Document:

Exhibit
10.2

LEASE
AGREEMENT

THIS LEASE AGREEMENT,
dated the fifteenth day of October, 2005, by and between CapGen CHP, Inc.,
whose address is 10101 - C. Avenue D, Brooklyn, New York, 11236, (hereinafter
called “Landlord”), and Capstone Turbine Corporation, whose address is 21211
Nordhoff Street, Chatsworth, California, 91311 (hereinafter called “Tenant”).

WHEREAS, the City of New
York is the fee owner of the property known as 101 - 01 Avenue D, Brooklyn, New
York (the “Property”), as more particularly described in the Master Lease. The
City of New York has heretofore entered into that certain Subordinate Lease,
dated as of September 1,1984, with Laura Realty Co. (successor in interest to
Rentar Development Corporation, and hereinafter referred to as “LRC”), as
tenant (the “Master Lease”).

WHEREAS, LRC further
subleased the property to A.P.L. Corporation (predecessor in interest to
Landlord) pursuant to that certain lease dated September 7th, 1967, as amended
by that First Amendatory Agreement, dated April 30, 1968, and that certain
Second Amendatory Agreement, dated October 21,1968, and that certain Agreement
pursuant to Section 2.03, dated May 6,1969, and made a part hereof (said lease
and all of the above agreements, as amended, being referred to as the “Lease”).

For and in consideration
of the respective covenants, conditions and agreements set forth herein
Landlord does hereby demise to Tenant approximately 6,000 +/–square feet of
space in the Property together with all required or necessary easements, rights
and ways appurtenant thereto, and those portions of Landlord’s rights, title
and interest necessary for access in all public ways adjoining the same and any
buildings, improvements, equipment and fixtures located within the rental
property hereinafter collectively called the “premises”).

Representations. (a)
Landlord represents that (1) It has a leasehold interest in the premises
pursuant to the Lease, and that the term of the Lease is equal to or greater
than the lease term hereof, including the renewal term set forth in paragraph 4
hereof; (2) Landlord has full power and authority to lease the premises to
Tenant; and (3) Landlord covenants the Tenant, upon payment or lease and
performance of the covenants contained herein, shall peaceably and quietly
have, hold and enjoy the premises during term of the lease agreement and any
renewal thereof.

(b) Tenant represents that (1) it has full power and
authority to enter into this agreement and (2) the execution and delivery of
this agreement has been duly authorized by Tenant.

Term. The primary term of
this lease agreement shall commence on October 15, 2005, and end upon October
14, 2010 unless modified by an approved sub-lease prior to the ending date.

Rent.
During the term of this Lease agreement, Tenant agrees to pay to Landlord for
the premises, the following sums:

	
  Years 1 and 2

  	
  (10/15/05 - 10/14/07)

  	
   

  	
  $8,375.00 per month

  
	
  Years 3 and 4

  	
  (10/15/07 - 10/14/09)

  	
   

  	
  $8,850.00 per month

  
	
  Year 5

  	
  (10/15/09 - 10/14/10)

  	
   

  	
  $9,250.00 per month

  

 

 

(Tenant shall also have three (3) individual one year
options to extend this lease for year 6 at $9,250.00 per month, year 7 and year
8 at $ 9,750.00 per month)

(b)  Lease shall
commence on October 15, 2005. As used herein the “Year” shall mean the period
from the commencement of the term to the end of the (12th) full calendar month
thereafter; subsequent years shall commence on the first (1st) day of the next month of the term and
on each anniversary thereafter. Tenant covenants and agrees to pay all lease
amounts reserved hereunder to Landlord, without notice or demand, in advance,
on the first (1st) day
of each month during the term of this agreement.

(c)  All
payments shall be paid to CapGen CHP, Inc., 10101 - C. Avenue D, Brooklyn, New
York, 11236, or at such other place or to such appointee of the Landlord as the
Landlord may from time to time designate in writing.

 

Utilities. Telephone and any
other utilities installed and utilized or consumed in the premises shall be
billed directly to Tenant, and Tenant shall be responsible for payment of said
bills. Tenant shall be responsible for the cost of bringing telephone and other
related utilities into the premises and the cost of their use. Landlord
represents that such utilities have been brought to the premises by landlord
and tenant must merely bring same into the demised premises.

Real Estate Taxes,
(a) Landlord shall pay the real estate taxes on the premises. Tenant shall pay
any tax assessed on the personal property, inventory, or additional equipment
used in the operation of his business.

Security Deposits. Upon
execution of this lease agreement, Tenant shall deliver to Landlord the first
month payment based on the monthly lease price.

Assignment
and Subletting. Tenant shall not have the right to assign
this agreement or sub-lease or to sublet all or any portion of the rental
premises, without Landlord’s consent which shall not be unreasonably withheld
or delayed.

Use of Premises. Tenant
shall use the premises for office space to support sales of its products and
services. Tenant shall not change the use of the premises without the prior
written consent of the Landlord which shall not be unreasonably withheld or
delayed. No hazardous waste or hazardous material shall be stored, disposed of
or used on the premises. Tenant agrees to comply with all applicable zoning and
other laws and regulations, and provide and install at its own expense any
additional equipment or alterations required to comply with all such laws and
regulations as required from time to time. Tenant further covenants and agrees
(1) to use the premises in a manner which does not interfere with the rights of
quiet enjoyment of any other tenants of the building and which is not a
nuisance, and (ii) not to make any objectionable use of the premises to
generate any objectionable odor therefrom. Notwithstanding the portioning
Landlord represents premises to have a valid Certificate of Occupancy for
Tenant’s use of this premise.

Parking. Tenant shall have a
non-exclusive use of the parking lot or parking areas. Tenant shall abide by
the terms and conditions as stated for In the Non-Exclusive use of the Common
Area of the parking lot, but will enjoy exclusive use of those areas designated
for parking in the additional Warehouse & Manufacturing spaces lease.

Compliance
with Laws: Environmental.

(a)  Tenant
covenants and agrees that it will, at its own expense, observe, comply with and
execute all laws, orders, rules, requirements and regulations of any and all
governmental departments, bodies, bureaus, agencies and officers, and all
rules, directions, requirements recommendations of local board of fire
underwriters and the fire insurance rating organizations having jurisdiction
over the area In which the premises are situated, or other bodies or agencies
now or hereinafter exercising similar functions in the area in which the
premises are situated, (collectively “Laws”), in any way pertaining to the
premises or the use and occupancy of the premises except that Landlord shall be
responsible for the Certificate of Occupancy and structural repairs. In the
event tenant shall fail or neglect to comply with any of the Laws, Landlord or
its agents may enter the premises and take all such action and do all such work
in or to the premises as may be necessary in order to cause compliance with
such laws, orders, rules, requirements or recommendations, and Tenant covenants
and agrees to reimburse Landlord promptly upon demand for the expense incurred
by Landlord in taking such action performing such work, which may be the
responsibility of Tenant.

(b)  Tenant will
not do, or suffer to be done, anything in or about the premises contrary to use
clause herein, or keep anything in or about the premises, contrary to use
clause herein, which will contravene or affect any policy of insurance against
loss by fire or other hazards, including, but not limited to, public liability,
now existing or which the Landlord may hereafter place thereon, or which will
prevent the Landlord from procuring such policies in companies acceptable to
Landlord at standard rates.

(c)  Tenant
shall use and operate the premises, at all times during the term hereof, under
and in compliance with all federal and State of New York laws and regulations,
and in compliance with all applicable Environmental Legal Requirements. “Environmental
Legal Requirements” shall mean any applicable law relating to public health,
safety, or the environment, including, without limitation, relating to
releases, discharges or omissions to air, water, land or groundwater, to the
withdrawal or use Of groundwater, to the use and handling of polychlorinated
biphenyls (“PCB’s”) or asbestos, or asbestos containing products, to the

 

disposal, treatment storage or management of solid or
other hazardous or harmful wastes or to exposure to toxic, hazardous or other
harmful materials (collectively Hazardous Substances”) to the handling,
transportation, discharge or release of gaseous or liquid substance and any
regulation or final order or directive issues pursuant to such statute or
ordinance, in each case applicable to the premises, the building or its
operation, construction or modification, including without limitation the
following: the Clean Air Act, the Federal Water Pollution Control Act (“FWPCA”),
the Safe Drinking Water Act, the Toxic Substances Control Act, the
Comprehensive Environmental Response Compensation and Liability Act, as amended
by the Solid and Hazardous Waste Amendments of 1984 (“RCRA”), the Occupational
Safety and Health Act, the Emergency Planning and Community Right-to-Know Act
of 1936, the Solid Waste Disposal Act, and any state statutes addressing
similar matters, and any state statute providing for financial responsibility
for clean-up or other actions with respect to the release or threatened release
of any the above-referenced substances.

(d)  Tenant
hereby indemnifies and saves landlord harmless from all liabilities and claims
arising from the use, storage or placement of any Hazardous Substances upon the
premises or elsewhere within the property of the Landlord related to the
premises.of Landlord (if brought or placed thereon by Tenant, its agents,
employees, contractors or invitees); and Tenant shall (i) within fifteen (15)
days after written notice thereof, take or cause to be taken, at its sole
expense, such actions as may be necessary to comply with all Environmental
Legal Requirements and (ii) within fifteen (15) days after written demand
therefore, reimburse Landlord for any amounts expended by Landlord to comply
with any Environmental Requirements with respect to the premises or with
respect to any other portions of Landlord’s property related to the premises as
the result of the placement or storage of Hazardous Substance by Tenant, its
agents, employees, contractors or invitees, or in connection with any judicial
or administrative investigation or proceeding relating thereto, including,
without limitation, reasonable attorneys’ fees, fines or the penalty payments.

(e)  For
purposes of this provision, Tenant shall be conclusively deemed to have
violated the Environmental Legal Requirements if (i) any notice or orders
directed to either Landlord or Tenant by any governmental agency, body, or
court alleging that such violation by Tenant has occurred; or (ii) if Landlord
obtains and delivers to Tenant a certified report prepared by an engineer or
other party engaged in the business of testing for determining the existence of
Hazardous Substances, which report states that there are Hazardous Substances
used, stored or placed upon the premises by Tenant.

Indemnification.   (a)
Tenant shall defend all actions against and shall pay, protect, indemnify and
hold harmless the Landlord or any officer, director, employee or shareholder of
Landlord, from and against any and all liabilities, losses, damages, costs,
expenses (including, without limitation, reasonable attorneys’ fees and
expenses), causes of action, suits, claims, demands or judgments of any nature
(but excepting such as may be due to the negligence of Landlord) arising out of
(a) any breach by tenant of any warranty, representation or covenant contained
in this Rental agreement; (b) the violation of the permitted specified
occupancy or use of the premises by tenant. The foregoing indemnification shall
survive the expiration or sooner termination of the lease agreement.

(b) Landlord shall defend all actions against and
shall pay, protect, indemnify and hold harmless the Tenant or any officer,
director, employee or shareholder of Tenant, from and against any and all
liabilities, losses, damages, costs, expenses (including, without limitation,
reasonable attorneys’ fees and expenses), causes of action, suits, claims,
demands or judgments of any nature (but excepting such as may be due to the
negligence of Tenant) arising out of any breach by Landlord of any warranty,
representation or covenant contained in the rental agreement. The foregoing
indemnification shall survive the expiration or sooner termination of the
rental agreement.

Tenant shall be responsible for any legal requirements
made necessary by any act or work performed by Tenant or by the particular
nature of Tenant’s use of the premises except for Landlords Certificate of
Occupancy obligation. Landlord shall be responsible for any legal requirements
made necessary by and act or work performed by Landlord or its agents. Any
legal requirement not meeting either of the above criteria shall be the
responsibility of Tenant if such requirements relate to a non-structural item
and apply to the premises (but not to other portions of the property of
Landlord or any easement area) and shall be the responsibility of Landlord if
such requirements relate to a structural item as they pertain to the premises
or relate to a structural or non- structural item as they pertain to any other
portions of Landlord’s property excluding the premises (including any easement
area).

 

Maintenance and Repairs and Work by Landlord.
Throughout the Term, Landlord shall be responsible for all repairs, maintenance
or replacement of structural portions of the premises, all easement areas, the
roof, building systems, parking lot, sidewalks, exterior of the building,
facade, all other areas other than the nonstructural portions of the premises
and any damage caused by the negligence of Landlord, its agents, contractors,
employees, invitees or licensees. Landlord’s obligations to repair, maintain or
replace shall not apply with respect to any damage caused by the negligence of
Tenant, its agents, contractors, employees, invitees or licensees.

Maintenance, Repairs and Work by Tenant.

(a)  Tenant
shall be responsible for all other repairs not expressly reserved to Landlord.
Tenant shall obtain certificates of insurance from any contractors performing
work on the premises as reasonably required by Landlord, Laura Realty Company
and/or the City of New York.

(b)  Tenant
shall submit in advance to Landlord details of plans for any work which will be
reviewed by Landlord, and is reasonably acceptable to Landlord shall be
submitted to CapGen, CHP Inc. Food Professionals, Inc. SETCO, LRC and the City
of New York for consent. Tenant shall not begin such work or any other
renovation or work without the prior written reasonable consent. of Landlord,
Setco, LRC, and the City of New York. Upon receipt of such consents, Tenant may
commence the work provided that such work is material in conformance with the
approved scope work and is performed in compliance with all applicable laws and
codes.

(c)  Tenant at
its cost shall have the right to place, construct and maintain interior signs
and, subject to Landlord’s reasonable consent, exterior signs on the premises
and the Building in compliance with all applicable laws, codes and governmental
regulations.

(d)  Tenant
further agrees that it will maintain the premises at its own expense in a clean,
orderly and sanitary condition, free of insects, rodents, vermin, and other
pests; and that it will not permit undue accumulation of garbage, trash,
rubbish or other refuse, but will remove the same at its own expense and will
keep such refuse in proper containers within the interior of the premises until
called for to be removed.

Insurance. Tenant at its sole
cost and expense, shall provide and keep in force comprehensive general
liability insurance against claims for bodily injury, death or property damage
occurring in or about the premises, operation and control of the premises,
including, but not limited to contractual liability in connection with the
indemnification of Landlord, in a combined
single event of not less than $ 2,000,000.00 (Two million dollars.) Such
Insurance shall be provided by an insurance company or Company’s licensed to do
business in the State of New York and reasonably acceptable to Landlord. Tenant
shall cause Landlord to be named as an additional insured on said liability
insurance and shall provide Landlord with a certificate evidencing such
coverage. Landlord shall maintain fire, casualty and extended risk insurance
coverage on the Building. Landlord represents and warrants that at all times
during the term hereof it will maintain such insurance in full force and
effect.

Miscellaneous. It is
understood and agreed that all prior understandings and agreements between the
parties hereto are merged in this instrument, which alone fully and completely
expresses their agreement, with neither party relying upon any statement or
representation made by the other which is not embodied in these instruments.
These instruments may not be changed or terminated orally. The terms,
covenants, and conditions of this rental agreement shall be binding upon, and
inure to the benefit of each of the parties hereto, their heirs, personal
representatives, successors and assigns, and shall run with the land. Whenever
used herein, the singular number shall include the plural, the plural the singular
and the use of any gender shall be applicable to all genders. At the request of
either party, and at the expense of the requesting party, both parties shall
execute recordable instruments evidencing this rental agreement.

Notices. All notices required
hereunder shall be sent by certified mail, return receipt requested, or by
recognized overnight delivery service to the following: To Landlord: at 10101-C
Avenue D, Brooklyn, NY 11236. To Tenant: 21211 Nordhoff Street, Chatsworth,
California, 91311.

Waiver of Jury Trial. THE
LANDLORD AND THE TENTANT WAIVE ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION,
COUNTERCLAIM, OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF
THIS RENTAL AGREEMENT. THIS WAIVER APPLIES TO ALL CLAIMS AGAINST ALL

 

PARTIES TO SUCH ACTIONS AND
PROCEEDINGS, INCLUDING PARTIES WHO ARE NOT PARTIES TO THIS RENTAL AGREEMENT.
THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND INVOLUNTARILY MADE BY THE TENANT
AND THE TENANT ACKNOWLEDGES THAT NEITHER THE LANDLORD, NOR ANY PERSON ACTING ON
BEHALF OF THE LANDLORD HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS
WAIVER OF TRIAL BY JURY OR IN ANY WAY MODIFY OR NULLIFY ITS EFFECTS.

IN WITNESS WHEREOF, the
parties hereto have caused this rental agreement to be executed, and their
respective seals affixed thereto, as of the date first above written.

	
  Capstone Turbine Corporation

  
	
   

  
	
  By

  	
  /s/ John R
  Tucker

  	
   

  	
  Date:

  	
  12/01/05

  
	
   

  	
  John R. Tucker,
  CEO and President

  
	
   

  
	
  CapGen CHP, Inc.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Dennis Lane

  	
   

  	
  Date:

  	
  12/06/05

  
	
   

  	
  Dennis Lane,
  Vice President

  

 

 

Addendum 1 to the Commercial Lease between CapGen CHP, Inc and Capstone
Turbine Corporation

This addendum (“Addendum”) to
the commercial lease effective October 15, 2005 between CapGen CHP, Inc (signed
in December, 2005) herein called Lessor, and Capstone Turbine Corporation,
herein called Lessee, is entered into for the purpose of changing the monthly
rent to accommodate additional square footage as follows:

Rent Paragraph of the lease is revised from:

Rent.   During the term of this Lease
agreement, Tenant agrees to pay to Landlord for the premises, the following
sums:

	
  Years 1 and 2 

  	
  (10/15/05 - 10/14/07) 

  	
   

  	
  $8,375.00 per month

  
	
  Years 3 and 4

  	
  (10/15/07 - 10/14/09)

  	
   

  	
  $8,850 00 per month

  
	
  Year 5

  	
  (10/15/09 - 10/14/10)

  	
   

  	
  $9,250 00 per month

  

 

(Tenant shall also have three
(3) individual one year options to extend this lease for year 6 at $9,250 00
per month, year 7 and year 8 at $ 9.750 00 per month)

TO:

Rent  
During the term of this Lease agreement, Tenant agrees to pay to
Landlord for the premises, the following sums:

	
  Year 1

  	
  (10/15/05 - 09/30/06)

  	
   

  	
  $8,375 00 per month

  	
   

  
	
  Year 2

  	
  (10/01/06 - 10/14/07)

  	
   

  	
  $45,850 00 per month

  	
   

  
	
  Years 3 and 4

  	
  (10/15/07 - 10/14/09)

  	
   

  	
  $ 47,250 00 per month

  	
   

  
	
  Year 5

  	
  (10/15/09 - 10/14/10)

  	
   

  	
  $48,250 00 per month

  	
   

  

 

(Tenant shall also have three
(3) individual one year options to extend this lease for year 6 at $ 49,250 00
per month, year 7 and year 8 at
$ 51,500 00 per month)

Assignment and Subletting  Paragraph of the lease is revised
from:

Assignment and Subletting  Tenant
shall not have the right to assign this agreement or sub-lease or to sublet all
or any portion of the rental premises, without Landlord’s consent which shall
not be unreasonably withheld or delayed.

TO:

Assignment and Subletting Tenant shall not have the right to assign this agreement or sub-lease
or to sublet all or any portion of the rental premises,
without Landlord’s consent which shall not be reasonably withheld or delayed.  Because of the multiple occupancies and
tenants within the building and their respective usage and utilization of the
building, and Tenant’s overlap of those adjoining occupancy spaces, additional
documents and/or amendments to this lease may be required by the
Landlord and Tenant in the future.

 

 

 

Use of Premises Paragraph of the lease is revised from:

Use of Premises  Tenant
shall use the premises for and as non-retail office space.  Tenant shall not change the use of the
premises without the prior written consent of the Landlord which shall not be
unreasonebly withheld or delayed.   No hazardous waste or hazardous material
shall be stored, disposed of or used on the premises.  Tenant agrees to comply with all applicable
zoning and other laws and regulations, and provide and install at its own
expense any additional equipment or alterations required to comply with all
such laws and regulations as required from time to time.  Tenant further covenants and agrees (1) to use
the premises in a manner which does not interfere with the rights of quiet
enjoyment of any other tenants of the building and which is not a nuisance, and
(ii) not to make any objectionable use of the premises to generate any
objectionable odor therefrom.  
Notwithstanding the portioning Landlord represents premises to have a
valid Certificate of Occupancy for Tenant’s use of this premise.

TO:

Use of
Premises  Tenant shall use the premises for office space
(approximately 5,000 sf), warehousing (approximately 17,500 sf), manufacturing
and light component assembly work (approximately 25,000 sf), for an approximate
aggregate total of 47,500 square feet. 
Tenant shall not change the use of the premises without the prior
written consent of the Landlord which shall not be unreasonably withheld or
delayed.   No hazardous waste or
hazardous material shall be stored, disposed of or used on the premises.  Tenant agrees to comply with all applicable
zoning and other laws and regulations, and provide and install at its own
expense any additional equipment or alterations required to comply with all
such laws and regulations as required from time to time.  Tenant further covenants and agrees (1) to
use the premises in a manner which does not interfere with the rights of quiet
enjoyment of any other tenants of the building and which is not a nuisance, and
(ii) not to make any objectionable use of the premises to generate any
objectionable odor therefrom. Notwithstanding the portioning Landlord
represents premises to have a valid Certificate of Occupancy for Tenant’s use
of this premise.

Signed
this 27 day of September 2006

	
  

  	
  LESSEE:

  CAPSTONE TURBINE CORPORATION

  	
   

  	
   

  	
  LESSOR: 

  CAPGEN CHP, INC,

  
	
  BY:

  	
  /s/ Mark Gilbreth

  	
   

  	
  BY:

  	
  /s/ Dennis Lane

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NAME:

  	
  Mark Gilbreth

  	
   

  	
  NAME

  	
  Dennis Lane

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TITLE:  

  	
  President
  & CEO/COO

  	
   

  	
  TITLE:  

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DATE:

  	
  9/27/06

  	
   

  	
  DATE:

  	
  9/27/06Exhibit
10.4

 

 

GRAMERCY REAL ESTATE CDO 2006-1, LTD.,

as Issuer

GRAMERCY REAL ESTATE CDO 2006-1 LLC,

as Co-Issuer

GKK LIQUIDITY LLC,

as Advancing Agent

AND

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee, Paying Agent, Calculation Agent, Transfer Agent,

Custodial Securities Intermediary, Backup Advancing Agent and Notes Registrar

INDENTURE

Dated as of August 24, 2006

 

 

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 1

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DEFINITIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
   

  	
  Definitions

  	
   

  	
  3

  
	
  Section 1.2

  	
   

  	
  Assumptions as to Pledged Obligations

  	
   

  	
  82

  
	
  Section 1.3

  	
   

  	
  Interest Calculation Convention

  	
   

  	
  84

  
	
  Section 1.4

  	
   

  	
  Rounding Convention

  	
   

  	
  84

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  THE NOTES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.1

  	
   

  	
  Forms Generally

  	
   

  	
  85

  
	
  Section 2.2

  	
   

  	
  Forms of Notes and Certificate of Authentication

  	
   

  	
  85

  
	
  Section 2.3

  	
   

  	
  Authorized Amount; Stated Maturity; and
  Denominations

  	
   

  	
  86

  
	
  Section 2.4

  	
   

  	
  Execution, Authentication, Delivery and Dating

  	
   

  	
  87

  
	
  Section 2.5

  	
   

  	
  Registration, Registration of Transfer and Exchange

  	
   

  	
  88

  
	
  Section 2.6

  	
   

  	
  Mutilated, Defaced, Destroyed, Lost or Stolen Note

  	
   

  	
  96

  
	
  Section 2.7

  	
   

  	
  Payment of Principal and Interest and Other Amounts;
  Principal and Interest Rights Preserved

  	
   

  	
  97

  
	
  Section 2.8

  	
   

  	
  Persons Deemed Owners

  	
   

  	
  108

  
	
  Section 2.9

  	
   

  	
  Cancellation

  	
   

  	
  109

  
	
  Section 2.10

  	
   

  	
  Global Securities; Temporary Notes

  	
   

  	
  109

  
	
  Section 2.11

  	
   

  	
  U.S. Tax Treatment of Notes

  	
   

  	
  110

  
	
  Section 2.12

  	
   

  	
  Authenticating Agents

  	
   

  	
  111

  
	
  Section 2.13

  	
   

  	
  Forced Sale on Failure to Comply with Restrictions

  	
   

  	
  111

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CONDITIONS
  PRECEDENT; PLEDGED OBLIGATIONS

  	
   

  	
   

  
	
  Section 3.1

  	
   

  	
  General Provisions

  	
   

  	
  113

  
	
  Section 3.2

  	
   

  	
  Security for Notes

  	
   

  	
  115

  
	
  Section 3.3

  	
   

  	
  Transfer of Pledged Obligations

  	
   

  	
  117

  

 

 i
 

 

 

	
  ARTICLE 4

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SATISFACTION AND
  DISCHARGE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.1

  	
   

  	
  Satisfaction and Discharge of Indenture

  	
   

  	
  124

  
	
  Section 4.2

  	
   

  	
  Application of Trust Money

  	
   

  	
  125

  
	
  Section 4.3

  	
   

  	
  Repayment of Monies Held by Paying Agent

  	
   

  	
  125

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  REMEDIES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.1

  	
   

  	
  Events of Default

  	
   

  	
  126

  
	
  Section 5.2

  	
   

  	
  Acceleration of Maturity; Rescission and Annulment

  	
   

  	
  129

  
	
  Section 5.3

  	
   

  	
  Collection of Indebtedness and Suits for Enforcement
  by Trustee

  	
   

  	
  131

  
	
  Section 5.4

  	
   

  	
  Remedies

  	
   

  	
  135

  
	
  Section 5.5

  	
   

  	
  Preservation of Assets

  	
   

  	
  137

  
	
  Section 5.6

  	
   

  	
  Trustee May Enforce Claims Without Possession of
  Notes

  	
   

  	
  138

  
	
  Section 5.7

  	
   

  	
  Application of Money Collected

  	
   

  	
  138

  
	
  Section 5.8

  	
   

  	
  Limitation on Suits

  	
   

  	
  138

  
	
  Section 5.9

  	
   

  	
  Unconditional Rights of Noteholders to Receive
  Principal and Interest

  	
   

  	
  139

  
	
  Section 5.10

  	
   

  	
  Restoration of Rights and Remedies

  	
   

  	
  139

  
	
  Section 5.11

  	
   

  	
  Rights and Remedies Cumulative

  	
   

  	
  140

  
	
  Section 5.12

  	
   

  	
  Delay or Omission Not Waiver

  	
   

  	
  140

  
	
  Section 5.13

  	
   

  	
  Control by the Controlling Class

  	
   

  	
  140

  
	
  Section 5.14

  	
   

  	
  Waiver of Past Defaults

  	
   

  	
  140

  
	
  Section 5.15

  	
   

  	
  Undertaking for Costs

  	
   

  	
  141

  
	
  Section 5.16

  	
   

  	
  Waiver of Stay or Extension Laws

  	
   

  	
  141

  
	
  Section 5.17

  	
   

  	
  Sale of Assets

  	
   

  	
  142

  
	
  Section 5.18

  	
   

  	
  Action on the Notes

  	
   

  	
  143

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  THE TRUSTEE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.1

  	
   

  	
  Certain Duties and Responsibilities

  	
   

  	
  144

  
	
  Section 6.2

  	
   

  	
  Notice of Default

  	
   

  	
  146

  
	
  Section 6.3

  	
   

  	
  Certain Rights of Trustee

  	
   

  	
  146

  
	
  Section 6.4

  	
   

  	
  Not Responsible for Recitals or Issuance of Notes

  	
   

  	
  148

  
	
  Section 6.5

  	
   

  	
  May Hold Notes

  	
   

  	
  148

  
	
  Section 6.6

  	
   

  	
  Money Held in Trust

  	
   

  	
  148

  
	
  Section 6.7

  	
   

  	
  Compensation and Reimbursement

  	
   

  	
  148

  
	
  Section 6.8

  	
   

  	
  Corporate Trustee Required; Eligibility

  	
   

  	
  150

  
	
  Section 6.9

  	
   

  	
  Resignation and Removal; Appointment of Successor

  	
   

  	
  150

  
	
  Section 6.10

  	
   

  	
  Acceptance of Appointment by Successor

  	
   

  	
  152

  
	
  Section 6.11

  	
   

  	
  Merger, Conversion, Consolidation or Succession to
  Business of Trustee

  	
   

  	
  152

  

 

 ii
 

 

 

	
  Section 6.12

  	
   

  	
  Co-Trustees and Separate Trustee

  	
   

  	
  152

  
	
  Section 6.13

  	
   

  	
  Certain Duties of Trustee Related to Delayed Payment
  of Proceeds

  	
   

  	
  154

  
	
  Section 6.14

  	
   

  	
  Representations and Warranties of the Trustee

  	
   

  	
  154

  
	
  Section 6.15

  	
   

  	
  Requests for Consents

  	
   

  	
  155

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  COVENANTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.1

  	
   

  	
  Payment of Principal and Interest

  	
   

  	
  156

  
	
  Section 7.2

  	
   

  	
  Maintenance of Office or Agency

  	
   

  	
  156

  
	
  Section 7.3

  	
   

  	
  Money for Note Payments to be Held in Trust

  	
   

  	
  157

  
	
  Section 7.4

  	
   

  	
  Existence of the Issuer and Co-Issuer

  	
   

  	
  159

  
	
  Section 7.5

  	
   

  	
  Protection of Assets

  	
   

  	
  161

  
	
  Section 7.6

  	
   

  	
  Notice of Any Amendments

  	
   

  	
  162

  
	
  Section 7.7

  	
   

  	
  Performance of Obligations

  	
   

  	
  162

  
	
  Section 7.8

  	
   

  	
  Negative Covenants

  	
   

  	
  163

  
	
  Section 7.9

  	
   

  	
  Statement as to Compliance

  	
   

  	
  165

  
	
  Section 7.10

  	
   

  	
  Issuer and Co-Issuer May Consolidate or Merge Only
  on Certain Terms

  	
   

  	
  165

  
	
  Section 7.11

  	
   

  	
  Successor Substituted

  	
   

  	
  168

  
	
  Section 7.12

  	
   

  	
  No Other Business

  	
   

  	
  168

  
	
  Section 7.13

  	
   

  	
  Reporting

  	
   

  	
  169

  
	
  Section 7.14

  	
   

  	
  Calculation Agent

  	
   

  	
  169

  
	
  Section 7.15

  	
   

  	
  Certain Tax Matters

  	
   

  	
  170

  
	
  Section 7.16

  	
   

  	
  Maintenance of Listing

  	
   

  	
  170

  
	
  Section 7.17

  	
   

  	
  Purchase of Assets

  	
   

  	
  171

  
	
  Section 7.18

  	
   

  	
  Effective Date Actions

  	
   

  	
  172

  
	
  Section 7.19

  	
   

  	
  Liquidity Tests

  	
   

  	
  173

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SUPPLEMENTAL
  INDENTURES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.1

  	
   

  	
  Supplemental Indentures Without Consent of
  Securityholders

  	
   

  	
  175

  
	
  Section 8.2

  	
   

  	
  Supplemental Indentures with Consent of
  Securityholders

  	
   

  	
  177

  
	
  Section 8.3

  	
   

  	
  Execution of Supplemental Indentures

  	
   

  	
  179

  
	
  Section 8.4

  	
   

  	
  Effect of Supplemental Indentures

  	
   

  	
  180

  
	
  Section 8.5

  	
   

  	
  Reference in Notes to Supplemental Indentures

  	
   

  	
  180

  
	
  Section 8.6

  	
   

  	
  Certain Consents Required for all Supplemental
  Indentures

  	
   

  	
  180

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  REDEMPTION OF
  SECURITIES; REDEMPTION PROCEDURES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.1

  	
   

  	
  Clean-up Call; Tax Redemption and Optional
  Redemption

  	
   

  	
  181

  
	
  Section 9.2

  	
   

  	
  Auction Call Redemption

  	
   

  	
  182

  

 

 iii
 

 

 

	
  Section 9.3

  	
   

  	
  Notice of Redemption

  	
   

  	
  183

  
	
  Section 9.4

  	
   

  	
  Notice of Redemption or Maturity by the Issuer

  	
   

  	
  184

  
	
  Section 9.5

  	
   

  	
  Notes Payable on Redemption Date

  	
   

  	
  185

  
	
  Section 9.6

  	
   

  	
  Mandatory Redemption

  	
   

  	
  185

  
	
  Section 9.7

  	
   

  	
  Special Amortization

  	
   

  	
  185

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACCOUNTS,
  ACCOUNTINGS AND RELEASES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.1

  	
   

  	
  Collection of Money; Custodial Account

  	
   

  	
  187

  
	
  Section 10.2

  	
   

  	
  Collection Accounts

  	
   

  	
  187

  
	
  Section 10.3

  	
   

  	
  Payment Account

  	
   

  	
  189

  
	
  Section 10.4

  	
   

  	
  Unused Proceeds Account

  	
   

  	
  190

  
	
  Section 10.5

  	
   

  	
  Delayed Funding Obligations Account

  	
   

  	
  192

  
	
  Section 10.6

  	
   

  	
  Expense Account

  	
   

  	
  193

  
	
  Section 10.7

  	
   

  	
  Asset Hedge Account

  	
   

  	
  194

  
	
  Section 10.8

  	
   

  	
  Suspense Account

  	
   

  	
  194

  
	
  Section 10.9

  	
   

  	
  Future Funding Reserve Account

  	
   

  	
  195

  
	
  Section 10.10

  	
   

  	
  Interest Advances

  	
   

  	
  195

  
	
  Section 10.11

  	
   

  	
  Reports by Parties

  	
   

  	
  198

  
	
  Section 10.12

  	
   

  	
  Reports; Accountings

  	
   

  	
  199

  
	
  Section 10.13

  	
   

  	
  Release of Pledged Collateral Debt Securities;
  Release of Assets

  	
   

  	
  208

  
	
  Section 10.14

  	
   

  	
  Reports by Independent Accountants

  	
   

  	
  209

  
	
  Section 10.15

  	
   

  	
  Reports to Rating Agencies

  	
   

  	
  210

  
	
  Section 10.16

  	
   

  	
  [Reserved]

  	
   

  	
  210

  
	
  Section 10.17

  	
   

  	
  Certain Procedures

  	
   

  	
  210

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  APPLICATION OF
  MONIES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 11.1

  	
   

  	
  Disbursements of Monies from Payment Account

  	
   

  	
  212

  
	
  Section 11.2

  	
   

  	
  Trust Accounts

  	
   

  	
  224

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 12

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SALE OF
  COLLATERAL DEBT SECURITIES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 12.1

  	
   

  	
  Sales of Collateral Debt Securities

  	
   

  	
  225

  
	
  Section 12.2

  	
   

  	
  Reinvestment Criteria and Trading Restrictions

  	
   

  	
  228

  
	
  Section 12.3

  	
   

  	
  Conditions Applicable to all Transactions Involving
  Sale or Grant

  	
   

  	
  230

  
	
  Section 12.4

  	
   

  	
  Sale of Collateral Debt Securities with respect to
  an Auction Call Redemption

  	
   

  	
  231

  
	
  Section 12.5

  	
   

  	
  Modifications to Collateral Quality Tests or
  Coverage Tests

  	
   

  	
  234

  

 

 iv
 

 

 

	
  ARTICLE 13

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NOTEHOLDERS’
  RELATIONS

  	
   

  	
   

  
	
  Section 13.1

  	
   

  	
  Subordination

  	
   

  	
  235

  
	
  Section 13.2

  	
   

  	
  Standard of Conduct

  	
   

  	
  240

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 14

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 14.1

  	
   

  	
  Form of Documents Delivered to the Trustee

  	
   

  	
  242

  
	
  Section 14.2

  	
   

  	
  Acts of Securityholders

  	
   

  	
  243

  
	
  Section 14.3

  	
   

  	
  Notices, etc.,
  to the Trustee, the Issuer, the Co-Issuer, the Collateral Manager, the
  Initial Purchasers, each Hedge Counterparty and each Rating Agency

  	
   

  	
  243

  
	
  Section 14.4

  	
   

  	
  Notices to Noteholders; Waiver

  	
   

  	
  245

  
	
  Section 14.5

  	
   

  	
  Effect of Headings and Table of Contents

  	
   

  	
  246

  
	
  Section 14.6

  	
   

  	
  Successors and Assigns

  	
   

  	
  246

  
	
  Section 14.7

  	
   

  	
  Severability

  	
   

  	
  246

  
	
  Section 14.8

  	
   

  	
  Benefits of Indenture

  	
   

  	
  246

  
	
  Section 14.9

  	
   

  	
  Governing Law

  	
   

  	
  247

  
	
  Section 14.10

  	
   

  	
  Submission to Jurisdiction

  	
   

  	
  247

  
	
  Section 14.11

  	
   

  	
  Counterparts

  	
   

  	
  247

  
	
  Section 14.12

  	
   

  	
  Liability of Co-Issuers

  	
   

  	
  247

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 15

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ASSIGNMENT OF
  COLLATERAL DEBT SECURITIES PURCHASE AGREEMENTS, COLLATERAL MANAGEMENT
  AGREEMENT, ASSET SERVICING AGREEMENT AND THE CDO SERVICING AGREEMENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 15.1

  	
   

  	
  Assignment of
  Collateral Debt Securities Purchase Agreement, the Collateral Management
  Agreements, the Asset Servicing Agreement and the CDO Servicing Agreement

  	
   

  	
  248

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 16

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HEDGE AGREEMENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 16.1

  	
   

  	
  Issuer’s Obligations under Hedge Agreement

  	
   

  	
  251

  
	
  Section 16.2

  	
   

  	
  Collateral Debt Securities Purchase Agreements

  	
   

  	
  255

  
	
  Section 16.3

  	
   

  	
  Cure Rights

  	
   

  	
  255

  
	
  Section 16.4

  	
   

  	
  Purchase Right; Majority Preferred Shares Holder

  	
   

  	
  256

  
	
  Section 16.5

  	
   

  	
  Representations and Warranties Related to Subsequent
  Collateral Debt Securities

  	
   

  	
  257

  

 

 v
 

 

 

	
  Section 16.6

  	
   

  	
  Operating Advisor; Additional Debt

  	
   

  	
  259

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 17

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ADVANCING AGENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 17.1

  	
   

  	
  Liability of the Advancing Agent

  	
   

  	
  260

  
	
  Section 17.2

  	
   

  	
  Merger or Consolidation of the Advancing Agent

  	
   

  	
  260

  
	
  Section 17.3

  	
   

  	
  Limitation on Liability of the Advancing Agent and
  Others

  	
   

  	
  260

  
	
  Section 17.4

  	
   

  	
  Representations and Warranties of the Advancing
  Agent

  	
   

  	
  261

  
	
  Section 17.5

  	
   

  	
  Resignation and Removal; Appointment of Successor

  	
   

  	
  262

  
	
  Section 17.6

  	
   

  	
  Acceptance of Appointment by Successor Advancing
  Agent

  	
   

  	
  263

  

 

 vi
 

 

 

	
  SCHEDULES

  	
   

  
	
   

  	
   

  
	
  Schedule A

  	
  Moody’s Recovery Rate Assumptions

  
	
  Schedule B

  	
  S&P Recovery Matrix

  
	
  Schedule C

  	
  S&P Non-Eligible Notching Asset Types

  
	
  Schedule D

  	
  S&P Eligible Notching Asset Types

  
	
  Schedule E

  	
  Gramercy Real Estate CDO 2006-1 Collateral Debt
  Securities Listing

  
	
  Schedule F

  	
  LIBOR

  
	
  Schedule G

  	
  List of Authorized Officers of Collateral Manager

  
	
  Schedule H

  	
  Form of Representations and Warranties Re:
  Collateral Debt Securities Consisting of Mortgage Loans

  
	
  Schedule I

  	
  Form of Representations and Warranties Re:
  Collateral Debt Securities Consisting of B Notes

  
	
  Schedule J

  	
  Form of Representations and Warranties Re:
  Collateral Debt Securities Consisting of Participations

  
	
  Schedule K

  	
  Form of Representations and Warranties Re:
  Collateral Debt Securities Consisting of Mezzanine Loans

  
	
  Schedule L

  	
  Form of Representations and Warranties Re:
  Collateral Debt Securities Consisting of CRE CDO Securities, CMBS Securities
  and Rake Bonds

  
	
  Schedule M

  	
  Form of Representations and Warranties Re:
  Collateral Debt Securities Consisting of Preferred Equity Securities

  
	
  Schedule N

  	
  Form of Representations and Warranties Re:
  Collateral Debt Securities Collateralized by Healthcare Properties (including
  skilled nursing facilities)

  
	
  Schedule O

  	
  [RESERVED]

  
	
  Schedule P

  	
  Form of Participation Agreement Provision

  
	
  Schedule Q

  	
  Primary Servicing Agreements

  
	
  Schedule R

  	
  Form of Representations and Warranties Re: Credit
  Tenant Lease Loans

  
	
   

  	
   

  
	
   

  	
   

  
	
  EXHIBITS

  	
   

  
	
   

  	
   

  
	
  Exhibit A

  	
  Form of Global Security

  
	
  Exhibit B

  	
  Form of Certificated Security

  
	
  Exhibit C

  	
  Form of Transfer Certificate for (1) Transfer at the
  Closing to a Regulation S Global Security or (2) Subsequent Transfer from a
  Rule 144A Global Security to a Regulation S Global Security

  
	
  Exhibit D

  	
  Form of Transfer Certificate for (1) Transfer at the
  Closing to a Rule 144A Global Security or (2) Subsequent Transfer from a
  Regulation S Global Security to a Rule 144A Global Security

  

 

 vii
 

 

 

	
  Exhibit E-1

  	
  Form of Transfer Certificate for a Transfer from a
  Certificated Rule 144A Security to a Certificated Regulation S Security

  
	
  Exhibit E-2

  	
  Form of Transfer Certificate for a Transfer from a
  Certificated Regulation S Security to a Certificated Rule 144A Security

  
	
  Exhibit F

  	
  Form of Liquidity Certification

  
	
  Exhibit G

  	
  Future Funding Report

  
	
  Exhibit H

  	
  [RESERVED]

  
	
  Exhibit I

  	
  [RESERVED]

  
	
  Exhibit J

  	
  [RESERVED]

  
	
  Exhibit K

  	
  Form of Trust Receipt

  
	
  Exhibit L

  	
  Form of Request for Release of Documents and Receipt

  
	
  Exhibit M

  	
  Form of Information Request from Beneficial Owners
  of Notes

  
	
  Exhibit N

  	
  Origination Agreement

  

 

 viii

INDENTURE, dated as of August 24, 2006, by and among GRAMERCY REAL
ESTATE CDO 2006-1, LTD., a Cayman Islands exempted company with limited
liability (the “Issuer”),
GRAMERCY REAL ESTATE CDO 2006-1 LLC, a limited liability company formed under
the laws of Delaware (the “Co-Issuer”),
WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as
trustee, paying agent, calculation agent, transfer agent, custodial securities
intermediary, backup advancing agent and notes registrar (herein, together with
its permitted successors and assigns in the trusts hereunder, the “Trustee”) and GKK
LIQUIDITY LLC ( “GKK Liquidity”),
a Delaware limited liability company, as advancing agent (herein, together with
its permitted successors and assigns in the trusts hereunder, the “Advancing Agent”).

PRELIMINARY
STATEMENT

Each of the Issuer and
the Co-Issuer is duly authorized to execute and deliver this Indenture to
provide for the Notes issuable as provided in this Indenture.  All covenants and agreements made by the
Issuer and Co-Issuer herein are for the benefit and security of the Secured
Parties.  The Issuer, the Co-Issuer,
Wells Fargo Bank, National Association, in its capacity other than as Trustee,
and the Advancing Agent are entering into this Indenture, and the Trustee is
accepting the trusts created hereby, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged.

All things necessary to
make this Indenture a valid agreement of the Issuer and Co-Issuer in accordance
with this Indenture’s terms have been done.

GRANTING CLAUSES

The Issuer hereby Grants
to the Trustee, for the benefit and security of the 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 (other than Excepted Assets), (a)
the Collateral Debt Securities listed in the Schedule of Closing Date
Collateral Debt Securities which the Issuer purchases on the Closing Date and
causes to be delivered to the Trustee (directly or through an agent or bailee)
herewith, all payments thereon or with respect thereto and all Collateral Debt
Securities which are delivered to the Trustee (directly or through an agent or
bailee) after the Closing Date pursuant to the terms hereof (including the
Collateral Debt Securities listed, as of the Effective Date, on the Schedule of
Closing Date Collateral Debt Securities delivered by the Issuer pursuant to Section
7.17) and all payments thereon or with respect thereto, (b) the rights of
the Issuer under each Hedge Agreement, (c) the Payment Account, the Interest
Collection Account, the Principal Collection Account, the Asset Hedge Account,
the Expense Account, the Unused Proceeds Account, the Delayed Funding
Obligations Account, the Custodial Account, each Hedge Collateral Account, each
Hedge Termination Account and all Eligible Investments purchased with funds on
deposit therein, the Custodial Account and all related security entitlements
and all income from the investment of funds in any of the foregoing, (d) the
rights of the Issuer under each Collateral Debt Securities Purchase Agreement
(including any Collateral Debt Securities Purchase Agreement entered into after
the Closing Date), the Collateral Management Agreement, the Asset Servicing Agreement,
the CDO Servicing Agreement and any other primary or special servicing
agreement, (e) all Cash or

 

Money delivered to the Trustee (or its bailee) in
respect of the Notes or the Assets, (f) all other investment property,
accounts, instruments and general intangibles in which the Issuer has an
interest, other than the Excepted Assets, (g) its rights in respect of the
Suspense Account and the Future Funding Reserve Account and (h) all proceeds
with respect to the foregoing clauses (a)-(f). 
The collateral described in the foregoing clauses (a)-(h) is referred to
as the “Assets.”  For the avoidance of
doubt, the Assets do not include the Excepted Assets.  Such Grants are made, however, in trust, to
secure the Notes and each Hedge Agreement, subject to the Priority of Payments,
equally and ratably without prejudice, priority or distinction between any Note
and any other Note by reason of difference in time of issuance or otherwise,
except as expressly provided in this Indenture, and to secure (i) the payment
of all amounts due on and in respect of the Notes and each Hedge Agreement in
accordance with their terms, (ii) the payment of all other sums payable under
this Indenture and (iii) compliance with the provisions of this Indenture, all
as provided in this Indenture.  For the
avoidance of doubt, the Assets shall not include the Excepted Assets.  The foregoing Grant shall, for the purpose of
determining the property subject to the lien of this Indenture (but not for the
purpose of determining compliance with any of the Coverage Tests or compliance
by the Issuer with any of the other provisions hereof), be deemed to include
any securities and any investments granted by or on behalf of the Issuer to the
Trustee for the benefit of the Noteholders and each Hedge Counterparty, whether
or not such securities or such investments satisfy the criteria set forth in
the definitions of “Collateral Debt Security” or “Eligible Investment,” as the
case may be.

Except to the extent
otherwise provided in this Indenture, this Indenture shall constitute a
security agreement under the laws of the State of New York applicable to
agreements made and to be performed therein, for the benefit of the Noteholders
and each Hedge Counterparty.  Upon the
occurrence and during the continuation of any Event of Default hereunder, and
in addition to any other rights available under this Indenture or any other
Assets held for the benefit and security of the Noteholders and each Hedge
Counterparty or otherwise available at law or in equity but subject to the
terms hereof, the Trustee shall have all rights and remedies of a secured party
on default under the laws of the State of New York and other applicable law to
enforce the assignments and security interests contained herein and, in
addition, shall have the right, subject to compliance with any mandatory
requirements of applicable law and the terms of this Indenture, to sell or
apply any rights and other interests assigned or pledged hereby in accordance
with the terms hereof at public and private sale.

The Trustee acknowledges
such Grants, accepts the trusts hereunder in accordance with the provisions
hereof, and agrees to perform the duties herein in accordance with, and subject
to, the terms hereof, in order that the interests of the Secured Parties may be
adequately and effectively protected in accordance with this Indenture.

 2
 

 

ARTICLE 1

DEFINITIONS

Section 1.1             Definitions.

Except as otherwise
specified herein or as the context may otherwise require, the following terms
have the respective meanings set forth below for all purposes of this
Indenture, and the definitions of such terms are equally applicable both to the
singular and plural forms of such terms and to the masculine, feminine and
neuter genders of such terms.  The word “including”
and its variations shall mean “including without limitation.”  Whenever any reference is made to an amount
the determination of which is governed by Section 1.2, the provisions of
Section 1.2 shall be applicable to such determination or calculation,
whether or not reference is specifically made to Section 1.2, unless
some other method of calculation or determination is expressly specified in the
particular provision. All references in this Indenture to designated “Articles,”
“Sections,” “Subsections” and other subdivisions are to the designated
Articles, Sections, Subsections and other subdivisions of this Indenture as
originally executed.  The words “herein,”
“hereof,” “hereunder” and other words of similar import refer to this Indenture
as a whole and not to any particular Article, Section, Subsection or other
subdivision.

“10% Limit”:  The meaning specified in Section 12.1(b)
hereof.

“63rd Street Townhouse Loan”:  The Initial Collateral Debt Security known as
the 63rd Street Townhouse Loan.

“A Note”:  A promissory note secured by a mortgaged
property that is not subordinate in right of payment to any separate promissory
note secured by the same mortgaged property.

“Above Cap Security”:  Any Collateral Debt Security, which initially
bore interest based upon a floating rate index subject to a cap (which, if
exceeded, would cause such Collateral Debt Security to bear interest at a fixed
rate) and which currently bears interest at a fixed rate as a result of such
cap being exceeded, but only for so long as such cap is exceeded.

“Account”: Any of the
Interest Collection Account, the Principal Collection Account, the Unused
Proceeds Account, the Delayed Funding Obligations Account, the Payment Account,
the Expense Account, the Custodial Account, each Hedge Termination Account, the
Preferred Shares Distribution Account and each Hedge Collateral Account, and
any subaccount thereof that the Trustee deems necessary or appropriate.

“Accountants’ Report”:  A report of a firm of Independent certified
public accountants of recognized national reputation appointed by the Issuer
pursuant to Section 10.14(a), which may be the firm of independent
accountants that reviews or performs procedures with respect to the financial
reports prepared by the Issuer or the Collateral Manager.

 3
 

 

“Accounts
Receivable”:  The
meaning specified in Section 3.3(a)(vi) hereof.

“Acquired Property”:  Any real property located in metropolitan New
York or Washington D.C. in which the Issuer acquires a direct or indirect
interest by foreclosure or other similar conveyance, or by transfer in lieu
thereof, as a result of the Issuer’s ownership of a related Collateral Debt
Security.

“Act” or “Act of Securityholders”:  The meaning specified in Section 14.2
hereof.

“Advancing Agent”:  GKK Liquidity, unless a successor Person
shall have become the Advancing Agent pursuant to the applicable provisions of
this Indenture, and thereafter “Advancing Agent” shall mean such successor
Person.

“Advancing Agent Fee”:  The fee payable quarterly in arrears on each
Payment Date to the Advancing Agent in accordance with the Priority of
Payments, equal to 0.07% per  annum on the Aggregate Outstanding Amount of the Class A
Notes and the Class B Notes on such Payment Date prior to giving effect to
distributions with respect to such Payment Date.

“Advisers Act”: The
Investment Advisers Act of 1940, as amended.

“Advisory Committee”:
The meaning specified in the Collateral Management Agreement.

“Affiliate” or “Affiliated”:  With respect to a Person, (i) any other
Person who, directly or indirectly, is in control of, or controlled by, or is
under common control with, such Person or (ii) any other Person who is a
director, Officer or employee (a) of such Person, (b) of any subsidiary or
parent company of such Person or (c) of any Person described in clause (i)
above.  For the purposes of this
definition, control of a Person shall mean the power, direct or indirect, (i)
to vote more than 50% of the securities having ordinary voting power for the
election of directors of such Person, or (ii) to direct or cause the direction
of the management and policies of such Person whether by contract or otherwise;
provided that (x) neither the Company
Administrator nor any other company, corporation or person to which the Company
Administrator provides directors and/or acts as share trustee shall be an
Affiliate of the Issuer or Co-Issuer and (y) neither the Collateral Manager,
Green Loan Services LLC, Gramercy Investment nor any of their respective
subsidiaries shall be deemed to be Affiliates of the Issuer.

“Agent Members”:  Members of, or participants in, the
Depository, Clearstream, Luxembourg or Euroclear.

“Aggregate Amortized Cost”:  With respect to any Interest Only Security or
Principal Only Security, as of any date of determination (a) on the date of
acquisition thereof by the Issuer, the cost of purchase thereof and (b) on any
date thereafter, the present value of all remaining payments on such security
discounted to such date of determination as of each subsequent due date for
such security at a discount rate per annum equal to the internal rate of return
on such security as calculated in good faith by the Collateral Manager at the
time of purchase thereof by the Issuer.

 4
 

 

“Aggregate
Collateral Balance”: 
The aggregate Principal Balance of (i) Collateral Debt Securities, (ii)
Eligible Investments purchased with Principal Proceeds and (iii) Eligible
Investments purchased with monies on deposit in the Unused Proceeds Account
that have not been designated as Interest Proceeds by the Collateral Manager pursuant
to Section 10.4(c).

“Aggregate Outstanding Amount”:  With respect to any Class or Classes of
Notes, the aggregate principal balance (excluding any Class C Capitalized
Interest, Class D Capitalized Interest, Class E Capitalized Interest, Class F
Capitalized Interest, Class G Capitalized Interest, Class H Capitalized
Interest, Class J Capitalized Interest and Class K Capitalized Interest, as the
case may be) of such Class or Classes Outstanding at the date of determination.

“Aggregate Principal Balance”:
When used with respect to any Pledged Collateral Debt Securities as of any date
of determination, the sum of the Principal Balances on such date of
determination of all such Pledged Collateral Debt Securities.

“Applicable Recovery Rate”:  The lower of the S&P Recovery Rate and
the Moody’s Recovery Rate, as applicable.

“Approved
Lender”:  The meaning specified in
clause (xxxvi) of the definition of Eligibility Criteria.

“ARD Loan”:  A Loan with an anticipated repayment date,
after which (if not repaid in full by such anticipated repayment date) the loan
provides for changes in payments and accrual of interest.

“Article 15 Agreement”:  The meaning specified in Section 15.1(a)
hereof.

“Asset Hedge
Account”:  The account established
pursuant to Section 10.7 hereof.

“Asset Hedge
Schedule”:  With regard to each
Non-Quarterly Pay Asset, a schedule prepared by the Collateral Manager and
delivered to the Trustee and each of the Rating Agencies not less than one
Business Day prior to the date of acquisition thereof by the Issuer which sets
forth with regard to such Non-Quarterly Pay Asset (x) the portion of each
scheduled payment of interest in respect of such Non-Quarterly Pay Asset that
is to be deposited in the Collection Account when received in cash by the Issuer,
(y) the portion of such payment that is to be deposited in the Asset Hedge
Account on such date and (z) the amount that is to be transferred from the
Asset Hedge Account to the Collection Account on or prior to the third Business
Day prior to each quarterly Payment Date in respect of such Non-Quarterly Pay
Asset in accordance with the Indenture, such that such schedule will have the
effect of synthetically converting non-quarterly coupon payments in respect of
each Non-Quarterly Pay Asset referred to therein into quarterly coupon
payments.  The Asset Hedge Schedule may
be amended from time to time by the Collateral Manager; provided that written
notice of any such amendments are delivered to the Trustee and the Rating
Agencies.

“Asset Servicing Agreement”:  The asset servicing agreement, dated as of
the Closing Date among the Issuer, Green Loan and the Collateral Manager.

 5
 

 

“Assets”:  The meaning specified in the first paragraph
of the Granting Clause of this Indenture.

“Assumed Portfolio”:  The portfolio with characteristics developed
in accordance with the Eligibility Criteria and Collateral Quality Tests for
purposes of determining the Class A-1 Break Even Loss Rate, the Class A-2
Break Even Loss Rate, the Class B Break-Even Loss Rate, the Class C Break-Even
Loss Rate, the Class D Break-Even Loss Rate, the Class E Break-Even Loss Rate,
the Class F Break-Even Loss Rate, the Class G Break-Even Loss Rate, the Class H
Break-Even Loss Rate, the Class J Break-Even Loss Rate and the Class K
Break-Even Loss Rate.

“Auction”:  Any auction conducted in connection with an
Auction Call Redemption.

“Auction Bid Date”:  The meaning specified in Section
12.4(b)(ii) hereof.

“Auction Call Period”:  The meaning specified in Section 9.2(a)
hereof.

“Auction Call Redemption”:  The meaning specified in Section 9.2(a)
hereof.

“Auction Call Redemption Date”:  The meaning specified in Section 9.2(a)
hereof.

“Auction Date”: The
meaning specified in Section 12.4(a)(i) hereof.

“Auction Procedures”:  The required procedures with respect to an
Auction set forth in Section 12.4(b) hereof.

“Auction Purchase Agreement”:  The meaning specified in Section
12.4(a)(iii) hereof.

“Auction Purchase Closing Date”:
The meaning specified in Section 12.4(b)(v) hereof.

“Authenticating Agent”:  With respect to the Notes or a Class of the
Notes, the Person designated by the Trustee to authenticate such Notes on
behalf of the Trustee pursuant to Section 2.12 hereof.

“Authorized Officer”:  With respect to the Issuer or Co-Issuer, any
Officer (or attorney-in-fact appointed by the Issuer or the Co-Issuer) who is
authorized to act for the Issuer or Co-Issuer in matters relating to, and
binding upon, the Issuer or Co-Issuer. 
With respect to the Collateral Manager, the persons listed on Schedule
G hereto.  With respect to the
Trustee or any other bank or trust company acting as trustee of an express
trust or as custodian, a Trust Officer. 
Each party may receive and accept a certification of the authority of
any other party as conclusive evidence of the authority of any person to act,
and such certification may be considered as in full force and effect until
receipt by such other party of written notice to the contrary.

 6
 

 

“Average
Life”:  On any
Measurement Date with respect to any Collateral Debt Security (other than a
Defaulted Security), the quotient obtained by dividing (i) the summing of the
products of (a) the number of years (rounded to the nearest one tenth thereof)
from such Measurement Date to the respective dates of each successive expected
distribution of principal of such Collateral Debt Security and (b) the
respective amounts of such expected distributions of principal by (ii) the sum
of all successive expected distributions of principal on such Collateral Debt
Security, calculated by the Collateral Manager.

“Backup Advancing Agent”:  Wells Fargo Bank, National Association, a
national banking association, solely in its capacity as Backup Advancing Agent
hereunder, or any successor Backup Advancing Agent; provided that any
such successor Backup Advancing Agent must be a financial institution having a
long-term debt rating from each Rating Agency at least equal to “A-” or “A2,”
as applicable, or a short-term debt rating at least equal to “A-1,” “P-1” or “F-1,”
as applicable.

“Backup Advancing Agent Fee”:  The fee payable quarterly in arrears on each
Payment Date to the Trustee, in its capacity as Backup Advancing Agent, in
accordance with the Priority of Payments, equal to 0.00125% per annum on the Aggregate Outstanding Amount of the Class A
Notes and the Class B Notes on such Payment Date prior to giving effect to
distributions with respect to such Payment Date.

“Bailee Letter”:  The meaning specified in Section
12.4(b)(v) hereof.

“Bank”:  Wells Fargo Bank, National Association, a
national banking association, in its individual capacity and not as Trustee
and, if any Person is appointed as a successor Trustee, such Person in its
individual capacity and not as Trustee.

“Bankruptcy Code”:  The federal Bankruptcy Code, Title 11 of the
United States Code, as amended.

“Bearer Securities”:  The meaning specified in Section
3.3(a)(iv) hereof.

“Benefit Plan”:  The meaning specified in Section
2.5(g)(vi) hereof.

“B Note”:  A promissory note secured by a mortgage on
commercial real estate property that is subordinate in right of payment to one
or more separate promissory notes secured by a direct or beneficial interest in
the same property.

“Board of Directors”:  With respect to the Issuer, the directors of
the Issuer duly appointed and, with respect to the Co-Issuer, the LLC Managers
duly appointed by the sole member of the Co-Issuer or otherwise.

“Board Resolution”:  With respect to the Issuer, a resolution of
the Board of Directors of the Issuer and, with respect to the Co-Issuer, a
resolution or unanimous written consent of the LLC Managers or the sole member
of the Co-Issuer.

“Business Day”:  Any day other than (i) a Saturday or Sunday
and (ii) a day on which commercial banks are authorized or required by
applicable law, regulation or executive

 7
 

 

order to close in New York, New York or the location
of the Corporate Trust Office; provided that if any action is required
of the Irish Paying Agent, then, for purposes of determining when such Irish
Paying Agent action is required, Dublin, Ireland will be considered in
determining “Business Day.”

“Calculation Agent”:  The meaning specified in Section 7.14(a)
hereof.

“Calculation Amount”:
With respect to any Collateral Debt Security, at any time, the lesser of (a)
the Market Value of such Collateral Debt Security and (b) the Applicable
Recovery Rate multiplied by the Principal Balance of such Collateral Debt
Security.

“Cash”:  Such coin or currency of the United States of
America as at the time shall be legal tender for payment of all public and
private debts.

“Certificate of Authentication”:  The meaning specified in Section 2.1
hereof.

“Certificated Note”:  Any of the Notes, as applicable, executed,
authenticated and delivered in definitive non-global, fully registered form
without interest coupons, pursuant to this Indenture.

“Certificated Security”:  A “certificated security” as defined in
Section 8-102(a)(4) of the UCC.

“CDO Servicing
Agreement”:  The servicing agreement
dated as of the Closing Date, among the Issuer, Green Loan, the Collateral
Manager and Capmark Finance Inc.

“Class”:  The Class A-1 Notes, the Class A-2 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 applicable.

“Class A Notes”:
The Class A-1 Notes and the Class A-2 Notes, collectively.

“Class A-1 Break-Even Loss Rate”:  At any time, the maximum percentage of
defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P’s assumptions on recoveries and timing and to the
Priority of Payments, will result in sufficient funds remaining for the timely
payment of interest and the ultimate payment of principal of the Class A-1
Notes.

“Class A-1 Defaulted Interest
Amount”:  As of each
Payment Date, the accrued and unpaid amount due to holders of the Class A-1
Notes on account of any shortfalls in the payment of the Class A-1 Interest
Distribution Amount with respect to any preceding Payment Date or Payment
Dates, together with interest accrued thereon (to the extent lawful).

“Class A-1 Interest Distribution Amount”:  On each Payment Date, the amount due to
Holders of the Class A-1 Notes on account of interest equal to the product of
(i) the Aggregate Outstanding Amount of the Class A-1 Notes with respect to the
related Interest Accrual Period, (ii) the actual number of days in such
Interest Accrual Period divided by 360 and (iii) the Class A-1 Rate.

 8
 

 

“Class
A-1 Loss Differential”: 
At any time, the rate calculated by subtracting the Class A-1 Scenario
Loss Rate from the Class A-1 Break-Even Loss Rate at such time.

“Class A-1 Notes”:  The Class A-1 Senior Secured Floating Rate
Term Notes, due 2041, issued by the Issuer and the Co-Issuer pursuant to this
Indenture.

“Class A-1 Rate”:  With respect to any Class A-1 Note, the per annum rate at which interest accrues on such Note for
any Interest Accrual Period, which shall be equal to three-month LIBOR for the
related Interest Accrual Period plus 0.26% per annum.

“Class A-1 Scenario Loss Rate”:  At any time, an estimate of the cumulative
default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then current rating of the Class A-1 Notes by
S&P, determined by application of the S&P CDO Monitor at such time.

“Class A-2
Break-Even Loss Rate”:  At any time,
the maximum percentage of defaults that the Assumed Portfolio should be able to
sustain, which after giving effect to S&P’s assumptions on recoveries and
timing and to the Priority of Payments, will result in sufficient funds remaining
for the timely payment of interest and the ultimate payment of principal of the
Class A-2 Notes.

“Class A-2 Defaulted Interest Amount”:  As of each Payment Date, the accrued and
unpaid amount due to holders of the Class A-2 Notes on account of any
shortfalls in the payment of the Class A-2 Interest Distribution Amount with
respect to any preceding Payment Date or Payment Dates, together with interest
accrued thereon (to the extent lawful).

“Class A-2 Interest Distribution Amount”:  On each Payment Date, the amount due to
Holders of the Class A-2 Notes on account of interest equal to the product of
(i) the Aggregate Outstanding Amount of the Class A-2 Notes with respect to the
related Interest Accrual Period, (ii) the actual number of days in such Interest
Accrual Period divided by 360 and (iii) the Class A-2 Rate.

“Class A-2 Loss Differential”:  At any time, the rate calculated by
subtracting the Class A-2 Scenario Loss Rate from the Class A-2 Break-Even Loss
Rate at such time.

“Class A-2 Notes”:  The Class A-2 Second Priority Senior Secured
Floating Rate Term Notes, due 2041, issued by the Issuer and the Co-Issuer
pursuant to this Indenture.

“Class A-2 Rate”:  With respect to any Class A-2 Note, the per annum rate at which interest accrues on such Note for
any Interest Accrual Period, which shall be equal to LIBOR for the related
Interest Accrual Period plus 0.30% per annum.

“Class A-2 Scenario Loss Rate”:  At any time, an estimate of the cumulative
default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then current rating of the Class A-2 Notes by
S&P, determined by application of the S&P CDO Monitor at such time.

 9
 

 

“Class
A-2 Subordinated Interests”: 
The meaning specified in Section 13.1(a) hereof.

“Class A/B Coverage Tests”:
The Class A/B Par Value Test and the Class A/B Interest Coverage Test.

“Class A/B Interest Coverage Ratio”:  The meaning specified under the definition of
“Interest Coverage Ratio.”

“Class A/B Interest Coverage Test”:
The test that will be deemed met as of any Measurement Date prior to the
Effective Date and will be met as of any Measurement Date on or after the
Effective Date on which any Class A Notes or Class B Notes remain Outstanding
if the Class A/B Interest Coverage Ratio as of such Measurement Date is equal
to or greater than 120.50%.

“Class A/B Par Value Ratio”:  As of any Measurement Date, the number
(expressed as a percentage) calculated by dividing (a) the Net Outstanding
Portfolio Balance on such Measurement Date by (b) the sum of the Aggregate
Outstanding Amount of the Class A Notes and the Class B Notes and the amount of
any unreimbursed Interest Advances.

“Class A/B Par Value Test”:  The test that will be deemed met as of any
Measurement Date prior to the Effective Date and will be met as of any
Measurement Date on or after the Effective Date on which any Class A Notes or
Class B Notes remain Outstanding if the Class A/B Par Value Ratio on such
Measurement Date is equal to or greater than 120.50%.

“Class B Break-Even Loss Rate”:  At any time, the maximum percentage of
defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P’s assumptions on recoveries and timing and to the
Priority of Payments, will result in sufficient funds remaining for the timely
payment of interest and the ultimate payment of principal of the Class B Notes.

“Class B Defaulted Interest Amount”:  As of each Payment Date, the accrued and
unpaid amount due to holders of the Class B Notes on account of any shortfalls
in the payment of the Class B Interest Distribution Amount with respect to any
preceding Payment Date or Payment Dates, together with interest accrued thereon
(to the extent lawful).

“Class B Interest Distribution Amount”:  On each Payment Date, the amount due to
Holders of the Class B Notes on account of interest equal to the product of (i)
the Aggregate Outstanding Amount of the Class B Notes with respect to the
related Interest Accrual Period, (ii) the actual number of days in such
Interest Accrual Period divided by 360 and (iii) the Class B Rate.

“Class B Loss Differential”:  At any time, the rate calculated by
subtracting the Class B Scenario Loss Rate from the Class B Break-Even Loss
Rate at such time.

“Class B Notes”:  The Class B Third Priority Floating Rate Term
Notes, due 2041, issued by the Issuer and the Co-Issuer pursuant to this
Indenture.

 10
 

 

“Class B
Rate”:  With respect to
any Class B Note, the per annum rate
at which interest accrues on such Note for any Interest Accrual Period, which
shall be equal to LIBOR for the related Interest Accrual Period plus 0.37% per annum.

“Class B Scenario Loss Rate”:  At any time, an estimate of the cumulative
default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then current rating of the Class B Notes by
S&P, determined by application of the S&P CDO Monitor at such time.

“Class B Subordinate Interests”:  The meaning specified in Section 13.1(b)
hereof.

“Class C Break-Even Loss Rate”:  At any time, the maximum percentage of
defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P’s assumptions on recoveries and timing and to the
Priority of Payments, will result in sufficient funds remaining for the
ultimate payment of interest and principal of the Class C Notes.

“Class C Capitalized Interest”:  The meaning specified in Section 2.7(d)
hereof.

“Class C Defaulted Interest Amount”:  On or after any Payment Date on which no
Class A Notes or Class B Notes are Outstanding, any interest on the Class C
Notes (other than Class C Capitalized Interest) that is due and payable but is
not punctually paid or duly provided for on or prior to the due date therefor
and which remains unpaid, together with interest accrued thereon (to the extent
lawful).

“Class C Interest Distribution Amount”:  On each Payment Date, the amount due to
Holders of the Class C Notes on account of interest equal to the product of (i)
the Aggregate Outstanding Amount (including any Class C Capitalized Interest)
of the Class C Notes with respect to the related Interest Accrual Period, (ii)
the actual number of days in such Interest Accrual Period divided by 360 and
(iii) the Class C Rate.

“Class C Loss Differential”:  At any time, the rate calculated by
subtracting the Class C Scenario Loss Rate from the Class C Break-Even Loss
Rate at such time.

“Class C Notes”:  The Class C Fourth Priority Floating Rate
Capitalized Interest Term Notes, due 2041, issued by the Issuer and the
Co-Issuer pursuant to this Indenture.

“Class C Rate”:  With respect to any Class C Note, the per annum rate at which interest accrues on such Note for
any Interest Accrual Period, which shall be equal to LIBOR for the related
Interest Accrual Period plus 0.52% per annum.

“Class C Scenario Loss Rate”:  At any time, an estimate of the cumulative
default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then current rating of the Class C Notes by
S&P, determined by application of the S&P CDO Monitor at such time.

“Class C Subordinate Interests”:  The meaning specified in Section 13.1(c)
hereof.

 11
 

 

“Class C/D/E Coverage Tests”:
The Class C/D/E Par Value Test and the Class C/D/E Interest Coverage Test.

“Class C/D/E Interest Coverage Ratio”:  The meaning specified in the definition of “Interest
Coverage Ratio.”

“Class C/D/E Interest Coverage Test”:
The test that will be deemed met as of any Measurement Date prior to the
Effective Date and will be met as of any Measurement Date on or after the
Effective Date on which any Class C Notes, Class D Notes or Class E Notes
remain Outstanding if the Class C/D/E Interest Coverage Ratio as of such
Measurement Date is equal to or greater than 110.15%.

“Class C/D/E Par Value Ratio”:
As of any Measurement Date, the number (expressed as a percentage) calculated
by dividing (a) the Net Outstanding Portfolio Balance on such Measurement Date
by (b) the sum of the Aggregate Outstanding Amount (including any Class C
Capitalized Interest , Class D Capitalized Interest and Class E Capitalized
Interest) of the Class A Notes, the Class B Notes, the Class C Notes, the Class
D and Class E Notes and the amount of any unreimbursed Interest Advances.

“Class C/D/E Par Value Test”:
The test that will be deemed met as of any Measurement Date prior to the Effective
Date and will be met as of any Measurement Date on or after the Effective Date
on which any Class C Notes, Class D Notes or Class E Notes remain Outstanding
if the Class C/D/E Par Value Ratio on such Measurement Date is equal to or
greater than 110.15%.

“Class D Break-Even Loss Rate”:  At any time, the maximum percentage of
defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P’s assumptions on recoveries and timing and to the
Priority of Payments, will result in sufficient funds remaining for the
ultimate payment of interest and principal of the Class D Notes.

“Class D Capitalized Interest”:
The meaning specified in Section 2.7(e) hereof.

“Class D Defaulted Interest Amount”:  On or after any Payment Date on which no
Class A Notes, Class B Notes or Class C Notes are Outstanding, any interest on
the Class D Notes (other than Class D Capitalized Interest) that is due and
payable but is not punctually paid or duly provided for on or prior to the due
date therefor and which remains unpaid, together with interest accrued thereon
(to the extent lawful).

“Class D Interest Distribution Amount”:  On each Payment Date, the amount due to
Holders of the Class D Notes on account of interest equal to the product of (i)
the Aggregate Outstanding Amount (including any Class D Capitalized Interest)
of the Class D Notes with respect to the related Interest Accrual Period, (ii)
the actual number of days in such Interest Accrual Period divided by 360 and
(iii) the Class D Rate.

“Class D Loss Differential”:  At any time, the rate calculated by
subtracting the Class D Scenario Loss Rate from the Class D Break-Even Loss
Rate at such time.

 12
 

 

“Class D
Notes”:  The Class D
Fifth Priority Floating Rate Capitalized Interest Term Notes, due 2041, issued
by the Issuer and the Co-Issuer pursuant to this Indenture.

“Class D Rate”:  With respect to any Class D Note, the per annum rate at which interest accrues on such Note for
any Interest Accrual Period, which shall be equal to LIBOR for the related Interest
Accrual Period plus 0.56% per annum.

“Class D Scenario Loss Rate”:  At any time, an estimate of the cumulative
default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then current rating of the Class D Notes by
S&P, determined by application of the S&P CDO Monitor at such time.

“Class D
Subordinate Interests”:  The meaning
specified in Section 13.1(d) hereof.

“Class E Break-Even Loss Rate”:  At any time, the maximum percentage of
defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P’s assumptions on recoveries and timing and to the
Priority of Payments, will result in sufficient funds remaining for the
ultimate payment of interest and principal of the Class E Notes.

“Class E Capitalized Interest”:  The meaning specified in Section 2.7(f)
hereof.

“Class E Defaulted Interest Amount”:  On or after any Payment Date on which no
Class A Notes, Class B Notes, Class C Notes or Class D Notes are Outstanding,
any interest on the Class E Notes (other than Class E Capitalized Interest)
that is due and payable but is not punctually paid or duly provided for on or
prior to the due date therefor and which remains unpaid, together with interest
accrued thereon (to the extent lawful).

“Class E Interest Distribution Amount”:  On each Payment Date, the amount due to
Holders of the Class E Notes on account of interest equal to the product of (i)
the Aggregate Outstanding Amount (including any Class E Capitalized Interest)
of the Class E Notes with respect to the related Interest Accrual Period, (ii)
the actual number of days in such Interest Accrual Period divided by 360 and
(iii) the Class E Rate.

“Class E Loss Differential”:  At any time, the rate calculated by
subtracting the Class E Scenario Loss Rate from the Class E Break-Even Loss
Rate at such time.

“Class E Notes”:  The Class E Sixth Priority Floating Rate
Capitalized Interest Term Notes, due 2041, issued by the Issuer and the
Co-Issuer pursuant to this Indenture.

“Class E Rate”:  With respect to any Class E Note, the per annum rate at which interest accrues on such Note for
any Interest Accrual Period, which shall be equal to LIBOR for the related
Interest Accrual Period plus 0.70% per annum.

“Class E Scenario Loss Rate”:  At any time, an estimate of the cumulative
default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then current rating of the Class E Notes by
S&P, determined by application of the S&P CDO Monitor at such time.

 13
 

 

“Class E Subordinate Interests”:  The meaning specified in Section 13.1(e)
hereof.

“Class F Break-Even Loss Rate”:  At any time, the maximum percentage of
defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P’s assumptions on recoveries and timing and to the
Priority of Payments, will result in sufficient funds remaining for the
ultimate payment of interest and principal of the Class F Notes.

“Class F Capitalized Interest”:
The meaning specified in Section 2.7(g) hereof.

“Class F Defaulted Interest Amount”:  On or after any Payment Date on which no
Class A Notes, Class B Notes, Class C Notes, Class D Notes or Class E Notes are
Outstanding, any interest on the Class F Notes (other than Class F Capitalized
Interest) that is due and payable but is not punctually paid or duly provided
for on or prior to the due date therefor and which remains unpaid, together
with interest accrued thereon (to the extent lawful).

“Class F Interest Distribution Amount”:  On each Payment Date, the amount due to
Holders of the Class F Notes on account of interest equal to the product of (i)
the Aggregate Outstanding Amount (including any Class F Capitalized Interest)
of the Class F Notes with respect to the related Interest Accrual Period, (ii)
the actual number of days in such Interest Accrual Period divided by 360 and
(iii) the Class F Rate.

“Class F Loss Differential”:  At any time, the rate calculated by
subtracting the Class F Scenario Loss Rate from the Class F Break-Even Loss
Rate at such time.

“Class F Notes”:  The Class F Seventh Priority Floating Rate
Capitalized Interest Term Notes, due 2041, issued by the Issuer and the
Co-Issuer pursuant to this Indenture.

“Class F Rate”:  With respect to any Class F Note, the per annum rate at which interest accrues on such Note for
any Interest Accrual Period, which shall be equal to LIBOR for the related
Interest Accrual Period plus 1.00% per annum.

“Class F Scenario Loss Rate”:  At any time, an estimate of the cumulative
default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then current rating of the Class F Notes by
S&P, determined by application of the S&P CDO Monitor at such time.

“Class F
Subordinate Interests”:  The meaning
specified in Section 13.1(f) hereof.

“Class
F/G/H Coverage Tests”: The Class F/G/H Par Value Test and the
Class F/G/H Interest Coverage Test.

“Class F/G/H Interest Coverage Ratio”:  The meaning specified in the definition of “Interest
Coverage Ratio”.

“Class F/G/H Interest Coverage Test”:
The test that will be deemed met as of any Measurement Date prior to the
Effective Date and will be met as of any Measurement Date on or after the
Effective Date on which any Class F Notes, Class G Notes or Class H Notes
remain

 14
 

 

Outstanding if the Class F/G/H
Interest Coverage Ratio as of such Measurement Date is equal to or greater than
105.15%.

“Class F/G/H Par Value Ratio”:
As of any Measurement Date, the number (expressed as a percentage) calculated
by dividing (a) the Net Outstanding Portfolio Balance on such Measurement Date
by (b) the sum of the Aggregate Outstanding Amount (including any Class C
Capitalized Interest, Class D Capitalized Interest, Class E Capitalized
Interest, Class F Capitalized Interest, Class G Capitalized Interest and Class
H Capitalized Interest) 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 the amount of any unreimbursed Interest
Advances.

“Class F/G/H Par Value Test”:
The test that will be deemed met as of any Measurement Date prior to the
Effective Date and will be met as of any Measurement Date on or after the
Effective Date on which any Class F Notes, Class G Notes or Class H Notes
remain Outstanding if the Class F/G/H Par
Value Ratio on such Measurement Date is equal to or greater than 105.15%.

“Class G Break-Even Loss Rate”:  At any time, the maximum percentage of
defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P’s assumptions on recoveries and timing and to the
Priority of Payments, will result in sufficient funds remaining for the
ultimate payment of interest and principal of the Class G Notes.

“Class G Capitalized Interest”:  The meaning specified in Section 2.7(h)
hereof.

“Class G Defaulted Interest Amount”:  On or after any Payment Date on which no
Class A Notes, Class B Notes, Class C Notes, Class D Notes, Class E Notes or
Class F Notes are Outstanding, any interest on the Class G Notes (other than
Class G Capitalized Interest) that is due and payable but is not punctually
paid or duly provided for on or prior to the due date therefor and which
remains unpaid, together with interest accrued thereon (to the extent lawful).

“Class G Interest Distribution Amount”:  On each Payment Date, the amount due to
Holders of the Class G Notes
on account of interest equal to the product of (i) the Aggregate Outstanding
Amount (including any Class G Capitalized Interest) of the Class G Notes with
respect to the related Interest Accrual Period, (ii) the actual number of days
in such Interest Accrual Period divided by 360 and (iii) the Class G Rate.

“Class G Loss Differential”:  At any time, the rate calculated by
subtracting the Class G Scenario Loss Rate from the Class G Break-Even Loss
Rate at such time.

“Class G Notes”:  The Class G Eighth Priority Floating Rate
Capitalized Interest Term Notes, due 2041, issued by the Issuer and the
Co-Issuer pursuant to this Indenture.

“Class G Rate”:  With respect to any Class G Note, the per annum rate at which interest accrues on such Note for
any Interest Accrual Period, which shall be equal to LIBOR for the related
Interest Accrual Period plus 1.20% per annum.

 15
 

 

“Class G
Scenario Loss Rate”: 
At any time, an estimate of the cumulative default rate for the Current
Portfolio or the Proposed Portfolio, as applicable, consistent with the then
current rating of the Class G Notes by S&P, determined by application of
the S&P CDO Monitor at such time.

“Class G
Subordinate Interests”:  The meaning specified
in Section 13.1(g), hereof.

“Class H Break-Even Loss Rate”:  At any time, the maximum percentage of
defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P’s assumptions on recoveries and timing and to the Priority
of Payments, will result in sufficient funds remaining for the ultimate payment
of interest and principal of the Class H Notes.

“Class H Capitalized Interest”:  The meaning specified in Section 2.7(i)
hereof.

“Class H Defaulted Interest Amount”:  On or after any Payment Date on which no
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 interest on the Class H
Notes (other than Class H Capitalized Interest) that is due and payable but is
not punctually paid or duly provided for on or prior to the due date therefor
and which remains unpaid, together with interest accrued thereon (to the extent
lawful).

“Class H Interest Distribution Amount”:  On each Payment Date, the amount due to
Holders of the Class H Notes
on account of interest equal to the product of (i) the Aggregate Outstanding
Amount (including any Class H Capitalized Interest) of the Class H Notes with
respect to the related Interest Accrual Period, (ii) the actual number of days
in such Interest Accrual Period divided by 360 and (iii) the Class H Rate.

“Class H Loss Differential”:  At any time, the rate calculated by
subtracting the Class H Scenario Loss Rate from the Class H Break-Even Loss
Rate at such time.

“Class H Notes”:  The Class H Ninth Priority Floating Rate
Capitalized Interest Term Notes, due 2041, issued by the Issuer and the
Co-Issuer pursuant to this Indenture.

“Class H Rate”:  With respect to any Class H Note, the per annum rate at which interest accrues on such Note for
any Interest Accrual Period, which shall be equal to LIBOR for the related
Interest Accrual Period plus 1.50% per annum.

“Class H Scenario Loss Rate”:  At any time, an estimate of the cumulative
default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then current rating of the Class H Notes by
S&P, determined by application of the S&P CDO Monitor at such time.

“Class H
Subordinate Interests”:  The meaning
specified in Section 13.1(h) hereof.

“Class J Break-Even Loss Rate”:  At any time, the maximum percentage of
defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P’s

 16
 

 

assumptions on recoveries and timing and to the
Priority of Payments, will result in sufficient funds remaining for the
ultimate payment of interest and principal of the Class J Notes.

“Class J Capitalized Interest”:  The meaning specified in Section 2.7(j)
hereof.

“Class J Defaulted Interest Amount”:  On or after any Payment Date on which 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 are Outstanding, any interest on
the Class J Notes (other than Class J Capitalized Interest) that is due and
payable but is not punctually paid or duly provided for on or prior to the due
date therefor and which remains unpaid, together with interest accrued thereon
(to the extent lawful).

“Class J Interest Distribution Amount”:  On each Payment Date, the amount due to
Holders of the Class J Notes
on account of interest equal to the product of (i) the Aggregate Outstanding
Amount (including any Class J Capitalized Interest) of the Class J Notes with
respect to the related Interest Accrual Period, (ii) the actual number of days
in such Interest Accrual Period divided by 360 and (iii) the Class J Rate.

“Class J Loss Differential”:  At any time, the rate calculated by
subtracting the Class J Scenario Loss Rate from the Class J Break-Even Loss
Rate at such time.

“Class J Notes”:  The Class J Tenth Priority Floating Rate
Capitalized Interest Term Notes, due 2041, issued by the Issuer and the
Co-Issuer pursuant to this Indenture.

“Class J Rate”:  With respect to any Class J Note, the per annum rate at which interest accrues on such Note for
any Interest Accrual Period, which shall be equal to LIBOR for the related
Interest Accrual Period plus 3.25% per annum.

“Class J Scenario Loss Rate”:  At any time, an estimate of the cumulative
default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then current rating of the Class J Notes by
S&P, determined by application of the S&P CDO Monitor at such time.

“Class J
Subordinate Interests”:  The meaning
specified in Section 13.1(i) hereof.

“Class K Break-Even Loss Rate”:  At any time, the maximum percentage of
defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P’s assumptions on recoveries and timing and to the
Priority of Payments, will result in sufficient funds remaining for the
ultimate payment of interest and principal of the Class K Notes.

“Class K Capitalized Interest”:  The meaning specified in Section 2.7(k)
hereof.

“Class K Defaulted Interest Amount”:  On or after any Payment Date on which 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 are Outstanding,
any interest on the Class K Notes (other than Class K Capitalized Interest)
that is due and payable but is not punctually paid or duly provided for on or
prior to the due date therefor and which remains unpaid, together with interest
accrued thereon (to the extent lawful).

 17
 

 

“Class K
Interest Distribution Amount”:  On each Payment Date, the amount due to
Holders of the Class K Notes on account of interest equal to the product of (i)
the Aggregate Outstanding Amount (including any Class K Capitalized Interest)
of the Class K Notes with respect to the related Interest Accrual Period, (ii)
the actual number of days in such Interest Accrual Period divided by 360 and
(iii) the Class K Rate.

“Class K Loss Differential”:  At any time, the rate calculated by
subtracting the Class K Scenario Loss Rate from the Class K Break-Even Loss
Rate at such time.

“Class K Notes”:  The Class K Eleventh Priority Floating Rate
Capitalized Interest Term Notes, due 2041, issued by the Issuer and the
Co-Issuer pursuant to this Indenture.

“Class K Rate”:  With respect to any Class K Note, the per annum rate at which interest accrues on such Note for
any Interest Accrual Period, which shall be equal to LIBOR for the related
Interest Accrual Period plus 6.75% per annum.

“Class K Scenario Loss Rate”:  At any time, an estimate of the cumulative
default rate for the Current Portfolio or the Proposed Portfolio, as applicable,
consistent with the then current rating of the Class K Notes by S&P,
determined by application of the S&P CDO Monitor at such time.

“Class K
Subordinate Interests”:  The meaning
specified in Section 13.1(j) hereof.

“Clean-up Call”:  The meaning specified in Section 9.1
hereof.

“Clearing Agency”: An
organization registered as a “clearing agency” pursuant to Section 17A of the
Exchange Act.

“Clearing
Corporation”:  The meaning specified
in Section 8-102(a)(5) of the UCC.

“Clearing Corporation Security”:
A security subject to book-entry transfers and pledges deposited with the
Clearing Agency.

“Clearstream”:
Clearstream Banking, société anonyme, a limited liability company organized
under the laws of the Grand Duchy of Luxembourg.

