.2.                     ACTS OF RATED NOTEHOLDERS

 

(a)                                  Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture to be given
or taken by Rated Noteholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Rated Noteholders in
person or by an agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee, and, where it is hereby
expressly required, to the Issuer. Such instrument or instruments (and the
action or actions embodied therein and evidenced thereby) are herein sometimes
referred to as the Act of the Rated Noteholders, signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and conclusive in favor of the Trustee and the Co-Issuers, if made in the
manner provided in this Section 14.2.

 

(b)                                 The fact and date of the execution by any Person of
any such instrument or writing may be proved in any manner which the Trustee
deems sufficient.

 

(c)                                  The principal amount and registered numbers of
Rated Notes held by any Person, and the date of his holding the same, shall be
proved by the Note Register.

 

(d)                                 Any request, demand, authorization, direction,
notice, consent, waiver or other action by the Holder of any Rated Notes shall
bind the Holder (and any transferee thereof) of such Rated Note and of every
Rated Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by
the Trustee or the Co-Issuers in reliance thereon, whether or not notation of
such action is made upon such Rated Note.

 

14.3.                     NOTICES, ETC., TO TRUSTEE, THE CO-ISSUERS
AND THE RATING AGENCIES

 

Any request, demand, authorization,
direction, notice, consent, waiver or Act of Rated Noteholders or other
documents provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with:

 

(a)                                  the Trustee, the PAA Issued Note Paying Agent, the Class A-R
Note Agent by any Rated Noteholder or by the Issuer or the Co-Issuer shall be
sufficient for every purpose hereunder if in writing and sent by facsimile in
legible form and confirmed by overnight courier service guaranteed next day
delivery to the Trustee or the PAA Issued Note Paying Agent addressed to it at
9062 Old Annapolis Road, Columbia, Maryland 21045, Attn: CDO Trust
Services—N-Star REL CDO VIII, telephone number 410-884-2000, fax number
410-715-3748, with a copy to P.O. Box 98,

 

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Columbia Maryland 21046 or at any other
address previously furnished in writing to the Co-Issuers or Rated Noteholder
by the Trustee, PAA Issued Note Paying Agent or the Class A-R Note Agent;

 

(b)                                 the Issuer by the Trustee or by any Rated
Noteholder shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing and mailed, first class postage
prepaid, hand delivered, sent by overnight courier service or by facsimile in
legible form, to the Issuer addressed to it at c/o Walkers SPV Limited, Walker
House, 87 Mary Street, George Town, Grand Cayman, KY1-9002, Cayman Islands,
Attention: The Directors, or at any other address previously furnished in
writing to the Trustee by the Issuer;

 

(c)                                  the Co-Issuer by the Trustee or by any Rated
Noteholder shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing and mailed, first-class postage
prepaid, hand delivered, sent by overnight courier service or by facsimile in
legible form, to the Co-Issuer addressed to it at c/o Puglisi &
Associates, 850 Library Avenue, Suite 204, Newark, Delaware 19711,
Attention: Donald Puglisi, Esq., facsimile no. 302-738-7210, or at any
other address previously furnished in writing to the Trustee by the Co-Issuer;
or

 

(d)                                 the Rating Agencies by the Co-Issuers or the
Trustee shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing and mailed, first-class postage
prepaid, hand delivered, sent by overnight courier service or by facsimile in
legible form, (i) in the case of Moody’s, addressed to Moody’s Investors
Service, Inc., 99 Church Street, New York, New York 10007 facsimile no.
(212) 553-7820, Attention: NorthStar REL CDO VIII CBO CLO Monitoring (e-mail:
cdomonitoring@moody’s.com); and (ii) in the case of Fitch, addressed to
Fitch, Inc., One State Street Plaza, New York, New York 10004, telecopy No. (212)
908-0500, Attention: Commercial Real Estate Loan CDOs, Performance Analytics (or
by electronic mail at cdo.surveillance@fitchratings.com and
Karen.trebach@fitchratings.com) or such other address that Fitch shall
designate in the future;

 

(e)                                  the Collateral Manager by the Co-Issuers or by the
Trustee or a Majority of the Rated Notes, or by the Collateral Administrator
shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and sent by facsimile in legible form and
confirmed by overnight courier service guaranteed next day delivery, or by
electronic mail (where expressly provided herein) to the Collateral Manager
addressed to it at the address specified in the Collateral Management Agreement
or at any other address previously furnished in writing to the Co-Issuers or
the Trustee by the Collateral Manager;

 

235

 

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

 

(g)                                 Wachovia Capital Markets, LLC by the Co-Issuers,
the Collateral Manager or the Trustee shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided) if in writing and
mailed, first-class postage prepaid, hand delivered, sent by overnight courier
service or by telecopy in legible form, to Wachovia Capital Markets, LLC
addressed to Wachovia Capital Markets, LLC., 375 Park Avenue, New York, New
York 10152, Attention: Structured Credit Products Group;

 

(h)                                 to the Repository by the Issuer pursuant to this
Indenture shall be made available to the Repository by electronic mail as a pdf
(portable document format) file to CDO Library, c/o The Bond Market
Association, 360 Madison Avenue (18th Floor), New York, NY 10017; Electronic
mail address: admin@cdolibrary.com; and

 

(i)                                     each Hedge Counterparty by the Co-Issuers, the
Collateral Manager or the Trustee shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided) if in writing and
mailed, first-class postage prepaid, hand delivered, sent by overnight courier
service or by telecopy in legible form, to the address set forth in the related
Hedge Agreement.

 

Delivery of any request, demand,
authorization, direction, notice, consent, waiver or Act of Rated Noteholders
or other documents made as provided above will be deemed effective: (i) if
in writing and delivered in person or by overnight courier service, on the date
it is delivered; (ii) if sent by facsimile transmission, on the date that
transmission is received by the recipient in legible form (as evidenced by the
sender’s written record of a telephone call to the recipient in which the recipient
acknowledged receipt of such facsimile transmission); and (iii) if sent by
mail, on the date that mail is delivered or its delivery is attempted; in each
case, unless the date of that delivery (or attempted delivery) or that receipt,
as applicable, is not a Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Business Day.

 

14.4.                     NOTICES AND REPORTS TO RATED NOTEHOLDERS; WAIVER

 

Except as otherwise expressly provided
herein, where this Indenture provides for a report to Holders or for a notice
to Holders of Rated Notes of any event, such notice shall be sufficiently given
to Holders of Rated Notes if in writing and mailed, first-class postage
prepaid, to each Holder of a Rated Note affected by such event, at the address
of such Holder as it appears in the Note Register, not earlier than the
earliest date and not later than the latest date, prescribed for the giving of
such report or notice and such report or notice shall be in the English
language. Notwithstanding any provision to the contrary contained herein or in
any agreement or document related hereto, any report, statement or other
information to be provided by the Trustee may be provided by providing access
to the Trustee’s website containing such information. Such reports and notices
will be deemed to have been given on the date of such mailing.

 

236

 

The Trustee will deliver to the Holder of any
Rated Note shown on the Note Register any readily available information or
notice requested to be so delivered, at the expense of the Issuer.

 

Neither the failure to mail any notice, nor
any defect in any notice so mailed, to any particular Holder of a Rated Note
shall affect the sufficiency of such notice with respect to other Holders of
Rated Notes.

 

Where this Indenture provides for notice in
any manner, such notice may be waived in writing by any Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Rated Noteholders shall be
filed with the Trustee but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such waiver.

 

In the event that, by reason of the
suspension of the regular mail service as a result of a strike, work stoppage or
similar activity, it shall be impractical to mail notice of any event to Rated
Noteholders when such notice is required to be given pursuant to any provision
of this Indenture, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice.

 

14.5.                     EFFECT OF HEADINGS AND TABLE OF CONTENTS

 

The Section headings herein and the
Table of Contents are for convenience only and shall not affect the
construction hereof.

 

14.6.                     SUCCESSORS AND ASSIGNS

 

All covenants and agreements in this Indenture
by the Co-Issuers shall bind their respective successors and assigns, whether
so expressed or not. Written notice of any assignment shall be promptly
provided by the Issuer to the Holders of Rated Notes, each Hedge Counterparty
and each Rating Agency.

 

14.7.                     SEVERABILITY

 

In case any provision in this Indenture or in
the Rated Notes shall be invalid, illegal or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.

 

14.8.                     BENEFITS OF INDENTURE

 

The Rated Noteholders, the Initial Hedge
Counterparty and each Income Noteholder is an express third-party beneficiary
of this Indenture. Nothing in this Indenture or in the Rated Notes, expressed
or implied, shall give to any Person, other than the parties hereto and their
successors hereunder, the Rated Noteholders, the Initial Hedge Counterparty and
each Income Noteholder, any benefit or any legal or equitable right, remedy or
claim under this Indenture.

 

237

 

14.9.                     GOVERNING LAW

 

This Indenture and each Rated Note shall be
construed in accordance with, and this Indenture and each Rated Note and all
matters arising out of or relating in any way whatsoever (whether in contract, tort
or otherwise) to this Indenture or any Rated Note shall be governed by, the law
of the State of New York.

 

14.10.              SUBMISSION TO JURISDICTION

 

The Co-Issuers hereby irrevocably submit to
the non-exclusive jurisdiction of the Supreme Court of the State of New York
sitting in Manhattan and the U.S. District Court for the Southern District of
New York, and any court of appeal therefrom, in any action or proceeding
arising out of or relating to the Rated Notes or this Indenture, and the
Co-Issuers hereby irrevocably agree that all claims in respect of such action
or proceeding may be heard and determined in such New York State or federal
court. The Co-Issuers hereby irrevocably waive, to the fullest extent that they
may legally do so, the defense of an inconvenient forum to the maintenance of
such action or proceeding. The Co-Issuers hereby irrevocably appoint and
designate CT Corporation, 111 Eighth Avenue, 13th Floor, New
York, New York 10011, or any other Person having and maintaining a place of
business in the State of New York whom the Co-Issuers may from time to time
hereafter designate as the true and lawful attorney and duly authorized agent
for acceptance of service of legal process of the Co-Issuers. The Co-Issuers
agree that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.

 

14.11.              COUNTERPARTS

 

This instrument may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.

 

14.12.              WAIVER OF JURY TRIAL

 

EACH PARTY HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT THAT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY PROCEEDING. Each party hereby (i) certifies that
no representative, agent or attorney of the other has represented, expressly or
otherwise, that the other would not, in the event of a Proceeding, seek to
enforce the foregoing waiver and (ii) acknowledges that it has been
induced to enter into this Indenture by, among other things, the mutual waivers
and certifications in this paragraph.

 

14.13.              JUDGMENT CURRENCY

 

This is an international financing
transaction in which the specification of Dollars (the Specified Currency),
and the specification of the place of payment, as the case may be (the Specified Place), is
of the essence, and the Specified Currency shall be the currency of account in
all events relating to payments of or on the Rated Notes. The payment
obligations of the Co-Issuers under this Indenture and the Rated Notes shall
not be discharged by an amount paid in another currency or in another place,
whether pursuant to a judgment or otherwise, to the

 

238

 

extent that the amount so paid on conversion
to the Specified Currency and transfer to the Specified Place under normal
banking procedures does not yield the amount of the Specified Currency at the
Specified Place. If for the purpose of obtaining judgment in any court it is
necessary to convert a sum due hereunder or the Rated Notes in the Specified
Currency into another currency (the Second Currency), the rate of exchange which
shall be applied shall be that at which in accordance with normal banking
procedures the Trustee could purchase the Specified Currency with the Second
Currency on the Business Day next preceding that on which such judgment is
rendered. The obligation of the Co-Issuers in respect of any such sum due from
the Co-Issuers hereunder shall, notwithstanding the rate of exchange actually
applied in rendering such judgment, be discharged only to the extent that on
the Business Day following receipt by the Trustee of any sum adjudged to be due
hereunder or under the Rated Notes in the Second Currency the Trustee may in
accordance with normal banking procedures purchase and transfer to the
Specified Place the Specified Currency with the amount of the Second Currency
so adjudged to be due; and the Co-Issuers hereby, as a separate obligation and
notwithstanding any such judgment (but subject to the Priority of Payments as
if such separate obligation in respect of each Class of Rated Notes
constituted additional principal owing in respect of such Class of Rated
Notes), agree to indemnify the Trustee and each Rated Noteholder against, and
to pay the Trustee or such Rated Noteholder, as the case may be, on demand in
the Specified Currency, any difference between the sum originally due to the
Trustee or such Rated Noteholder, as the case may be, in the Specified Currency
and the amount of the Specified Currency so purchased and transferred.

 

14.14.              CONFIDENTIAL TREATMENT OF DOCUMENTS

 

Except as otherwise provided in this
Indenture or as required by law, this Indenture and any Hedge Agreement shall
be treated by the Trustee and the Collateral Manager as confidential. The
Trustee shall provide a copy of this Indenture to the PAA Issued Note Paying
Agent and to any Holder of a beneficial interest in any Rated Note upon written
request therefor certifying that it is such a Holder.

 

ARTICLE XV

 

ASSIGNMENT
OF AGREEMENTS, ETC.

 

15.1.                     ASSIGNMENT

 

The Issuer, in furtherance of the covenants
of this Indenture and as security for the Rated Notes and amounts payable to the
Rated Noteholders hereunder and the performance and observance of the
provisions hereof, hereby assigns, transfers, conveys and sets over to the
Trustee, for the benefit of the Secured Parties, all of the Issuer’s estate,
right, title and interest in, to and under the Corporate Services Agreement,
the Collateral Management Agreement, the Asset Transfer Agreements and any
Hedge Agreement into which the Issuer may enter, including (i) the right
to give all notices, consents and releases thereunder, (ii) the right to
give all notices of termination, including the commencement, conduct and
consummation of proceedings at law or in equity, (iii) the right to
receive all notices, accountings, consents, releases and statements thereunder
and (iv) the right to do any and all other things whatsoever that the
Issuer is or may be entitled to do thereunder; provided that nothing herein shall obligate the Trustee to
determine

 

239

 

independently whether “cause” exists for the
removal of the Collateral Manager pursuant to the Collateral Management
Agreement. For the avoidance of doubt, in no event shall the Trustee be
required to perform the obligations of the Collateral Manager under the
Collateral Management Agreement.

 

15.2.                     NO IMPAIRMENT

 

The assignment made hereby is executed as
collateral security, and the execution and delivery hereby shall not in any way
impair or diminish the obligations of the Issuer under the provisions of the
Corporate Services Agreement or, the Collateral Management Agreement.

 

15.3.                     TERMINATION, ETC.

 

Upon the redemption and cancellation of the
Rated Notes and the payment of all other Secured Obligations and the release of
the Collateral from the lien of this Indenture, this assignment and all rights
herein assigned to the Trustee for the benefit of the Secured Parties shall
cease and terminate and all the estate, right, title and interest of the
Trustee in, to and under the Corporate Services Agreement and the Collateral
Management Agreement shall revert to the Issuer and no further instrument or
act shall be necessary to evidence such termination and reversion.

 

15.4.                     ISSUER AGREEMENTS, ETC

 

The Issuer represents that it has not
executed any other assignment of the Collateral Administration Agreement or the
Collateral Management Agreement. The Issuer agrees that this assignment is
irrevocable, and that it will not take any action which is inconsistent with
this assignment or make any other assignment inconsistent herewith. The Issuer
will, from time to time upon the request of the Trustee, execute all
instruments of further assurance and all such supplemental instruments with
respect to this assignment as the Trustee may reasonably specify.

 

ARTICLE XVI

 

HEDGE AGREEMENTS

 

16.1.                     HEDGE AGREEMENTS

 

(a)                                  The Issuer may, after the Closing Date, enter into
one or more Hedge Agreements (including one or more Deemed Floating Asset
Hedges) with Hedge Counterparties as the Issuer may elect in its sole
discretion, in each case (i) subject to Rating Confirmation and (ii) with
the delivery to the Issuer of an Opinion of Counsel to the Hedge Counterparty; provided that the Issuer will not be
required to obtain Rating Confirmation in connection with entering into any
Deemed Floating Asset Hedges which are Form-Approved Hedge Agreements with a
Hedge Counterparty that satisfies the Hedge Counterparty Ratings Requirement.

 

(b)                                 The Issuer shall assign such Hedge Agreement to the
Trustee pursuant to Article 15 hereof.

 

240

 

(c)                                  The Trustee shall, on behalf of the Issuer and in
accordance with the Note Valuation Report, pay amounts due to any Hedge
Counterparty under any Hedge Agreement on any Payment Date in accordance with Section 11.1
and Section 10.5(a)(5).

 

(d)                                 Upon the entry of the Issuer into a Hedge
Agreement, the Trustee shall cause the Custodian to establish a segregated,
non-interest bearing Securities Account which shall be designated as a Hedge Counterparty Collateral
Account with respect to the Hedge Counterparty in respect of
which the Trustee shall be the Entitlement Holder and which the Trustee shall
hold in trust for the benefit of the Secured Parties. The Trustee shall deposit
all collateral received from such Hedge Counterparty under the related Hedge
Agreement in such Hedge Counterparty Collateral Account. Any and all funds at
any time on deposit in, or otherwise standing to the credit of, each Hedge
Counterparty Collateral Account shall be held in trust by the Trustee for the
benefit of the Secured Parties subject to the rights and interests of the
related Hedge Counterparty under the related Hedge Agreement. The only
permitted withdrawal from or application of funds on deposit in, or otherwise
standing to the credit of, each Hedge Counterparty Collateral Account shall be (i) for
application to obligations of the related Hedge Counterparty to the Issuer
under the Hedge Agreement that are not paid when due (whether when scheduled or
upon early termination) or (ii) to return collateral to the related Hedge
Counterparty when and as required by the related Hedge Agreement in each case
upon the direction of the Issuer pursuant to an Issuer Order. No assets
credited to any Hedge Counterparty Collateral Account shall be considered an
asset of the Issuer for purposes of any of the Coverage Tests or any Redemption
unless and until the Issuer or the Trustee on its behalf is entitled to
foreclose on such assets in accordance with the terms of the Hedge Agreement.

 

(e)                                  Upon its receipt of notice that the Hedge
Counterparty has defaulted in the payment when due of its obligations to the
Issuer under any Hedge Agreement (or, if earlier, when the Trustee becomes
aware of such default) the Trustee shall make a demand on such Hedge
Counterparty, or any guarantor, if applicable, demanding payment forthwith. The
Trustee shall give notice to the Rated Noteholders and each Rating Agency upon
the continuance of the failure by such Hedge Counterparty to perform its
obligations for two Business Days following a demand made by the Trustee on
such Hedge Counterparty.

 

(f)                                    If at any time any Hedge Agreement becomes subject
to early termination due to the occurrence of an “event of default” or a
“termination event” (each as defined in the related Hedge Agreement), the
Issuer and the Trustee shall take such actions, if any, (following the
expiration of any applicable grace period) to enforce the rights of the Issuer
and the Trustee thereunder as may be permitted by the terms of such Hedge
Agreement

 

241

 

and consistent with the terms hereof, and
shall apply any proceeds of any such actions (including the proceeds of the
liquidation of any collateral pledged by the related Hedge Counterparty) to
enter into a replacement Hedge Agreement on substantially identical terms or on
such other terms as to which each Rating Agency shall have provided a Rating
Confirmation with a substitute Hedge Counterparty with respect to which the
Hedge Counterparty Ratings Requirement is satisfied and each Rating Agency
shall have provided a Rating Confirmation. If the Issuer is the sole
non-Affected Party or the sole non-Defaulting Party with respect to such “event
of default” or “termination event”, the Issuer will (with the assistance of the
Collateral Manager) obtain quotations with respect to such replacement Hedge
Agreement from five prospective counterparties Independent from the Issuer, the
Collateral Manager and each other that satisfy the Hedge Counterparty Ratings
Requirement and with respect to which a Rating Confirmation shall have been
obtained and enter into a replacement Hedge Agreement with the prospective
counterparty that provides the lowest quotation (if the Issuer is required to
make a payment to such replacement counterparty) or the highest quotation (if
such replacement counterparty is required to make a payment to the Issuer).

 

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

 

(h)                                 No Hedge Agreement may be amended or modified at
any time other than to effect the appointment of a substitute Hedge
Counterparty or to effect a modification which is of a formal, minor or
technical nature or is to correct a manifest error and which, in the opinion of
the Trustee (based upon an Opinion of Counsel) would not have a material
adverse effect on the interests of Holders of the Rated Notes or of Holders of
any Class or Classes of Rated Notes or the Holders of the Income Notes
unless the Issuer has obtained Rating Confirmation with respect to such
amendment or modification. The Trustee shall provide the Collateral Manager and
the Rating Agencies with a copy of any such amendment or modification within 10
Business Days before effecting such modification.

 

(i)                                     The Issuer shall enter into a Hedge Agreement only
if the payments from the Hedge Counterparty thereunder are not subject to
withholding tax or if the related Hedge Counterparty shall be required in
accordance with the terms of the related Hedge Agreement to pay additional
amounts to the Issuer sufficient to cover any withholding tax due on payments
made by such Hedge Counterparty to the Issuer under such Hedge Agreement,
subject to the Issuer making customary payee tax representations and providing
customary tax documentation. At any time at which the Issuer is not a Qualified
REIT Subsidiary, the Issuer shall not enter into any Hedge Agreement the
acquisition (including the manner of acquisition), ownership, enforcement or
disposition of which would subject the Issuer

 

242

 

to tax on a net income basis in any
jurisdiction outside the Issuer’s jurisdiction of incorporation.

 

(j)                                     The Issuer will not terminate any Hedge Agreement
without receiving Rating Confirmation with respect to such termination except
to the extent otherwise specified herein.

 

ARTICLE XVII

 

CLASS A-R NOTES

 

17.1.                     DRAWS ON THE CLASS A-R NOTES AND CLASS A-R COMMITMENT

 

(a)                                       Pursuant to the Class A-R Note Purchase
Agreement and subject to compliance with the conditions set forth therein and
herein, the Issuer (or the Collateral Manager on behalf of the Issuer) may
request and the Holders of the Class A-R Notes (or any Liquidity Provider
with respect to such Holders) shall be obligated to make, advances under the Class A-R Notes
(each such advance, a Class A-R Draw) in an amount up to their respective Class A-R
Commitment, to fund, during both the Ramp-Up Period and the Reinvestment
Period, Future Advance Amounts relating to Future Funding Assets and to acquire
Substitute Collateral Interests. After the Reinvestment Period and/or the
occurrence of an Event of Default, the Issuer will fund Future Advance Amounts
relating to Future Funding Assets from amounts on deposit in the Future Funding
Asset Account. Class A-R Draws may be made on any Business Day from and
including the Closing Date to but excluding the Commitment Termination Time
(the date of such Class A-R Draw, the Class A-R Draw Date).

 

(b)                                      Draws may be made from time to time in accordance
with the Class A-R Note Purchase Agreement. The Issuer shall duly and
punctually perform each of its obligations under the Class A-R Note
Purchase Agreement. The Issuer shall not be required to borrow any amount under
the Class A-R Notes at any time unless the applicable servicer or the
Collateral Manager, as applicable, has determined that a Future Advance is
required under the related Underlying Instruments and the amounts on deposit in
the Future Funding Asset Account, if any, are insufficient to make sure Future
Advance. The obligation of the Issuer to make any such Class A-R Draw is
subject to the conditions to make a Class A-R Draw in Sections 4.01 and
4.02 of the Class A-R Note Purchase Agreement.

 

(c)                                       On the Mandatory Class A-R Draw Date, subject
to the notice provisions set forth in each Class A-R Note Purchase
Agreement, the Issuer (or the Collateral Manager on behalf of the Issuer) shall
make a Class A-R Draw in an amount equal to the lesser of (x) the
Aggregate Class A-R Undrawn Amount, and (ii) the Total Net Unfunded
Future Advance Amount the proceeds of which will be deposited in the Future
Funding Asset Account.

 

243

 

Immediately following such draw, the Class A-R
Commitments will terminate.

 

(d)                                 The Trustee shall (at the direction of the
Collateral Manager) upon receipt of the proceeds of any Class A-R Draw,
deposit such proceeds into the Future Funding Asset Account where such amounts
shall be applied in accordance with Section 10.8.

 

(e)                                  The aggregate Class A-R Commitments shall not
exceed the Maximum Class A-R Commitment. To the extent that the principal
amount of the Class A-1 Notes is reduced pursuant to a Mandatory
Redemption, Special Amortization or redemption in connection with a Rating
Confirmation Failure, then Class A-R Commitments will be reduced so that
the Class A-R Commitments equal the Class A-R Proportion of the
outstanding principal amount of the Class A-1 Notes. The portion of each
such reduction of the Class A-R Commitment applicable to each Class A-R
Note shall be the pro rata share
of the unfunded Class A-R Commitments represented by such Class A-R
Note. Thus, the Class A-R Commitments will be reduced by the total amount
of principal payments allocable to the Class A-R Notes which are paid to
the Class A-R Notes and the remainder deposited as follows: (i) an
amount equal to the Total Net Unfunded Future Advance Amount will be deposited
in the Future Funding Asset Account, and (ii) any remainder will be
deposited in the Collection Account as Collateral Principal Collections.

 

(f)                                    Prior to the Commitment Termination Time, the
Aggregate Class A-R Undrawn Amount must be at least equal to the Total Net
Unfunded Future Advance Amount.

 

17.2.                     CLASS A-R INTEREST
AND CLASS A-R COMMITMENT
FEE.

 

(a)                                  With respect to any Payment Date or Class A-R
Prepayment Date, interest on the Class A-R Notes will be payable in
arrears in an amount equal to (i) the product of (1) the Average
Drawn Class A-R Note Portion during the Interest Period with respect to
such Payment Date, (2) the Class A-R Note Interest Rate, and (3) the
actual number of days elapsed in such Interest Period, divided by (ii) 360;
provided, that interest accrued in
respect of amounts borrowed under the Class A-R Notes during the period
following the Calculation Date through such Payment Date will be payable
(without penalty interest thereon) on the next succeeding Payment Date.
Interest on the Class A-R Notes will be computed on the basis of a 360-day
year and the actual number of days elapsed. Interest will be payable to the
Holders of the Class A-R Notes, pro rata,
based on their Class A-R Interest Allocation Percentage.

 

(b)                                 The Class A-R Commitment Fee will be payable
in arrears on each Payment Date and will rank pari
passu with the payment of interest on

 

244

 

the Class A Senior Notes. Interest at
the Class A-R Note Interest Rate will accrue on any portion of the Class A-R
Commitment Fee that is not paid when due.

 

17.3.                     PREPAYMENTS OF CLASS A-R NOTES.

 

(a)                                  During the Reinvestment Period, upon at least two
Business Days irrevocable notice to the Holders of the Class A-R Notes,
the Class A-R Notes may be prepaid (in whole or in part) without payment
of premium, at the option of the Issuer (at the direction of the Collateral
Manager) (i) prior to any payments on any other Class of Rated Notes,
on any Payment Date from Collateral Principal Collections to the extent
Collateral Principal Collections are available for such application pursuant to
the Priority of Payments and from amounts on deposit in the Future Funding
Asset Account or (ii) from excess amounts on deposit in the Collateral
Principal Collection Sub-Account and the Future Funding Asset Account on an
Interim Payment Date, but subject to the payment by the Issuer of Class A-R
Breakage Costs, if any. The Collateral Manager (on behalf of the Issuer) must
provide not less than two Business Days’ notice to the Class A-R Note
Agent (with a copy to the Trustee) in connection with any Class A-R
Prepayment to be made on an Interim Payment Date. Any Class A-R Breakage
Costs shall be paid in accordance with the Priority of Payments on the Payment
Date following the applicable Class A-R Prepayment Date.

 

(b)                                 If any Class A-R Prepayment is made on a day
other than a Payment Date, the Trustee shall pay the Class A-R Noteholders
(i) accrued and unpaid interest in respect of the amount of such Class A-R
Prepayment on such date and (ii) any Class A-R Breakage Costs resulting
from such Class A-R Prepayment in accordance with the Priority of Payments
on the first Payment Date following the Due Period in which such Class A-R
Prepayment is made. Any funds received from the Trustee after 1:00 p.m.
(New York City time) on any Business Day shall be deemed to be received on the
next Business Day.

 

(c)                                  The aggregate principal amount of any partial
voluntary Class A-R Prepayment, in respect of the Class A-R Notes
(taken as a whole) will be at least $800,000 (and integral multiples of $1000
in excess thereof) or, if the aggregate outstanding amount under the Class A-R
Notes is less than $800,000, such lesser amount. Any Class A-R Draw will
be made by the Collateral Manager on behalf of the Issuer, pro rata, according to the unused portion
of the Class A-R Commitment of each Class A-R Noteholder. The Issuer
shall make all Class A-R Prepayments pro
rata based on the Aggregate Outstanding Amount of the Class A-R
Notes at the time such prepayment is made. Subject to compliance with certain
draw conditions specified in the Class A-R Note Purchase Agreement and

 

245

 

herein, all such prepaid amounts may be
re-borrowed until the Commitment Termination Time.

 

17.4.                     CLASS A-R RATING CRITERIA

 

At the time of its purchase of a Class A-R
Note and prior to the Commitment Termination Time, each Holder of a Class A-R
Note must satisfy the Class A-R Rating Criteria. If any Holder of Class A-R
Notes at any required time fails to satisfy the Class A-R Rating Criteria
and such failure continues for five consecutive Business Days and such Holder
shall not have deposited cash in a Holder Sub-Account in such amount and at
such time as required by the Class A-R Note Purchase Agreement to which
such Holder is a party, the Collateral Manager on behalf of the Issuer shall
use reasonable efforts promptly to replace such Holder with another entity that
meets the Class A-R Rating Criteria (by requiring the replaced Holder to
transfer all of its rights and obligations in respect of the Class A-R
Notes to the transferee entity). The purchase of Class A-R Notes (whether
in connection with the initial placement or in a subsequent transfer) by any
purchaser who does not satisfy the Class A-R Rating Criteria set forth in
clause (i) of the definition thereof at the time of such purchase but who
is then entitled to the benefits of a Liquidity Facility described in clause (iii) of
such definition shall not be permitted unless Rating Confirmation is obtained
with respect to the acquisition of Class A-R Notes by such purchaser; provided however, that a Liquidity Provider
may purchase Class A-R Notes pursuant to the related Liquidity Facility,
which Liquidity Provider will be subject to the Class A-R Rating Criteria
and other provisions of the Class A-R Note Purchase Agreement; and provided further that if the Holder of a Class A-R
Note is a CP Conduit, it shall have the unconditional right to assign its
rights and obligations under the Class A-R Note Purchase Agreement.

 

17.5.                     CLASS A-R HOLDER COLLATERAL ACCOUNT

 

(a)                                  The Trustee shall, prior to the Closing Date,
establish a Securities Account which shall be designated as the Class A-R Holder Collateral
Account, which shall be held in trust for the benefit of the
Holders of the Class A-R Notes (and, to the extent of amounts applied in
accordance with the Class A-R Note Purchase Agreement for such purpose,
for the benefit of the Holders of the Notes) and each Liquidity Provider and
over which the Trustee shall have exclusive control and the sole right of
withdrawal. Any and all funds at any time on deposit in, or otherwise to the
credit of, the Class A-R Holder Collateral Account shall be held in trust
by the Trustee for the benefit of the Holders of the Class A-R Notes. If
at any time any Holder of a Class A-R Note shall be required to deposit
funds into the Class A-R Holder Collateral Account pursuant to the terms
of the Class A-R Note Purchase Agreement, then (i) the Collateral
Manager shall direct the Trustee to and the Trustee shall create a segregated
sub-account of the Class A-R Holder Collateral Account for such Class A-R
Holder (each, a Holder
Sub-Account) and (ii) the Class A-R Note Agent shall
deposit all funds received from such Holder into such Holder Sub-Account. All
payments of principal of the Class A-R Notes otherwise payable to such
Holder shall be deposited in such Holder Sub-Account to the extent

 

246

 

provided in the Class A-R Note Purchase
Agreement. The only permitted withdrawal from or application of funds credited
to a Holder Sub-Account shall, notwithstanding the occurrence of any Event of
Default, be to satisfy such Holder’s obligations under the Class A-R Note
Purchase Agreement, as specified in this Section 17.5 and to return such
amounts to such Holder in accordance with Sections 17.5(c) and (d).

 

(b)                                 The deposit of funds into a Holder Sub-Account
pursuant to Section 17.5 by any Holder of a Class A-R Note shall not
constitute a Draw by the Issuer and shall not constitute a utilization of the Class A-R
Commitment of such Holder, and the funds so deposited shall not constitute
principal outstanding under such Class A-R Note. However, from and after
the establishment of a Holder Sub-Account with respect to any Holder of Class A-R
Notes until otherwise provided below, (i) the obligation of such Holder to
advance funds under its Class A-R Notes as part of any Class A-R Draw
under this Indenture and the Class A-R Note Purchase Agreement shall be
satisfied by the Trustee, acting at the direction of the Collateral Manager,
withdrawing funds from such Holder Sub-Account in the amount of such Holder’s
share of such Class A-R Draw (determined in accordance with the Class A-R
Note Purchase Agreement), and (ii) all payments of principal with respect
to advances made by such Holder under its Class A-R Notes (whether or not
originally funded from such Holder Sub-Account) (and, in the case of any
defaulting Holder, all payments of interest thereon) shall be satisfied by the
Trustee depositing or causing the deposit of the related funds into such Holder
Sub-Account in the amount of such Holder’s share of such Class A-R Draw
(determined in accordance with the Class A-R Note Purchase Agreement),
with notice of such deposit to the Class A-R Note Agent and the Class A-R
Noteholder. The Trustee acting at the direction of the Collateral Manager shall
have full power and authority to withdraw funds (with notice of any such
withdrawal to the Class A-R Note Agent) from each such Holder Sub-Account
at the time of, and in connection with, the making of any such Class A-R
Draw and to deposit funds (with notice of any such deposit to the Class A-R
Note Agent) into each such Holder Sub-Account, all in accordance with the terms
of and for the purposes set forth in this Indenture and the related Class A-R
Note Purchase Agreement.

 

(c)                                  If at any time the amount of funds on deposit in
the Holder Sub-Account relating to any Holder of Class A-R Notes, net of
any reinvestment earnings in respect of Class A-R Eligible Investments,
exceeds the undrawn amount of the Class A-R Commitment of such Holder
(whether due to a reduction in the Class A-R Commitment or otherwise),
then the Collateral Manager on behalf of the Issuer shall instruct the Trustee
to remit to such Holder a specified portion of such funds then held in the
related Holder Sub-Account in an amount equal to such excess.

 

247

 

(d)                                      If at any time a Holder of Class A-R Notes is
no longer required to deposit or maintain funds in the Class A-R Holder
Collateral Account pursuant to the terms of its Class A-R Note Purchase
Agreement to which such Holder is a party, then the Collateral Manager shall
notify the Trustee of such fact and direct the Trustee to remit all funds then
held in the relevant Holder Sub-Account (after giving effect to any Class A-R
Draw in respect of such Class A-R Notes to be made on such date) (other
than reinvestment earnings in respect of Class A-R Eligible Investments
which shall be remitted to such Holder as provided in Section 17.5(c)) to
such Holder (with notice thereof to the Class A-R Note Agent), and
thereafter all payments of principal and interest with respect to advances made
by such Holder shall be paid directly to such Holder in accordance with the
terms of this Indenture and the Class A-R Note Purchase Agreement.

 

(e)                                       The Trustee agrees to give the Collateral Manager,
the Issuer and the related Holder immediate notice if it becomes aware that the
Class A-R Holder Collateral Account or any funds on deposit therein, or
otherwise to the credit of the Class A-R Holder 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 Class A-R Holder Collateral Account.

 

(f)                                         For so long as any amounts are on deposit in a
Holder Sub-Account, the Trustee shall, at the written direction of the related Class A-R
Noteholder (which may be in the form of standing instructions), invest and
reinvest such funds in investments which satisfy the definition of the term
Eligible Investments but which mature not later than the day following the date
of acquisition thereof (collectively, Class A-R Eligible Investments). Investment
earnings received during each Due Period in respect of Class A-R Eligible
Investments in the Holder Sub-Account of a Holder of Class A-R Notes will
(so long as such Holder is not a Defaulting Holder) be applied to fund a
shortfall in such Class A-R Noteholders’ obligation to fund a Class A-R
Draw, and any earnings in excess of such shortfall will be paid to such Holder
on the related Payment Date. In the absence of such instructions, such funds
will remain uninvested.

 

248

 

In Witness Whereof, we have set our hands as of the date first above written.

 

Executed
as a Deed by

N-STAR REL CDO VIII LTD.,

as Issuer

 

 

	
  By:

  	
  /s/
  Derrie Boggess

  	
   

  
	
   

  	
  Name:

  	
  Derrie
  Boggess

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  N-STAR REL CDO VIII LLC,

  
	
  as Co-Issuer

  
	
   

  
	
   

  
	
  By:

  	
  /s/
  Donald J. Puglisi

  	
   

  
	
   

  	
  Name:

  	
  Donald
  J. Puglisi

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
					

 

 

WELLS FARGO BANK, NATIONAL
ASSOCIATION,

as Trustee

 

 

	
  By:

  	
  /s/ Karen J. Ridgeway

  	
   

  
	
   

  	
  Name:

  	
  Karen J. Ridgeway

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  

 

 

CONFIRMED AND ACCEPTED,

as of the date first above written:

 

NS ADVISORS, LLC,

as Advancing Agent

 

	
  By:

  	
  /s/
  Daniel R. Gilbert

  	
   

  
	
   

  	
  Name:

  	
  Daniel
  R. Gilbert

  	
   

  
	
   

  	
  Title:

  	
  Executive
  Vice PresidentExhibit 10.25

 

EXECUTION COPY

 

 

Dated as of February 28, 2007

 

 

N-STAR REAL ESTATE CDO IX, LTD.,

as Issuer

 

 

LASALLE BANK NATIONAL ASSOCIATION,

as Trustee

 

 

INDENTURE

 

 

 

TABLE OF CONTENTS

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  PRELIMINARY STATEMENT

  	
  1

  
	
   

  	
   

  	
   

  
	
  GRANTING CLAUSES

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE I 

  	
  Definitions and Interpretation

  	
  2

  
	
  1.1.

  	
  Definitions

  	
  2

  
	
  1.2.

  	
  Assumptions as to Collateral Debt
  Securities, Fees, Etc.

  	
  64

  
	
  1.3.

  	
  Rules of Construction

  	
  66

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  The Secured Notes

  	
  67

  
	
  2.1.

  	
  Forms Generally

  	
  67

  
	
  2.2.

  	
  Authorized Amount; Applicable Periodic
  Interest Rate; Stated Maturity Date; Denominations

  	
  68

  
	
  2.3.

  	
  Execution, Authentication, Delivery and
  Dating

  	
  69

  
	
  2.4.

  	
  Registration, Transfer and Exchange of
  Secured Notes

  	
  70

  
	
  2.5.

  	
  Mutilated, Defaced, Destroyed, Lost or
  Stolen Secured Notes

  	
  78

  
	
  2.6.

  	
  Payment of Principal and Interest; Rights
  Preserved

  	
  78

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  Conditions Precedent

  	
  85

  
	
  3.1.

  	
  General Provisions

  	
  85

  
	
  3.2.

  	
  Security for the Secured Notes

  	
  87

  
	
  3.3.

  	
  Custodianship; Transfer of Collateral Debt
  Securities and Eligible Investments

  	
  89

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  Satisfaction and Discharge

  	
  92

  
	
  4.1.

  	
  Satisfaction and Discharge of Indenture

  	
  92

  
	
  4.2.

  	
  Application of Trust Money

  	
  93

  
	
  4.3.

  	
  Repayment of Funds Held by Note Paying
  Agent

  	
  93

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  Events of Default; Remedies

  	
  93

  
	
  5.1.

  	
  Events of Default

  	
  93

  
	
  5.2.

  	
  Acceleration of Maturity; Rescission and
  Annulment

  	
  95

  
	
  5.3.

  	
  Collection of Indebtedness and Suits for
  Enforcement by Trustee

  	
  96

  
	
  5.4.

  	
  Remedies

  	
  99

  
	
  5.5.

  	
  Preservation of Collateral

  	
  100

  
	
  5.6.

  	
  Trustee May Enforce Claims Without
  Possession

  	
  102

  
	
  5.7.

  	
  Application of Funds Collected

  	
  102

  
	
  5.8.

  	
  Limitation on Suits

  	
  102

  
	
  5.9.

  	
  Unconditional Rights of Secured Noteholders
  to Receive Principal and Interest

  	
  103

  
	
  5.10.

  	
  Restoration of Rights and Remedies

  	
  103

  
	
  5.11.

  	
  Rights and Remedies Cumulative

  	
  103

  
	
  5.12.

  	
  Delay or Omission Not Waiver

  	
  104

  
	
  5.13.

  	
  Control by Controlling Class

  	
  104

  
	
  5.14.

  	
  Waiver of Past Defaults

  	
  104

  
	
  5.15.

  	
  Undertaking for Costs

  	
  105

  
				

 

i

 

TABLE OF CONTENTS

(continued)

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  5.16.

  	
  Waiver of Stay or Extension Laws

  	
  105

  
	
  5.17. 

  	
  Sale of Collateral

  	
  105

  
	
  5.18.

  	
  Action on the Secured Notes

  	
  106

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  The Trustee

  	
  106

  
	
  6.1.

  	
  Certain Duties and Responsibilities

  	
  106

  
	
  6.2.

  	
  Notice of Default

  	
  108

  
	
  6.3.

  	
  Certain Rights of Trustee

  	
  108

  
	
  6.4.

  	
  Authenticating Agents

  	
  110

  
	
  6.5.

  	
  Not Responsible for Recitals or Issuance of
  Secured Notes

  	
  111

  
	
  6.6.

  	
  May Hold Secured Notes

  	
  111

  
	
  6.7.

  	
  Funds Held in Trust

  	
  111

  
	
  6.8.

  	
  Compensation and Reimbursement

  	
  111

  
	
  6.9.

  	
  Corporate Trustee Required; Eligibility

  	
  113

  
	
  6.10.

  	
  Resignation and Removal; Appointment of
  Successor

  	
  113

  
	
  6.11.

  	
  Acceptance of Appointment by Successor

  	
  114

  
	
  6.12. 

  	
  Merger, Conversion, Consolidation or
  Succession to Business of Trustee

  	
  114

  
	
  6.13.

  	
  Co-Trustees

  	
  115

  
	
  6.14. 

  	
  Certain Duties Related to Delayed Payment
  of Proceeds; Other Notices

  	
  116

  
	
  6.15. 

  	
  Representations and Warranties of the Bank

  	
  116

  
	
  6.16. 

  	
  Exchange Offers, Proposed Amendments, etc.

  	
  117

  
	
  6.17. 

  	
  Fiduciary for Secured Noteholders Only;
  Agent For Other Secured Parties

  	
  117

  
	
  6.18. 

  	
  Withholding

  	
  117

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  Covenants

  	
  118

  
	
  7.1.

  	
  Payment of Principal and Interest

  	
  118

  
	
  7.2.

  	
  Maintenance of Office or Agency

  	
  118

  
	
  7.3.

  	
  Funds for Secured Note Payments to be Held
  in Trust

  	
  119

  
	
  7.4.

  	
  Existence of Issuer

  	
  120

  
	
  7.5.

  	
  Protection of Collateral

  	
  121

  
	
  7.6.

  	
  Opinions as to Collateral

  	
  123

  
	
  7.7.

  	
  Performance of Obligations

  	
  123

  
	
  7.8.

  	
  Negative Covenants

  	
  124

  
	
  7.9.

  	
  Statement as to Compliance

  	
  126

  
	
  7.10. 

  	
  Issuer May Consolidate, Etc., Only on
  Certain Terms

  	
  126

  
	
  7.11.

  	
  Successor Substituted

  	
  128

  
	
  7.12. 

  	
  No Other Business

  	
  128

  
	
  7.13. 

  	
  Change or Withdrawal of Rating

  	
  128

  
	
  7.14. 

  	
  Reporting

  	
  128

  
	
  7.15. 

  	
  Secured Note Calculation Agent

  	
  129

  
	
  7.16.

  	
  Listing

  	
  130

  
	
  7.17. 

  	
  Amendment of Certain Documents

  	
  130

  
	
  7.18. 

  	
  Purchase of Collateral; Information
  Regarding Collateral; Rating Confirmation

  	
  130

  
				

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  Supplemental
  Indentures

  	
  132

  
	
  8.1.

  	
  Supplemental Indentures Without Consent of
  Secured Noteholders

  	
  132

  
	
  8.2.

  	
  Supplemental Indentures with Consent of
  Secured Noteholders

  	
  135

  
	
  8.3.

  	
  Execution of Supplemental Indentures

  	
  137

  
	
  8.4.

  	
  Effect of Supplemental Indentures

  	
  137

  
	
  8.5.

  	
  Reference in Secured Notes to Supplemental
  Indentures

  	
  138

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  Redemption
  of Secured Notes

  	
  138

  
	
  9.1.

  	
  Redemption of Secured Notes

  	
  138

  
	
  9.2.

  	
  Redemption Procedures; Auction

  	
  138

  
	
  9.3.

  	
  Record Date; Notice to Trustee of
  Redemption

  	
  140

  
	
  9.4.

  	
  Notice of Redemption

  	
  141

  
	
  9.5.

  	
  Notice of Withdrawal

  	
  141

  
	
  9.6.

  	
  Secured Notes Payable on Redemption Date

  	
  141

  
	
  9.7.

  	
  Special Amortization

  	
  142

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  Accounts,
  Accountings and Releases

  	
  142

  
	
  10.1. 

  	
  Collection of Funds

  	
  142

  
	
  10.2. 

  	
  General Provisions Applicable to Accounts

  	
  143

  
	
  10.3. 

  	
  Collateral Account

  	
  144

  
	
  10.4. 

  	
  Uninvested Proceeds Account

  	
  144

  
	
  10.5. 

  	
  Interest Reserve Account

  	
  144

  
	
  10.6. 

  	
  Collection Account

  	
  145

  
	
  10.7. 

  	
  Expense Reserve Account

  	
  145

  
	
  10.8. 

  	
  Non-Monthly Pay Asset Interest Reserve
  Account

  	
  146

  
	
  10.9. 

  	
  Discretionary Ramp-Up Interest Reserve
  Account

  	
  146

  
	
  10.10. 

  	
  Payment Account

  	
  147

  
	
  10.11. 

  	
  Derivative Contract Counterparty Accounts

  	
  147

  
	
  10.12. 

  	
  Derivative Contract Issuer Account

  	
  148

  
	
  10.13. 

  	
  Reports by Trustee

  	
  149

  
	
  10.14. 

  	
  Accountings

  	
  150

  
	
  10.15. 

  	
  Release of Securities

  	
  155

  
	
  10.16. 

  	
  Reports by Independent Accountants

  	
  156

  
	
  10.17. 

  	
  Reports to Rating Agencies

  	
  157

  
	
  10.18. 

  	
  Tax Matters

  	
  157

  
	
  10.19. 

  	
  Tax Information

  	
  157

  
	
  10.20. 

  	
  Cure Advances

  	
  159

  
	
  10.21. 

  	
  Purchase of Related Senior Loans by Holders of Subordinate Mortgage
  Loan Interests or Mezzanine Loans

  	
  159

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
  Application of Monies

  	
  160

  
	
  11.1. 

  	
  Disbursements of Funds from Payment
  Account; Priority of Payments

  	
  160

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII 

  	
  Purchase and Sale of Collateral Debt
  Securities

  	
  173

  
	
  12.1.

  	
  Sale of Collateral Debt Securities

  	
  173

  
	
  12.2. 

  	
  Portfolio Characteristics

  	
  175

  
	
  12.3. 

  	
  Conditions Applicable to all Transactions
  Involving Sale or Grant

  	
  178

  
							

 

iii

 

TABLE OF CONTENTS

(continued)

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII 

  	
  Secured Parties’ Relations

  	
  179

  
	
  13.1. 

  	
  Subordination

  	
  179

  
	
  13.2. 

  	
  Standard of Conduct

  	
  185

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV 

  	
  Miscellaneous

  	
  185

  
	
  14.1. 

  	
  Form of Documents Delivered to Trustee

  	
  185

  
	
  14.2. 

  	
  Acts of Secured Noteholders

  	
  186

  
	
  14.3. 

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

  	
  187

  
	
  14.4. 

  	
  Notices and Reports to Secured Noteholders;
  Waiver

  	
  188

  
	
  14.5. 

  	
  Effect of Headings and Table of Contents

  	
  189

  
	
  14.6. 

  	
  Successors and Assigns

  	
  189

  
	
  14.7. 

  	
  Severability

  	
  189

  
	
  14.8. 

  	
  Benefits of Indenture

  	
  189

  
	
  14.9. 

  	
  Governing Law

  	
  190

  
	
  14.10. 

  	
  Submission to Jurisdiction

  	
  190

  
	
  14.11. 

  	
  Counterparts

  	
  190

  
	
  14.12. 

  	
  Waiver of Jury Trial

  	
  190

  
	
  14.13. 

  	
  Judgment Currency

  	
  190

  
	
  14.14. 

  	
  Confidential Treatment of Documents

  	
  191

  
	
   

  	
   

  	
   

  
	
  ARTICLE XV 

  	
  Assignment of Agreements, etc.

  	
  191

  
	
  15.1. 

  	
  Assignment

  	
  191

  
	
  15.2. 

  	
  No Impairment

  	
  191

  
	
  15.3. 

  	
  Termination, etc.

  	
  192

  
	
  15.4. 

  	
  Issuer Agreements, etc.

  	
  192

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVI 

  	
  Hedge Agreements

  	
  192

  
	
  16.1. 

  	
  Hedge Agreements

  	
  192

  
					

 

	
  Schedules

  	
   

  	
   

  
	
  Schedule A

  	
  Schedule of Collateral Debt Securities as of the Closing Date

  	
   

  
	
  Schedule B

  	
  LIBOR Formula

  	
   

  
	
  Schedule C

  	
  Schedule of Temporary Ramp-Up Securities

  	
   

  
	
  Schedule D-1

  	
  S&P’s Recovery Rate Matrix

  	
   

  
	
  Schedule D-2

  	
  Moody’s Recovery Rate Matrix

  	
   

  
	
  Schedule E

  	
  Auction Procedures

  	
   

  
	
  Schedule F

  	
  S&P’s Notching Criteria

  	
   

  
	
  Schedule G

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

  	
   

  
	
  Schedule H

  	
  S&P’s Industry Classification Groups

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibits

  	
   

  	
   

  
	
  Exhibit A-1

  	
  Form of Regulation S Global Note

  	
   

  
	
  Exhibit A-2

  	
  Form of Rule 144A Global Note

  	
   

  
	
  Exhibit B-1

  	
  Form of Definitive Retained Note

  	
   

  
	
  Exhibit C-1

  	
  Form of Rule 144A Transfer Certificate

  	
   

  
	
  Exhibit C-2

  	
  Form of Regulation S Transfer Certificate

  	
   

  

 

iv

 

TABLE OF CONTENTS

(continued)

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Exhibit C-3

  	
  Form of Definitive
  Retained Note Transfer Certificate

  	
   

  
	
  Exhibit D

  	
  Form of Funding Certificate

  	
   

  
	
  Exhibit E

  	
  Secured Noteholder’s Certificat

  	
   

  
	
  Exhibit F

  	
  Definitions for Use in Exhibit F and G; Form of
  Representations, Warranties and Covenants for Mortgage Loan Interests,
  Subordinate Mortgage Loan Interests and Mezzanine Loans; Schedule F-2 to
  Exhibit F; Form of Representations, Warranties and Covenants for
  Credit Lease Loans

  	
   

  
	
  Exhibit G

  	
  Form of Representations, Warranties and Covenants for certain
  CMBS Securities, REIT Debt Securities, Real Estate CDO Securities, Trust
  Preferred Securities and CRE Debt Obligations

  	
   

  
	
  Exhibit H

  	
  Form of Real Estate Interest Servicing Agreement

  	
   

  
	
  Exhibit I

  	
  Form of Asset Transfer Agreement

  	
   

  
	
  Exhibit J

  	
  Form of Master Trust Agreement

  	
   

  

 

v

 

THIS INDENTURE dated as
of February 28, 2007 among:

 

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

 

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

 

PRELIMINARY STATEMENT

 

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

 

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

 

GRANTING CLAUSES

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

1.1.                              DEFINITIONS

 

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

 

2

 

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

 

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

 

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

 

Accountants’ Report means
a report of a firm of Independent certified public accountants of recognized
national reputation appointed by the Issuer (or the Collateral Manager on its
behalf) on the Closing Date pursuant to Section 10.16(a), which may be the
firm of Independent accountants that reviews or performs procedures with
respect to the financial reports prepared by the Issuer.

 

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

 

Act has the
meanings specified in Section 14.2.

 

Administrative Expenses means
amounts (including any applicable indemnities) due from, or accrued for, the
account of the Issuer with respect to any Payment Date to (i) the Trustee
and the Underlying Trustee pursuant to the Master Trust Agreement; (ii) the
Income Note Paying Agent pursuant to the Income Note Paying Agency Agreement; (iii) the
Collateral Administrator pursuant to the Collateral Administration Agreement; (iv) the
independent accountants, agents and counsel of the Issuer for fees and expenses
(including tax reports); (v) the Rating Agencies for fees and expenses in
connection with any Class of Notes rated by each such Rating Agency
(including expenses for credit estimates and ongoing surveillance of the
ratings of the Secured Notes); (vi) the Administrator pursuant to the
Corporate Services Agreement; (vii) the Collateral Manager and its counsel
for fees, expenses and indemnities under the Transaction Documents to the
extent set forth therein (including amounts payable under the Collateral
Management Agreement but excluding the Collateral Management Fee); (viii) any
Servicer pursuant to the Servicing Agreement for expenses and indemnities set
forth therein and any servicing fees to the extent not paid directly out of
collections received pursuant to the terms of the Servicing Agreement; (ix) any
other Person in respect of any governmental fee, charge or tax (including all
filing, registration and annual return fees payable to the Cayman Islands’
government and registered office fees); and (x) any other Person in
respect of any other fees or expenses permitted under the Indenture and the
documents delivered pursuant to or in connection with this Indenture, the
Income Note Paying Agency Agreement, the Collateral Management Agreement and
the Notes; provided
that Administrative Expenses may not include (a) any amounts
due or accrued with respect to the actions taken on, or prior to, the Closing
Date; (b) any amounts due as reimbursement for servicing advances pursuant
to any Servicing Agreement or Cure Advances; or (c) any indemnities,
servicing fees or expenses otherwise actually paid under any Servicing Agreement.

 

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

 

3

 

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

 

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

 

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

 

Aggregate Fees
and Expenses means, on any Payment Date, the sum of (i) the
Trustee Fee with respect to such Payment Date and any unpaid Trustee Fee
accrued with respect to a previous Payment Date, (ii) the Senior
Collateral Management Fee and all expenses of the Collateral Manager payable by
the Issuer pursuant to the Collateral Management Agreement with respect to such
Payment Date and any unpaid Senior Collateral Management Fee and unpaid
expenses of the Collateral Manager accrued with respect to a previous Payment
Date, (iii) the Trustee Expenses and other expenses (including other
Administrative Expenses) of the Issuer (including the fees to be paid to the
Irish Stock Exchange), (iv) taxes payable by the Issuer, if any, and (v) all
other expenses of the Issuer (including Administrative Expenses) payable on
such Payment Date pursuant to Sections 11.1(a)(1) and 11.1(b)(1) (in
each case to the extent not included in clauses (i) through (iv) above).

 

Aggregate
Outstanding Amount means, when used with respect to any of the Secured Notes
at any time, the aggregate principal amount of such Secured Notes Outstanding
at such time. Except as otherwise provided herein, (i) the Aggregate
Outstanding Amount of any Class C Notes at any time shall include the Class C
Cumulative Applicable Periodic Interest Shortfall Amount with respect to such Class C
Notes at such time, (ii) the Aggregate Outstanding Amount of any Class D  Notes at any time shall include the D Cumulative
Applicable Periodic Interest Shortfall Amount with respect to such Class D
Notes at such time, (iii) the Aggregate Outstanding Amount of any Class E
Notes at any time shall include the Class E Cumulative Applicable Periodic
Interest Shortfall Amount with respect to such Class E Notes at such time,
(iv) the Aggregate Outstanding Amount of any Class F Notes at any
time shall include the Class F Cumulative Applicable Periodic Interest
Shortfall Amount with respect to such Class F Notes at such time, (v) the
Aggregate Outstanding Amount of any Class G Notes at any time shall
include the Class G Cumulative Applicable Periodic Interest Shortfall
Amount with respect to such Class G Notes at such time, (vi) the
Aggregate Outstanding Amount of any Class H Notes at any time shall
include the Class H Cumulative Applicable Periodic Interest Shortfall
Amount with respect to such Class H Notes at such time, (vii) the
Aggregate Outstanding Amount of any Class J Notes at any time shall
include the Class J Cumulative Applicable Periodic Interest Shortfall
Amount with respect to such Class J Notes at such time and (viii) the
Aggregate Outstanding Amount of any Class K Notes at any time shall
include the Class K Cumulative Applicable Periodic Interest Shortfall
Amount with respect to such Class K Notes at such time.

 

Applicable
Periodic Interest Rate means, for any Interest Period, (i) with
respect to the Class A Notes, the applicable Class A Note Interest
Rate, (ii) with respect to the Class B Notes, the applicable Class B
Note Interest Rate, (iii) with respect to the Class C Notes, the
applicable Class C Note Interest Rate, (iv) with respect to the Class D
Notes, the applicable Class D Note Interest Rate, (v) with respect to
the Class E Notes, the applicable Class E Note Interest Rate, (vi) with
respect to the Class F Notes, the applicable Class F Note Interest
Rate, (vii) with respect to the Class G Notes, the applicable Class G
Note Interest Rate, (viii) with respect to the Class H Notes, the
applicable Class H Note Interest Rate, (ix) with

 

4

 

respect to the Class J Notes, the applicable Class J Note
Interest Rate and (x) with respect to the Class K Notes, the
applicable Class K Note Interest Rate.

 

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

 

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

 

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

 

Asset Purchase
Agreement means any purchase agreement between (i) a
seller of Real Estate Interests or, to the extent that the seller thereof is
the Collateral Manager or any of its affiliates, CMBS Securities, CRE Debt
Obligations, Real Estate CDO Securities, REIT Debt Securities or Trust
Preferred Securities and (ii) the Issuer, which shall contain provisions
regarding representations and warranties and remedies in case of a breach
thereof substantially in the form set forth in Exhibit F in the case of
Real Estate Interests and Exhibit G in the case of CMBS Securities, CRE
Debt Obligations, Real Estate CDO Securities, REIT Debt Securities or Trust
Preferred Securities.

 

Asset-Backed
Securities are debt securities that entitle the holders
thereof to receive payments that depend primarily on the cash flow from a
specified pool of financial assets, either fixed or revolving, that by their
terms convert into cash within a finite time period, together with rights or
other assets designed to assure the servicing or timely distribution of
proceeds to holders of such securities (including, for the avoidance of doubt,
leases).

 

Asset Transfer
Agreement means any asset transfer agreement
substantially in the form of Exhibit I entered into by the Issuer pursuant
to which the seller will sell, transfer, or otherwise convey, assign or cause
the assignment of certain Collateral Debt Securities to the Issuer.

 

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

 

Auction has
the meaning specified in Section 9.2.

 

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

 

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

 

Auction
Procedures has the meaning specified in Section 9.2.

 

Auction Purchase
Agreement has the meaning specified in Schedule E.

 

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

 

5

 

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

 

Available Funds means,
with respect to any Payment Date, the amount of any positive balance (of Cash
or Eligible Investments) in the Collection Account and, if the Trustee has been
so directed by 100% of the Holders of the Income Notes, any amount designated
by such Holders on deposit in the Interest Reserve Account, as of the
Calculation Date relating to such Payment Date and, with respect to any other
date, such amount as of that date.

 

Average Life means,
on any Calculation Date with respect to any Collateral Debt Security, the
quotient obtained by the Collateral Manager by dividing (i) the sum of the
products of (a) the number of years (rounded to the nearest one tenth
thereof) from such Calculation Date to the respective dates of each successive
distribution of principal of such Collateral Debt Security (assuming that (1) no
Collateral Debt Securities default or are sold, (2) any optional
redemption of the Collateral Debt Securities occurs in accordance with their
respective terms and (3) any extension of the Real Estate Interests is
exercised) and (b) the respective amounts of principal of such scheduled
distributions by (ii) the sum of all successive scheduled distributions of
principal on such Collateral Debt Security.

 

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

 

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

 

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

 

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

 

6

 

Benefit Plan
Investor means (i) an “employee benefit plan” (as
defined in Section 3(3) of ERISA), that is subject to part 4 of Title
I of ERISA, (ii) a “plan” (as defined in Section 4975(e)(1) of
the Code), including, without limitation, individual retirement accounts and
Keogh plans or (iii) an entity whose underlying assets include plan assets
by reason of such an employee benefit plan’s or plan’s investment in such
entity, including, without limitation, as applicable, an insurance company
general account.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

CDS Principal
Balance means the aggregate Principal Balance of (i) Collateral
Debt Securities included in the Collateral (including any Collateral Debt
Securities that have become Defaulted Securities or Written Down Securities)
and (ii) Eligible Investments, in each case, purchased with the proceeds
of the issuance of the Notes or thereafter with Collateral Principal Collections.

 

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

 

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

 

7

 

Class means
each of the classes comprised of the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes, the Class E Notes,
the Class F Notes, the Class G Notes, the Class H Notes, the Class J
Notes, the Class K Notes and the Income Notes.

 

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

 

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

 

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

 

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

 

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

 

Class A-1
Note Interest Rate means LIBOR plus 0.255%.

 

Class A-1
Notes means the U.S.$512,000,000 aggregate principal
amount of Class A-1 Floating Rate Notes due 2052.

 

Class A-2
Note Interest Rate means LIBOR plus 0.28%.

 

Class A-2
Notes means the U.S.$96,000,000 aggregate principal
amount of Class A-2 Floating Rate Notes due 2052.

 

Class A-3
Note Interest Rate means LIBOR plus 0.30%.

 

Class A-3
Notes means the U.S.$48,000,000 aggregate principal
amount of Class A-3 Floating Rate Notes due 2052.

 

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

 

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

 

Class A/B
Interest Coverage Test means, for so long as any Class A
Notes or Class B Notes remain Outstanding, a test that is satisfied as of
any Measurement Date if the Class A/B Interest Coverage Ratio as of such
date of determination is equal to or greater than 117.75%; provided
that for any

 

8

 

Measurement Date occurring on the Effective Date through the Payment
Date immediately subsequent to the Effective Date, the Class A/B Interest
Coverage Test will be satisfied if Class A/B Interest Coverage Ratio is
equal to or greater than 100%.

 

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

 

Class A/B
Principal Coverage Test means, for so long as any Class A
Notes or Class B Notes remain Outstanding, a test satisfied on any
Measurement Date if the Class A/B Principal Coverage Ratio as of such date
of determination is equal to or greater than 108.72%.

 

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

 

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

 

Class B
Note Interest Rate means LIBOR plus 0.35%.

 

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

 

Class B
Notes means the U.S.$37,280,000 aggregate principal
amount of Class B Floating Rate Notes due 2052.

 

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

 

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

 

Class C/D/E
Coverage Tests means the Class C/D/E Interest
Coverage Test and the Class C/D/E Principal Coverage Test.

 

Class C/D/E
Interest Coverage Ratio means, on any Measurement Date,
the ratio (expressed as a percentage) of (x) to (y), where (x) is
equal to the Interest Coverage Amount as of such Measurement Date and where (y) is
the sum of the Periodic Interest for the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes and the Class E
Notes for the Payment Date immediately following such

 

9

 

Measurement Date; provided that the
Interest Coverage Amount shall be calculated after giving effect to any
scheduled payment to the Non-Monthly Pay Asset Interest Reserve Account for the
Payment Date immediately following such Measurement Date.

 

Class C/D/E
Interest Coverage Test means, for so long as any Class A
Notes, Class B Notes, Class C Notes, Class D Notes or Class E
Notes remain Outstanding, a test that is satisfied as of any Measurement Date
if the Class C/D/E Interest Coverage Ratio as of such date of
determination is equal to or greater than 106.60%; provided that for any
Measurement Date occurring on the Effective Date through the Payment Date
immediately subsequent to the Effective Date, the Class C/D/E Interest
Coverage Test will be satisfied if Class C/D/E Interest Coverage Ratio is
equal to or greater than 100%.

 

Class C/D/E
Principal Coverage Ratio means, on any Measurement Date,
the ratio (expressed as a percentage) of (x) to (y), where (x) is the
Principal Coverage Amount as of such Measurement Date and (y) is the sum
of the aggregate principal amount of the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes and the Class E
Notes Outstanding as of such Measurement Date.

