Document:

Exhibit 10.2

 

EXECUTION COPY

 

SECURITY AGREEMENT

 

dated as of July 1, 2004

 

between

 

N-STAR REAL ESTATE CDO II
LTD.,

as Issuer,

 

and

 

LaSALLE BANK NATIONAL
ASSOCIATION,

as Trustee and as
Accountholder

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  I            DEFINITIONS

  	
   

  	
  2

  
	
  Section 1.01.   Definitions

  	
   

  	
  2

  
	
  Section 1.02.   Assumptions as to
  Collateral Debt Securities

  	
   

  	
  2

  
	
  Section 1.03.   Generic Terms

  	
   

  	
  3

  
	
  Section 1.04.   Times

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II           THE COLLATERAL

  	
   

  	
  3

  
	
  Section 2.01.   Security Interests

  	
   

  	
  3

  
	
  Section 2.02.   Creation of
  Security Interest; Transfer of Control

  	
   

  	
  7

  
	
  Section 2.03.   Termination of
  Security Interests

  	
   

  	
  7

  
	
  Section 2.04.   Priority of
  Payments

  	
   

  	
  7

  
	
  Section 2.05.   Representations
  Regarding Collateral

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III          RAMP-UP PERIOD PURCHASES
  AND EFFECTIVE DATE ACTIONS

  	
   

  	
  9

  
	
  Section 3.01.   Closing Date
  Requirements

  	
   

  	
  9

  
	
  Section 3.02.   Ramp-Up Period
  Purchases

  	
   

  	
  9

  
	
  Section 3.03.   Effective Date
  Actions

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV          ACCOUNTS, ACCOUNTINGS AND
  RELEASES

  	
   

  	
  11

  
	
  Section 4.01.   Collection of Money

  	
   

  	
  11

  
	
  Section 4.02.   Collection Account

  	
   

  	
  11

  
	
  Section 4.03.   Interest Reserve
  Account

  	
   

  	
  13

  
	
  Section 4.04.   Expense Reserve
  Account

  	
   

  	
  14

  
	
  Section 4.05.   Collateral Account

  	
   

  	
  15

  
	
  Section 4.06.   Reports by Trustee

  	
   

  	
  16

  
	
  Section 4.07.   Accountings

  	
   

  	
  16

  
	
  Section 4.08.   Release of
  Securities

  	
   

  	
  21

  
	
  Section 4.09.   Reports by
  Independent Accountants

  	
   

  	
  22

  
	
  Section 4.10.   Reports to Rating
  Agencies

  	
   

  	
  23

  
	
  Section 4.11.   Notices of
  Noteworthy Events

  	
   

  	
  23

  
	
  Section 4.12.   Amendments to the
  Transaction Documents

  	
   

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V           PRIORITY OF PAYMENTS

  	
   

  	
  23

  
	
  Section 5.01.   Disbursements of
  Money from Collection Account

  	
   

  	
  23

  
	
  Section 5.02.   Additional
  Provisions

  	
   

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI          PURCHASE, SALE AND
  REINVESTMENT OF COLLATERAL DEBT SECURITIES

  	
   

  	
  29

  

 

i

 

TABLE
OF CONTENTS

(continued)

 

	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 6.01.   Sale of Collateral
  Debt Securities

  	
   

  	
  29

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

  	
   

  	
  31

  
	
  Section 6.03.   Conditions
  Applicable to all Transactions

  	
   

  	
  35

  
	
  Section 6.04.   Collateral Quality
  Tests

  	
   

  	
  36

  
	
  Section 6.05.   Coverage Tests

  	
   

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII        SUBORDINATION

  	
   

  	
  39

  
	
  Section 7.01.   Subordination

  	
   

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII       HEDGE AGREEMENTS, INITIAL
  HEDGE AGREEMENT

  	
   

  	
  42

  
	
  Section 8.01.   Hedge Agreement
  Provisions

  	
   

  	
  42

  
	
  Section 8.02.   Initial Hedge
  Agreement

  	
   

  	
  45

  
	
  Section 8.03.   Acknowledgement of
  Custodian

  	
   

  	
  45

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IX         THE TRUSTEE AND ACCOUNTHOLDER

  	
   

  	
  45

  
	
  Section 9.01.   Appointment and
  Powers

  	
   

  	
  45

  
	
  Section 9.02.   Performance of
  Duties

  	
   

  	
  45

  
	
  Section 9.03.   Reliance Upon
  Documents

  	
   

  	
  46

  
	
  Section 9.04.   [Intentionally
  Omitted]

  	
   

  	
  47

  
	
  Section 9.05.   [Intentionally
  Omitted]

  	
   

  	
  45

  
	
  Section 9.06.   Indemnification

  	
   

  	
  45

  
	
  Section 9.07.   Compensation and
  Reimbursement

  	
   

  	
  48

  
	
  Section 9.08.   [Intentionally
  Omitted]

  	
   

  	
  48

  
	
  Section 9.09.   Accounts

  	
   

  	
  48

  
	
  Section 9.10.   Waiver of Setoffs

  	
   

  	
  48

  
	
  Section 9.11.   Provision of
  Information

  	
   

  	
  49

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  X           COVENANTS OF THE ISSUER

  	
   

  	
  49

  
	
  Section 10.01.   Preservation of
  Collateral

  	
   

  	
  49

  
	
  Section 10.02.   Opinions as to
  Collateral

  	
   

  	
  49

  
	
  Section 10.03.   Non-Interference;
  etc.

  	
   

  	
  50

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XI         MISCELLANEOUS

  	
   

  	
  50

  
	
  Section 11.01.   Amendments

  	
   

  	
  50

  
	
  Section 11.02.   Notices

  	
   

  	
  51

  
	
  Section 11.03.   Severability

  	
   

  	
  51

  
	
  Section 11.04.   Term of This
  Agreement

  	
   

  	
  52

  
	
  Section 11.05.   Assignments

  	
   

  	
  52

  
	
  Section 11.06.   Non-Petition
  Agreement

  	
   

  	
  52

  

 

ii

 

TABLE
OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 11.07.   Trial by Jury
  Waived

  	
   

  	
  52

  
	
  Section 11.08.   Governing Law

  	
   

  	
  53

  
	
  Section 11.09.   Consents to
  Jurisdiction

  	
   

  	
  53

  
	
  Section 11.10.   Service of Process

  	
   

  	
  53

  
	
  Section 11.11.   Time of Essence

  	
   

  	
  53

  
	
  Section 11.12.   Counterparts

  	
   

  	
  53

  
	
  Section 11.13.   Integration

  	
   

  	
  54

  
	
  Section 11.14.   Headings

  	
   

  	
  54

  
	
  Section 11.15.   Limited Recourse

  	
   

  	
  54

  
	
  Section 11.16.   Payments in Accordance
  with the Priority of Payments

  	
   

  	
  54

  
	
  Section 11.17.   Trustee and Its
  Affiliates

  	
   

  	
  54

  
	
  Section 11.18.   Judgment Currency

  	
   

  	
  54

  
	
   

  	
   

  	
   

  
	
  ANNEX
  A

  	
   

  	
  Steps
  Required For Delivery

  	
   

  	
  Annex A-1

  
	
  ANNEX
  B

  	
   

  	
  Glossary
  of Certain Defined Terms

  	
   

  	
  Annex B-1

  
	
  ANNEX
  C

  	
   

  	
  Specified
  Types

  	
   

  	
  Annex C-1

  
	
  SCHEDULE
  A

  	
   

  	
  Collateral
  Debt Securities as of the Closing Date

  	
   

  	
  Schedule A-1

  
	
  SCHEDULE
  B

  	
   

  	
  Temporary
  Ramp-Up Securities as of the Closing Date

  	
   

  	
  Schedule B-1

  
	
  SCHEDULE
  C

  	
   

  	
  Auction
  Procedures

  	
   

  	
  Schedule C-1

  
	
  SCHEDULE
  D

  	
   

  	
  S&P
  Recovery Rate Matrix

  	
   

  	
  Schedule D-1

  
	
  SCHEDULE
  E

  	
   

  	
  S&P
  Industry Classification Group

  	
   

  	
  Schedule E-1

  
	
  SCHEDULE
  F

  	
   

  	
  S&P
  Notching Criteria I

  	
   

  	
  Schedule F-1

  
	
  SCHEDULE
  G

  	
   

  	
  S&P
  Notching Criteria II

  	
   

  	
  Schedule G-1

  
	
  SCHEDULE
  H

  	
   

  	
  Moody’s
  Diversity Score

  	
   

  	
  Schedule H-1

  
	
  SCHEDULE
  I

  	
   

  	
  Moody’s
  Recovery Rate Matrix

  	
   

  	
  Schedule I-1

  
	
  SCHEDULE
  J

  	
   

  	
  Moody’s
  Notching Criteria

  	
   

  	
  Schedule J-1

  
	
  SCHEDULE
  K

  	
   

  	
  Moody’s
  Industry Classification Groups

  	
   

  	
  Schedule K-1

  
	
  SCHEDULE
  L

  	
   

  	
  Fitch
  Report

  	
   

  	
  Schedule L-1

  
	
  SCHEDULE
  M

  	
   

  	
  Fitch
  Industry Classification Groups

  	
   

  	
  Schedule M-1

  

 

iii

 

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

 

RECITALS

 

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

 

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

 

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

 

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

 

AGREEMENTS

 

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

 

 

ARTICLE I

 

DEFINITIONS

 

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

 

Section 1.02.          Assumptions
as to Collateral Debt Securities.

 

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

 

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

 

(c)           Each Scheduled
Distribution receivable with respect to a Collateral Debt Security shall be
assumed to be received on the applicable Due Date, and each such Scheduled
Distribution shall be assumed to be immediately deposited in the Collection
Account and, except as otherwise specified, to earn interest at the Assumed
Investment Rate; provided, however, that
if the nominal due date for any payment on any Collateral Debt Security or
Eligible Investment occurs on a day during a Due Period that is not a business
day under the applicable Underlying Instrument and as a result such payment is
paid and received in the following Due Period, then such payment shall be deemed
to have been received during the Due Period in which such nominal due date
falls if such payment is timely made in accordance with the related Underlying
Instrument. All such funds shall be assumed to continue to earn interest until
the date on which they are required to be available in the Collection Account
for transfer to the Note Payment Account and application, in accordance with
the terms hereof, of the Notes and of the Trust Deed, to payments on the Notes
or other amounts payable pursuant to this Agreement.

 

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

 

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

 

(f)            With respect to any
Collateral Debt Security as to which any interest or other payment thereon is
subject to withholding tax of any relevant jurisdiction, each Scheduled
Distribution

 

 

2

 

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

 

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

 

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

 

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

 

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

 

ARTICLE II

 

THE COLLATERAL

 

Section 2.01.          Security
Interests.

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

(d)           Delivery of
Portfolio Collateral. Collateral Debt Securities acquired prior to or on
the Closing Date shall be delivered by, or at the direction of, the Issuer to
the Trustee on or before the Closing Date in accordance with Annex A
hereto, and the Collateral Debt Securities which the Issuer has on or before
the Closing Date committed to purchase but which will not have settled on or
before the Closing Date, and any additional Collateral Debt Securities or
Substitute Collateral Debt Securities acquired by the Issuer after the Closing
Date, shall be delivered by, or at the direction of, the Issuer to the Trustee
when acquired in accordance with Annex A hereto. The Issuer shall Grant
pursuant to Section 2.01(a) all of the Issuer’s right, title
and interest in and to the Collateral Debt Securities and deliver the
Collateral Debt Securities in accordance with the requirements set forth in Annex
A hereto in order to perfect a first priority security interest in favor of
the Trustee on behalf and for the benefit of the Secured Parties. If any such
Collateral Debt Securities are held through the Accountholder, delivery shall
be deemed to have occurred upon receipt of evidence satisfactory to the Trustee
that such Collateral Debt Securities have been credited to the Collateral
Account in accordance with Annex A hereto.

 

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

 

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

 

(g)           No Transfer of
Duties. The security interests are Granted as security only and shall not
(i) transfer or in any way affect or modify, or relieve the Issuer from
any obligation to perform

 

5

 

or
satisfy, any term, covenant, condition or agreement to be performed or
satisfied by the Issuer under or in connection with this Agreement or any other
Transaction Document to which it is a party or (ii) impose any obligation
on the Trustee, the Collateral Advisor or the Accountholder to perform or
observe any such term, covenant, condition or agreement or impose any liability
on the Trustee, the Collateral Advisor or the Accountholder for any act or
omission on the part of the Issuer relative thereto or for any breach of any
representation or warranty on the part of the Issuer contained therein or made
in connection therewith.

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

insolvency,
moratorium or liquidation proceeding; and provided,
further, that the obligations of the Issuer hereunder shall be
payable solely from the Collateral in accordance with the Priority of Payments.

 

(j)            Trustee as
Attorney-In-Fact. Without imposing any obligations on the Trustee with
respect thereto (other than as set forth in this Agreement), the Issuer hereby
appoints the Trustee as its attorney-in-fact for the specific purpose of filing
any financing statements and continuation statements with respect to the
security interests provided for herein.

 

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

 

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

 

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

 

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

 

(a)           This Agreement
creates a valid and continuing security interest (as defined in the applicable
UCC) in the Collateral in favor of the Trustee on behalf and for the benefit of
the Secured Parties, which security interest is prior to all other Liens and
security interests, and is enforceable as such as against creditors of and
purchasers from the Issuer and, upon delivery of the Collateral Debt Securities
in accordance with the requirements set forth in Annex A hereto and
filing of the appropriate financing statements in the appropriate filing
offices, the Lien and security interest created by this Agreement shall be a
perfected first priority security interest in favor of the Trustee for the
benefit of the Secured Parties.

 

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

 

7

 

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

 

(d)                                 The Issuer (i) has delivered each such
Collateral Debt Security, or will deliver any Collateral Debt Securities which
the Issuer has on or before the Closing Date committed to purchase but which
will not have settled on or before the Closing Date or any additional
Collateral Debt Securities or Substitute Collateral Debt Securities acquired by
the Issuer after the Closing Date, to the Trustee in accordance with Annex A
hereto and (ii) has not assigned, pledged, sold, Granted a security
interest in or otherwise encumbered any interest in such Collateral Debt
Security other than interests Granted pursuant to this Agreement;

 

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

 

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

 

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

 

(h)                                 All items of the Collateral that constitute
Security Entitlements have been and will have been credited to one of the
Securities Accounts. The securities intermediary for each of the Accounts has
agreed to treat all assets credited to the Securities Accounts as financial assets
under the applicable UCC.

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

(p)                                 Notwithstanding any other provision of this
Agreement or any other related Transaction Document, the representations in
this Section 2.05 shall be continuing and deemed to be updated on
any day a new item of Collateral is acquired, and remain in full force and
effect until such time as all obligations under this Agreement, the Trust Deed,
the Note Agency Agreement and the Notes have been finally and fully paid and
performed.

 

(q)                                 The parties to this Agreement (i) shall
not, without obtaining a Rating Agency Confirmation, waive any of the representations
in this Section 2.05; (ii) shall provide each of the Rating
Agencies with prompt written notice of any breach of the representations
contained in this Section 2.05 upon becoming aware thereof; and
(iii) shall not, without obtaining a Rating Agency Confirmation (as
determined after any adjustment or withdrawal of the ratings following notice
of such breach), waive a breach of any of the representations in this Section 2.05.

 

ARTICLE III

 

RAMP-UP PERIOD PURCHASES AND EFFECTIVE DATE
ACTIONS

 

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

 

Section 3.02.                             Ramp-Up Period Purchases.

 

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

 

9

 

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

 

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

 

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

 

Section 3.03.                             Effective Date Actions.

 

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

 

(b)                                 In the case of an Effective Date specified in
clause (i) or (ii) of the definition of “Effective Date,” the Issuer
(or the Collateral Advisor on behalf of the Issuer) shall request each Rating
Agency rating a Class of Notes to confirm in writing, within thirty (30)
Business Days after such Effective Date, or such later date as such Rating
Agency may determine, that it has not reduced or withdrawn the rating it
assigned to such Class of Notes on the Closing Date. In the event of a
Ratings Confirmation Failure, on the next and succeeding Payment Dates, the
Issuer is required to pay principal, to the extent of Available Funds in the
Collection Account and subject to the Priority of Payments, on the
Class A-1 Notes, the Class A-2 Notes, the Class B-1 Notes, the
Class B-2 Notes, the Class C-1 Notes, the Class C-2 Notes and
the Class D Notes, in that order, in the amounts necessary for each Rating
Agency to confirm its respective ratings of the Notes assigned on the Closing
Date or until each Class of Notes is paid in full. Such request by the
Issuer to the Rating Agencies shall be accompanied by an accountant’s certificate
as provided in Section 3.03(c).

 

(c)                                  Within fifteen (15) Business Days after the
Effective Date, (i) the Issuer, or the Collateral Advisor on the Issuer’s
behalf, shall be required to obtain and deliver to the Trustee an accountants’
certificate from the Independent Accountants (A) confirming the
information with respect to each Collateral Debt Security set forth on the
amended schedule of Collateral Debt Securities delivered pursuant to Section 3.03(a) as
of the end of the Ramp-Up Period, and the information provided by the Issuer
with respect to every other asset included in the Collateral, by reference to
such sources as will be specified therein, (B) certifying as of the end of
the Ramp-Up Period the procedures applied and the

 

10

 

associated
findings with respect to (1) the Coverage Tests and (2) the
Collateral Quality Tests and (C) specifying the procedures undertaken by
them to review data and computations relating to the foregoing statement,
(ii) the Trustee shall be required to run the S&P CDO Monitor and
report to S&P whether or not the S&P CDO Monitor Test has been
satisfied and (iii) the Trustee will be required to report the S&P
scenario default and break-even default rate for each Class of Notes.

 

ARTICLE IV

 

ACCOUNTS, ACCOUNTINGS AND RELEASES

 

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

 

Section 4.02.                             Collection Account.

 

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

 

(b)                                 All Distributions, any deposit required
pursuant to Section 4.02(c) and any net proceeds from the sale
or disposition of a Collateral Debt Security received by the Trustee shall be
immediately deposited into the Collection Account. All such property, together
with any securities in which funds included in such property are or will be
invested or reinvested during the term of this Agreement, and any income or
other gain realized from such investments, shall be held by the Trustee in the
Collection Account as part of the Collateral subject to disbursement and
withdrawal as provided in this Section 4.02. By Issuer Order (which
may be in the form of standing instructions), the Issuer (or the

 

11

 

Collateral
Advisor on behalf of the Issuer) may at any time direct the Trustee to, and upon
receipt of such Issuer Order the Trustee shall, invest all funds received into
the Collection Account during a Due Period, and amounts received in prior Due
Periods and retained in the Collection Account, as so directed in Eligible
Investments maturing no later than the Business Day immediately preceding the
next Payment Date. The Trustee shall, within one (1) Business Day after
receipt of any Distribution or other proceeds which is not Cash, so notify the
Issuer and the Issuer (or the Collateral Advisor on behalf of the Issuer)
shall, within thirty (30) Business Days after receipt of such notice from the
Trustee, sell such Distribution or other proceeds for Cash in an arm’s-length
transaction to a Person which is not an Affiliate (other than a Permitted
Affiliate, subject to the Investment Advisers Act) of the Issuer or the
Collateral Advisor and deposit the proceeds thereof in the Collection Account
for investment pursuant to this Section 4.02;  provided, however, that the Issuer (or the
Collateral Advisor on behalf of the Issuer) need not sell such Distributions or
other proceeds if it delivers an Officer’s certificate to the Trustee
certifying that such Distributions or other proceeds constitute Collateral Debt
Securities or Eligible Investments.

 

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

 

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

 

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

 

12

 

in
an amount equal to the lesser of (i) the Collateral Principal Collections
and (ii) the amount of Available Funds remaining in the Collection
Account.

 

Section 4.03.                             Interest Reserve Account.

 

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

 

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

 

(c)                                  If, prior to the occurrence of an Event of
Default, the Issuer (or the Collateral Advisor on behalf of the Issuer) shall
not have given any investment directions pursuant to Section 4.03(b),
the Trustee shall seek instructions from the Collateral Advisor within three
(3) Business Days after transfer of such funds to the Interest Reserve
Account. If the Trustee does not thereupon receive written instructions from
the Issuer (or the Collateral Advisor on behalf of the Issuer) within three
(3) Business Days after transfer of such funds to the Interest Reserve
Account, it shall invest and reinvest the funds held in the Interest Reserve
Account, as fully as practicable, but only in one or more Eligible Investments
in clause (iii) of the definition of Eligible Investments of its selection
maturing no later than the Business Day immediately preceding the next Payment
Date. If, after the occurrence of an Event of

 

13

 

Default,
the Issuer (or the Collateral Advisor on behalf of the Issuer) shall not have
given investment directions to the Trustee pursuant to Section 4.03(b) for
three (3) consecutive days, the Trustee shall invest and reinvest such
Money as fully as practicable in Eligible Investments as described in clause
(iii) of the definition of Eligible Investments of its selection maturing
not later than the Business Day immediately preceding the next Payment Date.
All interest and other income from such investments shall be deposited in the
Interest Reserve Account, any gain realized from such investments shall be
credited to the Interest Reserve Account and any loss resulting from such
investments shall be charged to the Interest Reserve Account. The Trustee shall
not in any way be held liable by reason of any insufficiency of such Interest
Reserve Account resulting from any loss relating to any such Eligible
Investment, except with respect to investments in obligations of the Trustee or
any Affiliate thereof.

 

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

 

Section 4.04.                             Expense Reserve Account.

 

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

 

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

 

14

 

Investment
Advisers Act) of the Issuer or the Collateral Advisor and deposit the proceeds
thereof in the Expense Reserve Account for investment pursuant to this Section 4.04; provided, however, that the Issuer (or
the Collateral Advisor on behalf of the Issuer) need not sell such
Distributions or other proceeds if it delivers an Officer’s certificate to the
Trustee certifying that such Distributions or other proceeds constitute Collateral
Debt Securities or Eligible Investments.

 

(c)                                  If, prior to the occurrence of an Event of
Default, the Issuer shall not have given any investment directions pursuant to Section 4.04(b),
the Trustee shall seek instructions from the Collateral Advisor within three
(3) Business Days after transfer of such funds to the Expense Reserve
Account. If the Trustee does not thereupon receive written instructions from
the Issuer (or the Collateral Advisor on behalf of the Issuer) within thirty
(30) Business Days after transfer of such funds to the Expense Reserve Account,
it shall invest and reinvest the funds held in the Expense Reserve Account, as
fully as practicable, but only in Eligible Investments of the type described in
clause (iii) of the definition of “Eligible Investments”, maturing the
Business Day immediately preceding such Payment Date. If, after the occurrence
of an Event of Default, the Issuer shall not have given investment directions
to the Trustee pursuant to Section 4.04(b) for three
(3) consecutive days, the Trustee shall invest and reinvest such Money as
fully as practicable, but only in Eligible Investments of its selection of the
type described in clause (iii) of the definition of “Eligible
Investments”, maturing on the Business Day immediately preceding such Payment
Date. All interest and other income from such investments shall be deposited in
the Expense Reserve Account, any gain realized from such investments shall be
credited to the Expense Reserve Account and any loss resulting from such
investments shall be charged to the Expense Reserve Account. The Trustee shall
not in any way be held liable by reason of any insufficiency of such Expense
Reserve Account resulting from any loss relating to any such Eligible
Investment, except with respect to investments in obligations of the Trustee or
any Affiliate thereof.

 

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

 

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

 

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

 

15

 

Section 4.06.                             Reports by Trustee. The Trustee shall supply, in a timely
fashion, to the Co-Issuers, each Hedge Counterparty, the Principal Paying
Agent, each Rating Agency (so long as any Notes are rated by such Rating
Agency), the Initial Purchasers and the Collateral Advisor any information
regularly maintained by the Trustee that each such party may from time to time
request with respect to the Collateral Debt Securities, any Hedge Agreement,
the Collection Account and the Collateral Account and such other information as
is regularly maintained by the Trustee and is reasonably needed to verify
information contained in the Note Report. Additionally, the Trustee shall
promptly provide any other information reasonably available to the Trustee by
reason of its acting as Trustee hereunder and required to be provided by Section 4.07
or to permit the Collateral Advisor to perform its obligations under the
Collateral Advisory Agreement. The Trustee shall forward to the Collateral
Advisor copies of all notices and other writings received by it from the issuer
of any Collateral Debt Security or from any Clearing Agency with respect to any
Collateral Debt Security advising the holders of such security of any rights
that the holders might have with respect thereto (including, without
limitation, notices of calls and redemptions of securities) as well as all
periodic financial reports received from such issuer and Clearing Agencies with
respect to such issuer. The Trustee shall also cause the amount of interest
paid on the Notes on each Payment Date to be communicated to Euroclear,
Clearstream and the Irish Stock Exchange (as long as any of the Notes are
listed thereon) on or prior to such Payment Date.

 

Section 4.07.                             Accountings.

 

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

 

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

 

16

 

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

 

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

 

(iii)                               the Applicable Periodic Interest Rate in
respect of each Class of Notes and the amount of Periodic Interest payable
to the Holders of the Notes for such Payment Date (in the aggregate and by
Class);

 

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

 

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

 

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

 

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

 

(viii)                        for the Collection Account:

 

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

 

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

 

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

 

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

 

(ix)                                for the Interest Reserve Account:

 

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

 

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

 

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

 

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

 

(x)                                   for the Expense Reserve Account,

 

17

 

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

 

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

 

(xi)                                the Hedge Receipt Amount or the Hedge Payment
Amount for the related Payment Date, and for each Hedge Agreement, the outstanding
notional amount of such Hedge Agreement and the amounts, if any, scheduled to
be received or paid, as the case may be, by the Issuer pursuant to such Hedge
Agreement for the related Payment Date, separately stating the portion payable
under the Priority of Payments;

 

(xii)                             the amount of Excess Funds to be paid to the
Holders of the Class E Subordinate Income Notes on the related Payment
Date;

 

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

 

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

 

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

 

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

 

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

 

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

 

18

 

(xix)                                the identity of each Collateral Debt Security
that was upgraded or downgraded or placed on watch for upgrade or downgrade by
any Rating Agency since the date of the last Note Report; provided that the identity of each
Collateral Debt Security that was upgraded or downgraded for purposes of this
clause 4.07(a)(xix) shall not be obtained from Bloomberg Financial Markets
On-Line Data Retrieval Service or a similar service and must be obtained from
information provided directly by the Rating Agencies;

 

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

 

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

 

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

 

(xxiii)                          the amount of Purchased Accrued Interest;

 

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

 

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

 

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

 

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

 

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

 

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

 

19

 

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

 

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

 

(b)                                 Each Note Report sent to any Holder or
beneficial owner of any Note shall contain, or be accompanied by, the following
notice:

 

“The Notes have not been and will not be registered under the United
States Securities Act of 1933, as amended (the “Securities Act”), and
the Co-Issuers have not been registered under the United States Investment
Company Act of 1940, as amended (the “1940 Act”). Each Holder of the
Notes, other than those Holders that are not “U.S. persons” (“U.S.
Person”) within the meaning of Regulation S (“Regulation S”) under
the Securities Act and have acquired their Notes outside the United States
pursuant to Regulation S, is required to be (i) a “qualified institutional
buyer” as defined in Rule 144A under the Securities Act (“Qualified
Institutional Buyer”) and (ii) a “qualified purchaser” (“Qualified
Purchaser”) within the meaning of Section 2(a)(51) of the 1940 Act
that can make all of the representations in the Trust Deed and the Note Agency
Agreement applicable to a holder that is a U.S. Person. The beneficial interest
in the Notes may only be transferred to a transferee that is a Qualified
Institutional Buyer and a Qualified Purchaser that can make all of the
representations in the Trust Deed and the Note Agency Agreement applicable to a
holder that is a U.S. Person, except that in the case of any such transfer in
reliance on Regulation S, only to a transferee that is not a U.S. Person. The
Issuer has the right to compel any Holder that does not meet the qualifications
and the transfer restrictions set forth in the Trust Deed and the Note Agency
Agreement to sell its interest in the Notes, or may sell such interest on
behalf of such owner, pursuant to the Trust Deed and the Note Agency
Agreement.”

 

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

 

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

 

20

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 4.08.                             Release of Securities.

 

(a)                                  Subject to Article VI, the Issuer
(or the Collateral Advisor on behalf of the Issuer) may, by Issuer Order
delivered to the Trustee at least two (2) Business Days prior to the
settlement date for any sale of a security certifying that (i) the Issuer
(or the Collateral Advisor on behalf of the Issuer) has determined that a
Collateral Debt Security has become a Credit Risk Security (which certification
shall contain a short statement of the reason for such determination), a
Withholding Tax Security, a Written Down Security, a Defaulted Security or an
Equity Security and, in each case, that the

 

21

 

Issuer
(or the Collateral Advisor on behalf of the Issuer) has directed the Trustee to
sell such security pursuant to Section 6.01(a), (ii) the
Collateral Advisor on the Issuer’s behalf has directed the Trustee to sell such
security pursuant to Section 6.01(b), or (iii) the Collateral
Advisor on the Issuer’s behalf has directed the Trustee to sell such security
pursuant to Section 6.01(f), direct the Trustee to release such
security and, upon receipt of such Issuer Order, the Trustee shall release any
such security from the Lien of this Agreement and deliver any such security, if
in physical form, duly endorsed to the broker or purchaser designated in such
Issuer Order or, if such security is a Clearing Corporation Security, cause an
appropriate transfer thereof to be made, in each case against receipt of the
sales price therefor as set forth in such Issuer Order; provided, however, that
the Trustee may deliver any such security in physical form for examination in
accordance with street delivery custom.

 

(b)                                 If no Event of Default has occurred and is
continuing and subject to Article VI, the Issuer (or the Collateral
Advisor on behalf of the Issuer) may, by Issuer Order delivered to the Trustee
at least two (2) Business Days prior to the date set for redemption or
payment in full of a Collateral Debt Security and certifying that such security
is being redeemed or paid in full, direct the Trustee or at the Trustee’s
instructions, the Accountholder to release any such security from the Lien of
this Agreement and deliver such security, if in physical form, duly endorsed,
or, if such security is a Clearing Corporation Security, to cause it to be
presented to the appropriate paying agent therefor on or before the date set
for redemption or payment, in each case against receipt of the redemption price
or payment in full thereof.

 

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

 

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

 

Section 4.09.                             Reports by Independent Accountants.

 

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

 

22

 

shall
contain appropriate limited recourse and non-petition language as against the
Issuer equivalent to that contained in this Agreement.

 

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

 

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

 

Section 4.11.                             Notices of Noteworthy Events. The Issuer shall provide each Rating Agency
notice of the following events: (a) removal of the Collateral Advisor
pursuant to the terms of the Collateral Advisory Agreement and the Trustee
pursuant to the terms of the Trust Deed, (b) appointment of any successor
investment adviser pursuant to the terms of the Collateral Advisory Agreement
and any successor trustee pursuant to the terms of the Trust Deed, (c) any
delegation of duties by the Collateral Advisor under the Collateral Advisory
Agreement and by the Trustee under the Trust Deed, (d) any modification
of, or amendment to, the organizational documents of the Issuer and the
Co-Issuer, (e) any other event of a similar nature as set forth in clauses
(a), (b), (c) and (d) of this Section 4.11,
(f) any redemption of any Class of Notes and (g) any termination
of any party to a Transaction Document.

 

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

 

ARTICLE V

 

PRIORITY OF PAYMENTS

 

Section 5.01.                             Disbursements of Money from Collection
Account.

 

(a)                                  On any Payment Date that is not a Redemption
Date or a Payment Date following the occurrence and continuation of an
acceleration of the Rated Notes in connection with an

 

23

 

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

 

(i)                                          to pay, in the following order (a) taxes
and filing fees and registration fees (including, without limitation, annual
return fees) payable by the Co-Issuers, if any; and then, (b) the amount
of any due and unpaid Trustee Fee and, then, the amount of any due and unpaid
fees to the Administrator; and then, (c) the amount of any due and unpaid
Trustee Expenses and, then, (d) the amount of any due and unpaid fees and
expenses of the Rating Agencies, and, then, (e) the amount of any due and
unpaid Collateral Administrator Expenses and, then, (f) the amount of any
due and unpaid expenses of the Administrator and any due and unpaid
Administrative Expenses not included in (c), (d) and (e) above,
including amounts payable to the Collateral Advisor under the Collateral
Advisory Agreement; and then, (g) to deposit to the Expense Reserve
Account the amount needed to bring the amount on deposit therein to U.S.$25,000
(unless the Collateral Advisor directs that a lesser amount be deposited to the
Expense Reserve Account); provided
that the cumulative amount paid under (c) through
(g) (excluding any Administrative Expenses due or accrued with respect to
the actions taken on or prior to the Closing Date and accounting fees that the
Trustee is required to pay (other than certain accountants’ fees related to
annual reviews) and fees the Trustee pays in connection with any Events of
Default and any default of the Collateral Debt Securities) may not exceed
U.S.$235,000 in the aggregate in any consecutive 12-month period;

 

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

 

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

 

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

 

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

 

24

 

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

 

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

 

(viii)                             if a Ratings Confirmation Failure occurs, on
each Payment Date commencing with the Payment Date immediately following the
Effective Date, to pay principal on the Class A-1 Notes, the
Class A-2 Notes, the Class B-1 Notes, the Class B-2 Notes, the
Class C-1 Notes, the Class C-2 Notes and the Class D Notes, in
that order, in the amounts necessary for each Rating Agency to confirm its
respective ratings of the Notes assigned on the Closing Date or until each
Class of Notes is paid in full;

 

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

 

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

 

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

 

25

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

26

 

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

 

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

 

(xxi)                                to pay, in the following order, (a) the principal
of the Class A-1 Notes until paid in full and then (b) the principal
of the Class A-2 Notes until paid in full and then (c) the principal
of the Class B-1 Notes until paid in full and then (d) the principal
of the Class B-2 Notes until paid in full and then (e) the principal
of the Class C-1 Notes until paid in full and then (f) the principal
of the Class C-2 Notes until paid in full and then (g) the principal
of the Class D Notes until paid in full; provided that items
(a) through (g) shall be payable in an aggregate amount equal on any
Payment Date to the lesser of (1) the amount of Collateral Principal
Collections received during the related Due Period and (2) the amount of
Available Funds then remaining in the Collection Account;

 

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

 

(xxiii)                          to pay, in the following order, (a) any
due and unpaid Trustee Fee, Trustee Expenses and Collateral Administrator
Expenses, including amounts payable to the Collateral Advisor under the
Collateral Advisory Agreement, in each case, in the same order of priority as
provided in clause (i) above and to the extent not paid in full under
clause (i) above, and (b) on a pro rata basis, any

 

27

 

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

 

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

 

(xxv)                            after the Payment Date occurring in
June 2016, to pay from remaining Collateral Interest Collections on any
Payment Date the principal on the Class D Notes, until paid in full, then
the principal on the Class C-2 Notes, until paid in full, then the
principal of the Class C-1 Notes, until paid in full, then the principal
on the Class B-2 Notes, until paid in full, then the principal on the
Class B-1 Notes, until paid in full, then the principal on the
Class A-2 Notes until paid in full and then the principal on the
Class A-1 Notes until paid in full; and

 

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

 

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

 

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

 

Section 5.02.                             Additional Provisions.