“Closing”:  The transfer of any Note to the initial
registered Holder of such Note.

“Closing Date”:  August 24, 2006.

“CMBS Conduit Securities”:
Collateral Debt Securities (A) issued by a single-seller or multi-seller
conduit under which the holders of such Collateral Debt Securities have
recourse to a specified pool of assets (but not other assets held by the
conduit that support payments on other series of securities) and (B) that
entitle the holders thereof to receive payments that depend (except for rights
or other assets designed to assure the servicing or timely distribution of
proceeds to holders of the Collateral Debt Securities) on the cash flow from a
pool of commercial mortgage loans generally having the following
characteristics: (i) the commercial

 18
 

 

mortgage loans have varying contractual maturities;
(ii) the commercial mortgage loans are secured by real property purchased or
improved with the proceeds thereof (or to refinance an outstanding loan the
proceeds of which were so used); (iii) the commercial mortgage loans are
obligations of a relatively limited number of obligors (with the
creditworthiness of individual obligors being less material than for CMBS Large
Loan Securities) and accordingly represent a relatively undiversified pool of
obligor credit risk; (iv) upon original issuance of such Collateral Debt
Securities no five commercial mortgage loans account for more than 20% of the
aggregate principal balance of the entire pool of commercial mortgage loans
supporting payments on such securities; and (v) repayment thereof can vary
substantially from the contractual payment schedule (if any), with early
prepayment of individual loans depending on numerous factors specific to the
particular obligors and upon whether, in the case of loans bearing interest at
a fixed rate, such loans or securities include an effective prepayment premium.

“CMBS Large Loan Securities”:  Collateral Debt 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 Collateral Debt Securities)
on the cash flow from a pool of commercial mortgage loans made to finance the
acquisition, construction and improvement of properties.  They generally have the following
characteristics: (i) the commercial mortgage loans have varying contractual
maturities; (ii) the commercial mortgage loans are secured by real property
purchased or improved with the proceeds thereof (or to refinance one or more
outstanding loans the proceeds of which were so used); (iii) the commercial
mortgage loans are obligations of a relatively limited number of obligors and
accordingly represent a relatively undiversified pool of obligor credit risk;
(iv) repayment thereof can vary substantially from the contractual payment
schedule (if any), with early prepayment of individual loans depending on
numerous factors specific to the particular obligors and upon whether, in the
case of loans bearing interest at a fixed rate, such loans or securities
include an effective prepayment premium; and (v) the valuation of individual
properties securing the commercial mortgage loans is the primary factor in any
decision to invest in those securities.

“CMBS Security”: A CMBS
Conduit Security or a CMBS Large Loan Security, as the case may be, but
excluding any Single Asset Mortgage Security, Single Borrower Mortgage Security
or Rake Bond.

“Co-Issuer”:  Gramercy Real Estate CDO 2006-1 LLC, a
limited liability company formed under the laws of Delaware, until a successor
Person shall have become the Co-Issuer pursuant to the applicable provisions of
this Indenture, and thereafter “Co-Issuer” shall mean such successor Person.

“Co-Issuers”:  The Issuer and the Co-Issuer.

“Code”:  The United States Internal Revenue Code of
1986, as amended.

“Collateral Debt Securities Purchase
Agreement”: The collateral debt securities purchase agreement
entered into on or about the Closing Date and any other collateral debt
securities purchase agreement entered into after the Closing Date if a purchase
agreement is

 19
 

 

necessary to comply with this Indenture, which
agreement is assigned to the Trustee pursuant to this Indenture.

“Collateral Debt Security”
and “Collateral Debt Securities”:  Any loan, security or other obligation (other
than Eligible Investments) owned by the Issuer (including those acquired after
the Closing Date) that complied with the Eligibility Criteria at the time the
Issuer entered into the irrevocable binding commitment to purchase such loan,
security or other obligation in the case of the purchase of any CMBS Security,
REIT Debt Security and CRE CDO Security and (ii) the date of purchase of such
loan, security or other obligation in the case of the purchase of any other
Specified Type of asset.

“Collateral Management Agreement”:  The Collateral Management Agreement, dated as
of the Closing Date, by and between the Issuer and the Collateral Manager, as
amended, supplemented or otherwise modified from time to time in accordance
with its terms.

“Collateral
Management Fee”:  The Senior
Collateral Management Fee and the Subordinate Collateral Management Fee.

“Collateral Manager”:  GKK Manager LLC, each of GKK Manager LLC’s
permitted successors and assigns or any successor Person that shall have become
the Collateral Manager pursuant to the provisions of the Collateral Management
Agreement and thereafter “Collateral Manager” shall mean such successor Person.

“Collateral Manager Servicing Standard”:  With respect to the Collateral Manager, to manage
the Collateral Debt Securities that such Person is obligated to service and
administer pursuant to this Indenture and the Collateral Management Agreement
(i) in accordance with (A) the higher of the following standards of care:  (1) customary and usual standards of practice
of prudent institutional commercial mortgage lenders servicing their own assets
comparable to the Collateral Debt Securities and (2) the same manner in which,
and with the same care, skill, prudence and diligence with which, the Collateral
Manager manages assets comparable to the Collateral Debt Securities for its own
account; (B) applicable law and (C) the terms of this Indenture, the Collateral
Management Agreement and the terms of each such Collateral Debt Security and
the related Underlying Instruments and (ii) without regard to (A) any
relationship, including as lender on any other debt, that the Collateral
Manager or any Affiliate of the Collateral Manager, may have with the
underlying borrower, or any Affiliate of the borrower, or any other party to
this Indenture (or any agreements relating to this Indenture); (B) the identity
of the party that will be required to fund any Cure Advance, (C) the election
by the Collateral Manager whether or not to make Cure Advances from time to
time; (D) the right of the Collateral Manager or any Affiliate thereof, to
receive compensation or reimbursement of costs hereunder generally or with
respect to any particular transaction (including, without limitation, any
transaction related to the Collateral Management Agreement); (E) the ownership,
servicing or management for others of any security not subject to this
Indenture by the Collateral Manager or any Affiliate thereof or the obligation
of any Affiliate of the Collateral Manager to repurchase the Collateral Debt
Security; and (F) the ownership of any Notes by the Collateral Manager or any
Affiliate thereof.

 20
 

 

“Collateral Quality Test Modification”:  The meaning specified in Section 12.5 hereof.

“Collateral Quality Tests”:  The tests that are satisfied if, as of the
date of acquisition (or, in the case of an acquisition of any CMBS Security,
REIT Debt Security or CRE CDO Security, the date on which the Issuer
irrevocably commits to purchase such security) or disposition of any other
Collateral Debt Security or any Measurement Date, in the aggregate, the
Collateral Debt Securities purchased or irrevocably committed to be purchased
(and not sold) shall comply with all of the requirements set forth below:

(i)            the Aggregate Principal Balance of
Collateral Debt Securities backed or otherwise invested in properties located
in any single U.S. state does not exceed the greater of (x) 20% of the
Aggregate Collateral Balance and (y) $200,000,000, except that (A) the greater
of (x) 55% of the Aggregate Collateral Balance and (y) $550,000,000 may consist
of Collateral Debt Securities backed or otherwise invested in properties
located in the State of New York, (B) the greater of (x) 50% of the Aggregate
Collateral Balance and (y) $500,000,000 may consist of Collateral Debt
Securities backed or otherwise invested in properties located in the State of
California, (C) the greater of (x) 35% of the Aggregate Collateral Balance (or
40% of the Aggregate Collateral Balance, if none of the Collateral Debt
Securities are backed or otherwise invested in properties located in the
southern region of the State of California) and (y) $350,000,000 (or
$400,000,000, if none of the Collateral Debt Securities are backed or otherwise
invested in properties located in the southern region of the State of
California) may consist of Collateral Debt Securities backed or otherwise
invested in properties located in the northern region of the State of
California, (D) the greater of (x) 35% of the Aggregate Collateral Balance (or
40% of the Aggregate Collateral Balance, if none of the Collateral Debt
Securities are backed or otherwise invested in properties located in the
northern region of the State of California) and (y) $350,000,000 (or
$400,000,000, if none of the Collateral Debt Securities are backed or otherwise
invested in properties located in the northern region of the State of
California) may consist of Collateral Debt Securities backed or otherwise
invested in properties located in the southern region of the State of
California, (E) the greater of (x) 40% of the Aggregate Collateral Balance and
(y) $400,000,000 may consist of Collateral Debt Securities backed or otherwise
invested in properties located in Washington D.C. and (F) the greater of (x)
25% of the Aggregate Collateral Balance and (y) $250,000,000 may consist of
Collateral Debt Securities backed or otherwise invested in properties located
in the State of Texas;

(ii)           the Aggregate Principal Balance of
CMBS Securities and REIT Debt Securities does not exceed the greater of (A) 15%
of the Aggregate Collateral Balance and (B) $150,000,000;

(iii)          the Aggregate Principal Balance of CRE
CDO Securities does not exceed the greater of (A) 2% of the Aggregate
Collateral Balance and (B) $20,000,000;

 21
 

 

(iv)          the Aggregate Principal Balance of
Subordinate Whole Loans does not exceed the greater of (A) 15% of the Aggregate
Collateral Balance and (B) $150,000,000;

(v)           the Aggregate Principal Balance of
all Collateral Debt Securities issued by any single issuer does not exceed the
greater of (A) $100,000,000 and (B) 10% of the Aggregate Collateral Balance (provided
that, for the avoidance of doubt, with respect to any Loan, the issuer of such
Loan shall be deemed to be the borrower of such Loan);

(vi)          the Aggregate Principal Balance of all
Non-Quarterly Pay Assets (where such frequency is not hedged) does not exceed
the greater of (A) 5% of the Aggregate Collateral Balance and (B) $50,000,000;

(vii)         the Aggregate Principal Balance of all
Collateral Debt Securities with respect to which all or substantially all of
the underlying property is located in Aruba, the Bahamas, Bermuda, the British
Virgin Islands, Canada, the Cayman Islands, the Channel Islands, Guernsey,
Jersey, Luxembourg, Mexico or the Netherlands Antilles does not exceed the
greater of (A) $50,000,0000 and (B) 5% of the Aggregate Collateral Balance;

(viii)        the Aggregate Principal Balance of all
Loans with respect to which the related issuer is incorporated or organized
under the laws of Aruba, the Bahamas, Bermuda, the British Virgin Islands,
Canada, the Cayman Islands, the Channel Islands, Guernsey, Jersey, Luxembourg,
Mexico or the Netherlands Antilles does not exceed the greater of (A)
$50,000,000 and (B) 5% of the Aggregate Collateral Balance

(ix)           no more than 20% of the Aggregate
Collateral Balance consists of CMBS Securities issued in any single calendar
year;

(x)            the Aggregate Principal Balance of
Collateral Debt Securities that are collateralized or backed by interests on
any single Property Type (other than Condo Conversion Properties) does not
exceed the greater of (x) 20% of the Aggregate Collateral Balance and (y)
$200,000,000; provided that (A) the greater of (x) 65% of the Aggregate
Collateral Balance and (y) $650,000,000, may consist of Collateral Debt
Securities that are collateralized or backed by interests on any Urban Office
Property or Suburban Office Property; (B) the greater of (x) 40% of the
Aggregate Collateral Balance and (y) $400,000,000 may consist of Collateral
Debt Securities that are collateralized or backed by interests on any Multi
Family Properties; (C) the greater of (x) 40% of the Aggregate Collateral
Balance and (y) $400,000,000 may consist of Collateral Debt Securities that are
collateralized or backed by interests on Retail Properties; (D) the greater of
(x) 40% of the Aggregate Collateral Balance and (y) $400,000,000, may consist
of Collateral Debt Securities that are collateralized or backed by interests on
Hospitality Properties; (E) the greater of (x) 25% of the Aggregate Collateral
Balance and (y) $250,000,000 may consist of Collateral Debt Securities that are

 22
 

 

collateralized or backed by interests on Industrial
Properties; (F) the greater of (x) 15% of the Aggregate Collateral Balance and
(y) $150,000,000 may consist of Collateral Debt Securities that are
collateralized or backed by interests on Healthcare Properties (including
skilled nursing and assisted living facilities); and (G) the greater of (x) 10%
of the Aggregate Collateral Balance and (y) $100,000,000 may consist of
Collateral Debt Securities that are collateralized or backed by interests on
skilled nursing and assisted living facilities; provided that for the
avoidance of doubt, any Collateral Debt Security categorized pursuant to this
clause (G) shall also be included when calculating the applicable amount under
the preceding clause (F);

(xi)           the Aggregate Principal Balance of
Collateral Debt Securities (other than REIT Debt Securities and CRE CDO
Securities) that are collateralized or backed by interests in Condo Conversion
Properties does not exceed the greater of (A) 15% of the Aggregate Collateral
Balance and (B) $150,000,000;

(xii)          the Aggregate Principal Balance of
Floating Rate Securities that bear interest based upon a floating rate index
other than LIBOR and that are not subject to Liability Hedges does not exceed
the greater of (A) 5% of the Aggregate Collateral Balance and (B) $50,000,000;

(xiii)         the Aggregate Principal Balance of
Fixed Rate Securities that are not Covered Fixed Rate Securities does not
exceed the greater of (A) 5% of the Aggregate Collateral Balance and (B)
$50,000,000;

(xiv)        if the Collateral Debt Security is a
Principal Only Security or an Interest Only Security, the Aggregate Amortized
Cost (which accreted cost shall not exceed par) of all such Principal Only Securities
or Interest Only Securities does not exceed the greater of (A) an amount equal
to 5% of the Aggregate Collateral Balance and (B) $50,000,000, respectively;

(xv)         the Aggregate Principal Balance of
Loans related to undeveloped real estate intended to be developed into
residential property does not exceed the greater of (A) 10% of the Aggregate
Collateral Balance and (B) $100,000,000;

(xvi)        the Aggregate Principal Balance of all
Participations with respect to which the Participating Institution is a “qualified
institutional lender” as typically defined in Underlying Instruments related to
Participations and is not a “special purpose vehicle” does not exceed the
greater of (A) 10% of the Aggregate Collateral Balance and (B) $100,000,000;

(xvii)       without satisfaction of the Rating Agency
Condition with respect to S&P, the Aggregate Principal Balance of all (A)
Whole Loans, Subordinate Whole Loans and Mezzanine Loans that are not serviced
by a servicer on S&P’s Select Servicer List and (B) B Notes and Participations
with respect to which the related underlying term loans, A Notes or B Notes, as
applicable, are not serviced by a servicer on S&P’s Select Special Servicer
List does not exceed the greater of

 23
 

 

(x) 5% of the Aggregate Collateral Balance and (y)
$50,000,000; provided that such percentage and dollar limitations may be
increased after the Closing Date upon satisfaction of the Rating Agency
Condition with respect to S&P;

(xviii)      the Aggregate Principal Balance of all
CMBS Securities with a stated maturity later than the Stated Maturity of the
Notes does not exceed the greater of (A) 5% of the Aggregate Collateral Balance
and (B) $50,000,000;

(xix)         the Aggregate Principal Balance of all
CRE CDO Securities with a stated maturity later than the Stated Maturity of the
Notes does not exceed the greater of (A) 2% of the Aggregate Collateral Balance
and (B) $20,000,000;

(xx)          the Aggregate Principal Balance of all
CMBS Securities and CRE CDO Securities with a stated maturity later than the
Stated Maturity of the Notes, taken together, does not exceed the greater of
(x) 5% of the Aggregate Collateral Balance and (y) $50,000,000;

(xxi)         the aggregate Principal Balance of
Delayed Draw Term Loans does not exceed the greater of (x) 20% of the Aggregate
Collateral Balance and (y) $200,000,000;

(xxii)        the aggregate Principal Balance of all
CMBS Securities and REIT Debt Securities that are rated below “Baa3” by Moody’s
does not exceed the greater of (x) 3% of the Aggregate Collateral Balance and
(y) $30,000,000;

(xxiii)       the Moody’s Maximum Rating Factor Test is
satisfied;

(xxiv)       the Moody’s Recovery Test is satisfied;

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

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

(xxvii)      the Herfindahl Diversity Test is
satisfied;

(xxviii)     the Minimum Weighted Average Coupon Test is
satisfied;

(xxix)       the Minimum Weighted Average Spread Test
is satisfied;

(xxx)        the Weighted Average Life Test is
satisfied;

(xxxi)       S&P CDO Monitor Test is satisfied; and

(xxxii)      S&P Recovery Test is satisfied.

For the avoidance
of doubt, for purposes of the foregoing clauses (i) and (x) above, such
percentage determinations will be made by “looking-through” the CMBS
Securities, CRE CDO Securities and REIT Debt Securities included in the
Collateral Debt Securities;

 24
 

 

provided that such determinations
shall be based solely on publicly available information in respect of such
securities or other information available to the Collateral Manager without
undue expense.

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 Quality Test will be
disregarded for the purposes of the Reinvestment Criteria, but will be taken
into account for the purposes of any reports to be prepared pursuant to Section
10.12 of this Indenture.

“Collection Accounts”:  The trust accounts so designated and
established pursuant to Section 10.2(a) hereof.

“Company Administration Agreement”:  The administration agreement, dated on or
about the Closing Date, by and among the Issuer and the Company Administrator,
as modified and supplemented and in effect from time to time.

“Company Administrative Expenses”:  All fees, expenses and other amounts due or
accrued with respect to any Payment Date and payable by the Issuer or the
Co-Issuer to (i) the Trustee pursuant to Section 6.7 hereof or any
co-trustee appointed pursuant to this Indenture (including amounts payable by
the Issuer as indemnification pursuant to this Indenture), (ii) the Company
Administrator under the Company Administration Agreement (including amounts
payable by the Issuer as indemnification pursuant to the Company Administration
Agreement) and to provide for the costs of liquidating the Issuer following
redemption of the Notes, (iii) the LLC Managers (including indemnification),
(iv) the Independent accountants, agents and counsel of the Issuer for
reasonable fees and expenses (including amounts payable in connection with the
preparation of tax forms on behalf of the Issuer and the Co-Issuer) and any
registered office and government filing fees, (v) the Rating Agencies for fees
and expenses in connection with any rating (including the annual fee payable
with respect to the monitoring of any rating) of the Notes, including fees and
expenses due or accrued in connection with any credit estimate or rating of the
Collateral Debt Securities, (vi) the Collateral Manager under this Indenture
and the Collateral Management Agreement, (vii) the Collateral Manager or other
Persons as indemnification pursuant to the Collateral Management Agreement,
(viii) the Advancing Agent or other Persons as indemnification pursuant to Section
17.3, (ix) each member of the Advisory Committee (including amounts payable
as indemnification) under each agreement between such Advisory Committee member
and the Issuer (and the amounts payable by the Issuer to each member of the
Advisory Committee as indemnification pursuant to each such agreement); (x) the
Preferred Shares Paying Agent and the Share Registrar under the Preferred
Shares Paying Agency Agreement, (xi) any other Person in respect of any
governmental fee, charge or tax in relation to the Issuer or the Co-Issuer (in
each case as certified by an Authorized Officer of the Issuer or the Co-Issuer
to the Trustee), and (xii) any other Person in respect of any other fees or
expenses (including indemnifications) permitted under this Indenture and the
documents delivered pursuant to or in connection with this Indenture and the
Notes and any amendment or other modification of any such documentation, in
each case unless expressly prohibited under this Indenture (including, without
limitation, the payment of all transaction fees and all legal and other fees and
expenses required in connection with the purchase of any Collateral Debt
Securities or any other transaction authorized by this Indenture and any
amounts due in respect

 25

 

of the listing of any Notes on the Irish Stock
Exchange); provided that Company Administrative Expenses shall not
include (a) amounts payable in respect of the Notes, (b) amounts payable under
any Hedge Agreement and (c) any Collateral Management Fee payable pursuant to
the Collateral Management Agreement.

“Company Administrator”:  Maples Finance Limited, a licensed trust
company incorporated in the Cayman Islands, as administrator pursuant to the
Company Administration Agreement, unless a successor Person shall have become
administrator pursuant to the Company Administration Agreement, and thereafter,
Company Administrator shall mean such successor Person.

“Controlling Class”:  The Class A-1 Notes, so long as any Class A-1
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 Class B Notes are
Outstanding, then the Class C Notes, so long as any Class C Notes are
Outstanding, then the Class D Notes, so long as any Class D Notes are Outstanding,
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, then the Class K Notes, so long as any Class
K Notes are Outstanding, and after the Notes are no longer Outstanding, the
Preferred Shares.

“Corporate Trust Office”:  The principal 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:  Corporate Trust Services –
Gramercy Real Estate CDO 2006-1, Ltd. and (ii) for all other purposes, 9062 Old
Annapolis Road, Columbia, Maryland 21045, Attention:  CDO Trust Services – Gramercy Real Estate CDO
2006-1, Ltd., telephone number (410) 884-2000, or such other address as the
Trustee may designate from time to time by notice to the Noteholders, the
holders of the Preferred Shares, the Collateral Manager, the Rating Agencies,
the Issuer and each Hedge Counterparty or the principal corporate trust office
of any successor Trustee.

“Coverage Test
Modification”:  The meaning specified
in Section 12.5 hereof.

“Coverage Tests”:  The Class A/B Coverage Tests, the Class C/D/E
Coverage Tests and the Class F/G/H Coverage Tests.

“Covered Fixed Rate Security”:  Any Fixed Rate Security (including any Above
Cap Security) (i) for which the Issuer has entered into one or more interest
rate swap agreements (either individually or together with other Collateral
Debt Securities), which (A) is a market rate swap that does not require the
related Hedge Counterparty to make any upfront payments, (B) has a term which
is at least as long as the earlier of (i) the expected maturity of such Fixed
Rate Security and (ii) the expected maturity of the Notes, (C) requires the
related Hedge Counterparty to make floating rate payments to the Issuer based
on the related notional amount based on the London interbank offered rate for
U.S. Dollar deposits in Europe and (D) requires the Issuer to make fixed rate
payments to the related Hedge Counterparty or (ii) that is subject to a
Liability Hedge.

 26
 

 

“CRE CDO
Security”: 
Collateralized debt obligation, collateralized bond obligation or
collateralized loan obligation (including, without limitation, any synthetic
collateralized debt obligation or synthetic collateralized loan obligation)
that entitles the holder thereof to receive payments that depend (except for
rights or other assets designed to assure the servicing or timely distribution
of proceeds to the holder of such CRE CDO Security) on the cash flow from (and
not the market value of) a portfolio of securities related to commercial
mortgage property.

“Credit
Risk/Defaulted Security Cash Purchase”: The meaning specified in Section
12.1(b) hereof.

“Credit Risk Security”:
Any Collateral Debt Security that, in the Collateral Manager’s reasonable
business judgment, has a significant risk of declining in credit quality or,
with a lapse of time, becoming a Defaulted Security.

“Credit Tenant
Lease”:  A lease related to and
securing a commercial mortgage loan that is dependent principally on the
payment by the related tenant or guarantor, if any, of lease or rental payments
and other payments due under the terms of such lease and therefore the
performance of the related tenant.

“Credit Tenant
Lease Loan”:  A commercial loan that
is secured by a first lien on commercial real estate and an assignment of lease
or rental payments and other payments due from tenants under the terms of the
related Credit Tenant Lease.

“Cure Advance”:  An advance by the Collateral Manager, in
connection with the exercise of a cure right by the Issuer, as controlling
holder or directing holder or other similar function, with respect to a
Collateral Debt Security.

“Current Portfolio”:  The portfolio of Collateral Debt Securities
and Eligible Investments prior to giving effect to a proposed reinvestment in a
Substitute Collateral Debt Security.

“Custodial
Account”:   An account at the
Custodial Securities Intermediary in the name of the Trustee pursuant to Section
10.1(b) hereof.

“Custodial Securities Intermediary”:  The meaning specified in Section 3.3(a)
hereof.

“Dealers”:  Wachovia Capital Markets, LLC, Goldman, Sachs
& Co., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and WestLB AG.

“Default”:  Any Event of Default or any occurrence that
is, or with notice or the lapse of time or both would become, an Event of
Default.

“Defaulted Security”:  Any Collateral Debt Security or any other
security included in the Assets:

 27
 

 

(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 a Defaulted Security 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 sixty (60) days (or if the due date for
such dividend or distribution was previously so extended, not more than thirty (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 (2) 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 extended 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; provided, however, in
each case, if such default is cured or waived then such asset shall no longer
be a Defaulted Security or (3) with respect to which there is known to the
Collateral Manager that (A) any bankruptcy, insolvency or receivership
proceeding has been initiated in connection with the issuer of such Collateral
Debt Security, or (B) 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 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”,
“D” or “SD” or below by S&P or (5) with respect to which there is known to
the Collateral Manager that the issuer thereof is in default (without giving
effect to any applicable grace period or waiver) as to payment of principal
and/or interest on another obligation (and such default has not been cured or
waived) which is senior or pari passu in
right of payment to such Collateral Debt Security, except that a Collateral
Debt Security will not constitute a “Defaulted Security” under this clause (5)
if each of the Rating Agencies has

 28
 

 

confirmed in writing that such event shall not result
in the reduction, qualification or withdrawal of any rating of the Notes;

(ii)           with respect to a Loan (other than a
Single Asset Mortgage Security, a Single Borrower Mortgage Security or a Rake
Bond), if a foreclosure or default (whether or not declared) with respect to
the related commercial mortgage loan has occurred; provided, however,
that notwithstanding the foregoing, a Loan shall not be deemed to be a
Defaulted Security as a result of (1) the related borrower’s failure to pay
interest on such Loan or on the related commercial mortgage loan on the initial
due date therefor, if the related lender or holder of such 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 sixty (60) days (or
if the due date for such interest was previously so extended, not more than thirty (30) days) after the initial
date that it was due), or (2) the related borrower’s failure to pay principal
on such Loan or the related commercial mortgage loan on the original maturity
date thereof (as defined below), if the related lender or holder of such 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 Loan or the related
commercial mortgage loan, unless and until the earlier of (A) declaration of
default and acceleration of the maturity of the Loan by the lender or holder
thereof and (B) the continuance of such default uncured for sixty (60) days
after such default became known to the Issuer or the Collateral Manager or CDO
Servicer or, subject to the satisfaction of the Rating Agency Condition, such
longer period as the Collateral Manager determines.  As used herein, the term “original maturity
date” means the maturity date of a 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 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 Loan or the related commercial mortgage loan; and

(iii)          with respect to a CMBS Security, a CRE
CDO Security, a REIT Debt Security, a Single Asset Mortgage Security, a Single
Borrower Mortgage Security or a Rake Bond (1) as to which there has occurred
and is continuing a principal payment default (without 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; provided, however,
in each case, if such default is cured or waived then such asset shall no
longer be a Defaulted Security or (3) as to which there is known to the
Collateral Manager that (A) any bankruptcy, insolvency or receivership
proceeding has been initiated in connection with the issuer of such CMBS
Security, CRE CDO Security or REIT Debt Security, or (B) there has been

 29
 

 

proposed or effected any distressed exchange or other
debt re-structuring where the issuer of such CMBS Security, CRE 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 “CC”, “D” or “SD” or below by S&P or “Ca” or “C” by Moody’s, or with
respect to REIT Debt Securities, the issuer of which has a credit rating of “D”
or “SD” or as to which S&P has withdrawn its rating or (5) as to which
there is known to the Collateral Manager that the issuer thereof is in default
(without giving effect to any applicable grace period or waiver) as to payment
of principal and/or interest on another obligation (and such default has not
been cured or waived) which is senior or pari passu in
right of payment to such CMBS Security, CRE CDO Security or REIT Debt Security,
except that a CMBS Security, CRE CDO Security or REIT Debt Security will not
constitute a “Defaulted Security” 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; or (6) (A)
as to which there has been a failure to pay interest in whole or in part for
the lesser of (x) six months or (y) three payment periods (if such CMBS
Security, CRE CDO Security or REIT Debt Security is rated (or privately rated
for purposes of the issuance of the Securities) below “Baa3” by Moody’s or “BBB-”
by S&P); provided, however, if the Rating Agency Condition
for such CMBS Security, CRE CDO Security or REIT Debt Security is satisfied
with respect to S&P and Moody’s, the Collateral Manager may choose not to
treat such a CMBS Security, CRE CDO Security or REIT Debt Security as a
Defaulted Security 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 Security, CRE CDO Security or REIT Debt Security
is rated (or privately rated for purposes of the issuance of the Securities) “BBB-”
or higher by S&P, or “Baa3” or higher by Moody’s) even if by its terms it
provides for the deferral and capitalization of interest thereon.

provided that any Collateral Debt Security which has sustained a
write-down of principal balance in accordance with its terms will not
necessarily be considered a Defaulted Security solely due to such writedown.

For purposes of
calculating the Par Value Ratios, an appraisal reduction of a Collateral Debt
Security will be assumed to result in an implied reduction of principal balance
for such Collateral Debt Security only if such appraisal reduction is intended
to reduce the interest payable on such Collateral Debt Security and only in
proportion to such interest reduction. 
For purposes of the Par Value Ratios, any Collateral Debt Security that
has sustained an implied reduction of principal balance due to an appraisal
reduction will not be considered a Defaulted Security solely due to such
implied reduction.  The Collateral
Manager will notify the Trustee of any appraisal reductions of Collateral Debt
Securities if the Collateral Manager has actual knowledge thereof.

For purposes of the
definition of “Defaulted Security,” the “Maturity Extension Requirements” will
be satisfied with respect to any extension if the maturity date is extended

 30
 

 

(i) in the case of Loans other than ARD Loans, to a
new maturity date that is (A) not more than two (2) years after the original
maturity date and (B) not less than ten (10) years prior to the Stated Maturity
and (ii) in the case of ARD Loans, such that (A) the anticipated repayment date
will not be less than twenty (20) years prior to the Stated Maturity and (B)
the new maturity date is not later than the Stated Maturity; provided, however, that
notwithstanding the requirements in the foregoing clauses (i) and (ii), “Maturity
Extension Requirements” will be deemed satisfied with respect to any extensions
as to which the Rating Agency Condition has been satisfied.

For the avoidance of
doubt, the parties hereto understand and agree that any initial permissible
60-day extension period described in paragraphs (i) and (ii) of this definition
shall in no event be combined with any subsequent permissible 30-day extension
period described in paragraphs (i) and (ii) of this definition.

“Delayed Draw
Term Loan”: Any Loan that is fully committed on the initial funding date of
such Loan but is required to be fully funded in one or more installments but
which, once all such installments have been made, has the characteristics of a
term loan; provided that no Loan with respect to which the additional
funding obligation is held separately outside the Issuer by an affiliate of the
Seller or by an unaffiliated third party shall be deemed to be a “Delayed Draw
Term Loan” hereunder; provided, further, for purposes of the
Coverage Tests and the Collateral Quality Tests, the Principal Balance of a
Delayed Draw Term Loan, as of any date of determination, refers to the sum of
(i) the outstanding principal balance of such Delayed Draw Term Loan and (ii)
the amounts on deposit in the Delayed Funding Obligations Account in respect of
the unfunded portion of such Delayed Draw Term Loan.

“Delayed Funding Obligations Account”:  The account established pursuant to Section
10.5(a) hereof.

“Deposit Accounts”: The
meaning specified in Section 3.3(e)(xii) hereof.

“Depository” or “DTC”:  The Depository Trust Company, its nominees,
and their respective successors.

“Determination Date”:  With respect to the initial Payment Date,
October 19, 2006, and thereafter quarterly on each January 19th, April 19th, July 19th and October 19th (or if such date is not a Business Day, then
the next succeeding Business Day).

“Disqualified Transferee”:  The meaning specified in Section 2.5(l)
hereof.

“Distressed Debt Security”:  Any Collateral Debt Security (other than any
CMBS Security, CRE CDO Security or REIT Debt Security owned by the Issuer)
relating to real property located in metropolitan New York or Washington, D.C.
on which (i) there is a payment default, an acceleration, bankruptcy or
foreclosure, (ii) a default is highly likely because the loan-to-value is
greater than 100% or (iii) the debt service on such security exceeds the
available cash flow from the underlying property on a current and projected
basis.

“Dollar,” “U.S. $” or “$”:  A U.S. dollar or other equivalent unit in
Cash.

 31
 

 

“Due Date”:  Each date on which a Scheduled Distribution
is due on a Pledged Obligation.

“Due Period”:  With respect to any Payment Date, the period
commencing on the day immediately succeeding the second preceding Determination
Date (or commencing on the Closing Date, in the case of the Due Period relating
to the first Payment Date) and ending on and including the Determination Date
immediately preceding such Payment Date.

“Effective Date”:  The date which is the earlier of (i) the 270th day after the Closing Date and (ii) the date
on which the Issuer utilizes the $180,259,089.84 deposited into the Unused
Proceeds Account on the Closing Date to acquire additional Collateral Debt
Securities.

“Eligibility Criteria”:  The criteria set forth below, which if
satisfied with respect to any asset at the time it is purchased, as evidenced
by an Officer’s Certificate of the Collateral Manager delivered to the Trustee
as of the date of such acquisition, will make such asset eligible for purchase
by the Issuer as a Collateral Debt Security:

(i)            except with respect to the 63rd Street Townhouse Loan, it is a Loan or
security related to (A) commercial real estate, (B) undeveloped real estate
intended to be developed into residential or condominium property or (C) or a
combination of clauses (A) and (B); provided that no Loan shall be
secured by an individual residential property;

(ii)           it is issued by an issuer
incorporated or organized under the laws of the United States or a
commonwealth, territory or possession of the United States or under the laws of
Aruba, the Bahamas, Bermuda, the British Virgin Islands, Canada, the Cayman
Islands, the Channel Islands, Guernsey, Jersey, Luxembourg, Mexico or the
Netherlands Antilles;

(iii)          with respect to each Loan (other than
a Mezzanine Loan) substantially all of the underlying property securing such
Loan is located in the United States or a commonwealth, territory or possession
of the United States or in Aruba, the Bahamas, Bermuda, the British Virgin
Islands, Canada, the Cayman Islands, the Channel Islands, Guernsey, Jersey,
Luxembourg, Mexico or the Netherlands Antilles;

(iv)          with respect to each CMBS Security,
substantially all the loans backing such Collateral Debt Security are secured
by collateral substantially all of which is located in the United States or a
commonwealth, territory or possession of the United States and with respect to
each REIT Debt Security, the issuer of such Collateral Debt Security is
incorporated or organized under the laws of the United States or a
commonwealth, territory or possession of the United States;

(v)           it provides for periodic payments of
interest (or, in the case of Preferred Equity Securities, dividends or other
distributions) no less frequently than semi-annually;

 32
 

 

(vi)          except with respect to any Interest
Only Security, it provides for the repayment of principal at not less than par
no later than upon its maturity or upon redemption, acceleration or its full
prepayment;

(vii)         it has a Moody’s Rating and an S&P
Rating (and, unless otherwise agreed by S&P, such S&P Rating does not
include the subscript “t”);

(viii)        its acquisition would not cause the
Issuer, the Co-Issuer or the pool of Pledged Obligations to be required to
register as an investment company under the Investment Company Act; and if the
issuer of such Collateral Debt Security is excepted from the definition of an “investment
company” solely by reason of Section 3(c)(1) of the Investment Company Act,
then either (A) such Collateral Debt Security does not constitute a “voting
security” for purposes of the Investment Company Act or (B) the aggregate
amount of such Collateral Debt Security held by the Issuer is less than 10% of
the entire issue of such Collateral Debt Security;

(ix)           (A) if it is a Loan (including a
Mezzanine Loan but excluding an ARD Loan), no commercial mortgage loan
underlying, securing or constituting such Collateral Debt Security has a
maturity date (including any extension option) that is later than ten (10)
years prior to the Stated Maturity, (B) if it is a REIT Debt Security, such
REIT Debt Security (without regard to the maturities of any collateral underlying
such REIT Debt Security) does not have a stated final maturity later than the
Stated Maturity, (C) if it is a CMBS Security, such CMBS Security (without
regard to the maturities of any collateral underlying such CMBS Security) does
not have a rated final maturity later than five (5) years after the Stated
Maturity; provided that, if it has a rated final maturity later than the
Stated Maturity, it is rated at least “A3” by Moody’s, (D) if it is an ARD
Loan, (i) the anticipated repayment date of such ARD Loan is not later than
twenty (20) years prior to the Stated Maturity and (ii) the new maturity date
is not scheduled to occur later than the Stated Maturity, (E) if it is a CRE
CDO Security, it does not have a stated maturity later than five (5) years
after the Stated Maturity; provided that, if it has a rated final
maturity later than the Stated Maturity, it is rated at least “Aa2” by Moody’s,
and (F) if it is a Preferred Equity Security, the date (after giving effect to
all permissible extensions thereof) by which all 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 ten (10) years
prior to the Stated Maturity (after giving effect to all anticipated settlement
concerns in connection with such return of capital);

(x)            it is not prohibited under its
Underlying Instruments from being purchased by the Issuer and pledged to the
Trustee;

(xi)           it is not, and does not provide for
conversion or exchange into, “margin stock” (as defined under Regulations T, U
or X by the Board of Governors of the Federal Reserve System) at any time over
its life;

 33
 

 

(xii)          other than any Loan with respect to
which the Collateral Manager has a reasonable indication from the related
borrower that such borrower plans to prepay such Loan, it is not the subject of
(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 an issuer of such security or any other person to amend, modify or waive any
provision of such security or any related Underlying Instruments, and has not
been called for redemption;

(xiii)         it is not an Ineligible Equity
Security, Step-Up Security, Step-Down Bond, Market Value Collateralized Debt
Obligation, any security the repayment of which is subject to substantial
non-credit related risk, as determined by the Collateral Manager in its
reasonable business judgment, or a “synthetic security”;

(xiv)        except with respect to Preferred Equity
Securities, 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;

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

(xvi)        except with respect to Delayed Draw Term
Loans, it will not require the Issuer to make any future payments after the
initial purchase thereof;

(xvii)       if it is a Delayed Draw Term Loan, an
amount equal to the aggregate amount of the Issuer’s remaining commitments with
respect to such Delayed Draw Term Loan is deposited into the Delayed Draw
Funding Obligations Account on the date such Delayed Draw Term Loan is acquired
by the Issuer;

(xviii)      its acquisition will be in compliance with
Section 206 of the Advisers Act;

(xix)         except with respect to Partially
Deferred Loans, it does not have any outstanding deferred or capitalized
interest;

(xx)          it is not a security that, in the
Collateral Manager’s reasonable business judgment, has a significant risk of
declining in credit quality or, with lapse of time or notice, becoming a
Defaulted Security;

(xxi)         it is not a Defaulted Security (as
determined by the Collateral Manager after reasonable inquiry);

 34
 

 

(xxii)        if it is a Participation, (a) it is a
real estate related Participation, (b) except in the case of any Participation
with respect to which the Rating Agency Condition is satisfied, either (i) the
Underlying Term Loan, A Note or B Note has been included in a transaction that
would be classified as a CMBS Conduit Security or a CMBS Large Loan Security or
(ii) the Underlying Term Loan is serviced pursuant to a commercial mortgage
servicing arrangement, which includes the standard servicing provisions found
in CMBS Securities transactions, (c) the requirements regarding the
representations and warranties with respect to the Underlying Term Loan, the
Underlying Mortgaged Property (as applicable) and the Participation set forth
in Section 16.5 have been met, (d) the terms of the Underlying
Instruments are consistent with the terms of similar Underlying Instruments in
the CMBS industry and (e) the Participating Institution is either a “special
purpose vehicle” or qualifies as a “qualified institutional lender” as
typically defined in the Underlying Instruments related to Participations; provided
that a securitization trust, a CDO issuer or a similar securitization vehicle
and each of Gramercy Warehouse Funding I LLC, a Delaware limited liability company,
and Gramercy Warehouse Funding II LLC, a Delaware limited liability company,
shall be deemed to be a “special purpose vehicle” hereunder;

(xxiii)       if it is a B Note, it is (a) a real
estate related B Note, (b) except in the case of any B Note with respect to
which the Rating Agency Condition is satisfied, either (i) the related A Note
has been included in a transaction that would be classified as a CMBS Conduit
Security or a CMBS Large Loan Security or (ii) the B Note is serviced pursuant
to a commercial mortgage servicing arrangement, which includes the standard
servicing provisions found in CMBS Securities transactions, (c) the
requirements regarding the representations and warranties with respect to the
Underlying Term Loan, the Underlying Mortgaged Property (as applicable) and the
B Note set forth in Section 16.5 have been met and (d) the
terms of the Underlying Instruments are consistent with the terms of similar
Underlying Instruments in the CMBS industry;

(xxiv)       if it is a Mezzanine Loan (other than a
junior interest in a Mezzanine Loan), (a) except in the case of any Mezzanine
Loan with respect to which the Rating Agency Condition is satisfied, the
Mezzanine Loan is serviced pursuant to (A) the CDO Servicing Agreement or (B) a
commercial mortgage servicing arrangement, which includes the standard
servicing provisions found in CMBS Securities transactions, (b) the
requirements regarding the representations and warranties with respect to the
Underlying Term Loan, the Underlying Mortgaged Property (as applicable) and the
Mezzanine Loan set forth in Section 16.5 have been met and (c)
the terms of the Underlying Instruments are consistent with the terms of
similar Underlying Instruments in the CMBS industry with respect to Mezzanine
Loans;

(xxv)        if it is a Whole Loan (or a Subordinate
Whole Loan) (a) except in the case of any Whole Loan or Subordinate Whole Loan
with respect to which the Rating Agency Condition is satisfied, it is a real
estate related Loan that is serviced pursuant to (A) the CDO Servicing
Agreement or (B) a commercial

 35
 

 

mortgage servicing arrangement, which includes the
standard servicing provisions found in CMBS Securities transactions, (b) the
requirements regarding the representations and warranties with respect to the
Loan and the Underlying Mortgaged Property (as applicable) set forth in Section
16.5 have been met, (c) the terms of the Underlying Instruments are
consistent with the terms of similar Underlying Instruments in the CMBS
industry with respect to Whole Loans and Subordinate Whole Loans, and (d) in
the case of any Whole Loan (or a Subordinate Whole Loan) in the form of a
senior participation, the Participating Institution either is a “special
purpose vehicle,” qualifies as a “qualified institutional lender” as typically
defined in the Underlying Instruments related to Participations or a grantor
trust formed to hold the Loan in connection with the transaction contemplated
herein; provided that a securitization trust, a CDO issuer or a similar
securitization vehicle shall be deemed to be a “special purpose vehicle” for
purposes of the Eligibility Criteria;

(xxvi)       it is U.S. Dollar denominated and may
not, by its terms, be converted into a security payable in any other
currencies;

(xxvii)      if it is a Non-Quarterly Pay Asset, it is
included on an Asset Hedge Schedule;

(xxviii)     it is one of the Specified Types;

(xxix)       if it is a Loan or CMBS Security, the
principal balance of the Loan or CMBS Security has not been reduced by a
realized loss, expected loss, appraisal event, appraisal reduction or similar
item since initial issuance, other than a Loan 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;

(xxx)        any requirements regarding opinions with
respect to certain purchases of Collateral Debt Securities as provided in this
Indenture have been met;

(xxxi)       if it is an Interest Only Security, the
Rating Agency Condition has been satisfied with respect to the acquisition of
such Interest Only Security;

(xxxii)       if it is a Principal Only Security, the
Rating Agency Condition has been satisfied with respect to the acquisition of
such Principal Only Security;

(xxxiii)     its acquisition would not cause Gramercy
Investment to fail to qualify as a “REIT” under the Code;

(xxxiv)     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;

 36
 

 

(xxxv)      if it is (A) a CRE CDO Security or a CMBS
Security, at the time it was issued at least one class of the related issuer’s
securities was rated “AAA” (or the equivalent) by one or more nationally
recognized statistical rating organizations and (B) a CMBS Security or a REIT
Debt Security, it is rated at least “Ba3” by Moody’s;

(xxxvi)     if it is a Related Future Advance Loan,
either (A) (i) the related additional funding obligation is an obligation of
Gramercy Warehouse Funding I, LLC or Gramercy Warehouse Funding II, LLC (or a
successor special purpose entity or any similar special purpose entity that is
established as a repo 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 “A-” or
better from S&P and “A3” or better from Moody’s, or (y) with respect to
which the Rating Agency Condition has been satisfied (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
financed portion and (y) Liquidity to satisfy the unfinanced portion of the
additional funding obligation in respect of the related Other Loan (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 borrower has
acknowledged and/or agreed in writing that it has not, and will not, exercise
any right to offset or defense 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 Related Future Advance
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 satisfaction of the Rating Agency Condition
unless such transferee is rated at least “A-” by S&P or is otherwise
approved by S&P and “A3” by Moody’s or is otherwise approved by Moody’s;
(vi) GKK Capital LP, at all times (including upon any transfer of the
additional funding obligation), has agreed to indemnify the Issuer (for
purposes of this eligibility criterion, the “Indemnified Party”) for,
from and against any claims, demands, penalties, 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 for the failure to make such advance by such party related to
its future

 37
 

 

funding obligations under the commercial mortgage
loan; (vii) the 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 (and in the case of each Gramercy
Warehouse Funding I and Gramercy Warehouse Funding II, its term is scheduled to
end no earlier than August 1, 2009), (viii) the Future Funding Reserve Test is
satisfied as of the date on which the Issuer acquires such Related Future
Advance Loan (after giving effect to such acquisition); (ix) no Liquidity Test
Failure occurred with respect to the most recent Quarterly Measurement Date;
and (x) the related participation agreement includes the provision set forth on
Schedule P hereto; or (B) the Rating Agency Condition has been satisfied
with respect thereto; and

(xxxvii)    it is not a healthcare or mortgage-related
REIT Debt Security.

Notwithstanding the
foregoing provisions of this definition, with respect to any Collateral Debt
Security acquired by the Issuer on or prior to the Closing Date, if any of the
Eligibility Criteria (except for clause (xxxvi)) above pertains to the subject
matter of a representation and warranty under the related Collateral Debt
Securities Purchase Agreement as to which an exception has been disclosed in
the related exception schedule, such Collateral Debt Security shall be deemed
to satisfy such criterion notwithstanding such exception.

“Eligible Investments”:  Any Dollar-denominated investment that, at
the time it is Granted to the Trustee (directly or through a Securities Intermediary
or bailee), is Registered and is one or more of the following obligations or
securities:

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

(ii)           demand and time deposits in,
certificates of deposit of, bankers’ acceptances issued by, or federal funds
sold by, any depository institution or trust company incorporated under the
laws of the United States or any state thereof or the District of Columbia
(including the Trustee or the commercial department of any successor Trustee,
as the case may be; provided that such
successor otherwise meets the criteria specified herein) and subject to
supervision and examination by federal and/or state banking authorities so long
as the commercial paper and/or the debt obligations of such depositary
institution or trust company (or, in the case of the principal depositary
institution in a holding company system, the commercial paper or debt
obligations of such holding company) at the time of such investment or
contractual commitment providing for such investment have a credit rating not
less than “A1” by Moody’s, “A+” by Fitch and “A+” by S&P, in the case of
long-term debt obligations, and “P-1” by Moody’s, “F1” by Fitch and “A-1+” by
S&P for Eligible Investments which have a maturity of thirty (30) days or less;

 38
 

 

(iii)          unleveraged repurchase or forward
purchase obligations with respect to (a) any security described in clause (i)
above or (b) any other security issued or guaranteed by an agency or
instrumentality of the United States, in either case entered into with a
depository institution or trust company (acting as principal) described in
clause (ii) above (including the Trustee or the commercial department of any
successor Trustee, as the case may be; provided that
such person otherwise meets the criteria specified herein) or entered into with
a corporation (acting as principal) whose long-term rating is not less than “Aa2”
by Moody’s, “AA” by Fitch and “AAA” by S&P (for so long as any Notes rated
by S&P are Outstanding) or whose short-term credit rating is not less than “P-1”
by Moody’s, “F1” by Fitch and “A-1+” by S&P for Eligible Investments which
have a maturity of thirty (30) days
or less (for so long as any Notes rated by S&P are Outstanding); provided that the issuer thereof must also have at the time of such
investment a long-term credit rating of not less than “Aa2” by Moody’s, “A+” by
Fitch and “AAA” by S&P (for so long as any Notes rated by S&P are
Outstanding);

(iv)          registered securities bearing interest
or sold at a discount issued by any corporation incorporated under the laws of
the United States or any state thereof or the District of Columbia that has a
credit rating of not less than “Aa2” by Moody’s, “AA” by Fitch and “AAA” by
S&P (for so long as any Notes rated by S&P are Outstanding) at the time
of such investment or contractual commitment providing for such investment;

(v)           commercial paper or other similar
short-term obligations (including that of the Trustee or the commercial
department of any successor Trustee, as the case may be, or any Affiliate
thereof; provided that such
person otherwise meets the criteria specified herein) having at the time of
such investment a credit rating of “P-1” by Moody’s, “F1” by Fitch and “A-1+”
by S&P or “A-1” by S&P for Eligible Investments which have a maturity of
thirty (30) days or less (for so long
as any Notes rated by S&P are Outstanding); provided that the issuer thereof must also have at the time of such
investment a senior long-term debt rating of not less than “Aa3” by Moody’s, “AA”
by Fitch and “AA” by S&P (for so long as any Notes rated by S&P are
Outstanding);

(vi)          a reinvestment agreement issued by any
bank (if treated as a deposit by such bank), or a Registered guaranteed
investment or reinvestment agreement issued by an insurance company or other
corporation or entity, in each case that has a credit rating of not less than “P-1”
by Moody’s, “F1” by Fitch and “A-1+” by S&P or “A-1” by S&P for
Eligible Investments which have a maturity of thirty (30) days
or less (for so long as any Notes rated by S&P are Outstanding); provided that the issuer thereof must also have at the time of such
investment a long-term credit rating of not less than “Aa2” by Moody’s, “AA” by
Fitch and “AAA” by S&P (for so long as any Notes rated by S&P are
Outstanding);

 39
 

 

(vii)         money market funds which have at all
times the highest credit rating assigned by each of the Rating Agencies
(including funds for which the Trustee or an Affiliate provides services or
received compensation); and

(viii)        any other investment similar to those described
in clauses (i) through (vii) above that (1) each of Moody’s and S&P has
confirmed may be included in the portfolio of Pledged Obligations as an
Eligible Investment without adversely affecting its then-current ratings on the
Notes and (2) has a long-term credit rating of not less than “Aa2” by Moody’s, “AA”
by Fitch and “AAA” by S&P (for so long as any Notes rated by S&P are
Outstanding) or a credit rating of not less than “P-1” by Moody’s, “F1” by
Fitch and “A-1+” by S&P or “A-1” by S&P for Eligible Investments which
have a maturity of thirty (30) days
or less (for so long as any Notes rated by S&P are Outstanding);

provided
that, except in the case of clauses (iv), (vii) and (viii) above, such
obligations shall have a predetermined fixed dollar amount of principal due at
maturity that cannot vary or change; provided, further, that
mortgage-backed securities and Interest Only Securities shall not constitute
Eligible Investments; and provided, further,
that (a) Eligible Investments acquired with funds in the Collection Accounts
shall include only such obligations or securities as mature no later than the
Business Day prior to the next Payment Date succeeding the acquisition of such
obligations or securities, (b) Eligible Investments shall not include obligations
bearing interest at inverse floating rates, (c) Eligible Investments shall not
include obligations the purchase of which would cause the Issuer to be engaged
in a trade or business within the United States, shall not have payments
subject to foreign or United States withholding tax, shall not be purchased for
a price in excess of par and shall not have an S&P rating which contains a
subscript “r”, “t”, “p”, “pi” or “q” and (d) Eligible Investments shall not
include Margin Stock.

For the avoidance of
doubt, all credit ratings by Fitch required under this definition shall be
deemed to be Fitch Ratings for all purposes under this Indenture.

“Entitlement
Order”:  The meaning specified in
Section 8-102(a)(8) of the UCC.

“ERISA”:  The United States Employee Retirement Income
Security Act of 1974, as amended.

“Euroclear”:  Euroclear Bank S.A./N.V., as operator of the
Euroclear system.

“Event of Default”:  The meaning specified in Section 5.1
hereof.

“Excepted Assets”:  (i) The U.S. $250 of capital contributed by
the holder of the ordinary shares of the Issuer, the U.S. $250 transaction fee
paid to the Issuer, together with, in each case, any interest earned thereon
and the bank account in which such monies are held and (ii) the Preferred
Shares Distribution Account and all of the funds and other property from time
to time deposited in or credited to the Preferred Shares Distribution Account.

“Exchange Act”:  The Securities Exchange Act of 1934, as
amended.

“Exchange
Security”: The meaning specified in Section 12.1(b) hereof.

 40
 

 

“Expense
Account”:  The account
established pursuant to Section 10.6(a) hereof.

“Extended
Maturity Date”:  With respect to any
Collateral Debt Security, the maturity date of such Collateral Debt Security,
assuming the exercise of all extension options that are exercisable at the
option of the related borrower under the terms of such Collateral Debt
Security.

“Extended
Weighted Average Maturity”:  As of
any Measurement Date with respect to the Collateral Debt Securities (other than
Defaulted Securities), 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 Debt Security (other than Defaulted Securities) by (b) the
outstanding Principal Balance at such time of such Collateral Debt Security and
(ii) dividing the sum by the Aggregate Principal Balance at such time of all
Collateral Debt Securities (other than Defaulted Securities).

“Financial Asset”:  The meaning specified in Section 8-102(a)(9)
of the UCC.

“Financing Statements”:  Financing statements relating to the Assets
naming the Issuer, as debtor, and the Trustee, on behalf of the Noteholders and
each Hedge Counterparty as secured party.

“Fitch”:  Fitch Ratings and any successor or successors
thereto.

“Fixed Rate Excess”:  As of any Measurement Date, a fraction
(expressed as a percentage) the numerator of which is equal to the product of
(i) the greater of zero and the excess, if any, of the Weighted Average Coupon
for such Measurement Date over 7.0% and (ii) the Aggregate Principal Balance of
all Collateral Debt Securities that are Fixed Rate Securities (excluding all
Defaulted Securities and Written Down Securities) and the denominator of which
is the Aggregate Principal Balance of all Collateral Debt Securities that are
Floating Rate Securities (excluding all Defaulted Securities and Written Down
Securities), multiplying the resulting figure by 360 and then dividing by 365.

“Fixed Rate Security”:  Any Collateral Debt Security (including,
without limitation, an Above Cap Security) other than a Floating Rate Security.

“Floating Rate Security”:  Any Collateral Debt Security which bears
interest based upon a floating rate index (including a floating rate index
subject to a cap but other than an Above Cap Security); provided that any Covered Fixed Rate Security will be deemed to be a
Floating Rate Security for purposes of calculating the Fixed Rate Excess,
Spread Excess, Weighted Average Coupon and Weighted Average Spread and for
purposes of calculating the Spread Excess and Weighted Average Spread, such
Covered Fixed Rate Security shall be assumed to have a spread (i) above the
applicable London interbank offered rate equal to the spread over the London
interbank offered rate for U.S. Dollar deposits in Europe for the related swap
agreement or (ii) equal to the sum of (a) the coupon on the underlying related
Collateral Debt Security plus (b) the floating amount receivable from the applicable
Hedge Counterparty under the related swap agreement minus (c) the fixed amount
payable by the Issuer under the applicable swap agreement minus (d) the
applicable London interbank offered rate.

 41
 

 

“Form-Approved Liability Hedge”:  A Liability Hedge entered into with respect
to a Covered Fixed Rate Security (i) the documentation of which substantially
conforms (but for the amount and timing of periodic payments, the notional
amount, the effective date, the termination date and other similarly necessary
changes) to a form for which satisfaction of the Rating Agency Condition was
previously received in respect of the Notes (as certified to the Trustee by the
Collateral Manager); provided that (x) any
Rating Agency may withdraw its approval of a form at any time and (y) such form
does not provide for an upfront payment by the Issuer to the related Hedge
Counterparty, and (ii) for which the Issuer has provided each Rating Agency
with written notice of the purchase of the related Collateral Debt Security within
five Business Days after such purchase.

“Future Advance
Holder”: The meaning specified in clause (xxxvi) of the definition of
Eligibility Criteria.

“Future Funding
Letter of Credit Amount”:  The
aggregate amount of all Qualified Letters of Credit or guarantees issued by one
or more entities generally rated at least “A-” by S&P and “A3” by Moody’s
in favor of the Issuer and one or more Future Advance Holders or, subject to
satisfaction of the Rating Agency Condition, any Future Advance Holder and in
either case related to the additional funding obligations of Future Advance
Holders or other entities in respect of Other Loans or indemnifications for
losses as described in Section 7.19(a).

“Future Funding
Reserve Account”:  The account
established pursuant to Section 10.9 hereof.

“Future Funding
Reserve Test”:  A test that is
satisfied on any date if the sum of (A) amounts on deposit in any Future
Funding Reserve Account, (B) the Future Funding Letter of Credit Amount and (C)
amounts on deposit in the Unused Proceeds Subaccount is equal to or greater
than the Required Future Funding Reserve Amount.

“General
Intangible”:  The meaning specified
in Section 9-102(a)(42) of the UCC.

“GKK”:  Gramercy Capital Corp., a Maryland real
estate investment trust.

“Global Securities”:  The Rule 144A Global Securities and the
Regulation S Global Securities.

“Governing Documents”:  With respect to (i) the Issuer, the
memorandum and articles of association of the Issuer, as amended and restated
and/or supplemented and in effect from time to time and (ii) all other Persons,
the articles of incorporation, certificate of incorporation, by-laws,
certificate of limited partnership, limited partnership agreement, limited
liability company agreement, certificate of formation, articles of association
and similar charter documents, as applicable to any such Person.

“Government Items”:  A security (other than a security issued by
the Government National Mortgage Association) issued or guaranteed by the
United States of America or an agency or instrumentality thereof representing a
full faith and credit obligation of the United

 42
 

 

States of America and, with respect to each of the
foregoing, that is maintained in book-entry on the records of a Federal Reserve
Bank.

“Gramercy
Investment”:  Gramercy Investment
Trust, a Maryland real estate investment trust.

“Grant”:  To grant, bargain, sell, warrant, alienate,
remise, demise, release, convey, assign, transfer, mortgage, pledge, create and
grant a security interest in and right of set-off against, deposit, set over
and confirm.  A Grant of the Pledged
Obligations or of any other security or instrument shall include all rights,
powers and options (but none of the obligations) of the granting party
thereunder, including without limitation the immediate continuing right to
claim, collect, receive and take receipt for principal and interest payments in
respect of the Pledged Obligations (or any other security or instrument), and
all other Monies payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring Proceedings in the name of the granting party or otherwise, and generally
to do and receive anything that the granting party is or may be entitled to do
or receive thereunder or with respect thereto.

“Green Loan”:  Green Loan Services LLC, a Delaware limited
liability company.

“Green Loan
Administrative Fee”:  A fee which is
equal to 0.15% of the “book value” of each Collateral Debt Security (other than
any CMBS Security rated investment grade at the time of issuance thereof, any
CRE CDO Security or any REIT Debt Security, in each case owned by the Issuer)
payable to Green Loan under the Asset Servicing Agreement during such Due
Period; provided, however, that the Green Loan Administrative Fee
will be reduced by the fees payable to the Primary Servicers to the extent
described on Schedule Q hereto during such Due Period.  During any period in which Green Loan is
acting as special servicer under the Asset Servicing Agreement with respect to
a Collateral Debt Security which is subject to special servicing thereunder,
Green Loan will not be entitled to the Green Loan Administrative Fee with
respect to such Collateral Debt Security.

“Hedge Agreement”:  One or more interest rate cap agreements,
interest rate floor agreements, Interest Rate Swap Agreements or similar
agreements (including Liability Hedges), including any related ISDA Master
Agreement and hedge confirmations, entered into between the Issuer and one or more
Hedge Counterparties from time to time and any additional or replacement
interest rate cap or swap agreements or other agreements that address interest
rate exposure, entered into from time to time between the Issuer and each Hedge
Counterparty in accordance with the terms hereof, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms.

“Hedge Collateral Account”:  Each trust account established pursuant to Section
16.1(e) hereof.

“Hedge Counterparty”:  Any institution or institutions with whom the
Issuer enters into interest rate cap agreements, interest rate floor
agreements, Interest Rate Swap Agreements or other similar agreements
(including Liability Hedges) that address interest rate

 43
 

 

exposure, or any permitted assignees or successors of
such institutions under any Hedge Agreements.

“Hedge Counterparty Credit Support”:  With respect to any Hedge Agreement, the
agreement to provide collateral, if necessary, substantially in the form of the
ISDA Credit Support Annex attached to such Hedge Agreement, which in each case
will be substantially similar to the ISDA Credit Support Annex attached to the
Form-Approved Liability Hedge.

“Hedge Counterparty Credit Support
Provider”:  The meaning
specified in Section 16.1(a) hereof.

“Hedge Counterparty Required Rating”:
(i) with respect to a Person as an issuer or with respect to long-term senior
unsecured debt of such Person, (a) “A1” by Moody’s  to the extent such Person has a long-term
rating only (for so long as any Notes are Outstanding and are rated by Moody’s);
or (b) “A2” by Moody’s  to the extent
such Person has both a long-term and short-term rating and the short-term
rating is “P-1” (for so long as any Notes are Outstanding and are rated by
Moody’s); and (ii) with respect to a Person as an issuer or with respect to
long term senior unsecured debt of such Person, “BBB-” by S&P (for so long
as any Notes are Outstanding and are rated by S&P), or a short term rating
of such Person, of “A-3” by S&P (for so long as any Notes are Outstanding
and are rated by S&P); provided that should a Rating Agency effect
an overall downward adjustment of its short-term or long-term ratings, then the
applicable Hedge Counterparty Required Rating shall be downwardly adjusted accordingly;
provided, further, that any
adjustment to a rating shall be subject to the prior written consent of the
applicable Rating Agency.

“Hedge Counterparty Collateral Threshold
Rating”:  With respect
to a person as an issuer or with respect to the debt of such person, as the
case may be, such rating as shall be satisfactory to S&P (for so long as
any Class of Notes is Outstanding and is rated by S&P) and Moody’s (for so
long as any Class of Notes is Outstanding and is rated by Moody’s) at the time
of entering into the applicable Hedge Agreement and as specifically set forth
in the related Hedge Agreement; provided that should a Rating Agency
effect an overall downward adjustment of its short-term or long-term ratings,
then the applicable Hedge Counterparty Collateral Threshold Rating shall be
downwardly adjusted accordingly; provided, further, that any
adjustment to a rating shall be subject to the prior written consent of the
applicable Rating Agency.

“Hedge Payment Amount”:  With respect to each Hedge Agreement, the
amount of any payment then due and payable thereunder by the Issuer to each
Hedge Counterparty, including without limitation any payments due and payable
upon a termination of such Hedge Agreement.

“Hedge Termination Account”:  Each trust account established pursuant to Section
16.1(g) hereof.

“Herfindahl Diversity Test”:  A test that will be satisfied if on any
Measurement Date the Herfindahl Score for the Collateral Debt Securities on
such Measurement Date is greater than 20. 
In the event that Cash has been received in respect of Principal
Proceeds of the

 44
 

 

Collateral Debt Securities since the immediately
preceding Measurement Date but has not been reinvested in additional Collateral
Debt Securities as of the current Measurement Date, the Herfindahl Diversity
Test also will be deemed satisfied on the current Measurement Date
notwithstanding a Herfindahl Score of 20 or less if (i) the Herfindahl Test was
satisfied or deemed satisfied on the immediately preceding Measurement Date and
(ii) the reason for the failure on the current Measurement Date is the
existence of such Cash.  Similarly, if
the Herfindahl Diversity Test was not satisfied or deemed satisfied on the
immediately preceding Measurement Date and the Herfindahl Score has worsened as
of the current Measurement Date, the Herfindahl Score as of the immediately
preceding Measurement Date will be deemed to have been maintained on the
current Measurement Date to the extent that the reason for such worsened
Herfindahl Score is the existence of such Cash.

“Herfindahl Score”:  The amount determined by the Collateral
Manager on any Measurement Date, by dividing (i) one by (ii) the sum of the
series of products obtained for each Collateral Debt Security, by squaring the
quotient of (x) the Principal Balance on such Measurement Date of each such
Collateral Debt Security and (y) Aggregate Principal Balance of all Collateral
Debt Securities on such Measurement Date.

“Highest Auction Price”:  The meaning specified in Section
12.4(b)(iv) hereof.

“Holder” or “Securityholder”:  With respect to any Note, the Person in whose
name such Note is registered in the Notes Register.  With respect to any Preferred Share, the
Person in whose name such Preferred Share is registered in the register
maintained by the Share Registrar.

“Indenture”:  This instrument as originally executed and,
if from time to time supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
as so supplemented or amended.

“Independent”:  As to any Person, any other Person
(including, in the case of an accountant, or lawyer, a firm of accountants or
lawyers and any member thereof or an investment bank and any member thereof)
who (i) does not have and is not committed to acquire any material direct or
any material indirect financial interest in such Person or in any Affiliate of
such Person, and (ii) is not connected with such Person as an Officer,
employee, promoter, underwriter, voting trustee, partner, director or Person
performing similar functions.  “Independent”
when used with respect to any accountant may include an accountant who audits
the books of such Person if in addition to satisfying the criteria set forth
above the accountant is independent with respect to such Person within the
meaning of Rule 101 of the Code of Ethics of the American Institute of
Certified Public Accountants.

Whenever any
Independent Person’s opinion or certificate is to be furnished to the Trustee
such opinion or certificate shall state that the signer has read this
definition and that the signer is Independent within the meaning hereof.

“Indemnified
Party”:  The meaning specified in
clause (xxxvi) of the definition of Eligibility Criteria.

 45
 

 

“Ineligible Equity Security”: Any equity
security or any other security which is not eligible for purchase by the Issuer
as a Collateral Debt Security; provided that the term “Ineligible Equity
Security” will not include any Preferred Equity Security or any asset backed
security structured as a certificate or other form of beneficial interest or
any instrument that is otherwise eligible for purchase by the Issuer as a
Collateral Debt Security the terms of which include an “equity kicker.”

“Initial
Collateral Debt Security”:  Any of
the Collateral Debt Securities acquired by the Issuer on the Closing Date or
with respect to which the Issuer has, as of the Closing Date, entered into a
binding commitment to purchase.

“Initial
Deposit”:  Any Cash or Money
deposited with the Trustee by the Issuer on the Closing Date for inclusion as
Assets and deposited by the Trustee in the Unused Proceeds Account on the
Closing Date, which shall be equal to $180,259,089.84.

“Initial
Maturity Date”:  With respect to any
Collateral Debt Security, the maturity date of such Collateral Debt Security
without giving effect to any extension options available under the terms of
such Collateral Debt Security.

“Initial Purchaser”:  Each of Wachovia Capital Markets, LLC and
Goldman, Sachs & Co.

“Initial
Weighted Average Maturity”:  As of
any Measurement Date with respect to the Collateral Debt Securities (other than
Defaulted Securities), 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 Debt Security (other than Defaulted Securities) by (b) the
Outstanding Principal Balance of such Collateral Debt Security and (ii)
dividing the sum by the Aggregate Principal Balance at such time of all
Collateral Debt Securities (other than Defaulted Securities).

“Instrument”:  The meaning specified in Section 9-102(a)(47)
of the UCC.

“Interest Accrual Period”:  With respect to (i) the first Payment Date,
the period from and including the Closing Date to but excluding the initial
Payment Date and (ii) with respect to each successive Payment Date, the period
from and including the immediately preceding Payment Date to but excluding such
Payment Date.

“Interest Advance”:  The meaning specified in Section 10.10(a)
hereof.

“Interest Collection Account”:  The trust account established pursuant to Section
10.2(a) hereof.

“Interest Coverage Ratio”:
With respect to the Class A Notes and the Class B Notes (the “Class A/B Interest Coverage Ratio”),
the Class C Notes, the Class D Notes and the Class E Notes (the “Class C/D/E Interest Coverage Ratio”)
or the Class F Notes, the Class G Notes and the Class H Notes (the “Class F/G/H Interest Coverage Ratio”)
as of any Measurement Date, the ratio calculated by dividing:

 46
 

 

(1)                                  (i)
the sum of (A) Cash standing to the credit of the Expense Account, plus (B) the
Scheduled Distributions of interest due (or, in the case of the Preferred
Equity Securities, the scheduled payments of dividends or other distributions
not attributable to the return of capital by their governing documents) due (in
each case regardless of whether the due date for any such interest (or dividend
or other distribution) payment has yet occurred) in the Due Period in which
such Measurement Date occurs on (x) the Collateral Debt Securities (excluding
accrued and unpaid interest on Defaulted Securities); provided that no
interest (or dividends or other distributions) will be included with respect to
any Collateral Debt Security (including, without limitation, the deferred or
capitalized interest component of a Partially Deferred Loan) to the extent that
such Collateral Debt Security does not provide for the scheduled payment of
interest (or dividends or other distributions) in Cash; and (y) the Eligible
Investments held in the Payment Account, the Collection Accounts, the Delayed
Funding Obligations Account, the Unused Proceeds Account (including the Unused
Proceeds Subaccount) and the Expense Account (whether purchased with Interest
Proceeds or Principal Proceeds), plus (C) any net amount (other than any
termination payments) scheduled to be received by the Issuer from any Hedge
Counterparty under any related Hedge Agreement on or before the following
Payment Date, plus (D) Interest Advances, if any, advanced by the Advancing
Agent or the Trustee, in its capacity as Backup Advancing Agent, with respect
to the related Payment Date, minus (ii) the sum of (A) any net amount (other
than any termination payments) scheduled to be paid by the Issuer to any Hedge
Counterparty under any related Hedge Agreement on or before the following
Payment Date, plus, without duplication, (B) any amounts scheduled to be paid
pursuant to Section 11.1(a)(i)(1) through (5); by

(2)                                  (i)
in the case of the Class A/B Interest Coverage Ratio, the sum of the scheduled
interest on the Class A-1 Notes, the Class A-2 Notes and the Class B Notes
payable on the Payment Date immediately following such Measurement Date plus
any Class A-1 Defaulted Interest Amount, any Class A-2 Defaulted Interest Amount
and any Class B Defaulted Interest Amount payable on the Payment Date
immediately following such Measurement Date; (ii) in the case of the Class
C/D/E Interest Coverage Ratio, the amount determined by the foregoing clause
(i) plus the scheduled interest on the Class C Notes (including any Class C
Defaulted Interest Amount and interest on Class C Capitalized Interest, if any,
but excluding any Class C Capitalized Interest), the Class D Notes (including
any Class D Defaulted Interest Amount and interest on Class D Capitalized
Interest, if any, but excluding any Class D Capitalized Interest) and the Class
E Notes (including any Class E Defaulted Interest and interest on any Class E
Capitalized Interest, if any, but excluding any Class E Capitalized Interest)
payable on the Payment Date immediately following such Measurement Date; or
(iii) in the case of the Class F/G/H Interest Coverage Ratio, the amount
determined by the foregoing clause

 47
 

 

(ii) plus the scheduled interest on the Class F Notes
(including any Class F Defaulted Interest Amount and interest on Class F
Capitalized Interest, if any, but excluding any Class F Capitalized Interest),
the Class G Notes (including any Class G Defaulted Interest Amount and interest
on Class G Capitalized Interest, if any, but excluding any Class G Capitalized
Interest) and the Class H Notes (including any Class H Defaulted Interest and
interest on Class H Capitalized Interest, if any, but excluding any Class H
Capitalized Interest), in each case payable on the Payment Date immediately
following such Measurement Date.

“Interest Distribution Amount”:  Each of the Class A-1 Interest Distribution
Amount, Class A-2 Interest Distribution Amount, Class B Interest Distribution
Amount, Class C Interest Distribution Amount, Class D Interest Distribution
Amount, Class E Interest Distribution Amount, Class F Interest Distribution
Amount, Class G Interest Distribution Amount, Class H Interest Distribution
Amount, Class J Interest Distribution Amount and Class K Interest Distribution
Amount.

“Interest Only Security”:  Any security that by its terms provides for
periodic payments of interest on a notional amount and does not provide for the
repayment of a principal amount.

“Interest Proceeds”:  With respect to any Payment Date, (a) the sum
(without duplication) of (i) all Cash payments of interest (including any
amount representing the accreted portion of a discount from the face amount of
an Eligible Investment) or dividends and other distributions (but excluding
distributions on Preferred Equity Securities attributable to the return of
capital by their governing documents) received during the related Due Period on
the Collateral Debt Securities other than Defaulted Securities (net of the
Servicing Fee and other amounts payable in accordance with each Servicing
Agreement) and Eligible Investments, including, in the Collateral Manager’s
commercially reasonable discretion (exercised as of the trade date), the
accrued interest received in connection with a sale of such Collateral Debt
Securities or Eligible Investments (to the extent such accrued interest was not
applied to the purchase of Substitute Collateral Debt Securities), in each
case, excluding any accrued interest included in Principal Proceeds pursuant to
clause (a)(iv), (v) or (vii) of the definition of Principal Proceeds, (ii) all
make whole premiums, yield maintenance or any interest amount paid in excess of
the stated interest amount of a Collateral Debt Security received during the
related Due Period, (iii) all amendment and waiver fees, late payment fees,
commitment fees, exit fees, extension fees and other fees and commissions
received by the Issuer during such Due Period in connection with such
Collateral Debt Securities and Eligible Investments (other than, in each such
case, fees and commissions received in connection with the restructuring of a
Defaulted Security or default of Collateral Debt Securities and Eligible
Investments and, for the avoidance of doubt, any origination fees paid by a
related borrower), (iv) all payments pursuant to any Hedge Agreement for the
Payment Date immediately following such Due Period (excluding any amounts
payable by the Issuer upon a termination under any Hedge Agreement during such
Due Period), (v) all amounts to be transferred by the Trustee from the Asset
Hedge Account to the Collection Account in respect of such Payment Date
pursuant to the related Asset Hedge Schedules, (vi) funds in the Unused
Proceeds Account designated as Interest Proceeds by the Collateral Manager
pursuant to Section 10.4(c), (vii) funds in the Expense Account
designated as Interest Proceeds

 48
 

 

by the Collateral Manager pursuant to Section
10.6(a), (viii) funds remaining on deposit in the Expense Account upon
redemption of the Notes in whole, pursuant to Section 10.6(a), (ix)
except for distributions on Preferred Equity Securities attributable to the
return of capital by their governing documents and other than as specified in
item (i) above, all proceeds received in respect of equity features, if any, of
the Collateral Debt Securities, (x) with respect to any Defaulted Security sold
by the Issuer during the related Due Period, the excess, if any, of the amount
received by the Issuer in connection with such sale and the par amount of such
Defaulted Security, (xi) any payments received in respect of Interest Only
Securities to the extent they were purchased with Interest Proceeds, (xii) all
payments of principal on Eligible Investments purchased with proceeds of items
(a)(i), (ii) and (iii) of this definition and (xiii) any excess proceeds
received in respect of a Collateral Debt Security after required fixed payments
are made on other classes of securities senior to such Collateral Debt Security
to the extent such proceeds are designated as “Interest Proceeds” by the
Collateral Manager in its sole discretion; provided that
Interest Proceeds will in no event include any payment or proceeds specifically
defined as “Principal Proceeds” in the definition thereof; minus (b)(i) the
aggregate amount of any Nonrecoverable Advances that were previously reimbursed
to the Advancing Agent or the Trustee, in its capacity as Backup Advancing
Agent, and the aggregate amount of any Nonrecoverable Cure Advances reimbursed
to the Collateral Manager during the related Due Period from Interest Proceeds
and (ii) the aggregate amount of any Hedge Payment Amounts that were previously
paid to the applicable Hedge Counterparty from Interest Proceeds during the
related Due Period.  For the avoidance of
doubt, Servicing Fees are netted out of amounts received in respect of
Collateral Debt Securities, and are not included in the definition of “Interest
Proceeds” and are not payable pursuant to the Priority of Payments.

“Interest Rate Swap Agreement”:
An interest rate swap agreement, including any related ISDA Master Agreement
and hedge confirmations, for purposes of managing the Issuer’s interest rate
exposure related to the variable rate of interest applicable to the Notes.

“Interest Shortfall”:  The meaning set forth in Section 10.10(a)
hereof.

“Investment Company Act”:  The Investment Company Act of 1940, as
amended.

“Irish Paying
Agent”:  JPMorgan Bank (Ireland) PLC,
or any successor Irish Paying Agent under the Irish Paying Agent Agreement.

“Irish Paying Agent Agreement”:  The agreement between the Issuer and the
Irish Paying Agent that will be entered into in the event that the listing of
the Notes on the Irish Stock Exchange is obtained.

“Issuer”:  Gramercy Real Estate CDO 2006-1, Ltd., an
exempted company incorporated with limited liability under the laws of the
Cayman Islands, until a successor Person shall have become the Issuer pursuant
to the applicable provisions of this Indenture, and thereafter “Issuer” shall
mean such successor Person.

“Issuer Order” and “Issuer Request”:  A written order or request (which may be in
the form of a standing order or request) dated and signed in the name of the
Issuer and the Co-Issuer

 49
 

 

by an Authorized Officer of each of the Issuer and the
Co-Issuer, or by an Authorized Officer of the Collateral Manager.

“Liability Hedge”:
Any agreement, in the form of an interest rate exchange agreement, between the
Issuer and a Hedge Counterparty that is entered into by the Issuer in
connection with the purchase or holding of (i) a Fixed Rate Security or (ii) a
Floating Rate Security that bears interest upon a floating rate index other
than the applicable London interbank offered rate, and which, in each case,
entitles the Issuer to receive from the related Hedge Counterparty payments
based on the applicable London interbank offered rate, plus or minus a spread,
at prevailing market rates, as determined by the Collateral Manager at the date
of execution of such agreement.  In
addition to the foregoing, each Liability Hedge will be subject to the following
conditions:

(a)           the notional balance of each
Liability Hedge shall in no event exceed the scheduled principal amount of the
Collateral Debt Security to which it is related;

(b)           each Liability Hedge (i) (other than
Liability Hedges entered into in respect of an ARD Loan) will amortize according
to the same schedule as, and terminate on the maturity date of, the Collateral
Debt Security to which it is related and (ii) any such amounts so payable shall
be paid in accordance with the Priority of Payments;

(c)           the payment dates of the Liability
Hedge must match the payment dates of either the Collateral Debt Security to
which it is related or the Payment Dates for the Notes;

(d)           if the Collateral Debt Security
related to a Liability Hedge (i) is a Defaulted Security, or (ii) is sold by
the Issuer, such Liability Hedge shall be terminated; provided that if
any unscheduled Hedge Payment Amount is payable by the Issuer under the related
Hedge Agreement solely as a result of the early termination of such Liability
Hedge and is not offset by any amount payable by the relevant Hedge
Counterparty, (A) such Liability Hedge may only be terminated if the Rating
Agency Condition with respect to Moody’s and S&P shall have been satisfied
in connection with such termination; and (B) such Hedge Payment Amount shall be
paid in accordance with the Priority of Payments;

(e)           if the Collateral Debt Security
related to such Liability Hedge is not a Defaulted Obligation and such
Collateral Debt Security is called or prepaid, such Liability Hedge shall be
terminated; provided that if any unscheduled Hedge Payment Amount is
payable by the Issuer solely as a result of the early termination of such
Liability Hedge and is not offset by any amount payable by the relevant Hedge
Counterparty, (i) such Liability Hedge may only be terminated if the Rating
Agency Condition with respect to Moody’s and S&P shall have been satisfied
in connection with such termination, (ii) any such Hedge Payment Amount shall
first be paid from any call, redemption and prepayment premiums received from
such Collateral Debt Security, and (iii) any remaining amount so payable shall
be paid in accordance with the Priority of Payments;

 50

 

(f)            except upon satisfaction of the
Rating Agency Condition with respect to Moody’s and S&P, each Liability
Hedge entered into in respect of an ARD Loan will be for a term that terminates
at least three years after the anticipated repayment date of such ARD Loan; and

(g)           each Liability Hedge will contain
appropriate limited recourse and non-petition provisions equivalent (mutatis mutandis) to those contained in this Indenture.

“LIBOR”:  The meaning set forth in Schedule F
attached hereto.

“LIBOR
Determination Date”: 
The meaning set forth in Schedule F attached hereto.

“Liquidity”: 
As of any date of determination, an amount equal to the sum of (x) the
cash and cash equivalents of Gramercy Capital Corp. and GKK Capital LP (on a
consolidated basis) on such date of determination, (y) the total amount of
capacity available to Gramercy Capital Corp. and/or GKK Capital LP under any
unsecured facility in effect on such date of determination (determined in
accordance with the relevant provisions of each such facility) and (z) 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 Test”:  The meaning specified in Section 7.19
hereof.

“List”:  The meaning specified in Section
12.4(a)(ii) hereof.

“Listed
Bidders”:  The meaning
specified in Section 12.4(a)(ii) hereof.

“LLC Managers”: 
The managers of the Co-Issuer duly appointed by the sole member of the
Co-Issuer (or, if there is only one manager of the Co-Issuer so duly appointed,
such sole manager).

“Loan”:
Any U.S. Dollar denominated interest in a senior secured or senior unsecured or
senior or junior subordinated term loan (including, without limitation, a
mortgage loan, an ARD Loan, a Delayed Draw Term Loan, or a B Note (or other
interest in a split loan structure)) or any Participation interest therein, or
any Mezzanine Loan, Single Asset Mortgage Security, Single Borrower Mortgage
Security or Rake Bond.

“London
Banking Day”:  The
meaning set forth in Schedule F attached hereto.

“Majority”:  With respect to:

(i)            any Class of Notes, the Holders of
more than 50% of the Aggregate Outstanding Amount of the Notes of such Class;
and

 51
 

 

(ii)           the Preferred Shares, the Preferred
Shareholders representing more than 50% of the aggregate Notional Amount of the
outstanding Preferred Shares, which are issued and have not been redeemed.

“Majority Preferred Shares Holder”:  The holder of at least a majority of the
aggregate Notional Amount of the outstanding Preferred Shares.

“Mandatory
Redemption”:  The
meaning specified in Section 9.6 hereof.

“Margin
Stock”:  As defined
under Regulation U issued by the Board of Governors of the Federal Reserve
System.

“Market
Value”:  With respect
to any date of determination and any Collateral Debt Security or Eligible
Investment, an amount equal to (i) the median of the bona fide bids for such
Collateral Debt Security obtained by the Collateral Manager at such time from
any three nationally recognized dealers, which dealers are Independent from one
another and from the Collateral Manager, (ii) if the Collateral Manager is in good
faith unable to obtain bids from three such dealers, the lesser of the bona
fide bids for such Collateral Debt Security obtained by the Collateral Manager
at such time from any two nationally recognized dealers chosen by the
Collateral Manager, which dealers are Independent from each other and the
Collateral Manager, or (iii) if the Collateral Manager is in good faith unable
to obtain bids from two such dealers, the bona fide bid for such Collateral
Debt Security obtained by the Collateral Manager at such time from any
nationally recognized dealer chosen by the Collateral Manager, which dealer is
Independent from the Collateral Manager.

“Market
Value Collateralized Debt Obligation”:  Any collateralized debt obligation that is
valued on the basis of the market value of the underlying debt obligations
rather than the cash flow related to the underlying debt obligations.

“Maturity”:  With respect to any Note, the date on which
the unpaid principal of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration or
otherwise.

“Measurement
Date”:  Any of the
following: (i) the Closing Date, (ii) the date of acquisition (or, in the case
of an acquisition of any CMBS Security, REIT Debt Security or CRE CDO Security,
the date on which the Issuer irrevocably commits to purchase such security) or
disposition of any Collateral Debt Security, (iii) any date on which any
Collateral Debt Security becomes a Defaulted Security, (iv) each Determination
Date, (v) the last Business Day of each calendar month (other than any calendar
month in which a Determination Date occurs) and (vi) with reasonable notice to
the Issuer and the Trustee, any other Business Day that any Rating Agency or
the Holders of at least 66 2/3% of the Aggregate Outstanding Amount of any
Class of Notes requests be a “Measurement Date”;
provided that if any such date would
otherwise fall on a day that is not a Business Day, the relevant Measurement
Date will be the immediately preceding Business Day.

“Mezzanine Loan”: A Loan secured by one or more
direct or indirect ownership interests in a company, partnership or other
entity owning, operating or controlling, directly or

 52
 

 

through subsidiaries or affiliates, one or more
commercial properties, including a participation interest therein.

“Minimum Ramp-Up Amount”:  An amount equal to $1,000,000,000.

“Minimum
Weighted Average Coupon Test”:  A test that will be satisfied on any
Measurement Date if the Weighted Average Coupon for the Collateral Debt
Securities is greater than or equal to 7.0%.

“Minimum
Weighted Average Spread Test”:  A test that will be satisfied as of any
Measurement Date if the Weighted Average Spread as of such Measurement Date for
the Collateral Debt Securities is greater than or equal to 2.2%.

“Minnesota Collateral”:  The meaning specified in Section 3.3(a)(v)
hereof.

“Money”:  The meaning specified in Section 1-201(24) of
the UCC.

“Monthly
Report”:  The meaning
specified in Section 10.12(c) hereof.

“Moody’s”:  Moody’s Investors Service, Inc., and its
successors in interest.

“Moody’s Maximum Rating Factor Test”:  A test that will be satisfied on any
Measurement Date if the Weighted Average Moody’s Rating Factor does not exceed
3700.

“Moody’s Post-Acquisition Compliance Test”:  A test that will be satisfied if the Moody’s
Maximum Rating Factor Test is satisfied.

“Moody’s Post-Acquisition Failure”: The meaning
specified in Section 12.2(b) hereof.