 

Class C/D/E
Principal Coverage Test means, for so long as any Class A
Notes, Class B Notes, Class C Notes, Class D Notes or Class E
Notes remain Outstanding, a test satisfied on any Measurement Date if the Class C/D/E
Principal Coverage Ratio as of such date of determination is equal to or
greater than 104.86%.

 

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

 

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

 

Class C
Note Interest Rate means 5.7891%.

 

Class C
Notes means the U.S.$12,800,000 aggregate principal
amount of Class C Deferrable Fixed Rate Notes due 2052.

 

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

 

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

 

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

 

10

 

Class D Note Interest Rate means
LIBOR plus 0.57%.

 

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

 

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

 

Class D Notes means
the U.S.$23,200,000 aggregate principal amount of Class D Deferrable
Floating Rate Notes due 2052.

 

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

 

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

 

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

 

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

 

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

 

Class E Note Interest Rate means
LIBOR plus 0.68%.

 

Class E Notes means
the U.S.$4,800,000 aggregate principal amount of Class E Deferrable
Floating Rate Notes due 2052.

 

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

 

11

 

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

 

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

 

Class F
Note Interest Rate means LIBOR plus 1.05%.

 

Class F
Notes means the U.S.$3,600,000 aggregate principal amount
of Class F Deferrable Floating Rate Notes due 2052.

 

Class F/G/H
Coverage Tests means the Class F/G/H Interest
Coverage Test and the Class F/G/H Principal Coverage Test.

 

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

 

Class F/G/H
Interest Coverage Test means, for so long as any Class A
Notes, Class B Notes, Class C Notes, Class D Notes, Class E
Notes, Class F Notes, Class G Notes or Class H Notes remain
Outstanding, a test that is satisfied as of any Measurement Date if the Class F/G/H
Interest Coverage Ratio as of such date of determination is equal to or greater
than 101.00%; provided that for any Measurement Date occurring
on the Effective Date through the Payment Date immediately subsequent to the
Effective Date, the Class F/G/H Interest Coverage Test will be satisfied
if Class F/G/H Interest Coverage Ratio is equal to or greater than 100%.

 

Class F/G/H
Principal Coverage Ratio means, on any Measurement Date,
the ratio (expressed as a percentage) of (x) to (y), where (x) is the
Principal Coverage Amount as of such Measurement Date and (y) is the sum
of the aggregate principal amount of the Class A Notes, Class B  Notes, Class C Notes, Class D
Notes, Class E Notes, Class F  Notes, the Class G Notes and the Class H
Notes Outstanding as of such Measurement Date.

 

Class F/G/H
Principal Coverage Test means, for so long as any Class A
Notes, Class B Notes, Class C Notes, Class D Notes, Class E
Notes, Class F Notes, Class G Notes or Class H Notes remain
Outstanding, a test satisfied on any Measurement Date if the Class F/G/H
Principal Coverage Ratio as of such date of determination is equal to or
greater than 102.84%.

 

Class F
Note Break-Even Default Rate means the maximum percentage
of defaults that the portfolio of Collateral Debt Securities can sustain, as
determined by application of the S&P CDO Monitor, after giving effect to
S&P’s assumptions on recoveries, defaults and timing and to the Priority of

 

12

 

Payments such that sufficient funds will remain for the payment of
principal of the Class F Notes in full by their Stated Maturity Date and
the ultimate payment of interest on such Class F Notes by their Stated
Maturity Date.

 

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

 

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

 

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

 

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

 

Class G
Note Interest Rate means LIBOR plus 1.30%.

 

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

 

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

 

Class G
Notes means the U.S.$14,080,000 aggregate principal
amount of Class G Deferrable Floating Rate Notes due 2052.

 

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

 

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

 

Class H
Cumulative Applicable Periodic Interest Shortfall Amount means,
with respect to any date of determination, the sum of all Class H
Applicable Periodic Interest Shortfall Amounts with respect

 

13

 

to all Payment Dates preceding such date of determination, less any
amounts applied on all preceding Payment Dates pursuant to the Priority of
Payments to reduce such sum.

 

Class H
Note Interest Rate means LIBOR plus 1.60%.

 

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

 

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

 

Class H
Notes means the U.S.$7,200,000 aggregate principal amount
of Class H Deferrable Floating Rate Notes due 2052.

 

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

 

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

 

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

 

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

 

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

 

Class J
Note Interest Rate means 7.8016% per annum.

 

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

 

14

 

Class J Notes  means the
U.S.$7,040,000 aggregate principal amount of Class J  Deferrable
Fixed Rate Notes due 2052.

 

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

 

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

 

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

 

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

 

Class K Note Interest Rate  means 8.4305%
per annum.

 

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

 

Class K Notes  means the
U.S.$6,000,000 aggregate principal amount of Class K Deferrable Fixed Rate
Notes due 2052.

 

Clearing Agency  means DTC,
Euroclear or Clearstream.

 

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

 

Clearstream  means
Clearstream Banking, société anonyme.

 

CLO Securities  means
securities that entitle the holders thereof to receive payments that depend
(except for rights and other assets designed to assure the servicing or timely
distribution of proceeds to holders of the CLO Securities) on the cashflow from
a portfolio of primarily commercial loans.

 

Closing Date  means February 28,
2007.

 

CMBS Conduit Securities  means
Commercial Mortgage Backed Securities (a) issued by a single-seller or
multi-seller conduit under which the holders of such Commercial Mortgage Backed
Securities have recourse to a specified pool of assets (but not other assets
originated by the conduit that support payments on other series of securities)
and (b) that entitle the holders thereof to receive payments

 

15

 

that depend (except for rights or other assets designed to assure the
servicing or timely distribution of proceeds to holders of the Commercial
Mortgage Backed Securities) on the cash flow from a pool of commercial mortgage
loans.

 

CMBS Credit
Tenant Lease Securities means Commercial Mortgage Backed
Securities (other than CMBS Large Loan Securities and CMBS Conduit Securities
but including Tenant Lease Loan Interests) that (i) have a public rating
from a Rating Agency, (ii) incorporate a servicer or similar party to
service the related leased property in a manner that satisfies Rating Agency
servicing criteria for the servicing of commercial mortgage loans of this type
and (iii) entitle the holders thereof to receive payments that depend on
the cash flow from a single or a pool of commercial mortgage loans made to
finance the acquisition, construction and improvement of properties leased to
corporate tenants (or on the cash flow from such leases); provided that
such dependence may in addition be conditioned upon rights or additional assets
designed to assure the servicing or timely distribution of proceeds to holders
of the CMBS Securities such as a financial guaranty insurance policy.

 

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

 

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

 

CMBS Re-REMIC
Securities means any security that is secured directly
by, referenced to or representing ownership of, a pool at least 85% of which
consists of CMBS Conduit Securities, other CMBS Securities or certificates
representing a beneficial interest therein, but not including any Synthetic
Security. For the avoidance of doubt, a CMBS Re-REMIC Security shall include
any security backed by more than one credit default swap or referencing more
than one Reference Obligation or a synthetic collateralized debt obligation or
a synthetic resecuritization that (in each case) primarily references more than
one CMBS Conduit Security or other CMBS Security or certificates representing a
beneficial interest therein.

 

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

 

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

 

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

 

Collateral has
the meaning specified in the granting clauses.

 

16

 

Collateral
Account has the meaning specified in Section 10.3.

 

Collateral
Administration Agreement means the Collateral
Administration Agreement, dated, February 28, 2007, by and among the
Issuer, the Collateral Manager and the Collateral Administrator, as the same
may be amended and modified from time to time in accordance with its terms.

 

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

 

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

 

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

 

(i)                                          General
Limitations

 

(a)                                  the
aggregate Principal Balance of all Collateral Debt Securities that are PIK
Bonds (excluding the Collateral Debt Securities identified on Annex B as KDIAK
2006-1 and ANSONIA 2006-1) does not exceed the greater of 7.5% of the CDS
Principal Balance or U.S.$60,000,000;

 

(b)                                 the
aggregate amount of the CDS Principal Balance for which no related interest
rate Hedge Agreement is in place does not exceed 5% of the amount equal to (a) the
principal amount of the Floating Rate Notes on the first day of the related Due
Period minus (b) the aggregate Principal Balance of the Floating Rate
Collateral Debt Securities on the first day of such Due Period;

 

(c)                                  the
aggregate Principal Balance of all Collateral Debt Securities that provide for
periodic payments of interest in cash less frequently than monthly (other than
Collateral Debt Securities that are the subject of a Cash Flow Hedge Agreement)
does not exceed 35% of the CDS Principal Balance;

 

(d)                                 the
aggregate Principal Balance of all Collateral Debt Securities having a stated
maturity date or rated final distribution date later than the Stated Maturity
Date does not exceed 10% of the CDS Principal Balance (the “10%
bucket”), provided,  that in no event may the stated
maturity date or rated final distribution date of any CMBS Security or Real
Estate CDO Security be more than 10 years later than the Stated Maturity Date
and of any Real Estate Interest be more than 5 years prior to the Stated
Maturity Date; provided, further,  that for the CMBS Securities that
fall into the 10% bucket, on a look-through basis, none of the underlying loans
may mature (with extension options) later than 5 years prior to the Stated
Maturity Date; provided, further,  that in no event may the stated
maturity date or rated final distribution date of any REIT Debt Security or CRE

 

17

 

Debt Obligation be later than the Stated Maturity Date; provided further, that in no event may the
stated maturity date or rated final distribution date of any Trust Preferred
Security be more than 5 years later than the Stated Maturity Date.

 

(ii)                                       Collateral Debt Security Type Limitations

 

(a)                                  the
aggregate Principal Balance of all Collateral Debt Securities that are CMBS
Securities does not exceed the greater of 85% of the CDS Principal Balance or U.S.$680,000,000;
provided that no more than the
greater of 50% of the CDS Principal Balance or U.S.$400,000,000 shall consist
of CMBS Large Loan Securities, not more than the greater of 10% of the CDS
Principal Balance or U.S.$80,000,000 shall consist of CMBS Credit Tenant Lease
Securities and not more than the greater of 20% of the CDS Principal Balance or
U.S.$ 160,000,000, shall consist of CMBS Re-REMIC Securities;

 

(b)                                 the
sum of the aggregate Principal Balances of all REIT Debt Securities, Trust
Preferred Securities and CRE Debt Obligations does not exceed the greater of
30% of the CDS Principal Balance or U.S.$240,000,000; provided that not more than the greater of
4.0% of the CDS Principal Balance or U.S.$32,000,000 shall consist of Trust
Preferred Securities and not more than the greater of 20% of the CDS Principal
Balance or U.S.$160,000,000 shall consist of CRE Debt Obligations;

 

(c)                                  the
aggregate Principal Balance of all Collateral Debt Securities that are Real
Estate CDO Securities does not exceed the greater of 20% of the CDS Principal
Balance or U.S.$ 160,000,000;

 

(d)                                 the
aggregate Principal Balance of all Collateral Debt Securities that are Real
Estate Interests does not exceed the greater of 5.0% of the CDS Principal
Balance or U.S.$40,000,000;

 

(e)                                  the
aggregate Principal Balance of all Collateral Debt Securities that are
Synthetic Securities does not exceed the greater of 20% of the CDS Principal
Balance or U.S.$ 160,000,000;

 

(iii)            Single Issue Limitations

 

(a)                                  the
aggregate Principal Balance of all Collateral Debt Securities that are part of
the same Issue does not exceed the greater of 3.5% of the CDS Principal Balance
or U.S.$28,000,000, except for up to 4 Issues not to exceed the greater of 5.0%
of the CDS Principal Balance or U.S.$40,000,000;

 

(iv)                                   Property Type Limitations: the aggregate
Principal Balance of all CMBS Conduit Securities, CMBS Large Loan Securities,
CMBS Credit Tenant Lease Securities, CMBS Franchise Securities and Real Estate
Interests related to Mortgaged Properties that are classified as: (A) multifamily
properties does not exceed the greater of 50% of the CDS Principal Balance or
U.S.$400,000,000; (B) retail properties does not exceed the greater of 40% of
the CDS Principal Balance or U.S.$320,000,000; (C) office properties does not
exceed the greater of 40% of the CDS Principal Balance or U.S.$320,000,000; (D)
lodging properties does not exceed the greater of 30% of the CDS Principal
Balance or U.S.$240,000,000; (E) healthcare properties does not exceed the
greater of 20% of the CDS Principal Balance or U.S.$160,000,000 (provided, further, that skilled-nursing
healthcare properties does not exceed the greater of 10% of the CDS Principal
Balance or U.S.$80,000,000 and assisted living health care properties does not
exceed

 

18

 

the greater of 10% of the CDS Principal Balance or U.S.$ 80,000,000); (F) industrial
properties does not exceed the greater of 25% of the CDS Principal Balance or
U.S.$200,000,000; (G) self storage properties does not exceed the greater
of 10% of the CDS Principal Balance or U.S.$80,000,000; and (H) any other
property type other than those specified in clauses (A) through (G) above
does not exceed the greater of 10% of the CDS Principal Balance or U.S.$80,000,000;

 

(v)                                      Geographic Limitations: the
aggregate Principal Balance of all CMBS Conduit Securities, CMBS Large Loan
Securities, CMBS Credit Tenant Lease Securities, CMBS Franchise Securities and
Real Estate Interests related to Mortgaged Properties located in: (A) California
does not exceed the greater of 40% of the CDS Principal Balance or
U.S.$320,000,000; (B)  New York does not
exceed the greater of 40% of the CDS Principal Balance or U.S.$320,000,000; (C)
 Texas does not exceed the greater of 25% of the CDS Principal
Balance or U.S.$200,000,000; (D)   Florida does not exceed the greater of
30% of the CDS Principal Balance or U.S.$240,000,000; and (E) any other
single state other than California, New York, Texas and Florida does not exceed
the greater of 20% of the CDS Principal Balance or U.S.$160,000,000;

 

For purposes of determining compliance with any Collateral
Concentration Limitation, (a) all calculated percentages will be rounded
to the nearest hundredth of 1% (e.g., 5.13%), (b) Temporary Ramp-Up
Securities will be excluded from the calculation of the Collateral
Concentration Limitations and (c) with respect to each Synthetic Security,
satisfaction of the Collateral Concentration Limitations, for purposes of
clauses (i)(a), (ii)(a)-(d), (iii), (iv) and (v) above, shall be
based on the related Reference Obligation and, for purposes of clauses (i)(b)-(d) and
(ii)(e) above, shall be based on the Synthetic Security itself; provided that if
the Collateral Manager determines that a Synthetic Security should, for
purposes of clause (i)(a) above, be based instead on the Synthetic
Security, the Collateral Manager may seek Rating Agency Confirmation from
S&P with respect to the treatment of such Synthetic Security and any
similar Synthetic Security entered into subsequently.

 

Notwithstanding the foregoing, during the Ramp-Up Period the Collateral
Quality Tests need not be met. At all times, the dollar amount limitation set
forth in any individual Collateral Concentration Limitation will be disregarded
for the purposes of the Reinvestment Criteria, but will be taken into account
solely for purposes of any reports to be prepared under the Indenture.

 

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

 

Collateral
Interest Collections means, with respect to any Due
Period and the related Payment Date, without duplication, the sum of (i) (a) all
cash payments of interest with respect to any Collateral Debt Securities and
Eligible Investments included in the Collateral (including any Sale Proceeds of
a Collateral Debt Security sold at a price greater than or equal to its
Principal Balance representing unpaid interest accrued thereon to the date of
the sale thereof to the extent not treated as Collateral Principal Collections
at the option of the Collateral Manager) and (b) all Synthetic Security
Periodic Payments payable to the Issuer under a Synthetic Security, net, in the
case of a Derivative Contract, of any Synthetic Security Periodic Payments payable
by the Issuer to the Derivative Contract Counterparty during the related
Collection Period, but excluding in the case of the foregoing clauses (a) and
(b): (1) all funds received on a Defaulted Security (including any unpaid
interest) and any unpaid interest accrued on a Deferred Interest PIK  Bond or a Written Down Security to
the date of sale which are received during the related Due Period, and (2) any
servicing fees and other fees, expenses or indemnities paid directly to any
Servicer pursuant to any Servicing Agreement and any other amounts paid out of
collections of interest pursuant to any Servicing Agreement to reimburse the
related Servicer for servicing advances made by it thereunder which are
received during the related Due Period, (ii) all payments on Eligible
Investments

 

19

 

purchased with Collateral Interest Collections, (iii) payments
received or scheduled to be received from a Hedge Counterparty under any Hedge
Agreement (including the Initial Hedge Agreement) on the related Payment Date,
excluding any payments received from a Hedge Counterparty upon reduction of the
notional amount and any termination payments (provided that so
long as the Notes are Outstanding, any termination payments received from a
Hedge Counterparty will be used to enter into a substitute Hedge Agreement to
the extent required to maintain the then-current rating of the Notes by each
Rating Agency), (iv) all amendment and waiver fees, all late payment fees
and all other fees and commissions received during the related Due Period
(other than fees and commissions received in connection with the sale,
restructuring, workout or default of Collateral Debt Securities or in
connection with Defaulted Securities or Written Down Securities) (excluding any
payments representing exit fees, extension fees or prepayment premiums paid in
connection with Real Estate Interests), (v) the Principal Balance of any
Eligible Investments purchased with Collateral Interest Collections, (vi) all
interest accrued on the Closing Date on Collateral Debt Securities included in
the Collateral, (vii) any amounts on deposit in the Non-Monthly Pay Asset
Interest Reserve Account, (viii) any amounts in the Discretionary Ramp-Up
Interest Reserve Account and the Interest Reserve Account that are transferred
to the Payment Account, (ix) after the Effective Date, at the option of
the Collateral Manager, any amount on deposit in the Expense Reserve Account in
excess of U.S.$25,000, (x) all income received during the related Due
Period on any Eligible Investments then in any Derivative Contract Counterparty
Accounts, to the extent transferred to the Collection Account pursuant to and
in accordance with Section 10.11 and (xi) all proceeds from the foregoing;
provided, however, that
Collateral Interest Collections shall not include (i) the funds and other
property (including the paid-up share capital of the Issuer) with respect to
the Income Notes and the bank account in which such funds and the proceeds
thereof are held, (ii) principal of any Collateral Debt Security
representing capitalized interest after the date of purchase thereof by the
Issuer, (iii) Purchased Accrued Interest or (iv) any amounts
contributed by the Income Noteholders as capital contributions pursuant to Section 4.5
of the Income Note Paying Agency Agreement.

 

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

 

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

 

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

 

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

 

Collateral
Principal Collections Sub-Account has the meaning
specified in Section 10.6(a) hereof.

 

20

 

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

 

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

 

(1)                                 the
Fitch Weighted Average Rating Factor does not exceed 10;

 

(2)                                 (a) the
Weighted Average Fixed Rate Coupon as of such date equals or exceeds 5.95% and (b) the
Weighted Average Spread as of such date equals or exceeds 1.60%;

 

(3)                                 the
Weighted Average Life Test is satisfied;

 

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

 

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

 

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

 

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

 

(8)                                 the
Herfindahl Score of the Collateral Debt Securities is at least 43.

 

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

 

Collateralization
Event means, provided that no Substitution Event has occurred,
any of the following events: (a) the Hedge Ratings Determining Party’s
short-term rating from Moody’s is lower than “P-1” or the long-term rating from
Moody’s is below “A2” or, if the Hedge Ratings Determining Party does not have
a short-term rating from Moody’s, the long-term rating of such Hedge Ratings
Determining Party from Moody’s is below “Al”; (b) the Hedge Ratings
Determining Party’s short-term rating from Fitch is lower than “F1” or the
long-term rating of the Hedge Ratings Determining Party from Fitch is lower
than “A”, or (c) the short term rating of the Hedge Ratings Determining
Party from S&P is lower than “A-1” or, solely in the case of an interest
rate swap, if the Hedge Ratings Determining Party does not have a short term
rating from S&P, the long term rating of such Hedge Ratings Determining
Party is lower than “A+”.

 

Collection
Account means the Securities Account designated the “Collection
Account” and established in the name of the Trustee pursuant to Section 10.6,
including the Collateral Principal Collections Sub-Account.

 

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

 

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

 

Commission means
the United States Securities and Exchange Commission.

 

21

 

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

 

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

 

Controlling Person means any other person
(other than a Benefit Plan Investor) that has discretionary authority or
control with respect to the assets of the Issuer, a person who provides
investment advice for a fee (direct or indirect) with respect to the assets of
the Issuer, or any “affiliate” (within the meaning of 29 C.F.R. Section 2510.3-101(0(3))
of any such person.

 

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

 

Corporate Trust Office means the designated
corporate trust office of the Trustee, currently located at 181 West Madison
Street, 32nd Floor, Chicago, Illinois 60602, Attention: CDO Trust Services Group –
N-Star Real Estate CDO IX, Ltd., telephone number 312-904-0467, fax number
312-602-3935, or such other address as the Trustee may designate from time to time
by notice to the Secured Noteholders, the Income Noteholders, the Collateral
Manager and the Issuer or the principal corporate trust office of any successor
Trustee.

 

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

 

Coverage Ratios means the Interest
Coverage Ratios and the Principal Coverage Ratios.

 

CRE Debt Obligations means (i) a loan,
security or similar full recourse obligation made by a bank or other financial
institution based on the credit of the operating entity obligor or (ii) any
participation interest in, or assignment of, an asset which satisfies the
criteria in clause (i) of this definition, which obligor in the case of
clauses (i) and (ii) is a real estate operating company, real estate
development company, homebuilding company or any other company whose business
is significantly related to real estate, or any subsidiary thereof; provided that no Real Estate
Interests, REIT Debt Securities or Trust Preferred Securities shall constitute
CRE Debt Obligations.

 

Credit Improved Security means a Collateral Debt
Security or, with respect to a Synthetic Security, the Reference Obligation
thereof, that, since the date of purchase by the Issuer, in the Collateral
Manager’s reasonable business judgment, has improved in credit quality.

 

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

 

22

 

Credit Risk
Event means, with respect to any Collateral Debt Security
an event or circumstance that constitutes a change in the condition of the
issuer of such Collateral Debt Security (or of available information with
respect to such issuer) that evidences, in the good faith judgment of the
Collateral Manager, (A) a significant risk of such Collateral Debt
Security materially declining in credit quality, or (B) a significant
risk, with a lapse of time, of such Collateral Debt Security becoming a
Defaulted Security or a Written Down Security.

 

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

 

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

 

Cure Advance means,
in respect of any Real Estate Interest that is a Subordinate Loan Interest or a
Mezzanine Loan, amounts advanced by a Holder of Income Notes pursuant to the
Income Note Paying Agency Agreement to permit the Issuer to exercise its right
to cure monetary defaults with respect to any commercial mortgage loan or
mezzanine loan that ranks senior in priority to the related Real Estate
Interest in respect of the related commercial property, in each case in accordance
with the applicable Underlying Instrument.

 

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

 

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

 

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

 

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

 

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

 

23

 

Pursuant to this Indenture, a Deemed Floating Rate Collateral Debt
Security will be deemed a Floating Rate Collateral Debt Security with a spread
over LIBOR equal to the related Deemed Floating Spread.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

24

 

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

 

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

 

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

 

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

 

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

 

(vi)                             that
is a Synthetic Security (A) that has a single Reference Obligation which
would (if owned by the Issuer) constitute a Defaulted Security or (B) with respect to which the
Derivative Contract Counterparty is a “Defaulting Party” or the sole “Affected
Party” (as such terms are defined therein) thereunder; or

 

25

 

(vii)                          any
Trust Preferred Security with respect to which interest has been deferred or
capitalized and remains outstanding.

 

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

 

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

 

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

 

Definitive
Offered Note has the meaning specified in Section 2.1(c).

 

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

 

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

 

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

 

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

 

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

 

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

 

Derivative
Contract Counterparty Account means each account
established for the benefit of a Derivative Contract Counterparty in connection
with a Derivative Contract pursuant to Section 10.11  hereof.

 

26

 

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

 

Derivative
Contract Issuer Account means each account established
for the benefit of the Issuer in connection with a Derivative Contract pursuant
to Section 10.12 hereof

 

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

 

Discretionary
Ramp-Up Interest Reserve Account means the Securities
Account designated the “Discretionary Ramp-Up Interest Reserve Account” and
established in the name of the Trustee pursuant to Section 10.9.

 

Discretionary
Ramp-Up Interest Reserve Amount means, on the Closing
Date, the amount equal to approximately U.S.$1,000,000.

 

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

 

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

 

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

 

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

 

Due Period means,
with respect to each Payment Date, the period beginning on the day following
the last day of the preceding Due Period relating to the preceding Payment Date
(or, in the case of the Due Period that is applicable to the first Payment
Date, beginning on the Closing Date) and ending on the close of business on the
fourth Business Day preceding such Payment Date; provided that, if the occurrence
of a non-business day causes a scheduled distribution on any Collateral Debt
Security or other security held as Collateral to be received during the period
between the end of the Due Period in which such payment would otherwise have
been received and the related Payment Date, such payment will be deemed to have
been received during such Due Period.

 

27

 

Effective Date means the date that is
the earliest of (i) the 270 days following the Closing Date, (ii) the
date on which the Issuer has purchased Collateral Debt Securities, excluding
Temporary Ramp-Up Securities, having an aggregate par amount of U.S.$
800,000,000 or (iii) such earlier date (if any) that is designated by the
Collateral Manager by notice to the Trustee under the Indenture; provided that in the event that
such day does not fall on a Business Day, the Effective Date shall be the next
succeeding Business Day.

 

Eligibility
Criteria has the meaning specified in Section 12.2.

 

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

 

(i)                                    cash;

 

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

 

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

 

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

 

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

 

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

 

(v)                                unleveraged repurchase
obligations (if treated as debt for tax purposes by the issuer) with respect to
any security described in clause (ii) above, entered into with a
depository institution or trust company (acting as principal) described in
clause (iii) or entered into with broker-dealers registered with the
Commission (acting as principal) whose short-term debt has a credit rating of

 

28

 

“P-1” by Moody’s, “A-1+” by S&P and “F1+” if rated by
Fitch at the time of such investment in the case of any repurchase obligation
for a security having a maturity not more than 183 days from the date of its
issuance and whose long-term debt has a credit rating of at least “Aa2” by
Moody’s, “AA+” by S&P and “AA” if rated by Fitch at the time of such
investment in the case of any repurchase obligation for a security having a
maturity more than 183 days from the date of its issuance;

 

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

 

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

 

(viii)                       in the case of Eligible
Investments held in the Uninvested Proceeds Account only, Temporary Ramp Up
Securities; and

 

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

 

provided that (a) Eligible Investments purchased with
funds in any account will be held until maturity except as otherwise
specifically provided herein and will include only such obligations or
securities as mature no later than the Business Day prior to the Payment Date
next succeeding the date of investment in such obligations or securities,
unless such Eligible Investments are investments of the type described in
clause (i) or (iii) above, in which event such Eligible Investments
may mature on such Payment Date and (b) none of the foregoing obligations
or securities will constitute Eligible Investments if all, or substantially
all, of the remaining amounts payable thereunder will consist of interest and
not principal payments, if such security is purchased at a price in excess of
100% of par, if such security is subject to substantial non-credit related
risk, as determined by the Collateral Manager in its judgment, if any income
from or proceeds of disposition of the obligation or security is or will be
subject to deduction or withholding for or on account of any withholding or
similar tax or the acquisition (including the manner of acquisition),
ownership, enforcement or disposition of the obligation or security will
subject the Issuer to net income tax in any jurisdiction outside its
jurisdiction of incorporation, or if such security has an assigned rating with
an “r”, “t”, “p”, “pi” or “q” subscript, or if such security is a
mortgage-backed security or if such security is subject to an Offer; provided, further, that, notwithstanding the
foregoing, Eligible Investments with a maturity greater than one Business Day
and a rating of “A-1” by S&P may only be held by the Issuer in an amount up
to 20% of the aggregate Principal Balance of the Notes Outstanding.

 

29

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Event of Default
has the meaning specified in Section 5.1.

 

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

 

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

 

Expense Reserve
Account means the Securities Account designated the “Expense
Reserve Account” and established in the name of the Trustee pursuant to Section 10.7.

 

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

 

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

 

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

 

Fitch means
Fitch, Inc., Fitch Ratings, Ltd. and their subsidiaries, including
Derivative Fitch, Ltd. and any successor(s) thereto.

 

Fitch Industry
Classification Group means any of the Fitch industry and
sub-industry classification groups as currently set forth in “Global Rating
Criteria for Collateralised Debt Obligations”

 

30

 

available at www.fitchratings.com and www.derivativefitch.com. Fitch
may, from time to time, modify or replace this criteria which may have modified
or replaced this report if Fitch provides notice thereof to the Issuer, the
Collateral Manager and the Trustee.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

	
  Fitch Rating

  	
   

  	
  Fitch Rating Factor

  	
   

  	
  Fitch Rating

  	
   

  	
  Fitch Rating Factor

  	
   

  
	
  AAA

  	
   

  	
  .019

  	
   

  	
  BB

  	
   

  	
  13.53

  	
   

  
	
  AA+

  	
   

  	
  .057

  	
   

  	
  BB-

  	
   

  	
  18.46

  	
   

  
	
  AA

  	
   

  	
  .089

  	
   

  	
  B+

  	
   

  	
  22.84

  	
   

  
	
  AA-

  	
   

  	
  1.15

  	
   

  	
  B

  	
   

  	
  27.67

  	
   

  
	
  A+

  	
   

  	
  1.65

  	
   

  	
  B-

  	
   

  	
  34.98

  	
   

  
	
  A

  	
   

  	
  1.85

  	
   

  	
  CCC+

  	
   

  	
  43.36

  	
   

  
	
  A-

  	
   

  	
  2.44

  	
   

  	
  CCC

  	
   

  	
  48.52

  	
   

  
	
  BBB+

  	
   

  	
  3.13

  	
   

  	
  CC

  	
   

  	
  77.00

  	
   

  
	
  BBB

  	
   

  	
  3.74

  	
   

  	
  C

  	
   

  	
  95.00

  	
   

  

 

31

 

	
  Fitch Rating

  	
   

  	
  Fitch Rating Factor

  	
   

  	
  Fitch Rating

  	
   

  	
  Fitch Rating Factor

  	
   

  
	
  BBB-

  	
   

  	
  7.26

  	
   

  	
  DDD-D

  	
   

  	
  100.00

  	
   

  
	
  BB+

  	
   

  	
  10.18

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Fitch Recovery
Rate means, with respect to a Collateral Debt Security on
any Calculation Date, an amount equal to the percentage corresponding to the
domicile, original rating, seniority and tranche thickness of such item of
Collateral Debt Security as currently set forth in the Fitch Recovery Rate
Matrix available in the last version of Fitch’s Default Vector Model, which can
be downloaded from www.Derivativefitch.com and www.fitchratings.com. Fitch may, from time to time, modify or
replace this criteria and Fitch may apply the current criteria which may have
modified or replaced this report if Fitch provides notice thereof to the
Issuer, the Collateral Manager and the Trustee.

 

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

 

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

 

Fixed Rate
Excess means, as of any Measurement Date, a fraction
(expressed as a percentage), the numerator of which is equal to the product of (a) the
greater of zero and the excess, if any, of the Weighted Average Fixed Rate
Coupon for such Measurement Date over 5.95%, and (b) the aggregate
Principal Balance of all Collateral Debt Securities that are Fixed Rate
Collateral Debt Securities (excluding, in each case, Defaulted Securities,
Written Down Securities, Deferred Interest PIK Bonds and Deemed Floating Rate
Collateral Debt Securities) and the denominator of which is the aggregate
Principal Balance of all Collateral Debt Securities that are Floating Rate
Collateral Debt Securities or Deemed Floating Rate Collateral Debt Securities
(excluding, in each case, Defaulted Securities, Written Down Securities and
Deferred Interest PIK Bonds).

 

Fixed Rate Notes
means the Class C Notes, the Class J Notes and
the Class K Notes.

 

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

 

Floating Rate
Notes means, collectively, the Class A Notes, the Class B
Notes, the Class D Notes, the Class E Notes, the Class F Notes,
the Class G Notes and the Class H Notes.

 

32

 

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

 

Four-Month
Period means, at any time during the Reinvestment Period,
the period of four months following the earliest date as of which the number of
Key Managers that are employed on a substantially full-time basis in the
position of managing director or other management-level employee by the
Collateral Manager (or any of its successors or assigns permitted pursuant to Section 16
of the Collateral Management Agreement) becomes less than one.

 

Franchise Loan
Securities means securities that entitle the holders
thereof to receive payments that depend (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of such securities) on the cashflow from a pool of franchise loans made to
operators of franchises which, for the avoidance of doubt, do not include CMBS
Franchise Securities.

 

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

 

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

 

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

 

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

 

33

 

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

 

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

 

Hedge Counterparty
Ratings Requirement means, with respect to any Hedge
Ratings Determining Party: (a) either (i) the short-term rating of
the Hedge Ratings Determining Party by Moody’s is not lower than “P1” and the
long-term rating of such Hedge Ratings Determining Party is not lower than “A2”,
or (ii) if the Hedge Ratings Determining Party does not have a short-term
rating from Moody’s, the long term rating of such Hedge Ratings Determining
Party is not lower than “Al”; (b) both (x) the short-term rating of
such Hedge Ratings Determining Party by Fitch is not lower than “F1” and (y) the
long-term rating of such Hedge Ratings Determining Party by Fitch is not
withdrawn, suspended or downgraded below “A”; or if there is no short-term
rating by Fitch, the long-term rating of such Hedge Ratings Determining Party
by Fitch is not lower than “A”; and (c) either (i) the short-term
rating of such Hedge Ratings Determining Party is not lower than “A-1” by
S&P or (ii) if such Hedge Ratings Determining Party does not have a
short-term rating from S&P, the long-term rating of such Hedge Ratings
Determining Party by S&P is not lower than “A+”.

 

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

 

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

 

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

 

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

 

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

 

34

 

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

 

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

 

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

 

Income Note
Excess Funds means all remaining Collateral Interest
Collections and Collateral Principal Collections as set forth in Sections
11.1(a)(34) and 11.1(b)(28).

 

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

 

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

 

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

 

Income Note
Redemption Approval Condition means, in connection with a
Tax Redemption at the direction of the Controlling Class or an Auction
Call Redemption, the requirement that, unless and to the extent the Holders of
not less than 662/3% of the aggregate principal
amount of the Outstanding Income Notes have waived payment in full of the
Income Notes Stated Amount, the Income Noteholders receive in connection with
such Tax Redemption or Auction Call Redemption an amount equal to (x) the
Income Notes Stated Amount minus (y) the aggregate amount of all cash
distributions on the Income Notes (whether in respect of distributions or
redemption payments made to the Income Note Paying Agent for distribution to
the Income Noteholders) on or prior to the relevant Auction Date.

 

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

 

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

 

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

 

Income Notes means
the U.S.$28,000,000 Income Notes due 2052.

 

Income Notes
Stated Amount means U.S.$28,000,000.

 

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

 

35

 

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

 

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

 

Initial Hedge
Counterparty means Citigroup Financial Products Inc.
under the Initial Hedge Agreement and any of its successors, assigns or
replacements under the Initial Hedge Agreement appointed in accordance with the
terms of this Indenture and the Initial Hedge Agreement.

 

Initial Payment
Date means the Payment Date occurring in June 7,
2007.

 

Initial
Purchaser means Citigroup Global Markets Inc, as initial
purchaser of the Offered Notes.

 

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

 

Interest
Coverage Amount means, as of any Measurement Date, an
amount equal to (i) the amount received or scheduled to be received as
Collateral Interest Collections during the related Due Period, less (ii)(a) the
amount payable as Aggregate Fees and Expenses on the related Payment Date, (b) any
amounts paid or scheduled to be paid to the Hedge Counterparty on the related
Payment Date (excluding any termination payments) and (c) for purposes of
calculating the Class A/B Interest Coverage Ratio, the Class C/D/E
Interest Coverage Ratio and the Class F/G/H Interest Coverage Ratio, any
amounts scheduled to be paid to the Non-Monthly Pay Asset Interest Reserve Account
on the related Payment Date; provided that (a) following the date on which
a Collateral Debt Security becomes a Defaulted Security, scheduled Collateral
Interest Collections shall not include any amount scheduled to be received on
Defaulted Securities or any amount scheduled to be received on securities that
are currently deferring interest until (1) such scheduled amounts are
actually received in cash, or (2) the cumulative aggregate amounts
actually received on a Defaulted Security exceed the Principal Balance of such
Defaulted Security, (b) the expected interest income on Floating Rate
Collateral Debt Securities and Eligible Investments shall be calculated using
the then-current interest rate applicable thereto and (c) with respect to any
Written Down Security, the Interest Coverage Amount shall exclude any interest
accrued on any Written Down Amount.

 

Interest
Coverage Ratios means the Class A/B Interest
Coverage Ratio, the Class C/D/E Interest Coverage Ratio and the Class F/G/H
Interest Coverage Ratio.

 

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

 

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

 

36

 

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

 

Interest Reserve
Account means the account established by the Trustee,
held in the name of the Trustee for the benefit and on behalf of the Holders of
the Income Notes (i) into which the Trustee will deposit, at the request
of 100% of the Holders of the Income Notes, on each Payment Date, any Income
Note Excess Funds designated by such Holders in accordance with the Priority of
Payments and (ii) from which any unused amounts on deposit therein will be
distributed in accordance with the directions of 100% of the Holders of the
Income Notes as described in Section 10.5.

 

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

 

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

 

Irish Paying
Agent means NCB Stockbrokers Limited.

 

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

 

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

 

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

 

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

 

Key Manager
Event means any of the following: (a) the failure by
the Collateral Manager to propose a replacement Key Manager within the
applicable Four-Month Period, (b) the failure by the Collateral Manager,
within the Four-Month Period, to propose a different replacement Key Manager
following receipt of a Controlling Class Objection or (c) the receipt
of another Controlling Class Objection within ten Business Days after
delivery of such a proposal for a different replacement Key Manager to the
Holders of the Notes of the Controlling Class.

 

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

 

LIBOR
Calculation Date has the meaning specified in Schedule B.

 

37

 

Listed Bidders has
the meaning specified in Schedule E.

 

London Banking
Day has the meaning specified in Schedule B.

 

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

 

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

 

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

 

Market Value CDO
Securities means collateralized debt obligation
securities with respect to which the coverage ratios are primarily determined
by reference to the market value of the underlying portfolio of investments as
prescribed by the applicable rating agencies.

 

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

 

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

 

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

 

38

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(C)                               with
respect to any CMBS Large Loan Security or CMBS Re-REMIC Security not publicly
rated by Moody’s, the Issuer or the Collateral Manager on behalf of the Issuer
will request Moody’s to assign a rating to such CMBS Large Loan Security or
CMBS Re-REMIC Security on a case-by-case basis;

 

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

 

39

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(G)                               if
the corporate guarantee is a senior secured obligation of the guarantor or
obligor and the other security is a subordinated obligation that is: (1) rated
“Baa3” or higher by Moody’s, the Moody’s Rating of such corporate guarantee
will be one rating subcategory above the rating of the other security; (2) rated
below “Baa3” but not rated “B3” by Moody’s, the Moody’s Rating of such
corporate guarantee will be two rating subcategories above the rating of the
other security; or (3) rated “B3” by Moody’s, the Moody’s Rating of such
corporate guarantee will be “B2”;

 

(H)                              if
the corporate guarantee is a senior unsecured obligation of the guarantor or
obligor and the other security is a subordinated obligation that is: (1) rated

 

40

 

“Baa3” or higher by Moody’s, the Moody’s
Rating of such corporate guarantee will be one rating subcategory above the
rating of the other security; or (2) rated “Bal” or lower by Moody’s, the
Moody’s Rating of such corporate guarantee will also be one rating subcategory
above the rating of the other security; and

 

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

 

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

 

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

 

Notwithstanding the foregoing, the aggregate Principal Balance of all
Collateral Debt Securities rated pursuant to clauses (ii) and (iii) above
shall not exceed 20% of the CDS Principal Balance.

 

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

 

	
   

  	
  Moody’s Rating

  	
   

  	
  Moody’s Rating

  Factor

  	
   

  	
  Moody’s Rating

  	
   

  	
  Moody’s Rating

  Factor

  	
   

  
	
   

  	
  Aaa

  	
   

  	
  1

  	
   

  	
  Bal

  	
   

  	
  940

  	
   

  
	
   

  	
  Aal

  	
   

  	
  10

  	
   

  	
  Ba2

  	
   

  	
  1,350

  	
   

  
	
   

  	
  Aa2

  	
   

  	
  20

  	
   

  	
  Ba3

  	
   

  	
  1,766

  	
   

  
	
   

  	
  Aa3

  	
   

  	
  40

  	
   

  	
  B1

  	
   

  	
  2,220

  	
   

  
	
   

  	
  Al

  	
   

  	
  70

  	
   

  	
  B2

  	
   

  	
  2,720

  	
   

  
	
   

  	
  A2

  	
   

  	
  120

  	
   

  	
  B3

  	
   

  	
  3,490

  	
   

  
	
   

  	
  A3

  	
   

  	
  180

  	
   

  	
  Caal

  	
   

  	
  4,770

  	
   

  
	
   

  	
  Baal

  	
   

  	
  260

  	
   

  	
  Caa2

  	
   

  	
  6,500

  	
   

  
	
   

  	
  Baa2

  	
   

  	
  360

  	
   

  	
  Caa3

  	
   

  	
  8,070

  	
   

  
	
   

  	
  Baa3

  	
   

  	
  610

  	
   

  	
  Ca or lower

  	
   

  	
  10,000

  	
   

  

 

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

 

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

 

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

 

Moody’s WARF
Test means a test that will be satisfied on the Effective
Date and on any Measurement Date thereafter if the WARF is not more than 825.

 

41

 

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

 

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

 

Non-Monthly Pay
Asset Interest Reserve Account means the account established
by the Trustee, held in the name of the Trustee for the benefit and on behalf
of the Secured Parties and into which the Trustee will deposit, on each Payment
Date, the Non-Monthly Pay Asset Interest Reserve Amount, if any, in accordance
with the Priority of Payments or, at the request of 100% of the Holders of the
Income Notes, from any Income Note Excess Funds designated by such Holders
pursuant to Section 10.8.

 

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

 

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

 

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

 

Nonrecoverable
Cure Advance means a Cure Advance made or proposed to be
made that the Collateral Manager has determined (subject to a Servicer
Override) that the amount so advanced or proposed to be advanced will not be
recoverable from subsequent collections from the specific Collateral Debt
Security with respect to which such Cure Advance was made or proposed to be
made.

 

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

 

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

 

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

 

Note Valuation Report
has the meaning specified in Section 10.14(a).

 

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

 

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

 

42

 

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

 

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

 

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

 

One-Month LIBOR means
the rate for one-month U.S. Dollar deposits which appears on Moneyline Telerate
Page 3750 or such other page as may replace Moneyline Telerate page 3750,
as of 11:00 am. (London time) on the date of determination, as reported by
Bloomberg Financial Markets Commodities News.

 

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

 

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

 

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

 

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

 

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

 

Payment Account means
the Securities Account designated the “Payment Account” and established in the
name of the Trustee pursuant to Section 10.10.

 

43

 

Payment Date means
the 7th day of each calendar month, or if such day is not a Business Day, the
next succeeding Business Day, commencing in June 2007 and ending on the
applicable Stated Maturity Date (which shall be the final Payment Date).

 

Periodic
Interest means the amount of interest payable (i) in
respect of each Class of Floating Rate Notes, calculated with respect to
each such Class for the relevant Interest Period by multiplying the
Applicable Periodic Interest Rate by the Aggregate Outstanding Amount of the
related Class at the close of the Business Day immediately preceding the
relevant Payment Date, multiplying the resulting figure by the actual number of
days in such Interest Period, dividing by 360 and rounding the resulting figure
to the nearest U.S.$0.01 (U.S.$0.005 being rounded upwards), and (ii) in
respect of each Class of Fixed Rate Notes, calculated with respect to each
such Class for the relevant Interest Period by multiplying the Applicable
Periodic Interest Rate by the Aggregate Outstanding Amount of the related Class at
the close of the Business Day immediately preceding the relevant Payment Date,
multiplying the resulting figure by (a) for the first Interest Period, 97
days, and (b) for every other Interest Period, 30 days, dividing by 360
and rounding the resulting figure to the nearest U.S.$0.01 (U.S.$0.005 being
rounded upwards).

 

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

 

Permitted
Servicer means an entity the primary business of which is
servicing commercial real estate loans and/or mezzanine loans related to
commercial real estate, with a minimum servicing portfolio of $100,000,000; provided that NS
Advisors, LLC shall be deemed to be a Permitted Servicer so long as it (or an
Affiliate) maintains the designation of “Qualified CRE CDO Special Servicer”
from S&P.

 

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

 

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

 

Placement Agent means
Citigroup Global Markets Inc, as placement agent for the Retained Notes and the
Income Notes.

 

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

 

Pledged
Collateral Debt Security means as of any date of
determination, any Collateral Debt Security that has been Granted to the
Trustee and has not been released from the lien of this Indenture pursuant to Section 10.15.

 

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

 

44

 

Pledgee
Counterparty has
the meaning specified in Section 10.11.

 

Pledgor
Counterparty has
the meaning specified in Section 10.12.

 

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

 

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

 

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

 

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

 

(iii)                              with respect to each Defaulted Security, the
Defaulted Securities Amount;

 

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

 

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

 

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

 

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

 

Principal Only
Security means
any Collateral Debt Security that does not provide for payment of interest or
provides that all payments of interest will be deferred until the final
maturity date of such Collateral Debt Security.

 

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

 

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

 

Prohibited Asset
means any of the
following types of asset-backed securities that do not (in each case) otherwise
satisfy the definition of Specified Type): aircraft lease securities, enhanced
equipment

 

45

 

trust certificates, structured settlement securities, tobacco
settlement securities, manufactured housing securities, 12(b)-1 fee securities,
future flow securities, emerging markets securities, sub and reperforming
credit card securities, Franchise Loan Securities, Market Value CDO Securities,
CLO Securities or CDO of CDO Securities.

 

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

 

Purchase Agreement means
the agreement, dated as of the Closing Date, between the Issuer and the Initial
Purchaser relating to the purchase of the Offered Notes.

 

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

 

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

 

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

 

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

 

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

 

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

 

Qualified REIT Subsidiary means
a corporation that is wholly owned by a REIT, as defined in Section 856(i)(2) of
the Code or any successor provision, and is disregarded as being a separate
entity from such REIT for United States federal income tax purposes.

 

46

 

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

 

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

 

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

 

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

 

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

 

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

 

Rating Agency
Confirmation means, with respect to any specified action
or determination, for so long as any of the Secured Notes are Outstanding and
rated by Moody’s, S&P or Fitch, respectively, the receipt of written
confirmation by Moody’s, S&P and Fitch, that such specified action or
determination will not result in the downgrade, qualification or withdrawal or
other adverse action with respect to their then-current ratings on the Secured
Notes (including any private or confidential rating) unless Rating Agency
Confirmation is specified herein to be required by only Moody’s, S&P or
Fitch, in which case such Rating Agency Confirmation will be sufficient. For
the purposes of this definition, “Rating Agencies” will be deemed to not
include Fitch except with respect to the Effective Date any proposed action or
matter relating to any amendment to, or modification of, the Indenture, the
Collateral Administration Agreement and any other document relating to the
offering of the Secured Notes; provided that notification will be made to Fitch
within 30 days of any instance in which Rating Agency Confirmation is required
by either Moody’s or S&P and that Fitch reserves the right to request
further information regarding such action or event.

 

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

 

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

 

Real Estate CDO
Securities means securities that entitle the holders
thereof to receive payments that depend on the cash flow from or the credit
exposure to a portfolio consisting of at least 85% (i) REIT Debt
Securities, (ii) CMBS Securities, (iii) other Specified Types or (iv) a
combination of the foregoing; provided that such dependence may in addition be
conditioned upon rights or additional assets designed to assure the servicing
or timely distribution of proceeds to holders of the Real Estate CDO Securities
such as a financial guaranty insurance policy; provided that a Real Estate CDO Security
shall not include a CMBS Re-REMIC Security.

 

Real Estate
Interests means debt interests (other than CRE Debt
Obligations, REIT Debt Securities, Trust Preferred Securities, Real Estate CDO
Securities and Tenant Lease Loan Interests) that entitle the holders thereof to
receive payments substantially all of which depend on the cash flow from or

 

47

 

sale proceeds of mortgage loans on commercial and multifamily
properties, including senior and subordinate mortgage loans, participation
interests in mortgage loans on commercial and multifamily properties, including
subordinate interests, mezzanine loans secured by ownership interests in
entities owning commercial properties, mortgage loans secured by mortgages on
commercial real estate properties that are subject to a lease to a single
tenant.

 

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

 

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

 

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

 

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

 

Redemption Date
Statement has the meaning specified in Section 10.14(b).

 

Redemption
Premium means the premium payable to Holders of each Class of
Fixed Rate Notes in connection with an Optional Redemption of such Class of
Fixed Rate Notes in an amount equal to the excess, if any, of (i) the
present value (discounted to the applicable Redemption Date using the
Reinvestment Yield on a monthly basis using a 360 day year of twelve 30 day
months as the discount rate) of the remaining payments of interest and
principal due on such Class of Fixed Rate Notes, assuming that the entire
outstanding principal amount of such Class of Fixed Rate Notes will be
paid on the Payment Date occurring in February 2019 and that each
intervening payment of interest on such Class of Fixed Rate Notes will be
made on the related Payment Date in its entirety (and therefore there is no
Defaulted Interest on such Class of Fixed Rate Notes) over (ii) the
then Outstanding aggregate principal amount of such Class of Fixed Notes.

 

Redemption Price
means (i) with respect to each Class of Secured
Notes, (a) their then-outstanding aggregate principal amount plus (b) accrued
interest thereon to the date of redemption to the extent not already paid
(including any Class C Cumulative Applicable Periodic Interest Shortfall
Amount, Class D Cumulative Applicable Periodic Interest Shortfall Amount, Class E
Cumulative Applicable Periodic Interest Shortfall Amount, Class F
Cumulative Applicable Periodic Interest Shortfall Amount, Class G
Cumulative Applicable Periodic Interest Shortfall Amount, Class H
Cumulative Applicable Periodic Interest Shortfall Amount, Class J
Cumulative Applicable Periodic Interest Shortfall Amount and the Class K
Cumulative Applicable Periodic Interest Shortfall Amount) plus (c) in the
case of an Optional Redemption only and with respect to any Fixed Rate Notes,
the applicable Redemption Premium (unless otherwise waived by each of the
Noteholders of such Class of Fixed Rate Notes) and (ii) if the Income
Notes are redeemed, the “Redemption Price” for the Income Notes, except to the
extent the Income Note Redemption Approval Condition applies, means an amount
equal to the aggregate of any

 

48

 

amounts distributable on the Income Notes in respect of
such redemption pursuant to the Priority of Payments, and in any instance where
the Income Note Redemption Approval Condition applies, an amount equal to the
amounts necessary to satisfy the Income Note Redemption Approval Condition.

 

Redemption
Spread means, with respect to the Class C Notes, 0.5238%, the Class J
Notes, 0.5238% and the Class K Notes, 0.5238%.

 

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

 

Reference Banks has the meaning specified
in Schedule B.

 

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

 

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

 

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

 

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

 

Regulation S means Regulation S under
the Securities Act.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

49

 

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

 

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

 

(v)                                in
the case of Credit Improved Securities only, upon giving effect to the
reinvestment, (1) the Coverage Tests are satisfied and each S&P
Scenario Default Rate is improved such that the difference between such S&P
Break-Even Default Rate, less the related S&P Scenario Default Rate
generated by the CDO Monitor as a result of such reinvestment is equal to or
greater than the difference immediately prior to such reinvestment, (2) the
Coverage Ratios (taking into consideration any amounts received from or payable
to the related Hedge Counterparty upon termination of the related Hedge
Agreement) are no less than the Coverage Ratios as of the Effective Date or (3) the
sum of the Sale Proceeds and the amount, if any, received from or payable to
the related Hedge Counterparty upon termination of the related Hedge Agreement
is equal to or higher than the Principal Balance of the Credit Improved
Security being sold and such proceeds are reinvested in one or more Substitute
Collateral Debt Securities having an aggregate Principal Balance of not less
than 100% of the Principal Balance of the Credit Improved Security being sold.

 

Reinvestment Period means
the period beginning on the Closing Date and ending on and including the
Payment Date in June 2012; provided, however, that if (i) a
Key Manager Event occurs and (ii) the Holders of a majority in aggregate
principal amount of the Outstanding Notes of the Controlling Class direct
in writing that the Trustee terminate the Reinvestment Period, then the
Reinvestment Period shall instead end upon the Trustee’s issuance of written
notice of such termination to the Collateral Manager.

 

Reinvestment Yield means
with respect to any class of the Fixed Rate Notes, the rate equal to the sum of
the Redemption Spread with respect to such Fixed Rate Note and the applicable
yield to maturity implied by (i) the yields reported as of 10:00 a.m.
(New York City time) on the tenth Business Day preceding the related Optional
Redemption Date on the display page designated as “Page 678” on the
Telerate Service (or such other display as may replace Page 678 on the
Telerate Service) for actively traded U.S. Treasury securities having a
maturity as nearly as practicable equal to the Payment Date occurring in February 2019
or (ii) if such yields are not reported as of such time or the yields
reported as of such time are not ascertainable, the Treasury Constant Maturity Series Yields
reported, for the latest day for which such yields have been so reported as of
the tenth Business Day preceding the Optional Redemption Date, in Federal
Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having a constant
maturity as nearly as practicable equal to the Payment Date occurring in February 2019.

 

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

 

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

 

REIT Debt Securities—Diversified means
Collateral Debt Securities issued by a real estate investment trust (as defined
in Section 856 of the Code or any successor provision) whose assets
consist (except for rights or other assets designed to assure the servicing or
timely distribution of proceeds to

 

50

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

51

 

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

 

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

 

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

 

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

 

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

 

Repurchased Security means
any Real Estate Interest or other Collateral Debt Security acquired by the
Issuer in accordance with an Asset Transfer Agreement, which the related Seller
is required to repurchase from the Issuer pursuant to the terms thereof.

 

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

 

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

 

Retained Notes means
the Class J Notes and the Class K Notes.

 

52

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

S&P Break-Even Default Rate  means
collectively, the Class A Break-Even Default Rate, the Class B
Break-Even Default Rate, the Class C Break-Even Default Rate, the Class D
Break-Even Default Rate, the Class E Break-Even Default Rate, the Class F
Break-Even Default Rate, the Class G Break-Even Default Rate, the Class H
Break-Even Default Rate, the Class J Break-Even Default Rate and the Class K
Break-Even Default Rate.

 

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

 

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

 

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

 

53

 

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

 

S&P Minimum
Weighted Average Recovery Rate Test means a test that will be
satisfied as of any Measurement Date if the S&P Minimum Average Recovery
Rate is greater than or equal to (i) 39.75% with respect to the Class A
Notes, (ii) 42.85% with respect to the Class B Notes, (iii) 46.46%
with respect to the Class C Notes, (iv) 46.46% with respect to the Class D
Notes, (v) 46.46% with respect to the Class E Notes, (vi) 49.28%
with respect to the Class F Notes,
(vii) 49.28% with respect to the Class G Notes, (viii) 49.28%
with respect to the Class H Notes, (ix) 51.82% with respect to the Class J
Notes and (x) 51.82% with respect to the Class K Notes.

 

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

 

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

 

(ii)                                 if such Collateral Debt
Security is not rated by S&P but the Issuer or the Collateral Manager on
behalf of the Issuer has requested that S&P assign a rating to such
Collateral Debt Security, the S&P Rating shall be the rating so assigned by
S&P; provided that pending
receipt from S&P of such rating, if such Collateral Debt Security is not
eligible for notching in accordance with Schedule G, such Collateral Debt
Security shall have a S&P Rating of “CCC-,” otherwise such S&P Rating
shall be the rating assigned according to Schedule F until such time as S&P
shall have assigned a rating thereto; or

 

(iii)                              if any Collateral Debt
Security is a Collateral Debt Security that has not been assigned a rating by
S&P and is not a Collateral Debt Security listed in Schedule G, as
identified by the Collateral Manager, the S&P Rating of such Collateral
Debt Security shall be determined by reference to Schedule F to determine the
S&P Rating; provided that for purposes
of this clause (iii), CRE Debt Obligations shall be considered debt of “Real
Estate Operating Companies” for purposes of Schedule F; provided, further, (a) if any
Collateral Debt Security shall, at the time of its purchase by the Issuer, be
listed for a possible upgrade or downgrade on either Moody’s or Fitch’s then
current credit rating watch list, then the S&P Rating of such Collateral
Debt Security shall be one subcategory above or below, respectively, the rating
then assigned to such item in accordance with Schedule A; (b) for purposes
of determining compliance with S&P CDO Monitor Test, if the rating assigned
to such Collateral Debt Security pursuant to this subparagraph (iii) is
placed on a watch list for possible upgrade or downgrade by any Rating Agency,
the S&P Rating applicable to such Collateral Debt Security shall be one
rating subcategory above or below, respectively, the S&P Rating applicable
to such Collateral Debt Security immediately prior to such Collateral Debt
Security being placed on such watch list and (c) the aggregate Principal
Balance that may be given a rating based on this subparagraph

 

54

 

(iii) may not exceed 20% of the aggregate Principal Balance of all
Collateral Debt Securities.

 

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

 

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

 

S&P Scenario
Default Rate means collectively, the Class A
Scenario Default Rate, the Class B Scenario Default Rate, the Class C
Scenario Default Rate, the Class D Scenario Default Rate, the Class E
Scenario Default Rate, the Class F Scenario Default Rate, the Class G
Scenario Default Rate, the Class H Scenario Default Rate, the Class J
Scenario Default Rate and the Class K Scenario Default Rate.

 

S&P Servicer
means a master servicer on the S&P Select Servicer
List as a U.S. Commercial Mortgage Master Servicer and a special servicer on
the S&P Select Servicer List as a U.S. Commercial Mortgage Special
Servicer.

 

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

 

S&P’s
Preferred Format means an electronic spreadsheet file to
be provided to S&P, which file shall include the following information, if
available (to the extent such information is not confidential) with respect to
each Collateral Debt Security: (a) the name and country of domicile of the
issuer thereof and the particular issue held by the Issuer, (b) the CUSIP
or other applicable identification number associated with such Collateral Debt
Security, (c) the par value of such Collateral Debt Security, (d) the
type of issue (including, by way of example, whether such Collateral Debt
Security is a bond, loan or asset-backed security), using such abbreviations as
may be selected by the Trustee, (e) a description of the index or other
applicable benchmark upon which the interest payable on such Collateral Debt
Security is based (including, by way of example, fixed rate, step-up rate, zero
coupon and LIBOR), (f) the coupon (in the case of a Collateral Debt
Security which bears interest at a fixed rate) or the spread over the
applicable index (in the case of a Collateral Debt Security which bears interest
at a floating rate), (g) the S&P Industry Classification Group for
such Collateral Debt Security, (h) the Stated Maturity Date of such
Collateral Debt Security, (i) the S&P Rating of such Collateral Debt
Security or the issuer thereof, as applicable, (j) the Principal Balance
in cash and in Eligible Investments, (k) the priority category assigned by
S&P to such Collateral Debt Security, if available, and (1) such other
information as the Trustee may determine to include in such file.

 

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

 

55

 

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

 

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

 

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

 

Second Currency has
the meaning specified in Section 14.13.

 

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

 

Secured Notes means,
collectively, the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes, the Class F Notes,
the Class G Notes, the Class H Notes, the Class J Notes and the Class K Notes.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Semi-Annual Pay
Security Interest Reserve Amount means, with respect to
each Collateral Debt Security that is a Semi-Annual Pay Security and not
entitled to the benefit of a Cashflow Hedge Agreement, as of any Calculation
Date, the amount equal to (i) the amount of interest received by the
Issuer on the most recent payment date with respect to such Semi-Annual Pay
Security multiplied by

 

56

 

(ii) (A) six minus the number of months since the most recent
payment date with respect to such Semi-Annual Pay Security (rounded up to the
nearest whole number) divided by (B) six; provided that for
any Semi-Annual Pay Security with respect to which no scheduled interest
payments remain, the Semi-Annual Pay Security Interest Reserve Amount shall be
zero.

 

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

 

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

 

Senior Loan means
senior debt secured directly or indirectly by the same commercial real estate
securing any Real Estate Interest.

 

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

 

Servicing
Agreement means a servicing agreement between the
Servicer and the Issuer substantially in the form attached hereto as Exhibit H, relating to the servicing of any
Real Estate Interests, or in such other form satisfying the Rating Agency
Condition.

 

Servicer means
a Permitted Servicer appointed pursuant to a Servicing Agreement as servicer of
the Real Estate Interests owned by the Issuer.

 

Servicer
Override means the Servicer’s right to override, based on
its application of the servicing standards set forth in the Servicing
Agreement, certain decisions made by the Collateral Manager, including material
servicing actions and cure decisions.

 

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

 

Special Purpose
Vehicle means any special purpose vehicle organized under
the laws of a Tax Haven Jurisdiction.

 

Specified
Currency has the meaning specified in Section 14.13.

 

57

 

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

 

Specified Place has
the meaning specified in Section 14.13.

 

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

 

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

 

Spread Excess means,
as of any Measurement Date, a fraction (expressed as a percentage), the
numerator of which is equal to the product of (a) the greater of zero and
the excess, if any, of the Weighted Average Spread for such date over 1.60%,
and (b) the aggregate Principal Balance of all Floating Rate Collateral
Debt Securities and Deemed Floating Rate Collateral Debt Securities (excluding,
in each case, Defaulted Securities, Written Down Securities or Deferred
Interest PIK Bonds) and the denominator of which is the aggregate Principal
Balance of all Collateral Debt Securities that are Fixed Rate Collateral Debt
Securities (excluding Defaulted Securities, Written Down Securities, Deferred
Interest PIK Bonds and Deemed Floating Rate Collateral Debt Securities).

 

Stated Maturity
Date means August 7, 2052.

 

Step-Down
Security means a Collateral Debt Security which by the
terms of the related underlying instrument provides for a decrease, in the case
of a Fixed Rate Collateral Security, in the per annum interest rate on such
security or, in the case of a Floating Rate Collateral Security, in the spread
over the applicable index or benchmark rate, solely as a function of the
passage of time; provided that a Step-Down Security will not include any such
security providing for payment of a constant rate of interest at all times
after the date of acquisition by the Issuer.

 

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

 

Subordinate
Collateral Management Fee means the fee payable to the
Collateral Manager at a per annum rate in arrears on each Payment Date pursuant
to the Collateral Management Agreement, in an amount (as certified by the
Collateral Manager to the Trustee) equal to 0.25% of the Fee Basis Amount for
such Payment Date; provided
that the Subordinate Collateral Management Fee will be payable on
each Payment Date only to the extent of funds available for such purpose in
accordance with the Priority of Payments. Any unpaid Subordinate Collateral
Management Fee will be deferred and paid on the next succeeding Payment Date to
the extent funds are available for such purpose. Any unpaid Subordinate
Collateral Management Fee that is deferred due to the operation of the Priority
of Payments will not accrue interest. Any Subordinate Collateral Management Fee
accrued but not paid prior to the resignation or removal of the Collateral
Manager shall continue to be payable to the Collateral Manager on the Payment
Date immediately following the effectiveness of such resignation or removal.

 

Subordinate
Interests has the meaning specified in Section 13.1(a),
(b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (1) or (m) as
applicable.

 

Subordinate Loan
Interest means a Real Estate Interest that is a
subordinate interest in a commercial mortgage loan (including a subordinate
participation interest in a commercial mortgage loan) or a subordinate
commercial mortgage loan.

 

58

 

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

 

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

 

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

 

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

 

(i)                                    The
short-term rating of the Hedge Ratings Determining Party from Moody’s is “P-3”
or lower or the long-term rating of the Hedge Ratings Determining Party from
Moody’s is withdrawn, suspended or downgraded to “Baa1” or lower or, if the
related Hedge Ratings Determining Party does not have a short-term rating, the
long-term rating of the related Hedge Ratings Determining Party from Moody’s is
withdrawn, suspended or downgraded to “Baa1” or lower;

 

(ii)                                 The
short-term rating from S&P of the Hedge Ratings Determining Party is
withdrawn, suspended or downgraded below “A-3” or, if no short-term rating is
available, the long-term rating from S&P of the Hedge Ratings Determining
Party is withdrawn, suspended or downgraded below “BBB-”;

 

(iii)                              The
short-term rating of the Hedge Ratings Determining Party from Fitch is lower
than “F2” or the long-term rating of the Hedge Ratings Determining Party from
Fitch is lower than “BBB+”; or

 

(iv)                             the
failure by any Hedge Counterparty to take any of the actions specified upon the
occurrence of a Collateralization Event within the period of 30 days thereafter
(the expiration of which shall constitute a termination event).