 

(a)                                  (1)                                  On the applicable Stated Maturity Date of the
Notes, the Issuer (or the Collateral Advisor acting pursuant to the Collateral
Advisory Agreement on behalf of the Issuer) shall direct the Trustee in writing
to (and the Trustee shall, in the manner so directed by the Collateral Advisor
on behalf of the Issuer) liquidate any remaining Collateral Debt Securities and
any Hedge Agreements (for value on the applicable Stated Maturity Date of the
Notes) and deposit the proceeds thereof, if any, in the Collection Account. On
the applicable Stated Maturity Date of the Notes, all net proceeds from such

 

28

 

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

 

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

 

(b)                                 If on any Payment Date the amount available
in the Collection Account from amounts received in the related Due Period is
insufficient to make the full amount of the disbursements required by the
statements furnished by the Issuer pursuant to Section 4.07(a), the
Trustee shall make the disbursements called for in the order and according to
the Priority of Payments set forth under Section 5.01(a), subject
to Section 7.01, to the extent funds are available therefor.

 

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

 

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

 

(e)                                  As a condition to the payment of principal
and interest on any Note without U.S. federal back-up withholding, the Issuer
shall require the delivery of properly completed and signed applicable U.S.
federal income tax certifications (generally, an Internal Revenue Service
Form W-9 (or applicable successor form) in the case of a person that is a
“United States person” within the meaning of Section 7701(a)(30) of the
Code or an Internal Revenue Service Form W-8BEN (or applicable successor
form) in the case of a person that is not a “United States person” within the
meaning of Section 7701(a)(30) of the Code) from each beneficial owner of
the Notes.

 

ARTICLE VI

 

PURCHASE, SALE AND REINVESTMENT OF COLLATERAL
DEBT SECURITIES

 

Section 6.01.                             Sale of Collateral Debt Securities.

 

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

 

29

 

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

 

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

 

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

 

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

 

30

 

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

 

(e)                                  In the event of a Redemption or Auction Call
Redemption, the Collateral Advisor shall direct the Trustee to sell Collateral
Debt Securities without regard to the foregoing limitations; provided that the Sale
Proceeds therefrom and other amounts available therefor will be at least
sufficient to pay certain expenses, including all amounts due under any Hedge
Agreements, and redeem, in whole but not in part, the Notes at the applicable
Redemption Prices; and provided,
further, that such Sale Proceeds are used to make such a Redemption
or Auction Call Redemption.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

31

 

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

 

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

 

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

 

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

 

(xiii)                               it is not an Interest Only Security;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(E)                            it is not an Equity Security;

 

32

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

33

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

34

 

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

 

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

 

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

 

Section 6.03.                             Conditions Applicable to all Transactions.

 

(a)                                  Any transaction effected under this Article VI
shall be conducted on an arm’s-length basis, and, if effected with a Person
affiliated with the Collateral Advisor, the Issuer or the Trustee, shall be
effected in a primary or secondary market transaction on terms as favorable to
the Issuer as would be the case if such Person were not so affiliated; provided, however, that after the Closing
Date, the Collateral Advisor and its Affiliates may, as principals or for their
own accounts, enter into agreements to buy or sell Collateral Debt Securities
or enter into any Hedge Agreements with the Issuer if and to the extent such
transactions comply with the Investment Advisers Act; provided, further, that the Collateral
Advisor may, on behalf of the Issuer, buy or sell Collateral Debt Securities or
enter into Hedge Agreements with other entities for which it, or an Affiliate,
acts as an investment advisor; provided,
further, that, subject to the Eligibility Criteria and, during the
Ramp-Up Period, the Ramp-Up Criteria, the Collateral Advisor will be permitted
to acquire an obligation on behalf of the Issuer to be included in the
Collateral from its Permitted Affiliates as principal or as agent or to sell an
obligation to its Permitted Affiliates as principal or agent subject to the
Investment Advisers Act; and provided,
further, that, subject to the Eligibility Criteria and, during the
Ramp-Up Period, the Ramp-Up Criteria, the Collateral Advisor may acquire an
obligation on behalf of the Issuer to be included in the Collateral from itself
or from any of its Affiliates that are not Permitted Affiliates, or from funds
or accounts for which the Collateral Advisor or any of its Affiliates acts as
investment adviser or sell an obligation on behalf of the Issuer to itself, or
to any of its Affiliates that are not Permitted Affiliates or to funds or
accounts for which the Collateral Advisor or any of its Affiliates acts as an
investment adviser.

 

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

 

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

 

35

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

36

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 6.05.                             Coverage Tests.

 

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

 

37

 

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

 

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

 

	
  Interest Coverage Test

  	
   

  	
  Required Interest Coverage Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Class A Interest Coverage Test

  	
   

  	
  115

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Class B Interest Coverage Test

  	
   

  	
  110

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Class C Interest Coverage Test

  	
   

  	
  104

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Class D Interest Coverage Test

  	
   

  	
  102

  	
  %

  

 

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

 

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

 

	
  Principal Coverage Test

  	
   

  	
  Required Principal Coverage Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Class A Principal Coverage Test

  	
   

  	
  125

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Class B Principal Coverage Test

  	
   

  	
  118

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Class C Principal Coverage Test

  	
   

  	
  105.6

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Class D Principal Coverage Test

  	
   

  	
  103

  	
  %

  

 

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

 

38

 

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

 

ARTICLE VII

 

SUBORDINATION

 

Section 7.01.                             Subordination.

 

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

 

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

 

39

 

amounts
due under the Class B-1 Notes, the Class B-2 Notes, the Class C-1
Notes, the Class C-2 Notes, the Class D Notes, the Class E
Subordinate Income Notes and the Ordinary Shares or hereunder until the payment
in full of the Class A-2 Notes and not before one (1) year and one (1) day
have elapsed since such payment or, if longer, the applicable preference period
then in effect, including any preference period established pursuant to the
laws of the Cayman Islands.

 

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

 

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

 

40

 

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

 

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

 

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

 

41

 

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

 

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

 

ARTICLE VIII

 

HEDGE AGREEMENTS, INITIAL HEDGE AGREEMENT

 

Section 8.01.                             Hedge Agreement Provisions.

 

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

 

(b)                                 In the event of any early termination of a
Hedge Agreement with respect to which the Hedge Counterparty is the sole
Defaulting Party or Affected Party (as defined in the Hedge Agreements), (i) any
termination payment paid by the Hedge Counterparty to the Issuer will be
deposited in a single, segregated account held in the United States in the name
of the Trustee (the “Hedge Termination Receipts Account”) for and on
behalf of the Secured Parties (other than the Hedge

 

42

 

Counterparty)
under this Agreement and (ii) any Hedge Replacement Proceeds received from
a replacement counterparty will be deposited in a single, segregated account
held in the United States in the name of the Trustee (the “Hedge Replacement
Account”) for the benefit of the Hedge Counterparty under the terminated
Hedge Agreement.

 

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

 

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

 

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

 

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

 

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

 

If at any time (A) the short-term rating of the Hedge Counterparty
from Moody’s is lower than “P-1” or is “P-1” and has been placed on and is
remaining on credit watch with negative implications by Moody’s or the
long-term rating of the Hedge Counterparty from Moody’s is lower than “A1” or
is “Al” and has been placed on and is remaining on credit watch with negative
implications by Moody’s or, if no short-term rating is available, the long-term
rating of the Hedge Counterparty from Moody’s is withdrawn, suspended or
downgraded below “Aa3” or is “Aa3” and has been placed on and is remaining on
credit watch with negative implications by Moody’s, or the short-term rating of
the Hedge

 

43

 

Counterparty
from Fitch is lower than “F-1” or the long-term rating of the Hedge
Counterparty or its guarantor from Fitch is lower than “A” or (B) the
short-term rating of the Hedge Counterparty or its guarantor from S&P is
lower than “A-1” or, if the Hedge Counterparty or its guarantor does not have a
short-term rating from S&P, the long-term rating of such the Hedge
Counterparty or its guarantor is lower than “A+” or is “A+” but has been placed
on and is remaining on credit watch with negative implications by S&P
(each, a “Collateralization Event”), the Issuer and the Hedge
Counterparty shall amend the Hedge Agreement, solely at the expense of the
Hedge Counterparty, by incorporating provisions in the form of the ISDA Credit
Support Annex attached as an annex to the Hedge Agreement (the “Credit
Support Annex”) which shall require that the Hedge Counterparty deliver
collateral sufficient to maintain the then current rating of each Class of
Notes provided that if the Hedge
Counterparty has not within 30 days following a Collateralization Event
incorporated the Credit Support Annex and provided sufficient collateral, a
Substitution Event (as defined below) shall be deemed to have occurred and the
Hedge Counterparty shall be required to take the remedial action specified
thereunder. In the event that (i) so long as any Notes are Outstanding and
rated by S&P, the long-term rating of the Hedge Counterparty from S&P
is withdrawn, suspended or downgraded below “BBB-” or, if no long-term rating
is available, the short-term rating of the Hedge Counterparty from S&P is
withdrawn, suspended or downgraded below “A-3”, (ii) so long as any Notes
are Outstanding and rated by Fitch, the short-term rating of the Hedge
Counterparty from Fitch is withdrawn, suspended or downgraded below “F-2” or,
if no short-term rating is available, the long-term rating of the Hedge
Counterparty or its guarantor from Fitch is withdrawn, suspended or downgraded
below “BBB+” or (iii) the short-term rating of the Hedge Counterparty from
Moody’s is “P-2” or lower or the long-term rating of the Hedge Counterparty
from Moody’s is “A3” or lower or, if no short-term rating is available, the
long-term rating of the Hedge Counterparty from Moody’s is “A2” or lower (each,
a “Substitution Event”), the Hedge Counterparty will be required, within
thirty (30) days following such Substitution Event (in the case of a
Substitution Event referred to in subparagraph (iii) of the definition
thereof above) or within 7 days following such Substitution Event (in the case
of a Substitution Event referred to in subparagraph (i) of the definition
thereof above), to assign its rights and obligations under the Hedge Agreement
at no cost to the Issuer to a party (the “Substitute Party”) selected by
the Hedge Counterparty that satisfies the Hedge Counterparty Ratings
Requirement and with respect to which each Rating Agency has confirmed in
writing that its then-current ratings on any Class of Notes rated by such
Rating Agency will not be adversely affected; provided
that such right shall be subject to the assumption by the Substitute
Party of all of the Hedge Counterparty’s obligations under the Hedge Agreement
pursuant to an agreement satisfactory to the Issuer. If the Hedge Counterparty
fails to assign its rights and obligations under the Hedge Agreement to a
Substitute Party within thirty (30) days following such Substitution Event, (in
the case of a Substitution Event referred to in subparagraph (iii) of the
definition thereof above) or within 7 days following such Substitution Event
(in the case of a Substitution Event referred to in subparagraph (i) of
the definition thereof above); the Hedge Counterparty shall, while it continues
in good faith to search for an eligible Substitute Party, post and maintain, or
continue to maintain, as the case may be, Eligible Collateral in accordance
with the Credit Support Annex and it shall become an Additional Termination
Event pursuant to the Initial Hedge Agreement. Any costs attributable to
pledging and assigning any collateral and finding a suitable Substitute Party
shall be borne solely by the Hedge Counterparty and nothing in this paragraph
shall relieve the Hedge Counterparty from its obligations to assign its rights
and obligations under the Hedge Agreement to a Substitute Party in accordance
herewith or the terms of the Hedge Agreement.

 

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

 

44

 

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

 

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

 

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

 

Section 8.02.                             Initial Hedge Agreement. On or prior to the Closing Date, the Issuer
shall enter into an interest rate hedge agreement (the “Initial Hedge
Agreement”), dated as of the Closing Date, with the Initial Hedge
Counterparty. Under the Initial Hedge Agreement, on each Payment Date, the
Issuer will pay an amount equal to the Issuer Initial Hedge Payment Amount and
the Initial Hedge Counterparty will pay an amount equal to the Initial Hedge
Counterparty Payment Amount. Upon receipt of each Initial Hedge Counterparty
Payment Amount, such Initial Hedge Counterparty Payment Amount shall be
deposited in the Collection Account.

 

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

 

ARTICLE IX

 

THE TRUSTEE AND ACCOUNTHOLDER

 

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

 

Section 9.02.                             Performance of Duties.

 

(a)                                  The Trustee and the Accountholder, as
applicable, may perform any of its duties hereunder directly or by or through
agents or employees and shall be entitled to consult with counsel and to act in
reliance upon the advice of such counsel concerning matters pertaining to the
agencies created hereby and its duties hereunder, and shall not be liable for
any action taken or omitted to be taken by it in good faith and in reasonable
reliance upon and in accordance with the advice of counsel selected by it. The
Trustee and the Accountholder, as applicable, each undertakes to perform only
such duties as are expressly set forth herein, and no implied covenants or
obligations shall be read into this Agreement

 

45

 

against
the Trustee or the Accountholder. No provision hereof shall be construed to
relieve the Accountholder from liability to the Trustee or the Issuer, or the
Trustee from liability to the Accountholder or the Issuer, in each case, for
its own gross negligence, bad faith or willful misconduct; provided that (i) the
Trustee or the Accountholder shall not be liable with respect to any action
taken, suffered or omitted by it in good faith (A) reasonably believed by
it to be authorized or within the discretion or rights or powers conferred on
it by this Agreement or (B) in accordance with any written direction or
request of the Issuer or the Collateral Advisor (prior to the occurrence of an
Event of Default) or the Trustee or Accountholder, as applicable, (other than
those that require the consent of other parties and such consent has been
withheld), unless in either case the Accountholder or the Trustee, as the case
may be, was grossly negligent, acted in bad faith or committed willful
misconduct in ascertaining the pertinent facts or was grossly negligent, acted
in bad faith or committed willful misconduct in determining the requirements
imposed by this Agreement or such written direction or request; and (ii) neither
the Trustee nor the Accountholder shall be liable for any error of judgment made
in good faith by any of its officers or employees, unless the Trustee or the
Accountholder, as the case may be, was grossly negligent, acted in bad faith or
committed willful misconduct in ascertaining the pertinent facts or in
determining the requirements imposed by this Agreement. Whenever in this
Agreement it is provided that the absence of the occurrence and continuation of
an Event of Default is a condition precedent to the taking of any action by the
Trustee or the Accountholder at the request of the Issuer, then notwithstanding
that the satisfaction of such condition is a condition precedent to the Issuer’s
right to make such request or direction, the Trustee or the Accountholder, as
the case may be. shall not be liable for acting in accordance with such request
or direction if it does not have knowledge of the occurrence and continuance of
such Event of Default.

 

(b)                                 Anything in this Agreement to the contrary
notwithstanding, in no event shall the Trustee or the Accountholder be liable
under or in connection with this Agreement for indirect, special, incidental,
punitive or consequential losses or damages of any kind whatsoever, including,
but not limited to, lost profits, even if the Trustee or the Accountholder, as
the case may be, has been advised of the possibility thereof and regardless of
the form of action in which such damages are sought.

 

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

 

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

 

Section 9.03.                          Reliance Upon Documents.

 

(a)                                  In the absence of bad faith on its part, the
Trustee or the Accountholder, as applicable, (i) may conclusively rely, as
to the truth of the statements and the correctness of the opinions expressed
therein, upon any note, notice, resolution, consent, certificate, affidavit,
letter, telegram, teletype message, statement, order or other document or
instrument reasonably believed by it to be genuine and correct and to have been
signed or sent by the proper Person or Persons, (ii) shall not be
obligated to make any investigation into facts or matters stated in any such
document or instrument and (iii) shall have no liability in acting, or in
omitting to act, where such action or omission to act is in reliance upon any
statement or opinion contained in any such document or instrument. Neither the
Trustee nor the Accountholder assumes responsibility for the correctness of the
recitals to this Agreement or for the validity, effectiveness, value,
sufficiency or enforceability of this Agreement against the other

 

46

 

parties
hereto, of the other Transaction Documents against the parties thereto or of
the other Collateral (or any part thereof) against any parties thereto. Neither
the Trustee nor the Accountholder shall have responsibility for maintaining the
value of the Collateral or ensuring that any Collateral is properly delivered
to it; provided that
the Accountholder shall be responsible for holding the Collateral in accordance
with the provisions hereof. The Issuer shall take or cause to be taken all
action specified in Annex A hereto or recommended pursuant to any
Opinion of Counsel received by the Issuer pursuant to Section 10.02
as may be necessary or appropriate to perfect and protect the security
interests Granted hereby. In the event that any item of Collateral is not of
the type specified in Annex A hereto, then the Issuer shall take such
actions as are necessary to cause such item of Collateral to be subject to a
valid perfected security interest in accordance with Section 2.01.

 

(b)                                 Notwithstanding any provision to the contrary
contained in Article V, in performing its obligations to transfer
amounts and make payments to any Person in accordance with Article V,
the Accountholder and the Trustee is entitled to rely upon the information
furnished to it by the Issuer (or the Collateral Advisor on behalf of the
Issuer) pursuant to Article IV. If the Trustee or the Accountholder
has been given notice that a transfer or payment by the Trustee or the
Accountholder, as applicable, under Article V is required to be
made on a specified date and on such specified date the Trustee or
Accountholder, as the case may be, shall not have received all information
necessary for the making of such transfer or payment, then the Trustee or the
Accountholder, as the case may be, shall promptly give notice to the Issuer,
the Collateral Advisor and the Administrator, specifying, to the extent
reasonably within the knowledge of the Trustee or the Accountholder, such absence
of information or any inability to confirm information necessary for the making
of such transfer or payment. In the absence of information required to be
furnished by the Issuer under Article IV, the Trustee or the
Accountholder shall act in accordance with written instructions furnished to
the Trustee or the Accountholder, as applicable, by the Issuer. If the Trustee
or the Accountholder, as applicable, has been given notice that a transfer or
payment by the Trustee or the Accountholder under Article V is
required to be made on a specified date and on such specified date any
information necessary for the making of such transfer or payment is not
furnished by the Issuer and instructions necessary for the making of such
transfer or payment are not received from the Issuer in sufficient time to
effect such transfer or payment, then upon notice by the Trustee or the
Accountholder to the Issuer, the Trustee’s or the Accountholder’s obligations
with respect to such transfer or payment shall be suspended and the Trustee or
the Accountholder, as applicable, shall not be liable for the failure to make
such transfer or payment. Notwithstanding the foregoing, the Trustee or the
Accountholder may carry out transfers and payments of amounts specified in Article V
without specific instructions from the Collateral Advisor or the Issuer if the
Trustee or the Accountholder has actual knowledge of the information required
for the making of such transfer and payments. For the avoidance of doubt, the
parties hereto confirm that the Trustee and the Accountholder shall be entitled
to indemnification pursuant to Section 9.06 with respect to any
actions taken by it pursuant to the preceding sentence.

 

Section 9.04.                             [Intentionally Omitted].

 

Section 9.05.                             [Intentionally Omitted].

 

Section 9.06.                             Indemnification. The Issuer shall indemnify, defend and hold
the Trustee and its directors, officers, employees and agents (collectively
with the Trustee, the “Indemnitees”) harmless from and against every
loss, liability or expense, including, without limitation, damages, fines,
suits, actions, demands, penalties, costs, out-of-pocket or incidental
expenses, legal fees and expenses, the allocated costs and expenses of in-house
counsel and legal staff and the costs and expenses of defending or preparing to
defend against any claim (collectively, “Losses”), that may be imposed
on, incurred by, or asserted against, any Indemnitee for or in respect of the
Trustee’s (a) execution and delivery of this Agreement, (b) compliance
or attempted compliance with or reliance upon any instruction or other

 

47

 

direction
upon which the Trustee is authorized to rely pursuant to the terms of this
Agreement and (c) performance under this Agreement, except in the case of
such performance only and with respect to any Indemnitee to the extent that the
Loss resulted from such Indemnitee’s gross negligence, willful misconduct, bad
faith or default. The obligation of the Issuer under this Section 9.06
shall be subject to the Priority of Payments and shall survive the termination
of this Agreement and the resignation or removal of the Trustee and the
Accountholder. The Issuer agrees that the Trustee or the Accountholder, as
applicable, shall not be liable as a result of the Trustee’s or the
Accountholder’s following, in good faith and in accordance with this Agreement,
the written instructions given to it by the Issuer or the Collateral Advisor,
as applicable. None of the Secured Parties shall have any liability under this Section 9.06.

 

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

 

Section 9.07.           Compensation and Reimbursement. The Issuer agrees (a) to pay to the
Trustee from time to time reasonable compensation for all services rendered by
it hereunder and (b) to reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any provision of, or carrying out its duties and obligations
under, this Agreement (including reasonable compensation and fees and the
expenses and disbursements of its agents, any Independent certified public
accountants and Independent counsel), except any expense, disbursement or
advance as may be attributable to gross negligence, bad faith or willful
misconduct on the part of the Trustee. The compensation and reimbursement to
the Trustee under this Section 9.07 shall be an Administrative
Expense and the obligation of each of the Co-Issuers under this Section 9.07
shall survive the termination of this Agreement and the resignation or removal
of the Trustee pursuant to the Trust Deed. None of the Hedge Counterparties,
the Principal Paying Agent, the other Paying Agents, the Trustee, the Initial
Purchasers, the Placement Agent, the Collateral Advisor and the Noteholders
shall have any liability under this Section 9.07.

 

Section 9.08.          [Intentionally Omitted].

 

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

 

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

 

48

 

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

 

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

 

ARTICLE X

 

COVENANTS OF THE ISSUER

 

Section 10.01.      Preservation of Collateral.

 

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

 

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

 

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

 

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

 

49

 

and
maintenance of a perfected, first priority security interest therein in favor
of the Trustee and specifying any additional procedures as shall, in the
opinion of such counsel, be necessary or appropriate for such creation and
maintenance.

 

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

 

ARTICLE XI

 

MISCELLANEOUS

 

Section 11.01.       Amendments.

 

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

 

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

 

(b)           This Agreement (including, without
limitation, Annex A hereto) may otherwise be amended by the Issuer, with
notice to the Rating Agencies and upon receipt of Rating Agency Confirmation
from S&P, any other party hereto and each Hedge Counterparty (except as may
be specifically provided herein) (i) in order to further effectuate the
Grant of or further perfect any Lien or

 

50

 

security
interest of the Trustee in any item of Collateral, any such amendment that
becomes effective as of a specified date after the Closing Date to be
accompanied by an Opinion of Counsel to the Issuer and a copy of such amendment
and the related Opinion of Counsel shall be provided to the Trustee,
(ii) to amend the terms herein for the purpose of facilitating compliance
by the Issuer with any more favorable exemption from registration under the
Securities Act or the Investment Company Act, or to ensure the Issuer’s
exemption thereunder, (iii) upon receipt of Rating Agency Confirmation
from Moody’s and S&P, to effect the appointment of a successor Trustee,
(iv) upon receipt of Rating Agency Confirmation from Moody’s and S&P,
to take any action necessary or advisable to prevent the Issuer, the
Accountholder, any Paying Agent or the Trustee from being subject to
withholding or other taxes, fees or assessments or to prevent the Issuer from being
treated as engaged in a United States trade or business or otherwise being
subjected to United States federal, state or local income tax on a net income
tax basis, (v) to correct or amplify the description of any property at
any time subject to the Grant and Lien of this Agreement, or to better assure,
convey and confirm unto the Trustee any property subject to the Grant and Lien
of this Agreement, (vi) upon receipt of Rating Agency Confirmation from
Moody’s and S&P, to cure ambiguity or correct or supplement any provision
contained in this Agreement which may be defective or inconsistent with any
other provision contained in this Agreement or make any modification that is of
a formal, minor or technical nature or which is made to correct a manifest error,
(vii) upon receipt of Rating Agency Confirmation from Moody’s and S&P,
to correct, modify or supplement any provision which is inconsistent with the
Final Offering Circular; provided
that any such correction, modification or supplement made pursuant
to this clause (vii) shall be consistent with the Final Offering
Circular and (viii) to make any change required by the Irish Stock
Exchange (so long as any of the Notes are listed thereon) in order to permit or
maintain the listing of the Notes thereon.

 

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

 

Section 11.02.       Notices.

 

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

 

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

 

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

 

Section 11.03.        Severability. In the event any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render

 

51

 

unenforceable
any other provision hereof. The parties hereto further agree that the holding
by any court of competent jurisdiction that any right, power, privilege or
remedy pursued by the Trustee hereunder is unavailable or unenforceable shall
not affect in any way the ability of the Trustee to pursue any other right,
power, privilege or remedy available to it.

 

Section 11.04.         Term of This Agreement. This Agreement shall take effect on the
Closing Date and shall continue in effect until the Final Termination Date. On
the Final Termination Date, this Agreement shall terminate, all obligations of
the parties hereunder shall cease and terminate and the Collateral, if any,
held hereunder and not to be used or applied in discharge of any obligations of
the Issuer in respect of the obligations of the Issuer in respect of the Notes
or otherwise under this Agreement shall be released to and in favor of the
Issuer; provided that the
provisions of Sections 9.06, 9.07, 11.06, 11.07, 11.09
and 11.15 shall survive any termination of this Agreement and the
release of the Collateral upon such termination. Notwithstanding the foregoing,
if (a) after the termination of this Agreement or (b) at any time or
times subsequent to the payment of all or any part of the obligations of the
Issuer in respect of the Notes, the Trustee shall be required to repay any
amounts previously paid by or on behalf of the Issuer in reduction thereof by
virtue of an order of any court having jurisdiction in the premises, including,
without limitation, as a result of an adjudication that such amounts constituted
preferential payments or fraudulent conveyances, then this Agreement and the
obligations of the Issuer hereunder shall be reinstated and the Issuer
unconditionally agrees to pay to the Accountholder upon demand by the Trustee
or the Accountholder a sum in cash equal to the amount of any such repayment,
together with interest on such amount from the date of such repayment by the
Trustee to the date of payment to the Trustee. In all instances, the
Accountholder shall pay any amount received by it as aforesaid to the Trustee,
subject to the Priority of Payments.

 

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

 

Section 11.06.         Non-Petition Agreement. Each of the parties hereto covenants and
agrees that, so long as any Note is outstanding and for a period of one
(1) year plus one
(1) day (or, if longer, the applicable preference period then in effect)
after payment in full of all amounts payable under or in respect of the
Transaction Documents, it will not institute against, or join any other Person
in instituting against, the Issuer any bankruptcy, reorganization, arrangement,
insolvency or liquidation Proceedings, or other Proceedings under any federal
or state bankruptcy, insolvency or similar law. Nothing in this Section 11.06
shall preclude, or be deemed to estop, any of the parties hereto (a) from
taking any action prior to the expiration of the aforementioned one
(1) year plus one
(1) day period (or, if longer, the applicable preference period then in
effect) in (i) any case or proceeding voluntarily filed or commenced by
the Issuer or the Co-Issuer or (ii) any involuntary insolvency proceeding
filed or commenced by a Person other than any of the parties hereto, or
(b) from commencing against the Issuer or the Co-Issuer or any of its
properties any legal action which is not a bankruptcy, reorganization,
arrangement, insolvency, moratorium or liquidation proceeding

 

Section 11.07.         Trial by Jury Waived. EACH OF THE PARTIES HERETO WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY

 

52

 

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

 

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

 

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

 

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

 

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

 

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

 

53

 

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

 

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

 

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

 

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

 

Section 11.17.         Trustee and Its Affiliates. LaSalle Bank National Association and any
of its Affiliates providing services in connection with the transactions
contemplated in the Transaction Documents shall have only the duties and
responsibilities expressly provided in each capacity and shall not, by virtue
of its or any of its Affiliates acting in any other capacity, be deemed to have
duties or responsibilities or be deemed to be held to a standard of care other
than as expressly provided with respect to each such capacity. LaSalle Bank
National Association (or its Affiliates) in its and their various capacities in
connection with the transactions contemplated in the Transaction Documents,
including as Trustee, may enter into business transactions, including the
acquisition of investment securities as contemplated by the Transaction
Documents, from which it and/or such Affiliates may derive revenues and profits
in addition to the fees stated in the various Transaction Documents, without
any duty to account therefor.

 

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

 

54

 

with
normal banking procedures purchase the Original Currency with the Other
Currency. If the amount of the Original Currency so purchased is less than the
sum originally due to the Recipient in the Original Currency, the party
obligated to make such payment agrees, as a separate obligation and
notwithstanding any such judgment, to pay to the Recipient the amount of such
loss.

 

[SIGNATURES COMMENCE ON NEXT PAGE]

 

55

 

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

 

	
  ISSUER:

  	
  N-STAR REAL ESTATE CDO II LTD.

  
	
   

  	
  Executed as a Deed

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Derrie Boggess

  
	
   

  	
   

  	
  Name:
  Derrie Boggess

  
	
   

  	
   

  	
  Title: Director

  
	
   

  	
   

  
	
  TRUSTEE:

  	
  LASALLE BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Koren Sumser

  
	
   

  	
   

  	
  Name: Koren Sumser

  
	
   

  	
   

  	
  Title: First Vice President

  
	
   

  	
   

  
	
  ACCOUNTHOLDER:

  	
  LASALLE BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Koren Sumser

  
	
   

  	
   

  	
  Name: Koren Sumser

  
	
   

  	
   

  	
  Title: First Vice PresidentExhibit 10.10

 

Dated as of March 10, 2005

 

 

N-STAR REAL ESTATE CDO III LTD.,

as Issuer

 

 

N-STAR REAL ESTATE CDO III CORP.,

as Co-Issuer

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

 

 

INDENTURE

 

 

TABLE OF CONTENTS

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  PRELIMINARY STATEMENT

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  GRANTING CLAUSES

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE I Definitions and Interpretation

  	
   

  	
  2

  
	
  1.1.

  	
  Definitions

  	
   

  	
  2

  
	
  1.2.

  	
  Assumptions as to Collateral Debt
  Securities, Fees, Etc.

  	
   

  	
  52

  
	
  1.3.

  	
  Rules of Construction

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II The Rated Notes

  	
   

  	
  55

  
	
  2.1.

  	
  Forms Generally

  	
   

  	
  55

  
	
  2.2.

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

  	
   

  	
  56

  
	
  2.3.

  	
  Execution, Authentication, Delivery and
  Dating

  	
   

  	
  57

  
	
  2.4.

  	
  Registration, Transfer and Exchange of
  Rated Notes

  	
   

  	
  58

  
	
  2.5.

  	
  Mutilated, Defaced, Destroyed, Lost or
  Stolen Rated Notes

  	
   

  	
  66

  
	
  2.6.

  	
  Payment of Principal and Interest; Rights
  Preserved

  	
   

  	
  67

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III Conditions Precedent

  	
   

  	
  70

  
	
  3.1.

  	
  General Provisions

  	
   

  	
  70

  
	
  3.2.

  	
  Security for the Rated Notes

  	
   

  	
  73

  
	
  3.3.

  	
  Custodianship; Transfer of Collateral Debt
  Securities and Eligible Investments

  	
   

  	
  74

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV Satisfaction and Discharge

  	
   

  	
  77

  
	
  4.1.

  	
  Satisfaction and Discharge of Indenture

  	
   

  	
  77

  
	
  4.2.

  	
  Application of Trust Money

  	
   

  	
  79

  
	
  4.3.

  	
  Repayment of Funds Held by Note Paying
  Agent

  	
   

  	
  79

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V Events of Default; Remedies

  	
   

  	
  79

  
	
  5.1.

  	
  Events of Default

  	
   

  	
  79

  
	
  5.2.

  	
  Acceleration of Maturity; Rescission and
  Annulment

  	
   

  	
  80

  
	
  5.3.

  	
  Collection of Indebtedness and Suits for
  Enforcement by Trustee

  	
   

  	
  82

  
	
  5.4.

  	
  Remedies

  	
   

  	
  84

  
	
  5.5.

  	
  Preservation of Collateral

  	
   

  	
  85

  
	
  5.6.

  	
  Trustee May Enforce Claims Without
  Possession

  	
   

  	
  87

  
	
  5.7.

  	
  Application of Funds Collected

  	
   

  	
  87

  
	
  5.8.

  	
  Limitation on Suits

  	
   

  	
  87

  
	
  5.9.

  	
  Unconditional Rights of Rated Noteholders
  to Receive Principal and Interest

  	
   

  	
  88

  
	
  5.10.

  	
  Restoration of Rights and Remedies

  	
   

  	
  88

  
	
  5.11.