“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 or
REIT Debt Security, if such CMBS Security or REIT Debt Security is not rated by
Moody’s, then the Moody’s Rating of such CMBS Security or REIT Debt Security
may be determined using any one of the methods below:

(A)          with respect to any REIT Debt Security
not publicly rated by Moody’s that is a REIT Debt Securities—Diversified; REIT
Debt Securities—Health Care; REIT Debt Securities—Hotel; REIT Debt 

 53
 

 

Securities—Industrial;
REIT Debt Securities—Multi-Family; REIT Debt Securities—Office; REIT Debt
Securities—Residential; REIT Debt Securities—Retail; or REIT Debt
Securities—Storage, if such REIT Debt Security is publicly rated by S&P,
then the Moody’s Rating thereof will be (1) one subcategory below the Moody’s
equivalent rating assigned by S&P if the rating assigned by S&P is “BBB”
or greater and (2) two rating subcategories below the Moody’s equivalent rating
assigned by S&P if the rating assigned by S&P is below “BBB”;

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

(C)           with respect to any CMBS Large Loan
Security not 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 on a case-by-case basis; and

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

(iii)          with respect to corporate guarantees
on REIT Debt Securities, if such corporate guarantees are not publicly rated by
Moody’s but another security or obligation of the guarantor or obligor (an “other
security”) is publicly rated by Moody’s, and no rating has been assigned in
accordance with clause (i) above, the Moody’s Rating of such Collateral 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;

 54
 

 

(C)           if the corporate guarantee is a
subordinated obligation of the guarantor or obligor and the other security is a
senior secured obligation that is: (1) rated “Ba3” or higher by Moody’s, the
Moody’s Rating of such corporate guarantee will be three rating subcategories
below the rating of the other security; or (2) rated “B1” or lower by Moody’s,
the Moody’s Rating of such corporate guarantee will be two rating subcategories
below the rating of the other security;

(D)          if the corporate guarantee is a senior
secured obligation of the guarantor or obligor and the other security is a
senior unsecured obligation that is: (1) rated “Baa3” or higher by Moody’s, the
Moody’s Rating of such corporate guarantee will be the rating of the other
security; or (2) rated “Ba1” or lower by Moody’s, the Moody’s Rating of such
corporate guarantee will be one rating subcategory above the rating of the
other security;

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

(F)           if the corporate guarantee is a
subordinated obligation of the guarantor or obligor and the other security is a
senior unsecured obligation that is: (1) rated “B1” or higher by Moody’s, the
Moody’s Rating of such corporate guarantee will be two rating subcategories
below the rating of the other security; or (2) rated “B2” or lower by Moody’s,
the Moody’s Rating of such corporate guarantee will be one rating subcategory
below the rating of the other security;

(G)           if the corporate guarantee is a
senior secured obligation of the guarantor or obligor and the other security is
a subordinated obligation that is: (1) rated “Baa3” or higher by Moody’s, the
Moody’s Rating of such corporate guarantee will be one rating subcategory above
the rating of the other security; (2) rated below “Baa3” but not rated “B3” by
Moody’s, the Moody’s Rating of such corporate guarantee will be two rating
subcategories above the rating of the other security; or (3) rated “B3” by
Moody’s, the Moody’s Rating of such corporate guarantee will be “B2”;

(H)          if the corporate guarantee is a senior
unsecured obligation of the guarantor or obligor and the other security is a
subordinated obligation that is: (1) rated “Baa3” or higher by Moody’s, the
Moody’s Rating of such corporate guarantee will be one rating subcategory above
the rating of the other security; or (2) rated “Ba1” or lower by Moody’s, the
Moody’s Rating of such corporate guarantee will also be one rating subcategory
above the rating of the other security; and

 55
 

 

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

(iv)          if such Collateral Debt Security is a
Mezzanine Loan or a CRE CDO Security, no notching is permitted and the Moody’s
Rating will be the rating so assigned by Moody’s;

provided that (x) the
rating of either S&P or Fitch used to determine the Moody’s Rating pursuant
to any of clauses (ii) or (iii) above will be (a) a public rating that
addresses the obligation of the obligor (or guarantor, where applicable) to pay
principal of and interest on the relevant Collateral Debt Security in full and
is monitored on an ongoing basis by the relevant Rating Agency or (b) if no
such public rating is available, a rating determined pursuant to a method
determined by Moody’s on a case-by-case basis and (y) the Aggregate Principal
Balance of Collateral Debt Securities the Moody’s Rating of which is based on
an S&P rating or a Fitch rating may not exceed 20% of the Aggregate
Principal Balance of all Collateral Debt Securities; provided, further,
that the Moody’s Rating of any Collateral Debt Security will be reduced one
subcategory to the extent it is on credit watch with negative implications and
increased one subcategory to the extent it is on credit watch with positive
implications; provided, further, however, that
notwithstanding any of the foregoing provisions to the contrary, the Collateral
Manager may, consistent with Moody’s published criteria for underwriting and
tranching of commercial real estate loans, use its estimated ratings for
Collateral Debt Securities representing up to 20% of the Aggregate Collateral
Balance; provided that in connection with the foregoing, the Collateral Manager
on behalf of the Issuer may apply for an estimated rating from Moody’s within
10 Business Days after the date on which the Issuer purchases a Collateral Debt
Security.

“Moody’s
Rating Factor”: 
Relating 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

  	
   

  	
  Ba1

  	
   

  	
  940

  	
   

  
	
  Aa1

  	
   

  	
  10

  	
   

  	
  Ba2

  	
   

  	
  1,350

  	
   

  
	
  Aa2

  	
   

  	
  20

  	
   

  	
  Ba3

  	
   

  	
  1,766

  	
   

  
	
  Aa3

  	
   

  	
  40

  	
   

  	
  B1

  	
   

  	
  2,220

  	
   

  
	
  A1

  	
   

  	
  70

  	
   

  	
  B2

  	
   

  	
  2,720

  	
   

  
	
  A2

  	
   

  	
  120

  	
   

  	
  B3

  	
   

  	
  3,490

  	
   

  
	
  A3

  	
   

  	
  180

  	
   

  	
  Caa1

  	
   

  	
  4,770

  	
   

  
	
  Baa1

  	
   

  	
  260

  	
   

  	
  Caa2

  	
   

  	
  6,500

  	
   

  
	
  Baa2

  	
   

  	
  360

  	
   

  	
  Caa3

  	
   

  	
  8,070

  	
   

  
	
  Baa3

  	
   

  	
  610

  	
   

  	
  Ca or lower

  	
   

  	
  10,000

  	
   

  

 

“Moody’s
Recovery Rate”:  With
respect to any Collateral Debt Security on any Measurement Date, an amount
equal to (A) if the Specified Type of Collateral Debt Security is included in
the table attached as Schedule A (the Moody’s Recovery Rate Assumptions)
hereto,

 56
 

 

the percentage for such Collateral Debt Security set
forth in Schedule
A (the Moody’s Recovery Rate Assumptions) hereto in (x) the
table corresponding to the relevant Specified Type of Collateral Debt Security,
(y) the column in such table setting forth the Moody’s Rating of such
Collateral Debt Security on such Measurement Date and (z) the row in such table
opposite the percentage of the issue of which such Collateral Debt Security is
a part relative to the total capitalization of (including both debt and equity
securities issued by) the relevant issuer of or obligor on such Collateral Debt
Security determined on the date on which such Collateral Debt Security was
originally issued or (B) if the Specified Type of Collateral Debt Security is
not included in the table set forth in Schedule A (the Moody’s Recovery Rate
Assumptions) hereto, the Recovery Rate set forth following such table with
respect to the applicable Specified Type.

“Moody’s Recovery Test”:  A test that will be satisfied as of any
Measurement Date, if the Moody’s Weighted Average Recovery Rate is greater than
or equal to 42.0%.  For purposes of
determining whether the Moody’s Recovery Test has been satisfied, the Moody’s
Recovery Rate with respect to proceeds from any Collateral Debt Security which
have not been reinvested shall be the Moody’s Recovery Rate associated with
such Collateral Debt Security.

“Moody’s
Special Amortization Pro Rata Condition”:  A condition that will be satisfied with
respect to any Payment Date if either (i)(a) the aggregate Principal Balance of
the Collateral Debt Securities as of the related Determination Date is greater
than an amount equal to 50% of the aggregate Principal Balance of the
Collateral Debt Securities on the Effective Date and (b) the Collateral Quality
Tests (other than the Minimum Weighted Average Spread Test, the Weighted
Average Life Test, the S&P Recovery Test and the S&P CDO Monitor Test)
are satisfied as of the related Determination Date or (ii) the Rating Agency
Condition has been satisfied with respect to Moody’s.

“Moody’s Weighted Average Extended Maturity Test”:  A test that will be satisfied on any
Measurement Date if the Extended Weighted Average Maturity of the Collateral
Debt Securities as of such Measurement Date is five (5) years or less.

“Moody’s Weighted Average Initial Maturity Test”:  A test that will be satisfied on any
Measurement Date if the Initial Weighted Average Maturity of the Collateral
Debt Securities as of such Measurement Date is five (5) years or less.

“Moody’s Weighted Average Recovery Rate”:  The number obtained by summing the products obtained
by multiplying the Principal Balance of each Collateral Debt Security (other
than a Defaulted Security) by its Moody’s Recovery Rate, and dividing such sum
by the aggregate Principal Balance of all such Collateral Debt Securities.

“Net
Outstanding Portfolio Balance”:  On any Measurement Date, the sum (without
duplication) of:

(i)            the Aggregate Principal Balance on
such Measurement Date of the Collateral Debt Securities (other than Defaulted
Securities);

(ii)           the aggregate Principal Balance of
all Principal Proceeds held as Cash and Eligible Investments, all Cash and
Eligible Investments held in the Unused Proceeds Account that have not been
designated as Interest Proceeds by

 57
 

 

the Collateral Manager with respect to the Effective
Date and all Cash and Eligible Investments held in the Delayed Funding
Obligations Account; and

(iii)          with respect to each Defaulted
Security, the Calculation Amount of such Defaulted Security.

“Non-Advancing Collateral Debt Security”: Any
Collateral Debt Security, other than a CMBS Security, a CRE CDO Security or a
REIT Debt Security, with respect to which no servicer or other party is
required, under the terms of the Underlying Instruments governing such
Collateral Debt Security, to make any liquidity advances to ensure the timely
receipt of interest by and for the benefit of the holder of such Collateral
Debt Security.

“Non-call Period”:  The period from the Closing Date to and
including the Business Day immediately preceding the Payment Date in July 2009
during which the Issuer is not permitted to exercise an Optional Redemption as
described in Section 9.1(c) hereof.

“Non-Core Property Type”: Any Land Properties
and Other Properties.

“Non-Permitted
Holder”: The meaning specified in Section 2.13(b)
hereof.

“Non-Quarterly Pay Asset”:  Any Collateral Debt Security (other than a
Defaulted Security) that pays interest less frequently than quarterly.

“Nonrecoverable
Advance”: Any Interest Advance made or proposed to be made
pursuant to Section 10.10 hereof that the Advancing Agent or the
Trustee, as applicable, has determined in its sole discretion, exercised in
good faith, that the amount so advanced or proposed to be advanced plus
interest expected to accrue thereon, will not be ultimately recoverable from
subsequent payments or collections with respect to the Assets.

“Nonrecoverable
Cure Advance”:  Any
Cure Advance previously made or proposed to be made pursuant to Section 16.3
hereof with respect to any Collateral Debt Security that the Collateral Manager
(subject to the applicable provisions of the Asset Servicing Agreement) has
determined in its sole discretion, exercised in good faith, that the amount so
advanced or proposed to be advanced will not be ultimately recoverable from
collections from the specific Collateral Debt Security with respect to which
such Cure Advance was made or proposed to be made.

“Note Interest Rate”:  With respect to the Class A-1 Notes, the
Class A-2 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, the Class A-1 Rate, the Class A-2 Rate,
the Class B Rate, the Class C Rate, the Class D Rate, the Class E Rate, the
Class F Rate, the Class G Rate, the Class H Rate, the Class J Rate and the
Class K Rate, respectively.

“Note
Liquidation Event”: 
The meaning specified in Section 12.1(f) hereof.

“Noteholder”:  The Person in whose name such Note is
registered in the Notes Register.

 58
 

 

“Notes”:  The Class A-1 Notes, the Class A-2 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, collectively, authorized by, and authenticated and delivered
under, this Indenture or any supplemental indenture.

“Notes
Register” and “Notes
Registrar”:  The
respective meanings specified in Section 2.5(a) hereof.

“Notes
Valuation Report”:  The
meaning specified in Section 10.12(e) hereof.

“Notional Amount”:  In respect of the Preferred Shares, the per
share notional amount of $1.00.  The
aggregate Notional Amount of the Preferred Shares on the Closing Date will be
$57,500,000.

“Offer”:  With respect to any security, (i) any offer
by the issuer of such security or by any other person or entity made to all of
the holders of such security to purchase or otherwise acquire such security
(other than pursuant to any redemption in accordance with the terms of the
related Underlying Instruments) or to convert or exchange such security into or
for Cash, securities or any other type of consideration or (ii) any
solicitation by the issuer of such security or any other person or entity to
amend, modify or waive any provision of such security or any related Underlying
Instrument.

“Officer”:  With respect to any corporation or limited
liability company, including the Issuer, the Co-Issuer and the Collateral
Manager, any Director, the Chairman of the Board of Directors, the President,
any Senior Vice President any Vice President, the Secretary, any Assistant
Secretary, the Treasurer, any Assistant Treasurer, General Partner of such
entity; and with respect to the Trustee, any Trust Officer.

“Officer’s
Certificate”:  With
respect to the Issuer, the Co-Issuer and the Collateral Manager, any
certificate executed by an Officer thereof.

“Opinion
of Counsel”:  A written
opinion addressed to the Trustee and each Rating Agency in form and substance
reasonably satisfactory to the Trustee, each Rating Agency (and each Hedge
Counterparty, if applicable, pursuant to the provisions below) of an attorney
at law admitted to practice before the highest court of any state of the United
States or the District of Columbia (or the Cayman Islands, in the case of an
opinion relating to the laws of the Cayman Islands), which attorney may, except
as otherwise expressly provided in this Indenture, be counsel for the Issuer,
and which attorney shall be reasonably satisfactory to the Trustee.  Whenever an Opinion of Counsel is required
hereunder, such Opinion of Counsel may rely on opinions of other counsel who
are so admitted and so satisfactory which opinions of other counsel shall
accompany such Opinion of Counsel and shall either be addressed to the Trustee
and each Rating Agency or shall state that the Trustee and each Rating Agency
shall be entitled to rely thereon; provided, however,
that such Opinion of Counsel shall be addressed to each Hedge Counterparty (or
each Hedge Counterparty may rely on such Opinion of Counsel) to the extent that
such Opinion of Counsel relates to or affects the interests of each Hedge
Counterparty.

“Optional
Redemption”:  The
meaning specified in Section 9.1(c) hereof.

 59
 

 

“Origination Agreement”:  That certain amended and restated origination
agreement, dated as of April 19, 2006 between SLG and Gramercy Capital Corp.,
as modified by the Origination Agreement Side Letter, dated as of August 24,
2006, among SLG, Gramercy Capital Corp., GKK Manager LLC and the Issuer.  A copy of the Origination Agreement is
attached hereto as Exhibit N.

“Origination Agreement Security”:  Any Acquired Property or Distressed Debt
Security.

“Origination Agreement Security Sale”:  The meaning specified in Section 12.1(c)
hereof.

“Outstanding”:  With respect to the Notes, as of any date of
determination, all of the Notes or any Class of Notes, as the case may be,
theretofore authenticated and delivered under this Indenture except:

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

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

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

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

provided that in
determining whether the Noteholders of the requisite Aggregate Outstanding
Amount have given any request, demand, authorization, direction, notice,
consent or waiver hereunder, (x) Notes owned by the Issuer, the Co-Issuer or
any Affiliate thereof shall be disregarded and deemed not to be Outstanding and
(y) in relation to (1) any amendment or other modification of, or assignment or
termination of, any of the express rights or obligations of the Collateral
Manager under the Collateral Management Agreement or this Indenture (including
the exercise of any rights to remove the Collateral Manager or terminate the
Collateral Management Agreement or approve or object to a replacement for the
Collateral Manager except as specifically provided in the Collateral Management
Agreement with respect to the termination of the Collateral Manager without
cause and with respect to the replacement of the Collateral Manager) and (2)
the exercise by the Noteholders of their right, in connection with certain
Events of Default, to accelerate amounts due under the Notes,  Notes owned by the Collateral Manager or any
of its Affiliates, or by any accounts managed by them, shall be disregarded and
deemed not to be Outstanding.  In
determining whether the Trustee shall be protected in relying

 60
 

 

upon any such request, demand, authorization, direction, notice,
consent or waiver, only Notes that the Trustee knows to be so owned shall be so
disregarded.  Notes so owned that have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee’s right so to act
with respect to such Notes and that the pledgee is not the Issuer, the
Collateral Manager or any other obligor upon the Notes or any Affiliate of the
Issuer, the Collateral Manager or such other obligor.

“Par Value Ratio”:  Each
of the Class A/B Par Value Ratio, the Class C/D/E Par Value Ratio and the Class
F/G/H Par Value Ratio.

“Par Value Test”:  Each of
the Class A/B Par Value Test, the Class C/D/E Par Value Test and the Class
F/G/H Par Value Test.

“Partially Deferred Loan”: A Loan which by its
terms provides for the payment of interest in two components, one of which is
payable currently on each due date under the Loan and the other of which is
either deferred or capitalized until maturity.

“Participating
Institution”:  An
entity that creates a Participation.

“Participation”:  One or more participation interests in a
mortgage loan secured by a mortgage on a commercial real estate property that
is subordinate to other interests in such loan and which may be further
participated into sub-participations.

“Paying
Agent”:  Any Person
authorized by the Issuer and the Co-Issuer to pay the principal of or interest
on any Notes on behalf of the Issuer and the Co-Issuer as specified in Section
7.2 hereof.

“Payment
Account”:  The payment
account of the Trustee in respect of the Notes established pursuant to Section
10.3 hereof.

“Payment
Date”:  With respect to
each Class of Notes, October 25, 2006, and thereafter quarterly on each January
25th,
April 25th, July 25th and October 25th (or if such day is not a Business Day, the
next succeeding Business Day) to and including the Stated Maturity related to
such Class unless redeemed or repaid prior thereto.

“Permitted Investment”:  An Eligible Investment and any other security
rated at least “A-” by S&P and “A3” by Moody’s.

“Permitted Transfer”: A transfer, in whole but
not in part, to a party that meets the following requirements:

(A)           the
transferee is a recognized dealer in interest rate swaps organized under the
laws of the United States of America or a jurisdiction located in the United
States of America (or another jurisdiction reasonably acceptable to the Issuer
and the Trustee under this Indenture) that, at the time of the transfer,
maintains (or its proposed guarantor maintains) the Hedge Counterparty Required
Rating from each Rating Agency on its unsecured and unsubordinated debt,
deposit or letter of credit obligations;

 61
 

 

(B)           each
Rating Agency confirms in writing that such transfer will not result in a
reduction or withdrawal of its then current rating of any outstanding Class of
Notes under the Indenture with respect to which it has previously issued a
rating;

(C)           neither
an event of default with respect to the transferee nor a termination event
would exist immediately after the transfer;

(D)          the
transferee executes and delivers a written agreement reasonably satisfactory to
the Issuer and the Trustee under the Indenture in which the transferee, among
other things, legally and effectively accepts all the rights and assumes all
the obligations under the related swap documents;

(E)           as
of the time of the transfer, such transfer would not cause the related swap
documents to become subject to withholding tax; and

(F)           such
transfer otherwise complies with the terms of the Indenture.

If (i) a Hedge Counterparty (or any Hedge Counterparty
Credit Support Provider) fails to have the Hedge Counterparty Collateral
Threshold Rating and either Hedge Counterparty Credit Support or another
acceptable form of credit enhancement is not provided or the related Hedge
Agreement is not replaced as provided in the preceding paragraphs, or (ii) the
Hedge Counterparty (or any Hedge Counterparty Credit Support Provider) fails to
have the Hedge Counterparty Required Rating and the related Hedge Agreement is
not replaced as provided in the preceding paragraphs, the then current ratings
on the Notes may be reduced.  Moreover,
if a Hedge Agreement terminates and the Issuer is unable to obtain a substitute
Hedge Agreement as aforesaid, interest due on the Notes will be payable solely
from amounts received on the Collateral Debt Securities without the benefits of
such Hedge Agreement (although any payment received by the Issuer upon
termination of the related Hedge Agreement and not so applied to obtain a
substitute Hedge Agreement or to pay a prior Hedge Counterparty amounts due and
payable in connection with the termination of such prior Hedge Agreement will
constitute Principal Proceeds).

“Person”:  An individual, corporation (including a
business trust), partnership, limited liability company, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
unincorporated association or government or any agency or political subdivision
thereof.

“Plan
Assets”:  The meaning
specified in Section 2.5(g)(vi) hereof.

“Pledged
Collateral Debt Security”: 
On any date of determination, any Collateral Debt Security that has been
Granted to the Trustee and not been released from the lien of this Indenture
pursuant to Section 10.13 hereof.

“Pledged
Obligations”:  On any
date of determination, any Pledged Collateral Debt Securities and the Eligible
Investments that have been Granted to the Trustee for the benefit of the
Noteholders and each Hedge Counterparty and which form part of the Assets.

 62
 

 

“Preferred Equity Security”: 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.

“Preferred Shareholder”:  A registered owner of Preferred Shares as set
forth in the share register maintained by the Share Registrar.

“Preferred Shares”:  The preferred shares issued by the Issuer
concurrently with the issuance of the Notes.

“Preferred Shares Distribution Account”:  A segregated account established and
designated as such by the Preferred Shares Paying Agent pursuant to the
Preferred Shares Paying Agency Agreement.

“Preferred Shares Distribution Amount”:  Any remaining Interest Proceeds and Principal
Proceeds, if any, to be released from the lien of this Indenture and paid (upon
standing order of the Issuer) to the Preferred Shares Paying Agent for deposit
into the Preferred Shares Distribution Account for distribution to the holders
of the Preferred Shares after payment by the Trustee of all distributions which
take priority pursuant to Section 11.1(a).

“Preferred Shares Paying Agency Agreement”:  The Preferred Shares Paying Agency Agreement,
dated as of the Closing Date, between the Issuer and the Preferred Shares
Paying Agent relating to the Preferred Shares, as amended from time to time in accordance
with the terms thereof.

“Preferred Shares Paying Agent”:  The Bank, solely in its capacity as Preferred
Shares Paying Agent under the Preferred Shares Paying Agency Agreement and not
individually, unless a successor Person shall have become the Preferred Shares
Paying Agent pursuant to the applicable provisions of the Preferred Shares
Paying Agency Agreement, and thereafter Preferred Shares Paying Agent shall
mean such successor Person.

“Primary Servicer”:  Each servicer listed opposite the related
Collateral Debt Securities on Schedule Q hereto, as such schedule may be
amended from time to time.

“Principal
Balance” or “par”:  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:

(i)            the Principal Balance of a
Collateral Debt Security received upon acceptance of an Offer for another
Collateral Debt Security, which Offer expressly states that failure to accept
such Offer may result in a default under the Underlying Instruments, will be
deemed to be the Calculation Amount of such other Collateral Debt Security
until such time as Interest Proceeds and Principal

 63
 

 

Proceeds, as applicable, are received when due with
respect to such other Collateral Debt Security;

(ii)           the Principal Balance of any Eligible
Investment that does not pay Cash interest on a current basis will be the
accreted value thereof;

(iii)          the Principal Balance of any
Collateral Debt Security that permits the capitalization or deferral of any
interest payable thereon in accordance with the terms of its Underlying
Instruments will be deemed to exclude any deferred or capitalized interest;

(iv)          the Principal Balance of any Preferred
Equity Security will be equal to the component of the liquidation price thereof
that is attributable to the return of capital by its governing documents;

(v)           the Principal Balance of any Written
Down Security will exclude any portion of the principal balance of such
security that (x) has been written down as a result of a “realized loss,” “collateral
support deficit,” “additional trust fund expense” or other event that under the
terms of such security results in a write-down of principal balance (in each
case, which has not been written up subsequent thereto) or (y) would be
affected by an appraisal reduction;

(vi)          the Principal Balance of a Principal
Only Security will be the Aggregate Amortized Cost of such Principal Only
Security; and

(vii)         the Principal Balance of an Interest
Only Security will be deemed to be zero.

“Principal Collection
Account”:  The trust
account established pursuant to Section 10.2(a) hereof.

“Principal
Only Security”:  Any
Collateral Debt Security (other than a Step-Up Security) that does not provide
for payment of interest or provides that all payments of interest will be
deferred until the final maturity thereof.

“Principal
Proceeds”:  With
respect to any Payment Date, (a) the sum (without duplication) of (i) all
principal payments (including prepayments and Unscheduled Principal Payments)
received during the related Due Period (excluding those previously reinvested
or designated by the Collateral Manager for reinvestment in Collateral Debt
Securities) on (A) Eligible Investments (other than Eligible Investments
purchased with Interest Proceeds, Eligible Investments in the Unused Proceeds
Account designated as Interest Proceeds by the Collateral Manager with respect
to the Effective Date, Eligible Investments in the Delayed Funding Obligations
Account and Eligible Investments in the Expense Account and any amount
representing the accreted portion of a discount from the face amount of an
Eligible Investment) and (B) Collateral Debt Securities as a result of (1) a
maturity, scheduled amortization, mandatory prepayment or mandatory sinking
fund payment on a Collateral Debt Security, (2) optional redemptions,
prepayments, exchange offers or tender offers made at the option of the issuer
thereof, (3) recoveries on Defaulted Securities or (4) any other principal
payments with

 64
 

 

respect to Collateral Debt Securities (not included in
Sale Proceeds), (ii) all distributions on Preferred Equity Securities
attributable to the return of capital by their governing documents, (iii) all
fees and commissions received during such Due Period in connection with
Eligible Investments and the restructuring or default of such Eligible
Investments, (iv) any interest received during such Due Period on such
Collateral Debt Securities or Eligible Investments to the extent such interest
constitutes proceeds from accrued interest purchased with Principal Proceeds
other than accrued interest purchased by the Issuer on or prior to the
Effective Date and interest included in clause (a)(i) of the definition of
Interest Proceeds, (v) Sale Proceeds received during such Due Period in respect
of sales (excluding those previously reinvested or currently being reinvested
in Collateral Debt Securities in accordance with the Transaction Documents and
excluding accrued interest included in Sale Proceeds (unless such accrued
interest was purchased with Principal Proceeds) that are designated by the
Collateral Manager as Interest Proceeds in accordance with clause (a)(i) of the
definition of Interest Proceeds), (vi) all Cash payments of interest or
dividends received during such Due Period on Defaulted Securities, (vii) any
interest received during such Due Period on a Written Down Security to the
extent such interest constitutes accrued interest on the excess of the
principal amount of such Written Down Security over the Principal Balance of
such Written Down Security, (viii) any proceeds resulting from (A) the
termination (in whole or in part) of any Hedge Agreement during such Due Period
to the extent such proceeds are received from the related Hedge Counterparty to
such Hedge Agreement and, to the extent such proceeds exceed the cost of
entering into a replacement Hedge Agreement in accordance with the requirements
set forth in Section 16.1(a) hereof, (B)
payments received from a replacement Hedge Counterparty to the extent such
proceeds exceed the amount owed to a previous Hedge Counterparty in connection
with the termination of the related Hedge Agreement and (C) all amounts
transferred from each Hedge Termination Account pursuant to Section 16.1(g) hereof, (ix) during the Reinvestment Period,
the Special Amortization Amount, if any, (x) on the first Payment Date
following the Effective Date, if a Rating Confirmation Failure has not
occurred, funds in the Unused Proceeds Account to the extent the Collateral
Manager has not designated such amounts as Interest Proceeds pursuant to Section 10.4(c) hereof, (xi) funds transferred to the
Principal Collection Account from the Delayed Funding Obligations Account in
respect of amounts previously held on deposit in respect of unfunded
commitments for Delayed Draw Term Loans that have been sold or otherwise
disposed before such commitments thereunder have been drawn or as to which
excess funds remain, (xii) all amounts received during such Due Period in respect
of Defaulted Securities (other than any amounts included in the definition of “Interest
Proceeds” pursuant to item (ix) of the definition thereof), (xiii) any payments
received in respect of Interest Only Securities to the extent they were
purchased with Principal Proceeds, (xiv) any excess proceeds received in
respect of a Collateral Debt Security after required fixed payments are made on
other classes of securities senior to such Collateral Debt Security to the
extent such proceeds are designated as “Principal Proceeds” by the Collateral
Manager in its sole discretion and (xv) all other payments received in
connection with the Collateral Debt Securities and Eligible Investments that
are not included in Interest Proceeds; provided that
in no event will Principal Proceeds include any proceeds from the Excepted
Assets; minus (b)(i) the aggregate amount of any Nonrecoverable Advances that
were previously reimbursed to the Advancing Agent or the Trustee, in its
capacity as Backup Advancing Agent, and the aggregate amount of any
Nonrecoverable Cure Advances reimbursed to the Collateral Manager from
Principal Proceeds during the related Due Period and (ii) the aggregate amount
of any Hedge Payment Amounts that were previously paid to the applicable Hedge
Counterparty

 65
 

 

from Principal Proceeds during the related Due Period
as a result of the early termination of the related Liability Hedge from any
call, redemption and prepayment premiums in accordance with clause (e) of the
definition of Liability Hedge.

“Priority
of Payments”:  The
meaning specified in Section 11.1(a) hereof.

“Proceeding”:  Any suit in equity, action at law or other
judicial or administrative proceeding.

“Property
Type”:  Each of the
following types of property:

(i)            “Condo Conversion Properties”
means properties that have been, or are expected to be, converted to
condominium form of ownership for the purpose of redevelopment as, in whole or
in part, residential condominium apartments or time share units;

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

(iii)          “Healthcare Properties” means hospitals, clinics,
sports clubs, spas and other health care facilities and other similar real
property interests used in one or more similar businesses (but excluding
medical offices);

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

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

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

(vii)         “Mortgaged Properties” means
mortgages and real estate property interests provided, however,
when used in connection with a Mezzanine Loan, “Mortgaged Property” means the
real estate property interests securing the underlying mortgage loan or the collateral
for the Mezzanine Loan, as the situation dictates;

(viii)        “Multi-Family Properties” means multi-family
dwellings such as apartment blocks, condominiums and cooperative owned
buildings;

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

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

 66
 

 

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

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

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

(xiv)        “Land” means undeveloped real
estate intended to be developed into commercial, multi-family or condominium
property; and

(xv)         “Other Properties” means any property other than
Diversified Properties, Hospitality Properties, Industrial Properties, Multi-Family
Properties, Urban Office Properties, Suburban Office Properties, Retail
Properties, Self-Storage Properties, Healthcare Properties, Mixed Use
Properties, Mortgaged Properties and Warehouse Properties.

“Proposal”:  The meaning specified in Section 7.18(b)
hereof.

“Proposed
Portfolio”:  The
portfolio of Collateral Debt Securities and Eligible Investments resulting from
the disposition of a Collateral Debt Security or a proposed reinvestment of
Principal Proceeds in a Substitute Collateral Debt Security, as the case may
be.

“Pro Rata Principal Coverage Ratio”:  As of any Determination Date, the ratio
(expressed as a percentage) based on the ratio of (x) to (y), where (x) is the
Net Outstanding Portfolio Balance as of such Determination Date and (y) is the
sum of the Aggregate Outstanding Amount of the Class A Notes and Class B Notes
as of such Determination Date.

“Pro Rata Principal Coverage Test”: Such test
will be met as of any Determination Date if the Pro Rata Principal Coverage
Ratio as of such Determination Date is greater than or equal to 119.75%.

“Pro Rata Special Amortization Modification”:  The meaning specified in Section 12.5
hereof.

“PTCE”:  The meaning specified in Section
2.5(g)(vi) hereof.

“Purchase
Agreement”:  The
purchase agreement relating to the Notes dated on or about the Closing Date by
and among the Issuer, the Co-Issuer and the Dealers.

“Purchase Option Purchase Price”:  The meaning specified in Section 16.4 hereof.

“Purchase Price”: The purchase price identified
for each Collateral Debt Security against its name in Schedule E.

 67
 

 

“QIB”:  A “qualified institutional buyer” as defined
in Rule 144A.

“QRS II
Corp.”:  Gramercy
Investment QRS II Corp., a wholly owned subsidiary of Gramercy Investment.

“Qualified Letter of Credit”: 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 “A-” by S&P, and
otherwise meeting S&P’s published criteria found in Section 1 of S&P’s “publication
entitled “U.S. CMBS Legal and Structured Finance Criteria,” dated as of May 1,
2003, and at least “A” by Moody’s.

“Qualified
Purchaser”:  A “qualified
purchaser” within the meaning of Section 2(a)(51) of the Investment Company
Act.

“Rake Bond”: 
A loan-specific commercial mortgage pass-through certificate or similar
security backed by only one of the mortgage loans included in a pooled
securitization transaction, typically representing a non-pooled component of
the related mortgage loan that is subordinate to the pooled component with
respect to the right to receive distributions of collections on such mortgage
loan.

“Ramp-Up Period”:  The period commencing on the Closing Date and
ending on the Effective Date.

“Rating
Agency”:  Each of
S&P and Moody’s and any successor thereto, or, with respect to Pledged
Obligations generally, if at any time S&P or Moody’s or any such successor
ceases to provide rating services with respect to the Notes or certificates
similar to the Notes, any other nationally recognized investment rating agency
selected by the Issuer and reasonably satisfactory to each Hedge Counterparty
and a Majority of the Notes voting as a single Class.

“Rating
Agency Condition”: 
With respect to any proposed action or matter, the receipt by the
Trustee of confirmation in writing from the applicable Rating Agencies that the
then current ratings on the Notes, as applicable, shall not be reduced,
qualified or withdrawn as a result of such action or matter.

“Rating Confirmation Failure”:  The meaning specified in Section 7.18(b)
hereof.

“Record
Date”:  The date on
which the Holders of Notes entitled to receive a payment in respect of
principal or interest on the succeeding Payment Date is determined, such date
as to any Payment Date being the 15th day (whether or not a Business Day) prior
to the applicable Payment Date.

“Redemption
Date”:  Any Payment
Date specified for a redemption of the Securities pursuant to Section 9.1
or 9.2 hereof.

“Redemption
Date Statement”:  The
meaning specified in Section 10.12(i) hereof.

 68
 

 

“Redemption
Price”: The Redemption Price of each Class of Notes and the
Preferred Shares will be calculated as follows:

Class A-1 Notes.  The redemption price of the Class A-1 Notes
will be calculated on the related Determination Date and will be equal to the
Aggregate Outstanding Amount of the Class A-1 Notes to be redeemed, together
with the Class A-1 Interest Distribution Amount (plus any Class A-1 Defaulted
Interest Amount) due on that day of redemption;

Class A-2 Notes.  The redemption price of the Class A-2 Notes
will be calculated on the related Determination Date and will be equal to the
Aggregate Outstanding Amount of the Class A-2 Notes to be redeemed, together
with the Class A-2 Interest Distribution Amount (plus any Class A-2 Defaulted
Interest Amount) due on that day of redemption;

Class B Notes.  The redemption price of the Class B Notes
will be calculated on the related Determination Date and will be equal to the
Aggregate Outstanding Amount of the Class B Notes to be redeemed, together with
the Class B Interest Distribution Amount (plus any Class B Defaulted Interest
Amount) due on that day of redemption;

Class C Notes.  The redemption price of the Class C Notes
will be calculated on the related Determination Date and will be equal to the
Aggregate Outstanding Amount of the Class C Notes to be redeemed, together with
the Class C Interest Distribution Amount (plus any Class C Capitalized Interest
and any Class C Defaulted Interest Amount) due on that day of redemption;

Class D Notes.  The redemption price of the Class D Notes
will be calculated on the related Determination Date and will be equal to the
Aggregate Outstanding Amount of the Class D Notes to be redeemed, together with
the Class D Interest Distribution Amount (plus any Class D Capitalized Interest
and any Class D Defaulted Interest Amount) due on that day of redemption;

Class E Notes.  The redemption price of the Class E Notes
will be calculated on the related Determination Date and will be equal to the
Aggregate Outstanding Amount of the Class E Notes to be redeemed, together with
the Class E Interest Distribution Amount (plus any Class E Capitalized Interest
and any Class E Defaulted Interest Amount) due on that day of redemption;

Class F Notes.  The redemption price of the Class F Notes
will be calculated on the related Determination Date and will be equal to the
Aggregate Outstanding Amount of the Class F Notes to be redeemed, together with
the Class F Interest Distribution Amount (plus any Class F Capitalized Interest
and any Class F Defaulted Interest Amount) due on that day of redemption;

Class G Notes.  The redemption price of the Class G Notes
will be calculated on the related Determination Date and will be equal to the
Aggregate Outstanding Amount of the Class G Notes to be redeemed, together with
the Class G Interest Distribution Amount (plus any Class G Capitalized Interest
and any Class G Defaulted Interest Amount) due on that day of redemption;

 69
 

 

Class H Notes.  The redemption price of the Class H Notes
will be calculated on the related Determination Date and will be equal to the
Aggregate Outstanding Amount of the Class H Notes to be redeemed, together with
the Class H Interest Distribution Amount (plus any Class H Capitalized Interest
and any Class H Defaulted Interest Amount) due on that day of redemption;

Class J Notes.  The redemption price of the Class J Notes
will be calculated on the related Determination Date and will be equal to the
Aggregate Outstanding Amount of the Class J Notes to be redeemed, together with
the Class J Interest Distribution Amount (plus any Class J Capitalized Interest
and any Class J Defaulted Interest Amount) due on that day of redemption;

Class K Notes.  The redemption price of the Class K Notes
will be calculated on the related Determination Date and will be equal to the
Aggregate Outstanding Amount of the Class K Notes to be redeemed, together with
the Class K Interest Distribution Amount (plus any Class K Capitalized Interest
and any Class K Defaulted Interest Amount) due on that day of redemption;

Preferred Shares.  The redemption price for the Preferred Shares
will be calculated on the related Determination Date and will be equal to the
sum of all net proceeds and Cash, if any, remaining after redemption of the
Notes and payments of all amounts and expenses described under subclauses (1)
through (5), (31), (32), and (33) of Section 11.1(a)(i) of Section
11.1(a)(i); provided that if there
are no such net proceeds or Cash remaining, the redemption price for the
Preferred Shares shall be equal to $0.

“Reference
Banks”:  The meaning
set forth in Schedule F attached hereto.

“Registered”:  With respect to any debt obligation, a debt
obligation that is issued after July 18, 1984, and that is in registered form
for purposes of the Code.

“Registered Security”:  The meaning specified in Section
3.3(a)(iii) hereof.

“Regulation
S”:  Regulation S under
the Securities Act.

“Regulation
S Global Security”: 
The meaning specified in Section 2.2(b)(ii) hereof.

“Reimbursement
Interest”:  Interest
accrued on the amount of any Interest Advance made by the Advancing Agent or
the Trustee, for so long as it is outstanding, at the Reimbursement Rate.

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

“Reinvestment Asset Information”: The meaning
specified in Section 12.2(b) hereof

 70
 

 

“Reinvestment Criteria”:  The meaning specified in Section 12.2(a)
hereof.

“Reinvestment Income”:  Any interest or other earnings on the Initial
Deposit or funds in the Unused Proceeds Account that have not been designated
as Interest Proceeds by the Collateral Manager with respect to the Effective
Date.

“Reinvestment
Period”:  The period
beginning on the Closing Date and ending on and including the first to occur of
the following events or dates:  (i) the
end of the Due Period related to the Payment Date in July 2011; (ii) the end of
the Due Period related to the Payment Date immediately following the date on
which the Collateral Manager (with the written consent of Holders of the
Majority of the Preferred Shares) notifies the Trustee that, in light of the
composition of Collateral Debt Securities, general market conditions and other
factors, investments in additional Collateral Debt Securities within the
foreseeable future would be either impractical or not beneficial to the Issuer
and the holders of the Preferred Shares; (iii) the end of the Due Period
related to the date on which all of the Securities are redeemed as described
herein under Section 9.1 and (iv) the date on which the principal of and
accrued and unpaid interest on the Notes are declared immediately due and
payable pursuant to Section 5.2 hereof following the occurrence of an
Event of Default.

“REIT Debt Securities”: 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—Retail and REIT Debt
Securities—Storage.

“REIT Debt Securities—Diversified”:  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 on a portfolio of diverse real
property interests; provided that (a) any Collateral Debt Security
falling within this definition will be excluded from the definition of each
other Specified Type of Collateral Debt Security and (b) 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”:  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 on hospitals, clinics, sport clubs,
spas and other health care facilities and other similar real property interests
used in one or more similar businesses; provided that any Collateral
Debt Security falling within this definition will be excluded from the
definition of each other Specified Type of Collateral Debt Security.

“REIT Debt Securities—Hotel”:  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 on hotels, motels, youth hostels, bed
and breakfasts and other similar real property interests used in one or more
similar

 71
 

 

businesses; provided that
any Collateral Debt Security falling within this definition will be excluded
from the definition of each other Specified Type of Collateral Debt Security.

“REIT Debt Securities—Industrial”:  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 on factories, refinery plants,
breweries and other similar real property interests used in one or more similar
businesses; provided that any Collateral Debt Security falling within
this definition will be excluded from the definition of each other Specified
Type of Collateral Debt Security.

“REIT Debt Securities—Mortgage”:  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); provided that any Collateral Debt Security falling within
this definition will be excluded from the definition of each other Specified
Type of Collateral Debt Security.

“REIT Debt Securities—Multi Family”:  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 on multi family dwellings
such as apartment blocks, condominiums and co operative owned buildings; provided
that any Collateral Debt Security falling within this definition will be
excluded from the definition of each other Specified Type of Collateral Debt
Security.

“REIT Debt Securities—Office”:  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 on office buildings, conference
facilities and other similar real property interests used in the commercial
real estate business; provided that any Collateral Debt Security falling
within this definition will be excluded from the definition of each other
Specified Type of Collateral Debt Security.

“REIT Debt Securities—Retail”:  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 on retail stores, restaurants,
bookstores, clothing stores and other similar real property interests used in
one or more similar businesses; provided that any Collateral Debt
Security falling within this definition will be excluded from the definition of
each other Specified Type of Collateral Debt Security.

“REIT Debt Securities—Storage”:  Collateral Debt Securities issued by a real
estate investment trust (as defined in Section 856 of the Code or any successor
provision) whose

 72
 

 

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 storage facilities and other similar real
property interests used in one or more similar businesses; provided
that any Collateral Debt Security falling within this definition will be
excluded from the definition of each other Specified Type of Collateral Debt
Security.

“Related Future Advance Loan”: Any Loan
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 another Loan to the
same borrower that was made by the maker of the Issuer’s Loan (the “Other
Loan”) if with respect to the Other Loan both (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, and (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 borrower under the
Other Loan, upon the terms and conditions of the underlying loan documents for
the Other Loan.

“Repurchase Price”: The meaning specified in Section
16.5(c) hereof.

“Required Future Funding Reserve Amount”:  (i) On any date prior to April 25, 2007,
$20,000,000, and (ii) on any date thereafter, the greater of (x) $20,000,000
and (y) an amount equal to the highest scheduled future funding amount for any
quarter included in a four quarter period beginning on the most recent
Quarterly Measurement Date; provided that, on any day on which the
aggregate amount of all future funding commitments related to Other Loans is
less than $20,000,000, the “Required Future Funding Reserve Amount” shall be
equal to such lesser amount.

“Rule
144A”:  Rule 144A under
the Securities Act.

“Rule
144A Global Security”: 
The meaning specified in Section 2.2(b)(i) hereof.

“Rule
144A Information”:  The
meaning specified in Section 7.13 hereof.

“S&P”:  Standard & Poor’s Ratings Services, a
division of The McGraw-Hill Companies, Inc., and its successors in interest.

“S&P
CDO Monitor”:  A
dynamic, analytical computer model provided prior to the initial Payment Date
by S&P to the Collateral Manager and the Trustee, with written instructions
and assumptions to be applied when running such computer model, for the purpose
of estimating the default risk of a pool of Collateral Debt Securities.

“S&P CDO Monitor Test”:  A test that will be satisfied on any
Measurement Date if, after giving effect to any purchase or sale of a
Collateral Debt Security (or both), as the case may be, (i) the Class A-1
Loss Differential, the Class A-2 Loss Differential, the Class B Loss
Differential, the Class C Loss Differential, the Class D Loss Differential, the
Class E Loss Differential, the Class F Loss Differential, the Class G Loss
Differential, the Class H Loss Differential, the Class J Loss Differential or
the Class K Loss Differential, as the case may be, of

 73
 

 

the Proposed Portfolio is equal to or greater than
zero or (ii) the Class A-1 Loss Differential, the Class A-2 Loss
Differential, the Class B Loss Differential, the Class C Loss Differential, the
Class D Loss Differential, the Class E Loss Differential, the Class F Loss
Differential, the Class G Loss Differential, the Class H Loss Differential, the
Class J Loss Differential or the Class K Loss Differential, as the case may be,
of the Proposed Portfolio is greater than or equal to the Class A-1 Loss
Differential, the Class A-2 Loss Differential, the Class B Loss Differential,
the Class C Loss Differential, the Class D Loss Differential, the Class E Loss
Differential, the Class F Loss Differential, the Class G Loss Differential, the
Class H Loss Differential, the Class J Loss Differential or the Class K Loss
Differential, as the case may be, of the Current Portfolio, as such test may be
updated by S&P in its discretion.

“S&P Post-Acquisition Compliance Test”:  A test that will be satisfied if the S&P
CDO Monitor Test is satisfied.

“S&P Post-Acquisition Failure”: The meaning
specified in Section 12.2(c) hereof.

“S&P
Rating”:  Of any
Collateral Debt Security will be 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 the appropriate consents for the use of such private
rating), the S&P Rating shall be the rating assigned thereto by S&P
(or, in the case of a REIT Debt Security, the issuer credit rating assigned by
S&P); provided that,
notwithstanding the foregoing, if any Collateral Debt Security shall, at the
time of its purchase by the Issuer, be listed for a possible upgrade or
downgrade on S&P’s then current credit rating watch list, then the S&P
Rating of such Collateral 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 actual rating by S&P;

(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 of a type listed on Schedule C
hereto or is not eligible for notching in accordance with Schedule D
hereto, such Collateral Debt Security shall have an S&P Rating of “CCC-”,
otherwise such S&P Rating shall be the rating assigned according to Schedule
D hereto until such time as S&P shall have assigned a rating
thereto;

(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 C hereto, as
identified by the Collateral Manager, the S&P Rating shall be the rating
assigned according to Schedule D hereto; provided that 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

 74
 

 

be one subcategory above or below, respectively, the
rating then assigned to such Collateral Debt Security in accordance with Schedule
D hereto; provided, further, that the Aggregate
Principal Balance that may be given a rating based on this paragraph (c) may
not exceed 20% of the Aggregate Collateral Balance; or

(iv)          notwithstanding anything to the
contrary contained in clauses (ii) and (iii) above, the Collateral Manager may
apply for an estimated rating from S&P within ten (10) Business Days after
the date on which the Issuer purchases a Collateral Debt Security and use its
estimated rating of such Collateral Debt Security until S&P assigns a
rating to such security; provided that the aggregate Principal Balance of
Collateral Debt Securities that may be given a rating based on this paragraph
(iv) may not exceed 20% of the Aggregate Collateral Balance.

“S&P
Recovery Rate”:  With
respect to any Collateral Debt Security on any Measurement Date, an amount
equal to the percentage for such Collateral Debt Security set forth in Schedule
B (the Standard & Poor’s Recovery Matrix) hereto (or, in the case
of a Defaulted Security under Clause A of Schedule B (the
Standard & Poor’s Recovery Matrix) hereto, corresponding to the S&P
Rating at the time of issuance of such Collateral Debt Security).

“S&P Recovery Test”:  A test that will be satisfied on any
Measurement Date, if the S&P Weighted Average Recovery Rate as of such
Measurement Date is equal to or greater than (a) 42.5%, with respect to the
Class A Notes, (b) 42.5%, with respect to the Class B Notes, (c) 42.5%, with
respect to the Class C Notes, (d) 42.5%, with respect to the Class D Notes, (e)
42.5%, with respect to the Class E Notes, (f) 42.5%, with respect to the Class
F Notes (g) 42.5%, with respect to the Class G Notes, (h) 42.5%, with respect
to the Class H Notes, (i) 42.5%, with respect to the Class J Notes and (j)
42.5%, with respect to the Class K Notes.

“S&P
Special Amortization Pro Rata Condition”: A condition that
will be satisfied with respect to any Payment Date if (a) the aggregate
principal balance of the Collateral Debt Securities as of the related
Determination Date is greater than an amount equal to 50% of the aggregate
principal balance of the Collateral Debt Securities on the Effective Date and
(b)(1) the Pro Rata Principal Coverage Test has been satisfied on the related
and each prior Determination Date, or (2) if the Pro Rata Principal Coverage
Test has failed to be satisfied on any previous Determination Date, subsequent
to such failure, (x) the Pro Rata Principal Coverage Ratio as of the related
Determination 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 Determination Date without applying Principal
Proceeds on any previous Payment Date; provided that, if any Class of
Notes rated investment grade by S&P as of the Closing Date is downgraded by
two or more subcategories after the Closing Date, such condition shall not be
satisfied until such time as the S&P rating of such Class of Notes is
restored to a rating equal to or higher than the rating of such Class of Notes
on the Closing Date.

“S&P Weighted Average Recovery Rate”:  With respect to the Collateral Debt
Securities, as of any Measurement Date, the number obtained by summing the
products obtained by multiplying the Principal Balance of each Collateral Debt
Security, other than a Defaulted Security, by its S&P Recovery Rate, and
dividing such sum by the Aggregate Principal Balance of all such Collateral
Debt Securities and rounding up to the first decimal place.

 75

 

 “Sale”:  The meaning specified in Section 5.17(a)
hereof.

“Sale
Proceeds”:  All
proceeds (including accrued interest) received with respect to Collateral Debt
Securities and Eligible Investments as a result of sales of such Collateral
Debt Securities and Eligible Investments, in accordance with this Indenture,
net of any reasonable out-of-pocket expenses of the Collateral Manager or the
Trustee in connection with any such sale.

“Schedule
of Closing Date Collateral Debt Securities”:  The Collateral Debt Securities listed on Schedule
E attached hereto, which Schedule shall include the Principal Balance,
interest rate (if the security bears interest at a fixed rate) or the spread
and the relevant floating reference rate (if the security bears interest at a
floating rate), the maturity date, the S&P Rating and Moody’s Rating, if
any, of each such Collateral Debt Security.

“Scheduled
Distribution”:  With
respect to any Pledged Obligation, for each Due Date, the scheduled payment of
principal, interest or fee or any dividend or premium payment due on such Due
Date or any other distribution with respect to such Pledged Obligation,
determined in accordance with the assumptions specified in Section 1.2
hereof.

“Secured Parties”:  Collectively, the Trustee, the Noteholders,
each Hedge Counterparty (for so long as it is a party under its Hedge
Agreement) and the Collateral Manager, each as their interests appear in
applicable Transaction Documents.

“Securities”: 
Collectively, the Notes and the Preferred Shares.

“Securities Account”:  The meaning specified in Section 8-501(a) of
the UCC.

“Securities Accounts Control Agreement”:  The meaning specified in Section 3.3(a)
hereof.

“Securities
Act”:  The Securities
Act of 1933, as amended.

“Securities
Intermediary”:  The
meaning specified in Section 8-102(a)(14) of the UCC.

“Security
Entitlement”:  The
meaning specified in Section 8-102(a)(17) of the UCC.

“Seller”:  The meaning specified in the applicable
Collateral Debt Securities Purchase Agreement.

“Senior
Collateral Management Fee”: 
The fee payable quarterly in arrears on each Payment Date to the
Collateral Manager pursuant to this Indenture and the Collateral Management
Agreement, equal to 0.15% per annum of
the Net Outstanding Portfolio Balance for such Payment Date, to the extent
funds are available for such purpose in accordance with the Priority of
Payments.

 76
 

 

“Senior
Notes”:  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 and the Class H Notes.

“Senior
Tranche”:  (i) With
respect to a Participation or B Note, any senior interest in the same
Underlying Term Loan as a Participation or any senior debt secured by the same
Underlying Mortgaged Property as a B Note or Participation and (ii) with
respect to a Mezzanine Loan, any commercial mortgage loan related to the same
Underlying Mortgaged Property or Properties as the Mezzanine Loan.

“Servicing Agreement”:  Each of the CDO Servicing Agreement, the
Asset Servicing Agreement and any other servicing agreement entered into by the
Issuer, the Collateral Manager and any other servicer.

“Servicing Fee”:  With respect to each Due Period, the sum of
(i) the aggregate amount of all servicing and other fees payable to the Primary
Servicers or any other Persons under the related primary servicing agreements
during such Due Period, including servicing fees payable to Capmark Finance
Inc. pursuant to the CDO Servicing Agreement, (ii) the Green Loan
Administrative Fee and (iii) the aggregate amount of all special servicing fees
in respect of serviced loans payable to (x) Green Loan under the Asset
Servicing Agreement and (y) any other special servicer pursuant to the related
special servicing agreement between the Issuer and such special servicer, in
each case during such Due Period.

“Schedule P Failure”:  The meaning specified in Section 7.19(b)
hereof.

“Schedule P Failure Amount”:  The meaning specified in Section 7.19(b)
hereof.

“Share Registrar”:  Maples Finance Limited, unless a successor Person
shall have become the Share Registrar pursuant to the applicable provisions of
the Preferred Shares Paying Agency Agreement, and thereafter “Share Registrar”
shall mean such successor Person.

“Similar
Law”:  The meaning
specified in Section 2.5(g)(vi) hereof.

“Single Asset Mortgage Security”:  A commercial mortgage pass-through
certificate or similar security backed primarily by a single mortgage loan on
one or more commercial properties included in a property-specific
securitization transaction.

“Single Borrower Mortgage Security”:  A commercial mortgage pass-through
certificate or similar security backed primarily by one or more mortgage loans
to the same borrower (or affiliated borrowers) on one or more commercial
properties included in a securitization.

“SLG”: 
SL Green Operating Partnership L.P.

“Special
Amortization”:  The
meaning specified in Section 9.7 hereof.

“Special
Amortization Amount”: 
The meaning specified in Section 9.7 hereof.

 77
 

 

“Specified
Person”:  The meaning
specified in Section 2.6(a) hereof.

“Specified
Type”:  Each of a Loan,
CMBS Security, CRE CDO Security, REIT Debt Security and Preferred Equity
Security.

“Spread Appreciated Security”:  Any Collateral Debt Security that (a) in the
Collateral Manager’s judgment, has significantly improved in credit quality or
value since it was acquired by the Issuer, or (b) has been upgraded or put on a
watch list for possible upgrade by one or more rating subcategories by one or
more Rating Agencies since it was acquired by the Issuer.

“Spread
Excess”:  As of any
Measurement Date, a fraction (expressed as a percentage), the numerator of
which is equal to the product of (a) the greater of zero and the excess, if
any, of the Weighted Average Spread for such Measurement Date over 2.2% and (b)
the Aggregate Principal Balance of all Collateral Debt Securities that are
Floating Rate Securities (excluding all Defaulted Securities and Written Down
Securities) and the denominator of which is the Aggregate Principal Balance of
all Collateral Debt Securities that are Fixed Rate Securities (excluding all
Defaulted Securities and Written Down Securities), multiplying the resulting
figure by 365 and then dividing by 360.

“Stated
Maturity”:  The Payment
Date occurring in July 2041.

“Step-Down
Bond”:  A security which
by the terms of the related Underlying Instruments provides for a decrease, in
the case of a Fixed Rate Security, in the per annum
interest rate on such security or, in the case of a Floating Rate Security, in
the spread over the applicable index or benchmark rate, solely as a function of
the passage of time; provided that the term
Step-Down Bond shall not include any such security providing for payment of a
constant rate of interest at all times after the date of acquisition by the
Issuer or any Loan.

“Step-Up
Security”:  A security
with a current interest rate of zero percent per annum
at the time of purchase but which increases to predetermined levels on specific
dates; provided that the term Step-Up Security shall not include any
Loan.

“Subordinate
Collateral Management Fee”: 
The fee payable quarterly in arrears on each Payment Date to the
Collateral Manager pursuant to this Indenture and the Collateral Management
Agreement, in an amount equal to 0.25% per annum of
the Net Outstanding Portfolio Balance to the extent funds are available for
such purpose in accordance with the Priority of Payments.

“Subordinate
Interests”:  The Class
A-2 Subordinate Interests, the Class B Subordinate Interests, the Class C
Subordinate Interests, the Class D Subordinate Interests, the Class E
Subordinate Interests, the Class F Subordinate Interests, the Class G
Subordinate Interests, the Class H Subordinate Interests, the Class J
Subordinate Interests and/or the Class K Subordinate Interests, as the context
may require.

“Subordinate Whole Loan”:  The SunCal Loan and any whole loan secured by
a second-lien mortgage on commercial real estate property or a senior interest
therein.

 78
 

 

“Subsequent
Collateral Debt Security”: 
Any Collateral Debt Security that is acquired after the Closing Date.

“Substitute
Collateral Debt Security”: 
A Collateral Debt Security that is acquired by the Issuer in
substitution for securities previously pledged to the Trustee in accordance
herewith.

“Successful
Auction”:  (i) An
Auction which is conducted in accordance with Section 9.2(b) or (ii) the
purchase of Collateral Debt Securities by the Collateral Manager or its
Affiliates for a price equal to the Total Redemption Price pursuant to Section
12.4(c).

“SunCal Loan”: 
The Initial Collateral Debt Security known as the SunCal Loan.

“Suspense Account”:  The account established pursuant to Section
10.8 hereof.

“Tax
Event”: Means (i) any obligor is, or on the next scheduled
payment date under any Collateral Debt Security, will be, required to deduct or
withhold from any payment under any Collateral Debt Security to the Issuer for
or on account of any tax for whatever reason and such obligor 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 a 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 the
Hedge Counterparty, (iv) a Hedge Counterparty is required to deduct or withhold
from any payment under a 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 or (v)
the Issuer fails to maintain its status as a qualified REIT subsidiary (within
the meaning of Section 856(i)(2) of the Code).

“Tax
Materiality Condition”: 
The condition that will be satisfied if either (i) as a result of the
occurrence of a Tax Event, a tax or taxes are imposed on the Issuer or withheld
from payments to the Issuer and with respect to which the Issuer receives less
than the full amount that the Issuer would have received had no such deduction
occurred, and such amount exceeds, in the aggregate, U.S. $1 million during any
12-month period or (ii) the Issuer fails to maintain its status as a qualified
REIT subsidiary (within the meaning of Section 856(i)(2) of the Code).

“Tax
Opinion”:  A written
opinion addressed to the Issuer, in form and substance reasonably satisfactory
to the Issuer, of Cadwalader, Wickersham & Taft LLP or another nationally
recognized U.S. tax counsel, admitted to practice (or a law firm with one or
more partners admitted to practice) before the highest court of any state of
the United States or the District of Columbia and experienced in such matters
for which such Tax Opinion is sought.

“Tax
Redemption”:  The
meaning specified in Section 9.1(b) hereof.

 79
 

 

“Total
Redemption Price”:  The
amount equal to funds sufficient to pay all amounts and expenses described
under clauses (1) through (5), (31), (32) and (33) of Section 11.1(a)(i)
and to redeem all Notes at their applicable Redemption Prices.

“Transaction
Documents”:  This
Indenture, the Collateral Management Agreement, the Collateral Debt Securities
Purchase Agreements, the Servicing Agreements, the Company Administration
Agreement, the Preferred Shares Paying Agency Agreement and each Hedge
Agreement.

“Transfer
Agent”:  The Person or
Persons, which may be the Issuer, authorized by the Issuer to exchange or
register the transfer of Notes.

“Treasury
Regulations”: 
Temporary or final regulations promulgated under the Code by the United
States Treasury Department.

“Trust
Officer”:  When used
with respect to the Trustee, any officer within the CDO Trust Services Group of
the Corporate Trust Office (or any successor group of the Trustee) including
any vice president, assistant vice president or officer of the Trustee
customarily performing functions similar to those performed by the persons who
at the time shall be such officers, respectively, or to whom any corporate
trust matter is referred at the CDO Trust Services Group of the Corporate Trust
Office because of his knowledge of and familiarity with the particular subject.

“Trustee”:  Wells Fargo Bank, National Association, a
national banking association, solely in its capacity as trustee hereunder,
unless a successor Person shall have become the Trustee pursuant to the
applicable provisions of this Indenture, and thereafter “Trustee” shall mean
such successor Person.

“UCC”:  The applicable Uniform Commercial Code.

“UCC Account”: 
“Account,” as such term is
defined in Section 9-102(a)(2) of the UCC.

“Uncertificated
Security”:  The meaning
specified in Section 3.3(a)(ii) hereof.

“Underlying
Instruments”:  The
indenture, loan agreement, note, mortgage, intercreditor agreement, pooling and
servicing agreement, participation agreement or other agreement pursuant to
which a Collateral Debt Security or Eligible Investment has been issued or
created and each other agreement that governs the terms of or secures the
obligations represented by such Collateral Debt Security or Eligible Investment
or of which holders of such Collateral Debt Security or Eligible Investment are
the beneficiaries.

“Underlying
Mortgaged Property”: 
With respect to (i) a Loan (other than a Participation or Mezzanine
Loan), the commercial mortgage property or properties securing the Loan, (ii) a
Participation, the commercial mortgage property or properties securing the
Underlying Term Loan, or (iii) a Mezzanine Loan, the commercial mortgage
property or properties related to the Mezzanine Loan.

 80
 

 

“Underlying
Term Loan”:  With
respect to (i) a Loan (other than Participation or Mezzanine Loan), such Loan
or (ii) a Participation, the underlying commercial mortgage loan.

“United
States” and “U.S.”: The United States of America,
including any state and any territory or possession administered thereby.

“Unregistered
Securities”:  The
meaning specified in Section 5.17(c) hereof.

“Unscheduled
Principal Payments”: 
Any proceeds received by the Issuer from an unscheduled prepayment or
redemption (in whole but not in part) by or on behalf of the obligor of a
Collateral Debt Security prior to the stated maturity date of such Collateral
Debt Security.

“Unused Proceeds Account”:  The trust account established pursuant to Section
10.4(a) hereof.

“Unused Proceeds Subaccount”:  The trust account established pursuant to Section
10.4(g) hereof.

“U.S.
Person”: The meaning specified in Regulation S.

“Warehouse Facility”:  The meaning specified in clause (xxxvi) of
the definition of Eligibility Criteria.

“Weighted
Average Coupon”:  As of
any Measurement Date, (a) the number obtained (rounded up to the next 0.001%)
by (i) summing the products obtained by multiplying (x) the current interest
rate on each Collateral Debt Security that is a Fixed Rate Security (excluding
all Defaulted Securities and Written Down Securities) by (y) the Principal
Balance of each such Collateral Debt Security and (ii) dividing such sum by the
Aggregate Principal Balance of all Collateral Debt Securities that are Fixed
Rate Securities (excluding all Defaulted Securities and Written Down
Securities) plus (b) if the amount obtained pursuant to clause (a) is less than
7.0%, the Spread Excess, if any, as of such Measurement Date.

“Weighted
Average Life”:  As of
any Measurement Date with respect to the Collateral Debt Securities (other than
Defaulted Securities), the number obtained by (a) summing the products obtained
by multiplying (i) the Average Life at such time of each Collateral Debt
Security (other than Defaulted Securities) by (ii) the outstanding Principal
Balance of such Collateral Debt Security and (b) dividing such sum by the
Aggregate Principal Balance at such time of all Collateral Debt Securities
(other than Defaulted Securities).

“Weighted
Average Life Test”: 
With respect to any Collateral Debt Securities, a test that will be
satisfied as of any Measurement Date if the Weighted Average Life of such
Collateral Debt Securities as of such Measurement Date is less than or equal to
5 years.

“Weighted
Average Moody’s Rating Factor”:  The amount determined by summing the products
obtained by multiplying the Principal Balance of each Collateral Debt Security
(excluding Defaulted Securities) by its Moody’s Rating Factor, dividing such
sum by the Aggregate Principal Balance of all such obligations and rounding the
result up to the nearest whole number.

 81
 

 

“Weighted
Average Spread”:  As of
any Measurement Date, (a) the number obtained (rounded up to the next 0.001%),
by (i) summing the products obtained by multiplying (x) the stated spread above
LIBOR at which interest accrues on each Collateral Debt Security that is a
Floating Rate Security (other than a Defaulted Security or Written Down
Security) as of such date by (y) the Principal Balance of such Collateral Debt
Security as of such date, and (ii) dividing such sum by the Aggregate Principal
Balance of all Collateral Debt Securities that are Floating Rate Securities
(excluding all Defaulted Securities and Written Down Securities) plus (b) if
the amount obtained pursuant to clause (a) is less than 2.2%, the Fixed Rate
Excess, if any, as of such Measurement Date. 
For purposes of this definition, a Fixed Rate Security that is subject
to a Liability Hedge will be deemed to be a Floating Rate Security and the
floating rate applicable thereto shall be the rate payable taking into account
the related Liability Hedge.

“Whole Loan”:  
A whole loan secured by a mortgage on commercial real estate property or
a senior interest therein (including senior participations).

“Written
Down Security”:  As of
any date of determination, any Collateral Debt Security as to which the
aggregate par amount of the entire issue of such Collateral Debt Security and
all other securities secured by the same pool of collateral and that rank
senior in priority of payment to such issue exceeds the aggregate par amount of
all collateral (giving effect to any appraisal reductions) securing such issue
(excluding defaulted collateral).

Section 1.2     Assumptions as to Pledged Obligations.

(a)       In connection with all
calculations required to be made pursuant to this Indenture with respect to
Scheduled Distributions on any Pledged Obligation, or any payments on any other
assets included in the Assets, and with respect to the income that can be
earned on Scheduled Distributions on such Pledged Obligations and on any other
amounts that may be received for deposit in the applicable Collection Account,
the provisions set forth in this Section 1.2 shall be applied.

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

(c)       For each Due Period, the
Scheduled Distribution on any Pledged Obligation (other than a Defaulted
Security, which, except as otherwise provided herein, shall be assumed to have
a Scheduled Distribution of zero) shall be the sum of (i) the total amount of
payments and collections in respect of such Pledged Obligation (including all
Sales Proceeds received during the Due Period and not reinvested in Substitute
Collateral Debt Securities or retained in the Principal Collection Account for
subsequent reinvestment) that, if paid as scheduled, will be available in the
Collection Accounts at the end of such Due Period for payment on the Notes and
of expenses of the Issuer and the Co-Issuer pursuant to the Priority of Payments
and (ii) any such amounts received in prior Due Periods that were not

 82
 

 

disbursed on a previous Payment Date and do not constitute amounts
which have been used as reimbursement with respect to a prior Interest Advance
pursuant to the terms of this Indenture.

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

(e)       For purposes of
calculating any Interest Coverage Ratio, the expected interest income on
floating rate Collateral Debt Securities and Eligible Investments and under
each Hedge Agreement and the expected interest payable on the Notes shall be
calculated using (i) the interest rates applicable thereto on the applicable
Measurement Date and (ii) accrued original issue discount on Eligible
Investments shall be deemed to be Scheduled Distributions of interest due on
the date such original issue discount is scheduled to be paid.  Notwithstanding the foregoing, for the
purposes of calculating any Interest Coverage Ratio, there shall be excluded
all scheduled or deferred payments of interest on or principal of Collateral Debt
Securities and any payment, including any amount payable to the Issuer by each
Hedge Counterparty, which the Collateral Manager has determined in its
reasonable judgment shall not be made in Cash or received when due.

(f)        Each Scheduled
Distribution receivable with respect to a Pledged Obligation shall be assumed
to be received on the applicable Due Date, and each such Scheduled Distribution
shall be assumed to be immediately deposited in the applicable Collection
Account except to the extent the Collateral Manager has a reasonable expectation
that such Scheduled Distribution will not be received on the applicable Due
Date.  All such funds shall be assumed to
continue to earn interest until the date on which they are required to be
available in the applicable Collection Account for transfer to the Payment
Account for application, in accordance with the terms hereof, to payments of
principal of or interest on the Notes or other amounts payable pursuant to this
Indenture.

(g)       All calculations
required to be made and all reports which are to be prepared pursuant to this
Indenture with respect to the Pledged Obligations, shall be made on the basis
of the date on which the Issuer makes a commitment to purchase or sell an asset
(the “trade date”),
not the settlement date.

(h)       For purposes of
calculating the Par Value Ratio, an appraisal reduction of a Collateral Debt
Security will be assumed to result in an implied reduction of Principal Balance
for such Collateral Debt Security only if such appraisal reduction is intended
to reduce the interest payable on such Collateral Debt Security and only in
proportion to such interest reduction. 
For purposes of the Par Value Ratio, any Collateral Debt Security that
has sustained an implied reduction of Principal Balance due to an appraisal
reduction will not be considered a Defaulted Security solely due to such
implied reduction.  The Collateral
Manager 

 83
 

 

will notify the Trustee of any appraisal reductions of Collateral Debt
Securities if the Collateral Manager has actual knowledge thereof.

(i)        For purposes of calculating
the Weighted Average Coupon in respect of Fixed Rate Securities that are
subject to any Servicing Agreement, the current interest rates in respect of
such Fixed Rate Securities shall be adjusted to reflect the amount of interest
withheld by or on behalf of the related servicer in respect of such Fixed Rate
Securities as a part of its Servicing Fee. 
For purposes of calculating the Weighted Average Spread in respect of
Floating Rate Securities that are subject to any Servicing Agreement, the
stated spreads above LIBOR in respect of such Floating Rate Securities shall be
adjusted to reflect the amount of interest withheld by or on behalf of the
related servicer in respect of such Floating Rate Securities as a part of its
Servicing Fee.

Section 1.3     Interest
Calculation Convention.

All calculations of interest hereunder that are made with respect to
the Notes shall be made on the basis of the actual number of days during the
related Interest Accrual Period divided by 360.

Section 1.4     Rounding
Convention.

Unless otherwise specified herein, test calculations that evaluate to a
percentage will be rounded to the nearest hundredth of a percentage point and
test calculations that evaluate to a number or decimal will be rounded to 2
decimal places.

Section 1.5     Servicing
Override.

For the avoidance of doubt, in the case of any action required or
permitted to be taken by the Collateral Manager hereunder, any such action
shall be subject to override by the applicable servicer to the extent set forth
in the Collateral Management Agreement and any Servicing Agreement.

 84
 

 

ARTICLE 2

THE NOTES

Section 2.1     Forms Generally.

The Notes and the Trustee’s or Authenticating Agent’s certificate of
authentication thereon (the “Certificate
of Authentication”) shall be in substantially the forms
required by this Article 2, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon, as may be consistent herewith,
determined by the Authorized Officers of the Issuer and the Co-Issuer,
executing such Notes as evidenced by their execution of such Notes.  Any portion of the text of any Note may be
set forth on the reverse thereof, with an appropriate reference thereto on the
face of the Note.

Section 2.2     Forms of Notes and Certificate of
Authentication.

(a)       Form.  The form of each Class of Notes, including
the Certificate of Authentication, shall be substantially as set forth in Exhibits
A and B hereto.

(b)           Global Securities and Certificated Notes.

(i)               The Senior Notes
initially offered and sold in the United States to (or to U.S. Persons who are)
QIBs shall be represented by one or more permanent global notes in definitive,
fully registered form without interest coupons with the applicable legend set
forth in Exhibit A hereto added to the form of such Notes (each, a “Rule 144A Global Security”),
which shall be registered in the name of the nominee of the Depository and
deposited with the Trustee, at its Corporate Trust Office, as custodian for the
Depository, duly executed by the Issuer and the Co-Issuer and authenticated by
the Trustee as hereinafter provided.  The
aggregate principal amount of the Rule 144A Global Securities may from time to
time be increased or decreased by adjustments made on the records of the
Trustee or the Depository or its nominee, as the case may be, as hereinafter
provided.

(ii)              The Senior Notes
initially sold in offshore transactions in reliance on Regulation S shall be
represented by one or more permanent global notes in definitive, fully
registered form without interest coupons with the applicable legend set forth
in Exhibit B hereto added to the form of such Notes (each, a “Regulation S Global Security”),
which shall be deposited on behalf of the subscribers for such Notes
represented thereby with the Trustee as custodian for the Depository and
registered in the name of a nominee of the Depository for the respective
accounts of Euroclear and Clearstream, Luxembourg or their respective
depositories, duly executed by the Issuer and the Co-Issuer and authenticated
by the Trustee as hereinafter provided. 
The aggregate principal amount of the Regulation S Global Securities may
from time to time

 85
 

 

be increased
or decreased by adjustments made on the records of the Trustee or the
Depository or its nominee, as the case may be, as hereinafter provided.

(iii)             The Class J
Notes and the Class K Notes initially sold in the United States to QRS II Corp.
pursuant to a transaction exempt from registration under Section 4(2) of the
Securities Act shall be represented by one or more Certificated Notes in
definitive, fully registered form without interest coupons with the applicable
legend set forth in Exhibit B, duly executed by the Issuer and
authenticated by the Trustee or Authenticating Agent as hereinafter
provided.  No Class J Note or Class K
Note shall be issued in the form of a Global Security.

(c)       Book-Entry Provisions.  This Section 2.2(c) shall apply only
to Global Securities deposited with or on behalf of the Depository.

Each of the Issuer and Co-Issuer shall execute and the Trustee shall,
in accordance with this Section 2.2(c), authenticate and deliver
initially one or more Global Securities that shall be (i) registered in the
name of the nominee of the Depository for such Global Security or Global
Securities and (ii) delivered by the Trustee to such Depository or pursuant to
such Depository’s instructions or held by the Trustee’s agent as custodian for
the Depository.

Agent Members shall have no rights under this Indenture with respect to
any Global Security held on their behalf by the Trustee, as custodian for the
Depository or under the Global Security, and the Depository may be treated by
the Issuer, the Co-Issuer, the Trustee, and any agent of the Issuer, the
Co-Issuer or the Trustee as the absolute owner of such Global Security for all
purposes whatsoever.  Notwithstanding the
foregoing, nothing herein shall prevent the Issuer, the Co-Issuer, the Trustee,
or any agent of the Issuer, the Co-Issuer or the Trustee, from giving effect to
any written certification, proxy or other authorization furnished by the
Depository or impair, as between the Depository and its Agent Members, the
operation of customary practices governing the exercise of the rights of a
holder of any Global Security.

(d)       Delivery of
Certificated Notes in Lieu of Global Securities.  Except as provided in Section 2.10
hereof, owners of beneficial interests in a Class of Global Securities shall
not be entitled to receive physical delivery of a Certificated Note.

Section 2.3     Authorized Amount; Stated Maturity; and
Denominations.

(a)       The aggregate principal
amount of Notes that may be authenticated and delivered under this Indenture is
limited to $942,500,000, except for Notes authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Notes
pursuant to Sections 2.5, 2.6 or 8.5 hereof.

Such Notes shall be divided into eleven (11) Classes having
designations and original principal amounts as follows:

 86
 

 

 

	
  Designation

  	
   

  	
  Original

  Principal

  Amount

  	
   

  
	
  Class A-1 Senior
  Secured Floating Rate

  	
   

  	
   

  	
   

  
	
  Term Notes, Due
  2041

  	
   

  	
  $

  	
  500,000,000

  	
   

  
	
  Class A-2 Second
  Priority Senior Secured Floating Rate

  	
   

  	
   

  	
   

  
	
  Term Notes, Due
  2041

  	
   

  	
  $

  	
  171,250,000

  	
   

  
	
  Class B Third
  Priority Floating Rate

  	
   

  	
   

  	
   

  
	
  Term Notes, Due
  2041

  	
   

  	
  $

  	
  95,000,000

  	
   

  
	
  Class C Fourth
  Priority Floating Rate Capitalized Interest

  	
   

  	
   

  	
   

  
	
  Term Notes, Due
  2041

  	
   

  	
  $

  	
  33,750,000

  	
   

  
	
  Class D Fifth
  Priority Floating Rate Capitalized Interest

  	
   

  	
   

  	
   

  
	
  Term Notes, Due
  2041

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
  Class E Sixth
  Priority Floating Rate Capitalized Interest

  	
   

  	
   

  	
   

  
	
  Term Notes, Due
  2041

  	
   

  	
  $

  	
  26,250,000

  	
   

  
	
  Class F Seventh
  Priority Floating Rate Capitalized Interest Term Notes, Due 2041

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
  Class G Eighth
  Priority Floating Rate Capitalized Interest Term Notes, Due 2041

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
  Class H Ninth
  Priority Floating Rate Capitalized Interest Term Notes, Due 2041

  	
   

  	
  $

  	
  17,500,000

  	
   

  
	
  Class J Tenth
  Priority Floating Rate Capitalized Interest Term Notes, Due 2041

  	
   

  	
  $

  	
  22,750,000

  	
   

  
	
  Class K Eleventh
  Priority Floating Rate Capitalized Interest Term Notes, Due 2041

  	
   

  	
  $

  	
  16,000,000

  	
   

  

 

(b)       The Notes shall be
issuable in minimum denominations of U.S.$500,000 and integral multiples of
U.S.$1,000 in excess thereof (plus any residual amount).

Section 2.4     Execution, Authentication, Delivery and
Dating.

The Notes shall be executed on behalf of the Issuer and the Co-Issuer
by an Authorized Officer of the Issuer and the Co-Issuer, respectively.  The signature of such Authorized Officers on
the Notes may be manual or facsimile.

Notes bearing the manual or facsimile signatures of individuals who
were at any time the Authorized Officers of the Issuer or the Co-Issuer shall
bind the Issuer or the Co-Issuer, as the case may be, notwithstanding the fact
that such individuals or any of them have ceased to hold such offices prior to
the authentication and delivery of such Notes or did not hold such offices at
the date of issuance of such Notes.

At any time and from time to time after the execution and delivery of
this Indenture, the Issuer and the Co-Issuer may deliver Notes executed by the
Issuer and the Co-Issuer to the Trustee or the Authenticating Agent for
authentication and the Trustee or the 

 87
 

 

Authenticating Agent, upon Issuer Order, shall
authenticate and deliver such Notes as provided in this Indenture and not
otherwise.

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

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

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

Section 2.5     Registration, Registration of Transfer
and Exchange.

(a)       The Issuer and the
Co-Issuer shall cause to be kept a register (the “Notes Register”) in which, subject to such
reasonable regulations as it may prescribe, the Issuer and the Co-Issuer shall
provide for the registration of Notes and the registration of transfers and
exchanges of Notes.  The Trustee is
hereby initially appointed “Notes Registrar” for the purpose of registering
Notes and transfers and exchanges of such Notes with respect to any duplicate
copy of the Notes Register kept in the United States as herein provided.  Upon any resignation or removal of the Notes
Registrar, the Issuer and the Co-Issuer shall promptly appoint a successor or,
in the absence of such appointment, assume the duties of Notes Registrar.

If a Person other than the Trustee is appointed by the Issuer and the
Co-Issuer as Notes Registrar, the Issuer and the Co-Issuer shall give the
Trustee prompt written notice of the appointment of a successor Notes Registrar
and of the location, and any change in the location, of the Notes Registrar,
and the Trustee shall have the right to inspect the Notes Register at all
reasonable times and to obtain copies thereof and the Trustee shall have the
right to rely upon a certificate executed on behalf of the Notes Registrar by
an Officer thereof as to the names and addresses of the Holders of the Notes
and the principal amounts and numbers of such Notes.

Subject to this Section 2.5, upon surrender for registration of
transfer of any Notes at the office or agency of the Issuer to be maintained as
provided in Section 7.2, the Issuer and the Co-Issuer shall execute, and
the Trustee shall authenticate and deliver, in the name of the 

 88
 

 

designated transferee or transferees, one or more new
Notes of any authorized denomination and of a like aggregate principal amount.

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

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

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

No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

None of the Notes Registrar, the Issuer or the Co-Issuer shall be
required (i) to issue, register the transfer of or exchange any Note during a
period beginning at the opening of business fifteen (15) days before any
selection of Notes to be redeemed and ending at the close of business on the
day of the mailing of the relevant notice of redemption, or (ii) to register
the transfer of or exchange any Note so selected for redemption.

(b)       No Note may be sold or
transferred (including, without limitation, by pledge or hypothecation) unless
such sale or transfer is exempt from the registration requirements of the
Securities Act and is exempt from the registration requirements under
applicable state securities laws.

(c)       No Senior Note may be
offered, sold, resold or delivered, within the United States or to, or for the
benefit of, U.S. Persons except in accordance with Section 2.5(e) below
and in accordance with Rule 144A to QIBs who are Qualified Purchasers
purchasing for their own account or for the accounts of one or more QIBs who
are Qualified Purchasers, for which the purchaser is acting as fiduciary or
agent.  The Senior Notes may be offered,
sold, resold or delivered, as the case may be, in offshore transactions to
non-U.S. Persons in reliance on Regulation S. 
None of the Issuer, the Co-Issuer, the Trustee or any other Person may
register the Notes under the Securities Act or any state securities laws.

(d)       Upon final payment due
on the Stated Maturity of a Note, the Holder thereof shall present and
surrender such Note at the Corporate Trust Office of the Trustee or at the
office of the Paying Agent (outside the United States if then required by
applicable law in the case of a Note in definitive form issued in exchange for
a beneficial interest in a Regulation S Global Security pursuant to Section
2.10).

 89
 

 

(e)       Transfers of Global
Securities.  Notwithstanding any
provision to the contrary herein, so long as a Global Security remains
outstanding and is held by or on behalf of the Depository, transfers of a
Global Security, in whole or in part, shall be made only in accordance with Section
2.2(c) and this Section 2.5(e).

(i)              Subject to
clauses (ii) through (iv) of this Section 2.5(e), transfers of a Global
Security shall be limited to transfers of such Global Security in whole, but
not in part, to nominees of the Depository or to a successor of the Depository
or such successor’s nominee.

(ii)             Regulation S
Global Security to Rule 144A Global Security.  If a holder of a beneficial interest in a
Regulation S Global Security wishes to transfer all or a part of its interest
in such Regulation S Global Security to a Person who wishes to take delivery
thereof in the form of a Rule 144A Global Security, such holder may, subject to
the terms hereof and the rules and procedures of Euroclear, Clearstream,
Luxembourg or the Depository, as the case may be, exchange or cause the
exchange of such interest for an equivalent beneficial interest in a Rule 144A
Global Security of the same Class.  Upon
receipt by the Trustee, as Notes Registrar, of (A) instructions from Euroclear,
Clearstream, Luxembourg or the Depository, as the case may be, directing the
Trustee, as Notes Registrar, to cause such Rule 144A Global Security to be
increased by an amount equal to such beneficial interest in such Regulation S
Global Security but not less than the minimum denomination applicable to the
related Class of Notes, and (B) a certificate substantially in the form of Exhibit
D hereto given by the prospective transferee of such beneficial interest
and stating, among other things, that such transferee acquiring such interest
in a Rule 144A Global Security is a QIB and a Qualified Purchaser, is obtaining
such beneficial interest in a transaction pursuant to Rule 144A and in
accordance with any applicable securities laws of any state of the United
States or any other applicable jurisdiction, then Euroclear, Clearstream,
Luxembourg or the Trustee, as Notes Registrar, as the case may be, shall
approve the instruction at the Depository to reduce such Regulation S Global
Security by the aggregate principal amount of the interest in such Regulation S
Global Security to be transferred and increase the Rule 144A Global Security
specified in such instructions by an Aggregate Outstanding Amount equal to such
reduction in such principal amount of the Regulation S Global Security.

(iii)            Rule 144A
Global Security to Regulation S Global Security.  If a holder of a beneficial interest in a
Rule 144A Global Security wishes to transfer all or a part of its interest in
such Rule 144A Global Security to a Person who wishes to take delivery thereof
in the form of a Regulation S Global Security, such holder may, subject to the
terms hereof and the rules and procedures of Euroclear, Clearstream, Luxembourg
or the Depository, as the case may be, exchange or cause the exchange of such
interest for an equivalent beneficial interest in a Regulation S Global
Security of the same Class.  Upon receipt
by the Trustee, as Notes Registrar, of (A) instructions from Euroclear,
Clearstream, Luxembourg or the Depository, as the case may be, directing the
Trustee, as Notes Registrar, to cause such Regulation S Global Security to be
increased by an amount equal to the beneficial interest in such Rule 144A
Global Security but not less than the minimum denomination applicable to the
related Class of Notes to be exchanged, and (B) a certificate substantially in
the form of Exhibit C hereto given by the prospective

 90
 

 

transferee of
such beneficial interest and stating, among other things, that such transferee
acquiring such interest in a Regulation S Global Security is a not a U.S.
Person and that such transfer is being made pursuant to Rule 903 or 904 under
Regulation S, then Euroclear, Clearstream, Luxembourg or the Trustee, as Notes
Registrar, as the case may be, shall approve the instruction at the Depository
to reduce such Rule 144A Global Security by the aggregate principal amount of
the interest in such Rule 144A Global Security to be transferred and increase
the Regulation S Global Security specified in such instructions by an Aggregate
Outstanding Amount equal to such reduction in the principal amount of the Rule
144A Global Security.

(iv)           Other Exchanges.  (A)  In
the event that, pursuant to Section 2.10 hereof, a Global Security is
exchanged for Certificated Notes, such Notes may be exchanged for one another
only in accordance with such procedures as are substantially consistent with
the provisions above (including certification requirements intended to ensure
that such transfers are to a QIB who is also a Qualified Purchaser or are to a
non-U.S. Person, or otherwise comply with Rule 144A or Regulation S, as the
case may be) and as may be from time to time adopted by the Issuer, the
Co-Issuer and the Trustee.

(B)        Subject
to satisfaction of the conditions set forth in subparagraph (D) of this Section
2.5(e)(iv), a Class J Note or Class K Note represented by a Certificated
Note may be transferred to a Qualified Institutional Buyer in the form of a
Certificated Note upon receipt by the Trustee, as Notes Registrar, of a
certificate substantially in the form of Exhibit E-2 hereto given by the
prospective transferee of such beneficial interest and stating, among other
things, that such transferee acquiring such interest in a Rule 144A Global
Security is a QIB and a Qualified Purchaser, is obtaining such beneficial
interest in a transaction pursuant to Rule 144A and in accordance with any
applicable securities laws of any state of the United States or any other
applicable jurisdiction.  In connection
with any such transfer, such prospective transferee shall be deemed to have
made the applicable representations contained in Section 2.5(g) hereof.

(C)        Subject
to satisfaction of the conditions set forth in subparagraph (D) of this Section
2.5(e)(iv), a Class J Note or Class K Note represented by a Certificated
Note may be transferred to a Person other than a U.S. Person in the form of a
Certificated Note upon receipt by the Trustee, as Notes Registrar, of a
certificate substantially in the form of Exhibit E-1 hereto given by the
prospective transferee of such beneficial interest and stating, among other
things, that such transferee acquiring such interest in a Regulation S Global
Security is a not a U.S. Person and that such transfer is being made pursuant
to Rule 903 or 904 under Regulation S. 
In connection with any such transfer, such prospective transferee shall
be deemed to have made the applicable representations contained in Section
2.5(g) hereof.

 91
 

 

(D)       Notwithstanding
anything contained in this Indenture to the contrary, as long as any Class of
Senior Notes is Outstanding, no wholly-owned and disregarded, direct or
indirect, subsidiary of GKK may sell or otherwise transfer or finance any Class
J Note or Class K Note to any other Person that is not a wholly-owned and
disregarded, direct or indirect, 
subsidiary of GKK unless the Issuer and the Trustee shall have received
an appropriate Tax Opinion to the effect that the Class J Notes or Class K
Notes, as applicable, will be treated as debt for U.S. federal income tax
purposes at the time of such sale, transfer or financing.