 

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

 

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

 

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

 

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

 

59

 

(d)                                the
Reference Obligation is a Specified Type and, if purchased by the Issuer, would
satisfy the Eligibility Criteria;

 

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

 

(f)                                   for
purposes of calculating the Weighted Average Fixed Rate Coupon and the Weighted
Average Spread, such Synthetic Security will be deemed to be a Floating Rate
Collateral Debt Security.

 

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

 

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

 

Tax Event means
a new, or change in any, U.S. or foreign tax statute, treaty, regulation, rule,
ruling, practice, procedure or judicial decision or interpretation, occurring in
each case after the Closing Date, which results in (i) any portion of any
payment due from any issuer or obligor under any Collateral Debt Security
becoming properly subject to the imposition of U.S. or foreign withholding tax,
which withholding tax is not compensated for by a “gross up” provision under
the terms of the related Collateral Debt Security, (ii) any jurisdiction
imposing net income, profits, or similar tax on the Issuer, (iii) the
Issuer being required to deduct or withhold from any payment under a Hedge
Agreement for or on account of any tax and the Issuer being obligated to make a
gross up payment (or otherwise pay additional amounts) to a Hedge Counterparty,
or (iv) a Hedge Counterparty being required to deduct or withhold from any
payment under a Hedge Agreement for or on account of any tax for whatever
reason if such Hedge Counterparty is not required to pay to the Issuer such
additional amount as is necessary to ensure that the net amount actually
received by the Issuer (free and clear of taxes, whether assessed against such
obligor or the Issuer) will equal the full amount that the Issuer would have
received had no such deduction or withholding been required, and where the sum
of the amount of (i) such a tax or taxes imposed on the Issuer or withheld
from payments to the Issuer to the extent the Issuer receives less than the
full amount that the Issuer would have received had no such deduction occurred,
and (ii) such gross up payments required to be made by the Issuer to the
extent they exceed the amounts that the Issuer would have been required to pay
had no deduction or withholding been required, in the aggregate, equals 10% or
more of the amount of aggregate interest payments on all of the related
Collateral Debt Securities during the related Due Period.

 

Tax Haven
Jurisdiction means (i) any sovereign jurisdiction
that is commonly used as the place of organization for an entity for the
purpose of reducing or eliminating tax liabilities for such entity, which shall
be limited to: the Bahamas, the Cayman Islands, Bermuda, the British Virgin
Islands, the Netherlands Antilles, the Netherlands, Luxembourg or the Channel
Islands or (ii) upon receipt of Rating Agency Confirmation from Moody’s
and S&P, any other jurisdiction.

 

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

 

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

 

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

 

60

 

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

 

Temporary
Ramp-Up Security means a security that (i) is a
direct unsecured debt obligation of the Federal National Mortgage Corporation
or the Federal Home Mortgage Corporation, (ii) bears interest at a fixed
rate, (iii) is acquired by the Issuer on the Closing Date in furtherance
of interest rate hedging of the Issuer’s portfolio by being sold on or prior to
the Effective Date in conjunction with the acquisition of one or more Ramp-Up
Collateral Debt Securities that are Fixed Rate Collateral Debt Securities and (iv) is
rated in the highest rating category by at least one Rating Agency.

 

Tenant Lease
Loan Interests means any debt securities that entitle the
holders thereof to receive payments that depend (except for rights or other
assets designed to assure the servicing or timely distribution of proceeds to
holders of such securities) on the cash flow from one or more properties leased
to corporate tenants.

 

Transaction
Documents means the Indenture, the Collateral Management
Agreement, the Account Control Agreement, any Hedge Agreements, the Corporate
Services Agreement, the Master Trust Agreement, the Collateral Administration
Agreement, the Income Note Paying Agency Agreement, any Servicing Agreement,
any Asset Purchase Agreements, the Purchase Agreement, the Placement Agreement,
the asset transfer agreements in respect of certain Collateral Debt Securities
transferred to the Issuer on the Closing Date and the Forward Purchase
Agreement.

 

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

 

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

 

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

 

Trustee Expenses
means, with respect to any Payment Date, an amount equal
to the sum of all expenses or indemnities incurred by or otherwise owing to the
Trustee during the preceding Due Period in accordance with the Indenture or any
other Transaction Document, other than the Trustee Fee, including, without
limitation, any expenses or indemnities incurred by the Trustee and the Bank in
its capacities as Collateral Administrator, Calculation Agent, Note Paying Agent,
Income Note Paying Agent, Registrar and the Underlying Trustee.

 

Trustee Fee means,
with respect to any Payment Date, the fee payable to the Trustee in an
aggregate amount equal to 0.010% per annum of the CDS Principal Balance as of
the first day of the related Due Period; provided that so long as any Class of
Secured Notes remain Outstanding, such fee shall in no event be an annual
amount less than U.S.$25,000.

 

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

 

61

 

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

 

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

 

Uninvested
Proceeds Account has the meaning specified in Section 10.4.

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)                                if
the number obtained in clause (a) is less than 5.95%, the Spread Excess.

 

Weighted Average
Life means, on any Calculation Date with respect to all
Collateral Debt Securities (excluding any Defaulted Securities), the number
obtained by the Collateral Manager by (i) summing the products obtained by
multiplying (a) the Average Life at such time of each Collateral Debt
Security by (b) the outstanding Principal Balance of such Collateral Debt
Security and (ii) dividing such sum by the aggregate Principal Balance at
such time of all Collateral Debt Securities.

 

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

 

62

 

	
  As of any Calculation Date

  Occurring During the Period Below

  	
   

  	
  Weighted Average Life

  (in Years)

  	
   

  
	
  Closing Date – <1.0 year

  	
   

  	
  10.0 years

  	
   

  
	
  >1.0 year – <2.0 years

  	
   

  	
  9.0 years

  	
   

  
	
  >2.0 years – <3.0 years

  	
   

  	
  8.0 years

  	
   

  
	
  >3.0 years – <4.0 years

  	
   

  	
  7.0 years

  	
   

  
	
  >4.0 years – <5.0 years

  	
   

  	
  6.0 years

  	
   

  
	
  >5.0 years – Stated Maturity Date

  	
   

  	
  5.0 years

  	
   

  

 

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

 

(a)                                 the
number obtained by (i) summing the products obtained by multiplying (A) for
each Floating Rate Collateral Debt Security (other than any Defaulted Security,
Written Down Security or Deferred Interest PlK Bond), the stated spread above
LIBOR (net of any servicing fees and expenses) at which interest accrues on
such Collateral Debt Security as of such date and, for each Deemed Floating
Rate Collateral Debt Security (other than any Defaulted Security, Written Down
Security or Deferred Interest PIK Bond), the Deemed Floating Spread (net of any
servicing fees and expenses, without duplication) by (B) the principal
balance of such Collateral Debt Security as of such date and (ii) dividing
such sum by the aggregate Principal Balance of all Floating Rate Collateral
Debt Securities and all Deemed Floating Rate Collateral Debt Securities; provided that for purposes of calculating
the Weighted Average Spread, Collateral Debt Securities that are Defaulted
Securities, the Written Down Amount with respect to Written Down Securities and
Equity Securities will be excluded, except for those Defaulted Securities that
at the time of such calculation have fully become current on all past due
interest and scheduled principal and are paying full current interest in cash
pursuant to the terms of their respective Underlying Instrument provided, further, that in the case of a
floating rate Step-Down Security, the spread on any date will be deemed to be
the lowest spread scheduled to apply to such Step-Down Security on or after
such date; provided, further, that
for purposes of calculating the Weighted Average Spread, the spread of any
Floating Collateral Debt Securities that bear interest based on a floating-rate
index other than One-Month LIBOR will be deemed to be the excess of (x) the
rate at which such Floating Rate Collateral Debt Securities pay interest over (y) One-Month
LIBOR; plus

 

(b)                                if
the number obtained pursuant to the calculations in clause (a) is less
than 1.60%, the Fixed Rate Excess.

 

Withholding Tax
Security means a Collateral Debt Security if:

 

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

 

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

 

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

 

63

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

64

 

(c)                                 For
each Due Period, the Scheduled Distribution on any Pledged Security (other than
(i) a Defaulted Security, (ii) a Deferred Interest PIK Bond or (iii) an
Equity Security, which, in each case except as otherwise provided herein, shall
be assumed to have a Scheduled Distribution of zero and with respect to any
Written Down Security, the Interest Coverage Amount shall exclude any interest
accrued on any Written Down Amount) shall be the sum of (x) the total
amount of payments and collections in respect of such Pledged Security
(including the proceeds of the sale of such Pledged Security received during
the Due Period) that, if paid as scheduled, will be available in the Collection
Account at the end of the Due Period for payment on the Secured Notes or other
amounts payable pursuant to this Indenture and of certain expenses of the
Issuer plus (y) any
such amounts received in prior Due Periods that were not disbursed on a
previous Payment Date (provided that such sum shall be computed without regard to
any amounts excluded from the determination of compliance with the Coverage
Tests pursuant to Section 1.2(b)).

 

(d)                                Subject
to Section 1.2(b), each Scheduled Distribution receivable with respect to
a Pledged Security shall be assumed to be received on the applicable Due Date,
and each such Scheduled Distribution shall be assumed to be immediately
deposited in the Collection Account and, except as otherwise specified, to earn
interest at the Assumed Reinvestment Rate. All such funds shall be assumed to
continue to earn interest until the date on which they are required to be
available in the Collection Account for transfer to the Payment Account and
application, in accordance with the terms hereof, to payments of principal of
or interest on the Secured Notes or other amounts payable pursuant to this
Indenture.

 

(e)                                 With
respect to any Collateral Debt Security as to which any interest or other
payment thereon is subject to withholding tax of any Relevant Jurisdiction,
each Distribution thereon shall, for purposes of the Coverage Tests and each
Collateral Quality Test, be deemed to be payable net of such withholding tax
unless the issuer thereof or obligor thereon is required to make additional
payments sufficient on an after tax basis to cover any withholding tax imposed
on payments to the Issuer with respect thereto (including in respect of any
such additional payment). On any date of determination, the amount of any
Scheduled Distribution due on any future date shall be assumed to be made net
of any such uncompensated withholding tax based upon withholding tax rates in
effect on such date of determination.

 

(f)                                   For
purpose of determining compliance with the Interest Coverage Tests, it will be
assumed that any amount required to be paid for taxes, filing and registration
fees on the Payment Date immediately following the relevant Due Period shall be
equal to the aggregate amount for which the Trustee has received an invoice or
demand for payment on or prior to the relevant Measurement Date.

 

(g)                                Any
reference in the definition of “Senior Collateral Management Fee” or “Subordinate
Collateral Management Fee” in Section 1.1(a) to an amount calculated
with respect to a period at a per annum rate shall be computed on the basis of
a 360-day year and the actual number of days elapsed during the applicable Due
Period.

 

(h)                                Unless
otherwise specified, test calculations that evaluate to a percentage will be
rounded to the nearest one-hundredth, and test calculations that evaluate to a
number or decimal will be rounded to the nearest one hundredth.

 

65

 

(i)                                    Unless
otherwise specified, all calculations required to be made and all reports which
are to be prepared pursuant to this Indenture with respect to the Collateral
Debt Securities, shall be made on the basis of the date on which the Issuer
makes a commitment to acquire or to sell an asset, as applicable (the trade date), not the settlement date
for such sale.

 

(j)                                    For
the purpose of determining fees constituting Administrative Expenses payable
under the Priority of Payments hereunder, periods longer or shorter than a
one-month period shall be prorated based on the number of days in such period.

 

(k)                                 If
the Issuer or the Collateral Manager determines that a Collateral Debt Security
would fall within the definition of more than one Specified Type, then the
Issuer or the Collateral Manager shall classify that obligation in a manner it
deems appropriate and reasonable.

 

1.3.                            RULES OF CONSTRUCTION

 

Unless the context otherwise clearly requires:

 

(a)                                 the
definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined;

 

(b)                                whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms;

 

(c)                                 the
words “include”, “includes” and “including” shall be deemed to be followed by
the phrase “without limitation”;

 

(d)                                the
word “will” shall be construed to have the same meaning and effect as the word “shall”;

 

(e)                                 any
definition of or reference to any agreement, statute, instrument or other
document herein shall be construed as referring to such agreement, instrument
or other document as from time to time amended, supplemented or otherwise
modified (subject to any restrictions on such amendments, supplements or
modifications set forth herein);

 

(f)                                   any
reference herein to any Person, or to any Person in a specified capacity, shall
be construed to include such Person’s successors and assigns or such Person’s
successors in such capacity, as the case may be;

 

(g)                                all
references in this instrument to designated “Sections”, “clauses” and other
subdivisions are to the designated Sections, clauses and other subdivisions of
this instrument as originally executed, and the words “herein”, “hereof’, “hereunder”
and other words of similar import refer to this Indenture as a whole and not to
any particular Section, clause or other subdivision; and

 

(h)                                unless
otherwise stated to the contrary herein, any payments to be made by the Issuer
(or by the Trustee on behalf of the Issuer) in respect of a Class of Notes
shall be payable pari passu between any subclasses
of such Class of Notes.

 

66

 

ARTICLE II

 

THE SECURED NOTES

 

2.1.                             FORMS GENERALLY

 

(a)                                 The
Class A Notes, the Class B Notes,
the Class C Notes, the Class D Notes, the Class E Notes, the Class F
Notes, the Class G Notes, the Class H Notes, the Class J Notes
and the Class K Notes offered and sold in reliance on Regulation S (each,
a Regulation
S Note)
shall be issued in fully Registered form without interest coupons
substantially in the form of the note attached as Exhibit A-1 (each, a Regulation S
Global Note) with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Indenture and such
legends as may be applicable thereto, which shall be deposited with the Trustee
at its Corporate Trust Office in Chicago, Illinois, as custodian for DTC and
registered in the name of DTC or a nominee of DTC, duly executed by the Issuer
and authenticated by the Trustee or the Authenticating Agent as hereinafter
provided. The Aggregate Outstanding Amount of each Regulation S Global Note may
from time to time be increased or decreased by adjustments made on the records
of the Trustee, as custodian for DTC or its nominee, as the case may be.

 

(b)                                The
Class A Notes, the Class B Notes,
the Class C Notes, the Class D Notes, the Class E Notes, the Class F
Notes, the Class G Notes and the Class H Notes offered and sold in the United States pursuant to an
exemption from the registration requirements of the Securities Act (Rule 144A
Notes) shall be issued in fully Registered form without
interest coupons substantially in the form of the note attached as Exhibit A-2
(each, a Rule 144A
Global Note), with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and such legends as may be applicable thereto, which shall be
deposited with the Trustee at its Corporate Trust Office, as custodian for DTC
and registered in the name of DTC or a nominee of DTC, duly executed by the
Issuer and authenticated by the Trustee or the Authenticating Agent as hereinafter
provided. The Aggregate Outstanding Amount of each Rule 144A Global Note
may from time to time be increased or decreased by adjustments made on the
records of the Trustee, as custodian for DTC or its nominee, as the case may
be.

 

(c)                                 Regulation
S Global Notes and Rule 144A Global Notes may also be exchanged under the
limited circumstances set forth in Section 2.4 for notes in definitive
fully Registered form without interest coupons (each, a Definitive Offered Note), which may be
either a Regulation S Definitive Offered Note or a Rule 144A Definitive
Offered Note, with such legends as may be applicable thereto, which shall be
duly executed by the Issuer and authenticated by the Trustee or the
Authenticating Agent as hereinafter provided.

 

(d)                                The
Retained Notes offered or sold in the United States or to U.S. Persons pursuant
to Rule 144A or another applicable exemption from registration under the
Securities Act shall be issued in the form of physical certificates in
definitive fully Registered form without interest coupons substantially in the
form of the certificated note attached as Exhibit B-1 (each, a Definitive
Retained Note), as the case may be, with such legends as may
be applicable thereto, which shall be duly executed by the Issuer and
authenticated by the Trustee or the Authenticating Agent as hereinafter
provided.

 

(e)                                 The
Issuer in issuing the Secured Notes may use “CUSIP” or “private placement”
numbers (if then generally in use), and, if so, the Trustee will indicate the “CUSIP”
or

 

67

 

“private placement” numbers of the Secured Notes in notices of
redemption and related materials as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such numbers either as
printed on the Secured Notes or as contained in any notice of redemption and
related materials.

 

2.2.                             AUTHORIZED AMOUNT; APPLICABLE PERIODIC INTEREST RATE; STATED MATURITY
DATE; DENOMINATIONS

 

(a)                                 The
aggregate principal amount of Secured Notes which may be issued under this
Indenture may not exceed U.S.$772,000,000, excluding Secured Notes issued upon
registration of, transfer of, or in exchange for, or in lieu of, other Secured
Notes pursuant to Section 2.4, 2.5 or 8.5.

 

(b)                                Such
Secured Notes shall be divided into sixteen Classes having designations,
original principal amounts, original Applicable Periodic Interest Rates and
Stated Maturities as follows:

 

	
  Designation

  	
   

  	
  Original Principal

  Amount

  	
   

  	
  Applicable

  Periodic Interest

  Rate

  	
   

  	
  Secured Note

  Stated Maturity

  Date

  	
   

  
	
  Class A-1 Notes

  	
   

  	
  U.S.$512,000,000

  	
   

  	
  LIBOR + 0.255%

  	
   

  	
  August 2052

  	
   

  
	
  Class A-2 Notes

  	
   

  	
  U.S.$96,000,000

  	
   

  	
  LIBOR + 0.28%

  	
   

  	
  August 2052

  	
   

  
	
  Class A-3 Notes

  	
   

  	
  U.S.$48,000,000

  	
   

  	
  LIBOR + 0.30%

  	
   

  	
  August 2052

  	
   

  
	
  Class B Notes

  	
   

  	
  U.S.$37,280,000

  	
   

  	
  LIBOR + 0.35%

  	
   

  	
  August 2052

  	
   

  
	
  Class C Notes

  	
   

  	
  U.S.$12,800,000

  	
   

  	
  5.7891%

  	
   

  	
  August 2052

  	
   

  
	
  Class D Notes

  	
   

  	
  U.S.$23,200,000

  	
   

  	
  LIBOR + .57%

  	
   

  	
  August 2052

  	
   

  
	
  Class E Notes

  	
   

  	
  U.S.$4,800,000

  	
   

  	
  LIBOR + .68%

  	
   

  	
  August 2052

  	
   

  
	
  Class F Notes

  	
   

  	
  U.S.$3,600,000

  	
   

  	
  LIBOR + 1.05%

  	
   

  	
  August 2052

  	
   

  
	
  Class G Notes

  	
   

  	
  U.S.$14,080,000

  	
   

  	
  LIBOR + 1.30%

  	
   

  	
  August 2052

  	
   

  
	
  Class H Notes

  	
   

  	
  U.S.$7,200,000

  	
   

  	
  LIBOR + 1.60%

  	
   

  	
  August 2052

  	
   

  
	
  Class J Notes

  	
   

  	
  U.S.$7,040,000

  	
   

  	
  7.8016%

  	
   

  	
  August 2052

  	
   

  
	
  Class K Notes

  	
   

  	
  U.S.$6,000,000

  	
   

  	
  8.4305%

  	
   

  	
  August 2052

  	
   

  

 

The Secured Notes will be issuable in minimum denominations of
U.S.$250,000 and, in each case, only in integral multiples of U.S.$1,000 in
excess of such minimum denominations. After issuance, (x) a Secured Note
may fail to be in compliance with the minimum denomination requirement as a
result of the repayment of principal thereon in accordance with the Priority of
Payments and (y) the Class B Notes, the Class C Notes, the Class D
Notes, the Class E Notes, the Class F Notes, the Class G Notes,
the Class H Notes, the Class J
Notes or the Class K Notes may fail to be in an amount which is an
integral multiple of U.S.$1,000 due to the addition to the principal amount
thereof of deferred interest.

 

(c)                                 Interest
shall accrue on the Aggregate Outstanding Amount of each Class of Secured
Notes (determined as of the first day of each Interest Period and after giving
effect to any

 

68

 

payment of principal occurring on such day) from the Closing Date and
will be payable in arrears on each Payment Date. Interest on each Class of
Secured Notes and interest on Defaulted Interest will be calculated in
accordance with the definition of Periodic Interest.

 

(d)                                The
Secured Notes shall be redeemable as provided in Article IX.

 

(e)                                 The
Depositary for the Global Notes shall initially be DTC.

 

(f)                                   The
Secured Notes shall be numbered, lettered or otherwise distinguished in such
manner as may be consistent herewith, determined by the Authorized Officer of
the Issuer executing such Secured Notes as evidenced by its execution of such
Secured Notes.

 

2.3.                             EXECUTION, AUTHENTICATION, DELIVERY AND DATING

 

(a)                                 The
Secured Notes shall be executed on behalf of the Issuer by an Authorized
Officer of the Issuer. The signatures of such Authorized Officers on the
Secured Notes may be manual or facsimile (including in counterparts).

 

(b)                                Secured
Notes bearing the manual or facsimile signatures of individuals who were at any
time the Authorized Officers of the Issuer shall bind such Person,
notwithstanding the fact that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Secured
Notes or did not hold such offices at the date of issuance of such Secured
Notes.

 

(c)                                 At
any time and from time to time after the execution and delivery of this
Indenture, the Issuer may deliver Secured Notes executed by it to the Trustee
or the Authenticating Agent for authentication, and the Trustee or the
Authenticating Agent, upon Issuer Order, shall authenticate and deliver such
Secured Notes as provided in this Indenture and not otherwise.

 

(d)                                Each
Secured Note authenticated and delivered by the Trustee or the Authenticating
Agent to or upon Issuer Order on the Closing Date shall be dated as of the
Closing Date. All other Secured Notes that are authenticated after the Closing
Date for any other purpose under this Indenture shall be dated the date of
their authentication.

 

(e)                                 Secured
Notes issued upon transfer, exchange or replacement of other Secured Notes
shall be issued in authorized denominations reflecting the original aggregate
principal amount of the Secured Notes so transferred, exchanged or replaced,
but shall represent only the current Aggregate Outstanding Amount of the
Secured Notes so transferred, exchanged or replaced. In the event that any
Secured Note is divided into more than one Secured Note in accordance with this
Section 2, the original principal amount of such Secured Note shall be
proportionately divided among the Secured Notes delivered in exchange therefor
and shall be deemed to be the original aggregate principal amount of such
subsequently issued Secured Notes.

 

(f)                                   No
Secured Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Secured Note a
certificate of authentication (the Certificate of Authentication), substantially
in the form provided for herein, executed by the Trustee or by the
Authenticating Agent by the manual signature of one of their Authorized
Officers, and such certificate upon any Secured Note shall be

 

69

 

conclusive evidence, and the only evidence, that such
Secured Note has been duly authenticated and delivered hereunder.

 

2.4.                             REGISTRATION, TRANSFER AND EXCHANGE OF SECURED NOTES

 

(a)                                 Registration of Secured Notes. The Trustee is hereby
appointed as the registrar hereunder (the Note Registrar). The Trustee is hereby
appointed as a transfer agent with respect to the Secured Notes (the Note Transfer
Agent).
The Note
Registrar shall (acting solely for this purpose as agent for the Issuer) keep a
register (the Note Register) at the Corporate Trust Office in which, subject to such
reasonable regulations as it may prescribe, the Note Registrar shall provide
for the registration of Secured Notes and the registration of transfers of
Secured Notes. Upon any resignation or removal of the Note Registrar, the
Issuer (after consultation with the Collateral Manager) shall propose a
replacement for approval by the Holders of a Majority of the then Aggregate
Outstanding Amount of the Notes of the Controlling Class. The Issuer may not
terminate the appointment of the Note Registrar or any Note Transfer Agent
without the consent of each Holder of Secured Notes.

 

Subject to this Section 2.4, upon surrender for
registration of transfer of any Secured Notes at the office or agency of the
Issuer to be maintained as provided in Section 7.2, the Issuer shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Secured Notes of any
authorized denomination and of a like aggregate principal amount.

 

At the option of the Holder, Secured Notes may be
exchanged for Secured Notes of like terms, in any authorized denominations and
of like aggregate principal amount, upon surrender of the Secured Notes to be
exchanged at such office or agency. Whenever any Secured Note is surrendered
for exchange, the Issuer shall execute and the Trustee shall authenticate and
deliver the Secured Notes that the Secured Noteholder making the exchange is
entitled to receive.

 

All Secured Notes issued and authenticated upon any
registration of transfer or exchange of Secured Notes shall be the valid
obligations of the Issuer, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Secured Notes surrendered upon such
registration of transfer or exchange.

 

Every Secured Note presented or surrendered for
registration of transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Issuer and the
Note Registrar duly executed, by the Holder thereof or his attorney duly
authorized in writing.

 

No service charge shall be made to a Holder for any
registration of transfer or exchange of Secured Notes, but the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith and delivery charges, if any, not made
by regular mail.

 

(b)                                The initial sale of each
Note may be made in accordance with Section 4(2) of (or another
applicable exemption from registration under) the Securities Act or in
accordance with Regulation S under the Securities Act.

 

70

 

(c)                                 Transfers of Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes Class G
Notes and Class H Notes.

 

(1)                                 Subject to Section 2.4(c)(4),
exchanges or transfers of beneficial interests in a Global Note may be made
only in accordance with the rules and regulations of the Depositary and
the transfer restrictions contained in the legend on such Global Note and
exchanges or transfers of interests in a Global Note may be made only in
accordance with the following:

 

(i)                                    Subject to Section 2.4(c)(1)(ii) through
(vi), transfers of a Global Note shall be limited to transfers of such Global
Note in whole, but not in part, to nominees of the Depositary or to a successor
of the Depositary or such successor’s nominee.

 

(ii)                                 The Trustee shall cause
the exchange or transfer of any beneficial interest in a Regulation S Global
Note for a beneficial interest in a Rule 144A Global Note upon provision
to the Trustee and the Issuer of a written certification in the form of Exhibit C-1
(a Rule 144A Transfer
Certificate).

 

(iii)                             The Trustee shall cause
the exchange or transfer of any beneficial interest in a Rule 144A Global
Note for a beneficial interest in a Regulation S Global Note upon provision to
the Trustee and the Issuer of a written certification substantially in the form
of Exhibit C-2 (a Regulation
S Transfer Certificate).

 

(iv)                             An owner of a beneficial
interest in a Regulation S Global Note may transfer such interest in the form
of a beneficial interest in such Regulation S Global Note without the provision
of written certification; provided that (1) such
transfer is made to a Person who is not a U.S. Person in an offshore
transaction in reliance on an exemption from the registration requirements of
the Securities Act under Regulation S, and (2) the transferee, by purchase
of such interest in such Regulation S Global Note, will be deemed to have made
all representations, warranties and acknowledgements set forth in the
Regulation S Transfer Certificate.

 

(v)                                An owner of a beneficial
interest in a Rule 144A Global Note may transfer such interest in the form
of a beneficial interest in such Rule 144A Global Note without the
provision of written certification; provided
that the
transferee, by purchase of such interest in such Rule 144A Global Note,
will be deemed to have made all representations, warranties and
acknowledgements set forth in the Rule 144A Transfer Certificate.

 

(vi)                             In the event Definitive
Offered Notes are issued pursuant to Section 2.4(c)(5), the Trustee shall
cause the transfer of (i) any beneficial interest in a Global Note for a
Definitive A-H Note that is a Regulation S Note (a Regulation S Definitive Note), upon
provision to the Trustee and the Issuer of a Regulation S Transfer Certificate
or (ii) any beneficial interest in a Global Note for a Definitive A-H Note
that is a Rule 144A

 

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Note (a Rule 144A Definitive Note),  upon
provision to the Trustee, the Issuer and the Note Registrar of a Rule 144A
Transfer Certificate.

 

(2)                                 Subject
to Section 2.4(c)(4), in the event Definitive Offered Notes are issued
pursuant to Section 2.4(c)(5), the Trustee shall cause the transfer of (i) any
Definitive A-H Note for a beneficial interest in a Regulation S Global Note,
upon provision to the Trustee and the Issuer of a Regulation S Transfer
Certificate or (ii) any Definitive A-H Note for a beneficial interest in a
Rule 144A Global Note, upon provision to the Trustee and the Issuer of a Rule 144A
Transfer Certificate.

 

(3)                                 Upon
acceptance for exchange or transfer of a beneficial interest in a Global Note
for a Definitive A-H Note, or upon acceptance for exchange or transfer of a
Definitive A-H Note for a beneficial interest in a Global Note, each as
provided herein, the Trustee shall approve the instruction at the Depositary to
adjust the principal amount of such Global Note on its records to evidence the
date of such exchange or transfer and the change in the principal amount of
such Global Note.

 

(4)                                 Subject
to the restrictions on transfer and exchange set forth in this Section 2.4
and to any additional restrictions on transfer or exchange specified in the
Definitive Offered Notes, the Holder of any Definitive A-H Note may transfer or
exchange the same in whole or in part (in a principal amount equal to the
minimum authorized denomination or any larger authorized amount) by
surrendering such Definitive A-H Note at the Corporate Trust Office or at the
office of any Note Transfer Agent, together with (x) in the case of any
transfer, an executed instrument of assignment and (y) in the case of any
exchange, a written request for exchange. Following a proper request for
transfer or exchange, the Trustee shall (provided it has available in its
possession an inventory of Definitive Offered Notes), within five Business Days
of such request if made at such Corporate Trust Office, or within ten Business
Days if made at the office of a Note Transfer Agent (other than the Trustee),
authenticate and make available at such Corporate Trust Office or at the office
of such Note Transfer Agent, as the case may be, to the transferee (in the case
of transfer) or Secured Noteholder (in the case of exchange) or send by first
class mail (at the risk of the transferee in the case of transfer or Secured
Noteholder in the case of exchange) to such address as the transferee or
Secured Noteholder, as applicable, may request, a Definitive A-H Note or Notes,
as the case may require, for a like aggregate principal amount and in such
authorized denomination or denominations as may be requested. The presentation
for transfer or exchange of any Definitive Note shall not be valid unless made
at the Corporate Trust Office or at the office of a Note Transfer Agent or by a
duly authorized attorney-in-fact. Beneficial interests in Global Notes shall be
exchangeable for Definitive Offered Notes only under the limited circumstances
described in Section 2.4(c)(5).

 

(5)                                 Interests
in a Global Note deposited with or on behalf of the Depositary pursuant to Section 2.1
hereunder shall be transferred (A) to the Beneficial Owners thereof in the
form of Definitive Offered Notes only if such transfer otherwise complies with
this Section 2.4 (including Section 2.4(c)(1) and (2) and (1) the
Depositary notifies the Issuer that it is unwilling or unable to continue as
Depositary for the Secured Notes, (2) the Depositary ceases to be a “clearing
agency” registered under the Exchange Act and a successor Depositary is not
appointed by the Issuer within 90 days of such notice or (3) as a result
of any amendment to or

 

72

 

change in the laws or regulations of the Cayman Islands, or of any
authority therein or thereof having power to tax, or in the interpretation or
administration of such laws or regulations which become effective on or after
the Closing Date, the Issuer, the Trustee or any Note Paying Agent becomes
aware that it is or will be required to make any deduction or withholding from
any payment in respect of the Global Notes which would not be required if the
Global Notes were not represented by a global certificate or (B) to the
purchaser thereof in the form of one or more Definitive Notes in accordance
with the provisions of Section 2.4(c)(1).

 

(6)                                 If
interests in any Global Note are to be transferred to the Beneficial Owners
thereof in the form of Definitive Offered Notes pursuant to Section 2.4(c)(5),
such Global Note shall be surrendered by the Depositary, or its custodian on
its behalf, to the Corporate Trust Office or to the Note Transfer Agent located
in Chicago, Illinois and the Trustee shall authenticate and deliver without
charge, upon such transfer of interests in such Global Note, an equal aggregate
principal amount of Definitive Notes of authorized denominations. The
Definitive Offered Notes transferred pursuant to this Section 2.4 shall be
executed, authenticated and delivered only in the denominations specified in Section 2.2(b) and
registered in such names as the Depositary shall direct in writing.

 

(7)                                 For
so long as one or more Global Notes are Outstanding:

 

(i)                                    the
Trustee and its directors, officers, employees and agents may deal with the
Depositary for all purposes (including the making of distributions on, and the
giving of notices with respect to, the Global Notes);

 

(ii)                                 unless
otherwise provided herein and subject to Section 2.4(c)(7)(i) above,
the rights of Beneficial Owners shall be exercised only through the Depositary
and shall be limited to those established by law and agreements between such
Beneficial Owners and the Depositary;

 

(iii)                              for
purposes of determining the identity of and principal amount of Secured Notes
beneficially owned by a Beneficial Owner, the records of the Depositary shall
be conclusive evidence of such identity and principal amount and the Trustee
may conclusively rely on such records when acting hereunder;

 

(iv)                             the
Depositary will make book-entry transfers among the Depositary Participants of
the Depositary and will receive and transmit distributions of principal of and
interest on the Global Notes to such Depositary Participants; and

 

(v)                                the
Depositary Participants of the Depositary shall have no rights under this
Indenture under or with respect to any of the Global Notes held on their behalf
by the Depositary, and the Depositary may be treated by the Trustee and its
agents, employees, officers and directors as the absolute owner of the Global
Notes for all purposes whatsoever.

 

73

 

(d)                                Transfers of the Retained Notes.

 

(1)                                 If
a holder of a beneficial interest in a Definitive Retained Note wishes at any
time to transfer its interest in such Definitive Retained Note, such holder may
transfer or cause the transfer of such interest for an equivalent beneficial
interest in one or more such Definitive Retained Notes or Regulation S Global
Notes as provided below. Upon receipt by the Issuer and the Note Registrar of (A) such
holder’s Definitive Retained Note properly endorsed for assignment to the
transferee and (B) in the case of a transfer to a holder taking an
interest in a Definitive Retained Note, a certificate in the form of Exhibit C-3
(each a Definitive Retained Note Transfer Certificate) or, in the case of a transfer to a holder taking an interest
in a Regulation S Global Note, a Regulation S Transfer Certificate
substantially in the form of Exhibit C-2 given by the transferee of such
beneficial interest then the Note Registrar shall cancel such Definitive
Retained Note, record the transfer in the Note Register and either (i) authenticate
and deliver one or more Definitive Retained Notes bearing the same designation
as the Definitive Retained Notes endorsed for transfer, registered in the names
specified in the assignment described in clause (A) above, or (ii) the
Trustee shall cause the transfer to the Regulation S Global Note in principal
amounts designated by the transferee (the Class and the aggregate of such
amounts being the same as the beneficial interest in the Definitive Retained
Notes surrendered by the transferor), and in the minimum denominations and
integral multiples in excess thereof. In addition, the Note Registrar shall not
register any transfer of Definitive Retained Notes to a proposed transferee of
Definitive Retained Notes that has represented that it is a Benefit Plan
Investor or a Controlling Person if the transfer would result in Benefit Plan
Investors owning 25% or more of the value of the outstanding Retained Notes (as
determined without regard to interests held by Controlling Persons, and
otherwise contemplated by the applicable regulations under ERISA) immediately
after such transfer, based on assurances received from investors. Without
limiting the generality of the forgoing, the Note Registrar shall not register
any transfer of Definitive Retained Notes represented by Regulation S Notes to
a proposed transferee of such Definitive Retained Notes that has represented
that it is or may become a Benefit Plan Investor or a Controlling Person.
Without limiting the generality of the foregoing, a transfer of beneficial
interests in a Definitive Retained Note not represented by a Regulation S Note
will not be permitted unless a representation is obtained from each transferee
of a Definitive Retained Note, for the benefit of the Issuer, the Trustee, the
Initial Purchaser and the Placement Agent, regarding whether it is, or is not
and will not be, a Benefit Plan Investor or Controlling Person. In the case of
a Definitive Retained Note represented by a Regulation S Note, each transferee
will be deemed to represent that it is not and will not be a Benefit Plan
Investor or Controlling Person. Any purported transfer in violation of the
foregoing requirements shall be null and void ab initio, and the
Note Registrar shall not register any such purported transfer and shall not
authenticate and deliver such Definitive Retained Notes.

 

(2)                                 If
a holder of a beneficial interest in one or more Definitive Retained Notes
wishes at any time to exchange its interest in such Definitive Retained Notes
for an interest in one or more such Definitive Retained Notes of different
principal amounts, such holder may exchange or cause the exchange of such
interest for an equivalent beneficial interest in the Definitive Retained Notes
bearing the same

 

74

 

designation as the Definitive Retained Notes endorsed for exchange as
provided below. Upon receipt by the Note Registrar of (A) such holder’s
Definitive Retained Notes properly endorsed for such exchange and (B) written
instructions from such holder designating the number and principal amounts of
the applicable Definitive Retained Notes to be issued (the aggregate principal
amounts of such Definitive Retained Notes being the same as the Definitive Retained
Notes surrendered for exchange), then the Note Registrar shall cancel such
Definitive Retained Notes, record the exchange in the Note Register and
authenticate and deliver one or more Definitive Retained Notes bearing the same
designation endorsed for exchange, registered in the same names as the
Definitive Retained Notes surrendered by such holder or such different names as
are specified in the endorsement described in clause (A) above, in
different principal amounts designated by such holder (the Class and the
aggregate principal amounts being the same as the beneficial interest in the
Definitive Retained Notes surrendered by such holder), and the minimum
denominations and integral multiples in excess.

 

(e)                                 Denominations; Qualified Purchaser Status.  No Person may hold a beneficial
interest in any Secured Note except in a denomination authorized for the
Secured Notes of such Class under Section 2.2(b). In addition, no
transfer of a Secured Note (or any interest therein) may be made to any Person
that is a U.S. Person unless such Person is (A) a Qualified Institutional
Buyer (or, with respect to the Retained Notes and the Income Notes, an
Institutional Accredited Investor or a Permitted NS Purchaser) and (B) a
Qualified Purchaser. In addition, no transfer of a Secured Note (or any
interest therein) may be made to any Person that is a U.S. Person unless such
Person (A) was not formed for the purpose of investing in the Issuer
(except when each beneficial owner of the purchaser is a Qualified Purchaser), (B) has
received the necessary consent from its beneficial owners if it is a private
investment company formed before April 30, 1996, (C) is not a
broker-dealer that owns and invests on a discretionary basis less than
U.S.$25,000,000 in securities of unaffiliated issuers, (D) is not a
pension, profit, sharing or other retirement trust fund or plan in which the
partners, beneficiaries or participants, as applicable, may designate the
particular investments to be made, and in a transaction that may be effected
without loss of any applicable Investment Company Act exemption, (E) will
provide notice to any subsequent transferee of the transfer restrictions
provided in the legend, (F) will hold and transfer in a principal amount
of not less than U.S.$250,000, for it or for each account for which it is
acting, and (G) will provide the Issuer from time to time such information
as it may reasonably request in order to ascertain compliance with the
foregoing. Any purported transfer that is not in compliance with this Section 2.4
or the legends on the Secured Notes will be void ab initio, and will
not operate to transfer any rights to the transferee, notwithstanding any
instructions to the contrary to the Issuer, the Trustee or any intermediary. If
any purported transfer of Secured Notes or any beneficial interest therein to a
purported transferee does not comply with the requirements set forth in this Section 2.4
or the legends on the Secured Notes, then the purported transferor of such
Secured Notes or beneficial interest therein shall be required to cause the
purported transferee to surrender the Secured Notes or any beneficial interest
therein in return for a refund of the consideration paid therefor by such
transferee (together with interest thereon) or to cause the purported
transferee to dispose of such Secured Notes or beneficial interest promptly in
one or more open market sales to one or more persons each of whom satisfies the
requirements of this Section 2.4 and the legends on the Secured Notes and
such purported transferor shall take, and shall cause such transferee to take,
all further action necessary

 

75

 

or desirable, in the judgment of the Trustee, to ensure that such
Secured Notes or any beneficial interest therein are held by persons in
compliance therewith.

 

(f)                                   Requirement
to Sell.

 

(1)                                 If,
notwithstanding the restrictions set forth in this Section 2.4, the Issuer
determines that any beneficial owner of a Rule 144A Note (A) is a
U.S. Person and (B) is not a Qualified Institutional
Buyer and also a Qualified Purchaser, the Issuer may require, by notice to such
beneficial owner that such beneficial owner sell all of its right, title and
interest to such Secured Note (or interest therein) to a Person that is both (1) a
Qualified Institutional Buyer and (2) a Qualified Purchaser, with such
sale to be effected within 30 days after notice of such sale requirement is
given. If such beneficial owner fails to effect the transfer required within
such 30-day period, (x) upon written direction from the Issuer, the
Trustee shall, and is hereby irrevocably authorized by such beneficial owner to
cause its interest in such Secured Note to be transferred in a commercially
reasonable sale (conducted by the Trustee in accordance with Sections 9-610 and
9-611 of the UCC as applied to securities that are customarily sold on a
recognized market or that may decline speedily in value) to a Person that
certifies to the Trustee, in connection with such transfer, that such Person is
both (1) a Qualified Institutional Buyer and (2) a Qualified
Purchaser and (y) pending such transfer, no further payments will be made
in respect of such Secured Note (or beneficial interest therein) held by such
beneficial owner.

 

(2)                                 If,
notwithstanding the restrictions set forth in this Section 2.4, the Issuer
determines that any beneficial owner of a Regulation S Note is (A) a U.S.
Person or (B) a Benefit Plan Investor or a Controlling Person (for the
purposes of ERISA), the Issuer may require, by notice to such beneficial owner
that such beneficial owner sell all of its right, title and interest to such
Secured Note (or interest therein) to a Person that is not (1) a U.S.
Person or (2) a Benefit Plan Investor or a Controlling Person (for the
purposes of ERISA), with such sale to be effected within 30 days after notice
of such sale requirement is given. If such beneficial owner fails to effect the
transfer required within such 30-day period, (x) upon written direction
from the Issuer, the Trustee shall, and is hereby irrevocably authorized by
such beneficial owner to cause its interest in such Secured Note to be
transferred in a commercially reasonable sale (conducted by the Trustee in
accordance with Sections 9-610 and 9-611 of the UCC as applied to securities
that are customarily sold on a recognized market or that may decline speedily
in value) to a Person that certifies to the Trustee, in connection with such
transfer, that such Person is neither (1) a U.S. Person nor (2) a
Benefit Plan Investor or a Controlling Person (for the purposes of ERISA), and (y) pending
such transfer, no further payments will be made in respect of such Secured Note
(or beneficial interest therein) held by such beneficial owner.

 

(g)                                Legends.  Any Secured Note issued upon the
transfer, exchange or replacement of Secured Notes shall bear such applicable
legend set forth in the relevant Exhibit hereto unless there is delivered
to the Trustee, the Note Registrar and the Issuer such satisfactory evidence,
which may include an Opinion of Counsel, as may be reasonably required by any
of the Trustee, the Note Registrar and the Issuer to the effect that neither
such applicable legend nor the restrictions on transfer set forth therein are
required to ensure that transfers thereof comply with the provisions of Rule 144A
or another exemption

 

76

 

from registration under the Securities Act and to ensure that neither
the Issuer nor the pool of Collateral becomes an investment company required to
be registered under the Investment Company Act. Upon provision of such
satisfactory evidence, the Trustee, at the direction of the Issuer, shall
authenticate and deliver Secured Notes that do not bear such applicable legend.

 

(h)                                Expenses; Acknowledgment of
Transfer.  Transfer,
registration and exchange shall be permitted as provided in this Section 2.4
without any charge to the Secured Noteholder except for a sum sufficient to
cover any tax or other governmental charge payable in connection therewith or
the expenses of delivery (if any) not made by regular mail and payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith pursuant to Section 2.4(a). Registration of the transfer of a
Secured Note by the Trustee shall be deemed to be the acknowledgment of such
transfer on behalf of the Issuer.

 

(i)                                    Surrender upon Final Payment.  Upon final payment due on the date
on which all outstanding unpaid principal of a Secured Note becomes due and
payable as therein or herein provided, whether at the Stated Maturity Date or
by declaration of acceleration, call for redemption or otherwise, the Holder
thereof shall present and surrender such Secured Note at the Corporate Trust
Office of the Trustee in Chicago, Illinois.

 

(j)                                    Repurchase and Cancellation
of Secured Notes.  The Issuer will not
purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of
the Outstanding Secured Notes except upon the redemption of the Secured Notes
in accordance with the terms of this Indenture and the Secured Notes. The
Issuer will promptly cancel all Secured Notes acquired by them pursuant to any
payment, purchase, redemption, prepayment or other acquisition of Secured Notes
pursuant to any provision of this Indenture and no Secured Notes may be issued
in substitution or exchange for any such Secured Notes.

 

(k)                                 Compliance with Transfer
Restrictions.  Notwithstanding
anything contained herein to the contrary, neither the Trustee nor the Note
Registrar shall be responsible for ascertaining whether any transfer complies
with the registration provisions of or exemptions from the Securities Act,
applicable state securities laws, the rules of any Depositary, ERISA, the
Code or the Investment Company Act; provided that if a certificate is specifically
required by the express terms of this Section 2.4 to be delivered to the
Trustee or the Note Registrar by a purchaser or transferee of a Secured Note,
the Trustee or the Note Registrar, as the case may be, shall be under a duty to
receive and examine the same to determine whether the transfer contemplated
thereby substantially complies with the express terms of this Indenture and
shall promptly notify the party delivering the same if such transfer does not
comply with such terms. To the extent applicable to the Issuer, the Issuer
shall impose additional restrictions to comply with the USA PATRIOT Act, and
any such transfer restrictions shall be binding on each Holder or Beneficial
Owner of a Secured Note. The Issuer shall notify the Trustee and the Note Registrar
of the imposition of any such transfer restrictions.

 

(I)                                     Physical Secured Notes.  The Issuer will promptly make
available to the Trustee without charge, a reasonable supply of Definitive
Notes in definitive, fully Registered Form, without interest coupons.

 

77

 

2.5.                             MUTILATED, DEFACED,
DESTROYED, LOST OR STOLEN SECURED NOTES

 

If
(a) any mutilated or defaced Secured Note is surrendered to a Note
Transfer Agent, or if there shall be delivered to the Issuer, the Trustee and
the Note Transfer Agent (each, a Specified Person)  evidence to their reasonable satisfaction of the
destruction, loss or theft of any Secured Note, and (b) there is delivered
to the Specified Persons such security or indemnity as may reasonably be
required by them to save each of them harmless then, in the absence of notice
to the Specified Persons that such Secured Note has been acquired by a bona
fide purchaser, the Issuer shall execute and shall direct the Trustee to
authenticate, and upon Issuer Request the Trustee shall authenticate and
deliver, in lieu of any such mutilated, defaced, destroyed, lost or stolen
Secured Note, a new Secured Note of the same Class as such mutilated,
defaced, destroyed, lost or stolen Secured Note, of like tenor (including the
same date of issuance) and equal principal amount, registered in the same
manner, dated the date of its authentication, bearing interest from the date to
which interest has been paid on the mutilated, defaced, destroyed, lost or stolen
Secured Note and bearing a number not contemporaneously outstanding.

 

If, after delivery of such new Secured Note, a bona fide purchaser of
the predecessor Secured Note presents for payment, transfer or exchange such
predecessor Secured Note, the Specified Persons shall be entitled to recover
such new Secured Note from the Person to whom it was delivered or any Person
taking therefrom, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expense
incurred by the Specified Persons in connection therewith.

 

In case any such mutilated, defaced, destroyed, lost or stolen Secured
Note has become due and payable, the Issuer in its (as applicable) discretion
may, instead of issuing a new Secured Note, pay such Secured Note without
requiring surrender thereof except that any
mutilated Secured Note shall be surrendered.

 

Upon the issuance of any new Secured Note under this Section 2.5,
the Issuer, the Trustee or any Note Transfer Agent may require the payment by
the registered Holder thereof of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

 

Every new Secured Note issued pursuant to this Section 2.5 in lieu
of any mutilated, defaced, destroyed, lost or stolen Secured Note, shall
constitute an original additional contractual obligation of the Issuer and such
new Secured Note shall be entitled, subject to the second paragraph of this Section 2.5,
to all the benefits of this Indenture equally and proportionately with any and
all other Secured Notes duly issued hereunder.

 

The provisions of this Section 2.5 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, defaced, destroyed, lost or stolen
Secured Notes.

 

2.6.                             PAYMENT OF PRINCIPAL AND INTEREST; RIGHTS PRESERVED

 

(a)                                 Each
Class of Secured Notes shall accrue interest during each Interest Period
applicable to such Class in the manner and at the Applicable Periodic
Interest Rate specified in Section 2.2. Interest on each Class of
Secured Notes shall be due and payable on each Payment Date; provided
that (i) interest on the Class A-2 Notes is subordinated
in right of payment to the prior payment in full on each Payment Date of the
interest due and payable on the Class A-1 Notes (together with any
Defaulted Interest thereon), (ii) interest on the Class A-3 Notes is
subordinated in right of payment to the prior

 

78

 

payment in full on each Payment Date of the interest due and payable on
the Class A-1 Notes and the Class A-2 Notes (together with any
Defaulted Interest thereon), (iii) interest on the Class B Notes is
subordinated in right of payment to the prior payment in full on each Payment
Date of the interest due and payable on the Class A Notes (together with
any Defaulted Interest thereon), (iv) interest on the Class C Notes
is subordinated in right of payment to the prior payment in full on each
Payment Date of the interest due and payable on the Class A Notes
(together with any Defaulted Interest thereon) and on the Class B Notes
(together with any Defaulted Interest thereon), (v) interest on the Class D
Notes is subordinated in right of payment to the prior payment in full on each
Payment Date of the interest due and payable on the Class A Notes
(together with any Defaulted Interest thereon), on the Class B Notes
(together with any Defaulted Interest thereon) and on the Class C Notes
(together with any Defaulted Interest thereon), (vi) interest on the Class E
Notes is subordinated in right of payment to the prior payment in full on each
Payment Date of the interest due and payable on the Class A Notes
(together with any Defaulted Interest thereon), on the Class B Notes
(together with any Defaulted Interest thereon), on the Class C Notes
(together with any Defaulted Interest thereon) and on the Class D Notes
(together with any Defaulted Interest thereon), (vii) interest on the Class F
Notes is subordinated in right of payment to the prior payment in full on each
Payment Date of the interest due and payable on the Class A Notes
(together with any Defaulted Interest thereon), on the Class B Notes
(together with any Defaulted Interest thereon), on the Class C Notes
(together with any Defaulted Interest thereon), on the Class D Notes
(together with any Defaulted Interest thereon) and on the Class E Notes
(together with any Defaulted Interest thereon), (viii) interest on the Class G
Notes is subordinated in right of payment to the prior payment in full on each
Payment Date of the interest due and payable on the Class A Notes
(together with any Defaulted Interest thereon), on the Class B Notes
(together with any Defaulted Interest thereon), on the Class C Notes
(together with any Defaulted Interest thereon), on the Class D Notes
(together with any Defaulted Interest thereon), on the Class E Notes
(together with any Defaulted Interest thereon) and on the Class F Notes
(together with any Defaulted Interest thereon), (ix) interest on the Class H
Notes is subordinated in right of payment to the prior payment in full on each
Payment Date of the interest due and payable on the Class A Notes (together
with any Defaulted Interest thereon), on the Class B Notes (together with
any Defaulted Interest thereon), on the Class C Notes (together with any
Defaulted Interest thereon), on the Class D Notes (together with any
Defaulted Interest thereon), on the Class E Notes (together with any
Defaulted Interest thereon), on the Class F Notes (together with any
Defaulted Interest thereon) and on the Class G Notes (together with any
Defaulted Interest thereon), (x) interest on the Class J Notes is
subordinated in right of payment to the prior payment in full on each Payment
Date of the interest due and payable on the Class A Notes (together with
any Defaulted Interest thereon), on the Class B Notes (together with any
Defaulted Interest thereon), on the Class C Notes (together with any
Defaulted Interest thereon), on the Class D Notes (together with any
Defaulted Interest thereon), on the Class E Notes (together with any
Defaulted Interest thereon), on the Class F Notes (together with any
Defaulted Interest thereon), on the Class G Notes (together with any
Defaulted Interest thereon) and on the Class H Notes (together with any
Defaulted Interest thereon), (xi) interest on the Class K Notes is
subordinated in right of payment to the prior payment in full on each Payment
Date of the interest due and payable on the Class A Notes (together with
any Defaulted Interest thereon), on the Class B Notes (together with any
Defaulted Interest thereon), on the Class C Notes (together with any
Defaulted Interest thereon), on the Class D Notes (together with any
Defaulted Interest thereon), on the Class E Notes (together with any
Defaulted Interest thereon), on the

 

79

 

Class F Notes (together with any Defaulted Interest thereon), on
the Class G Notes (together with any Defaulted Interest thereon), on the Class H
Notes (together with any Defaulted Interest thereon) and on the Class J
Notes (together with any Defaulted Interest thereon) and (xii) interest on all
Secured Notes is subordinated in right of payment to the prior payment in full
on each Payment Date of other amounts in accordance with Section 11.1.
Except as provided in Section 5.5, no payment shall be made by the Issuer
hereunder other than on a Payment Date.

 

So long as any Class A Notes or Class B Notes are
Outstanding, any Class C Applicable Periodic Interest Shortfall Amount
shall be deferred and added to the then Aggregate Outstanding Amount of the Class C
Notes and shall not be considered “due and payable” for the purposes of Section 5.1(a) until
the Payment Date on which funds are available to pay such Class C
Applicable Periodic Interest Shortfall Amount in accordance with Section 11.1.

 

So long as any Class A Notes, Class B Notes or Class C
Notes are Outstanding, any Class D Applicable Periodic Interest Shortfall
Amount shall be deferred and added to the then Aggregate Outstanding Amount of
the Class D Notes and shall not be considered “due and payable” for the
purposes of Section 5.1(a) until the Payment Date on which funds are
available to pay such Class D Applicable Periodic Interest Shortfall
Amount in accordance with Section 11.1.

 

So long as any Class A Notes, Class B Notes, Class C
Notes or Class D Notes are Outstanding, any Class E Applicable
Periodic Interest Shortfall Amount shall be deferred and added to the then
Aggregate Outstanding Amount of the Class E Notes and shall not be
considered “due and payable” for the purposes of Section 5.1(a) until
the Payment Date on which funds are available to pay such Class E
Applicable Periodic Interest Shortfall Amount in accordance with Section 11.1.

 

So long as any Class A Notes, Class B Notes, Class C
Notes, Class D Notes or Class E Notes are Outstanding, any Class F
Applicable Periodic Interest Shortfall Amount shall be deferred and added to
the then Aggregate Outstanding Amount of the Class F Notes and shall not
be considered “due and payable” for the purposes of Section 5.1(a) until
the Payment Date on which funds are available to pay such Class F
Applicable Periodic Interest Shortfall Amount in accordance with Section 11.1.

 

So long as any Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes or Class F Notes are
Outstanding, any Class G Applicable Periodic Interest Shortfall Amount
shall be deferred and added to the then Aggregate Outstanding Amount of the Class G
Notes and shall not be considered “due and payable” for the purposes of Section 5.1(a) until
the Payment Date on which funds are available to pay such Class G
Applicable Periodic Interest Shortfall Amount in accordance with Section 11.1.

 

So long as any Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes or Class G
Notes are Outstanding, any Class H Applicable Periodic Interest Shortfall
Amount shall be deferred and added to the then Aggregate Outstanding Amount of
the Class H Notes and shall not be considered “due and payable” for the
purposes of Section 5.1(a) until the Payment Date on which funds are
available to pay such Class H Applicable Periodic Interest Shortfall
Amount in accordance with Section 11.1.

 

80

 

So long as any Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes or Class H Notes are Outstanding, any Class J Applicable
Periodic Interest Shortfall Amount shall be deferred and added to the then Aggregate
Outstanding Amount of the Class J Notes and shall not be considered “due
and payable” for the purposes of Section 5.1(a) until the Payment
Date on which funds are available to pay such Class J Applicable
Periodic Interest Shortfall Amount in accordance with Section 11.1.

 

So long as any Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes or Class J Notes are Outstanding, any Class K
Applicable Periodic Interest Shortfall Amount shall be deferred and added to
the then Aggregate Outstanding Amount of the Class K Notes and shall not
be considered “due and payable” for the purposes of Section 5.1(a) until
the Payment Date on which funds are available to pay such Class K
Applicable Periodic Interest Shortfall Amount in accordance with Section 11.1.

 

(b)                                 The
principal of each Secured Note shall be payable no later than the Stated
Maturity Date thereof unless the unpaid principal of such Secured Note becomes
due and payable at an earlier date by declaration of acceleration, call for
redemption or otherwise; provided that:

 

(1)                                  so
long as any Class A-1 Notes are Outstanding, except as provided in Article IX,
the payment of principal of the Class A-2 Notes, the Class A-3 Notes,
the B Notes, the Class C Notes, the Class D Notes, the Class E
Notes, the Class F Notes, the Class G Notes, the Class H Notes,
the Class J Notes and the Class K Notes (x) may only occur after
principal of the Class A-1 Notes has been paid in full and (y) shall
be subordinated to the payment on each Payment Date of the principal and
interest due and payable on the Class A-1 Notes and other amounts payable
in accordance with Section 11.1;

 

(2)                                  so
long as any Class A-1 Notes or Class A-2 Notes are Outstanding,
except as provided in Article IX, the payment of principal of the Class A-3
Notes, the B Notes, the Class C Notes, the Class D Notes, the Class E Notes, the Class F
Notes, the Class G Notes, the Class H Notes, the Class J Notes
and the Class K Notes, (x) may only occur after principal of the Class A-1
Notes and Class A-2 Notes has been paid in full and (y) shall be
subordinated to the payment on each Payment Date of the principal and interest
due and payable on the Class A-1 Notes and Class A-2 Notes and other
amounts payable in accordance with Section 11.1;

 

(3)                                  so
long as any Class A Notes are Outstanding, except as provided in Article IX,
the payment of principal of the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes, the Class F Notes, the Class G
Notes, the Class H Notes, the Class J Notes and the Class K
Notes (x) may only occur after principal of the Class A Notes has
been paid in full and (y) shall be subordinated to the payment on each
Payment Date of the principal and interest due and payable on the Class A
Notes and other amounts payable in accordance with Section 11.1;

 

(4)                                  so
long as any Class A Notes or Class B Notes are Outstanding, except as
provided in Article IX, the payment of principal of the Class C
Notes, the Class D Notes, the Class E Notes, the Class F Notes,
the Class G Notes, the Class H

 

81

 

Notes, the Class J Notes and the Class K Notes (x) may
only occur after principal of the Class A Notes and the Class B Notes
has been paid in full and (y) shall be subordinated to the payment on each
Payment Date of the principal and interest due and payable on the Class A
Notes and Class B Notes and other amounts payable in accordance with Section 11.1;

 

(5)                                  so
long as any Class A Notes, Class B Notes or Class C Notes are
Outstanding, except as provided in Article IX, the payment of principal of
the Class D Notes, the Class E Notes, the Class F Notes, the Class G
Notes, the Class H Notes, the Class J Notes and the Class K
Notes (x) may only occur after principal of the Class A Notes, the Class B
Notes and the Class C Notes has been paid in full and (y) shall be
subordinated to the payment on each Payment Date of the principal and interest
due and payable on the Class A Notes, the Class B Notes and the Class C
Notes and other amounts payable in accordance with Section 11.1;

 

(6)                                  so
long as any Class A Notes, Class B Notes, Class C Notes or Class D
Notes are Outstanding, except as provided in Article IX, the payment of
principal of the Class E Notes, the Class F Notes, the Class G
Notes, the Class H Notes, the Class J Notes and the Class K
Notes (x) may only occur after principal of the Class A Notes, the Class B
Notes, the Class C Notes and the Class D Notes has been paid in full
and (y) shall be subordinated to the payment on each Payment Date of the
principal and interest due and payable on the Class A Notes, the Class B
Notes, the Class C Notes and the Class D Notes and other amounts
payable in accordance with Section 11.1;

 

(7)                                  so
long as any Class A Notes, Class B Notes, Class C Notes, Class D
Notes or Class E Notes are Outstanding, except as provided in Article IX,
the payment of principal of the Class F Notes, the Class G Notes, the
Class H Notes, the Class J Notes and the Class K Notes (x) may
only occur after principal of the Class A Notes, the Class B Notes,
the Class C Notes, the Class D Notes and the Class E Notes has
been paid in full and (y) shall be subordinated to the payment on each
Payment Date of the principal and interest due and payable on the Class A
Notes, the Class B Notes, the Class C Notes, the Class D Notes
and the Class E Notes and other amounts payable in accordance with Section 11.1;

 

(8)                                  so
long as any Class A Notes, Class B Notes, Class C Notes, Class D
Notes, Class E Notes or Class F Notes are Outstanding, except as
provided in Article IX, the payment of principal of the Class G
Notes, the Class H Notes, the Class J Notes and the Class K
Notes (x) may only occur after principal of the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes, the Class E Notes
and the Class F Notes has been paid in full and (y) shall be
subordinated to the payment on each Payment Date of the principal and interest
due and payable on the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes and the Class F
Notes and other amounts payable in accordance with Section 11.1;

 

(9)                                  so
long as any Class A Notes, Class B Notes, Class C Notes, Class D
Notes, Class E Notes, Class F Notes or Class G Notes are
Outstanding, except as provided in Article IX, the payment of principal of
the Class H Notes, the Class J Notes and the Class K Notes (x) may
only occur after principal of the Class A Notes, the Class B Notes,
the Class C Notes, the Class D Notes, the Class E

 

82

 

Notes, the Class F Notes and the Class G Notes
has been paid in full and (y) shall be subordinated to the payment on each
Payment Date of the principal and interest due and payable on the Class A
Notes, the Class B Notes, the Class C Notes, the Class D Notes,
the Class E Notes, the Class F Notes and the Class G Notes and
other amounts payable in accordance with Section 11.1;

 

(10)                            so long as any Class A
Notes, Class B Notes, Class C Notes, Class D Notes, Class E
Notes, Class F Notes, Class G Notes or Class H Notes are
Outstanding, except as provided in Article IX, the payment of principal of
the Class J Notes and the Class K Notes (x) may only occur after
principal of the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes, the Class F Notes,
the Class G Notes and the Class H Notes has been paid in full and (y) shall
be subordinated to the payment on each Payment Date of the principal and
interest due and payable on the Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes, the Class F
Notes, the Class G Notes and the Class H Notes and other amounts
payable in accordance with Section 11.1; and

 

(11)                            so long as any Class A
Notes, Class B Notes, Class C Notes, Class D Notes, Class E
Notes, Class F Notes, Class G Notes, Class H Notes or Class J
Notes are Outstanding, except as provided in Article IX, the payment of
principal of the Class K Notes (x) may only occur after principal of
the Class A Notes, the Class B Notes, the Class C Notes, the Class D
Notes, the Class E Notes, the Class F Notes, the Class G Notes,
the Class H Notes and the Class J Notes has been paid in full and (y) shall
be subordinated to the payment on each Payment Date of the principal and
interest due and payable on the Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes, the Class F
Notes, the Class G Notes, the Class H Notes and the Class J
Notes and other amounts payable in accordance with Section 11.1.

 

(c)                                  So long as the Coverage
Tests are satisfied, principal will not be payable on any Class of Secured
Notes except (i) upon the occurrence of a Redemption, (ii) in the
case of any Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes, Class H Notes, Class J Notes and Class K
Notes to pay amounts in respect of the Class C Cumulative Applicable
Periodic Interest Shortfall Amount, the Class D Cumulative Applicable
Periodic Interest Shortfall Amount, the Class E Cumulative Applicable
Periodic Interest Shortfall Amount, the Class F Cumulative Applicable
Periodic Interest Shortfall Amount, the Class G Cumulative Applicable
Periodic Interest Shortfall Amount, the Class H Cumulative Applicable
Periodic Interest Shortfall Amount, the Class J Cumulative Applicable
Periodic Interest Shortfall Amount or the Class K Cumulative Applicable
Periodic Interest Shortfall Amount, as the case may be, in accordance with Section 11.1
and (iii) on each Payment Date, in accordance with Section 11.1.

 

(d)                                 As a condition to the
payment of any principal of or interest on any Secured Note without the
imposition of withholding tax, any Note Paying Agent shall require the previous
delivery of properly completed and signed applicable U.S. federal income tax
certifications (generally, an Internal Revenue Service Form W-9 (or
applicable successor form) in the case of a person that is a “United States
person” within the meaning of Section 7701(a)(30) of the Code or an
Internal Revenue Service Form W-8 (or applicable successor form) in the
case of a person that is not a “United States person” within the

 

83

 

meaning of Section 7701(a)(30) of the Code) or other certification
acceptable to it to enable the Issuer, the Trustee and any Note Paying Agent to
determine their duties and liabilities with respect to any taxes or other
charges that they may be required to pay, deduct or withhold in respect of such
Secured Note or the Holder of such Secured Note under any present or future law
or regulation of the Cayman Islands or the United States or any present or
future law or regulation of any political subdivision thereof or taxing
authority therein or to comply with any reporting or other requirements under
any such law or regulation.