  	
  Rights and Remedies Cumulative

  	
   

  	
  88

  
	
  5.12.

  	
  Delay or Omission Not Waiver

  	
   

  	
  89

  
	
  5.13.

  	
  Control by Controlling Class

  	
   

  	
  89

  
	
  5.14.

  	
  Waiver of Past Defaults

  	
   

  	
  89

  
	
  5.15.

  	
  Undertaking for Costs

  	
   

  	
  90

  
	
  5.16.

  	
  Waiver of Stay or Extension Laws

  	
   

  	
  90

  
	
  5.17.

  	
  Sale of Collateral

  	
   

  	
  90

  
	
  5.18.

  	
  Action on the Rated Notes

  	
   

  	
  91

  

 

i

 

TABLE
OF CONTENTS

(continued)

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI The Trustee

  	
   

  	
  91

  
	
  6.1.

  	
  Certain Duties and Responsibilities

  	
   

  	
  91

  
	
  6.2.

  	
  Notice of Default

  	
   

  	
  93

  
	
  6.3.

  	
  Certain Rights of Trustee

  	
   

  	
  93

  
	
  6.4.

  	
  Authenticating Agents

  	
   

  	
  95

  
	
  6.5.

  	
  Not Responsible for Recitals or Issuance of Rated Notes

  	
   

  	
  96

  
	
  6.6.

  	
  May Hold Rated Notes

  	
   

  	
  96

  
	
  6.7.

  	
  Funds Held in Trust

  	
   

  	
  96

  
	
  6.8.

  	
  Compensation and Reimbursement

  	
   

  	
  96

  
	
  6.9.

  	
  Corporate Trustee Required; Eligibility

  	
   

  	
  98

  
	
  6.10.

  	
  Resignation and Removal; Appointment of Successor

  	
   

  	
  98

  
	
  6.11.

  	
  Acceptance of Appointment by Successor

  	
   

  	
  99

  
	
  6.12.

  	
  Merger, Conversion, Consolidation or Succession to Business
  of Trustee

  	
   

  	
  100

  
	
  6.13.

  	
  Co-Trustees

  	
   

  	
  100

  
	
  6.14.

  	
  Certain Duties Related to Delayed Payment of Proceeds;
  Other Notices

  	
   

  	
  101

  
	
  6.15.

  	
  Representations and Warranties of the Bank

  	
   

  	
  101

  
	
  6.16.

  	
  Exchange Offers, Proposed Amendments etc.

  	
   

  	
  102

  
	
  6.17.

  	
  Fiduciary for Rated Noteholders Only; Agent For Other
  Secured Parties

  	
   

  	
  102

  
	
  6.18.

  	
  Withholding

  	
   

  	
  102

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII Covenants

  	
   

  	
  103

  
	
  7.1.

  	
  Payment of Principal and Interest

  	
   

  	
  103

  
	
  7.2.

  	
  Maintenance of Office or Agency

  	
   

  	
  103

  
	
  7.3.

  	
  Funds for Rated Note Payments to be Held in Trust

  	
   

  	
  104

  
	
  7.4.

  	
  Existence of Co-Issuers

  	
   

  	
  106

  
	
  7.5.

  	
  Protection of Collateral

  	
   

  	
  106

  
	
  7.6.

  	
  Opinions as to Collateral

  	
   

  	
  108

  
	
  7.7.

  	
  Performance of Obligations

  	
   

  	
  108

  
	
  7.8.

  	
  Negative Covenants

  	
   

  	
  109

  
	
  7.9.

  	
  Statement as to Compliance

  	
   

  	
  110

  
	
  7.10.

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

  	
   

  	
  111

  
	
  7.11.

  	
  Successor Substituted

  	
   

  	
  113

  
	
  7.12.

  	
  No Other Business

  	
   

  	
  114

  
	
  7.13.

  	
  Change or Withdrawal of Rating

  	
   

  	
  114

  
	
  7.14.

  	
  Reporting

  	
   

  	
  114

  
	
  7.15.

  	
  Rated Note Calculation Agent

  	
   

  	
  114

  
	
  7.16.

  	
  Listing

  	
   

  	
  115

  
	
  7.17.

  	
  Amendment of Certain Documents

  	
   

  	
  115

  
	
  7.18.

  	
  Purchase of Collateral; Information Regarding Collateral;
  Rating Confirmation

  	
   

  	
  116

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII Supplemental Indentures

  	
   

  	
  117

  
	
  8.1.

  	
  Supplemental Indentures Without Consent of Rated
  Noteholders

  	
   

  	
  117

  
	
  8.2.

  	
  Supplemental Indentures with Consent of Rated Noteholders

  	
   

  	
  119

  
	
  8.3.

  	
  Execution of Supplemental Indentures

  	
   

  	
  122

  
	
  8.4.

  	
  Effect of Supplemental Indentures

  	
   

  	
  122

  
	
  8.5.

  	
  Reference in Rated Notes to Supplemental Indentures

  	
   

  	
  122

  

 

ii

 

TABLE
OF CONTENTS

(continued)

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX Redemption of Rated Notes

  	
   

  	
  122

  
	
  9.1.

  	
  Redemption of Rated Notes

  	
   

  	
  122

  
	
  9.2.

  	
  Redemption Procedures; Auction

  	
   

  	
  123

  
	
  9.3.

  	
  Record Date; Notice to Trustee of Redemption

  	
   

  	
  124

  
	
  9.4.

  	
  Notice of Redemption

  	
   

  	
  125

  
	
  9.5.

  	
  Notice of Withdrawal

  	
   

  	
  125

  
	
  9.6.

  	
  Rated Notes Payable on Redemption Date

  	
   

  	
  126

  
	
  9.7.

  	
  Special Amortization

  	
   

  	
  126

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X Accounts, Accountings and Releases

  	
   

  	
  127

  
	
  10.1.

  	
  Collection of Funds

  	
   

  	
  127

  
	
  10.2.

  	
  General Provisions Applicable to Accounts

  	
   

  	
  127

  
	
  10.3.

  	
  Collateral Account

  	
   

  	
  128

  
	
  10.4.

  	
  Uninvested Proceeds Account

  	
   

  	
  129

  
	
  10.5.

  	
  Collection Account and CPP Sub-Accounts

  	
   

  	
  128

  
	
  10.6.

  	
  Expense Reserve Account

  	
   

  	
  130

  
	
  10.7.

  	
  Interest Reserve Account

  	
   

  	
  130

  
	
  10.8.

  	
  Payment Account

  	
   

  	
  131

  
	
  10.9.

  	
  Reports by Trustee

  	
   

  	
  131

  
	
  10.10.

  	
  Accountings

  	
   

  	
  132

  
	
  10.11.

  	
  Release of Securities

  	
   

  	
  137

  
	
  10.12.

  	
  Reports by Independent Accountants

  	
   

  	
  137

  
	
  10.13.

  	
  Reports to Rating Agencies

  	
   

  	
  138

  
	
  10.14.

  	
  Tax Matters

  	
   

  	
  138

  
	
  10.15.

  	
  Tax Information

  	
   

  	
  138

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI Application of Monies

  	
   

  	
  139

  
	
  11.1.

  	
  Disbursements of Funds from Payment Account; Priority of
  Payments

  	
   

  	
  139

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII Purchase and Sale of Collateral Debt Securities

  	
   

  	
  151

  
	
  12.1.

  	
  Sale of Collateral Debt Securities

  	
   

  	
  151

  
	
  12.2.

  	
  Portfolio Characteristics

  	
   

  	
  155

  
	
  12.3.

  	
  Conditions Applicable to all Transactions Involving Sale or
  Grant

  	
   

  	
  158

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII Secured Parties’ Relations

  	
   

  	
  159

  
	
  13.1.

  	
  Subordination

  	
   

  	
  159

  
	
  13.2.

  	
  Standard of Conduct

  	
   

  	
  162

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIV Miscellaneous

  	
   

  	
  162

  
	
  14.1.

  	
  Form of Documents Delivered to Trustee

  	
   

  	
  162

  
	
  14.2.

  	
  Acts of Rated Noteholders

  	
   

  	
  163

  
	
  14.3.

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

  	
   

  	
  164

  
	
  14.4.

  	
  Notices and Reports to Rated Noteholders; Waiver

  	
   

  	
  165

  
	
  14.5.

  	
  Effect of Headings and Table of Contents

  	
   

  	
  166

  
	
  14.6.

  	
  Successors and Assigns

  	
   

  	
  166

  
	
  14.7.

  	
  Severability

  	
   

  	
  166

  
	
  14.8.

  	
  Benefits of Indenture

  	
   

  	
  166

  
	
  14.9.

  	
  Governing Law

  	
   

  	
  166

  
	
  14.10.

  	
  Submission to Jurisdiction

  	
   

  	
  166

  

 

iii

 

TABLE
OF CONTENTS

(continued)

 

	
  Section

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  14.11.

  	
  Counterparts

  	
   

  	
  167

  
	
  14.12.

  	
  Waiver of Jury Trial

  	
   

  	
  167

  
	
  14.13.

  	
  Judgment Currency

  	
   

  	
  167

  
	
  14.14.

  	
  Confidential Treatment of Documents

  	
   

  	
  168

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XV Assignment of Agreements, Etc.

  	
   

  	
  168

  
	
  15.1.

  	
  Assignment

  	
   

  	
  168

  
	
  15.2.

  	
  No Impairment

  	
   

  	
  168

  
	
  15.3.

  	
  Termination, Etc.

  	
   

  	
  168

  
	
  15.4.

  	
  Issuer Agreements, Etc.

  	
   

  	
  168

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVI Hedge Agreement

  	
   

  	
  169

  
	
  16.1.

  	
  Hedge Agreement

  	
   

  	
  169

  

 

	
  Schedules

  	
   

  
	
  Schedule A

  	
  Schedule of Collateral Debt Securities as of the Closing Date

  
	
  Schedule B

  	
  LIBOR Formula

  
	
  Schedule C

  	
  Schedule of Temporary Ramp-Up Securities

  
	
  Schedule D

  	
  S&P’s Recovery Rate Matrix

  
	
  Schedule E

  	
  Auction Procedures

  
	
  Schedule
  F

  	
  S&P’s
  Notching Criteria

  
	
  Schedule G

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

  
	
  Schedule H

  	
  S&P’s Industry Classification Groups

  
	
  Schedule I

  	
  Fitch Industry Classification Groups

  
	
   

  	
   

  
	
  Exhibits

  	
   

  
	
  Exhibit
  A-1

  	
  Form
  of Regulation S Global Note

  
	
  Exhibit
  A-2

  	
  Form
  of Rule 144A Global Note

  
	
  Exhibit
  B

  	
  Form
  of Definitive Class D Note

  
	
  Exhibit
  C-1

  	
  Form
  of Rule 144A Transfer Certificate

  
	
  Exhibit
  C-2

  	
  Form
  of Regulation S Transfer Ccrtificate

  
	
  Exhibit
  C-3

  	
  Form
  of Definitive Class D Note Transfer Certificate

  
	
  Exhibit
  D

  	
  Form
  of Funding Certificate

  
	
  Exhibit
  E-1

  	
  Form
  of Opinion of Clifford Chance US LLP

  
	
  Exhibit
  E-2

  	
  Form
  of Opinion of Walkers

  
	
  Exhibit
  F

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

  
	
  Exhibit
  G

  	
  Form
  of Opinion of Thacher Profitt & Wood LLP

  
	
  Exhibit
  H

  	
  Form
  of Opinion of In-House Counsel to Initial Hedge Counterpart

  
	
  Exhibit
  I

  	
  Rated
  Noteholder’s Certificate

  

 

iv

 

THIS INDENTURE dated as of March 10, 2005
among:

 

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

 

N-STAR REAL ESTATE CDO III CORP., a
corporation organized and existing under the law of the State of Delaware; and

 

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

 

PRELIMINARY STATEMENT

 

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

 

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

 

GRANTING CLAUSES

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

1.1.          DEFINITIONS

 

Except as otherwise specified herein or as the context may otherwise
require, the following terms have the respective meanings set forth below for
all purposes of this Indenture. Whenever any reference

 

2

 

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

 

Account means any of
the Collection Account (including each Collateral Sub-Account established
therein), the Collateral Account, the Uninvested Proceeds Account, the Payment
Account, the Interest Reserve Account and the Expense Reserve Account
(including each Collateral Sub-Account established therein).

 

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

 

Accountants’ Report means
a report of a firm of Independent certified public accountants of recognized
national reputation appointed by the Issuer (or the Collateral Advisor on its
behalf) on the Closing Date pursuant to Section 10.12(a), which may be the
firm of Independent accountants that reviews or performs procedures with
respect to the financial reports prepared by the Issuer.

 

Act has the meanings
specified in Section 14.2.

 

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

 

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

 

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

 

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

 

3

 

direct
or cause the direction of the management and policies of such person whether by
contract or otherwise.

 

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

 

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

 

Aggregate Outstanding Amount means, when used with respect to any of the
Rated Notes at any time, the aggregate principal amount of such Rated Notes
Outstanding at such time. Except as otherwise provided herein, (i) the
Aggregate Outstanding Amount of any Class B Notes at any time shall
include the Class B Cumulative Applicable Periodic Interest Shortfall
Amount with respect to such Class B Notes at such time, (ii) the
Aggregate Outstanding Amount of any Class C-lA Notes at any time shall
include the Class C-lA Cumulative Applicable Periodic Interest Shortfall
Amount with respect to such Class C-lA Notes at such time, (iii) the
Aggregate Outstanding Amount of any Class C-1B Notes at any time shall
include the C-1B Cumulative Applicable Periodic Interest Shortfall Amount with
respect to such Class C-1B Notes at such time, (iv) the Aggregate
Outstanding Amount of any Class C-2A Notes at any time shall include the
C-2A Cumulative Applicable Periodic Interest Shortfall Amount with respect to
such Class C-2A Notes at such time, (v) the Aggregate Outstanding
Amount of any Class C-2B Notes at any time shall include the C-2B
Cumulative Applicable Periodic Interest Shortfall Amount with respect to such Class C-2B
Notes at such time and (vi) the Aggregate Outstanding Amount of any Class D
Notes at any time shall include the Class D Cumulative Applicable Periodic
Interest Shortfall Amount with respect to such Class D Notes at such time.

 

Applicable Periodic Interest Rate means, for any Interest Period, (i) with
respect to the Class A-1 Notes, the applicable Class A-1 Note
Interest Rate, (ii) with respect to the Class A-2A Notes, the
applicable Class A-2A Note Interest Rate, (iii) with respect to the Class A-2B
Notes, the applicable Class A-2B Note Interest Rate (iv) with respect
to the Class B Notes, the applicable Class B Note Interest Rate, (v) with
respect to the Class C-lA Notes, the applicable Class C-lA Note
Interest Rate, (vi) with respect to the Class C-1B Notes, the
applicable Class C-1B Note Interest Rate, (vii) with respect to the Class C-2A
Notes, the applicable Class C-2A Note Interest Rate, (viii) with
respect to the Class C-2B Notes, the applicable Class C-2B Note
Interest Rate and (ix) with respect to the Class D Notes, the
applicable Class D Note Interest Rate.

 

Applicable Recovery Rate means, with respect to any Collateral Debt
Security on any Measurement Date, the applicable S&P Recovery Rate for such
Collateral Debt Security on such date.

 

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

 

4

 

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

 

Assumed Reinvestment Rate means,
with respect to any Account or fund securing the Rated Notes, the greater of (i) LIBOR
minus 0.5% and (ii) zero.

 

Auction has the
meaning specified in Section 9.2.

 

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

 

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

 

Auction Procedures has
the meaning specified in Section 9.2.

 

Auction Purchase Agreement has
the meaning specified in Schedule E.

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

Board of Directors means,
with respect to the Issuer, the directors of the Issuer duly appointed in
accordance with the Articles, and, with respect to the Co-Issuer, the directors
of the Co-Issuer duly appointed by the shareholders of the Co-Issuer.

 

Board Resolution means,
with respect to the Issuer or the Co-Issuer, a resolution of the Board of
Directors of the Issuer or the Co-Issuer, as the case may be.

 

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

 

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

 

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

 

6

 

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

 

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

 

CDS Principal Balance means,
prior to the Effective Date, U.S.$400,000,000, and thereafter, the aggregate
Principal Balance of (i) Collateral Debt Securities included in the
Collateral (including any Collateral Debt Securities that have become Defaulted
Securities or Written Down Securities) and (ii) Eligible Investments, in
each case, purchased with the proceeds of the issuance of the Notes or
thereafter with Collateral Principal Collections.

 

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

 

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

 

Citigroup means
Citigroup Global Markets Inc.

 

Class means any
class of the Notes, consisting of the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes and the Income Notes.

 

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

 

Class A Interest Coverage Ratio means
on any Measurement Date, the ratio (expressed as a percentage) of (i) to
(ii), where (i) is equal to the Interest Coverage Amount as of such
Measurement Date and where (ii) is the sum of the Periodic Interest for
the Class A Notes for the Payment Date immediately following such
Measurement Date.

 

Class A Interest Coverage Test means,
for so long as any Class A Notes remain Outstanding, a test satisfied on
any date of determination if the Class A Interest Coverage Ratio as of
such date of determination is equal to or greater than 115%.

 

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

 

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

 

Class A Principal Coverage Test means,
for so long as any Class A Notes remain Outstanding, a test satisfied on
any Measurement Date, if the Class A Principal Coverage Ratio as of such
Measurement Date is equal to or greater than 117%.

 

Class A-1 Note Break-Even Default Rate
means the maximum percentage of defaults that the
portfolio of Collateral Debt Securities can sustain, as determined by S&P
by application of the S&P CDO Monitor, after giving effect to S&P’s
assumptions on recoveries, defaults and timing and to the Priority of Payments
such that sufficient funds will remain for the payment of principal of the Class A-1
Notes in full by their Stated Maturity Dates and the timely payment of interest
on such Class A-1 Notes.

 

Class A-1 Note Default Differential means,
with respect to any Calculation Date, the rate obtained by subtracting the Class A-1
Note Scenario Default Rate from the Class A-1 Note Break-Even Default
Rate.

 

7

 

Class A-1 Note Interest Rate means
LIBOR plus 0.28%.

 

Class A-1 Note Scenario Default Rate means
an estimate of the cumulative default rate for the portfolio of Collateral Debt
Securities consistent with S&P’s rating of the Class A-1 Notes on the
Closing Date, determined by S&P by application of the S&P CDO Monitor.

 

Class A-1 Notes means
the U.S.$294,000,000 aggregate principal amount of Class A-1 Floating Rate
Senior Notes Due 2040.

 

Class A-2 Notes means,
collectively, the Class A-2A Notes and the Class A-2B Notes.

 

Class A-2A Note Break-Even Default
Rate means the maximum percentage of defaults that the
portfolio of Collateral Debt Securities can sustain, as determined by S&P
by application of the S&P CDO Monitor, after giving effect to S&P’s
assumptions on recoveries, defaults and timing and to the Priority of Payments
such that sufficient funds will remain for the payment of principal of the Class A-2A
Notes in full by their Stated Maturity Dates and the timely payment of interest
on such Class A-2A Notes.

 

Class A-2A Note Default Differential means,
with respect to any Calculation Date, the rate obtained by subtracting the Class A-2A
Note Scenario Default Rate from the Class A-2A Note Break-Even Default
Rate.

 

Class A-2A Note Interest Rate means
LIBOR plus 0.50%.

 

Class A-2A Note Scenario Default Rate means
an estimate of the cumulative default rate for the portfolio of Collateral Debt
Securities consistent with S&P’s rating of the Class A-2A Notes on the
Closing Date, determined by S&P by application of the S&P CDO Monitor.

 

Class A-2A Notes means
the U.S.$15,000,000 aggregate principal amount of Class A-2A Floating Rate
Senior Notes Due 2040.

 

Class A-2B Note Break-Even Default
Rate means the maximum percentage of defaults that the
portfolio of Collateral Debt Securities can sustain, as determined by S&P
by application of the S&P CDO Monitor, after giving effect to S&P’s
assumptions on recoveries, defaults and timing and to the Priority of Payments
such that sufficient funds will remain for the payment of principal of the Class A-2B
Notes in full by their Stated Maturity Dates and the timely payment of interest
on such Class A-2B Notes.

 

Class A-2B Note Default Differential means,
with respect to any Calculation Date, the rate obtained by subtracting the Class A-2B
Note Scenario Default Rate from the Class A-2B Note Break-Even Default
Rate.

 

Class A-2B Note Interest Rate means
5.042%.

 

Class A-2B Note Scenario Default Rate means
an estimate of the cumulative default rate for the portfolio of Collateral Debt
Securities consistent with S&P’s rating of the Class A-2B Notes on the
Closing Date, determined by S&P by application of the S&P CDO Monitor.

 

Class A-2B Notes means
the U.S.$5,000,000 aggregate principal amount of Class A-2B Fixed Rate
Senior Notes Due 2040.

 

Class B Applicable Periodic Interest
Shortfall Amount means, with respect to any Interest
Period, the amount of unpaid interest for such Interest Period that will be
added to the principal amount of the

 

8

 

Class B Notes and paid thereafter in accordance with the Priority
of Payments in the event that any Class A Notes are Outstanding and funds
are not available in accordance with the Priority of Payments on any Payment
Date to pay the full amount of Periodic Interest on the Class B Notes.

 

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

 

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

 

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

 

Class B Interest Coverage Test means,
for so long as any Class A Notes or Class B Notes remain Outstanding,
a test that is satisfied on any date of determination if the Class B
Interest Coverage Ratio as of such date of determination is equal to or greater
than 110%.

 

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

 

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

 

Class B Note Interest Rate means
LIBOR plus 0.85%.

 

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

 

Class B Notes means
the U.S.$17,000,000 aggregate principal amount of Class B Floating
Rate Senior Subordinate Notes Due 2040.

 

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

 

Class B Principal Coverage Test means,
for so long as any Class A Notes or Class B Notes remain Outstanding,
a test satisfied on any date of determination if the Class B Principal
Coverage Ratio as of such date of determination is equal to or greater than
114%.

 

9

 

Class C Applicable Periodic Interest
Shortfall Amount means, collectively, the Class C-1
Applicable Periodic Interest Shortfall Amount and the Class C-2 Applicable
Periodic Interest Shortfall Amount.

 

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

 

Class C Cumulative Applicable Periodic
Interest Shortfall Amount means, collectively, the
Class C-1 Cumulative Applicable Periodic Interest Shortfall Amount and the
Class C-2 Cumulative Applicable Periodic Interest Shortfall Amount.

 

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

 

Class C Interest Coverage Test means,
for so long as any Class A Notes, Class B Notes or Class C Notes
remain Outstanding, a test that is satisfied as of any date of determination
when the Class C Interest Coverage Ratio as of such date of determination
is equal to or exceeds 104%.

 

Class C Notes means
collectively the Class C-1 Notes and the Class C-2 Notes.

 

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

 

Class C Principal Coverage Test means,
for so long as any Class A Notes, Class B Notes or Class C Notes
remain Outstanding, a test satisfied on any date of determination if the
Class C Principal Coverage Ratio as of such Date of determination is equal
to or greater than 106%.

 

Class C-1 Applicable Periodic Interest
Shortfall Amount means, collectively, the Class C-1A
Applicable Periodic Interest Shortfall Amount and the Class C-1B
Applicable Periodic Interest Shortfall Amount.

 

Class C-1 Cumulative Applicable Periodic
Interest Shortfall Amount means, collectively, the
Class C-1A Cumulative Applicable Periodic Interest Shortfall Amount and
the Class C-1B Cumulative Applicable Periodic Interest Shortfall Amount.

 

Class C-1 Notes means,
collectively, the Class C-1A Notes and the C-1B Notes.

 

Class C-1A Applicable Periodic
Interest Shortfall Amount means, with respect to any
Interest Period, the amount of unpaid interest for such Interest Period that
will be added to the principal amount of the Class C-1A Notes and paid thereafter
in accordance with the Priority of Payments in the event that any Class A
Notes or Class B Notes are Outstanding and funds are not available in
accordance with the Priority of Payments on any Payment Date to pay the full
amount of Periodic Interest on the Class C-1A Notes.

 

Class C-1A Cumulative Applicable
Periodic Interest Shortfall Amount means, with respect to
any date of determination, the sum of all Class C-1A Applicable Periodic
Interest Shortfall Amounts with respect

 

10

 

to all Payment Dates preceding such date of determination, less any
amounts applied on all preceding Payment Dates pursuant to the Priority of
Payments to reduce such sum.

 

Class C-1A Note Break-Even Default
Rate means the maximum percentage of defaults that the
portfolio of Collateral Debt Securities can sustain, as determined by S&P
by application of the S&P CDO Monitor, after giving effect to S&P’s
assumptions on recoveries, defaults and timing and to the Priority of Payments
such that sufficient funds will remain for the payment of principal of the
Class C-lA Notes in full by their Stated Maturity Date and the ultimate
payment of interest on such Class C-lA Notes.

 

Class C-1A Note Default Differential means,
with respect to any Calculation Date, the rate obtained by subtracting the
Class C-1 Note Scenario Default Rate from the Class C-1 Note
Break-Even Default Rate.

 

Class C-1A Note Interest Rate means
LIBOR plus 1.25%.

 

Class C-1A Note Scenario Default Rate means
an estimate of the cumulative default rate for the portfolio of Collateral Debt
Securities consistent with S&P’s rating of the Class C-lA Notes on the
Closing Date, determined by S&P by application of the S&P CDO Monitor.

 

Class C-IA Notes means
the U.S.$10,000,000 aggregate principal amount of Class C-lA Floating Rate
Junior Subordinate Notes Due 2040.

 

Class C-1B Applicable Periodic
Interest Shortfall Amount means, with respect to any
Interest Period, the amount of unpaid interest for such Interest Period that will
be added to the principal amount of the Class C-1B Notes and paid
thereafter in accordance with the Priority of Payments in the event that any
Class A Notes or Class B Notes are Outstanding and funds are not
available in accordance with the Priority of Payments on any Payment Date to
pay the full amount of Periodic Interest on the Class C-1B Notes.

 

Class C-1B Cumulative Applicable
Periodic Interest Shortfall Amount means, with respect to
any date of determination, the sum of all Class C-1B Applicable Periodic
Interest Shortfall Amounts with respect to all Payment Dates preceding such
date of determination, less any amounts applied on all preceding Payment Dates
pursuant to the Priority of Payments to reduce such sum.

 

Class C-1B Note Break-Even Default Rate
means the maximum percentage of defaults that the
portfolio of Collateral Debt Securities can sustain, as determined by S&P
by application of the S&P CDO Monitor, after giving effect to S&P’s
assumptions on recoveries, defaults and timing and to the Priority of Payments
such that sufficient funds will remain for the payment of principal of the
Class C-1B Notes in full by their Stated Maturity Date and the ultimate
payment of interest on such Class C-1B Notes.

 

Class C-1B Note Default Differential means,
with respect to any Calculation Date, the rate obtained by subtracting the
Class C-1B Note Scenario Default Rate from the Class C-1B Note
Break-Even Default Rate.

 

Class C-1B Note Interest Rate means
5.804%.

 

Class C-1B Note Scenario Default Rate means
an estimate of the cumulative default rate for the portfolio of Collateral Debt
Securities consistent with S&P’s rating of the Class C-1B Notes on the
Closing Date, determined by S&P by application of the S&P CDO Monitor.

 

Class C-1B Notes means
the U.S.$6,000,000 aggregate principal amount of Class C-1B Fixed Rate
Junior Subordinate Notes Due 2040.

 

11

 

Class C-2 Applicable Periodic Interest
Shortfall Amount means, collectively, the Class C-2A
Applicable Periodic Interest Shortfall Amount and the Class C-2B
Applicable Periodic Interest Shortfall Amount.

 

Class C-2 Cumulative Applicable
Periodic Interest Shortfall Amount means, collectively,
the Class C-2A Cumulative Applicable Periodic Interest Shortfall Amount
and the Class C-2B Cumulative Applicable Periodic Interest Shortfall
Amount.

 

Class C-2 Notes means,
collectively, the Class C-2A Notes and the Class C-2B Notes.

 

Class C-2A Applicable Periodic
Interest Shortfall Amount means, with respect to any
Interest Period, the amount of unpaid interest for such Interest Period that
will be added to the principal amount of the Class C-2A Notes and paid
thereafter in accordance with the Priority of Payments in the event that any
Class A Notes, Class B Notes or Class C-1 Notes are Outstanding
and funds are not available in accordance with the Priority of Payments on any
Payment Date to pay the full amount of Periodic Interest on the Class C-2A
Notes.

 

Class C-2A Cumulative Applicable
Periodic Interest Shortfall Amount means, with respect to
any date of determination, the sum of all Class C-2A Applicable Periodic
Interest Shortfall Amounts with respect to all Payment Dates preceding such
date of determination, less any amounts applied on all preceding Payment Dates
pursuant to the Priority of Payments to reduce such sum.

 

Class C-2A Note Break-Even Default
Rate means the maximum percentage of defaults that the
portfolio of Collateral Debt Securities can sustain, as determined by S&P
by application of the S&P CDO Monitor, after giving effect to S&P’s
assumptions on recoveries, defaults and timing and to the Priority of Payments
such that sufficient funds will remain for the payment of principal of the
Class C-2A Notes in full by their Stated Maturity Date and the ultimate payment
of interest on such Class C-2A Notes.

 

Class C-2A Note Default Differential means,
with respect to any Calculation Date, the rate obtained by subtracting the
Class C-2A Note Scenario Default Rate from the Class C-2B Note
Break-Even Default Rate.

 

Class C-2A Note Interest Rate means
LIBOR plus 1.55%.

 

Class C-2A Note Scenario Default Rate means
an estimate of the cumulative default rate for the portfolio of Collateral Debt
Securities consistent with S&P’s rating of the Class C-2A Notes on the
Closing Date, determined by S&P by application of the S&P CDO Monitor.

 

Class C-2A Notes means
the U.S.$12,000,000 aggregate principal amount of Class C-2A Floating Rate
Junior Subordinate Notes Due 2040.

 

Class C-2B Applicable Periodic
Interest Shortfall Amount means, with respect to any
Interest Period, the amount of unpaid interest for such Interest Period that
will be added to the principal amount of the Class C-2B Notes and paid
thereafter in accordance with the Priority of Payments in the event that any
Class A Notes, Class B Notes or Class C-1 Notes are Outstanding
and funds are not available in accordance with the Priority of Payments on any
Payment Date to pay the full amount of Periodic Interest on the Class C-2B
Notes.

 

Class C-2B Cumulative Applicable Periodic
Interest Shortfall Amount means, with respect to any date
of determination, the sum of all Class C-2B Applicable Periodic Interest
Shortfall Amounts with respect to all Payment Dates preceding such date of
determination, less any amounts applied on all preceding Payment Dates pursuant
to the Priority of Payments to reduce such sum.

 

12

 

Class C-2B Note Break-Even Default
Rate means the maximum percentage of defaults that the
portfolio of Collateral Debt Securities can sustain, as determined by S&P
by application of the S&P CDO Monitor, after giving effect to S&P’s
assumptions on recoveries, defaults and timing and to the Priority of Payments
such that sufficient funds will remain for the payment of principal of the
Class C-2B Notes in full by their Stated Maturity Date and the ultimate
payment of interest on such Class C-2B Notes.

 

Class C-2B Note Default Differential means,
with respect to any Calculation Date, the rate obtained by subtracting the
Class C-2B Note Scenario Default Rate from the Class C-2B Note
Break-Even Default Rate.

 

Class C-2B Note Interest Rate means
6.135%.

 

Class C-2B Note Scenario Default Rate means
an estimate of the cumulative default rate for the portfolio of Collateral Debt
Securities consistent with S&P’s rating of the Class C-2B Notes on the
Closing Date, determined by S&P by application of the S&P CDO Monitor.

 

Class C-2B Notes means
the U.S.$2,000,000 aggregate principal amount of Class C-2B Fixed Rate
Senior Subordinate Notes Due 2040.

 

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

 

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

 

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

 

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

 

Class D Interest Coverage Test means,
for so long as any Class A Notes, Class B Notes, Class C Notes
or Class D Notes remain Outstanding, a test that is satisfied as of any
date of determination when the Class D Interest Coverage Ratio as of such
date of determination is equal to or exceeds 101%.

 

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

 

13

 

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

 

Class D Note Interest Rate means
6.458%.

 

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

 

Class D Notes means
the U.S.$16,000,000 aggregate principal amount of Class D Fixed Rate
Junior Subordinate Notes due 2040.

 

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

 

Class D Principal Coverage Test means
a test that is satisfied as of any date of determination when the Class D
Principal Coverage Ratio is equal to or exceeds 103%.

 

Clearing Agency means
DTC, Euroclear or Clearstream.

 

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

 

Clearstream means
Clearstream Banking, société anonyme.

 

Closing Date means
March 10, 2005.

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

Co-Issuer means
N-Star Real Estate CDO III Corp., a corporation organized under the law of the
State of Delaware, unless a successor Person shall have become the Co-Issuer
pursuant to the applicable provisions of this Indenture, and thereafter Co-Issuer shall
mean such successor Person.

 

Co-Issuers means the
Issuer and Co-Issuer.

 

Collateral has the
meaning specified in the Granting Clauses.

 

Collateral Administration Agreement means
the Collateral Administration Agreement, dated March 10, 2005, by and
among the Issuer, the Collateral Advisor and the Collateral Administrator, as
the same may be amended and modified from time to time in accordance with its
terms.