(f)        Removal of Legend.  If Notes are issued upon the transfer,
exchange or replacement of Notes bearing the applicable legends set forth in Exhibits
A and B hereto, and if a request is made to remove such applicable
legend on such Notes, the Notes so issued shall bear such applicable legend, or
such applicable legend shall not be removed, as the case may be, unless there
is delivered to the Issuer and the Co-Issuer such satisfactory evidence, which
may include an Opinion of Counsel of an attorney at law licensed to practice
law in the State of New York (and addressed to the Issuer and the Trustee), as
may be reasonably required by the Issuer and the Co-Issuer, if applicable, to
the effect that neither such applicable legend nor the restrictions on transfer
set forth therein are required to ensure that transfers thereof comply with the
provisions of Rule 144A or Regulation S, as applicable, the Investment Company
Act or ERISA.  So long as the Issuer or
the Co-Issuer is relying on an exemption under or promulgated pursuant to the
Investment Company Act, the Issuer or the Co-Issuer shall not remove that
portion of the legend required to maintain an exemption under or promulgated
pursuant to the Investment Company Act. 
Upon provision of such satisfactory evidence, as confirmed in writing by
the Issuer and the Co-Issuer, if applicable, to the Trustee, the Trustee, at
the direction of the Issuer and the Co-Issuer, if applicable, shall
authenticate and deliver Notes that do not bear such applicable legend.

(g)       Each beneficial owner of
Rule 144A Global Securities shall be deemed to represent and agree as follows
(terms used in this paragraph that are defined in Rule 144A are used herein as
defined therein):

(i)              In the case of a
Rule 144A Global Security, the owner is (A) a QIB and a Qualified Purchaser,
(B) is aware that the sale of the Notes to it (other than the initial sale by
the Issuer and the Co-Issuer, as applicable,) is being made in reliance on the
exemption from registration provided by Rule 144A, and (C) is acquiring the
Notes for its own account or for one or more accounts, each of which is a QIB and
a Qualified Purchaser, and as to each of which the owner exercises sole
investment discretion, (D) in a principal amount of not less than U.S.$100,000,
for each such account.

(ii)             The owner
understands that the Notes are being offered only in a transaction not
involving any public offering in the United States within the meaning of the
Securities Act, the Notes have not been and shall not be registered under the
Securities Act, and, if in the future the owner decides to offer, resell,
pledge or otherwise transfer the Notes, such Notes may only be offered, resold,
pledged or otherwise transferred in accordance with this Indenture and the
applicable legend on such Notes set

 92
 

 

forth in Exhibits
A and B, as applicable.  The
owner acknowledges that no representation is made by the Issuer, the Co-Issuer,
or the Dealers, as the case may be, as to the availability of any exemption
under the Securities Act or any state securities laws for resale of the Notes.

(iii)            The owner is not
purchasing the Notes with a view to the resale, distribution or other
disposition thereof in violation of the Securities Act.  The owner understands that an investment in
the Notes involves certain risks, including the risk of loss of all or a substantial
part of its investment under certain circumstances.  The owner has had access to such financial
and other information concerning the Issuer, the Co-Issuer and the Notes as it
deemed necessary or appropriate in order to make an informed investment decision
with respect to its purchase of the Notes, including an opportunity to ask
questions of and request information from the Collateral Manager, the Issuer
and the Co-Issuer.

(iv)           In connection with
the purchase of the Notes (A) none of the Issuer, the Co-Issuer, the Dealers,
the Collateral Manager or the Trustee is acting as a fiduciary or financial or
investment adviser for the owner; (B) the owner is not relying (for purposes of
making any investment decision or otherwise) upon any advice, counsel or
representations (whether written or oral) of the Issuer, the Co-Issuer, the
Dealers, the Collateral Manager or the Trustee other than in a current offering
memorandum for such Notes and any representations expressly set forth in a
written agreement with such party; (C) none of the Issuer, the Co-Issuer, the
Dealers, the Collateral Manager or the Trustee has given to the owner (directly
or indirectly through any other person) any assurance, guarantee, or
representation whatsoever as to the expected or projected success,
profitability, return, performance, result, effect, consequence, or benefit
(including legal, regulatory, tax, financial, accounting, or otherwise) of its
purchase; (D) the owner has consulted with its own legal, regulatory, tax,
business, investment, financial, and accounting advisers to the extent it has
deemed necessary, and it has made its own investment decisions (including
decisions regarding the suitability of any transaction pursuant to this
Indenture) based upon its own judgment and upon any advice from such advisers
as it has deemed necessary and not upon any view expressed by the Issuer, the
Co-Issuer, the Dealers, the Collateral Manager or the Trustee; and (E) the
owner is purchasing the Notes with a full understanding of all of the terms,
conditions and risks thereof (economic and otherwise), and is capable of
assuming and willing to assume (financially and otherwise) these risks.

(v)            The owner
understands that the Notes shall bear the applicable legend set forth in Exhibits
A and B as applicable.  The
Rule 144A Global Securities may not at any time be held by or on behalf of any
U.S. Person that is not a QIB who is a Qualified Purchaser.  The owner must inform a prospective
transferee of the transfer restrictions.

(vi)           Unless a
prospective Holder of a Senior Note otherwise provides another representation
acceptable to the Trustee, the Collateral Manager, the Issuer and the
Co-Issuer, each Holder of a Senior Note, by its acquisition thereof, shall be
deemed to have represented to the Issuer, the Co-Issuer, the Collateral Manager
and the Trustee that either (A) no part of the funds being used to pay the
purchase price for such Senior Notes

 93
 

 

constitutes an
asset of any “employee benefit plan” (as defined in Section 3(3) of ERISA) or “plan”
(as defined in Section 4975(e)(1) of the Code) that is subject to Title I of
ERISA or Section 4975 of the Code or any other plan which is subject to any
federal, state or local law (“Similar
Law”) that is substantially similar to Section 406 of ERISA
or Section 4975 of the Code (each a “Benefit Plan”), or an entity whose underlying
assets include plan assets of any such Benefit Plan, or (B) if the funds being
used to pay the purchase price for such Senior Notes include plan assets of any
Benefit Plan, its purchase and holding are eligible for the exemptive relief
from the prohibited transaction rules granted by Prohibited Transaction Class
Exemption (“PTCE”) 84-14, PTCE 90-1, PTCE 91-38, PTCE 95-60, PTCE 96-23,
or a similar exemption, or in the case of any Benefit Plan subject to Similar
Law, do not result in a non-exempt violation of Similar Law.

(vii)          The owner shall
not, at any time, offer to buy or offer to sell the Notes by any form of
general solicitation or advertising, including, but not limited to, any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar medium or broadcast over television or radio or
at a seminar or meeting whose attendees have been invited by general
solicitations or advertising.

(viii)         The owner is not a
member of the public in the Cayman Islands, within the meaning of Section 194
of the Cayman Islands Companies Law (2004 Revision), unless the Issuer has been
listed on the Cayman Islands Stock Exchange.

(ix)            The owner
understands that the Issuer, Co-Issuer, Trustee or Paying Agent shall require
certification acceptable to it (A) as a condition to the payment of principal
of and interest on any Notes without, or at a reduced rate of, U.S. withholding
or backup withholding tax, and (B) to enable the Issuer, Co-Issuer, Trustee and
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
from payments in respect of such Notes or the Holder of such Notes 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. 
Such certification may include U.S. federal income tax forms (such as
IRS Form W-8BEN (Certification of Foreign Status of Beneficial Owner), IRS Form
W-8IMY (Certification of Foreign Intermediary Status), IRS Form W-9 (Request
for Taxpayer Identification Number and Certification), or IRS Form W-8ECI
(Certification of Foreign Person’s Claim for Exemption from Withholding on
Income Effectively Connected with Conduct of a U.S. Trade or Business) or any
successors to such IRS forms).  In
addition, the Issuer, Co-Issuer, Trustee or Paying Agent may require
certification acceptable to it to enable the Issuer to qualify for a reduced
rate of withholding in any jurisdiction from or through which the Issuer
receives payments on its assets.  Each
owner agrees to provide any certification requested pursuant to this paragraph
and to update or replace such form or certification in accordance with its
terms or its subsequent amendments.

(x)             The owner hereby
agrees that, for purposes of U.S. federal, state and local income and franchise
tax and any other income taxes, (A) the Notes will be treated as indebtedness,
and (B) the Preferred Shares will be treated as equity; the owner agrees to 

 94
 

 

such treatment
and agrees to take no action inconsistent with such treatment, unless required
by law.

(xi)            The owner, if not
a “United States person” (as defined in Section 7701(a)(30) of the Code),
either: (A) is not a bank (within the meaning of Section 881(c)(3)(A) of the
Code); (B) is a bank and has provided an IRS Form W-8ECI representing that all
payments received or to be received by it from the Issuer are effectively
connected with the conduct of a trade or business in the United States; or (C)
is a bank and is eligible for benefits under an income tax treaty with the
United States that eliminates U.S. federal income taxation of U.S. source
interest not attributable to a permanent establishment in the United States and
the Issuer is treated as a fiscally transparent entity (as defined in Treasury
Regulations section 1.894-1(d)(3)(ii)) under the laws of owner’s jurisdiction
with respect to payments made on the Senior Notes held by the owner.

(h)       Each beneficial owner of
Regulation S Global Securities shall be deemed to have made the representations
set forth in clauses (ii), (iii), (iv), (vi), (vii), (viii), (ix), (x) and (xi)
of Section 2.5(g) and shall be deemed to have further represented and
agreed as follows:

(i)              The owner is
aware that the sale of such Senior Notes to it is being made in reliance on the
exemption from registration provided by Regulation S and understands that the
Senior Notes offered in reliance on Regulation S will bear the appropriate
legend set forth in Exhibit A or B, as applicable, and be
represented by one or more Regulation S Global Securities.  The Senior Notes so represented may not at
any time be held by or on behalf of U.S. Persons.  Each of the owner and the related Holder is
not, and shall not be, a U.S. Person. 
Before any interest in a Regulation S Global Security may be offered,
resold, pledged or otherwise transferred to a person who takes delivery in the
form of a Rule 144A Global Security, the transferee shall be required to
provide the Trustee with a written certification substantially in the form of Exhibits
C and D as applicable hereto as to compliance with the transfer
restrictions.  The owner must inform a
prospective transferee of the transfer restrictions.

(i)        Any purported transfer
of a Note not in accordance with this Section 2.5 shall be null and void
and shall not be given effect for any purpose hereunder.

(j)        Notwithstanding
anything contained in this Indenture to the contrary, neither the Trustee nor
the Notes Registrar (nor any other Transfer Agent) shall be responsible or
liable for compliance with applicable federal or state securities laws
(including, without limitation, the Securities Act or Rule 144A or Regulation S
promulgated thereunder), the Investment Company Act, ERISA or the Code (or any
applicable regulations thereunder); provided, however,
that if a specified transfer certificate or Opinion of Counsel is required by
the express terms of this Section 2.5 to be delivered to the Trustee or
Notes Registrar prior to registration of transfer of a Note, the Trustee and/or
Notes Registrar, as applicable, is required to request, as a condition for
registering the transfer of the Note, such certificate or Opinion of Counsel
and to examine the same to determine whether it conforms on its face to the
requirements hereof (and the Trustee or Notes Registrar, as the case may be,
shall promptly

 95
 

 

notify the party delivering the same if it determines that such
certificate or Opinion of Counsel does not so conform).

(k)       If the Trustee
determines or is notified by the Issuer, Co-Issuer or the Collateral Manager
that (i) a transfer or attempted or purported transfer of any interest in any
Note was consummated in compliance with the provisions of this Section 2.5
on the basis of a materially incorrect certification from the transferee or
purported transferee, (ii) a transferee failed to deliver to the Trustee any
certification required to be delivered hereunder or (iii) the holder of any
interest in a Note is in breach of any representation or agreement set forth in
any certification or any deemed representation or agreement of such holder, the
Trustee shall not register such attempted or purported transfer and if a
transfer has been registered, such transfer shall be absolutely null and void ab initio and shall vest no rights in the purported
transferee (such purported transferee, a “Disqualified Transferee”) and the last preceding
holder of such interest in such Note that was not a Disqualified Transferee
shall be restored to all rights as a Holder thereof retroactively to the date
of transfer of such Note by such Holder.

In addition, the Trustee may require that the interest in the Note
referred to in (i), (ii) or (iii) in the preceding paragraph be transferred to
any person designated by the Issuer or the Collateral Manager at a price
determined by the Issuer or the Collateral Manager, as applicable, based upon
its estimation of the prevailing price of such interest and each Holder, by
acceptance of an interest in a Note, authorizes the Trustee to take such
action.  In any case, the Trustee shall
not be held responsible for any losses that may be incurred as a result of any
required transfer under this Section 2.5(l).

(l)        Each Holder of Notes
approves and consents to (i) the initial purchase of the Collateral Debt
Securities by the Issuer from Affiliates of the Collateral Manager on or prior
to the Closing Date and (ii) any other transaction between the Issuer and the
Collateral Manager or its Affiliates that are permitted under the terms of this
Indenture or the Collateral Management Agreement.

Section 2.6     Mutilated, Defaced, Destroyed, Lost or
Stolen Note.

If (a) any mutilated or defaced Note is surrendered to a Transfer
Agent, or if there shall be delivered to the Issuer, the Co-Issuer, the Trustee
and the relevant Transfer Agent (each a “Specified Person”) evidence to their reasonable
satisfaction of the destruction, loss or theft of any Note, and (b) there is
delivered to the Specified Person such security or indemnity as may be required
by each Specified Person to save each of them and any agent of any of them
harmless (an unsecured indemnity agreement delivered to the Trustee by an
institutional investor with a net worth of at least U.S.$200,000,000 being
deemed sufficient to satisfy such security or indemnity requirement), then, in
the absence of notice to the Specified Persons that such Note has been acquired
by a bona fide purchaser, the Issuer and the Co-Issuer shall execute and, upon
Issuer Request, the Trustee shall authenticate and deliver, in lieu of any such
mutilated, defaced, destroyed, lost or stolen Note, a new 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 Note and bearing a number not contemporaneously outstanding.

 96
 

 

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

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

Upon the issuance of any new Note under this Section 2.6, the
Issuer and the Co-Issuer, if applicable, 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 Note issued pursuant to this Section 2.6 in lieu of
any mutilated, defaced, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer and the Co-Issuer, if
applicable, and such new Note shall be entitled, subject to the second
paragraph of this Section 2.6, to all the benefits of this Indenture
equally and proportionately with any and all other Notes duly issued hereunder.

The provisions of this Section 2.6 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, defaced, destroyed, lost or stolen Notes.

Section 2.7     Payment of Principal and Interest and
Other Amounts; Principal and Interest Rights Preserved.

(a)  The Class A-1 Notes shall
accrue interest during each Interest Accrual Period at the Class A-1 Rate.  Interest on each Class A-1 Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class A-1 Note bears to the Aggregate Outstanding Amount of all Class A-1
Notes; provided, however, that the payment of interest on the
Class A-1 Notes is subordinated to the payment on each Payment Date of certain
amounts in accordance with the Priority of Payments.

(b)  The Class A-2 Notes shall
accrue interest during each Interest Accrual Period at the Class A-2 Rate.  Interest on each Class A-2 Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class A-2 Note bears to the Aggregate Outstanding Amount of all Class A-2
Notes; provided, however, that the payment of interest on the
Class A-2 Notes is subordinated to the payment on each Payment Date of the interest
due and payable on the Class A-1 Notes (including any Class A-1 Defaulted
Interest Amount) and certain other amounts in accordance with the Priority of
Payments.

 97
 

 

(c)  The Class B Notes shall
accrue interest during each Interest Accrual Period at the Class B Rate.  Interest on each Class B Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such Class
B Note bears to the Aggregate Outstanding Amount of all Class B Notes; provided, however, that payment of interest on the Class B
Notes is subordinated to the payment on each Payment Date of the interest due
and payable on the Class A-1 Notes and the Class A-2 Notes, (including any
Class A-1 Defaulted Interest Amount and any Class A-2 Defaulted Interest
Amount) and certain other amounts in accordance with the Priority of Payments.

(d)  The Class C Notes shall
accrue interest during each Interest Accrual Period at the Class C Rate.  Interest on each Class C Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class C Note bears to the Aggregate Outstanding Amount of all Class C Notes; provided, however, that payment of interest on the Class C
Notes is subordinated to the payment on each Payment Date of the interest due
and payable on the Class A-1 Notes, the Class A-2 Notes and the Class B Notes
(including any Class A-1 Defaulted Interest Amount, Class A-2 Defaulted
Interest Amount and Class B Defaulted Interest Amount) and certain other
amounts in accordance with the Priority of Payments.

For so long as any Class B Notes are Outstanding, any payment of
interest due on the Class C Notes which is not available to be paid (the “Class C Capitalized Interest”)
in accordance with the Priority of Payments on any Payment Date shall not be
considered “due and payable” for the purpose of Section 5.1(a) hereof
(and the failure to pay such Class C Capitalized Interest shall not be an Event
of Default) until the Payment Date on which funds are available to pay all or
any portion of such Class C Capitalized Interest in accordance with the
Priority of Payments.  On or after such
Payment Date, only such portion of any payment of Class C Capitalized Interest
for which funds are available in accordance with the Priority of Payments shall
be considered “due and payable” and the failure to pay such portion of Class C
Capitalized Interest shall be an Event of Default.  Class C Capitalized Interest shall be added
to the principal amount of the Class C Notes, shall bear interest thereafter at
the Class C Rate (to the extent lawful) and shall be payable on the first
Payment Date on which funds are permitted to be used for such purpose in
accordance with the Priority of Payments. 
On or after the Payment Date on which the Class B Notes are no longer
Outstanding, to the extent interest is due (excluding any previously deferred
Class C Capitalized Interest) but not paid on the Class C Notes, the failure to
pay such interest shall constitute an Event of Default hereunder.

(e)  The Class D Notes shall
accrue interest during each Interest Accrual Period at the Class D Rate.  Interest on each Class D Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class D Note bears to the Aggregate Outstanding Amount of all Class D Notes; provided, however, that payment of interest on the Class D
Notes is subordinated to the payment on each Payment Date of the interest due
and payable on the Class A-1 Notes, the Class A-2 Notes, the Class B Notes and
the Class C Notes (including any Class A-1 Defaulted Interest Amount, Class A-2
Defaulted Interest Amount, Class B Defaulted Interest Amount, Class C Defaulted
Interest Amount and Class C Capitalized Interest) and certain other amounts in
accordance with the Priority of Payments.

 98
 

 

For so long as any Class C Notes are Outstanding, any payment of
interest due on the Class D Notes which is not available to be paid (“Class D Capitalized Interest”)
in accordance with the Priority of Payments on any Payment Date shall not be
considered “due and payable” for the purpose of Section 5.1(a) hereof
(and the failure to pay such Class D Capitalized Interest shall not be an Event
of Default) until the Payment Date on which funds are available to pay all or
any portion of such Class D Capitalized Interest in accordance with the Priority
of Payments.  On or after such Payment
Date, only such portion of any payment of Class D Capitalized Interest for
which funds are available in accordance with the Priority of Payments shall be
considered “due and payable” and the failure to pay such portion of Class D
Capitalized Interest shall be an Event of Default.  Class D Capitalized Interest shall be added
to the principal amount of the Class D Notes, shall bear interest thereafter at
the Class D Rate (to the extent lawful) and shall be payable on the first
Payment Date on which funds are permitted to be used for such purpose in
accordance with the Priority of Payments. 
On or after the Payment Date on which the Class C Notes are no longer
Outstanding, to the extent interest is due (excluding any previously deferred
Class D Capitalized Interest) but not paid on the Class D Notes, the failure to
pay such interest shall constitute an Event of Default hereunder.

(f)   The Class E Notes shall
accrue interest during each Interest Accrual Period at the Class E Rate.  Interest on each Class E Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class E Note bears to the Aggregate Outstanding Amount of all Class E Notes; provided, however, that payment of interest on the Class E
Notes is subordinated to the payment on each Payment Date of the interest due
and payable on the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the
Class C Notes and the Class D Notes (including any Class A-1 Defaulted Interest
Amount, Class A-2 Defaulted Interest Amount, Class B Defaulted Interest Amount,
Class C Defaulted Interest Amount, Class C Capitalized Interest, Class D
Defaulted Interest Amount and Class D Capitalized Interest) and certain other
amounts in accordance with the Priority of Payments.

For so long as any Class D Notes are Outstanding, any payment of
interest due on the Class E Notes which is not available to be paid (the “Class E Capitalized Interest”)
in accordance with the Priority of Payments on any Payment Date shall not be
considered “due and payable” for the purpose of Section 5.1(a) hereof
(and the failure to pay such Class E Capitalized Interest shall not be an Event
of Default) until the Payment Date on which funds are available to pay all or
any portion of such Class E Capitalized Interest in accordance with the
Priority of Payments.  On or after such
Payment Date, only such portion of any payment of Class E Capitalized Interest for
which funds are available in accordance with the Priority of Payments shall be
considered “due and payable” and the failure to pay such portion of Class E
Capitalized Interest shall be an Event of Default.  Class E Capitalized Interest shall be added to
the principal amount of the Class E Notes, shall bear interest thereafter at
the Class E Rate (to the extent lawful) and shall be payable on the first
Payment Date on which funds are permitted to be used for such purpose in
accordance with the Priority of Payments. 
On or after the Payment Date on which the Class D Notes are no longer
Outstanding, to the extent interest is due (excluding any previously deferred
Class E Capitalized Interest) but not paid on the Class E Notes, the failure to
pay such interest shall constitute an Event of Default hereunder.

 99
 

 

(g)  The Class F Notes shall
accrue interest during each Interest Accrual Period at the Class F Rate.  Interest on each Class F Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class F Note bears to the Aggregate Outstanding Amount of all Class F Notes; provided, however, that payment of interest on the Class F
Notes is subordinated to the payment on each Payment Date of the interest due
and payable on the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the
Class C Notes, the Class D Notes and the Class E Notes (including any Class A-1
Defaulted Interest Amount, Class A-2 Defaulted Interest Amount, Class B
Defaulted Interest Amount, Class C Defaulted Interest Amount, Class C
Capitalized Interest, Class D Defaulted Interest Amount, Class D Capitalized
Interest, Class E Defaulted Interest Amount and Class E Capitalized Interest) and
certain other amounts in accordance with the Priority of Payments.

For so long as any Class E Notes are Outstanding, any payment of
interest due on the Class F Notes which is not available to be paid (“Class F Capitalized Interest”)
in accordance with the Priority of Payments on any Payment Date shall not be
considered “due and payable” for the purpose of Section 5.1(a) hereof
(and the failure to pay such Class F Capitalized Interest shall not be an Event
of Default) until the Payment Date on which funds are available to pay all or
any portion of such Class F Capitalized Interest in accordance with the
Priority of Payments.  On or after such
Payment Date, only such portion of any payment of Class F Capitalized Interest
for which funds are available in accordance with the Priority of Payments shall
be considered “due and payable” and the failure to pay such portion of Class F
Capitalized Interest shall be an Event of Default.  Class F Capitalized Interest shall be added
to the principal amount of the Class F Notes, shall bear interest thereafter at
the Class F Rate (to the extent lawful) and shall be payable on the first
Payment Date on which funds are permitted to be used for such purpose in
accordance with the Priority of Payments. 
On or after the Payment Date on which the Class E Notes are no longer
Outstanding, to the extent interest is due (excluding any previously deferred
Class F Capitalized Interest) but not paid on the Class F Notes, the failure to
pay such interest shall constitute an Event of Default hereunder.

(h)  The Class G Notes shall
accrue interest during each Interest Accrual Period at the Class G Rate.  Interest on each Class G Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class G Note bears to the Aggregate Outstanding Amount of all Class G Notes; provided, however, that payment of interest on the Class G
Notes is subordinated to the payment on each Payment Date of the interest due
and payable on the Class A-1 Notes, Class A-2 Notes, the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes and the Class F Notes
(including any Class A-1 Defaulted Interest Amount, Class A-2 Defaulted
Interest Amount, Class B Defaulted Interest Amount, Class C Defaulted Interest
Amount, Class C Capitalized Interest, Class D Defaulted Interest Amount, Class
D Capitalized Interest, Class E Defaulted Interest Amount, Class E Capitalized
Interest, Class F Defaulted Interest Amount and Class F Capitalized Interest)
and certain other amounts in accordance with the Priority of Payments.

For so long as any Class F Notes are Outstanding, any payment of
interest due on the Class G Notes which is not available to be paid (the “Class G Capitalized Interest”)
in accordance with the Priority of Payments on any Payment Date shall not be
considered “due and

 100

 

payable” for the purpose of Section 5.1(a)
hereof (and the failure to pay such Class G Capitalized Interest shall not be
an Event of Default) until the Payment Date on which funds are available to pay
all or any portion of such Class G Capitalized Interest in accordance with the
Priority of Payments.  On or after such
Payment Date, only such portion of any payment of Class G Capitalized Interest
for which funds are available in accordance with the Priority of Payments shall
be considered “due and payable” and the failure to pay such portion of Class G
Capitalized Interest shall be an Event of Default.  Class G Capitalized Interest shall be added
to the principal amount of the Class G Notes, shall bear interest thereafter at
the Class G Rate (to the extent lawful) and shall be payable on the first
Payment Date on which funds are permitted to be used for such purpose in
accordance with the Priority of Payments. 
On or after the Payment Date on which the Class F Notes are no longer
Outstanding, to the extent interest is due (excluding any previously deferred
Class G Capitalized Interest) but not paid on the Class G Notes, the failure to
pay such interest shall constitute an Event of Default hereunder.

(i)       The Class H Notes shall
accrue interest during each Interest Accrual Period at the Class H Rate.  Interest on each Class H Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class H Note bears to the Aggregate Outstanding Amount of all Class H Notes; provided, however, that payment of interest on the Class H
Notes is subordinated to the payment on each Payment Date of the interest due
and payable on the Class A-1 Notes, Class A-2 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 (including any Class A-1 Defaulted Interest Amount, Class A-2
Defaulted Interest Amount, Class B Defaulted Interest Amount, Class C Defaulted
Interest Amount, Class C Capitalized Interest, Class D Defaulted Interest
Amount, Class D Capitalized Interest, Class E Defaulted Interest Amount, Class
E Capitalized Interest, Class F Defaulted Interest Amount, Class F Capitalized
Interest, Class G Defaulted Interest Amount and Class G Capitalized Interest)
and certain other amounts in accordance with the Priority of Payments.

For so long as any Class
G Notes are Outstanding, any payment of interest due on the Class H Notes which
is not available to be paid (“Class
H Capitalized Interest”) in accordance with the Priority of
Payments on any Payment Date shall not be considered “due and payable” for the
purpose of Section 5.1(a) hereof (and the failure to pay such Class H
Capitalized Interest shall not be an Event of Default) until the Payment Date
on which funds are available to pay all or any portion of such Class H
Capitalized Interest in accordance with the Priority of Payments.  On or after such Payment Date, only such portion
of any payment of Class H Capitalized Interest for which funds are available in
accordance with the Priority of Payments shall be considered “due and payable”
and the failure to pay such portion of Class H Capitalized Interest shall be an
Event of Default.  Class H Capitalized
Interest shall be added to the principal amount of the Class H Notes, shall
bear interest thereafter at the Class H Rate (to the extent lawful) and shall
be payable on the first Payment Date on which funds are permitted to be used
for such purpose in accordance with the Priority of Payments.  On or after the Payment Date on which the
Class G Notes are no longer Outstanding, to the extent interest is due
(excluding any previously deferred Class H Capitalized Interest) but not paid
on the Class H Notes, the failure to pay such interest shall constitute an
Event of Default hereunder.

 101
 

 

(j)       The Class J Notes shall
accrue interest during each Interest Accrual Period at the Class J Rate.  Interest on each Class J Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class J Note bears to the Aggregate Outstanding Amount of all Class J Notes; provided,
however, that payment of interest on the Class J Notes is subordinated
to the payment on each Payment Date of the interest due and payable on the
Class A-1 Notes, Class A-2 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 (including any Class A-1 Defaulted Interest, Class A-2 Defaulted
Interest Amount, Class B Defaulted Interest Amount, Class C Defaulted Interest
Amount, Class C Capitalized Interest, Class D Defaulted Interest Amount, Class
D Capitalized Interest, Class E Defaulted Interest Amount, Class E Capitalized
Interest, Class F Defaulted Interest Amount, Class F Capitalized Interest,
Class G Defaulted Interest Amount, Class G Capitalized Interest, Class H
Defaulted Interest Amount and Class H Capitalized Interest) and certain other
amounts in accordance with the Priority of Payments.

For so long as any Class
H Notes are Outstanding, any payment of interest due on the Class J Notes which
is not available to be paid (“Class J Capitalized Interest”) in
accordance with the Priority of Payments on any Payment Date shall not be
considered “due and payable” for the purpose of Section 5.1(a) hereof
(and the failure to pay such Class J Capitalized Interest shall not be an Event
of Default) until the Payment Date on which funds are available to pay all or
any portion of such Class J Capitalized Interest in accordance with the
Priority of Payments.  On or after such
Payment Date, only such portion of any payment of Class J Capitalized Interest
for which funds are available in accordance with the Priority of Payments shall
be considered “due and payable” and the failure to pay such portion of Class J
Capitalized Interest shall be an Event of Default.  Class J Capitalized Interest shall be added
to the principal amount of the Class J Notes, shall bear interest thereafter at
the Class J Rate (to the extent lawful) and shall be payable on the first
Payment Date on which funds are permitted to be used for such purpose in
accordance with the Priority of Payments. 
On or after the Payment Date on which the Class H Notes are no longer
Outstanding, to the extent interest is due (excluding any previously deferred
Class J Capitalized Interest) but not paid on the Class J Notes, the failure to
pay such interest shall constitute an Event of Default hereunder.

(k)      The Class K Notes shall
accrue interest during each Interest Accrual Period at the Class K Rate.  Interest on each Class K Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class K Note bears to the Aggregate Outstanding Amount of all Class K Notes; provided,
however, that payment of interest on the Class K Notes is subordinated
to the payment on each Payment Date of the interest due and payable on the
Class A-1 Notes, Class A-2 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 (including any Class A-1 Defaulted Interest
Amount, Class A-2 Defaulted Interest Amount, Class B Defaulted Interest Amount,
Class C Defaulted Interest Amount, Class C Capitalized Interest, Class D
Defaulted Interest Amount, Class D Capitalized Interest, Class E Defaulted
Interest Amount, Class E Capitalized Interest, Class F Defaulted Interest
Amount, Class F Capitalized Interest, Class G Defaulted Interest Amount, Class
G Capitalized Interest, Class H Defaulted Interest Amount, Class H Capitalized
Interest, Class J Defaulted

 102
 

 

Interest Amount and Class J Capitalized Interest) and certain other
amounts in accordance with the Priority of Payments.

For so long as any Class
J Notes are Outstanding, any payment of interest due on the Class K Notes which
is not available to be paid (“Class
K Capitalized Interest”) in accordance with the Priority of
Payments on any Payment Date shall not be considered “due and payable” for the
purpose of Section 5.1(a) hereof (and the failure to pay such Class K
Capitalized Interest shall not be an Event of Default) until the Payment Date
on which funds are available to pay all or any portion of such Class K
Capitalized Interest in accordance with the Priority of Payments.  On or after such Payment Date, only such
portion of any payment of Class K Capitalized Interest for which funds are
available in accordance with the Priority of Payments shall be considered “due
and payable” and the failure to pay such portion of Class K Capitalized
Interest shall be an Event of Default. 
Class K Capitalized Interest shall be added to the principal amount of
the Class K Notes, shall bear interest thereafter at the Class K Rate (to the
extent lawful) and shall be payable on the first Payment Date on which funds
are permitted to be used for such purpose in accordance with the Priority of
Payments.  On or after the Payment Date
on which the Class J Notes are no longer Outstanding, to the extent interest is
due (excluding any previously deferred Class K Capitalized Interest) but not
paid on the Class K Notes, the failure to pay such interest shall constitute an
Event of Default hereunder.

(l)       Upon any Optional
Redemption, Tax Redemption, Auction Call Redemption or Clean-up Call, all net
proceeds from such liquidation and all available Cash (other than the Issuer’s
right, title and interest in the Excepted Assets), after the payment of (x) the
Redemption Prices of the Notes and (y) the amounts and the expenses referred to
in clauses (1) through (33) of Section 11.1(a)(i) and clauses (1)
through (16) of Section 11.1(a)(ii) will be distributed by Trustee to
the Preferred Shares Paying Agent for distribution to the holders of the
Preferred Shares in accordance with the Preferred Shares Paying Agency
Agreement, whereupon the Preferred Shares will be cancelled and deemed paid in
full for all purposes.

(m)     Interest shall cease to
accrue on each Class of Notes, or in the case of a partial repayment, on such
part, from the date of repayment or Stated Maturity unless payment of principal
is improperly withheld or unless a Default has occurred with respect to such
payments of principal.

(n)      The principal of each
Class of Notes matures at par and is due and payable on the Stated Maturity,
unless the unpaid principal of such Class of Notes becomes due and payable at
an earlier date by declaration of acceleration, call for redemption or
otherwise; provided, however,
that the payment of principal of the Class A-2 Notes (other than payment of
principal pursuant to Section 9.6 or Section 9.7) may only occur
after the principal of the Class A-1 Notes has been paid in full and is
subordinated to the payment on each Payment Date of the principal and interest
due and payable on the Class A-1 Notes and other amounts in accordance
with the Priority of Payments and any payment of principal of the Class A-2
Notes which is not paid in accordance with the Priority of Payments, on any
Payment Date, shall not be considered “due and payable” solely for purposes of Section
5.1(b) until the Payment Date on which such principal may be paid in
accordance with the Priority of Payments or all of the Class A-1 Notes
have been paid in full; provided, further, that the 

 103
 

 

payment of principal of the Class B Notes (other than payment of
principal pursuant to Section 9.6 or Section 9.7) may only occur
after the principal of the Class A-1 Notes and the Class A-2 Notes has been
paid in full and is subordinated to the payment on each Payment Date of the
principal and interest due and payable on the Class A-1 Notes and the Class A-2
Notes, and other amounts in accordance with the Priority of Payments and any
payment of principal of the Class B Notes which is not paid, in accordance with
the Priority of Payments, on any Payment Date, shall not be considered “due and
payable” solely for purposes of Section 5.1(b) until the Payment Date on
which such principal may be paid in accordance with the Priority of Payments or
all of the Class A-1 Notes and Class A-2 Notes have been paid in full; provided, further, that the payment of principal of the Class
C Notes (other than payment of the amounts constituting Class C Capitalized
Interest, notwithstanding that such Class C Capitalized Interest may be deemed
to constitute additions to principal, and other than the payment of principal
pursuant to Section 9.6 or Section 9.7) may only occur after the
principal of the Class A-1 Notes, the Class A-2 Notes and the Class B Notes has
been paid in full and is subordinated to the payment on each Payment Date of
the principal and interest due and payable on the Class A-1 Notes, the Class
A-2 Notes, the Class B Notes, and other amounts in accordance with the Priority
of Payments and any payment of principal of the Class C Notes which is not
paid, in accordance with the Priority of Payments, on any Payment Date, shall
not be considered “due and payable” solely for purposes of Section 5.1(b)
until the Payment Date on which such principal may be paid in accordance with
the Priority of Payments or all of the Class A-1 Notes, the Class A-2 Notes and
the Class B Notes have been paid in full; provided, further,
that the payment of principal of the Class D Notes (other than payment of the
amounts constituting Class D Capitalized Interest, notwithstanding that such
Class D Capitalized Interest may be deemed to constitute additions to
principal, and other than the payment of principal pursuant to Section 9.6
or Section 9.7) may only occur after the principal of the Class A-1
Notes, the Class A-2 Notes, the Class B Notes and the Class C Notes has been
paid in full and is subordinated to the payment on each Payment Date of the
principal and interest due and payable on the Class A-1 Notes, the Class A-2
Notes, the Class B Notes, the Class C Notes, and other amounts in accordance
with the Priority of Payments and any payment of principal of the Class D Notes
which is not paid, in accordance with the Priority of Payments, on any Payment
Date, shall not be considered “due and payable” solely for purposes of Section
5.1(b) until the Payment Date on which such principal may be paid in
accordance with the Priority of Payments or all of the Class A Notes, the Class
B Notes and the Class C Notes have been paid in full; provided, further, that the payment of principal of the Class
E Notes (other than payment of the amounts constituting Class E Capitalized
Interest, notwithstanding that such Class E Capitalized Interest may be deemed
to constitute additions to principal, and other than the payment of principal
pursuant to Section 9.6 or Section 9.7) may only occur after the
principal of the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the
Class C Notes and the Class D Notes has been paid in full and is subordinated
to the payment on each Payment Date of the principal and interest due and
payable on the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the
Class C Notes, the Class D Notes, and other amounts in accordance with the
Priority of Payments and any payment of principal of the Class E Notes which is
not paid, in accordance with the Priority of Payments, on any Payment Date,
shall not be considered “due and payable” solely for purposes of Section
5.1(b) until the Payment Date on which such principal may be paid in
accordance with the Priority of Payments or all of the Class A-1 Notes, the
Class A-2 Notes, the Class B Notes, the Class C Notes and the Class D 

 104
 

 

Notes have been paid in full; provided, further,
that the payment of principal of the Class F Notes (other than payment of the
amounts constituting Class F Capitalized Interest, notwithstanding that such
Class F Capitalized Interest may be deemed to constitute additions to
principal, and other than the payment of principal pursuant to Section 9.6
or Section 9.7) may only occur after the principal of the Class A-1
Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes, the Class D
Notes and the Class E Notes has been paid in full and is subordinated to the
payment on each Payment Date of the principal and interest due and payable on
the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes,
the Class D Notes, the Class E Notes, and other amounts in accordance with the
Priority of Payments and any payment of principal of the Class F Notes which is
not paid, in accordance with the Priority of Payments, on any Payment Date,
shall not be considered “due and payable” solely for purposes of Section 5.1(b)
until the Payment Date on which such principal may be paid in accordance with
the Priority of Payments or all of the Class A-1 Notes, the Class A-2 Notes,
the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes
have been paid in full; provided, further,
that the payment of principal of the Class G Notes (other than payment of the
amounts constituting Class G Capitalized Interest, notwithstanding that such
Class G Capitalized Interest may be deemed to constitute additions to principal,
and other than the payment of principal pursuant to Section 9.6 or Section
9.7) may only occur after the principal of the Class A-1 Notes, the Class
A-2 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 is subordinated to the
payment on each Payment Date of the principal and interest due and payable on
the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes,
the Class D Notes, the Class E Notes, the Class F Notes, and other amounts in
accordance with the Priority of Payments and any payment of principal of the
Class G Notes which is not paid, in accordance with the Priority of Payments,
on any Payment Date, shall not be considered “due and payable” solely for
purposes of Section 5.1(b) until the Payment Date on which such
principal may be paid in accordance with the Priority of Payments or all of the
Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes and the Class F Notes have been paid in full; provided, further, that the payment of principal of the Class
H Notes (other than payment of the amounts constituting Class H Capitalized
Interest, notwithstanding that such Class H Capitalized Interest may be deemed
to constitute additions to principal, and other than the payment of principal
pursuant to Section 9.6 or Section 9.7) may only occur after the
principal of the Class A-1 Notes, the Class A-2 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 has been paid in full and is subordinated to the payment on each
Payment Date of the principal and interest due and payable on the Class A-1
Notes, the Class A-2 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 other
amounts in accordance with the Priority of Payments and any payment of
principal of the Class H Notes which is not paid, in accordance with the Priority
of Payments, on any Payment Date, shall not be considered “due and payable”
solely for purposes of Section 5.1(b) until the Payment Date on which
such principal may be paid in accordance with the Priority of Payments or all
of the Class A-1 Notes, the Class A-2 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 have been paid in full; provided, further,
that the payment of principal of the Class J Notes (other than payment of the
amounts constituting Class J Capitalized Interest, notwithstanding that such
Class J Capitalized Interest 

 105
 

 

may be deemed to constitute additions to principal, and other than the
payment of principal pursuant to Section 9.6 or Section 9.7) may
only occur after the principal of the Class A-1 Notes, the Class A-2 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 is subordinated to the payment on each Payment Date of the principal and
interest due and payable on the Class A-1 Notes, the Class A-2 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 other amounts in accordance
with the Priority of Payments and any payment of principal of the Class H Notes
which is not paid, in accordance with the Priority of Payments, on any Payment
Date, shall not be considered “due and payable” solely for purposes of Section
5.1(b) until the Payment Date on which such principal may be paid in
accordance with the Priority of Payments or all of the Class A-1 Notes, the
Class A-2 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 have
been paid in full; provided, further,
that the payment of principal of the Class K Notes (other than payment of the
amounts constituting Class K Capitalized Interest, notwithstanding that such
Class K Capitalized Interest may be deemed to constitute additions to
principal, and other than the payment of principal pursuant to Section 9.6
or Section 9.7) may only occur after the principal of the Class A-1
Notes, the Class A-2 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 is subordinated to the
payment on each Payment Date of the principal and interest due and payable on the
Class A-1 Notes, the Class A-2 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 other amounts in accordance with the
Priority of Payments and any payment of principal of the Class H Notes which is
not paid, in accordance with the Priority of Payments, on any Payment Date,
shall not be considered “due and payable” solely for purposes of Section
5.1(b) until the Payment Date on which such principal may be paid in
accordance with the Priority of Payments or all of the Class A-1 Notes, the
Class A-2 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 have been paid in full.

(o)      As a condition to the
payment of principal of and interest on any Note without the imposition of U.S.
withholding tax, the Issuer shall require certification acceptable to it to
enable the Issuer, the Co-Issuer, the Trustee, the Preferred Shares Paying
Agent and the Paying Agent to determine their duties and liabilities with
respect to any taxes or other charges that they may be required to deduct or
withhold from payments in respect of such Security under any present or future
law or regulation of the United States or any present or future law or
regulation of any political subdivision thereof or taxing authority therein or
to comply with any reporting or other requirements under any such law or
regulation.

(p)      Payments in respect of
interest on and principal of the Notes shall be payable by wire transfer in
immediately available funds to a Dollar account maintained by the Holder or its
nominee; provided that the Holder has provided wiring instructions to
the Trustee on or before the related Record Date or, if wire transfer cannot be
effected, by a Dollar check drawn on a bank in the United States, or by a
Dollar check mailed to the Holder at its address in the Notes Register.  The Issuer expects that the Depository or its
nominee, upon receipt of any payment of principal or interest in respect of a
Global Security held by the Depository or

 106
 

 

its nominee, shall immediately credit the applicable Agent Members’
accounts with payments in amounts proportionate to the respective beneficial
interests in such Global Security as shown on the records of the Depository or
its nominee.  The Issuer also expects
that payments by Agent Members to owners of beneficial interests in such Global
Security held through Agent Members will be governed by standing instructions
and customary practices, as is now the case with securities held for the
accounts of customers registered in the names of nominees for such
customers.  Such payments will be the
responsibility of the Agent Members. 
Upon final payment due on the Maturity of a Note, the Holder thereof
shall present and surrender such Note at the Corporate Trust Office of the
Trustee or at the office of the Paying Agent (outside of the United States if
then required by applicable law in the case of a Certificated Note issued in
exchange for a beneficial interest in the Regulation S Global Security) on or
prior to such Maturity.  None of the
Issuer, the Co-Issuer, the Trustee or the Paying Agent will have any
responsibility or liability with respect to any records maintained by the
Holder of any Note with respect to the beneficial holders thereof or payments
made thereby on account of beneficial interests held therein.  In the case where any final payment of principal
and interest is to be made on any Note (other than on the Stated Maturity
thereof) the Issuer or, upon Issuer Request, the Trustee, in the name and at
the expense of the Issuer shall, not more than thirty (30) nor
fewer than five Business Days prior to the date on which such payment is to be
made, mail to the Persons entitled thereto at their addresses appearing on the
Notes Register, a notice which shall state the date on which such payment will
be made and the amount of such payment per U.S.$500,000 initial principal
amount of Notes and shall specify the place where such Notes may be presented
and surrendered for such payment.

(q)      Subject to the provisions
of Sections 2.7(a) through (l) hereof, Holders of Notes as of the
Record Date in respect of a Payment Date shall be entitled to the interest
accrued and payable in accordance with the Priority of Payments and principal
payable in accordance with the Priority of Payments on such Payment Date.  All such payments that are mailed or wired
and returned to the Paying Agent shall be held for payment as herein provided
at the office or agency of the Issuer and the Co-Issuer to be maintained as
provided in Section 7.2 (or returned to the Trustee).

(r)       Interest on any Note
which is payable, and is punctually paid or duly provided for, on any Payment
Date shall be paid to the Person in whose name that Note (or one or more
predecessor Notes) is registered at the close of business on the Record Date
for such interest.

(s)      Payments of principal to
Holders of the Notes of each Class shall be made in the proportion that the
Aggregate Outstanding Amount of the Notes of such Class registered in the name
of each such Holder on such Record Date bears to the Aggregate Outstanding
Amount of all Notes of such Class on such Record Date.

(t)       Interest accrued with
respect to the Notes shall be calculated as described in the applicable form of
Note attached hereto.

(u)      All reductions in the
principal amount of a Note (or one or more predecessor Notes) effected by
payments of installments of principal made on any Payment Date, Redemption Date
or upon Maturity shall be binding upon all future Holders of such 

 107
 

 

Note and of any 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 Note.

(v)      Notwithstanding anything
contained in this Indenture to the contrary, the obligations of the Issuer and
the Co-Issuer under the Notes and this Indenture are non-recourse obligations
of the Issuer and the Co-Issuer payable solely from the Assets and following
realization of the Assets, the obligations of the Co-Issuers and any claims of
the Noteholders, the Trustee, any other Secured Party or any third party
beneficiary of this Indenture shall be extinguished.  No recourse shall be had for the payment of
any amount owing in respect of the Notes against any Officer, director,
employee, shareholder, limited partner or incorporator of the Issuer, the
Co-Issuer or any of their respective successors or assigns for any amounts
payable under the Notes or this Indenture. 
It is understood that the foregoing provisions of this paragraph shall
not (i) prevent recourse to the Assets for the sums due or to become due under
any security, instrument or agreement which is part of the Assets or (ii)
constitute a waiver, release or discharge of any indebtedness or obligation
evidenced by the Notes or secured by this Indenture (to the extent it relates
to the obligation to make payments on the Notes) until such Assets have been
realized, whereupon any outstanding indebtedness or obligation in respect of
the Notes shall be extinguished.  It is
further understood that the foregoing provisions of this paragraph shall not
limit the right of any Person to name the Issuer or the Co-Issuer as a party
defendant in any Proceeding or in the exercise of any other remedy under the
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.

(w)     Subject to the foregoing
provisions of this Section 2.7, each Note delivered under this Indenture
and upon registration of transfer of or in exchange for or in lieu of any other
Note shall carry the rights of unpaid interest and principal that were carried
by such other Note.

(x)      Notwithstanding any of
the foregoing provisions with respect to payments of principal of and interest
on the Notes (but subject to Section 2.7(l)), if the Notes have become
or been declared due and payable following an Event of Default and such
acceleration of Maturity and its consequences have not been rescinded and
annulled and the provisions of Section 5.5 are not applicable, then
payments of principal of and interest on such Notes shall be made in accordance
with Section 5.7 hereof.

(y)      Payments in respect of
the Preferred Shares as contemplated by Sections 11.1(a)(i)(34) and 11.1(a)(ii)(17)
shall be made by the Trustee to the Preferred Shares Paying Agent.

Section 2.8             Persons Deemed Owners.

The Issuer, the
Co-Issuer, the Trustee, and any agent of the Issuer, the Co-Issuer or the
Trustee may treat as the owner of a Note the Person in whose name such Note is
registered on the Notes Register on the applicable Record Date for the purpose
of receiving payments of principal of and interest and other amounts on such
Note and on any other date for all other purposes whatsoever (whether or not
such Note is overdue), and none of the Issuer, the Co-Issuer or the Trustee nor
any agent of the Issuer, the Co-Issuer 

 108
 

 

or the Trustee shall be affected by notice to the contrary; provided, however, that the Depository, or its nominee, shall
be deemed the owner of the Global Securities, and owners of beneficial
interests in Global Securities will not be considered the owners of any Notes
for the purpose of receiving notices. 
With respect to the Preferred Shares, on any Payment Date, the Trustee
shall deliver to the Preferred Shares Paying Agent the distributions thereon
for distribution to the Preferred Shareholders.

 

Section 2.9             Cancellation.

All Notes surrendered for
payment, registration of transfer, exchange or redemption, or deemed lost or
stolen, shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee, and shall be promptly canceled by the Trustee and may
not be reissued or resold.  No Notes
shall be authenticated in lieu of or in exchange for any Notes canceled as
provided in this Section 2.9, except as expressly permitted by this
Indenture.  All canceled Notes held by
the Trustee shall be destroyed or held by the Trustee in accordance with its
standard retention policy unless the Issuer and the Co-Issuer shall direct by
an Issuer Order that they be returned to them.

Section 2.10           Global Securities; Temporary Notes.

(a)      In the event that the
Depository notifies the Issuer and the Co-Issuer that it is unwilling or unable
to continue as Depository for a Global Security or if at any time such
Depository ceases to be a “Clearing Agency” registered under the Exchange Act
and a successor depository is not appointed by the Issuer within ninety (90)
days of such notice, the Global Securities deposited with the Depository
pursuant to Section 2.2 hereof shall be transferred to the beneficial
owners thereof subject to the procedures and conditions set forth in this Section
2.10.

(b)      Any Global Security that
is transferable to the beneficial owners thereof pursuant to Section 2.10(a)
above shall be surrendered by the Depository to the Trustee’s Corporate Trust
Office together with necessary instruction for the registration and delivery of
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 and Class H Notes in definitive
registered form without interest coupons to the beneficial owners (or such
owner’s nominee) holding the ownership interests in such Global Security.  Any such transfer shall be made, without
charge, and the Trustee shall authenticate and deliver, upon such transfer of
each portion of such Global Security, an equal aggregate principal amount of
Certificated Notes of the same Class and authorized denominations.  Any Certificated Notes delivered in exchange
for an interest in a Global Security shall, except as otherwise provided by Section
2.5(f), bear the applicable legend set forth in Exhibit A or B,
as applicable, and shall be subject to the transfer restrictions referred to in
such applicable legend.  The Holder of
each such registered individual Global Security may transfer such Global
Security by surrendering it at the Corporate Trust Office of the Trustee, or at
the office of the Paying Agent or Irish Paying Agent.

(c)      Subject to the provisions
of Section 2.10(b) above, the registered Holder of a Global Security may
grant proxies and otherwise authorize any Person, including Agent 

 109
 

 

Members and Persons that may hold interests through Agent Members, to
take any action which a Holder is entitled to take under this Indenture or the
Notes.

(d)      In the event of the
occurrence of either of the events specified in Section 2.10(a)
above, the Issuer and the Co-Issuer shall promptly make available to the
Trustee a reasonable supply of Certificated Notes.

Pending the preparation
of Certificated Notes pursuant to this Section 2.10, the Issuer and the
Co-Issuer may execute and, upon Issuer Order, the Trustee shall authenticate
and deliver, temporary 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 or Class H
Notes that are printed, lithographed, typewritten, mimeographed or otherwise
reproduced, in any authorized denomination, substantially of the tenor of the
Certificated Notes in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the Officers
executing such Certificated Notes may determine, as conclusively evidenced by
their execution of such Certificated Notes.

If temporary Certificated
Notes are issued, the Issuer and the Co-Issuer shall cause permanent
Certificated Notes to be prepared without unreasonable delay.  The Certificated Notes shall be printed,
lithographed, typewritten or otherwise reproduced, or provided by any
combination thereof, or in any other manner permitted by the rules and
regulations of any applicable notes exchange, all as determined by the Officers
executing such Certificated Notes.  After
the preparation of Certificated Notes, the temporary Notes shall be
exchangeable for Certificated Notes upon surrender of the applicable temporary
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 or Class H Notes at the office or
agency maintained by the Issuer and the Co-Issuer for such purpose, without
charge to the Holder.  Upon surrender for
cancellation of any one or more temporary 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 or Class H Notes, the Issuer and the Co-Issuer shall execute, and
the Trustee shall authenticate and deliver, in exchange therefor the same aggregate
principal amount of Certificated Notes of authorized denominations.  Until so exchanged, the temporary 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 or Class H Notes shall in all respects be
entitled to the same benefits under this Indenture as Certificated Notes.

Section 2.11           U.S. Tax Treatment of Notes.

(a)      Each of the Issuer and
the Co-Issuer intends that, for U.S. federal income tax purposes, the Senior
Notes be treated as debt.  Each
prospective purchaser and any subsequent transferee of a Senior Note or any
interest therein shall, by virtue of its purchase or other acquisition of such
Senior Note or interest therein, be deemed to have agreed to treat such Senior
Note as debt for U.S. federal income tax purposes.

(b)      [Reserved]

(c)      [Reserved]

 110
 

 

(d)      Each Holder of Notes
shall timely furnish to the Issuer, the Co-Issuer or its agents any U.S.
federal income tax form or certification (such as IRS Form W-8BEN
(Certification of Foreign Status of Beneficial Owner) (with Part III marked),
IRS Form W-8IMY (Certification of Foreign Intermediary Status), IRS Form W-9
(Request for Taxpayer Identification Number and Certification), or IRS Form
W-8ECI (Certification of Foreign Person’s Claim for Exemption from Withholding
on Income Effectively Connected with Conduct of a U.S. Trade or Business) or
any successors to such IRS forms that the Issuer, the Co-Issuer or its agents
may reasonably request and shall update or replace such forms or certification
in accordance with its terms or its subsequent amendments.

Section 2.12           Authenticating Agents.

Upon the request of the
Issuer and the Co-Issuer, the Trustee shall, and if the Trustee so chooses the
Trustee may, pursuant to this Indenture, appoint one or more Authenticating
Agents with power to act on its behalf and subject to its direction in the
authentication of Notes in connection with issuance, transfers and exchanges
under Sections 2.4, 2.5, 2.6 and 8.5 hereof, as fully to
all intents and purposes as though each such Authenticating Agent had been
expressly authorized by such Sections to authenticate such Notes.  For all purposes of this Indenture, the
authentication of Notes by an Authenticating Agent pursuant to this Section
2.12 shall be deemed to be the authentication of Notes by the Trustee.

Any corporation or
banking association into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation or banking
association resulting from any merger, consolidation or conversion to which any
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
such Authenticating Agent hereunder, without the execution or filing of any
further act on the part of the parties hereto or such Authenticating Agent or
such successor corporation.  Any
Authenticating Agent may at any time resign by giving written notice of resignation
to the Trustee, the Issuer and the Co-Issuer. 
The Trustee may at any time terminate the agency of any Authenticating
Agent by giving written notice of termination to such Authenticating Agent, the
Issuer and the Co-Issuer.  Upon receiving
such notice of resignation or upon such a termination, the Trustee shall
promptly appoint a successor Authenticating Agent and shall give written notice
of such appointment to the Issuer.

The Trustee agrees to pay
to each Authenticating Agent appointed by it from time to time reasonable
compensation for its services, and reimbursement for its reasonable expenses
relating thereto and the Trustee shall be entitled to be reimbursed for such
payments, subject to Section 6.7 hereof. 
The provisions of Sections 2.9, 6.4 and 6.5 hereof
shall be applicable to any Authenticating Agent.

Section 2.13           Forced Sale on Failure to Comply
with Restrictions.

(a)      Notwithstanding anything
to the contrary elsewhere in this Indenture, any transfer of a Note or interest
therein to a U.S. Person who is determined not to have been both a QIB (except
in the case of QRS II Corp.) and a Qualified Purchaser at the time of
acquisition of the Note or interest therein shall be null and void and any such
proposed transfer of which 

 111
 

 

the Issuer, the Co-Issuer or the Trustee shall have notice may be
disregarded by the Issuer, the Co-Issuer and the Trustee for all purposes.

(b)      If the Issuer determines
that any Holder of a Note has not satisfied the applicable requirement
described in Section 2.13(a) above (any such person a “Non-Permitted Holder”),
then the Issuer shall promptly after discovery that such Person is a
Non-Permitted Holder by the Issuer, the Co-Issuer or the Trustee (and notice by
the Trustee or the Co-Issuer to the Issuer, if either of them makes the
discovery), send notice to such Non-Permitted Holder demanding that such
Non-Permitted Holder transfer its interest to a Person that is not a
Non-Permitted Holder within thirty (30) days
of the date of such notice.  If such
Non-Permitted Holder fails to so transfer its Note or interest therein, the
Issuer shall have the right, without further notice to the Non-Permitted
Holder, to sell such Note or interest therein to a purchaser selected by the
Issuer that is not a Non-Permitted Holder on such terms as the Issuer may
choose.  The Issuer, or the Trustee
acting on behalf of the Issuer, may select the purchaser by soliciting one or
more bids from one or more brokers or other market professionals that regularly
deal in securities similar to the Note, and selling such Note to the highest such
bidder.  However, the Issuer or the
Trustee may select a purchaser by any other means determined by it in its sole
discretion.  The Holder of such Note, the
Non-Permitted Holder and each other Person in the chain of title from the
Holder to the Non-Permitted Holder, by its acceptance of an interest in the
Note, agrees to cooperate with the Issuer and the Trustee to effect such
transfers.  The proceeds of such sale,
net of any commissions, expenses and taxes due in connection with such sale
shall be remitted to the Non-Permitted Holder. 
The terms and conditions of any sale under this Section 2.13(b)
shall be determined in the sole discretion of the Issuer, and the Issuer shall
not be liable to any Person having an interest in the Note sold as a result of
any such sale of exercise of such discretion.

 112
 

 

ARTICLE 3

CONDITIONS
PRECEDENT; PLEDGED OBLIGATIONS

Section 3.1             General Provisions.

The Notes to be issued on
the Closing Date shall be executed by the Issuer and the Co-Issuer upon
compliance with Section 3.2 and shall be delivered to the Trustee for
authentication and thereupon the same shall be authenticated and delivered by
the Trustee upon Issuer Request and upon receipt by the Trustee of the items
described below:

(a)      an Officer’s Certificate
of the Issuer (i) evidencing the authorization by Board Resolution of the
execution and delivery of this Indenture, the Collateral Management Agreement,
each Hedge Agreement and related documents, the execution, authentication and
delivery of the Notes and specifying the Stated Maturity of each Class of
Notes, the principal amount of each Class of Notes and the applicable Note
Interest Rate of each Class of Notes to be authenticated and delivered, and
(ii) certifying that (A) the attached copy of the Board Resolution is a true
and complete copy thereof, (B) such resolutions have not been rescinded and are
in full force and effect on and as of the Closing Date, (C) the Directors
authorized to execute and deliver such documents hold the offices and have the
signatures indicated thereon and (4) at least U.S.$57,500,000 of proceeds on
account of the sale on the Closing Date of the Preferred Shares shall have been
received;

(b)      an Officer’s Certificate
of the Co-Issuer (i) evidencing the authorization by Board Resolution of the
execution and delivery of this Indenture and related documents, the execution,
authentication and delivery of the Notes and specifying the Stated Maturity of
each Class of Notes, the principal amount of each Class of Notes and the
applicable Note Interest Rate of each Class of Notes to be authenticated and
delivered, and (ii) certifying that (A) the attached copy of the Board
Resolution is a true and complete copy thereof, (B) such resolutions have not
been rescinded and are in full force and effect on and as of the Closing Date
and (C) the Officers authorized to execute and deliver such documents hold the
offices and have the signatures indicated thereon;

(c)      (i) either (A)
certificates of the Issuer or other official document evidencing the due
authorization, approval or consent of any governmental body or bodies, at the
time having jurisdiction in the premises, together with an Opinion of Counsel
of the Issuer that no other authorization, approval or consent of any
governmental body is required for the valid issuance of such Notes, or (B) an
Opinion of Counsel of the Issuer reasonably satisfactory in form and substance
to the Trustee that no such authorization, approval or consent of any
governmental body is required for the valid issuance of such Notes except as
may have been given; and

(ii)      either (A) certificates
of the Co-Issuer or other official document evidencing the due authorization,
approval or consent of any governmental body or bodies, at the time having
jurisdiction in the premises, together with an Opinion of 

 113
 

 

Counsel of the
Co-Issuer that no other authorization, approval or consent of any governmental
body is required for the valid issuance of such Notes, or (B) an Opinion of
Counsel of the Co-Issuer reasonably satisfactory in form and substance to the
Trustee that no such authorization, approval or consent of any governmental
body is required for the valid issuance of such Notes except as may have been
given;

(d)      opinions of Cadwalader,
Wickersham & Taft LLP, special U.S. counsel to the Issuer, the Co-Issuer
and the Collateral Manager (which opinions may be limited to the laws of the
State of New York and the federal law of the United States and may assume,
among other things, the correctness of the representations and warranties made
or deemed made by the owners of Notes pursuant to Sections 2.5(g) and (i))
dated the Closing Date in a form satisfactory to the Initial Purchasers and the
Trustee;

(e)      an opinion of Maples and
Calder, Cayman Islands counsel to the Issuer (which opinion shall be limited to
the laws of the Cayman Islands), dated the Closing Date in a form satisfactory
to the Initial Purchasers and the Trustee;

(f)       an opinion of counsel to
each Hedge Counterparty, dated the Closing Date in a form satisfactory to the
Initial Purchasers and the Trustee;

(g)      opinions of Clifford
Chance, (i) special tax counsel to Gramercy Investment regarding its
qualification and taxation as a REIT, substantially in the form of Exhibit K
attached hereto, (ii) special counsel to Gramercy Investment, as the Seller,
dated the Closing Date, and (iii) special counsel to the Advancing Agent, dated
the Closing Date in a form satisfactory to the Initial Purchasers and the
Trustee;

(h)      an Officer’s Certificate,
given on behalf of the Issuer and without personal liability, stating that the
Issuer is not in Default under this Indenture and that the issuance of the
Notes will not result in a breach of any of the terms, conditions or provisions
of, or constitute a Default under, the Governing Documents of the Issuer, any
indenture or other agreement or instrument to which the Issuer is a party or by
which it is bound, or any order of any court or administrative agency entered
in any Proceeding to which the Issuer is a party or by which it may be bound or
to which it may be subject; that all conditions precedent provided in this
Indenture relating to the authentication and delivery of the Notes applied for
and all conditions precedent provided in the Preferred Shares Paying Agency
Agreement relating to the issuance by the Issuer of the Preferred Shares have
been complied with;

(i)       an Officer’s Certificate
stating that the Co-Issuer is not in Default under this Indenture and that the
issuance of the Securities will not result in a breach of any of the terms,
conditions or provisions of, or constitute a Default under, the Governing
Documents of the Co-Issuer, any indenture or other agreement or instrument to
which the Co-Issuer is a party or by which it is bound, or any order of any
court or administrative agency entered in any Proceeding to which the Co-Issuer
is a party or by which it may be bound or to which it may be subject; that all
conditions precedent provided in this Indenture relating to the authentication
and delivery of the 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;

 114
 

 

(j)       an executed counterpart
of the initial Collateral Debt Securities Purchase Agreement and the Collateral
Management Agreement;

(k)      an executed copy of each
Hedge Agreement;

(l)       an executed counterpart
of the Preferred Shares Paying Agency Agreement;

(m)     an opinion of counsel to
the Trustee, dated the Closing Date in a form satisfactory to the Initial
Purchasers;

(n)      an Accountants’ Report
confirming the following information as of the Closing Date:  (i) the information (other than the Principal
Balance and the Purchase Price) with respect to each Collateral Debt Security
set forth on the Schedule of Closing Date Collateral Debt Securities attached
hereto as Schedule E by reference to such sources as shall be
specified therein and (ii) specifying the procedures undertaken by the
accountants to review data and computations relating to the foregoing;

(o)      an Officer’s Certificate
from the Collateral Manager (i) confirming that each Collateral Debt Security
set forth on the Schedule E attached hereto meets the
Eligibility Criteria and that Schedule E correctly lists the
Collateral Debt Securities to be Granted to the Trustee on the Closing Date,
and (ii) stating the Aggregate Principal Amount of the Collateral Debt
Securities;

(p)      evidence of preparation
for filing at the appropriate filing office in the District of Columbia of a
financing statement executed on behalf of the Issuer relating to the perfection
of the lien of this Indenture;

(q)      an Issuer Order executed
by the Issuer and the Co-Issuer directing the Trustee to (i) authenticate the
Notes specified therein, in the amounts set forth therein and registered in the
name(s) set forth therein and (ii) deliver the authenticated Notes as directed
by the Issuer and the Co-Issuer; and

(r)       such other documents as
the Trustee may reasonably require.

Section 3.2             Security for Notes.

Prior to the issuance of
the 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
Assets and the transfer of all Collateral Debt Securities acquired in
connection therewith purchased by the Issuer on the Closing Date (as set forth
in the Schedule of Closing Date Collateral Debt Securities) to the Trustee, without
recourse (except as expressly provided in each applicable Collateral Debt
Security Purchase Agreement), in the manner provided in Section 3.3(a)
and the crediting to the Custodial Account by the Custodial Securities
Intermediary of such Collateral Debt Securities shall have occurred;

 115
 

 

(b)      Certificate of the
Issuer.  A certificate of an
Authorized Officer of the Issuer given on behalf of the Issuer and without
personal liability, dated as of the Closing Date, delivered to the Trustee, to
the effect that, in the case of each Collateral Debt Security pledged to the
Trustee for inclusion in the Assets on the Closing Date and immediately prior
to the delivery thereof on the Closing Date:

(i)       the Issuer is the owner
of such Collateral 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;

(ii)      the Issuer has acquired
its ownership in such Collateral Debt Security in good faith without notice of
any adverse claim, except as described in paragraph (i) above;

(iii)     the Issuer has not
assigned, pledged or otherwise encumbered any interest in such Collateral 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;

(iv)    the Underlying Instrument
with respect to such Collateral Debt Security does not prohibit the Issuer from
Granting a security interest in and assigning and pledging such Collateral Debt
Security to the Trustee;

(v)     the information set forth
with respect to such Collateral Debt Security in the Schedule of Closing Date
Collateral Debt Securities is correct;

(vi)    the Collateral Debt
Securities included in the Assets satisfy the requirements of the definition of
Eligibility Criteria and the requirements of Section 3.2(a); and

(vii)   the Grant pursuant to the
Granting Clauses of this Indenture shall result in a first priority security
interest in favor of the Trustee for the benefit of the Holders of the Notes
and each Hedge Counterparty in all of the Issuer’s right, title and interest in
and to the Collateral Debt Securities pledged to the Trustee for inclusion in
the Assets on the Closing Date.

(c)      Rating Letters.  The Trustee’s receipt of a letter signed by
each Rating Agency and confirming that (i) Class A-1 Notes have been rated “Aaa”
by Moody’s and “AAA” by S&P, (ii) the Class A-2 Notes have been rated “Aaa”
by Moody’s and “AAA” by S&P, (iii) the Class B Notes have been rated at
least “Aa2” by Moody’s and “AA” by S&P, (iv) the Class C Notes have been
rated at least “A1” by Moody’s and “A+” by S&P, (v) the Class D Notes have
been rated at least “A2” by Moody’s and “A” by S&P, (vi) the Class E Notes
have been rated at least “A3” by Moody’s and “A-” by S&P, (vii) the Class F
Notes have been rated at least “Baa1” by Moody’s and “BBB+” by S&P, (viii)
the Class G Notes have been rated at least “Baa2” by Moody’s and “BBB” by
S&P, (ix) the Class H Notes have been rated at least “Baa3” by Moody’s and “BBB-”
by S&P, (x) the Class J Notes have been rated at least “Ba2” by Moody’s and
“BB” by S&P and (xi) the Class K Notes have been rated 

 116
 

 

at least “B2” by Moody’s and “B” by S&P and that such ratings are
in full force and effect on the Closing Date.

(d)      Accounts.  Evidence of the establishment of the Payment
Account, the Collection Account, the Interest Collection Account, the Principal
Collection Account, the Unused Proceeds Account, the Delayed Funding
Obligations Account, the Expense Account, each Hedge Collateral Account, each
Hedge Termination Account, the Preferred Shares Distribution Account and the
Custodial  Account.

(e)      Deposit to Expense
Account.  On the Closing Date, the
Issuer shall deposit into the Expense Account from the gross proceeds of the offering
of the Securities, approximately $ 10,992,796.

(f)       Deposit to Delayed
Funding Obligations Account.  On the
Closing Date, the Issuer or the Seller shall deposit into the Delayed Funding
Obligations Account approximately $0, which, in the aggregate is sufficient to
fulfill the maximum funding obligations under all Delayed Draw Term Loans
included in the Initial Collateral Debt Securities.

(g)      Deposit to Unused
Proceeds Account.  On the Closing
Date, the Issuer shall deposit the Initial Deposit with the Trustee in an
amount equal to approximately $224,545,308.

(h)      Issuance of Preferred
Shares.  The Issuer shall have
delivered to the Trustee evidence that the Preferred Shares have been, or
contemporaneously with the issuance of the Notes will be, (1) issued by the
Issuer and (2) acquired in their entirety by QRS II Corp.

Section 3.3             Transfer of Pledged Obligations.

(a)      Wells Fargo Bank,
National Association is hereby appointed as Securities Intermediary (in such
capacity, the “Custodial Securities Intermediary”) to hold all Pledged
Obligations delivered to it in physical form at its office in Minneapolis,
Minnesota.  Any successor to such
Securities Intermediary shall be a U.S. state or national bank or trust company
that is not an Affiliate of the Issuer or the Co-Issuer and has capital and
surplus of at least U.S.$100,000,000. 
Subject to the limited right to relocate Pledged Obligations set forth
in Section 7.5(b), the Custodial Securities Intermediary, as a
Securities Intermediary, shall hold all Collateral Debt Securities in the
Custodial Account and Eligible Investments and other investments purchased in
accordance with this Indenture in the respective Accounts in which the funds
used to purchase such investments are held in accordance with Article 10,
and, in respect of each Account (other than the Payment Account), the Trustee
shall have entered into an agreement with the Securities Intermediary (the “Securities
Accounts Control Agreement”) providing, inter alia,
that the establishment and maintenance of such Account will be governed by a
law satisfactory to the Issuer, the Trustee and the Custodial Securities
Intermediary.  To the maximum extent
feasible, Pledged Obligations shall be transferred to the Trustee as Security
Entitlements in the manner set forth in clause (i) below.  In the event that the measures set forth in
clause (i) below cannot be taken as to any Pledged Obligations, such Pledged
Obligation may be transferred to the Trustee in the manner set forth in clauses
(ii) 

 117
 

 

through (vii) below, as appropriate. 
The security interest of the Trustee in Pledged Obligations shall be
perfected and otherwise evidenced as follows:

(i)       in the case of such
Pledged Obligations consisting of Security Entitlements by (A) the Issuer
causing the Custodial Securities Intermediary, in accordance with the
Securities Accounts Control Agreement, to indicate by book entry that a
Financial Asset has been credited to the Custodial Account and (B) the Issuer
causing the Custodial Securities Intermediary to agree pursuant to the
Securities Accounts Control Agreement that it will comply with Entitlement
Orders originated by the Trustee with respect to each such Security Entitlement
without further consent by the Issuer;

(ii)      in the case of Pledged
Obligations that are “uncertificated securities” (as such term is defined in
the UCC) to the extent that any such uncertificated securities do not
constitute Financial Assets forming the basis of Security Entitlements by the
Trustee pursuant to clause (i) (the “Uncertificated Securities”), by the
Issuer (A)  causing the issuer(s) of such
Uncertificated Securities to register on their respective books the Trustee as
the registered owner thereof upon original issue or transfer thereof or (B)
causing another Person, other than a Securities Intermediary, either to become
the registered owner of such Uncertificated Securities on behalf of the
Trustee, or such Person having previously become the registered owner, to
acknowledge that it holds such Uncertificated Securities for the Trustee;

(iii)     in the case of Pledged
Obligations consisting of Certificated Securities in registered form to the
extent that any such Certificated Securities do not constitute Financial Assets
forming the basis of Security Entitlements acquired by the Trustee pursuant to
clause (i) (the “Registered Securities”), by the Issuer (A) causing (1)
the Trustee to obtain possession of such Registered Securities in the State of
Minnesota or (2) another Person, other than a Securities Intermediary, either
to acquire possession of such Registered Securities on behalf of the Trustee,
or having previously acquired such Registered Securities, in either case, in
the State of Minnesota to acknowledge that it holds such Registered Securities
for the Trustee and (B) causing (1) the endorsement of such Registered
Securities to the Trustee by an effective endorsement; or (2) the registration
of such Registered Securities in the name of the Trustee by the issuer thereof
upon its original issue or registration of transfer;

(iv)    in the case of Pledged
Obligations consisting of Certificated Securities in bearer form to the extent
that any such Certificated Securities do not constitute Financial Assets
forming the basis of Security Entitlements acquired by the Trustee pursuant to
clause (i) (the “Bearer Securities”), by the Issuer causing (A) the
Trustee to obtain possession of such Bearer Securities in the State of
Minnesota or (B) another Person, other than a Securities Intermediary, either
to acquire possession of such Bearer Securities on behalf of the Trustee or,
having previously acquired possession of such Bearer Securities, in either
case, in the State of Minnesota to acknowledge that it holds such Bearer
Securities for the Trustee;

 118
 

 

(v)     in the case of Pledged
Obligations that consist of Money or Instruments (the “Minnesota Collateral”), to the extent that any
such Minnesota Collateral does not constitute a Financial Asset forming the
basis of a Security Entitlement acquired by the Trustee pursuant to clause (i),
by the Issuer causing (A) the Trustee to acquire possession of such Minnesota
Collateral in the State of Minnesota or (B) another Person (other than the
Issuer or a Person controlling, controlled by, or under common control with,
the Issuer) (1) to (x) take possession of such Minnesota Collateral in the
State of Minnesota and (y) authenticate a record acknowledging that it holds
such possession for the benefit of the Trustee or (2) to (x) authenticate a
record acknowledging that it will hold possession of such Minnesota Collateral
for the benefit of the Trustee and (y) take possession of such Minnesota
Collateral in the State of Minnesota;

(vi)    in the case of Pledged
Obligations that consist of UCC Accounts or General Intangibles (“Accounts
Receivable”), by the Issuer (A) notifying, or causing the notification of,
the account debtors (as such term is defined in Section 9-102(a) of the
UCC) for such Accounts Receivable of the security interest of the Trustee in
such Accounts Receivable and causing the Securities Intermediary to credit such
Accounts Receivable to the Custodial Account and to treat such Accounts
Receivable as Financial Assets within the meaning of Article 8 of the UCC and
(B) to the extent that doing so would be effective to perfect a security
interest in such Accounts Receivable under the UCC as in effect at the time of
transfer of such Accounts Receivable to the Trustee hereunder, filing or
causing the filing of a UCC financing statement that encompasses such Accounts
Receivable with the Recorder of Deeds of the District of Columbia and such
other offices as applicable; and

(vii)   to the maximum extent
reasonably possible, in the case of any Loans, 
Preferred Equity Securities or Participations that are not evidenced by
Instruments, Certificated Securities or Uncertificated Securities, by the
Issuer (A) taking all steps necessary (including obtaining any necessary
consents to the transfer of the Loan, 
Participation or Preferred Equity Security, as applicable) to make the
Custodial Securities Intermediary the registered owner thereof, (B) causing the
Custodial Securities Intermediary to credit such Loans, Participations or
Preferred Equity Securities, as applicable, to the Custodial Account and to
treat such Loans, Participations or Preferred Equity Securities, as applicable,
as Financial Assets within the meaning of Article 8 of the UCC and (C) to the
extent that doing so would be effective to perfect a security interest in such
Loans, Participations or Preferred Equity Securities, as applicable, under the
UCC as in effect at the time of transfer of such Loans, Participations or
Preferred Equity Securities to the Trustee hereunder, filing or causing the
filing of a UCC financing statement that encompasses such Loans, Participations
or Preferred Equity Securities, as applicable, with the Recorder of Deeds of
the District of Columbia and such other offices as applicable.

(b)      The Issuer hereby
authorizes the filing of UCC financing statements describing as the collateral
covered thereby “all of the debtor’s personal property and assets,” or words to
that effect, notwithstanding that such wording may be broader in scope than the
Assets described in this Indenture.

 119
 

 

(c)      Without limiting the
foregoing, the Issuer and the Trustee on behalf of the Bank agree, and the Bank
shall cause the Custodial Securities Intermediary, to take such different or
additional action as the Trustee may reasonably request in order to maintain
the perfection and priority of the security interest of the Trustee in the
event of any change in applicable law or regulation, including Articles 8 and 9
of the UCC and Treasury Regulations governing transfers of interests in
Government Items (it being understood that the Trustee shall be entitled to
rely upon an Opinion of Counsel, including an Opinion of Counsel delivered in
accordance with Section 3.1(d), as to the need to file any financing
statements or continuation statements, the dates by which such filings are
required to be made and the jurisdictions in which such filings are required to
be made).

(d)      Without limiting any of
the foregoing,

(i)       in connection with each
Grant of a Collateral Debt Security hereunder, the Issuer shall deliver (or
cause to be delivered by the applicable Seller) to the Custodial Securities
Intermediary (A) the original of any note (or a copy of such note together with
a lost note affidavit), certificate or other instrument constituting or
evidencing such Collateral Debt Security and any other Underlying Instrument
related to such Collateral Debt Security the delivery of which is necessary in
order to perfect the security interest of the Trustee in such Collateral Debt
Security granted pursuant to this Indenture and (B) copies of the other
Underlying Instruments then in possession of the Issuer;

(ii)      from time to time upon
the request of the Trustee or Collateral Manager, the Issuer shall deliver (or
cause to be delivered) to the Custodial Securities Intermediary any Underlying
Instrument in the possession of the Issuer and not previously delivered
hereunder (including originals of Underlying Instruments not previously
required to be delivered as originals) and as to which the Trustee or
Collateral Manager, as applicable, shall have reasonably determined to be
necessary or appropriate for the administration of such Collateral Debt Security
hereunder or under the Collateral Management Agreement or for the protection of
the security interest of the Trustee under this Indenture;

(iii)     in connection with any
delivery of documents to the Custodial Securities Intermediary pursuant to
clauses (i) and (ii) above, the Trustee shall deliver to the Collateral
Manager, on behalf of the Issuer, a Trust Receipt in the form of Exhibit K
acknowledging the receipt of such documents by the Custodial Securities
Intermediary and that it is holding such documents subject to the terms of this
Indenture;

(iv)    from time to time upon
request of the Collateral Manager, the Custodial Securities Intermediary shall,
upon delivery by the Collateral Manager of a duly completed Request for Release
in the form of Exhibit L hereto, release to the Collateral Manager such
of the Underlying Instruments then in its custody as the Collateral Manager
reasonably so requests.  By submission of
any such Request for Release, the Collateral Manager shall be deemed to have
represented and warranted that it has determined, in accordance with the
Collateral Manager Servicing Standard, that the requested release is necessary
for one or more of the purposes described in clause (ii) above.  The Collateral Manager shall return to the
Custodial Securities Intermediary each Underlying Instrument released from
custody pursuant to this clause (iv) within twenty 

 120
 

 

(20) Business
Days of receipt thereof (except such Underlying Instruments as are released in
connection with a sale, exchange or other disposition, in each case only as
permitted under this Indenture, of the related Collateral Debt Security that is
consummated within such 20-day period). 
Notwithstanding the foregoing provisions of this clause (iv), (A) any
note, certificate or other instrument evidencing a Pledged Collateral Debt
Security shall be released only for the purpose of (1) a sale, exchange or
other disposition of such Pledged Collateral Debt Security that is permitted in
accordance with the terms of this Indenture or (2) presentation, collection,
renewal or registration of transfer of such Collateral Debt Security and (B)
the Custodial Securities Intermediary may refuse to honor any Request for
Release following the occurrence of an Event of Default under this Indenture.

(e)      As of the Closing Date
(with respect to the Assets) and each date on which an Asset is acquired (only
with respect to the Asset so acquired) the Issuer represents and warrants as
follows:

(i)       this Indenture creates a
valid and continuing security interest (as defined in the UCC) in the Assets in
favor of the Trustee for the benefit of the Noteholders and each Hedge
Counterparty, which security interest is prior to all other liens, and is
enforceable as such against creditors of and purchasers from the Issuer;

(ii)      the Issuer owns and has
good and marketable title to such Assets free and clear of any lien, claim or
encumbrance of any Person;

(iii)     in the case of each
Asset, the Issuer has acquired its ownership in such Asset in good faith
without notice of any adverse claim as defined in Section 8-102(a)(1) of the
UCC as in effect on the date hereof;

(iv)    other than the security
interest granted to the Trustee for the benefit of the Noteholders and each
Hedge Counterparty pursuant to this Indenture, the Issuer has not, pledged,
assigned, sold, granted a security interest in, or otherwise conveyed any of
the Assets;

(v)     the Issuer has not
authorized the filing of and is not aware of any financing statements against
the Issuer that include a description of collateral covering the Assets other
than any financing statement relating to the security interest granted to the
Trustee for the benefit of the Noteholders and each Hedge Counterparty
hereunder or that has been terminated; the Issuer is not aware of any judgment
or Pension Benefit Guarantee Corporation lien and tax lien filings against the
Issuer;

(vi)    the Issuer has received
all consents and approvals required by the terms of each Asset and the
Underlying Instruments to grant to the Trustee its interest and rights in such
Asset hereunder;

(vii)   the Issuer has caused or
will have caused, within ten (10) days, the filing of all appropriate financing
statements in the proper filing office in the appropriate jurisdictions under
applicable law in order to perfect the security interest in the Assets 

 121
 

 

granted to the
Trustee for the benefit of the Noteholders and each Hedge Counterparty
hereunder;

(viii)  each Asset is an
Instrument, a General Intangible or a Certificated Security or Uncertificated
Security or has been and will have been credited to a Securities Account;

(ix)     the Custodial Securities
Intermediary has agreed to treat all assets credited to the Securities Account
as Financial Assets;

(x)      the Issuer has delivered
a fully executed Securities Accounts Control Agreement pursuant to which the
Custodial Securities Intermediary has agreed to comply with all instructions
originated by the Trustee relating to the Custodial Account without further
consent of the Issuer;  the Custodial
Account is not in the name of any person other than the Issuer or the
Trustee;  the Issuer has not consented to
the  Securities Intermediary of the  Custodial Account to comply with Entitlement
Orders of any person other than the Trustee;

(xi)     (A) all original executed
copies of each promissory note or other writings that constitute or evidence
any pledged obligation that constitutes Instruments have been delivered to the
Custodial Securities Intermediary for the benefit of the Trustee, (B) the
Issuer has received a written acknowledgement from the Custodial Securities
Intermediary that the Custodial Securities Intermediary is acting solely as
agent of the Trustee and (C) none of the promissory notes or other writings
that constitute or evidence such collateral has any marks or notations indicating
that they have been pledged, assigned or otherwise conveyed by the Issuer to
any Person other than the Trustee;

(xii)    (A) the Collection
Accounts, the Unused Proceeds Account, the Delayed Funding Obligations Account,
each Hedge Termination Account, each Hedge Collateral Account, the Expense
Account and the Payment Account (collectively, the “Deposit Accounts”)
constitute “deposit accounts” within the meaning of the UCC, (B) the Issuer has
taken all steps necessary to cause the Trustee to become the customer and
account holder of the Deposit Accounts, (C) other than the security interest
granted to the Trustee pursuant to this Indenture, the Issuer has not pledged,
assigned, sold, granted a security interest in, or otherwise conveyed any of
the Deposit Accounts, and (D) the Deposit Accounts are not in the name of any
person other than the Issuer or the Trustee. 
The Issuer has not consented to the bank maintaining the Deposit
Accounts to comply with the instructions of any person other than the Trustee;
and

(xiii)   the Issuer has
established procedures such that any Eligible Investments purchased with funds
withdrawn from the Deposit Accounts will be either (i) credited to a Securities
Account over which the Trustee will have a first priority perfected security
interest, (ii) purchased in the name of the Trustee, or (iii) held in another
manner sufficient to establish the Trustee’s first priority perfected security
interest over such Eligible Investments.

 122
 

 

(f)       The Trustee shall only
invest in Eligible Investments which the applicable Custodial Securities
Intermediary agrees to credit to the applicable account.  To the extent any Eligible Investment shall
not be delivered to the Trustee by causing the Custodial Securities
Intermediary to create a Security Entitlement in the Securities Account in
favor of the Trustee, the Issuer shall deliver an Opinion of Counsel to the
Trustee to the effect that any other delivery will effect a first priority
security interest in favor of the Trustee in such Eligible Instrument.

 123
 

 

ARTICLE 4

SATISFACTION
AND DISCHARGE

Section 4.1             Satisfaction and Discharge of
Indenture.

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

(a)      either:

(i)       all Notes theretofore
authenticated and delivered (other than (A) Notes which have been mutilated,
defaced, destroyed, lost or stolen and which have been replaced or paid as
provided in Section 2.6 and (B) Notes for whose payment Money has
theretofore irrevocably been deposited in trust and thereafter repaid to the
Issuer or discharged from such trust, as provided in Section 7.3) have
been delivered to the Trustee for cancellation; or

(ii)      all Notes not
theretofore delivered to the Trustee for cancellation (A) have become due and
payable, or (B) will become due and payable at their Stated Maturity within one
year, or (C) are to be called for redemption pursuant to Section 9.1 or Section
9.2 under an arrangement satisfactory to the Trustee for the giving of
notice of redemption by the Issuer and the Co-Issuer pursuant to Section 9.4
and the Issuer or the Co-Issuer, in the case of clauses (A), (B) or (C) of this
subsection (ii), has irrevocably deposited or caused to be deposited with the
Trustee, in trust for such purpose, Cash or non-callable direct obligations of
the United States of America; provided that
the obligations are entitled to the full faith and credit of the United States
of America or are debt obligations which are rated “Aaa” by Moody’s, “AAA” by
Fitch and “AAA” by S&P in an amount sufficient, as verified by a firm of
certified public accountants which are nationally recognized, to pay and
discharge the entire indebtedness (including, in the case of a redemption
pursuant to Section 9.1 or Section 9.2, the Redemption Price) on
such Notes not theretofore delivered to the Trustee for cancellation, for
principal and interest to the date of such deposit (in the case of Notes which
have become due and payable), or to the Stated Maturity or the Redemption Date,
as the case may be (and in each case in respect of the Notes, subject to the
Priority of Payments); provided, further,
that any such deposit of funds with the Trustee in satisfaction of this
Indenture shall be subject to the Rating Agency Condition; provided, however, this subsection (ii) shall not 

 124
 

 

apply if an election
to act in accordance with the provisions of Section 5.5(a) shall have
been made and not rescinded;

(b)      (i) the Issuer has paid
or caused to be paid or provided for (to the satisfaction of the Person
entitled thereto) all other sums payable hereunder and under the Collateral
Management Agreement, Preferred Shares Paying Agency Agreement and the Company
Administration Agreement, and (ii) all Hedge Agreements then in effect have
been terminated and Issuer has paid all amounts, including payments due and
payable in connection with such termination and has paid all other outstanding
amounts, including any outstanding payments due and payable for any previously
terminated Hedge Agreement.