 

(e)                                  All
payments made by the Issuer under the Secured Notes will be made without any
deduction or withholding for or on the account of any tax unless such deduction
or withholding is required by applicable law, as modified by the practice of
any relevant governmental authority, then in effect. If the Issuer is so
required to deduct or withhold, then the Issuer will not be obligated to pay
any additional amounts in respect of such withholding or deduction.

 

(f)                                    Payments
in respect of principal of and interest on the Secured Notes shall be payable
by wire transfer in immediately Available Funds to a Dollar account maintained
by the Secured Noteholders in accordance with wire transfer instructions
received by any Note Paying Agent on or before the Record Date or, if no wire
transfer instructions are received by a Note Paying Agent, by a Dollar check
drawn on a bank in the United States mailed to the address of such Secured
Noteholder as it appears on the Note Register at the close of business on the
Record Date for such payment.

 

(g)                                 The
principal of and interest on any Secured Note which is payable on a Redemption
Date or in accordance with Section 11.1 on a Payment Date and is
punctually paid or duly provided for on such Redemption Date or Payment Date
shall be paid to the Person in whose name that Secured Note (or one or more
predecessor Secured Notes) is registered at the close of business on the Record
Date for such payment. All such payments that are mailed or wired and returned
to the Note Paying Agent shall be held for payment as herein provided at the
office or agency of the Issuer to be maintained as provided in Section 7.2.

 

Payments to Holders of the Secured Notes of each Class shall be
made in the proportion that the Aggregate Outstanding Amount of the Secured
Notes of such Class registered in the name of each such Holder on the
Record Date for such payment bears to the Aggregate Outstanding Amount of all
Secured Notes of such Class on such Record Date.

 

(h)                                 Payment of any
Defaulted Interest may be made in any other lawful manner in accordance with Section 11.1
if notice of such payment is given by the Trustee to the Issuer and the Secured
Noteholders, and such manner of payment shall be deemed practicable by the Trustee.

 

(i)                                     All
reductions in the principal amount of a Secured Note (or one or more
predecessor Secured Notes) effected by payments of installments of principal
made on any Payment Date or Redemption Date shall be binding upon all future
Holders of such Secured Note and of any Secured Note issued upon the
registration of transfer thereof, or in exchange therefor, or in lieu thereof,
whether or not such payment is noted on such Secured Note.

 

(j)                                     Notwithstanding
anything to the contrary herein, the obligations of the Issuer under the
Secured Notes or this Indenture or arising in connection herewith are limited
recourse

 

84

 

obligations of the Issuer payable solely from the Collateral and
following realization of the Collateral, all obligations of and all claims
against the Issuer hereunder or arising in connection herewith shall be
extinguished and shall not thereafter revive. No recourse shall be had against
any Officer, member, director, employee, security holder or incorporator of the
Issuer or its respective successors or assigns for the payment of any amounts
payable under the Secured Notes or this Indenture. It  is understood that the foregoing
provisions of this Section 2.6(j) shall not (i) prevent recourse
to the Collateral for the sums due or to become due under any security,
instrument or agreement which is part of the Collateral or (ii) constitute
a waiver, release or discharge of any indebtedness or obligation evidenced by
the Secured Notes or secured by this Indenture until such Collateral has been
realized, whereupon any outstanding indebtedness or obligation shall be
extinguished. It is further understood that the foregoing provisions of this Section 2.6(j) shall
not limit the right of any Person to name the Issuer as a party defendant in
any action or suit or in the exercise of any other remedy under the Secured
Notes or this Indenture, so long as no judgment in the nature of a deficiency
judgment or seeking personal liability shall be asked for or (if obtained)
enforced against any such Person or entity.

 

(k)                                  Subject
to the foregoing provisions of this Section 2.6 and the provisions of
Sections 2.4  and 2.5, each Secured Note
delivered under this Indenture and upon registration of, transfer of, or in exchange
for, or in lieu of any other Secured Note shall carry the rights of unpaid
interest and principal that were carried by such other Secured Note.

 

ARTICLE III

 

CONDITIONS PRECEDENT

 

3.1.          GENERAL
PROVISIONS

 

The Secured Notes may be executed by the Issuer and delivered to the
Trustee for authentication and thereupon the same shall be authenticated and
delivered by the Trustee (or an Authenticating Agent on its behalf) upon Issuer
Request, upon receipt by the Trustee of the following:

 

(a)                                  an
Officer’s certificate of the Issuer, (A) evidencing the authorization by
Board Resolution of the execution and delivery of, and the performance of the
Issuer’s obligations under, each Transaction Document, in each case as may be
amended on or prior to, and as in effect on, the Closing Date, and the
execution, authentication and delivery of the Secured Notes and specifying the
Stated Maturity Date, the principal amount and the Applicable Periodic Interest
Rate with respect to each Class of Secured Notes to be authenticated and
delivered, and (B) certifying that (1) the
attached copy of such Board Resolution is a true and complete copy thereof, (2) such
resolutions have not been rescinded and are in full force and effect on and as
of the Closing Date and (3) the Officers authorized to execute and deliver
such documents hold the offices and have the signatures indicated thereon;

 

(b)                                 either
(A) a certificate of the Issuer, or other official document evidencing the
due authorization, approval or consent of any governmental body or bodies, at
the time having jurisdiction in the premises, together with an Opinion of
Counsel to the Issuer satisfactory in form and substance to the Trustee and the
Initial Hedge Counterparty on which the Trustee and the Initial Hedge
Counterparty are entitled to rely to the effect that no other authorization,
approval or consent of any governmental body is required for the

 

85

 

valid issuance of the Secured Notes, or (B) an Opinion of Counsel
to the Issuer satisfactory in form and substance to the Trustee and the Initial
Hedge Counterparty to the effect that no such authorization, approval or
consent of any governmental body is required for the valid issuance of the
Secured Notes except as may have been given; and

 

(c)          (1)                                  an
opinion of Clifford Chance US LLP, special New York counsel to the Issuer,
dated the Closing Date, in form and substance satisfactory to the Trustee;

 

(2)                                  an
opinion of Walkers, special Cayman Islands counsel to the Issuer, dated the
Closing Date, in form and substance satisfactory to the Trustee;

 

(3)                                  an
opinion of Kennedy Covington Lobdell & Hickman, L.L.P., counsel to the
Trustee, dated the Closing Date, in form and substance satisfactory to the
Trustee;

 

(4)                                  an
opinion of Thacher Proffitt & Wood LLP, counsel to the Collateral
Manager, dated the Closing Date, in form and substance satisfactory to the
Trustee; and

 

(5)                                  an
opinion of in-house counsel to the Initial Hedge Counterparty, dated the
Closing Date, in form and substance satisfactory to the Trustee;

 

(d)                                 an
Officer’s certificate of the Issuer, stating that the Issuer is not in Default
under this Indenture and that the issuance of the Secured Notes will not result
in a breach of any of the terms, conditions or provisions of, or constitute a
Default under, the Articles, any indenture or other agreement or instrument to
which the Issuer is a party or by which it is bound, or any order of any court
or administrative agency entered in any Proceeding to which the Issuer is a
party or by which it may be bound or to which it may be subject; that no Event
of Default shall have occurred and be continuing; that all of the
representations and warranties contained herein are true and correct as of the
Closing Date; that all conditions precedent provided in this Indenture relating
to the authentication and delivery of the Secured Notes applied for (including
in Section 3.2) have been complied with; and that all expenses due or
accrued with respect to the Offering or relating to actions taken on or in
connection with the Closing Date have been paid;

 

(e)                                  an
Accountants’ Report (A) confirming the information with respect to each
Collateral Debt Security (other than its price) set forth on a schedule setting
forth each Collateral Debt Security and the information provided by the Issuer
with respect to every other asset forming part of the Collateral, by reference
to such sources as shall be specified therein, and (B) specifying the procedures undertaken by them to review
data and computations relating to the foregoing statement;

 

(f)                                    executed
counterparts of this Indenture, the Account Control Agreement, the Collateral
Administration Agreement, the Collateral Management Agreement and the other
Transaction Documents;

 

(g)                                 an
executed copy of the Initial Hedge Agreement and an executed copy of the
Collateral Assignment of Hedge Agreement with respect thereto (and all
acknowledgments thereto);

 

(h)                                 execution
and delivery of the Financing Statement for filing against the Issuer with the
Recorder of Deeds in the District of Columbia; and

 

86

 

(i)                                     evidence
of an entry having been made in the Issuer’s Register of Mortgages and Charges
in respect of the charge.

 

3.2.          SECURITY FOR
THE SECURED NOTES

 

Prior to the issuance of the Secured Notes on the Closing Date, the
Issuer shall cause the following conditions to be satisfied:

 

(a)                                  Grant of Security Interest; Delivery of Collateral Debt Securities. The Grant pursuant to the granting
clauses of this Indenture of all of the Issuer’s right, title and interest in
and to the Collateral and the transfer of all Collateral Debt Securities
purchased by the Issuer on the Closing Date (as set forth in Schedule A) to the
Trustee in the manner provided in Section 3.3(b).

 

(b)                                 Certificate of the Issuer. The delivery to the Trustee of a certificate of an Authorized
Officer of the Issuer or the Collateral Manager, for and on behalf of the
Issuer, dated as of the Closing Date, to the effect that (x) the Issuer
has no assets other than the Collateral, (y) the Issuer has no investments
that do not qualify as Collateral Debt Securities or Eligible Investments and (z) in
the case of each Collateral Debt Security identified on Schedule A and pledged
to the Trustee for inclusion in the Collateral on the Closing Date:

 

(1)                                  the
Issuer is the owner of such Collateral Debt Security free and clear of any
liens, claims or encumbrances of any nature whatsoever except for those which
are being released on the Closing Date and except for those Granted pursuant to
this Indenture and encumbrances arising from due bills, if any, with respect to
interest, or a portion thereof, accrued on such Collateral Debt Security prior
to the first Payment Date and owed by the Issuer to the seller of such Collateral
Debt Security;

 

(2)                                  the
Issuer has acquired its ownership in such Collateral Debt Security in good
faith without notice of any adverse claim (within the meaning given to such
term by Section 8-102(a)(1) of the UCC), except as described in
clause (1) above;

 

(3)                                  the
Issuer has not assigned, pledged or otherwise encumbered any interest in such
Collateral Debt Security (or, if any such interest has been assigned, pledged
or otherwise encumbered, it has been released) other than interests Granted
pursuant to this Indenture;

 

(4)                                  the
Issuer has full right to Grant a security interest in and assign and pledge all
of its right, title and interest in such Collateral Debt Security to the
Trustee;

 

(5)                                  the
information set forth with respect to such Collateral Debt Security on Schedule
A is correct and each such Collateral Debt Security is transferred to the
Trustee as required by Section 3.2(a) (or, if any such Collateral
Debt Security is not so transferred to the Trustee on the Closing Date, the
Issuer has entered into a binding agreement to purchase such Collateral Debt
Security for settlement within 10 days after the Closing Date);

 

(6)                                  each
such Collateral Debt Security satisfies the requirements of the definition of “Collateral
Debt Security” and is not a Defaulted Security; and

 

87

 

(7)                                  upon Grant by the
Issuer, the Trustee has a first priority perfected security interest in the
Collateral (assuming that any Clearing Corporation, Securities Intermediary or
other entity not within the control of the Issuer involved in the Grant of
Collateral takes the actions required of it under Section 3.3(b) for
perfection of that interest) and a “securities entitlement” (as defined in the
UCC) with respect to Financial Assets.

 

(c)                                  Rating Letters. The
delivery to the Trustee of an Officer’s certificate of the Issuer, to the
effect that (i) attached thereto are true and correct copies of (A) a
letter signed by Fitch confirming that the Class A-1 Notes have been rated
“AAA”, the Class A-2 Notes have been rated “AAA”, the Class A-3 Notes
have been rated “AAA”, the Class B Notes have been rated at least “AA”,
the Class C Notes have been rated at least “A+”, the Class D Notes
have been rated at least “A”, the Class E Notes have been rated at least “A-”,
the Class F Notes have been rated at least “BBB+”, the Class G Notes
have been rated at least “BBB”, the Class H Notes have been rated at least “BBB-”,
the Class J Notes have been rated at least “BB+” and the Class K Notes
have been rated at least “BB”; (B) a letter signed by Moody’s confirming
that the Class A-1 Notes have been rated “Aaa”, the Class A-2 Notes
have been rated “Aaa”, the Class A-3 Notes have been rated “Aaa”, the Class B Notes have
been rated at least “Aa2”, the Class C Notes have been rated at least “Al”,
the Class D Notes have been rated at least “A2,” the Class E Notes
have been rated at least “A3,” the Class F Notes have been rated at least “Baal,”
the Class G Notes have been rated at least “Baa2,” the Class H Notes have
been rated at least “Baa3,” the Class J Notes have been rated at least “Ba1”
and the Class K Notes have been rated at least “Ba2” and (C) a letter
signed by S&P confirming that the Class A-1 Notes have been rated “AAA”,
the Class A-2 Notes have been rated “AAA”, the Class A-3 Notes have
been rated “AAA”, the Class B Notes have been rated at least “AA”, the Class C
Notes have been rated at least “A+”, the Class D Notes have been rated at
least “A,” the Class E Notes have been rated at least “A-”, the Class F
Notes have been rated at least “BBB+,” the Class G Notes have been
rated at least “BBB,” the Class H Notes have been rated at least “BBB-,” the Class J Notes have
been rated at least “BB+” and the Class K Notes have been rated at least “BB”
and (ii) each such rating is in full force and effect on the Closing Date.

 

(d)                                 Accounts.
The delivery by the Trustee of evidence of the establishment of the Payment
Account, the Collection Account (including each Collateral Sub-Account
established therein), the Expense Reserve Account, the Discretionary Ramp-Up
Interest Reserve Account, the Non-Monthly Pay Asset Interest Reserve Account,
the Collateral Account and the Uninvested Proceeds Account, each to be
established on the Closing Date.

 

(e)                                  Funding Certificate. The
delivery to the Trustee of a funding certificate (the Funding
Certificate), duly executed by an Authorized Officer of the
Issuer, relating to, among other things, the disposition of the proceeds of the
issuance of the Secured Notes, dated the Closing Date, in substantially the
form of Exhibit D hereto.

 

(f)                                    Purchases. The
delivery to the Trustee of a certification of the Issuer that it shall have
entered into one or more binding agreements to purchase, for settlement on or
following the Closing Date in accordance with customary settlement procedures
in the relevant markets, Collateral Debt Securities having an aggregate
Principal Balance of not less than U.S. $600,000,000.

 

88

 

3.3.                              CUSTODIANSHIP;
TRANSFER OF COLLATERAL DEBT SECURITIES AND ELIGIBLE INVESTMENTS

 

(a)                                  The
Trustee shall hold all Certificated Securities and Instruments in physical form
at the office of a custodian appointed by it in Illinois (together with any
successor, the Custodian). Initially, such Custodian shall be
LaSalle Bank National Association with its address: 181 West Madison Street, 32nd Floor, Chicago, Illinois 60602, Attention: CDO
Trust Services Group — N-Star Real Estate CDO IX, Ltd. Any successor custodian
shall be a state or national bank or trust company that is not an Affiliate of
the Issuer, has a long-term debt rating of at least “BBB+” by S&P and has a
combined capital and surplus of at least U.S.$250,000,000.

 

(b)                                 Each
Collateral Debt Security, Equity Security and Eligible Investment shall be
credited to the appropriate Account. Each time that the Issuer shall direct or
cause the acquisition of any Collateral Debt Security, Equity Security or
Eligible Investment, the Trustee (on behalf of the Issuer) shall, if such Collateral
Debt Security, Equity Security or Eligible Investment has not already been
transferred to the Collateral Account and credited thereto, cause the transfer
of such Collateral Debt Security, Equity Security or Eligible Investment to the
Custodian to be held in and credited to the Collateral Account for the benefit
of the Trustee in accordance with the terms of this Indenture. The security
interest of the Trustee in the funds or other property utilized in connection
with such acquisition shall, immediately and without further action on the part
of the Trustee, be released. The security interest of the Trustee shall
nevertheless come into existence and continue in the Collateral Debt Security,
Equity Security or Eligible Investment so acquired, including all rights of the
Issuer in and to any contracts related to and proceeds of such Collateral Debt
Security, Equity Security or Eligible Investment.

 

(c)                                  On
the Closing Date, on each day thereafter, if any, that any Collateral is
acquired or otherwise becomes subject to the lien of this Indenture and on the
Effective Date, the Issuer represents and warrants to the Trustee as follows:

 

(1)                                  This
Indenture creates a valid and continuing security interest (as defined in the
applicable Uniform Commercial Code) in the Collateral in favor of the Trustee
on behalf and for the benefit of the Secured Parties, which security interest
is prior to all other liens and security interests, and is enforceable as such
as against creditors of and purchasers from the Issuer and, upon delivery of
the Collateral Debt Securities and filing of the appropriate financing
statements in the appropriate filing offices, the lien and security interest
created by this Indenture shall be a perfected first priority security interest
in favor of the Trustee for the benefit of the Secured Parties.

 

(2)                                  The
Issuer owns and has good and marketable title to the Collateral free and clear
of any liens, claims, encumbrances or defects of any nature whatsoever except
for those which are being released on the Closing Date or on the date of
purchase by the Issuer or those created pursuant to or contemplated under this
Indenture and encumbrances arising from due bills, if any, with respect to
interest, or a portion thereof, accrued on any Collateral Debt Security prior
to the first payment date and owed by the Issuer to the seller of such
Collateral Debt Security.

 

89

 

(3)                                  The
Issuer has acquired its ownership in each such Collateral Debt Security, or
will acquire in the case of any Collateral Debt Securities which the Issuer has
on or before the Closing Date committed to purchase, but which will not have
settled on or before the Closing Date or any additional Collateral Debt
Securities or Substitute Collateral Debt Securities acquired by the Issuer
after the Closing Date, in good faith without notice of any adverse claim,
except as described in clause (2) above.

 

(4)                                  The
Issuer (a) has delivered each such Collateral Debt Security, or will
deliver any Collateral Debt Securities which the Issuer has on or before the
Closing Date committed to purchase, but which will not have settled on or
before the Closing Date, or any additional Collateral Debt Securities or
Substitute Collateral Debt Securities acquired by the Issuer after the Closing
Date, to the Trustee and (b) has not assigned, pledged, sold, granted a
security interest in or otherwise encumbered any interest in such Collateral
Debt Security other than interests granted pursuant to this Indenture.

 

(5)                                  The
Issuer has full right to grant all security interests granted herein.

 

(6)                                  All
Collateral is comprised of either “securities”, “instruments”, “tangible
chattel paper”, “accounts”, “security entitlements” or “general intangibles”,
in each case as defined in the applicable Uniform Commercial Code.

 

(7)                                  Each
of the Accounts, and all subaccounts thereof, constitute securities accounts as
defined in the applicable Uniform Commercial Code.

 

(8)                                  All
items of the Collateral that constitute security entitlements have been and
will have been credited to one of the securities accounts. The securities
intermediary for each of the Accounts has agreed to treat all assets credited
to the securities accounts as financial assets under the applicable Uniform
Commercial Code.

 

(9)                                  Other
than the security interest granted to the Trustee on behalf and for the benefit
of the Secured Parties pursuant to this Indenture, the Issuer has not pledged,
assigned, sold, granted a security interest in or otherwise conveyed any of the
Collateral. The Issuer has not authorized the filing of, and is not aware of
any financing statements against the Issuer that include a description of
collateral covering the Collateral other than any financing statement relating
to the security interest granted to the Trustee on behalf and for the benefit
of the Secured Parties hereunder or that has been terminated. The Issuer is not
aware of any judgment, Pension Benefit Guarantee Corporation lien or tax lien
filings against it.

 

(10)                            The
Issuer has caused or will have caused, within ten days of the Closing Date, the
filing of all appropriate financing statements in the proper filing office in
the appropriate jurisdictions under applicable law in order to perfect the
security interest in the Collateral granted to the Trustee on behalf and for
the benefit of the Secured Parties hereunder that constitutes chattel paper,
instruments, accounts, securities entitlements or general intangibles under the
applicable Uniform Commercial Code, if any.

 

(11)                            The
Trustee or the Accountholder has in its possession all original copies of the
instruments that constitute or evidence the Collateral, if any. The
instruments,

 

90

 

loan agreements and leases that constitute or evidence the Collateral
do not have any marks or notations indicating that they have been pledged,
assigned or otherwise conveyed to any Person other than the Trustee on behalf
and for the benefit of the Secured Parties. All financing statements filed or
to be filed against the Issuer in favor of the Trustee on behalf and for the
benefit of the Secured Parties in connection herewith describing the Collateral
contain a statement to the following effect: “A purchase of or security
interest in any collateral described in this financing statement will violate
the rights of the Trustee on behalf and for the benefit of (A) itself and
for the benefit of the Noteholders, (B) the Collateral Manager and (C) each
Hedge Counterparty.”

 

(12)                            The
authoritative copy of any chattel paper that constitutes or evidences the
Collateral, if any, has been communicated to the Trustee and has no marks or
notations indicating that it has been pledged, assigned or otherwise conveyed
to any Person other than the Trustee on behalf and for the benefit of the
Secured Parties.

 

(13)                            The
Issuer has received or will receive all consents and approvals required by the
terms of the underlying loan agreement, indenture or other underlying
documentation, if any, relating to the Collateral to the transfer to the Trustee
on behalf and for the benefit of the Secured Parties of its interest and rights
in the Collateral hereunder.

 

(14)                            The
Issuer, the Accountholder and the Trustee have entered into the Account Control
Agreement pursuant to which the Accountholder has agreed to comply with all
instructions originated by the Trustee relating to the Accounts without further
consent by the Issuer.

 

(15)                            None
of the Accounts is in the name of any person other than the Trustee, held on
behalf and for the benefit of the Secured Parties. The Issuer has not consented
to the Trustee or the Accountholder maintaining any of the Accounts to comply
with entitlement orders or instructions of any Person other than the Trustee.

 

(16)                            Notwithstanding
any other provision of this Indenture or any other related Transaction
Document, the representations in this Section 3.3(c) shall be
continuing and deemed to be updated on any day a new item of Collateral is
acquired, and remain in full force and effect until such time as all
obligations under this Indenture and the Notes have been finally and fully paid
and performed and shall survive the termination of this Indenture for any other
reason.

 

(17)                            The
parties to this Indenture (i) shall not, without obtaining a Rating Agency
Confirmation, waive any of the representations in this Section 3.3(c); (ii) shall
provide each of the Rating Agencies with prompt written notice of any breach of
the representations contained in this Section 3.3(c) upon becoming
aware thereof; and (iii) shall not, without obtaining a Rating Agency
Confirmation (as determined after any adjustment or withdrawal of the ratings
following notice of such breach), waive a breach of any of the representations
in this Section 3.3(c).

 

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ARTICLE IV

 

SATISFACTION AND DISCHARGE

 

4.1.          SATISFACTION AND DISCHARGE OF
INDENTURE

 

This Indenture shall be discharged and shall cease to be of further
effect with respect to the Collateral securing the Secured Notes except as to (i) rights
of registration of transfer and exchange, (ii) substitution of mutilated,
defaced, destroyed, lost or stolen Secured Notes, (iii) rights of Secured
Noteholders to receive payments of principal thereof and interest thereon, (iv) the
rights, obligations and immunities of the Trustee hereunder, (v) the
rights, obligations and immunities of the Collateral Manager hereunder and
under the Collateral Management Agreement and (vi) the rights of the
Secured Parties as beneficiaries hereof with respect to the property deposited with
the Trustee and payable to all or any of them; and the Trustee, on demand of
and at the expense of the Issuer, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when:

 

(a)           either:

 

(1)           all Secured Notes theretofore
authenticated and delivered (other than (A) Secured Notes which have been
mutilated, defaced, destroyed, lost or stolen and which have been replaced or
paid as provided in Section 2.5 and (B) Secured Notes for whose
payment funds have theretofore irrevocably been deposited in trust and
thereafter repaid to the Issuer or discharged from such trust, as provided in Section 7.3)
have been delivered to the Trustee for cancellation; or

 

(2)           all Secured Notes not
theretofore delivered to the Trustee for cancellation (A) have become due
and payable, or (B) will become due and payable at their Stated Maturity
Date within one year, or (C) are to be called for redemption pursuant to Section 9.1
under an arrangement satisfactory to the Trustee for the giving of notice of
redemption by the Issuer pursuant to Section 9.3 and the Issuer has
irrevocably deposited or caused to be deposited with the Trustee, in trust for
such purpose, Cash or non-callable direct obligations of the United States in
an amount sufficient, according to the Priority of Payments as verified by a
firm of nationally recognized Independent certified public accountants, to pay
and discharge the entire indebtedness on all Secured Notes not theretofore
delivered to the Trustee for cancellation, including all principal and interest
(including Class C Cumulative Applicable Periodic Interest Shortfall
Amount, Class D Cumulative Applicable Periodic Interest Shortfall Amount, Class E
Cumulative Applicable Periodic Interest Shortfall Amount, Class F Cumulative
Applicable Periodic Interest Shortfall Amount, Class G Cumulative
Applicable Periodic Interest Shortfall Amount, Class H Cumulative
Applicable Periodic Interest Shortfall Amount, Class J Cumulative
Applicable Periodic Interest Shortfall Amount and Class K Cumulative
Applicable Periodic Interest Shortfall Amount accrued to the date of such
deposit) (in the case of Secured Notes which have become due and payable) or to
the Stated Maturity Date or the Redemption Date, as the case may be; provided that (x) such
obligations are entitled to the full faith and credit of the United States and (y) this
subclause (2) shall not apply if an election to act in accordance with the
provisions of Section 5.5(a) shall have been made and not rescinded;

 

92

 

(b)           the Issuer has paid or
caused to be paid all other sums payable hereunder (including amounts payable
pursuant to any Hedge Agreement, the Income Note Paying Agency Agreement, the
Corporate Services Agreement, the Collateral Management Agreement and the
Collateral Administration Agreement) and no other amounts will become due and
payable by the Issuer; and

 

(c)           the Issuer has
delivered to the Trustee and the Initial Hedge Counterparty Officer’s
certificates and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture have been complied with.

 

Notwithstanding the satisfaction and discharge of this Indenture, the
rights and obligations of the Issuer, the Trustee and the Hedge Counterparty
and, if applicable, the Secured Noteholders, as the case may be, under Sections
2.6, 4.1, 4.2, 5.9, 5.18, 6.7, 6.8, 7.1 and 7.3 shall survive.

 

4.2.          APPLICATION
OF TRUST MONEY

 

All funds deposited with the Trustee pursuant to Section 4.1 for
the payment of principal of and interest on the Secured Notes and amounts
payable pursuant to any Hedge Agreement, the Collateral Management Agreement,
the Income Note Paying Agency Agreement, the Corporate Services Agreement and
the Collateral Administration Agreement shall be held in trust and applied by
it in accordance with the provisions of the Secured Notes and this Indenture,
including the Priority of Payments, for the payment either directly or through
any Note Paying Agent, as the Trustee may determine, to the Person entitled
thereto of the respective amounts in respect of which such funds has been
deposited with the Trustee; but such funds need not be segregated from other
funds except to the extent required herein or required by law.

 

4.3.          REPAYMENT
OF FUNDS HELD BY NOTE PAYING AGENT

 

In connection with the satisfaction and discharge of this Indenture
with respect to the Secured Notes, all funds then held by any Note Paying Agent
other than the Trustee under the provisions of this Indenture shall, upon
demand of the Issuer, be paid to the Trustee to be held and applied pursuant to
Section 7.3 and in accordance with the Priority of Payments and thereupon
such Note Paying Agent shall be released from all further liability with
respect to such funds.

 

ARTICLE V

 

EVENTS
OF DEFAULT; REMEDIES

 

5.1.          EVENTS OF DEFAULT

 

Event of Default  is defined as
any one of the following wherever used herein and means any one of the
following events as set forth in Section 5.1(a) through (h) (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

 

(a)           a
default for five Business Days in the payment, when due and payable, of any
interest on any Class A Note or Class B Note or, if there are no Class A
Notes or Class B Notes Outstanding, on any Class C Note or, if there
are no Class A Notes, Class B Notes or Class C Notes Outstanding, on
any Class D Note or, if there are no Class A Notes,

 

93

 

Class B Notes, Class C Notes or Class D
Notes Outstanding, on any Class E Note, or, if there are no Class A
Notes, Class B Notes, Class C Notes, Class D Notes or Class E
Notes Outstanding, on any Class F Note, or, if there are no Class A
Notes, Class B Notes, Class C Notes, Class D Notes, Class E
Notes or Class F Notes Outstanding, on any Class G Note, or, if there
are no Class A Notes, Class B Notes, Class C Notes, Class D
Notes, Class E Notes, Class F Notes or Class G Notes
Outstanding, on any Class H Note, or, if there are no Class A Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes or Class H Notes Outstanding, on any Class J
Note, or if there are no Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G
Notes, Class H Notes or Class J Notes Outstanding, on any Class K
Note;

 

(b)           a default in the payment
of any principal, when due and payable of any Secured Note (or, in the case of
a default in payment resulting solely from an administrative error or omission
by the Trustee, the Administrator, any Note Paying Agent or the Note Registrar,
such default continues for a period of five Business Days);

 

(c)           the failure on any
Payment Date to disburse amounts available in accordance with Section 11.1
(except as provided in Section 5.1(a) and (b) above) and a
continuation of such failure for three Business Days (or, in the case of a
default in payment resulting solely from an administrative error or omission by
the Trustee, the Administrator, any Note Paying Agent or the Note Registrar,
such default continues for a period of five Business Days);

 

(d)           on any Measurement Date,
the Class A/B Principal Coverage Ratio is less than 100%;

 

(e)           the Issuer or the pool of
Collateral becomes an investment company required to be registered under the
Investment Company Act;

 

(f)            a default in the
performance, or breach, of any other covenant (it being understood that
non-compliance with any of the Coverage Tests, the Collateral Concentration
Limitations or the Collateral Quality Tests will not constitute a default or
breach) or of any representation or warranty of the Issuer under the Indenture
of any representation or if any certificate or writing delivered pursuant
thereto proves to be incorrect when made, which default or breach has a
material adverse effect on the Secured Noteholders and continues for a period
of 30 days (or, in the case of a default, breach or failure of a representation
or warranty regarding the Collateral, 15 days) of the earlier of knowledge by
the Issuer or the Collateral Manager or notice to the Issuer and the Collateral
Manager by the Trustee or to the Issuer and the Collateral Manager by the
Holders of at least 25%, of the then Aggregate Outstanding Amount of the
Secured Notes of any Class, specifying such default, breach or failure and
requiring it to be remedied and stating that such notice is a “Notice of
Default” under this Indenture;

 

(g)           the entry of a decree or
order by a court having competent jurisdiction adjudging the Issuer as bankrupt
or insolvent, or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Issuer under the
Bankruptcy Code or any other applicable law, or appointing a receiver,
liquidator, assignee, or sequestrator (or other similar official) of the Issuer
or of any substantial part of its property; ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 90 consecutive days; or

 

94

 

(h)           the institution by the
Issuer of proceedings to be adjudicated as bankrupt or insolvent, or the
consent by it to the institution of bankruptcy or insolvency proceedings
against it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under the Bankruptcy Code or any other similar
applicable law, or the consent by it to the filing of any such petition or to
the appointment of a receiver, liquidator, assignee, trustee or sequestrator
(or other similar official) of the Issuer or of any substantial part of its
property, respectively, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its debts
generally as they become due, or the taking of any action by the Issuer in
furtherance of any such action.

 

If the Issuer shall obtain actual knowledge that an Event of Default
shall have occurred and be continuing, the Issuer shall (unless the Trustee
shall have provided notice of such Event of Default pursuant to Section 6.2)
promptly notify the Trustee, the Secured Noteholders, the Hedge Counterparty,
the Collateral Manager and each Rating Agency in writing of such Event of
Default.

 

5.2.          ACCELERATION
OF MATURITY; RESCISSION AND
ANNULMENT

 

(a)           If an Event of Default
occurs and is continuing, the Trustee may or, if so directed by the Holders of
a Majority in aggregate principal amount of the Outstanding Notes of the
Controlling Class, will declare the principal of and accrued interest on all
Notes to be immediately due and payable (except that in the case of an Event of
Default described in Section 5.1(g) or 5.1(h) above, such an
acceleration will occur automatically).

 

(b)           No Hedge Agreement
existing on or after such acceleration may be terminated by the Issuer unless
and until liquidation of the Collateral has commenced and annulment of such
acceleration may no longer be affected.

 

(c)           At any time after such
acceleration of maturity has been made and before a judgment or decree for
payment of the amount due has been obtained by the Trustee as hereinafter
provided in this Article V, the Trustee may reverse such acceleration and
its consequences if the Trustee determines that:

 

(1)           the Issuer has paid or deposited with the
Trustee funds sufficient to pay:

 

(i)            all overdue
installments of principal of and interest on the Notes (including interest upon
the Class C Cumulative Applicable Periodic Interest Shortfall Amount, the Class D
Cumulative Applicable Periodic Interest Shortfall Amount, the Class E
Cumulative Applicable Periodic Interest Shortfall Amount, the Class F
Cumulative Applicable Periodic Interest Shortfall Amount, the Class G
Cumulative Applicable Periodic Interest Shortfall Amount, the Class H
Cumulative Applicable Periodic Interest Shortfall Amount, the Class J
Cumulative Applicable Periodic Interest Shortfall Amount and the Class K
Cumulative Applicable Periodic Interest Shortfall Amount respectively, at the
Applicable Periodic Interest Rate and, to the extent that payment of such
interest is lawful, upon Defaulted Interest at the Applicable Periodic Interest
Rate);

 

(ii)           all accrued and unpaid
amounts (including termination payments, if any) payable by the Issuer pursuant
to any Hedge Agreements;

 

95

 

(iii)          all unpaid taxes and
Administrative Expenses, any accrued and unpaid Senior Collateral Management
Fee, and other sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel; and

 

(2)           the Trustee has
determined that all Events of Default of which it has actual knowledge, other
than the nonpayment of the principal of or interest on the Secured Notes that
have become due solely by such acceleration, have been cured; and

 

(3)           any Hedge Agreements in
effect immediately prior to such acceleration shall remain in effect;

 

provided that the
Trustee shall have obtained (and shall be entitled to rely upon) a
certification of an Independent accounting firm of national reputation as to
the sufficiency of the amounts in Section 5.2(c)(1) above, which
certification shall be conclusive evidence as to such sufficiency. In addition,
the Trustee may, but is not required to, obtain, at the Issuer’s expense (and
may rely upon), an Opinion of Counsel as to the matters in Sections 5.2(c)(2) and
(3) above.

 

At any such time as the Trustee shall reverse such acceleration and its
consequences, the Trustee shall preserve the Collateral in accordance with the
provisions of Section 5.5; provided that, if the
conditions for liquidation of the Collateral are satisfied pursuant to Section 5.5,
the Secured Notes may be accelerated pursuant to Section 5.2(a),
notwithstanding any previous reversal of acceleration pursuant to this Section 5.2(c).

 

No such reversal of acceleration shall affect any subsequent Default or
impair any right consequent thereon.

 

5.3.          COLLECTION
OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE

 

The Issuer covenants that if a Default shall occur in respect of the payment
of any principal of or interest on any Class A-1 Note, the payment of
principal of or interest on any Class A-2 Note (but with respect to
interest, only after the Class A-1 Notes and all interest accrued thereon
have been paid in full), the payment of principal of or interest on any Class A-3
Note (but with respect to interest, only after the Class A-1 Notes and Class A-2
Notes and all interest accrued thereon have been paid in full), the payment of
principal of or interest on any Class B Note (but with respect to
interest, only after the Class A Notes and all interest accrued thereon
have been paid in full), the payment of principal of or interest on any Class C
Note (but with respect to interest, only after the Class A Notes and Class B
Notes and all interest accrued thereon have been paid in full) the payment of
principal of or interest on any Class D Note (but with respect to
interest, only after the Class A Notes, the Class B Notes and the Class C
Notes and all interest accrued thereon have been paid in full), the payment of
principal of or interest on any Class E Note (but with respect to
interest, only after the Class A Notes, the Class B Notes, the Class C
Notes and the Class D Notes and all interest accrued thereon have been
paid in full), the payment of principal of or interest on any Class F Note
(but with respect to interest, only after the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes and the Class E
Notes and all interest accrued thereon have been paid in full), the payment of
principal of or interest on any Class G Note (but with respect to
interest, only after the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes and the Class F
Notes and all interest accrued thereon have been paid in full), the payment of
principal of or interest on any Class H Note (but with respect to
interest, only after the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes, the Class F
Notes and the Class G Notes and all interest accrued thereon have
been paid in full), the payment of principal of or interest on any Class J

 

96

 

Note (but with respect to interest, only after the Class A Notes,
the Class B Notes, the Class C Notes, the Class D
Notes, the Class E Notes, the Class F Notes, the Class G Notes
and the Class H Notes and all interest accrued thereon have been paid in
full), the payment of principal of or interest on any Class K Note (but
with respect to interest, only after the Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes, the Class F
Notes, the Class G Notes, the Class H Notes and the Class J Notes and
all interest accrued thereon have been paid in full), the Issuer will, upon
demand of the Trustee or any affected Secured Noteholder, pay to the Trustee,
for the benefit of the Holder of such Secured Note, the whole amount, if any,
then due and payable on such Secured Note for principal and interest, with
interest upon the overdue principal and, to the extent that payments of such
interest shall be legally enforceable, upon overdue installments of interest,
at the Applicable Periodic Interest Rate and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee and such Secured Noteholder and their respective agents and
counsel.

 

If the Issuer fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
Proceeding for the collection of the sums so due and unpaid, and may, and
shall, upon the direction of a Majority of the Holders of the then Aggregate
Outstanding Amount of the Notes of Controlling Class (and, if the action
of the Issuer pursuant to such direction would have a material adverse effect
on any Hedge Counterparty or such Initial Hedge Counterparty), prosecute such
Proceeding to judgment or final decree, and may enforce the same against the
Issuer or any other obligor upon the Secured Notes and collect the amounts
adjudged or decreed to be payable in the manner provided by law out of the
Collateral; provided that a Holder of a Secured Note may
institute any proceeding if (i) such Holder previously has given to the
Trustee written notice of an Event of Default, (ii) except in the case of
a default in the payment of principal or interest, the Holders of at least 25%
of the then Aggregate Outstanding Amount of the Notes of the Controlling Class have
made a written request upon the Trustee to institute such proceedings in its
own name as Trustee and such Holders have offered the Trustee reasonable
indemnity, (iii) the Trustee has, for 30 days after receipt of notice,
request and offer of such indemnity, failed to institute any such proceeding
and (iv) no direction inconsistent with such written request has been
given to the Trustee during such 30-day period by the Holders of a Majority of
the then Aggregate Outstanding Amount of the Notes of the Controlling Class.

 

If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Secured Parties by such appropriate Proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or
legal or equitable right vested in the Trustee by this Indenture or by law.

 

The Holders of a Majority of the then Aggregate Outstanding Amount of
the Notes of the Controlling Class may, in certain cases, waive any
default with respect to such Notes, except (i) a default for more than
five Business Days in the payment, when due and payable, of any interest on any
Note, (ii) a default in the payment of principal on any Note at its Stated
Maturity Date or Redemption Date, (iii) the failure on any Payment Date to
disburse amounts available in the Collection Account in accordance with Section 11.1
and continuation of such failure for a period of three Business Days, (iv) certain
events of bankruptcy or insolvency with respect to the Issuer or (v) a
default in respect of any provision of the Indenture that cannot be modified or
amended without the waiver or consent of the Holder of each Outstanding Note
adversely affected thereby.

 

In case there shall be pending Proceedings relative to the Issuer or
any other obligor upon the Secured Notes or Hedge Agreement under the
Bankruptcy Code or any other applicable bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization,

 

97

 

liquidator, sequestrator or similar official shall have been appointed
for or taken possession of the Issuer or its respective property or such other
obligor or its property, or in case of any other comparable Proceedings
relative to the Issuer or other obligor upon the Secured Notes or Hedge
Agreement, or the creditors or property of the Issuer or such other obligor,
the Trustee, regardless of whether the principal of any Secured Notes or Hedge
Agreement shall then be due and payable as therein expressed or by declaration
or otherwise and regardless of whether the Trustee shall have made any demand
pursuant to the provisions of this Section 5.3, shall be entitled and
empowered, by intervention in such Proceedings or otherwise:

 

(a)           to file and prove a
claim or claims for the whole amount of principal and interest owing and unpaid
in respect of the Secured Notes or Hedge Agreement upon direction by a Majority
of the Controlling Class, and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including
any claim for reasonable compensation to the Trustee and each predecessor
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances made,
by the Trustee and each predecessor Trustee) and of the Secured Noteholders
allowed in any Proceedings relative to the Issuer or other obligor upon the
Secured Notes or to the creditors or property of the Issuer or such other
obligor;

 

(b)           unless prohibited by
applicable law and regulations, to vote on behalf of the Holders of the Secured
Notes, upon the direction of such Holders, in any election of a trustee or a
standby trustee in arrangement, reorganization, liquidation or other bankruptcy
or insolvency Proceedings or person performing similar functions in comparable
Proceedings; and

 

(c)           to collect and receive
any amounts or other property payable to or deliverable on any such claims, and
to distribute all amounts received with respect to the claims of the Secured
Noteholders and of the Trustee on behalf of the Secured Noteholders and the
Trustee; and any trustee, receiver or liquidator, custodian or other similar
official is hereby authorized by each of the Secured Noteholders to make
payments to the Trustee, and, in the event that the Trustee shall consent to
the making of payments directly to the Secured Noteholders, to pay to the
Trustee such amounts as shall be sufficient to cover reasonable compensation to
the Trustee, each predecessor Trustee and their respective agents, attorneys
and counsel, and all other reasonable expenses and liabilities incurred, and
all advances made, by the Trustee and each predecessor Trustee except as a
result of negligence or bad faith.

 

Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any Secured
Noteholder or any Hedge Counterparty, any plan of reorganization, arrangement,
adjustment or composition affecting the Secured Notes, any Hedge Agreement or
the rights of any Holder thereof or any Hedge Counterparty, or to authorize the
Trustee to vote in respect of the claim of any Secured Noteholder or any Hedge
Counterparty in any such Proceeding except, as aforesaid, to vote for the
election of a trustee in bankruptcy or similar person.

 

In any Proceedings brought by the Trustee on behalf of the Holders, the
Trustee shall be held to represent, subject to Section 6.17, all the
Secured Parties if applicable, pursuant to Section 6.17.

 

Notwithstanding anything in this Section 5.3 to the contrary, the
Trustee may not sell or liquidate the Collateral or institute Proceedings in
furtherance thereof pursuant to this Section 5.3 except in accordance with
Section 5.5(a).

 

98

 

5.4.                              REMEDIES

 

(a)                                  If an Event of Default shall have occurred
and be continuing, and the Notes have been declared due and payable and such
declaration and its consequences have not been rescinded and annulled, the
Issuer agrees that, in addition to the requirements of Section 5.5(a), the
Trustee may, after giving notice to the Noteholders, the Collateral Manager,
each Hedge Counterparty and each Rating Agency, and with the consent of the
Holders of a Majority of the then Aggregate Outstanding Amount of the Notes of
the Controlling Class, and shall, upon written direction by the Holders of a
Majority of the then Aggregate Outstanding Amount of the Notes of the
Controlling Class, to the extent permitted by applicable law, exercise one or
more of the following rights, privileges and remedies:

 

(1)                                  institute Proceedings for the collection of
all amounts then payable on the Notes or otherwise payable under this
Indenture, whether by declaration or otherwise, enforce any judgment obtained,
and collect from the Collateral any amounts adjudged due;

 

(2)                                  institute Proceedings from time to time for
the complete or partial foreclosure of this Indenture with respect to the
Collateral;

 

(3)                                  exercise any remedies of a secured party
under the UCC and take any other appropriate action to protect and enforce the
rights and remedies of the Secured Parties hereunder; and

 

(4)                                  subject to Section 5.4(d) below,
exercise any other rights and remedies that may be available at law or in
equity;

 

provided that
the Trustee may not sell or liquidate the Collateral or institute Proceedings
in furtherance thereof pursuant to this Section 5.4 except in accordance
with Section 5.5(a).

 

The
Trustee may, but need not, obtain and rely upon an opinion of an Independent
investment banking firm of national reputation as to the feasibility of any
action proposed to be taken in accordance with this Section 5.4 and as to
the sufficiency of the proceeds and other amounts receivable with respect to
the Collateral to make the required payments of principal of and interest on
the Notes and amounts due to any Hedge Counterparty, which opinion shall be
conclusive evidence as to such feasibility or sufficiency.

 

(b)                                 If an Event of Default as described in
Section 5.1(f) shall have occurred and be continuing, the Trustee
may, and at the request of at least 25% of the Holders of the then Aggregate
Outstanding Amount of the Notes of the Controlling Class shall, institute
a Proceeding solely to compel performance of the covenant or agreement or to
cure the representation or warranty, the breach of which gave rise to the Event
of Default under such Section, and enforce any equitable decree or order
arising from such proceeding; provided that
(i) such request does not conflict with any provision in the Indenture,
(ii) the Trustee determines that such action will not involve the Trustee
incurring any liability (unless the Trustee is indemnified to its satisfaction
against any such liability) and (iii) the Trustee may take other action
deemed proper by the Trustee, that is not inconsistent with such direction.

 

99

 

(c)                                  Upon any sale of the Collateral, whether made
under the power of sale hereby given or by virtue of judicial proceedings, the
Placement Agent, any Hedge Counterparty, any Noteholder or Noteholders may bid
for and purchase the Collateral or any part thereof and, upon compliance with
the terms of sale, may hold, retain, possess or dispose of such property in its
or their own absolute right without accountability.

 

Upon
any sale of the Collateral, whether made under the power of sale hereby given
or by virtue of judicial proceedings, the receipt of the Trustee, or of the
Officer making a sale under judicial proceedings, shall be a sufficient
discharge to the purchaser or purchasers at any sale for its or their purchase
price, and such purchaser or purchasers shall not be obliged to see to the
application thereof.

 

Any
such sale, whether under any power of sale hereby given or by virtue of
judicial proceedings, shall bind the Issuer, the Trustee and the Noteholders,
shall operate to divest all right, title and interest whatsoever, either at law
or in equity, of each of them in and to the property sold, and shall be a
perpetual bar, both at law and in equity, against each of them and their
successors and assigns, and against any and all Persons claiming through or
under them.

 

(d)                                 Notwithstanding any other provision of this
Indenture, the Trustee may not, prior to the date which is one year, or if
longer the applicable preference period then in effect, and one day after the
payment in full of all Notes, institute against, or join any other Person in
instituting against, the Issuer any bankruptcy, reorganization, arrangement,
insolvency, moratorium or liquidation proceedings, or other proceedings under
federal or state bankruptcy or similar laws (of any jurisdiction). Nothing in
this Section 5.4 shall preclude, or be deemed to stop, the Trustee
(i) from taking any action prior to the expiration of the aforementioned
one year and one day period, or if longer the applicable preference period then
in effect, in (A) any case or proceeding voluntarily filed or commenced by
the Issuer or (B) any involuntary insolvency proceeding filed or commenced
by a Person other than the Trustee, or (ii) from commencing against the
Issuer or any of its properties any legal action which is not a bankruptcy,
reorganization, arrangement, insolvency, moratorium, liquidation or similar
proceeding.

 

5.5.                              PRESERVATION OF COLLATERAL

 

(a)                                  If an Event of Default shall have occurred
and be continuing when any Class of Secured Notes is Outstanding, the
Trustee shall retain the Collateral securing the Secured Notes and the Hedge
Agreement intact, collect and cause the collection of the proceeds thereof and
make all payments and deposits, and maintain all accounts in respect of the
Collateral and the Secured Notes and any Hedge Agreement in accordance with
Section 11.1 and the provisions of Articles X, XII and XIII unless:

 

(1)                                  the Trustee, pursuant to Section 5.5(c),
determines (such determinations may be based upon a certificate from the
Collateral Manager) that the anticipated proceeds of a sale or liquidation of
the Collateral (after deducting reasonable expenses relating to such sale or
liquidation) would be sufficient to discharge in full the Redemption Prices
then due on the Secured Notes, any amounts required to be paid under any Hedge
Agreement, all unreimbursed Cure Advances, all unpaid Administrative Expenses
and any accrued and unpaid Senior Collateral Management Fee (to the extent not
waived by the Collateral Manager) and the

 

100

 

                                              Holders of a Majority of the then Aggregate
Outstanding Amount of Notes of the Controlling Class agrees with such
determination; or

 

(2)                                  the Holders of at least 662/3% of the Aggregate Outstanding Amount of the
Secured Notes of the Controlling Class (and, unless it will be paid in
full all amounts owing to it by the Issuer, each Hedge Counterparty), subject
to the provisions hereof, and subject to the Trustee determining that such
action will not involve the Trustee incurring any liability, (unless the
Trustee is indemnified to its satisfaction against any such liability) direct
the sale and liquidation of the Collateral.

 

For
purposes of Section 5.5(a)(2), if any Hedge Counterparty shall fail to
vote to direct the sale and liquidation of the Collateral within three Business
Days after written notice from the Issuer or the Trustee requesting a vote
pursuant to such Section 5.5(a)(2), such Hedge Counterparty shall not be
entitled to participate in the vote requested by such notice. The Trustee shall
give written notice of the retention of the Collateral to the Issuer with a
copy to each Holder of the Controlling Class of Notes and each Hedge
Counterparty. So long as such Event of Default is continuing, any such
retention pursuant to this Section 5.5(a) may be rescinded at any
time when the conditions specified in clause Section 5.5(a)(1) or
(2) exist.

 

(b)                                 Nothing contained in Section 5.5(a) shall
be construed to require the Trustee to preserve the Collateral securing the
Secured Notes if prohibited by applicable law.

 

(c)                                  In determining whether the condition
specified in Section 5.5(a)(1) exists, the Trustee shall obtain bid
prices with respect to each security contained in the Collateral from two
nationally recognized dealers (or if it is unable in good faith to obtain such
bid prices from two nationally recognized dealers, one nationally recognized
dealer), as specified by the Collateral Manager in writing, which are
Independent from each other and the Collateral Manager, at the time making a
market in such securities and shall compute the anticipated proceeds of sale or
liquidation on the basis of the lower of such bid prices for each such
security. In addition, for the purposes of determining issues relating to the
execution of a sale or liquidation of the Pledged Securities and the execution
of a sale or other liquidation thereof in connection with a determination
whether the condition specified in Section 5.5(a)(1) exists, the
Trustee may retain and rely on an opinion of an Independent investment banking
firm of national reputation.

 

The
Trustee shall deliver to the Noteholders, each Hedge Counterparty, the Rating
Agencies and the Issuer a report stating the results of any determination
required pursuant to Section 5.5(a)(1) no later than ten days after
making such determination but in any event prior to the sale or liquidation of
the Collateral. The Trustee shall make the determinations required by
Section 5.5(a)(1) within 30 days after an Event of Default and at the
request of the Holders of a Majority of the then Aggregate Outstanding Amount
of the Notes of the Controlling Class at any time during which the Trustee
retains the Collateral pursuant to Section 5.5(a)(1). In the case of each
calculation made by the Trustee pursuant to Section 5.5(a)(1), the Trustee
shall obtain a letter of an Independent certified public accountant confirming
the accuracy of the computations of the Trustee and certifying their conformity
to the requirements of this Indenture. In determining whether the Holders of
the requisite percentage of any Class of Secured Notes or the requisite
percentage of Income Noteholders have given any direction or notice or have
agreed pursuant to Section 5.5(a), any Holder of a Secured Note of a
Class or Income

 

101

 

Notes who is also a Holder of Secured Notes of another Class or of
Income Notes or any Affiliate of any such Holder shall be counted as a Holder
of each such Secured Note and/or Income Note for all purposes.

 

(d)                                 If an Event of Default shall have occurred
and be continuing at a time when no Secured Note is Outstanding, the Trustee
shall retain the Collateral securing the Hedge Agreements and the Secured Notes
intact, collect and cause the collection of the proceeds thereof and make and
apply all payments and deposits and maintain all accounts in respect of the
Collateral and the Secured Notes in accordance with Section 11.1 and the
provisions of Article X and Article XII unless a Majority of the
Income Noteholders direct the sale and liquidation of the Collateral.

 

5.6.                              TRUSTEE MAY ENFORCE CLAIMS
WITHOUT POSSESSION

 

All
rights of action and of asserting claims under this Indenture, or under any of
the Secured Notes, may be enforced by the Trustee without the possession of any
Hedge Agreement or the Secured Notes or the production thereof in any trial or
other Proceedings relative thereto, and any action or Proceedings instituted by
the Trustee shall be brought in its own name as trustee of an express trust,
and any recovery of judgment, subject to the payment of the reasonable
expenses, disbursements and compensation of the Trustee, each predecessor
trustee and their respective agents and attorneys and counsel, shall be for the
benefit of the Secured Parties and shall be applied as set forth in
Section 5.7.

 

5.7.                              APPLICATION OF FUNDS COLLECTED

 

Any
funds collected by the Trustee with respect to the Hedge Agreements or the
Secured Notes pursuant to this Article V and any funds that may then be
held or thereafter received by the Trustee with respect to any Hedge Agreements
or the Secured Notes hereunder shall be applied subject to Section 13.1
and in accordance with the provisions of Section 11.1(c), at the date or
dates fixed by the Trustee.

 

5.8.                              LIMITATION ON SUITS

 

Only
the Trustee may pursue remedies available hereunder and no Holder of any Note
shall have any right to institute any Proceedings, judicial or otherwise, with
respect to this Indenture, or its Note or otherwise, for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless:

 

(a)                                  such Holder has previously given to the
Trustee written notice of a continuing Event of Default;

 

(b)                                 except in the case of a default in the
payment of principal or interest, the Holders or Holders of at least 25% of the
then Aggregate Outstanding Amount of the Secured Notes of the Controlling
Class shall have made a written request to the Trustee to institute
Proceedings in respect of such Event of Default in its own name as Trustee
hereunder and such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;

 

(c)                                  the Trustee for 30 days after its receipt of
such notice, request and offer of indemnity has failed to institute any such
Proceeding; and

 

(d)                                 no direction inconsistent with such written
request has been given to the Trustee during such 30-day period by the Holders
of a Majority of the then Aggregate Outstanding Amount of the Notes of the
Controlling Class;

 

102

 

it
being understood and intended that no one or more Holders of Secured Notes
shall have any right in any manner whatever by virtue of, or by availing of,
any provision of this Indenture to affect, disturb or prejudice the rights of
any other Holders of Notes or to obtain or to seek to obtain priority or
preference over any other Holders of the Notes of the same Class or to
enforce any right under this Indenture, except in the manner herein provided
and for the equal and ratable benefit of all the Holders of Notes of the same
Class. In addition, any action taken by any one or more of the Holders of Notes
shall be subject to and in accordance with Sections 13.1 and 11.1(c).

 

Notwithstanding
any other provisions of this Indenture but subject to Section 5.8(d), if
the Trustee shall receive conflicting or inconsistent requests and indemnity
from two or more groups of Holders of the Notes of the Controlling Class, each
representing less than a Majority of the then Aggregate Outstanding Amount of
Notes of this Controlling Class, the Trustee shall follow the instructions of
the group representing the higher percentage of aggregate principal amount of
Outstanding Notes of the Controlling Class.

 

5.9.                              UNCONDITIONAL RIGHTS OF
SECURED NOTEHOLDERS TO RECEIVE PRINCIPAL AND INTEREST

 

Notwithstanding
any other provision in this Indenture (other than Section 2.6(i)), the
Holder of any Secured Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest (if any) on
such Secured Note as such principal and/or interest become due and payable in
accordance with Sections 13.1 and 11.1(c) and, subject to the provisions
of Section 5.8, to institute proceedings for the enforcement of any such
payment, and such right shall not be impaired without the consent of such
Holder. Holders of the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes, the Class F Notes, the
Class G Notes, the Class H Notes, the Class J Notes and the
Class K Notes shall have no right to institute proceedings for the
enforcement of any such payment until such time as no Class of Secured
Note that is senior to such Class of them remains Outstanding, which right
shall be subject to the provisions of Section 5.8, and shall not be
impaired without the consent of any such Holder.

 

5.10.                        RESTORATION OF RIGHTS AND
REMEDIES

 

If
the Trustee or any Secured Noteholder has instituted any Proceeding to enforce
any right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Secured Noteholder, then and in every such case the
Issuer, the Trustee and the Secured Noteholder shall, subject to any
determination in such Proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Secured Parties shall continue as though no such Proceeding had been
instituted.

 

5.11.                        RIGHTS AND REMEDIES
CUMULATIVE

 

No
right or remedy herein conferred upon or reserved to the Trustee or to the
Secured Noteholders is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing by law or in equity or otherwise. The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.

 

103

 

5.12.                        DELAY OR OMISSION NOT WAIVER

 

No
delay or omission of the Trustee or any Secured Noteholder or any Hedge
Counterparty to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article V or by law to the Trustee, the Secured Noteholders or any Hedge
Counterparty may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee, the Secured Noteholders or such Hedge Counterparty,
as the case may be.

 

5.13.                        CONTROL BY CONTROLLING CLASS

 

Notwithstanding
any other provision of this Indenture (but subject to the proviso in the
definition of “Outstanding” in Section 1.1(a), the Holders of a Majority of the then Aggregate Outstanding
Amount of the Notes of the Controlling Class shall have the right to cause
the institution of and direct the time, method and place of conducting any
Proceeding for any remedy available to the Trustee, or of any sale of the
Collateral, in whole or in part, provided that:

 

(a)                                  such direction shall not conflict with any
rule of law or with this Indenture;

 

(b)                                 the Trustee may take any other action deemed
proper by it that is not inconsistent with such direction; provided
that, subject to Section 6.1, the Trustee need not take any action that it
determines might involve it in liability (unless the Trustee has received an
indemnity reasonably satisfactory to it against such liability as set forth
below);

 

(c)                                  the Trustee shall have been provided with an
indemnity reasonably satisfactory to it; and

 

(d)                                 any direction to the Trustee to undertake a
Sale of the Collateral shall be made only pursuant to, and in accordance with,
Sections 5.4 and 5.5.

 

5.14.                        WAIVER OF PAST DEFAULTS

 

The
Holders of a Majority of the then Aggregate Outstanding Amount of the Notes of
the Controlling Class may, in certain cases waive any past Default and its
consequences, except:

 

(a)                                  a Default for more than five Business Days in
the payment, when due and payable, of any interest on any Secured Note; or

 

(b)                                 a Default in the payment of principal on any
Note at its Stated Maturity Date or Redemption Date; or

 

(c)                                  the failure on any Payment Date to disburse
amounts available in the Collection Account in accordance with
Section 11.1 and the continuation of such failure for a period of three
Business Days; or

 

(d)                                 a Default arising under
Section 5.1(g) or 5.1(h); or

 

(e)                                  a Default in respect of any provision of this
Indenture that under Section 8.2 cannot be modified or amended without the
waiver or consent of the Holder of each Outstanding Note adversely affected
thereby.

 

In
the case of any such waiver, (i) the Issuer, the Trustee and the Holders
of the Notes shall be restored to their former positions and rights hereunder,
respectively, but no such waiver shall extend to

 

104

 

any
subsequent or other Default or impair any right consequent thereto, and
(ii) the Trustee shall promptly give written notice of any such waiver to
the Collateral Manager and each Holder of Secured Notes. The Rating Agencies
shall be notified by the Issuer of any such waiver.

 

Upon
any such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Indenture, but no such waiver shall extend to any subsequent or other Default
or impair any right consequent thereto.

 

5.15.                        UNDERTAKING FOR COSTS

 

All
parties to this Indenture agree, and each Holder of any Secured Note by its
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
or omitted by it as Trustee, the filing by any party litigant in such suit of
an undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys’ fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.15 shall not apply to any suit instituted by
the Trustee, to any suit instituted by any Secured Noteholder, or group of
Secured Noteholders, holding in the aggregate more than 10% in Aggregate
Outstanding Amount of the Controlling Class, or to any suit instituted by any
Secured Noteholder for the enforcement of the payment of the principal of or
interest on any Secured Note on or after the Stated Maturity Date expressed in
such Secured Note (or, in the case of redemption, on or after the applicable
Redemption Date).

 

5.16.                        WAIVER OF STAY OR EXTENSION LAWS

 

The
Issuer covenants (to the extent that they may lawfully do so) that it will not
at any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law wherever enacted, now or
at any time hereafter in force (including but not limited to filing a voluntary
petition under Chapter 11  of the Bankruptcy Code and by the
voluntary commencement of a proceeding or the filing of a petition seeking
winding up, liquidation, reorganization or other relief under any bankruptcy,
insolvency, receivership or similar law now or hereafter in effect), which may
affect the covenants, the performance of or any remedies under this Indenture;
and the Issuer (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.

 

5.17.                        SALE OF COLLATERAL

 

(a)                                  The power to effect any sale (a Sale)  of
any portion of the Collateral pursuant to Sections 5.4 and 5.5 shall not be
exhausted by any one or more Sales as to any portion of such Collateral
remaining unsold, but shall continue unimpaired until the entire Collateral
shall have been sold or all amounts secured by the Collateral shall have been
paid. The Trustee hereby expressly waives its rights to any amount fixed by law
as compensation for any Sale; provided that
the Trustee shall be authorized to deduct the reasonable costs, charges and
expenses incurred by it in connection with such Sale from the proceeds thereof
notwithstanding the provisions of Section 6.7.

 

(b)                                 The Trustee may bid for and acquire any
portion of the Collateral in connection with a public Sale thereof, by
crediting all or part of the net proceeds of such Sale after deducting the
reasonable costs, charges and expenses incurred by the Trustee in connection
with such Sale notwithstanding the provisions of Section 6.7. The Secured

 

105

 

Notes and any Hedge Agreement need not be produced in order to complete
any such Sale, or in order for the net proceeds of such Sale to be credited
against amounts owing on the Secured Notes. The Trustee may hold, lease,
operate, manage or otherwise deal with any property so acquired in any manner
permitted by law in accordance with this Indenture.

 

(c)                                  If any portion of the Collateral consists of
securities not registered under the Securities Act (Unregistered
Securities), the Trustee may, but shall not be required to, seek
an Opinion of Counsel, or, if no such Opinion of Counsel can be obtained, with
the consent of a Majority of the Controlling Class seek, a no-action
position from the Commission or any other relevant federal or state regulatory
authorities, regarding the legality of a public or private sale of such
Unregistered Securities. In no event will the Trustee be required to register
Unregistered Securities under the Securities Act.

 

(d)                                 The Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any portion
of the Collateral in connection with a sale thereof. In addition, the Trustee
is hereby irrevocably appointed the agent and attorney-in-fact of the Issuer to
transfer and convey its interest in any portion of the Collateral in connection
with a sale thereof, and to take all action necessary to effect such sale. No
purchaser or transferee at such a sale shall be bound to ascertain the Trustee’s
authority, to inquire into the satisfaction of any conditions precedent or see
to the application of any funds.

 

5.18.                        ACTION ON THE SECURED NOTES

 

The
Trustee’s right to seek and recover judgment on the Secured Notes or under this
Indenture shall not be affected by the seeking or obtaining of or application
for any other relief under or with respect to this Indenture. Neither the lien
of this Indenture nor any rights or remedies of the Secured Parties shall be
impaired by the recovery of any judgment by the Trustee against the Issuer or
by the levy of any execution under such judgment upon any portion of the
Collateral or upon any of the assets of the Issuer.

 

ARTICLE VI

 

THE TRUSTEE

 

6.1.                              CERTAIN DUTIES AND
RESPONSIBILITIES

 

(a)                                  Except during the continuance of an Event of
Default:

 

(1)                                  the Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture against the
Trustee; and

 

(2)                                  in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this Indenture; provided that, in the case of any such
certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they substantially conform to the
requirements of this Indenture and shall promptly, but in any event within
three Business Days in the

 

106

 

case
of an Officer’s certificate furnished by the Issuer, notify the party
delivering the same if such certificate or opinion does not conform. If a
corrected form shall not have been delivered to the Trustee within 15 days
after such notice from the Trustee, the Trustee shall promptly notify the
Secured Noteholders and each Hedge Counterparty.

 

(b)                                 In case an Event of Default actually known to
the Trustee has occurred and is continuing, the Trustee shall, prior to the
receipt of directions, if any, from a Majority of the Controlling Class,
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in its exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person’s own
affairs.