 

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

 

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

 

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

 

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

 

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

 

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

 

Collateral Interest Collections means,
with respect to any Due Period and the related Payment Date, without
duplication, the sum of (i) all cash payments of interest with respect to
any Collateral Debt

 

15

 

Securities and Eligible Investments included in the Collateral
(including any Sale Proceeds representing unpaid interest accrued thereon to
the date of the sale thereof to the extent not treated as Collateral Principal
Collections at the option of the Collateral Advisor, but excluding all funds
received on a Defaulted Security (including any unpaid interest) and any unpaid
interest accrued on a Deferred Interest PIK Bond or a Written Down Security to
the date of sale) which are received during the related Due Period (excluding
any Purchased Accrued Interest), (ii) all payments on Eligible Investments
purchased with Collateral Interest Collections, (iii) payments received or
scheduled to be received from a Hedge Counterparty under any Hedge Agreement
(including the initial Hedge Agreement) on the related Payment Date, excluding
any payments received from a Hedge Counterparty upon reduction of the notional
amount and any termination payments (provided that so
long as the Notes are Outstanding, any termination payments received from a
Hedge Counterparty will be used to enter into a substitute Hedge Agreement to
the extent required to maintain the then-current rating of the Notes by each
Rating Agency), (iv) all amendment and waiver fees, all late payment fees
and all other fees and commissions received during the related Due Period (other
than fees and commissions received in connection with the sale, restructuring,
workout or default of Collateral Debt Securities or in connection with
Defaulted Securities or Written Down Securities), (v) the Principal
Balance of any Eligible Investments purchased with Collateral Interest
Collections, (vi) all interest accrued on the Closing Date on Collateral
Debt Securities included in the Collateral, (vii) any amounts on deposit
in the Interest Reserve Account, (viii) at the option of the Collateral
Advisor, any amount on deposit in the Expense Reserve Account in excess of
U.S.$25,000 and (ix) all proceeds from the foregoing; provided, however, that
Collateral Interest Collections shall not include the funds and other property
(including, without limitation, the paid-up share capital of the Issuer) with
respect to the Income Notes and the bank account in which such funds and the
proceeds thereof are held); provided, further,  that Collateral Interest Collections
shall not include principal of any Collateral Debt Security representing
capitalized interest after the date of purchase thereof by the Issuer but shall
include the funds and other property (including, without limitation, the
paid-up share capital of the Issuer) with respect to the Income Notes and the
bank account in which such funds and the proceeds thereof are held)..

 

Collateral Principal Collections means,
with respect to any Due Period and the related Payment Date, all amounts
received by the Issuer during such Due Period that do not constitute Collateral
Interest Collections; provided, however,  that
Collateral Principal Collections shall include (A) principal of any
Collateral Debt Security representing capitalized interest after the date of
purchase thereof by the Issuer and (B) any Uninvested Proceeds which have
not been invested on or prior to the Effective Date.

 

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

 

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

 

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

 

(1)           the aggregate Principal Balance of all
Collateral Debt Securities with an S&P Rating of below “BBB-” does not exceed
the greater of (a) 30% of the CDS Principal Balance and
(b) U.S.$120,000,000;

 

(2)           the aggregate Principal Balance of all
Collateral Debt Securities with an S&P Rating of below “BB-” does
not exceed the greater of (a) 14% of the CDS Principal Balance and
(b) U.S.$56,000,000;

 

16

 

(3)           the aggregate Principal Balance of all
Collateral Debt Securities that are PIK Bonds does not exceed 6.5% of the CDS
Principal Balance;

 

(4)           the aggregate Principal Balance of all
Collateral Debt Securities that are CMBS Securities does not exceed the greater
of (a) 80% of the CDS Principal Balance and (b) U.S.$320,000,000; provided that
(x) the aggregate Principal Balance of all Collateral Debt Securities that
are CMBS Large Loan Securities does not exceed the greater of (a) 25% of
the CDS Principal Balance and (b) U.S.$100,000,000, (y) the aggregate
Principal Balance of all Collateral Debt Securities that are CMBS Credit Tenant
Lease Securities does not exceed the greater of (a) 5% of the CDS
Principal Balance and (b) U.S.$20,000,000, and (z) the aggregate
Principal Balance of all Collateral Debt Securities that are CMBS Single
Borrower Securities does not exceed the greater of (a) 14% of the CDS
Principal Balance and (b) U.S.$56,000,000;

 

(5)           the aggregate Principal Balance of all
Collateral Debt Securities that are REIT Debt Securities does not exceed the
greater of (a) 25% of the CDS Principal Balance and
(b) U.S.$100,000,000;

 

(6)           the aggregate Principal Balance of all Collateral
Debt Securities that are Real Estate CDO Securities does not exceed the greater
of (a) 6.5% of the CDS Principal Balance and (b) U.S.$26,000,000;

 

(7)           the aggregate Principal Balance of all
Collateral Debt Securities that are Real Estate Interests does not exceed the
greater of (a) 9% of the CDS Principal Balance and
(b) U.S.$36,000,000;

 

(8)           with respect to the particular Issue of the
Collateral Debt Security being acquired,

 

(i)            the aggregate Principal Balance of all
Collateral Debt Securities that are part of the same Issue does not exceed the
greater of (a) 4% of the CDS Principal Balance and
(b) U.S.$16,000,000,

 

(ii)           the aggregate Principal Balance of all
Collateral Debt Securities that are CMBS Securities Rated below BBB- by S&P
and are part of the same Issue does not exceed the greater of (a) 3% CDS
Principal Balance and (b) U.S.$12,000,000,

 

(iii)          the aggregate Principal Balance of all
Collateral Debt Securities that are REIT Debt Securities issued by the same
obligor does not exceed the greater of (a) 4% of the CDS Principal Balance
and (b) U.S.$16,000,000,

 

(iv)          the aggregate Principal Balance of all
Collateral Debt Securities that are Real Estate CDO Securities that are part of
the same Issue does not exceed the greater of (a) 2.5% of the CDS
Principal Balance and (b) U.S.$10,000,000 and

 

(v)           the aggregate Principal Balance of all
Collateral Debt Securities that are Real Estate Interests that are part of the
same Issue does not exceed the greater of (a) 4% of the CDS Principal
Balance and (b) U.S.$16,000,000;

 

(9)           with respect to the servicer of the security
being acquired, (a) the aggregate Principal Balance of all Collateral Debt
Securities serviced by such servicer does not exceed the greater of
(a) 20% of the CDS Principal Balance and (b) U.S.$80,000,000, except
that the aggregate Principal Balance of all Collateral Debt Securities serviced
by servicers rated “Below Average” by S&P, or if there is no servicer
rating by S&P or Fitch, having long-term unsecured debt securities rated
“BB” or

 

17

 

lower, shall not exceed the greater of (a) 5% of the CDS Principal
Balance and (b) U.S.$20,000,000;

 

(10)         the aggregate Principal Balance of all
Collateral Debt Securities that mature beyond the Stated Maturity Date does not
exceed 25% of the CDS Principal Balance;

 

(11)         the aggregate Principal Balance of all Fixed
Rate Collateral Debt Securities does not exceed the greater of (a) 90% of
the CDS Principal Balance and (b) U.S.$360,000,000;

 

(12)         the Fitch Weighted Average Rating Factor does
not exceed 9.5;

 

(13)         (i) the Weighted Average Fixed Rate
Coupon as of such date equals or exceeds 6.15% and (ii) the Weighted
Average Spread as of such date equals or exceeds 1.87%;

 

(14)         the Weighted Average Life Test is satisfied;

 

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

 

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

 

(17)         the aggregate Principal Balance of all
Collateral Debt Securities that provide for periodic payments of interest in
Cash less frequently than monthly does not exceed the greater of (a) 32%
of the CDS Principal Balance and (b) U.S.$128,000,000; and

 

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

 

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

 

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

 

Collateralization Event means,
provided that
no Substitution Event has occurred, any of the following events: (a) if
the Hedge Ratings Determining Party’s short-term rating from Fitch is lower
than “F1” or the long-term rating of the Hedge Ratings Determining Party from
Fitch is withdrawn, suspended or downgraded below “A”, (b) if no
short-term rating is available from Fitch, the long-term rating of the Hedge
Ratings Determining Party from Fitch is withdrawn, suspended or downgraded
below “A”, or (c) the short term rating of the Hedge Ratings Determining
Party from S&P is lower than “A-1” or, if the Hedge Ratings Determining
Party does not have a short term rating from S&P, the long term rating of
such Hedge Ratings Determining Party is lower than “A+”.

 

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

 

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

 

Commercial Mortgage Backed Security means
securities backed by obligations (including certificates of participations in
obligations) that are principally secured by mortgages on real property or
interests

 

18

 

therein having a multifamily or commercial use, such as regional malls,
retail space, office buildings, warehouse or industrial properties, hotels,
nursing homes and senior living centers.

 

Commission means the
United States Securities and Exchange Commission.

 

Controlling Class means
the Class A Notes voting as a single Class, so long as any Class A
Notes are Outstanding, then the Class B Notes, so long as any Class B
Notes are Outstanding, then the Class C Notes voting as a single Class, so
long as any Class C Notes are Outstanding and then the Class D Notes,
so long as any Class D Notes are Outstanding in each case, based on the
then Aggregate Outstanding Amount thereof; provided that if any Coverage Test is not
satisfied on a Calculation Date (i) the “Controlling Class” shall mean 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 any Class B Notes
are Outstanding, then the Class C-1 Notes, so long as any Class C-1
Notes are Outstanding, and then the Class C-2 Notes, as long as any
Class C-2 Notes are Outstanding, in each case, based on the aggregate
principal amount thereof and (ii) on any Calculation Date thereafter, the
“Controlling Class” shall remain as specified in (i) above notwithstanding
any subsequent satisfaction of the failed Coverage Test.

 

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

 

Corporate Services Agreement means
that certain Corporate Services Agreement, dated as of March 10, 2005, as
the same may be amended or supplemented from time to time, between the Issuer
and the Administrator.

 

Corporate Trust Office means
the designated corporate trust office of the Trustee, currently located at:
(i) for note transfer purposes, Wells Fargo Center, Sixth Street and
Marquette Avenue, Minneapolis, Minnesota 66749, Attention: CDO Trust Services —
N-Star Real Estate CDO III and (ii) for all other purposes, 9062 Old
Annapolis Road, Columbia, Maryland 21045. Attention: CDO Trust Services —
N-Star Real Estate CDO III, telephone number 410-884-2000, fax number 410-715-3748, or
such other address as the Trustee may designate from time to time by notice to
the Rated Noteholders, the Income Noteholders, the Collateral Advisor and the
Co-Issuers or the principal corporate trust office of any successor Trustee.

 

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

 

CPP Asset Type means
REIT Debt Securities that are Fixed Rate Securities, REIT Debt Securities that
are Floating Rate Securities, CMBS Securities that are Fixed Rate Securities,
CMBS Securities that are Floating Rate Securities, Real Estate CDO Securities
that are Fixed Rate Securities and Real Estate CDO Securities that are Floating
Rate Securities.

 

CPP Sub-Account has
the meaning specified in Section 10.5(b).

 

Credit Risk Event means,
with respect to any Collateral Debt Security, (i) if a Note Downgrade Event
shall have occurred and be continuing, (a) such Collateral Debt Security
has been put on watch for possible downgrade, or has been downgraded, by any
Rating Agency or (b) such Collateral Debt Security has experienced an
increase in credit spread of 10% or more (due to credit related reasons as
determined by the Collateral Advisor in its reasonable business judgment)
compared to the credit spread at which

 

19

 

such Collateral Debt Security was purchased by the Issuer, determined
by reference to an applicable index selected by the Collateral Advisor or
(ii) if no Note Downgrade Event shall have occurred and be continuing,
there has been an event or circumstance that constitutes a change in the
condition of the issuer of such Collateral Debt Security (or of available
information with respect to such issuer) that evidences, in the good faith
judgment of the Collateral Advisor, (a) a significant risk of such
Collateral Debt Security materially declining in credit quality, or (b) a
significant risk, with a lapse of time, of such Collateral Debt Security
becoming a Defaulted Security or a Written Down Security.

 

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

 

Credit Support Annex  means an ISDA
Credit Support Annex to a Hedge Agreement, if any.

 

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

 

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

 

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

 

Deemed Floating Asset Hedge  means, with
respect to a Fixed Rate Collateral Debt Security, an interest rate swap having
(i) a notional schedule equal to the Principal Balance as it is reduced by
expected amortization of such Fixed Rate Collateral Debt Security over time and
(ii) payment dates identical to the Payment Dates of the Issuer under the
Indenture; provided that, (w) at the time of entry
into the Deemed Floating Asset Hedge, (i) the expected principal payments
on the Fixed Rate Collateral Debt Security comprising a Deemed Floating Rate
Collateral Debt Security will not extend beyond 10 years after the effective
date thereof and (ii) the scheduled notional amount of such Deemed
Floating Asset Hedge at any time is equal to the expected principal amount of
the related Fixed Rate Collateral Debt Security (as calculated at such time),
(x) the Rating Agencies and the Trustee are notified prior to the Issuer’s
entry into a Deemed Floating Asset Hedge, and each will be provided with the
identity of the proposed hedge counterparty and copies of the hedge
documentation and notional schedule, (y) such Deemed Floating Asset Hedge
will require Rating Agency Confirmation from S&P to the extent the
applicable master agreement or schedule attached thereto is not a hedge
agreement with respect to which the documentation thereof conforms in all
material respects to a form in respect of which Rating Agency Confirmation was
previously obtained by the Issuer and (z) such Deemed Floating Asset Hedge
is priced at then-current market rates.

 

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

 

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

 

20

 

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

 

Defaulted Interest means
any interest due and payable in respect of any Class A Note or, if no
Class A Notes are Outstanding, in respect of any Class B Note or, if
no Class B Notes are Outstanding, in respect of any Class C-1 Note
or, if no Class C-1 Notes are Outstanding, in respect of any
Class C-2 Note, or if no Class C-2 Notes are Outstanding, in respect
of any Class D Note and any interest on such Defaulted Interest that (in
each case) is not punctually paid or duly provided for on the applicable
Payment Date (including the applicable Stated Maturity Date) of the applicable
Rated Note.

 

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

 

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

 

(i)            as to which (a) the issuer thereof has
defaulted in the payment of principal or interest (without giving effect to any
applicable notice or grace period or waiver, unless the Collateral Advisor
certifies to the Trustee that in the Collateral Advisor’s judgment such default
of up to the lesser of (1) three (3) Business Days and (2) the
grace period provided for in the Underlying Instruments is due to non-credit
and non-fraud related reasons and the Collateral Advisor has so certified in
writing to the Trustee or (b) pursuant to its Underlying Instruments, there
has occurred any default or event of default which entitles the holders
thereof, with notice or passage of time or both, to accelerate the maturity
(whether by mandatory prepayments, mandatory redemption or otherwise) of all or
a portion of the outstanding principal amount of such security, unless
(1) in the case of a default or event of default consisting of a failure
of the obligor on such security to make required interest payments and/or
scheduled principal payments, such security has resumed current payments of interest
and scheduled principal in cash (including all past due interest and scheduled
principal) and, in the Collateral Advisor’s judgment, will continue to make
such current payments of interest in cash (provided that
no restructuring has been effected) or (2) in the case of any other
default or event of default, such default or event of default is no longer
continuing (provided that no event of default
has been waived with respect to (A) a default in the payment of principal
or interest or (B) insolvency in the event that all outstanding amounts
have not been paid) and such security satisfies the criteria for inclusion of
securities in the definition of “Collateral Debt Security”;

 

(ii)           that ranks pari passu with or subordinate to any
other indebtedness for borrowed money owing by the issuer of such security, if
any (for purposes hereof, “Other Indebtedness”; provided, however,  that
such Other Indebtedness of such issuer will not include series of such Other
Indebtedness that may be issued or owing by a separate special purpose entity
and is not guaranteed by the issuer) if such issuer had defaulted in the
payment of principal or interest in respect of such Other Indebtedness (without
giving effect to any applicable notice or grace period or waiver, unless the
Collateral Advisor certifies to the Trustee that in the Collateral Advisor’s
judgment such default of up to the lesser of (a) three (3) Business
Days and (b) the grace period provided for in the Underlying Instruments
is due to non-credit and non-fraud related reasons and the Collateral Advisor
has so certified in writing to the Trustee), unless, in the case of a default
or event of default consisting of a failure of the obligor on such security to
make required interest payments and/or scheduled principal payments, such Other
Indebtedness has resumed current payments of interest and scheduled principal
(including all due interest and scheduled principal) in cash (whether or not
any waiver or restructuring has been effected) and, in the Collateral

 

21

 

Advisor’s judgment, will continue to make such current payments of
interest and scheduled principal in cash; provided that a security shall be considered a
Defaulted Security pursuant to this clause (ii) only if the Collateral
Advisor knows, after due inquiry as required pursuant to the Collateral
Advisory Agreement, that the issuer thereof is (or is reasonably expected by
the Collateral Advisor to be, as of the next scheduled payment distribution
date) in default (without giving effect to any applicable grace period or
waiver) as to payment of principal and/or interest on another obligation (and
such default has not been cured or waived) which is senior or pari passu in
right of payment to such Collateral Debt Security;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Definitive Class D Note Transfer Certificate  has the meaning
specified in Section 2.4(c)(1)

 

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

 

22

 

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

 

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

 

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

 

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

 

Double B Excess Percentage means,
on any Measurement Date, the greater of (a) zero; and
(b) (i) the aggregate Principal Balance of all Collateral Debt
Securities with an S&P Rating lower than BBB- and higher than B+ (expressed
as a percentage of the CDS Principal Balance) minus (ii) 18%;

 

Double B Principal Coverage Adjustment
Percentage means, on any Measurement Date, the greater of
(a) zero; and (b) (i) the Double B Excess Percentage minus (ii) 5%;

 

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

 

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

 

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

 

Effective Date means
the date that is the earliest of (i) the 90th day following the Closing
Date, (ii) the date on which the Issuer has purchased Collateral Debt
Securities, excluding Temporary Ramp-Up Securities, having an aggregate par
amount of U.S.$400,000,000 or (iii) such earlier date (if any) that is
designated by the Collateral Advisor by notice to the Trustee under the
Indenture; provided
that the Collateral Advisor has received Rating Agency Confirmation
on such date; provided,
further, that in the event that such day does not fall on a Business Day,
the Effective Date shall be the next succeeding Business Day.

 

Eligibility Criteria has
the meaning specified in Section 12.2.

 

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

 

(i)            cash;

 

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

 

23

 

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

 

(a)           in the case of long-term debt obligations,
not less than “AA+” by S&P; or

 

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

 

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

 

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

 

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

 

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

 

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

 

provided that (a) Eligible Investments
purchased with funds in the Collection Account will be held until maturity
except as otherwise specifically provided herein and will include only such
obligations or securities as mature no later than the Business Day prior to the
Payment Date next succeeding the date of

 

24

 

investment
in such obligations or securities, unless such Eligible Investments are
investments of the type described in clause (i) or (iii) above, in
which event such Eligible Investments may mature on such Payment Date and
(b) none of the foregoing obligations or securities will constitute
Eligible Investments if all, or substantially all, of the remaining amounts
payable thereunder will consist of interest and not principal payments, if such
security is purchased at a price in excess of 100% of par, if such security is
subject to substantial non-credit related risk, as determined by the Collateral
Advisor in its judgment, if any income from or proceeds of disposition of the
obligation or security is or will be subject to deduction or withholding for or
on account of any withholding or similar tax or the acquisition (including the
manner of acquisition), ownership, enforcement or disposition of the obligation
or security will subject the Issuer to net income tax in any jurisdiction
outside its jurisdiction of incorporation, if such security has an assigned
rating with an “r” or “t” subscript, if such security is a mortgage-backed
security or if such security is subject to an Offer.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Event of Default has the meaning specified in
Section 5.1.

 

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

 

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

 

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

 

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

 

25

 

the related Due Period and the aggregate CDS Principal Balance
(excluding the aggregate Principal Balance of Defaulted Securities) on the last
day of such Due Period.

 

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

 

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

 

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

 

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

 

Fitch Rating with
respect to any Collateral Debt Security, for determining the Fitch Rating as of
any date of determination:

 

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

 

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

 

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

 

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

 

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

 

26

 

	
  Fitch Rating

  	
   

  	
  Fitch Rating Factor

  	
   

  	
  Fitch Rating

  	
   

  	
  Fitch Rating Factor

  	
   

  
	
  AAA

  	
   

  	
  .019

  	
   

  	
  BB

  	
   

  	
  13.53

  	
   

  
	
  AA+

  	
   

  	
  .057

  	
   

  	
  BB-

  	
   

  	
  18.46

  	
   

  
	
  AA

  	
   

  	
  .089

  	
   

  	
  B+

  	
   

  	
  22.84

  	
   

  
	
  AA-

  	
   

  	
  1.15

  	
   

  	
  B

  	
   

  	
  27.67

  	
   

  
	
  A+

  	
   

  	
  1.65

  	
   

  	
  B-

  	
   

  	
  34.98

  	
   

  
	
  A

  	
   

  	
  1.85

  	
   

  	
  CCC+

  	
   

  	
  43.36

  	
   

  
	
  A-

  	
   

  	
  2.44

  	
   

  	
  CCC

  	
   

  	
  48.52

  	
   

  
	
  BBB+

  	
   

  	
  3.13

  	
   

  	
  CC

  	
   

  	
  77.00

  	
   

  
	
  BBB

  	
   

  	
  3.74

  	
   

  	
  C

  	
   

  	
  95.00

  	
   

  
	
  BBB-

  	
   

  	
  7.26

  	
   

  	
  DDD-D

  	
   

  	
  100.00

  	
   

  
	
  BB+

  	
   

  	
  10.18

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

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

 

Five Percent Limit means
the maximum cumulative amount that is allowed to be reinvested in Substitute
Collateral Debt Securities with Sale Proceeds received in the manner specified
in Section 12.1(b) and which amount cannot exceed 5% of the CDS
Principal Balance as of the Effective Date

 

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

 

Fixed Rate Excess means,
as of any Measurement Date, a fraction (expressed as a percentage), the numerator
of which is equal to the product of (a) the greater of zero and the
excess, if any, of the Weighted Average Fixed Rate Coupon for such Measurement
Date over 6.15%, and (b) the aggregate Principal Balance of all Collateral
Debt Securities that are Fixed Rate Collateral Debt Securities (excluding, in
each case, Defaulted Securities, Written Down Securities, Deferred Interest PIK
Bonds and Deemed Floating Rate Collateral Debt Securities) and the denominator
of which is the aggregate Principal Balance of all Collateral Debt Securities
that are Floating Rate Collateral Debt Securities or Deemed Floating Rate
Collateral Debt Securities (excluding, in each case, Defaulted Securities,
Written Down Securities and Deferred Interest PIK Bonds).

 

Fixed Rate Notes means,
collectively, the Class A-2B Fixed Rate Senior Notes, the Class C-1B
Fixed Rate Junior Subordinate Notes, the Class C-2B Fixed Rate Junior
Subordinate Notes and the Class D Notes.

 

27

 

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

 

Floating Rate Notes means,
collectively, the Class A-1 Notes, the Class A-2A Notes, the
Class B Notes, the Class C-lA Notes, and the Class C-2A Notes.

 

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

 

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

 

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

 

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

 

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

 

Hedge Counterparty means
(a) with respect to the initial Hedge Agreement entered into on the
Closing Date, the Initial Hedge Counterparty, (b) any hedge counterparty
(or any permitted assignee or successor) under a Hedge Agreement that satisfies
the Hedge Counterparty Ratings Requirement and (c) any substitute or
additional parties therefore appointed in accordance with Section 16.1(d) or
Section 16.1(e).

 

28

 

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

 

Hedge Counterparty Ratings Requirement means,
with respect to any Hedge Ratings Determining Party: (a) either
(i) both (x) the short-term rating of such Hedge Ratings Determining
Party by Fitch is not lower than “Fl” and (y) the long-term rating of such
Hedge Ratings Determining Party by Fitch is not withdrawn, suspended or
downgraded below “A” or is “A” and has been placed and is not remaining on
credit watch with negative implications or (ii) if such Hedge Ratings
Determining Party has no short-term rating from Fitch, the long-term rating by
Fitch of such Hedge Ratings Determining Party is at least “A” and
(b) either (i) the short-term rating of such Hedge Ratings
Determining Party is not lower than “A-1” by S&P or (ii) if such Hedge
Ratings Determining Party does not have a short-term rating from S&P, the
long-term rating of such Hedge Ratings Determining Party by S&P is not
lower than “A+”.

 

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

 

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

 

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

 

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

 

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

 

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

 

Income Note Excess Funds means
all remaining Collateral Interest Collections and Collateral Principal
Collections as set forth in Section 11.1(a)(24) and 11.1(b)(18).

 

Income Note Paying Agency Agreement means
that certain Income Note Paying Agency Agreement, dated as of March 10,
2005, as the same may be amended or supplemented from time to time, among the
Issuer, the Income Note Paying Agent and the Income Note Registrar.

 

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

 

29

 

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

 

Income Note Paying Agent Fee means,
with respect to any Payment Date, the fee payable to the Income Note Paying
Agent in an aggregate amount equal to U.S.$10,000 per annum.

 

Income Note Redemption Approval Condition means,
in connection with a Tax Redemption at the direction of the Controlling
Class and an Auction Call Redemption, the requirement that, unless and to
the extent the Holders of 662/3% of the aggregate principal
amount of the Outstanding Income Notes have waived payment in full of the
aggregate principal amount of the Income Notes, the Income Noteholders receive
in connection with such Tax Redemption or Auction Call Redemption an amount
equal to (x) the Income Notes Stated Amount minus (y) the aggregate
amount of all cash distributions on the Income Notes (whether in respect of
distributions or redemption payments made to the Income Note Paying Agent for
distribution to the Income Noteholders) on or prior to the relevant Auction Date.

 

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

 

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

 

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

 

Income Notes means
the U.S.$23,000,000 Income Notes Due 2040. 

 

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

 

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

 

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

 

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

 

Initial Payment Date means
the Payment Date occurring in July, 2005.

 

30

 

Initial Purchasers means
Citibank Global Markets Inc. and Banc of America Securities LLC, each as an
initial purchaser of the Rated Notes.

 

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

 

Interest Coverage Amount means,
as of any Measurement Date, an amount equal to (i) the amount received or
scheduled to be received as Collateral Interest Collections during the related
Due Period, less (ii) the amounts scheduled to be paid on the related
Payment Date pursuant to Section 11.1(a)(1) through (3) and (to
the extent not covered by Section 11.1(a)(1) through (3))
Section 11.1(b)(1) and, for purposes of calculating the Class B
Interest Coverage Ratio, the Class C Interest Coverage Ratio and Class D
Interest Coverage Ratio only, any amounts scheduled to be paid to the Interest
Reserve Account on the related Payment Date pursuant to
Section 11.1(a)(7); provided that (a) following the date on which a
Collateral Debt Security becomes a Defaulted Security, scheduled Collateral
Interest Collections shall not include any amount scheduled to be received on
Defaulted Securities or any amount scheduled to be received on securities that
are currently deferring interest until (1) such amounts are actually
received in Cash or (2) the cumulative aggregate amounts actually received
on a Defaulted Security exceed the Principal Balance of such Defaulted
Security, (b) the expected interest income on Floating Rate Collateral
Debt Securities and Eligible Investments shall be calculated using the then-current
interest rate applicable thereto and (c) with respect to any Written Down
Security, the Interest Coverage Amount shall exclude any interest accrued on
any Written Down Amount.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Irish Listing Agent means
NCB Stockbrokers Limited.

 

Irish Paying Agent means
NCB Stockbrokers Limited. 

 

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

 

31

 

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

 

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

 

LIBOR means, with
respect to each Interest Period (other than the first Interest Period), a
floating rate equal to the London interbank offered rate for one-month U.S.
Dollar deposits determined in the manner described in Schedule B. LIBOR for the
first Interest Period is 3.02645%.

 

LIBOR Calculation Date has
the meaning specified in Schedule B. 

 

Listed Bidders has
the meaning specified in Schedule E.

 

London Banking Day has
the meaning specified in Schedule B.

 

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

 

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

 

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

 

Measurement Date means
any of the following: (a) the Effective Date; (b) any date after the
Effective Date upon which the Issuer disposes or acquires (which date of
acquisition shall be deemed to be the date on which the Issuer enters into commitments
to acquire such Collateral Debt Security) any Collateral Debt Security;
(c) each Calculation Date; (d) the last Business Day of each calendar
month (other than the calendar month preceding the month in which a Calculation
Date occurs and any calendar month prior to and including the month in which
the Effective Date occurs); and (e) with reasonable notice to the Issuer,
the Collateral Advisor and the Trustee, any other Business Day that any Rating
Agency or Holders of more than 50% of the then Aggregate Outstanding Amount of
any Class of Rated Notes requests to be a

 

32

 

“Measurement Date”; provided that if any such date would
otherwise fall on a day that is not a Business Day, the relevant Measurement Date
will be the next succeeding day that is a Business Day.

 

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

 

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

 

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

 

Note Downgrade Event means
any (i) reduction of the Fitch Rating of the Class A Notes to one or
more categories below the Fitch Rating assigned to such Notes on the Closing
Date or (ii) reduction of the Fitch Rating of the Class B Notes, the
Class C Notes or the Class D Notes to two or more categories below
the Fitch Rating assigned to such Class of Notes on the Closing Date.

 

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

 

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

 

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

 

Note Valuation Report has
the meaning specified in Section 10.10(a).

 

Notes means the Rated
Notes and the Income Notes.

 

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

 

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

 

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

 

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

 

Opinion of Counsel means
a written opinion addressed to the Trustee and each Rating Agency (each, a Recipient),
in form and substance reasonably satisfactory to each Recipient,
of an attorney at law admitted to practice before the highest court of any
state of the United States or the District of Columbia (or the Cayman Islands,
in the case of an opinion relating to the laws of the Cayman Islands), which

 

33

 

attorney
may, except as otherwise expressly provided in this Indenture, be inside or
outside counsel for the Issuer or the Co-Issuer, as the case may be, and which
attorney shall be reasonably satisfactory to the Trustee. Whenever an Opinion
of Counsel is required hereunder, such Opinion of Counsel may rely on opinions
of other counsel who are so admitted and so satisfactory which opinions of
other counsel shall accompany such Opinion of Counsel and shall either be
addressed to each Recipient or shall state that each Recipient shall be
entitled to rely thereon.

 

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

 

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

 

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

 

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

 

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

 

Payment Date means the 5th day of each calendar month, or
if such day is not a Business Day, the next succeeding Business Day, commencing
in July, 2005 and ending in April, 2040 or such earlier date upon which all of
the Notes are redeemed as provided herein.

 

Periodic Interest means the amount of interest payable
(i) in respect of each Class of Floating Rate Notes, calculated with
respect to each such Class for the relevant Interest Period by multiplying
the Applicable Periodic Interest Rate by the Aggregate Outstanding Amount of
the related Class at the close of business on the day immediately
preceding the relevant Payment Date, multiplying the resulting figure by the
actual number of days in such Interest Period, dividing by 360 and rounding the
resulting figure to the nearest U.S.$0.01 (U.S.$0.005 being rounded upwards),
and (ii) in respect of each Class of Fixed Rate Notes, calculated
with respect to each such Class for the relevant Interest Period by
multiplying the Applicable Periodic Interest Rate by the Aggregate Outstanding
Amount of the related Class at the close of the Business Day immediately
preceding the relevant Payment Date, multiplying the resulting figure by
(a) for the first Interest Period, 115 days, and (b) for every other
Interest Period, 30 days, dividing by 360 and rounding the resulting figure to
the nearest U.S.$0.01 (U.S.$0.005 being rounded upwards).

 

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

 

Person means any individual, corporation,
partnership, limited liability partnership, limited liability company, joint
venture, association, joint stock company, trust (including any beneficiary
thereof),

 

34

 

unincorporated organization or government or any agency or political
subdivision thereof or any similar entity.

 

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

 

Placement Agent means
Citibank Global Markets Inc., as placement agent of the Income Notes.

 

Pledged Collateral Debt Security means
as of any date of determination, any Collateral Debt Security that has been
Granted to the Trustee and has not been released from the lien of this
Indenture pursuant to Section 10.11.

 

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

 

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

 

Principal Coverage Amount means,
on any Measurement Date, an amount equal to (i) the aggregate Principal
Balance of all Collateral Debt Securities (other than Defaulted Securities,
Written Down Securities and Deferred Interest PIK Bonds) included in the
Collateral on such date, plus (ii) the aggregate Principal Balance of the
Eligible Investments in the Collateral Account on such date that represent
Collateral Principal Collections, plus (iii) the Defaulted Securities Amount, plus (iv) with
respect to Written Down Securities, the Reduced Principal Balance, plus (v) the
Deferred Interest PIK Bond Amount, minus, if the aggregate Principal Balance of all
Collateral Debt Securities with an S&P Rating lower than “BBB-” and higher
than “CCC+” (expressed as a percentage of the CDS Principal Balance) exceeds
33%, (vi) the product of (a) the aggregate Principal Balance of all
Collateral Debt Securities, (b) the Double B Principal Coverage Adjustment
Percentage and (c) 10%, minus, if the aggregate Principal Balance of all
Collateral Debt Securities with an S&P Rating lower than “BBB-” and higher
than “CCC+” (expressed as a percentage of the CDS Principal Balance) exceeds
33%, (vii) the product of (a) the aggregate Principal Balance of all
Collateral Debt Securities, (b) the Single B Principal Coverage Adjustment
Percentage and (c) 20%; provided that any Collateral Debt Security and
Written Down Security carried at its Reduced Principal Balance (other than any
Defaulted Security or any Deferred Interest PIK Bond) that has a Rating of
“CCC+” or lower shall be included at 70% of its Principal Balance.