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

Notwithstanding the
satisfaction and discharge of this Indenture, the rights and obligations of the
Issuer, the Co-Issuer, the Trustee, and, if applicable, the Noteholders, as the
case may be, under Sections 2.7, 4.2, 5.4(d), 5.9, 5.18,
6.7, 7.3 and 14.12 hereof shall survive

Section 4.2             Application of Trust Money.

All Monies deposited with
the Trustee pursuant to Section 4.1 shall be held in trust and applied
by it in accordance with the provisions of the Notes and this Indenture to the
payment of the principal and interest, either directly or through the Paying
Agent, as the Trustee may determine, to the Person entitled thereto of the
principal and interest for whose payment such Money has been deposited with the
Trustee; but such Money need not be segregated from other funds except to the
extent required herein or when commingling of funds is prohibited by law.

Section 4.3             Repayment of Monies Held by
Paying Agent.

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

 125

 

ARTICLE 5

REMEDIES

Section 5.1             Events of Default.

“Event of Default,”
wherever used herein, means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

(a)      a default in the payment of
any interest on any Note when the same becomes due and payable (provided
that (a) if any Class A Notes or Class B Notes are Outstanding, solely for the
purposes of this Section 5.1(a), no interest shall be “due and payable”
on any 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, (b) if any Class C Notes
are Outstanding, solely for the purposes of this Section 5.1(a), no
interest shall be “due and payable” on any Class D Notes, Class E Notes, Class
F Notes, Class G Notes, Class H Notes, Class J Notes or Class K Notes, (c) if
any Class D Notes are Outstanding, solely for the purposes of this Section
5.1(a), no interest shall be “due and payable” on any Class E Notes, Class
F Notes, Class G Notes, Class H Notes, Class J Notes or Class K Notes, (d) if
any Class E Notes are Outstanding, solely for the purposes of this Section
5.1(a), no interest shall be “due and payable” on any Class F Notes, Class
G Notes, Class H Notes, Class J Notes or Class K Notes, (e) if any Class F
Notes are Outstanding, solely for the purposes of this Section 5.1(a),
no interest shall be “due and payable” on any Class G Notes, Class H Notes,
Class J Notes or Class K Notes, (f) if any Class G Notes are Outstanding,
solely for the purposes of this Section 5.1(a), no interest shall be “due
and payable” on any Class H Notes, Class J Notes or Class K Notes, (g) if any
Class H Notes are Outstanding, solely for purposes of this Section 5.1(a),
no interest shall be “due and payable” on any Class J Notes or Class K Notes,
(h) if any Class J Notes are Outstanding, solely for purposes of this Section
5.1(a), no interest shall be “due and payable” on any Class K Notes and (g)
if any Class K Notes are Outstanding, solely for purposes of this Section
5.1(a), no dividends or other distributions shall be payable on the
Preferred Shares, in each case unless such amount is available pursuant to the
Priority of Payments), in each case, which default continues for a period of
three (3) Business Days or, in the case of a default in payment due to an
administrative error or omission by the Trustee or Paying Agent, which default
continues for five (5) Business Days;

(b)      a default in the payment of
principal (or the related Redemption Price, if applicable) of any Class A-1
Note when the same becomes due and payable, at its Stated Maturity or any
Redemption Date, or if there are no Class A-1 Notes Outstanding a default in
the payment of principal (or the related Redemption Price, if applicable) of
any Class A-2 Note when the same becomes due and payable, at its Stated
Maturity or any Redemption Date, or if there are no Class A-2 Notes
Outstanding, a default in the payment of principal (or the related Redemption
Price, if applicable) of any Class B Note when the same becomes due and payable
at its Stated Maturity or any Redemption Date, or if there are no Class B Notes

 126
 

 

Outstanding, a
default in the payment of principal (or the related Redemption Price, if
applicable) of any Class C Note (plus any Class C Capitalized Interest) when
the same becomes due and payable at its Stated Maturity or any Redemption Date,
or if there are no Class C Notes Outstanding, a default in the payment of
principal (or the related Redemption Price, if applicable) of any Class D Note
(plus any Class D Capitalized Interest) when the same becomes due and payable
at its Stated Maturity or any Redemption Date, or if there are no Class D Notes
Outstanding, a default in the payment of principal (or the related Redemption
Price, if applicable) of any Class E Note (including any Class E Capitalized
Interest) when the same becomes due and payable at its Stated Maturity or any
Redemption Date, or if there are no Class E Notes Outstanding, a default in the
payment of principal (or the related Redemption Price, if applicable) of any
Class F Note (including Class F Capitalized Interest) when the same becomes due
and payable at its Stated Maturity or any Redemption Date, or if there are no
Class F Notes Outstanding, a default in the payment of principal (or the
related Redemption Price, if applicable) of any Class G Note (including any
Class G Capitalized Interest) when the same becomes due and payable at its
Stated Maturity or any Redemption Date, or if there are no Class G Notes
Outstanding, a default in the payment of principal (or the related Redemption
Price, if applicable) of any Class H Note (including Class H Capitalized
Interest) when the same becomes due and payable at its Stated Maturity or any
Redemption Date, or if there are no Class H Notes Outstanding, a default in the
payment of principal (or the related Redemption Price, if applicable) of any
Class J Note (including Class J Capitalized Interest) when the same becomes due
and payable, or if there are no Class J Notes Outstanding, a default in the
payment of principal (or the related Redemption Prince, if applicable) of any
Class K Note (including Class K Capitalized Interest) when the same becomes due
and payable at its Stated Maturity or any Redemption Date (or in the case of a
default in payment due to any administrative error or omission by the Trustee
or the Paying Agent, such default continues for a period of five (5) Business
Days);

(c)      the failure on any Payment
Date to disburse amounts available in the Payment Account in accordance with
the Priority of Payments set forth under Section 11.1(a) (other than a
default in payment described in clause (a) or (b) above), which failure
continues for a period of three Business Days or, in the case of a failure to
disburse such amounts due to an administrative error or omission by the Trustee
or Paying Agent, which failure continues for five Business Days;

(d)      either the Issuer, the
Co-Issuer or the pool of Assets becomes an investment company required to be
registered under the Investment Company Act;

(e)      a default in the
performance, or breach, of any other covenant or other agreement (other than
the covenant to meet or improve the Collateral Quality Tests or the Coverage
Tests) of the Issuer or the Co-Issuer hereunder or any representation or
warranty of the Issuer or the Co-Issuer hereunder or in any certificate or
other writing delivered pursuant hereto or in connection herewith proves to be
incorrect in any material respect when made, and the continuation of such
default or breach for a period of thirty (30) days
(or, if such default, breach or failure has an adverse effect on the validity,
perfection or priority of the security interest granted hereunder, fifteen (15)
days) after either the Issuer, the Co-Issuer or the Collateral Manager has
actual knowledge thereof or after notice thereof to the Issuer, the Co-Issuer
and the Collateral Manager by the Trustee or to the Issuer, the Co-Issuer, the

 127
 

 

Collateral
Manager and the Trustee by Holders of at least 25% of the Aggregate Outstanding
Amount of the Controlling Class; provided that a default in the
performance by the Issuer of the obligations imposed on it by this Indenture in
connection with the entry into a replacement Hedge Agreement upon the early
termination of a Hedge Agreement shall not be an Event of Default if the Rating
Agency Condition has been satisfied;

(f)       the entry of a decree or
order by a court having competent jurisdiction adjudging the Issuer or the
Co-Issuer as bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Issuer or the Co-Issuer under the Bankruptcy Code, or any bankruptcy,
insolvency, reorganization or similar law enacted under the laws of the Cayman
Islands or any other applicable law, or appointing a receiver, liquidator,
assignee, or sequestrator (or other similar official) of the Issuer or the
Co-Issuer or of any substantial part of its property, respectively, or ordering
the winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of sixty (60) consecutive
days;

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

(h)      one or more final judgments
being rendered against the Issuer or the Co-Issuer which exceed, in the
aggregate, U.S. $1,000,000 (or such lesser amount as any Rating Agency may
specify) and which remain unstayed, undischarged and unsatisfied for thirty (30) days after such judgment(s)
becomes nonappealable, unless adequate funds have been reserved or set aside
for the payment thereof, and unless (except as otherwise specified in writing
by each Rating Agency) the Rating Agency Condition shall have been satisfied;
or

(i)       the Issuer loses its status
as a qualified REIT subsidiary (within the meaning of Section 856(i)(2) of the
Code), unless (A) within ninety (90) days, the Issuer either (1) delivers an
opinion of tax counsel of nationally recognized standing in the United States experienced
in such matters to the effect that, 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, otherwise subject to U.S. federal income tax on a net
basis and the Noteholders are not otherwise materially adversely affected by
the loss of qualified REIT subsidiary status or (2) receives an amount from the
Preferred Shareholders sufficient to discharge in full the amounts then due and
unpaid on the Notes and amounts and expenses described in clauses (1)
through (5), (31), (32) and (33) of Section 11.1(a)(i) in accordance
with the Priority of Payments or (B) all Classes of the Notes

 128
 

 

are subject to
a Tax Redemption announced by the Issuer in compliance with this Indenture, and
such redemption has not been rescinded; or

(j)       so long as the Class A-1
Notes are the Controlling Class, the Class A/B Par Value Ratio is less than
101.87% on any Measurement Date.

Upon becoming aware of
the occurrence of an Event of Default, the Issuer, shall promptly notify the
Trustee, the Collateral Manager, the Noteholders, the Preferred Shares Paying
Agent, the Preferred Shareholders, each Rating Agency, each Hedge Counterparty
and, for so long as any Notes are listed on the Irish Stock Exchange, the Irish
Paying Agent in writing.  If the
Collateral Manager has actual knowledge of the occurrence of an Event of
Default, the Collateral Manager shall promptly notify, in writing, the
Trustee.  Upon such notification from the
Collateral Manager, the Trustee shall promptly notify the Noteholders, each
Rating Agency and each Hedge Counterparty of the occurrence of such Event of
Default.

Section 5.2             Acceleration of Maturity; Rescission
and Annulment.

(a)      If an Event of Default shall
occur and be continuing (other than the Events of Default specified in Section
5.1(f), 5.1(g) or 5.1(i)), the Trustee may, and shall at the
direction of a Majority, by outstanding principal amount, of (x) in the case of
an Event of Default described in clause (j) above, the Controlling Class
(excluding Collateral Manager Securities), (y) in the case of an Event of
Default described in clause (a) or clause (b) above at any time when the Class
A-1 Notes are the Controlling Class, the Controlling Class (excluding
Collateral Manager Securities) or (z) in any other case, each Class of Notes
voting as a separate Class (excluding in each case any Notes held by the
Collateral Manager, any of its Affiliates or any funds (other than the Issuer)
managed by the Collateral Manager or its Affiliates)), declare the principal of
and accrued and unpaid interest on all the Notes to be immediately due and
payable (and any such acceleration shall automatically terminate the Reinvestment
Period).  If an Event of Default
described in Section 5.1(f), Section 5.1(g) or Section 5.1(i)
above occurs, such an acceleration shall occur automatically and without any
further action.  If the Notes are
accelerated, payments shall be made in the order and priority set forth in Section
11.1(a)(i) and Section 11.1(a)(ii) hereof.

(b)      At any time after such a
declaration of acceleration of Maturity of the Notes has been made and before a
judgment or decree for payment of the Money due has been obtained by the
Trustee as hereinafter provided in this Article 5, a Majority of each
and every Class of Notes (voting as a separate Class), by written notice to the
Issuer and the Co-Issuer, the Trustee and each Hedge Counterparty, may rescind
and annul such declaration and its consequences if:

(i)       the Issuer or the Co-Issuer
has paid or deposited with the Trustee a sum sufficient to pay:

(A)     all unpaid installments of
interest on and principal of the Notes, that would be due and payable hereunder
if the Event of Default giving rise to such acceleration had not occurred;

 129
 

 

(B)     to the extent that payment of
such interest is lawful, interest on the Class C Capitalized Interest at the
Class C Rate, interest on the Class D Capitalized Interest at the Class D Rate,
interest on the Class E Capitalized Interest at the Class E Rate, interest on
the Class F Capitalized Interest at the Class F Rate, interest on the Class G
Capitalized Interest at the Class G Rate, interest on the Class H Capitalized
Interest at the Class H Rate, interest on the Class J Capitalized Interest at
the Class J Rate and interest on the Class K Capitalized Interest at the Class
K Rate;

(C)     all unpaid taxes of the
Issuer and the Co-Issuer, Company Administrative Expenses and other sums paid
or advanced by or otherwise due and payable to the Trustee hereunder;

(D)     with respect to each Hedge
Agreement, any amount then due and payable thereunder; and

(E)      with respect to the
Collateral Management Agreement, any Senior Collateral Management Fee then due
and any Company Administrative Expense due and payable to the Collateral
Manager thereunder.

(ii)      if any Hedge Agreement has
been reduced or terminated, the Rating Agency Condition has been satisfied with
respect to such reduction or termination; and

(iii)     the Trustee has determined
that all Events of Default of which it has actual knowledge, other than the
non-payment of the interest and principal on the Notes that have become due
solely by such acceleration, have been cured and a Majority of the Controlling
Class, by written notice to the Trustee and each Hedge Counterparty has agreed
with such determination (which agreement shall not be unreasonably withheld or
delayed) or waived as provided in Section 5.14.

At any such time that the
Trustee shall rescind and annul such declaration and its consequences as
permitted hereinabove, the Trustee shall preserve the Assets in accordance with
the provisions of Section 5.5 with respect to the Event of Default that
gave rise to such declaration; provided, however,
that if such preservation of the Assets is rescinded pursuant to Section 5.5,
the Notes may be accelerated pursuant to the first paragraph of this Section
5.2, notwithstanding any previous rescission and annulment of a declaration
of acceleration pursuant to this paragraph.

No such rescission shall
affect any subsequent Default or impair any right consequent thereon.  In addition, no such rescission shall affect
any Hedge Agreement if it has been terminated in accordance with its terms.

(c)      Subject to Sections 5.4
and 5.5, a Majority of the Controlling Class shall have the right to
direct the Trustee in the conduct of any proceedings for any remedy available
to the Trustee; provided that (i) such direction will not conflict with
any rule of law or this Indenture (including the limitations described in this Section
5 but, solely in the case of

 130
 

 

proceedings
resulting from an Event of Default described in clause (j) of the definition
thereof, excluding any requirement requiring sufficient proceeds to pay in full
the amounts then due and unpaid on the Notes); (ii) the Trustee may take any
other action not inconsistent with such direction; (iii) the Trustee has been
provided with an indemnity or reasonable security satisfactory to it (and the
Trustee need not take any action that it determines might involve it in
liability or subject it to expense unless it has received such indemnity or
security against such liability or expense); and (iv) any direction to
undertake a sale of the Assets may be made only as described in Section 5.17.  The Trustee shall provide written notice of
the receipt of such direction to each Hedge Counterparty promptly after receipt
thereof.  .

(d)      As security for the payment
by the Issuer of the compensation and expenses of the Trustee and any sums the
Trustee may be entitled to receive as indemnification by the Issuer, the Issuer
hereby grants the Trustee a lien on the Assets, which lien is senior to the
lien of the Noteholders. The Trustee’s lien shall be subject to the Priority of
Payments and exercisable by the Trustee only if the Notes have been declared
due and payable following an Event of Default and such acceleration has not
been rescinded or annulled.

(e)      A Majority of the
Controlling Class, may, prior to the time a judgment or decree for the payment
of money due has been obtained by the Trustee, waive any past Default on behalf
of the holders of all the Notes and its consequences in accordance with Section
5.14.

(f)       In determining whether the
holders of the requisite percentage of Notes have given any direction, notice
or consent hereunder, (i) Notes owned by the Issuer, the Co-Issuer or any
Affiliate thereof shall be disregarded and deemed not to be outstanding and
(ii) in relation to (x) any amendment or other modification of, or assignment
or termination of, any of the express rights or obligations of the Collateral
Manager under the Collateral Management Agreement or this Indenture (including
the exercise of any rights to remove the Collateral Manager or terminate the
Collateral Management Agreement or approve or object to a replacement for the
Collateral Manager except as specifically provided in the Collateral Management
Agreement with respect to the termination of the Collateral Manager without
cause and with respect to the replacement of the Collateral Manager) and (y)
the exercise by the Noteholders of their right, in connection with certain
Events of Default, to accelerate amounts due under the Notes, Notes owned by
the Collateral Manager or any of its Affiliates, or by any accounts managed by
them, shall be disregarded and deemed not to be outstanding.  The Collateral Manager and its Affiliates
shall be entitled to vote Notes held by them, and by accounts managed by them,
with respect to all other matters other than those described in clause (ii).

Section 5.3             Collection of Indebtedness and Suits
for Enforcement by Trustee.

The Issuer covenants that
if a Default shall occur in respect of the payment of any interest on any Class
A-1 Note, the payment of principal on any Class A-1 Note (but only after
interest with respect to the Class A-1 Notes and any amounts payable pursuant
to Section 11.1(a) having a higher priority have been paid in full), the
payment of interest on any Class A-2 Note (but only after interest with respect
to the Class A-1 Notes and any amounts payable pursuant to

 131
 

 

Section 11.1(a)
having a higher priority have been paid in full), the payment of principal on
any Class A-2 Note (but only after interest with respect to the Class A-2 Notes
and any amounts payable pursuant to Section 11.1(a) having a higher
priority have been paid in full), the payment of interest on any Class B Note
(but only after interest with respect to the Class A-1 Notes and the Class A-2
Notes and any amounts payable pursuant to Section 11.1(a) having a
higher priority have been paid in full), the payment of principal on any Class
B Note (but only after interest and principal with respect to the Class A-1
Notes and the Class A-2 Notes and interest with respect to the Class B Notes
and any amounts payable pursuant to Section 11.1(a) having a higher
priority have been paid in full), the payment of interest on any Class C Note
(but only after interest with respect to the Class A-1 Notes, the Class A-2
Notes and the Class B Notes and any amounts payable pursuant to Section
11.1(a) having a higher priority have been paid in full), the payment of
principal on any Class C Note (but only after interest and principal with
respect to the Class A-1 Notes, the Class A-2 Notes and the Class B Notes and
interest with respect to the Class C Notes and any amounts payable pursuant to Section
11.1(a) having a higher priority have been paid in full), the payment of
interest on any Class D Note (but only after interest with respect to the Class
A-1 Notes, the Class A-2 Notes, the Class B Notes and the Class C Notes and any
amounts payable pursuant to Section 11.1(a) having a higher priority
have been paid in full) or the payment of principal on any Class D Note (but
only after interest and principal with respect to the Class A-1 Notes, the
Class A-2 Notes, the Class B Notes and the Class C Notes and interest with
respect to the Class D Notes and any amounts payable pursuant to Section
11.1(a) having a higher priority have been paid in full), the payment of
interest on any Class E Note (but only after interest with respect to the Class
A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes and the
Class D Notes and any amounts payable pursuant to Section 11.1(a) having
a higher priority have been paid in full), the payment of principal on any
Class E Note (but only after interest and principal with respect to the Class
A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes and the
Class D Notes and interest with respect to the Class E Notes and any amounts
payable pursuant to Section 11.1(a) having a higher priority have been
paid in full), the payment of interest on any Class F Note (but only after
interest with respect to the Class A-1 Notes, the Class A-2 Notes, the Class B
Notes, the Class C Notes, the Class D Notes and the Class E Notes and any
amounts payable pursuant to Section 11.1(a) having a higher priority
have been paid in full), the payment of principal on any Class F Note (but only
after interest and principal with respect to the Class A-1 Notes, the Class A-2
Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E
Notes and interest with respect to the Class F Notes and any amounts payable
pursuant to Section 11.1(a) having a higher priority have been paid in
full), the payment of interest on any Class G Note (but only after interest
with respect to the Class A-1 Notes, the Class A-2 Notes, the Class B Notes,
the Class C Notes, the Class D Notes, the Class E Notes and the Class F Notes
and any amounts payable pursuant to Section 11.1(a) having a higher
priority have been paid in full), the payment of principal on any Class G Note
(but only after interest and principal with respect to the Class A-1 Notes, the
Class A-2 Notes, the Class B Notes, the Class C Notes, the Class D Notes, the
Class E Notes and the Class F Notes and interest with respect to the Class G
Notes and any amounts payable pursuant to Section 11.1(a) having a
higher priority have been paid in full), the payment of interest on any Class H
Note (but only after interest with respect to the Class A-1 Notes, the Class
A-2 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 any amounts payable pursuant
to Section 11.1(a) having a higher priority have been paid in full), the
payment of principal on any Class H

 132
 

 

Note (but only after interest and principal with
respect to the Class A-1 Notes, the Class A-2 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 interest with respect to the Class H Notes and any amounts
payable pursuant to Section 11.1(a) having a higher priority have been
paid in full), the payment of interest on any Class J Note (but only after
interest with respect to the Class A-1 Notes, the Class A-2 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 any amounts payable pursuant
to Section 11.1(a) having a higher priority have been paid in full), the
payment of principal on any Class J Note (but only after interest and principal
with respect to the Class A-1 Notes, the Class A-2 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 interest with respect to the Class J
Notes and any amounts payable pursuant to Section 11.1(a) having a
higher priority have been paid in full), the payment of interest on any Class K
Note (but only after interest with respect to the Class A-1 Notes, the Class
A-2 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 any amounts payable pursuant to Section 11.1(a) having a
higher priority have been paid in full) or the payment of principal on any
Class K Note (but only after interest and principal with respect to the Class
A-1 Notes, the Class A-2 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 interest with respect to the Class K Notes and
any amounts payable pursuant to Section 11.1(a) having a higher priority
have been paid in full), the Issuer and Co-Issuer shall, upon demand of the
Trustee or any affected Noteholder, pay to the Trustee, for the benefit of the
Holder of such Note, the whole amount, if any, then due and payable on such
Note for principal and interest or other payment with interest on the overdue
principal and, to the extent that payments of such interest shall be legally
enforceable, upon overdue installments of interest, at the applicable interest
rate and, in addition thereto, such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee and such
Noteholder and their respective agents and counsel.

If the Issuer or the
Co-Issuer fails to pay such amounts forthwith upon such demand, the Trustee, in
its own name and as Trustee of an express trust, may institute a Proceeding for
the collection of the sums so due and unpaid, and may prosecute such Proceeding
to judgment or final decree, and may enforce the same against the Issuer and
the Co-Issuer or any other obligor upon the Notes and collect the Monies
adjudged or decreed to be payable in the manner provided by law out of the
Assets.

If an Event of Default
occurs and is continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Noteholders by such appropriate
Proceedings as the Trustee shall deem most effectual (if no direction by a
Majority of the Controlling Class is received by the Trustee), or the Trustee
shall proceed to protect and enforce its rights and the rights of the
Noteholders by such Proceedings as the Trustee may be directed by Majority of
the Controlling Class, to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid
of the exercise of any power granted herein, or to enforce any other proper
remedy or legal or equitable right vested in the Trustee by this Indenture or
by law.

 133
 

 

In case there shall be pending Proceedings relative to the Issuer or
the Co-Issuer under the Bankruptcy Code, any bankruptcy, insolvency,
reorganization or similar law enacted under the laws of the Cayman Islands, or
any other applicable bankruptcy, insolvency or other similar law, or in case a
receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for or taken
possession of the Issuer or the Co-Issuer, or their respective property, or in
case of any other comparable Proceedings relative to the Issuer or the
Co-Issuer, or the creditors or property of the Issuer or the Co-Issuer, the
Trustee, regardless of whether the principal of any Notes shall then be due and
payable as therein expressed or by declaration or otherwise and regardless of
whether the Trustee shall have made any demand pursuant to the provisions of
this Section 5.3, shall be entitled and empowered, by intervention in
such Proceedings or otherwise:

(a)      to file and prove a claim or
claims for the whole amount of principal and interest owing and unpaid in
respect of the Notes and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including
any claim for reasonable compensation to the Trustee and each predecessor
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances made,
by the Trustee and each predecessor Trustee, except as a result of negligence
or bad faith) and of the Noteholders allowed in any Proceedings relative to the
Issuer, the Co-Issuer or other obligor upon the 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 Notes
in any election of a trustee or a standby trustee in arrangement,
reorganization, liquidation or other bankruptcy or insolvency proceedings or
Person performing similar functions in comparable Proceedings; and

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

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

All rights of action and
of asserting claims under this Indenture, or under any of the Notes, may be
enforced by the Trustee without the possession of any of the Notes or the

 134
 

 

production thereof in any trial or other Proceedings
relative thereto, and any action or Proceedings instituted by the Trustee shall
be brought in its own name as trustee of an express trust, and any recovery of
judgment, shall be applied as set forth in Section 5.7.

In any Proceedings
brought by the Trustee on behalf of the Holders, the Trustee shall be held to
represent all the Holders of the Notes.

Notwithstanding anything
in this Section 5.3 to the contrary, the Trustee may not sell or
liquidate the Assets or institute Proceedings in furtherance thereof pursuant
to this Section 5.3 unless the conditions specified in Section 5.5(a)
are met.

Section 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 and the Co-Issuer agree that the Trustee may, after notice to the
Noteholders and each Hedge Counterparty, and shall, upon direction by a
Majority of the Controlling Class, to the extent permitted by applicable law,
exercise one or more of the following rights, privileges and remedies:

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

(ii)      sell all or a portion of the
Assets or rights of interest therein, at one or more public or private sales
called and conducted in any manner permitted by law and in accordance with Section
5.17 hereof;

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

(iv)    exercise any remedies of a
secured party under the UCC and take any other appropriate action to protect
and enforce the rights and remedies of the Trustee and the Holders of the Notes
hereunder; and

(v)     exercise any other rights and
remedies that may be available at law or in equity;

provided, however, that the Trustee may not sell or liquidate
the Assets or institute Proceedings in furtherance thereof pursuant to this Section
5.4 unless either of the conditions specified in Section 5.5(a) is
met.

The Trustee may, but need
not, obtain and rely upon an opinion of an Independent investment banking firm
of national reputation with demonstrated capabilities in structuring and
distributing notes or certificates similar to the Notes as to the feasibility
of any action proposed to be taken in accordance with this Section 5.4
and as to the sufficiency of the proceeds and other amounts receivable with
respect to the Assets to make the required payments of principal of and

 135
 

 

interest on the Notes and other amounts payable
hereunder, 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) hereof shall have occurred and be
continuing, the Trustee may, and at the request of the Holders of not less than
25% of the Aggregate Outstanding Amount of the Controlling Class shall,
institute a Proceeding solely to compel performance of the covenant or
agreement or to cure the representation or warranty, the breach of which gave
rise to the Event of Default under such Section, and enforce any equitable
decree or order arising from such Proceeding.

(c)      Upon any Sale, whether made
under the power of sale hereby given or by virtue of judicial proceedings, any
Noteholder or Noteholders or Preferred Shareholder or Preferred Shareholders or
the Collateral Manager or any of its Affiliates may bid for and purchase the
Assets or any part thereof and, upon compliance with the terms of Sale, may
hold, retain, possess or dispose of such property in its or their own absolute
right without accountability; and any purchaser at any such Sale may, in paying
the purchase Money, turn in any of the Notes in lieu of Cash equal to the
amount which shall, upon distribution of the net proceeds of such sale, be
payable on the Notes so turned in by such Holder (taking into account the Class
of such Notes).  Such Notes, in case the
amounts so payable thereon shall be less than the amount due thereon, shall be
returned to the Holders thereof after proper notation has been made thereon to
show partial payment.

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

Any such Sale, whether
under any power of sale hereby given or by virtue of judicial proceedings,
shall bind the Issuer, the Co-Issuer, the Trustee, the Noteholders and the
Preferred Shareholders, 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, none of the Trustee, any other Secured Party or
any third party beneficiary of this Indenture may, 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 (or, if longer, the applicable preference period then in effect)
period in (A) any case or proceeding voluntarily filed or commenced by the
Issuer or the Co-Issuer or (B) any involuntary insolvency proceeding filed or
commenced by a Person other than the Trustee, or (ii) from commencing against
the Issuer or the Co-Issuer or any of

 136
 

 

their
respective properties any legal action which is not a bankruptcy,
reorganization, arrangement, insolvency, moratorium or liquidation proceeding.

Section 5.5             Preservation of Assets.

(a)      Notwithstanding anything to
the contrary herein, if an Event of Default shall have occurred and be
continuing when any of the Notes are Outstanding, the Trustee shall retain the
Assets securing the Notes, collect and cause the collection of the proceeds
thereof and make and apply all payments and deposits and maintain all accounts
in respect of the Assets and the Notes in accordance with the Priority of
Payments and the provisions of Articles 10, 12 and 13
unless either:

(i)       the Trustee, pursuant to Section
5.5(c), determines that the anticipated proceeds of a sale or liquidation
of the Assets (after deducting the reasonable expenses of such sale or
liquidation) would be sufficient to discharge in full the amounts then due and
unpaid on the Notes (except in the case of an Event of Default described in
clause (j) of the definition thereof as described in Section 5.2(c)),
Company Administrative Expenses due and payable pursuant to clauses (3) and
(31) of Section 11.1(a)(i) and clauses (1) and (13) of Section
11.1(a)(ii), the Senior Collateral Management Fees due and payable pursuant
to clause (4) of Section 11.1(a)(i), the Subordinate Collateral
Management Fees due and payable pursuant to clause (32) of Section
11.1(a)(i), any amounts due and unpaid to each Hedge Counterparty,
including without limitation, any payments (however described) due and payable
by the Issuer under each Hedge Agreement upon a termination of such Hedge
Agreement (including any interest that may accrue thereon), Cure Advances and
interest thereon, and amounts due and payable to the Advancing Agent and the
Trustee, in its capacity as Backup Advancing Agent, in respect of unreimbursed
Interest Advances and Reimbursement Interest, and a Majority of the Controlling
Class agrees with such determination; or

(ii)      the Holders of a Majority of
the Aggregate Outstanding Amount of each Class of Notes (each voting as a
separate Class) (and each Hedge Counterparty, unless each shall be paid in full
the amounts due and unpaid, including, without limitation, any payments
(however described) due and payable by the Issuer under each Hedge Agreement
upon a termination of such Hedge Agreement (including any interest that may
accrue thereon)), direct, subject to the provisions of this Indenture, the sale
and liquidation of the Assets.

The Trustee shall give
written notice of the retention of the Assets to the Issuer, the Co-Issuer, the
Collateral Manager, each Hedge Counterparty and the Rating Agencies.  So long as such Event of Default is
continuing, any such retention pursuant to this Section 5.5(a) may be
rescinded at any time when the conditions specified in clause (i) or (ii) above
exist.

(b)      Nothing contained in Section
5.5(a) shall be construed to require the Trustee to sell the Assets
securing the Notes if the conditions set forth in Section 5.5(a) are not
satisfied.  Nothing contained in Section
5.5(a) shall be construed to require the Trustee to preserve the Assets
securing the Notes if prohibited by applicable law.

 137
 

 

(c)      In determining whether the
condition specified in Section 5.5(a)(i) exists, the Collateral Manager
shall obtain bid prices with respect to each Pledged Collateral Debt Security
from two dealers (Independent of the Collateral Manager and any of its
Affiliates) at the time making a market in such Pledged Collateral Debt
Securities (or, if there is only one market maker, then the Collateral Manager
shall obtain a bid price from that market maker or, if no market maker, from a
pricing service).  The Collateral Manager
shall compute the anticipated proceeds of sale or liquidation on the basis of
the lowest of such bid prices for each such Pledged Collateral Debt
Security.  For the purposes of
determining issues relating to the Market Value of the Pledged Collateral Debt
Security and the execution of a sale or other liquidation thereof, the Trustee
may, but need not, retain at the expense of the Issuer and rely on an opinion of
an Independent investment banking firm of national reputation in connection
with a determination (notwithstanding that such opinion will not be the basis
for such determination) as to whether the condition specified in Section
5.5(a)(i) exists.

The Trustee shall
promptly deliver to the Noteholders and each Hedge Counterparty a report
stating the results of any determination required to be made pursuant to Section
5.5(a)(i).  The Trustee shall make
the determinations required by Section 5.5(a)(i) within thirty (30) days after an Event of
Default if requested by a Majority of the Controlling Class.

Section 5.6             Trustee May Enforce Claims Without
Possession of Notes.

All rights of action and
claims under this Indenture or under any of the Notes may be prosecuted and
enforced by the Trustee without the possession of any of the Notes or the
production thereof in any trial or other Proceeding relating thereto, and any
such action or Proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust.  Any
recovery of judgment in respect of the Notes shall be applied as set forth in Section
5.7 hereof.

In any Proceedings
brought by the Trustee (and any Proceedings involving the interpretation of any
provision of this Indenture to which the Trustee shall be a party), in respect
of the Notes, the Trustee shall be held to represent all the Holders of the
Notes.

Section 5.7             Application of Money Collected.

Any Money collected by
the Trustee with respect to the Notes pursuant to this Article 5 and any
Money that may then be held or thereafter received by the Trustee with respect
to the Notes hereunder shall be applied subject to Section 13.1 hereof
and in accordance with the Priority of Payments set forth in Section 11.1
hereof, at the date or dates fixed by the Trustee.

Section 5.8             Limitation on Suits.

No Holder of any Notes
shall have any right to institute any Proceedings, judicial or otherwise, with
respect to this Indenture, or for the appointment of a receiver or trustee, or
for any other remedy hereunder, unless:

(a)      such Holder has previously
given to the Trustee written notice of an Event of Default;

 138
 

 

(b)      except as otherwise provided
in Section 5.9 hereof, the Holders of at least 25% of the then Aggregate
Outstanding Amount of the Controlling Class shall have made written request to
the Trustee to institute Proceedings in respect of such Event of Default in its
own name as Trustee hereunder and such Holder or Holders have offered to the
Trustee reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;

(c)      the Trustee for 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 a Majority of the Controlling Class; it being understood and intended
that no one or more Holders of 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 of the
same Class 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 subject to and in
accordance with Section 13.1 hereof and the Priority of Payments.

In the event the Trustee
shall receive conflicting or inconsistent requests and indemnity from two or
more groups of Holders of the Controlling Class, each representing less than a
Majority of the Controlling Class, the Trustee in its sole discretion may
determine what action, if any, shall be taken, notwithstanding any other
provisions of this Indenture.

Section 5.9             Unconditional Rights of Noteholders to
Receive Principal and Interest.

Notwithstanding any other
provision in this Indenture (except for Section 2.7(n) and 2.7(v)),
the Holder of any Class of Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest on such
Class of Note as such principal, interest and other amounts become due and
payable in accordance with the Priority of Payments and Section 13.1,
and, subject to the provisions of Section 5.4(d) and Section 5.8
to institute Proceedings for the enforcement of any such payment, and such
right shall not be impaired without the consent of such Holder; provided, however, that the right of such Holder to institute
proceedings for the enforcement of any such payment shall not be subject to the
25% threshold requirement set forth in Section 5.8(b).

Section 5.10           Restoration of
Rights and Remedies.

If the Trustee or any
Noteholder has instituted any Proceeding to enforce any right or remedy under
this Indenture and such Proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee, or to such Noteholder,
then and in every such case the Issuer, the Co-Issuer, the Trustee, and the
Noteholder shall, subject to any determination in such Proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of the Trustee, and the Noteholders shall continue as
though no such Proceeding had been instituted.

 139
 

 

Section 5.11           Rights and Remedies
Cumulative.

No right or remedy herein
conferred upon or reserved to the Trustee, or to the Noteholders, is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise.  The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.

Section 5.12           Delay or Omission
Not Waiver.

No delay or omission of
the Trustee, or of any Noteholder to exercise any right or remedy accruing upon
any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein or a waiver of a
subsequent Event of Default.  Every right
and remedy given by this Article 5 or by law to the Trustee, or to the
Noteholders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee, or by the Noteholders, as the case may be.

Section 5.13           Control by the
Controlling Class.

Notwithstanding any other
provision of this Indenture, if an Event of Default shall have occurred and be
continuing when any of the Notes are Outstanding, a Majority of the Controlling
Class shall have the right to cause the institution of and direct the time,
method and place of conducting any Proceeding for any remedy available to the
Trustee for exercising any trust, right, remedy or power conferred on the
Trustee in respect of the Notes; provided that:

(a)      such direction shall not
conflict with any rule of law or with this Indenture (including, without
limitation, any provision hereof providing a limitation on the liability of the
Co-Issuers as set forth in Section 2.7(v));

(b)      the Trustee may take any
other action deemed proper by the Trustee that is not inconsistent with such
direction; provided, however,
that, subject to Section 6.1, the Trustee need not take any action that
it determines might involve it in liability (unless the Trustee has received
satisfactory indemnity against such liability as set forth below);

(c)      the Trustee shall have been
provided with indemnity satisfactory to it; and

(d)      any direction to the Trustee
to undertake a Sale of the Assets shall be by the Holders of Notes secured
thereby representing a Majority of the Aggregate Outstanding Amount of each
Class of Notes.

Section 5.14           Waiver of Past
Defaults.

Prior to the time a
judgment or decree for payment of the Money due has been obtained by the
Trustee, as provided in this Article 5, a Majority of each and every
Class of Notes voting as a separate Class may on behalf of the Holders of all
the Notes waive any past Default in respect of the Notes and its consequences,
except a Default:

 140
 

 

(a)      in the payment of  principal of any Note;

(b)      in the payment of interest
in respect of the Class A Notes and the Class B Notes and any other Class of
Notes (to the extent such Class of Notes is the Controlling Class at such
time);

(c)      in respect of a covenant or
provision hereof that under Section 8.2 cannot be modified or amended
without the waiver or consent of the Holder of each Outstanding Note adversely
affected thereby; or

(d)      in respect of any covenant
or provision hereof for the individual protection or benefit of the Trustee
(without the Trustee’s express written consent thereto);

provided that the Controlling Class alone
shall have the right to waive an Event of Default described in clause (j) of
the definition thereof.

In the case of any such
waiver, the Issuer, the Co-Issuer, the Trustee, and the Holders of the Notes
shall be restored to their former positions and rights hereunder, respectively,
but no such waiver shall extend to any subsequent or other Default or impair
any right consequent thereto.  The
Trustee shall promptly give written notice of any such waiver to the Collateral
Manager, each Noteholder and each Hedge Counterparty.

Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured, for every purpose of this Indenture, but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereto.

Section 5.15           Undertaking for
Costs.

All parties to this
Indenture agree, and each Holder of any Note by its acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in any
suit against the Trustee for any action taken, or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys’ fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made
by such party litigant; but the provisions of this Section 5.15 shall
not apply to any suit instituted by the Trustee, to any suit instituted by any
Noteholder, or group of Noteholders, holding in the aggregate more than 10% of
the Aggregate Outstanding Amount of the Controlling Class, or to any suit
instituted by any Noteholder for the enforcement of the payment of the
principal of or interest on any Note or any other amount payable hereunder on
or after the Stated Maturity (or, in the case of redemption, on or after the
applicable Redemption Date).

Section 5.16           Waiver of Stay or
Extension Laws.

Each of the Issuer and
the Co-Issuer covenants (to the extent that it may lawfully do so) that it will
not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time

 141
 

 

hereafter in force, which may affect the covenants,
the performance of or any remedies under this Indenture; and each of the Issuer
and the Co-Issuer (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.

Section 5.17           Sale of Assets.

(a)      The power to effect any sale
(a “Sale”) of
any portion of the Assets pursuant to Sections 5.4 and 5.5 hereof
shall not be exhausted by any one or more Sales as to any portion of such
Assets remaining unsold, but shall continue unimpaired until all amounts
secured by the Assets shall have been paid or if there are insufficient
proceeds to pay such amount until the entire Assets shall have been sold.  The Trustee may upon notice to the
Securityholders and each Hedge Counterparty, and shall, upon direction of a
Majority of the Controlling Class, from time to time postpone any Sale by
public announcement made at the time and place of such Sale; provided, however, that if the Sale is rescheduled for a date
more than three Business Days after the date of the determination by the
Trustee pursuant to Section 5.5 hereof, such Sale shall not occur unless
and until the Trustee has again made the determination required by Section
5.5 hereof.  The Trustee hereby
expressly waives its rights to any amount fixed by law as compensation for any
Sale; provided that the
Trustee shall be authorized to deduct the reasonable costs, charges and
expenses incurred by it in connection with such Sale from the proceeds thereof
notwithstanding the provisions of Section 6.7 hereof.

(b)      The Trustee may bid for and
acquire any portion of the Assets in connection with a public Sale thereof, and
may pay all or part of the purchase price by crediting against amounts owing on
the Notes or other amounts secured by the Assets, all or part of the net
proceeds of such Sale after deducting the reasonable costs, charges and
expenses incurred by the Trustee in connection with such Sale notwithstanding
the provisions of Section 6.7 hereof. 
The Notes need not be produced in order to complete any such Sale, or in
order for the net proceeds of such Sale to be credited against amounts owing on
the Notes.  The Trustee may hold, lease,
operate, manage or otherwise deal with any property so acquired in any manner
permitted by law in accordance with this Indenture.

(c)      If any portion of the Assets
consists of securities issued without registration under the Securities Act (“Unregistered Securities”),
the Trustee may seek an Opinion of Counsel, or, if no such Opinion of Counsel
can be obtained and with the consent of a Majority of the Controlling Class,
seek a no action position from the Securities and Exchange Commission or any
other relevant federal or State regulatory authorities, regarding the legality
of a public or private Sale of such Unregistered Securities.  In no event shall the Trustee be required to
register Unregistered Securities under the Securities Act.

(d)      The Trustee shall execute
and deliver an appropriate instrument of conveyance transferring its interest
in any portion of the Assets in connection with a Sale thereof.  In addition, the Trustee is hereby
irrevocably appointed the agent and attorney in fact of the Issuer to transfer
and convey its interest in any portion of the Assets in connection with a Sale
thereof, and to take all action necessary to effect such Sale.  No purchaser or transferee

 142
 

 

at such a Sale
shall be bound to ascertain the Trustee’s authority, to inquire into the
satisfaction of any conditions precedent or see to the application of any
Monies.

(e)      In the event of any Sale of
the Assets pursuant to Section 5.4 or Section 5.5, payments shall
be made in the order and priority set forth in Section 11.1(a)(i) and Section
11.1(a)(ii) in the same manner as if the Notes had been accelerated.

Section 5.18           Action on the Notes.

The Trustee’s right to
seek and recover judgment on the Notes or under this Indenture shall not be
affected by the seeking or obtaining of or application for any other relief
under or with respect to this Indenture. 
Neither the lien of this Indenture nor any rights or remedies of the
Trustee, or the Noteholders shall be impaired by the recovery of any judgment
by the Trustee against the Issuer or the Co-Issuer or by the levy of any
execution under such judgment upon any portion of the Assets or upon any of the
assets of the Issuer or the Co-Issuer.

 143
 

 

ARTICLE 6

THE
TRUSTEE

Section 6.1             Certain Duties and Responsibilities.

(a)      Except during the
continuance of an Event of Default:

(i)       the Trustee undertakes to
perform such duties and only such duties as are set forth in this Indenture,
and no implied covenants or obligations shall be read into this Indenture
against the Trustee; and

(ii)      in the absence of manifest
error, or bad faith on its part, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein,
upon certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; provided, however,
that in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the same to determine whether or not they
substantially conform to the requirements of this Indenture and shall promptly,
but in any event within three Business Days in the case of an Officer’s
Certificate furnished by the Collateral Manager, notify the party delivering
the same if such certificate or opinion does not conform.  If a corrected form shall not have been
delivered to the Trustee within fifteen (15) days after such notice from the
Trustee, the Trustee shall so notify the Noteholders.

(b)      In case an Event of Default
known to the Trustee has occurred and is continuing, the Trustee shall, prior
to the receipt of directions, if any, from a Majority of the Controlling Class
(or other Noteholders to the extent provided in Article 5 hereof),
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in its exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person’s own
affairs.

(c)      If, in performing its duties
under this Agreement, the Trustee is required to decide between alternative
courses of action, the Trustee may request written instructions from the
Collateral Manager as to courses of action desired by it.  If the Trustee does not receive such
instructions within two (2) Business Days after it has requested them, it may,
but shall be under no duty to, take or refrain from taking such action.  The Trustee shall act in accordance with
instructions received after such two-Business Day period except to the extent
it has already taken, or committed itself to take, action inconsistent with
such instructions.  The Trustee shall be
entitled to rely on the advice of legal counsel and Independent accountants in
performing its duties hereunder and be deemed to have acted in good faith if it
acts in accordance with such advice.

 144
 

 

(d)      No provision of this
Indenture shall be construed to relieve the Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

(i)           this subsection shall
not be construed to limit the effect of subsection (a) of this Section 6.1;

(ii)          the Trustee shall not be
liable for any error of judgment made in good faith by a Trust Officer, unless
it shall be proven that the Trustee was negligent in ascertaining the pertinent
facts;

(iii)         the Trustee shall not be
liable with respect to any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Issuer in accordance with this
Indenture and/or the Controlling Class relating to the time, method and place
of conducting any Proceeding for any remedy available to the Trustee in respect
of any Note or exercising any trust or power conferred upon the Trustee under
this Indenture;

(iv)        no provision of this
Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers contemplated
hereunder, if it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it (if the amount of such funds or risk or liability does
not exceed the amount payable to the Trustee pursuant to Section
11.1(a)(i)(3) and Section 11.1(a)(ii)(1) net of the amounts
specified in Section 6.7(a)(i), the Trustee shall be deemed to be
reasonably assured of such repayment) unless such risk or liability relates to
its ordinary services under this Indenture, except where this Indenture
provides otherwise; and

(v)         the Trustee shall not be
liable to the Noteholders for any action taken or omitted by it at the
direction of the Issuer, the Co-Issuer, the Collateral Manager, the Controlling
Class and/or a Noteholder under circumstances in which such direction is required
or permitted by the terms of this Indenture.

(e)      For all purposes under this
Indenture, the Trustee shall not be deemed to have notice or knowledge of any
Event of Default described in Section 5.1(d), 5.1(f), 5.1(g), 5.1(h) or 5.1(i)
or any Default described in Section 5.1(e) unless a Trust Officer
assigned to and working in the Corporate Trust Office has actual knowledge
thereof or unless written notice of any event which is in fact such an Event of
Default or Default is received by the Trustee at the Corporate Trust Office,
and such notice references, as applicable, the Notes generally, the Issuer, the
Assets or this Indenture.  For purposes
of determining the Trustee’s responsibility and liability hereunder, whenever
reference is made in this Indenture to such an Event of Default or a Default,
such reference shall be construed to refer only to such an Event of Default or
Default of which the Trustee is deemed to have notice as described in this Section
6.1.

 145
 

 

(f)       Whether or not therein
expressly so provided, every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of Section 6.1(a), 6.1(b), 6.1(c),
6.1(d) and 6.1(e).

(g)      The Trustee shall, upon reasonable
prior written notice to the Trustee, permit the Issuer, the Co-Issuer, the
Collateral Manager or the Rating Agencies, during the Trustee’s normal business
hours, to examine all books of account, records, reports and other papers of
the Trustee relating to the Notes, to make copies and extracts therefrom (the
reasonable out-of-pocket expenses incurred in making any such copies or
extracts to be reimbursed to the Trustee by such Person) and to discuss the
Trustee’s actions, as such actions relate to the Trustee’s duties with respect
to the Notes, with the Trustee’s officers and employees responsible for
carrying out the Trustee’s duties with respect to the Notes.

Section 6.2             Notice of Default.

Promptly (and in no event
later than three Business Days) after the occurrence of any Default known to
the Trustee or after any declaration of acceleration has been made or delivered
to the Trustee pursuant to Section 5.2, the Trustee shall transmit by
mail to the Collateral Manager, the Irish Paying Agent (for so long as any
Notes are listed on the Irish Stock Exchange), each Hedge Counterparty and each
Rating Agency (for so long as any Class of Notes is Outstanding and rated by
such Rating Agency), to all Holders of Notes as their names and addresses
appear on the Notes Register, notice of all Defaults hereunder known to the
Trustee, unless such Default shall have been cured or waived.

Section 6.3             Certain Rights of Trustee.

Except as otherwise
provided in Section 6.1:

(a)      the Trustee may rely and
shall be protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, note or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties;

(b)      any request or direction of
the Issuer or the Co-Issuer mentioned herein shall be sufficiently evidenced by
an Issuer Request or Issuer Order, as the case may be;

(c)      whenever in the
administration of this Indenture the Trustee shall (i) deem it desirable that a
matter be proved or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be herein specifically
prescribed) may, in the absence of bad faith on its part, rely upon an Officer’s
Certificate or (ii) be required to determine the value of any Assets or funds
hereunder or the cash flows projected to be received therefrom, the Trustee
may, in the absence of bad faith on its part, rely on reports of nationally
recognized accountants, investment bankers or other persons qualified to
provide the information required to make such determination, including
nationally recognized dealers in securities of the type being valued and
securities quotation services;

(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

 146
 

 

shall be full
and complete authorization and protection in respect of any action taken or
omitted by it hereunder in good faith and in reliance thereon;

(e)      the Trustee shall be under
no obligation to exercise or to honor any of the rights or powers vested in it
by this Indenture at the request or direction of any of the Noteholders
pursuant to this Indenture, unless such Noteholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might reasonably be incurred by it in compliance with such
request or direction;

(f)       the Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, note or other paper documents, but the
Trustee, in its discretion, may and, upon the written direction of a Majority
of the Controlling Class or of a Rating Agency, shall make such further inquiry
or investigation into such facts or matters as it may see fit or as it shall be
directed and shall have received indemnification reasonably acceptable to the
Trustee, and, the Trustee shall be entitled, on reasonable prior notice to the
Issuer, the Co-Issuer and the Collateral Manager, to examine the books and
records relating to the Notes and the Assets, as applicable, at the premises of
the Issuer, the Co-Issuer and the Collateral Manager, personally or by agent or
attorney during the Issuer’s, the Co-Issuer’s or the Collateral Manager’s
normal business hours upon not less than three Business Days’ prior written
notice; provided that the
Trustee shall, and shall cause its agents to, hold in confidence all such
information, except (i) to the extent disclosure may be required by law by any
regulatory authority and (ii) 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 (except with
respect to its duty to make any Interest Advance under the circumstances
specified in Section 10.10) either directly or by or through agents or
attorneys; provided that the
Trustee shall not be responsible for any willful misconduct or negligence on
the part of any agent 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 prudently believes to be authorized or within its rights or
powers hereunder;

(i)       the Trustee shall not be
responsible for the accuracy of the books or records of, or for any acts or
omissions of, the Depository, any Transfer Agent (other than the Trustee itself
acting in that capacity), Clearstream, Luxembourg, Euroclear, any Calculation
Agent (other than the Trustee itself acting in that capacity) or any Paying
Agent (other than the Trustee itself acting in that capacity); and

(j)       the Trustee shall not be
liable for the actions or omissions of the Collateral Manager; and without
limiting the foregoing, the Trustee shall not (except to the extent, if at all,
otherwise expressly stated in this Indenture) be under any obligation to
monitor, evaluate or verify compliance by the Collateral Manager with the terms
hereof or the Collateral Management Agreement, or to verify or independently
determine the accuracy of information

 147
 

 

received by it
from the Collateral Manager (or from any selling institution, agent bank,
trustee or similar source) with respect to the Collateral Debt Securities.

Section 6.4             Not Responsible for Recitals or Issuance
of Notes.

The recitals contained
herein and in the Notes, other than the Certificate of Authentication thereon,
shall be taken as the statements of the Issuer and the Co-Issuer, and the
Trustee assumes no responsibility for their correctness.  The Trustee makes no representation as to the
validity or sufficiency of this Indenture (except as may be made with respect
to the validity of the Trustee’s obligations hereunder), the Assets or the
Notes.  The Trustee shall not be
accountable for the use or application by the Issuer or the Co-Issuer of the
Notes or the proceeds thereof or any Money paid to the Issuer or the Co-Issuer
pursuant to the provisions hereof.

Section 6.5             May Hold Notes.

The Trustee, the Paying
Agent, the Notes Registrar or any other agent of the Issuer or the Co-Issuer,
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Issuer and the Co-Issuer with the same
rights it would have if it were not Trustee, Paying Agent, Notes Registrar or
such other agent.

Section 6.6             Money Held in Trust.

Money held by the Trustee
hereunder shall be held in trust to the extent required herein.  The Trustee shall be under no liability for
interest on any Money received by it hereunder except as otherwise agreed upon
with the Issuer and except to the extent of income or other gain on investments
which are deposits in or certificates of deposit of the Trustee in its
commercial capacity and income or other gain actually received by the Trustee
on Eligible Investments.

Section 6.7             Compensation and Reimbursement.

(a)      The Issuer agrees:

(i)       to pay the Trustee on each
Payment Date in accordance with the Priority of Payments reasonable
compensation for all services rendered by it hereunder (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);

(ii)      except as otherwise
expressly provided herein, to reimburse the Trustee (subject to any written
agreement between the Issuer and the Trustee) in a timely manner upon its
request for all reasonable expenses, disbursements and advances (except as
otherwise provided herein with respect to Interest Advances) incurred or made
by the Trustee in accordance with any provision of this Indenture (including
securities transaction charges to the extent not waived due to the Trustee’s
receipt of payments from a financial institution with respect to certain
Eligible Investments, as specified by the Collateral Manager and the reasonable
compensation and expenses and disbursements of its agents and legal counsel and
of any accounting firm or investment banking firm employed by the Trustee
pursuant to Section 5.4, 5.5, 10.12 or 10.14
hereof, except any

 148
 

 

such expense,
disbursement or advance as may be attributable to its negligence, willful
misconduct or bad faith);

(iii)     to indemnify the Trustee and
its Officers, directors, employees and agents for, and to hold them harmless
against, any loss, liability or expense incurred without negligence, willful
misconduct or bad faith on their part, arising out of or in connection with the
acceptance or administration of this trust, including the costs and expenses of
defending themselves against any claim or liability in connection with the
exercise or performance of any of their powers or duties hereunder; and

(iv)    to pay the Trustee reasonable
additional compensation together with its expenses (including reasonable
counsel fees) for any collection action taken pursuant to Section 6.13
hereof.

(b)      The Issuer may remit payment
for such fees and expenses to the Trustee or, in the absence thereof, the
Trustee may from time to time deduct payment of its fees and expenses hereunder
from Monies on deposit in the Payment Account in accordance with the Priority
of Payments.

(c)      The Trustee in its capacity
as Trustee, Paying Agent, Calculation Agent, Transfer Agent, Custodial
Securities Intermediary, Backup Advancing Agent and Notes Registrar, hereby
agrees not to cause the filing of a petition in bankruptcy against the Issuer
or the Co-Issuer 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
Notes issued under this Indenture.  This
provision shall survive termination of this Agreement.

(d)      The Trustee agrees that the
payment of all amounts to which it is entitled pursuant to sub-sections
6.7(a)(i), (a)(ii), (a)(iii) and (a)(iv) shall be
subject to the Priority of Payments, shall be payable only to the extent funds
are available in accordance with such Priority of Payments, shall be payable
solely from the Assets and following realization of the Assets, any such claims
of the Trustee against the Issuer, and all obligations of the Issuer, shall be
extinguished.  The Trustee will have a
lien upon the Assets to secure the payment of such payments to it in accordance
with the Priority of Payments; provided that
the Trustee shall not institute any proceeding for enforcement of such lien
except in connection with an action taken pursuant to Section 5.3 hereof
for enforcement of the lien of this Indenture for the benefit of the
Noteholders.

Fees shall be accrued on
the actual number of days in the related Interest Accrual Period.  The Trustee shall receive amounts pursuant to
this Section 6.7 and Sections 11.1(a)(i) and (ii) only to
the extent that such payment is made in accordance with the Priority of
Payments and the failure to pay such amounts to the Trustee will not, by
itself, constitute an Event of Default. 
Subject to Section 6.9, the Trustee shall continue to serve as
Trustee under this Indenture notwithstanding the fact that the Trustee shall
not have received amounts due to it hereunder. 
No direction by a Majority of the Controlling Class shall affect the
right of the Trustee to collect amounts owed to it under this Indenture.

 149
 

 

If on any Payment Date when any amount shall be payable to the Trustee
pursuant to this Indenture is not paid because there are insufficient funds
available for the payment thereof, all or any portion of such amount not so
paid shall be deferred and payable on any later Payment Date on which a fee
shall be payable and sufficient funds are available therefor in accordance with
the Priority of Payments.

Section 6.8             Corporate Trustee Required; Eligibility.

There shall at all times
be a Trustee hereunder which shall be a corporation organized and doing
business under the laws of the United States of America or of any State
thereof, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least U.S.$200,000,000, subject to
supervision or examination by federal or State authority, having a rating of at
least “A2” by Moody’s, a rating of at least “BBB” by Fitch and a long-term
senior unsecured debt rating of at least “A+” and a short-term debt rating of
at least “A-1” by S&P and having an office within the United States.  If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this Section
6.8, the combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in its most recent report
of condition so published.  If at any
time the Trustee shall cease to be eligible in accordance with the provisions
of this Section 6.8, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article 6.

Section 6.9             Resignation and Removal; Appointment of
Successor.

(a)      No resignation or removal of
the Trustee and no appointment of a successor Trustee pursuant to this Article
6 shall become effective until the acceptance of appointment by the
successor Trustee under Section 6.10.

(b)      The Trustee may resign at
any time by giving written notice thereof to the Issuer, the Co-Issuer, the
Collateral Manager, each Hedge Counterparty, the Noteholders and each Rating
Agency.  Upon receiving such notice of
resignation, the Issuer and the Co-Issuer shall promptly appoint a successor
trustee or trustees by written instrument, in duplicate, executed by an
Authorized Officer of the Issuer and an Authorized Officer of the Co-Issuer,
one copy of which shall be delivered to the Trustee so resigning and one copy
to the successor Trustee or Trustees, together with a copy to each Noteholder,
each Hedge Counterparty and the Collateral Manager; provided that such successor Trustee shall be appointed only upon
the written consent of a Majority of the Notes (or if there are no Notes
Outstanding, a Majority of the Preferred Shares) or, at any time when an Event
of Default shall have occurred and be continuing or when a successor Trustee
has been appointed pursuant to Section 6.10, by Act of a Majority of the
Controlling Class.  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 thirty (30) days after the giving of
such notice of resignation, the resigning Trustee, the Controlling Class of
Notes or any Holder of a Note, on behalf of himself and all others similarly
situated, may petition any court of competent jurisdiction for the appointment
of a successor Trustee.

 150

 

(c)      The Trustee is subject to
removal by act of a Majority of the Holders of the Notes (or if there are no
Notes Outstanding, a Majority of the Preferred Shares) or, at any time when an
Event of Default shall have occurred and be continuing or when a successor
Trustee has been appointed pursuant to Section 6.10, by Act of a
Majority of the Controlling Class, upon written notice delivered to the Trustee
and to the Issuer and the Co-Issuer.

(d)      If at any time:

(i)           the Trustee shall
cease to be eligible under Section 6.8 and shall fail to resign after
written request therefor by the Issuer, the Co-Issuer, or by any Holder; or

(ii)          the Trustee shall
become incapable of acting or there shall be instituted any proceeding pursuant
to which it could be adjudged as bankrupt or insolvent or a receiver or
liquidator of the Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation;

then, in any such case
(subject to Section 6.9(a)), (a) the Issuer or the Co-Issuer, by Issuer
Order, subject to the written consent of each Hedge Counterparty, may remove
the Trustee or (b) subject to Section 5.15, a Majority of the
Controlling Class or any Holder may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.

(e)      If the Trustee shall
resign, be removed or become incapable of acting, or if a vacancy shall occur
in the office of the Trustee for any reason, the Issuer and the Co-Issuer, by
Issuer Order, subject to the written consent of each Hedge Counterparty and the
Collateral Manager, shall promptly appoint a successor Trustee.  If the Issuer and the Co-Issuer shall fail to
appoint a successor Trustee within sixty (60) days after such resignation,
removal or incapability or the occurrence of such vacancy, a successor Trustee
may be appointed by Act of a Majority of the Controlling Class delivered to the
Issuer, the Co-Issuer, the Collateral Manager and the retiring Trustee.  The successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Trustee
and supersede any successor Trustee proposed by the Issuer and the
Co-Issuer.  If no successor Trustee shall
have been so appointed by the Issuer and the Co-Issuer or a Majority of the
Controlling Class and shall have accepted appointment in the manner hereinafter
provided, subject to Section 5.15, each Hedge Counterparty, the
Controlling Class or any Holder may, on behalf of itself or himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.

(f)       The Issuer and the
Co-Issuer shall give prompt notice of each resignation and each removal of the
Trustee and each appointment of a successor Trustee by mailing written notice
of such event by first class mail, postage prepaid, to each Rating Agency, each
Hedge Counterparty, the Preferred Shares Paying Agent and to the Holders of the
Notes as their names and addresses appear in the Notes Register.  Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust Office.  If the Issuer or the Co-Issuer fail to mail
such notice within ten days after acceptance of appointment by the

 151
 

 

successor Trustee, the successor Trustee shall cause such notice to be
given at the expense of the Issuer or the Co-Issuer, as the case may be.

Section 6.10           Acceptance of Appointment by
Successor.

Every successor Trustee
appointed hereunder shall execute, acknowledge and deliver to the Issuer, the
Co-Issuer, each Hedge Counterparty, the Collateral Manager and the retiring
Trustee an instrument accepting such appointment.  Upon delivery of the required instruments,
the resignation or removal of the retiring Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts, duties and obligations of
the retiring Trustee; but, on request of the Issuer and the Co-Issuer or a
Majority of the Controlling Class or the Collateral Manager or the successor
Trustee, such retiring Trustee shall, upon payment of its charges then unpaid,
execute and deliver an instrument transferring to such successor Trustee all
the rights, powers and trusts of the retiring Trustee, and shall duly assign,
transfer and deliver to such successor Trustee all property and Money held by
such retiring Trustee hereunder, subject nevertheless to its lien, if any,
provided for in Section 6.7(d). 
Upon request of any such successor Trustee, the Issuer and the Co-Issuer
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and trusts.

No successor Trustee
shall accept its appointment unless at the time of such acceptance such
successor shall be qualified and eligible under this Article 6 and (a)
such successor shall have long term debt rated within the four (4) highest
rating categories by each Rating Agency, and (b) each Rating Agency has
confirmed in writing that the employment of such successor would not adversely
affect the rating on the Notes.

Section 6.11           Merger, Conversion, Consolidation
or Succession to Business of Trustee.

Any corporation or
banking association into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation or banking association
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be otherwise
qualified and eligible under this Article 6, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto.  In case any of the 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 Notes so authenticated with the
same effect as if such successor Trustee had itself authenticated such Notes.

Section 6.12           Co-Trustees and Separate Trustee.

At any time or times,
including for the purpose of meeting the legal requirements of any jurisdiction
in which any part of the Assets may at the time be located, the Issuer, the
Co-Issuer and the Trustee shall have power to appoint, one or more Persons to
act as co-trustee jointly with the Trustee of all or any part of the Assets,
with the power to file such proofs of

 152
 

 

claim and take such other actions pursuant to Section
5.6 herein and to make such claims and enforce such rights of action on
behalf of the Holders of the Notes as such Holders themselves may have the
right to do, subject to the other provisions of this Section 6.12.

Each of the Issuer and
the Co-Issuer shall join with the Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to appoint a
co-trustee.  If the Issuer and the
Co-Issuer do not both join in such appointment within fifteen (15) days after
the receipt by them of a request to do so, the Trustee shall have power to make
such appointment.

Should any written
instrument from the Issuer or the Co-Issuer be required by any co-trustee, so
appointed, more fully confirming to such co-trustee such property, title, right
or power, any and all such instruments shall, on request, be executed,
acknowledged and delivered by the Issuer or the Co-Issuer, as the case may
be.  The Issuer agrees to pay (but only
from and to the extent of the Assets) to the extent funds are available therefor
under subclauses (3) and (31) of Section 11.1(a)(i), for any reasonable
fees and expenses in connection with such appointment.

Every co-trustee, shall,
to the extent permitted by law, but to such extent only, be appointed subject
to the following terms:

(a)      the Notes shall be
authenticated and delivered and all rights, powers, duties and obligations
hereunder in respect of the custody of securities, Cash and other personal
property held by, or required to be deposited or pledged with, the Trustee
hereunder, shall be exercised solely by the Trustee;

(b)      the rights, powers,
duties and obligations hereby conferred or imposed upon the Trustee in respect
of any property covered by the appointment of a co-trustee shall be conferred
or imposed upon and exercised or performed by the Trustee or by the Trustee and
such co-trustee jointly in the case of the appointment of a co-trustee as shall
be provided in the instrument appointing such co-trustee, except to the extent
that under any law of any jurisdiction in which any particular act is to be
performed, the Trustee shall be incompetent or unqualified to perform such act,
in which event such rights, powers, duties and obligations shall be exercised
and performed by a co-trustee;

(c)      the Trustee at any time,
by an instrument in writing executed by it, with the concurrence of the Issuer
and the Co-Issuer evidenced by an Issuer Order, may accept the resignation of
or remove any co-trustee appointed under this Section 6.12, and in case
an Event of Default has occurred and is continuing, the Trustee shall have the
power to accept the resignation of, or remove, any such co-trustee without the
concurrence of the Issuer or the Co-Issuer. 
A successor to any co-trustee so resigned or removed may be appointed in
the manner provided in this Section 6.12;

(d)      no co-trustee hereunder
shall be personally liable by reason of any act or omission of the Trustee
hereunder;

(e)      the Trustee shall not be
liable by reason of any act or omission of a co-trustee; and

 153
 

 

(f)       any Act of
Securityholders delivered to the Trustee shall be deemed to have been delivered
to each co-trustee.

Section 6.13           Certain Duties of Trustee Related
to Delayed Payment of Proceeds.

In the event that in any
month the Trustee shall not have received a Scheduled Distribution, (a) the
Trustee shall promptly notify the Issuer and the Collateral Manager in writing
and (b) unless within three Business Days (or the end of the applicable grace
period for such payment, if longer) after such notice such payment shall have
been received by the Trustee, or the Issuer, in its absolute discretion (but
only to the extent permitted by Section 10.2(a)), shall have made
provision for such payment satisfactory to the Trustee in accordance with Section
10.2(a), the Trustee shall request the obligor of such Pledged Obligation,
the trustee under the related Underlying Instrument or paying agent designated
by either of them, as the case may be, to make such payment as soon as
practicable after such request but in no event later than three Business Days
after the date of such request.  In the
event that such payment is not made within such time period, the Trustee,
subject to the provisions of clause (iv) of Section 6.1(d), shall take
such action as the Collateral Manager reasonably shall direct in writing.  Any such action shall be without prejudice to
any right to claim a Default or Event of Default under this Indenture.  In the event that the Issuer or the
Collateral Manager requests a release of a Pledged Obligation in connection
with any such action under the Collateral Management Agreement, such release
shall be subject to Section 10.13 and Article 12 of this
Indenture, as the case may be. 
Notwithstanding any other provision hereof, the Trustee shall deliver to
the Issuer or its designee any payment with respect to any Pledged Obligation
received after the Due Date thereof to the extent the Issuer previously made
provisions for such payment satisfactory to the Trustee in accordance with this
Section 6.13 and such payment shall not be deemed part of the Assets.

Section 6.14           Representations and Warranties of
the Trustee.

The Trustee represents
and warrants that:

(a)      the Trustee is a national
banking association with trust powers, duly and validly existing under the laws
of the United States of America, with corporate power and authority to execute,
deliver and perform its obligations under this Indenture, and is duly eligible
and qualified to act as trustee under this Indenture;

(b)      this Indenture has been
duly authorized, executed and delivered by the Trustee and constitutes the valid
and binding obligation of the Trustee, enforceable against it in accordance
with its terms except (i) as limited by bankruptcy, fraudulent conveyance,
fraudulent transfer, insolvency, reorganization, liquidation, receivership,
moratorium or other similar laws now or hereafter in effect relating to
creditors’ rights generally and by general equitable principles, regardless of
whether considered in a proceeding in equity or at law, and (ii) that the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought;

(c)      neither the execution or
delivery by the Trustee of this Indenture nor the performance by the Trustee of
its obligations under this Indenture requires the consent or

 154
 

 

approval of, the giving of notice to or the registration or filing
with, any governmental authority or agency under any existing law of the United
States of America governing the banking or trust powers of the Trustee;

(d)      neither the execution,
delivery and performance of this Indenture, nor the consummation of the
transactions contemplated by this Indenture, (i) is prohibited by, or requires
the Trustee to obtain any consent, authorization, approval or registration
under, any law, statute, rule, regulation, or any judgment, order, writ,
injunction or decree that is binding upon the Trustee or any of its properties
or assets, (ii) will violate the provisions of the Governing Documents of the
Trustee or (iii) will violate any provision of, result in any default or
acceleration of any obligations under, result in the creation or imposition of
any lien pursuant to, or require any consent under, any material agreement to
which the Trustee is a party or by which it or any of its property is bound,
the violation of which would have a material adverse effect on the Trustee or
its property; and

(e)      there are no proceedings
pending or, to the best knowledge of the Trustee, threatened against the Trustee
before any Federal, state or other governmental agency, authority,
administrator or regulatory body, arbitrator, court or other tribunal, foreign
or domestic, which could have a material adverse effect on the Pledged
Obligations or the performance by the Trustee of its obligations under this
Indenture.

Section 6.15           Requests for Consents.

In the event that the
Trustee receives written notice of any proposed amendment, consent or waiver
under the Underlying Instruments of any Collateral Debt Security (before or
after any default) or in the event any action is required to be taken in
respect to an Underlying Instrument, the Trustee shall promptly contact the
Issuer and the Collateral Manager.  The
Collateral Manager may, on behalf of the Issuer, instruct the Trustee pursuant
to an Issuer Order to, and the Trustee shall, with respect to which a
Collateral 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 or with respect to action required to be taken in respect of an
Underlying Instrument, give consent, grant a waiver, vote or exercise any or
all other rights or remedies with respect to any such Collateral Debt Security
in accordance with such Issuer Order.  In
the absence of any instruction from the Collateral Manager, the Trustee shall
not engage in any vote or take any action with respect to such a Collateral
Debt Security.

 155
 

 

ARTICLE 7

COVENANTS

Section 7.1             Payment of Principal and
Interest.

The Issuer and the
Co-Issuer shall duly and punctually pay the principal of and interest on each
Class of Notes in accordance with the terms of such Notes and this Indenture.
Amounts properly withheld under the Code or other applicable law by any Person
from a payment to any Noteholder of interest and/or principal shall be
considered as having been paid, by the Issuer and the Co-Issuer, and, with
respect to the Preferred Shares, by the Issuer, to such Preferred Shareholder
for all purposes of this Indenture.

The Trustee shall, unless
prevented from doing so for reasons beyond its reasonable control, give notice
to each Securityholder of any such withholding requirement no later than ten
days prior to the related Payment Date from which amounts are required (as
directed by the Issuer or the Collateral Manager on behalf of the Issuer) to be
withheld; provided that despite
the failure of the Trustee to give such notice amounts withheld pursuant to
applicable tax laws shall be considered as having been paid by the Issuer and
the Co-Issuer, as provided above.

Section 7.2             Maintenance of Office or Agency.

The Issuer and the
Co-Issuer hereby appoint the Trustee as a Paying Agent for the payment of
principal of and interest on the Notes and where Notes may be surrendered for
registration of transfer or exchange and the Issuer and the Co-Issuer hereby
appoint the Trustee, as their agent where notices and demands to or upon the
Co-Issuer in respect of the Notes or this Indenture, or the Issuer in respect
of the Notes or this Indenture, may be served.

The Issuer and the
Co-Issuer hereby appoint the Irish Paying Agent as a Paying Agent for the
payment of principal of and interest on the Notes and to act as their agent
where notices and demands to or upon the Issuer or the Co-Issuer in respect of
the Notes or this Indenture may be served and where Notes may be surrendered
for registration of transfer or exchange.

The Issuer or the
Co-Issuer may at any time and from time to time vary or terminate the
appointment of any such agent or appoint any additional agents for any or all
of such purposes; provided, however,
that the Issuer and the Co-Issuer, if applicable, will maintain in the Borough
of Manhattan, The City of New York, an office or agency where notices and
demands to or upon the Issuer and the Co-Issuer in respect of the Notes and
this Indenture may be served, and, subject to any laws or regulations
applicable thereto, an office or agency outside of the United States where
Notes may be presented and surrendered for payment; provided, further, that no paying agent shall be appointed in
a jurisdiction which subjects payments on the Notes to withholding tax. The
Issuer or the Co-Issuer, as the case may be, shall give prompt written notice
to the Trustee, each Rating Agency and the Noteholders of the appointment or

 156
 

 

termination of any such agent and of the location and
any change in the location of any such office or agency.

If at any time the Issuer
and the Co-Issuer, if applicable, shall fail to maintain any such required
office or agency in the Borough of Manhattan, The City of New York, or outside
the United States, or shall fail to furnish the Trustee with the address
thereof, presentations and surrenders may be made (subject to the limitations
described in the preceding paragraph) at and notices and demands may be served
on the Issuer and the Co-Issuer, and Notes may be presented and surrendered for
payment to the appropriate Paying Agent at its main office and the Issuer and
the Co-Issuer hereby appoint the same as their agent to receive such respective
presentations, surrenders, notices and demands.

Section 7.3             Money for Note Payments to be
Held in Trust.

All payments of amounts
due and payable with respect to any Notes that are to be made from amounts
withdrawn from the Payment Account shall be made on behalf of the Issuer and
the Co-Issuer by the Trustee or a Paying Agent (in each case, from and to the
extent of available funds in the Payment Account and subject to the Priority of
Payments) with respect to payments on the Notes.

When the Paying Agent is
not also the Notes Registrar, the Issuer and the Co-Issuer shall furnish, or
cause the Notes Registrar to furnish, no later than the fifth calendar day
after each Record Date a list, if necessary, in such form as such Paying Agent
may reasonably request, of the names and addresses of the Holders of Notes and
of the certificate numbers of individual Notes held by each such Holder.

Whenever the Paying Agent
is not also the Trustee, the Issuer, the Co-Issuer, and such Paying Agent
shall, on or before the Business Day next preceding each Payment Date or
Redemption Date, as the case may be, direct the Trustee to deposit on such
Payment Date with such Paying Agent, if necessary, an aggregate sum sufficient
to pay the amounts then becoming due pursuant to the terms of this Indenture
(to the extent funds are then available for such purpose in the Payment
Account, and subject to the Priority of Payments), such sum to be held for the
benefit of the Persons entitled thereto and (unless such Paying Agent is the
Trustee) the Issuer and the Co-Issuer shall promptly notify the Trustee of its
action or failure so to act. Any Monies deposited with a Paying Agent (other
than the Trustee) in excess of an amount sufficient to pay the amounts then
becoming due on the Notes with respect to which such deposit was made shall be
paid over by such Paying Agent to the Trustee for application in accordance
with Article 11.  Any such Paying
Agent shall be deemed to agree by assuming such role not to cause the filing of
a petition in bankruptcy against the Issuer or the Co-Issuer for the
non-payment to the Paying Agent of any amounts payable thereto until at least
one year and one day or, if longer, the applicable preference period then in
effect after the payment in full of all Notes issued under this Indenture.

The initial Paying Agent
shall be as set forth in Section 7.2. Any additional or successor Paying
Agents shall be appointed by Issuer Order of the Issuer and Issuer Order of the
Co-Issuer with written notice thereof to the Trustee; provided, however, that so long as any Class of the Notes are
rated by a Rating Agency and with respect to any additional or successor Paying

 157
 

 

Agent for the Notes, either (i) such Paying Agent has
a long-term debt rating of “Aa3” or higher by Moody’s, “AA-”or higher by Fitch
and “AA-” or higher by S&P or a short-term debt rating of “P-1” by Moody’s,
“F1+” by Fitch and “A1+” by S&P or (ii) each Rating Agency confirms that
employing such Paying Agent shall not adversely affect the then-current ratings
of the Notes.  In the event that such
successor Paying Agent ceases to have a long-term debt rating of “Aa3” or
higher by Moody’s, “AA-”or higher by Fitch or “AA-” or higher by S&P or a
short-term debt rating of at least  “P-1”
by Moody’s, “F1+” by Fitch and “A-1+” by S&P, the Issuer and the Co-Issuer
shall promptly remove such Paying Agent and appoint a successor Paying Agent.
The Issuer and the Co-Issuer shall not appoint any Paying Agent that is not, at
the time of such appointment, a depository institution or trust company subject
to supervision and examination by federal and/or state and/or national banking
authorities. The Issuer and the Co-Issuer shall cause the Paying Agent other
than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee (and if the Trustee acts as
Paying Agent, it hereby so agrees), subject to the provisions of this Section
7.3, that such Paying Agent will:

(a)      allocate all sums
received for payment to the Holders of Notes for which it acts as Paying Agent
on each Payment Date and Redemption Date among such Holders in the proportion
specified in the applicable report or Redemption Date Statement, as the case
may be, in each case to the extent permitted by applicable law;

(b)      hold all sums held by it
for the payment of amounts due with respect to the Notes for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such Persons as
herein provided;

(c)      if such Paying Agent is
not the Trustee, immediately resign as a Paying Agent and forthwith pay to the
Trustee all sums held by it for the payment of Notes if at any time it ceases
to meet the standards set forth above required to be met by a Paying Agent at
the time of its appointment;

(d)      if such Paying Agent is
not the Trustee, immediately give the Trustee notice of any Default by the
Issuer or the Co-Issuer (or any other obligor upon the Notes) in the making of any
payment required to be made; and

(e)      if such Paying Agent is
not the Trustee at any time during the continuance of any such Default, upon
the written request of the Trustee, forthwith pay to the Trustee all sums so
held by such Paying Agent.

The Issuer or the
Co-Issuer may at any time, for the purpose of obtaining the satisfaction and
discharge of this Indenture or for any other purpose, pay, or by Issuer Order
direct the Paying Agent to pay, to the Trustee all sums held by the Issuer or
the Co-Issuer or held by the Paying Agent for payment of the Notes, such sums
to be held by the Trustee in trust for the same Noteholders as those upon which
such sums were held by the Issuer, the Co-Issuer or the Paying Agent; and, upon
such payment by the Paying Agent to the Trustee, the Paying Agent shall be
released from all further liability with respect to such Money.

 158
 

 

Except as otherwise required by applicable law, any Money deposited
with the Trustee in trust or deposited with the Paying Agent for the payment of
the principal of or interest on any Note and remaining unclaimed for two (2)
years after such principal or interest has become due and payable shall be paid
to the Issuer; and the Holder of such Note shall thereafter, as an unsecured
general creditor, look only to the Issuer for payment of such amounts and all
liability of the Trustee or the Paying Agent with respect to such Money (but
only to the extent of the amounts so paid to the Issuer or the Co-Issuer, as
applicable) shall thereupon cease; provided, however,
that the Irish Paying Agent, before being required to make any such payment,
shall at the expense of the Issuer cause to be published once, in a newspaper
published in the English language, customarily published on each Business Day
and of general circulation in Dublin, Ireland, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less
than thirty (30) days from the date of such publication, any unclaimed balance
of such money then remaining shall be repaid to the Issuer. The Trustee or the
Paying Agent, before being required to make any such release of payment, may,
but shall not be required to, adopt and employ, at the expense of the Issuer or
the Co-Issuer, as the case may be, any reasonable means of notification of such
release of payment, including, but not limited to, mailing notice of such
release to Holders whose Notes have been called but have not been surrendered
for redemption or whose right to or interest in Monies due and payable but not
claimed is determinable from the records of the Paying Agent, at the last
address of record of each such Holder.

Section 7.4             Existence of the Issuer and
Co-Issuer.

(a)      So long as any Note is
outstanding, the Issuer shall, to the maximum extent permitted by law, maintain
in full force and effect its existence and rights as an exempted company
incorporated with limited liability under the laws of the Cayman Islands and
shall obtain and preserve its qualification to do business as a foreign limited
liability company in each jurisdiction in which such qualifications are or
shall be necessary to protect the validity and enforceability of this
Indenture, the Notes or any of the Assets; provided that
the Issuer shall be entitled to change its jurisdiction of registration from
the Cayman Islands to any other jurisdiction reasonably selected by the Issuer
so long as (i) such change is not disadvantageous in any material respect to
the Holders of the Notes or the Preferred Shares, (ii) written notice of such
change shall have been given by the Trustee to the Holders of the Notes or
Preferred Shares, the Preferred Shares Paying Agent and each Rating Agency
fifteen (15) Business Days prior to such change and (iii) on or prior to the
fifteenth (15th)
Business Day following such notice the Trustee shall not have received written
notice from a Majority of the Controlling Class or a Majority of the Preferred
Shares objecting to such change.  So long
as any Note is outstanding, the Issuer will maintain at all times at least one
director who is Independent of the Collateral Manager and its Affiliates.

(b)      So long as any Note is
outstanding, the Co-Issuer shall maintain in full force and effect its
existence and rights as a limited liability company organized under the laws of
Delaware and shall obtain and preserve its qualification to do business as a
foreign limited liability company in each jurisdiction in which such
qualifications are or shall be necessary to protect the validity and
enforceability of this Indenture or the Notes; provided, however, that the Co-Issuer shall be entitled to
change its jurisdiction of formation from Delaware to any other jurisdiction
reasonably selected by the Co-Issuer so long as (i) such change is not
disadvantageous in any material respect to the Holders of the Notes, (ii)
written

 159
 

 

notice of such change shall have been given by the Trustee to the
Holders of the Notes and each Rating Agency fifteen (15) Business Days prior to
such change and (iii) on or prior to the 15th Business Day following such notice
the Trustee shall not have received written notice from a Majority of the
Controlling Class objecting to such change. 
So long as any Note is outstanding, the Co-Issuer shall maintain at all
times at least one manager who is Independent of the Collateral Manager and its
Affiliates.

(c)      So long as any Note is
outstanding, the Issuer shall ensure that all corporate or other formalities
regarding its existence are followed (including correcting any known
misunderstanding regarding its separate existence).  So long as any Note is outstanding, the
Issuer shall not take any action or conduct its affairs in a manner that is
likely to result in its separate existence being ignored or its assets and
liabilities being substantively consolidated with any other Person in a
bankruptcy, reorganization or other insolvency proceeding.  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 and other information customarily
maintained for the performance of the Issuer’s obligations hereunder. Without
limiting the foregoing, so long as any Note is outstanding, (i) the Issuer
shall (A) pay its own liabilities only out of its own funds and (B) use
separate stationery, invoices and checks, (ii) the Issuer shall not have any
subsidiaries, and (iii) the Issuer shall not (A) have any employees, (B) engage
in any transaction with any shareholder that is not permitted under the terms
of the Collateral Management Agreement, (C) pay dividends other than in
accordance with the terms of this Indenture or (D) 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
Company Administration Agreement with the Company Administrator and the
Preferred Shares Paying Agency Agreement with the Share Registrar.

(d)      So long as any Note is
outstanding, the Co-Issuer shall ensure that all limited liability company or
other formalities regarding its existence) are followed, as well as correcting
any known misunderstanding regarding its separate existence.  The Co-Issuer shall not take any action or
conduct its affairs in a manner, that is likely to result in its separate
existence being ignored or its assets and liabilities being substantively consolidated
with any other Person in a bankruptcy, reorganization or other insolvency
proceeding.  The Co-Issuer shall maintain
and implement administrative and operating procedures reasonably necessary in
the performance of the Co-Issuer’s obligations hereunder, and the Co-Issuer
shall at all times keep and maintain, or cause to be kept and maintained,
books, records, accounts and other information customarily maintained for the
performance of the Co- Issuer’s obligations hereunder.  Without limiting the foregoing, (i) the
Co-Issuer shall not have any subsidiaries, and (ii) the Co-Issuer shall not (A)
have any employees (other than its managers), (B) join in any transaction with
any member that is not permitted under the terms of the Collateral Management
Agreement or (C) pay dividends other than in accordance with the terms of this
Indenture.

 160
 

 

Section 7.5             Protection of Assets.

(a)      The Trustee, on behalf of
the Issuer, pursuant to any Opinion of Counsel received pursuant to Section
7.5(d) shall execute and deliver all such Financing Statements, continuation
statements, instruments of further assurance and other instruments, and shall
take such other action as may be necessary or advisable or desirable to secure
the rights and remedies of the Holders and each Hedge Counterparty hereunder
and to:

(i)           Grant more
effectively all or any portion of the Assets;

(ii)          maintain or preserve
the lien (and the priority thereof) of this Indenture or to carry out more
effectively the purposes hereof;

(iii)         perfect, publish
notice of or protect the validity of any Grant made or to be made by this
Indenture (including, without limitation, any and all actions necessary or
desirable as a result of changes in law or regulations);

(iv)        enforce any of the
Pledged Obligations or other instruments or property included in the Assets;

(v)         preserve and defend
title to the Assets and the rights of the Trustee, the Holders of the Notes and
each Hedge Counterparty in the Assets against the claims of all persons and
parties; and

(vi)        pursuant to Sections
11.1(a)(i)(1) and 11.1(a)(ii)(1), pay or cause to be paid any and
all taxes levied or assessed upon all or any part of the Assets.

The Issuer hereby
designates the Trustee, its agent and attorney-in-fact to execute any Financing
Statement, continuation statement or other instrument required pursuant to this
Section 7.5.  The Trustee agrees
that it will from time to time execute and cause to be filed Financing
Statements and continuation statements (it being understood that the Trustee
shall be entitled to rely upon an Opinion of Counsel described in Section
7.5(d), at the expense of the Issuer, as to the need to file such Financing
Statements and continuation statements, the dates by which such filings are
required to be made and the jurisdictions in which such filings are required to
be made).

(b)      The Trustee shall not (i)
except in accordance with Section 10.13(a), (b) or (c) and except
for payments, deliveries and distributions otherwise expressly permitted under
this Indenture, remove any portion of the Assets that consists of Cash or is
evidenced by an instrument, certificate or other writing (A) from the
jurisdiction in which it was held at the date as described in the Opinion of
Counsel delivered at the Closing Date pursuant to Section 3.1(d) or (B)
from the possession of the Person who held it on such date or (ii) cause or
permit the Custodial Account or the Custodial Securities Intermediary to be
located in a different jurisdiction from the jurisdiction in which such
securities accounts and Custodial Securities Intermediary were located on the
Closing Date, unless the Trustee shall have first received an Opinion of
Counsel to the effect that the lien and security interest created by this
Indenture with respect to such property will continue to be maintained after
giving effect to such action or actions.

 161
 

 

(c)      The Issuer shall pay or
cause to be paid taxes, if any, levied on account of the beneficial ownership
by the Issuer of any Pledged Obligations that secure the Notes.