 

(c)                                  No provision of this Indenture shall be
construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except that:

 

(1)                                  this Section 6.1(c) shall not be
construed to limit the effect of Section 6.1(a);

 

(2)                                  the Trustee shall not be liable for any error
of judgment made in good faith by a Trust Officer, unless it shall be proven
that the Trustee was negligent in ascertaining the pertinent facts;

 

(3)                                  the Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Issuer in accordance with this Indenture and/or a
Majority (or such other percentage as may be required by the terms hereof) of
the Aggregate Outstanding Amount of the Controlling Class (or other
Class if required or permitted by the terms hereof) relating to the time,
method and place of conducting any Proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under
this Indenture;

 

(4)                                  no provision of this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers contemplated hereunder, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it (if
the amount of such funds or risk or liability does not exceed the amount
payable to the Trustee pursuant to Section 11.1(a)(1) net of the
amounts specified in Section 6.8(a)(1), the Trustee shall be deemed to be
reasonably assured of such repayment) unless such risk or liability relates to
performance of its ordinary services, including under Section 5, under
this Indenture; and

 

(5)                                  the Trustee shall not be liable to the
Secured Noteholders for any action taken or omitted by it at the direction of
the Issuer, the Collateral Manager and/or the Holders of the Secured Notes
under the circumstances in which such direction is required or permitted by the
terms of this Indenture.

 

(d)                                 For all purposes under this Indenture, the
Trustee shall not be deemed to have notice or knowledge of any Event of Default
described in Section 5.1(e), 5.1(f), 5.1(g) or 5.1(h) unless a
Trust Officer assigned to and working in the Corporate Trust Office has actual
knowledge thereof or unless written notice of any event which is in fact such
an

 

107

 

Event of Default or such a Default, as the case may be, is received by
the Trustee at the Corporate Trust Office. For purposes of determining the
Trustee’s responsibility and liability hereunder, whenever reference is made in
this Indenture to such an Event of Default or such a Default, as the case may
be, such reference shall be construed to refer only to such an Event of Default
or such a Default, as the case may be, of which the Trustee is deemed to have
notice as described in this Section 6.1(d).

 

(e)                                  Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to the
provisions of this Article VI.

 

(f)                                    The Trustee shall, upon receipt of reasonable
(but no less than three Business Days) prior written notice, permit any
representative of a Holder of a Secured Note or any Hedge Counterparty, during
the Trustee’s normal business hours, to examine all books of account, records,
reports and other papers of the Trustee relating to the Secured Notes or any
Hedge Agreement, to make copies and extracts therefrom (the reasonable
out-of-pocket expenses incurred in making any such copies or extracts to be
reimbursed to the Trustee by such Holder) and to discuss the Trustee’s actions,
as such actions relate to the Trustee’s duties with respect to the Secured
Notes or any Hedge Agreement, with the Trustee’s officers and employees
responsible for carrying out the Trustee’s duties with respect to the Secured
Notes; provided that under no
circumstances shall any Hedge Counterparty be permitted to review any
documentation containing the names or other indicia of identity of any of the
Noteholders unless any such information (including the number of shares held by
such Noteholder) has been redacted from such documentation.

 

(g)                                 With respect to the security interests
created hereunder, the Trustee acts as a fiduciary for the Secured Noteholders
only, and serves as a collateral agent for the other Secured Parties.

 

6.2.                              NOTICE OF DEFAULT

 

Promptly
(and in no event later than three Business Days) after the occurrence of any
Default actually known to a Trust Officer of the Trustee or after acceleration
has been made pursuant to Section 5.2, the Trustee shall send to the
Issuer, the Income Note Paying Agent, each Rating Agency (for so long as any
Class of Secured Notes is Outstanding), the Collateral Manager, each Hedge
Counterparty and to all Holders of Secured Notes, as their names and addresses
appear on the Note Register, notice of all Defaults hereunder known to the
Trustee, unless such Default shall have been cured or waived.

 

6.3.                              CERTAIN RIGHTS OF TRUSTEE

 

Except as otherwise provided in Sections 6.1 and Article VIII:

 

(a)                                  the Trustee may rely and shall be protected
in acting or refraining from acting in good faith and in reliance upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, note or other paper or document
reasonably believed by it to be genuine and to have been signed or presented by
the proper party or parties;

 

(b)                                 any request or direction of the Issuer
mentioned herein shall be sufficiently evidenced by an Issuer Request or Issuer
Order, as the case may be;

 

108

 

(c)           whenever in the administration of this Indenture the Trustee shall
(i) deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officer’s certificate or (ii) be required to
determine the value of any Collateral or funds hereunder or the cashflows
projected to be received therefrom, the Trustee may, in the absence of bad
faith on its part, rely on reports of nationally recognized accountants,
investment bankers or other Persons qualified to provide the information
required to make such determination, including nationally recognized dealers in
securities of the type being valued and securities quotation services;

 

(d)           as a condition to the taking or omitting of any action by it hereunder,
the Trustee may consult with counsel and the advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken or omitted by it hereunder in good faith and in
reliance thereon;

 

(e)           the Trustee shall be under no obligation to exercise or to honor any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Secured Noteholders pursuant to this Indenture, unless such
Secured Noteholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might reasonably be
incurred by it in compliance with such request or direction;

 

(f)            the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order,
bond, note or other paper documents, but the Trustee, in its discretion, may
and, upon the written direction of the Holders of a Majority of the then
Aggregate Outstanding Amount of the Notes of any Class, any Hedge Counterparty
or any Rating Agency shall make such further inquiry or investigation into such
facts or matters as it may see fit or as it shall be directed, and, the Trustee
shall be entitled, on reasonable prior notice to the Issuer, to examine the
books and records of the Issuer or the Collateral Manager relating to the
Secured Notes and the Collateral, personally or by agent or attorney at a time
acceptable to the Issuer or the Collateral Manager in their reasonable judgment
during normal business hours; provided that
the Trustee shall, and shall cause its agents, to hold in confidence all such
information, except (i) to the extent disclosure may be required by law by
any regulatory authority and (ii) to the extent that the Trustee, in its
sole judgment, may determine that such disclosure is consistent with its
obligations hereunder;

 

(g)           the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys; provided that the Trustee shall
not be responsible for any misconduct or negligence on the part of any agent
(other than any Affiliate of the Trustee) appointed and supervised, or attorney
appointed, with due care by it hereunder;

 

(h)           the Trustee shall not be liable for any action it takes or omits to
take in good faith that it reasonably and, after the occurrence and during the
continuance of an Event of Default, prudently believes to be authorized or
within its rights or powers hereunder;

 

(i)            nothing herein shall be construed to impose
an obligation on the part of the Trustee to recalculate, evaluate or verify any
report, certificate or information received from the

 

109

 

Issuer or Collateral Manager (unless and except to the extent otherwise
expressly set forth herein or upon the request of any Hedge Counterparty, a
Rating Agency or a Majority of the then Aggregate Outstanding Amount of the
Notes of the Controlling Class);

 

(j)            the Trustee shall not be responsible or
liable for the actions or omissions of, or any inaccuracies in the records of,
any non-Affiliated custodian, clearing agency, common depository, Euroclear or
Clearstream or for the acts or omissions of the Collateral Manager or the
Issuer;

 

(k)           to the extent any defined term hereunder, or any calculation required
to be made or determined by the Trustee hereunder, is dependent upon or defined
by reference to generally accepted accounting principles in the United States (GAAP), the Trustee shall be
entitled to request and receive (and rely upon) instruction from the Issuer or
the accountants appointed pursuant to 10.14 as to the application of GAAP in
such connection, in any instance;

 

(1)           to the extent permitted by law, the Trustee shall not be required to
give any bond or surety in respect of the execution of this Indenture or
otherwise; and

 

(m)          the permissive right of the Trustee to take or refrain from taking any
actions enumerated in this Indenture shall not be construed as a duty.

 

6.4.
                           AUTHENTICATING AGENTS

 

If
the Trustee so chooses the Trustee may appoint one or more Authenticating
Agents with power to act on its behalf and subject to its direction in the
authentication of Secured Notes in connection with issuance, transfers and
exchanges under Sections 2.4, 2.5 and 8.5, as fully to all intents and purposes
as though each such Authenticating Agent had been expressly authorized by those
Sections to authenticate such Secured Notes. For all purposes of this
Indenture, the authentication of Secured Notes by an Authenticating Agent
pursuant to this Section 6.4 shall be deemed to be the authentication of
Secured Notes “by the Trustee”.

 

Any
entity into which any Authenticating Agent may be merged or converted or with
which it may be consolidated, or any entity resulting from any merger,
consolidation or conversion to which any Authenticating Agent shall be a party,
or any entity succeeding to the corporate trust business of any Authenticating
Agent, shall be the successor of such Authenticating Agent hereunder, without
the execution or filing of any further act on the part of the parties hereto or
such Authenticating Agent or such successor entity.

 

Any
Authenticating Agent may at any time resign by giving written notice of
resignation to the Trustee and the Issuer. The Trustee may at any time terminate
the agency of any Authenticating Agent by giving written notice of termination
to such Authenticating Agent and the Issuer. Upon receiving such notice of
resignation or upon such a termination, the Trustee shall promptly appoint a
successor Authenticating Agent and shall give written notice of such
appointment to the Issuer.

 

The
Issuer agrees to pay to each Authenticating Agent from time to time reasonable
compensation for its services (provided, however,  that, so long as an Authenticating
Agent is the Trustee, or an Affiliate thereof, such compensation shall be
payable by the Trustee, rather than by the Issuer), and reimbursement for its
reasonable expenses relating thereto and the Trustee shall be entitled to

 

110

 

be
reimbursed for such payments, subject to Section 6.8. The provisions of
Sections 6.8, 6.5 and 6.6 shall be applicable to any Authenticating Agent.

 

6.5.                             NOT RESPONSIBLE FOR RECITALS OR
ISSUANCE OF SECURED NOTES

 

The recitals contained herein and in the Secured Notes, other than the
Certificate of Authentication thereon, shall be taken as the statements of the
Issuer, and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representation as to the validity or sufficiency of this
Indenture (except as may be made with respect to the validity of the Trustee’s
obligations hereunder), of the Collateral or of the Secured Notes. The Trustee
shall not be accountable for the use or application by the Issuer of the
Secured Notes or the proceeds thereof or any amounts paid to the Issuer
pursuant to the provisions hereof.

 

6.6.                             MAY HOLD SECURED NOTES

 

The
Trustee, any Note Paying Agent, the Note Registrar or any other agent of the
Issuer, in its individual or any other capacity, may become the owner or
pledgee of Secured Notes and, may otherwise deal with the Issuer or any of its
Affiliates, with the same rights it would have if it were not Trustee, Note
Paying Agent, Note Registrar or such other agent.

 

6.7.                             FUNDS HELD IN TRUST

 

Funds
held by the Trustee hereunder shall be held in trust to the extent required
herein. The Trustee shall be under no liability for interest on any funds
received by it hereunder except as otherwise agreed upon with the Issuer and
except to the extent of income or other gain on investments which are deposits
in or certificates of deposit of the Trustee in its commercial capacity and
income or other gain actually received by the Trustee on Eligible Investments.

 

6.8.          COMPENSATION AND REIMBURSEMENT 

 

(a)           The Issuer agrees:

 

(1)           to pay the Trustee on each Payment Date the Trustee Fee and reasonable
compensation for all other services, including custodial services, rendered by
it hereunder (which compensation shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust);

 

(2)           except as otherwise expressly provided herein, to reimburse the Trustee
(subject to any written agreement between the Issuer and the Trustee) in a
timely manner upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision of
this Indenture or in the enforcement of any provision hereof and expenses
related to the maintenance and administration of the Collateral (including
securities transaction charges and the reasonable compensation and expenses and
disbursements of its agents and legal counsel and of any accounting firm or
investment banking firm employed by the Trustee pursuant to Section 5.2,
5.4, 5.5, 6.3(c), 6.3(k), 10.14 or 10.16, except any such expense, disbursement
or advance as may be attributable to its negligence, willful misconduct or bad
faith but only to the extent any such securities transaction charges have not
been waived during a Due Period due to the Trustee’s receipt of a payment from
a financial institution with respect to certain Eligible Investments);

 

111

 

(3)           to indemnify the Trustee and its Officers, directors, employees and
agents for, and to hold them harmless against, any loss, liability or expense
incurred by it without negligence, willful misconduct or bad faith on their
part, arising out of or in connection with the acceptance or administration of
this trust, including the reasonable costs and expenses (including reasonable
counsel fees) of defending themselves against any claim or liability in
connection with the exercise or performance of any of their powers or duties
hereunder; and

 

(4)           to pay the Trustee reasonable additional compensation together with its
expenses (including reasonable counsel fees) for any collection action taken
pursuant to Section 6.14.

 

(b)           The Issuer may remit payment for such fees and expenses to the Trustee
or, in the absence thereof, the Trustee may from time to time deduct payment of
its fees and expenses hereunder from funds on deposit in the Expense Account
pursuant to Section 11.1.

 

(c)           The Trustee hereby agrees not to cause the filing of a petition in
bankruptcy against the Issuer for the non-payment to the Trustee of any amounts
provided by this Section 6.8 until at least one year, or if longer the
applicable preference period then in effect, and one day after the payment in
full of all Secured Notes issued under this Indenture.

 

(d)           The amounts payable to the Trustee pursuant to Sections
6.8(a)(2) through (4) (other than amounts received by the Trustee
from financial institutions under Section 6.8(a)(2) above) shall not,
except as provided by Section 11.1(a)(30), exceed on any Payment Date the
limitation described in Section 11.1(a)(1) for such Payment Date; provided that (A) the Trustee shall not institute any
proceeding for enforcement of such lien except in connection with an action
pursuant to Section 5.3 or 5.4 for the enforcement of the lien of this Indenture
for the benefit of the Secured Parties and (B) the Trustee may only
enforce such a lien in conjunction with the enforcement of the rights of the
Secured Parties in the manner set forth in Section 5.4.

 

The Trustee shall, subject to the Priority of Payments, receive amounts
pursuant to this Section 6.8 and Section 11.1 only to the extent that
the payment thereof will not result in an Event of Default and the failure to
pay such amounts to the Trustee will not, by itself, constitute an Event of
Default. Subject to Section 6.10, the Trustee shall continue to serve as
Trustee under this Indenture notwithstanding the fact that the Trustee shall
not have received amounts due it hereunder and hereby agrees not to cause the
filing of a petition in bankruptcy against the Issuer for the nonpayment to the
Trustee of any amounts provided by this Section 6.8 until at least one
year, or, if longer, the applicable preference period then in effect, and one
day after the payment in full of all Secured Notes issued under this Indenture.
No direction by the Holders of a Majority of the then Aggregate Outstanding
Amount of the Notes of the Controlling Class shall affect the right of the
Trustee to collect amounts owed to it under this Indenture.

 

The indemnifications in favor of the Trustee in this Section 6.8
shall (i) survive any resignation or removal of any Person acting as
Trustee (to the extent of any indemnified liabilities, costs, expenses and
other amounts arising or incurred prior to, or arising out of actions or omissions
occurring prior to, such resignation or removal) and (ii) apply to the
Trustee in its capacities as Custodian, Note Paying Agent, Secured Note
Calculation Agent and Authenticating Agent.

 

112

 

6.9.          CORPORATE TRUSTEE REQUIRED; ELIGIBILITY

 

There shall at all times be a Trustee
hereunder which shall be a bank, corporation or trust company organized and
doing business under the laws of the United States or of any State thereof,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least U.S.$250,000,000, subject to
supervision or examination by federal or state banking authorities, having a
rating of at least “BBB+” by S&P and having an office within the
United States. If such entity publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section 6.9, the
combined capital and surplus of such entity shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 6.9, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article VI.

 

6.10.        RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR

 

(a)           No resignation or
removal of the Trustee and no appointment of a successor Trustee pursuant to
this Article VI shall become effective until the acceptance of appointment
by the successor Trustee under Section 6.11.

 

(b)           The Trustee may resign
at any time by giving 90 days prior written notice thereof to the Issuer, the
Secured Noteholders, each Hedge Counterparty, the Collateral Manager and each
Rating Agency. Upon receiving such notice of resignation, or if the Trustee is
removed or becomes incapable of acting, or if a vacancy shall occur in the
office of the Trustee for any reason, the Issuer shall (after consultation with
the Collateral Manager) promptly propose a successor trustee for approval by
the Holders of 662/3% of the then Aggregate
Outstanding Amount of the Notes of each Class of Secured Notes. A proposed
successor trustee approved in accordance with the preceding sentence shall be
appointed by the Issuer as successor trustee by written instrument, in
duplicate, executed by an Authorized Officer of the Issuer, one copy of which
shall be delivered to the Trustee so resigning and one copy to the successor
trustee or trustees, together with a copy to each Secured Noteholder. If no
successor trustee shall have been appointed and an instrument of acceptance by
a successor Trustee shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee or any
Holder of a Secured Note or any Hedge Counterparty on behalf of itself and all
others similarly situated, subject to Section 5.15, may petition any court
of competent jurisdiction for the appointment of a successor Trustee.

 

(c)           The Trustee may be
removed at any time by an Act of the Holders of at least 662/3%
of the then Aggregate Outstanding Amount of the Notes of each Class of
Secured Notes delivered to the Trustee and to the Issuer.

 

(d)           If at any time:

 

(1)           the Trustee shall cease
to be eligible under Section 6.9 and shall fail to resign after written
request therefor by any Holder; or

 

(2)           the Trustee shall
become incapable of acting or shall be adjudged as bankrupt or insolvent or a
receiver or liquidator of the Trustee or of its property shall be appointed or
any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation,

 

113

 

then, in any such case (subject to Section 6.10(a)),
(A) the Issuer, by Issuer Order shall remove the Trustee, or (B) subject to Section 5.15, any Holder or any
Hedge Counterparty may, on behalf of itself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.

 

(e)           The Issuer shall give
prompt notice of each resignation and each removal of the Trustee and each
appointment of a successor Trustee by mailing written notice of such event by
first class mail, postage prepaid, to each Rating Agency, each Hedge
Counterparty, the Collateral Manager and the Holders as their names and
addresses appear in the Note Register. Each notice shall include the name of
the successor Trustee and the address of its Corporate Trust Office. If the
Issuer fails to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be given at the expense of the Issuer.

 

6.11.        ACCEPTANCE OF APPOINTMENT BY SUCCESSOR

 

Every successor Trustee appointed hereunder shall
execute, acknowledge and deliver to the Issuer and the retiring Trustee (with
copies to each Hedge Counterparty and the Collateral Manager) an instrument
accepting such appointment. Upon delivery of the required instruments, the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any other act, deed or conveyance, shall become vested
with all the rights, powers, trusts, duties and obligations of the retiring
Trustee; but, on request of the Issuer or a Majority of the then Aggregate
Outstanding Amount of the Notes of any Class of Notes, any Hedge
Counterparty or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, fees, indemnities and expenses then unpaid, execute and
deliver an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee, and shall duly assign, transfer and
deliver to such successor Trustee all property and funds held by such retiring
Trustee hereunder, subject nevertheless to its lien, if any, provided for in Section 6.8(d).
Upon request of any such successor Trustee, the Issuer shall execute any and
all instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts.

 

No successor Trustee shall accept its appointment
unless (a) at the time of such acceptance such successor shall be
qualified and eligible under Section 6.9 and the other provisions of this Article VI
and (b) a Rating Agency Confirmation shall have been obtained with respect
to the appointment of such successor Trustee shall have been satisfied. No
appointment of a successor Trustee shall become effective if the Holders of a
Majority of the then Aggregate Outstanding Amount of the Notes of the
Controlling Class objects to such appointment; and no appointment of a
successor Trustee shall become effective until the date ten days after notice
of such appointment has been given to each Secured Noteholder and each Rating
Agency.

 

6.12.        MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS OF TRUSTEE

 

Any Person into which the Trustee may be merged or
converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which the Trustee shall be a party,
or any Person succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder;
provided such Person shall be otherwise qualified and eligible under this Article VI,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. The successor Trustee will notify each Rating Agency
of any such merger, conversion or consolidation. In case any of the Secured
Notes have been authenticated, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Secured
Notes so authenticated with the same effect as if such successor Trustee had
itself authenticated such Secured Notes.

 

114

 

6.13.        CO-TRUSTEES

 

At any time or times, for the purpose of
meeting the legal requirements of any jurisdiction in which any part of the
Collateral may at the time be located, the Trustee shall have power to appoint
one or more Persons to act as Co-trustee, jointly with the Trustee of all or
any part of the Collateral, with the power to file such proofs of claim and
take such other actions pursuant to Section 5.6 and to make such claims
and enforce such rights of action on behalf of the Holders of the Secured Notes
subject to the other provisions of this Section 6.13.

 

The Issuer shall join with the Trustee in the
execution, delivery and performance of all instruments and agreements necessary
or proper to appoint a Co-trustee. If the Issuer does not join in such
appointment within 15 days after the receipt by them of a request to do so, the
Trustee shall have power to make such appointment.

 

Should any written instrument from the Issuer
be required by any Co-trustee so appointed for more fully confirming to such
Co-trustee such property, title, right or power, any and all such instruments
shall, on request, be executed, acknowledged and delivered by the Issuer. The
Issuer agrees to pay (subject to the Priority of Payments) for any reasonable
fees and expenses in connection with such appointment.

 

Every Co-trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the
following terms:

 

(a)           the Secured Notes shall
be authenticated and delivered and all rights, powers, duties and obligations
hereunder in respect of the custody of securities, funds and other personal
property held by, or required to be deposited or pledged with, the Trustee
hereunder, shall be exercised solely by the Trustee;

 

(b)           the rights, powers,
duties and obligations hereby conferred or imposed upon the Trustee in respect
of any property covered by the appointment of a Co-trustee shall be conferred
or imposed upon and exercised or performed by the Trustee or by the Trustee and
such Co-trustee jointly, as shall be provided in the instrument appointing such
Co-trustee, except to the extent that under any law of any jurisdiction in
which any particular act is to be performed, the Trustee shall be incompetent
or unqualified to perform such act, in which event such rights, powers, duties
and obligations shall be exercised and performed by a Co-trustee;

 

(c)           the Trustee at any
time, by an instrument in writing executed by it, may accept the resignation of
or remove any Co-trustee appointed under this Section 6.13. A successor to
any Co-trustee so resigned or removed may be appointed in the manner provided
in this Section 6.13;

 

(d)           no Co-trustee hereunder
shall be personally liable by reason of any act or omission of the Trustee or
any other Co-trustee hereunder;

 

(e)           the Trustee shall not
be liable by reason of any act or omission of a Co-trustee;

 

(f)            any Act of Secured
Noteholders delivered to the Trustee shall be deemed to have been delivered to
each Co-trustee; and

 

115

 

(g)                                 each
Co-trustee hereunder shall at the time of such acceptance satisfy the
qualification required of a Trustee under Section 6.9 and the other
provisions of this Article VI.

 

6.14.        CERTAIN DUTIES RELATED TO
DELAYED PAYMENT OF PROCEEDS; OTHER NOTICES

 

In the event that the Trustee shall not have
received a payment with respect to any Pledged Security within two Business
Days after its Due Date, the Trustee shall (i) notify the Issuer and
Collateral Manager in writing and (ii) promptly request the issuer of such
Pledged Security, the trustee under the related Underlying Instrument or paying
agent designated by either of them, as the case may be, to make such payment as
soon as practicable after such request but in no event later than three
Business. Days after the date of such request. In the event that such payment
is not made within such time period, the Trustee, subject to the provisions of Section 6.1(c)(4),
shall, subject to the restrictions on the sale of Collateral Debt Securities
set forth in Section 12.1, take such action as the Collateral Manager
shall direct in writing. Any such action shall be without prejudice to any
right to claim a Default under this Indenture. The Trustee will promptly notify
the Issuer if the Collateral Manager has determined that (i) any Collateral
Debt Security has become a Defaulted Security, a Deferred Interest PIK Bond, a
Credit Risk Security, a Credit Improved Security or a Written Down Security or (ii) the
Trustee has received an Equity Security in connection with any Collateral Debt
Security.

 

6.15.        REPRESENTATIONS AND
WARRANTIES OF THE BANK

 

(a)           Organization.   The Bank has been
duly organized and is validly existing as a national banking association under
the laws of the United States and has the power to conduct its business and affairs
as a trustee.

 

(b)                                 Authorization; Binding
Obligations.   The
Bank has the power and authority to perform the duties and obligations of
Trustee, Note Registrar and Note Transfer Agent or any other capacity to which
it is appointed under this Indenture. The Bank has taken all necessary action
to authorize the execution, delivery and performance of this Indenture, and all
of the documents required to be executed by the Bank pursuant hereto. This
Indenture has been duly executed and delivered by the Bank. Upon execution and
delivery by the Issuer, this Indenture will constitute the legal, valid and
binding obligation of the Bank enforceable in accordance with its terms.

 

(c)                                  Eligibility.   The Bank is
eligible under Section 6.9 to serve as Trustee hereunder.

 

(d)                                 No Conflict.   Neither the
execution, delivery and performance of this Indenture, nor the consummation of
the transactions contemplated by this Indenture, (i) is prohibited by, or
requires the Bank to obtain any consent, authorization, approval or registration
under, any law, statute, rule, regulation, judgment, order, writ, injunction or
decree that is binding upon the Bank or any of its properties or assets, or (ii) will
violate any provision of, result in any default or acceleration of any obligations
under, result in the creation or imposition of any lien pursuant to, or require
any consent under, any agreement to which the Bank is a party or by which it or
any of its property is bound.

 

(e)                                  No Proceedings.   There are no
proceedings pending, or to the best knowledge of the Bank, threatened against
the Bank before any federal, state or other governmental agency, authority,
administrator or regulatory body, arbitrator, court or other tribunal, foreign
or domestic, that could have a material adverse effect on the Collateral or any
action taken or to be taken by the Bank under this Indenture.

 

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6.16.                        EXCHANGE OFFERS, PROPOSED
AMENDMENTS, ETC.

 

The Collateral Manager may, on behalf of the Issuer, instruct the
Trustee pursuant to an Issuer Order to, and the Trustee shall, take any of the
following actions with respect to a Collateral Debt Security or Equity Security
as to which an Offer has been made or as to which any consent, waiver, vote or
exercise has been requested: (i) exchange such instrument for other
securities or a mixture of securities and other consideration pursuant to such
Offer (and in making a determination whether or not to exchange any security,
none of the restrictions set forth in Article XII shall be applicable);
and (ii) give consent, grant waiver, vote or exercise any or all other
rights or remedies with respect to any such Collateral Debt Security or Equity
Security. In the event that the Trustee does not receive instruction from the
Collateral Manager, the Trustee shall have no obligation to take action with
respect to such exchange or such request for consent, waiver, vote or exercise.
In the event that the Trustee receives written notice of any proposed
amendment, consent or waiver under the Underlying Instruments of any Collateral
Debt Securities (before or after any default), the Trustee shall promptly
deliver copies of such notice to the Issuer and the Collateral Manager. The
Collateral Manager may, on behalf of the Issuer, instruct the Trustee pursuant
to an Issuer Order to, and the Trustee shall, with respect to a Collateral Debt
Security as to which a consent or waiver under the Underlying Instruments of
such Collateral Debt Security (before or after any default) has been proposed,
give consent, grant waiver, vote or exercise any or all other rights or
remedies with respect to any such Collateral Debt Security only in accordance
with such Issuer Order. In the absence of any instruction from the Collateral
Manager, the Trustee shall not engage in any vote with respect to such
Collateral Debt Security.

 

6.17.                        FIDUCIARY FOR SECURED
NOTEHOLDERS ONLY; AGENT FOR OTHER SECURED PARTIES

 

With respect to the security interests created hereunder, the pledge of
any portion of the Collateral to the Trustee is to the Trustee as
representative of the Secured Noteholders and agent for other Secured Parties.
In furtherance of the foregoing, the possession by the Trustee of any portion
of the Collateral and the endorsement to or registration in the name of the
Trustee of any portion of the Collateral (including without limitation as
entitlement holder of the Collateral Account) are all undertaken by the Trustee
in its capacity as representative of the Secured Noteholders and as agent for
the other Secured Parties. The Trustee shall not by reason of this Indenture be
deemed to be acting as fiduciary for each Hedge Counterparty or the Collateral
Manager, provided that the foregoing shall not limit any of
the express obligations of the Trustee under this Indenture.

 

6.18.                        WITHHOLDING

 

If any withholding tax is imposed on the Issuer’s payment (or
allocations of income) under the Secured Notes to any Secured Noteholder, such
tax shall reduce the amount otherwise distributable to such Secured Noteholder.
The Trustee is hereby authorized and directed to retain from amounts otherwise
distributable to any Secured Noteholder sufficient funds for the payment of any
tax that is required to be withheld or deducted by the Issuer (but such
authorization shall not prevent the Trustee from contesting any such tax in
appropriate proceedings and withholding payment of such tax, if permitted by
law, pending the outcome of such proceedings). The amount of any withholding
tax imposed with respect to any Secured Noteholder shall be treated as Cash
distributed to such Secured Noteholder at the time it is withheld by the
Trustee and remitted to the appropriate taxing authority. If there is a
possibility that withholding tax is payable with respect to a distribution, the
Trustee may in its sole discretion withhold such amounts in accordance with
this Section 6.18. If any Secured Noteholder wishes to apply for a refund
of any such withholding tax, the Trustee shall reasonably cooperate with such
Secured Noteholder in making such claim so long as such Secured Noteholder
agrees to reimburse the Trustee for any out-of-pocket expenses incurred.
Nothing herein shall impose an obligation on the part of

 

117

 

the Trustee to determine the amount of any tax or withholding
obligation on the part of the Issuer or in respect of the Income Notes.

 

ARTICLE VII

 

COVENANTS

 

7.1.                              PAYMENT OF PRINCIPAL AND INTEREST

 

The Issuer will duly and punctually pay all principal (including the Class C
Cumulative Periodic Interest Shortfall Amount, the Class D Cumulative
Periodic Interest Shortfall Amount, the Class E Cumulative Periodic
Interest Shortfall Amount, the Class F Cumulative Periodic Interest
Shortfall Amount, the Class G Cumulative Periodic Interest Shortfall
Amount, the Class H Cumulative Periodic Interest Shortfall Amount, the Class J
Cumulative Periodic Interest Shortfall Amount and the Class K Cumulative
Periodic Interest Shortfall Amount) and interest (including Defaulted Interest
and interest thereon, if any) in accordance with the terms of the Secured Notes
and this Indenture and amounts due under any Hedge Agreement in accordance with
this Indenture. Amounts properly withheld under the Code or other applicable
law by any Person from a payment to any Secured Noteholder of principal and/or
interest shall be considered as having been paid by the Issuer to such Secured
Noteholder for all purposes of this Indenture.

 

The Trustee shall, unless prevented from doing so for reasons beyond
its reasonable control, give notice to each Secured Noteholder and each Rating
Agency of any such withholding requirement no later than ten days prior to the
date of the payment from which amounts are required to be withheld; provided
that despite the failure of the Trustee to give such notice, amounts
withheld pursuant to applicable tax laws shall be considered as having been
paid by the Issuer as provided above.

 

7.2.                              MAINTENANCE
OF OFFICE OR AGENCY

 

The Issuer hereby appoints the Trustee as Note Paying Agent for the
payment of principal of and interest on the Secured Notes. Secured Notes may be
surrendered for registration of transfer or exchange at the Corporate Trust
Office. The Issuer hereby appoints NCB Stockbroker Limited, 3 George’s Dock,
Dublin 1, Ireland, as offshore Note Paying Agent and as the Issuer’s agent
where notices and demands to or upon the Issuer in respect of any Secured Notes
listed on the Irish Stock Exchange may be served and where such Secured Notes
may be surrendered for registration of transfer or exchange.

 

The Issuer may at any time and from time to time, terminate the
appointment of any such agent or appoint any additional agents for any or all
of such purposes; provided that (A) the
Issuer will maintain in the Borough of Manhattan, The City of New York, an
office or agency where notices and demands to or upon the Issuer in respect of
the Secured Notes and this Indenture may be served, (B) no Note Paying
Agent shall be appointed in a jurisdiction which subjects payments on the
Secured Notes to withholding tax and (C) the Issuer may not terminate the
appointment of any Note Paying Agent without the consent of each Income
Noteholder. The Issuer shall give prompt written notice to the Trustee and each
Rating Agency and the Secured Noteholders of the appointment or termination of
any such agent and of the location and any change in the location of any such
office or agency.

 

If at any time the Issuer shall fail to maintain any such required
office or agency in the Borough of Manhattan, The City of New York or shall
fail to furnish the Trustee with the address thereof, presentations and
surrenders may be made at and notices and demands may be served on the Issuer
and Secured Notes may be presented and surrendered for payment to the Note
Paying Agent at its office in

 

118

 

Illinois (and the Issuer hereby appoints the same as its agent to
receive such respective presentations, surrenders, notices and demands).

 

For so long as any Class of Secured Notes is listed on the Irish
Stock Exchange and such exchange shall so require, the Issuer shall maintain a
listing agent, a paying agent and an agent where notices and demands to or upon
the Issuer in respect of any Secured Notes listed on the Irish Stock Exchange
may be served and where such Secured Notes may be surrendered for registration
of transfer or exchange.

 

7.3.                              FUNDS FOR SECURED NOTE
PAYMENTS TO BE HELD IN TRUST

 

All payments of amounts due and payable with respect to any Secured
Notes that are to be made from amounts withdrawn from the Payment Account shall
be made on behalf of the Issuer by the Trustee or a Note Paying Agent with
respect to payments on the Secured Notes.

 

When the Issuer shall have a Note Paying Agent that is not also the
Note Registrar, it shall direct the Note Registrar to furnish, no later than
the fifth calendar day after each Record Date a list, if necessary, in such
form as such Note Paying Agent may reasonably request, of the names and
addresses of the Holders and of the certificate numbers of individual Secured
Notes held by each such Holder.

 

The initial Note Paying Agent shall be as set forth in Section 7.2.
Any additional or successor Paying Agents shall be appointed by Issuer Order
with written notice thereof to the Trustee and the Rating Agencies; provided that so
long as any Class of Secured Notes is rated by the Rating Agencies and
with respect to any additional or successor Note Paying Agent for the Secured
Notes, (a) the Note Paying Agent for the Secured Notes has a rating of not
less than “AA-” and not less than “A-1+” by S&P or (b) a Rating Agency
Confirmation from S&P shall have been obtained with respect to the appointment
of such Note Paying Agent. In the event that (i) the Issuer has actual
knowledge that such successor Note Paying Agent ceases to have a rating of at
least “AA-” and of “A-1+” by S&P or (ii) a Rating Agency Confirmation
from S&P shall not have been obtained with respect to the appointment of
such Note Paying Agent, the Issuer shall promptly remove such Note Paying Agent
and appoint a successor Note Paying Agent. The Issuer shall not appoint any
Note Paying Agent (other than an initial Note Paying Agent) that is not, at the
time of such appointment, a depository institution or trust company subject to
supervision and examination by federal and/or state and/or national banking
authorities. The Issuer shall cause each Note Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in which such Note
Paying Agent shall agree with the Trustee (and if the Trustee acts as Note
Paying Agent, it hereby so agrees), subject to the provisions of this Section 7.3,
that such Note Paying Agent will:

 

(a)                                  allocate
all sums received for payment to the Holders of Secured Notes for which it acts
as Note Paying Agent on each Payment Date and Redemption Date among such
Holders in the proportion specified in the instructions set forth in the applicable
Note Valuation Report or Redemption Date Statement or as otherwise provided
herein, in each case to the extent permitted by applicable law;

 

(b)                                 hold
all amounts held by it for the payment of amounts due with respect to the
Secured Notes in trust for the benefit of the Persons entitled thereto until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided and pay such sums to such Persons as herein provided;

 

(c)                                  if
such Note Paying Agent is not the Trustee, immediately resign as a Note Paying
Agent and forthwith pay to the Trustee all amounts held by it in trust for the
payment of Secured

 

119

 

Notes if at any time it ceases to meet the standards set forth above
required to be met by a Note Paying Agent at the time of its appointment;

 

(d)                                 if
such Note Paying Agent is not the Trustee, immediately give the Trustee notice
of any Default by the Issuer (or any other obligor upon the Secured Notes) in
the making of any payment required to be made; and

 

(e)                                  if
such Note Paying Agent is not the Trustee at any time during the continuance of
any such Default, upon the written request of the Trustee, forthwith pay to the
Trustee all amounts so held in trust by such Note Paying Agent.

 

If the Issuer shall have appointed a Note Paying Agent other than the
Trustee, the Trustee shall deposit on or prior to the Business Day next
preceding each Payment Date or Redemption Date, as the case may be, with such
Note Paying Agent, if necessary, an aggregate amount sufficient to pay the
amounts then becoming due (to the extent funds are then available for such
purpose in the Collection Account, as the case may be), such amount to be held
in trust for the benefit of the Persons entitled thereto. Any funds deposited
with a Note Paying Agent (other than the Trustee) in excess of an amount
sufficient to pay the amounts then becoming due on the Secured Notes with
respect to which such deposit was made shall be paid over by such Note Paying
Agent to the Trustee for application in accordance with Section 11.

 

The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, direct
any Note Paying Agent to pay to the Trustee all amounts held in trust by such
Note Paying Agent, such amounts to be held by the Trustee upon the same trusts
as those upon which such amounts were held by such Note Paying Agent; and, upon
such payment by any Note Paying Agent to the Trustee, such Note Paying Agent
shall be released from all further liability with respect to such amounts.

 

Except as otherwise required by applicable law, any funds deposited
with the Trustee or any Note Paying Agent in trust for the payment of the
principal of or interest on any Secured Note and remaining unclaimed for two
years after the same has become due and payable shall be paid to the Issuer on
Issuer Request; and the Holder of such Secured Note shall thereafter, as an
unsecured general creditor, look only to the Issuer for payment of such amounts
and all liability of the Trustee or such Note Paying Agent with respect to such
trust funds (but only to the extent of the amounts so paid to the Issuer) shall
thereupon cease. The Trustee or such Note Paying Agent, before being required
to make any such release of payment, may, but shall not be required to, adopt
and employ, at the expense of the Issuer, any reasonable means of notification
of such release of payment, including mailing notice of such release to Holders
whose Secured Notes have been called but have not been surrendered for
redemption or whose right to or interest in amounts due and payable but not
claimed is determinable from the records of any Note Paying Agent, at the last
address of record of each such Holder.

 

7.4.                              EXISTENCE
OF ISSUER

 

The Issuer shall maintain in full force and effect its existence and
rights as an exempted company incorporated and registered under the laws of the
Cayman Islands and shall obtain and preserve its qualification to do business
in each jurisdiction in which such qualifications are or shall be necessary to
protect the validity and enforceability of this Indenture, the Secured Notes or
any of the Collateral.

 

The Issuer shall ensure that all corporate or other formalities
regarding its existence (including holding regular board of directors’ and
shareholders’, or other similar, meetings) or registrations are followed
(including correcting any known misunderstanding regarding its separate
existence). The Issuer

 

120

 

shall not take any action, or conduct its affairs in a manner, that is
likely to result in its separate existence being ignored or in its assets and
liabilities being substantively consolidated with any other Person in a
bankruptcy, reorganization or other insolvency proceeding. At least one
director of the Issuer shall be Independent of other parties to the Transaction
Documents. So long as any Note is outstanding, the Issuer shall maintain and
implement administrative and operating procedures reasonably necessary in the
performance of the Issuer’s obligations hereunder, and the Issuer shall at all
times keep and maintain, or cause to be kept and maintained, separate books,
records, accounts, financial statements and other information customarily
maintained for the performance of the Issuer’s obligations hereunder and shall
allocate fairly and reasonably and pay any overhead for shared office space
utilized, if any; shall at all times hold itself out to the public and all
other persons as a legal entity separate from its equity holders and any other
person; and shall not become involved in the day-to-day management of any other
person (except as otherwise provided or contemplated in this Indenture or other
related documents to which it is a party). Without limiting the foregoing, so
long as any Note is outstanding (i) the Issuer shall (a) pay its own
liabilities out of its own funds, (b) maintain an arm’s-length
relationship with its Affiliates and (c) (if utilized) use separate
stationary, invoices and checks and (ii) the Issuer shall not (a) have
any subsidiaries (other than any Tax Subsidiary), (b) have any employees
(other than its directors), (c) engage in any transaction with any
shareholder that would constitute a conflict of interest or (d) pay
dividends (other than in accordance with the terms of this Indenture, its
Articles and the Income Note Paying Agency Agreement), (e) commingle
assets with those of any other entity, or (f) conduct business under an
assumed name (i.e. no “DBAs”), provided that the foregoing shall not
prohibit the Issuer from entering into the transactions contemplated by the
Corporate Services Agreement with the Administrator and the Income Note Paying
Agency Agreement with the Income Note Paying Agent.

 

7.5.                              PROTECTION
OF COLLATERAL

 

(a)                                  The
Issuer shall from time to time, execute and deliver all such supplements and amendments
hereto and all such Financing Statements, continuation statements, instruments
of further assurance and other instruments, and shall take such other action as
may be necessary or advisable or desirable to secure the rights and remedies of
the Secured Parties hereunder and to:

 

(1)           Grant more effectively
all or any portion of the Collateral;

 

(2)           maintain, preserve and
perfect the lien (and the first priority nature thereof) of this Indenture or
to carry out more effectively the purposes hereof;

 

(3)           perfect, publish notice
of or protect the validity of any Grant made or to be made by this Indenture
(including any and all actions necessary or desirable as a result of changes in
law or regulations);

 

(4)           enforce any of the
Pledged Securities or other instruments or property included in the Collateral;

 

(5)           preserve and defend
title to the Collateral and the rights therein of the Trustee, each Hedge Counterparty
and the Holders of the Secured Notes against the claims of all Persons and
parties; or

 

(6)           pay or cause to be paid
any and all taxes levied or assessed upon all or any part of the Collateral.

 

121

 

The Issuer hereby designates the Trustee its
agent and attorney-in-fact to execute any Financing Statement, continuation
statement or other instrument delivered to it pursuant to this Section 7.5,
and the Trustee, as agent of the Issuer, agrees to file such continuation
statements as are necessary to maintain perfection of the Collateral perfected
by the filing of Financing Statements, provided that
the Issuer retains ultimate responsibility to maintain the perfection of the
Collateral perfected by the filing of Financing Statements and any failure of
the Trustee to file continuation statements pursuant to this undertaking shall
not result in any liability of the Trustee and the Trustee shall be entitled to
indemnification pursuant to Section 6.8(a) with respect to any claim,
loss, liability or expense incurred by the Trustee with respect to the filing
of such continuation statements. The Trustee agrees that it will from time to
time, at the direction of any Secured Party, execute and cause to be filed Financing
Statements and continuation statements. The Issuer shall otherwise cause the
perfection and priority of the security interest in the Collateral and the
maintenance of such security interest at all times. Notwithstanding anything to
the contrary herein, the right of a Secured Party to provide direction to the
Trustee shall not impose upon the Trustee, as Secured Party, any obligation to
provide any such direction. The Issuer agrees that a carbon, photographic,
photostatic or other reproduction of this Indenture or of a Financing Statement
is sufficient as an Indenture or a Financing Statement as the case may be.

 

(b)                                 The
Trustee shall not (i) except in accordance with Section 10.15(a) or
(b), as applicable, remove any portion of the Collateral that consists of Cash
or is evidenced by an Instrument, certificate or other writing (A) from
the jurisdiction in which it was held at the date the most recent Opinion of
Counsel was delivered pursuant to Section 7.6 (or from the jurisdiction in
which it was held as described in the Opinion of Counsel delivered at the
Closing Date pursuant to Section 3.1(c), if no Opinion of Counsel has yet
been delivered pursuant to Section 7.6) or (B) from the possession of
the Person who held it on such date or (ii) cause or permit ownership or
the pledge of any portion of the Collateral that consists of book-entry
securities to be recorded on the books of a Person (A) located in a
different jurisdiction from the jurisdiction in which such ownership or pledge
was recorded at such date or (B) other than the Person on whose books such
ownership or pledge was recorded at such date, unless the Trustee shall have
first received an Opinion of Counsel to the effect that the lien and security
interest created by this Indenture with respect to such property will continue
to be maintained after giving effect to such action or actions.

 

(c)                                  The
Issuer shall pay or cause to be paid taxes, if any, levied on account of the
beneficial ownership by the Issuer of any Pledged Securities that secure the
Secured Notes; provided that the Issuer shall not
be required to pay or discharge or cause to be paid or discharged any such tax
whose amount, applicability or validity is being contested in good faith by
appropriate proceedings and for which disputed amounts or adequate reserves
have been made or the failure of which to pay or discharge could not reasonably
be expected to have a material adverse effect upon the ability of the Issuer to
timely and fully perform any of its payment or other material obligations under
this Indenture or upon the interests of the Secured Noteholders in the
Collateral.

 

(d)                                 The
Issuer shall enforce all of its material rights and remedies under the
Transaction Documents to which it is a party.

 

122

 

(e)                                  Without at least 30
days’ prior written notice to the Trustee, the Issuer shall not change its name,
or the name under which it does business, from the name shown on the signature pages hereto.

 

7.6.                              OPINIONS
AS TO COLLATERAL

 

On or before 30 days prior to the Payment Date in June of each
calendar year, commencing in 2008, the Issuer shall furnish to the Trustee and
each Rating Agency (with copies to each Hedge Counterparty) an Opinion of
Counsel (which shall include assumptions and qualifications substantially
similar to those set forth in the legal opinion rendered on the Closing Date
pursuant to Section 3.1(c)(1)) stating that, in the opinion of such
counsel, as of the date of such opinion, the lien and security interest created
by this Indenture with respect to the Collateral remains a valid and perfected
first priority lien and describing the manner in which such security interest
shall remain perfected.

 

7.7.                              PERFORMANCE
OF OBLIGATIONS

 

(a)                                  The Trustee shall
notify the Issuer, each Hedge Counterparty and each Secured Noteholder of any
request for an amendment, waiver or supplement to any Underlying Instrument
included in the Collateral or of any other notice of a vote in respect of any
Collateral Debt Security included in the Collateral. The Issuer shall not enter
into any such amendment, waiver or supplement; provided
that, notwithstanding anything in this Section 7.7(a) to the
contrary, the Issuer may enter into any amendment or waiver of or supplement to
any such Underlying Instrument if such amendment, supplement or waiver:

 

(1)           is required by the
provisions of any Underlying Instrument or by applicable law (other than
pursuant to an Underlying Instrument);

 

(2)           is necessary to cure
any ambiguity, inconsistency or formal defect or omission in such Underlying
Instrument; or

 

(3)           (x) is deemed
necessary by the Issuer or the Collateral Manager and does not materially and
adversely affect the Secured Parties or (y) is effected pursuant to Section 6.16.

 

The Issuer shall be entitled to rely on an Opinion of Counsel as to
material adverse effect and as to whether the entry into an amendment,
supplement or waiver is permitted pursuant to this Indenture.

 

(b)                                 The Issuer may, with
the prior written consent of the Holders of a Majority of the then Aggregate
Outstanding Amount of the Notes of each Class of Secured Notes and the
Holders of not less than 662/3% of the aggregate principal
amount of the Outstanding Income Notes, contract with other Persons, including
the Collateral Administrator, the Collateral Manager and the Bank, for the
performance of actions and obligations to be performed by the Issuer hereunder
by such Persons. Notwithstanding any such arrangement, the Issuer shall remain
liable for all such actions and obligations. In the event of such contract, the
performance of such actions and obligations by such Persons shall be deemed to
be performance of such actions and obligations by the Issuer and the Issuer
will punctually perform, and use its best efforts to cause such other Person to
perform, all of their obligations and agreements contained in related
agreement.

 

123

 

(c)                                  The
Issuer shall treat all acquisitions of Collateral Debt Securities as a
“purchase” for tax, accounting and reporting purposes.

 

(d)                                 The
Issuer shall file, or cause to be filed, any tax returns, including information
tax returns, required by any governmental authority.

 

(e)                                  In
the event that (i) the ownership of a Collateral Debt Security or property
acquired in respect of a Collateral Debt Security would result in the Issuer
being or becoming subject to U.S. tax on a net income basis or being or
becoming subject to the U.S. branch profits tax (in either case, such
Collateral Debt Security becoming a Taxed Collateral Debt
Security and such property becoming a Taxed Property),  and (ii) the
Issuer does not sell or otherwise dispose of all or a portion of such Taxed
Collateral Debt Security or Taxed Property in accordance with the provisions of
the Indenture, the Collateral Manager on behalf of the Issuer shall, prior to
such Collateral Debt Security becoming a Taxed Collateral Debt Security or such
property becoming a Taxed Property, (a) set up a special purpose
subsidiary meeting S&P’s then current published criteria for bankruptcy
remote special purpose entities (a Tax Subsidiary)  to receive and hold any such Taxed Collateral
Debt Security or Taxed Property or transfer such Taxed Collateral Debt Security
or Taxed Property to the Tax Subsidiary or (b) contribute such taxed
Collateral Debt Security or Taxed Property to a REMIC or other entity, the
interests in which, if owned by the Issuer would not cause the Issuer to become
subject to U.S. tax on a net income basis or to the U.S. branch profits tax
unless the Issuer has received an opinion of nationally recognized counsel to
the effect that the Issuer can hold such Taxed Collateral Debt Security
directly without causing the Issuer to be treated as engaged in a trade or
business in the United States for United States federal income tax purposes.
The Issuer shall cause the purposes and permitted activities of any such Tax
Subsidiary or entity described in clause (b) to be restricted solely to
the acquisition, holding and disposition of such Taxed Collateral Debt Security
or Taxed Property and shall require such subsidiary to distribute 100% of the
proceeds of any sale of such Taxed Collateral Debt Security or Taxed Property,
net of any tax liabilities, to the Issuer.

 

(f)                                    As
long as any Secured Notes are Outstanding, the Issuer shall enter into one or
more Servicing Agreements prior to or concurrent with the acquisition of each
Real Estate Interest and shall maintain a Servicing Agreement in respect of
each Real Estate Interest until the sale or other liquidation of such Real
Estate Interests in accordance with this Indenture.

 

7.8.                              NEGATIVE
COVENANTS

 

(a)                                  The Issuer will not:

 

(1)           intentionally operate
so as to be subject to U.S. federal income taxes on its net income;

 

(2)           sell, assign,
participate, transfer, exchange or otherwise dispose of, or pledge, mortgage,
hypothecate or otherwise encumber (or permit such to occur or suffer such to
exist), any part of the Collateral, except as expressly permitted by this
Indenture;

 

(3)           claim any credit on,
make any deduction from, or dispute the enforceability of, the payment of the
principal or interest (or any other amount) payable in respect

 

124

 

of the Secured Notes (other than amounts required to be paid, deducted
or withheld in accordance with any applicable law or regulation of any
governmental authority) or assert any claim against any present or future
Secured Noteholder by reason of the payment of any taxes levied or assessed
upon any part of the Collateral;

 

(4)           (A) incur or
assume or guarantee any indebtedness, other than the Secured Notes and this
Indenture and the transactions contemplated hereby; (B) issue any
additional class of securities other than the Income Notes; or (C) issue
any additional shares of stock;

 

(5)           (A) take any
action that would impair the validity or effectiveness of this Indenture or any
Grant hereunder or the lien of this Indenture, amend hypothecate, subordinate,
terminate, discharge or release any Person from any covenants or obligations
with respect to this Indenture or the Secured Notes, except as may be permitted
hereby, (B) create or extend any lien, charge, adverse claim, security
interest, mortgage or other encumbrance (other than the lien of this Indenture)
on or to the Collateral or any part thereof, any interest therein or the
proceeds thereof, or (C) take any action that would cause the lien of this
Indenture not to constitute a valid first priority security interest in the
Collateral;

 

(6)           use any of the proceeds
of the Secured Notes issued hereunder (A) to extend “purpose credit”
within the meaning given to such term in Regulation U or (B) to purchase
or otherwise acquire any Margin Stock;

 

(7)           permit the aggregate
book value of all Margin Stock held by the Issuer on any date to exceed the net
worth of the Issuer on such date (excluding any unrealized gains and losses) on
such date;

 

(8)           dissolve or liquidate
in whole or in part, except as permitted hereunder; or

 

(9)           except for any
agreements involving the purchase and sale of Collateral Debt Securities having
customary purchase or sale terms and documents with customary loan trading
documentation (but not excepting any Hedge Agreement), enter into any
agreements unless such agreements contain “non-petition” and “limited recourse”
provisions with respect to the Issuer, nor shall the Issuer amend any such
“non-petition” or “limited recourse” provisions without first obtaining Rating
Agency Confirmation from S&P.

 

(b)                                 Except
as permitted by this Indenture, the Issuer will not do business under any other
name other than the name set forth in the Articles and neither the Issuer nor
the Trustee shall acquire any Collateral after the Closing Date, sell,
transfer, exchange or otherwise dispose of Collateral, or enter into or engage
in any business with respect to any part of the Collateral.

 

(c)                                  The
Issuer will not permit Northstar OS IX, LLC to sell or otherwise transfer any
or all of the Ordinary Shares to any transferee unless (1) Rating Agency
Confirmation with respect to the transfer of such Ordinary Shares is obtained, (2) (i) such
Ordinary Share transferee is a “special purpose entity” formed in compliance
with then published Rating Agency criteria and (ii) Northstar OS IX, LLC
delivers to each Rating Agency an opinion of counsel of nationally recognized
standing to the affect that, upon the event of the

 

125

 

bankruptcy of any equity owner of the Ordinary Share
transferee, a court would not order the substantive consolidation of the assets
and liabilities of the Ordinary Share Transferee with those of such equity
owner or owners (which shall be in a form and, subject to such assumptions and
exceptions, customary of legal opinions of this type) or (3) such Ordinary
Share transferee is a charitable trust organized in the Cayman Islands formed
for the sole purpose of holding the Ordinary Shares that meets published Rating
Agency criteria with respect to the bankruptcy remoteness of Cayman Island
exempted companies formed for the purpose of issuing securities in
collateralized debt obligation transactions.

 

7.9.                              STATEMENT AS TO COMPLIANCE

 

On or before the Payment Date in June of each
calendar year commencing in 2008, or immediately upon the occurrence of a
Default in the fulfillment of an obligation under this Indenture, the Issuer
shall deliver to the Trustee, the Income Note Paying Agent, each Secured
Noteholder making a written request therefor, the Irish Paying Agent, each
Hedge Counterparty, the Collateral Manager and each Rating Agency a certificate
of the Issuer stating, as to each signer thereof, that:

 

(a)                                  the Officer executing
such certificate has conducted a review of the activities of the Issuer and of
the Issuer’s performance under this Indenture during the 12-month period ending
on December 31 of such year (or from the Closing Date until December 31,
2007, in the case of the first such certificate) based on reports and other
information delivered to such Officer by the Trustee, the Collateral Manager
and the Collateral Administrator and a review of the Accountant’s Reports
prepared pursuant to Section 10.16 and such other materials as such
Officer deems appropriate; and

 

(b)                                 to the best of knowledge
of the Issuer, based on such review, the Issuer has fulfilled all of its
material obligations under this Indenture throughout the period, or, if there
has been a Default in the fulfillment of any such obligation, specifying each
such Default known to such Officer and the nature and status thereof, including
actions undertaken to remedy the same.

 

7.10.                        ISSUER MAY CONSOLIDATE, ETC., ONLY ON
CERTAIN TERMS

 

(a)                                  The Issuer shall not
consolidate or merge with or into any other Person or transfer or convey all or
substantially all of its assets to any Person, unless permitted by Cayman
Islands law and unless:

 

(1)           the Issuer shall be the
surviving entity, or the Person (if other than the Issuer) formed by such
consolidation or into which the Issuer is merged or to which all or
substantially all of the assets of the Issuer are transferred or conveyed shall
be an exempted limited liability company organized and existing under the laws
of the Cayman Islands or such other jurisdiction outside the United States as
may be approved by a Majority of each Class and each Hedge Counterparty,
and shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, each Hedge Counterparty and each Secured Noteholder,
the due and punctual payment of the principal of and interest on all Secured
Notes and the performance of every covenant of this Indenture and any Hedge
Agreement on the part of the Issuer to be performed or observed, all as
provided herein;

 

(2)           each Rating Agency and
each Hedge Counterparty shall have received written notification from the
Issuer of such consolidation, merger, transfer or conveyance

 

126

 

and the identity of the surviving entity and
a Rating Agency Confirmation shall have been obtained with respect to the
consummation of such transaction;

 

(3)           if the Issuer is not
the surviving entity, the Person formed by such consolidation or into which the
Issuer is
merged or to which all or substantially all of the assets of the Issuer are
transferred or conveyed shall have agreed with the Trustee (A) to observe
the same legal requirements for the recognition of such formed or surviving
entity as a legal entity separate and apart from any of its Affiliates as are
applicable to the Issuer with respect to its Affiliates and (B) not to
consolidate or merge with or into any other Person or transfer or convey the
Collateral or all or substantially all of its assets to any other Person except
in accordance with the provisions of this Section 7.10;

 

(4)           if the Issuer is not
the surviving entity, the Person formed by such consolidation or into which the
Issuer is merged or to which all or substantially all of the assets of the
Issuer are transferred or conveyed shall have delivered to the Trustee, each
Counterparty and each Rating Agency an Officer’s certificate and an Opinion of
Counsel each stating that such Person shall be duly organized, validly existing
and (if applicable) in good standing in the jurisdiction in which such Person
is organized; that such Person has sufficient power and authority to assume the
obligations set forth in Section 7.10(a)(1) above and to execute and
deliver an indenture supplemental hereto for the purpose of assuming such
obligations; that such Person has duly authorized the execution, delivery and
performance of an indenture supplemental hereto for the purpose of assuming
such obligations and that such supplemental indenture is a valid, legal and
binding obligation of such Person, enforceable in accordance with its terms,
subject only to bankruptcy, reorganization, insolvency, moratorium and other
laws affecting the enforcement of creditors’ rights generally and to general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law); that, immediately following the event
which causes such Person to become the successor to the Issuer, (A) such
Person has good and marketable title, free and clear of any lien, security
interest or charge, other than the lien and security interest of this
Indenture, to the Collateral; (B) the Trustee continues to have a valid perfected
first priority security interest in the Collateral securing all of the Secured
Notes; (C) such Person has received an Opinion of Counsel to the effect
that such Person will not be subject to net income tax or be treated as engaged
in a trade or business within the United States for U.S. federal income tax
purposes and such other matters as the Trustee, any Hedge Counterparty or any
Secured Noteholder may reasonably require;

 

(5)           immediately after
giving effect to such transaction, no Default shall have occurred and be
continuing;

 

(6)           the Issuer shall have
delivered to the Trustee, each Hedge Counterparty and each Secured Noteholder
an Officer’s certificate and an Opinion of Counsel each stating that such
consolidation, merger, transfer or conveyance and such supplemental indenture
comply with this Article VII, that all conditions precedent in this Article VII
provided for relating to such transaction have been complied with and that no
adverse tax consequences will result therefrom to any Secured Noteholder or any
Hedge Counterparty; and

 

127

 

(7)           the Issuer shall have delivered to the
Trustee an Opinion of Counsel stating that after giving effect to such
transaction, the Issuer will not be required to register as an investment
company under the Investment Company Act.

 

7.11.        SUCCESSOR SUBSTITUTED

 

Upon any consolidation or merger, or transfer or conveyance of all or
substantially all of the assets of the Issuer or the Issuer, in accordance with
Section 7.10, the Person formed by or surviving such consolidation or
merger (if other than the Issuer), or, the Person to which such transfer or
conveyance is made, shall succeed to, and be substituted for, and may exercise
every right and power of, and shall be bound by each obligation or covenant of,
the Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein. In the event of any such consolidation, merger,
transfer or conveyance, the Person named as the “Issuer” in the first paragraph
of this Indenture or any successor which shall theretofore have become such in
the manner prescribed in this Article VII may be dissolved, wound-up and
liquidated at any time thereafter, and such Person thereafter shall be released
from its liabilities as obligor and maker on all the Secured Notes and from its
obligations under this Indenture.

 

7.12.        NO OTHER BUSINESS

 

The Issuer shall not engage in any business or activity other than (i) issuing
and selling the Secured Notes pursuant to this Indenture, (ii) issuing and
selling the Income Notes in accordance with the Income Note Paying Agency
Agreement (iii) issuing the Ordinary Shares pursuant to the Issuer
Charter, (iv) acquiring, pledging, holding and disposing of, solely for its own
account, Collateral Debt Securities, Eligible Investments and other Collateral
described in clauses (a) to (e) of the granting clauses hereof, and (v)
such other activities that are incidental thereto and connected therewith. The
Issuer shall not hold itself out as a derivatives dealer willing to enter into
either side of, or to offer to enter into, assume, offset, assign or otherwise
terminate positions in (i) interest rate, currency, equity or commodity
swaps or caps or (ii) derivative financial instruments (including options,
forward contracts, short positions and similar instruments) in any commodity,
currency, share of stock, partnership or trust, note, bond, debenture or other
evidence of indebtedness, swap or cap. The foregoing shall not limit the
ability of the Issuer to enter into Hedge Agreements. Furthermore, the Issuer
shall not hold itself out, whether through advertising or otherwise, as a bank,
insurance company or finance company, or as originating loans, lending funds,
making a market in loans or other assets or selling loans or other assets to
customers. The Issuer will not amend the Issuer Charter, if such amendment
would result in the rating (including any private or confidential rating) of
any Class of Secured Notes being reduced or withdrawn. The Issuer shall
not engage in any business or activity or hold any asset that would cause the
Issuer to be engaged in a U.S. trade or business for U.S. federal income tax
purposes, except as the result of ownership of Equity Securities or securities
received in an Offer in accordance with the provisions of this Indenture.

 

7.13.        CHANGE OR WITHDRAWAL OF
RATING

 

The Issuer shall promptly notify the Trustee in writing and upon
receipt of such notice the Trustee shall promptly notify the Secured
Noteholders and each Hedge Counterparty if at any time the rating of any Class of
Secured Notes has been, or is known will be, changed or withdrawn.

 

7.14.        REPORTING

 

At any time when the Issuer is not subject to Section 13 or 15(d) of
the Exchange Act and is not exempt from reporting pursuant to Rule 12g3-2(b) under
the Exchange Act, upon the request of a Holder or Beneficial Owner of a Secured
Note or Income Note, the Issuer shall promptly furnish or cause to be furnished
Rule 144A Information to such Holder or Beneficial Owner, to a prospective
purchaser of such

 

128

 

Secured Note or Income Note designated by such Holder or Beneficial
Owner or to the Trustee for delivery to such Holder or Beneficial Owner or a
prospective purchaser designated by such Holder or Beneficial Owner, as the
case may be, in order to permit compliance by such Holder or Beneficial Owner
with Rule 144A in connection with the resale of such Secured Note or
Income Note by such Holder or Beneficial Owner.

 

7.15.        SECURED NOTE CALCULATION AGENT

 

(a)           The Issuer hereby
agrees that for so long as any of the Secured Notes remain Outstanding the
Issuer will at all times cause there to be an agent appointed to calculate
LIBOR in respect of each Interest Period in accordance with the terms of
Schedule B (the Secured Note Calculation Agent),  which agent shall be a financial
institution, subject to supervision or examination by federal or state
authority, having a rating of at least “BBB+” by S&P and having an office
within the United States. Whenever the Secured Note Calculation Agent is required
to act or exercise judgment, it will do so in good faith and in a commercially
reasonable manner. The Issuer has initially appointed the Trustee as Secured
Note Calculation Agent for purposes of determining LIBOR for each Interest
Period. If the Secured Note Calculation Agent is unable or unwilling to act as
such or is removed by the Issuer, the Issuer (after consultation with the
Collateral Manager) will propose a leading bank which is engaged in
transactions in Dollar deposits in the international Eurodollar market and
which does not control or is not controlled by or under common control with the
Issuer or any of its Affiliates as a replacement Secured Note Calculation Agent
for approval by Holders of not less than 662/3% of
the aggregate principal amount of the Outstanding Income Notes. The Secured
Note Calculation Agent may not resign its duties without a successor having
been duly appointed.