 

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

 

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

 

35

 

Principal Prepayments means,
following any failure of any Coverage Test as of any Calculation Date, amounts
that would otherwise be used (i) for payments of Income Note Excess Funds,
(ii) for the purchase of additional Collateral Debt Securities,
(iii) for the payment of certain fees and expenses, (iv) in the case
of a failure to satisfy either the Class A Interest Coverage Test or the
Class A Principal Coverage Test, for interest payments on the Class B Notes, the
Class C Notes and the Class D Notes, (v) in the case of a
failure to satisfy either the Class B Interest Coverage Test or the
Class B Principal Coverage Test, for interest payments on the Class C
Notes and the Class D Notes, (vi) in the case of a failure to satisfy
either the Class C Interest Coverage Test or the Class C Principal
Coverage Test, for interest payments on the Class D Notes and
(vii) in the case of a failure to satisfy either the Class D Interest
Coverage Test or the Class D Principal Coverage Test, for payments of
Income Note Excess Funds, that are instead applied on the related Payment Date,
in each case to the extent necessary to satisfy such Coverage Test as of the
related Calculation Date, to principal payments on each Class of Notes,
starting with the most senior Class of Notes then Outstanding, until such
Coverage Test is satisfied as of the related Calculation Date or the Notes are
paid in full.

 

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

 

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

 

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

 

Pro Rata Principal Amortization means,
with respect to any Payment Date, any payment by the Issuer in respect of the
principal of the Notes that is made pursuant to Clause (13)(iii) of
Section 11.1(b) on such Payment Date upon compliance with the Pro
Rata Principal Amortization Condition, to the extent that the amount applied to
such payment of principal constitutes (i) Sale Proceeds applied in
accordance with the Substitution Criteria or (ii) Collateral Principal
Payments applied in accordance with the Replacement Criteria.

 

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

 

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

 

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

 

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

 

36

 

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

 

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

 

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

 

Quarterly Pay Security Interest Reserve
Amount means, with respect to each Collateral Debt
Security that is a Quarterly Pay Security, as of any Calculation Date, the
amount equal to (i) the amount of interest received by the Issuer on the
most recent payment date with respect to such Quarterly Pay Security multiplied
by (ii) (A) three minus the number of months since the most recent
payment date with respect to such Quarterly Pay Security (rounded up to the
nearest whole number) divided by (B) three; provided that for any Quarterly Pay
Security with respect to which no scheduled interest payments remain, the
Quarterly Pay Security Interest Reserve Amount shall be zero.

 

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

 

Ramp-Up Criteria means
the following criteria which must be met by each Ramp-Up Collateral Debt
Security:

 

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

 

(ii)           no more than U.S.$21,000,000 million in
aggregate Principal Balance of Ramp-Up Collateral Debt Securities is rated “BB+” or
lower by S&P or “BB+” or lower by Fitch;

 

(iii)          none of the Ramp-Up Collateral Debt
Securities is rated “B+” or lower by S&P or “B+” or lower by Fitch;

 

(iv)          no more than U.S.$16,000,000 million in
aggregate Principal Balance of Ramp-Up Collateral Debt Securities is issued by
a single issuer;

 

(v)           such Ramp-Up Collateral Debt Security is not
on the “credit watch negative” watchlist of S&P; and

 

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

 

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

 

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

 

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

 

37

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Record Date means the
date on which the Holders of Rated Notes entitled to (i) vote with respect
to any matters under the Indenture are determined, such date being the 15th day
(whether or not a Business Day)

 

38

 

prior to the date the Trustee delivers notice with respect to such vote
and (ii) receive a payment in respect of principal or interest on the
succeeding Payment Date or Redemption Date are determined, such date as to any
Payment Date or Redemption Date being the 15th day (whether or not a Business
Day) prior to such Payment Date or Redemption Date.

 

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

 

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

 

Redemption Date Statement has
the meaning specified in Section 10.10(b).

 

Redemption Premium The
premium payable to Holders of each Class of Fixed Rate Notes in connection
with an Optional Redemption of such Class of Fixed Rate Notes in an amount
equal to the excess, if any, of (i) the present value (discounted to the
applicable Redemption Date using the Reinvestment Yield on a monthly basis
using a 360-day year of twelve 30-day months as the discount rate) of the
remaining payments of interest and principal due on such Class of Fixed
Rate Notes, assuming that the entire outstanding principal amount of such
Class of Fixed Rate Notes will be paid on the Payment Date occurring in
April, 2017 and that each intervening payment of interest on such Class of
Fixed Rate Notes will be made on the related Payment Date in its entirety (and
therefore there is no Defaulted Interest on such Class of Fixed Rate
Notes) over (ii) the outstanding principal amount of such Class of
Fixed Rate Notes on the applicable Redemption Date.

 

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

 

Redemption Spread means,
with respect to the Class A-2B Notes, 0.75%, with respect to the
Class C-1B Notes, 1.50%, with respect to the Class C-2B Notes 1.80%,
and with respect to the Class D Notes, 3.75%.

 

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

 

Reference Banks has
the meaning specified in Schedule B.

 

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

 

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

 

39

 

Regulation S means
Regulation S under the Securities Act.

 

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

 

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

 

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

 

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

 

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

 

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

 

(i)            Each Collateral Principal Payment must be
reinvested in one or more Substitute Collateral Debt Securities of the same CPP
Asset Type as the Collateral Debt Security on which such Collateral Principal
Payment occurred;

 

(ii)           The spread from a comparable index or
security (Spread) of the Substitute Collateral Debt
Security may not exceed the Spread of the original Collateral Debt Security on
which the applicable Collateral Principal Payment was received as set forth in
a schedule provided to the Trustee; provided that in the event Collateral Principal
Payments for any CPP Asset Type are comprised of proceeds from multiple
Collateral Debt Securities, the Spread of each Substitute Collateral Debt
Security may not exceed the Spread of a single Collateral Debt Security on
which the Collateral Principal Payments being reinvested were received; and

 

(iii)          The lowest explicit rating by either Rating
Agency of the Substitute Collateral Debt Security must be equal to or higher
than the lowest explicit rating by either Rating Agency at purchase by the
Issuer of the Collateral Debt Security on which the applicable Collateral
Principal Payment was received; provided that in the event that Collateral
Principal Payments for any CPP Asset Type are comprised of proceeds from
multiple Collateral Debt Securities, the lowest explicit rating by either
Rating Agency of each Substitute Collateral Debt Security must be no lower than
the lowest explicit rating as of the Effective Date of a single original
Collateral Debt Security on which the applicable Collateral Principal Payment
was received (or such earlier date, if any, of purchase by the Issuer);

 

provided, however, that in determining
whether the Reinvestment Criteria are satisfied, Collateral Principal Payments
on Real Estate Interests bearing interest at a fixed rate shall be treated as
though such amounts were Collateral Principal Payments on CMBS Securities that are
Fixed Rate Securities and Collateral Principal Payments on Real Estate
Interests bearing interest at a floating rate shall be treated as though such
amounts were Collateral Principal Payments on CMBS Securities that are Floating
Rate Securities.

 

Reinvestment Period means
the period beginning on the Closing Date and ending and including the Payment
Date in April, 2010.

 

Reinvestment Threshold Amount means
an amount that equal or exceeds U.S.$5,000,000; provided that for purposes of determining
whether the Reinvestment Threshold Amount has been met, Collateral Principal
Payments on Real Estate Interests bearing interest at a fixed rate shall be
treated as though such

 

40

 

amounts were Collateral Principal Payments on CMBS Securities that are
Fixed Rate Securities and Collateral Principal Payments on Real Estate
Interests bearing interest at a floating rate shall be treated as though such
amounts were Collateral Principal Payments on CMBS Securities that are Floating
Rate Securities.

 

Reinvestment Trigger Date means
any Business Day, prior to the end of the Reinvestment Period, on which the
Collateral Advisor directs the Issuer to reinvest Collateral Principal Payments
in Substitute Collateral Debt Securities in accordance with the Reinvestment
Criteria.

 

Reinvestment Yield means
with respect to either class of the Fixed Rate Notes, the rate equal to the sum
of the Redemption Spread with respect to such Fixed Rate Note and the
applicable yield to maturity implied by (i) the yields reported as of
10:00 a.m. (New York City time) on the tenth Business Day preceding the
related Optional Redemption Date on the display page designated as
“Page 678” on the Telerate Service (or such other display as may replace
Page 678 on the Telerate Service) for actively traded U.S. Treasury
securities having a maturity as nearly as practicable equal to the Payment Date
occurring in April, 2017 or (ii) if such yields are not reported as of
such time or the yields reported as of such time are not ascertainable, the
Treasury Constant Maturity Series Yields reported, for the latest day for
which such yields have been so reported as of the tenth Business Day preceding
the Optional Redemption Date, in Federal Reserve Statistical Release H.15 (519)
(or any comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity as nearly as practicable equal to the
Payment Date occurring in April, 2017.

 

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

 

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

 

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

 

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

 

REIT Debt Securities—Industrial means
Collateral Debt Securities issued by a real estate investment trust (as defined
in Section 856 of the Code or any successor provision) whose assets
consist (except for rights or other assets designed to assure the servicing or
timely distribution of proceeds to holders of the Collateral Debt Securities)
of a portfolio of properties including warehouse, industrial and distribution

 

41

 

facilities, factories, refinery plants, breweries and other similar
real property interests used in one or more similar businesses.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Replacement Criteria means,
with respect to any reinvestment of Sales Proceeds in accordance with
Section 12.1(b) hereof, the following criteria:

 

42

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(ix)           The Average Life of the Substitute
Collateral Debt Security must be the same or lower than that of the Collateral
Debt Security being replaced as of the date of the Issuer’s sale thereof.

 

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

 

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

 

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

 

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

 

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

 

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

 

43

 

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

 

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

 

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

 

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

 

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

 

S&P CDO Monitor Test means
the test which is satisfied, as of any Calculation Date, if each of the
Class A-1 Note Default Differential, the Class A-2A Note Default
Differential, the Class A-2B Note Default Differential, the Class B
Note Default Differential, the Class C-1A Note Default Differential, the
Class C-1B Note Default Differential, the Class C-2A Note Default
Differential, the Class C-2B Note Default Differential and the
Class D Note Default Differential of the Current Portfolio or the Proposed
Portfolio, as applicable, is positive. The S&P CDO Monitor Test will be
considered to be improved if the Class A-1 Note Default Differential of
the Proposed Portfolio is greater than the Class A-1 Note Default
Differential of the Current Portfolio, the Class A-2A Note Default
Differential of the Proposed Portfolio is greater than the Class A-2A Note
Default Differential of the Current Portfolio, the Class A-2B Note Default
Differential of the Proposed Portfolio is greater than the Class A-2B Note
Default Differential of the Current Portfolio, the Class B Note Default
Differential of the Proposed Portfolio is greater than the Class B Note
Default Differential of the Current Portfolio, the Class C-1A Note Default
Differential of the Proposed Portfolio is greater than the Class C-1A Note
Default Differential of the Current Portfolio, the Class C-1B Note Default
Differential of the Proposed Portfolio is greater than the Class C-1B Note
Default Differential of the Current Portfolio, the Class C-2A Note Default
Differential of the Proposed Portfolio is greater than the Class C-2A Note
Default Differential of the Current Portfolio, the Class C-2B Note Default
Differential of the Proposed Portfolio is greater than the Class C-2B Note
Default Differential of the Current Portfolio, and the Class D Note
Default Differential of the Proposed Portfolio is greater than the Class D
Note Default Differential of the Current Portfolio.

 

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

 

S&P Minimum Average Recovery Rate Test means
a test that will be satisfied as of any Measurement Date if the S&P
Weighted Average Recovery Rate is greater than or equal to (i) 24.6% with
respect to the Class A-1 Notes, (ii) 26.2% with respect to the
Class A-2 Notes, (iii) 30.1% with respect to the Class B Notes,
(iv) 36.3% with respect to the Class C Notes and (v) 41.7% with
respect to the Class D Notes.

 

S&P’s Preferred Format means
an electronic spreadsheet file to be provided to S&P, which file shall
include the following information, if available (to the extent such information
is not confidential) with respect to each Collateral Debt Security:
(a) the name and country of domicile of the issuer thereof and the
particular issue held by the Issuer, (b) the CUSIP or other applicable
identification number associated with such Collateral Debt Security,
(c) the par value of such Collateral Debt Security, (d) the type of
issue (including, by way of example, whether such Collateral Debt Security is a
bond, loan or asset-backed security), using such abbreviations as may be
selected by the Trustee, (e) a description of the index or

 

44

 

other applicable benchmark upon which the interest payable on such Collateral
Debt Security is based (including, by way of example, fixed rate, step-up rate,
zero coupon and LIBOR), (f) the coupon (in the case of a Collateral Debt
Security which bears interest at a fixed rate) or the spread over the
applicable index (in the case of a Collateral Debt Security which bears
interest at a floating rate), (g) the S&P Industry Classification
Group for such Collateral Debt Security, (h) the Stated Maturity Date of
such Collateral Debt Security, (i) the S&P Rating of such Collateral Debt
Security or the issuer thereof, as applicable, (j) the priority category
assigned by S&P to such Collateral Debt Security, if available, and
(k) such other information as the Trustee may determine to include in such
file.

 

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

 

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

 

(b)           if such Collateral Debt Security is not
rated by S&P but the Issuer or the Collateral Advisor on behalf of the
Issuer has requested that S&P assign a rating to such Collateral Debt
Security, the S&P Rating shall be the rating so assigned by S&P; provided that
pending receipt from S&P of such rating, if such Collateral Debt Security
is not eligible for notching in accordance with Schedule G, such Collateral
Debt Security shall have a Rating of “CCC-”, otherwise such S&P Rating
shall be the rating assigned according to Schedule F until such time as S&P
shall have assigned a rating thereto; or

 

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

 

45

 

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 by 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 then-current
actual rating by S&P.

 

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

 

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

 

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

 

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

 

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

 

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

 

Second Currency  has the meaning
specified in Section 14.13.

 

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

 

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

 

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

 

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

 

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

 

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

 

46

 

Semi-Annual Pay Security Interest Reserve
Amount means, with respect to each Collateral Debt
Security that is a Semi-Annual Pay Security, as of any Calculation Date, the
amount equal to (i) the amount of interest received by the Issuer on the
most recent payment date with respect to such Semi-Annual Pay Security
multiplied by (ii) (A) six (6) minus the number of months since
the most recent payment date with respect to such Semi-Annual Pay Security
(rounded up to the nearest whole number) divided by (B) six (6); provided that for
any Semi-Annual Pay Security with respect to which no scheduled interest
payments remain, the Semi-Annual Pay Security Interest Reserve Amount shall be
zero.

 

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

 

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

 

Single B Excess Percentage means,
on any Measurement Date, the greater of (a) zero; and
(b) (i) the aggregate Principal Balance of all Collateral Debt
Securities with an S&P Rating lower than BB- and higher than CCC+
(expressed as a percentage of the CDS Principal Balance) minus (ii) 10%.

 

Single B Principal Coverage Adjustment
Percentage means, on any Measurement Date, the greater of
(a) zero; and (b) (i) the Single B Excess Percentage minus (ii) the
greater of (x) zero; and (y) (A) 5% minus (B) the Double B Excess Percentage.

 

Sixty-Day Reinvestment Window means
(i) with respect to Sale Proceeds received in respect of any Credit Risk
Security, Defaulted Security, Equity Security, Withholding Tax Security,
Credit-Improved Security or Written Down Security, the period from (and
including) the date of receipt of such Sale Proceeds by the Issuer to (but
including) the sixtieth (60th) calendar day thereafter and (ii) with
respect to Collateral Principal Payments received in respect of any CPP Asset
Type, the period from (and including) the date on which the cumulative amount
of such Collateral Principal Payments for such CPP Asset Type equals or exceeds
the Reinvestment Threshold Amount for such CPP Asset Type, to (but including)
the sixtieth (60th) calendar day thereafter.

 

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

 

(A)          (I)(x) the aggregate CDS Principal
Balance as of the related Calculation Date is at least equal to 50% of the
aggregate CDS Principal Balance on the Closing Date and (y) the S&P
CDO Monitor Test has been satisfied and (II) the Collateral Quality Tests
(except the items specified in clauses (xiii), (xiv) and (xv) of the definition
thereof) are satisfied; or

 

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

 

47

 

Specified Currency has
the meaning specified in Section 14.13. 

 

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

 

Specified Place has
the meaning specified in Section 14.13.

 

Specified Types means
CMBS Securities, REIT Debt Securities, Real Estate CDO Securities and Real
Estate Interests.

 

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

 

Spread Excess means,
as of any Measurement Date, a fraction (expressed as a percentage), the
numerator of which is equal to the product of (a) the greater of zero and
the excess, if any, of the Weighted Average Spread for such date over 1.87%,
and (b) the aggregate Principal Balance of all Floating Rate Collateral
Debt Securities and Deemed Floating Rate Collateral Debt Securities (excluding,
in each case, Defaulted Securities, Written Down Securities or Deferred Interest
PIK Bonds) and the denominator of which is the aggregate Principal Balance of
all Collateral Debt Securities that are Fixed Rate Collateral Debt Securities
(excluding Defaulted Securities, Written Down Securities, Deferred Interest PIK
Bonds and Deemed Floating Rate Collateral Debt Securities).

 

Stated Maturity Date means
the Payment Date occurring in April 2040.

 

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

 

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

 

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

 

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

 

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

 

Substitution Event means,
with respect to the Hedge Agreement, the occurrence of any of the following:
(a) so long as any Rated Notes are Outstanding and rated by S&P, the
long-term rating of the Hedge Ratings Determining Party from S&P is
withdrawn, suspended or downgraded below “BBB-”, or, if no long-term rating is
available, the short-term rating from S&P of the Hedge Ratings Determining
Party is withdrawn, suspended or downgraded below “A-3”, (b) the
short-term rating of the Hedge Ratings

 

48

 

Determining Party from Fitch is “F2” or lower or, if the related Hedge
Ratings Determining Party does not have a short-term rating, the long-term
rating of the related Hedge Ratings Determining Party from Fitch is withdrawn,
suspended or falls to below “BBB+”, or (c) the failure of the relevant
Hedge Counterparty to take any of the actions specified in
Section 16.1(b) within 30 days of the occurrence of a Collateralization
Event.

 

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

 

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

 

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

 

Tax Event means a
new, or change in any, U.S. or foreign tax statute, treaty, regulation, rule,
ruling, practice, procedure or judicial decision or interpretation, occurring
in each case after the Closing Date, which results in (i) any portion of
any payment due from any issuer or obligor under any Collateral Debt Security
becoming properly subject to the imposition of U.S. or foreign withholding tax,
which withholding tax is not compensated for by a “gross up” provision under
the terms of the related Collateral Debt Security, (ii) any jurisdiction
imposing net income, profits, or similar tax on the Issuer, (iii) the
Issuer being required to deduct or withhold from any payment under a Hedge
Agreement for or on account of any tax and the Issuer being obligated to make a
gross up payment (or otherwise pay additional amounts) to the Hedge
Counterparty, or (iv) a Hedge Counterparty being required to deduct or
withhold from any payment under a Hedge Agreement for or on account of any tax
for whatever reason if such Hedge Counterparty is not required to pay to the
Issuer such additional amount as is necessary to ensure that the net amount
actually received by the Issuer (free and clear of taxes, whether assessed
against such obligor or the Issuer) will equal the full amount that the Issuer
would have received had no such deduction or withholding been required, and
where the sum of the amount of (i) such a tax or taxes imposed on the
Issuer or withheld from payments to the Issuer to the extent the Issuer
receives less than the full amount that the Issuer would have received had no
such deduction occurred, and (ii) such gross up payments required to be
made by the Issuer to the extent they exceed the amounts that the Issuer would
have been required to pay had no deduction or withholding been required, in the
aggregate, equals ten percent (10%) or more of the amount of aggregate interest
payments on all of the related Collateral Debt Securities during the related
Due Period.

 

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

 

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

 

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

 

49

 

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

 

Three-Year Period means
the period beginning on the Closing Date and up to and including the Payment
Date in April, 2008.

 

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

 

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

 

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

 

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

 

Trustee Fee means,
with respect to any Payment Date, the fee payable to the Trustee in an
aggregate amount equal to 0.0180% per annum of the CDS Principal Balance as of
the first day of the related Due Period; provided that in no event shall, so long as
any Class of Rated Notes remains Outstanding, such fee be an annual amount
less than U.S.$40,000.

 

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

 

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

 

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

 

Uninvested Proceeds Account has
the meaning specified in Section 10.4.

 

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

 

50

 

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

 

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

 

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

 

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

 

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

 

(b)           if the number obtained pursuant to the
calculations in clause (a) is less than 6.15%, the Spread Excess.

 

Weighted Average Life means,
on any Calculation Date with respect to all Collateral Debt Securities
(excluding any Defaulted Securities), the number obtained by the Collateral
Advisor by (i) summing the products obtained by multiplying (a) the
Average Life at such time of each Collateral Debt Security by (b) the
outstanding Principal Balance of such Collateral Debt Security and
(ii) dividing such sum by the aggregate Principal Balance at such time of
all Collateral Debt Securities.

 

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

 

	
  As of any Calculation Date

  Occurring During the Period Below

  	
   

  	
  Weighted Average Life

  (in Years)

  	
   

  
	
  Closing Date – < 1.0 year

  	
   

  	
  9 years

  	
   

  
	
  >1.0 year – < 2.0 years

  	
   

  	
  8 years

  	
   

  
	
  >2.0 years – < 53.0 years

  	
   

  	
  7 years

  	
   

  
	
  >3.0 years – < 4.0 years

  	
   

  	
  6 years

  	
   

  
	
  >4.0 years – < 5.0 years

  	
   

  	
  5 years

  	
   

  
	
  >5.0 years – Stated Maturity Date

  	
   

  	
  4 years

  	
   

  

 

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

 

(a)           the number obtained by (i) summing the
products obtained by multiplying (A) for each Floating Rate Collateral
Debt Security (other than any Defaulted Security, Written Down Security or

 

51

 

Deferred Interest PIK Bond), the stated spread above LIBOR at which
interest accrues on such Collateral Debt Security as of such date and, for each
Deemed Floating Rate Collateral Debt Security (other than any Defaulted
Security, Written Down Security or Deferred Interest PIK Bond), the Deemed
Floating Spread by (B) the Principal Balance of such Collateral Debt
Security as of such date and (ii) dividing such sum by the aggregate
Principal Balance of all Floating Rate Collateral Debt Securities and all
Deemed Floating Rate Collateral Debt Securities (excluding, in each case, all
Defaulted Securities, Written Down Securities and Deferred Interest PIK Bonds,
except for those Defaulted Securities that at the time of such calculation have
fully become current on all past due interest and scheduled principal and are
paying full current interest in cash pursuant to the terms of their respective
Underlying Instrument); plus

 

(b)           if the number obtained pursuant to the
calculations in clause (a) is less than 1.87%, the Fixed Rate Excess.

 

Withholding Tax Security  means a
Collateral Debt Security if:

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)           All calculations with respect to Scheduled
Distributions on the Pledged Securities securing the Rated Notes shall be made
by the Issuer or the Collateral Administrator on behalf of the Issuer using (in
the case of the Collateral Debt Securities) the assumptions that (i) no
Pledged Security defaults or is sold, (ii) prepayment of any Pledged
Security during any month occurs at a rate equal to the average rate of
prepayment during the period of six consecutive months immediately preceding
the current month (or, with respect to any Pledged Security that has not been
outstanding for at least six consecutive

 

52

 

calendar months, at the rate of prepayment assumed at the time of
issuance of such Pledged Security), (iii) any clean-up call with respect
to a Pledged Security will be exercised when economic to the Person or Persons
entitled to exercise such call and (iv) no other optional redemption of
any Pledged Security will occur except for those that have actually occurred or
as to which irrevocable notice thereof shall have been given.

 

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

 

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

 

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

 

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

 

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

 

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

 

53

 

of principal of or interest on the Rated Notes or other amounts payable
pursuant to this Indenture.

 

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

 

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

 

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

 

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

 

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

 

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

 

1.3.          RULES OF CONSTRUCTION

 

Unless the context otherwise clearly
requires:

 

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

 

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

 

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

 

54

 

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

 

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

 

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

 

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

 

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

 

ARTICLE II

 

THE RATED NOTES

 

2.1.          FORMS GENERALLY

 

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

 

(b)           The Class A Notes, the Class B Notes and
the Class C Notes offered and sold in the United States pursuant to an
exemption from the registration requirements of the Securities Act  (Rule 144A Notes)  shall be issued
in fully Registered form without interest coupons substantially in the form of
the note attached as Exhibit A-2 (each, a Rule 144A Global Note), with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture and such legends as may be applicable
thereto, which shall be deposited with the Trustee at its Corporate Trust
Office, as custodian for DTC and registered in the name of DTC or a nominee of
DTC,

 

55

 

duly executed by the Co-Issuers and authenticated by the Trustee or the
Authenticating Agent as hereinafter provided. The Aggregate Outstanding Amount
of each Rule 144A Global Note may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for
DTC or its nominee, as the case may be.

 

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

 

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

 

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

 

	
  2.2.

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

  

 

(a)           The aggregate principal amount of Rated
Notes which may be issued under this Indenture may not exceed U.S.$377,000,000,
excluding Rated Notes issued upon registration of, transfer of, or in exchange
for, or in lieu of, other Rated Notes pursuant to Section 2.4, 2.5 or 8.5.

 

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

 

	
  Designation

  	
   

  	
  Original Principal

  Amount

  	
   

  	
  Applicable

  Periodic Interest

  Rate

  	
   

  	
  Rated Note Stated

  Maturity Date

  	
   

  
	
  Class A-1 Notes

  	
   

  	
  U.S.$294,000,000

  	
   

  	
  LIBOR + 0.28%

  	
   

  	
  2040

  	
   

  
	
  Class A-2A Notes

  	
   

  	
  U.S.$15,000,000

  	
   

  	
  LIBOR + 0.50%

  	
   

  	
  2040

  	
   

  
	
  Class A-2B Notes

  	
   

  	
  U.S.$5,000,000

  	
   

  	
  5.042%

  	
   

  	
  2040

  	
   

  
	
  Class B Notes

  	
   

  	
  U.S.$17,000,000

  	
   

  	
  LIBOR + 0.85%

  	
   

  	
  2040

  	
   

  
	
  Class C-IA Notes

  	
   

  	
  U.S.$10,000,000

  	
   

  	
  LIBOR + 1.25%

  	
   

  	
  2040

  	
   

  

 

56

 

	
  Designation

  	
   

  	
  Original Principal

  Amount

  	
   

  	
  Applicable

  Periodic Interest

  Rate

  	
   

  	
  Rated Note Stated

  Maturity Date

  	
   

  
	
  Class C-1B Notes

  	
   

  	
  U.S.$6,000,000

  	
   

  	
  5.804%

  	
   

  	
  2040

  	
   

  
	
  Class C-2A Notes

  	
   

  	
  U.S.$12,000,000

  	
   

  	
  LIBOR 1.55%

  	
   

  	
  2040

  	
   

  
	
  Class C-2B Notes

  	
   

  	
  U.S.$2,000,000

  	
   

  	
  6.135%

  	
   

  	
  2040

  	
   

  
	
  Class D Notes

  	
   

  	
  U.S.$16,000,000

  	
   

  	
  6.458%

  	
   

  	
  2040

  	
   

  

 

The Rated Notes will be issuable in minimum denominations of
U.S.$500,000 and, in each case, only in integral multiples of U.S.$1,000 in
excess of such minimum denominations. After issuance, (x) a Rated Note may
fail to be in compliance with the minimum denomination requirement as a result
of the repayment of principal thereon in accordance with the Priority of
Payments and (y) the Class B Notes, the Class C Notes or the
Class D Notes may fail to be in an amount which is an integral multiple of
U.S.$1,000 due to the addition to the principal amount thereof of deferred
interest.

 

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

 

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

 

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

 

(f)            The Rated Notes shall be numbered, lettered
or otherwise distinguished in such manner as may be consistent herewith,
determined by the Authorized Officers of the Co-Issuers executing such Rated
Notes as evidenced by their execution of such Rated Notes.

 

2.3.          EXECUTION, AUTHENTICATION, DELIVERY
AND DATING

 

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

 

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

 

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

 

57

 

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

 

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

 

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

 

2.4.          REGISTRATION, TRANSFER AND EXCHANGE OF RATED NOTES

 

(a)           Registration of Rated
Notes. The Trustee is hereby appointed as the registrar hereunder
(the Note
Registrar). The Trustee is hereby appointed as a transfer agent with
respect to the Rated Notes (the Note Transfer Agent). The Note Registrar shall (acting
solely for this purpose as agent for the Issuer) keep a register (the Note Register) at the
Corporate Trust Office in which, subject to such reasonable regulations as it
may prescribe, the Note Registrar shall provide for the registration of Rated
Notes and the registration of transfers of Rated Notes. Upon any resignation or
removal of the Note Registrar, the Issuer (after consultation with the
Collateral Advisor) shall propose a replacement for approval by the Holders of
a Majority of the then Aggregate Outstanding Amount of the Notes of the
Controlling Class. The Co-Issuers may not terminate the appointment of the Note
Registrar or any Note Transfer Agent without the consent of each Holder of
Rated Notes.

 

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

 

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

 

58

 

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

 

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

 

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

 

(b)           Transfers of Class A Notes,
Class B Notes
and Class C Notes

 

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

 

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

 

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

 

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

 

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

 

59

 

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

 

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

 

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

 

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

 

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

 

60

 

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

 

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

 

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

 

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

 

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

 

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

 

61

 

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

 

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

 

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

 

(c)           Transfers of Class D Notes.

 

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

 

62

 

be, a Benefit Plan Investor or Controlling Person, or (ii) in the
case of a Definitive Class D Note represented by a Regulation S Note, to
the effect that it is not and will not be a Benefit Plan Investor or
Controlling Person. Any purported transfer in violation of the foregoing
requirements shall be null and void ab initio, and
the Note Registrar shall not register any such purported transfer and shall not
authenticate and deliver such Definitive Class D Notes.

 

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

 

(d)           Denominations;
Qualified Purchaser Status. No Person may hold a beneficial interest
in any Rated Note except in a denomination authorized for the Rated Notes of
such Class under Section 2.2(b). In  addition, no
transfer of a Rated Note (or any interest therein) may be made to any Person
that is a U.S. Person unless such Person is (A) a Qualified Institutional
Buyer (or, with respect to the Class D Notes only, an Institutional
Accredited Investor) or an NS Purchaser) and (B) a Qualified Purchaser. In
addition, no transfer of a Rated Note (or any interest therein) may be made to
any Person that is a U.S. Person unless such Person (A) was not formed for
the purpose of investing in either of the Co-Issuers (except when each
beneficial owner of the purchaser is a Qualified Purchaser, (B) has
received the necessary consent from its beneficial owners if it is a private
investment company formed before April 30, 1996, (C) is not a
broker-dealer that owns and invests on a discretionary basis less than
U.S.$25,000,000 in securities of unaffiliated issuers, (D) is not  a
pension, profit, sharing or other retirement trust fund or plan in which the
partners, beneficiaries or participants, as applicable, may designate the
particular investments to be made, and in a transaction that may be effected
without loss of any applicable Investment Company Act exemption, (E) will
provide notice to any subsequent transferee of the transfer restrictions
provided in the legend, (F) will hold and transfer in a principal amount
of not less than U.S.$500,000, for it or for each account for which it is
acting and (G) will provide the Issuer from time to time such information
as it may reasonably request in order to ascertain compliance with the
foregoing. Any purported transfer that is not in compliance with this
Section 2.4 or the legends on the Rated Notes will be void ab initio, and
will not operate to transfer any rights to the transferee, notwithstanding any
instructions to the contrary to the Co-Issuers, the Trustee

 

63

 

or any intermediary. If any purported transfer of Rated Notes or any
beneficial interest therein to a purported transferee does not comply with the
requirements set forth in this Section 2.4 or the legends on the Rated Notes,
then the purported transferor of such Rated Notes or beneficial interest
therein shall be required to cause the purported transferee to surrender the
Rated Notes or any beneficial interest therein in return for a refund of the
consideration paid therefor by such transferee (together with interest thereon)
or to cause the purported transferee to dispose of such Rated Notes or
beneficial interest promptly in one or more open market sales to one or more
persons each of whom satisfies the requirements of this Section 2.4 and
the legends on the Rated Notes and such purported transferor shall take, and
shall cause such transferee to take, all further action necessary or desirable,
in the judgment of the Trustee, to ensure that such Rated Notes or any beneficial
interest therein are held by persons in compliance therewith.

 

(e)           Requirement to Sell.

 

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

 

(2)           If, notwithstanding the restrictions set
forth in this Section 2.4, either of the Co-Issuers determines that any
beneficial owner of a Regulation S Note is (A) a U.S. Person or (B) a
Benefit Plan Investor or a Controlling Person (for the purposes of ERISA),
either of the Co-Issuers may require, by notice to such beneficial owner that
such beneficial owner sell all of its right, title and interest to such Rated
Note (or interest therein) to a Person that is not (1) a U.S. Person or
(2) a Benefit Plan Investor or a Controlling Person (for the purposes of
ERISA), with such sale to be effected within 30 days after notice of such sale
requirement is given. If such beneficial owner fails to effect the transfer
required within such 30-day period, (x) upon written direction from the
Issuer, the Trustee shall, and is hereby irrevocably authorized by such
beneficial owner to cause its interest in such Rated Note to be transferred in
a commercially reasonable sale (conducted by the Trustee in accordance with
Sections 9-610 and 9-611 of the UCC as applied to securities that are
customarily sold on a recognized market or that may decline speedily in value)
to a Person that certifies to the Trustee, in connection with such transfer,
that such Person is neither (1) a U.S. Person nor (2) a Benefit

 

64

 

Plan Investor or a Controlling Person (for the purposes of ERISA) and
(y) pending such transfer, no further payments will be made in respect of
such Rated Note (or beneficial interest therein) held by such beneficial owner.