(d)      For so long as the Notes
are Outstanding, (i) on July 31, 2011 and (ii) every sixty (60) months after
such date, the Issuer (or the Collateral Manager on behalf of the Issuer) shall
deliver to the Trustee for the benefit of the Trustee, the Collateral Manager,
each Hedge Counterparty and each Rating Agency, at the expense of the Issuer,
an Opinion of Counsel stating what is required, in the opinion of such counsel,
as of the date of such opinion, to maintain the lien and security interest
created by this Indenture with respect to the Assets, and confirming the matters
set forth in the Opinion of Counsel, furnished pursuant to Section 3.1(d),
with regard to the perfection and priority of such security interest (and such
Opinion may likewise be subject to qualifications and assumptions similar to
those set forth in the Opinion delivered pursuant to Section 3.1(d)); provided
that the Issuer shall be required to deliver an Opinion of Counsel with respect
to the foregoing matters within sixty (60) days after any change in the
jurisdiction of organization of the Trustee; and provided, further, that a
Majority of the Controlling Class shall be entitled to direct the Issuer to
deliver an additional Opinion of Counsel with respect to the foregoing matters,
at the expense of such Holders, twice within any such 60-month period.

Section 7.6             Notice of Any Amendments.

Each of the Issuer and
the Co-Issuer shall give notice to the Rating Agencies of, and satisfy the
Rating Agency Condition with respect to, any amendments to its Governing
Documents.

Section 7.7             Performance of Obligations.

(a)      Each of the Issuer and
the Co-Issuer shall not take any action, and will use its best effort not to
permit any action to be taken by others, that would release any Person from any
of such Person’s covenants or obligations under any instrument included in the
Assets, except in the case of enforcement action taken with respect to any
Defaulted Security in accordance with the provisions hereof and as otherwise
required hereby.

(b)      The Issuer or the
Co-Issuer may, with the prior written consent of the Majority of the Notes (or
if there are no Notes Outstanding, a Majority of the Preferred Shares),
contract with other Persons, including the Collateral Manager or the Trustee,
for the performance of actions and obligations to be performed by the Issuer or
the Co-Issuer, as the case may be, hereunder by such Persons and the
performance of the actions and other obligations with respect to the Assets of
the nature set forth in the Collateral Management Agreement by the Collateral
Manager. Notwithstanding any such arrangement, the Issuer or the Co-Issuer, as
the case may be, shall remain primarily liable with respect thereto. In the
event of such contract, the performance of such actions and obligations by such
Persons shall be deemed to be performance of such actions and obligations by
the Issuer or the Co-Issuer; and the Issuer or the Co-Issuer shall punctually
perform, and use its best efforts to cause the Collateral Manager or such other
Person to perform, all of their obligations and agreements contained in the
Collateral Management Agreement or such other agreement.

 162
 

 

Section 7.8             Negative Covenants.

(a)      The Issuer and the
Co-Issuer shall not:

(i)           sell, assign,
participate, transfer, exchange or otherwise dispose of, or pledge, mortgage,
hypothecate or otherwise encumber (or permit such to occur or suffer such to
exist), any part of the Assets, except as otherwise expressly permitted by this
Indenture or the Collateral Management Agreement;

(ii)          claim any credit on,
make any deduction from, or dispute the enforceability of, the payment of the
principal or interest payable in respect of the Notes (other than amounts
required to be paid, deducted or withheld in accordance with any applicable law
or regulation of any governmental authority), or assert any claim against any
present or future Noteholder by reason of the payment of any taxes levied or
assessed upon any part of the Assets;

(iii)         (A) incur or assume
or guarantee any indebtedness, other than the Notes and this Indenture and the
transactions contemplated hereby; (B) issue any additional class of securities,
other than the Notes, the Preferred Shares, the ordinary shares of the Issuer
and the limited liability company membership interests of the Co-Issuer; or (C)
issue any additional shares of stock, other than the ordinary shares of the
Issuer and the Preferred Shares;

(iv)        (A) permit the
validity or effectiveness of this Indenture or any Grant hereunder to be
impaired, or permit the lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released
from any covenants or obligations with respect to this Indenture or the Notes,
except as may be expressly permitted hereby, (B) permit any lien, charge,
adverse claim, security interest, mortgage or other encumbrance (other than the
lien of this Indenture) to be created on or extend to or otherwise arise upon
or burden the Assets or any part thereof, any interest therein or the proceeds
thereof, except as may be expressly permitted hereby or (C) take any action
that would permit the lien of this Indenture not to constitute a valid first
priority security interest in the Assets, except as may be expressly permitted
hereby;

(v)         amend the Collateral
Management Agreement, except pursuant to the terms thereof;

(vi)        amend any Servicing
Agreement, except pursuant to the terms thereof;

(vii)       amend the Preferred
Shares Paying Agency Agreement, except pursuant to the terms thereof;

(viii)      to the maximum extent
permitted by applicable law, dissolve or liquidate in whole or in part, except
as permitted hereunder;

(ix)         make or incur any
capital expenditures, except as reasonably required to perform its functions in
accordance with the terms of this Indenture;

 163
 

 

(x)          become liable in any
way, whether directly or by assignment or as a guarantor or other surety, for
the obligations of the lessee under any lease, hire any employees or pay any
dividends to its shareholders, except with respect to the Preferred Shares in
accordance with the Priority of Payments;

(xi)         maintain any bank
accounts other than the Accounts and the bank account in the Cayman Islands in
which (inter alia) the proceeds of the Issuer’s
issued share capital and the transaction fees paid to the Issuer for agreeing
to issue the Securities will be kept;

(xii)        conduct business
under an assumed name, or change its name without first delivering at least
thirty (30) days’ prior written notice to the Trustee, the Noteholders and the
Rating Agencies and an Opinion of Counsel to the effect that such name change
will not adversely affect the security interest hereunder of the Trustee;

(xiii)       engage in any
activity that would cause the Issuer to be treated as a foreign corporation
subject to U.S. Federal, state or local income or franchises tax; or

(xiv)       except for any agreements
(other than a Hedge Agreement) involving the purchase and sale of Collateral
Debt Securities having customary purchase or sale terms and documented with
customary loan trading documentation, enter into any agreements unless such
agreements contain “non-petition” and “limited recourse” provisions.

(b)      Neither the Issuer nor
the Trustee shall sell, transfer, exchange or otherwise dispose of Assets, or
enter into or engage in any business with respect to any part of the Assets,
except as expressly permitted or required by this Indenture or the Collateral
Management Agreement.

(c)      The Co-Issuer shall not
invest any of its assets in “securities” (as such term is defined in the
Investment Company Act) and shall keep all of the Co-Issuer’s assets in Cash.

(d)      For so long as any of the
Notes are Outstanding, the Co-Issuer shall not issue any limited liability
company membership interests of the Co-Issuer to any Person other than Gramercy
Investment or a wholly-owned subsidiary of Gramercy Investment.

(e)      The Issuer shall not
enter into any material new agreements (other than any Hedge Agreement, Hedge
Counterparty Credit Support, Collateral Debt Security, Collateral Debt Security
Purchase Agreement or other agreement (including, without limitation, in connection
with the sale of Assets by the Issuer) contemplated by this Indenture) without
the prior written consent of Holders of a Majority of the Notes (or if there
are no Notes Outstanding, a Majority of the Preferred Shares) and shall provide
notice of all new agreements (other than any Hedge Agreement, Collateral Debt
Security or other agreement specifically contemplated by this Indenture) to the
Holders of the Notes.  The foregoing
notwithstanding, the Issuer may agree to any new agreements; provided
that (i) the Issuer, or the Collateral Manager on behalf of the Issuer,
determines that such new agreements would not, upon or after becoming
effective, adversely affect the rights or interests of any Class or Classes of
Noteholders and (ii) subject to satisfaction of the Rating Agency Condition.

 164
 

 

(f)       As long as any Senior
Note is outstanding, QRS II Corp. may not transfer the Preferred Shares to any
other Person.

(g)      For so long as any Senior
Note is Outstanding, QRS II Corp. may not sell, transfer or finance any Class J
Note or Class K Note except in accordance with the transfer restrictions set
forth in Section 2.5(e)(iv).

Section 7.9             Statement as to Compliance.

(a)      On or before January 31,
in each calendar year, commencing in 2007 or immediately if there has been a
Default in the fulfillment of an obligation under this Indenture, the Issuer
shall deliver to the Trustee (which will deliver a copy to each Hedge
Counterparty and each Rating Agency) an Officer’s Certificate given on behalf
of the Issuer and without personal liability stating, as to each signer
thereof, that, since the date of the last certificate or, in the case of the
first certificate, the Closing Date, to the best of the knowledge, information
and belief of such Officer, the Issuer has fulfilled all of its obligations
under this Indenture or, if there has been a Default in the fulfillment of any
such obligation, specifying each such Default known to them and the nature and
status thereof.

Section 7.10           Issuer and Co-Issuer May
Consolidate or Merge Only on Certain Terms.

(a)      The Issuer shall not
consolidate or merge with or into any other Person or transfer or convey all or
substantially all of its assets to any Person, unless permitted by the
Governing Documents and Cayman Islands law and unless:

(i)           the Issuer shall be
the surviving entity, or the Person (if other than the Issuer) formed by such
consolidation or into which the Issuer is merged or to which all or
substantially all of the assets of the Issuer are transferred shall be an
entity organized and existing under the laws of the Cayman Islands or such
other jurisdiction approved by a Majority of each and every Class of the Notes
(each voting as a separate Class) and a Majority of the Preferred Shares; provided that no such approval shall be required in connection with
any such transaction undertaken solely to effect a change in the jurisdiction
of registration pursuant to Section 7.4 hereof; and provided, further, that the surviving entity shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Trustee and each Noteholder, the due and punctual payment of the principal of
and interest on all Notes and other amounts payable hereunder and under each
Hedge Agreement and the Collateral Management Agreement and the performance and
observance of every covenant of this Indenture and under each Hedge Agreement
and the Collateral Management Agreement on the part of the Issuer to be
performed or observed, all as provided herein;

(ii)          each Rating Agency
shall have been notified in writing of each proposed consolidation or merger of
the Issuer and the Trustee shall have received written confirmation from each
Rating Agency that the ratings issued with respect to each Class of Notes shall
not be reduced or withdrawn as a result of the consummation of such
transaction;

 165
 

 

(iii)         if the Issuer is not
the surviving entity, the Person formed by such consolidation or into which the
Issuer is merged or to which all or substantially all of the assets of the
Issuer are transferred shall have agreed with the Trustee (A) to observe the
same legal requirements for the recognition of such formed or surviving entity
as a legal entity separate and apart from any of its Affiliates as are
applicable to the Issuer with respect to its Affiliates and (B) not to
consolidate or merge with or into any other Person or transfer or convey all or
substantially all of the Assets or all or substantially all of its assets to
any other Person except in accordance with the provisions of this Section
7.10, unless in connection with a sale of the Assets pursuant to Article
5, Article 9 or Article 12;

(iv)        if the Issuer is not
the surviving entity, the Person formed by such consolidation or into which the
Issuer is merged or to which all or substantially all of the assets of the
Issuer are transferred shall have delivered to the Trustee, each Hedge
Counterparty, the Collateral Manager and each Rating Agency an Officer’s
Certificate and an Opinion of Counsel each stating that such Person is duly
organized, validly existing and in good standing in the jurisdiction in which
such Person is organized; that such Person has sufficient power and authority
to assume the obligations set forth in subsection (i) above and to execute and
deliver an indenture supplemental hereto for the purpose of assuming such
obligations; that such Person has duly authorized the execution, delivery and
performance of an indenture supplemental hereto for the purpose of assuming
such obligations and that such supplemental indenture is a valid, legal and
binding obligation of such Person, enforceable in accordance with its terms,
subject only to bankruptcy, reorganization, insolvency, moratorium and other
laws affecting the enforcement of creditors’ rights generally and to general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law); that, immediately following the event
which causes such Person to become the successor to the Issuer, (A) such Person
has good and marketable title, free and clear of any lien, security interest or
charge, other than the lien and security interest of this Indenture, to the
Assets securing, in the case of a consolidation or merger of the Issuer, all of
the Notes or, in the case of any transfer or conveyance of the Assets securing
any of the Notes, such Notes, (B) the Trustee continues to have a valid
perfected first priority security interest in the Assets securing, in the case
of a consolidation or merger of the Issuer, all of the Notes, or, in the case
of any transfer or conveyance of the Assets securing any of the Notes, such
Notes and (C) such other matters as the Trustee, each Hedge Counterparty, the
Collateral Manager or any Noteholder may reasonably require;

(v)         immediately after
giving effect to such transaction, no Default or Event of Default shall have
occurred and be continuing;

(vi)        the Issuer shall have
delivered to the Trustee, the Preferred Shares Paying Agent, each Hedge
Counterparty, the Collateral Manager and each Noteholder, an Officer’s
Certificate and an Opinion of Counsel each stating that such consolidation,
merger, transfer or conveyance and such supplemental indenture comply with this
Article 7 and that all conditions precedent in this Article 7
provided for relating to such transaction have been complied with and that no
adverse tax consequences will result

 166
 

 

therefrom to
the Holders of the Notes, the Preferred Shareholders and any Hedge
Counterparty; and

(vii)       after giving effect to
such transaction, the Issuer shall not 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 no Notes remain
Outstanding or:

(i)           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 shall be a company
organized and existing under the laws of Delaware or such other jurisdiction
approved by a Majority of the Controlling Class; provided that no such approval shall be required in connection with
any such transaction undertaken solely to effect a change in the jurisdiction
of formation pursuant to Section 7.4; and provided, further, that the surviving entity shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Trustee and each Noteholder, the due and punctual payment of the principal of
and interest on all Notes and the performance and observance of every covenant
of this Indenture on the part of the Co-Issuer to be performed or observed, all
as provided herein;

(ii)          each Rating Agency
shall have been notified in writing of each proposed consolidation or merger of
the Co-Issuer and the Trustee shall have received written confirmation from
each Rating Agency that the ratings issued with respect to each Class of Notes
shall not be reduced or withdrawn as a result of the consummation of such
transaction;

(iii)         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 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 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;

(iv)        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 shall have delivered to the Trustee and each
Rating Agency an Officer’s Certificate and an Opinion of Counsel each stating
that such Person is duly organized, validly existing and in good standing in
the jurisdiction in which such Person is organized; that such Person has
sufficient power and authority to assume the obligations set forth in subsection
(i) above and to execute and deliver an indenture supplemental hereto for the
purpose of assuming such obligations; that such Person has duly authorized the
execution, delivery and performance of an indenture

 167
 

 

supplemental
hereto for the purpose of assuming such obligations and that such supplemental
indenture is a valid, legal and binding obligation of such Person, enforceable
in accordance with its terms, subject only to bankruptcy, reorganization,
insolvency, moratorium and other laws affecting the enforcement of creditors’
rights generally and to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law); such
other matters as the Trustee or any Noteholder may reasonably require;

(v)         immediately after
giving effect to such transaction, no Default or Event of Default shall have
occurred and be continuing;

(vi)        the Co-Issuer shall
have delivered to the Trustee, the Preferred Shares Paying Agent and each
Noteholder an Officer’s Certificate and an Opinion of Counsel each stating that
such consolidation, merger, transfer or conveyance and such supplemental
indenture comply with this Article 7 and that all conditions precedent
in this Article 7 provided for relating to such transaction have been
complied with and that no adverse tax consequences will result therefrom to the
Holders of the Notes or the Preferred Shareholders; and

(vii)       after giving effect to
such transaction, the Co-Issuer shall not be required to register as an
investment company under the Investment Company Act.

Section 7.11           Successor Substituted.

Upon any consolidation or
merger, or transfer or conveyance of all or substantially all of the assets of
the Issuer or the Co-Issuer, in accordance with Section 7.10 hereof, the
Person formed by or surviving such consolidation or merger (if other than the
Issuer or the Co-Issuer), or the Person to which such consolidation, merger,
transfer or conveyance is made, shall succeed to, and be substituted for, and
may exercise every right and power of, the Issuer or the Co-Issuer, as the case
may be, under this Indenture with the same effect as if such Person had been
named as the Issuer or the Co-Issuer, as the case may be, herein.  In the event of any such consolidation,
merger, transfer or conveyance, the Person named as the “Issuer” or the “Co-Issuer”
in the first paragraph of this Indenture or any successor which shall
theretofore have become such in the manner prescribed in this Article 7
may be dissolved, wound-up and liquidated at any time thereafter, and such
Person thereafter shall be released from its liabilities as obligor and maker
on all the Notes or Notes, as applicable, and from its obligations under this
Indenture.

Section 7.12           No Other Business.

The Issuer shall not
engage in any business or activity other than issuing and selling the Notes
pursuant to this Indenture and any supplements thereto, issuing and selling the
Preferred Shares in accordance with its Governing Documents, entering into any
Hedge Agreement, the Collateral Management Agreement, and acquiring, owning,
holding and pledging the Assets in connection with the Notes and such other
activities which are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith.  The Co-Issuer shall not engage in any
business or activity other than issuing and selling the Notes

 168
 

 

pursuant to this Indenture and any supplements thereto
and such other activities which are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith.

Section 7.13           Reporting.

At any time when the
Issuer and/or the Co-Issuer is not subject to Section 13 or 15(d) of the
Exchange Act and is not exempt from reporting pursuant to Rule 12g3-2(b) under
the Exchange Act, upon the request of a Holder or beneficial owner of a Note,
the Issuer and/or the Co-Issuer shall promptly furnish or cause to be furnished
“Rule 144A Information” (as defined below) to such holder or beneficial owner,
to a prospective purchaser of such 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
Note by such holder or beneficial owner. 
“Rule 144A Information” shall be such information as is specified
pursuant to Rule 144A(d)(4) under the Securities Act (or any successor
provision thereto).  The Trustee shall
reasonably cooperate with the Issuer and/or the Co-Issuer in mailing or
otherwise distributing (at the Issuer’s expense) to such Noteholders or
prospective purchasers, at and pursuant to the Issuer’s and/or the Co-Issuer’s
written direction the foregoing materials prepared by or on behalf of the
Issuer and/or the Co-Issuer; provided, however,
that the Trustee shall be entitled to prepare and affix thereto or enclose
therewith reasonable disclaimers to the effect that such Rule 144A Information
was not assembled by the Trustee, that the Trustee has not reviewed or verified
the accuracy thereof, and that it makes no representation as to such accuracy
or as to the sufficiency of such information under the requirements of Rule
144A or for any other purpose.

Section 7.14           Calculation Agent.

(a)      The Issuer and the
Co-Issuer hereby agree that for so long as any Notes remain Outstanding there
shall at all times be an agent appointed to calculate LIBOR in respect of each
Interest Accrual Period in accordance with the terms of Schedule F
hereto (the “Calculation Agent”).  The Issuer and the Co-Issuer have initially
appointed the Trustee as Calculation Agent for purposes of determining LIBOR
for each Interest Accrual Period.  The
Calculation Agent may be removed by the Issuer and the Co-Issuer at any
time.  The Calculation Agent may resign
at any time by giving written notice thereof to the Issuer, the Co-Issuer, the
Collateral Manager, each Hedge Counterparty, the Noteholders and each Rating
Agency.  If the Calculation Agent is
unable or unwilling to act as such or is removed by the Issuer and the
Co-Issuer in respect of any Interest Accrual Period, the Issuer and the Co-Issuer
shall, with the prior written consent of each Hedge Counterparty, promptly
appoint as a replacement Calculation Agent a leading bank which is engaged in
transactions in Eurodollar deposits in the international Eurodollar market and
which does not control or is not controlled by or under common control with the
Issuer or the Co-Issuer.  The Calculation
Agent may not resign its duties without a successor having been duly appointed,
and shall promptly inform the Hedge Counterparty of any such appointment.  If no successor Calculation Agent shall have
been appointed within thirty (30) days after giving of a notice of resignation,
the resigning Calculation Agent, each Hedge Counterparty, a Majority of the
Notes or any Holder

 169
 

 

of a Note, on behalf of himself and all others similarly situated, may
petition a court of competent jurisdiction for the appointment of a successor
Calculation Agent.

(b)      The Calculation Agent
shall be required to agree that, as soon as practicable after 11:00 a.m.
(London time) on each LIBOR Determination Date (as defined in Schedule F
hereto), but in no event later than 11:00 a.m. (New York time) on the London
Banking Day immediately following each LIBOR Determination Date, the
Calculation Agent shall calculate (x) LIBOR for the next Interest Accrual
Period and (y) the amount of interest for such Interest Accrual Period payable
in respect of each U.S. $1,000 principal amount of each Class of Notes (rounded
to the nearest cent, with half a cent being rounded upward) on the related
Payment Date, and will communicate such rates and amounts to the Issuer, the
Co-Issuer, the Trustee, the Collateral Manager, the Paying Agent, each Hedge
Counterparty and, if any Floating Rate Note is in the form of a Regulation S
Global Security, to Euroclear and Clearstream, Luxembourg.  The Calculation Agent shall also specify to
the Issuer and the Co-Issuer the quotations upon which LIBOR is based, and in
any event the Calculation Agent shall notify the Issuer and the Co-Issuer
before 5:00 p.m. (New York time) on each LIBOR Determination Date if it has not
determined and is not in the process of determining LIBOR and the Interest
Distribution Amounts for each Class of Notes, together with the reasons
therefor.  The determination of the Class
A-1 Rate, Class A-2 Rate, Class B Rate, Class C Rate, Class D Rate, Class E
Rate, Class F Rate, Class G Rate, Class H Rate, Class J Rate and Class K Rate
and the related Class A-1 Interest Distribution Amount, Class A-2 Interest
Distribution Amount, Class B Interest Distribution Amount, Class C Interest Distribution
Amount, Class D Interest Distribution Amount, Class E Interest Distribution
Amount, Class F Interest Distribution Amount, Class G Interest Distribution
Amount, Class H Interest Distribution Amount, Class J Interest Distribution
Amount and Class K Interest Distribution Amount, respectively, by the
Calculation Agent shall, absent manifest error, be final and binding on all
parties.

Section 7.15           Certain Tax Matters.

The Issuer will provide,
upon request of any Holder of any Class of Notes deemed equity for U.S. federal
income tax purposes, any information with regard to any filing requirements
that such Holder may have as a result of the Issuer being classified as a “passive
foreign investment company” or a “controlled foreign corporation” (as applicable)
for U.S. federal income tax purposes.

Section 7.16           Maintenance of Listing.

(a)      For so long as any of the
Senior Notes remain Outstanding, the Issuer and Co-Issuer shall use all
reasonable efforts to arrange and maintain the listing of the Senior Notes on
the Irish Stock Exchange.

(b)      If the Senior Notes are
listed on the Irish Stock Exchange, the Issuer shall:

(i)           in each calendar
year commencing in 2006, request from the Irish Stock Exchange a waiver of the
Irish Stock Exchange’s requirement to publish annual reports and accounts;

 170
 

 

(ii)          submit to the Irish
Stock Exchange draft copies of any proposed amendments to the Governing
Documents which would affect the rights of the Holders of the Senior Notes
listed on the Irish Stock Exchange;

(iii)         pay the annual fee
for listing the Senior Notes on the Irish Stock Exchange, if any; and

(iv)        inform the Irish Stock
Exchange if the rating assigned to any of the Senior Notes is reduced or
withdrawn.

(c)      All notices, documents,
reports and other announcements delivered to such Company Announcements Office
shall be in the English language.

(d)      Notwithstanding the
foregoing, if the Collateral Manager on behalf of the Co-Issuers determines
that the maintenance of the listing of any Class of Senior Notes on the Irish
Stock Exchange (or any alternative listing on another securities exchange) is
unduly onerous or burdensome, the Co-Issuers will have the right to cause such
Class of Senior Notes to be delisted from the Irish Stock Exchange (or such
other securities exchange).  Without
limiting the Collateral Manager’s discretion with respect to any determination
that maintaining or obtaining a listing is unduly onerous or burdensome, the
Collateral Manager may take into account various factors, including any
requirement, resulting from a listing, that either Co-Issuer prepare financial
statements of any particular kind or provide additional disclosure of any
particular kind, in each case including any such requirement arising out of
disclosure or transparency directives of the European Union or any other law or
governmental rule.  Notwithstanding the
foregoing, the consent of a Majority of the Controlling Class shall be required
unless the reason for delisting relates to a legal/compliance, regulatory,
accounting or tax issue.  In the event
any Class of Senior Notes is delisted pursuant to this Section 7.16(d), the
Co-Issuers shall use reasonable efforts to obtain an alternative listing of
such Class of Senior Notes on another securities exchange chosen by the
Collateral Manager; provided, however, if the Collateral Manager
determines that obtaining an alternative listing is unduly onerous or
burdensome, the Co-Issuers shall not obtain an alternative listing for such
Class of Senior Notes.

Section 7.17           Purchase of Assets.

The Issuer (or the
Collateral Manager on behalf of the Issuer) shall use reasonable commercial
efforts to invest Principal Proceeds and any remaining Initial Deposit and any
Reinvestment Income during the Ramp-Up Period in Collateral Debt Securities in
accordance with the provisions hereof. 
Subject to the provisions of this Section 7.17, Principal
Proceeds and all or any portion of any remaining Initial Deposit and any
Reinvestment Income thereon may be applied prior to the Effective Date to
purchase Collateral Debt Securities (which shall be, and hereby are, Granted to
the Trustee pursuant to the Granting Clause of this Agreement) for inclusion in
the Assets upon receipt by the Trustee of an Issuer Order executed by the
Issuer (or the Collateral Manager on behalf of the Issuer) with respect thereto
directing the Trustee to pay out the amount specified therein against delivery
of the Collateral Debt Security specified therein and a certificate of an
Authorized Officer of the Issuer (or the Collateral Manager), dated as of the
trade date, and delivered to the Trustee on or prior to the date of such
purchase and Grant, to

 171
 

 

the effect that the criteria set forth below in this Section
7.17 will be satisfied (such criteria to be applied as of the trade date)
after giving effect to such purchase and Grant of the Collateral Debt
Securities:

(a)           the Eligibility Criteria are met with
respect to the Collateral Debt Securities purchased;

(b)           the Reinvestment Criteria are
satisfied after giving effect to such investment; and

(c)           the procedures relating to the
perfection of the Trustee’s security interest in the Collateral Debt Securities
described in this Agreement have been satisfied.

Section 7.18           Effective Date Actions.

(a)           The Issuer (or the Collateral Manager
on behalf of the Issuer) shall cause to be delivered to the Trustee and each
Rating Agency on the Effective Date an amended Schedule of Closing Date
Collateral Debt Securities listing all Collateral Debt Securities Granted to
the Trustee pursuant to Section 7.17 on or before the Effective Date,
which schedule shall supersede any prior Schedule of Closing Date Collateral
Debt Securities delivered to the Trustee.

(b)           Within ten (10) Business Days after
the Effective Date, the Issuer (or the Collateral Manager on behalf of the
Issuer) shall request each Rating Agency rating a Class of Notes to confirm
within twenty (20) Business Days after the Effective Date, and to so notify in
writing the Trustee and any Hedge Counterparty, that it has not reduced or
withdrawn the ratings assigned by it on the Closing Date to such Class of
Notes.  If, within twenty (20) Business
Days after the Effective Date, any rating assigned as of the Closing Date to
any Class of Notes has not been confirmed, or is reduced or withdrawn, the
Collateral Manager may, on behalf of the Issuer, within ten (10) Business Days,
provide to such Rating Agency a proposal (a “Proposal”) with respect to the Collateral Debt
Securities.  If such Rating Agency does
not accept the Proposal, or the Collateral Manager, on behalf of the Issuer,
elects not to submit a Proposal, a “Rating Confirmation Failure” shall
have occurred.  If such Rating Agency
accepts the Proposal, a Rating Confirmation Failure shall not be deemed to have
occurred unless and until the Collateral Manager fails to meet the conditions
set forth in the Proposal in accordance with the time requirements set forth in
such Proposal.  Within ten (10) Business
Days after the conditions set forth in the Proposal have been satisfied, the
Issuer must request a Rating Confirmation. If the relevant Rating Agency does
not confirm its ratings, a Rating Confirmation Failure shall have
occurred.  If a Rating Confirmation
Failure occurs on the first Payment Date thereafter, (i) as provided in Section
10.4, amounts on deposit in the Unused Proceeds Account, (ii) as provided
in Section 11.1(a)(i), all Interest Proceeds remaining after payment of
amounts referred to in clauses (1) through (29) of Section 11.1(a)(i)
and (iii) as provided in Section 11.1(a)(ii), all Principal Proceeds
remaining after payment of the amounts referred to in clauses (1) through (10)
of Section 11.1(a)(ii), in each case will be used to pay principal of
each such Class of Notes, sequentially in accordance with the Priority of
Payments, until each such rating is confirmed or reinstated or such Class of
Notes has been paid in full.

 172
 

 

(c)           The Collateral
Manager on behalf of the Issuer shall cause to be delivered to the Trustee,
each Hedge Counterparty and each Rating Agency, within six (6) Business Days
after the Effective Date, an Accountants’ Report, dated as of the Effective
Date, confirming that the Collateral Quality Tests and the Coverage Tests have
been satisfied and that the Collateral Debt Securities have an aggregate par
amount equal to at least the Minimum Ramp-Up Amount and certifying the
procedures applied and such accountants’ associated findings with respect to
the Eligibility Criteria and specifying the procedures undertaken by them to
review data and computations relating to such information. The Collateral
Manager may on any date, prior to the 270th day following the Closing Date or
the purchase of Collateral Debt Securities having an aggregate par amount equal
to the Minimum Ramp-Up Amount, upon written notice to the Trustee, the Issuer
and the Co-Issuer and each Rating Agency (with a copy to each Hedge
Counterparty), declare that the Effective Date shall occur on the date
specified in such notice; provided that each of the Collateral Quality
Tests and the Coverage Tests will be satisfied as of such Effective Date and
the Rating Agency Condition has been satisfied. 
The Issuer (or the Collateral Manager on behalf of the Issuer) shall
cause to be delivered to S&P on the Effective Date a Microsoft Excel file
that provides all of the inputs required to determine whether the S&P CDO
Monitor Test has been satisfied.

Section 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,
Gramercy Capital Corp.’s and GKK Capital LP’s combined Liquidity will be
measured quarterly on each Payment Date (each such day, a “Quarterly
Measurement Date” and each such measurement, a “Liquidity Test”).  If Gramercy Capital Corp.’s and GKK Capital
LP’s combined Liquidity (plus any amounts on deposit in the Suspense Account as
a result of the operation of this Section 7.19(a)) is less than $20,000,000 on
any Quarterly Measurement Date on or after the Quarterly Measurement Date in
April 2007 on which the aggregate amount of the additional funding commitments
related to such Other Loans is greater than $5,000,000, and Gramercy Capital
Corp. and/or GKK Capital LP does not, within 30 calendar days, (i) increase
their combined Liquidity (plus any amounts on deposit in the Suspense Account
as a result of the operation of this Section 7.19(a)) to at least $20,000,000,
(ii) obtain a Qualified Letter of Credit or a guarantee from an entity rated at
least “A-” by S&P and “A3” by Moody’s in an amount at least equal to the
excess, if any, of $20,000,000 over their combined Liquidity (plus any amounts
on deposit in the Suspense Account as a result of the operation of this Section
7.19(a)), (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
$20,000,000 over their combined Liquidity (plus any amounts on deposit in the
Suspense Account as a result of the operation of this Section 7.19(a)), 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 acceptable to the Rating Agencies, a “Liquidity
Test Failure” shall have occurred with respect to such Quarterly Measurement
Date.  If such Liquidity Test Failure is
not cured by the following Payment Date, amounts available to be distributed to
the Holders of the Preferred Shares pursuant to clause (34) of Section
11.1(a)(i) instead shall be deposited into

 173
 

 

the Suspense Account until the sum of Liquidity and all amounts on
deposit in the Suspense Account as a result of the obligation of this Section
7.19(a) is equal to $20,000,000.  The
Collateral Manager shall notify the Rating Agencies if a Liquidity Test Failure
occurs (and in connection therewith shall report to the Rating Agencies the
amount of Liquidity as of the date of the Liquidity Test Failure).  For the avoidance of doubt, if Gramercy
Capital Corp. and/or GKK Capital LP takes one of the actions described in
clause (ii) or (iii) of the immediately preceding sentence following the
occurrence of a Liquidity 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 the case may be, at any time thereafter when their
combined Liquidity is at least $20,000,000. 
Amounts on deposit in the Suspense Account (or any portion thereof) will
be paid (upon standing order of the Issuer) to the Preferred Shares Paying
Agent for deposit into the Preferred Shares Distribution Account for
distribution to the holders of the Preferred Shares as payments of the
Preferred Shares Distribution Amount (subject to and in accordance with the
provisions of the Preferred Shares Paying Agency Agreement) on any date on
which the Liquidity Test would be satisfied after such release and payment.

(b)      With respect to each
Related Future Advance Loan described in clause (xxxvi)(A)(i) of the definition
of Eligibility Criteria, on any Payment Date on which the aggregate amount of
additional funding commitments related to Other Loans is greater than
$5,000,000, if the related Participating Institution has failed to fund any
future advance required to be funded by it in accordance with the terms of the
related Other Loan and Gramercy Capital Corp. and/or GKK Capital LP has not,
within 30 calendar days thereafter, (i) obtained a Qualified Letter of Credit
or a guarantee from an entity rated at least “A-” by S&P and “A3” by Moody’s
in an amount at least equal to $20,000,000, (ii) funded one or more accounts
owned by the relevant Future Advance Holder(s) in an aggregate amount at least
equal to $20,000,000, 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 (iii) taken some other action acceptable to the Rating
Agencies (any such event, a “Schedule P Failure”), amounts available to
be distributed to the Holders of the Preferred Shares pursuant to clause (34)
of Section 11.1(a)(i), up to an aggregate amount of $20,000,000 (the “Schedule
P Failure Amount”), instead shall be deposited into the Suspense Account
until such time as all such failures to fund have been cured.  Subject to Section 7.19(a), amounts on
deposit in the Suspense Account (or any portion thereof) will be paid (upon
standing order of the Issuer) to the Preferred Shares Paying Agent for deposit
into the Preferred Shares Distribution Account for distribution to the holders
of the Preferred Shares as payments of the Preferred Shares Distribution Amount
(subject to and in accordance with the provisions of the Preferred Shares
Paying Agency Agreement) on any date on which all such failures to fund have
been cured (and the Liquidity Test would be satisfied after such release and
payment).  For the avoidance of doubt, if
Gramercy Capital Corp. and/or GKK Capital LP takes one of the actions described
in clause (i) or (ii) above following the occurrence of a failure to fund, 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 the case may be, at any
time thereafter when all such failures to fund have been cured.

 174
 

 

ARTICLE
8

SUPPLEMENTAL
INDENTURES

Section 8.1             Supplemental Indentures Without
Consent of Securityholders.

Without the consent of
the Holders of any Notes or any Preferred Shareholders, the Issuer, the
Co-Issuer, when authorized by Board Resolutions, and the Trustee, with the
written consent of each Hedge Counterparty delivered to the Issuer, the
Co-Issuer and the Trustee, and, at any time and from time to time subject to
the requirement provided below in this Section 8.1, may enter into one
or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:

(a)      to evidence the
succession of another Person to the Issuer or the Co-Issuer and the assumption
by any such successor Person of the covenants of the Issuer or the Co-Issuer
herein and in the Notes;

(b)      to add to the covenants
of the Issuer, the Co-Issuer or the Trustee for the benefit of the Holders of
the Notes, Preferred Shareholders, each Hedge Counterparty or to surrender any
right or power herein conferred upon the Issuer or the Co-Issuer;

(c)      to convey, transfer,
assign, mortgage or pledge any property to or with the Trustee, or add to the
conditions, limitations or restrictions on the authorized amount, terms and
purposes of the issue, authentication and delivery of the Notes;

(d)      to evidence and provide
for the acceptance of appointment hereunder by a successor Trustee and to add
to or change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one Trustee,
pursuant to the requirements of Sections 6.9, 6.10 and 6.12
hereof;

(e)      to correct or amplify the
description of any property at any time subject to the lien of this Indenture,
or to better assure, convey and confirm unto the Trustee any property subject
or required to be subjected to the lien of this Indenture (including, without
limitation, any and all actions necessary or desirable as a result of changes
in law or regulations) or to subject to the lien of this Indenture any
additional property;

(f)       to modify the
restrictions on and procedures for resales and other transfers of Notes to
reflect any changes in applicable law or regulation (or the interpretation
thereof) or to enable the Issuer and the Co-Issuer to rely upon any exemption
from registration under the Securities Act or the Investment Company Act or to
remove restrictions on resale and transfer to the extent not required thereunder;

(g)      to accommodate the
issuance, if any, of Notes in global or book-entry form through the facilities
of the Depository Trust Company or otherwise;

(h)      to enable the Issuer and
the Trustee to rely upon any exemption from registration under the Securities
Act, the Exchange Act or the Investment Company Act or to remove certain
existing restrictions to the extent not required under such exemption;

 175

 

(i)       otherwise to correct any
inconsistency or cure any ambiguity or mistake;

(j)       to take any action
commercially reasonably necessary or advisable to prevent the Issuer from
failing to qualify as a qualified REIT subsidiary (within the meaning of
Section 856(i)(2) of the Code) or to prevent the Issuer from being treated as a
foreign corporation subject to U.S. federal, state or local income or franchise
tax on a net income tax basis or to prevent the Issuer, the Holders of the
Securities or the Trustee from being treated as a foreign corporation subject
to withholding or other taxes, fees or assessments; and

(k)      to conform this Indenture
(other than Sections 7.18 and 7.19 hereof) to the provisions described in the
Offering Memorandum, dated August 23, 2006 (or any supplement thereto).

The Trustee is hereby
authorized to join in the execution of any such supplemental indenture and to
make any further appropriate agreements and stipulations which may be therein
contained, but the Trustee shall not be obligated to enter into any such
supplemental indenture which affects the Trustee’s own rights, duties,
liabilities or immunities under this Indenture or otherwise, except to the
extent required by law.

If any Class of Notes is
Outstanding and rated by a Rating Agency, the Trustee shall not enter into any
such supplemental indenture if, as a result of such supplemental indenture,
such Rating Agency would cause the rating of any such Notes to be reduced or
withdrawn.  At the cost of the Issuer,
for so long as any Class of Notes shall remain Outstanding and is rated by a
Rating Agency, the Trustee shall provide to such Rating Agency a copy of any
proposed supplemental indenture at least fifteen (15) days prior to the
execution thereof by the Trustee, and, for so long as such Notes are
Outstanding and so rated, request written confirmation that such Rating Agency
will not, as a result of such supplemental indenture, cause the rating of any
such Class of Notes to be reduced or withdrawn, and, as soon as practicable
after the execution by the Trustee, the Issuer and the Co-Issuer of any such
supplemental indenture, provide to such Rating Agency a copy of the executed
supplemental indenture.

The Trustee shall not
enter into any such supplemental indenture if, as a result of such supplemental
indenture, the interests of any Holder of Securities would be materially and
adversely affected thereby or such action will cause the Holders of the Notes
to experience any material change to the timing, character or source of the
income from the Notes, unless the Majority of each and every Class of Notes or
the Preferred Shares so affected have approved such Supplemental
Indenture.  The Trustee shall be entitled
to rely upon an Opinion of Counsel provided by and at the expense of the party
requesting such supplemental indenture in determining whether or not the
Holders of Securities would be adversely affected by such change (after giving
notice of such change to the Holders of Securities).  Such determination shall be conclusive and
binding on all present and future Holders of Securities.  The Trustee shall not be liable for any such
determination made in good faith and in reliance upon an Opinion of Counsel
delivered to the Trustee as described in Section 8.3 hereof.

Furthermore, the Trustee
shall not enter into any such supplemental indenture unless the Trustee has
received an Opinion of Counsel from Cadwalader, Wickersham & Taft LLP or
other nationally recognized U.S. tax counsel experienced in such matters that
the

 176
 

 

proposed supplemental indenture will not cause the
Issuer to fail to be treated as a qualified REIT subsidiary (within the meaning
of Section 856(i)(2) of the Code) or otherwise be treated as a foreign
corporation subject to U.S. federal income tax on a net income tax basis.

Section 8.2             Supplemental Indentures with
Consent of Securityholders.

Except as set forth
below, with the written consent of (a) the holders of not less than a Majority
in Aggregate Outstanding Amount (excluding any Notes owned by the Collateral
Manager or any of its Affiliates, or by any accounts managed by them) of the
Notes of each class materially and adversely affected thereby and all of the
Holders of Preferred Shares if materially and adversely affected thereby by Act
of said Securityholders delivered to the Trustee and the Co-Issuers, and (b)
the consent of each Hedge Counterparty that is materially and adversely
affected thereby, and subject to satisfaction of the Rating Agency Condition,
the Trustee and the Co-Issuers may enter into one or more indentures
supplemental hereto to add any provisions to, or change in any manner or
eliminate any of the provisions of, this Indenture or modify in any manner the
rights of the Holders of the Notes of such Class or the Preferred Shares, as
the case may be, under this Indenture. 
Unless notified (after giving fifteen (15) Business Days’ notice of such
change to the Holders of each Class of Notes, the Holders of the Preferred
Shares and each Hedge Counterparty) by Holders of a Majority (excluding any
Notes owned by the Collateral Manager or any of its Affiliates, or by any
accounts managed by them) of the Notes of any Class and the Preferred Shares
that such Class of Notes or the Preferred Shares 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.  Such
determinations shall be conclusive and binding on all present and future
Noteholders and Holders of the Preferred Shares.  The consent of the Holders of the Preferred
Shares shall be binding on all present and future Holders of the Preferred
Shares.

Without the consent of
(x) each Hedge Counterparty (if any) (to the extent set forth in the related
Hedge Agreement) and (y) in the case of clauses (a) through (h) and (j) below,
all of the holders of each Outstanding Class of Notes adversely affected, or,
in the case of clause (i) below, all of the Holders of the Controlling Class
and in each such case subject to satisfaction of the Rating Agency Condition,
no supplemental indenture may:

(a)      change the Stated
Maturity of the principal of or the due date of any installment of interest on
any Note, reduce the principal amount thereof or the Note Interest Rate thereon
or the Redemption Price with respect to any Note, change the date of any
scheduled distribution on the Preferred Shares, or the Redemption Price with
respect thereto, or change the earliest date on which any Note may be redeemed
at the option of the Issuer, change the provisions of this Indenture that apply
the proceeds of any Assets to the payment of principal of or interest on Notes
or of distributions to the Preferred Shares Paying Agent for the payment of
distributions in respect of the Preferred Shares or change any place where, or
the coin or currency in which, any Note or the principal thereof or interest
thereon is payable, or impair the right to institute suit for the enforcement
of any such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the applicable Redemption Date);

 177
 

 

(b)      reduce the percentage of
the Aggregate Outstanding Amount of Holders of Notes of each Class or the
Notional Amount of Preferred Shares of Preferred Shareholders whose consent is
required for the authorization of any such supplemental indenture or for any
waiver of compliance with certain provisions of this Indenture or certain
Defaults hereunder or their consequences provided for in this Indenture;

(c)      impair or adversely
affect the Assets except as otherwise permitted in this Indenture;

(d)      permit the creation of
any lien ranking prior to or on a parity with the lien of this Indenture with
respect to any part of the Assets or terminate such lien on any property at any
time subject hereto or deprive the Holder of any Note, or the Holder of any
Preferred Share as an indirect beneficiary, of the security afforded to such
Holder by the lien of this Indenture;

(e)      reduce the percentage of
the Aggregate Outstanding Amount of Holders of Notes of each Class whose
consent is required to request the Trustee to preserve the Assets or rescind
the Trustee’s election to preserve the Assets pursuant to Section 5.5 or
to sell or liquidate the Assets pursuant to Section 5.4 or 5.5
hereof;

(f)       modify any of the
provisions of this Section 8.2, except to increase any percentage of
outstanding Notes 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 consent of the Holder of each outstanding Note affected thereby;

(g)      modify the definition of
the term “Outstanding” or the provisions of Section 11.1 or Section
13.1 hereof;

(h)      modify or amend any of
the non-petition and limited-recourse provisions set forth herein or in any of
the related Transaction Documents;

(i)       modify the definition of
the term “Collateral Manager Servicing Standard”; or

(j)       modify any of the
provisions of this Indenture in such a manner as to affect the calculation of
the amount of any payment of interest or principal on any Note on any Payment
Date or of distributions to the Preferred Shares Paying Agent for the payment
of distributions in respect of the Preferred Shares on any Payment Date (or any
other date) or to affect the rights of the Holders of Securities to the benefit
of any provisions for the redemption of such Securities contained herein;

provided, however, that no supplemental indenture may reduce
the permitted minimum denominations of the Notes or modify any provisions
regarding non-recourse or non-petition covenants with respect to the Issuer and
the Co-Issuer.

If any Class of Notes are
Outstanding and rated by a Rating Agency, the Trustee shall not enter into any
such supplemental indenture if, as a result of such supplemental indenture,
such Rating Agency would cause the rating of any such Notes to be immediately

 178
 

 

reduced or withdrawn. 
At the cost of the Issuer, for so long as any Class of Notes shall
remain Outstanding and is rated by a Rating Agency, the Trustee shall provide
to such Rating Agency a copy of any proposed supplemental indenture at least
fifteen (15) days prior to the execution thereof by the Trustee, and, for so
long as such Notes are Outstanding and so rated, request written confirmation
that such Rating Agency will not, as a result of such supplemental indenture,
cause the rating of any such Class of Notes to be reduced or withdrawn.

The Trustee shall be
entitled to rely upon an Opinion of Counsel provided by and at the expense of
the party requesting such supplemental indenture in determining whether or not
the Holders of Securities would be adversely affected by such change (after
giving notice of such change to the Holders of Securities).  Such determination shall be conclusive and
binding on all present and future Holders of Securities.  The Trustee shall not be liable for any such
determination made in good faith and in reliance upon an Opinion of Counsel
delivered to the Trustee as described in Section 8.3 hereof.

It shall not be necessary
for any Act of Securityholders under this Section 8.2 to approve the
particular form of any proposed supplemental indenture, but it shall be
sufficient if such Act shall approve the substance thereof.

Promptly after the
execution by the Issuer, the Co-Issuer and the Trustee of any supplemental
indenture pursuant to this Section 8.2, the Trustee, at the expense of
the Issuer, shall mail to the Securityholders, each Hedge Counterparty, the
Preferred Shares Paying Agent, the Collateral Manager, and, so long as the
Notes are Outstanding and so rated, each Rating Agency a copy thereof based on
an outstanding rating.  Any failure of
the Trustee to publish or mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental indenture.

Section 8.3             Execution of Supplemental
Indentures.

In executing or accepting
the additional trusts created by any supplemental indenture permitted by this Article
8 or the modifications thereby of the trusts created by this Indenture, the
Trustee shall be entitled to receive, and shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture and that all conditions
precedent thereto have been satisfied. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee’s own rights, duties or immunities under this Indenture or
otherwise.  The Collateral Manager will
be bound to follow any amendment or supplement to this Indenture of which it
has received written notice at least ten (10) Business Days prior to the
execution and delivery of such amendment or supplement; provided, however, that with respect to any amendment or
supplement to this Indenture which may, in the judgment of the Collateral
Manager adversely affect the Collateral Manager, the Collateral Manager shall
not be bound (and the Issuer agrees that it will not permit any such amendment
to become effective) unless the Collateral Manager gives written consent to the
Trustee and the Issuer to such amendment. 
The Issuer and the Trustee shall give written notice to the Collateral
Manager of any amendment made to this Indenture pursuant to its terms.  In addition, the Collateral Manager’s written
consent shall be required prior to any amendment to this Indenture by which it
is adversely affected.

 179
 

 

Section 8.4             Effect
of Supplemental Indentures.

Upon the execution of any
supplemental indenture under this Article 8, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture for all purposes; and every Holder of Notes and
Preferred Shares theretofore and thereafter authenticated and delivered
hereunder shall be bound thereby.

Section 8.5             Reference in Notes to
Supplemental Indentures.

Notes authenticated and
delivered after the execution of any supplemental indenture pursuant to this Article
8 may, and if required by the Trustee shall, bear a notice in form approved
by the Trustee as to any matter provided for in such supplemental
indenture.  If the Issuer and the
Co-Issuer shall so determine, new Notes, so modified as to conform in the
opinion of the Trustee and the Issuer and the Co-Issuer to any such
supplemental indenture, may be prepared and executed by the Issuer and the
Co-Issuer and authenticated and delivered by the Trustee in exchange for
Outstanding Notes.

Section 8.6             Certain Consents Required for
all Supplemental Indentures.

Notwithstanding anything
in this Article 8 to the contrary, so long as the Class A-1 Notes are the
Controlling Class, the Issuer, the Co-Issuer and the Trustee shall not enter
into any supplemental indenture without obtaining the consent of the Holders of
a Majority of the Class A-1 Notes (such consent not to be unreasonably
withheld); provided that, if the Holders of the Class A-1 Notes do not object
to such supplemental indenture within seven (7) days after notice is given,
such Holders will be deemed to have consented to such supplemental indenture.

 180
 

 

ARTICLE 9

REDEMPTION
OF SECURITIES; REDEMPTION PROCEDURES

Section 9.1             Clean-up Call; Tax Redemption
and Optional Redemption.

(a)      The Notes may be redeemed
at the option of and at the direction of the Collateral Manager, in whole but
not in part, on any Payment Date (the “Clean-up Call Date”), on or after the Payment
Date on which the Aggregate Outstanding Amount of the Notes has been reduced to
ten percent (10%) of the Aggregate Outstanding Amount of the Notes on the
Closing Date, at a price equal to the applicable Redemption Prices (such
redemption, a “Clean-up Call”);
provided that any payments due and
payable upon a termination of each Hedge Agreement will be made on the Clean-up
Call Date in accordance with the terms thereof and this Indenture; and provided, further, that the funds available to be used for
such Clean-up Call will be sufficient to pay (x) the Redemption Prices of the
Notes simultaneously and (y) the amounts and the expenses described in clauses
(1) through (5) and (31) through (33) of Section 11.1(a)(i).

(b)      The Notes and the
Preferred Shares shall be redeemable, in whole but not in part, by Act of a
Majority of the Preferred Shares delivered to the Trustee, on the Payment Date
(the “Tax Redemption Date”)
by the Issuer following the occurrence of a Tax Event, if the Tax Materiality
Condition is satisfied at a price equal to the applicable Redemption Prices
(such redemption, a “Tax
Redemption”); provided that
any payments due and payable upon a termination of each Hedge Agreement will be
made in accordance with the terms thereof and this Indenture; and provided, further, the funds available to be used for such Tax
Redemption will be sufficient to pay (x) the Redemption Prices of the Notes
simultaneously and (y) the amounts and the expenses described in clauses (1)
through (5) and (31) through (33) of Section 11.1(a)(i).  Upon the occurrence of a Tax Event, the
Issuer and the Co-Issuer, at the direction of the Collateral Manager shall
provide written notice thereof to the Trustee, the Irish Paying Agent (for so
long as any Notes are listed on the Irish Stock Exchange), each Hedge
Counterparty and each Rating Agency.

(c)      The Notes shall be
redeemable, in whole but not in part, at a price equal to the applicable
Redemption Price, after the end of the Non-call Period, at the direction of the
Issuer (such redemption, an “Optional
Redemption”) (i) by Act of a Majority of the Preferred Shares
delivered to the Trustee, or (ii) at the direction of the Collateral Manager
unless a Majority of the Preferred Shares object; provided, however, that any payments due and payable upon a
termination of each Hedge Agreement will be made in accordance with the terms
thereof and this Indenture; and provided, further,
that the funds available to be used for such Optional Redemption will be
sufficient to pay the amount necessary to pay (x) the Redemption Prices of the
Notes simultaneously and (y) the amounts and the expenses described in clauses
(1) through (5) and (31) through (33) of Section 11.1(a)(i).

(d)      The election by the
Collateral Manager to redeem the Notes pursuant to a Clean-up Call shall be
evidenced by an Officer’s Certificate from the Collateral Manager

 181
 

 

directing the Trustee to make the payment to the Paying Agent of the
applicable Redemption Price of all of the Notes to be redeemed from funds in
the Payment Account in accordance with the Priority of Payments.  In connection with a Tax Redemption, the
occurrence of a Tax Event and satisfaction of the Tax Materiality Condition
shall be evidenced by an Issuer Order from the Issuer or from the Collateral
Manager on behalf of the Issuer certifying that such conditions for a Tax
Redemption have occurred.  The election
by the Collateral Manager to redeem the Notes pursuant to an Optional
Redemption shall be evidenced by an Officer’s Certificate from the Collateral
Manager on behalf of the Issuer certifying that the conditions for an Optional
Redemption have occurred.

(e)      A redemption pursuant to Sections
9.1(a), 9.1(b) or 9.1(c) shall not occur unless (1) (i) at
least six (6) Business Days before the scheduled Redemption Date, the
Collateral Manager shall have certified to the Trustee that the Collateral
Manager on behalf of the Issuer has entered into a binding agreement or
agreements, with (A) one or more financial institutions whose long-term
unsecured debt obligations (other than such obligations whose rating is based
on the credit of a person other than such institution) have a credit rating
from each Rating Agency of at least equal to the highest rating of any Notes
then Outstanding or whose short-term unsecured debt obligations have a credit
rating of “P-1” by Moody’s as long as the term of such agreement is ninety (90)
days or less and “A-1” by S&P or (B) one or more Affiliates of the
Collateral Manager, to sell all or part of the Pledged Obligations, not later
than the Business Day immediately preceding the scheduled Redemption Date or
(ii) the Trustee shall have received written confirmation that the method of
redemption satisfies the Rating Agency Condition and (2) the related Sale
Proceeds (in immediately available funds), together with all other available
funds (including proceeds from the sale of the Assets, Eligible Investments
maturing on or prior to the scheduled Redemption Date, all amounts in the
Collection Accounts and available Cash), shall be an aggregate amount
sufficient to pay all amounts, payments, fees and expenses in accordance with
the Priority of Payments due and owing on such Redemption Date.

Section 9.2             Auction Call Redemption.

(a)      During the period from
and including the Payment Date occurring in July 2016 and to but not including
the first Payment Date on which the Clean-up Call may be exercised (the “Auction Call Period”),
the Notes and the Preferred Shares will be redeemed, in whole but not in part,
if a Successful Auction is completed (such redemption, an “Auction Call Redemption”),
at their applicable Redemption Prices; provided that
any payments due and payable upon a termination of each Hedge Agreement will be
made on the Auction Call Redemption Date in accordance with the terms thereof
and this Indenture; and provided, further,
that the funds available to be used for such Auction Call Redemption will be
sufficient to pay the Total Auction Call Redemption Price.  An Auction Call Redemption may only occur on
a Payment Date occurring in January or July during the Auction Call Period
(such Payment Date, the “Auction
Call Redemption Date”).

(b)      The Trustee shall sell
and transfer the Collateral Debt Securities to the highest bidder for all of the
Collateral Debt Securities (or to each highest bidder for one or more (but not
all) of the Collateral Debt Securities), at the Auction, as long as:

 182
 

 

(i)           the Auction has been
conducted in accordance with the Auction Procedures, as evidenced by a certification
of the Collateral Manager;

(ii)          at least one bidder
delivers to the Collateral Manager a bid (which bid may be based upon a fixed
spread above or below a generally recognized price index) for (x) the purchase
of all of the Collateral Debt Securities or (y) the purchase of each Collateral
Debt Security (which bid may be for one or more (but not all) of the Collateral
Debt Securities);

(iii)         based on the
Collateral Manager’s certification to the Trustee of the amount of the cash
purchase price of each bid, the Trustee, in consultation with the Collateral
Manager, determines that the Highest Auction Price would result in a cash
purchase price for the Collateral Debt Securities which, together with the
balance of all Eligible Investments and Cash on deposit in the Collection
Accounts, the Payment Account and the Expense Account, will be at least equal
to the Total Auction Call Redemption Price; and

(iv)        each bidder who
offered the Highest Auction Price for all of the Collateral Debt Securities or
for one or more of the Collateral Debt Securities enters into a written
agreement with the Issuer (which the Issuer shall execute if the conditions set
forth in clauses (i) through (iii) above are satisfied) obligating the highest
bidder for all of the Collateral Debt Securities (or the highest bidder for one
or more (but not all) of the Collateral Debt Securities) to purchase all
(either individually or together with other bidders, as applicable) of the
Collateral Debt Securities with the closing of such purchase (and full payment
in Cash to the Trustee) to occur on or before the tenth Business Day prior to
the scheduled Redemption Date.

(c)      If any of the foregoing
conditions is not met with respect to any Auction, or if the highest bidder or
the Collateral Manager, as the case may be, fails to pay the purchase price on
or before the sixth (6th) Business Day following the relevant Auction Date, (i)
the Auction Call Redemption shall not occur on the Payment Date following the
relevant Auction Date, (ii) the Trustee shall give notice of the withdrawal
pursuant to Section 9.3, (iii) subject to subclause (iv) below, the
Trustee shall decline to consummate such sale and shall not solicit any further
bids or otherwise negotiate any further sale of Collateral Debt Securities in
relation to such Auction and (iv) unless the Notes and the Preferred Shares are
redeemed in full prior to the next succeeding Auction Date, or the Collateral
Manager notifies the Trustee that market conditions are such that such Auction
is not likely to be successful, the Trustee shall conduct another Auction on
the next succeeding Auction Date.

Section 9.3             Notice of Redemption.

(a)      In connection with an
Optional Redemption, a Clean-up Call or a Tax Redemption pursuant to Section
9.1 or an Auction Call Redemption pursuant to Section 9.2, the
Trustee on behalf of the Issuer and the Co-Issuer shall (i) set the applicable
Record Date and (ii) at least forty-five (45) days prior to the proposed
Redemption Date, notify the Collateral Manager, each Hedge Counterparty, the
Rating Agencies and each Preferred Shareholder at such Preferred Shareholder’s
address in the register maintained by the Share

 183
 

 

Registrar, of such proposed Redemption Date, the applicable Record
Date, the principal amount of Notes to be redeemed on such Redemption Date and
the Redemption Price of such Notes in accordance with Section 9.1 or Section
9.2.  The Redemption Price shall be
determined no earlier than sixty (60) days prior to the proposed Redemption
Date.

(b)      Any such notice of an
Auction Call Redemption, an Optional Redemption, a Clean-up Call or a Tax
Redemption may be withdrawn by the Issuer and the Co-Issuer at the direction of
the Collateral Manager up to the fourth Business Day prior to the scheduled
Redemption Date by written notice to the Trustee, the Irish Paying Agent (for
so long as any Notes are listed on the Irish Stock Exchange), each Hedge
Counterparty, to each Holder of Notes to be redeemed, and the Collateral
Manager only if (i) in the case of an Optional Redemption, a Clean-up Call or a
Tax Redemption the Collateral Manager is unable to deliver the sale agreement
or agreements or certifications referred to in Section 9.1(e), as the
case may be or (ii) in the case of an Auction Call Redemption, the Auction is
unable to be consummated pursuant to the Auction Procedures.

Section 9.4             Notice of Redemption or Maturity
by the Issuer.

Notice of redemption
pursuant to Section 9.1, Section 9.2 or the Maturity of any Notes
shall be given by first class mail, postage prepaid, mailed not less than ten
(10) Business Days (or four (4) Business Days where the notice of an Auction
Call Redemption, an Optional Redemption, a Clean-up Call or a Tax Redemption is
withdrawn pursuant to Section 9.3(b)) prior to the applicable Redemption
Date or Maturity, to each Holder of Notes to be redeemed, at its address in the
Notes Register.  In addition, so long as
any Notes are listed on the Irish Stock Exchange, notice of redemption or
Maturity shall be published in the Irish Stock Exchange’s Daily Official List
or as otherwise required by the rules of the Irish Stock Exchange not less than
ten (10) Business Days prior to the applicable Redemption Date or Maturity.

All notices of redemption
shall state:

(a)      the applicable Redemption
Date;

(b)      the applicable Redemption
Price;

(c)      that all the Notes are
being paid in full, and that interest on the Notes shall cease to accrue on the
Redemption Date specified in the notice; and

(d)      the place or places where
such Notes to be redeemed in whole are to be surrendered for payment of the
Redemption Price which shall be the office or agency of the Paying Agent as
provided in Section 7.2.

Notice of redemption
shall be given by the Issuer and Co-Issuer, or at their request, by the Trustee
in their names and at the expense of the Issuer.  Failure to give notice of redemption, or any
defect therein, to any Holder of any Note shall not impair or affect the
validity of the redemption of any other Notes.

 184
 

 

Section 9.5             Notes
Payable on Redemption Date.

Notice of redemption
having been given as aforesaid, the Notes to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption Price therein
specified, and from and after the Redemption Date (unless the Issuer shall
Default in the payment of the Redemption Price and accrued interest) the Notes
shall cease to bear interest on the Redemption Date.  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, however, that if there is delivered to the Issuer,
the Co-Issuer and the Trustee such security or indemnity as may be required by
them to save each of them harmless (an unsecured indemnity agreement delivered
to the Issuer, the Co-Issuer and the Trustee by an institutional investor with
a net worth of at least U.S.$200,000,000 being deemed to satisfy such security
or indemnity requirement) and an undertaking thereafter to surrender such Note,
then, in the absence of notice to the Issuer, the Co-Issuer and the Trustee
that the applicable Note has been acquired by a bona fide purchaser, such final
payment shall be made without presentation or surrender.  Payments of interest on Notes of a Class so
to be redeemed whose Stated Maturity is on or prior to the Redemption Date
shall be payable to the Holders of such Notes, or one or more predecessor
Notes, registered as such at the close of business on the relevant Record Date
according to the terms and provisions of Section 2.7(m).

If any Note called for
redemption shall not be paid upon surrender thereof for redemption, the
principal thereof shall, until paid, bear interest from the Redemption Date at
the applicable Note Interest Rate for each successive Interest Accrual Period
the Note remains Outstanding.

Section 9.6             Mandatory Redemption.

On any Payment Date on
which any of the Coverage Tests applicable to any Class of Notes is not met on
the most recent Measurement Date, the Notes shall be redeemed (a “Mandatory Redemption”),
first from Interest Proceeds and then from Principal Proceeds in each case in
accordance with the Priority of Payments in an amount necessary, and only to
the extent necessary, to cause each of the Coverage Tests to be satisfied.  Further, each Hedge Agreement will be
terminated in part in accordance with the terms thereof and any payments due
and payable on the Hedge Agreement in connection with the termination of the
Hedge Agreement will be made on such Payment Date in accordance with the terms
thereof and this Indenture, including satisfaction of the Rating Agency
Condition.  Such Principal Proceeds and
Interest Proceeds shall be applied to each of the outstanding Classes of Notes
in accordance with its relative seniority in accordance with the Priority of
Payments.  On or promptly after such
Mandatory Redemption, the Issuer and the Co-Issuer shall certify or cause to be
certified to each of the Rating Agencies and the Trustee whether the Coverage
Tests have been met.

Section 9.7             Special Amortization.

The Notes may be
amortized in part by the Issuer (at the election and direction of the
Collateral Manager) if, at any time during the Reinvestment Period, the
Collateral Manager has been unable, for a period of at least thirty (30)
consecutive days, to identify Substitute Collateral Debt Securities that it
determines would be appropriate and would meet the Eligibility

 185
 

 

Criteria in sufficient amounts to permit the
reinvestment of all or a portion of the Principal Proceeds on deposit in the
Principal Collection Account and the amounts on deposit in the Unused Proceeds
Account in Substitute Collateral Debt Securities.  The Collateral Manager shall notify the
Trustee, the Issuer, the Co-Issuer and each Hedge Counterparty of such election
(a “Special Amortization”)
and the amount to be amortized (such amount, the “Special Amortization Amount”).  On the first Payment Date following the date
on which such notice is given, the Special Amortization Amount will be applied
to amortize the Notes in accordance with the Priority of Payments (i) on a pro rata basis (based on the Aggregate Outstanding Amount of
each Class) among all Classes of Notes (without regard to any Capitalized
Interest) if each of the S&P Special Amortization Pro Rata Condition and
the Moody’s Special Amortization Pro Rata Condition is satisfied with respect
to the related Payment Date and each of the Coverage Tests is satisfied as of
such Payment Date (after giving effect to Mandatory Redemption Payments
actually made, if any, on such Payment Date); or (ii) sequentially among all
Classes of Notes, if either the S&P Special Amortization Pro Rata Condition
or the Moody’s Special Amortization Pro Rata Condition is not satisfied with
respect to the related Payment Date or any Coverage Test is not satisfied as of
such Payment Date (after giving effect to Mandatory Redemption Payments
actually made, if any, on such Payment Date); provided, however,
that all amounts representing recoveries in respect of Defaulted Securities
will be distributed sequentially in any event, in accordance with Section
11.1(a)(ii)(12).

 186
 

 

ARTICLE
10

ACCOUNTS,
ACCOUNTINGS AND RELEASES

Section 10.1           Collection of Money; Custodial
Account.

(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 Money and other property payable to
or receivable by the Trustee pursuant to this Indenture, including all payments
due on the Pledged Obligations in accordance with the terms and conditions of
such Pledged Obligations.  The Trustee
shall segregate and hold all such Money and property received by it in trust
for the Holders of the Notes and each Hedge Counterparty, and shall apply it as
provided in this Indenture.

(b)      The Trustee shall credit
all Collateral Debt Securities and Eligible Securities to an account designated
as the “Custodial Account.”

Section 10.2           Collection Accounts.

(a)      The Trustee shall, prior
to the Closing Date, establish a segregated trust account which shall be
designated as the “Collection Account” and will consist of two subaccounts, the
“Interest Collection Account” and the “Principal Collection Account”
(collectively, the “Collection
Accounts”), which shall be held in trust in the name of the
Trustee for the benefit of the Noteholders and each Hedge Counterparty, into
which Collection Accounts, as applicable, the Trustee shall from time to time
deposit (i) all amounts, if any, received by the Issuer pursuant to the Hedge
Agreements (other than amounts received by the Issuer by reason of an event of
default or termination event (each as defined in the related Hedge Agreement)
or other comparable event that are required, pursuant to Section 16.1(g)
to be used for the purchase by the Issuer of a replacement Hedge Agreement) and
amounts held in each Hedge Collateral Account pursuant to Section 16.1(e),
(ii) all Sale Proceeds (unless simultaneously reinvested in Substitute
Collateral Debt Securities, subject to the Reinvestment Criteria and (iii) all
Interest Proceeds and all Principal Proceeds. 
In addition, the Issuer may, but under no circumstances shall be
required to, deposit from time to time such Monies in the Collection Accounts
as it deems, in its sole discretion, to be advisable.  All Monies deposited from time to time in the
Collection Accounts pursuant to this Indenture shall be held by the Trustee as
part of the Assets and shall be applied to the purposes herein provided.  The Collection Accounts shall remain at all
times with the Corporate Trust Office or a financial institution having a
long-term debt rating at least equal to “A-” or “A2,” as applicable, or a
short-term debt rating at least equal to “A-1,” “P-1” or “F1,” as applicable.

(b)      All distributions of
principal or interest received in respect of the Assets, and any Sale Proceeds
from the sale or disposition of a Collateral Debt Security or other Assets
received by the Trustee in Dollars shall be immediately deposited into the
Interest Collection Account or the Principal Collection Account, as Interest
Proceeds or Principal

 187
 

 

Proceeds, respectively (unless, in the case of proceeds received from
the sale or disposition of any Assets, such proceeds are simultaneously
reinvested pursuant to Section 10.2(d) in Substitute Collateral Debt
Securities, subject to the Reinvestment Criteria, or in Eligible
Investments).  Subject to Sections
10.2(d), 10.2(e) and 11.2, all such property, together with
any securities in which funds included in such property are or will be invested
or reinvested during the term of this Indenture, and any income or other gain
realized from such investments, shall be held by the Trustee in the Collection
Accounts as part of the Assets subject to disbursement and withdrawal as
provided in this Section 10.2. 
Subject to Section 10.2(e) by Issuer Order (which may be in the
form of standing instructions), the Issuer or the Collateral Manager, on behalf
of the Issuer, shall at all times direct the Trustee to, and, upon receipt of
such Issuer Order, the Trustee shall, invest all funds received into the
Collection Accounts during a Due Period, and amounts received in prior Due
Periods and retained in the Collection Accounts, as so directed in Eligible
Investments having stated maturities no later than the Business Day immediately
preceding the next Payment Date.  The
Trustee, within one Business Day after receipt of any Scheduled Distribution or
other proceeds in respect of the Assets which is not Cash, shall so notify the
Issuer and the Collateral Manager and the Issuer, or the Collateral Manager on
behalf of the Issuer, shall, within five Business Days of receipt of such
notice from the Trustee, sell such Scheduled Distribution or other non-Cash
proceeds for Cash in an arm’s length transaction to a Person which is not an
Affiliate of the Issuer or the Collateral Manager and deposit the proceeds
thereof in the applicable Collection Account for investment pursuant to this Section
10.2; provided, however,
that the Issuer, or the Collateral Manager on behalf of the Issuer, need not
sell such Scheduled Distributions or other non-Cash proceeds if it delivers an
Officer’s Certificate to the Trustee certifying that such Scheduled
Distributions or other proceeds constitute Collateral Debt Securities or
Eligible Investments.

(c)      If prior to the
occurrence of an Event of Default, the Issuer, or the Collateral Manager on
behalf of the Issuer, shall not have given any investment directions pursuant
to Section 10.2(b), the Trustee shall seek instructions from the Issuer,
or the Collateral Manager on behalf of the Issuer, within three Business Days
after transfer of such funds to the applicable Collection Account.  If the Trustee does not thereupon receive
written instructions from the Issuer, or the Collateral Manager on behalf of the
Issuer, within five Business Days after transfer of such funds to the
applicable Collection Account, it shall invest and reinvest the funds held in
the applicable Collection Account in one or more Eligible Investments described
in clause (ii) of the definition of Eligible Investments maturing no later than
the Business Day immediately preceding the next Payment Date.  If after the occurrence of an Event of
Default, the Issuer, or the Collateral Manager on behalf of the Issuer, shall
not have given investment directions to the Trustee pursuant to Section
10.2(b) for three consecutive days, the Trustee shall invest and reinvest
such Monies as fully as practicable in Eligible Investments described in clause
(ii) of the definition of Eligible Investments maturing not later than the
earlier of (i) thirty (30) days after the date of such investment or (ii) the
Business Day immediately preceding the next Payment Date.  All interest and other income from such
investments shall be deposited in the applicable Collection Account, any gain
realized from such investments shall be credited to the applicable Collection
Account, and any loss resulting from such investments shall be charged to the
applicable Collection Account.  The Trustee
shall not in any way be held liable (except as a result of negligence, willful
misconduct or bad faith) by reason of any insufficiency of such applicable
Collection Account

 188
 

 

resulting from any loss relating to any such investment, except with
respect to investments in obligations of the Trustee or any Affiliate thereof.

(d)      During the Reinvestment
Period (and thereafter to the extent necessary to acquire Collateral Debt
Securities pursuant to contracts entered into during the Reinvestment Period),
the Collateral Manager on behalf of the Issuer may by Issuer Order direct the
Trustee to, and upon receipt of such Issuer Order the Trustee shall, reinvest
Principal Proceeds in Collateral Debt Securities selected by the Collateral
Manager as permitted under and in accordance with the requirements of Article
12 and such Issuer Order.

(e)      Subject to Section
10.2(f), the Trustee shall transfer to the Payment Account for application
pursuant to Section 11.1(a) and in accordance with the calculations and
the instructions contained in the Notes Valuation Report prepared by the
Trustee on behalf of the Issuer pursuant to Section 10.12(e), on or
prior to the Business Day prior to each Payment Date, any amounts then held in
the Collection Accounts other than (i) Interest Proceeds or Principal Proceeds
received after the end of the Due Period with respect to such Payment Date and
(ii) amounts that the Issuer is entitled to reinvest in accordance with Section
12.2 and which the Issuer so elects to reinvest in accordance with the
terms of this Indenture.

(f)       Notwithstanding the
foregoing, the Trustee shall transfer to the Payment Account from amounts on
deposit in the Interest Collection Account or, solely in the case of clause
(iii) below, the Principal Collection Account, as applicable, such amounts, if
any, that are due and payable to (i) Green Loan in respect of the Green Loan
Administrative Fee in accordance with, and at the times set forth in, the Asset
Servicing Agreement, (ii) Green Loan in respect of any special servicing fees
due to Green Loan in accordance with, and at the times set forth in, the Asset
Servicing Agreement (to the extent such amounts have not otherwise been paid)
and (iii) any Hedge Counterparty, in satisfaction of any Hedge Payment Amount
(other than any amount due and payable by the Issuer under the related Hedge
Agreement following an Event of Default or Termination Event (other than
Illegality or Tax event) (each as defined in the related Hedge Agreement) with
respect to which such Hedge Counterpart is the Defaulting Party or the sole
Affected Party (as defined in the related Hedge Agreement)), if any, then due
and payable to such Hedge Counterparty in accordance with the terms of the
related Hedge Agreement.  Any required
payments to Hedge Counterparties pursuant to clause (iii) of the preceding
sentence shall be made, first, from amounts on deposit in the Interest
Collection Account and, second, to the extent amounts on deposit in the
Interest Collection Account are insufficient, from amounts on deposit in the
Principal Collection Account.  The
Trustee shall make each such transfer on or prior to the Business Day prior to
the related payment date.

(g)      Notwithstanding the
foregoing, the Trustee shall deposit a portion, as specified in the related
Asset Hedge Schedules, of all payments of interest received in respect of
Non-Quarterly Pay Assets into the Asset Hedge Account.

Section 10.3           Payment Account.

(a)      The Trustee shall, prior
to the Closing Date, establish a single, segregated trust account which shall
be designated as the “Payment Account,” which shall be held in trust

 189
 

 

for the benefit of the Noteholders and each Hedge Counterparty and over
which the Trustee shall have exclusive control and the sole right of
withdrawal.  Any and all funds at any
time on deposit in, or otherwise to the credit of, the Payment Account shall be
held in trust by the Trustee for the benefit of the Noteholders.  Except as provided in Sections 11.1
and 11.2, the only permitted withdrawal from or application of funds on
deposit in, or otherwise to the credit of, the Payment Account shall be (i) to
pay the interest on and the principal of the Notes and make other payments in
respect of the Notes in accordance with their terms and the provisions of this
Indenture, (ii) to pay the Preferred Share Paying Agent for deposit into the
Preferred Share Distribution Account for distributions to the Preferred
Shareholders in accordance with the terms and the provisions of the Preferred
Shares Paying Agency Agreement, (iii) upon Issuer Order, to pay other amounts
specified therein, and (iv) otherwise to pay amounts payable pursuant to and in
accordance with the terms of this Indenture, each in accordance with the
Priority of Payments.  The Trustee agrees
to give the Issuer and the Co-Issuer immediate notice if it becomes aware that
the Payment Account or any funds on deposit therein, or otherwise to the credit
of the Payment Account, shall become subject to any writ, order, judgment,
warrant of attachment, execution or similar process.  Neither the Issuer nor the Co-Issuer shall
have any legal, equitable or beneficial interest in the Payment Account other
than in accordance with the Priority of Payments.  The Payment Account shall remain at all times
with the Corporate Trust Office or a financial institution having a long-term
debt rating by each Rating Agency at least equal to “A-” or “A2,” as
applicable, or a short-term debt rating by each Rating Agency at least equal to
“A-1,”  “P-1” or “F1,” as
applicable.  Amounts in the Payment
Account shall not be invested.

Section 10.4           Unused Proceeds Account.

(a)      The Trustee shall prior
to the Closing Date establish a single, segregated trust account which shall be
designated as the “Unused Proceeds Account” which shall be held in trust in the
name of the Trustee for the benefit of the Noteholders, into which the amount
specified in Section 3.2(g) shall be deposited.  All Monies deposited from time to time in the
Unused Proceeds Account pursuant to this Indenture shall be held by the Trustee
as part of the Assets and shall be applied to the purposes herein provided.

(b)      The Trustee agrees to
give the Issuer immediate notice if it becomes aware that the Unused Proceeds
Account or any funds on deposit therein, or otherwise to the credit of the
Unused Proceeds Account, shall become subject to any writ, order, judgment,
warrant of attachment, execution or similar process.  The Unused Proceeds Account shall remain at
all times with the Corporate Trust Office of a financial institution having a
long-term debt rating by each Rating Agency at least equal to “A-” or “A2,” as
applicable, or a short-term debt rating at least equal to “A-1,” “P-1” or “F1,”
as applicable.

(c)      During the Reinvestment
Period, amounts on deposit in the Unused Proceeds Account may or shall be
designated by the Collateral Manager as Special Amortization Amounts to be
included as Principal Proceeds pursuant to Section 9.7.  If the Aggregate Principal Balance of the
Collateral Debt Securities exceeds the Minimum Ramp-Up Amount on the Effective
Date, amounts remaining on deposit in the Unused Proceeds Account at the end of
the Ramp-Up Period not to exceed an amount equal to 15% of the Initial Deposit
may, at the option of the Collateral Manager, be designated as Interest
Proceeds.  Any such

 190
 

 

election will be made on a one-time basis and must be made by written
notice to the Trustee not later than the twentieth (20th) Business Day after
the Effective Date, which notice shall set forth any such amounts in the Unused
Proceeds Account so designated (and any interest or earnings thereon).  Upon receipt of such notice, the Trustee
shall transfer such amount to the Interest Collection Account (for subsequent
transfer to the Payment Account), which will be treated as Interest Proceeds
and applied in accordance with the Priority of Payments.  Any amounts remaining in the Unused Proceeds
Account on the twentieth (20th) Business Day after the Effective Date, to the
extent not designated as Interest Proceeds and provided that a Ratings
Confirmation Failure has not occurred, shall be transferred by the Trustee to
the Principal Collection Account (for subsequent transfer to the Payment
Account) and treated as Principal Proceeds and applied in accordance with the
Priority of Payments.

(d)      If a Rating Confirmation
Failure occurs, upon receipt of notice from the Collateral Manager pursuant to Section
7.18, the Trustee shall transfer amounts in the Unused Proceeds Account to
the Payment Account for application on the immediately following Payment Date
to pay principal of the Notes, first, to the payment of principal of the Class
A-1 Notes, second, the payment of principal of the Class A-2 Notes, third, the
payment of principal of the Class B Notes, fourth, the payment of principal of
the Class C Notes, fifth, the payment of principal of the Class D Notes, sixth,
the payment of principal of the Class E Notes, seventh, the payment of
principal of the Class F Notes, eighth, the payment of principal of the Class G
Notes, ninth, the payment of principal of the Class H Notes, tenth, the payment
of principal of the Class J Notes and eleventh, the payment of principal of the
Class K Notes, in each case until the ratings assigned on the Closing Date to
each Class of Notes have been reinstated or such Class has been paid in
full.  Any excess amount shall be treated
as Principal Proceeds and applied in accordance with the Priority of
Payments.  If no Ratings Confirmation
Failure occurs, to the extent the Collateral Manager has not identified such
amounts as Interest Proceeds pursuant to Section 10.4(c), the Trustee shall
transfer the amounts on deposit in the Unused Proceeds Account to the Principal
Collection Account, and such amounts will be treated as Principal Proceeds and
applied in accordance with the Priority of Payments.

(e)      During the Ramp-Up
Period, the Issuer (or the Collateral Manager on behalf of the Issuer) may by
Issuer Order direct the Trustee to, and upon receipt of such Issuer Order the
Trustee shall, apply amounts on deposit in the Unused Proceeds Account to
acquire Collateral Debt Securities selected by the Collateral Manager as
permitted under and in accordance with the requirements of Section 7.17
and such Issuer Order.

(f)       To the extent not
applied pursuant to Section 7.17, the Collateral Manager on behalf of
the Issuer may direct the Trustee to, and upon such direction the Trustee
shall, invest all funds in the Unused Proceeds Account in Eligible Investments
designated by the Collateral Manager. 
All interest and other income from such investments shall be deposited
in the Unused Proceeds Account, any gain realized from such investments shall
be credited to the Unused Proceeds Account, and any loss resulting from such
investments shall be charged to the Unused Proceeds Account.  The Trustee shall not in any way be held
liable (except as a result of negligence, willful misconduct or bad faith) by
reason of any insufficiency of the Unused Proceeds Account resulting from any
loss relating to any such investment, except with respect to investments in
obligations of the Trustee or any Affiliate thereof.  If the Trustee does not receive investment
instructions from an Authorized Officer of the Collateral

 191
 

 

Manager, the Trustee may invest funds received in the Unused Proceeds
Account in Eligible Investments of the type described in clause (ii) of the
definition thereto.

(g)      On the Closing Date, the
Trustee shall establish a subaccount of the Unused Proceeds Account (the “Unused
Proceeds Subaccount”) and credit such amount equal to $20,000,000.  As directed by the Collateral Manager,
amounts credited thereto may be released from the lien of this Indenture and
paid to Future Advance Holders to satisfy the additional funding commitments of
the Future Advance Holders.  At any time
prior to the Effective Date, the Collateral Manager may direct the Trustee to
terminate the Unused Proceeds Subaccount and credit any amounts remaining on
deposit therein to the Unused Proceeds Subaccount.

Section 10.5           Delayed Funding Obligations
Account.

(a)      The Trustee shall prior
to the Closing Date establish a single, segregated trust account which shall be
designated as the “Delayed Funding Obligations Account” which shall be held in
trust in the name of the Trustee for the benefit of the Noteholders and each
Hedge Counterparty, into which Delayed Draw Funding Obligations Account the Trustee
shall deposit funds for any additional funding commitments of the Issuer under
any Delayed Draw Term Loans included in the Collateral Debt Securities.  All amounts in the Delayed Funding
Obligations Account shall be deposited in overnight funds in Eligible
Investments and released to fulfill such commitments.  If a Delayed Draw Term Loan is sold or
otherwise disposed before the full commitment thereunder has been drawn, or if
excess funds remain following the termination of the funding obligation giving
rise to the deposit of such funds in the Delayed Funding Obligations Account,
such Eligible Investments on deposit in the Delayed Funding Obligations Account
for the purpose of fulfilling such commitment shall be transferred to the
Principal Collection Account as Principal Proceeds.  The Delayed Funding Obligations Account shall
remain at all times with the Corporate Trust Office or a financial institution
having a long-term debt rating from each Rating Agency at least equal to “A-”
or “A2,” as applicable, or a short-term debt rating at least equal to “A-1,” “P-1”
or “F-1,” as applicable.

(b)      Funds in the Delayed
Funding Obligations Account shall be available solely to fulfill any additional
funding commitments of the Issuer under any Delayed Draw Term Loans included in
the Collateral Debt Securities, and only funds in the Delayed Funding
Obligations Account shall be used for such purpose.  Upon the purchase of any Collateral Debt
Security that is a Delayed Draw Term Loan, the Collateral Manager shall direct
the Trustee to deposit Principal Proceeds into the Delayed Funding Obligation
Account in an amount equal to the Issuer’s maximum future funding obligation
under the terms of such Delayed Draw Term Loan, and the Principal Proceeds so
deposited shall be considered part of the purchase price of such Delayed Draw
Term Loan for purposes of Article 12. 
The Collateral Manager shall not permit all amounts then on deposit in
the Delayed Funding Obligation Account to be less than the aggregate amount of
all future funding obligations outstanding under the terms of all Delayed Draw
Term Loans that constitute Collateral Debt Securities.

 192
 

 

(c)      The Collateral Manager
shall direct the Trustee to withdraw funds from the Delayed Funding Obligation
Account to fund amounts drawn under any Delayed Draw Term Loan.  Pursuant to an Issuer Order, all or a portion
of the funds, as specified in such Issuer Order, on deposit in the Delayed
Funding Obligation Account at any time in excess of the aggregate principal
amount of commitments which may be drawn upon under the Delayed Draw Term Loan
shall be transferred by the Trustee to the Collection Account as Principal
Proceeds.

Section 10.6           Expense Account.

(a)      The Trustee shall prior
to the Closing Date establish a single, segregated trust account which shall be
designated as the “Expense Account” which shall be held in trust in the name of
the Trustee for the benefit of the Noteholders and each Hedge
Counterparty.  The only permitted
withdrawal from or application of funds on deposit in, or otherwise standing to
the credit of, the Expense Account shall be to pay (on any day other than a
Payment Date) accrued and unpaid Company Administrative Expenses of the Issuer
and the Co-Issuer (other than accrued and unpaid expenses and indemnities
payable to the Collateral Manager under the Collateral Management
Agreement).  On the Closing Date, the
Trustee shall deposit into the Expense Account an amount equal to approximately
U.S.$10,812,796 from the net proceeds received by the Issuer on such date from
the initial issuance of the Notes.  Funds
in the Expense Account shall be replenished on each Payment Date, if necessary,
in accordance with the Priority of Payments. 
On or after the Effective Date, any amount remaining in the Expense
Account may, at the election of the Collateral Manager be designated as
Interest Proceeds.  On the date on which
substantially all of the Issuer’s assets have been sold or otherwise disposed
of, the Issuer by Issuer Order executed by an Authorized Officer of the Collateral
Manager shall direct the Trustee to, and, upon receipt of such Issuer Order,
the Trustee shall, transfer all amounts on deposit in the Expense Account to
the Interest Collection Account for application pursuant to Section
11.1(a)(i) as Interest Proceeds. 
Amounts credited to the Expense Account will (a) be applied on or prior
to the Determination Date preceding the first Payment Date to pay amounts due
in connection with the offering of the Notes and (b) on the first Payment Date,
to the extent the balance of the Expense Account exceeds $50,000 on the related
Determination Date, be transferred to the Payment Account and applied as
Interest Proceeds.

(b)      The Trustee agrees to
give the Issuer immediate notice if it becomes aware that the Expense Account
or any funds on deposit therein, or otherwise to the credit of the Expense
Account, shall become subject to any writ, order, judgment, warrant of
attachment, execution or similar process. 
The Issuer shall not have any legal, equitable or beneficial interest in
the Expense Account.  The Expense Account
shall remain at all times with the Corporate Trust Office of a financial
institution having a long-term debt rating by each Rating Agency at least equal
to “A-” or “Baa1,” as applicable.

(c)      The Collateral Manager on
behalf of the Issuer may direct the Trustee to, and upon such direction the
Trustee shall, invest all funds in the Expense Account in Eligible Investments
designated by the Collateral Manager. 
All interest and other income from such investments shall be deposited
in the Expense Account, any gain realized from such investments shall be
credited to the Expense Account, and any loss resulting from such

 193
 

 

investments shall be charged to the Expense Account.  The Trustee shall not in any way be held liable
(except as a result of negligence, willful misconduct or bad faith) by reason
of any insufficiency of such Expense Account resulting from any loss relating
to any such investment, except with respect to investments in obligations of
the Trustee or any Affiliate thereof.  If
the Trustee does not receive investment instructions from an Authorized Officer
of the Collateral Manager, the Trustee may invest funds received in the Expense
Account in Eligible Investments of the type described in clause (ii) of the
definition thereto.