 

(b)           As soon as possible
after 11:00 a.m. (London time) on each LIBOR Calculation Date, but in no
event later than 11:00 a.m. (New York time) on the Business Day
immediately following each LIBOR Calculation Date, the Secured Note Calculation
Agent will calculate LIBOR for the next Interest Period and the Periodic
Interest payable for such Interest Period in respect of the Outstanding Secured
Notes, rounded to the nearest cent, with half a cent being rounded upward, on
the related Payment Date to be given to the Issuer, the Trustee, the Collateral
Manager, the Depositary, Euroclear, Clearstream, the Note Paying Agent and the
Irish Paying Agent. The Secured Note Calculation Agent will also specify to the
Issuer and the Collateral Manager the quotations upon which the Applicable
Periodic Interest Rate for each Class of Secured Notes is based, and in
any event the Secured Note Calculation Agent must notify the Issuer and the
Collateral Manager before 5:00 p.m. (New York time) on each applicable
LIBOR Calculation Date if it has not determined and is not in the process of
determining LIBOR with respect to the Secured Notes and the Periodic Interest
with respect to each Class of Secured Notes, together with its reasons for
the delay. The Irish Paying Agent also will cause the Applicable Periodic
Interest Rate for each Interest Period for each Class of Secured Notes
listed on the Irish Stock Exchange, the amount of interest payable in respect
of each Class of Secured Notes listed on the Irish Stock Exchange and each
Payment Date to be delivered to the Company Announcements Office of the Irish
Stock Exchange as soon as possible after the Irish Paying Agent has received
notice from the Secured Note Calculation Agent of such Applicable Periodic
Interest Rates and amounts.

 

129

 

7.16.        LISTING

 

The Issuer will use its commercially reasonable efforts to obtain and
maintain the listing of each Class of Secured Notes on the Irish Stock
Exchange.

 

7.17.        AMENDMENT OF CERTAIN DOCUMENTS

 

The Issuer will not agree to any amendment to or modification of its
Articles, the Corporate Services Agreement, the Collateral Management
Agreement, the Account Control Agreement or any Hedge Agreement at any time
without obtaining Rating Agency Confirmation with respect to any such
modification and will not amend, modify or waive any “non-petition” or “limited
recourse” provisions of any Transaction Document to which it is a party without
obtaining a Rating Agency Confirmation with respect to such modification. The
Trustee shall provide each of the Hedge Counterparties, the Holders of Secured
Notes of the Controlling Class, the Collateral Manager and the Rating Agencies
with a copy of any such amendment or modification at least ten Business Days
before effecting such amendment or modification. Prior to entering into any
waiver in respect of the any of the foregoing agreements, the Issuer will
provide to each Rating Agency and the Trustee with written notice of such
waiver.

 

7.18.        PURCHASE OF COLLATERAL;
INFORMATION REGARDING COLLATERAL; RATING CONFIRMATION

 

(a)           The Issuer will use
reasonable efforts to purchase or enter into binding agreements to purchase, on
or before the Effective Date, Collateral Debt Securities having an aggregate
Principal Balance, together with the aggregate Principal Balance of all
Eligible Investments purchased with Collateral Principal Collections, of not
less than U.S.$800,000,000 (assuming, for these purposes, settlement (in
accordance with customary settlement procedures in the relevant markets) of all
agreements entered into by the Issuer to acquire Collateral Debt Securities
scheduled to settle on or following the Effective Date).

 

(b)           The Issuer (or the
Collateral Manager on behalf of the Issuer) shall cause to be delivered to the
Trustee on the Effective Date an amended Schedule A listing all Collateral Debt
Securities purchased on or before the Effective Date, which schedule will
supersede any prior Schedule A delivered to the Trustee.

 

(c)           The Collateral Manager,
on behalf of the Issuer, shall give prompt written notice to S&P of any
purchase of a Collateral Debt Security which includes, as one of its rights or
counterparts, the right to distributions from excess proceeds after required
fixed payments are made on other classes of securities.

 

(d)           On or before the
Effective Date, the Issuer (or the Collateral Manager on its behalf) shall
deliver an Officer’s certificate to the Trustee, the Holders of Secured Notes
of the Controlling Class, each Hedge Counterparty and each Rating Agency (in
addition to any such Officer’s Certificate, the information set forth in such
Officer’s Certificate shall also be provided to S&P in a form that complies
with and includes the information required by S&P’s Preferred Format)
demonstrating compliance by the Issuer with its obligations under Section 7.18(a) and
satisfaction of each applicable Collateral Quality Test (with the exception of
S&P’s CDO Monitor Test), each applicable Collateral Concentration
Limitation and each applicable Coverage Test or, if on the Effective Date, the
Issuer shall be in default in the performance of its obligations under this Section 7.18
or any of the Collateral Quality Tests (with the exception of S&P’s CDO
Monitor Test), the Collateral

 

130

 

Concentration Limitations or the specified
Coverage Tests shall fail to be satisfied, the Issuer (or the Collateral
Manager on its behalf) shall deliver an Officer’s certificate to the Trustee,
the Holders of Secured Notes of the Controlling Class, each Hedge Counterparty
and each Rating Agency specifying the details of such default or failure; provided that the
failure to satisfy any of the Collateral Quality Tests, Collateral
Concentration Limitations or Coverage Tests does not constitute an Event of
Default but such failure may result in a Rating Confirmation Failure.

 

(e)           No later than 15
Business Days after the Effective Date, the Issuer (or the Collateral Manager
on its behalf) shall deliver or cause to be delivered to the Trustee an
accountant’s certificate (the Accountant’s Certificate)  (i) confirming
the information with respect to each Collateral Debt Security set forth on the
amended schedule delivered pursuant to Section 7.18(b) as of the
Effective Date, and the information provided by the Issuer with respect to
every other asset included in the Collateral, (ii) certifying as of the
Effective Date the procedures applied and their associated findings with
respect to the Coverage Tests, the Collateral Concentration Limitations and the
Collateral Quality Tests and (iii) specifying the procedures undertaken to
review data and computations relating to the foregoing clause (ii) held by
the Issuer on the Effective Date.

 

(f)            The Issuer
(or the Collateral Manager on its behalf) shall request in writing that each of
the Rating Agencies confirm in writing (a Rating Confirmation),  within
30 Business Days after the Effective Date (or, in the case of each Rating
Agency, any such later date (in no event longer than 60 Business Days after the
Effective Date) that shall be acceptable to such Rating Agency), the ratings
(including any private or confidential ratings) assigned by it on the Closing
Date to the Secured Notes. In the event that the Issuer fails to obtain a
Rating Confirmation within such time period (a Rating Confirmation Failure),  Collateral
Interest Collections and, to the extent Collateral Interest Collections are
insufficient therefor, Collateral Principal Collections shall be applied on the
next Payment Date and any succeeding Payment Dates, as applicable as provided
in Section 11.1 to the extent necessary for each of the Rating Agencies to
provide a Rating Confirmation.

 

(g)           Notwithstanding the
foregoing, if the Issuer (or the Collateral Manager on its behalf) has requested
in writing that each of the Rating Agencies provide Rating Confirmation within
five Business Days after the Effective Date and obtained confirmation by
electronic mail, facsimile or telephone that each of the Rating Agencies has
received such request and has promptly delivered to the applicable Rating
Agency any additional information reasonably requested by such Rating Agency,
and any of the Rating Agencies fails to respond to such request within 30
Business Days after the Effective Date, then such failure to respond will not
immediately constitute a Rating Confirmation Failure so long as (x) the
CDS Principal Balance equals at least U.S.$800,000,000 and (y) the
Collateral Quality Tests are satisfied, but such failure to respond shall not
constitute receipt of Rating Confirmation; provided that Rating Confirmation Failure
will thereafter occur immediately upon receipt from any Rating Agency of an
actual notice of Rating Confirmation Failure. If such response is not received
from any Rating Agency within 60 Business Days after the Effective Date, the
Issuer (or the Collateral Manager on behalf of the Issuer) may repeat such
request within 60 Business Days thereafter. In addition, if any rating assigned
as of the Closing Date to any Class of Notes has not been confirmed, or is
reduced or withdrawn, within 30 Business Days after the Effective Date by any
Rating Agency, the Collateral Manager may, on behalf of the Issuer, within 10
Business Days thereafter provide to such Rating Agency a proposal (a Proposal)  with
respect to

 

131

 

the Collateral Debt Securities. If such Rating Agency accepts the
Proposal, a Rating Confirmation shall be deemed to have occurred with respect
to such Rating Agency, so long as the Collateral Manager meets the conditions
set forth in such Proposal within the time requirements set forth in such Proposal.
If the Collateral Manager, on behalf of the Issuer, elects not to submit a
Proposal, if a Proposal is submitted but not accepted or if the Collateral
Manager fails to meet the conditions set forth in the Proposal within the time
requirements set forth in such Proposal, then a Rating Confirmation Failure
shall be deemed to have occurred.

 

(h)           No later than 15
Business Days following the Effective Date, the Trustee shall (i) run the
S&P CDO Monitor and report to S&P whether or not the S&P CDO
Monitor Test has been satisfied and (ii) report the S&P Scenario
Default Rate and the S&P Break-Even Default Rate for each Class of
Notes.

 

ARTICLE VIII

 

SUPPLEMENTAL INDENTURES

 

8.1.          SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF SECURED NOTEHOLDERS

 

Without the consent of the Holders of any Secured Notes, any Hedge
Counterparty (except as specified below) or the Income Noteholders, but with
Rating Agency Confirmation for so long as any Class of Notes are rated as
such time by any Rating Agency, the Issuer, when authorized by Board
Resolutions, and the Trustee, at any time and from time to time subject to the
requirement provided below in this Section 8.1 with respect to the ratings
of the Secured Notes and subject to Section 8.3, may enter into one or
more indentures supplemental hereto, in form satisfactory to the Trustee, for
certain limited purposes including, inter
alia,  to:

 

(a)           evidence the succession
of another Person to the Issuer and the assumption by any such successor Person
of the covenants of the Issuer herein and in the Secured Notes pursuant to Section 7.10
or 7.11;

 

(b)           add to the covenants of
the Issuer or the Trustee for the benefit of the Holders of all of the Secured
Notes;

 

(c)           pledge any additional
property to the Trustee;

 

(d)           add to the conditions,
limitations or restrictions on the authorized amount, terms and purposes of the
issue, authentication and delivery of the Secured Notes;

 

(e)           effect the appointment
of a successor;

 

(f)            reduce the permitted
minimum denomination of the Secured Notes;

 

(g)           take any action
necessary or advisable to prevent the Issuer, any Note Paying Agent or the
Trustee from being subject to withholding or other taxes, fees or assessments,
to prevent the Issuer (without adverse effect to the Issuer) from failing to
qualify as a Qualified REIT Subsidiary or to prevent the Issuer from being
treated as engaged in a U.S. trade or business or otherwise being subjected to
U.S. federal, state or local income

 

132

 

tax on a net income tax basis; provided, further, that such action will not cause the Noteholders to
experience any material change to the timing, character or source of income
from the Notes and will not be considered a significant modification resulting
in an exchange for purposes of section 1.1001-3 of the U.S. Treasury
regulations;

 

(h)           modify the restrictions
on and procedures for resale and other transfer of the Secured Notes in
accordance with any change in any applicable law or regulation (or the
interpretation thereof) or to enable the Issuer to rely upon any less
restrictive exemption from registration under the Securities Act or the
Investment Company Act (in addition to that provided under Section 3(c)(7) thereunder)
or to remove restrictions on resale and transfer to the extent not required
thereunder;

 

(i)            grant, convey, transfer,
assign, mortgage or pledge any property to or with the Trustee for the benefit
of the Secured Parties; 

 

(j)            correct or amplify the
description of any property at any time subject to the lien of this Indenture,
or to better assure, convey and confirm unto the Trustee any property subject
or required to be subjected to the lien of this Indenture (including any and
all actions necessary or desirable as a result of changes in law or regulations)
or to subject to the lien of this Indenture any additional property;

 

(k)           make any change required
by the stock exchange on which any Class of Secured Note is listed, if
any, in order to permit or maintain such listing;

 

(l)            correct, amend, cure any
manifest error, inconsistency, defect or ambiguity or correct any typographical
error in this Indenture;

 

(m)          modify this Indenture to
conform the terms herein to the terms set forth in the then current Offering Circular;

 

(n)           modify any provision
(other than in respect of a Reserved Matter), with respect to restrictions upon
the Issuer’s rights to acquire and dispose of Collateral Debt Securities and
other assets, that the Issuer or the Collateral Manager determines to be
necessary or desirable in order for the Issuer to maintain any desired
exemption from registration of the Issuer under the Investment Company Act or
of the Notes under the Securities Act;

 

(o)           with the consent of the
Collateral Manager, modify the calculation of the Collateral Quality Tests and the
definitions applicable thereto to correspond with published or written changes
in the guidelines, methodology or standards established by the Rating Agencies;

 

(p)           with the consent of the
Collateral Manager and the consent of not less than a Majority of the aggregate
Outstanding principal amount of the Controlling Class, to modify the
calculation of the Coverage Tests and the definitions applicable thereto to
correspond with published or written changes in the guidelines, methodology or
standards established by the Rating Agencies; or

 

(q)           agree to any modification
of the Indenture or any other Transaction Document (other than in respect of a
Reserved Matter), which is, in the opinion of the Trustee, proper to make if,
in the opinion of the Trustee (based upon an Opinion of Counsel), such modification
will not have a material adverse effect on the interests of Holders of any Class or
Classes

 

133

 

 

of Notes or any Hedge Counterparty and which is of a formal, minor or
technical nature or is to correct a manifest error.

 

In addition, the Trustee may, but is not obligated to, without the
consent of the Secured Noteholders or of the Holders of any relevant Class or
Classes of Secured Notes, agree to any modification of any other Transaction
Document which is of a formal, minor or technical nature or is to correct a
manifest error and which is, in the opinion of the Trustee (based upon an
Opinion of Counsel as described in Section 8.3), proper to make; provided
such modification will not have a material adverse effect on the interests of
any Hedge Counterparty or the Holders of any Class or Classes of Notes.

 

The Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations which may be therein contained, but the Trustee shall not be
obligated to enter into any such supplemental indenture which affects the
Trustee’s own rights, duties, liabilities or indemnities under this Indenture
or otherwise, except to the extent required by law.

 

No modification to the Indenture will be effective until the Collateral
Manager has received written notice of such amendment and, if such amendment
affects the rights, obligations or compensation of the Collateral Manager, the
Collateral Manager has consented in writing to the terms of the proposed
amendment. In addition, the consent of any predecessor Collateral Manager will
be required to implement any such supplemental indenture that would change any
provision of the Indenture entitling such predecessor Collateral Manager to any
fee or other amount payable to it under the Indenture or to reduce or delay the
right of such predecessor to such payment.

 

Without obtaining the requisite consents of the applicable parties
pursuant to this Section 8.1, the Trustee shall not enter into any such
supplemental indenture if, as a result of such supplemental indenture, the
interests of any Hedge Counterparty, any Holder of Secured Notes or the Income
Notes would be materially and adversely affected thereby. In determining
whether or not the interests of any Holder of Secured Notes or Income Notes
will be materially and adversely affected, the Trustee shall be entitled to
rely upon an Opinion of Counsel or a certificate of the Issuer or the
Collateral Manager as to whether the interests of any Holder of Secured Notes
or of Income Notes would be materially and adversely affected by any such
supplemental indenture (after giving notice of such change to the Income Note
Paying Agent). The Collateral Manager will not be bound by any supplemental
indenture that affects the obligations of the Collateral Manager unless the
Collateral Manager has consented thereto in writing (which consent will not be
unreasonably withheld). The Issuer will not consent to any supplemental
indenture that would have a material adverse effect on any Hedge Counterparty
without the consent of such Hedge Counterparty (which shall not be unreasonably
withheld, conditioned or delayed).

 

At the cost of the Issuer, the Trustee shall provide to the Secured
Noteholders, the Collateral Manager, the Income Note Paying Agent, each Hedge
Counterparty and each Rating Agency a copy of any proposed supplemental
indenture at least ten days prior to the execution thereof by the Trustee and,
for so long as any Secured Notes are Outstanding, request a Rating Agency
Confirmation from each Rating Agency with respect to such supplemental
indenture. As soon as practicable after the execution by the Trustee and the Issuer
of any such supplemental indenture, the Trustee shall provide to the Secured
Noteholders, the Collateral Manager, the Income Note Paying Agent, each Hedge
Counterparty and each Rating Agency a copy of the executed supplemental
indenture.

 

For so long as any Secured Notes are Outstanding and rated by either of
the Rating Agencies, no supplemental indenture pursuant to this Section 8.1,
shall be effective unless and until a Rating Agency Confirmation from each
Rating Agency has been received.

 

134

 

8.2.                              SUPPLEMENTAL
INDENTURES WITH CONSENT OF SECURED NOTEHOLDERS

 

Except as provided below, with
the prior written consent of each Hedge Counterparty (but only if the right of
such Hedge Counterparty to payments in accordance with the Priority of Payments
is adversely affected), the Holders of not less than a majority of the
aggregate principal amount of the Outstanding Secured Notes of each
Class (in principal amount) adversely affected thereby, receipt of Rating
Agency Confirmation and the written consent of Holders of not less than 662/3% of the aggregate principal amount of
the Outstanding Income Notes (if materially and adversely affected thereby),
the Trustee and the Issuer may execute a supplemental indenture to add
provisions to, or change in any manner or eliminate any provisions of, the
Indenture or modify in any manner the rights of the Holders of the Secured
Notes of such Class or of the Income Notes or the Hedge Counterparty under
the Indenture. Unless notified (after giving 30 Business Days’ notice of such
amendment to the holders of each Class of Notes, the Holders of the Income
Notes and each Hedge Counterparty) by holders of a majority in Aggregate
Outstanding Amount of the Notes of any Class that such Class of Notes
will be materially and adversely affected by the proposed supplemental
indenture, the interests of such Class will be deemed not to be materially
and adversely affected by such proposed supplemental indenture.

 

With the
written consent of the Holders of not less than 75% of the then Aggregate
Outstanding Amount of each adversely affected Class of Secured Notes and
the written consent of 75% of the Holders of the aggregate principal amount of
the Outstanding Income Notes if materially and adversely affected thereby
(which consent shall be evidenced by an Officer’s certificate of the Issuer
certifying that such consent has been obtained), Rating Agency Confirmation and
the written consent of each Hedge Counterparty (which shall be required only if
the right of such Hedge Counterparty to payments in accordance with the
Priority of Payments is adversely affected), the Trustee and Issuer may,
subject to Section 8.3, enter into one or more indentures supplemental
hereto in order to:

 

(a)                                  change
the applicable Stated Maturity Date of the Secured Notes or scheduled
redemption of the principal of or the due date of any installment of interest
on the Secured Notes, reduce the principal amount thereof or the rate of
interest thereon, or the Redemption Price with respect thereto, or change the earliest
date on which Secured Notes may be redeemed, change the provisions of the
Indenture relating to the application of proceeds of any Collateral to the
payment of principal of or interest on the Secured Notes or change any place
where, or the coin or currency in which, Secured Notes or the principal thereof
or interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity Date thereof
(or, in the case of redemption, on or after the Redemption Date);

 

(b)                                 reduce
the percentage, in principal amount, of Holders of Secured Notes of each Class,
or the percentage of Income Noteholders, whose consent is required for the
authorization of any supplemental indenture or for any waiver of compliance
with certain provisions of the Indenture or certain defaults thereunder or
their consequences;

 

(c)                                  impair
or adversely affect the Collateral other than as permitted by the Indenture;

 

(d)                                 permit
the creation of any security interest ranking prior to or on a parity with the
security interest of the Indenture with respect to any part of the Collateral
or terminate such security interest on any property at any time subject thereto
(other than in accordance with the Indenture) or deprive the Holder of any
Secured Note or any Hedge Counterparty of the security afforded by the security
interest of the Indenture;

 

135

 

(e)                                  reduce
the percentage of the aggregate principal amount of Holders of Secured Notes of
each Class whose consent is required to request the Trustee to preserve
the Collateral or rescind the Trustee’s election to preserve the Collateral
pursuant to Section 5.5 or to sell or liquidate the Collateral pursuant to
Section 5.4 or 5.5;

 

(f)                                    modify
any of the provisions of this Section 8.2, except to increase the
percentage of the aggregate principal amount of Outstanding Secured Notes of
each Class whose Holders’ consent is required for any such action or to
provide that other provisions of the Indenture cannot be modified or waived
without the written consent of the Holders of 75% of the then Aggregate
Outstanding Amount of each affected Class of Secured Notes Outstanding or
each Hedge Counterparty;

 

(g)                                 modify
the definition of the term “Outstanding” or Section 11.1;

 

(h)                                 modify
any of the provisions of the Indenture in such a manner as to affect the
calculation of the amount of any payment of interest or principal of any
Secured Note on any Payment Date or to affect the right of the Holders of
Secured Notes or any Hedge Counterparty to the benefit of any provisions for
the redemption of such Secured Notes contained therein;

 

(i)                                     modify
provisions related to the bankruptcy or insolvency of the Issuer; or

 

(j)                                     modify
provisions stating that the obligations of the Issuer are limited recourse
obligations of the Issuer payable solely from the Collateral in accordance with
the terms of the Indenture (Section 8.2(a) through
(j) collectively, the Reserved Matters).

 

The Trustee is
hereby authorized to join in the execution of any such supplemental indenture
and to make any further appropriate agreements and stipulations which may be
therein contained, but the Trustee shall not be obligated to enter into any
such supplemental indenture which affects the Trustee’s own rights, duties,
liabilities or indemnities under this Indenture or otherwise, except to the
extent required by law.

 

Not later than
15 Business Days prior to the execution of any proposed supplemental indenture
pursuant to this Section 8.2, the Trustee, at the expense of the Issuer,
shall mail to the Secured Noteholders, Income Note Paying Agent, each Hedge
Counterparty, the Collateral Manager and each Rating Agency a copy of such
proposed supplemental indenture (or a description of the substance thereof) and
shall request Rating Agency Confirmation with respect to such supplemental
indenture. If any Class of Secured Notes is then rated by any Rating
Agency, the Trustee shall not enter into any such supplemental indenture if, as
a result of such supplemental indenture, Rating Agency Confirmation would not
be received with respect to such supplemental indenture, unless each Holder of
Secured Notes of each Class whose rating will be reduced or withdrawn has,
after notice that the proposed supplemental indenture would result in such
reduction or withdrawal of the rating of the Class of Secured Notes held
by such Holder, consented to such supplemental indenture. Without having
obtained the consent of the applicable parties pursuant to this Section 8.2,
the Trustee shall not enter into any such supplemental indenture if, as a
result of such supplemental indenture, the interests of any Hedge Counterparty,
any Holder of Secured Notes or Income Noteholders would be materially and
adversely affected thereby. Unless notified by (i) the Holders of a
Majority of the then Aggregate Outstanding Amount of any Class of Secured
Notes that such Class will be materially and adversely affected or
(ii) the Holders of a Majority of aggregate principal amount of the Income
Notes that the Income Noteholders will be materially and adversely affected,
the Trustee shall be entitled to rely upon an Opinion of Counsel or certificate
of the Issuer or the Collateral Manager as to whether the interests of any
Holder of Secured

 

136

 

Notes or of the Income
Noteholders would be materially and adversely affected by any such supplemental
indenture (after giving notice of such change to the Income Note Paying Agent).

 

It shall not
be necessary for any Act of Secured Noteholders or any consent of Income
Noteholders under this Section 8.2 to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such Act or
consent shall approve the substance thereof.

 

Promptly after
the execution by the Issuer and the Trustee of any supplemental indenture
pursuant to this Section 8.2, the Trustee, at the expense of the Issuer,
shall mail or make available to the Secured Noteholders, the Income Note Paying
Agent (for forwarding to the Income Noteholders), each Hedge Counterparty, the
Collateral Manager and each Rating Agency a copy thereof. Any failure of the
Trustee to publish or mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture. In addition, the Issuer shall cause to be delivered a copy of the
executed supplemental indenture to the Repository for posting on the Repository
in the manner described in Section 14.3.

 

8.3.                              EXECUTION
OF SUPPLEMENTAL INDENTURES

 

In executing
or accepting the additional trusts created by any supplemental indenture
permitted by this Article VIII or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and (subject
to Sections 6.1 and 6.3) shall be fully protected in relying in good faith upon
an Opinion of Counsel (which may rely on an Officer’s certificate of the Issuer
or Collateral Manager), stating that the execution of such supplemental
indenture is authorized, or permitted by this Indenture and that all conditions
precedent thereto have been complied with. Any such Opinion of Counsel may be
supported as to factual (including financial and capital markets) matters by
such relevant certificates and other documents as may be necessary or advisable
in the judgment of counsel delivering such Opinion of Counsel. The Trustee may,
but shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee’s own rights, duties or indemnities under this Indenture or
otherwise. Such supplemental indenture will not be binding on the Collateral
Manager to the extent that it reduces the rights or increases the obligations
of the Collateral Manager, unless such supplemental indenture is consented to
in writing by the Collateral Manager.

 

8.4.                              EFFECT
OF SUPPLEMENTAL INDENTURES

 

Upon the
execution of any supplemental indenture under this Article VIII, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Secured Notes theretofore and thereafter authenticated and delivered
hereunder shall be bound thereby.

 

Notwithstanding
anything to the contrary herein, no amendment or modification of or supplement
to this Indenture will be effective until the Collateral Manager has received
written notice of such amendment, modification or supplement. If such
amendment, modification or supplement affects the rights, obligations or
compensation of the Collateral Manager, the Collateral Manager shall obtain the
consent of any predecessor Collateral Manager with respect to any such
amendment, modification or supplemental that would change any provision of this
Indenture entitling such predecessor Collateral Manager to any fee or other
amount payable to it under this Indenture or to reduce or delay the right of
such predecessor to such payments.

 

137

 

8.5.                              REFERENCE IN SECURED NOTES TO
SUPPLEMENTAL INDENTURES

 

Secured Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article VIII may, and if required by the Trustee shall,
bear a notation in form approved by the Trustee as to any matter provided for
in such supplemental indenture. If the Issuer shall so determine, new Secured
Notes, so modified as to conform in the opinion of the Trustee and the Issuer
to any such supplemental indenture, may be prepared and executed by the Issuer
and authenticated and delivered by the Trustee in exchange for Outstanding
Secured Notes.

 

ARTICLE IX

 

REDEMPTION OF SECURED NOTES

 

9.1.                              REDEMPTION OF SECURED NOTES

 

The Secured
Notes will be subject to redemption in whole but not in part at their
respective Redemption Prices, in each case, in accordance with the procedures,
and subject to the satisfaction of the conditions, in Section 9.2 below,
in the following circumstances:

 

(a)                                  on
or after the Payment Date occurring in June 2010 and continuing until the
Stated Maturity Date (the Call Period),  at
the direction of the Holders of not less than 662/3%
of the aggregate principal amount of the Outstanding Income Notes (an Optional
Redemption);

 

(b)                                 on
any Payment Date following the occurrence and during the continuation of a Tax
Event, (i) at the direction of the Holders of not less than 662/3% of the aggregate principal amount of
the Outstanding Income Notes or (ii) subject to the satisfaction of the
Income Note Redemption Approval Condition, at the direction of the Holders of a
Majority of the then Aggregate Outstanding Amount of the Controlling
Class (such a redemption, a Tax Redemption);  and

 

(c)                                  automatically
and without any direction by any Person, (i) if the Notes have not been
redeemed in full on or after the Payment Date occurring in February 2019,
and (ii) if any of the conditions set forth in Sections 9.2(a) and
(b) below have not been met or if the highest bidder fails to pay the
purchase price within six Business Days following such Payment Date, the
Payment Date thereafter, unless the Notes are redeemed in full prior to the
next Auction Date (such a redemption, an Auction Call Redemption).

 

9.2.                              REDEMPTION PROCEDURES;
AUCTION

 

In connection
with any Redemption, the Trustee and the Collateral Manager will, in accordance
with the procedures set forth in Schedule E (the Auction
Procedures)  and at the expense of the Issuer,
conduct an auction (an Auction)  of the Collateral Debt Securities
included in the Collateral on a date (each such date, an Auction
Date)  occurring no later than ten Business
Days prior to the Payment Date occurring in February 2019, or if the
conditions for an Auction Call Redemption Date set forth below are not met on
such date, ten Business Days prior to the Payment Date occurring in
February 2019 of the following year (or on such earlier Payment Date
following the Payment Date occurring in February 2019 as determined by the
Collateral Manager in its sole discretion. Any of the Placement Agents, the
Collateral Manager, the Income Noteholders, the Trustee or their respective
Affiliates may, but will not be required to, bid at the Auction.

 

138

 

(a)                                  Any
Redemption will be subject to the satisfaction of each of the following
conditions:

 

(1)                                  the
related Auction has been conducted in accordance with the Auction Procedures;

 

(2)                                  the
Trustee has received bids for the Collateral Debt Securities (or for each of
the related Subpools) from at least two Qualified Bidders (including the
winning Qualified Bidder) identified on a list of qualified bidders provided by
the Collateral Manager to the Trustee;

 

(3)                                  the
Collateral Manager certifies that the Highest Auction Price would result in the
Sale Proceeds from the Collateral Debt Securities (or the related Subpools) for
a purchase price (paid in cash) plus the Balance of all Eligible Investments and
cash held by the Issuer plus any termination payments payable by a Hedge Counterparty
to the Issuer (in excess of any amounts payable by the Issuer to a Hedge
Counterparty) resulting from the termination of any Hedge Agreement pursuant to
the Redemption being at least equal to the sum of (i) the aggregate
Redemption Prices of the Notes plus (ii) any accrued but unpaid fees and
expenses of the Issuer pursuant to Section 11.1(b)(1), (24) and (25) (including
any termination payments payable by the Issuer resulting from the termination
of any Hedge Agreement pursuant to the Redemption) plus (iii) (a) in connection with
a Tax Redemption at the direction of the Controlling Class and (b) an
Auction Call Redemption, any additional amounts necessary to satisfy the Income
Note Redemption Approval Condition; and

 

(4)                                  the
bidder(s) who offered the Highest Auction Price for the Collateral Debt
Securities (or the related Subpools) enter(s) into a written agreement
with the Issuer (which the Issuer will execute if the conditions set forth
above and in the Indenture are satisfied, which execution will constitute
certification by the Issuer that such conditions have been satisfied) that
obligates the highest bidder(s) (or the highest bidder for each Subpool)
to purchase all of the Collateral Debt Securities (or the relevant Subpool) and
provides for payment in full (in Cash) of the purchase price to the Trustee on
or prior to the sixth Business Day following the relevant Auction Date.

 

(b)                                 In
addition, any Optional Redemption requires the occurrence of the following:

 

(1)                                  at
least four Business Days before the scheduled Redemption Date, the Collateral
Manager has furnished to the Trustee evidence, in form satisfactory to the
Trustee, that the Collateral Manager on behalf of the Issuer has entered into a
binding agreement or agreements with an institution or institutions (or
guarantor or guarantors of the obligations): (A) with regard to which
Rating Agency Confirmation has been received; or (B) whose short-term
unsecured debt obligations (other than such obligations whose rating is based
on the credit of a person other than such institution) have a credit rating
from Moody’s, if rated by Moody’s, of “P-1,” Fitch of “F1 “ and of at least
“A-1” from S&P; and in each case, to sell, not later than the Business Day
immediately preceding the scheduled Redemption Date, in immediately available
funds, all or part of the Collateral Debt Securities at an aggregate purchase
price at least equal to an amount sufficient together with the balance of all
Eligible Investments maturing on or prior to the scheduled Redemption Date and
any termination payments

 

139

 

received by the Issuer under any Hedge Agreements on or prior to the
scheduled redemption date, to pay all administrative and other fees and
expenses, the Collateral Management Fee and any other amount payable under
Section 11.1(b)(1), (24) and (25), to pay any amounts payable under each
Hedge Agreement, if any, and to redeem all of the Notes on the scheduled
redemption date at the applicable Redemption Price; or

 

(2)                                  prior
to selling any Collateral Debt Securities or any other collateral, the
Collateral Manager certifies that the expected proceeds from such sale will, in
the aggregate, equal or exceed, in each case, the sum of (a) the
Redemption Prices of the Notes plus (b) all expenses of such redemption and
all other administrative fees and expenses payable on the related Redemption Date;

 

provided
that all of the conditions set forth in Section 9.2(a) and
(b) have been met, the Trustee will sell and transfer the Collateral Debt
Securities (or each related Subpool), without representation, warranty or
recourse, to the bidder(s) who offered the Highest Auction Price for the
Collateral Debt Securities (or the related Subpools) in accordance with and
upon completion of the Auction Procedures. If any of the conditions set forth
in Section 9.2(a) through (b) are not met, (i) the
Redemption will not occur on the Payment Date following the relevant Auction
Date, (ii) the Trustee shall give notice of the withdrawal of the
Redemption, (iii) subject to clause (iv) below, the Trustee shall
decline to consummate such sale and may not solicit any further bids or
otherwise negotiate any further sale of Collateral Debt Securities in relation
to such Auction and (iv) unless the Secured Notes are redeemed in full
prior to the next succeeding Auction Date, the Trustee shall conduct another
Auction on the next succeeding Auction Date.

 

The Trustee
will deposit the purchase price for the Collateral Debt Securities in the
Collection Account, and the Secured Notes and, to the extent funds are
available therefor, the Income Notes, will be redeemed on the Payment Date
immediately following the relevant Auction Date in the order of priorities set
forth in Section 11.1. Any Redemption will only be effected on a Payment
Date. Installments of principal and interest due on or prior to a Redemption
Date shall continue to be payable to the Holders of such Secured Notes as of
the relevant Record Dates according to their terms.

 

Neither the Issuer nor the
Trustee shall terminate any Hedge Agreement in conjunction with a Redemption
unless the Redemption Conditions are met and the notice of Redemption cannot be
withdrawn or rescinded pursuant to Section 9.5.

 

9.3.                              RECORD
DATE; NOTICE TO TRUSTEE OF REDEMPTION

 

(a)                                  The
Issuer shall set the Redemption Date and the applicable Record Date and give
notice thereof to the Trustee pursuant to Section 9.3(b) below and
shall issue an Issuer Request to the Trustee for the provision of the
information necessary for the Issuer to compile the Redemption Date Statement
in accordance with Section 10.14(b).

 

(b)                                 In
the event of any Redemption, the Issuer shall, at least 45 days (but not more
than 90 days) prior to the Redemption Date, notify the Trustee and each Hedge
Counterparty of such Redemption Date, the applicable Record Date, the principal
amount of each Class of Notes to be redeemed on such Redemption Date and
the Redemption Price of such Notes.

 

140

 

9.4.                              NOTICE OF REDEMPTION

 

Notice of
Redemption will be given by first-class mail, postage prepaid, mailed not less
than eight Business Days prior to the applicable Redemption Date, to each Hedge
Counterparty, each Rating Agency and each Holder of Secured Notes at such
Holder’s address in the Note Register maintained by the Note Registrar in
accordance with the provisions of this Indenture and to the Collateral Manager.
Secured Notes called for Redemption must be surrendered at the office of any
Note Paying Agent appointed pursuant to this Indenture in order to receive the
Redemption Price. The Issuer will also deliver notice of Redemption to the
Irish Paying Agent if and so long as any Class of Secured Notes to be
redeemed is listed on the Irish Stock Exchange.

 

All notices of
redemption shall state:

 

(a)                                  the
applicable Redemption Date;

 

(b)                                 the
applicable Record Date;

 

(c)                                  the
Redemption Price;

 

(d)                                 that
all the Notes of the relevant Class are being redeemed in full and that
interest on the applicable principal amount of Notes shall cease to accrue on
the date specified in the notice; and

 

(e)                                  the
place or places where such Secured Notes are to be surrendered for payment of
the Redemption Price, which shall be the office or agency of the Note Paying
Agent to be maintained as provided in Section 7.2.

 

Notice of
redemption shall be given by the Issuer or, at the Issuers’ request, by the
Trustee in the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note selected for
redemption shall not impair or affect the validity of the redemption of any
other Notes.

 

9.5.                              NOTICE OF WITHDRAWAL

 

With regard to
an Optional Redemption or a Tax Redemption, any notice of redemption may be
withdrawn by the Issuer up to the fourth Business Day prior to the Redemption
Date by written notice to the Trustee and the Collateral Manager only if the
Collateral Manager is unable to deliver such sale agreement or agreements or
certifications, as the case may be, in form satisfactory to the Trustee. With
regard to any Redemption, notice of any withdrawal pursuant to Section 9.2
shall be given by the Trustee to each Holder of Secured Notes at such Holder’s
address in the Note Register maintained by the Note Registrar by overnight
courier guaranteeing next day delivery (or second day delivery outside the
United States) sent not later than the third Business Day prior to such
Redemption Date. In addition, the Trustee will, if any Class of Secured
Notes to have been redeemed is listed on the Irish Stock Exchange, deliver a
notice of such withdrawal to the Irish Stock Exchange not less than three
Business Days prior to such Redemption Date.

 

9.6.                              SECURED NOTES PAYABLE ON
REDEMPTION DATE

 

Notice of
redemption having been given as aforesaid, the Notes so to be redeemed shall,
on the Redemption Date, become due and payable at the Redemption Price therein
specified, and from and after the Redemption Date (unless the Issuer shall
default in the payment of the Redemption Price) such

 

141

 

Secured Notes shall cease to
bear interest. Upon final payment on a Note to be redeemed, the Holder shall
present and surrender such Note at the place specified in the notice of
redemption on or prior to such Redemption Date; provided that if
there is delivered to the Issuer (i) such security or indemnity as may be
required by it to save it harmless and (ii) an undertaking thereafter to
surrender such Note, then, in the absence of notice to the Issuer that the
applicable Note has been acquired by a bona fide purchaser, such final payment
shall be made without presentation or surrender. Installments of interest on
Secured Notes of a Class so to be redeemed whose Stated Maturity Date is
on or prior to the Redemption Date shall be payable to the Holders of such
Secured Notes, or one or more predecessor Secured Notes, registered as such at
the close of business on the relevant Record Date according to the terms and
provisions of Section 2.6(e).

 

If any Secured
Note called for redemption shall not be paid upon surrender thereof for
redemption, the principal thereof shall, until paid, bear interest from the
Redemption Date at the Applicable Periodic Interest Rate for each successive
Interest Period the Secured Note remains Outstanding.

 

9.7.                              SPECIAL
AMORTIZATION

 

If the
Collateral Manager notifies the Trustee in writing that it has determined, in
its sole discretion, that investments in additional Collateral Debt Securities
would either be impractical or not beneficial, the amount of such Collateral
Principal Collections available pursuant to Section 11.1(b)(22)(a), as
determined by the Collateral Manager (the Special
Amortization Amount),  shall
be applied to the payment of principal on the Notes on the next succeeding
Payment Date (a Special Amortization)  in
accordance with Section 11.1(b)(22).

 

In order for
amounts to be applied for a Special Amortization on any Payment Date, the
Collateral Manager is required to deliver, to each of the Trustee and each
Rating Agency, advance written notice (which may be included in the related
Note Report) (each, a Special Amortization Notice)  specifying the identity and principal
amount of each Class of Secured Notes to be paid pursuant to such Special
Amortization and that the Collateral Manager has been unable to identify for
purchase by the Issuer Substitute Collateral Debt Securities that comply with
the Reinvestment Criteria and the other applicable requirements of the
Indenture.

 

On each
Payment Date on which a Special Amortization occurs, each related Hedge
Agreement, to the extent provided for therein, will be terminated in part in
accordance with the terms and conditions thereof, including compliance with any
applicable requirement that the Issuer receive Rating Agency Confirmation from
S&P and Moody’s, and any amounts due and payable pursuant to such Hedge
Agreement in connection with such termination thereof will be paid on such
Payment Date in accordance with the terms thereof subject to the Indenture.

 

ARTICLE X

 

ACCOUNTS, ACCOUNTINGS AND RELEASES

 

10.1.                        COLLECTION
OF FUNDS

 

(a)                                  Except as otherwise
expressly provided herein, the Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all funds and other property payable to
or receivable by the Trustee pursuant to this Indenture, including all payments
due on the Pledged Securities, in accordance with the terms and conditions of
such Pledged

 

142

 

Securities.
The Trustee shall segregate and hold all such funds and property received by it
in trust for the Secured Parties and shall apply such funds as provided in this
Indenture.

 

(b)                                 Each
of the parties hereto hereby agrees to cause the Custodian or any other
Securities Intermediary that holds any funds or other property for the Issuer
in an Account to agree with the parties hereto that (1) each Account is a
Securities Account in respect of which the Trustee is the Entitlement Holder,
(2) each Account is held by a financial institution that has a combined
capital and surplus of at least U.S.$250,000,000 and being subject to
supervision or examination by federal or state banking authority, (3) the
Cash, Securities and other property credited to any Account is to be treated as
a Financial Asset under Article 8 of the UCC and (4) the securities
intermediary’s  jurisdiction  (within
the meaning of Section 8-110 of the UCC) for that purpose will be the
State of New York. In no event may any Financial Asset held in any Account be
registered in the name of, payable to the order of, or specially Indorsed to,
the Issuer unless such Financial Asset has also been Indorsed in blank or to
the Custodian or other Securities Intermediary that holds such Financial Asset
in such Account. Each Account shall be held and maintained at an office located
in Chicago, Illinois.

 

10.2.                        GENERAL PROVISIONS
APPLICABLE TO ACCOUNTS

 

The Payment
Account, Collateral Account, Uninvested Proceeds Account, Collection Account
(including each Collateral Sub-Account therein), Expense Reserve Account, each
Hedge Counterparty Collateral Account, Discretionary Ramp-Up Interest Reserve
Account and Non-Monthly Pay Asset 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.

 

(a)                                  The
Trustee agrees to give the Issuer prompt notice (with a copy to the Hedge
Counterparty, the Collateral Manager, each Rating Agency and the Income Note
Paying Agent) if any Account or any funds on deposit therein, or otherwise
standing to the credit of any Account, shall become subject to any writ, order,
judgment, warrant of attachment, execution or similar process.

 

(b)                                 The
Collateral Manager shall direct the Trustee to invest and reinvest any funds on
deposit in any of the Accounts (other than the Payment Account). In the event
that the Collateral Manager has not delivered investment instructions to the
Trustee or after the occurrence of an Event of Default, the Trustee shall
invest and reinvest any funds on deposit in any Account (other than the Payment
Account) as fully as practicable in investments described in clause
(iii) of the definition of Eligible Investments maturing not later than
the earlier of (i) 30 days after the date of such investment or
(ii) the Business Day immediately preceding the next Payment Date. With
respect to each Account, all interest and other income from Eligible
Investments purchased with funds on deposit in such Account shall be deposited
in such Account, any gain realized from such investments shall be credited to
such Account, and any loss resulting from such investments shall be charged to
such Account. Any gain or loss with respect to an Eligible Investment shall be
allocated in such a manner as to increase or decrease, respectively, Collateral
Principal Collections and/or Collateral Interest Collections in the proportion
that the amount of Collateral Principal Collections and/or Collateral Interest
Collections used to acquire such Eligible Investment bears to the purchase
price thereof. The Trustee shall not in any way be held liable by reason of any
insufficiency of any such Account resulting from any loss relating to any such
investment. Nothing herein shall be

 

143

 

deemed to
relieve the Bank or its Affiliates from any duties or liabilities with respect
to investments in obligations of the Bank or any Affiliate thereof.

 

(c)                                  All
funds deposited from time to time in the Collection Account, the Uninvested
Proceeds Account, the Payment Account, the Expense Reserve Account, the
Discretionary Ramp-Up Interest Reserve Account or the Non-Monthly Pay Asset
Interest Reserve Account pursuant to this Indenture shall be held by the
Trustee as part of the Collateral and shall be applied to the purposes herein
provided.

 

10.3.                        COLLATERAL
ACCOUNT

 

The Trustee
shall, prior to the Closing Date, cause the Custodian to establish a Securities
Account which shall be designated as the “Collateral Account”, which shall be
in the name of the Trustee as Entitlement Holder in trust for the benefit of
the Secured Parties and into which the Trustee shall from time to time deposit
Collateral. All Collateral from time to time deposited in, or otherwise
standing to the credit of, the Collateral Account pursuant to this Indenture
shall be held by the Trustee as part of the Collateral and shall be applied to the
purposes herein provided. The Issuer shall not have any legal, equitable or
beneficial interest in the Collateral Account other than in accordance with the
Priority of Payments.

 

10.4.                        UNINVESTED
PROCEEDS ACCOUNT

 

The Trustee
shall, prior to the Closing Date, cause to be established a Securities Account
which shall be designated as the “Uninvested Proceeds Account”, which shall be
held in the name of the Trustee as Entitlement Holder in trust for the benefit
of the Secured Parties, into which the Trustee shall deposit all Uninvested
Proceeds (other than the organizational and structuring fees and expenses of
the Issuer (including the legal fees and expenses of counsel to the Issuer, the
Initial Purchaser, the Placement Agent and the Collateral Manager), the
expenses of offering the Secured Notes and the Income Notes and amounts
deposited in the Expense Reserve Account and Discretionary Ramp-Up Interest
Reserve Account on such date). On or prior to the Effective Date, the
Collateral Manager on behalf of the Issuer may direct the Trustee to, and upon
such direction the Trustee shall, apply funds in the Uninvested Proceeds
Account to purchase additional Collateral Debt Securities and, pending such
investment in additional Collateral Debt Securities, such funds shall be
invested in Eligible Investments, as directed by the Collateral Manager, with
stated maturities no later than the Business Day immediately preceding the next
Payment Date. The Trustee shall transfer any Uninvested Proceeds remaining on
deposit in the Uninvested Proceeds Account on the Effective Date to the
Collection Account, at the direction of the Collateral Manager, to be treated
as either (i) Collateral Interest Collections; provided that a
Rating Confirmation Failure has not occurred and Rating Confirmation has been
obtained from S&P, or (ii) if a Rating Confirmation Failure has
occurred, all amounts in the Uninvested Proceeds Account will be used on the
immediately following Payment Date to repay principal on the Notes in
accordance with the Priority of Payments, 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. If such ratings
are reinstated and funds remain in the Uninvested Proceeds Account, such funds
will be treated as Collateral Principal Collections on the first Payment Date
and distributed in accordance with the Priority of Payments.

 

10.5.                        INTEREST
RESERVE ACCOUNT

 

The Trustee
shall from time to time deposit, at the request of 100% of the Holders of the
Income Notes, any Income Note Excess Funds designated by such Holders, in
accordance with the Priority of Payments, into the Interest Reserve Account.
All funds deposited in, or otherwise standing to the credit

 

144

 

of, the Interest Reserve
Account shall be held by the Trustee on behalf of the Holders of the Income
Notes and be applied to the purposes described herein. Such funds shall not be
subject to the lien of the Indenture, and at the direction of 100% of the
Holders of the Income Notes, any unused amounts on deposit in the Interest
Reserve Account shall be returned to the Holders of the Income Notes.

 

10.6.                        COLLECTION
ACCOUNT

 

(a)                                  The
Trustee shall, prior to the Closing Date, cause to be established a Securities
Account which shall be designated as the “Collection Account” (and which may be
a sub-account of the Collateral Account), which shall be held in the name of
the Trustee as Entitlement Holder in trust for the benefit of the Secured
Parties. The Trustee shall cause to be established two sub-accounts of the
Collection Account. The Trustee shall deposit Collateral Principal Collections
into one sub-account (the Collateral Principal Collections Sub-Account)  and Collateral Interest
Collections into the other sub-account. At the direction of the Issuer (or the
Collateral Manager on behalf of the Issuer), the Trustee shall invest all funds
on deposit in the Collection Account (including the Collateral Principal
Collection Sub-Account) in Eligible Investments or Substitute Collateral Debt
Securities in accordance with the requirements and limitations contained in
Section 12.1(c).

 

(b)                                 The
Trustee, within one Business Day after receipt of any Distribution or other
proceeds that are not Cash shall so notify the Issuer and the Issuer shall sell
such Distribution or other proceeds for Cash in accordance with
Section 12.1.

 

(c)                                  The
Trustee shall transfer to the Payment Account for application pursuant to
Section 11.1(a) and in accordance with the calculations and the
instructions contained in the Note Valuation Report prepared by the Issuer
pursuant to Section 10.14(a), on or prior to the Business Day prior to
each Payment Date, funds on deposit in the Collection Account (including
reinvestment income) other than Collections received after the end of the Due
Period with respect to such Payment Date.

 

(d)                                 The
Trustee shall withdraw and apply amounts on deposit in the Collection Account
in accordance with any Redemption Date Statement delivered to the Trustee in
connection with the redemption of Secured Notes pursuant to Section 9.1.

 

10.7.                        EXPENSE
RESERVE ACCOUNT

 

The Trustee
shall, prior to the Closing Date, cause to be established a Securities Account
which shall be designated as the “Expense Reserve Account”, which shall be held
in the name of the Trustee as Entitlement Holder in trust for the benefit of
the Secured Parties. Any and all funds at any time on deposit in, or otherwise
standing to the credit of, the Expense Reserve Account shall be held in trust
by the Trustee for the benefit of the Secured Parties. On the Closing Date, the
Trustee shall deposit into the Expense Reserve Account an amount equal to
U.S.$75,000 together with an amount sufficient to pay any outstanding fees and
expenses of the Issuer in relation to the offering of the Secured Notes and the
Income Notes which are not paid on the Closing Date. At the direction of the
Issuer (or the Collateral Manager on behalf of the Issuer), the Trustee shall
invest all funds on deposit in the Expense Reserve Account in Eligible
Investments. Any amounts held in the Expense Reserve Account in excess of
U.S.$25,000 on the day which is subsequent to the Effective Date (or, if such
day is not a Business Day, the next following Business Day) shall be
transferred by the Trustee into the Uninvested Proceeds Account. Thereafter,
the Trustee shall transfer to the Expense Reserve Account from the Payment
Account amounts required to be deposited therein pursuant to
Section 11.1(a) and in accordance with the

 

145

 

calculations and the
instruction contained in the Note Valuation Report prepared by the Issuer
pursuant to Section 10.14(a). Except as provided in Section 11.1, the
only permitted withdrawal from or application of funds on deposit in, or
otherwise standing to the credit of, the Expense Reserve Account shall be to
pay (on any day other than a Payment Date) accrued and unpaid Administrative
Expenses of the Issuer; provided that the Trustee shall deposit all
amounts remaining on deposit in the Expense Reserve Account at the time when
substantially all of the Issuer’s assets have been sold or otherwise disposed
of into the Collection Account for application as Collateral Interest Collections
on the immediately succeeding Payment Date.

 

10.8.                        NON-MONTHLY
PAY ASSET INTEREST RESERVE ACCOUNT

 

The Trustee
shall, prior to the Closing Date, cause to be established a Securities Account
which shall be designated as the “Non-Monthly Pay Asset Interest Reserve
Account”, which shall be held in the name of the Trustee as Entitlement Holder
in trust for the benefit of the Secured Parties. Any and all funds at any time
on deposit in, or otherwise standing to the credit of, the Non-Monthly Pay
Asset Interest Reserve Account shall be held in trust by the Trustee for the
benefit of the Secured Parties. At the direction of the Issuer (or the
Collateral Manager on behalf of the Issuer), the Trustee shall invest all funds
on deposit in the Non-Monthly Pay Asset Interest Reserve Account in Eligible
Investments. On each Payment Date, in accordance with the Priority of Payments,
the Trustee shall deposit the Non-Monthly Pay Asset Interest Reserve Amount
into the Non-Monthly Pay Asset Interest Reserve Account. In addition, at the
request of 100% of the Holders of the Income Notes, the Trustee shall deposit
any Income Note Excess Funds designated by such Holders, in accordance with the
Priority of Payments, into the Non-Monthly Pay Interest Reserve Account. The
only permitted withdrawal from or application of funds on deposit in, or
otherwise standing to the credit of, the Non-Monthly Pay Asset Interest Reserve
Account shall be to deposit into the Payment Account, on the Business Day prior
to each Payment Date, the Balance of the Non-Monthly Pay Asset Interest Reserve
Account with such amount to be distributed as Collateral Interest Collections
in accordance with the Priority of Payments on the related Payment Date.

 

10.9.                        DISCRETIONARY
RAMP-UP INTEREST RESERVE ACCOUNT

 

The Trustee
shall, prior to the Closing Date, cause to be established a Securities Account
which shall be designated as the “Discretionary Ramp-Up Interest Reserve
Account”, which shall be held in the name of the Trustee as Entitlement Holder
in trust for the benefit of the Secured Parties. Any and all funds at any time
on deposit in, or otherwise standing to the credit of, the Discretionary
Ramp-Up Interest Reserve Account shall be held in trust by the Trustee for the
benefit of the Secured Parties. At the direction of the Issuer (or the
Collateral Manager on behalf of the Issuer), the Trustee shall invest all funds
on deposit in the Discretionary Ramp-Up Interest Reserve Account in Eligible
Investments. On the Closing Date, the Trustee shall deposit the Discretionary
Ramp-Up Interest Reserve Amount into the Discretionary Ramp-Up Interest Reserve
Account. Prior to the first Payment Date after the Effective Date, the only
permitted withdrawal from or application of funds on deposit in, or otherwise
standing to the credit of, the Discretionary Ramp-Up Interest Reserve Account
shall be (i) to purchase accrued interest, if any, on any Collateral Debt
Security acquired during the Ramp-Up Period or (ii) to deposit into the
Payment Account, on the Business Day prior to each Payment Date, an amount, if
any, equal to the lesser of (a) the Balance of the Discretionary Ramp-Up
Interest Reserve Account or (b) the Secured Notes Interest Shortfall
Amount, with such amount to be distributed as Collateral Interest Collections
in accordance with the Priority of Payments on the related Payment Date. On the
first Payment Date after the Effective Date, upon receipt of Rating
Confirmation from S&P, the Balance of the Discretionary Ramp-Up Interest
Reserve Account shall be deposited into the Payment Account to be distributed
as Collateral Interest Collections in accordance with the Priority of Payments
on the related Payment Date.

 

146

 

10.10.     PAYMENT ACCOUNT

 

The Trustee
shall, prior to the Closing Date, establish a Securities Account which shall be
designated as the “Payment Account”, which shall be held in the name of the
Trustee as Entitlement Holder in trust for the benefit of the Secured Parties.
Any and all funds at any time on deposit in, or otherwise standing to the
credit of, the Payment Account shall be held in trust by the Trustee for the
benefit of the Secured Parties. Except as provided in Section 11.1, the
only permitted withdrawal from or application of funds on deposit in, or
otherwise standing to the credit of, the Payment Account shall be to pay the
interest on and the principal of the Secured Notes in accordance with their
terms and the provisions of this Indenture and, upon Issuer Order, to pay
Administrative Expenses, certain Cure Advances and (without duplication of
amounts withheld from collections by a Service) certain servicing fees and
expenses paid in accordance with any Servicing Agreement and interest thereon and
other amounts specified therein, each in accordance with the Priority of
Payments. The Issuer shall not have any legal, equitable or beneficial interest
in the Payment Account other than in accordance with the Priority of Payments.

 

10.11.     DERIVATIVE CONTRACT
COUNTERPARTY ACCOUNTS

 

For each
Derivative Contract, the Trustee shall establish a segregated trust account in
respect of each such Derivative Contract, which shall be designated as a
Derivative Contract Counterparty Account and shall be held in trust in the name
and for the benefit of and pledged to the related Derivative Contract
Counterparty (the Pledgee Counterparty) and over which
the Trustee shall have exclusive control and the sole right of withdrawal in
accordance with the applicable Derivative Contract and this Indenture. Each
Derivative Contract Counterparty Account (including any subaccount) shall be a
securities account established with the Securities Intermediary in the name of
the Trustee in accordance with Section 6.17. The Derivative Contract
Counterparty Account shall remain at all times with the Trustee or a financial
institution having a combined capital and surplus of at least U.S.$250,000,000
and a long-term debt rating by each Rating Agency at least equal to “Baa2” by
Moody’s and “BBB+” by S&P or its equivalent.

 

Funds in the
Derivative Contract Counterparty Account are to be held as security for and
applied to pay amounts due the Pledgee Counterparty and shall not be available
to pay amounts due the Noteholders unless and to the extent such funds are
released as Collateral Interest Collections or Collateral Principal Collections
in accordance with this Section 10.11, the applicable Derivative Contract
and applicable law. The Issuer shall not have any right to withdraw money from
any Derivative Contract Counterparty Account other than in accordance with this
Section 10.11, the applicable Derivative Contract and applicable law.

 

As directed by
the Collateral Manager, the Trustee shall deposit into each Derivative Contract
Counterparty Account all amounts which are required to secure the obligations
of the Issuer to the Pledgee Counterparty in accordance with the terms of the
related Derivative Contract. The Collateral Manager shall direct any such
deposit only to the extent that monies are available therefor as provided
herein.

 

As directed by
the Collateral Manager in writing and in accordance with the applicable
Derivative Contract, amounts on deposit in a Derivative Contract Counterparty
Account shall be invested in Eligible Investments. In the absence of direction
from the Collateral Manager, the Trustee shall invest such amounts in Eligible
Investments of the type described in paragraph (iii) of the deifnition of
Eligible Investments.

 

Income on and
proceeds of Eligible Investments on deposit in each Derivative Contract
Counterparty Account shall be applied, as directed by the Collateral Manager,
to the extent required by

 

147

 

the Derivative Contract, to the
payment of any periodic amounts owed by the Issuer to the Pledgee Counterparty
on the date any such amounts are due. Any income on or proceeds of Eligible
Investments in a Derivative Contract Counterparty Account not required to pay
amounts due the Pledgee Counterparty shall be withdrawn from such account at
the end of each Due Period and deposited in the Collection Account for
distribution as Collateral Interest Collections or Collateral Principal
Collections, as the case may be.

 

Upon the
occurrence of the designation of an Early Termination Date, Scheduled
Termination Date or Termination Date under (and as each of those terms are
defined in) the applicable Derivative Contract, amounts contained in the
related Derivative Contract Counterparty Account shall be applied by the Trustee,
as directed by the Collateral Manager, to pay any amounts then due the Pledgee
Counterparty.

 

Any excess
amounts held in a Derivative Contract Counterparty Account after payment of all
amounts owing from the Issuer to the Pledgee Counterparty in accordance with
the terms of the Derivative Contract (other than any Defaulted Derivative
Contract Counterparty Termination Payment) shall be withdrawn from such
Derivative Contract Counterparty Account and, in the case of (a) any Cash
or Eligible Investment readily convertible into Cash, deposited in the
Collection Account for application as Collateral Principal Collections (or to
the extent constituting income on an Eligible Investment, Collateral Interest
Collections), and (b) any security which satisfies the definition of a
Collateral Debt Security, the inclusion of which in the Collateral would
satisfy the Collateral Concentration Limitations, the Collateral Quality Tests
and the Coverage Tests shall be retained by the Issuer as Collateral, subject
to the terms of this Indenture or otherwise sold by the Collateral Manager. No
property other than Eligible Investments and funds in the Derivative Contract
Counterparty Account shall be available to pay amounts due the Pledgee
Counterparty; provided that, to the extent funds
in the Derivative Contract Counterparty Account are insufficient, Termination
Payments shall be paid solely from amounts available therefor in accordance
with the Priority of Payments.

 

Amounts
contained in any Derivative Contract Counterparty Account shall not be
considered to be an asset of the Issuer for purposes of any of the Collateral
Quality Tests, the Collateral Concentration Limitations or the Coverage Tests,
but the Derivative Contract which relates to such Derivative Contract Counterparty
Account shall be so considered an asset of the Issuer.

 

10.12.     DERIVATIVE CONTRACT ISSUER
ACCOUNT

 

If and to the
extent that any Derivative Contract requires the Derivative Contract
Counterparty (a Pledgor Counterparty) to secure its
obligations to the Issuer with respect to such Derivative Contract, the Trustee
shall, on or prior to the date such Derivative Contract is entered into,
establish a segregated trust account, which shall be designated as a Derivative
Contract Issuer Account. Each Derivative Contract Issuer Account (including any
subaccount) shall be a securities account established with the Securities
Intermediary in the name of the Trustee in accordance with Section 6.17.
The Derivative Contract Issuer Account shall remain at all times with the
Trustee or a financial institution having a combined capital and surplus of at
least U.S.$250,000,000 and a long-term debt rating by each Rating Agency at
least equal to “Baa2” by Moody’s and “BBB+” by S&P or its equivalent. The
Trustee shall deposit into each Derivative Contract Issuer Account all amounts
which are required to secure the obligations of the Pledgor Counterparty to the
Issuer in accordance with the terms of such Derivative Contract. A Pledgor
Counterparty shall not have any right to withdraw money from a Derivative
Contract Issuer Account.

 

As directed by
the Collateral Manager in writing, in accordance with the applicable Derivative
Contract, amounts on deposit in a Derivative Contract Issuer Account shall be
invested in Eligible Investments. Income received on amounts on deposit in each
Derivative Contract Issuer Account shall be

 

148

 

withdrawn from such account
and, to the extent required by the related Derivative Contract, released to the
applicable Pledgor Counterparty or otherwise retained in the Derivative
Contract Issuer Account. In the absence of direction from the Collateral
Manager, the Trustee shall invest such amounts in Eligible Investments of the
type described in paragraph (iii) of the definition of Eligible
Investments.

 

Upon the
occurrence of the designation of an “Early Termination Date”, “Scheduled
Termination Date” or “Termination Date” under (and as each of those terms are
defined in) the applicable Derivative Contract, amounts contained in the
related Derivative Contract Issuer Account shall be applied by the Trustee, as
directed by the Collateral Manager, in accordance with the terms of the
Derivative Contract, to pay any amounts then due the Issuer. Any excess amounts
held in a Derivative Contract Issuer Account, after payment of all amounts
owing from the Pledgor Counterparty to the Issuer in accordance with the terms
of the Derivative Contract shall be withdrawn from such Derivative Contract
Counterparty Account and released to the Pledgor Counterparty in accordance
with the terms of the Derivative Contract.

 

Amounts
contained in any Derivative Contract Issuer Account shall not be considered to
be an asset of the Issuer for purposes of any of the Collateral Quality Tests,
the Collateral Concentration Limitations or the Coverage Tests, but the
Derivative Contract which relates to such Derivative Contract Issuer Account
shall be so considered an asset of the Issuer.

 

10.13.     REPORTS BY TRUSTEE

 

The Trustee
shall supply, in a timely fashion to each Rating Agency (so long as any Secured
Notes are rated by such Rating Agency), each Hedge Counterparty, the Holders of
Secured Notes of the Controlling Class, the Collateral Manager, the Income Note
Paying Agent, the Initial Purchaser, the Placement Agent and the Issuer any
information regularly maintained by the Trustee that each such Person may from
time to time request with respect to the Pledged Securities or the Accounts
reasonably needed to complete the Note Valuation Report or to provide any other
information reasonably available to the Trustee by reason of its acting as
Trustee hereunder and required to be provided by Section 10.14.

 

The Trustee
shall forward to the Collateral Manager, the Holders of Secured Notes of the
Controlling Class, or upon request therefor, any Holder of a Secured Note shown
on the Note Register, the Initial Purchaser, the Placement Agent, any Hedge
Counterparty or the Income Note Paying Agent, copies of notices and other
writings received by it from the issuer of any Collateral Debt Security or from
any Clearing Agency with respect to any Collateral Debt Security advising the
holders of such security of any rights that the holders might have with respect
thereto (including notices of calls and redemptions of securities) as well as
all periodic financial reports received from such issuer and Clearing Agencies
with respect to such issuer; provided that
the Trustee shall not disclose any unpublished S&P Rating assigned by
S&P with respect to any Collateral Debt Security without the prior consent
of S&P.

 

So long as any
Class of Secured Notes is listed on the Irish Stock Exchange, the Irish
Paying Agent shall notify the Irish Stock Exchange not later than the Business
Day preceding each Payment Date of the amount of principal payments to be made
on the Secured Notes of each Class on such Payment Date, any Class C
Cumulative Periodic Interest Shortfall Amount, any Class D Cumulative
Periodic Interest Shortfall Amount, any Class E Cumulative Periodic
Interest Shortfall Amount, any Class F Cumulative Periodic Interest
Shortfall Amount, any Class G Cumulative Periodic Interest Shortfall
Amount, any Class H Cumulative Periodic Interest Shortfall Amount, any
Class J Cumulative Periodic Interest Shortfall Amount, any Class K
Cumulative Periodic Interest Shortfall Amount and the Aggregate Outstanding
Amount of the Secured Notes of each Class and as a percentage of the
original Aggregate Outstanding Amount of the Secured Notes of such
Class after giving effect to the principal payments, if any, on such
Payment Date.

 

149

 

As promptly as
possible following the delivery of each Note Valuation Report to the Trustee
pursuant to Section 10.14(a) or (b), as applicable, the Issuer shall
cause a copy of such report to be delivered the Repository for posting on the
Repository in the manner described in Section 14.3. In connection
therewith, the Issuer acknowledges and agrees that each Note Valuation Report
shall be posted to the Repository for use in the manner described in the
section headed “Terms of Use” on the Repository.