 

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

 

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

 

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

 

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

 

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

 

65

 

USA PATRIOT Act, and any such transfer restrictions shall be binding on
each Holder or Beneficial Owner of a Rated Note. The Issuer shall notify the
Trustee and the Note Registrar of the imposition of any such transfer
restrictions.

 

(k)           Physical
Rated Notes. The Co-Issuers will promptly make available to the
Trustee without charge a reasonable supply of Definitive Notes in definitive,
fully Registered Form, without interest coupons.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

66

 

2.6.          PAYMENT OF PRINCIPAL AND INTEREST; RIGHTS PRESERVED

 

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

 

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

 

So long as any Class A Notes or Class B Notes are
Outstanding, any Class C-1 Applicable Periodic Interest Shortfall Amount
shall be deferred and added to the then Aggregate Outstanding Amount of the
Class C-1 Notes and shall not be considered “due and payable” for the
purposes of Section 5.1(a) until the Payment Date on which funds are
available to pay such Class C-1 Applicable Periodic Interest Shortfall
Amount in accordance with Section 11.1.

 

So long as any Class A Notes, Class B Notes or Class C-1
Notes are Outstanding, any Class C-2 Applicable Periodic Interest
Shortfall Amount shall be deferred and added to the then Aggregate Outstanding
Amount of the Class C-2 Notes and shall not be considered “due and
payable” for the purposes of Section 5.1(a) until the Payment Date on
which funds are available to pay such Class C-2 Applicable Periodic
Interest Shortfall Amount in accordance with Section 11.1.

 

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

 

67

 

funds are available to pay such Class D Applicable Periodic
Interest Shortfall Amount in accordance with Section 11.1.

 

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

 

(1)           so long as any Class A-1 Notes are
Outstanding, except as provided in Section 9 and Section 11.1(b)(13)
and (14), the payment of principal of the Class A-2 Notes, the
Class B Notes, the Class C Notes and the Class D Notes
(x) may only occur after principal of the Class A-1 Notes has been
paid in full and (y) shall be subordinated to the payment on each Payment
Date of the principal and interest due and payable on the Class A-1 Notes
and other amounts payable in accordance with Section 11.1;

 

(2)           so long as any Class A Notes are
Outstanding, except as provided in Section 9 and Section 11.1(b)(13)
and (14), the payment of principal of the Class B Notes, the Class C
Notes and the Class D Notes (x) may only occur after principal of the
Class A Notes has been paid in full and (y) shall be subordinated to
the payment on each Payment Date of the principal and interest due and payable
on the Class A Notes and other amounts payable in accordance with Section 11.1;

 

(3)           so long as any Class A Notes or
Class B Notes are Outstanding, except as provided in
Section 11.1(b)(13) and (14), the payment of principal of the Class C
Notes and the Class D Notes (x) may only occur after principal of the
Class A Notes and Class B Notes has been paid in full and
(y) shall be subordinated to the payment on each Payment Date of the
principal and interest due and payable on the Class A Notes and
Class B Notes and other amounts payable in accordance with Section 11.1;

 

(4)           so long as any Class A Notes,
Class B Notes or Class C-1 Notes are Outstanding, except as provided
in Section 9 and Section 11.1(b)(13) and (14), the payment of
principal of the Class C-2 Notes and the Class D Notes (x) may
only occur after principal of the Class A Notes, the Class B Notes
and the Class C-1 Notes has been paid in full and (y) shall be
subordinated to the payment on each Payment Date of the principal and interest
due and payable on the Class A Notes, the Class B Notes and the
Class C-1 Notes and other amounts payable in accordance with
Section 11.1;

 

(5)           so long as any Class A Notes,
Class B Notes
or Class C Notes are Outstanding, except as provided in Section 9 and
Section 11(b)(13) and (14), the payment of principal of the Class D
Notes (x) may only occur after principal of the Class A Notes, the
Class B Notes and the Class C Notes has been paid in full and
(y) shall be subordinated to the payment on each Payment Date of the
principal and interest due and payable on the Class A Notes, the
Class B Notes and the Class C Notes and other amounts payable in
accordance with Section 11.1.

 

(c)           So long as the Coverage Tests are satisfied,
principal will not be payable on any Class of Rated Notes except
(i) upon the occurrence of a Redemption, (ii) in the case of any
Class B Notes, Class C Notes or Class D Notes, to pay amounts in
respect of the Class B

 

68

 

Cumulative Applicable Periodic Interest Shortfall Amount, the
Class C Cumulative Applicable Periodic Interest Shortfall Amount or the
Class D Cumulative Applicable Periodic Interest Shortfall Amount, as the
case may be, in accordance with Section 11.1 and (iii) on each
Payment Date, in accordance with Section 11.1.

 

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

 

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

 

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

 

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

 

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

 

69

 

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

 

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

 

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

 

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

 

ARTICLE III

 

CONDITIONS PRECEDENT

 

3.1.                             GENERAL PROVISIONS

 

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

 

(a)                                  (1)        an
Officer’s certificate of the Issuer, (A) evidencing the authorization by
Board Resolution of the execution and delivery of, and the performance of the
Issuer’s obligations under, each Transaction Document, in each case as may be
amended on or prior to, and as in effect on, the Closing Date, and the
execution,

 

70

 

authentication and delivery of the Rated Notes and specifying the
Stated Maturity Date, the principal amount and the Applicable Periodic Interest
Rate with respect to each Class of Rated Notes to be authenticated and
delivered, and (B) certifying that (1) the attached copy of such
Board Resolution is a true and complete copy thereof, (2) such resolutions
have not been rescinded and are in full force and effect on and as of the
Closing Date and (3) the Officers authorized to execute and deliver such
documents hold the offices and have the signatures indicated thereon; and

 

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

 

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

 

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

 

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

 

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

 

71

 

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

 

(4)                       an
opinion of Thacher Profitt & Wood LLP, counsel to the Collateral
Advisor, dated the Closing Date, substantially in the form of Exhibit G;
and

 

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

 

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

 

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

 

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

 

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

 

72

 

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

 

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

 

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

 

3.2.                             SECURITY FOR THE RATED NOTES

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(5)                       the
information set forth with respect to such Collateral Debt Security on Schedule
A is correct and each such Collateral Debt Security is transferred to the
Trustee as required by Section 3.2(a) (or, if any such Collateral
Debt Security is

 

73

 

not so transferred to the Trustee on the Closing Date, the Issuer has
entered into a binding agreement to purchase such Collateral Debt Security for
settlement within 10 days after the Closing Date);

 

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

 

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

 

(c)                                 Rating Letters. The
delivery to the Trustee of an Officer’s certificate of the Issuer, to the
effect that (i) attached thereto are true and correct copies of (A) a
letter signed by Fitch confirming that the Class A-1 Notes have been rated
“AAA”, the Class A-2 Notes have been rated at least “AA”, the Class B
Notes have been rated at least “A-”, the Class C-1 Notes have been rated
at least “BBB+”, the Class C-2 Notes have been rated at least “BBB” and
the Class D Notes have been rated at least “BB” by Fitch and (B) a
letter signed by S&P confirming that the Class A-1 Notes have been
rated “AAA”, the Class A-2 Notes have been rated at least “AA”, the
Class B  Notes have been rated at least
“A-”, the Class C-1 Notes have been rated at least “BBB+”, the
Class C-2 Notes have been rated at least “BBB” and the Class D Notes
have been rated at least “BB” by S&P and (ii) each such rating is in
full force and effect on the Closing Date.

 

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

 

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

 

(f)                                   Purchases. The
delivery to the Trustee of a certification of the Issuer that it shall have
entered into one or more agreements to purchase, for settlement on or following
the Closing Date in accordance with customary settlement procedures in the
relevant markets, Collateral Debt Securities having an aggregate Principal
Balance of not less than U.S.$340,000,000.

 

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

 

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

 

74

 

successor custodian shall be a state or national bank or trust company
that is not an Affiliatè of the Issuer or the Co-Issuer, has a long-term debt
rating of at least “BBB+” by S&P and has a combined capital and surplus of
at least U.S.$250,000,000.

 

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

 

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

 

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

 

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

 

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

 

75

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

76

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE IV

 

SATISFACTION AND DISCHARGE

 

4.1.                             SATISFACTION AND DISCHARGE OF INDENTURE

 

This Indenture shall be discharged and shall cease to be of further
effect with respect to the Collateral securing the Rated Notes and the Rated
Notes except as to (i) rights of registration of transfer and exchange,
(ii) substitution of mutilated, defaced, destroyed, lost or stolen Rated
Notes, (iii) rights of Rated Noteholders to receive payments of principal
thereof and interest thereon, (iv) the rights,

 

77

 

obligations and immunities of the Trustee hereunder, (v) the
rights, obligations and immunities of the Collateral Advisor hereunder and
under the Collateral Advisory Agreement and (vi) the rights of the Secured
Parties as beneficiaries hereof with respect to the property deposited with the
Trustee and payable to all or any of them; and the Trustee, on demand of and at
the expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when:

 

(a)                                 either:

 

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

 

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

 

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

 

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

 

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

 

78

 

4.2.                             APPLICATION OF TRUST MONEY

 

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

 

4.3.                             REPAYMENT OF FUNDS HELD BY NOTE PAYING AGENT

 

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

 

ARTICLE V

 

EVENTS OF DEFAULT; REMEDIES

 

5.1.                             EVENTS OF DEFAULT

 

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

 

(a)                                 a
default for five (5) Business Days in the payment, when due and payable,
of any interest on any Class A Note or, if there are no Class A Notes
Outstanding, on any Class B Note or, if there are no Class A Notes or
Class B Notes Outstanding, on any Class C-1 Note or, if there are no
Class A Notes, Class B Notes or Class C-1 Notes Outstanding,
on any Class C-2 Note or, if there are no Class A Notes, Class B
Notes or Class C Notes Outstanding, on any Class D Note;

 

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

 

(c)                                 the
failure on any Payment Date to disburse amounts available in accordance with
Section 11.1 (except as provided in Section 5.1(a) and
(b) above) and a continuation of such failure for three (3) Business
Days (or, in the case of a default in payment resulting solely from an
administrative error or omission by the Trustee, the Administrator, any Note
Paying Agent or the Note Registrar, such default continues for a period of five
(5) Business Days);

 

79

 

(d)           on
any date of determination, the failure to maintain an aggregate principal
amount of Collateral Debt Securities and Eligible Investments at least equal to
100% of the aggregate principal amount of the Outstanding Class A Notes;

 

(e)           the
event that either of the Co-Issuers or the pool of Collateral becomes an
investment company required to be registered under the Investment Company Act;

 

(f)            a
default in the performance, or breach, of any other covenant (it being
understood that non-compliance with any of the Coverage Tests or the Collateral
Quality Tests will not constitute a default or breach) or warranty of either of
the Co-Issuers under the Indenture of any representation or if any certificate
or writing delivered pursuant thereto proves to be incorrect when made, which
default or breach has a material adverse effect on the Rated Noteholders and
continues for a period of thirty (30) days (or, in the case of a default,
breach or failure of a representation or warranty regarding the Collateral,
fifteen (15) days) of the earlier of knowledge by the Co-Issuers or the
Collateral Advisor or notice to the Co-Issuers and the Collateral Advisor by
the Trustee or to the Co-Issuers and the Collateral Advisor by the Holders of
at least 25%, of the then Aggregate Outstanding Amount of the Rated Notes of
any Class, specifying such default, breach or failure and requiring it to be
remedied and stating that such notice is a “Notice of Default” under this
Indenture;

 

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

 

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

 

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

 

5.2.          ACCELERATION
OF MATURITY; RESCISSION AND ANNULMENT

 

(a)                                  If
an Event of Default occurs and is continuing, the Trustee may or, if so directed
by the Holders of a Majority in aggregate principal amount of the Outstanding
Notes of the Controlling Class, will declare the principal of and accrued
interest on all Notes to be

 

80

 

immediately due and payable (except that in
the case of an Event of Default described in Section 5.1(g) or
5.1(h) above, such an acceleration will occur automatically).

 

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

 

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

 

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

 

(i)            all
overdue installments of principal of and interest on the Notes (including
interest upon the Class B Cumulative Applicable Periodic Interest
Shortfall Amount, the Class C Cumulative Applicable Periodic Interest
Shortfall Amount and the Class D Cumulative Applicable Periodic Interest
Shortfall Amount, respectively, at the Applicable Periodic Interest Rate and,
to the extent that payment of such interest is lawful, upon Defaulted Interest
at the Applicable Periodic Interest Rate);

 

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

 

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

 

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

 

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

 

provided that the Trustee shall have
obtained (and shall be entitled to rely upon) a certification of an Independent
accounting firm of national reputation as to the sufficiency of the amounts in
Section 5 .2(c)(1) above, which certification shall be conclusive
evidence as to such sufficiency. In addition, the Trustee may, but is not
required to, obtain, at the Issuer’s expense (and may rely upon), an Opinion of
Counsel as to the matters in Sections 5.2(c)(2) and (3) above.

 

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

 

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

 

81

 

5.3.          COLLECTION OF
INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE

 

The Co-Issuers covenant that if a Default
shall occur in respect of the payment of any principal of or interest on any
Class A-1 Note, the payment of principal of or interest on any
Class A-2 Note (but with respect to interest, only after the
Class A-1 Notes and all interest accrued thereon have been paid in full),
the payment of principal of or interest on any Class B Note (but with
respect to interest, only after the Class A Notes and all interest accrued
thereon have been paid in full), the payment of principal of or interest on any
Class C-1 Note (but with respect to interest, only after the Class A
Notes and Class B Notes and all interest accrued thereon have been paid in
full) the payment of principal of or interest on any Class C-2 Note (but
with respect to interest, only after the Class A Notes, the Class B
Notes and the Class C-1 Notes and all interest accrued thereon have been
paid in full) or the payment of principal of or interest on any Class D
Note (but with respect to interest, only after the Class A Notes, the
Class B Notes and the Class C Notes and all interest accrued thereon
have been paid in full), the Co-Issuers will, upon demand of the Trustee or any
affected Rated Noteholder, pay to the Trustee, for the benefit of the Holder of
such Rated Note, the whole amount, if any, then due and payable on such Rated
Note for principal and interest, with interest upon the overdue principal and,
to the extent that payments of such interest shall be legally enforceable, upon
overdue installments of interest, at the Applicable Periodic Interest Rate and,
in addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee and such Rated Noteholder
and their respective agents and counsel.

 

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

 

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

 

The Holders of a Majority of the then
Aggregate Outstanding Amount of the Notes of the Controlling Class may, in
certain cases, waive any default with respect to such Notes, except (i) a
default for more than five (5) Business Days in the payment, when due and
payable, of any interest on any Note, (ii) a default in the payment of
principal on any Note at its Stated Maturity Date or Redemption Date, (iii) the
failure on any Payment Date to disburse amounts available in the Collection
Account in

 

82

 

accordance with Section 11.1 and continuation of such failure for
a period of three (3) Business Days, (iv) certain events of
bankruptcy or insolvency with respect to the Co-Issuers or (v) a default
in respect of any provision of the Indenture that cannot be modified or amended
without the waiver or consent of the Holder of each Outstanding Note adversely
affected thereby.

 

In case there shall be pending Proceedings
relative to the Issuer or the Co-Issuer or any other obligor upon the Rated
Notes or Hedge Agreement under the Bankruptcy Code or any other applicable
bankruptcy, insolvency or other similar law, or in case a receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, sequestrator or similar
official shall have been appointed for or taken possession of the Issuer, the
Co-Issuer or their respective property or such other obligor or its property,
or in case of any other comparable Proceedings relative to the Issuer, the
Co-Issuer or other obligor upon the Rated Notes or Hedge Agreement, or the
creditors or property of the Issuer, the Co-Issuer or such other obligor, the
Trustee, regardless of whether the principal of any Rated Notes or Hedge
Agreement shall then be due and payable as therein expressed or by declaration
or otherwise and regardless of whether the Trustee shall have made any demand
pursuant to the provisions of this Section 5.3, shall be entitled and
empowered, by intervention in such Proceedings or otherwise:

 

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

 

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

 

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

 

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

 

83

 

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

 

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

 

5.4.          REMEDIES

 

(a)                                  If
an Event of Default shall have occurred and be continuing, and the Notes have
been declared due and payable and such declaration and its consequences have
not been rescinded and annulled, the Co-Issuers agree that, in addition to the
requirements of Section 5.5(a), the Trustee may, after giving notice to
the Noteholders, the Collateral Advisor, the Initial Hedge Counterparty and
each Rating Agency, and with the consent of the Holders of a Majority of the
then Aggregate Outstanding Amount of the Notes of the Controlling Class, and
shall, upon written direction by the Holders of a Majority of the then
Aggregate Outstanding Amount of the Notes of the Controlling Class, to the
extent permitted by applicable law, exercise one or more of the following
rights, privileges and remedies:

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)                                 If
an Event of Default as described in Section 5.1(f) shall have
occurred and be continuing, the Trustee may, and at the request of at least 25%
of the Holders of the then Aggregate Outstanding Amount of the Notes of the
Controlling Class shall, institute a Proceeding solely to compel
performance of the covenant or agreement or to cure the

 

84

 

representation or warranty, the breach of which
gave rise to the Event of Default under such Section, and enforce any equitable
decree or order arising from such proceeding; provided that
(i) such request does not conflict with any provision in the Indenture,
(ii) the Trustee determines that such action will not involve the Trustee
incurring any liability (unless the Trustee is indemnified to its satisfaction
against any such liability) and (iii) the Trustee may take other action
deemed proper by the Trustee, that is not inconsistent with such direction.

 

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

 

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

 

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

 

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

 

5.5.          PRESERVATION
OF COLLATERAL

 

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

 

85

 

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

 

(2)                                  the
Holders of at least 662/3% of the Aggregate Outstanding
Amount of the Rated Notes of the Controlling Class (and, unless it will be
paid in full all amounts owing to it by the Issuer, the Initial Hedge
Counterparty), subject to the provisions hereof, and subject to the Trustee
determining that such action will not involve the Trustee incurring any
liability, (unless the Trustee is indemnified to its satisfaction against any
such liability) direct the sale and liquidation of the Collateral.

 

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

 

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

 

(c)           In
determining whether the condition specified in
Section 5.5(a)(1) exists, the Trustee shall obtain bid prices with
respect to each security contained in the Collateral from two nationally
recognized dealers (or if it is unable in good faith to obtain such bid prices
from two nationally recognized dealers, one nationally recognized dealer), as
specified by the Collateral Advisor in writing, which are Independent from each
other and the Collateral Advisor, at the time making a market in such
securities and shall compute the anticipated proceeds of sale or liquidation on
the basis of the lower of such bid prices for each such security. In addition,
for the purposes of determining issues relating to the execution of a sale or
liquidation of the Pledged Securities and the execution of a sale or other
liquidation thereof in connection with a determination whether the condition
specified in Section 5.5(a)(1) exists, the Trustee may retain and
rely on an opinion of an Independent investment banking firm of national
reputation.

 

The Trustee shall deliver to the Noteholders,
the Initial Hedge Counterparty, the Rating Agencies and the Co-Issuers a report
stating the results of any determination required pursuant to
Section 5.5(a)(1) no later than ten (10) days after making such
determination but in any event prior to the sale or liquidation of the
Collateral. The Trustee shall make the determinations required by
Section 5.5(a)(1) within thirty (30) days after an Event of Default
and at the request of the Holders of a Majority of the then Aggregate
Outstanding

 

86

 

Amount of the Notes of the Controlling
Class at any time during which the Trustee retains the Collateral pursuant
to Section 5.5(a)(1). In the case of each calculation made by the Trustee
pursuant to Section 5.5(a)(1), the Trustee shall obtain a letter of an
Independent certified public accountant confirming the accuracy of the
computations of the Trustee and certifying their conformity to the requirements
of this Indenture. In determining whether the Holders of the requisite
percentage of any Class of Rated Notes or the requisite percentage of
Income Noteholders have given any direction or notice or have agreed pursuant
to Section 5.5(a), any Holder of a Rated Note of a Class or Income
Notes who is also a Holder of Rated Notes of another Class or of Income
Notes or any Affiliate of any such Holder shall be counted as a Holder of each
such Rated Note and/or Income Note for all purposes.

 

(d)                                 If
an Event of Default shall have occurred and be continuing at a time when no
Rated Note is Outstanding, the Trustee shall retain the Collateral securing the
Hedge Agreements and the Rated Notes intact, collect and cause the collection
of the proceeds thereof and make and apply all payments and deposits and
maintain all accounts in respect of the Collateral and the Rated Notes in
accordance with Section 11.1 and the provisions of Section 10 and
Section 12 unless a Majority of the Income Noteholders direct the sale and
liquidation of the Collateral.

 

5.6.          TRUSTEE
MAY ENFORCE CLAIMS WITHOUT POSSESSION

 

All rights of action and of asserting claims
under this Indenture, or under any of the Rated Notes, may be enforced by the
Trustee without the possession of any of Hedge Agreements or the Rated Notes or
the production thereof in any trial or other Proceedings relative thereto, and
any action or Proceedings instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment, subject to
the payment of the reasonable expenses, disbursements and compensation of the
Trustee, each predecessor trustee and their respective agents and attorneys and
counsel, shall be for the benefit of the Secured Parties and shall be applied
as set forth in Section 5.7.

 

5.7.          APPLICATION
OF FUNDS COLLECTED

 

Any funds collected by the Trustee with
respect to the Hedge Agreements or the Rated Notes pursuant to this
Section 5 and any funds that may then be held or thereafter received by
the Trustee with respect to the Hedge Agreements or the Rated Notes hereunder
shall be applied subject to Section 13.1 and in accordance with the
provisions of Section 11.1(c), at the date or dates fixed by the Trustee.

 

5.8.          LIMITATION
ON SUITS

 

Only the Trustee may pursue remedies
available hereunder and no Holder of any Note shall have any right to institute
any Proceedings, judicial or otherwise, with respect to this Indenture, or its
Note or otherwise, for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:

 

(a)           such
Holder has previously given to the Trustee written notice of a continuing Event
of Default;

 

(b)                                 except
in the case of a default in the payment of principal or interest, the Holders
or Holders of at least 25% of the then Aggregate Outstanding Amount of the
Rated Notes of the Controlling Class shall have made a written request to
the Trustee to institute Proceedings in respect of such Event of Default in its
own name as Trustee hereunder and

 

87

 

such Holder or Holders have offered to the Trustee reasonable indemnity
against the costs, expenses and liabilities to be incurred in compliance with
such request;

 

(c)           the Trustee for thirty (30) days after its
receipt of such notice, request and offer of indemnity has failed to institute
any such Proceeding; and

 

(d)                                 no direction inconsistent with such written
request has been given to the Trustee during such 30-day period by the Holders
of a Majority of the then Aggregate Outstanding Amount of the Notes of the
Controlling Class;

 

it
being understood and intended that no one or more Holders of Rated Notes shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Notes or to obtain or to seek to obtain priority or preference
over any other Holders of the Notes of the same Class or to enforce any
right under this Indenture, except in the manner herein provided and for the
equal and ratable benefit of all the Holders of Notes of the same Class. In
addition, any action taken by any one or more of the Holders of Notes shall be
subject to and in accordance with Sections 13.1 and 11.1(d).

 

Notwithstanding any other provisions of this Indenture but subject to
Section 5.8(d), if the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of the Notes of the
Controlling Class, each representing less than a Majority of the then Aggregate
Outstanding Amount of Notes of this Controlling Class, the Trustee shall follow
the instructions of the group representing the higher percentage of aggregate
principal amount of Outstanding Notes of the Controlling Class.

 

5.9.          UNCONDITIONAL RIGHTS OF RATED
NOTEHOLDERS TO
RECEIVE PRINCIPAL AND INTEREST

 

Notwithstanding any other provision in this Indenture (other than
Section 2.6(i)), the Holder of any Rated Note shall have the right, which
is absolute and unconditional, to receive payment of the principal of and
interest (if any) on such Rated Note as such principal and/or interest become
due and payable in accordance with Sections 13.1 and 11.1(c) and, subject
to the provisions of Section 5.8, to institute proceedings for the
enforcement of any such payment, and such right shall not be impaired without
the consent of such Holder. Holders of the Class B Notes, the Class C
Notes and the Class D Notes shall have no right to institute proceedings
for the enforcement of any such payment until such time as no Class of
Rated Note that is senior to such Class of them remains Outstanding, which
right shall be subject to the provisions of Section 5.8, and shall not be
impaired without the consent of any such Holder.

 

5.10.        RESTORATION OF RIGHTS AND
REMEDIES

 

If the Trustee or any Rated Noteholder has instituted any Proceeding to
enforce any right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Rated Noteholder, then and in every such case the
Co-Issuers, the Trustee and the Rated Noteholder shall, subject to any
determination in such Proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Secured Parties shall continue as though no such Proceeding had been
instituted.

 

5.11.        RIGHTS AND REMEDIES CUMULATIVE

 

No right or remedy herein conferred upon or reserved to the Trustee or
to the Rated Noteholders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now

 

88

 

or hereafter existing by law or in equity or otherwise. The assertion
or employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.

 

5.12.        DELAY OR
OMISSION NOT WAIVER

 

No delay or omission of the Trustee or any
Rated Noteholder or the Initial Hedge Counterparty to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or remedy
or constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Section 5 or by law to the Trustee,
the Rated Noteholders or the Initial Hedge Counterparty may be exercised from
time to time, and as often as may be deemed expedient, by the Trustee, the
Rated Noteholders or the Initial Hedge Counterparty, as the case may be.

 

5.13.        CONTROL BY
CONTROLLING CLASS

 

Notwithstanding any other provision of this
Indenture (but subject to the proviso in the definition of “Outstanding” in
Section 1.1(a)), the Holders of a Majority of the then Aggregate
Outstanding Amount of the Notes of the Controlling Class shall have the
right to cause the institution of and direct the time, method and place of
conducting any Proceeding for any remedy available to the Trustee, or of any
sale of the Collateral, in whole or in part, provided that:

 

(a)                                  such
direction shall not conflict with any rule of law or with this Indenture;

 

(b)                                 the
Trustee may take any other action deemed proper by it that is not inconsistent
with such direction; provided that, subject to Section 6.1, the Trustee need
not take any action that it determines might involve it in liability (unless
the Trustee has received an indemnity reasonably satisfactory to it against
such liability as set forth below);

 

(c)                                  the
Trustee shall have been provided with an indemnity reasonably satisfactory to
it; and

 

(d)                                 any
direction to the Trustee to undertake a Sale of the Collateral shall be made
only pursuant to, and in accordance with, Sections 5.4 and 5.5.

 

5.14.        WAIVER OF
PAST DEFAULTS

 

The Holders of a Majority of the then
Aggregate Outstanding Amount of the Notes of the Controlling Class may, in
certain cases waive any past Default and its consequences, except:

 

(a)           a
Default for more than five (5) Business Days in the payment, when due and
payable, of any interest on any Rated Note; or

 

(b)           a
Default in the payment of principal on any Note at its Stated Maturity Date or
Redemption Date; or

 

(c)           the
failure on any Payment Date to disburse amounts available in the Collection
Account in accordance with Section 11.1 and the continuation of such
failure for a period of three (3) Business Days; or

 

(d)           a
Default arising under Section 5.1(g) or 5.1(h); or

 

89

 

(e)           a
Default in respect of any provision of this Indenture that under
Section 8.2 cannot be modified or amended without the waiver or consent of
the Holder of each Outstanding Note adversely affected thereby.

 

In the case of any such waiver, (i) the
Co-Issuers, the Trustee and the Holders of the Notes shall be restored to their
former positions and rights hereunder, respectively, but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereto, and (ii) the Trustee shall promptly give written notice of any
such waiver to the Collateral Advisor and each Holder of Rated Notes. The
Rating Agencies shall be notified by the Issuer of any such waiver.

 

Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured for every purpose of this Indenture, but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereto.

 

5.15.        UNDERTAKING
FOR COSTS

 

All parties to this Indenture agree, and each
Holder of any Rated Note by its acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken, or omitted by it as Trustee, the filing by
any party litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys’ fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made
by such party litigant; but the provisions of this Section 5.15 shall not
apply to any suit instituted by the Trustee, to any suit instituted by any
Rated Noteholder, or group of Rated Noteholders, holding in the aggregate more
than 10% in Aggregate Outstanding Amount of the Controlling Class, or to any
suit instituted by any Rated Noteholder for the enforcement of the payment of the
principal of or interest on any Rated Note on or after the Stated Maturity Date
expressed in such Rated Note (or, in the case of redemption, on or after the
applicable Redemption Date).

 

5.16.        WAIVER OF
STAY OR EXTENSION LAWS

 

The Co-Issuers covenant (to the extent that
they may lawfully do so) that they will not at any time insist upon, or plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay
or extension law wherever enacted, now or at any time hereafter in force (including
but not limited to filing a voluntary petition under Chapter 11 of the
Bankruptcy Code and by the voluntary commencement of a proceeding or the filing
of a petition seeking winding up, liquidation, reorganization or other relief
under any bankruptcy, insolvency, receivership or similar law now or hereafter
in effect), which may affect the covenants, the performance of or any remedies
under this Indenture; and the Co-Issuers (to the extent that they may lawfully
do so) hereby expressly waive all benefit or advantage of any such law, and
covenant that they will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.

 

5.17.        SALE OF
COLLATERAL

 

(a)           The
power to effect any sale (a Sale) of any portion of the Collateral pursuant
to Sections 5.4 and 5.5 shall not be exhausted by any one or more Sales as to
any portion of such Collateral remaining unsold, but shall continue unimpaired
until the entire Collateral shall have been sold or all amounts secured by the
Collateral shall have been paid. The Trustee hereby expressly waives its rights
to any amount fixed by law as compensation for any Sale; provided that the
Trustee shall be authorized to deduct the reasonable costs,

 

90

 

charges and expenses incurred by it in
connection with such Sale from the proceeds thereof notwithstanding the
provisions of Section 6.7.

 

(b)           The
Trustee may bid for and acquire any portion of the Collateral in connection
with a public Sale thereof, by crediting all or part of the net proceeds of
such Sale after deducting the reasonable costs, charges and expenses incurred
by the Trustee in connection with such Sale notwithstanding the provisions of
Section 6.7. The Rated Notes and the Hedge Agreement need not be produced
in order to complete any such Sale, or in order for the net proceeds of such
Sale to be credited against amounts owing on the Rated Notes. The Trustee may
hold, lease, operate, manage or otherwise deal with any property so acquired in
any manner permitted by law in accordance with this Indenture.

 

(c)           If
any portion of the Collateral consists of securities not registered under the
Securities Act (Unregistered Securities),
the Trustee may, but shall not be required to, seek an Opinion of
Counsel, or, if no such Opinion of Counsel can be obtained, with the consent of
a Majority of the Controlling Class seek, a no-action position from the
Commission or any other relevant federal or state regulatory authorities,
regarding the legality of a public or private sale of such Unregistered
Securities. In no event will the Trustee be required to register Unregistered
Securities under the Securities Act.

 

(d)           The
Trustee shall execute and deliver an appropriate instrument of conveyance
transferring its interest in any portion of the Collateral in connection with a
sale thereof. In addition, the Trustee is hereby irrevocably appointed the
agent and attorney-in-fact of the Issuer to transfer and convey its interest in
any portion of the Collateral in connection with a sale thereof, and to take
all action necessary to effect such sale. No purchaser or transferee at such a
sale shall be bound to ascertain the Trustee’s authority, to inquire into the
satisfaction of any conditions precedent or see to the application of any
funds.

 

5.18.        ACTION ON
THE RATED NOTES

 

The Trustee’s right to seek and recover
judgment on the Rated Notes or under this Indenture shall not be affected by
the seeking or obtaining of or application for any other relief under or with
respect to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of the Secured Parties shall be impaired by the recovery of any
judgment by the Trustee against the Issuer or by the levy of any execution
under such judgment upon any portion of the Collateral or upon any of the
assets of the Issuer or the Co-Issuer.

 

ARTICLE VI

 

THE TRUSTEE

 

6.1.                              CERTAIN DUTIES AND RESPONSIBILITIES

 

(a)                                  Except
during the continuance of an Event of Default:

 

(1)           the
Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and

 

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(2)           in
the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and conforming
to the requirements of this Indenture; provided that, in the case of any such
certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they substantially conform to the
requirements of this Indenture and shall promptly, but in any event within
three Business Days in the case of an Officer’s certificate furnished by the
Issuer, notify the party delivering the same if such certificate or opinion
does not conform. If a corrected form shall not have been delivered to the
Trustee within 15 days after such notice from the Trustee, the Trustee shall
promptly notify the Rated Noteholders and the Initial Hedge Counterparty.

 

(b)                                 In
case an Event of Default actually known to the Trustee has occurred and is
continuing, the Trustee shall, prior to the receipt of directions, if any, from
a Majority of the Controlling Class, exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and skill in
its exercise as a prudent person would exercise or use under the circumstances
in the conduct of such person’s own affairs.

 

(c)                                  No
provision of this Indenture shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that:

 

(1)           This
Section 6.1(c) shall not be construed to limit the effect of
Section 6.1(a);

 

(2)           the
Trustee shall not be liable for any error of judgment made in good faith by a
Trust Officer, unless it shall be proven that the Trustee was negligent in
ascertaining the pertinent facts;

 

(3)           the
Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction of the Issuer or the
Co-Issuer in accordance with this Indenture and/or a Majority (or such other
percentage as may be required by the terms hereof) of the Aggregate Outstanding
Amount of the Controlling Class (or other Class if required or
permitted by the terms hereof) relating to the time, method and place of
conducting any Proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Indenture;

 

(4)           no
provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers
contemplated hereunder, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it (if the amount of such funds or risk or liability
does not exceed the amount payable to the Trustee pursuant to
Section 11.1(a)(1) net of the amounts specified in
Section 6.8(a)(1), the Trustee shall be deemed to be reasonably assured of
such repayment) unless such risk or liability relates to performance of its
ordinary services, including under Section 5, under this Indenture; and

 

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(5)           the
Trustee shall not be liable to the Rated Noteholders for any action taken or
omitted by it at the direction of the Issuer, the Co-Issuer, the Collateral
Advisor and/or the Holders of the Rated Notes under the circumstances in which
such direction is required or permitted by the terms of this Indenture.