Section 10.7           Asset Hedge Account.

The Trustee shall prior
to the Closing Date establish a single, segregated trust account which shall be
designated as the “Asset Hedge Account” which shall be held in trust in the
name of the Trustee for the benefit of the Issuer. The only permitted
withdrawal from or application of funds on deposit in, or otherwise standing to
the credit of, the Asset Hedge Account shall be funds received in respect of
each payment of interest in respect of any Non-Quarterly Pay Asset.  On each date on which the Trustee receives a
payment of interest in respect of any Non-Quarterly Pay Asset, the Trustee
shall deposit a portion of the amount received into the Collection Account and
shall deposit the remaining portion in to the Asset Hedge Account in accordance
with the Asset Hedge Schedule.  On the
third Business Day prior to each quarterly Payment Date, the Trustee will
transfer from the Asset Hedge Account to the Collection Account, for
distribution in accordance with the Priority of Payments, the amounts specified
in the Asset Hedge Schedule.  All funds
on deposit in the Asset Hedge Account will be invested in Eligible Investments
in accordance hereto.

Section 10.8           Suspense Account.

The Trustee shall prior
to the Closing Date establish a single, segregated trust account which shall be
designated as the “Suspense Account” which shall be held in trust in the name
of the Trustee for the benefit of the Future Advance Holders.  On any Payment Date on which a Liquidity Test
Failure or a Schedule P Failure has occurred and is continuing, the Trustee
shall release from the lien of this Indenture and deposit into the Suspense
Account all amounts available to be distributed pursuant to clause (34) under
of Section 11.1(a)(i) until such Liquidity Test Failure or such Schedule
P Failure, as the case may be, 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
shall, transfer all amounts on deposit in the Suspense Account, if any, to the
Future Advance Holders to satisfy the additional commitments in respect of one
or more Other Loans or reimburse the Issuer for losses related to the failure
to fund such future funding commitments in accordance with the related
Underlying Instruments.  Amounts on
deposit in the Suspense Account shall be invested in Permitted Investments as
set forth herein.  Subject to Section
7.19 hereof, Amounts on deposit in the Suspense Account (or any portion
thereof) shall be released and paid (upon standing order of the Issuer) to the
Preferred Shares Paying Agent for deposit into the Preferred Shares
Distribution Account for distribution to the holders of the Preferred Shares as
payments of the Preferred Shares Distribution Amount (subject to and in
accordance with the provisions of the Preferred Shares Paying Agency Agreement)
on any date on which no Schedule P Failures have occurred and are continuing
the Liquidity Test would be satisfied after such release and payment.  For the avoidance of doubt,

 194
 

 

amounts on deposit in the Suspense Account shall not
be included in the Assets securing the Notes.

Section 10.9           Future Funding Reserve Account.

The Trustee shall prior
to the Closing Date establish a single, segregated trust account which shall be
designated as the “Future Funding Reserve Account” which shall be held in trust
in the name of the Trustee 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 shall 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 shall, transfer all amounts on deposit in the Future
Funding Reserve Account, if any, to the Future Advance Holders to satisfy the
additional commitments in respect of one or more Other Loans or reimburse the
Issuer for losses related to the failure to fund such future funding
commitments in accordance with the related Underlying Instruments.  Amounts on deposit in the Future Funding Reserve
Account shall be invested in Permitted Investments.  Amounts on deposit in the Future Funding
Reserve Account (or any portion thereof) shall be released and paid to the
Future Advance Holders (or their designees) on any date on which the Future
Funding Reserve Test would be satisfied after such release and payment.  For the avoidance of doubt, amounts on
deposit in the Future Funding Reserve Account shall not be included in the
Assets securing the Notes.

Section 10.10         Interest Advances.

(a)      With respect to each
Determination Date for which the sum of Interest Proceeds and, if applicable,
Principal Proceeds, collected during the related Due Period that are available
to pay interest on the Class A-1 Notes, the Class A-2 Notes and the Class B
Notes in accordance with the Priority of Payments, are insufficient to remit
the interest due and payable with respect to the Class A-1 Notes, the Class A-2
Notes and the Class B Notes on the following Payment Date (the amount of such
insufficiency, an “Interest
Shortfall”), the Trustee shall provide the Advancing Agent
with written notice of such Interest Shortfall no later than the close of
business on the Business Day following such Determination Date.  The Trustee shall provide the Advancing Agent
with notice, prior to any funding of an Interest Advance by the Advancing
Agent, of any additional interest remittances received by the Trustee after
delivery of such initial notice that reduce such Interest Shortfall.  No later than 5:00 p.m. (New York time) on
the Business Day immediately preceding the related Payment Date (but in any
event no earlier than one Business Day following the Advancing Agent’s receipt
of notice of such Interest Shortfall), the Advancing Agent shall advance the
difference between such amounts (each such advance, an “Interest Advance”) by
deposit of an amount equal to such Interest Advance in the Payment Account,
subject to a determination of recoverability by the Advancing Agent as
described in Section 10.10(b), and subject to a maximum limit in respect
of any Payment Date equal to the lesser of (i) the aggregate of such Interest
Shortfalls that would otherwise occur on the Class A-1 Notes, the Class A-2
Notes and Class B Notes and (ii) the aggregate of the interest payments not
received in respect of Non-Advancing Collateral Debt Securities.  Notwithstanding the foregoing, in no
circumstance will the Advancing Agent be required to make an Interest Advance
in respect of a Non-Advancing

 195
 

 

Collateral Debt Security (x) to the extent that the aggregate outstanding
amount of all unreimbursed Interest Advances would exceed the aggregate
outstanding principal amount of the Class A Notes and the Class B Notes or (y)
if the Class A/B Par Value Ratio on the relevant Measurement Date is less than
100%. Any Interest Advance made by the Advancing Agent with respect to a
Payment Date that is in excess of the actual Interest Shortfall for such
Payment Date shall be refunded to the Advancing Agent by the Trustee on the
same Business Day that such Interest Advance was made (or, if such Interest
Advance is made prior to final determination by the Trustee of such Interest
Shortfall, on the Business Day of such final determination).  The Advancing Agent shall provide the Trustee
written notice of a determination by the Advancing Agent that a proposed
Interest Advance would constitute a Nonrecoverable Advance no later than the
close of business on the Business Day immediately preceding the related Payment
Date (or, in the event that the Advancing Agent did not receive notice of the
related Interest Shortfall on the related Determination Date, no later than the
close of business on the Business Day immediately following the Advancing Agent’s
receipt of notice of such Interest Shortfall). 
If the Advancing Agent shall fail to make any required Interest Advance
at or prior to the time at which distributions are to be made pursuant to Section
11.1(a), the Trustee, in its capacity as Backup Advancing Agent, shall be
required to make such Interest Advance, subject to a determination of
recoverability by the Trustee as described in Section 10.10(b).  The Trustee shall be entitled to conclusively
rely on any affirmative determination by the Advancing Agent that an Interest
Advance would constitute a Nonrecoverable Advance.  Based upon available information at the time,
the Trustee, the Collateral Manager or the Advancing Agent will provide fifteen
(15) days prior notice to each Rating Agency if recovery of a Nonrecoverable
Advance would result in an Interest Shortfall on the next succeeding Payment
Date.  No later than the close of
business on the Determination Date related to a Payment Date on which the
recovery of a Nonrecoverable Advance would result in an Interest Shortfall, the
Collateral Manager will provide each Rating Agency notice of such recovery.

(b)      Notwithstanding anything
herein to the contrary, neither the Advancing Agent nor the Trustee, in its
capacity as Backup Advancing Agent, as applicable, shall be required to make
any Interest Advance unless such Person determines, in its sole discretion,
exercised in good faith that such Interest Advance, or such proposed Interest
Advance, plus interest expected to accrue thereon at the Reimbursement Rate,
will be recoverable from subsequent payments or collections with respect to all
Assets and has determined in its reasonable judgment that the recovery would
not result in an Interest Shortfall.  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, in its capacity as Backup Advancing Agent, as applicable,
will take into account:

(i)           amounts that may be
realized on each Underlying Mortgaged Property in its “as is” or then current
condition and occupancy;

(ii)          that the related
Senior Tranches of any Collateral Debt Security may be required to be fully
paid and any advances (and interest thereon) made in respect of such Senior
Tranches may be required to be fully reimbursed, prior to any amounts recovered
in respect of the Underlying Mortgage Properties are allocated or otherwise
made available to the Collateral Debt Securities;

 196
 

 

(iii)         the possibility and
effects of future adverse change with respect to the Underlying Mortgage
Properties, the potential length of time before such Interest Advance may be
reimbursed and the resulting degree of uncertainty with respect to such
reimbursement; and

(iv)        the fact that Interest
Advances are intended to provide liquidity only and not credit support to the
Class A-1 Noteholders, the Class A-2 Noteholders and the Class B 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, in its capacity as Backup Advancing
Agent, as applicable, determines that future Interest Proceeds and Principal
Proceeds may be ultimately 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, in its capacity as Backup
Advancing Agent, as applicable, as to the nonrecoverability of any Interest
Advance shall be conclusive and binding on the Holders of the Notes.

(c)      The Advancing Agent and
the Trustee, in its capacity as Backup Advancing Agent, will each be entitled
to recover any previously unreimbursed Interest Advance made by it (including
any Nonrecoverable Advance), together with interest thereon, first, from
Interest Proceeds and second (to the extent that there are insufficient
Interest Proceeds for such reimbursement), from Principal Proceeds to the
extent that such reimbursement would not trigger an additional Interest Shortfall;
provided that if at any time an Interest
Advance is determined to be a Nonrecoverable Advance, the Advancing Agent or
the Trustee, in its capacity as Backup Advancing Agent, shall be entitled to
recover all outstanding Interest Advances from the Collection Accounts on any
Business Day during any Interest Accrual Period prior to the related
Determination Date (or on a Payment Date prior to any payment of interest on or
principal of the Notes in accordance with the Priority of Payments).  The Advancing Agent shall 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 Noteholders as a collective whole, which may include
being reimbursed for Nonrecoverable Advances in installments.

(d)      The Advancing Agent and
the Trustee, in its capacity as Backup Advancing Agent, 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.

(e)      The obligations of the
Advancing Agent and the Trustee to make Interest Advances in respect of the
Collateral Debt Securities will continue through the Stated Maturity, unless
the Class A Notes and the Class B Notes are previously redeemed or repaid in
full.

(f)       In no event will the
Advancing Agent in its capacity as such hereunder or the Trustee, in its
capacity as Backup Advancing Agent hereunder, be required to make

 197
 

 

Interest Advances for distributions to the Holders of any Class of
Notes other than the Class A Notes and the Class B Notes, or with respect to
any Collateral Debt Security other than a Non-Advancing Collateral Debt Security,
and in no event will the Advancing Agent or the Trustee, in its capacity as
back-up advancing agent, be required to advance any amounts in respect of
payments of principal of any Collateral Debt Security.

(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 Priority of
Payments, to the extent funds are available therefor, the Advancing Agent Fee.
In consideration of the Trustee’s back-up advancing obligations hereunder, the
Trustee shall be entitled to receive, at the times set forth herein and subject
to the Priority of Payments, to the extent funds are available therefore, the
Back-Up Advancing Agent Fee.

(h)      The determination by the
Advancing Agent or the Trustee, in its capacity as Backup Advancing Agent, 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), the Issuer, the applicable
Rating Agencies, setting forth the basis for such determination; provided that failure to give such notice, or any defect therein, shall
not impair or affect the validity of, or the Advancing Agent or the Trustee’s
entitlement to reimbursement with respect to, any Interest Advance.

(i)       If a Scheduled
Distribution on any Collateral Debt Security 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, upon request, the Trustee shall
provide the Advancing Agent (either electronically or in hard-copy format),
with copies of all reports received from any trustee, trust administrator,
master servicer or similar administrative entity with respect to the Collateral
Debt Securities and the Trustee shall promptly make available to the Advancing
Agent any other information reasonably available to the Trustee by reason of
its acting as Trustee hereunder to permit the Advancing Agent to make a
determination of recoverability with respect to any Interest Advance and to
otherwise perform its advancing functions under this Indenture.

Section 10.11         Reports by Parties.

The Trustee shall supply,
in a timely fashion, to the Issuer, the Co-Issuer, the Preferred Shares Paying
Agent and the Collateral Manager any information regularly maintained by the
Trustee that the Issuer, the Co-Issuer, the Preferred Shares Paying Agent or
the Collateral Manager may from time to time request with respect to the
Pledged Obligations or the Accounts and provide any other information
reasonably available to the Trustee by reason of its acting as Trustee
hereunder and required to be provided by Section 10.12 or to permit the
Collateral Manager to perform its obligations under the Collateral Management
Agreement.  The Trustee shall forward to
the Collateral Manager and each Hedge Counterparty 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, without limitation, notices of calls and redemptions of
securities) as well as all periodic financial reports received from such

 198
 

 

issuer and Clearing Agencies with respect to such
issuer.  Each of the Issuer and
Collateral Manager shall promptly forward to the Trustee any information in
their possession or reasonably available to them concerning any of the Pledged
Obligations that the Trustee reasonably may request or that reasonably may be
necessary to enable the Trustee to prepare any report or perform any duty or
function on its part to be performed under the terms of this Indenture.

Section 10.12         Reports; Accountings.

(a)      The Trustee shall monitor
the Assets on an ongoing basis and provide access to the information maintained
by the Trustee to, and upon reasonable request of the Collateral Manager, shall
assist the Collateral Manager in performing its duties under the Collateral
Management Agreement, each in accordance with this Indenture.

(b)      The Trustee shall perform
the following functions during the term of this Agreement:

(i)           Create and maintain
a database with respect to the Collateral Debt Securities (the “Database”);

(ii)          Permit access to the
information contained in the Database by the Collateral Manager and the Issuer;

(iii)         On a monthly basis,
monitor and update the Database for ratings changes;

(iv)        Update the Database
for Collateral Debt Securities or Eligible Investments acquired or sold or
otherwise disposed of;

(v)         Prepare and arrange
for the delivery to each Rating Agency, the Collateral Manager, each Hedge
Counterparty, the Initial Purchasers, and upon request therefor, any Holder of
a Note shown on the Note Registrar, any Preferred Shareholder shown on the
register maintained by the Share Registrar, and, for so long as any Notes are
listed on the Irish Stock Exchange, the Irish Paying Agent of the Monthly
Reports;

(vi)        Prepare and arrange
for the delivery to the Collateral Manager, each Hedge Counterparty, and upon
request therefor, any Holder of a Note shown on the Notes Register, any
Preferred Shareholder shown on the register maintained by the Share Registrar,
the firm of Independent certified public accountants appointed pursuant to Section
10.14(a) hereof, each Rating Agency, the Depository (with instructions to
forward it to each of its participants who are holders of any Notes) and, for
so long as any Notes are listed on the Irish Stock Exchange, the Irish Paying
Agent, of the Notes Valuation Report;

(vii)       Assist in preparation
and arrange for the delivery to the Collateral Manager and each Hedge
Counterparty of the Redemption Date Statement;

(viii)      Arrange for the
delivery to each Rating Agency of all information or reports required under
this Indenture, including, but not limited to, providing the applicable Rating
Agencies with (A) written notice of (1) any breaches under any of the

 199
 

 

Transaction
Documents and (2) the termination or change of any parties to the Transaction
Documents, in each case, for which the Trustee has received prior written
notice pursuant to the terms of the Transaction Document and (B) each Monthly
Report in Excel spreadsheet format; and

(ix)         Assist the
Independent certified public accountants in the preparation of those reports
required under Section 10.14 hereof by providing access to the
information contained in the Database.

(c)      The Trustee, on behalf of
the Issuer, shall compile and provide or make available on its website
initially located at www.cdolink.com to each Rating Agency, the Collateral
Manager, each Hedge Counterparty, the Initial Purchasers, for so long as any
Notes are listed on the Irish Stock Exchange, and upon request therefor, any
Holder of a Note shown on the Notes Register, any beneficial owner of a Note
who provides to the Trustee a certification in the form of Exhibit M
hereto, any Preferred Shareholder shown on the register maintained by the Share
Registrar, not later than the fifth (5th) Business Day after the first (1st) day of each month commencing
in October 2006 (or solely in the case of the first Monthly Report, the
fifteenth (15th) Business
Day), determined as of the last Business Day of the preceding month, a monthly
report (the “Monthly Report”).  The Monthly Report shall contain the
following information and instructions with respect to the Pledged Obligations
included in the Assets based in part on information provided by the Collateral
Manager:

(i)           (1) the Aggregate
Principal Balance of all Collateral Debt Securities, together with a
calculation, in reasonable detail, of the sum of (A) the Aggregate Principal
Balance of all Collateral Debt Securities (other than Defaulted Securities and
Written Down Securities) plus (B) the Principal Balance of each Pledged
Obligation which is Written Down Security and (C) the Principal Balance of each
Pledged Obligation which is a Defaulted Security;

(ii)          the balance of all
Eligible Investments and Cash in each of the Interest Collection Account, the
Principal Collection Account, the Delayed Funding Obligations Account and the
Expense Account;

(iii)         the nature, source
and amount of any proceeds in the Collection Accounts, including Interest
Proceeds, Principal Proceeds, Unscheduled Principal Payments and Sale Proceeds,
received since the date of determination of the last Monthly Report;

(iv)        with respect to each
Collateral Debt Security and each Eligible Investment that is part of the
Assets, its Principal Balance, annual interest rate, average life, issuer,
Moody’s Rating, S&P Rating and Fitch Rating;

(v)         the identity of each
Collateral Debt Security that was sold or disposed of pursuant to Section
12.1 (indicating whether such Collateral Debt Security is a Defaulted
Security, Credit Risk Security or otherwise (in each case, as reported in
writing to the Issuer by the Collateral Manager) and whether such Collateral
Debt Security was sold pursuant to Section 12.1(a)(i) or (ii)) or
Granted to the Trustee since the date of determination of the most recent
Monthly Report;

 200

 

(vi)        the identity of each
Collateral Debt Security which became a Defaulted Security, Credit Risk
Security or a Written Down Security since the date of determination of the last
Monthly Report;

(vii)       the identity of each
Collateral Debt Security that has been upgraded or downgraded by one or more
Rating Agencies;

(viii)      the Aggregate
Principal Balance of all Fixed Rate Securities;

(ix)         the Aggregate
Principal Balance of all Floating Rate Securities;

(x)          based on information
provided by the Collateral Manager, the Aggregate Principal Balance of all
Floating Rate Securities that constitute Covered Fixed Rate Securities;

(xi)         the Aggregate
Principal Balance of all Collateral Debt Securities that are guaranteed as to
ultimate or timely payment of principal or interest;

(xii)        with respect to each
Specified Type of Collateral Debt Security, the Aggregate Principal Balance of
all Collateral Debt Securities consisting of such Specified Type of Collateral
Debt Securities;

(xiii)       based on information
provided by the Collateral Manager, the identity of, and the Aggregate
Principal Balance of all Collateral Debt Securities whose Moody’s Rating is
determined as provided in each clause of the definition of “Moody’s Rating” and
the identity of, and the Aggregate Principal Balance of all Collateral Debt
Securities whose S&P Rating is determined as provided in each of the
clauses of the definition of “S&P Rating,” identifying in reasonable detail
the basis for such calculation with respect to Collateral Debt Securities with
an S&P Rating assigned pursuant to Annex 1, 2 or 3 of Schedule D,
based on information provided by the Collateral Manager;

(xiv)       with respect to each
Collateral Debt Security, the Aggregate Principal Balance of all Collateral
Debt Securities that are part of the same issuance;

(xv)        the Aggregate
Principal Balance of all Collateral Debt Securities that are securities that
provide for periodic payments of interest less frequently than quarterly;

(xvi)       based upon the
information supplied by the Collateral Manager, the Aggregate Principal Balance
of all Collateral Debt Securities issued by any single issuer (provided
that for avoidance of doubt, with respect to any Loan, the issuer of such Loan
shall be deemed to be the borrower of such Loan);

(xvii)      based upon the
information supplied by the Collateral Manager, the Aggregate Collateral
Balance of the Collateral Debt Securities consisting of CMBS Securities issued
in any single calendar year;

 201
 

 

(xviii)     the Aggregate
Principal Balance of all Collateral Debt Securities (other than CMBS
Securities, CRE CDO Securities and REIT Debt Securities) backed by each single
Property Type based on information provided by the Collateral Manager;

(xix)       the Aggregate
Principal Balance of all Collateral Debt Securities (other than CMBS
Securities, CRE CDO Securities and REIT Debt Securities) that are backed or
otherwise invested in properties located in any single U.S. state (for each
such state) based on information provided by the Collateral Manager;

(xx)        the Class A/B Par
Value Ratio, the Class A/B Interest Coverage Ratio, the Class C/D/E Par Value
Ratio, the Class C/D/E Interest Coverage Ratio, the Class F/G/H Par Value Ratio
and the Class F/G/H Interest Coverage Ratio, and a statement as to whether the
Interest Coverage Test and the Par Value Test are satisfied;

(xxi)       the Moody’s Rating
Factor and a statement as to whether the Moody’s Maximum Rating Factor Test is
satisfied;

(xxii)      the Herfindahl Score,
the amount of Cash that has been received in respect of Principal Proceeds of
the Collateral Debt Securities since the immediately preceding Measurement Date
but has not been reinvested in additional Collateral Debt Securities (and what
the Herfindahl score would have been had such Cash in respect of such Principal
Proceeds not existed), a statement as to whether the Herfindahl Test was
satisfied or deemed satisfied on the immediately preceding Measurement Date and
a statement as to whether the Herfindahl Diversity Test is satisfied;

(xxiii)     the Weighted Average
Coupon and a statement as to whether the Minimum Weighted Average Coupon Test
is satisfied;

(xxiv)     the Weighted Average
Spread and a statement as to whether the Minimum Weighted Average Spread Test
is satisfied;

(xxv)      the Extended Weighted
Average Maturity and a statement as to whether the Moody’s Weighted Average
Extended Maturity Test is satisfied;

(xxvi)     the Initial Weighted
Average Maturity and a statement as to whether the Moody’s Weighted Average
Initial Maturity Test is satisfied;

(xxvii)    based upon information
supplied by the Collateral Manager, the Average Life of each Collateral Debt
Security, the Weighted Average Life and a statement as to whether the Weighted
Average Life Test is satisfied;

(xxviii)   the Class A-1 Loss
Differential, the Class A-2 Loss Differential, the Class B Loss
Differential, the Class C Loss Differential, the Class D Loss
Differential, the Class E Loss Differential, the Class F Loss Differential, the
Class G Loss Differential, the Class H Loss Differential, the Class J Loss
Differential and the Class K Loss Differential of the Current Portfolio and a
statement as to whether the S&P CDO Monitor Test is satisfied;

 202
 

 

(xxix)      the S&P Weighted
Average Recovery Rate and a statement as to whether the S&P Recovery Test
is satisfied;

(xxx)       a calculation in
reasonable detail necessary to determine compliance with each of the other
Collateral Quality Tests;

(xxxi)      the Principal Balance
of each Collateral Debt Security that is on credit watch with negative
implications;

(xxxii)     the Principal Balance
of each Collateral Debt Security that is on credit watch with positive
implications;

(xxxiii)    the amount of the
current portion and the unpaid portion, if any, of the Senior Collateral
Management Fee and the Subordinated Collateral Management Fee with respect to
the related Payment Date;

(xxxiv)   based upon information
supplied by the Collateral Manager, the current ratings of any Hedge
Counterparty and the credit support provider of any Hedge Counterparty;

(xxxv)    the aggregate notional
amount as of the end of such month and each following month for all outstanding
Transactions under all Hedge Agreements which the Issuer has entered into; and

(xxxvi)   such other information
as the Collateral Manager, the Trustee or any Hedge Counterparty may reasonably
request.

(d)      The Trustee, on behalf of
the Issuer, shall perform the following functions and report to the Issuer, the
Co-Issuer and the Collateral Manager on each Measurement Date:

(i)       Calculate the Class A/B
Par Value Ratio and the Class A/B Interest Coverage Ratio and indicate whether
the Class A/B Par Value Test and the Class A/B Interest Coverage Test are met;

(ii)      Calculate the Class
C/D/E Par Value Ratio and the Class C/D/E Interest Coverage Ratio and indicate
whether the Class C/D/E Par Value Test and the Class C/D/E Interest Coverage
Test are met; and

(iii)     Calculate the Class
F/G/H Par Value Ratio and the Class F/G/H Interest Coverage Ratio and indicate
whether the Class F/G/H Par Value Test and the Class F/G/H Interest Coverage
Test are met.

(e)      The Trustee, on behalf of
the Issuer, shall perform the following functions and prepare a report thereof
relating to the most recently ended Due Period determined as of each
Determination Date not later than the Business Day preceding the Payment Date
(the “Notes Valuation Report”),
which shall contain the following information, based in part on information
provided by the Collateral Manager:

 203
 

 

(i)           Calculate the
percentage (based on the outstanding Aggregate Principal Balances of the
Pledged Collateral Debt Securities) of the Pledged Collateral Debt Securities
which have a maturity date occurring on or prior to each Payment Date;

(ii)          Identify the
Principal Proceeds and Interest Proceeds;

(iii)         Determine the Net
Outstanding Portfolio Balance as of the close of business on the last Business
Day of each Due Period after giving effect to the Principal Proceeds as of the
last Business Day of such Due Period, principal collections received from
Collateral Debt Securities in the related Due Period, the reinvestment of such
proceeds in Eligible Investments during such Due Period and the Collateral Debt
Securities that were released during such Due Period;

(iv)        Determine the
Aggregate Outstanding Amount of the Notes of each Class at the beginning of the
Due Period and such Aggregate Outstanding Amount as a percentage of the
original Aggregate Outstanding Amount of the Notes of such Class, the amount of
principal payments to be made on the Notes of each Class on the next Payment
Date, the amount of any Class C Capitalized Interest on the Class C Notes, the
amount of any Class D Capitalized Interest on the Class D Notes, the amount of
any Class E Capitalized Interest on the Class E Notes, the amount of any Class
F Capitalized Interest on the Class F Notes, the amount of any Class G
Capitalized Interest on the Class G Notes, the amount of any Class H
Capitalized Interest on the Class H Notes, the amount of any Class J
Capitalized Interest on the Class J Notes, the amount of any Class K
Capitalized Interest on the Class K Notes, the Aggregate Outstanding Amount of
the Notes of each Class after giving effect to the payment of principal (and
with respect to 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, Class C Capitalized Interest, Class D Capitalized Interest,
Class E Capitalized Interest, Class F Capitalized Interest, Class G Capitalized
Interest, Class H Capitalized Interest, Class J Capitalized Interest or Class K
Capitalized Interest as applicable), on the related Payment Date and such
Aggregate Outstanding Amount as a percentage of the original Aggregate
Outstanding Amount of the Notes of such Class;

(v)         Calculate the Class
A-1 Interest Distribution Amount, the Class A-2 Interest Distribution Amount,
the Class B Interest Distribution Amount, the Class C Interest Distribution
Amount, the Class D Interest Distribution Amount, the Class E Interest
Distribution Amount, the Class F Interest Distribution Amount, the Class G
Interest Distribution Amount, the Class H Interest Distribution Amount, the
Class J Interest Distribution Amount and the Class K Interest Distribution
Amount, for the related Payment Date and the aggregate amount paid for all
prior Payment Dates in respect of such amounts;

(vi)        With the assistance of
the Collateral Manager, determine the Company Administrative Expenses on an
itemized basis, the Senior Collateral Management Fee and the Subordinate
Collateral Management Fee payable by the Issuer on the related Payment Date;

 204
 

 

(vii)       With the assistance of
the Collateral Manager as set forth in Section 10.12(f), determine (A)
the balance on deposit in the Interest Collection Account and the Principal
Collection Account at the end of the related Due Period, (B) the amounts
payable from the Collection Accounts to the Payment Account in order to make
payments pursuant to Section 11.1(a)(i) and Section 11.1(a)(ii)
on the related Payment Date (the amounts payable pursuant to each such clause
to be set forth and identified separately) and (C) the balance of Principal
Proceeds and the balance of Interest Proceeds remaining in the Collection
Accounts immediately after all payments and deposits to be made on the related
Payment Date;

(viii)      Calculate the amount
to be paid to each Hedge Counterparty and the amount to be paid by each Hedge
Counterparty in each case, specifying (a) the amount to be paid under each
Hedge Agreement (other than any payments due and payable upon a termination of
the related Hedge Agreement) and (b) the amount owing as a result of a
termination with respect to each Hedge Agreement;

(ix)         Calculate the amount
to be paid to the Advancing Agent or the Trustee, as applicable, as
reimbursement of Interest Advances and Reimbursement Interest and calculate the
amount of the Nonrecoverable Advances to be paid to the Advancing Agent or the
Trustee, as applicable;

(x)          Calculate the amount
on deposit in the Expense Account, the Unused Proceeds Account, the Delayed
Funding Obligations Account, each Hedge Collateral Account and each Hedge Termination
Account;

(xi)         The nature, source
and amount of any proceeds in the Collection Accounts, including Interest
Proceeds, Principal Proceeds, Unscheduled Principal Payments and Sale Proceeds,
received since the date of determination of the last Monthly Report;

(xii)        With respect to each
Collateral Debt Security and each Eligible Investment that is part of the
Assets, its Principal Balance, annual interest rate, average life, issuer,
Moody’s Rating, S&P Rating and Fitch Rating;

(xiii)       The identity of each
Collateral Debt Security that was sold or disposed of pursuant to Section
12.1 (indicating whether such Collateral Debt Security is a Defaulted
Security, Credit Risk Security or otherwise (in each case, as reported in
writing to the Issuer by the Collateral Manager) and whether such Collateral
Debt Security was sold pursuant to Section 12.1(a)(i) or (ii)) or
Granted to the Trustee since the date of determination of the most recent
Monthly Report; and

(xiv)       The identity of each
Collateral Debt Security which became a Defaulted Security, Credit Risk
Security or a Written Down Security since the date of determination of the last
Monthly Report.

(f)       Upon receipt of each
Monthly Report, each Notes Valuation Report and each Redemption Date Statement,
the Collateral Manager shall compare the information contained in its records
with respect to the Pledged Obligations and shall, within five Business

 205
 

 

Days after receipt of each such Monthly Report, such Notes Valuation
Report or such Redemption Date Statement, notify the Issuer and the Trustee
whether such information contained in the Monthly Report, the Notes Valuation
Report or the Redemption Date Statement, as the case may be, conforms to the
information maintained by the Collateral Manager with respect to the Pledged
Obligations, or detail any discrepancies. 
If any discrepancy exists, the Trustee, the Issuer and the Collateral
Manager shall attempt to resolve the discrepancy and shall provide notice to a
designated representative of the Controlling Class.  If such discrepancy cannot be promptly
resolved, the Trustee shall cause the firm of Independent certified public
accountants appointed by the Issuer pursuant to Section 10.14 hereof to
review such Monthly Report, Notes Valuation Report or Redemption Date Statement,
as the case may be, and the Collateral Manager’s records and the Trustee’s
records to determine the cause of such discrepancy.  If such review reveals an error in the
Monthly Report, Notes Valuation Report or Redemption Date Statement, as the
case may be, or the Trustee’s or the Collateral Manager’s records, the Monthly
Report, Notes Valuation Report or Redemption Date Statement, as the case may
be, or the Trustee’s or the Collateral Manager’s records, shall be revised
accordingly and, as so revised, shall be utilized in making all calculations
pursuant to this Indenture.  Each Rating
Agency (in each case only so long as any Class of Notes is rated), the Initial
Purchasers and the Collateral Manager shall be notified in writing of any such
revisions by the Trustee on behalf of the Issuer.

(g)      The Trustee shall prepare
the Notes Valuation Report and shall deliver or make available on its website
initially located at www.cdolink.com such Notes Valuation Report to the
Collateral Manager, each Hedge Counterparty, and upon request therefor, any
Holder of a Note shown on the Notes Register, any beneficial owner of a Note
who provides to the Trustee a certification in the form of Exhibit M
hereto, any Holder of a Preferred Share shown on the register maintained by the
Share Registrar, the firm of Independent certified public accountants appointed
pursuant to Section 10.14(a) hereof, each Rating Agency, the Depository
(with instructions to forward it to each of its participants who are holders of
any Notes) and, for so long as any Senior Notes are listed on the Irish Stock
Exchange, the Irish Paying Agent not later than the related Payment Date.  The Notes Valuation Report shall have
attached to it (with the exception of the first Notes Valuation Report) the most
recent Monthly Report.  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 (301) 815-6600.

The Notes Valuation
Report shall also contain the following statements:

“Instruction to
Participant:  Please send

this to the beneficial owners of the Senior Notes”

Reminder to Owners of each Class
of Senior Notes:

Each owner or beneficial
owner of Senior Notes must be either a U.S. Person who is a qualified
institutional buyer as defined in Rule 144A under the Securities Act of 1933
and a

 206
 

 

Qualified Purchaser as defined by the Investment
Company Act of 1940 or not a U.S. Person, and if a U.S. Person, can represent
as follows:

(i)           it is not a
broker-dealer which owns and invests on a discretionary basis less than
U.S.$25,000,000 in securities of unaffiliated issuers;

(ii)          it is not a
participant-directed employee plan such as a 401(k) plan;

(iii)         it is acting for its
own account or for the account of another who is a qualified institutional
buyer and a qualified purchaser that is not included in (i) or (ii) above;

(iv)        it is not formed for
the purpose of investing in the Notes;

(v)         it, and each account
for which it holds the Notes, shall hold at least the minimum denomination
therefor; and

(vi)        it will provide notice
of these transfer restrictions to any transferee from it.

(h)      Each Notes Valuation
Report (after approval by the Collateral Manager after giving effect to any
revisions thereto in accordance with Section 10.12(f)) shall constitute
instructions from the Collateral Manager, on behalf of the Issuer, to the
Trustee to transfer funds from the Collection Accounts to the Payment Account
pursuant to Section 10.2(e) and to withdraw on the related Payment Date
from the Payment Account and pay or transfer the amounts set forth in the Notes
Valuation Report, as applicable, in the manner specified, and in accordance
with the priorities established, in Section 11.1 hereof.

(i)       Not more than five
Business Days after receiving an Issuer Request requesting information
regarding a redemption of the Notes of a Class as of a proposed Redemption Date
set forth in such Issuer Request, the Trustee shall compute the following
information and provide such information in a statement (the “Redemption Date Statement”)
delivered to the Collateral Manager (which shall review such statement in the
manner provided for in Section 10.12(f)), the Preferred Shares Paying
Agent and each Hedge Counterparty:

(i)           the Aggregate
Outstanding Amount of the Notes of the Class or Classes to be redeemed as of
such Redemption Date;

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

(iii)         the Redemption
Price;

(iv)        the sum of all amounts
due and unpaid under Section 11.1(a) (other than amounts payable on the
Notes being redeemed or to the Noteholders thereof);

(v)         the amount due and
payable to each Hedge Counterparty pursuant to the applicable Hedge Agreement;
and

 207
 

 

(vi)        the amount in the
Accounts available for application to the redemption of such Notes.

(j)       In the event of a sale
by the Issuer of any Collateral Debt Security that is subject to a Liability
Hedge, the Issuer (at the direction Collateral Manager) shall provide written
notice to each Hedge Counterparty under such Liability Hedge at least 5
Business Days prior to such sale.

Section 10.13         Release of Pledged Collateral Debt
Securities; Release of Assets.

(a)      If no Event of Default
has occurred and is continuing and subject to Article 12 hereof, the
Issuer may, by Issuer Order delivered to the Trustee at least two (2) Business
Days prior to the settlement date for any sale of a Pledged Collateral Debt
Security certifying that (i) it has sold such Pledged Collateral Debt Security
pursuant to and in compliance with Article 12 or (ii) in the case of a
redemption pursuant to Section 9.1 or Section 9.2 the proceeds
from any such sale of Pledged Collateral Debt Securities are sufficient to
redeem the Notes pursuant to Section 9.1 or Section 9.2, direct
the Trustee to release such Pledged Collateral Debt Security and, upon receipt
of such Issuer Order, the Trustee shall deliver any such Pledged Collateral
Debt Security, if in physical form, duly endorsed to the broker or purchaser
designated in such Issuer Order or, if such Pledged Collateral Debt Security is
represented by a Security Entitlement, cause an appropriate transfer thereof to
be made, in each case against receipt of the sales price therefor as set forth
in such Issuer Order; provided, however, that the Trustee may
deliver any such Pledged Collateral Debt Security in physical form for
examination (prior to receipt of the sales proceeds) in accordance with street
delivery custom.  The Trustee shall (i)
deliver any agreements and other documents in its possession relating to such
Pledged Collateral Debt Security and (ii) if applicable, duly assign each such
agreement and other document, in each case, to the broker or purchaser
designated in such Issuer Order.

(b)      The Issuer may, by Issuer
Order, delivered to the Trustee at least three Business Days prior to the date
set for redemption or payment in full of a Pledged Collateral Debt Security,
certifying that such Pledged Collateral Debt Security is being redeemed or paid
in full, direct the Trustee, or at the Trustee’s instructions, the Custodial
Securities Intermediary, to deliver such Pledged Collateral Debt Security, if
in physical form, duly endorsed, or, if such Pledged Collateral Debt Security
is a Clearing Corporation Security, to cause it to be presented, to the
appropriate paying agent therefor on or before the date set for redemption or
payment, in each case against receipt of the applicable redemption price or
payment in full thereof.

(c)      If no Event of Default
has occurred and is continuing and subject to Article 12, the Issuer
may, by Issuer Order delivered to the Trustee at least two (2) Business Days
prior to the date set for an exchange, tender or sale, certifying that a
Collateral Debt Security is subject to an Offer and setting forth in reasonable
detail the procedure for response to such Offer, direct the Trustee or at the
Trustee’s instructions, the Custodial Securities Intermediary, to deliver such
security, if in physical form, duly endorsed, or, if such security is a
Clearing Corporation Security, to cause it to be delivered, in accordance with
such Issuer Order, in each case against receipt of payment therefor.

 208
 

 

(d)      The Trustee shall deposit
any proceeds received by it from the disposition of a Pledged Collateral Debt
Security in the Principal Collection Account unless simultaneously applied to
the purchase of Substitute Collateral Debt Securities, subject to the
Reinvestment Criteria, or Eligible Investments under and in accordance with the
requirements of Article 12 and this Article 10.  Neither the Trustee nor the Custodial
Securities Intermediary shall be responsible for any loss resulting from
delivery or transfer of any security prior to receipt of payment in accordance
herewith.

(e)      The Trustee shall, upon
receipt of an Issuer Order at such time as there are no Notes Outstanding and
all obligations of the Issuer hereunder have been satisfied, release the Assets
from the lien of this Indenture.

Section 10.14         Reports by Independent Accountants.

(a)      On or about the Closing
Date, the Issuer shall appoint a firm of Independent certified public
accountants of recognized national reputation for purposes of preparing and
delivering the reports or certificates of such accountants required by this
Indenture.  The Collateral Manager, on
behalf of the Issuer, shall have the right to remove such firm or any successor
firm.  Upon any resignation by or removal
of such firm, the Collateral Manager, on behalf of the Issuer, shall promptly
appoint, by Issuer Order delivered to the Trustee, each Hedge Counterparty and
each Rating Agency, a successor thereto that shall also be a firm of
Independent certified public accountants of recognized national reputation and
shall provide notice to a designated representative of the Controlling
Class.  If the Collateral Manager, on
behalf of the Issuer, shall fail to appoint a successor to a firm of
Independent certified public accountants which has resigned or been removed,
within thirty (30) days after such resignation or removal, the Issuer
shall promptly notify the Trustee of such failure in writing.  If the Collateral Manager, on behalf of the
Issuer, shall not have appointed a successor within ten (10) days thereafter, the
Trustee shall promptly appoint a successor firm of Independent certified public
accountants of recognized national reputation. 
The fees of such Independent certified public accountants and its
successor shall be payable by the Issuer or by the Trustee as provided in the
Priority of Payments.

(b)      Within sixty (60) days
after December 31 of each year (commencing with December 31, 2006), the Issuer
shall cause to be delivered to the Trustee, the Collateral Manager and each
Rating Agency an Accountants’ Report specifying the procedures applied and the
associated findings with respect to the Monthly Reports, the Notes Valuation
Reports and any Redemption Date Statements prepared in the year ending on such
date.  At least sixty (60) days prior to
the Payment Date in April 2007 (and, if at any time a successor firm of
Independent certified public accountants is appointed, to the Payment Date
following the date of such appointment), the Issuer shall deliver to the
Trustee an Accountant’s Report specifying in advance the procedures that such
firm will apply in making the aforementioned findings throughout the term of
its service as accountants to the Issuer. 
The Trustee shall promptly forward a copy of such Accountant’s Report to
the Collateral Manager and each Holder of Notes of the Controlling Class, at
the address shown on the Note Register. 
The Issuer shall not approve the institution of such procedures if a
Majority of the Aggregate Outstanding Amount of Notes of the Controlling Class,
by written notice to the Issuer and the Trustee within thirty (30) days after
the date of the related notice to the Trustee, object thereto.

 209
 

 

(c)      If any Hedge Counterparty
is required to post collateral pursuant to the related Hedge Agreement during
any Due Period, then on or prior to the Payment Date following such Due Period
and on or prior to each anniversary of such Payment Date the Issuer shall cause
a firm of Independent certified public accountants to review and verify that
the value of collateral posted is in accordance with the applicable provisions
of the related Hedge Agreement.

Section 10.15         Reports to Rating Agencies.

(a)      In addition to the
information and reports specifically required to be provided to each Rating
Agency pursuant to the terms of this Indenture, the Trustee shall provide each
Rating Agency and each Hedge Counterparty with all information or reports
delivered by the Trustee hereunder, and such additional information as each
Rating Agency may from time to time reasonably request and the Trustee
determines in its sole discretion may be obtained and provided without
unreasonable burden or expense.  The
Issuer shall promptly notify the Trustee and the Preferred Shares Paying Agent
if a Rating Agency’s rating of any Class of Notes has been, or it is known by
the Issuer that such rating will be, reduced, or qualified or withdrawn.  The Issuer, or the Collateral Manager on
behalf of the Issuer, also shall deliver to the Rating Agencies, within 10
Business Days after each Quarterly Measurement Date, (x) a completed
certificate substantially in the form of Exhibit F hereto, and (y) a completed
report substantially in the form of Exhibit G hereto.

(b)      The Issuer, or the
Collateral Manager on behalf of the Issuer, shall provide the Rating Agencies
with all information and reports delivered to the Trustee hereunder.

(c)      All additional reports to
be sent to the Rating Agencies pursuant to clause (a) above shall be reviewed
prior to such transmission by the Collateral Manager.

Section 10.16         [Reserved].

Section 10.17         Certain Procedures.

(a)      For so long as the Notes
may be transferred only in accordance with Rule 144A or another exemption from
registration under the Securities Act, the Issuer (or the Collateral Manager on
behalf of the Issuer) will ensure that any Bloomberg screen containing
information about the Rule 144A Global Notes includes the following (or
similar) language:

(i)           the “Note Box” on
the bottom of the “Security Display” page describing the Rule 144A Global Notes
will state: “Iss’d Under 144A/3c7”;

(ii)          the “Security
Display” page will have the flashing red indicator “See Other Available
Information”; and

(iii)         the indicator will
link to the “Additional Security Information” page, which will state that the
Notes “are being offered in reliance on the exemption from registration under
Rule 144A of the Securities Act to persons who are both (i) qualified
institutional buyers (as defined in Rule 144A under the Securities Act) and
(ii) qualified

 210
 

 

purchasers (as
defined under Section 3(c)(7) under the Investment Company Act of 1940).

(b)      For so long as the Rule
144A Global Notes are registered in the name of DTC or its nominee, the Issuer
(or the Collateral Manager on behalf of the Issuer) will instruct DTC to take
these or similar steps with respect to the Rule 144A Global Notes:

(i)           the DTC 20-character
security descriptor and 48-character additional descriptor will indicate with
marker “3c7” that sales are limited to (i) QIBs and (ii) Qualified Purchasers;

(ii)          where the DTC
deliver order ticket sent to purchasers by DTC after settlement is physical, it
will have the 20-character security descriptor printed on it.  Where the DTC deliver order ticket is
electronic, it will have a “3c7” indicator and a related user manual for
participants, which will contain a description of the relevant restriction; and

(iii)         DTC will send an “Important
Notice” outlining the 3(c)(7) restrictions applicable to the Rule 144A Global
Notes to all DTC participants in connection with the initial offering of Notes
by the issuers.

 211
 

 

ARTICLE
11

APPLICATION
OF MONIES

Section 11.1           Disbursements of Monies from
Payment Account.

(a)      Notwithstanding any other
provision in this Indenture, but subject to the other subsections of this Section
11.1 and Section 13.1 hereof, on each Payment Date, or Redemption
Date the Trustee shall disburse amounts transferred to the Payment Account from
the Interest Collection Account and the Principal Collection Account pursuant
to Section 10.2 hereof in accordance with the following priorities (the “Priority of Payments”):

(i)           Interest Proceeds.
On each Payment Date or Redemption Date, (except as otherwise provided in Section
11.1(c)) Interest Proceeds with respect to the related Due Period shall be
distributed in the following order of priority:

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

(2)           (a) first, to the
extent not previously reimbursed, to the Advancing Agent or the Trustee, in its
capacity as Backup Advancing Agent, the aggregate amount of any Nonrecoverable
Advances due and payable to such party, (b) second, to the extent not
previously reimbursed, to the Collateral Manager, the aggregate amount of any
Nonrecoverable Cure Advance due and payable to the Collateral Manager, (c)
third, to the Advancing Agent, the Advancing Agent Fee and any previously due
but unpaid Advancing Agent Fee (provided that the Advancing Agent has
not failed to make any Interest Advance required to be made in respect of such
Payment Date pursuant to the terms of this Indenture), (d) fourth, to the Advancing
Agent and the Trustee, in its capacity as Backup Advancing Agent, (i) to the
extent due and payable to such party, Reimbursement Interest and (ii)
reimbursement of any outstanding Interest Advances not (in the case of this
clause (ii)) to exceed the amount that would result in an Interest Shortfall
with respect to such Payment Date and (e) fifth, to the extent due and payable
to the Collateral Manager, reimbursement of any outstanding Cure Advance (but
only to the extent of the applicable proceeds in respect of the Collateral Debt
Security with respect to which such Cure Advance was made and not to exceed the
amount that would result in an Interest Shortfall with respect to such Payment
Date);

(3)           (a) first, to the
payment to the Trustee, in its capacity as Backup Advancing Agent, the Backup
Advancing Agent Fee (or if the Advancing Agent has failed to make any Interest
Advance required to be made by the Advancing Agent in respect of such
Distribution Date pursuant to the terms of this Indenture, the Advancing Agent
Fee otherwise payable to the Advancing Agent on such Distribution Date) and any
previously due but unpaid Backup Advancing Agent

 212
 

 

Fee, (b)
second, to the payment to the Trustee of the accrued and unpaid fees in respect
of its services equal to the greater of (i) 0.0066% per annum of the Aggregate
Collateral Balance and (ii) U.S. $25,000 per annum, (c) third, to the payment
of other accrued and unpaid Company Administrative Expenses of the Trustee, the
Paying Agent, the Preferred Shares Paying Agent and the Calculation Agent, (d)
fourth, to the payment of any other accrued and unpaid Company Administrative
Expenses, and (e) fifth, prior to the date on which amounts on deposit in the
Expense Account are transferred to the Payment Account (in connection with the
sale or disposition of substantially all of the Issuer’s assets) for
application as Interest Proceeds, for deposit in the Expense Account an amount
equal to an amount sufficient to cause the balance of all Eligible Investments
and cash in the Expense Account, immediately after such deposit, to equal U.S.$
50,000, the aggregate of all such amounts in clauses (c), (d) and (e) above
(including such amounts paid since the previous Payment Date from the Expense
Account) not to exceed 0.06% per annum of the Aggregate Collateral Balance as
of the beginning of the related Due Period;

(4)           to the payment of
the Senior Collateral Management Fee and any previously due but unpaid Senior
Collateral Management Fees;

(5)           pro rata on the basis of amounts payable
under each Hedge Agreement (if any), to the payment of any amounts (including,
without limitation, any Hedge Payment Amounts) scheduled to be paid to each
Hedge Counterparty, if any, pursuant to any Hedge Agreement, along with any
payments (however described) due and payable by the Issuer under any Hedge
Agreement in connection with a termination (in whole or in part) of any Hedge
Agreement (including any interest that may accrue thereon), other than by
reason of an Event of Default (as defined in the related Hedge Agreement) or
Termination Event (other than Illegality or Tax Event) (each as defined in the
related Hedge Agreement) in each case, with respect to which the Hedge
Counterparty is the Defaulting Party or the sole Affected Party (as defined in
the related Hedge Agreement);

(6)           to the payment of
the Class A-1 Interest Distribution Amount, plus, any Class A-1 Defaulted
Interest Amount;

(7)           to the payment of
the Class A-2 Interest Distribution Amount, plus, any Class A-2 Defaulted
Interest Amount;

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

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

(a)           in the event that the Class A-1 Notes
become due and payable (x) as a result of an acceleration following an Event of
Default, (y)

 213
 

 

pursuant to an Auction
Call Redemption, an Optional Redemption, a Clean-up Call or a Tax Redemption or
(z) upon the Stated Maturity of the Class A-1 Notes, to the payment in full of
principal of the Class A-1 Notes;

(b)           in the event that the Class A-2 Notes
become due and payable (x) as a result of an acceleration following an Event of
Default, (y) pursuant to an Auction Call Redemption, an Optional Redemption, a
Clean-up Call or a Tax Redemption or (z) upon Stated Maturity of the Class A-2
Notes, to the payment in full of principal of, first, the Class A-1 Notes and
second, the Class A-2 Notes;

(c)           in the event that the Class B Notes
become due and payable (x) as a result of an acceleration following an Event of
Default, (y) pursuant to an Auction Call Redemption, an Optional Redemption, a
Clean-up Call or a Tax Redemption or (z) upon Stated Maturity of the Class B
Notes, to the payment in full of principal of, first, the Class A-1 Notes,
second, the Class A-2 Notes and third, the Class B Notes; or

(d)           in the event of a Mandatory
Redemption of the Class A Notes and the Class B Notes, first, to the payment of
principal of the Class A-1 Notes, second, to the payment of principal of the
Class A-2 Notes and third, to the payment of principal of the Class B Notes, to
the extent necessary to cause each of the Class A/B Coverage Tests to be
satisfied (after giving effect to the payment of all amounts previously paid on
such Payment Date pursuant to this Section 11.1(a)(i) and this Section
11.1(a)(ii);

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

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

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

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

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

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

(16)         as long as any of the
Class C Notes, the Class D Notes or the Class E Notes are Outstanding, to the
payment of the following amounts:

(a)           in the event that the Class C Notes
become due and payable (x) as a result of an acceleration following an Event of
Default, (y) pursuant to an Auction Call Redemption, an Optional Redemption, a
Clean-up Call or a Tax Redemption or (z) upon Stated Maturity of the Class C
Notes, to the payment in

 214
 

 

full of principal of
first, the Class A-1 Notes, second, the Class A-2 Notes, third, the Class B
Notes and fourth, the Class C Notes;

(b)           in the event that the Class D Notes
become due and payable (x) as a result of an acceleration following an Event of
Default, (y) pursuant to an Auction Call Redemption, an Optional Redemption, a
Clean-up Call or a Tax Redemption or (z) upon Stated Maturity of the Class D
Notes, to the payment in full of principal of first, the Class A-1 Notes,
second, the Class A-2 Notes, third, the Class B Notes, fourth, the Class C
Notes and fifth, the Class D Notes;

(c)           in the event that the Class E Notes
become due and payable (x) as a result of an acceleration following an Event of
Default, (y) pursuant to an Auction Call Redemption, an Optional Redemption, a
Clean-up Call or a Tax Redemption or (z) upon Stated Maturity of the Class E
Notes, to the payment in full of principal of first, the Class A-1 Notes,
second, the Class A-2 Notes, third, the Class B Notes, fourth, the Class C
Notes, fifth, the Class D Notes and sixth, the Class E Notes; or

(d)           in the event of a Mandatory
Redemption of the Class C Notes, the Class D Notes and the Class E Notes,
first, to the payment of principal of the Class A-1 Notes, second, to the
payment of principal of the Class A-2 Notes, third, to the payment of principal
of the Class B Notes, fourth, to the payment of principal of the Class C Notes,
fifth, to the payment of principal of the Class D Notes and sixth, to the
payment of principal of the Class E Notes, to the extent necessary to cause
each of the Class C/D/E Coverage Tests to be satisfied (after giving effect to
the payment of all amounts previously paid on such Payment Date pursuant to
this Section 11.1(a)(i));

(17)         to the payment of the
Class F Interest Distribution Amount, plus, any Class F Defaulted Interest
Amount;

(18)         to the payment of the
Class F Capitalized Interest (if any);

(19)         to the payment of the
Class G Interest Distribution Amount, plus, any Class G Defaulted Interest
Amount;

(20)         to the payment of the
Class G Capitalized Interest (if any);

(21)         to the payment of the
Class H Interest Distribution Amount, plus, any Class H Defaulted Interest
Amount;

(22)         to the payment of the
Class H Capitalized Interest (if any);

(23)         as long as any of the
Class F Notes, Class G Notes or Class H Notes are Outstanding, to the payment
of the following amounts:

(a)           in the event that the Class F Notes
become due and payable (x) as a result of an acceleration following an Event of
Default, (y) pursuant to an

 215
 

 

Auction Call Redemption,
an Optional Redemption, a Clean-up Call or a Tax Redemption or (z) upon Stated
Maturity of the Class F Notes, to the payment in full of principal of first,
the Class A-1 Notes, second, the Class A-2 Notes, third, the Class B Notes,
fourth, the Class C Notes, fifth, the Class D Notes, sixth, the Class E Notes
and seventh, the Class F Notes;

(b)           in the event that the Class G Notes
become due and payable (x) as a result of an acceleration following an Event of
Default, (y) pursuant to an Auction Call Redemption, an Optional Redemption, a
Clean-up Call or a Tax Redemption or (z) upon Stated Maturity of the Class G
Notes, to the payment in full of principal of first, the Class A-1 Notes, second,
the Class A-2 Notes, third, the Class B Notes, fourth, the Class C Notes,
fifth, the Class D Notes, sixth, the Class E Notes, seventh, the Class F Notes
and eighth, the Class G Notes;

(c)           in the event that the Class H Notes
become due and payable (x) as a result of an acceleration following an Event of
Default, (y) pursuant to an Auction Call Redemption, an Optional Redemption, a
Clean-up Call or a Tax Redemption or (z) upon Stated Maturity of the Class H
Notes, to the payment in full of principal of first, the Class A-1 Notes,
second, the Class A-2 Notes, third, the Class B Notes, fourth, the Class C
Notes, fifth, the Class D Notes, sixth, the Class E Notes, seventh, the Class F
Notes, eighth, the Class G Notes and ninth, the Class H Notes; or

(d)           in the event of a Mandatory
Redemption of the Class F Notes, the Class G Notes and the Class H Notes,
first, to the payment of principal of the Class A-1 Notes, second, to the
payment of principal of the Class A-2 Notes, third, to the payment of principal
of the Class B Notes, fourth, to the payment of principal of the Class C Notes,
fifth, to the payment of principal of the Class D Notes, sixth, to the payment
of principal of the Class E Notes, seventh, to the payment of principal of the
Class F Notes, eighth, to the payment of principal of the Class G Notes and
ninth, to the payment of principal of the Class H Notes, to the extent
necessary to cause the Class F/G/H Coverage Tests to be satisfied (after giving
effect to the payment of all amounts previously paid on such Payment Date
pursuant to this Section 11.1(a)(i));

(24)         to the payment of the
Class J Interest Distribution Amount, plus, any Class J Defaulted Interest
Amount;

(25)         to the payment of the
Class J Capitalized Interest (if any);

(26)         as long as any of the
Class J Notes are Outstanding, in the event that the Class J Notes become due
and payable (x) as a result of an acceleration following an Event of Default,
(y) pursuant to an Auction Call Redemption, an Optional Redemption, a Clean-up
Call or a Tax Redemption or (z) upon Stated Maturity of the Class J Notes, to
the payment in full of principal of first, the Class A-1 Notes, second, the
Class A-2 Notes, third, the Class B Notes, fourth, the Class C Notes, fifth,
the Class D Notes, sixth, the Class E Notes, seventh, the

 216
 

 

Class F Notes,
eighth, the Class G Notes, ninth, the Class H Notes and tenth, the Class J
Notes;

(27)         to the payment of the
Class K Interest Distribution Amount, plus, any Class K Defaulted Interest
Amount;

(28)         to the payment of the
Class K Capitalized Interest (if any);

(29)         as long as any of the
Class K Notes are Outstanding, in the event that the Class K Notes become due
and payable (x) as a result of an acceleration following an Event of Default,
(y) pursuant to an Auction Call Redemption, an Optional Redemption, a Clean-up
Call or a Tax Redemption or (z) upon Stated Maturity of the Class K Notes, to
the payment in full of principal of first, the Class A-1 Notes, second, the
Class A-2 Notes, third, the Class B Notes, fourth, the Class C Notes, fifth,
the Class D Notes, sixth, the Class E Notes, seventh, the Class F Notes,
eighth, the Class G Notes, ninth, the Class H Notes, tenth, the Class J Notes
and eleventh, the Class K Notes;

(30)         on the first Payment
Date following the occurrence of a Rating Confirmation Failure, to the extent
that application of any unused proceeds remaining on deposit on the Unused
Proceeds Account is insufficient to cause the ratings assigned to each Class of
Notes to be reinstated or any affected Class to be paid in full, to the payment
of principal of each Class of Notes, first, to the Class A-1 Notes, second, to
the Class A-2 Notes, third, to the Class B Notes, fourth, to the Class C Notes,
fifth, to the Class D Notes, sixth, to the Class E Notes, seventh, to the Class
F Notes, eighth, to the Class G Notes, ninth, to the Class H Notes, tenth, to
the Class J Notes and eleventh, to the Class K Notes, in each case until the
ratings assigned on the Closing Date to each Class of Notes have been
reinstated or such Class has been paid in full;

(31)         to the payment of any
Company Administrative Expenses not paid pursuant to paragraph (3) above in the
order specified therein;

(32)         to the payment of the
Subordinate Collateral Management Fee and any accrued and unpaid Subordinate
Collateral Management Fee;

(33)         pro rata on the basis of amounts payable
under each Hedge Agreement (if any), to the payment of any amounts (including,
without limitation, any Hedge Payment Amounts) (including any interest accrued
thereon), if any, payable by the Issuer to the Hedge Counterparty under the
related Hedge Agreement following an Event of Default or Termination Event
(other than Illegality or Tax Event) (each as defined in the related Hedge
Agreement) with respect to which the Hedge Counterparty is the Defaulting Party
or the sole Affected Party (as defined in the related Hedge Agreement); and

(34)         if a Liquidity Test
Failure or a Schedule P Failure has occurred and is continuing, to the Suspense
Account in an amount (x) necessary to cause such Liquidity Test Failure to be
cured and/or (y) up to the Schedule P Failure

 217
 

 

Amount, and
any remaining Interest Proceeds to be released from the lien of this Indenture
and paid (upon standing order of the Issuer) to the Preferred Shares Paying
Agent for deposit into the Preferred Shares Distribution Account for
distribution to the holders of the Preferred Shares as payments of the
Preferred Shares Distribution Amount subject to and in accordance with the
provisions of the Preferred Shares Paying Agency Agreement.

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

(1)           to the payment of
the amounts referred to in paragraphs (1) through (8) of Section 11.1(a)(i)
in the same order of priority specified therein, but only to the extent not
paid in full thereunder;

(2)           to the extent that
the amounts paid pursuant to paragraph (9) of Section 11.1(a)(i) are
insufficient to pay such amounts in full thereunder and any Class A Notes or
Class B Notes are Outstanding, to the payment of the following amounts:

(a)           in the event that the Class A-1 Notes
are Outstanding and become due and payable (x) as a result of an acceleration
following an Event of Default, (y) pursuant to an Auction Call Redemption, an
Optional Redemption, a Clean-up Call or a Tax Redemption or (z) upon the Stated
Maturity of the Class A-1 Notes, to the payment in full of principal of the
Class A-1 Notes;

(b)           in the event that the Class A-2 Notes
are Outstanding and become due and payable (x) as a result of an acceleration
following an Event of Default, (y) pursuant to an Auction Call Redemption, an
Optional Redemption, a Clean-up Call or a Tax Redemption or (z) upon the Stated
Maturity of the Class A-2 Notes, to the payment in full of principal of, first,
the Class A-1 Notes and second, the Class A-2 Notes;

(c)           in the event that the Class B Notes
become due and payable (x) as a result of an acceleration following an Event of
Default, (y) pursuant to an Auction Call Redemption, an Optional Redemption, a
Clean-up Call or a Tax Redemption or (z) upon Stated Maturity of the Class B
Notes, to the payment in full of principal of, first, the Class A-1 Notes,
second, the Class A-2 Notes and third, the Class B Notes; or

(d)           in the event of a Mandatory
Redemption of the Class A Notes and the Class B Notes, first, to the payment of
principal of the Class A-1 Notes, second, to the payment of principal of the
Class A-2 Notes and third, to the payment of principal of the Class B Notes, to
the extent necessary to cause each of the Class A/B Coverage Tests to be
satisfied (after giving effect to the payment of all amounts previously paid on
such Payment Date pursuant to Section 11.1(a)(i) and Section
11.1(a)(ii));

 218
 

 

(3)           (a)           if the Class A Notes and the Class B
Notes are no longer Outstanding, to the payment of first, the amounts referred
to in paragraph (10) of Section 11.1(a)(i) and second, the amounts
referred to in paragraph (11) of Section 11.1(a)(i), but only to the
extent not paid in full thereunder;

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

(c)           if the Class A Notes, the Class B
Notes, the Class C Notes and the Class D Notes are no longer outstanding, to
the payment of first, the amounts referred to in paragraph (14) of Section
11.1(a)(i) and second, the amounts referred to in paragraph (15) of Section
11.1(a)(i), but only to the extent not paid in full thereunder;

(4)           to the extent that
the amounts paid pursuant to paragraph (16) of Section 11.1(a)(i) are
insufficient to pay such amounts in full thereunder and any Class C Notes,
Class D Notes or Class E Notes are Outstanding, to the payment of the following
amounts:

(a)           in the event that the Class C Notes
become due and payable (x) as a result of an acceleration following an Event of
Default, (y) pursuant to an Auction Call Redemption, an Optional Redemption, a
Clean-up Call or a Tax Redemption or (z) upon Stated Maturity of the Class C
Notes, to the payment in full of principal of first, the Class A-1 Notes,
second, the Class A-2 Notes, third, the Class B Notes and fourth, the Class C
Notes;

(b)           in the event that the Class D Notes
become due and payable (x) as a result of an acceleration following an Event of
Default, (y) pursuant to an Auction Call Redemption, an Optional Redemption, a
Clean-up Call or a Tax Redemption or (z) upon Stated Maturity of the Class D
Notes, to the payment in full of principal of first, the Class A-1 Notes,
second, the Class A-2 Notes, third, the Class B Notes, fourth, the Class C
Notes and fifth, the Class D Notes;

(c)           in the event that the Class E Notes
become due and payable (x) as a result of an acceleration following an Event of
Default, (y) pursuant to an Auction Call Redemption, an Optional Redemption, a
Clean-up Call or a Tax Redemption or (z) upon Stated Maturity of the Class E
Notes, to the payment in full of principal of first, the Class A-1 Notes,
second, the Class A-2 Notes, third, the Class B Notes, fourth, the Class C
Notes, fifth, the Class D Notes and sixth, the Class E Notes; or

(d)           in the event of a Mandatory
Redemption of the Class C Notes, the Class D Notes and the Class E Notes,
first, to the payment of principal of the Class A-1 Notes, second, to the
payment of principal of the Class A-2

 219
 

 

Notes, third, to
the payment of principal of the Class B Notes, fourth, to the payment of
principal of the Class C Notes, fifth, to the payment of principal of the Class
D Notes and sixth, to the payment of principal of the Class E Notes, to the
extent necessary to cause the Class C/D/E Coverage Tests to be satisfied (after
giving effect to the payment of all amounts previously paid on such Payment
Date pursuant to Section 11.1(a)(i) and Section 11.1(a)(ii));

(5)           (a)           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 the payment of first, the amounts referred to in paragraph (17)
of Section 11.1(a)(i) and second, the amounts referred to in paragraph
(18) of Section 11.1(a)(i), but only to the extent not paid in full
thereunder;

(b)           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 the payment of first, the amounts referred
to in paragraph (19) of Section 11.1(a)(i) and second, the amounts
referred to in paragraph (20) of Section 11.1(a)(i), but only to the
extent not paid in full thereunder;

(c)           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 the payment of first,
the amounts referred to in paragraph (21) of Section 11.1(a)(i) and
second, the amounts referred to in paragraph (22) of Section 11.1(a)(i),
but only to the extent not paid in full thereunder;

(6)           to the extent that
the amounts paid pursuant to paragraph (23) of Section 11.1(a)(i) are
insufficient to pay such amounts in full thereunder and any Class F Notes,
Class G Notes or Class H Notes are Outstanding, to the payment of the following
amounts:

(a)           in the event that the Class F Notes
become due and payable (x) as a result of an acceleration following an Event of
Default, (y) pursuant to an Auction Call Redemption, an Optional Redemption, a
Clean-up Call or a Tax Redemption or (z) upon Stated Maturity of the Class F
Notes, to the payment in full of principal of first, the Class A-1 Notes,
second, the Class A-2 Notes, third, the Class B Notes, fourth, the Class C
Notes, fifth, the Class D Notes, sixth, the Class E Notes and seventh, the
Class F Notes;

(b)           in the event that the Class G Notes
become due and payable (x) as a result of an acceleration following an Event of
Default, (y) pursuant to an Auction Call Redemption, an Optional Redemption, a
Clean-up Call or a Tax Redemption or (z) upon Stated Maturity of the Class G
Notes, to the payment in full of principal of first, the Class A-1 Notes,
second, the Class A-2 Notes, third, the Class B Notes, fourth, the Class C
Notes, fifth, the Class D Notes, sixth, the Class E Notes, seventh, the Class F
Notes and eighth, the Class G Notes;

 220
 

 

(c)           in the event that the Class H Notes
become due and payable (x) as a result of an acceleration following an Event of
Default, (y) pursuant to an Auction Call Redemption, an Optional Redemption, a
Clean-up Call or a Tax Redemption or (z) upon Stated Maturity of the Class H
Notes, to the payment in full of principal of first, the Class A-1 Notes,
second, the Class A-2 Notes, third, the Class B Notes, fourth, the Class C
Notes, fifth, the Class D Notes, sixth, the Class E Notes, seventh, the Class F
Notes, eighth, the Class G Notes and ninth, the Class H Notes; or

(d)           in the event of a Mandatory
Redemption of the Class F Notes, the Class G Notes and the Class H Notes,
first, to the payment of principal of the Class A-1 Notes, second, to the
payment of principal of the Class A-2 Notes, third, to the payment of principal
of the Class B Notes, fourth, to the payment of principal of the Class C Notes,
fifth, to the payment of principal of the Class D Notes, sixth, to the payment
of principal of the Class E Notes, seventh, to the payment of principal of the
Class F Notes, eighth, to the payment of principal of the Class G Notes and
ninth, to the payment of principal of the Class H Notes, to the extent
necessary to cause the Class F/G/H Coverage Tests to be satisfied (after giving
effect to the payment of all amounts previously paid on such Payment Date
pursuant to Section 11.1(a)(i) and Section 11.1(a)(ii);

(7)           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 Class H Notes are no longer
Outstanding, to the payment of first, the amounts referred to in paragraph (24)
of Section 11.1(a)(i), and second, the amounts referred to in paragraph
(25) of Section 11.1(a)(i), but only to the extent not paid in full
thereunder;

(8)           to the extent that
the amounts paid pursuant to paragraph (26) of Section 11.1(a)(i) are
insufficient to pay such amounts in full thereunder and any Class J Notes are
Outstanding, in the event that the Class J Notes become due and payable (x) as
a result of an acceleration following an Event of Default, (y) pursuant to an
Auction Call Redemption, an Optional Redemption, a Clean-up Call or a Tax
Redemption or (z) upon Stated Maturity of the Class J Notes, to the payment in
full of principal of first, the Class A-1 Notes, second, the Class A-2 Notes,
third, the Class B Notes, fourth, the Class C Notes, fifth, the Class D Notes,
sixth, the Class E Notes, seventh, the Class F Notes, eighth, the Class G
Notes, ninth, the Class H Notes and tenth, the Class J Notes;

(9)           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 the payment of first, the amounts referred
to in paragraph (27) of Section 11.1(a)(ii), and second, the amounts
referred to in paragraph (28) of Section 11.1(a)(i), but only to the extent
not paid in full thereunder;

 221
 

 

(10)         to the extent that
the amounts paid pursuant to paragraph (29) of Section 11.1(a)(i) are
insufficient to pay such amounts in full thereunder and any Class K Notes are
Outstanding, in the event that the Class K Notes become due and payable (x) as
a result of an acceleration following an Event of Default, (y) pursuant to an
Auction Call Redemption, an Optional Redemption, a Clean-up Call or a Tax
Redemption or (z) upon Stated Maturity of the Class K Notes, to the payment in
full of principal of first, the Class A-1 Notes, second, the Class A-2 Notes,
third, the Class B Notes, fourth, the Class C Notes, fifth, the Class D Notes,
sixth, the Class E Notes, seventh, the Class F Notes, eighth, the Class G
Notes, ninth, the Class H Notes, tenth, the Class J Notes and eleventh, the
Class K Notes;

(11)         to the extent that
the amounts paid pursuant to paragraph (30) of Section 11.1(a)(i) are
insufficient to pay such amounts in full thereunder and any Notes are
Outstanding, on the first Payment Date following the occurrence of a Rating
Confirmation Failure, to the payment of principal of each Class of Notes,
first, to the Class A-1 Notes, second, to the Class A-2 Notes, third, to the
Class B Notes, fourth, to the Class C Notes, fifth, the Class D Notes, sixth,
the Class E Notes, seventh, the Class F Notes, eighth, the Class G Notes,
ninth, the Class H Notes, tenth, the Class J Notes and eleventh, the Class K
Notes, in each case until the ratings assigned on the Closing Date to each Class
of Notes have been reinstated or such Class has been paid in full;

(12)         prior to the last day
of the Reinvestment Period, to the investment in Eligible Investments and
reinvestment in Substitute Collateral Debt Securities subject to the
Reinvestment Criteria or, if determined by the Collateral Manager, to pay any
Special Amortization Amount, to amortize the Class A-1 Notes, the Class A-2
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 as follows: (x) if each of the S&P Special
Amortization Pro Rata Condition and the Moody’s Special Amortization Pro Rata
Condition is satisfied with respect to such Payment Date and each Coverage Test
was satisfied as of the related Determination Date, on a pro rata basis without regard to any
Capitalized Interest (based on the Aggregate Outstanding Amount of each Class)
among all Classes of Notes, or (y) if either the S&P Special Amortization
Pro Rata Condition or the Moody’s Special Amortization Pro Rata Condition is
not satisfied with respect to such Payment Date or any of the Coverage Tests
were not satisfied as of the related Determination Date, sequentially among all
Classes of Notes; provided, however, that amounts representing
recoveries in respect of Defaulted Securities will be distributed sequentially
in any event;

(13)         after the
Reinvestment Period (x) on each Payment Date that is not also a Redemption Date
or the Stated Maturity of the Notes and (y) in the absence of an acceleration
following an Event of Default, to the payment of principal of first, the Class
A-1 Notes, until the Class A-1 Notes have been paid in full, second, the Class
A-2 Notes, until the Class A-2 Notes have been paid in full,

 222
 

 

third, the
Class B Notes, until the Class B Notes have been paid in full, fourth, the
Class C Notes, until the Class C Notes have been paid in full, fifth, the Class
D Notes, until the Class D Notes have been paid in full, sixth, the Class E Notes,
until the Class E Notes have been paid in full, seventh, the Class F Notes,
until the Class F Notes have been paid in full, eighth, the Class G Notes,
until the Class G Notes have been paid in full, ninth, the Class H Notes, until
the Class H Notes have been paid in full, tenth, the Class J Notes, until the
Class J Notes have been paid in full and eleventh, the Class K Notes, until the
Class K Notes have been paid in full;

(14)         to the payment of
amounts referred to in paragraph (31) of Section 11.1(a)(i) to the
extent not paid thereunder;

(15)         to the payment of
amounts referred to in paragraph (32) of Section 11.1(a)(i) to the
extent not paid thereunder;

(16)         to the payment of
amounts referred to in paragraph (33) of Section 11.1(a)(i) to the
extent not paid thereunder; and

(17)         any remaining
Principal Proceeds to be released from the lien of this Indenture and paid
(upon standing order of the Issuer) to the Preferred Shares Paying Agent for
deposit into the Preferred Shares Distribution Account for distribution to the
holders of the Preferred Shares as payments of the Preferred Shares
Distribution Amount subject to and in accordance with the provisions of the
Preferred Shares Paying Agency Agreement.

(b)      On or before the Business
Day prior to each Payment Date, the Issuer shall, pursuant to Section
10.2(e), remit or cause to be remitted to the Trustee for deposit in the
Payment Account an amount of Cash sufficient to pay the amounts described in Section
11.1(a) required to be paid on such Payment Date.

(c)      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 Trustee pursuant to Section
10.12(e) hereof, the Trustee shall make the disbursements called for in the
order and according to the priority set forth under Section 11.1(a)
above, subject to Section 13.1 hereof, to the extent funds are available
therefor.

(d)      Except as otherwise
expressly provided in this Section 11.1, if on any Payment Date the
amount available in the Payment Account from amounts received in the related
Due Period are insufficient to make the full amount of the disbursements
required by any lettered subclause of Section 11.1(a)(i) or Section
11.1(a)(ii), the Trustee shall make the disbursements called for by such
subclause ratably in accordance with the respective amounts of such
disbursements then due and payable to the extent funds are available therefor,
unless such subclause provides otherwise.

(e)      In connection with the
application of funds to pay Company Administrative Expenses of the Issuer, in
accordance with clauses (3) and (4) of clause (i) of

 223
 

 

Section 11.1(a) and sub-clause (1) of clause
(ii) of Section 11.1(a), the Trustee shall remit such funds, to the
extent available, to the Issuer (or as the Issuer may otherwise direct), as
directed by the Issuer to the Trustee or otherwise set forth in the written
instructions delivered to the Trustee by the Issuer (net of amounts payable to
the Trustee) no later than the Business Day prior to the applicable Payment
Date.  All such payments shall be made
pursuant to the Priority of Payments.

(f)       In connection with the
payment to each Hedge Counterparty pursuant to each Hedge Agreement of any
amount scheduled to be paid from time to time between Payment Dates from
amounts received with respect to the Collateral Debt Securities, such amounts
shall be distributed to each Hedge Counterparty pursuant to the related Hedge
Agreement.

(g)      In connection with any
required payment by the Issuer to Green Loan pursuant to the Asset Servicing
Agreement of any amount scheduled to be paid from time to time between Payment
Dates from amounts received with respect to the Collateral Debt Securities,
such amounts shall be distributed to Green Loan pursuant to the Asset Servicing
Agreement.

Section 11.2           Trust Accounts.

All Monies held by, or
deposited with the Trustee in the Collection Accounts, the Payment Account, the
Expense Account, the Unused Proceeds Account or the Delayed Funding Obligations
Account pursuant to the provisions of this Indenture, and not invested in
Eligible Investments as herein provided, shall be deposited in one or more
trust accounts, maintained at the Corporate Trust Office or at a financial
institution whose long-term rating is at least equal to, “A2” by Moody’s and “A-”
by S&P to be held in trust for the benefit of the Noteholders.  To the extent Monies deposited in such trust
account exceed amounts insured by the Bank Insurance Fund or Savings
Association Insurance Fund administered by the Federal Deposit Insurance
Corporation, or any agencies succeeding to the insurance functions thereof, and
are not fully collateralized by direct obligations of the United States of America,
such excess shall be invested in Eligible Investments as directed by Issuer
Order.

 224
 

 

ARTICLE
12

SALE OF
COLLATERAL DEBT SECURITIES

Section 12.1           Sales of Collateral Debt
Securities.

(a)      Except as otherwise
expressly permitted or required by this Indenture, the Issuer shall not sell or
otherwise dispose of any Collateral Debt Security; provided that subject
to satisfaction of any applicable conditions in Section 10.13, so long
as (A) no Event of Default has occurred and is continuing and (B) on or prior
to the trade date for such sale the Collateral Manager has certified to the
Trustee that each of the conditions applicable to such sale set forth below has
been satisfied, the Collateral Manager on behalf of the Issuer acting pursuant
to the Collateral Management Agreement may direct the Trustee in writing to
sell, and the Trustee shall sell in the manner directed by the Collateral
Manager in writing (which writing shall specify whether such security is a
Defaulted Security, Credit Risk Security or Spread Appreciated Security, if
applicable, or whether such security is otherwise permitted to be sold pursuant
to this Section 12.1(a)):

(i)           any Defaulted
Security at any time;

(ii)          a Credit Risk
Security or Spread Appreciated Security, (A) during the Reinvestment Period, if
the Collateral Manager has certified to the Trustee that it shall use
commercially reasonable efforts to purchase one or more Substitute Collateral
Debt Securities having an Aggregate Principal Balance no less than the Sale
Proceeds (excluding accrued interest) from such sale, and after giving effect
to such sale and to the purchase of Substitute Collateral Debt Securities with
the Sale Proceeds thereof, in the reasonable business judgment of the
Collateral Manager (which shall not be called into question solely as a result
of subsequent events), the Reinvestment Criteria shall be met; provided
that, with respect  to the reinvestment
of Sale Proceeds received in respect of Spread Appreciated Securities, the
Collateral Manager will use commercially reasonable efforts to reinvest such
Sale Proceeds in one or more Substitute Collateral Debt Securities having an
aggregate Principal Balance of not less than 100% of the Principal Balance of
each Collateral Debt Security being sold, and (B) after the Reinvestment
Period, at any time;

(iii)         if a Collateral Debt
Security that is a Defaulted Security is not sold by the Issuer (at the
direction of the Collateral Manager) within three (3) years of such Collateral
Debt Security becoming a Defaulted Security, the Collateral Manager, on behalf
of the Issuer, shall use its commercially reasonable efforts to sell such
Collateral Debt Security as soon as commercially practicable thereafter; and

(iv)        without limiting the
foregoing, any Collateral Debt Security that is not a Defaulted Security, a
Credit Risk Security or a Spread Appreciated Security may be sold during the
Reinvestment Period if (A) the Aggregate Principal Balance of Collateral Debt
Securities sold pursuant to this paragraph for a given calendar year does not
exceed 10%

 225

 

of the
Aggregate Collateral Balance at the beginning of that year, (B) the Collateral
Manager believes in good faith that proceeds from the sale of such Collateral
Debt Security can be reinvested, within five (5) Business Days after the trade
date on which such Collateral Debt Security is sold 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,
(C) 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 (D) such Collateral Manager has not been removed or
voted to be removed, for “cause” as described in Section 12 of the Collateral
Management Agreement.

(b)      Notwithstanding the
foregoing, the Collateral Manager (at its option and at any time) shall be
permitted to effect a sale of a Credit Risk Security or a Defaulted Security
hereunder by purchasing (or causing its Affiliate to purchase) such Defaulted
Security or Credit Risk Security from the Issuer for a cash purchase price that
shall be equal to the sum of (i) the Aggregate Principal Balance thereof plus
(ii) all accrued and unpaid interest (or, in the case of a Preferred Equity
Security, all accrued and unpaid dividends or other distributions not
attributable to the return of capital by its governing documents) thereon and
all other amounts due thereunder. 
Notwithstanding anything to the contrary set forth herein, no Advisory
Committee consent shall be required in connection with such cash purchase (the “Credit
Risk/Defaulted Security Cash Purchase”).

In addition and
notwithstanding anything to the contrary set forth herein (and provided
that no Event of Default has occurred and is continuing), the Collateral
Manager (at its option but only upon disclosure to, and with the prior consent
of, the Advisory Committee) shall be permitted to effect a sale of a Defaulted
Security or a Credit Risk Security hereunder by directing the Issuer to
exchange such Defaulted Security or Credit Risk Security for (i) a Substitute
Collateral Debt Security (that is not a Defaulted Security or a Credit Risk
Security) owned by an Affiliate of the Collateral Manager (such Substitute
Collateral Debt Security, the “Exchange Security”) or (ii) a combination
of an Exchange Security and cash, provided that:

(i)           (A) the sum of (1)
the Principal Balance of such Exchange Security plus (2) all accrued and unpaid
interest (or, in the case of a Preferred Equity Security, all accrued and
unpaid dividends or other distributions not attributable to the return of
capital by its governing documents) thereon plus (3) the cash amount (if any)
to be paid to the Issuer in respect of such exchange by such Affiliate of the
Collateral Manager, shall be equal to or greater than (B) the sum of (1) the
Principal Balance of such Defaulted Security or Credit Risk Security sought to
be substituted plus (2) all accrued and unpaid interest (or, in the case of a
Preferred Equity Security, all accrued and unpaid dividends or other
distributions not attributable to the return of capital by its governing
documents) thereon;

(ii)          the Eligibility
Criteria and the Reinvestment Criteria shall be satisfied immediately after
such exchange; and

 226
 

 

(iii)         the Aggregate
Principal Balance of the Defaulted Securities and Credit Risk Securities so
exchanged shall not exceed 10% of the Aggregate Collateral Balance as of the
Closing Date (such limitation, the “10% Limit”).

(c)      Notwithstanding anything contained
herein to the contrary, the Collateral Manager, on behalf of the Issuer, shall
(at any time) be permitted to effect a sale of any Origination Agreement
Security hereunder by selling (or causing the Trustee to sell) such Origination
Agreement Security to SLG (an “Origination Agreement Security Sale”) for
a purchase price and upon such terms as determined in accordance with the
Origination Agreement.  Notwithstanding
anything to the contrary set forth herein, no Advisory Committee consent shall
be required in connection with any such sales.

(d)      After the Issuer has
notified the Trustee of an Optional Redemption, a Clean-Up Call or a Tax
Redemption in accordance with Section 9.1 or an Auction Call Redemption
in accordance with Section 9.2, the Collateral Manager on behalf of the
Issuer acting pursuant to the Collateral Management Agreement may at any time
direct the Trustee in writing to sell, and the Trustee shall sell in the manner
directed by the Collateral Manager in writing, any Collateral Debt Security
without regard to the foregoing limitations in Section 12.1(a); provided
that:

(i)           the Sale Proceeds
therefrom must be used to pay certain expenses and redeem all of the Notes in
whole but not in part pursuant to Sections 9.1 and Section 9.2,
and upon any such sale the Trustee shall release such Collateral Debt Security
pursuant to Section 10.13;

(ii)          the Issuer may not
direct the Trustee to sell (and the Trustee shall not be required to release) a
Collateral Debt Security pursuant to this Section 12.1(d) unless:

(1)           the Collateral
Manager certifies to the Trustee that (x) in the Collateral Manager’s judgment
based on calculations included in the certification (which shall include the
sales prices of each of the Collateral Debt Securities), the Sale Proceeds from
the sale of one or more of the Collateral Debt Securities and all Cash and
proceeds from Eligible Investments will be at least equal to the Total
Redemption Price, and (y) an Independent bond pricing service (which shall be
one or more broker-dealers selected by the Collateral Manager which are rated
at least “P-1” by Moody’s and at least “A-1+” by Standard & Poor’s and
which make a market in the applicable Collateral Debt Securities) has confirmed
(which confirmation may be in the form of a firm bid) the sales prices
contained in the certification in clause (x) above (and attaching a copy of
such confirmation); and

(2)           the Independent
accountants appointed by the Issuer pursuant to Section 10.14
shall confirm in writing the calculations made in clause (1)(x) above.

(iii)         in connection with
an Optional Redemption, an Auction Call Redemption, a Clean-up Call or a Tax
Redemption, all the Collateral Debt Securities to be sold

 227
 

 

pursuant to
this Section 12.1(d) must be sold in accordance with the requirements
set forth in Section 9.1(e) and Section 9.2, as applicable.

(e)      In the event that any
Collateral Debt Security becomes the subject of a conversion, exchange,
redemption or offer, whether voluntary or involuntary, the Issuer (or the
Collateral Manager acting on behalf of the Issuer) shall take no action to
acquire the asset or instrument into which such Collateral Debt Security is
convertible or exchangeable unless such asset or instrument would qualify as a
Substitute Collateral Debt Security.  In the
event of an involuntary exchange or conversion of a Collateral Debt Security,
if the resulting asset or instrument would not qualify as a Substitute
Collateral Debt Security, the Issuer (or the Collateral Manager acting on
behalf of the Issuer) shall use its best efforts to sell such Collateral Debt
Security prior to conversion or exchange and, in any event, shall refuse to
accept, and shall not acquire or hold, the asset or instrument offered in
exchange.

(f)       In the event that any
Notes remain Outstanding as of the Payment Date occurring six months prior to
the Stated Maturity of the Notes, the Collateral Manager will be required to
determine whether proceeds expected to be received on the Assets prior to the
Stated Maturity of the Notes will be sufficient to pay in full the principal
amount of (and accrued interest on) the Notes on the Stated Maturity.  If the Collateral Manager determines, in its
sole discretion, that such proceeds will not be sufficient to pay the
outstanding principal amount of and accrued interest on the Notes (a “Note Liquidation Event”)
on the Stated Maturity of the Notes, the Issuer will, at the direction of the
Collateral Manager, be obligated to liquidate the portion of Collateral Debt
Securities sufficient to pay the remaining principal amount of and interest on
the Notes on or before the Stated Maturity. 
The Collateral Debt Securities to be liquidated by the Issuer will be
selected by the Collateral Manager.

Section 12.2           Reinvestment Criteria and Trading
Restrictions.