 

10.14.     ACCOUNTINGS

 

(a)           Payment Date Accounting. The Issuer shall,
not later than the related Payment Date and after the reconciliation process
described in this Section 10.14, render an accounting (a Note Valuation
Report), determined as
of each Calculation Date, and deliver the Note Valuation Report to each Rating
Agency, the Trustee and the Collateral Manager and make available via the
Trustee’s interne website, initially located at www.cdotrustee.net to the
Trustee, the Irish Paying Agent, each Hedge Counterparty, the Income Note
Paying Agent, each Note Transfer Agent, the Initial Purchaser, the Placement
Agent and, upon written request therefor, any Holder of a Secured Note shown on
the Note Register. The Note Valuation Report shall contain the following
information (which shall, in the case of any Note Valuation Report delivered to
S&P, be presented in a form that complies with and includes the information
required by S&P’s Preferred Format) determined, unless otherwise specified
below, as of the related Calculation Date:

 

(1)           the
calculation showing compliance with each of the Coverage Tests, accompanied by
a list setting forth the applicable maximum or minimum value, percentage or
ratio which must be maintained pursuant to this Agreement with respect to each
of the Coverage Tests and a list setting forth the results of the calculation
of each of the Coverage Tests with respect to the Collateral Debt Securities,
the calculation showing whether the S&P CDO Monitor Test is satisfied
(including the weighted average rating, the default measure, variability
measure and correlation measure, the scenario default rate and/or such other
information required to be computed with respect to the S&P CDO Monitor
Test), and the calculation showing the Fitch Weighted Average Rating Factor,
the Weighted Average Fixed Rate Coupon, the Weighted Average Spread, the
Weighted Average Life, the S&P Weighted Average Recovery Rate for each
Class of Notes, the Moody’s Recovery Rate Test and the Moody’s WARF Test;

 

(2)           the
estimated remaining Average Life of each of the Collateral Debt Securities;

 

(3)           the
Applicable Periodic Interest Rate in respect of each Class of Notes and
the amount of Periodic Interest payable to the Holders of the Notes for such
Payment Date (in the aggregate and by Class);

 

(4)           the
amount (if any) payable to each Hedge Counterparty pursuant to the related
Hedge Agreement;

 

(5)           the
amount (if any) payable by each Hedge Counterparty pursuant to the related
Hedge Agreement:

 

(6)           the
Aggregate Fees and Expenses payable on the next Payment Date on an itemized
basis;

 

150

 

(7)           the
Aggregate Fees and Expenses paid during a period of 12 months ending on the
next Payment Date on an itemized basis;

 

(8)           for
the Collection Account:

 

(i)            the
Balance on deposit in the Collection Account and the Collateral Principal
Collections Sub-Account at the end of the related Due Period;

 

(ii)           the
nature and source of any Collections in the Collection Account and the
Collateral Principal Collections Sub-Account, including Collections received
since the date of the last Note Valuation Report;

 

(iii)          the
amounts payable from the Collection Account in accordance with the priority set
forth in Section 11.1 on the next Payment Date; and

 

(iv)          the
Balance remaining in the Collection Account immediately after all payments and
deposits to be made on such Payment Date; and

 

(v)           the
Balance on deposit in the Collateral Principal Collections Sub-Account;

 

(9)           for
the Non-Monthly Pay Asset Interest Reserve Account:

 

(i)            the
balance on deposit in the Non-Monthly Pay Asset Interest Reserve Account at the
end of the related Due Period;

 

(ii)           the
amount payable from the Non-Monthly Pay Asset Interest Reserve Account pursuant
to the Priority of Payments on the next Payment Date;

 

(iii)          the
Non-Monthly Pay Asset Interest Reserve Amount to be paid into the Non-Monthly
Pay Asset Interest Reserve Account on the next Payment Date; and

 

(iv)          the
Balance remaining in the Non-Monthly Pay Asset Interest Reserve Account
immediately after all payments and deposits to be made on such Payment Date;

 

(10)         for
the Discretionary Ramp-Up Interest Reserve Account prior to the Payment Date
after the Effective Date, the balance on deposit in the Discretionary Ramp-Up
Interest Reserve Account at the end of the related Due Period;

 

(11)         for
the Expense Reserve Account:

 

(i)            the amount to be paid
into the Expense Reserve Account on the next Payment Date; and

 

(ii)           the
Balance remaining in the Expense Reserve Account immediately after all payments
and deposits to be made on such Payment Date;

 

(12)         the
nature, source and amount of any proceeds in the Derivative Contract Issuer
Account and any sub-accounts thereof;

 

151

 

(13)         the
Hedge Receipt Amount or the Hedge Payment Amount for the related Payment Date,
and for each Hedge Agreement, the outstanding notional amount of such Hedge
Agreement and the amounts, if any, scheduled to be received or paid, as the
case may be, by the Issuer pursuant to such Hedge Agreement for the related
Payment Date, separately stating the portion payable in accordance with
Section 11.1;

 

(14)         the
aggregate amount of outstanding Cure Advances and any outstanding
Nonrecoverable Cure Advances, as well as any outstanding servicing advances
made pursuant to the Servicing Agreement;

 

(15)         the
amount of Income Note Excess Funds on the related Payment Date;

 

(16)         the
amount of the Senior Collateral Management Fee and the amount of the
Subordinate Collateral Management Fee;

 

(17)         such
other information as the Collateral Manager, the Initial Purchaser, the
Placement Agent, the Trustee, S&P, Fitch or any Hedge Counterparty may reasonably
request;

 

(18)         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
S&P Industry Classification Group, the Fitch Industry Classification Group,
the S&P Recovery Rate, the S&P Rating and the Fitch Rating (provided that if
any Fitch Rating for any Collateral Debt Security is an “estimated” or “shadow”
rating, such rating shall be identified as “estimated” or “shadow rated”, shall
be disclosed with an asterisk in the place of the applicable estimated or
shadow rating and shall include the date as of which such rating was first
provided by Fitch to the Issuer); and any S&P Rating which is determined
from an implied rating, a credit estimate, a confidential rating or another
non-public rating, shall not be distinguished and shall either (i) be
reported in a single column with the public ratings of S&P (without
distinguishing the source) or (ii) be reported in a separate column
labeled “Non-public and Implied S&P Rating”; 

 

(19)         the
identity and current ratings of each Derivative Contract Counterparty and,
unless the Derivative Security is a Synthetic CDO Security, the Reference
Obligation(s) of such related Derivative Security;

 

(20)         the
Principal Balance, the maturity date, the S&P Rating, the Fitch Rating and
the issuer of each Eligible Investment included in the Collateral;

 

(21)         (A) the
identity and Principal Balance of each Collateral Debt Security that became a
Credit Risk Security, a Defaulted Security, a Credit Improved Security, an
Equity Security, a Written Down Security, a Withholding Tax Security, a
Deferred Interest PIK Bond, (B) the date, as provided by the Collateral
Manager, on which any Collateral Debt Security became a Credit Risk Security, a
Defaulted Security, an Equity Security, a Credit Improved Security, a Written
Down Security or a Withholding Tax Security, (C) the date by which the
Issuer or the Collateral Manager is required to declare its intention to sell
or to hold

 

152

 

such
Collateral Debt Security, (D) whether the Collateral Manager has directed
the Issuer to sell or not to sell such Collateral Debt Security, and
(E) the date by which any such sale must occur;

 

(22)         the
identity of each Collateral Debt Security that was upgraded or downgraded or
placed on watch for upgrade or downgrade by any Rating Agency since the date of
the last Note Valuation Report;

 

(23)         the
Principal Balance and identity of each Collateral Debt Security that was
released for sale indicating the reason for such sale and the amount and
identity of each Collateral Debt Security that was granted since the date of
the last Note Valuation Report;

 

(24)         the
identity and Principal Balance of each Collateral Debt Security that was a
Credit Risk Security, a Defaulted Security, an Equity Security, a Credit
Improved Security, a Written Down Security, a Withholding Tax Security or a
Deferred Interest PIK Bond;

 

(25)         the
purchase price of each Pledged Security granted and the sale price of each
Pledged Security subject to a sale since the date of the last Note Valuation Report;
and whether such Pledged Security is a Collateral Debt Security, an Eligible
Investment or proceeds in the Collection Account;

 

(26)         the
amount of Purchased Accrued Interest;

 

(27)         a
description of any transactions with the Collateral Manager, the Issuer, the
Collateral Administrator and the Trustee and any Affiliates thereof;

 

(28)         the
Class A Note Break-Even Default Rate, the Class B Note Break-Even
Default Rate, the Class C Note Break-Even Default Rate, the Class D
Note Break-Even Default Rate, the Class E Note Break-Even Default Rate,
the Class F Note Break-Even Default Rate, the Class G Note Break-Even
Default Rate, the Class H Note Break-Even Default Rate, the Class J Note Break-Even Default Rate and the
Class K Note Break-Even Default Rate;

 

(29)         the
Class A Note Default Differential, the Class B Note Default
Differential, the Class C Note Default Differential, the Class D Note
Default Differential, the Class E Note Default Differential, the
Class F Note Default Differential, the Class G Note Default
Differential, the Class H Note
Default Differential, the Class J Note
Default Differential and the Class K Note Default Differential; and

 

(30)         the
Class A Note Scenario Default Rate, the Class B Note Scenario Default
Rate, the Class C Note Scenario Default Rate, the Class D Note
Scenario Default Rate, the Class E Note Scenario Default Rate, the
Class F Note Scenario Default Rate, the Class G Note Scenario Default
Rate, the Class H Note Scenario Default Rate, the Class J Note Scenario Default Rate and the
Class K Note Scenario Default Rate.

 

(31)         Whether
or not, and to what extent, the representations and warranties (and remedies)
required pursuant to Sections 12.2(t)(8) and 12.2(t)(9)(ii) and the required
servicing arrangements required pursuant to Section 12.2(t)(9)(i) remain

 

153

 

in effect and
are satisfied as of the related Calculation Date with regard to each Collateral
Interest.

 

Upon receipt
of each Note Valuation Report, the Trustee and the Collateral Manager shall
compare the information contained therein to the information contained in their
respective records with respect to the Collateral and shall, within two
Business Days after receipt of such Note Valuation Report, notify each of the
Issuer, each Hedge Counterparty, the Collateral Manager, the Trustee, Fitch and
S&P if the information contained in the Note Valuation Report does not
conform to the information maintained by the Trustee or the Collateral Manager
as applicable, with respect to the Collateral, and detail any discrepancies. In
the event that any discrepancy exists, the Trustee and the Issuer, or the
Collateral Manager shall attempt to promptly resolve the discrepancy. If such
discrepancy cannot be promptly resolved, the Trustee shall within five Business
Days after discovery of such discrepancy cause the Independent Accountants of
recognized international reputation to review such Note Valuation Report and
the Trustee’s and the Collateral Manager’s records to determine the cause of such
discrepancy. If such review reveals an error in the Note Valuation Report or
the records of the Trustee or the Collateral Manager, as the case may be, such
item shall be revised accordingly and, as so revised, shall be utilized in
making further calculations.

 

Subject to the
terms of this Agreement, the Trustee shall be entitled to rely on the
information supplied by the Collateral Manager in relation to the preparation
of the Note Valuation Report and shall not be liable for the accuracy or
completeness of such information or the lack thereof.

 

In addition to
the foregoing information, each Note Valuation Report shall include a statement
to the following effect:

 

“The Notes
have not been and will not be registered under the United States Securities Act
of 1933, as amended (the Securities Act),  or under any state securities
laws, and the Issuer has not been and will not be registered under the United
States Investment Company Act of 1940, as amended (the 1940 Act).  Each
Holder of the Notes, other than those Holders that are not “U.S. persons” (U.S. Person)  within the
meaning of Regulation S (Regulation S)  under the Securities Act and
have acquired their Notes outside the United States pursuant to Regulation S,
is required to be both (i) (A) with respect to any Secured Note, a “qualified
institutional buyer” as defined in Rule 144A under the Securities Act (Qualified
Institutional Buyer),  (B) solely with respect to the
Retained Notes and the Income Notes, either (1) an “accredited investor”
as defined in paragraphs (1), (2), (3) or (7) of
Rule 501(A) under the Securities Act (each an Institutional
Accredited Investor),  (2) any
of NorthStar OS IX, LLC, NS Advisors,
LLC or any “affiliate” thereof within the meaning of Rule 405 under the
Securities Act that is an “accredited investor” within the meaning of
Rule 501(A) under the Securities Act (each of the foregoing, a Permitted
NS Purchaser) or (3) a Permitted NS Purchaser and
(ii) a “qualified purchaser” (Qualified
Purchaser)  within
the meaning of Section 3(c)(7) of the 1940 Act, purchasing for its
own account or for the account of another Qualified Purchaser, that can make
all of the representations in the Indenture applicable to a holder that is a
U.S. Person. The beneficial interest in the Notes may be transferred only to a
transferee that meets both of the criteria in clauses (i) and
(ii) above and can make all of the representations in the Indenture
applicable to a Holder that is a U.S. Person, except that any such transfer in
reliance on Regulation S can be made only to a transferee that is not a U.S.
Person. The Issuer has the right to compel any Holder that does not meet the
qualifications and the transfer restrictions set forth in the Indenture to sell
its interest in the Notes, or may sell such interest on behalf of such owner,
pursuant to the Indenture.”

 

(b)           Redemption Date Instructions.  Not
less than five Business Days after receiving an Issuer Request requesting
information regarding a redemption pursuant to Section 9.1 of the Secured
Notes of a Class as of a proposed Redemption Date set forth in such Issuer

 

154

 

Request, the
Trustee shall provide the necessary information (to the extent it is available
to the Trustee) to the Issuer, and the Issuer shall compute the following
information and provide such information in a statement (the Redemption Date
Statement)  delivered to the
Trustee:

 

(1)           the
Aggregate Outstanding Amount of the Secured Notes of the Class or Classes
to be redeemed as of such Redemption Date;

 

(2)           the
amount of accrued interest due on such Secured Notes as of the last day of the
Interest Period immediately preceding such Redemption Date; and

 

(3)           the
amount in the Collection Account available for application to the redemption of
such Secured Notes.

 

(c)           If
the Trustee shall not have received any accounting provided for in this
Section 10.14 on the first Business Day after the date on which such
accounting is due to the Trustee, the Trustee shall use reasonable efforts to
cause such accounting to be made by the applicable Payment Date or Redemption
Date. To the extent the Trustee is required to provide any information or
reports pursuant to this Section 10.14 as a result of the failure of the
Issuer to provide such information or reports, the Trustee shall be entitled to
retain an Independent certified public accountant in connection therewith and
the reasonable costs incurred by the Trustee for such Independent certified
public accountant shall be reimbursed pursuant to Section 6.8.

 

The Trustee
will make the Note Valuation Report available via its internet website
initially located at www.cdotrustee.net. All information made available on the
Trustee’s website will be restricted and the Trustee will only provide access
to such reports to those parties entitled thereto pursuant to the Indenture. In
connection with providing access to its website, the Trustee may require
registration and the acceptance of a disclaimer.

 

10.15.     RELEASE OF SECURITIES

 

(a)           If
no Event of Default has occurred and is continuing and subject to
Article XII, the Issuer shall, in connection with any sale required
pursuant to Section 12.1, by Issuer Order executed by an Authorized
Officer of the Issuer and delivered to the Trustee at least two Business Days
prior to the settlement date for any sale of a security certifying that the
conditions set forth in Section 12.1 are satisfied, direct the Trustee to
release such security from the lien of this Indenture against receipt of
payment therefor.

 

(b)           The
Issuer shall, if notified that the issuer of the Pledged Security requires
delivery of such Pledged Security as a condition to redemption or payment in
full, by Issuer Order executed by an Authorized Officer of the Issuer and
delivered to the Trustee at least two Business Days prior to the date set for
redemption or payment in full of a Pledged Security, certifying that such
security is being redeemed or paid in full, direct the Trustee or, at the
Trustee’s instructions, the Custodian, to deliver such security, if in physical
form, duly endorsed, or, if such security is a Clearing Corporation Security,
to cause it to be presented, to the appropriate paying agent therefor on or
before the date set for redemption or payment, in each case against receipt of
the redemption price or payment in full thereof.

 

155

 

(c)           The
Trustee shall deposit any proceeds received by it from the disposition of a
Pledged Security in the Collection Account.

 

(d)           The
Trustee shall, upon receipt of an Issuer Order at such time as there are no
Secured Notes Outstanding and all obligations of the Issuer hereunder have been
satisfied, release the Collateral from the lien of this Indenture.

 

(e)           The
Issuer may retain agents (including the Collateral Manager) to assist the
Issuer in preparing any notice or other report required under this Section 10.15.

 

10.16.     REPORTS BY INDEPENDENT
ACCOUNTANTS

 

(a)           At
the Closing Date the Issuer (or the Collateral Manager on its behalf) shall
appoint a firm of Independent certified public accountants of recognized
national reputation for purposes of preparing and delivering the reports or
certificates of such accountants required by this Indenture. Upon any
resignation by such firm, the Issuer shall (after consultation with the
Collateral Manager) propose a replacement firm meeting the criteria set forth in
the preceding sentence for approval by a Majority of the Controlling Class.
Upon approval by a Majority of the Controlling Class, the Issuer shall promptly
appoint such firm by Issuer Order delivered to the Trustee, each Hedge
Counterparty, the Collateral Manager and each Rating Agency. If the Issuer
shall fail to appoint a successor to a firm of Independent certified public
accountants which has resigned within 30 days after such resignation, the
Issuer shall promptly notify the Trustee of such failure in writing. The fees
of such Independent certified public accountants and its successor shall be
payable by the Issuer as provided in Section 11.1.

 

(b)           On
or before June of each year (commencing with June, 2008), the Issuer shall
cause to be delivered to the Trustee, the Income Note Paying Agent and each
Rating Agency an Accountants’ Report specifying the procedures applied and
their associated findings with respect to the Note Valuation Reports and any
Redemption Date Statements prepared in the preceding year. At least 60 days
prior to the Payment Date in June 2008 (and, if at any time a successor
firm of Independent certified public accountants is appointed, prior to the
Payment Date in May following the date of such appointment), the Issuer
shall deliver to the Trustee an Accountant’s Report specifying in advance the
procedures that such firm will apply in making the aforementioned findings
throughout the term of its service as accountants to the Issuer. The Trustee
shall promptly forward a copy of such Accountant’s Report to each Hedge
Counterparty, the Rating Agencies, the Income Note Paying Agent and each Holder
of Class A Notes (or, if no Class A Notes are Outstanding, each
Holder of Class B Notes or, if no Class B Notes are Outstanding, each
Holder of Class C Notes or, if no Class C Notes are Outstanding, each
Holder of Class D Notes or, if no Class D Notes are Outstanding, each
Holder of Class E Notes, or, if no Class E Notes are Outstanding,
each Holder of Class F Notes, or, if no Class F Notes are Outstanding,
each Holder of Class G Notes, or, if no Class G Notes are
Outstanding, each Holder of Class H Notes, or, if no Class H Notes
are Outstanding, each Holder of Class J Notes or, if no Class J Notes
are Outstanding, each Holder of Class K Notes, or, if no Class K
Notes are Outstanding, at the address shown on the Note Register. The Issuer
shall not approve the institution of such procedures if a Majority of the
Controlling Class or the Collateral Manager, by notice to the Issuer and
the Trustee within 30 days after the date of the related notice to the Trustee,
object thereto.

 

156

 

(c)           Any
statement delivered to the Trustee pursuant to Section 10.16(b) above
shall be made available by the Trustee to any Holder of a Secured Note shown on
the Note Register upon written request therefor.

 

10.17.     REPORTS TO
RATING AGENCIES

 

In addition to
the information and reports specifically required to be provided to the Rating
Agencies, the Income Note Paying Agent, the Holders of Secured Notes of the
Controlling Class, and any Hedge Counterparty pursuant to the terms of this
Indenture, the Income Note Paying Agency Agreement or any Hedge Agreement (as
the case may be), the Issuer shall provide or procure to provide the Rating
Agencies and each Hedge Counterparty with (a) all information or reports
delivered to the Trustee hereunder and (b) such additional information as
the Rating Agencies, the Income Note Paying Agent or any Hedge Counterparty may
from time to time reasonably request and such information may be obtained and
provided without unreasonable burden or expense. The Issuer shall promptly
notify the Trustee, the Income Note Paying Agent and each Hedge Counterparty if
the rating of any Class of Secured Notes has been, or it is known by the
Issuer that such rating will be, changed or withdrawn. The Issuer shall notify
each Rating Agency in the case of (i) termination or amendment of any
Transaction Document or organizational document of the Issuer, (ii) termination
or change of party to any of the Transaction Documents or (iii) material
breach of any of the Transaction Documents by any party thereto. From time to
time Fitch may request information or reports from the Collateral Manager on
the properties underlying the Collateral, including, without limitation,
information on underwritten cash flow and occupancy. With respect to any
Collateral Debt Security that is a Trust Preferred Security, for so long as
Fitch is rating any Class of Outstanding Secured Notes, the Issuer shall
provide to Fitch via email to CDO.Surveillance@iftchrating.com the following
report or information (if available) with respect to the issuing entity of the
related Trust Preferred Security: (a) if the issuing entity of such Trust
Preferred Security is a private company, the financials for such company;
(b) annual audited financials; (c) quarterly financials; and
(d) quarterly compliance certificates.

 

10.18.     TAX MATTERS

 

The Issuer
agrees to treat, and hereby notify the Trustee to treat, and, by accepting a
Secured Note, each Holder of the Secured Notes agrees to treat, the Secured
Notes, for U.S. federal, state and local income tax purposes, as indebtedness
of the Issuer, to report all income (or loss) in accordance with such treatment
and not to take any action inconsistent with such treatment except as otherwise
required by any taxing authority under applicable law. The Issuer agrees not to
elect to be treated as other than a corporation for U.S. federal income tax
purposes.

 

10.19.     TAX INFORMATION

 

(a)           The
Issuer shall provide on a timely basis to any holder of a beneficial interest
in Rule 144A Definitive Notes (or its designee), Rule 144A Global
Notes (or its designee) and Definitive Retained Notes (or its designee), upon
written request therefor certifying that it is such a holder, (i) all
information that a U.S. shareholder making a “qualified electing fund” election
(as defined in the Code) is required to obtain for U.S. federal income tax
purposes and (ii) a “PFIC Annual Information Statement” as described in
Treasury Regulation 1.1295-1 (or any successor Internal Revenue Service release
or Treasury Regulation), including all representations and statements required
by such statement, and will take any other steps necessary to facilitate such
election by a holder of a beneficial interest in any Rule 144A Definitive
Notes, Rule 144A Global Notes and Definitive Retained Notes. The Issuer
shall also provide, upon request of a Holder of, or a holder of a beneficial
interest in, any Rule 144A Definitive Notes, Rule 144A Global 

 

157

 

Notes and
Definitive Retained Notes, any information that such Holder or holder of a
beneficial interest reasonably requests to assist such Holder or holder of a
beneficial interest with regard to any filing requirements the Holder or holder
of a beneficial interest may have as a result of the controlled foreign
corporation rules under the Code. The cost and expense of the preparation
and delivery of the PFIC Annual Information Statement shall be at the expense
of the Issuer.

 

(b)           The
Issuer will treat each purchase of Collateral Debt Securities as “purchase” for
tax accounting and reporting purposes.

 

(c)           The
Issuer shall file, or cause to be filed, any tax returns, including information
tax returns, required by any governmental authority; provided, however it shall not file, or
cause to be filed, any United States federal, state or local income or
franchise tax return in any state of the United States unless it shall have
obtained an opinion of nationally recognized tax counsel experienced in such
matters prior to such filing that, under the laws of such jurisdiction, the
Issuer is required to file such income or franchise tax return.

 

(d)           If
required to prevent the withholding and imposition of United States income tax,
the Issuer agrees to deliver or cause to be delivered a United States Internal
Revenue Service Form W-9 or applicable successor form, or such other form
as may be required by the underlying documents with respect to any asset, to
each issuer or obligor of or counterparty with respect to any asset at the time
such asset is purchased or entered into by the Issuer and annually thereafter.

 

(e)           Notwithstanding
any contrary agreement or understanding, the Collateral Manager, the Issuer,
the Trustee and the Noteholders and beneficial owners of the Notes (and each of
their respective employees, representatives or other agents) may disclose to
any and all Persons, without limitation of any kind, the tax treatment and tax
structure of the transactions contemplated by this Indenture and all materials
of any kind (including opinions or other tax analyses) that are provided to
them relating to such tax treatment and tax structure. The foregoing provision
shall apply from the beginning of discussions between the parties. For this
purpose, the tax treatment of a transaction is the purported or claimed U.S.
tax treatment of the transaction under applicable U.S. federal, state or local
law, and the tax structure of a transaction is any fact that may be relevant to
understanding the purported or claimed U.S. tax treatment of the transaction
under applicable U.S. federal, state or local law.

 

(f)            A
Note holder (or beneficial owner of a Note) will, upon request, notify the Issuer
whether or not the Noteholder (or beneficial owner of such Note) is a United
States person within the meaning of Section 7701(a)(30) of the Code and
the name and status of such Noteholder or beneficial owner as an individual,
partnership, corporation or other entity and such other information the Issuer
shall reasonably request for purposes of tax reporting of the Issuer or other
Noteholders.

 

(g)           The
Issuer agrees that it does not intend for this Indenture to represent an
agreement to enter into a partnership, a joint venture or any other business
entity for U.S. Federal income tax purposes. The Issuer shall not represent or
otherwise hold themselves out to the United States Internal Revenue Service or
other third parties as partners in a partnership or members of a joint venture
or other business entity for U.S. Federal income tax purposes.

 

158

 

10.20.     CURE ADVANCES

 

(a)           To the extent that the Trustee receives any amounts from the Income
Note Paying Agent in respect of any Cure Advances made at the election of the
Holders of the Majority of the Income Notes in accordance with the Income Note
Paying Agency Agreement, together with a copy of the written instruction
received by the Income Note Paying Agent from the Holders of the Majority of
the Income Notes in accordance with the Income Note Paying Agency Agreement, to
exercise the Issuer’s rights in respect of a Cure Advance, the Trustee shall
promptly remit such amounts to the Collateral Manager for application in the
payment of such Cure Advances (subject to the Servicer Override).

 

(b)           The Holders of the Majority of the Income Notes will be entitled to
reimbursement from any subsequent payments or recoveries on each Real Estate
Interest in respect of which it makes a Cure Advance in accordance with the
Priority of Payments; provided that,
if at any time the Collateral Manager determines in its sole discretion,
exercised in good faith (subject to the Service Override) that a Cure Advance
previously made is a Nonrecoverable Cure Advance, the Holders of the Majority
of the Income Notes will be entitled to reimbursement for such Cure Advance
from subsequent payments or collections with respect to all of the Collateral
Debt Securities on any Business Day during any Interest Period prior to the end
of the related Due Period (or on a Payment Date prior to any payment of
interest on or principal of the Notes in accordance with the Priority of
Payments). Reimbursement of such Nonrecoverable Cure Advances will be made first
from Collateral Interest Collections and, then, to the extent Collateral
Interest Collections were insufficient, from Collateral Principal Collections.
The Trustee shall remit any amounts due and payable in respect of repayment of
Cure Advances or Nonrecoverable Cure Advances, as the case may be, to the
Holders of the Majority of the Income Notes in accordance with the Income Note
Paying Agency Agreement.

 

10.21.      PURCHASE OF RELATED SENIOR LOANS BY HOLDERS OF SUBORDINATE
MORTGAGE LOAN INTERESTS OR MEZZANINE LOANS.

 

To the extent that the
underlying documents related to any Subordinate Loan Interest, or Mezzanine
Loan provides that (i) the holders of the related Subordinate Loan
Interest or Mezzanine Loan may, subject to the rights of the more subordinate
holders and the mezzanine loan holders, purchase the related Senior Loan or
commercial mortgage loan from the holder thereof generally at a price equal to
the outstanding principal amount of such Senior Loan or commercial mortgage
loan, plus accrued and unpaid interest up to the purchase date, plus any
unreimbursed servicing advances with respect to the related commercial mortgage
loan and any accrued and unpaid interest on such advances, plus, in certain
circumstances, additional fees to the special servicer and (ii) is
exercisable by the Issuer, and (iii) if the Issuer does not otherwise
purchase such Senior Loan or commercial mortgage loan in accordance with the
applicable Reinvestment Criteria, a Majority of the Income Noteholders may direct
the Issuer to exercise its purchase option on behalf of such Majority of the
Income Noteholders, to the extent that the Issuer has received funds from the
Majority of the Income Noteholders for such purpose, at any time, regardless of
whether such purchase would occur during the Reinvestment Period. The Majority
of the Income Noteholders will provide the necessary funds directly to the
Issuer to make such purchase; provided that the Issuer shall not commit to make any such purchase until the
necessary funds have been actually received from the Income Noteholders. In
making its determination whether to exercise such option, the Majority of the
Income Noteholders may act in their own interest only and are not required to
take into account the interests of any other Noteholders. The related
Subordinate Loan Interest or Mezzanine Loan will remain as part of the
Collateral; however, the Senior Loan or commercial mortgage loan purchased
through the exercise of such purchase option will be transferred to the
Majority of the Income

 

159

 

Noteholders or any designee
thereof in exchange for the requisite purchase price received from such Income
Noteholders.

 

ARTICLE XI

 

APPLICATION
OF MONIES

 

11.1.        DISBURSEMENTS OF FUNDS FROM PAYMENT ACCOUNT; PRIORITY OF PAYMENTS

 

(a)           Collateral Interest
Collections. On any Payment Date that is not a Redemption Date or a
Payment Date following the occurrence and continuation of an acceleration of
the Secured Notes in connection with an Event of Default, in accordance with a
Note Valuation Report prepared by the Collateral Administrator as of the last
day of the Due Period preceding such Payment Date, Collateral Interest
Collections, to the extent of Available Funds in (i) the Collection Account
and (ii) to the extent funds are not available in the Collection Account,
the Interest Reserve Account, less (x) any collections in respect of
interest applied to reimburse any outstanding Cure Advance (other than a
Nonrecoverable Cure Advance) to the extent of a specific recovery in full of
such Cure Advance from the obligor of the specific proceeds of the Collateral
Debt Security as to which such Cure Advance was made, as described under
Section 10.20, and (y) any amounts in respect of interest applied to
reimburse Nonrecoverable Cure Advances as described in Section 10.20 will
be applied by the Trustee in the following order of priority:

 

(1)           to pay, in the
following order:

 

(i)            taxes
and filing fees and registration fees (including annual return fees) payable by
the Issuer, if any; and then,

 

(ii)           the
amount of any due and unpaid Trustee Fee; and then,

 

(iii)          the
amount of any due and unpaid fees to the Administrator; and then, 

 

(iv)          the
amount of any due and unpaid Trustee Expenses; and then,

 

(v)           the
amount of any due and unpaid fees and expenses of the Rating Agencies; and
then,

 

(vi)          the
amount of any due and unpaid expenses of the Administrator and any due and
unpaid Administrative Expenses not included in (iii), (iv) and
(v) above, including amounts payable to the Collateral Manager under the
Collateral Management Agreement but excluding the Collateral Management Fee;

 

(vii)         to
deposit into the Expense Reserve Account the amount needed to bring the amount
on deposit therein to U.S.$25,000 (unless the Collateral Manager directs that a
lesser amount be deposited to the Expense Reserve Account); and then,

 

160

 

(viii)        the
amount of any reimbursement to the Trustee for nonrecoverable servicing
advances (together with interest thereon) made by the Trustee and not
reimbursed pursuant to any Servicing Agreement.

 

provided that the cumulative amount paid
under (iii) through (viii) above (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 Event of Default and any default of the Collateral
Debt Securities) may not exceed U.S.$279,500 in the aggregate in any
consecutive 12-month period;

 

(2)           to
pay the Senior Collateral Management Fee with respect to such Payment Date and
any Senior Collateral Management Fee with respect to a previous Payment Date
that was not paid on a previous Payment Date (excluding any interest payable on
such unpaid Senior Collateral Management Fee);

 

(3)           to
pay an amount equal to the Non-Monthly Pay Asset Interest Reserve Amount for
deposit into the Non-Monthly Pay Asset Interest Reserve Account;

 

(4)           to
pay first, any Hedge
Counterparty, any amounts due to such Hedge Counterparty under any Hedge
Agreement, excluding any termination payments where such Hedge Counterparty is
the Defaulting Party or the sole Affected Party and second, to the extent funds in the related
Derivative Contract Counterparty Account are insufficient, any Derivative
Contract Counterparty, any amounts due to such Derivative Contract
Counterparty, excluding any termination payments where such Derivative Contract
Counterparty is the Defaulting Party or the sole Affected Party;

 

(5)           to
pay Periodic Interest on the Class A-1 Notes and any Defaulted Interest thereon;

 

(6)           to
pay Periodic Interest on the Class A-2 Notes and any Defaulted Interest thereon;

 

(7)           to
pay Periodic Interest on the Class A-3 Notes and any Defaulted Interest thereon;

 

(8)           to
pay Periodic Interest on the Class B Notes and any Defaulted Interest;

 

(9)           if
either of the Class A/B Coverage Tests is not satisfied as of the
preceding Calculation Date, to pay principal of the most senior Class of
Notes then Outstanding until such Class A/B Coverage Test is satisfied as
of such Calculation Date or until such most senior Class of Notes is paid
in full, and then to pay principal of the next most senior Class of Notes
Outstanding until such Class A/B Coverage Test is satisfied as of such
Calculation Date or until such next most senior Class of Notes is paid in
full and so on, until such Class A/B Coverage Test is satisfied or until
the Class B Notes are paid in full; provided that for purposes of determining
if the Class A/B Principal Coverage Test is

 

161

 

satisfied
after giving effect to any payments under this Section 11.1(a)(9), the
denominator of the Class A/B Principal Coverage Ratio shall be calculated
after giving effect to any payments of principal on the Notes made pursuant to
any of the sections above and pursuant to this Section 11.1(a)(9) on
the related Payment Date;

 

(10)         if
a Rating Confirmation Failure occurs, on each Payment Date commencing with the
Payment Date following the Calculation Date following such Rating Confirmation
Failure, to pay principal on the Class A-1 Notes, the Class A-2
Notes, the Class A-3 Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes, the Class F Notes,
the Class G Notes, the Class H  Notes,
the Class J Notes and the Class K 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;

 

(11)         to
pay Periodic Interest on the Class C Notes and, if no Class A Notes
and no Class B Notes are Outstanding, any Defaulted Interest on the
Class C Notes;

 

(12)         to
pay the Class C Cumulative Applicable Periodic Interest Shortfall Amount
and interest thereon, if any;

 

(13)         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;

 

(14)         to
pay the Class D Cumulative Applicable Periodic Interest Shortfall Amount
and interest thereon, if any;

 

(15)         to
pay Periodic Interest on the Class E Notes and, if no Class A Notes,
no Class B Notes, no Class C Notes, and no Class D Notes are
Outstanding, any Defaulted Interest on the Class E Notes;

 

(16)         to
pay the Class E Cumulative Applicable Periodic Interest Shortfall Amount
and interest thereon, if any;

 

(17)         if
either of the Class C/D/E Coverage Tests is not satisfied as of the
preceding Calculation Date, to pay principal of the most senior class of Notes
then Outstanding until such Class C/D/E Coverage Test is satisfied as of
such Calculation Date or until such most senior Class of Notes is paid in
full, and then to pay principal of the next most senior Class of Notes
Outstanding until such Class C/D/E Coverage Test is satisfied as of such
Calculation Date or until such next most senior Class of Notes are paid in
full and so on, until such Class C/D/E Coverage Test is satisfied or until
the Class E Notes are paid in full; provided that for purposes of determining
if the Class C/D/E Principal Coverage Test is satisfied after giving
effect to any payments under this Section 11.1(a)(17), the denominator of
the Class C/D/E Principal Coverage Ratio shall be calculated after giving
effect to any payments of principal on the Notes made pursuant to any of the
sections above and pursuant to this Section 11.1(a)(17), on the related
Payment Date;

 

162

 

(18)         to pay Periodic Interest on the Class F Notes and, if no
Class A Notes, no Class B Notes, no Class C Notes, no
Class D Notes and no Class E Notes are Outstanding, any Defaulted
Interest on the Class F Notes;

 

(19)         to pay the Class F Cumulative Applicable Periodic Interest
Shortfall Amount and interest thereon, if any;

 

(20)         to pay Periodic Interest on the Class G Notes and, if no
Class A Notes, no Class B Notes, no Class C Notes, no
Class D Notes, no Class E Notes and no Class F Notes are
Outstanding, any Defaulted Interest on the Class G Notes;

 

(21)         to pay the Class G Cumulative Applicable Periodic Interest
Shortfall Amount and interest thereon, if any;

 

(22)         to pay Periodic Interest on the Class H Notes and, if no
Class A Notes, no Class B Notes, no Class C Notes, no
Class D Notes, no Class E Notes, no Class F Notes and no
Class G Notes are Outstanding, any Defaulted Interest on the Class H
Notes;

 

(23)         to pay the Class H Cumulative Applicable Periodic Interest
Shortfall Amount and interest thereon, if any;

 

(24)         if either of the Class F/G/H Coverage Tests is not satisfied as of
the preceding Calculation Date, to pay principal of the most senior
Class of Notes then Outstanding until such Class F/G/H Coverage Test
is satisfied as of such Calculation Date or until such most senior
Class of Notes are paid in full, and then to pay principal of the next
most senior Class of Notes Outstanding until such Class F/G/H
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 F/G/H Coverage Test is satisfied or until the Class H Notes are
paid in full; provided that for
purposes of determining if the Class F/G/H Principal Coverage Test is
satisfied after giving effect to any payments under this
Section 11.1(a)(24) the denominator of the Class F/G/H Principal
Coverage Ratio shall be calculated after giving effect to any payments of
principal on the Notes made pursuant to any of the sections above and pursuant
to this Section 11.1(a)(24) on the related Payment Date;

 

(25)         to pay Periodic Interest on the Class J Notes and, if no
Class A Notes, no Class B Notes, no Class C Notes, no
Class D Notes, no Class E Notes, no Class F Notes, no
Class G Notes and no Class H Notes are Outstanding, any Defaulted
Interest on the Class J Notes;

 

(26)         to pay the Class J Cumulative Applicable Periodic Interest
Shortfall Amount and interest thereon, if any;

 

(27)         to pay Periodic Interest on the Class K Notes and, if no
Class A Notes, no Class B  Notes, no Class C Notes, no
Class D Notes, no Class E Notes, no Class F Notes, no
Class G Notes, no Class H Notes and no Class J Notes are
Outstanding, any Defaulted Interest on the Class K Notes;

 

163

 

(28)         to
pay the Class K Cumulative Applicable Periodic Interest Shortfall Amount
and interest thereon, if any;

 

(29)         to
pay first, any termination
payments payable by the Issuer under any Hedge Agreement upon the termination
of the related Hedge Agreement and not payable pursuant to
Section 11.1(a)(4), and second, to
the extent funds in the related Derivative Contract Counterparty Account are
insufficient, any termination payments payable by the Issuer under any
Derivative Contract upon the termination of the related Derivative Contract and
not payable pursuant to Section 11.1(a)(4), in each case if such
termination occurred solely as the result of an event of default or a
termination event with respect to which any Hedge Counterparty or Derivative Contract
Counterparty, as the case may be, is the Defaulting Party or the sole Affected
Party, as the case may be;

 

(30)         to
pay, in the following order:

 

(i)            to
any Servicer or the Trustee, any reimbursements for nonrecoverable servicing
advances (together with interest thereon) due and owing and not paid out of
collections received pursuant to the terms of the related Servicing Agreement
or (in the case of the Trustee) pursuant to
Section 11.1(a)(1)(viii) above;

 

(ii)           any
due and unpaid Trustee Expenses and unpaid Administrative Expenses, including
amounts payable to the Collateral Manager under the Collateral Management
Agreement but excluding the Collateral Management Fee, in each case, in the
same order of priority as provided in Section 11.1(a)(1) and to the extent
not paid in full under Section 11.1 (a) (1)
without regard to any limitation on any maximum amounts payable on such date
contained therein; and

 

(iii)          on
a pro rata basis, any due and
unpaid expenses and other liabilities of the Issuer to the extent not paid
under Section 11.1(a)(1), whether as a result of an amount limitation
imposed thereunder or otherwise;

 

(31)         to
pay, first, the Subordinate
Collateral Management Fee with respect to such Payment Date and any due and
unpaid Subordinate Collateral Management Fee with respect to a previous Payment
Date that was not paid on a previous Payment Date, and second, any accrued and unpaid interest on
the then-due and unpaid Collateral Management Fee;

 

(32)         to
repay, pro rata, the amount of any
outstanding Cure Advances not previously reimbursed, if any;

 

(33)         at
the election of 100% of the Holders of the Income Notes, an amount of Income
Note Excess Funds as determined by such Holders in accordance with such
election, to be deposited in the Interest Reserve Account; and

 

(34)         all
Income Note Excess Funds after giving effect to any election pursuant to
Section 11.1(a)(33) above, to the Income Note Paying Agent, on behalf of
the Issuer, for distributions on the Income Notes in accordance with the Income
Note Paying Agency Agreement.

 

164

 

(b)           Collateral Principal
Collections. On any Payment Date that is not a Redemption Date or a
Payment Date following the occurrence and continuation of an acceleration of
the Secured Notes in connection with an Event of Default, in accordance with a
Note Valuation Report prepared by the Collateral Administrator as of the last
day of the Due Period preceding such Payment Date, Collateral Principal
Collections, to the extent of Available Funds in the Collection Account, less
(i) any amounts in respect of principal applied to reimburse any
outstanding Cure Advance (other than a Nonrecoverable Cure Advance) to the
extent of a specific recovery in full of such Cure Advance from the obligor of
the specific proceeds of the Collateral Debt Security as to which such Cure
Advance was made, as described Section 10.20 and (ii) any amounts in
respect of principal applied to reimburse Nonrecoverable Cure Advances as
described under Section 10.20 will be applied by the Trustee in the
following order of priority:

 

(1)           to
the payment of the amounts referred to in Section 11.1(a)(1) through
(8), in the same order of priority specified therein, but only to the extent
not paid in full thereunder;

 

(2)           if
either of the Class A/B Coverage Tests is not satisfied as of the
preceding Calculation Date and to the extent that the amounts paid pursuant to
Section 11.1(a)(9) are insufficient to cause the Class A/B
Coverage Tests to be satisfied, to pay principal of the most senior
Class of Notes then Outstanding until such Class A/B Coverage Test is
satisfied as of such Calculation Date or until such most senior Class of
Notes is paid in full, and then to pay principal of the next most senior
Class of Notes Outstanding until such Class A/B Coverage Test is
satisfied as of such Calculation Date or until such next most senior
Class of Notes is paid in full and so on, until such Class A/B
Coverage Test is satisfied or until the Class B Notes are paid in full; provided that for
purposes of determining if the Class A/B Principal Coverage Test is satisfied
after giving effect to any payments under this Section 11.1(b)(2), the
denominator of the Class A/B Principal Coverage Ratio shall be calculated
after giving effect to any payments of principal on the Notes made pursuant to
any clause or subclause of Section 11.1(a) on the related Payment
Date and pursuant to Section 11.1(b)(1) above and this clause (2); provided, further, that
the numerator of the Class A/B Principal Coverage Ratio shall be
calculated after giving effect to any Collateral Principal Collections applied
pursuant to any of the clauses above and pursuant to this
Section 11.1(b)(2) on the related Payment Date;

 

(3)           if
a Rating Confirmation Failure occurs, on each Payment Date commencing with the
Payment Date following the Calculation Date following such Rating Confirmation
Failure, to the extent that the amounts paid pursuant to
Section 11.1(a)(10) are insufficient to pay such amounts in full
thereunder, to pay principal on the Class A-1 Notes, the Class A-2
Notes, the Class A-3 Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes, the Class F Notes,
the Class G Notes, the Class H  Notes,
the Class J  Notes and the
Class K 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;

 

(4)           if
the Class A Notes and the Class B Notes are no longer Outstanding, to
pay Periodic Interest on the Class C Notes and any Defaulted Interest on
the Class C

 

165

 

Notes, to the
extent that the amounts paid pursuant to Section 11.1(a)(11) are
insufficient to pay such amounts in full thereunder;

 

(5)           if
the Class A Notes and the Class B Notes are no longer Outstanding, to
pay the Class C Cumulative Applicable Periodic Interest Shortfall Amount,
to the extent that the amounts paid pursuant to Section 11.1(a)(12) are
insufficient to pay such amounts in full thereunder;

 

(6)           if
the Class A Notes, the Class B Notes and the Class C Notes are
no longer Outstanding, to pay Periodic Interest on the Class D Notes and
any Defaulted Interest on the Class D Notes, to the extent that the
amounts paid pursuant to Section 11.1(a)(13) are insufficient to pay such
amounts in full thereunder;

 

(7)           if
the Class A Notes, the Class B Notes, and the Class C Notes are
no longer Outstanding, to pay the Class D Cumulative Applicable Periodic
Interest Shortfall Amount, to the extent that amounts paid pursuant to
Section 11.1(a)(14) are insufficient to pay such amounts in full
thereunder;

 

(8)           if
the Class A Notes, the Class B Notes, the Class C Notes and the
Class D Notes are no longer Outstanding, to pay Periodic Interest on the
Class E Notes and any Defaulted Interest on the Class E Notes, to the
extent that the amounts paid pursuant to Section 11.1(a)(15) are
insufficient to pay such amounts in full thereunder;

 

(9)           if
the Class A Notes, the Class B Notes, the Class C Notes, and the
Class D Notes are no longer Outstanding, to pay the Class E
Cumulative Applicable Periodic Interest Shortfall Amount, to the extent that
amounts paid pursuant to Section 11.1(a)(16) are insufficient to pay such
amounts in full thereunder;

 

(10)         if
either of the Class C/D/E Coverage Tests is not satisfied as of the
preceding Calculation Date and to the extent that the amounts paid pursuant to
Section 11.1(a)(17) are insufficient to cause the Class C/D/E
Coverage Tests to be satisfied, to pay principal of the most senior
Class of Notes then Outstanding until such Class C/D/E Coverage Test
is satisfied as of such Calculation Date or until such most senior
Class of Notes is paid in full, and then to pay principal of the next most
senior Class of Notes Outstanding until such Class C/D/E Coverage
Test is satisfied as of such Calculation Date or until such next most senior
Class of Notes is paid in full and so on, until such Class C/D/E
Coverage Test is satisfied or until the Class E Notes are paid in full; provided that for
purposes of determining if the Class C/D/E Principal Coverage Test is
satisfied after giving effect to any payments under this
Section 11.1(b)(9), the denominator of the Class C/D/E Principal
Coverage Ratio shall be calculated after giving effect to any payments of
principal on the Notes made pursuant to any of the foregoing sections above and
pursuant to this Section 11.1(b)(9) on the related Payment Date; provided, further, that
the numerator of the Class C/D/E Principal Coverage Ratio shall be
calculated after giving effect to any Collateral Principal Collections applied
pursuant to any of the subsections above and pursuant to this
Section 11.1(b)(9) on the related Payment Date;

 

(11)         if
the Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes and the Class E Notes are no longer Outstanding, to pay
Periodic Interest on the Class

 

166

 

F Notes and any Defaulted
Interest on the Class F Notes, to the extent that the amounts paid
pursuant to Section 11.1(a)(18) are insufficient to pay such amounts in
full thereunder;

 

(12)         if the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes and the Class E Notes are no longer
Outstanding, to pay the Class F Cumulative Applicable Periodic Interest
Shortfall Amount, to the extent that amounts paid pursuant to
Section 11.1(a)(19) are insufficient to pay such amounts in full
thereunder;

 

(13)         if the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes and the Class F
Notes are no longer Outstanding, to pay Periodic Interest on the Class G
Notes and any Defaulted Interest on the Class G Notes, to the extent that
the amounts paid pursuant to Section 11.1(a)(20) are insufficient to pay
such amounts in full thereunder;

 

(14)         if the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes and the Class F
Notes are no longer Outstanding, to pay the Class G Cumulative Applicable
Periodic Interest Shortfall Amount, to the extent that amounts paid pursuant to
Section 11.1(a)(21) are insufficient to pay such amounts in full
thereunder;

 

(15)         if the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes, the Class F Notes
or the Class G Notes are no longer Outstanding, to pay Periodic Interest
on the Class H Notes and any Defaulted Interest on the Class H Notes,
to the extent that the amounts paid pursuant to Section 11.1(a)(22) are
insufficient to pay such amounts in full thereunder;

 

(16)         if the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes, the Class F Notes
and the Class G Notes are no longer Outstanding, to pay the Class H
Cumulative Applicable Periodic Interest Shortfall Amount, to the extent that
amounts paid pursuant to Section 11.1(a)(23) are insufficient to pay such
amounts in full thereunder;

 

(17)         if either of the Class F/G/H Coverage Tests is not satisfied as of
the preceding Calculation Date and to the extent that the amounts paid pursuant
to Section 11.1(a)(24) are insufficient to cause the Class F/G/H
Coverage Tests to be satisfied, to pay principal of the most senior
Class of Notes then Outstanding until such Class F/G/H 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 F/G/H 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 F/G/H
Coverage Test is satisfied or until the Class H Notes are paid in full; provided that for purposes of determining
if the Class F/G/H Principal Coverage Test is satisfied after giving
effect to any payments under this Section 11.1(b)(17), the denominator of
the Class F/G/H Principal Coverage Ratio shall be calculated after giving
effect to any payments of principal on the Notes made pursuant to any section
or subsection of Section 11.1(a) on the related Payment Date and
pursuant to Section 11.1(b) above and this Section 11.1(b)(17)
on the related Payment Date; provided,
further, that the numerator of the Class F/G/H

 

167

 

Principal Coverage Ratio
shall be calculated after giving effect to any Collateral Principal Collections
applied pursuant to any of the foregoing sections above and pursuant to this
Section 11.1(b)(17) on the related Payment Date;

 

(18)         if the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes, the Class F Notes,
the Class G Notes and the Class H Notes are no longer Outstanding, to
pay Periodic Interest on the Class J Notes and any Defaulted Interest on
the Class J Notes, to the extent that the amounts paid pursuant to
Section 11.1(a)(25) are insufficient to pay such amounts in full
thereunder;

 

(19)         if the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes, the Class F Notes,
the Class G Notes and the Class H Notes are no longer Outstanding, to
pay the Class J Cumulative Applicable Periodic Interest Shortfall Amount,
to the extent that amounts paid pursuant to Section 11.1(a)(26) are
insufficient to pay such amounts in full thereunder;

 

(20)         if the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes, the Class F Notes,
the Class G Notes, the Class H Notes and the Class J Notes are
no longer Outstanding, to pay Periodic Interest on the Class K Notes and
any Defaulted Interest on the Class K Notes, to the extent that the
amounts paid pursuant to Section 11.1(a)(27) are insufficient to pay such
amounts in full thereunder;

 

(21)         if the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes, the Class F Notes,
the Class G Notes, the Class H Notes and the Class J Notes are
no longer Outstanding, to pay the Class K Cumulative Applicable Periodic
Interest Shortfall Amount, to the extent that amounts paid pursuant to
Section 11.1(a)(28) are insufficient to pay such amounts in full
thereunder;

 

(22)         during the Reinvestment Period,

 

(i)            to the purchase of Substitute Collateral Debt
Securities or to the Collection Account for reinvestment in Eligible
Investments pending investment in Substitute Collateral Obligations in
accordance with the Reinvestment Criteria; or: 

 

(ii)           upon the occurrence of a Special Amortization, Collateral Principal
Collections in an amount determined by the Collateral Manager (notice of which
shall be provided to the Trustee on or prior to the related Calculation Date)
will be applied as follows:

 

(A)          if the Special Amortization Pro-Rata Condition is satisfied, to pay
principal of the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes, the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes, the Class F Notes, the
Class G Notes, the Class H Notes, the Class J Notes and the
Class K Notes on a pro rata basis
(based on the outstanding principal balance (not including any Class C
Cumulative Applicable Periodic Interest Shortfall Amount, any Class D
Cumulative

 

168

 

Applicable Periodic Interest
Shortfall Amount, any Class E Cumulative Applicable Periodic Interest
Shortfall Amount, any Class F Cumulative Applicable Periodic Interest
Shortfall Amount, any Class G Cumulative Applicable Periodic Interest
Shortfall Amount, any Class H Cumulative Applicable Periodic Interest
Shortfall Amount, any Class J Cumulative Applicable Periodic Interest
Shortfall Amount or any Class K Cumulative Applicable Periodic Interest
Shortfall Amount, as the case may be), of each such Class of Secured
Notes); or;

 

(B)           if the Special Amortization Pro-Rata Condition is not satisfied, the
following payments in the following order of priority:

 

1)             to pay principal of any outstanding
Class A-1 Notes;

 

2)             if the principal balance of the
Class A-1 Notes has been repaid in full, to pay principal of the
Class A-2 Notes;

 

3)             if the principal balance of the
Class A-2 Notes has been repaid in full, to pay principal of the
Class A-3 Notes;

 

4)             if the principal balance of the
Class A-3 Notes has been repaid in full, to pay principal of the
Class B Notes;

 

5)             if the principal balance of the Class B
Notes has been repaid in full, to pay principal of the Class C Notes;

 

6)             if the principal balance of the Class C
Notes has been repaid in full, to pay principal of the Class D Notes;

 

7)             if the principal balance of the Class D Notes has been repaid in full, to pay principal of the Class E
Notes;

 

8)             if the principal balance of the Class E
Notes has been repaid in full, to pay principal of the Class F Notes;

 

9)             if the principal balance of the Class F
Notes has been repaid in full, to pay principal of the Class G Notes;

 

10)           if the principal balance of the Class G Notes has been repaid in
full, to pay principal of the Class H Notes;

 

11)           if the principal balance of the Class H Notes has been repaid in
full, to pay principal of the Class J Notes;

 

12)           if the principal balance of the Class J Notes has been repaid in
full, to pay principal of the Class K Notes;

 

(23)         after the end of the Reinvestment Period, to pay each Class of
Secured Notes:

 

169

 

(i)            first,  to the
Class A-1 Notes, until the Class A-1 Notes have been paid in full;

 

(ii)           second,  to the
Class A-2 Notes, until the Class A-2 Notes have been paid in full;

 

(iii)          third, to the Class A-3 Notes, until the Class A-3
Notes have been paid in full;

 

(iv)          fourth, to the Class B Notes, until the Class B
Notes have been paid in full;

 

(v)           fifth, to the Class C Notes, until the Class C
Notes have been paid in full;

 

(vi)          sixth, to the Class D Notes, until the Class D
Notes have been paid in full;

 

(vii)         seventh, to the Class E Notes, until the Class E
Notes have been paid in full;

 

(viii)        eighth, to the Class F Notes, until the Class F
Notes have been paid in full;

 

(ix)           ninth, to the Class G Notes, until the Class G
Notes have been paid in full;

 

(x)            tenth, to the Class H Notes, until the Class H
Notes have been paid in full;

 

(xi)           eleventh, to the Class J Notes, until the Class J
Notes have been paid in full;

 

(xii)          twelfth, to the Class K Notes, until the Class K
Notes have been paid in full;

 

(24)         to
pay, first, termination payments payable to any Hedge Counterparty upon the
termination of the related Hedge Agreement, if such termination occurred solely
as the result of an event of default or a termination event with respect to any
Hedge Counterparty as the Defaulting Party or the sole Affected Party, as the
case may be, to the extent that the amounts paid pursuant to
Section 11.1(a)(29) are insufficient to pay such amounts in full
thereunder, and second, termination payments to any
Derivative Contract Counterparty if such termination occurred solely as a
result of an event of default or a termination event with respect to which the
Derivative Contract Counterparty is the Defaulting Party or the sole Affected
Party, as the case may be, to the extent funds in the related Derivative
Contract Counterparty Account are insufficient and the amounts paid pursuant to
Section 11.1(a)(29) are insufficient to pay such amounts in full
thereunder;

 

(25)         to
pay, in the following order:

 

170

 

(i)            to
any Servicer or the Trustee, any reimbursements for nonrecoverable servicing
advances (together with interest thereon) due and owing and not paid out of
collections received pursuant to the terms of the related Servicing Agreement
or (in the case of the Trustee) pursuant to Section 11.1(b)(1) above;
and

 

(ii)           any
due and unpaid Trustee Expenses, and any due Administrative Expenses, including
amounts payable to the Collateral Manager under the Collateral Management
Agreement but excluding the Collateral Management Fee, in each case, in the
same order of priority as provided in Section 11.1(b)(1) above and to
the extent not paid in full under Section 11.1(b)(1) above and to the
extent that the amounts paid pursuant to Section 11.1(a)(1) and (30)
are insufficient to pay such amounts in full thereunder;

 

(26)         to
pay, first, the
Subordinate Collateral Management Fee with respect to such Payment Date and any
due and unpaid Subordinate Collateral Management Fee with respect to a previous
Payment Date that was not paid on a previous Payment Date, and second, any
accrued and unpaid interest on the then-due and unpaid Collateral Management
Fee, to the extent that the amounts paid pursuant to Section 11.1(a)(31)
are insufficient to pay such amounts in full thereunder;

 

(27)         to
repay, pro rata, the
amount of any outstanding Cure Advances, if any to the extent that the amounts
paid pursuant to Section 11.1(a)(32) are insufficient to pay such amounts
in full thereunder; and

 

(28)         all
Income Note Excess Funds to the Income Note Paying Agent, on behalf of the
Issuer, for distributions on the Income Notes in accordance with the Income Note
Paying Agency Agreement.

 

(c)           If
an Event of Default has occurred and is continuing, on the date or dates
determined by the Trustee upon a declaration of acceleration of the maturity of
the Notes, the Trustee will pay, from all collections from, and proceeds of the
sale or liquidation of, the Collateral (excluding any unpaid Nonrecoverable
Cure Advances and any other amounts due under any Servicing Agreement together
with interest thereon), in the following order:

 

(1)           amounts
corresponding to any amounts payable under in
Section 11.1(a)(1) through (4), and (to the extent not covered by
Section 11.1(a)(1) through (4)) Section 11.1(b)(1);

 

(2)           the
Periodic Interest on the Class A-1 Notes (including Defaulted Interest on
such Class A-1 Notes, if any);

 

(3)           outstanding
principal on the Class A-1 Notes until paid in full;

 

(4)           the
Periodic Interest on the Class A-2 Notes (including Defaulted Interest on
such Class A-2 Notes, if any);

 

(5)           outstanding
principal on the Class A-2 Notes until paid in full];

 

171

 

(6)           the Periodic Interest on the Class A-3 Notes (including Defaulted
Interest on such Class A-3 Notes, if any);

 

(7)           outstanding principal on the Class A-3 Notes until paid in full;

 

(8)           the Periodic Interest on the Class B Notes (including Defaulted
Interest on the Class B Notes, if any) and then outstanding principal on
the Class B Notes until paid in full;

 

(9)           the Periodic Interest on the Class C Notes (including Defaulted
Interest on the Class C Notes, if any) and then outstanding principal on
the Class C Notes (including, the Class C Cumulative Applicable
Periodic Interest Shortfall Amount, if any) until paid in full;

 

(10)         the Periodic Interest on the Class D Notes (including Defaulted
Interest on the Class D Notes, if any) and then outstanding principal on
the Class D Notes (including, the Class D Cumulative Applicable
Periodic Interest Shortfall Amount, if any) until paid in full;

 

(11)         the Periodic Interest on the Class E Notes (including Defaulted
Interest on the Class E Notes, if any) and then outstanding principal on
the Class E Notes (including, the Class E Cumulative Applicable
Periodic Interest Shortfall Amount, if any) until paid in full;

 

(12)         the Periodic Interest on the Class F Notes (including any
Defaulted Interest on the Class F Notes, if any) and then outstanding
principal on the Class F Notes (including, the Class F Cumulative
Applicable Periodic Interest Shortfall Amount, if any) until paid in full,

 

(13)         the Periodic Interest on the Class G Notes (including any
Defaulted Interest on the Class G Notes, if any) and then outstanding
principal on the Class G Notes (including, the Class G Cumulative
Applicable Periodic Interest Shortfall Amount, if any) until paid in full;

 

(14)         the Periodic Interest on the Class H Notes (including any
Defaulted Interest on the Class H Notes, if any) and then outstanding
principal on the Class H Notes (including, the Class H Cumulative
Applicable Periodic Interest Shortfall Amount, if any) until paid in full;

 

(15)         the Periodic Interest on the Class J Notes (including any
Defaulted Interest on the Class J Notes, if any) and then outstanding
principal on the Class J Notes (including, the Class J Cumulative
Applicable Periodic Interest Shortfall Amount, if any) until paid in full;

 

(16)         the Periodic Interest on the Class K Notes (including any
Defaulted Interest on the Class K Notes, if any) and then outstanding
principal on the Class K Notes (including, the Class K Cumulative
Applicable Periodic Interest Shortfall Amount, if any) until paid in full;

 

(17)         amounts corresponding to the amounts set forth in
Section 11.1(a)(29) through (32), and Section 11.1(b)(24) through
(27); and

 

172

 

(18)                            to
the Income Note Paying Agent, any remaining amounts for distributions on the
Income Notes as set forth in Section 11.1(a)(34) and
Section 11.1(b)(28).

 

(d)                                 Not
later than 12:00 p.m., New York time, on or before the Business Day
preceding each Payment Date, the Issuer shall, pursuant to Article X,
remit or cause to be remitted to the Trustee for deposit in the Payment Account
an amount of Cash sufficient to pay the amounts described in
Section 11.1(a) and 11.1(b) required to be paid on such Payment Date.

 

(e)                                  If,
on any Payment Date, the amount available in the Payment Account from amounts
received in the related Due Period is insufficient to make the full amount of
the disbursements required by the statements furnished by the Issuer pursuant
to Section 10.14(b), the Trustee shall make the disbursements called for
in the order and according to the priority set forth under
Section 11.1(a) and 11.1(b), subject to Section 13.1, to the
extent funds are available therefor.

 

(f)                                    Except
as otherwise expressly provided in this Section 11.1, if on any Payment
Date the amount of funds is insufficient to make the full amount of the
disbursements required by any section or subsection of
Section 11.1(a) or 11.1(b) to different Persons, the Trustee
shall make the disbursements called for by such section or subsection ratably
in accordance with the respective amounts of such disbursements then due and
payable to the extent funds are available therefor.

 

(g)                                 Any
amounts to be paid to the Income Note Paying Agent pursuant to
Section 11.1(a)(34) or to Section 11.1(b)(28) will be released from
the lien of this Indenture.

 

(h)                                 No
Collateral Principal Collections will be paid to a Class of Secured Notes
in accordance with the Priority of Payments on a Payment Date if, after giving
effect to such payment, any Principal Coverage Test for a more Senior
Class of Secured Notes would have failed.

 

ARTICLE XII

 

PURCHASE
AND SALE OF COLLATERAL DEBT SECURITIES

 

12.1.                        SALE OF COLLATERAL DEBT
SECURITIES

 

(a)                                  Sale of Collateral Debt Securities.

 

(1)           Subject to the satisfaction of the
conditions specified in Section 10.15 as applicable, if the Collateral
Manager, on behalf of the Issuer, pursuant to this Article XII, shall
direct the Trustee to sell any Temporary Ramp-Up Security, Defaulted Security,
Equity Security, Credit Improved Security, Credit Risk Security, Written Down
Security or Withholding Tax Security, the Trustee shall sell in the manner
directed by the Collateral Manager, any Temporary Ramp-Up Security, Defaulted
Security, Equity Security, Credit Improved Security, Credit Risk Security,
Written Down Security or Withholding Tax Security.

 

(2)           During the Ramp-Up
Period, and in any event, no later than the Effective Date, the Collateral
Manager shall direct the Issuer to sell or otherwise dispose of all Temporary
Ramp-Up Securities. Sale Proceeds received with respect to

 

173

 

Temporary Ramp-Up Securities
shall be reinvested 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.$1,000,000 of such
Sale Proceeds that may be reinvested in Substitute Collateral Debt Securities
that are not Fixed Rate Collateral Debt Securities, shall be treated as
Collateral Principal Collections and shall be applied by the Issuer to the
making of payments on the Notes, subject to and in accordance with the Priority
of Payments, on the Payment Date immediately following the Effective Date.

 

(b)                                 Reinvestment Criteria. Following the Closing Date, the Collateral Manager will make
commercially reasonable efforts to direct the reinvestment of Sale Proceeds
received at any time on Collateral Debt Securities that are Defaulted
Securities, Equity Securities, Credit Improved Securities, Credit Risk
Securities, Written Down Securities, Repurchased Securities or Withholding Tax
Securities, as well as Collateral Principal Payments in Substitute Collateral
Debt Securities with an aggregate Principal Balance no less than the amount of
the Sale Proceeds from the sale of such Collateral Debt Securities, in each
case during the Ramp-Up Period and thereafter during the Reinvestment Period,
subject to complying with the Eligibility Criteria and the Reinvestment
Criteria described below, or may direct the investment of such Sale Proceeds
temporarily in Eligible Investments pending such reinvestment in Substitute Collateral
Debt Securities. Any such Sale Proceeds and Collateral Principal Payments will
be eligible to be reinvested in Substitute Collateral Debt Securities by the
Issuer and pledged to the Trustee if such Substitute Collateral Debt Securities
meet each of the Reinvestment Criteria.