 

(d)                                 For
all purposes under this Indenture, the Trustee shall not be deemed to have
notice or knowledge of any Event of Default described in Section 5.1(e),
5.1(f), 5.1(g) or 5.1(h) unless a Trust Officer assigned to and
working in the Corporate Trust Office has actual knowledge thereof or unless
written notice of any event which is in fact such an Event of Default or such a
Default, as the case may be, is received by the Trustee at the Corporate Trust
Office. For purposes of determining the Trustee’s responsibility and liability
hereunder, whenever reference is made in this Indenture to such an Event of
Default or such a Default, as the case may be, such reference shall be
construed to refer only to such an Event of Default or such a Default, as the
case may be, of which the Trustee is deemed to have notice as described in this
Section 6.1(d).

 

(e)                                  Whether
or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection
to the Trustee shall be subject to the provisions of this Section 6.

 

(f)            The
Trustee shall, upon receipt of reasonable (but no less than three Business
Days’) prior written notice, permit any representative of a Holder of a Rated
Note or the Initial Hedge Counterparty, during the Trustee’s normal business
hours, to examine all books of account, records, reports and other papers of
the Trustee relating to the Rated Notes or the Hedge Agreement, to make copies
and extracts therefrom (the reasonable out-of-pocket expenses incurred in
making any such copies or extracts to be reimbursed to the Trustee by such
Holder) and to discuss the Trustee’s actions, as such actions relate to the
Trustee’s duties with respect to the Rated Notes or the Hedge Agreement, with
the Trustee’s officers and employees responsible for carrying out the Trustee’s
duties with respect to the Rated Notes; provided that under no circumstances shall
the Initial Hedge Counterparty be permitted to review any documentation
containing the names or other indicia of identity of any of the Noteholders
unless any such information (including the number of shares held by such
Noteholder) has been redacted from such documentation.

 

(g)                                 With
respect to the security interests created hereunder, the Trustee acts as a
fiduciary for the Rated Noteholders only, and serves as a collateral agent for
the other Secured Parties.

 

6.2.          NOTICE OF
DEFAULT

 

Promptly (and in no event later than three
Business Days) after the occurrence of any Default actually known to a Trust
Officer of the Trustee or after acceleration has been made pursuant to
Section 5.2, the Trustee shall send to the Issuer, the Income Note Paying
Agent, each Rating Agency (for so long as any Class of Rated Notes is
Outstanding), the Collateral Advisor, the Initial Hedge Counterparty and to all
Holders of Rated Notes, as their names and addresses appear on the Note
Register, notice of all Defaults hereunder known to the Trustee, unless such
Default shall have been cured or waived.

 

6.3.          CERTAIN
RIGHTS OF TRUSTEE

 

Except as otherwise provided in Sections 6.1
and 8:

 

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(a)           the
Trustee may rely and shall be protected in acting or refraining from acting in
good faith and in reliance upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
note or other paper or document reasonably believed by it to be genuine and to
have been signed or presented by the proper party or parties;

 

(b)           any
request or direction of the Issuer or the Co-Issuer mentioned herein shall be sufficiently
evidenced by an Issuer Request or Issuer Order, as the case may be;

 

(c)           whenever
in the administration of this Indenture the Trustee shall (i) deem it
desirable that a matter be proved or established prior to taking, suffering or
omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely
upon an Officer’s certificate or (ii) be required to determine the value
of any Collateral or funds hereunder or the cashflows projected to be received
therefrom, the Trustee may, in the absence of bad faith on its part, rely on
reports of nationally recognized accountants, investment bankers or other
Persons qualified to provide the information required to make such determination,
including nationally recognized dealers in securities of the type being valued
and securities quotation services;

 

(d)           as
a condition to the taking or omitting of any action by it hereunder, the
Trustee may consult with counsel and the advice of such counsel or any Opinion
of Counsel shall be full and complete authorization and protection in respect
of any action taken or omitted by it hereunder in good faith and in reliance
thereon;

 

(e)           the
Trustee shall be under no obligation to exercise or to honor any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Rated Noteholders pursuant to this Indenture, unless such Rated Noteholders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might reasonably be incurred by it in
compliance with such request or direction;

 

(f)            the
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, note or other paper
documents, but the Trustee, in its discretion, may and, upon the written
direction of the Holders of a Majority of the then Aggregate Outstanding Amount
of the Notes of any Class, the Initial Hedge Counterparty or any Rating Agency
shall make such further inquiry or investigation into such facts or matters as
it may see fit or as it shall be directed, and, the Trustee shall be entitled,
on reasonable prior notice to the Co-Issuers, to examine the books and records
of the Co-Issuers or the Collateral Advisor relating to the Rated Notes and the
Collateral, personally or by agent or attorney at a time acceptable to the
Co-Issuers or the Collateral Advisor in their reasonable judgment during normal
business hours; provided that the Trustee shall,
and shall cause its agents, to hold in confidence all such information, except
(i) to the extent disclosure may be required by law by any regulatory
authority and (ii) to the extent that the Trustee, in its sole judgment,
may determine that such disclosure is consistent with its obligations
hereunder;

 

(g)           the
Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys; provided that the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent (other 

 

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than any Affiliate of the Trustee) appointed
and supervised, or attorney appointed, with due care by it hereunder;

 

(h)           the
Trustee shall not be liable for any action it takes or omits to take in good
faith that it reasonably and, after the occurrence and during the continuance
of an Event of Default, prudently believes to be authorized or within its
rights or powers hereunder;

 

(i)            nothing
herein shall be construed to impose an obligation on the part of the Trustee to
recalculate, evaluate or verify any report, certificate or information received
from the Issuer or Collateral Advisor (unless and except to the extent
otherwise expressly set forth herein or upon the request of the Initial Hedge
Counterparty, a Rating Agency or a Majority of the then Aggregate Outstanding
Amount of the Notes of the Controlling Class);

 

(g)           the
Trustee shall not be responsible or liable for the actions or omissions of, or
any inaccuracies in the records of, any non-Affiliated custodian, clearing
agency, common depository, Euroclear or Clearstream or for the acts or
omissions of the Collateral Advisor or either Co-Issuer;

 

(k)           to
the extent any defined term hereunder, or any calculation required to be made
or determined by the Trustee hereunder, is dependent upon or defined by
reference to generally accepted accounting principles in the United States (GAAP), the Trustee shall be
entitled to request and receive (and rely upon) instruction from the Issuer or
the accountants appointed pursuant to 10.13 as to the application of GAAP in
such connection, in any instance;

 

(1)           to
the extent permitted by law, the Trustee shall not be required to give any bond
or surety in respect of the execution of this Indenture or otherwise; and

 

(m)          the
permissive right of the Trustee to take or refrain from taking any actions
enumerated in this Indenture shall not be construed as a duty.

 

6.4.          AUTHENTICATING
AGENTS

 

If the Trustee so chooses the Trustee may
appoint one or more Authenticating Agents with power to act on its behalf and
subject to its direction in the authentication of Rated Notes in connection
with issuance, transfers and exchanges under Sections 2.4, 2.5 and 8.5, as
fully to all intents and purposes as though each such Authenticating Agent had
been expressly authorized by those Sections to authenticate such Rated Notes.
For all purposes of this Indenture, the authentication of Rated Notes by an
Authenticating Agent pursuant to this Section 6.4 shall be deemed to be
the authentication of Rated Notes “by the Trustee”.

 

Any entity into which any Authenticating
Agent may be merged or converted or with which it may be consolidated, or any
entity resulting from any merger, consolidation or conversion to which any
Authenticating Agent shall be a party, or any entity succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
such Authenticating Agent hereunder, without the execution or filing of any
further act on the part of the parties hereto or such Authenticating Agent or
such successor entity.

 

Any Authenticating Agent may at any time
resign by giving written notice of resignation to the Trustee and the Issuer.
The Trustee may at any time terminate the agency of any Authenticating Agent by

 

95

 

giving written notice of termination to such Authenticating Agent and
the Co-Issuers. Upon receiving such notice of resignation or upon such a
termination, the Trustee shall promptly appoint a successor Authenticating
Agent and shall give written notice of such appointment to the Co-Issuers.

 

The Issuer agrees to pay to each
Authenticating Agent from time to time reasonable compensation for its services
(provided, however, that, so long as an Authenticating Agent is the Trustee, or
an Affiliate thereof, such compensation shall be payable by the Trustee, rather
than by the Issuer), and reimbursement for its reasonable expenses relating
thereto and the Trustee shall be entitled to be reimbursed for such payments,
subject to Section 6.8. The provisions of Sections 2.8, 6.5 and 6.6 shall
be applicable to any Authenticating Agent.

 

6.5.          NOT RESPONSIBLE FOR RECITALS
OR ISSUANCE OF RATED NOTES

 

The recitals contained herein and in the
Rated Notes, other than the Certificate of Authentication thereon, shall be
taken as the statements of the Co-Issuers, and the Trustee assumes no responsibility
for their correctness. The Trustee makes no representation as to the validity
or sufficiency of this Indenture (except as may be made with respect to the
validity of the Trustee’s obligations hereunder), of the Collateral or of the
Rated Notes. The Trustee shall not be accountable for the use or application by
the Co-Issuers of the Rated Notes or the proceeds thereof or any amounts paid
to the Co-Issuers pursuant to the provisions hereof.

 

6.6.          MAY HOLD RATED NOTES

 

The Trustee, any Note Paying Agent, the Note
Registrar or any other agent of the Co-Issuers, in its individual or any other
capacity, may become the owner or pledgee of Rated Notes and, may otherwise
deal with the Co-Issuers or any of their Affiliates, with the same rights it
would have if it were not Trustee, Note Paying Agent, Note Registrar or such
other agent.

 

6.7.          FUNDS HELD IN TRUST

 

Funds held by the Trustee hereunder shall be
held in trust to the extent required herein. The Trustee shall be under no
liability for interest on any funds received by it hereunder except as
otherwise agreed upon with the Issuer and except to the extent of income or
other gain on investments which are deposits in or certificates of deposit of
the Trustee in its commercial capacity and income or other gain actually
received by the Trustee on Eligible Investments.

 

6.8.        COMPENSATION AND REIMBURSEMENT

 

(a)           The
Issuer agrees:

 

(1)           to
pay the Trustee on each Payment Date the Trustee Fee, the Income Note Paying
Agent Fee and reasonable compensation for all other services, including
custodial services, rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust);

 

(2)           except
as otherwise expressly provided herein, to reimburse the Trustee (subject to
any written agreement between the Issuer and the Trustee) in a timely manner
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture or in the enforcement of any provision hereof and expenses related to

 

96

 

the maintenance and administration of the
Collateral (including securities transaction charges and the reasonable compensation
and expenses and disbursements of its agents and legal counsel and of any
accounting firm or investment banking firm employed by the Trustee pursuant to
Section 5.2, 5.4, 5.5, 6.3(c), 6.3(k), 10.11 or 10.13, except any such
expense, disbursement or advance as may be attributable to its negligence,
willful misconduct or bad faith but only to the extent any such securities
transaction charges have not been waived during a Due Period due to the
Trustee’s receipt of a payment from a financial institution with respect to
certain Eligible Investments);

 

(3)           to
indemnify the Trustee and its Officers, directors, employees and agents for,
and to hold them harmless against, any loss, liability or expense incurred by
it without negligence, willful misconduct or bad faith on their part, arising
out of or in connection with the acceptance or administration of this trust,
including the reasonable costs and expenses (including reasonable counsel fees)
of defending themselves against any claim or liability in connection with the
exercise or performance of any of their powers or duties hereunder; and

 

(4)           to
pay the Trustee reasonable additional compensation together with its expenses
(including reasonable counsel fees) for any collection action taken pursuant to
Section 6.14.

 

(b)           The
Issuer may remit payment for such fees and expenses to the Trustee or, in the
absence thereof, the Trustee may from time to time deduct payment of its fees
and expenses hereunder from funds on deposit in the Expense Account pursuant to
Section 11.1.

 

(c)           The
Trustee hereby agrees not to cause the filing of a petition in bankruptcy
against the Issuer for the non-payment to the Trustee of any amounts provided
by this Section 6.8 until at least one year and one day, or if longer the
applicable preference period then in effect, after the payment in full of all
Rated Notes issued under this Indenture.

 

(d)           The
amounts payable to the Trustee pursuant to Sections 6.8(a)(2) through
(4) (other than amounts received by the Trustee from financial institutions
under Section 6.8(a)(2) above) shall not, except as provided by
Section 11.1(a)(19), exceed on any Payment Date the limitation described
in Section 11.1(a)(1) for such Payment Date; provided that
(A) the Trustee shall not institute any proceeding for enforcement of such
lien except in connection with an action pursuant to Section 5.3 or 5.4
for the enforcement of the lien of this Indenture for the benefit of the
Secured Parties and (B) the Trustee may only enforce such a lien in
conjunction with the enforcement of the rights of the Secured Parties in the
manner set forth in Section 5.4.

 

The Trustee shall, subject to the Priority of
Payments, receive amounts pursuant to this Section 6.8 and
Section 11.1 only to the extent that the payment thereof will not result
in an Event of Default and the failure to pay such amounts to the Trustee will
not, by itself, constitute an Event of Default. Subject to Section 6.10,
the Trustee shall continue to serve as Trustee under this Indenture
notwithstanding the fact that the Trustee shall not have received amounts due
it hereunder and hereby agrees not to cause the filing of a petition in
bankruptcy against the Co-Issuers for the nonpayment to the Trustee of any
amounts provided by this Section 6.8 until at least one year and one day,
or, if longer, the applicable preference period then in effect, after the
payment in full of all Rated Notes issued under this Indenture. No direction by
the Holders of a Majority of the then Aggregate Outstanding Amount of the

 

97

 

Notes of the Controlling Class shall affect the right of the
Trustee to collect amounts owed to it under this Indenture.

 

The indemnifications in favor of the Trustee
in this Section 6.8 shall (i) survive any resignation or removal of
any Person acting as Trustee (to the extent of any indemnified liabilities,
costs, expenses and other amounts arising or incurred prior to, or arising out
of actions or omissions occurring prior to, such resignation or removal) and
(ii) apply to the Trustee in its capacities as Custodian, Note Paying
Agent, Rated Note Calculation Agent and Authenticating Agent.

 

6.9.          CORPORATE
TRUSTEE REQUIRED; ELIGIBILITY

 

There shall at all times be a Trustee
hereunder which shall be a bank, corporation or trust company organized and
doing business under the laws of the United States or of any State thereof,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least U.S.$250,000,000, subject to supervision
or examination by federal or state banking authorities, having a rating of at
least “BBB+” by S&P and having an office within the United States. If such
entity publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then for
the purposes of this Section 6.9, the combined capital and surplus of such
entity shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this
Section 6.9, it shall resign immediately in the manner and with the effect
hereinafter specified in this Section 6.

 

6.10.        RESIGNATION
AND REMOVAL; APPOINTMENT OF SUCCESSOR

 

(a)           No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Section 6 shall become effective until the acceptance of
appointment by the successor Trustee under Section 6.11.

 

(b)           The
Trustee may resign at any time by giving 90 days prior written notice thereof
to the Co-Issuers, the Rated Noteholders, the Initial Hedge Counterparty, the
Collateral Advisor and each Rating Agency. Upon receiving such notice of
resignation, or if the Trustee is removed or becomes incapable of acting, or if
a vacancy shall occur in the office of the Trustee for any reason, the Issuer
shall (after consultation with the Collateral Advisor) promptly propose a
successor trustee for approval by the Holders of 662/3%
of the then Aggregate Outstanding Amount of the Notes of each Class of
Rated Notes. A proposed successor trustee approved in accordance with the
preceding sentence shall be appointed by the Co-Issuers as successor trustee by
written instrument, in duplicate, executed by an Authorized Officer of the
Issuer and an Authorized Officer of the Co-Issuer, one copy of which shall be
delivered to the Trustee so resigning and one copy to the successor trustee or
trustees, together with a copy to each Rated Noteholder. If no successor
trustee shall have been appointed and an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee or any
Holder of a Rated Note or the Initial Hedge Counterparty on behalf of itself
and all others similarly situated, subject to Section 5.15, may petition
any court of competent jurisdiction for the appointment of a successor Trustee.

 

(c)           The
Trustee may be removed at any time by an Act of the Holders of at least 662/3% of the then Aggregate Outstanding
Amount of the Notes of each Class of Rated Notes delivered to the Trustee
and to the Co-Issuers.

 

98

 

(d)                                 If at any time:

 

(1)           the Trustee shall cease to be eligible under
Section 6.9 and shall fail to resign after written request therefor by any
Holder; or

 

(2)           the Trustee shall become incapable of acting
or shall be adjudged as bankrupt or insolvent or a receiver or liquidator of
the Trustee or of its property shall be appointed or any public officer shall
take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,

 

then, in any such case (subject to Section 6.10(a)), (A) the
Co-Issuers, by Issuer Order shall remove the Trustee, or (B) subject to
Section 5.15, any Holder or the Initial Hedge Counterparty may, on behalf
of itself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.

 

(e)           The Co-Issuers shall give prompt notice of
each resignation and each removal of the Trustee and each appointment of a
successor Trustee by mailing
written notice of such event by first class mail, postage prepaid, to each
Rating Agency, the Initial Hedge Counterparty, the Collateral Advisor and the
Holders as their names and addresses appear in the Note Register. Each notice
shall include the name of the successor Trustee and the address of its
Corporate Trust Office. If the Co-Issuers fail to mail such notice within ten
days after acceptance of appointment by the successor Trustee, the successor
Trustee shall cause such notice to be given at the expense of the Co-Issuers.

 

6.11.        ACCEPTANCE OF APPOINTMENT BY
SUCCESSOR

 

Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Co-Issuers and the retiring Trustee (with copies to the
Initial Hedge Counterparty and the Collateral Advisor) an instrument accepting
such appointment. Upon delivery of the required instruments, the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any other act, deed or conveyance, shall become vested with
all the rights, powers, trusts, duties and obligations of the retiring Trustee;
but, on request of the Co-Issuers or a Majority of the then Aggregate
Outstanding Amount of the Notes of any Class of Notes, the Initial Hedge
Counterparty or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, fees, indemnities and expenses then unpaid, execute and
deliver an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee, and shall duly assign, transfer and
deliver to such successor Trustee all property and funds held by such retiring
Trustee hereunder, subject nevertheless to its lien, if any, provided for in
Section 6.8(d). Upon request of any such successor Trustee, the Co-Issuers
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and trusts.

 

No successor Trustee shall accept its appointment unless (a) at
the time of such acceptance such successor shall be qualified and eligible
under Section 6.9 and the other provisions of this Section 6 and
(b) a Rating Agency Confirmation shall have been obtained with respect to
the appointment of such successor Trustee shall have been satisfied. No appointment
of a successor Trustee shall become effective if the Holders of a Majority of
the then Aggregate Outstanding Amount of the Notes of the Controlling
Class objects to such appointment; and no appointment of a successor
Trustee shall become effective until the date ten days after notice of such
appointment has been given to each Rated Noteholder and each Rating Agency.

 

99

 

6.12.        MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS OF TRUSTEE

 

Any Person into which the Trustee may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any Person succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder; provided such Person shall be otherwise qualified
and eligible under this Section 6, without the execution or filing of any paper
or any further act on the part of any of the parties hereto. The successor
Trustee will notify each Rating Agency of any such merger, conversion or
consolidation. In case any of the Rated Notes have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion
or consolidation to such authenticating Trustee may adopt such authentication
and deliver the Rated Notes so authenticated with the same effect as if such
successor Trustee had itself authenticated such Rated Notes.

 

6.13.        CO-TRUSTEES

 

At any time or times, for the purpose of
meeting the legal requirements of any jurisdiction in which any part of the
Collateral may at the time be located, the Trustee shall have power to appoint
one or more Persons to act as Co-trustee, jointly with the Trustee of all or
any part of the Collateral, with the power to file such proofs of claim and
take such other actions pursuant to Section 5.6 and to make such claims and enforce
such rights of action on behalf of the Holders of the Rated Notes subject to
the other provisions of this Section 6.13.

 

The Co-Issuers shall join with the Trustee in
the execution, delivery and performance of all instruments and agreements
necessary or proper to appoint a Co-trustee. If the Co-Issuers do not join in
such appointment within 15 days after the receipt by them of a request to do
so, the Trustee shall have power to make such appointment.

 

Should any written instrument from the
Co-Issuers be required by any Co-trustee so appointed for more fully confirming
to such Co-trustee such property, title, right or power, any and all such
instruments shall, on request, be executed, acknowledged and delivered by the
Co-Issuers. The Co-Issuers agree to pay (subject to the Priority of Payments)
for any reasonable fees and expenses in connection with such appointment.

 

Every Co-trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the
following terms:

 

(a)                                  the
Rated Notes shall be authenticated and delivered and all rights, powers, duties
and obligations hereunder in respect of the custody of securities, funds and
other personal property held by, or required to be deposited or pledged with,
the Trustee hereunder, shall be exercised solely by the Trustee;

 

(b)                                 the
rights, powers, duties and obligations hereby conferred or imposed upon the
Trustee in respect of any property covered by the appointment of a Co-trustee
shall be conferred or imposed upon and exercised or performed by the Trustee or
by the Trustee and such Co-trustee jointly, as shall be provided in the
instrument appointing such Co-trustee, except to the extent that under any law
of any jurisdiction in which any particular act is to be performed, the Trustee
shall be incompetent or unqualified to perform such act, in which event such
rights, powers, duties and obligations shall be exercised and performed by a
Co-trustee;

 

100

 

(c)                                  the
Trustee at any time, by an instrument in writing executed by it, may accept the
resignation of or remove any Co-trustee appointed under this Section 6.13. A
successor to any Co-trustee so resigned or removed may be appointed in the
manner provided in this Section 6.13;

 

(d)                                 no
Co-trustee hereunder shall be personally liable by reason of any act or
omission of the Trustee or any other Co-trustee hereunder;

 

(e)                                  the
Trustee shall not be liable by reason of any act or omission of a Co-trustee;

 

(f)                                    any
Act of Rated Noteholders delivered to the Trustee shall be deemed to have been
delivered to each Co-trustee; and

 

(g)                                 each
Co-trustee hereunder shall at the time of such acceptance satisfy the
qualification required of a Trustee under Section 6.9 and the other provisions
of this Section 6.

 

6.14.        CERTAIN DUTIES RELATED TO DELAYED PAYMENT OF PROCEEDS; OTHER NOTICES

 

In the event that the Trustee shall not have
received a payment with respect to any Pledged Security within two Business
Days after its Due Date, the Trustee shall (i) notify the Issuer and Collateral
Advisor in writing and (ii) promptly request the issuer of such Pledged
Security, the trustee under the related Underlying Instrument or paying agent
designated by either of them, as the case may be, to make such payment as soon
as practicable after such request but in no event later than three Business
Days after the date of such request. In the event that such payment is not made
within such time period, the Trustee, subject to the provisions of Section 6.1(c)(4),
shall, subject to the restrictions on the sale of Collateral Debt Securities
set forth in Section 12.1, take such action as the Collateral Advisor shall
direct in writing. Any such action shall be without prejudice to any right to
claim a Default under this Indenture. The Trustee will promptly notify the
Issuer if the Collateral Advisor has determined that (i) any Collateral Debt
Security has become a Defaulted Security, a Deferred Interest PIK Bond, a
Credit Risk Security or a Written Down Security or (ii) the Trustee has
received an Equity Security in connection with any Collateral Debt Security.

 

6.15.        REPRESENTATIONS AND WARRANTIES OF THE BANK

 

(a)                                  Organization.
The Bank has been duly organized and is validly existing as a national
banking association under the laws of the United States and has the power to
conduct its business and affairs as a trustee.

 

(b)                                 Authorization;
Binding Obligations. The Bank has the power and authority to perform the
duties and obligations of Trustee, Note Registrar and Note Transfer Agent or
any other capacity to which it is appointed under this Indenture. The Bank has
taken all necessary action to authorize the execution, delivery and performance
of this Indenture, and all of the documents required to be executed by the Bank
pursuant hereto. This Indenture has been duly executed and delivered by the
Bank. Upon execution and delivery by the Co-Issuers, this Indenture will
constitute the legal, valid and binding obligation of the Bank enforceable in
accordance with its terms.

 

(c)                                  Eligibility.
The Bank is eligible under Section 6.9 to serve as Trustee hereunder.

 

(d)                                 No
Conflict. Neither the execution, delivery and performance of this
Indenture, nor the consummation of the transactions contemplated by this
Indenture, (i) is prohibited by, or

 

101

 

requires the Bank to obtain any consent,
authorization, approval or registration under, any law, statute, rule,
regulation, judgment, order, writ, injunction or decree that is binding upon
the Bank or any of its properties or assets, or (ii) will violate any provision
of, result in any default or acceleration of any obligations under, result in
the creation or imposition of any lien pursuant to, or require any consent
under, any agreement to which the Bank is a party or by which it or any of its
property is bound.

 

(e)                                  No Proceedings. There are no proceedings pending, or to the
best knowledge of the Bank, threatened against the Bank before any federal,
state or other governmental agency, authority, administrator or regulatory
body, arbitrator, court or other tribunal, foreign or domestic, that could have
a material adverse effect on the Collateral or any action taken or to be taken
by the Bank under this Indenture.

 

6.16.        EXCHANGE OFFERS, PROPOSED
AMENDMENTS ETC.

 

The Collateral Advisor may, on behalf of the
Issuer, instruct the Trustee pursuant to an Issuer Order to, and the Trustee
shall, take any of the following actions with respect to a Collateral Debt
Security or Equity Security as to which an Offer has been made or as to which
any consent, waiver, vote or exercise has been requested: (i) exchange such
instrument for other securities or a mixture of securities and other
consideration pursuant to such Offer (and in making a determination whether or not
to exchange any security, none of the restrictions set forth in Section 12
shall be applicable); and (ii) give consent, grant waiver, vote or exercise any
or all other rights or remedies with respect to any such Collateral Debt
Security or Equity Security. In the event that the Trustee does not receive
instruction from the Collateral Advisor, the Trustee shall have no obligation
to take action with respect to such exchange or such request for consent,
waiver, vote or exercise. In the event that the Trustee receives written notice
of any proposed amendment, consent or waiver under the Underlying Instruments
of any Collateral Debt Securities (before or after any default), the Trustee
shall promptly deliver copies of such notice to the Issuer and the Collateral
Advisor. The Collateral Advisor may, on behalf of the Issuer, instruct the
Trustee pursuant to an Issuer Order to, and the Trustee shall, with respect to
a Collateral Debt Security as to which a consent or waiver under the Underlying
Instruments of such Collateral Debt Security (before or after any default) has
been proposed, give consent, grant waiver, vote or exercise any or all other
rights or remedies with respect to any such Collateral Debt Security only in
accordance with such Issuer Order. In the absence of any instruction from the
Collateral Advisor, the Trustee shall not engage in any vote with respect to
such Collateral Debt Security.

 

6.17.        FIDUCIARY FOR RATED
NOTEHOLDERS ONLY; AGENT FOR OTHER SECURED PARTIES

 

With respect to the security interests
created hereunder, the pledge of any portion of the Collateral to the Trustee
is to the Trustee as representative of the Rated Noteholders and agent for
other Secured Parties. In furtherance of the foregoing, the possession by the
Trustee of any portion of the Collateral and the endorsement to or registration
in the name of the Trustee of any portion of the Collateral (including without
limitation as entitlement holder of the Collateral Account) are all undertaken
by the Trustee in its capacity as representative of the Rated Noteholders and
as agent for the other Secured Parties. The Trustee shall not by reason of this
Indenture be deemed to be acting as fiduciary for the Initial Hedge
Counterparty or the Collateral Advisor, provided that the
foregoing shall not limit any of the express obligations of the Trustee under
this Indenture.

 

6.18.        WITHHOLDING

 

If any withholding tax is imposed on the
Issuer’s payment (or allocations of income) under the Rated Notes to any Rated
Noteholder, such tax shall reduce the amount otherwise distributable to such

 

102

 

Rated Noteholder. The Trustee is hereby authorized and directed to
retain from amounts otherwise distributable to any Rated Noteholder sufficient
funds for the payment of any tax that is required to be withheld or deducted by
the Issuer (but such authorization shall not prevent the Trustee from
contesting any such tax in appropriate proceedings and withholding payment of
such tax, if permitted by law, pending the outcome of such proceedings). The
amount of any withholding tax imposed with respect to any Rated Noteholder
shall be treated as Cash distributed to such Rated Noteholder at the time it is
withheld by the Trustee and remitted to the appropriate taxing authority. If
there is a possibility that withholding tax is payable with respect to a
distribution, the Trustee may in its sole discretion withhold such amounts in
accordance with this Section 6.18. If any Rated Noteholder wishes to apply for
a refund of any such withholding tax, the Trustee shall reasonably cooperate
with such Rated Noteholder in making such claim so long as such Rated
Noteholder agrees to reimburse the Trustee for any out-of-pocket expenses
incurred. Nothing herein shall impose an obligation on the part of the Trustee
to determine the amount of any tax or withholding obligation on the part of the
Issuer or in respect of the Income Notes.

 

ARTICLE
VII

 

COVENANTS

 

7.1.
         PAYMENT OF PRINCIPAL AND INTEREST

 

The Co-Issuers will duly and punctually pay
all principal (including the Class B Cumulative Periodic Interest Shortfall
Amount and the Class C Cumulative Periodic Interest Shortfall Amount and the Class
D Cumulative Periodic Interest Shortfall Amount), interest (including Defaulted
Interest and interest thereon, if any) in accordance with the terms of the
Rated Notes and this Indenture and amounts due under the Hedge Agreement in
accordance with this Indenture. Amounts properly withheld under the Code or
other applicable law by any Person from a payment to any Rated Noteholder of
principal and/or interest shall be considered as having been paid by the
Co-Issuers to such Rated Noteholder for all purposes of this Indenture.

 

The Trustee shall, unless prevented from
doing so for reasons beyond its reasonable control, give notice to each Rated
Noteholder and each Rating Agency of any such withholding requirement no later
than ten days prior to the date of the payment from which amounts are required
to be withheld; provided that despite the failure
of the Trustee to give such notice, amounts withheld pursuant to applicable tax
laws shall be considered as having been paid by the Co-Issuers as provided
above.

 

7.2.          MAINTENANCE OF OFFICE OR AGENCY

 

The Co-Issuers hereby appoint the Trustee as
Note Paying Agent for the payment of principal of and interest on the Rated
Notes. The Co-Issuers hereby appoint Wells Fargo Bank, National Association
with an address at 9062 Old Annapolis Road, Columbia, Maryland 21045, Attn: CDO
Trust Services—N-Star Real Estate CDO III, as the Co-Issuers’ agent where
notices and demands to or upon the Co-Issuers in respect of the Rated Notes or
this Indenture (except service of any and all process in any action or
proceeding) may be served and where such Rated Notes may be surrendered for
registration of transfer or exchange. The Issuer hereby appoints NCB
Stockbroker Limited, 3 George’s Dock, Dublin 1, Ireland, as offshore Note
Paying Agent and as the Issuer’s agent where notices and demands to or upon the
Issuer in respect of any Rated Notes listed on the Irish Stock Exchange may be
served and where such Rated Notes may be surrendered for registration of
transfer or exchange.

 

The Co-Issuers may at any time and from time
to time, terminate the appointment of any such agent or appoint any additional
agents for any or all of such purposes; provided
that (A) the Co-Issuers

 

103

 

will maintain in the Borough of Manhattan, The City of New York, an
office or agency where notices and demands to or upon the Co-Issuers in respect of the
Rated Notes and this Indenture may be served, (B) no Note Paying Agent shall be
appointed in a jurisdiction which subjects payments on the Rated Notes to
withholding tax and (C) the Co-Issuers may not terminate the appointment of any
Note Paying Agent without the consent of each Income Noteholder. The Co-Issuers
shall give prompt written notice to the Trustee and each Rating Agency and the
Rated Noteholders of the appointment or termination of any such agent and of
the location and any change in the location of any such office or agency.

 

If at any time the Co-Issuers shall fail to
maintain any such required office or agency in the Borough of Manhattan, The
City of New York or shall fail to furnish the Trustee with the address thereof,
presentations and surrenders may be made at and notices and demands may be
served on the Co-Issuers and Rated Notes may be presented and surrendered for
payment to the Note Paying Agent at its office in Minnesota (and the Co-Issuers
hereby appoint the same as their agent to receive such respective
presentations, surrenders, notices and demands).

 

For so long as any Class of Rated Notes is
listed on the Irish Stock Exchange and such exchange shall so require, the
Co-Issuers shall maintain a listing agent, a paying agent and an agent where
notices and demands to or upon the Co-Issuers in respect of any Rated Notes
listed on the Irish Stock Exchange may be served and where such Rated Notes may
be surrendered for registration of transfer or exchange.

 

7.3.          FUNDS FOR RATED NOTE PAYMENTS TO BE HELD IN TRUST

 

All payments of amounts due and payable with
respect to any Rated Notes that are to be made from amounts withdrawn from the
Payment Account shall be made on behalf of the Co-Issuers by the Trustee or a
Note Paying Agent with respect to payments on the Rated Notes.