(a)      Except as provided in Section
12.3(c), during the Reinvestment Period, Unscheduled Principal Payments,
Sale Proceeds and other Principal Proceeds will be reinvested in Substitute
Collateral Debt Securities (which shall be, and hereby are, Granted to the
Trustee pursuant to the Granting Clause of this Agreement) only if the
Collateral Manager has not been removed, or voted to be removed as a result of
the occurrence of an act by the Collateral Manager or its affiliates that
constitutes fraud or criminal activity in the performance of its obligations
under the Collateral Management Agreement and, after giving effect to such
reinvestment, the following criteria (the “Reinvestment Criteria”) are satisfied, as
evidenced by an Officer’s Certificate of the Issuer or the Collateral Manager
delivered to the Trustee, as of (i) the date of the irrevocable binding
commitment to purchase such Substitute Collateral Debt Securities in the case
of the purchase of any CMBS Securities, REIT Debt Securities and CRE CDO
Securities and (ii) the date of purchase of such Substitute Collateral Debt
Securities in the case of the purchase of any other Specified Type of
Collateral Debt Securities:

(i)           the Collateral
Quality Tests are satisfied, or, if any Collateral Quality Test was not satisfied
immediately prior to such reinvestment, the extent of compliance with such
Collateral Quality Test will be maintained or improved following such
reinvestment, except as otherwise specified in the Reinvestment Criteria below;

 228
 

 

(ii)          the Coverage Tests
are satisfied, or, except with respect to Sale Proceeds in respect of Defaulted
Securities, if not satisfied, are maintained or improved; provided that
if any Par Value Test is not satisfied, the Issuer shall not effect such
reinvestment to the extent sufficient proceeds would not remain on deposit in
the Collection Accounts following such reinvestment to cause each of the
relevant Par Value Test(s) to be satisfied following disbursements on the
following Payment Date in accordance with the Priority of Payments;

(iii)         if immediately prior
to such investment the S&P CDO Monitor Test or the S&P Recovery Test
was not satisfied, such test result is maintained or improved after giving
effect to such reinvestment; and

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

(b)      Within ten (10) Business
Days of purchasing each Substitute Collateral Debt Security, the Collateral
Manager shall deliver to each Rating Agency a comprehensive set of asset and
underwriting materials in form and substance acceptable to the Rating Agencies
(the “Reinvestment Asset Information”) describing such Substitute
Collateral Debt Security. After receiving the Reinvestment Asset Information, a
Rating Agency may, in the case of S&P and Moody’s, provide an estimated
rating to the Collateral Manager necessary to confirm whether a Moody’s
Post-Acquisition Compliance Test or an S&P Post-Acquisition Compliance Test
failure has occurred.

(c)      Within 60 days of finding
a Moody’s Post-Acquisition Compliance Test failure (a “Moody’s
Post-Acquisition Failure”), the Collateral Manager shall use commercially
reasonable efforts to come into compliance with the Moody’s Post-Acquisition
Compliance Test to the extent that the Collateral Manager believes it is in the
best interest of the Noteholders by (i) directing and assisting the Trustee to
sell the Substitute Collateral Debt Security that caused the Moody’s
Post-Acquisition Failure, at a price at least equal to the price paid by the
Issuer for the Substitute Collateral Debt Security, plus any fees and expenses
attributable to such sale, (ii) instructing and assisting the Trustee to sell
any other Collateral Debt Securities (provided that the sale price must be at a
price at least equal to the price paid by the Issuer for the Collateral Debt
Security, plus any fees and expenses attributable to such sale) and/or (iii)
instructing and assisting the Trustee to purchase additional Substitute
Collateral Debt Securities (subject to the Reinvestment Criteria) that
ultimately would result in satisfaction of the Moody’s Post-Acquisition
Compliance Test. Following a Moody’s Post-Acquisition Failure, until such time
as the Moody’s Post-Acquisition Compliance Test is satisfied, the Collateral
Manager may purchase a Substitute Collateral Debt Security only if it has a Moody’s
Rating; provided, however, if the Moody’s Post- Acquisition Compliance Test is
not satisfied within sixty (60) days of a finding of a Moody’s Post-Acquisition
Failure, each Collateral Debt Security acquired must have a Moody’s Rating
until such time as the Rating Agency Condition with respect to Moody’s has been
satisfied. Notwithstanding the foregoing, if the Moody’s Post-Acquisition
Compliance Test is not satisfied within 120 days of a finding of a Moody’s
Post-Acquisition Failure, each Collateral Debt Security thereafter acquired
must have a Moody’s Rating regardless of whether the Moody’s Post-Acquisition
Compliance Test is satisfied. In no circumstances following the failure to meet
a Moody’s Post-Acquisition

 229
 

 

Compliance Test within 120 days of a finding of a Moody’s
Post-Acquisition Failure may a Collateral Debt Security be acquired without a
Moody’s Rating.

(d)      Within 60 days of finding
an S&P Post-Acquisition Compliance Test failure (an “S&P
Post-Acquisition Failure”), the Collateral Manager may (i) direct and
assist the Trustee in selling the Substitute Collateral Debt Security that
caused the S&P Post-Acquisition Failure, (ii) instruct and assist the
Trustee to sell any other Collateral Debt Securities and/or (iii) instruct and
assist the Trustee to purchase additional Substitute Collateral Debt Securities
(subject to the Reinvestment Criteria) that ultimately would result in
satisfaction of the S&P Post-Acquisition Compliance Test. Until such time
as the S&P Post-Acquisition Compliance Test is satisfied, the Collateral
Manager may purchase a Substitute Collateral Debt Security only if it has an
S&P Rating.  No more than 20% of the
Aggregate Collateral Balance as of the Closing Date can be purchased by the
Issuer pending satisfaction of any of the Moody’s Post-Acquisition Compliance
Test and the S&P Post-Acquisition Compliance Test; provided that,
solely with respect to Non-Core Property Types, no more than 5% of the
Aggregate Collateral Balance as of the Closing Date can be purchased by the Issuer
pending satisfaction of the Moody’s Post-Acquisition Test.

(e)      Notwithstanding the
foregoing provisions, (i) Cash on deposit in the Collection Accounts may be
invested in Eligible Investments, pending investment in Substitute Collateral
Debt Securities and (ii) if an Event of Default shall have occurred and be
continuing, no Substitute Collateral Debt Security may be acquired unless it
was the subject of a commitment entered into by the Issuer prior to the
occurrence of such Event of Default.

Section 12.3           Conditions Applicable to all
Transactions Involving Sale or Grant.

(a)      Any transaction effected
after the Closing Date under this Article 12 or Section 10.13
shall be conducted in accordance with the requirements of the Collateral
Management Agreement; provided that, (1) the Collateral Manager shall
not direct the Trustee to acquire any Substitute Collateral Debt Security for
inclusion in the Assets from the Collateral Manager or any of its Affiliates as
principal or to sell any Collateral Debt Security from the Assets to the
Collateral Manager or any of its Affiliates as principal unless the transaction
is effected in accordance with the Collateral Management Agreement and (2) the
Collateral Manager shall not direct the Trustee to acquire any Substitute Collateral
Debt Security for inclusion in the Assets from any account or portfolio for
which the Collateral Manager serves as investment adviser or direct the Trustee
to sell any Collateral Debt Security to any account or portfolio for which the
Collateral Manager serves as investment adviser unless such transactions comply
with the requirements of any applicable laws. 
The Trustee shall have no responsibility to oversee compliance with this
clause by the other parties.

(b)      Upon any Grant pursuant
to this Article 12, all of the Issuer’s right, title and interest to the
Pledged Obligation or Securities shall be Granted to the Trustee pursuant to
this Indenture, such Pledged Obligation or Securities shall be registered in
the name of the Trustee, and, if applicable, the Trustee shall receive such
Pledged Collateral Debt Security or Securities. 
The Trustee shall also receive, not later than the date of delivery of
any Collateral Debt Security delivered after the Closing Date, an Officer’s
Certificate of the Collateral Manager certifying that, as of the date of such
Grant, such Grant complies with the applicable

 230
 

 

conditions of and is permitted by this Article 12 (and setting
forth, to the extent appropriate, calculations in reasonable detail necessary
to determine such compliance).

(c)      Notwithstanding anything
contained in this Article 12 to the contrary, the Issuer shall, subject
to this Section 12.3(c), have the right to effect any transaction which
has been consented to (i) by the Holders of Notes evidencing 100% of the
Aggregate Outstanding Amount of each and every Class of Notes (or if there are
no Notes Outstanding, 100% of the Preferred Shares) and (ii) each Hedge
Counterparty, and of which each Rating Agency has been notified.

Section 12.4           Sale of Collateral Debt Securities
with respect to an Auction Call Redemption.

(a)      Pre-Auction Process.

(i)           Each Auction will
occur on the Business Day that is at least 13 Business Days prior to the
proposed Auction Call Redemption Date (such date, the “Auction Date”).

(ii)          The Collateral
Manager will initiate the Auction Procedures at least 24 Business Days before
the proposed Auction Call Redemption Date by: (a) preparing a list of
Collateral Debt Securities (including CUSIP Number, if any, par amount and
issuer name for each Collateral Debt Security); (b) deriving a list of not less
than three qualified bidders (the “Listed Bidders”) and requesting from each Listed
Bidder bids by the applicable Auction Date; and (c) notifying the Trustee of
the list of Listed Bidders (the “List”).

(iii)         The Collateral
Manager will deliver a general solicitation package to the Listed Bidders
consisting of: (a) a form of a purchase agreement (“Auction Purchase Agreement”) provided to the
Trustee by the Collateral Manager (which shall provide that (I) upon
satisfaction of all conditions precedent therein, the purchaser is irrevocably
obligated to purchase, and the Issuer is irrevocably obligated to sell, the
Collateral Debt Securities on the date and on the terms stated therein, (II)
each bidder may tender a separate bid for one or more Collateral Debt
Securities in an Auction, (III) if the Collateral Debt Securities are to be
sold to different bidders, that the consummation of the purchase of all
Collateral Debt Securities must occur simultaneously and that the closing of
each purchase is conditional on the closing of the other purchases, (IV) if for
any reason whatsoever the Trustee has not received, by a specified Business Day
(which shall be more than ten Business Days before the proposed Auction Call
Redemption Date), payment in full in immediately available funds of the
purchase price for all Collateral Debt Securities, the obligations of the
parties shall terminate and the Issuer shall have no obligation or liability
whatsoever and (V) any prospective purchasers will be subject to the “limited
recourse” and “non-petition” provisions set forth in this Indenture), (b) the
minimum aggregate Cash purchase price (which shall be determined by the
Collateral Manager as the Total Redemption Price less the balance of all
Eligible Investments and Cash on deposit in the Collection Accounts, the
Payment Account, the Delayed Funding Obligations Account, each Hedge
Termination Account and the

 231
 

 

Expense
Account; (c) the list of Collateral Debt Securities; (d) a formal bid sheet
(which will permit a bidder to bid for all of the Collateral Debt Securities or
separately for any one or more (but not all) Collateral Debt Securities and
will include a representation from the bidder that it is eligible to purchase all
of the Collateral Debt Securities or any one or more (but not all) Collateral
Debt Securities) to be provided to the Trustee by the Collateral Manager; (e) a
detailed timetable; and (f) copies of all transfer documents provided to the
Trustee by the Collateral Manager (including transfer certificates and
subscription agreements which a bidder must execute pursuant to the underlying
instruments and a list of the requirements which the bidder must satisfy under
the underlying instruments (i.e., QIB status, Qualified Purchaser status,
etc.)).

(iv)        The Collateral Manager
will send solicitation packages to all Listed Bidders on the List at least
twenty (20) Business Days before the proposed Auction Call Redemption Date. The
Listed Bidders will be required to submit any due diligence questions (or
comments on the draft purchase agreement) in writing to the Collateral Manager
by a date specified in the solicitation package. The Collateral Manager will be
required to answer all reasonable and relevant questions by the date specified
in the solicitation package and the Collateral Manager will distribute the
questions and answers and the revised final Auction Purchase Agreement to all
Listed Bidders (with a copy to the Issuer and the Trustee).

(b)      Auction Process.

(i)           Wells Fargo Bank,
National Association or its Affiliates may, but shall not be required to, bid
at the Auction.  The Collateral Manager
and its Affiliates may bid in the Auction if the Collateral Manager deems such
bidding to be appropriate but is not required to do so.

(ii)          On the second
Business Day prior to the Auction Date (the “Auction Bid Date”), all bids will be due by
facsimile at the offices of the Trustee by 11:00 a.m. New York City time, with
the winning bidder or bidders to be notified by 2:00 p.m. New York City
time.  All bids from Listed Bidders on
the List will be due on the bid sheet contained in the solicitation package.
Each bid shall be for the purchase and delivery to one purchaser (i) of all (but
not less than all) of the Collateral Debt Securities or (ii) of one or more
(but not all) of the Collateral Debt Securities.

(iii)         Unless the Trustee
receives (A) at least one bid from a Listed Bidder to purchase all of the
Collateral Debt Securities or (B) receives bids from one or more Listed Bidders
(to purchase one or more (but not all) Collateral Debt Securities) for all
Collateral Debt Securities in the aggregate, the Trustee will decline to
consummate the sale.

(iv)        Subject to clause
(iii) above, with the advice of the Collateral Manager, the Trustee shall
select the bid or bids which result in the Highest Auction Price from one or
more Listed Bidders (in excess of the specified minimum purchase price). “Highest
Auction Price” means the higher of (i) the highest price bid by any Listed Bidder
for all of the Collateral Debt Securities or (ii) the sum of the highest prices
bid by one or more

 232
 

 

Listed Bidders
(for one or more (but not all) Collateral Debt Securities) for all Collateral
Debt Securities in the aggregate. In each case, the price bid by a Listed
Bidder will be the dollar amount which the Collateral Manager certifies to the
Trustee based on the Collateral Manager’s review of the bids, which
certification shall be binding and conclusive.

(v)         Upon notification to
the winning bidder or bidders, the winning bidder (or, if the Highest Auction
Price requires the sale of the Collateral Debt Securities to more than one
bidder, each winning bidder) will be required to deliver to the Trustee a
signed counterpart of the Auction Purchase Agreement no later than 4:00 p.m.
New York City time on the Auction Date. The winning bidder (or, if the Highest
Auction Price requires the sale of the Collateral Debt Securities to more than
one bidder, each winning bidder) will make payment in full of the purchase
price on the Business Day (the “Auction
Purchase Closing Date”) specified in the general solicitation
package (which will be no later than ten Business Days prior to the proposed
Auction Call Redemption Date). If a winning bidder so requests, the Trustee and
the Issuer will enter into a bailee letter in the form agreed upon by the
Trustee and the Collateral Manager to this Indenture (a “Bailee Letter”) with
each winning bidder and its designated bank (which bank will be subject to
approval by the Issuer or the Collateral Manager on behalf of the Issuer); provided
that such bank enters into an account control agreement with the Trustee and
the Issuer and has a long term debt rating of at least “BBB+” by Standard &
Poor’s and (if rated by Fitch) at least “BBB+” by Fitch and (if rated by Moody’s)
at least “A2” by Moody’s. If the above requirements are satisfied, the Trustee
will deliver the Collateral Debt Securities (to be sold to such bidder)
pursuant thereto to the bailee bank at least one Business Day prior to the
closing on the sale of the Collateral Debt Securities and accept payment of the
purchase price pursuant thereto. If payment in full of the purchase price is
not made by the Auction Purchase Closing Date for any reason whatsoever (or, if
the Collateral Debt Securities are to be sold to more than one bidder, if any
bidder fails to make payment in full of the purchase price by the Auction
Purchase Closing Date for any reason whatsoever), the Issuer will decline to
consummate the sale of all Collateral Debt Securities, the Trustee and the
Issuer will direct the bailee bank to return the Collateral Debt Securities to
the Trustee, and (if notice of redemption has been given by the Trustee) the
Trustee will give notice (in accordance with the terms of this Indenture) that
the Auction Call Redemption will not occur.

(vi)        Notwithstanding the
foregoing, but subject to the satisfaction of the conditions set forth in Section
9.2(b), the Collateral Manager and/or any of its Affiliates, although it
may not have been the highest bidder, will have the option to purchase any one
or more Collateral Debt Securities for a purchase price equal to the highest
bid therefor.

(c)      Notwithstanding anything
to the contrary set forth in this Section 12.4, but subject to the satisfaction
of the conditions set forth in Section 9.2(b) and the consummation of
the Auction Call Redemption, at the election of the Collateral Manager, in lieu
of initiating or conducting any Auction, the Collateral Manager and/or any of
its Affiliates will have the option to purchase all of the Collateral Debt
Securities that would otherwise be subject to such Auction for a price equal to
the Total Auction Call Redemption Price. 
Such purchase of

 233
 

 

Collateral Debt Securities by the Collateral Manager or its Affiliates
pursuant to this Section 12.4(c) will be deemed to be a Successful
Auction pursuant to this Indenture.

Section 12.5           Modifications to Collateral
Quality Tests or Coverage Tests.

In the event any of the
Rating Agencies modifies the definitions or calculations relating to (i) the
method of calculating any of its respective Collateral Quality Tests (a “Collateral
Quality Test Modification”), (ii) any of the Coverage Tests (a “Coverage
Test Modification”) or (iii) its requirements for pro rata “special
amortizations” (a “Pro Rata Special Amortization Modification”), in
either case in order to correspond with published changes in the guidelines,
methodology or standards established by such Rating Agency, the Issuer may, but
is under no obligation solely as a result of this Section 12.5 to,
incorporate corresponding changes into this Indenture by an amendment hereto
without the consent of the Holders of the Notes (except as provided below) (but
with written notice to the Noteholders) or the Preferred Shares if (x)(1) in
the case of a Collateral Quality Test Modification, the Rating Agency Condition
is satisfied with respect to the Rating Agency that made such modification or
(2) in the case of a Coverage Test Modification or a Pro Rata Special Amortization
Modification, the Rating Agency Condition is satisfied with respect to each
Rating Agency then rating the Notes and (y) written notice of such modification
is delivered by the Collateral Manager to the Trustee and to the Holders of the
Notes and Preferred Shares (which notice may be included in the next regularly
scheduled report to Noteholders).  Any
such Collateral Quality Test Modification, 
Coverage Test Modification or Pro Rata Special Amortization
Modification, as the case may be, shall be effected without execution of a
supplemental indenture; provided, however, that such amendment
shall be (i) evidenced by a written instrument executed and delivered by each
of the Co-Issuers and the Collateral Manager and delivered to the Trustee, (ii)
accompanied by delivery by the Issuer to the Trustee of (A) an Officer’s
Certificate of the Issuer certifying that such amendment has been made pursuant
to and in compliance with this Section 12.5 and (B) if requested by the
Trustee, an Opinion of Counsel stating that such amendment is authorized or
permitted by this Section 12.5 and that all applicable conditions
precedent under this Section 12.5 have been satisfied, on which such
Officer’s Certificate or such Officer’s Certificate and Opinion of Counsel, as
the case may be, the Trustee shall be entitled to rely.  Notwithstanding the foregoing, so long as the
Class A-1 Notes are the Controlling Class, the Issuer shall not make any such
change without obtaining the consent of a Majority of the Class A-1 Notes (such
consent not to be unreasonably withheld); provided that, if the Holders
of the Class A-1 Notes do not object to such change within seven (7) days after
notice thereof if given, such Holders will be deemed to have consented to such
change.  Notwithstanding the foregoing,
any such amendment reasonably determined by the Trustee to be unduly burdensome
to the Trustee, shall not take effect without the Trustee’s express written
consent.

 234
 

 

ARTICLE
13

NOTEHOLDERS’
RELATIONS

Section 13.1           Subordination.

(a)      Anything in this
Indenture or the Notes to the contrary notwithstanding, the Issuer and the
Holders of the Class A-2 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 each Hedge Counterparty that the Class A-2
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 Assets (the “Class
A-2 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 hereinafter provided.  If any Event of Default has not been cured or
waived and acceleration occurs in accordance with Article 5, including
as a result of an Event of Default specified in Section 5.1(f) or 5.1(g),
the Class A-1 Notes shall be paid in full before any further payment or
distribution is made on account of the Class A-2 Subordinate Interests.  The Holders of the Class A-2 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, each Hedge
Counterparty, not to cause the filing of a petition in bankruptcy against the Issuer
for failure to pay to them amounts due under the Class A-2 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 hereunder until the payment in full of the Class A-1 Notes and not before
one year and one day, or, if longer, the applicable preference period then in
effect, has elapsed since such payment.

(b)      Anything in this
Indenture or the 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-1
Notes and the Class A-2 Notes and each Hedge Counterparty 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 Assets (the “Class B 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 has not been cured or
waived and acceleration occurs in accordance with Article 5, including
as a result of an Event of Default specified in Section 5.1(f) or 5.1(g),
the Class A-1 Notes and the Class A-2 Notes shall be paid in full before any
further payment or distribution is made on account of the Class B Subordinate
Interests.  The Holders of the Class B
Notes, the Class C Notes, the Class D Notes, 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

 235
 

 

the Class A-2 Notes and each Hedge Counterparty, not to cause the
filing of a petition in bankruptcy against the Issuer for failure to pay to
them amounts due under the Class B Notes, the Class C Notes, the Class D Notes,
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 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,
or, if longer, the applicable preference period then in effect, has elapsed
since such payment.

(c)      Anything in this
Indenture or the 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-1 Notes, the Class A-2
Notes, the Class B Notes and each Hedge Counterparty 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 Assets (the “Class C
Subordinate Interests”) shall be subordinate and junior to
the Class A-1 Notes, the Class A-2 Notes and the Class B Notes to the extent
and in the manner set forth in this Indenture including as set forth in Section
11.1(a) and hereinafter provided.  If
any Event of Default has not been cured or waived and acceleration occurs in
accordance with Article 5, including as a result of an Event of Default
specified in Section 5.1(f) or 5.1(g), the Class A-1 Notes, the
Class A-2 Notes and the Class B Notes shall be paid in full before any further
payment or distribution is made on account of the Class C Subordinate
Interests.  The Holders of the Class C
Notes, the Class D Notes, 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, the Class A-2 Notes and the
Class B Notes and each Hedge Counterparty, not to cause the filing of a
petition in bankruptcy against the Issuer for failure to pay to them amounts
due under the Class C Notes, the Class D Notes, 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 hereunder until the payment in full of the Class A-1 Notes, the Class A-2
Notes and the Class B Notes and not before one year and one day, or, if longer,
the applicable preference period then in effect, has elapsed since such
payment.

(d)      Anything in this
Indenture or the 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-1 Notes, the Class A-2 Notes, the Class B
Notes, the Class C Notes and each Hedge Counterparty 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
Assets (the “Class D Subordinate
Interests”) shall be subordinate and junior to the Class A-1
Notes, the Class A-2 Notes, the Class B Notes and the Class C Notes to the
extent and in the manner set forth in this Indenture including as set forth in Section
11.1(a) and hereinafter provided.  If
any Event of Default has not been cured or waived and acceleration occurs in
accordance with Article 5, including as a result of an Event of Default
specified in Section 5.1(f) or 5.1(g), the Class A-1 Notes, the
Class A-2 Notes, the Class B Notes and the Class C Notes shall be paid in full
before any further payment or distribution is made on account of the Class D
Subordinate Interests.  The Holders of
the Class D Notes, 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, the

 236
 

 

Class A-2 Notes, the Class B Notes, and the Class C Notes and each
Hedge Counterparty, not to cause the filing of a petition in bankruptcy against
the Issuer for failure to pay to them amounts due under the Class D Notes, 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 hereunder until the payment in full of the
Class A-1 Notes, the Class A-2 Notes, the Class B Notes and the Class C Notes
and not before one year and one day, or, if longer, the applicable preference
period then in effect, has elapsed since such payment.

(e)      Anything in this
Indenture or the Notes to the contrary notwithstanding, the Issuer and the
Holders 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 agree for the benefit of the
Holders of the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the
Class C Notes and the Class D Notes and each Hedge Counterparty that 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 Issuer’s rights in and to the Assets (the “Class
E Subordinate Interests”) shall be subordinate and junior to the Class A-1
Notes, the Class A-2 Notes, the Class C Notes and the Class D Notes to the
extent and in the manner set forth in this Indenture including as set forth in Section
11.1(a) and hereinafter provided.  If
any Event of Default has not been cured or waived and acceleration occurs in
accordance with Article 5, including as a result of an Event of Default
specified in Section 5.1(f) or 5.1(g), the Class A-1 Notes, the
Class A-2 Notes, the Class B Notes, the Class C Notes, and the Class D Notes
shall be paid in full before any further payment or distribution is made on
account of the Class E Subordinate Interests. 
The Holders of the Class E Notes, 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, the Class A-2 Notes, the Class B
Notes, the Class C Notes and the Class D Notes and each Hedge Counterparty, not
to cause the filing of a petition in bankruptcy against the Issuer for failure
to pay to them amounts due under the Class E Notes, the Class F Notes, the
Class G Notes, the Class H Notes, the Class J Notes and the Class K Notes
hereunder until the payment in full of the Class A-1 Notes, the Class A-2
Notes, the Class B Notes, the Class C Notes and the Class D Notes and not
before one year and one day, or, if longer, the applicable preference period in
effect, has elapsed since such payment.

(f)       Anything in this
Indenture or the Notes to the contrary notwithstanding, the Issuer and the
Holders of 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, the Class A-2 Notes, the Class B Notes, the Class C Notes, the Class
D Notes, the Class E Notes and each Hedge Counterparty 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 Assets (the “Class F Subordinate
Interests”) shall be subordinate and junior to the Class A-1 Notes, the
Class A-2 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 has not been cured or
waived and acceleration occurs in accordance with Article 5, including
as a result of an Event of Default specified in Section 5.1(f) or 5.1(g),
the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes,
the Class D Notes and the Class E Notes shall be paid in full before any
further payment or distribution is made on account of the Class F Subordinate
Interests.  The Holders of the Class F Notes,
the Class G Notes, the Class H Notes, the Class J

 237
 

 

Notes and the Class K Notes agree, for the benefit of the Holders of
the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes,
the Class D Notes, the Class E Notes and each Hedge Counterparty, not to cause
the filing of a petition in bankruptcy against the Issuer for failure to pay to
them amounts due under the Class F Notes, the Class G Notes, the Class H Notes,
the Class J Notes and the Class K Notes hereunder until the payment in full of
the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes,
the Class D Notes and the Class E Notes and not before one year and one day,
or, if longer, the applicable preference period then in effect, has elapsed
since such payment.

(g)      Anything in this
Indenture or the Notes to the contrary notwithstanding, the Issuer and the
Holders of 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, the
Class A-2 Notes, the Class B Notes, the Class C Notes, the Class D Notes, the
Class E Notes, the Class F Notes and each Hedge Counterparty 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 Assets (the “Class G Subordinate Interests”)
shall be subordinate and junior to the Class A-1 Notes, the Class A-2 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 has not been cured or
waived and acceleration occurs in accordance with Article 5, including
as a result of an Event of Default specified in Section 5.1(f) or 5.1(g),
the Class A-1 Notes, the Class A-2 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 before any further payment or distribution is made on account of the Class
G Subordinate Interests.  The Holders of
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, the Class A-2
Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes and the Class F Notes and each Hedge Counterparty, not to cause the
filing of a petition in bankruptcy against the Issuer for failure to pay to
them amounts due under the Class G Notes, the Class H Notes, the Class J Notes
and the Class K Notes hereunder until the payment in full of the Class A-1
Notes, the Class A-2 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, or, if longer, the applicable preference period then in effect, has
elapsed since such payment.

(h)      Anything in this
Indenture or the Notes to the contrary notwithstanding, the Issuer and the
Holders of 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, the Class A-2 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 each Hedge Counterparty that the Class H
Notes, the Class J Notes and the Class K Notes and the Issuer’s rights in and
to the Assets (the “Class H Subordinate Interests”) shall be subordinate
and junior to the Class A-1 Notes, the Class A-2 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 has not been cured or
waived and acceleration occurs in accordance with Article 5, including
as a result of an Event of Default specified in Section 5.1(f) or 5.1(g),
the Class A-1 Notes, the Class A-2 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 before any further payment or distribution is made on

 238
 

 

account of the Class H Subordinate Interests.  The Holders of 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, the Class A-2 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 each
Hedge Counterparty, not to cause the filing of a petition in bankruptcy against
the Issuer for failure to pay to them amounts due under the Class H Notes, the
Class J Notes and the Class K Notes hereunder until the payment in full of the
Class A-1 Notes, the Class A-2 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, or if longer, the applicable preference period
then in effect, has elapsed since such payment.

(i)       Anything in this
Indenture or the 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 -1 Notes, the Class A-2 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 each Hedge Counterparty that the Class J
Notes and the Class K Notes and the Issuer’s rights in and to the Assets (the “Class J Subordinate Interests”)
shall be subordinate and junior to the Class A-1 Notes, the Class A-2 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 to the extent and in the
manner set forth in this Indenture including as set forth in Section 11.1(a)
and hereinafter provided.  If any Event
of Default has not been cured or waived and acceleration occurs in accordance
with Article 5, including as a result of an Event of Default specified
in Section 5.1(f) or 5.1(g), the Class A-1 Notes, the Class A-2
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 before any further payment or distribution is made on account of the
Class J Subordinate Interests.  The
Holders of the Class J Notes and the Class K Notes agree, for the benefit of
the Holders of the Class A-1 Notes and the Class A-2 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 each Hedge Counterparty, not to cause
the filing of a petition in bankruptcy against the Issuer for failure to pay to
them amounts due under the Class J Notes and the Class K Notes hereunder until
the payment in full of the Class A-1 Notes and the Class A-2 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, or if longer, the applicable preference period then in effect, has elapsed
since such payment.

(j)       Anything in this
Indenture or the Notes to the contrary notwithstanding, the Issuer and the
Holders of the Class K Notes agree for the benefit of the Holders of the Class
A-1 Notes, the Class A-2 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 each Hedge Counterparty that the Class K Notes
and the Issuer’s rights in and to the Assets (the “Class K Subordinate Interests”) shall be
subordinate and junior to the Class A-1 Notes, the Class A-2 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 to the extent
and in the manner set forth in this Indenture including as set forth in Section
11.1(a) and hereinafter provided.  If
any Event of Default has not been cured or waived and acceleration occurs in
accordance with Article 5, including as a result of an Event

 239
 

 

of Default specified in Section 5.1(f) or 5.1(g), the
Class A-1 Notes, the Class A-2 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 shall be paid in full before any further
payment or distribution is made on account of the Class J Subordinate
Interests.  The Holders of the Class K
Notes agree, for the benefit of the Holders of the Class A -1 Notes, the Class
A-2 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 each Hedge Counterparty, not to cause the filing of a petition in
bankruptcy against the Issuer for failure to pay to them amounts due under the
Class K Notes hereunder until the payment in full of the Class A-1 Notes, the
Class A-2 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 not before one year and one day, or if longer, the applicable
preference period then in effect, has elapsed since such payment.

(k)      In the event that
notwithstanding the provisions of this Indenture, any holder of any Subordinate
Interests shall have received any payment or distribution in respect of such
Subordinate Interests contrary to the provisions of this Indenture, then,
unless and until the Class A-1 Notes, the Class A-2 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, as
the case may be, shall have been paid in full in accordance with this
Indenture, such payment or distribution shall be received and held in trust for
the benefit of, and shall forthwith be paid over and delivered to, the Trustee,
which shall pay and deliver the same to the Holders of the Class A-1 Notes, the
Class A-2 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, as the case may be, in accordance with
this Indenture.

(l)       Each Holder of
Subordinate Interests agrees with all Holders of the Class A-1 Notes, the Class
A-2 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, as the case may be, that such Holder of
Subordinate Interests shall not demand, accept, or receive any payment or
distribution in respect of such Subordinate Interests in violation of the
provisions of this Indenture including this Section 13.1; provided, however, that after the Class A-1 Notes, the Class
A-2 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, as the case may be, have been paid in full, the
Holders of Subordinate Interests shall be fully subrogated to the rights of the
Holders of the Class A Notes, the Class B Notes, the Class C Notes, the Class D
Notes, the Class E 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, as the case
may be.  Nothing in this Section 13.1
shall affect the obligation of the Issuer to pay Holders of Subordinate
Interests.

Section 13.2           Standard of Conduct.

In exercising any of its
or their voting rights, rights to direct and consent or any other rights as a
Securityholder under this Indenture, subject to the terms and conditions of
this Indenture, including, without limitation, Section 5.9, a
Securityholder or Securityholders shall

 240
 

 

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 Securityholder, the Issuer, or any other Person, except for any
liability to which such Securityholder may be subject to the extent the same
results from such Securityholder’s taking or directing an action, or failing to
take or direct an action, in bad faith or in violation of the express terms of
this Indenture.

 241
 

 

ARTICLE
14

MISCELLANEOUS

Section 14.1           Form of Documents Delivered to the
Trustee.

In any case where several
matters are required to be certified by, or covered by an opinion of, any
specified Person, it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.

Any certificate or
opinion of an Authorized Officer of the Issuer or the Co-Issuer may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such Authorized Officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous.  Any such certificate of an
Authorized Officer of the Issuer or the Co-Issuer or Opinion of Counsel may be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, the Issuer, the Co-Issuer, the Collateral Manager or
any other Person, stating that the information with respect to such factual
matters is in the possession of the Issuer, the Co-Issuer, the Collateral
Manager or such other Person, unless such Authorized Officer of the Issuer or
the Co-Issuer or such counsel knows that the certificate or opinion or
representations with respect to such matters are erroneous.  Any Opinion of Counsel may also be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an Authorized Officer of the Issuer or the Co-Issuer,
stating that the information with respect to such matters is in the possession
of the Issuer or the Co-Issuer, unless such counsel knows that the certificate
or opinion or representations with respect to such matters are erroneous.

Where any Person is
required to make, give or execute two or more applications, requests, consents,
certificates, statements, opinions or other instruments under this Indenture,
they may, but need not, be consolidated and form one instrument.

Whenever in this
Indenture it is provided that the absence of the occurrence and continuation of
a Default or Event of Default is a condition precedent to the taking of any
action by the Trustee at the request or direction of the Issuer or the
Co-Issuer, then notwithstanding that the satisfaction of such condition is a
condition precedent to the Issuer’s or the Co-Issuer’s rights to make such
request or direction, the Trustee shall be protected in acting in accordance
with such request or direction if it does not have knowledge of the occurrence
and continuation of such Default or Event of Default as provided in Section
6.1(e).

 242
 

 

Section 14.2           Acts of
Securityholders.

(a)      Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Securityholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Securityholders in person or by an agent duly appointed in writing; and,
except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee, and,
where it is hereby expressly required, to the Issuer and/or the Co-Issuer.  Such instrument or instruments (and the
action or actions embodied therein and evidenced thereby) are herein sometimes
referred to as the “Act” of the Securityholders signing such instrument or
instruments.  Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and conclusive in favor of the Trustee, the
Issuer and the Co-Issuer, if made in the manner provided in this Section
14.2.

(b)      The fact and date of the
execution by any Person of any such instrument or writing may be proved in any
manner which the Trustee deems sufficient.

(c)      The principal amount and
registered numbers of Notes held by any Person, and the date of his holding the
same, shall be proved by the Notes Register. 
The Notional Amount and registered numbers of the Preferred Shares held
by any Person, and the date of his holding the same, shall be proved by the
register maintained with respect to the Preferred Shares.

(d)      Any request, demand,
authorization, direction, notice, consent, waiver or other action by the
Securityholder shall bind such Securityholder (and any transferee thereof) of
such Security and of every Security issued upon the registration thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee, the Preferred Shares Paying Agent, the
Share Registrar, the Issuer or the Co-Issuer in reliance thereon, whether or
not notation of such action is made upon such Security.

Section 14.3           Notices, etc., to the Trustee, the
Issuer, the Co-Issuer, the Collateral Manager, the Initial Purchasers, each
Hedge Counterparty and each Rating Agency.

Any request, demand, authorization,
direction, notice, consent, waiver or Act of Securityholders or other documents
provided or permitted by this Indenture to be made upon, given or furnished to,
or filed with:

(a)      the Trustee by any
Securityholder or by the Issuer or the Co-Issuer shall be sufficient for every
purpose hereunder if made, given, furnished or filed in writing to and mailed,
by certified mail, return receipt requested, hand delivered, sent by overnight
courier service guaranteeing next day delivery or by facsimile in legible form,
to the Trustee addressed to it at P.O. Box 98, Columbia, Maryland 21046,
Attention:  CDO Trust Services Group –
Gramercy Real Estate CDO 2006-1, facsimile number:  (410) 715-3748, with a copy to its Corporate
Trust Office, or at any other address previously furnished in writing to the
Issuer, the Co-Issuer or Securityholders by the Trustee;

 243
 

 

(b)      the Issuer by the Trustee
or by any Securityholder 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 c/o Gramercy Real
Estate CDO 2006-1, Ltd. at c/o Maples Finance Limited, P.O. Box 1093GT, Queensgate
House, South Church Street, George Town, Grand Cayman, Cayman Islands,
facsimile number:  345-945-7100,
Attention:  The Directors, or at any
other address previously furnished in writing to the Trustee by the Issuer,
with a copy to the Collateral Manager at its address set forth below;

(c)      the Co-Issuer by the
Trustee or by any Securityholder 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 in
c/o National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover,
Delaware 19904, facsimile number:  (609)
716-0820, or at any other address previously furnished in writing to the
Trustee by the Co-Issuer, with a copy to the Collateral Manager at its address
set forth below;

(d)      the Preferred Shares
Paying Agent shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to and mailed, by certified mail, return receipt
requested, hand delivered, sent by overnight courier service guaranteeing next
day delivery or by facsimile in legible form, to the Preferred Shares Paying
Agent addressed to it at P.O. Box 98, Columbia, Maryland 21046, Attention:  CDO Trust Services Group – Gramercy Real
Estate CDO 2006-1, facsimile number: 
(410) 715-3748, or at any other address previously furnished in writing
by the Trustee;

(e)      the Collateral Manager by
the Issuer, the Co-Issuer or the Trustee shall be sufficient for every purpose
hereunder if in writing and mailed, first class postage prepaid, hand
delivered, sent by overnight courier service or by facsimile in legible form,
to the Collateral Manager addressed to it at GKK Manager LLC, 420 Lexington
Avenue, 19th Floor, New York, New York 10170, Attention:  Marc Holliday and Andrew Levine, facsimile
number:  (212) 216-1785, or at any other
address previously furnished in writing to the Issuer, the Co-Issuer or the
Trustee;

(f)       each Rating Agency, as
applicable, by the Issuer, the Co-Issuer, the Collateral Manager or the Trustee
shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first class postage prepaid, hand
delivered, sent by overnight courier service or by facsimile in legible form,
to each Rating Agency addressed to it: in the case of S&P, at Standard
& Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.,
55 Water Street, 41st Floor, New York, New York 10041-0003, facsimile number:
(212) 438-2664, Attention:  Structured
Finance Ratings, Asset-Backed Securities CBO/CLO Surveillance (and by
electronic mail at cdosurveillance@standardandpoors.com; provided that all reports required to be submitted to S&P
pursuant to this Indenture only shall be provided in electronic form to such
e-mail address); and in the case of Moody’s, at Moody’s Investor Services,
Inc., 99 Church Street, New York, New York 10007, facsimile number: (212)
553-4170, Attention:  CBO/CLO Monitoring
(or by electronic mail at cdomonitoring@moodys.com) or such other address that
a Rating Agency shall designate in the future;

 244
 

 

(g)      each Hedge Counterparty
by the Issuer, the Co-Issuer, the Collateral Manager or the Trustee shall be
sufficient for every purpose hereunder if in writing and mailed, first class
postage prepaid, hand delivered, sent by overnight courier service or by
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, the Co-Issuer, the Collateral
Manager and the Trustee by each Hedge Counterparty; and

(h)      the Initial Purchasers by
the Issuer, the Co-Issuer, the Trustee or the Collateral Manager shall be
sufficient for every purpose hereunder if in writing and mailed, first class
postage prepaid, hand delivered, sent by overnight courier service or by
facsimile in legible form to the Initial Purchasers at (i) with respect to Wachovia
Capital Market, LLC, c/o Wachovia Capital Markets, LLC, 12 East 49th Street,
45th Floor, New York, NY  10017,
Attention:  Structured Products Group,
facsimile no.:  (212) 451-2565 and (ii)
with respect to Goldman, Sachs & Co., c/o Goldman, Sachs & Co., 85
Broad Street, New York, New York 10004.

Section 14.4           Notices to Noteholders; Waiver.

Except as otherwise
expressly provided herein, where this Indenture provides for notice to Holders
of Notes of any event,

(a)      such notice shall be
sufficiently given to Holders of Notes if in writing and mailed, first class
postage prepaid, to each Holder of a Note affected by such event, at the
address of such Holder as it appears in the Notes Register, not earlier than
the earliest date and not later than the latest date, prescribed for the giving
of such notice;

(b)      such notice shall be in
the English language;

(c)      such notice shall also be
provided to the Irish Paying Agent (for so long as any Notes are listed on the
Irish Stock Exchange); and

(d)      all reports or notices to
Preferred Shareholders shall be sufficiently given if provided in writing and
mailed, first class postage prepaid, to the Preferred Shares Paying Agent.

Notwithstanding clause
(a) above, a Holder of Notes may give the Trustee written notice that it is
requesting that notices to it be given by facsimile transmissions and stating
the facsimile number for such transmission. 
Thereafter, the Trustee shall give notices to such Holder by facsimile
transmission; provided that if such
notice also requests that notices be given by mail, then such notice shall also
be given by mail in accordance with clause (a) above.

The Trustee shall deliver
to the Holders of the Notes any information or notice requested to be so
delivered by at least 25% of the Holders of any Class of Notes.

Neither the failure to
mail any notice, nor any defect in any notice so mailed, to any particular
Holder of a Note shall affect the sufficiency of such notice with respect to
other Holders of Notes.  In case by reason
of the suspension of regular mail service or by reason of any

 245
 

 

other cause, it shall be impracticable to give such
notice by mail, then such notification to Holders of Notes shall be made with
the approval of the Trustee and shall constitute sufficient notification to
such Holders of Notes for every purpose hereunder.

Where this Indenture
provides for notice in any manner, such notice may be waived in writing by any
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice.  Waivers of notice by Noteholders shall be
filed with the Trustee but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such waiver.

In the event that, by
reason of the suspension of the regular mail service as a result of a strike,
work stoppage or similar activity, it shall be impractical to mail notice of
any event to Noteholders when such notice is required to be given pursuant to
any provision of this Indenture, then any manner of giving such notice as shall
be satisfactory to the Trustee shall be deemed to be a sufficient giving of
such notice.

For so long as any Notes
are listed on the Irish Stock Exchange and the rules of such exchange so
require, all notices to Noteholders of such Notes will be published in the
Daily Official List of the Irish Stock Exchange.

Section 14.5           Effect of Headings and Table of
Contents.

The Article and Section
headings herein and the Table of Contents are for convenience only and shall
not affect the construction hereof.

Section 14.6           Successors and Assigns.

All covenants and
agreements in this Indenture by the Issuer and the Co-Issuer shall bind their
respective successors and assigns, whether so expressed or not.

Section 14.7           Severability.

In case any provision in
this Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

Section 14.8           Benefits of Indenture.

Nothing in this Indenture
or in the Securities, expressed or implied, shall give to any Person, other
than (i) the parties hereto and their successors hereunder and (ii) the
Collateral Manager, each Hedge Counterparty, the Preferred Shareholders, the
Preferred Shares Paying Agent, the Share Registrar and the Noteholders (each of
whom, in the case of this subclause (ii), shall be an express third party
beneficiary hereunder), any benefit or any legal or equitable right, remedy or
claim under this Indenture.

 246
 

 

Section 14.9           Governing
Law.

THIS INDENTURE AND EACH
NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF STATE OF
NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES.

Section 14.10         Submission to Jurisdiction.

Each of the Issuer and
the Co-Issuer hereby irrevocably submits to the non-exclusive jurisdiction of
any New York State or federal court sitting in the Borough of Manhattan in The
City of New York in any action or proceeding arising out of or relating to the
Notes or this Indenture, and each of the Issuer and the Co-Issuer hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York State or federal court.  Each of the Issuer and the Co-Issuer hereby
irrevocably waives, to the fullest extent that they may legally do so, the
defense of an inconvenient forum to the maintenance of such action or
proceeding.  Each of the Issuer and the
Co-Issuer irrevocably consents to the service of any and all process in any
action or proceeding by the mailing or delivery of copies of such process to it
at the office of the Issuer’s and the Co-Issuer’s agent set forth in Section
7.2.  Each of the Issuer and the
Co-Issuer agrees that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.

Section 14.11         Counterparts.

This instrument may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.

Section 14.12         Liability of Co-Issuers.

Notwithstanding any other
terms of this Indenture, the Notes or any other agreement entered into between,
inter alios, the Issuer and the
Co-Issuer or otherwise, neither the Issuer nor the Co-Issuer shall have any
liability whatsoever to the Co-Issuer or the Issuer, respectively, under this
Indenture, the Notes, any such agreement or otherwise and, without prejudice to
the generality of the foregoing, neither the Issuer nor the Co-Issuer shall be
entitled to take any steps to enforce, or bring any action or proceeding, in
respect of this Indenture, the Notes, any such agreement or otherwise against
the other Co-Issuer or the Issuer, respectively.  In particular, neither the Issuer nor the
Co-Issuer shall be entitled to petition or take any other steps for the winding
up or bankruptcy of the Co-Issuer or the Issuer, respectively or shall have any
claim in respect of any assets of the Co-Issuer or the Issuer, respectively.

 247
 

 

ARTICLE
15

ASSIGNMENT
OF COLLATERAL DEBT SECURITIES PURCHASE AGREEMENTS, COLLATERAL MANAGEMENT
AGREEMENT, ASSET SERVICING AGREEMENT AND THE CDO SERVICING AGREEMENT

Section 15.1           Assignment of Collateral Debt
Securities Purchase Agreement, the Collateral Management Agreements, the Asset
Servicing Agreement and the CDO Servicing Agreement.

(a)      The Issuer, in
furtherance of the covenants of this Indenture and as security for the Notes
and amounts payable to the Noteholders hereunder and the performance and
observance of the provisions hereof, hereby collaterally assigns, transfers,
conveys and sets over to the Trustee, for the benefit of the Noteholders and each
Hedge Counterparty, all of the Issuer’s estate, right, title and interest in,
to and under each Collateral Debt Securities Purchase Agreement (now or
hereafter entered into), the Collateral Management Agreement, the Asset
Servicing Agreement and the CDO Servicing Agreement (each, an “Article 15 Agreement”),
including, without limitation, (i) the right to give all notices, consents and
releases thereunder, (ii) the right to give all notices of termination and to
take any legal action upon the breach of an obligation of a Seller or the
Collateral Manager thereunder, including the commencement, conduct and
consummation of proceedings at law or in equity, (iii) the right to receive all
notices, accountings, consents, releases and statements thereunder and (iv) the
right to do any and all other things whatsoever that the Issuer is or may be
entitled to do thereunder; provided, however,
the Trustee hereby grants the Issuer a license to exercise all of the Issuer’s
rights pursuant to the Article 15 Agreements without notice to or the consent
of the Trustee (except as otherwise expressly required by this Indenture,
including, without limitation, as set forth in subsection (f) of this Section
15.1) which license shall be and is hereby deemed to be automatically
revoked upon the occurrence of an Event of Default hereunder until such time,
if any, as such Event of Default is cured or waived.

(b)      The assignment made
hereby is executed as collateral security, and the execution and delivery
hereby shall not in any way impair or diminish the obligations of the Issuer
under the provisions of each of the Article 15 Agreements, nor shall any of the
obligations contained in each of the Article 15 Agreements be imposed on the
Trustee.

(c)      Upon the retirement of
the Notes, the payment by the Issuer of all amounts payable under each Hedge
Agreement and the release of the Assets from the lien of this Indenture, this
assignment and all rights herein assigned to the Trustee for the benefit of the
Noteholders and each Hedge Counterparty shall cease and terminate and all the
estate, right, title and interest of the Trustee in, to and under each of the
Article 15 Agreements shall revert to the Issuer and no further instrument or
act shall be necessary to evidence such termination and reversion.

(d)      The Issuer represents
that it has not executed any assignment of any of the Article 15 Agreements
other than this collateral assignment.

 248
 

 

(e)      The Issuer agrees that
this assignment is irrevocable, and that it shall not take any action which is
inconsistent with this assignment or make any other assignment inconsistent
herewith.  The Issuer shall, from time to
time upon the request of the Trustee, execute all instruments of further
assurance and all such supplemental instruments with respect to this assignment
as the Trustee may specify.

(f)       The Issuer hereby
agrees, and hereby undertakes to obtain the agreement and consent of the Seller
and the Collateral Manager, as applicable, in the Collateral Debt Securities
Purchase Agreements, the Collateral Management Agreement, the Asset Servicing
Agreement and the CDO Servicing Agreement, as applicable, to the following:

(i)           each of the Seller
and the Collateral Manager consents to the provisions of this collateral
assignment and agrees to perform any provisions of this Indenture made
expressly applicable to each of the Seller and the Collateral Manager pursuant
to the applicable Article 15 Agreement;

(ii)          each of the Seller
and the Collateral Manager, as applicable, acknowledges that the Issuer is
collaterally assigning all of its right, title and interest in, to and under
the Collateral Debt Securities Purchase Agreements, the Collateral Management
Agreement, the Asset Servicing Agreement and the CDO Servicing Agreement, as
applicable, to the Trustee for the benefit of the Noteholders, each Hedge
Counterparty and each of the Seller and the Collateral Manager, as applicable,
agrees that all of the representations, covenants and agreements made by each
of the Seller and the Collateral Manager, as applicable, in the applicable
Article 15 Agreement are also for the benefit of, and enforceable by, the
Trustee, the Noteholders and each Hedge Counterparty;

(iii)         each of the Seller
and the Collateral Manager, as applicable, shall deliver to the Trustee
duplicate original copies of all notices, statements, communications and
instruments delivered or required to be delivered to the Issuer pursuant to the
applicable Article 15 Agreement;

(iv)        none of the Issuer,
the Seller or the Collateral Manager shall enter into any agreement amending,
modifying or terminating the applicable Article 15 Agreement, (other than in
respect of an amendment or modification to cure any inconsistency, ambiguity or
manifest error) or selecting or consenting to a successor collateral manager, without
notifying each Rating Agency and without the prior written consent and written
confirmation of each Rating Agency that such amendment, modification or
termination will not cause its then-current ratings of the Notes to be reduced;

(v)         except as otherwise
set forth herein and therein (including, without limitation, pursuant to Sections
12 and 13 of the Collateral Management Agreement), the Collateral
Manager shall continue to serve as Collateral Manager under the Collateral
Management Agreement, notwithstanding that the Collateral Manager shall not
have received amounts due it under the Collateral Management Agreement because
sufficient funds were not then available hereunder to pay such amounts pursuant
to the Priority of Payments.  The
Collateral Manager agrees not to cause the filing of a petition in bankruptcy
against the Issuer for the nonpayment of the fees or other amounts payable to

 249
 

 

the Collateral
Manager under the Collateral Management Agreement until the payment in full of
all Notes issued under this Indenture and the expiration of a period equal to
one year and one day (or, if longer, the applicable preference period then in
effect) following such payment; and

(vi)        the Collateral Manager
irrevocably submits to the non-exclusive jurisdiction of any New York State or
federal court sitting in the Borough of Manhattan in The City of New York in
any action or proceeding arising out of or relating to the Notes or this
Indenture, and the Collateral Manager 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
Collateral Manager irrevocably waives, to the fullest extent it may legally do
so, the defense of an inconvenient forum to the maintenance of such action or
proceeding.  The Collateral Manager
irrevocably consents to the service of any and all process in any action or
Proceeding by the mailing by certified mail, return receipt requested, or
delivery requiring signature and proof of delivery of copies of such initial
process to it at GKK Manager LLC, 420 Lexington Avenue, 19th Floor, New York,
New York 10170, Attention:  Andrew
Levine.  The Collateral Manager agrees
that a final and non-appealable judgment by a court of competent jurisdiction
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law.

 250

 

ARTICLE
16

HEDGE
AGREEMENT

Section 16.1           Issuer’s Obligations under Hedge
Agreement.

(a)      On the Closing Date and
thereafter, and on and after any date on which the Issuer enters into an
additional or replacement Hedge Agreement (including any related Hedge Counterparty
Credit Support), the Issuer as directed by the Collateral Manager shall (i)
require that each Hedge Counterparty thereto, or any third party (including an
Affiliate of such Hedge Counterparty) that (A) has absolutely and
unconditionally guaranteed the obligations of the Hedge Counterparty under the
related Hedge Agreement (with such form of guaranty as shall be satisfactory to
each Rating Agency then rating any Notes hereunder), (B) has entered into
credit intermediation arrangements in respect of the obligations of the Hedge
Counterparty under the related Hedge Agreement satisfactory to each Rating
Agency then rating any Notes hereunder, (C) is the issuing bank on one or more
letters of credit supporting the obligations of the Hedge Counterparty under
the related Hedge Agreement and that shall be reasonably acceptable to each
Rating Agency then rating any Notes hereunder or (D) has provided any other
additional credit support and such inclusion of additional credit support shall
have satisfied the Rating Agency Condition (any such third party, including an
Affiliate of such Hedge Counterparty, a “Hedge Counterparty Credit Support Provider”))
has, at the time the Hedge Agreement is executed, with respect to itself as an
issuer or with respect to its indebtedness, credit ratings at least equal to
the Hedge Counterparty Collateral Threshold Rating, and will maintain (at the
Hedge Counterparty’s or the Hedge Counterparty’s Credit Support Provider’s
expense), subject to Section 16.1(d) hereof, with respect to itself as
an issuer or with respect to its indebtedness, credit ratings at least equal to
the Hedge Counterparty Required Rating, by each Rating Agency then rating any
Notes hereunder, (ii) except with respect to a Form-Approved Liability Hedge, satisfy
the Rating Agency Condition with respect to any additional or replacement Hedge
Agreement and the related Hedge Counterparty and (iii) assign and grant a
security interest in such Hedge Agreement to the Trustee pursuant to this
Indenture.  Each Hedge Agreement will
provide that no amendment, modification or waiver in respect of such Hedge
Agreement, including any additional or replacement Hedge Agreement will be
effective unless (A) evidenced by a writing executed by each party thereto, (B)
the Trustee has acknowledged its consent thereto in writing and (C) each
Rating Agency confirms that such amendment, modification or waiver will not
cause the reduction or withdrawal of its then-current rating on any Class of
Notes.

(b)      The Trustee shall, on
behalf of the Issuer, pay amounts due to each Hedge Counterparty under the
related Hedge Agreements in accordance with Section 10.2(f), the
Priority of Payments and Section 16.1(g) hereof.

(c)      The notional amount of
certain Hedge Agreements providing for floating rate payments to the Issuer
will be calculated as a percentage of the principal amount of the Notes
originally anticipated to be Outstanding on each Payment Date based on certain
assumptions. In accordance with the terms of each Hedge Agreement, such notional
amount

 251
 

 

will be reduced by the Issuer (or the Collateral Manager on behalf of
the Issuer) or each Hedge Counterparty on each Payment Date to the extent that
(i) the outstanding principal amount of the Notes is less than the scheduled
aggregate notional amount of the related Hedge Agreements for such Payment Date
and/or (ii) the Net Outstanding Portfolio Balance is less than the scheduled
aggregate notional amount of the related Hedge Agreements for such Payment Date
and/or (iii) in the case of a Liability Hedge or other single asset-specific
Hedge Agreement, the outstanding Principal Balance of the related underlying
Collateral Debt Security is less than a percentage (as set forth in the related
Hedge Agreement) of the Scheduled material amount of the related Hedge
Agreement; provided that if any Notes are then Outstanding, the Trustee
shall first have received written evidence that the Rating Agency Condition
with respect to Moody’s and S&P has been satisfied with respect to such
reduction other than as scheduled and Fitch shall have been notified of such
reduction other than as scheduled. 
Additionally, subject to satisfaction of the Rating Agency Condition
with respect to Moody’s and S&P and the notification of Fitch in respect
thereof, a termination in part of a Hedge Agreement and a corresponding
reduction in the notional amount of the Hedge Agreement may occur, in the event
of a Mandatory Redemption or Special Amortization of the Notes.  The Issuer’s remaining obligations in
accordance with the Priority of Payments will not be affected by any such
reduction.  Notwithstanding any right of
the Issuer to terminate each Hedge Agreement or related Hedge Counterparty
Credit Support upon the occurrence of a Termination Event or an Event of
Default (each as defined in each Hedge Agreement) or otherwise pursuant to a
Hedge Agreement, the Issuer shall not (x) terminate any Hedge Agreement or
Hedge Counterparty Credit Support or (y) cause the non-replacement of any
terminated Hedge Agreement, unless in each case the Issuer notifies Fitch
thereof and obtains a written confirmation from Moody’s and S&P that such
termination or non-replacement, as applicable, would not cause such Rating
Agency’s then-current rating on any Class of Notes, as applicable, to be
adversely qualified, reduced, suspended or withdrawn.

(d)      Each Hedge Agreement
shall provide for termination, and shall be capable of being terminated (i) by
or on behalf of the Issuer upon the failure of the related Hedge Counterparty
to post collateral under a Hedge Counterparty Credit Support within the time
period specified in the related Hedge Agreement or provide other alternate
credit enhancement in accordance with the related Hedge Agreement, and upon the
failure of the related Hedge Counterparty to make a Permitted Transfer (at the
Hedge Counterparty’s sole cost and expense) of all of its rights and
obligations under the related Hedge Agreement or subject to satisfaction of the
Rating Agency Condition, to a Counterparty that maintains the Hedge
Counterparty Required Ratings within the time period specified in the related
Hedge Agreement, after the failure of the related Hedge Counterparty (or any
Hedge Counterparty Credit Support Provider) to have the Hedge Counterparty
Collateral Threshold Ratings; (ii) by or on behalf of the Issuer upon the
failure of the related Hedge Counterparty to make a Permitted Transfer (at the
related Hedge Counterparty’s sole cost and expense) of all of its rights and
obligations under the related Hedge Agreement within the time period specified
in the related Hedge Agreement after the failure of the related Hedge
Counterparty (or any Hedge Counterparty Credit Support Provider) to have the
Hedge Counterparty Required Ratings (provided, however,
that the related Hedge Counterparty shall continue to post collateral and use
its best efforts to find a replacement pursuant to the related Hedge Agreement
until the earlier to occur of termination of the related Hedge Agreement by or
on behalf of the Issuer or consummation of a Permitted Transfer unless the
Rating Agency

 252
 

 

Condition has been satisfied with respect to such termination, (iii) by
the related Hedge Counterparty, upon the failure of the Issuer to make, when
due, any scheduled periodic payments under the related Hedge Agreement, (iv) in
whole or in part as provided in the related Hedge Agreement, upon the final
sale of the Assets, an Auction Call Redemption, an Optional Redemption, a
Clean-up Call or a Tax Redemption, (v) in part as provided in the related Hedge
Agreement, subject to satisfaction of the Rating Agency Condition with respect
to Moody’s and S&P, upon a Mandatory Redemption or a Special Amortization,
(vi) by the related Hedge Counterparty upon any declaration by the Trustee that
the Notes have become due and payable or (vii) as otherwise expressly provided
for in the related Hedge Agreement.  The
Issuer shall satisfy the Rating Agency Condition with respect to Moody’s and
S&P with respect to any transfer of all of the rights and obligations of
any Hedge Counterparty under any Hedge Agreement.

(e)      The Trustee shall, prior
to the Closing Date, establish a single, segregated trust account with respect
to each Hedge Counterparty in the name of the Trustee, each designated as the “Hedge
Collateral Account,” which shall be held in trust for the benefit of the
Noteholders and the applicable Hedge Counterparty, over which the Trustee shall
have exclusive control and the sole right of withdrawal, and in which no Person
other than the Trustee and the Noteholders and the applicable Hedge
Counterparty shall have any legal or beneficial interest.  The Trustee shall deposit all collateral
received from the related Hedge Counterparty under the related Hedge Agreement
in the related Hedge Collateral Account. 
Any and all funds at any time on deposit in, or otherwise to the credit
of, each Hedge Collateral Account shall be held in trust by the Trustee for the
benefit of the Noteholders.  The only
permitted withdrawal from or application of funds on deposit in, or otherwise
to the credit of, each Hedge Collateral Account shall be (i) for application to
obligations of the applicable Hedge Counterparty to the Issuer under the
related Hedge Agreement in accordance with the terms of such Hedge Agreement or
(ii) to return collateral to the applicable Hedge Counterparty when and as
required by the related Hedge Agreement, which the Trustee shall return to the
applicable Hedge Counterparty in accordance with the related Hedge
Agreement.  Each Hedge Collateral Account
shall remain at all times with the Corporate Trust Office or a financial
institution having a long-term debt rating at least equal to “A-” or “A2,” as
applicable, or a short-term debt rating at least equal to “A-1,” “P-1” or “F1,”
as applicable.

(f)       Upon the default by a
Hedge Counterparty in the payment when due of its obligations to the Issuer
under the related Hedge Agreement (following the expiration of any applicable
grace period), the Trustee shall forthwith provide facsimile notice thereof to
the Issuer, the Collateral Manager, each of the Rating Agencies and, if
applicable, any Hedge Counterparty Credit Support Provider.  When the Trustee becomes aware of such
default, the Trustee shall make a demand on the applicable Hedge Counterparty,
or any Hedge Counterparty Credit Support Provider, if applicable, for payment
forthwith.  The Trustee shall give notice
to the Noteholders and further notice to the Collateral Manager upon the
continuing failure by such Hedge Counterparty or any Hedge Counterparty Credit
Support Provider to perform its obligations during the two (2) Business Days
following a demand made by the Trustee on such Hedge Counterparty or any such
Hedge Counterparty Credit Support Provider.

 253
 

 

(g)      Upon the termination or
partial termination of each Hedge Agreement, the Issuer at the direction of the
Collateral Manager and the Trustee shall take such commercially reasonable
actions (following the expiration of any applicable grace period and after the
expiration of the applicable time period set forth in the related Hedge
Agreement) to enforce the rights of the Issuer and the Trustee thereunder as
may be permitted by the terms of the Hedge Agreement and consistent with the
terms hereof, and shall apply the proceeds of any such actions (including,
without limitation, the proceeds of the liquidation of any collateral pledged
by or on behalf of each Hedge Counterparty) to enable the Issuer to enter into
an additional or replacement Hedge Agreements within thirty (30) days
of the expiration of any such grace period and such applicable time period as
set forth in the related Hedge Agreement on substantially identical terms or on
such other terms subject to the Rating Agency Condition.  The Trustee shall, promptly after the Closing
Date, in respect of each Hedge Counterparty, establish a single segregated
trust account in the name of the Trustee, each designated the “Hedge
Termination Account,” which shall be held in trust for the benefit of the
Noteholders and each Hedge Counterparty and over which the Trustee will have
exclusive control and the sole right of withdrawal, and in each of which no
person other than the Trustee, the Noteholders and the Hedge Counterparty will
have any legal or beneficial interest. 
Each Hedge Collateral Account shall remain at all times with the
Corporate Trust Office or a financial institution having a long-term debt
rating at least equal to “A-” or “A2,” as applicable, or a short-term debt
rating at least equal to “A-1,” “P-1” or “F1,” as applicable.  Notwithstanding anything contained in this
Indenture to the contrary, any payments (other than payments relating to
past-due scheduled payments on a Hedge Agreement) received by the Issuer or
Trustee in connection with either (x) the termination (in whole or in part) of
a related Hedge Agreement or (y) the execution of an additional or replacement
Hedge Agreements shall be immediately transferred to the Trustee for deposit
into the related Hedge Termination Account. 
Any costs attributable to entering into an additional or replacement
Hedge Agreements (other than in connection with a Permitted Transfer) with
respect to the related Hedge Counterparty shall be paid from the related Hedge
Termination Account, and any such amounts which are payable but exceed the
balance in the related Hedge Termination Account shall be borne solely by the
Issuer and shall constitute expenses payable under clause (5) of Section
11.1(a)(i) hereof.  Additionally, any
amounts that are due and payable to a Hedge Counterparty upon a termination of
a Hedge Agreement shall be paid from any amounts on deposit in the related
Hedge Termination Account, and, to the extent the amounts on deposit in such
Hedge Termination Account are insufficient to pay all such amounts, then such
amounts will be payable in accordance with Sections 11.1(a)(i) and (ii)
hereof.  Any amounts remaining on deposit
in a Hedge Termination Account related to a Hedge Agreement following payment
to the Hedge Counterparty shall be transferred to the Principal Collection
Account and shall constitute Principal Proceeds.  If determining the amount payable under the
terminated Hedge Agreement, the Issuer or the Collateral Manager on behalf of
the Issuer shall seek quotations in accordance with the terms of the related
Hedge Agreement from reference market-makers whose ratings are at least equal
to the Hedge Counterparty Collateral Threshold Ratings.  In certain circumstances, a Hedge Agreement
may provide that the applicable Hedge Counterparty is responsible for
determining the amounts payable.  In
addition, the Issuer or the Collateral Manager on behalf of the Issuer shall
use commercially reasonable efforts to cause the termination of the related
Hedge Agreement to become

 254
 

 

effective simultaneously with the effectiveness of a replacement
thereto, described as aforesaid.

(i)            Notwithstanding
anything to the contrary set forth herein, for so long as any Class of Notes is
Outstanding under this Indenture and is rated by (i) S&P if any Hedge
Counterparty falls below (A) a rating by S&P of at least “A+” (if such
Hedge Counterparty does not have a short-term debt rating from S&P) or (B)
a short-term debt rating by S&P of at least “A-1”, then such Hedge
Counterparty shall, within thirty (30) days, post
collateral in respect of its obligations under the related Hedge Agreement.

Section 16.2           Collateral Debt Securities
Purchase Agreements.

Following the Closing
Date, unless a Collateral Debt Securities Purchase Agreement is necessary to
comply with the provisions of this Indenture, the Issuer may acquire Collateral
Debt Securities in accordance with customary settlement procedures in the
relevant markets. In any event, the Issuer shall obtain from any seller of a
Loan, all Underlying Instruments with respect to each Collateral Debt Security
and all Underlying Instruments related to any related Senior Tranche that
govern, directly or indirectly, the rights and obligations of the owner of the
Collateral Debt Security with respect to the Underlying Term Loan, the
Underlying Mortgaged Property and the Collateral Debt Security and any
certificate evidencing the Collateral Debt Security.

Section 16.3           Cure Rights.

(a)      If the Issuer, as holder
of a Loan, has the right pursuant to the related Underlying Instruments to cure
an event of default on the Underlying Term Loan, the Collateral Manager may, in
accordance with the Collateral Manager Servicing Standard advance from its own
funds with respect to the Loan as a reimbursable Cure Advance, all such amounts
as are necessary to effect the timely cure of such event of default pursuant to
the terms of the related Underlying Instruments; provided that (i) such advances may only be made (A) to the extent
that the Collateral Manager reasonably believes that such cash advances can be
repaid from future payments on the related underlying commercial mortgage loan
and in accordance with the Collateral Manager’s Servicing Standard and (B) if
the Collateral Manager receives written instruction from holders of at least a
Majority of the aggregate outstanding notional amount of the Preferred Shares
with respect thereto, and (ii) the particular advance would not, if made,
constitute a Nonrecoverable Cure Advance. 
The determination by the Collateral Manager that it has made a
Nonrecoverable Cure Advance or that any proposed Cure Advance, if made, would
constitute a Nonrecoverable Cure Advance shall be made by the Collateral
Manager in its reasonable good faith judgment in accordance with the Collateral
Manager Servicing Standard and shall be evidenced by an Officer’s Certificate
delivered promptly to the Trustee, setting forth the basis for such
determination, accompanied by an appraisal, if available, or an independent
broker’s opinion of the value of the Underlying Mortgaged Property and any
information that the Collateral Manager may have obtained and that supports
such determination.  The Collateral
Manager will be entitled to reimbursement from any subsequent payments or
recoveries on each Collateral Debt Security in respect of which it makes a Cure
Advance in accordance with the Priority of Payments if such reimbursement would
not cause an Interest Shortfall; provided that, if at any

 255
 

 

time the Collateral Manager shall determine in its sole discretion,
exercised in good faith and in accordance with the Collateral Manager Servicing
Standard, that a Cure Advance previously made is a Nonrecoverable Cure Advance,
the Collateral Manager shall be entitled to reimbursements for such
Nonrecoverable Cure Advance from subsequent payments or collections with
respect to the Assets on any Business Day during any Interest Accrual Period
prior to the related Determination Date (or on a Payment Date prior to any
payment of interest on or principal of the Notes in accordance with the
Priority of Payments).  Notwithstanding
the foregoing, the Collateral Manager will be permitted (but not obligated) to
defer or otherwise structure the timing of recovery of any Nonrecoverable Cure
Advance in such manner as the Collateral Manager determines (subject to the
applicable provisions of the Asset Servicing Agreement) is in the best interest
of the Noteholders as a collective whole, which may include being reimbursed
for such Nonrecoverable Cure Advance in installments; provided that the
Collateral Manager will not be permitted to defer recovery of any
Nonrecoverable Cure Advance (or any portion thereof) on any Payment Date to the
extent that there are amounts available to be distributed to the Preferred
Shares Paying Agent for deposit into the Preferred Shares Distribution Account
on such Payment Date for distribution to the holders of the Preferred Shares in
accordance with the Priority of Payments without regard to such deferral.  For the avoidance of doubt, the Collateral
Manager may terminate any such deferment at any time.

(b)      On the Business Day
preceding each Determination Date, the Collateral Manager may request by
Officer’s Certificate delivered to the Trustee, reimbursement for any (x) Cure
Advance or (y) Nonrecoverable Cure Advance, from any amounts received with
respect to the related Collateral Debt Security or the Assets,
respectively.  No later than the Payment
Date related to the Determination Date for which the Collateral Manager has
delivered an Officer’s Certificate requesting reimbursement of a Cure Advance
or a Nonrecoverable Cure Advance, the Trustee shall transfer to the Collateral
Manager, by wire transfer to an account identified to the Trustee in writing,
the amount of such Cure Advance or Nonrecoverable Cure Advance, as applicable.

(c)      Notwithstanding anything
to the contrary set forth herein, the Collateral Manager shall not be required
to make any Cure Advance that it determines in its reasonable, good faith
judgment would constitute a Nonrecoverable Cure Advance as determined pursuant
to Section 16.3(a).

Section 16.4           Purchase Right; Majority Preferred
Shares Holder.

If the Issuer, as holder
of a Participation or B Note, has the right pursuant to the related Underlying
Instruments to purchase any related Senior Tranche(s), the Issuer may, and
shall if directed by the Majority Preferred Shares Holder, exercise such right,
if the Collateral Manager determines based on the Collateral Manager Servicing
Standard that the exercise of the option would be in the best interest of the
Noteholders, but may not exercise such right if the Collateral Manager
determines otherwise.  The Collateral
Manager shall deliver to the Trustee an Officer’s Certificate certifying such
determination, accompanied by an Act of the Majority Preferred Shares Holder
directing the Issuer to exercise such right. 
In connection with the purchase of any such Senior Tranche(s), the
Issuer shall assign to the Majority Preferred Shares Holder or its designee all
of its right, title and interest in such Senior Tranche(s) in exchange for

 256
 

 

a purchase price (such price and any other associated
expense of such exercise to be paid by the Majority Preferred Shares Holder) of
the Senior Tranche(s) (or, if the Underlying Instruments permit, the Issuer may
assign the purchase right to the Majority Preferred Shares Holder or its
designee; otherwise the Majority Preferred Shares Holder or its designee shall
fund the purchase by the Issuer, which shall then assign the Senior Tranche(s)
to the Majority Preferred Shares Holder or its designee) (the “Purchase
Option Purchase Price”), which amount shall be delivered by the Majority
Preferred Shares Holder or its designee from its own funds to or upon the
instruction of the Collateral Manager in accordance with terms of the
Underlying Instruments related to the acquisition of such Senior
Tranche(s).  The Trustee or the Issuer
shall execute and deliver at the Majority Preferred Shares Holder’s direction
such instruments of transfer or assignment prepared by the Majority Preferred
Shares Holder, in each case without recourse, as shall be necessary to transfer
title to the Majority Preferred Shares Holder or its designee of the Senior
Tranche(s) and the Trustee shall have no responsibility with regard to such
Senior Tranche(s).  As long as the Issuer
owns the related Collateral Debt Security, the Issuer shall not exercise any
purchase rights with respect to a Participation or B Note that is a pari passu interest relative to another Participation or B
Note related to the same mortgage loan; provided, however, that the Collateral Manager may (in accordance with the
Collateral Manager Servicing Standard) assign such right to third parties to
the extent that it is able to do so pursuant to the terms of the related
Underlying Instruments.

Section 16.5           Representations and Warranties
Related to Subsequent Collateral Debt Securities.

(a)      If the Collateral Debt
Security is a Subsequent Collateral Debt Security, upon the acquisition of such
Subsequent Collateral Debt Security by the Issuer, the related seller has made
or assigned to the Issuer the following:

(i)           (A) representations
and warranties in form and substance substantially similar to the
representations and warranties set forth as Schedule H with
respect to the Underlying Term Loan and the Underlying Mortgaged Property
(except with respect to Mezzanine Loans) and (B) representations and
warranties regarding good title, no liens, no modifications, no defaults and
valid assignment with respect to the Loan itself; and

(ii)          in the case of a B
Note, the representations and warranties in form and substance substantially
similar to the representations and warranties set forth as Schedule I
with respect to such B Note;

(iii)         in the case of a
Participation, the representations and warranties in form and substance
substantially similar to the representations and warranties set forth as Schedule
J with respect to such Participation;

(iv)        in the case of a
Mezzanine Loan, the representations and warranties in form and substance
substantially similar to the representations and warranties set forth as Schedule
K with respect to such Mezzanine Loan;

 257
 

 

(v)         in the case of a
Preferred Equity Security, the representations and warranties in form and
substance substantially similar to the representations and warranties set forth
as Schedule M with respect to such Preferred Equity Security;

(vi)        in the case of a CMBS
Security, the representations and warranties in form and substance
substantially similar to the representations and warranties set forth as Schedule
L with respect to such CMBS Security;

(vii)       in the case of a CRE
CDO Security, the representations and warranties in form and substance
substantially similar to the representations and warranties set forth as Schedule
L with respect to such CRE CDO Security;

(viii)      in the case of a Rake
Bond, the representations and warranties in form and substance substantially
similar to the representations and warranties set forth as Schedule L
with respect to such Rake Bond;

(ix)         in the case of
Collateral Debt Securities collateralized by Healthcare Properties (including
skilled nursing facilities), the representations and warranties in form and substance
substantially similar to the representations and warranties set forth as Schedule
N with respect to such Securities collateralized by Healthcare Properties
(including skilled nursing facilities);

(x)          in the case of a REIT
Debt Security, the representations and warranties in form and substance
substantially similar to the representations and warranties set forth as Schedule
L with respect to such REIT Debt Security; and

(xi)         in the case of a
Credit Tenant Lease Loan, the representations and warranties in form and
substance substantially similar to the representations and warranties set forth
as Schedule R with respect to such Credit Tenant Lease Loan.

(b)      The representations and
warranties in Section 16.5(a) with respect to the acquisition of a Subsequent
Collateral Debt Security may be subject to any modification, limitation or
qualification that the Collateral Manager determines to be acceptable in
accordance with the Collateral Manager Servicing Standard; provided that
the Collateral Manager will provide each Rating Agency with a report attached
to each Monthly Report identifying each such modification, exception,
limitation or qualification received with respect to the acquisition of any
Subsequent Collateral Debt Security during the period covered by the Monthly
Report, which report may contain explanations by the Collateral Manager as to
its determinations.

(c)      The Issuer shall obtain a
covenant from the Person making any representation or warranty to the Issuer
pursuant to Section 16.5(a) that such Person shall repurchase the
related Collateral Debt Security if any such representation or warranty is
breached (but only after the expiration of any permitted cure periods and
failure to cure such breach).  The purchase
price for any Collateral Debt Security repurchased (the “Repurchase Price”)
shall be a price equal to the sum of the following (in each case, without
duplication) as of the date of such repurchase: (i) the outstanding principal
amount thereof, plus (ii) accrued and unpaid
interest on such Collateral Debt Security, plus (iii) any
unreimbursed advances,

 258
 

 

plus (iv) accrued and unpaid interest on
advances on the Collateral Debt Security, plus (v) any
reasonable costs and expenses (including, but not limited to, the cost of any
enforcement action, incurred by the Issuer or the Trustee in connection with
any such purchase by a seller).

Section 16.6           Operating Advisor; Additional Debt.

If the Issuer, as holder
of a B Note, a Participation, Preferred Equity Security or a Mezzanine Loan,
has the right pursuant to the related Underlying Instruments to appoint the
operating advisor, directing holder or Person serving a similar function under
the Underlying Instruments, each of the Issuer, the Trustee and the Collateral
Manager shall take such actions as are reasonably necessary to appoint the
Collateral Manager to such position.  If
the Issuer, as holder of a B Note, a Participation or a Mezzanine Loan, has the
right pursuant to the related Underlying Instruments to consent to the related
borrower incurring any additional debt, such consent will be subject to
satisfaction of the Rating Agency Condition.

 259
 

 

ARTICLE
17

ADVANCING
AGENT

Section 17.1           Liability of the Advancing Agent.

The Advancing Agent shall
be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Advancing Agent.  The Advancing Agent shall promptly provide
notice to the Issuer, the Co-Issuer, the Collateral Manager, each Hedge
Counterparty and the Trustee of (i) any voluntary or involuntary proceeding or
petition seeking winding up, liquidation, reorganization or other relief under
any bankruptcy, insolvency, receivership or similar law now or hereinafter in
effect, (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Advancing Agent or for a substantial
part of its assets and (iii) any general assignment made by the Advancing Agent
for the benefit of its creditors.

Section 17.2           Merger or Consolidation of the
Advancing Agent.

(a)      The Advancing Agent will
keep in full effect its existence, rights and franchises as a corporation under
the laws of the jurisdiction in which it was formed, and will obtain and
preserve its qualification to do business as a foreign corporation in each jurisdiction
in which such qualification is or shall be necessary to protect the validity
and enforceability of this Indenture to perform its duties under this
Indenture.

(b)      Any Person into which the
Advancing Agent may be merged or consolidated, or any corporation resulting
from any merger or consolidation to which the Advancing Agent shall be a party,
or any Person succeeding to the business of the Advancing Agent shall be the
successor of the Advancing Agent, hereunder, without the execution or filing of
any paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding (it being understood and agreed by the
parties hereto that the consummation of any such transaction by the Advancing
Agent shall have no effect on the Trustee’s obligations under Section 10.10,
which obligations shall continue pursuant to the terms of Section 10.10).

Section 17.3           Limitation on Liability of the
Advancing Agent and Others.

None of the Advancing
Agent or any of its affiliates, directors, officers, employees or agents shall
be under any liability for any action taken or for refraining from the taking
of any action in good faith pursuant to this Indenture, or for errors in
judgment; provided, however,
that this provision shall not protect the Advancing Agent against liability to
the Issuer or Noteholders for any breach of warranties or representations made
herein or any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of negligent disregard of obligations and duties hereunder.  The Advancing Agent and any director,
officer, employee or agent of the Advancing Agent may rely in good faith on any
document of any kind prima facie properly executed and

 260
 

 

submitted by any Person respecting any matters arising
hereunder. The Advancing Agent and any director, officer, employee or agent of
the Advancing Agent shall be indemnified by the Issuer pursuant to the
priorities set forth in Section 11.1(a) and held harmless against any
loss, liability or expense incurred in connection with any legal action
relating to this Indenture or the Notes, other than any loss, liability or
expense (i) specifically required to be borne by the Advancing Agent pursuant
to the terms hereof or otherwise incidental to the performance of obligations
and duties hereunder (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Indenture); or (ii) incurred by reason
of any breach of a representation, warranty or covenant made herein, any
misfeasance, bad faith or negligence by the Advancing Agent in the performance
of or negligent disregard of, obligations or duties hereunder or any violation
of any state or federal securities law.

Section 17.4           Representations and Warranties of
the Advancing Agent.

The Advancing Agent
represents and warrants that:

(a)      the Advancing Agent (i)
has been duly organized, is validly existing and is in good standing under the
laws of the State of Delaware, (ii) has full power and authority to own the
Advancing Agent’s assets and to transact the business in which it is currently
engaged, and (iii) is duly qualified and in good standing under the laws of
each jurisdiction where the Advancing Agent’s ownership or lease of property or
the conduct of the Advancing Agent’s business requires, or the performance of
this Indenture would require, such qualification, except for failures to be so
qualified that would not in the aggregate have a material adverse effect on the
business, operations, assets or financial condition of the Advancing Agent or
the ability of the Advancing Agent to perform its obligations under, or on the
validity or enforceability of, the provisions of this Indenture applicable to
the Advancing Agent;

(b)      the Advancing Agent has
full power and authority to execute, deliver and perform this Indenture; this
Indenture has been duly authorized, executed and delivered by the Advancing
Agent and constitutes a legal, valid and binding agreement of the Advancing
Agent, enforceable against it in accordance with the terms hereof, except that
the enforceability hereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors’ rights and (ii) general principles of equity (regardless
of whether such enforcement is considered in a proceeding in equity or at law);

(c)      neither the execution and
delivery of this Indenture nor the performance by the Advancing Agent of its
duties hereunder conflicts with or will violate or result in a breach or
violation of any of the terms or provisions of, or constitutes a default under:
(i) the Certificate of Formation and limited liability company agreement of the
Advancing Agent, (ii) the terms of any indenture, contract, lease, mortgage,
deed of trust, note agreement or other evidence of indebtedness or other
agreement, obligation, condition, covenant or instrument to which the Advancing
Agent is a party or is bound, (iii) any law, decree, order, rule or regulation
applicable to the Advancing Agent of any court or regulatory, administrative or
governmental agency, body or authority or arbitrator having jurisdiction over
the Advancing Agent or its properties, and which would have, in the case of any
of (i), (ii) or (iii) of this

 261
 

 

subsection (c), either individually or in the aggregate, a material
adverse effect on the business, operations, assets or financial condition of
the Advancing Agent or the ability of the Advancing Agent to perform its
obligations under this Indenture;

(d)      no litigation is pending
or, to the best of the Advancing Agent’s knowledge, threatened, against the
Advancing Agent that would materially and adversely affect the execution,
delivery or enforceability of this Indenture or the ability of the Advancing
Agent to perform any of its obligations under this Indenture in accordance with
the terms hereof; and

(e)      no consent, approval,
authorization or order of or declaration or filing with any government,
governmental instrumentality or court or other person is required for the
performance by the Advancing Agent of its duties hereunder, except such as have
been duly made or obtained.

Section 17.5           Resignation and Removal;
Appointment of Successor.

(a)      No resignation or removal
of the Advancing Agent and no appointment of a successor Advancing Agent
pursuant to this Article 17 shall become effective until the acceptance
of appointment by the successor Advancing Agent under Section 17.6.

(b)      The Advancing Agent may
resign at any time by giving written notice thereof to the Issuer, the
Co-Issuer, the Trustee, the Collateral Manager, each Hedge Counterparty, the
Noteholders and each Rating Agency.

(c)      The Advancing Agent may
be removed at any time by Act of 66 2/3% of the Preferred Shares upon written
notice delivered to the Trustee and to the Issuer and the Co-Issuer.

(d)      If the Advancing Agent
fails to make an Interest Advance required by this Indenture with respect to a
Distribution Date, the Trustee, in its capacity as Back-Up Advancing Agent,
shall be required to make such Interest Advance and shall be entitled to
receive, in consideration thereof, the Advancing Agent Fee (in lieu of the
Back-Up Advancing Fee) in accordance with the Priority of Payments.

(e)      In addition, if the
Advancing Agent shall have failed, on more than two occasions prior to date on
which no Class A Notes or Class B Notes remain Outstanding, to make an Interest
Advance required by this Indenture, which failure, in each case, is not cured
by the remittance of the amount of such Interest Advance by the Advancing Agent
to the Trustee within thirty (30) days of such failure, such Advancing Agent
shall be deemed to have automatically (and without the need for any act on the
part of any Person) resigned as an advancing agent hereunder and the Trustee
shall automatically (and without the need for any act on the part of any
Person) assume the capacity of the successor Advancing Agent hereunder.  Thereafter, the Trustee shall be entitled to
receive, in consideration of becoming the successor Advancing Agent, the
Advancing Agent Fee (for so long as the Trustee acts as successor Advancing
Agent) in lieu of the Backup Advancing Agent Fee in accordance with the
Priority of Payments.

 262
 

 

(f)       If the Advancing Agent
shall resign or be removed, upon receiving such notice of resignation or
removal, the Issuer and the Co-Issuer shall promptly appoint a successor
advancing agent by written instrument, in duplicate, executed by an Authorized
Officer of the Issuer and an Authorized Officer of the Co-Issuer, one copy of
which shall be delivered to the Advancing Agent so resigning and one copy to
the successor Advancing Agent, together with a copy to each Noteholder, the
Trustee, each Hedge Counterparty and the Collateral Manager; provided that such successor Advancing Agent shall be appointed only
subject to satisfaction of the Rating Agency Condition and upon the written
consent of a Majority of the Preferred Shares. 
If no successor Advancing Agent shall have been appointed and an
instrument of acceptance by a successor Advancing Agent shall not have been
delivered to the Advancing Agent within thirty (30) days after the giving of
such notice of resignation, the resigning Advancing Agent, the Trustee or any
Preferred Shareholder, on behalf of himself and all others similarly situated,
may petition any court of competent jurisdiction for the appointment of a
successor Advancing Agent.

(g)      The Issuer and the
Co-Issuer shall give prompt notice of each resignation and each removal of the
Advancing Agent and each appointment of a successor Advancing Agent by mailing
written notice of such event by first class mail, postage prepaid, to each
Rating Agency, each Hedge Counterparty and to the Holders of the Notes as their
names and addresses appear in the Notes Register.

(h)      No resignation or removal
of the Advancing Agent and no appointment of a Successor Advancing Agent shall
become effective until the acceptance of appointment by the Successor Advancing
Agent.

Section 17.6           Acceptance of Appointment by Successor
Advancing Agent.

(a)      Every successor Advancing
Agent appointed hereunder shall execute, acknowledge and deliver to the Issuer,
the Co-Issuer, each Hedge Counterparty, the Collateral Manager, the Trustee and
the retiring Advancing Agent an instrument accepting such appointment.  Upon delivery of the required instruments,
the resignation or removal of the retiring Advancing Agent shall become
effective and such successor Advancing Agent, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts, duties and
obligations of the retiring Advancing Agent.

(b)      No appointment of a
successor Advancing Agent shall become effective unless each Rating Agency has
confirmed in writing that the employment of such successor would not adversely
affect the rating on the Notes.

 263

 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Indenture as of the day and year first above written.

	
  

  	
  Executed as a
  Deed

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GRAMERCY REAL
  ESTATE CDO 2006-1,

  LTD., as Issuer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Witness:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GRAMERCY REAL
  ESTATE CDO 2006-1

  LLC, as Co-Issuer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WELLS FARGO
  BANK, NATIONAL ASSOCIATION, solely as Trustee, Paying Agent, Calculation
  Agent, Transfer Agent, Custodial Securities Intermediary, Backup Advancing
  Agent and Notes Registrar and not in its individual capacity

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

 

	
  

  	
  GKK LIQUIDITY
  LLC, as Advancing Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00112-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00112-of-00352.parquet"}]]