 

If the Collateral Manager
determines, in its sole discretion, that investments in additional Collateral
Debt Securities would either be impractical or not beneficial, an amount of
Collateral Principal Collections available for reinvestment pursuant to the
Priority of Payments as determined by the Collateral Manager will be applied to
principal on the Notes in a Special Amortization. Collateral Principal
Collections (including Sale Proceeds) will not be reinvested following the Reinvestment
Period.

 

Notwithstanding the
foregoing restrictions, the Collateral Manager will direct the Trustee to sell,
and, the Trustee will sell in accordance with such direction, all Collateral
Debt Securities in connection with a Redemption of the Notes, subject to the
satisfaction of the conditions set forth in Article IX herein. During the
Reinvestment Period, principal of the Notes will be payable on any Payment Date
in a Special Amortization if the Collateral Manager has notified the Trustee in
writing on or before the related Calculation Date that it has determined, in
its sole discretion, that investments in additional Collateral Debt Securities
would not be practical or beneficial.

 

During the Ramp-Up Period,
Substitute Collateral Debt Securities will be purchased with Collateral
Principal Collections, if sufficient Collateral Principal Collections are
available, and only if sufficient Collateral Principal Collections are not
available, with Uninvested Proceeds.

 

(c)                                  Discretionary Sales. So long as no Event of
Default has occurred and is continuing, the Collateral Manager, on behalf of
the Issuer, may, during the Reinvestment Period, direct the Trustee to sell,
and the Trustee will sell in the manner directed by the Collateral

 

174

 

Manager, any
Collateral Debt Security (in addition to sales of any Defaulted Securities,
Credit Risk Securities, Withholding Tax Securities, Repurchased Securities,
Credit Improved Securities, Equity Securities and Written Down Securities)
(each such sale a Discretionary Sale)  so
long as each of the following applies:

 

(1)                                the aggregate Principal
Balance of all Collateral Debt Securities sold pursuant to such Discretionary
Sales for a given calendar year does not exceed 10% of the CDS Principal
Balance at the beginning of that year (or, with respect to calendar year 2007,
as of the Closing Date);

 

(2)                                the
Collateral Manager believes in good faith that Sale Proceeds from such sale can
be reinvested within 60 Business Days after the sale of such Collateral Debt
Security in one or more Substitute Collateral Debt Securities having an
aggregate Principal Balance of not less than 100% of the Principal Balance of
the Collateral Debt Security being sold;

 

(3)                                after
giving effect to such sale and to the purchase of Substitute Collateral Debt
Securities with the Sale Proceeds thereof, the Reinvestment Criteria will be
met; and

 

(4)                                such
Collateral Manager has not been removed, or voted to be removed, for “cause” as
set forth in the Collateral Management Agreement.

 

12.2.                        PORTFOLIO CHARACTERISTICS

 

Except as
provided in Section 12.3(c), a security will be eligible for inclusion in
the Collateral as a Pledged Collateral Debt Security only if, as evidenced by
an Officer’s certificate from the Collateral Manager to the Trustee, each of
the following eligibility criteria is satisfied immediately after the Issuer
Grants such Collateral Debt Security to the Trustee (collectively, the Eligibility
Criteria):

 

(a)                                  (1) it
is issued by an issuer incorporated or organized under the laws of the United
States of America or it is issued by a Qualifying Foreign Obligor, (2) it
is issued by a Special Purpose Vehicle or (3) S&P has rated such
security or any securities issued in connection with its related securitization;

 

(b)                                 if
it is a Real Estate Interest it is secured by, or the payment obligations of
which are tied to, collateral substantially all of which is located in the
United States or a commonwealth, territory or possession of the United States;

 

(c)                                  the
principal balance of the Collateral Debt Security is not currently reduced by a
realized loss, expected loss, appraisal event, appraisal reduction or similar
item, other than any Real Estate Interest as to which a workout or other
restructuring has occurred but as to which no such reduction has occurred since
the completion of such workout or restructuring;

 

(d)                                 if
such Collateral Debt Security has attached “buy/sell” rights in favor of the
Issuer, such rights are freely assignable by the Issuer to any of its
Affiliates;

 

(e)                                  it
is U.S. Dollar-denominated, and it is not convertible into, or payable in, any
other currency;

 

175

 

(f)                                    it
is one (or, in the case of a Synthetic Security, references at least one of) of
the Specified Types of Collateral Debt Securities;

 

(g)                                 it
has an S&P Rating (which rating does not include a “p”, “pi”, “q”, “t” or
“r” subscript), a Moody’s Rating
and a Fitch Rating;

 

(h)                                 the
acquisition, ownership, enforcement and disposition of such security will not
cause the Issuer to be treated as engaged in a U.S. trade or business for U.S.
federal income tax purposes or otherwise to be subject to tax on a net income
basis in any jurisdiction outside the Issuer’s jurisdiction of incorporation
(other than as attributable to property received in connection with a
foreclosure, as permitted under the Transaction Documents);

 

(i)                                     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;

 

(j)                                     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;

 

(k)                                  it
is not a security that is ineligible under its Underlying Instruments to be
purchased by the Issuer and pledged to the Trustee;

 

(l)                                     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;

 

(m)                               it
is not a security that provides for the payment of principal upon maturity,
redemption or acceleration at less than the par amount thereof;

 

(n)                                 unless
it is a Derivative Contract, its Underlying Instruments do not obligate the
Issuer to make any future advances or any other payment except the purchase price
thereof;

 

(o)                                 it
is not an Equity Security, Principal Only Security or Interest Only Security;

 

(p)                                 it
is not a security issued by an Emerging Market Issuer;

 

(q)                                 it
is not a security that has, at the time of purchase, any deferred or
capitalized interest;

 

(r)                                    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;

 

(s)                                  (a) if
it is a Derivative Contract, the Derivative Contract Counterparty, at the time
of entry into such Derivative Contract, has a short term rating of at least
“A-1+” by S&P (or “A-1” by S&P if the premium (and any other relevant
amount (such as coupon) required under the related Derivative Contract) to be
paid by such Derivative Contract Counterparty is posted at least one payment
period in advance for the term of the Derivative Contract) and is not on
negative watch and a long term rating of at least “A2” and a short term rating
of “P1” by Moody’s, or if there is no short term rating, a long term rating of
at least “A1” by Moody’s, and (b) in the case of any Synthetic Security
other than a Derivative Contract, such Synthetic Security Counterparty has a
short term rating

 

176

 

of at least
“A-1” by S&P, or if no such short term rating is available, a long-term
rating of at least “A” by S&P and a long term rating of at least “A2” and a
short term rating of “P1” by Moody’s, or if there is no short term rating, a
long term rating of at least “Al” by Moody’s;

 

(t)                                    at
the time the security is purchased by the Issuer:

 

(1)                                  it
is not a security issued by an issuer located in a country that imposes foreign
exchange controls that effectively limit the availability or use of U.S.
Dollars to make when due the scheduled payments of principal and interest on
such security;

 

(2)                                  it
is not, and does not provide for conversion or exchange into, Margin Stock at
any time over its life;

 

(3)                                  it
is not 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;

 

(4)                                  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;

 

(5)                                  it
is not a financing by a debtor-in-possession in any insolvency proceeding;

 

(6)                                  it
is not a first loss tranche of any securitization unless such tranche has an
S&P Rating (as defined in clause (i) of the definition of S&P
Rating) or a Moody’s Rating (as defined in clause (i) of the definition of
Moody’s Rating) that addresses the obligation of the obligor (or guarantor, if
applicable) to pay principal of and interest on the relevant Collateral Debt
Security in full, which ratings are monitored on an ongoing basis by the
relevant Rating Agency;

 

(7)                                  if
it is a Deemed Floating Rate Collateral Debt Security, the Deemed Floating
Asset Hedge entered into with respect to such Deemed Floating Rate Collateral
Debt Security conforms to all requirements set forth in the definition of Deemed
Floating Asset Hedge;

 

(8)                                  if
it is a Collateral Debt Security that is a REIT Debt Security, Trust Preferred
Security, CMBS Security, Real Estate CDO Security or CRE Debt Obligation and is
acquired after the Closing Date from the Collateral Manager or any of its
Affiliates, the requirements set forth in Exhibit G regarding the
representations and warranties (and remedies for any breach thereof) with
respect to such Collateral Debt Security have been met;

 

(9)                                  if
it is a Real Estate Interest, (i) it is either (a) serviced pursuant
to a Servicing Agreement or (b) solely with regard to any Subordinate Loan
Interest, the related

 

177

 

Senior Loan
has been included in a transaction that would be classified as a CMBS Conduit
Security or a CMBS Large Loan Security with an S&P Servicer, (ii) the
requirements set forth in Exhibit F regarding the representations and
warranties (and remedies for any breach thereof) with respect to such Real
Estate Interest have been met; and (iii) the Underlying Instruments
contain the basic terms that are generally accepted as market standard in the
CMBS industry for Underlying Instruments; and

 

(10)                            it
is not a Prohibited Asset;

 

provided
that notwithstanding anything to the contrary herein,
the Issuer may, while attempting to dispose of property acquired in foreclosure
or similar circumstances, make an election under Section 882(d) of
the Code to treat the income related to real property located in the United
States as income that is effectively connected with a U.S. trade or business; provided, further that except for property
acquired by the Issuer in foreclosure or similar circumstances and for property
expressly permitted to be acquired by the Issuer, the Issuer may not purchase,
acquire or hold (whether as part of a unit with a Collateral Debt Security, in
exchange for a Collateral Debt Security or otherwise) any asset unless the
underlying documents for such asset specify, or the Issuer has received advice
of tax counsel of nationally recognized standing in the United States
experienced in such matters to the effect that, under the relevant facts and
circumstances with respect to such transaction, for U.S. federal income tax
purposes, (i) the obligation or security is indebtedness, (ii) all
obligors and issuers of the assets are classified as corporations (and no
elections have been made to the contrary), (iii) no obligor on or issuer
of the asset is engaged in the conduct of a trade or business within the United
States, or (iv) all obligors and issuers of the assets qualify as “grantor
trusts”, and all of the assets of the obligors and issuers consist of
obligations or securities that the Issuer could have directly acquired and held
as assets (but for restrictions related to withholding taxes) and,
notwithstanding anything to the contrary herein, the Issuer shall not purchase,
acquire or hold any asset the gain from the disposition of which will be
subject to U.S. federal income or withholding tax under Section 897 or
Section 1445 of the Code and the Treasury regulations promulgated
thereunder other than United States real property interests that the Issuer
acquires in foreclosure and with respect to which has made a
Section 882(d) election.

 

12.3.                        CONDITIONS APPLICABLE TO ALL TRANSACTIONS INVOLVING SALE OR GRANT

 

(a)                                  Any
transaction effected under Article V, Article IX, Section 10.2
or Section 12.1 shall be conducted on an arms’ length basis and if
effected with the Issuer, the Trustee, the Collateral Manager or any Affiliate
of any of the foregoing, shall be effected in a secondary market transaction on
terms at least as favorable to the Secured Noteholders as would be the case if
such Person were not so Affiliated; provided that
any disposition of a Collateral Debt Security in accordance with
Section 12.1 shall be deemed to comply with this Section 12.3(a). The
Trustee shall have no responsibility to oversee compliance with this clause by
the other parties.

 

(b)                                 Upon
any purchase or substitution pursuant to this Article XII, all of the
Issuer’s right, title and interest to the Pledged Security or Securities shall
be, and hereby is, Granted to the Trustee pursuant to this Indenture, such
Pledged Security or Securities shall be registered in the name of the Trustee,
and, if applicable, the Trustee shall receive such Pledged Security or
Securities. The Trustee shall receive, not later than the date of delivery of
any Pledged Security pursuant to a purchase under this Article XII,
(a) an Officer’s Certificate of the Collateral Manager certifying
(1) compliance with the Reinvestment Criteria in accordance with
Section 12.1(b), (2) that the Collateral Debt Security to be sold
constitutes an Equity Security, a Defaulted Security, a Credit Risk

 

178

 

Security, a
Credit Improved Security, a Withholding Tax Security or a Written Down Security
and (3) that any security to be purchased satisfies the definition of
Collateral Debt Security and (b) an Officer’s Certificate of the
Collateral Manager on behalf of the Issuer containing the statements set forth
in Section 3.2(b)(2) through (4), (6) and (7).

 

(c)                                  Notwithstanding
anything contained in this Article XII to the contrary, the Issuer shall,
subject to Section 12.3(d), have the right to effect any transaction to
which each Hedge Counterparty and Holders of Secured Notes evidencing 100% of
the Aggregate Outstanding Amount of each Class of Secured Notes, and each
Income Noteholder has consented, and of which each Rating Agency has been
notified in advance.

 

(d)                                 Except
as specifically provided in this Indenture, in no event may the Issuer
(i) engage in any business or activity that would cause the Issuer to be
treated as engaged in a U.S. trade or business for U.S. federal income tax
purposes or (ii) acquire or hold any asset that is an equity interest in
an entity that is treated as a partnership engaged in a U.S. trade or business
for U.S. federal income tax purposes or the acquisition or ownership of which
otherwise would subject the Issuer to net income tax in any jurisdiction
outside its jurisdiction of incorporation. The foregoing shall not, however,
preclude the Issuer from holding Equity Securities or securities received in an
Offer pending their sale in accordance with Section 12.1(a)(1).

 

ARTICLE XIII

 

SECURED
PARTIES’ RELATIONS

 

13.1.                        SUBORDINATION

 

(a)                                  Anything
in this Indenture or the Secured Notes to the contrary notwithstanding, the
Issuer and the Holders of the Secured Notes agree for the benefit of each Hedge
Counterparty that the Secured Notes and the Issuer’s rights in and to the
Collateral (solely with respect to all amounts payable to such Hedge
Counterparty pursuant to Section 11.1(a)(4)), the Subordinate Interests)  shall be subordinate and junior to
the rights of such Hedge Counterparty with respect to payments to be made to
such Hedge Counterparty pursuant to the related Hedge Agreement to the extent
and in the manner set forth in Section 11.1(a)(4) and hereinafter
provided. If any Event of Default (including an Event of Default specified in
Section 5.1(g) or (h)) has occurred and has not been cured or waived
all amounts payable to such Hedge Counterparty pursuant to
Section 11.1(a)(4) shall be paid in Cash or, to the extent such Hedge
Counterparty consents, other than in Cash, before any further payment or
distribution is made on account of the Subordinate Interests.

 

(b)                                 Anything
in this Indenture or the Secured Notes to the contrary notwithstanding, the
Issuer and the Holders of the Class A-2 Notes, the Class A-3 Notes,
the Class B Notes, the Class C Notes, the Class D Notes, the
Class E Notes, the Class F Notes, the Class G Notes, the
Class H Notes, the Class J Notes and the Class K Notes agree for
the benefit of the Holders of the Class A-1 Notes that the Class A-2
Notes, the Class A-3 Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes, the Class F Notes,
the Class G Notes, the Class H Notes, the Class J Notes and the
Class K Notes and the Issuer’s rights in and to the Collateral (with
respect to the Class A-1 Notes, the Subordinate Interests) shall be
subordinate and junior to the Class A-1 Notes to the extent and in the
manner set forth in this Indenture, including as set forth in
Section 11.1(a) and

 

179

 

hereinafter
provided. If any Event of Default (including an Event of Default specified in
Section 5.1(g) or (h)) has occurred and has not been cured or waived,
the Class A-1 Notes shall be paid in full in Cash or, to the extent a
Majority of the Class A-1 Notes consent, other than in Cash, before any
further payment or distribution is made on account of the Subordinate
Interests. The Holders of Secured Notes evidencing Subordinate Interests and
the holders of equity in the Issuer agree, for the benefit of the Holders of
the Class A-1 Notes, not to cause the filing of a petition in bankruptcy
against the Issuer for failure to pay to them amounts due under the Secured
Notes evidencing such Subordinate Interests or hereunder until the payment in
full of the Class A-1 Notes and not before one year and one day has
elapsed since such payment or, if longer, the applicable preference period then
in effect, including any period established pursuant to the laws of the Cayman
Islands.

 

(c)                                  Anything
in this Indenture or the Secured Notes to the contrary notwithstanding, the
Issuer and the Holders of the Class A-3 Notes, the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes, the
Class F Notes, the Class G Notes, the Class H Notes, the
Class J Notes and the Class K Notes agree for the benefit of the
Holders of the Class A-1 Notes and Class A-2 Notes that the
Class A-3 Notes, the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes, the Class F Notes, the
Class G Notes, the Class H Notes, the Class J Notes and the
Class K Notes and the Issuer’s rights in and to the Collateral (with
respect to the Class A-1 Notes and the Class A-2 Notes, the
Subordinate Interests) shall be subordinate and junior to the Class A-1
Notes and the Class A-2 Notes to the extent and in the manner set forth in
this Indenture, including as set forth in Section 11.1(a) and
hereinafter provided. If any Event of Default (including an Event of Default
specified in Section 5.1(g) or (h)) has occurred and has not been
cured or waived, the Class A-1 Notes and the Class A-2 Notes shall be
paid in full in Cash or, to the extent a Majority of the Class A-1 Notes
and the Class A-2 Notes consent, other than in Cash, before any further
payment or distribution is made on account of the Subordinate Interests. The
Holders of Secured Notes evidencing Subordinate Interests and the holders of
equity in the Issuer agree, for the benefit of the Holders of the Class A-1
Notes and the Class A-2 Notes, not to cause the filing of a petition in
bankruptcy against the Issuer for failure to pay to them amounts due under the
Secured Notes evidencing such Subordinate Interests or hereunder until the
payment in full of the Class A-1 Notes and the Class A-2 Notes and
not before one year and one day has elapsed since such payment or, if longer,
the applicable preference period then in effect, including any period
established pursuant to the laws of the Cayman Islands.

 

(d)                                 Anything
in this Indenture or the Secured Notes to the contrary notwithstanding, the
Issuer and the Holders of the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes, the Class F Notes, the
Class G Notes, the Class H Notes, the Class J Notes and the
Class K Notes agree for the benefit of the Holders of the Class A
Notes that the Class B Notes, the Class C Notes, the Class D
Notes, the Class E Notes, the Class F Notes, the Class G Notes,
the Class H Notes, the Class J Notes and the Class K Notes and
the Issuer’s rights in and to the Collateral (with respect to the Class A
Notes, the Subordinate Interests) shall be subordinate and junior to the
Class A Notes to the extent and in the manner set forth in this Indenture,
including as set forth in Section 11.1(a) and hereinafter provided.
If any Event of Default (including an Event of Default specified in
Section 5.1(g) or (h)) has occurred and has not been cured or waived,
the Class A Notes shall be paid in full in Cash or, to the extent a
Majority of the Class A Notes consent, other than in Cash, before any
further payment or distribution is made on account of the Subordinate
Interests. The Holders of Secured Notes evidencing Subordinate Interests

 

180

 

and the
holders of equity in the Issuer agree, for the benefit of the Holders of the
Class A Notes, not to cause the filing of a petition in bankruptcy against
the Issuer for failure to pay to them amounts due under the Secured Notes
evidencing such Subordinate Interests or hereunder until the payment in full of
the Class A Notes and not before one year and one day has elapsed since
such payment or, if longer, the applicable preference period then in effect,
including any period established pursuant to the laws of the Cayman Islands.

 

(e)                                  Anything
in this Indenture or the Secured Notes to the contrary notwithstanding, the
Issuer and the Holders of the Class C Notes, the Class D Notes, the
Class E Notes, the Class F Notes, the Class G Notes, the
Class H Notes, the
Class J Notes and the Class K Notes agree for the benefit of the
Holders of the Class A Notes and the Class B Notes that the
Class C Notes, the Class D Notes, the Class E Notes, the
Class F Notes, the Class G Notes, the Class H Notes, the Class J
Notes and the Class K Notes and the Issuer’s rights in and to the
Collateral (with respect to the Class A Notes and the Class B Notes,
the Subordinate
Interests)  shall be
subordinate and junior to the Class A Notes and the Class B Notes to
the extent and in the manner set forth in this Indenture, including as set
forth in Section 11.1(a) and hereinafter provided. If any Event of
Default (including an Event of Default specified in Section 5.1(g) or
(h)) has occurred and has not been cured or waived, the Class A Notes and the
Class B Notes shall be paid in full in Cash or, to the extent a Majority
of the Class A Notes and the Class B Notes consent, other than in
Cash, before any further payment or distribution is made on account of the
Subordinate Interests. The Holders of Secured Notes evidencing Subordinate
Interests and the holders of equity in the Issuer agree, for the benefit of the
Holders of the Class A Notes and the Class B Notes, not to cause the
filing of a petition in bankruptcy against the Issuer for failure to pay to
them amounts due under the Secured Notes evidencing such Subordinate Interests
or hereunder until the payment in full of the Class A Notes and the
Class B Notes and not before one year and one day has elapsed since such
payment or, if longer, the applicable preference period then in effect,
including any period established pursuant to the laws of the Cayman Islands.

 

(f)                                    Anything
in this Indenture or the Secured Notes to the contrary notwithstanding, the
Issuer and the Holders of the Class D Notes, the Class E Notes, the
Class F Notes, the Class G Notes, the Class H Notes, the
Class J Notes and the Class K Notes agree for the benefit of the
Holders of the Class A Notes, the Class B Notes and the Class C
Notes that the Class D Notes,
the Class E Notes, the Class F Notes, the Class G Notes, the
Class H Notes, the
Class J Notes and the Class K Notes and the Issuer’s rights in and to
the Collateral (with respect to the Class A Notes, the Class B Notes
and the Class C Notes, the Subordinate Interests) shall be subordinate and
junior to the Class A Notes, the Class B Notes and the Class C
Notes to the extent and in the manner set forth in this Indenture including as
set forth in Section 11.1(a) and hereinafter provided. If any Event
of Default (including an Event of Default specified in
Section 5.1(g) or (h)) has occurred and has not been cured or waived
the Class A Notes, the Class B Notes and the Class C Notes shall
be paid in full in Cash or, to the extent a Majority of each of the
Class A Notes, the Class B Notes and the Class C Notes consent,
other than in Cash, before any further payment or distribution is made on
account of the Subordinate Interests. The Holders of Secured Notes evidencing
Subordinate Interests and the holders of equity in the Issuer agree, for the
benefit of the Holders of the Class A Notes, the Class B Notes and the Class C Notes,
not to cause the filing of a petition in bankruptcy against the Issuer for
failure to pay to them amounts due under the Secured Notes evidencing such
Subordinate Interests or hereunder until the payment in full of the
Class A Notes, the

 

181

 

Class B
Notes and the Class C Notes and not before one year and one day has
elapsed since such payment or, if longer, the applicable preference period then
in effect, including any period established pursuant to the laws of the Cayman
Islands.

 

(g)                                 Anything
in this Indenture or the Secured Notes to the contrary notwithstanding, the
Issuer and the Holders of the Class E Notes, Class F Notes,
Class G Notes, Class H Notes, Class J Notes and Class K
agree for the benefit of the Holders of the Class A Notes, the
Class B Notes, the Class C Notes and the Class D Notes that the
Class E Notes, the Class F Notes, the Class G Notes, the
Class H Notes, the Class J Notes and the Class K Notes and the
Issuer’s rights in and to the Collateral (with respect to the Class A
Notes, the Class B Notes, the Class C Notes and the Class D
Notes, the Subordinate
Interests)  shall be
subordinate and junior to the Class A Notes, the Class B Notes, the
Class C Notes and the Class D
Notes to the extent and in the manner set forth in this Indenture
including as set forth in Section 11.1(a) and hereinafter provided.
If any Event of Default (including an Event of Default specified in Section 5.1(g) or
(h)) has occurred and has not been cured or waived the Class A Notes, the
Class B Notes, the Class C Notes and the Class D Notes shall be
paid in full in Cash or, to the extent a Majority of each of Class A
Notes, the Class B Notes, the Class C Notes and the Class D
Notes consent, other than in Cash, before any further payment or distribution
is made on account of the Subordinate Interests. The Holders of Secured Notes
evidencing Subordinate Interests and the holders of equity in the Issuer agree,
for the benefit of the Holders of the Class A Notes, the Class B
Notes, the Class C Notes and the Class D Notes, not to cause the
filing of a petition in bankruptcy against the Issuer for failure to pay to
them amounts due under the Secured Notes evidencing such Subordinate Interests
or hereunder until the payment in full of the Class A Notes, the
Class B Notes, the Class C Notes and the Class D Notes and not
before one year and one day has elapsed since such payment or, if longer, the
applicable preference period then in effect, including any period established
pursuant to the laws of the Cayman Islands.

 

(h)                                 Anything
in this Indenture or the Secured Notes to the contrary notwithstanding, the
Issuer and the Holders of the Class F Notes, Class G Notes, Class H
Notes, Class J Notes and Class K Notes agree for the benefit of the
Holders of the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes and the Class E Notes that the Class F
Notes, the Class G Notes, the Class H Notes, the Class J Notes
and the Class K Notes and the Issuer’s rights in and to the Collateral
(with respect to the Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes and the Class E Notes, the Subordinate
Interests)  shall be
subordinate and junior to the Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes and the Class E Notes to the extent and in the manner
set forth in this Indenture including as set forth in
Section 11.1(a) and hereinafter provided. If any Event of Default
(including an Event of Default specified in Section 5.1(g) or (h))
has occurred and has not been cured or waived the Class A Notes, the
Class B Notes, the Class C Notes, the Class D Notes and the
Class E Notes shall be paid in full in Cash or, to the extent a Majority
of each of Class A Notes, the Class B Notes, the Class C Notes,
the Class D Notes and the Class E Notes consent, other than in Cash,
before any further payment or distribution is made on account of the
Subordinate Interests. The Holders of Secured Notes evidencing Subordinate
Interests and the holders of equity in the Issuer agree, for the benefit of the
Holders of the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes
and the Class E Notes, not to cause the filing of a petition in bankruptcy
against the Issuer for failure to pay to them amounts due under the Secured
Notes evidencing such Subordinate Interests or hereunder until the payment in
full of the Class A Notes, the Class B Notes, the Class C Notes,
the Class D

 

182

 

 

Notes and the
Class E Notes and not before one year and one day has elapsed since such
payment or, if longer, the applicable preference period then in effect,
including any period established pursuant to the laws of the Cayman Islands.

 

(i)                                     Anything
in this Indenture or the Secured Notes to the contrary notwithstanding, the
Issuer and the Holders of the Class G Notes, Class H Notes,
Class J Notes and the Class K Notes agree for the benefit of the
Holders of the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes and the Class F
Notes that the Class G Notes, the Class H Notes, the Class J
Notes and the Class K Notes and the Issuer’s rights in and to the
Collateral (with respect to the Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes and the
Class F Notes, the Subordinate Interests)  shall
be subordinate and junior to the Class A Notes, the Class B Notes,
the Class C Notes, the Class D Notes, the Class E Notes and the
Class F Notes to the extent and in the manner set forth in this Indenture
including as set forth in Section 11.1(a) and hereinafter provided.
If any Event of Default (including an Event of Default specified in
Section 5.1(g) or (h)) has occurred and has not been cured or waived
the Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes and the Class F Notes shall be
paid in full in Cash or, to the extent a Majority of each of Class A
Notes, the Class B Notes, the Class C Notes, the Class D Notes,
the Class E Notes and the Class F Notes consent, other than in Cash,
before any further payment or distribution is made on account of the
Subordinate Interests. The Holders of Secured Notes evidencing Subordinate
Interests and the holders of equity in the Issuer agree, for the benefit of the
Holders of the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes and the Class F
Notes, not to cause the filing of a petition in bankruptcy against the Issuer
for failure to pay to them amounts due under the Secured Notes evidencing such
Subordinate Interests or hereunder until the payment in full of the
Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes and the Class F Notes and not
before one year and one day has elapsed since such payment or, if longer, the
applicable preference period then in effect, including any period established
pursuant to the laws of the Cayman Islands.

 

(j)                                     Anything
in this Indenture or the Secured Notes to the contrary notwithstanding, the
Issuer and the Holders of the Class H Notes, Class J Notes and the
Class K Notes agree for the benefit of the Holders of the Class A
Notes, the Class B Notes, the Class C Notes, the Class D Notes,
the Class E Notes, the Class F Notes and the Class G Notes that
the Class H Notes, the Class J Notes and the Class K Notes and
the Issuer’s rights in and to the Collateral (with respect to the Class A
Notes, the Class B Notes, the Class C Notes, the Class D Notes,
the Class E Notes, the Class F Notes and the Class G Notes, the Subordinate
Interests)  shall be subordinate and junior to
the Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes, the Class F Notes and the
Class G Notes to the extent and in the manner set forth in this Indenture
including as set forth in Section 11.1(a) and hereinafter provided.
If any Event of Default (including an Event of Default specified in
Section 5.1(g) or (h)) has occurred and has not been cured or waived
the Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes, the Class F Notes and the
Class G Notes shall be paid in full in Cash or, to the extent a Majority
of each of Class A Notes, the Class B Notes, the Class C Notes,
the Class D Notes, the Class E Notes, the Class F Notes and the
Class G Notes consent, other than in Cash, before any further payment or
distribution is made on account of the Subordinate Interests. The Holders of
Secured Notes evidencing Subordinate Interests and the holders of equity in the
Issuer agree, for the benefit of the Holders of the Class A Notes, the
Class B Notes, the Class C Notes, the Class D Notes,

 

183

 

the
Class E Notes, the Class F Notes and the Class G Notes, not to
cause the filing of a petition in bankruptcy against the Issuer for failure to
pay to them amounts due under the Secured Notes evidencing such Subordinate
Interests or hereunder until the payment in full of the Class A Notes, the
Class B Notes, the Class C Notes, the Class D Notes, the
Class E Notes, the Class F Notes and the Class G Notes and not
before one year and one day has elapsed since such payment or, if longer, the
applicable preference period then in effect, including any period established
pursuant to the laws of the Cayman Islands.

 

(k)                                  Anything
in this Indenture or the Secured Notes to the contrary notwithstanding, the
Issuer and the Holders of the Class J Notes and the Class K Notes
agree for the benefit of the Holders of the Class A Notes, the
Class B Notes, the Class C Notes, the Class D Notes, the
Class E Notes, the Class F Notes, the Class G Notes and the
Class H Notes, that the Class J Notes and the Class K Notes and
the Issuer’s rights in and to the Collateral (with respect to the Class A
Notes, the Class B Notes, the Class C Notes, the Class D Notes,
the Class E Notes, the Class F Notes, the Class G Notes and the
Class H Notes, the Subordinate Interests)  shall
be subordinate and junior to the Class A Notes, the Class B Notes,
the Class C Notes, the Class D Notes, the Class E Notes, the
Class F Note, the Class G Notes and the Class H Notes to the
extent and in the manner set forth in this Indenture including as set forth in
Section 11.1(a) and hereinafter provided. If any Event of Default
(including an Event of Default specified in Section 5.1(g) or (h))
has occurred and has not been cured or waived the Class A Notes, the
Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes, the Class F Notes, the Class G Notes and the Class H
Notes shall be paid in full in Cash or, to the extent a Majority of each of
Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes, the Class F Notes, the
Class G Notes and the Class H Notes consent, other than in Cash,
before any further payment or distribution is made on account of the
Subordinate Interests. The Holders of Secured Notes evidencing Subordinate
Interests and the holders of equity in the Issuer agree, for the benefit of the
Holders of the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes, the Class F Notes,
the Class G Notes and the Class H Notes, not to cause the filing of a
petition in bankruptcy against the Issuer for failure to pay to them amounts
due under the Secured Notes evidencing such Subordinate Interests or hereunder
until the payment in full of the Class A Notes, the Class B Notes,
the Class C Notes, the Class D Notes, the Class E Notes, the
Class F Notes, the Class G Notes and the Class H Notes and not
before one year and one day has elapsed since such payment or, if longer, the
applicable preference period then in effect, including any period established
pursuant to the laws of the Cayman Islands.

 

(l)                                     In
the event that notwithstanding the provisions of this Indenture, any Holder of
any Subordinate Interests shall have received any payment or distribution in
respect of such Subordinate Interests contrary to the provisions of this
Indenture, then, unless and until all amounts payable to each Hedge
Counterparty pursuant to Section 11.1(a)(4) or to the Class A
Notes, the Class B Notes, the Class C Notes, the Class D Notes,
the Class E Notes, the Class F Notes, the Class G Notes, the Class H
Notes, the Class J Notes or the Class K Notes, as the case may be,
shall have been paid in full in Cash or, to the extent each Hedge Counterparty
or a Majority of the Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes, the Class F
Notes, the Class G Notes, the Class H Notes, the Class J  Notes or the Class K Notes,
as the case may be, consent, other than in Cash in accordance with this
Indenture, such payment or distribution shall be received and held in trust for
the benefit of, and shall forthwith be paid over and delivered to, the Trustee,
which shall pay and deliver the same to such Hedge Counterparty or the Holders
of the Class A Notes, the Class B Notes, the Class C

 

184

 

Notes, the
Class D Notes, the Class E Notes, the Class F Notes, the
Class G Notes, the Class H  Notes,
the Class J Notes or the Class K Notes, as the case may be, in
accordance with this Indenture; provided that, if any such payment or distribution
is made other than in Cash, it shall be held by the Trustee as part of the
Collateral and subject in all respects to the provisions of this Indenture,
including this Section 13.1.

 

(m)          Each
Holder of Subordinate Interests agrees with each Hedge Counterparty and all
Holders of the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes, the Class F Notes,
the Class G Notes, the Class H Notes, the Class J Notes or the
Class K Notes, as the case may be, that such Holder of Subordinate
Interests shall not demand, accept, or receive any payment or distribution in
respect of such Subordinate Interests in violation of the provisions of this
Indenture including this Section 13.1; provided that after all amounts payable
pursuant to Section 11.1(a)(4) and all amounts payable in respect of
the Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes, the Class F Notes, the
Class G Notes, the Class H Notes, the Class J Notes or the
Class K Notes, as the case may be, have been paid in full, the Holders of
Subordinate Interests shall be fully subrogated to the rights of each Hedge
Counterparty or the Holders of the Class A Notes, the Class B Notes,
the Class C Notes, the Class D Notes, the Class E Notes, the
Class F Notes, the Class G Notes, the Class H Notes, the
Class J  Notes or the Class K Notes, as
the case may be. Nothing in this Section 13.1 shall affect the obligation
of the Issuer to pay Holders of Subordinate Interests.

 

13.2.        STANDARD OF CONDUCT

 

In exercising
any of its or their voting rights, rights to direct and consent or any other
rights as a Secured Party under this Indenture, subject to the terms and
conditions of this Indenture, including Section 5.9, a Secured Party or
Secured Parties shall not have any obligation or duty to any Person or to
consider or take into account the interests of any Person and shall not be
liable to any Person for any action taken by it or them or at its or their
direction or any failure by it or them to act or to direct that an action be
taken, without regard to whether such action or inaction benefits or adversely
affects any Secured Party, the Issuer, or any other Person.

 

ARTICLE XIV

 

MISCELLANEOUS

 

14.1.        FORM OF DOCUMENTS DELIVERED
TO TRUSTEE

 

In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.

 

Any
certificate or opinion of an Authorized Officer of the Issuer or the Collateral
Manager may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such
Authorized Officer knows, or in the exercise of reasonable care should know, that
the certificate or opinion or representations with respect to the matters upon
which his certificate or opinion is based are erroneous. Any such certificate
of an Authorized Officer of the Issuer or the

 

185

 

Collateral Manager or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an Authorized Officer of the
Issuer, the Collateral Manager or any other Person, stating that the
information with respect to such factual matters is in the possession of the
Issuer, the Collateral Manager or such other Person, unless such Authorized
Officer of the Issuer or the Collateral Manager or such counsel knows that the
certificate or opinion or representations with respect to such matters are
erroneous. Any Opinion of Counsel may also be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
Authorized Officer of the Issuer or the Collateral Manager, stating that the
information with respect to such matters is in the possession of the Issuer or
the Collateral Manager, unless such counsel knows that the certificate or
opinion or representations with respect to such matters are erroneous.

 

Where any
Person is required to make, give or execute two or more applications, requests,
consents, certificates, statements, opinions or other instruments under this
Indenture, they may, but need not, be consolidated and form one instrument.

 

Whenever in
this Indenture it is provided that the absence of the occurrence and
continuation of a Default is a condition precedent to the taking of any action
by the Trustee at the request or direction of the Issuer, then notwithstanding
that the satisfaction of such condition is a condition precedent to the
Issuer’s rights to make such request or direction, the Trustee shall be
protected in acting in accordance with such request or direction if it does not
have actual knowledge of the occurrence and continuation of such Default as
provided in Section 6.1(d).

 

14.2.        ACTS OF SECURED NOTEHOLDERS

 

(a)                                  Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Secured Noteholders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Secured Noteholders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee, and, where it is hereby expressly required, to the Issuer. Such
instrument or instruments (and the action or actions embodied therein and
evidenced thereby) are herein sometimes referred to as the Act  of the Secured Noteholders, signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Issuer, if made in the
manner provided in this Section 14.2.

 

(b)                                 The
fact and date of the execution by any Person of any such instrument or writing
may be proved in any manner which the Trustee deems sufficient.

 

(c)                                  The
principal amount and registered numbers of Secured Notes held by any Person,
and the date of his holding the same, shall be proved by the Note Register.

 

(d)                                 Any
request, demand, authorization, direction, notice, consent, waiver or other
action by the Holder of any Secured Notes shall bind the Holder (and any
transferee thereof) of such Secured Note and of every Secured Note issued upon
the registration thereof or in exchange therefor or in lieu thereof, in respect
of anything done, omitted or suffered to be done by the Trustee or the Issuer
in reliance thereon, whether or not notation of such action is made upon such
Secured Note.

 

186

 

14.3.        NOTICES, ETC., TO TRUSTEE, THE
ISSUER AND THE RATING AGENCIES

 

Any request,
demand, authorization, direction, notice, consent, waiver or Act of Secured
Noteholders or other documents provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with:

 

(a)                                  the
Trustee or the Income Note Paying Agent by any Secured Noteholder or by the
Issuer shall be sufficient for every purpose hereunder if in writing and sent
by facsimile in legible form and confirmed by overnight courier service
guaranteed next day delivery to the Trustee or the Income Note Paying Agent
addressed to it at 181 West Madison Street, 32nd Floor, Chicago, Illinois 60602, Attention: CDO
Trust Services Group — N-Star Real Estate CDO IX, Ltd., telephone number
312-904-0467, fax number 312-602-3935, or at any other address previously
furnished in writing to the Issuer or Secured Noteholder by the Trustee or
Income Note Paying Agent;

 

(b)                                 the
Issuer by the Trustee or by any Secured Noteholder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first class postage prepaid, hand delivered, sent by
overnight courier service or by facsimile in legible form, to the Issuer
addressed to it at c/o Walkers SPV Limited, Walker House, 87 Mary Street,
George Town, Grand Cayman, KY1-9002 Cayman Islands, Attention: The Directors,
or at any other address previously furnished in writing to the Trustee by the
Issuer;

 

(c)                                  the
Rating Agencies by the Issuer or the Trustee shall be sufficient for every
purpose hereunder (unless otherwise herein expressly provided) if in writing and
mailed, first-class postage prepaid, hand delivered, sent by overnight courier
service or by facsimile in legible form, (i) in the case of Fitch,
addressed to Fitch Ratings, One State Street Plaza, New York, New York 10041,
facsimile no. (212) - 558-2618, Attention: Commercial Real Estate CDO Surveillance
- Additional Reporting (e-mail: cdo.surveillance@fitchratings.com);
(ii) in the case of Moody’s, addressed to Moody’s Investors Service, 99
Church Street, New York, New York 10007, facsimile no. (212) 553-0355, Attention:
CDO Monitoring (e-mail: moodys_cre_cdo_monitoring@moodys.com)
and (iii) in the case of S&P, addressed to S&P, 55 Water Street,
41st Floor, New York, New York, 10041, Attention: CMBS Surveillance and all Note
Valuation Reports shall be sent to S&P electronically at cmbs_surveillance@sandp.com; or

 

(d)                                 Each
Hedge Counterparty by the Issuer or the Trustee shall be sufficient for every
purpose hereunder (unless otherwise herein expressly provided) if in writing
and mailed, first class postage prepaid, hand delivered or sent by overnight
courier service or by facsimile in legible form to each Hedge Counterparty
addressed to it at the address specified in the related Hedge Agreement or at
any other address previously furnished in writing to the Issuer or the Trustee
by each Hedge Counterparty;

 

(e)                                  the
Collateral Manager by the Issuer or by the Trustee or a Majority of the
Controlling Class, or by the Collateral Administrator shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and sent by facsimile in legible form and confirmed by overnight
courier service guaranteed next day delivery, or by electronic mail (where
expressly provided herein) to the Collateral Manager addressed to it at the address
specified in the Collateral Management Agreement or at any other

 

187

 

address
previously furnished in writing to the Issuer or the Trustee by the Collateral
Manager;

 

(f)                                    the
Income Note Paying Agent by the Trustee in writing sent by facsimile confirmed
by overnight courier guaranteed next day delivery;

 

(g)                                 the
Initial Purchaser or the Placement Agent by the Issuer, the Collateral Manager
or the Trustee shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, hand delivered, sent by overnight courier service or by
telecopy in legible form, to the Initial Purchaser or the Placement Agent
addressed to Citigroup Global Markets Inc., 390 Greenwich Street, 4th Floor, New York, New York 10013 telecopy no.
212-723-8671, Attention: Managing Directors, Global Structured Credit Products;
and

 

(h)                                 to
the Repository by the Issuer pursuant to this Indenture shall be made available
to the Repository by electronic mail as a pdf (portable document format) file
to CDO Library, c/o The Bond Market Association, 360 Madison Avenue (18th
Floor), New York, NY 10017; Electronic mail address: admin@cdolibrary.com.

 

Delivery of
any request, demand, authorization, direction, notice, consent, waiver or Act
of Secured Noteholders or other documents made as provided above will be deemed
effective: (i) if in writing and delivered in person or by overnight
courier service, on the date it is delivered; (ii) if sent by facsimile
transmission, on the date that transmission is received by the recipient in
legible form (as evidenced by the sender’s written record of a telephone call
to the recipient in which the recipient acknowledged receipt of such facsimile
transmission); and (iii) if sent by mail, on the date that mail is
delivered or its delivery is attempted; in each case, unless the date of that
delivery (or attempted delivery) or that receipt, as applicable, is not a
Business Day or that communication is delivered (or attempted) or received, as
applicable, after the close of business on a Business Day, in which case that
communication shall be deemed given and effective on the first following day
that is a Business Day.

 

14.4.        NOTICES AND REPORTS TO SECURED NOTEHOLDERS; WAIVER

 

Except as
otherwise expressly provided herein, where this Indenture provides for a report
to Holders or for a notice to Holders of Secured Notes of any event, such
notice shall be sufficiently given to Holders of Secured Notes if in writing
and mailed, first-class postage prepaid, to each Holder of a Secured Note
affected by such event, at the address of such Holder as it appears in the Note
Register, not earlier than the earliest date and not later than the latest
date, prescribed for the giving of such report or notice and such report or
notice shall be in the English language. Notwithstanding any provision to the
contrary contained herein or in any agreement or document related hereto, any
report, statement or other information to be provided by the Trustee may be
provided by providing access to the Trustee’s website containing such
information. Such reports and notices will be deemed to have been given on the
date of such mailing.

 

The Trustee
will deliver to the Holder of any Secured Note shown on the Note Register any
readily available information or notice requested to be so delivered, at the
expense of the Issuer. In addition, for so long as any Class of Secured
Notes is listed on the Irish Stock Exchange and so long as the rules of
such exchange so require, notices to the Holders of such Secured Notes shall
also be given by the Trustee to the Irish Paying Agent for delivery to the
Company Announcements Office of the Irish Stock Exchange.

 

188

 

Neither the
failure to mail any notice, nor any defect in any notice so mailed, to any
particular Holder of a Secured Note shall affect the sufficiency of such notice
with respect to other Holders of Secured Notes.

 

Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by any Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Secured Noteholders shall be filed with the Trustee but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.

 

In the event
that, by reason of the suspension of the regular mail service as a result of a
strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Secured Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.

 

14.5.        EFFECT OF HEADINGS AND TABLE OF CONTENTS

 

The
Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.

 

14.6.        SUCCESSORS AND ASSIGNS

 

All covenants
and agreements in this Indenture by the Issuer shall bind its respective
successors and assigns, whether so expressed or not. Written notice of any
assignment shall be promptly provided by the Issuer to each Hedge Counterparty,
the Holders of Notes of the Controlling Class and each Rating Agency.

 

14.7.        SEVERABILITY

 

In case any
provision in this Indenture or in the Secured Notes shall be invalid, illegal
or unenforceable, the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

 

14.8.        BENEFITS OF INDENTURE

 

Nothing in
this Indenture or in the Secured Notes, expressed or implied, shall give to any
Person, other than the parties hereto and their successors hereunder, the
Secured Noteholders, and (to the extent provided herein, and as express
third-party beneficiaries hereof) the Income Noteholders, the Income Note
Paying Agent, each Hedge Counterparty, the Collateral Manager and the Servicer
(if and when applicable), any benefit or any legal or equitable right, remedy
or claim under this Indenture. Notwithstanding the foregoing, any rights of the
Income Noteholders, the Income Note Paying Agent, each Hedge Counterparty, the
Collateral Manager and the Servicer to receive any payment under this Indenture
(i) shall be determined in the Income Note Paying Agency Agreement, the
related Hedge Agreement, the Collateral Management Agreement and the Servicing
Agreement, as applicable, and (ii) are limited in recourse to the Collateral,
and to the extent the proceeds of the Collateral, when applied in accordance
with the Priority of Payments, are insufficient to meet the obligations of the
Issuer to the Income Note Paying Agent, each Hedge Counterparty, the Collateral
Manager and the Servicer in full, the Issuer shall have no further liability in
respect of any such underlying obligations, and any claims against the Issuer
shall be extinguished and shall not thereafter revive.

 

189

 

14.9.        GOVERNING LAW

 

This Indenture
and each Secured Note shall be governed by, and construed in accordance with,
the internal laws of the State of New York.

 

14.10.      SUBMISSION TO JURISDICTION

 

The Issuer
hereby irrevocably submits to the non-exclusive jurisdiction of the Supreme
Court of the State of New York sitting in Manhattan and the U.S. District Court
for the Southern District of New York, and any court of appeal therefrom, in
any action or proceeding arising out of or relating to the Secured Notes or
this Indenture, and the Issuer hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in such New
York State or federal court. The Issuer hereby irrevocably waives, to the
fullest extent that it may legally do so, the defense of an inconvenient forum
to the maintenance of such action or proceeding. The Issuer hereby irrevocably
appoints and designates CT Corporation, 111 Eighth Avenue, 13th Floor, New York, New York 10011, or any other
Person having and maintaining a place of business in the State of New York whom
the Issuer may from time to time hereafter designate as the true and lawful
attorney and duly authorized agent for acceptance of service of legal process
of the Issuer. The Issuer agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.

 

14.11.      COUNTERPARTS

 

This
instrument may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.

 

14.12.      WAIVER OF JURY TRIAL

 

EACH PARTY
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
THAT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDING. Each
party hereby (i) certifies that no representative, agent or attorney of
the other has represented, expressly or otherwise, that the other would not, in
the event of a Proceeding, seek to enforce the foregoing waiver and
(ii) acknowledges that it has been induced to enter into this Indenture
by, among other things, the mutual waivers and certifications in this
paragraph.

 

14.13.      JUDGMENT CURRENCY

 

This is an
international financing transaction in which the specification of Dollars (the Specified
Currency),  and the
specification of the place of payment, as the case may be (the Specified Place),  is of the essence, and the
Specified Currency shall be the currency of account in all events relating to
payments of or on the Secured Notes. The payment obligations of the Issuer
under this Indenture and the Secured Notes shall not be discharged by an amount
paid in another currency or in another place, whether pursuant to a judgment or
otherwise, to the extent that the amount so paid on conversion to the Specified
Currency and transfer to the Specified Place under normal banking procedures
does not yield the amount of the Specified Currency at the Specified Place. If
for the purpose of obtaining judgment in any court it is necessary to convert a
sum due hereunder or the Secured Notes in the Specified Currency into another
currency (the Second
Currency),  the rate of
exchange which shall be applied shall be that at which in accordance with
normal banking procedures the Trustee could purchase the Specified Currency
with the Second Currency on the Business Day next preceding that on which such
judgment is rendered. The obligation of the Issuer in respect of any such sum
due from the Issuer hereunder shall, notwithstanding

 

190

 

the rate of exchange actually
applied in rendering such judgment, be discharged only to the extent that on
the Business Day following receipt by the Trustee of any sum adjudged to be due
hereunder or under the Secured Notes in the Second Currency the Trustee may in
accordance with normal banking procedures purchase and transfer to the
Specified Place the Specified Currency with the amount of the Second Currency
so adjudged to be due; and the Issuer hereby, as a separate obligation and
notwithstanding any such judgment (but subject to the Priority of Payments as
if such separate obligation in respect of each Class of Secured Notes
constituted additional principal owing in respect of such Class of Secured
Notes), agrees to indemnify the Trustee and each Secured Noteholder against,
and to pay the Trustee or such Secured Noteholder, as the case may be, on
demand in the Specified Currency, any difference between the sum originally due
to the Trustee or such Secured Noteholder, as the case may be, in the Specified
Currency and the amount of the Specified Currency so purchased and transferred.

 

14.14.      CONFIDENTIAL TREATMENT OF DOCUMENTS

 

Except as
otherwise provided in this Indenture or as required by law or as required to
maintain the listing of the Secured Notes on the Irish Stock Exchange, this
Indenture and each Hedge Agreement shall be treated by the Trustee and the
Collateral Manager as confidential. The Trustee shall provide a copy of this
Indenture to the Income Note Paying Agent and to any Holder of a beneficial
interest in any Secured Note upon written request therefor certifying that it
is such a Holder.

 

ARTICLE XV

 

ASSIGNMENT
OF AGREEMENTS, ETC.

 

15.1.        ASSIGNMENT

 

The Issuer, in
furtherance of the covenants of this Indenture and as security for the Secured
Notes and amounts payable to the Secured Noteholders hereunder and the
performance and observance of the provisions hereof, hereby assigns, transfers,
conveys and sets over to the Trustee, for the benefit of the Secured Parties,
all of the Issuer’s estate, right, title and interest in, to and under the
Corporate Services Agreement, the Collateral Management Agreement, any
Servicing Agreement, any Asset Purchase Agreement and any Hedge Agreement,
including (i) the right to give all notices, consents and releases
thereunder, (ii) the right to give all notices of termination, including
the commencement, conduct and consummation of proceedings at law or in equity,
(iii) the right to receive all notices, accountings, consents, releases
and statements thereunder and (iv) the right to do any and all other
things whatsoever that the Issuer is or may be entitled to do thereunder; provided that
nothing herein shall obligate the Trustee to determine independently whether
“cause” exists for the removal of the Collateral Manager pursuant to the
Collateral Management Agreement. For the avoidance of doubt, in no event shall
the Trustee be required to perform the obligations of the Collateral Manager
under the Collateral Management Agreement.

 

15.2.        NO IMPAIRMENT

 

The assignment
made hereby is executed as collateral security, and the execution and delivery
hereby shall not in any way impair or diminish the obligations of the Issuer
under the provisions of the Corporate Services Agreement, the Collateral
Management Agreement, Servicing Agreement, Asset Purchase Agreement or any
Hedge Agreement.

 

191

 

15.3.        TERMINATION, ETC.

 

Upon the
redemption and cancellation of the Secured Notes and the payment of all other
Secured Obligations and the release of the Collateral from the lien of this
Indenture, this assignment and all rights herein assigned to the Trustee for
the benefit of the Secured Parties shall cease and terminate and all the
estate, right, title and interest of the Trustee in, to and under the Corporate
Services Agreement, the Collateral Management Agreement and any Hedge Agreement
shall revert to the Issuer and no further instrument or act shall be necessary
to evidence such termination and reversion.

 

15.4.        ISSUER AGREEMENTS, ETC.

 

The Issuer
represents that it has not executed (and covenants that it will not execute)
any other assignment of the Collateral Administration Agreement, the Collateral
Management Agreement, Servicing Agreement, Asset Purchase Agreement or any
Hedge Agreement. The Issuer agrees that this assignment is irrevocable, and
that it will not take any action which is inconsistent with this assignment or
make any other assignment inconsistent herewith. The Issuer will, from time to
time upon the request of the Trustee, execute all instruments of further
assurance and all such supplemental instruments with respect to this assignment
as the Trustee may reasonably specify.

 

ARTICLE XVI

 

HEDGE
AGREEMENTS

 

16.1.        HEDGE AGREEMENTS

 

The Issuer
will, on or prior to the Closing Date, enter into the Initial Hedge Agreements
with the Initial Hedge Counterparty for the purpose of managing the Issuer’s
interest rate risk exposure relating to the variable rate of interest
applicable to certain Classes of Secured Notes and/or the cash flow timing
mismatch with respect to particular Collateral Debt Securities. On the Closing
Date (or any date on which the Issuer enters into an additional or a
replacement Hedge Agreement), (i) the Hedge Counterparty entering into
such Hedge Agreement shall satisfy the Hedge Counterparty Ratings Requirement
and (ii) the Issuer shall assign such Hedge Agreement to the Trustee
pursuant to this Indenture and the Collateral Assignment of Hedge Agreement.

 

(a)                                  The
Trustee shall, on behalf of the Issuer and in accordance with the Note
Valuation Report, pay amounts due to the Hedge Counterparty under the Hedge
Agreement on any Payment Date in accordance with Section 11.1.

 

(b)                                 If
a Collateralization Event occurs, the Hedge Counterparty shall within 30 days
of the occurrence of such Collateralization Event either (i) enter into a
Credit Support Annex and post collateral of such types, in such amounts and at
such times as are sufficient to maintain the then-current rating of each
Class of Secured Notes by each Rating Agency, as evidenced by receipt of
Rating Agency Confirmation (ii) find a replacement Hedge Counterparty as
permitted under the Hedge Agreement that satisfies the Hedge Counterparty
Ratings Requirement and obtain Rating Agency Confirmation from S&P with
respect to such replacement, (iii) obtain a guarantee (meeting S&P’s
then-current published criteria regarding guarantees) for the obligations of
the Hedge Counterparty under the Hedge Agreement from a guarantor which meets
the Hedge Counterparty Ratings Requirement and obtain Rating Agency
Confirmation from S&P or (iv) take such other steps as each Rating
Agency that has downgraded the Hedge Counterparty may require (as confirmed to
the Collateral Manager in writing) to ensure that the then-current

 

192

 

ratings on the
Secured Notes by any Rating Agency are not reduced or withdrawn. If the Hedge
Counterparty has not, within 30 days of the occurrence of such
Collateralization Event, taken any of the actions required above, an additional
termination event with respect to which the Hedge Counterparty shall be the
sole “affected party” will be deemed to have occurred and the Issuer shall have
the right to terminate the Hedge Agreement (with all costs and expenses in
connection with any such termination to be paid by the Hedge Counterparty).

 

(c)                                  If
at any time a Substitution Event has occurred and is continuing, then the Hedge
Counterparty will, (x) in the case of a Substitution Event referred to in
sub-paragraph (ii) or sub-paragraph (iii) of the definition thereof,
within 30 days following such Substitution Event or (y) in the case of a
Substitution Event referred to in sub-clause (iii) of the definition
thereof, immediately following such Substitution Event, assign its rights and
obligations under the Hedge Agreement, at no cost to the Issuer, to a party
(the Substitute Party)  selected by
the Hedge Counterparty that (i) satisfies the Hedge Counterparty Ratings
Requirement, (ii) with respect to which a Rating Agency Confirmation has
been obtained and (iii) that assumes all of the Hedge Counterparty’s
obligations under the Hedge Agreement pursuant to an agreement satisfactory to
the Issuer; provided,
further,  that in the event
of a Substitution Event referred to in subparagraphs (ii) and
(iii) of the definition thereof, the Hedge Counterparty may cure such
Substitution Event by obtaining a guarantee for the obligations of the Hedge
Counterparty by a guarantor which meets the Hedge Counterparty Ratings
Requirement; provided,
further, that in the event of a Substitution Event referred to in
subparagraph (i) of the definition thereof, the Hedge Counterparty may
cure such Substitution Event by obtaining a guarantee for the obligations of
the Hedge Counterparty by a guarantor which meets the Hedge Counterparty
Ratings Requirement and with respect to which Rating Agency Confirmation from
S&P has been obtained.

 

If the Hedge
Counterparty fails to assign its rights and obligations under the Hedge
Agreement to a Substitute Party within 30 days following such Substitution
Event (in the case of a Substitution Event referred to in sub-clauses
(i) or (iii) of the definition thereof) or within seven Business Days
following such Substitution Event (in the case of a Substitution Event referred
to in sub-clause (ii) of the definition thereof), then (x) the Hedge
Counterparty shall, while it continues in good faith to search for an eligible
Substitute Party, post and maintain, or continue to maintain, as the case may
be, collateral in accordance with a Credit Support Annex of such types, in such
amounts and at such times and on such terms as are sufficient to maintain the
then-current rating of each Class of Secured Notes by each Rating Agency
as evidenced by the receipt of Rating Agency Confirmation, and (y) in the
case of a Substitution Event referred to in sub-paragraph (i) of the
deifnition thereof, the Issuer shall have the right to terminate the Hedge
Agreement with all costs of such termination to be paid by the Hedge
Counterparty (subject to receipt of Rating Agency Confirmation from S&P).

 

(d)                                 The
Issuer may, after the Closing Date, enter into additional Hedge Agreements
(including one or more Deemed Floating Asset Hedges) with additional Hedge
Counterparties as the Issuer may elect in its sole discretion, in each case
(i) subject to Rating Agency Confirmation, (ii) in the event a
proposed additional Hedge Agreement has an initial notional amount which
exceeds U.S.$25,000,000, with the prior consent of the Initial Hedge
Counterparty (so long as it continues to act as Initial Hedge Counterparty),
such consent not to be unreasonably conditioned, delayed or withheld, and
(iii) in the case of additional Hedge Counterparties, with the delivery to
the Issuer of an

 

193

 

Opinion of
Counsel to the additional Hedge Counterparty; provided that the
Issuer will not be required to obtain Rating Agency Confirmation in connection
with entering into any Deemed Floating Asset Hedges or Cashflow Hedge
Agreements which are Form-Approved Hedge Agreements with a Hedge Counterparty
that satisfies the Hedge Counterparty Ratings Requirement.

 

(e)                                  The
Trustee shall, prior to the Closing Date in respect of the Initial Hedge
Agreement, cause the Custodian to establish a segregated, non-interest bearing
Securities Account which shall be designated as a “Hedge Counterparty
Collateral Account” with respect to the Hedge Counterparty in respect of which
the Trustee shall be the Entitlement Holder and which the Trustee shall hold in
trust for the benefit of the Secured Parties. The Trustee shall deposit all
collateral received from such Hedge Counterparty under the Hedge Agreement in
such Hedge Counterparty Collateral Account. Any and all funds at any time on
deposit in, or otherwise standing to the credit of, each Hedge Counterparty
Collateral Account shall be held in trust by the Trustee for the benefit of the
Secured Parties. The only permitted withdrawal from or application of funds on
deposit in, or otherwise standing to the credit of, each Hedge Counterparty
Collateral Account shall be (i) for application to obligations of the
Hedge Counterparty to the Issuer under the Hedge Agreement that are not paid
when due (whether when scheduled or upon early termination) or (ii) to
return collateral to the Hedge Counterparty when and as required by the Hedge
Agreement in each case upon the direction of the Issuer pursuant to an Issuer Order.
No assets credited to any Hedge Counterparty Collateral Account shall be
considered an asset of the Issuer for purposes of any of the Coverage Tests
unless and until the Issuer or the Trustee on its behalf is entitled to
foreclose on such assets in accordance with the terms of the Hedge Agreement.

 

(f)                                    Upon
its receipt of notice that the Hedge Counterparty has defaulted in the payment
when due of its obligations to the Issuer under any Hedge Agreement (or, if
earlier, when the Trustee becomes aware of such default) the Trustee shall make
a demand on such Hedge Counterparty, or any guarantor, if applicable, demanding
payment forthwith. The Trustee shall give notice to the Secured Noteholders and
each Rating Agency upon the continuance of the failure by such Hedge
Counterparty to perform its obligations for two Business Days following a
demand made by the Trustee on such Hedge Counterparty.

 

(g)                                 If
at any time the Hedge Agreement becomes subject to early termination due to the
occurrence of an “event of default” or a “termination event” (each as defined
in the Hedge Agreement) solely attributable to the Hedge Counterparty or other
comparable event, the Issuer and the Trustee shall take such actions (following
the expiration of any applicable grace period) to enforce the rights of the
Issuer and the Trustee thereunder and under the Collateral Assignment of Hedge
Agreement as may be permitted by the terms of such Hedge Agreement and
consistent with the terms hereof, and shall apply any proceeds of any such actions
(including the proceeds of the liquidation of any collateral pledged by the
Hedge Counterparty) to enter into a replacement Hedge Agreement on
substantially identical terms or on such other terms as to which each Rating
Agency shall have provided a Rating Agency Confirmation (to the extent such
Rating Agency has not waived its right of review) with a Substitute Party with
respect to which the Hedge Counterparty Ratings Requirement is satisfied and
each Rating Agency shall have provided a Rating Agency Confirmation. If the
Issuer is the sole non-Affected Party or the sole non-Defaulting Party with
respect to such “event of default” or “termination event”, the Issuer will
(with the assistance of the Collateral Manager) obtain quotations

 

194

 

with respect
to such replacement Hedge Agreement from five prospective counterparties
Independent from the Issuer, the Collateral Manager and each other that satisfy
the Hedge Counterparty Ratings Requirement and with respect to which a Rating
Agency Confirmation (to the extent such Rating Agency has not waived its right
of review) shall have been obtained and enter into a replacement Hedge
Agreement with the prospective counterparty that provides the lowest quotation
(if the Issuer is required to make a payment to such replacement counterparty)
or the highest quotation (if such replacement counterparty is required to make
a payment to the Issuer).

 

(h)                                 The
Issuer shall notify each Rating Agency if at any time the Hedge Counterparty is
required to post collateral or assign its rights and obligations in and under
the Hedge Agreement.

 

(i)                                     The
Hedge Agreement may not be amended or modified at any time other than to effect
the appointment of a substitute Hedge Counterparty or to effect a modification
which is of a formal, minor or technical nature or is to correct a manifest
error and which, in the opinion of the Trustee (based upon an Opinion of
Counsel) would not have a material adverse effect on the interests of Holders of
the Secured Notes or of Holders of any Class or Classes of Secured Notes
or the Holders of the Income Notes; provided that the Issuer has obtained Rating
Agency Confirmation (to the extent such Rating Agency has not waived its right
of review) with respect to any such modification. The Trustee shall provide the
Collateral Manager and the Rating Agencies with a copy of any such modification
within 10 Business Days before effecting such modification.

 

(j)                                     The
Issuer shall enter into a Hedge Agreement only if the payments from the Hedge
Counterparty thereunder are not subject to withholding tax or if the Hedge
Counterparty shall be required in accordance with the terms of the Hedge
Agreement to pay additional amounts to the Issuer sufficient to cover any withholding
tax due on payments made by the Hedge Counterparty to the Issuer under such
Hedge Agreement, subject to the Issuer making customary payee tax
representations and providing customary tax documentation. The Issuer shall not
enter into any Hedge Agreement the acquisition (including the manner of
acquisition), ownership, enforcement or disposition of which would subject the
Issuer to tax on a net income basis in any jurisdiction outside the Issuer’s
jurisdiction of incorporation.

 

(k)                                  The
Issuer will not terminate or amend any Hedge Agreement without receiving Rating
Agency Confirmation (to the extent such Rating Agency has not waived its right
of review) with respect to such termination or amendment.

 

195

 

IN WITNESS
WHEREOF, we have set
our hands as of the date first above written.

 

 

	
  Executed as a Deed by

  	
   

  
	
  N-STAR
  REAL ESTATE CDO IX, LTD.,

  	
   

  
	
  as Issuer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ John Cullinane

  	
   

  
	
   

  	
  Name: John Cullinane

  	
   

  
	
   

  	
  Title: Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  In the presence of:

  	
  /s/ Brittany Webster

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Witness Name:

  	
  Brittany Webster

  	
   

  
	
  Witness Title:

  	
  Administrative Assistant

  	
   

  
	
   

  	
   

  
					

 

	
  LASALLE
  BANK NATIONAL ASSOCIATION,

  	
   

  
	
  as Trustee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jessica J. Mead

  	
   

  
	
   

  	
  Name: Jessica J. Mead

  	
   

  
	
   

  	
  Title:
  Vice President

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