 

When the Co-Issuers shall have a Note Paying
Agent that is not also the Note Registrar, they shall direct the Note Registrar
to furnish, no later than the fifth calendar day after each Record Date a list,
if necessary, in such form as such Note Paying Agent may reasonably request, of
the names and addresses of the Holders and of the certificate numbers of
individual Rated Notes held by each such Holder.

 

The initial Note Paying Agent shall be as set
forth in Section 7.2. Any additional or successor Paying Agents shall be
appointed by Issuer Order with written notice thereof to the Trustee and the
Rating Agencies; provided that
so long as any Class of Rated Notes is rated by the Rating Agencies and with
respect to any additional or successor Note Paying Agent for the Rated Notes, (a)
the Note Paying Agent for the Rated Notes has a rating of not less than “AA-”
and not less than “A-1+” by S&P or (b) a Rating Agency Confirmation from
S&P shall have been obtained with respect to the appointment of such Note
Paying Agent. In the event that (i) the Co-Issuers have actual knowledge that
such successor Note Paying Agent ceases to have a rating of at least “AA-” and
of “A-1+” by S&P or (ii) a Rating Agency Confirmation from S&P shall
not have been obtained with respect to the appointment of such Note Paying
Agent, the Co-Issuers shall promptly remove such Note Paying Agent and appoint
a successor Note Paying Agent. The Co-Issuers shall not appoint any Note Paying
Agent (other than an initial Note Paying Agent) that is not, at the time of
such appointment, a depository institution or trust company subject to
supervision and examination by federal and/or state and/or national banking authorities.
The Co-Issuers shall cause each Note Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Note Paying
Agent shall agree with the Trustee (and if the Trustee acts as Note Paying
Agent, it hereby so agrees), subject to the provisions of this Section 7.3,
that such Note Paying Agent will:

 

(a)                                  allocate
all sums received for payment to the Holders of Rated Notes for which it acts
as Note Paying Agent on each Payment Date and Redemption Date among such Holders
in

 

104

 

the proportion specified in the instructions
set forth in the applicable Note Valuation Report or Redemption Date Statement
or as otherwise provided herein, in each case to the extent permitted by
applicable law;

 

(b)                                 hold
all amounts held by it for the payment of amounts due with respect to the Rated
Notes in trust for the benefit of the Persons entitled thereto until such sums
shall be paid to such Persons or otherwise disposed of as herein provided and
pay such sums to such Persons as herein provided;

 

(c)                                  if
such Note Paying Agent is not the Trustee, immediately resign as a Note Paying
Agent and forthwith pay to the Trustee all amounts held by it in trust for the
payment of Rated Notes if at any time it ceases to meet the standards set forth
above required to be met by a Note Paying Agent at the time of its appointment;

 

(d)                                 if
such Note Paying Agent is not the Trustee, immediately give the Trustee notice
of any Default by the Issuer or the Co-Issuer (or any other obligor upon the
Rated Notes) in the making of any payment required to be made; and

 

(e)                                  if
such Note Paying Agent is not the Trustee at any time during the continuance of
any such Default, upon the written request of the Trustee, forthwith pay to the
Trustee all amounts so held in trust by such Note Paying Agent.

 

If the Co-Issuers shall have appointed a Note
Paying Agent other than the Trustee, the Trustee shall deposit on or prior to
the Business Day next preceding each Payment Date or Redemption Date, as the
case may be, with such Note Paying Agent, if necessary, an aggregate amount
sufficient to pay the amounts then becoming due (to the extent funds are then
available for such purpose in the Collection Account, as the case may be), such
amount to be held in trust for the benefit of the Persons entitled thereto. Any
funds deposited with a Note Paying Agent (other than the Trustee) in excess of
an amount sufficient to pay the amounts then becoming due on the Rated Notes
with respect to which such deposit was made shall be paid over by such Note
Paying Agent to the Trustee for application in accordance with Section 11.

 

The Co-Issuers may at any time, for the
purpose of obtaining the satisfaction and discharge of this Indenture or for any
other purpose, direct any Note Paying Agent to pay, to the Trustee all amounts
held in trust by such Note Paying Agent, such amounts to be held by the Trustee
upon the same trusts as those upon which such amounts were held by such Note
Paying Agent; and, upon such payment by any Note Paying Agent to the Trustee,
such Note Paying Agent shall be released from all further liability with
respect to such amounts.

 

Except as otherwise required by applicable
law, any funds deposited with the Trustee or any Note Paying Agent in trust for
the payment of the principal of or interest on any Rated Note and remaining
unclaimed for two years after the same has become due and payable shall be paid
to the Co-Issuers on Issuer Request; and the Holder of such Rated Note shall
thereafter, as an unsecured general creditor, look only to the Issuer or the
Co-Issuer for payment of such amounts and all liability of the Trustee or such
Note Paying Agent with respect to such trust funds (but only to the extent of
the amounts so paid to the Co-Issuers) shall thereupon cease. The Trustee or
such Note Paying Agent, before being required to make any such release of
payment, may, but shall not be required to, adopt and employ, at the expense of
the Co-Issuers, any reasonable means of notification of such release of
payment, including mailing notice of such release to Holders whose Rated Notes
have been called but have not been surrendered for redemption or whose right to
or interest in amounts due and payable but not claimed is determinable from the
records of any Note Paying Agent, at the last address of record of each such
Holder.

 

105

 

7.4.          EXISTENCE OF CO-ISSUERS

 

The Issuer and the Co-Issuer shall maintain
in full force and effect their existence and rights as an exempted company
incorporated and registered under the laws of the Cayman Islands and as a
corporation incorporated under the laws of the State of Delaware, respectively,
and shall obtain and preserve their qualification to do business in each
jurisdiction in which such qualifications are or shall be necessary to protect
the validity and enforceability of this Indenture, the Rated Notes or any of
the Collateral.

 

The Issuer and the Co-Issuer shall ensure
that all corporate or other formalities regarding their respective existences
(including holding regular board of directors’ and shareholders’, or other
similar, meetings) or registrations are followed. Neither the Issuer nor the
Co-Issuer shall take any action, or conduct its affairs in a mariner, that is
likely to result in its separate existence being ignored or in its assets and
liabilities being substantively consolidated with any other Person in a
bankruptcy, reorganization or other insolvency proceeding. At least one director
of the Issuer and of the Co-Issuer shall be Independent of other parties to the
Transaction Documents. Without limiting the foregoing, (a) the Issuer shall not
have any subsidiaries (other than the Co-Issuer and any Tax Subsidiary), (b) the
Co-Issuer shall not have any subsidiaries and (c) the Issuer and the Co-Issuer
shall not (i) have any employees, (ii) engage in any transaction with any
shareholder that would constitute a conflict of interest or (iii) pay
dividends, provided that the foregoing
shall not prohibit the Issuer from entering into the transactions contemplated
by the Corporate Services Agreement with the Administrator.

 

7.5.          PROTECTION OF COLLATERAL

 

(a)                                  The
Issuer shall from time to time, execute and deliver all such supplements and amendments
hereto and all such Financing Statements, continuation statements, instruments
of further assurance and other instruments, and shall take such other action as
may be necessary or advisable or desirable to secure the rights and remedies of
the Secured Parties hereunder and to:

 

(1)                                  Grant
more effectively all or any portion of the Collateral;

 

(2)                                  maintain,
preserve and perfect the lien (and the first priority nature thereof) of this
Indenture or to carry out more effectively the purposes hereof;

 

(3)                                  perfect,
publish notice of or protect the validity of any Grant made or to be made by
this Indenture (including any and all actions necessary or desirable as a
result of changes in law or regulations);

 

(4)                                  enforce
any of the Pledged Securities or other instruments or property included in the
Collateral;

 

(5)                                  preserve
and defend title to the Collateral and the rights therein of the Trustee, the
Initial Hedge Counterparty and the Holders of the Rated Notes against the
claims of all Persons and parties; or

 

(6)                                  pay
or cause to be paid any and all taxes levied or assessed upon all or any part
of the Collateral.

 

The Issuer hereby designates the Trustee its
agent and attorney-in-fact to execute any Financing Statement, continuation
statement or other instrument delivered to it pursuant

 

106

 

to this Section 7.5, and the Trustee, as
agent of the Issuer, agrees to file such continuation statements as are
necessary to maintain perfection of the Collateral perfected by the filing of
Financing Statements, provided that the Issuer retains ultimate responsibility
to maintain the perfection of the Collateral perfected by the filing of
Financing Statements and any failure of the Trustee to file continuation
statements pursuant to this undertaking shall not result in any liability of
the Trustee and the Trustee shall be entitled to indemnification pursuant to Section
6.8(a) with respect to any claim, loss, liability or expense incurred by the
Trustee with respect to the filing of such continuation statements. The Trustee
agrees that it will from time to time, at the direction of any Secured Party,
execute and cause to be filed Financing Statements and continuation statements.
The Issuer shall otherwise cause the perfection and priority of the security
interest in the Collateral and the maintenance of such security interest at all
times. Notwithstanding anything to the contrary herein, the right of a Secured
Party to provide direction to the Trustee shall not impose upon the Trustee, as
Secured Party, any obligation to provide any such direction. The Issuer agrees
that a carbon, photographic, photostatic or other reproduction of this
Indenture or of a Financing Statement is sufficient as an Indenture or a
Financing Statement as the case may be.

 

(b)                                 The
Trustee shall not (i) except in accordance with Section 10.11(a) or (b), as
applicable, remove any portion of the Collateral that consists of Cash or is
evidenced by an Instrument, certificate or other writing (A) from the
jurisdiction in which it was held at the date the most recent Opinion of
Counsel was delivered pursuant to Section 7.6 (or from the jurisdiction in
which it was held as described in the Opinion of Counsel delivered at the Closing
Date pursuant to Section 3.1(c), if no Opinion of Counsel has yet been
delivered pursuant to Section 7.6) or (B) from the possession of the Person who
held it on such date or (ii) cause or permit ownership or the pledge of any
portion of the Collateral that consists of book-entry securities to be recorded
on the books of a Person (A) located in a different jurisdiction from the
jurisdiction in which such ownership or pledge was recorded at such date or (B)
other than the Person on whose books such ownership or pledge was recorded at
such date, unless the Trustee shall have first received an Opinion of Counsel
to the effect that the lien and security interest created by this Indenture
with respect to such property will continue to be maintained after giving
effect to such action or actions.

 

(c)                                  The
Issuer shall pay or cause to be paid taxes, if any, levied on account of the
beneficial ownership by the Issuer of any Pledged Securities that secure the
Rated Notes; provided that the
Issuer shall not be required to pay or discharge or cause to be paid or
discharged any such tax whose amount, applicability or validity is being
contested in good faith by appropriate proceedings and for which disputed
amounts or adequate reserves have been made or the failure of which to pay or
discharge could not reasonably be expected to have a material adverse effect
upon the ability of the Issuer to timely and fully perform any of its payment
or other material obligations under this Indenture or upon the interests of the
Rated Noteholders in the Collateral.

 

(d)                                 The
Issuer shall enforce all of its material rights and remedies under the
Transaction Documents to which it is a party.

 

(e)                                  Without
at least thirty (30) days’ prior written notice to the Trustee, the Issuer
shall not change its name, or the name under which it does business, from the
name shown on the signature pages hereto.

 

107

 

7.6.          OPINIONS AS TO COLLATERAL

 

On or before May 31 in each calendar year,
commencing in 2006, the Issuer shall furnish to the Trustee and each Rating
Agency (with copies to the Initial Hedge Counterparty) an Opinion of Counsel
(which shall include assumptions and qualifications substantially similar to
those set forth in Exhibit E-1) stating that, in the opinion of such counsel,
as of the date of such opinion, the lien and security interest created by this
Indenture with respect to the Collateral remains a valid and perfected first
priority lien and describing the manner in which such security interest shall
remain perfected.

 

7.7.          PERFORMANCE OF OBLIGATIONS

 

(a)                                  The
Trustee shall notify the Issuer, the Initial Hedge Counterparty and each Rated Noteholder
of any request for an amendment, waiver or supplement to any Underlying
Instrument included in the Collateral or of any other notice of a vote in
respect of any Collateral Debt Security included in the Collateral. The Issuer
shall not enter into any such amendment, waiver or supplement; provided that,
notwithstanding anything in this Section 7.7(a) to the contrary, the Issuer may
enter into any amendment or waiver of or supplement to any such Underlying
Instrument if such amendment, supplement or waiver:

 

(1)                                  is
required by the provisions of any Underlying Instrument or by applicable law
(other than pursuant to an Underlying Instrument);

 

(2)                                  is
necessary to cure any ambiguity, inconsistency or formal defect or omission in
such Underlying Instrument; or

 

(3)                                  (x)
is deemed necessary by the Issuer or the Collateral Advisor and does not
materially and adversely affect the Secured Parties or (y) is effected pursuant
to Section 6.16.

 

The Issuer shall be entitled to rely on an
Opinion of Counsel as to material adverse effect and as to whether the entry
into an amendment, supplement or waiver is permitted pursuant to this
Indenture.

 

(b)                                 The
Issuer or the Co-Issuer may, with the prior written consent of the Holders of a
Majority of the then Aggregate Outstanding Amount of the Notes of each Class of
Rated Notes and the Holders of not less than 662/3%
of the aggregate principal amount of the Outstanding Income Notes and the
Initial Hedge Counterparty, contract with other Persons, including the
Collateral Administrator, the Collateral Advisor and the Bank, for the
performance of actions and obligations to be performed by the Issuer or the
Co-Issuer hereunder by such Persons. Notwithstanding any such arrangement, the
Issuer or the Co-Issuer, as the case may be, shall remain liable for all such
actions and obligations. In the event of such contract, the performance of such
actions and obligations by such Persons shall be deemed to be performance of
such actions and obligations by the Issuer or the Co-Issuer, as the case may
be; and the Issuer or Co-Issuer, as the case may be, will punctually perform,
and use its best efforts to cause such other Person to perform, all of their
obligations and agreements contained in related agreement.

 

(c)                                  The
Co-Issuers shall treat all acquisitions of Collateral Debt Securities as a
“purchase” for tax, accounting and reporting purposes.

 

108

 

(d)           Each of the Co-Issuers
shall file, or cause to be filed, any tax returns, including information tax
returns, required by any governmental authority.

 

(e)           In the event (i) a
Collateral Debt Security becomes a Withholding Tax Security, or the ownership of
a Collateral Debt Security would otherwise result in the Issuer being or
becoming subject to U.S. tax on a net income basis or being or becoming subject
to the U.S. branch profits tax (in either case, such Collateral Debt Security
becoming a Taxed
Collateral Debt Security), and (ii) the Issuer does not sell or
otherwise dispose of all or a portion of such Taxed Collateral Debt Security in
accordance with the provisions of Section 12.1(a)(3), the Collateral Advisor on
behalf of the Issuer shall, within five (5) Business Days of such Collateral
Debt Security becoming a Taxed Collateral Debt Security, set up a special
purpose subsidiary (a Tax Subsidiary) to receive and hold any such Taxed
Collateral Debt Security unless the Issuer has received an opinion of
nationally recognized counsel that the Issuer can hold such Taxed Collateral
Debt Security directly without causing the Issuer to be treated as engaged in a
trade or business in the United States for United States federal income tax
purposes. The Issuer shall cause the purposes and permitted activities of any
such subsidiary to be restricted solely to the acquisition, holding and
disposition of such Taxed Collateral Debt Security and shall require such
subsidiary to distribute 100% of the proceeds of any sale of such Taxed
Collateral Debt Security, net of any tax liabilities, to the Issuer.

 

7.8.          NEGATIVE COVENANTS

 

(a)           The Issuer will not
and, with respect to Section 7.8(a)(3), (4), (5) and (9), the Co-Issuer will
not:

 

(1)           intentionally operate
so as to be subject to U.S. federal income taxes on its net income;

 

(2)           sell, assign,
participate, transfer, exchange or otherwise dispose of, or pledge, mortgage,
hypothecate or otherwise encumber (or permit such to occur or suffer such to
exist), any part of the Collateral, except as expressly permitted by this
Indenture;

 

(3)           claim any credit on,
make any deduction from, or dispute the enforceability of, the payment of the
principal or interest (or any other amount) payable in respect of the Rated
Notes (other than amounts required to be paid, deducted or withheld in
accordance with any applicable law or regulation of any governmental authority)
or assert any claim against any present or future Rated Noteholder by reason of
the payment of any taxes levied or assessed upon any part of the Collateral;

 

(4)           (A) incur or assume or
guarantee any indebtedness, other than the Rated Notes and this Indenture and
the transactions contemplated hereby; (B) issue any additional class of
securities other than the Income Notes; or (C) issue any additional shares of
stock;

 

(5)           (A) take any action
that would impair the validity or effectiveness of this Indenture or any Grant
hereunder or the lien of this Indenture, amend hypothecate, subordinate,
terminate, discharge or release any Person from any covenants or obligations
with respect to this Indenture or the Rated Notes, except

 

109

 

as may be permitted hereby, (B) create or extend any lien, charge,
adverse claim, security interest, mortgage or other encumbrance (other than the
lien of this Indenture) on or to the Collateral or any part thereof, any
interest therein or the proceeds thereof, or (C) take any action that would
cause the lien of this Indenture not to constitute a valid first priority
security interest in the Collateral;

 

(6)           use any of the proceeds
of the Rated Notes issued hereunder (A) to extend “purpose credit” within the
meaning given to such term in Regulation U or (B) to purchase or otherwise
acquire any Margin Stock;

 

(7)           permit the aggregate
book value of all Margin Stock held by the Issuer on any date to exceed the net
worth of the Issuer on such date (excluding any unrealized gains and losses) on
such date;

 

(8)           dissolve or liquidate
in whole or in part, except as permitted hereunder; or

 

(9)           except for any
agreements involving the purchase and sale of Collateral Debt Securities having
customary purchase or sale terms and documents with customary loan trading
documentation (but not excepting the Hedge Agreement), enter into any
agreements unless such agreements contain “non-petition” and “limited recourse”
provisions with respect to the Issuer.

 

(b)           Except as permitted by
this Indenture, the Issuer will not do business under any other name other than
the name set forth in the Articles and neither the Issuer nor the Trustee shall
acquire any Collateral after the Closing Date, sell, transfer, exchange or
otherwise dispose of Collateral, or enter into or engage in any business with
respect to any part of the Collateral.

 

(c)           The Co-Issuer will not
invest any of its assets in “securities” (as such term is defined in the
Investment Company Act), and will keep all of its assets in Cash.

 

7.9.          STATEMENT AS TO COMPLIANCE

 

On or before May 31 in each calendar year commencing in 2006, or
immediately if there has been a Default in the fulfillment of an obligation
under this Indenture, the Issuer shall deliver to the Trustee, the Income Note
Paying Agent, each Rated Noteholder making a written request therefor, the
Irish Paying Agent, the Initial Hedge Counterparty, the Collateral Advisor and
each Rating Agency a certificate of the Issuer stating, as to each signer
thereof, that:

 

(a)           the Officer executing
such certificate has conducted a review of the activities of the Issuer and of
the Issuer’s performance under this Indenture during the 12-month period ending
on December 31 of such year (or from the Closing Date until December 31, 2005,
in the case of the first such certificate) based on reports and other
information delivered to such Officer by the Trustee, the Collateral Advisor
and the Collateral Administrator and a review of the Accountant’s Reports
prepared pursuant to Section 10.10 and such other materials as such Officer
deems appropriate; and

 

(b)           to the best of knowledge
of the Issuer, based on such review, the Issuer has fulfilled all of its
material obligations under this Indenture throughout the period, or, if there
has been a Default in the fulfillment of any such obligation, specifying each
such Default known to

 

110

 

such Officer and the nature and status thereof, including actions
undertaken to remedy the same.

 

7.10.        CO-ISSUERS MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS

 

(a)           The Issuer shall not
consolidate or merge with or into any other Person or transfer or convey all or
substantially all of its assets to any Person, unless permitted by Cayman
Islands law and unless:

 

(1)           the Issuer shall be the
surviving entity, or the Person (if other than the Issuer) formed by such
consolidation or into which the Issuer is merged or to which all or
substantially all of the assets of the Issuer are transferred or conveyed shall
be an exempted limited liability company organized and existing under the laws
of the Cayman Islands or such other jurisdiction outside the United States as
may be approved by a Majority of each Class and the Initial Hedge Counterparty,
and shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, the Initial Hedge Counterparty and each Rated
Noteholder, the due and punctual payment of the principal of and interest on
all Rated Notes and the performance of every covenant of this Indenture and the
Hedge Agreement on the part of the Issuer to be performed or observed, all as
provided herein;

 

(2)           each Rating Agency and
the Initial Hedge Counterparty shall have received written notification from
the Issuer of such consolidation, merger, transfer or conveyance and the
identity of the surviving entity and a Rating Agency Confirmation shall have
been obtained with respect to the consummation of such transaction;

 

(3)           if the Issuer is not
the surviving entity, the Person formed by such consolidation or into which the
Issuer is merged or to which all or substantially all of the assets of the
Issuer are transferred or conveyed shall have agreed with the Trustee (A) to
observe the same legal requirements for the recognition of such formed or
surviving entity as a legal entity separate and apart from any of its
Affiliates as are applicable to the Issuer with respect to its Affiliates and
(B) not to consolidate or merge with or into any other Person or transfer or
convey the Collateral or all or substantially all of its assets to any other
Person except in accordance with the provisions of this Section 7.10;

 

(4)           if the Issuer is not
the surviving entity, the Person formed by such consolidation or into which the
Issuer is merged or to which all or substantially all of the assets of the
Issuer are transferred or conveyed shall have delivered to the Trustee, the
Initial Hedge Counterparty and each Rating Agency an Officer’s certificate and
an Opinion of Counsel each stating that such Person shall be duly organized,
validly existing and (if applicable) in good standing in the jurisdiction in
which such Person is organized; that such Person has sufficient power and
authority to assume the obligations set forth in Section 7.10(a)(1) above and
to execute and deliver an indenture supplemental hereto for the purpose of
assuming such obligations; that such Person has duly authorized the execution,
delivery and performance of an indenture supplemental hereto for the purpose of
assuming such obligations and that such supplemental indenture is a valid,
legal and binding obligation of such Person, enforceable in accordance with its
terms,

 

111

 

subject only to bankruptcy, reorganization, insolvency, moratorium and
other laws affecting the enforcement of creditors’ rights generally and to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law); that, immediately following
the event which causes such Person to become the successor to the Issuer, (A) such
Person has good and marketable title, free and clear of any lien, security
interest or charge, other than the lien and security interest of this
Indenture, to the Collateral; (B) the Trustee continues to have a valid
perfected first priority security interest in the Collateral securing all of
the Rated Notes; (C) such Person has received an Opinion of Counsel to the
effect that such Person will not be subject to net income tax or be treated as
engaged in a trade or business within the United States for U.S. federal income
tax purposes and such other matters as the Trustee, the Initial Hedge
Counterparty or any Rated Noteholder may reasonably require;

 

(5)           immediately after
giving effect to such transaction, no Default shall have occurred and be
continuing;

 

(6)           the Issuer shall have
delivered to the Trustee, the Initial Hedge Counterparty and each Rated
Noteholder an Officer’s certificate and an Opinion of Counsel each stating that
such consolidation, merger, transfer or conveyance and such supplemental
indenture comply with this Section 7, that all conditions precedent in this
Section 7 provided for relating to such transaction have been complied with and
that no adverse tax consequences will result therefrom to any Rated Noteholder
or the Initial Hedge Counterparty; and

 

(7)           the Issuer shall have
delivered to the Trustee an Opinion of Counsel stating that after giving effect
to such transaction, neither of the Co-Issuers will be required to register as
an investment company under the Investment Company Act.

 

(b)           The Co-Issuer shall not
consolidate or merge with or into any other Person or transfer or convey all or
substantially all of its assets to any Person, unless:

 

(1)           the Co-Issuer shall be
the surviving corporation, or the Person (if other than the Co-Issuer) formed
by such consolidation or into which the Co-Issuer is merged or to which all or
substantially all of the assets of the Co-Issuer are transferred or conveyed
shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, the due and punctual payment of the principal of and
interest on all Rated Notes and the performance of every covenant of this
Indenture on the part of the Co-Issuer to be performed or observed, all as
provided herein;

 

(2)           each Rating Agency
shall have received written notification from the Co-Issuer of such
consolidation, merger, transfer or conveyance and the identity of the surviving
entity and a Rating Agency Confirmation shall have been obtained with respect
to the consummation of such transaction;

 

(3)           if the Co-Issuer is not
the surviving corporation, the Person formed by such consolidation or into
which the Co-Issuer is merged or to which all or substantially all of the
assets of the Co-Issuer are transferred or conveyed shall have agreed with the
Trustee (A) to observe the same legal requirements for the recognition of such
formed or surviving corporation as a legal entity separate and

 

112

 

apart
from any of its Affiliates as are applicable to the Co-Issuer with respect to
its Affiliates and (B) not to consolidate or merge with or into any other
Person or transfer or convey all or substantially all of its assets to any
other Person except in accordance with the provisions of this Section 7.10;

 

(4)           if the Co-Issuer is not the surviving corporation, the Person formed by
such consolidation or into which the Co-Issuer is merged or to which all or
substantially all of the assets of the Co-Issuer are transferred or conveyed
shall have delivered to the Trustee and each Rating Agency an Officer’s
certificate and an Opinion of Counsel each stating that such Person shall be
duly organized, validly existing and (if applicable) in good standing in the
jurisdiction in which such Person is organized; that such Person has sufficient
power and authority to assume the obligations set forth in Section 7.10(b)(1) above
and to execute and deliver an indenture supplemental hereto for the purpose of
assuming such obligations; that such Person has duly authorized the execution,
delivery and performance of an indenture supplemental hereto for the purpose of
assuming such obligations and that such supplemental indenture is a valid,
legal and binding obligation of such Person, enforceable in accordance with its
terms, subject only to bankruptcy, reorganization, insolvency, moratorium and
other laws affecting the enforcement of creditors’ rights generally and to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law); and such other matters as the
Trustee or any Rated Noteholder may reasonably require;

 

(5)           immediately after giving effect to such transaction, no Default shall
have occurred and be continuing;

 

(6)           the Co-Issuer shall have delivered to the Trustee and each Rated
Noteholder an Officer’s certificate and an Opinion of Counsel each stating that
such consolidation, merger, conveyance or transfer and such supplemental
indenture comply with this Section 7 and that all conditions precedent in this
Section 7 provided for relating to such transaction have been complied with and
that no adverse tax consequences will result therefrom to any Rated Noteholder;

 

(7)           after giving effect to such transaction, neither of the Co-Issuers will
be required to register as an investment company under the Investment Company
Act; and

 

(8)           after giving effect to such transaction, the
outstanding stock of the Co-Issuer will not be beneficially owned by any Person
other than the Issuer.

 

7.11.
       SUCCESSOR SUBSTITUTED

 

Upon
any consolidation or merger, or transfer or conveyance of all or substantially
all of the assets of the Issuer or the Co-Issuer, in accordance with Section 7.10,
the Person formed by or surviving such consolidation or merger (if other than
the Issuer or the Co-Issuer), or, the Person to which such transfer or
conveyance is made, shall succeed to, and be substituted for, and may exercise
every right and power of, and shall be bound by each obligation or covenant of,
the Issuer or the Co-Issuer, as the case may be, under this Indenture with the
same effect as if such Person had been named as the Issuer or the Co-Issuer, as
the case may be, herein. In the event of any such consolidation, merger,
transfer or conveyance, the Person named as the “Issuer” or the “Co-Issuer” in
the first paragraph of this Indenture or any successor which shall theretofore
have become such in the manner prescribed in this Section 7 may

 

113

 

be dissolved, wound-up and liquidated at any time thereafter, and such
Person thereafter shall be released from its liabilities as obligor and maker
on all the Rated Notes and from its obligations under this Indenture.

 

7.12.        NO OTHER BUSINESS

 

The Issuer shall not engage in any business or activity other than (i) issuing
and selling the Rated Notes pursuant to this Indenture, (ii) issuing and
selling the Income Notes in accordance with the Income Note Paying Agency
Agreement (iii) issuing the Ordinary Shares pursuant to the Issuer Charter,
(iv) acquiring, pledging, holding and disposing of, solely for its own account,
Collateral Debt Securities, Eligible Investments and other Collateral described
in clauses (a) to (e) of the granting clauses hereof, (vi) holding the capital
stock of the Co-Issuer and (vi) such other activities that are incidental
thereto and connected therewith. The Co-Issuer shall not engage in any business
or activity other than issuing and selling the Rated Notes pursuant to this
Indenture and such other activities incidental thereto or connected therewith.
The Issuer shall not hold itself out as a derivatives dealer willing to enter
into either side of, or to offer to enter into, assume, offset, assign or
otherwise terminate positions in (i) interest rate, currency, equity or
commodity swaps or caps or (ii) derivative financial instruments (including
options, forward contracts, short positions and similar instruments) in any
commodity, currency, share of stock, partnership or trust, note, bond,
debenture or other evidence of indebtedness, swap or cap. The foregoing shall
not limit the ability of the Issuer to enter into Hedge Agreements.
Furthermore, the Issuer shall not hold itself out, whether through advertising
or otherwise, as a bank, insurance company or finance company, or as
originating loans, lending funds, making a market in loans or other assets or
selling loans or other assets to customers. The Issuer will not amend the
Issuer Charter and the Co-Issuer will not amend its Certificate of
Incorporation or By-Laws, if such amendment would result in the rating
(including any private or confidential rating) of any Class of Rated Notes
being reduced or withdrawn. The Issuer shall not engage in any business or
activity or hold any asset that would cause the Issuer to be engaged in a U.S.
trade or business for U.S. federal income tax purposes, except as the result of
ownership of Equity Securities or securities received in an Offer in accordance
with the provisions of this Indenture.

 

7.13.      CHANGE OR WITHDRAWAL OF RATING

 

The Issuer shall promptly notify the Trustee
in writing and upon receipt of such notice the Trustee shall promptly notify
the Rated Noteholders and the Initial Hedge Counterparty if at any time the
rating of any Class of Rated Notes has been, or is known will be, changed or
withdrawn.

 

7.14.      REPORTING

 

At any time when the Co-Issuers are not
subject to Section 13 or 15(d) of the Exchange Act and are not exempt from
reporting pursuant to Rule 12g3-2(b) under the Exchange Act, upon the request
of a Holder or Beneficial Owner of a Rated Note or Income Note, the Co-Issuers
shall promptly furnish or cause to be furnished Rule 144A Information to such
Holder or Beneficial Owner, to a prospective purchaser of such Rated Note or
Income Note designated by such Holder or Beneficial Owner or to the Trustee for
delivery to such Holder or Beneficial Owner or a prospective purchaser
designated by such Holder or Beneficial Owner, as the case may be, in order to
permit compliance by such Holder or Beneficial Owner with Rule 144A under the
Securities Act in connection with the resale of such Rated Note or Income Note
by such Holder or Beneficial Owner.

 

7.15.      RATED NOTE CALCULATION AGENT

 

(a)           The Issuer hereby
agrees that for so long as any of the Rated Notes remain Outstanding the Issuer
will at all times cause there to be an agent appointed to calculate LIBOR in

 

114

 

respect
of each Interest Period in accordance with the terms of Schedule B (the Rated Note Calculation Agent), which agent shall be a financial
institution, subject to supervision or examination by federal or state
authority, having a rating of at least “BBB+” by S&P and having an office
within the United States. Whenever the Note Calculation Agent is required to
act or exercise judgment, it will do so in good faith and in a commercially
reasonable manner. The Issuer has initially appointed the Trustee as Rated Note
Calculation Agent for purposes of determining LIBOR for each Interest Period.
If the Rated Note Calculation Agent is unable or unwilling to act as such or is
removed by the Issuer, the Issuer (after consultation with the Collateral
Advisor) will propose a leading bank which is engaged in transactions in Dollar
deposits in the international Eurodollar market and which does not control or
is not controlled by or under common control with the Co-Issuers or any of
their Affiliates as a replacement Rated Note Calculation Agent for approval by
Holders of not less than 662/3% of the aggregate principal amount of the Outstanding Income Notes.
The Rated Note Calculation Agent may not resign its duties without a successor
having been duly appointed.

 

(b)           As soon as possible after 11:00 a.m. (London time) on each LIBOR
Calculation Date, but in no event later than 11:00 a.m. (New York time) on the
London Banking Day immediately following each LIBOR Calculation Date, the Rated
Note Calculation Agent will calculate LIBOR for the next Interest Period and
the Periodic Interest payable for such Interest Period in respect of the
Outstanding Rated Notes, rounded to the nearest cent, with half a cent being
rounded upward, on the related Payment Date to be given to the Co-Issuers, the
Trustee, the Collateral Advisor, the Depositary, Euroclear, Clearstream, the
Note Paying Agent and the Irish Paying Agent. The Rated Note Calculation Agent
will also specify to the Co-Issuers and the Collateral Advisor the quotations
upon which the Applicable Periodic Interest Rate for each Class of Rated Notes
is based, and in any event the Rated Note Calculation Agent must notify the Co-Issuers
and the Collateral Advisor before 5:00 p.m. (New York time) on each applicable
LIBOR Calculation Date if it has not determined and is not in the process of
determining LIBOR with respect to the Rated Notes and the Periodic Interest
with respect to each Class of Rated Notes, together with its reasons for the
delay. The Irish Paying Agent also will cause the Applicable Periodic Interest
Rate for each Interest Period for each Class of Rated Notes listed on the Irish
Stock Exchange, the amount of interest payable in respect of each Class of
Rated Notes listed on the Irish Stock Exchange and each Payment Date to be
delivered to the Company Announcements Office of the Irish Stock Exchange as
soon as possible after the Irish Paying Agent has received notice from the
Rated Note Calculation Agent of such Applicable Periodic Interest Rates and
amounts.

 

7.16.
       LISTING

 

The
Issuer will use its commercially reasonable efforts to obtain and maintain the
listing of each Class of Rated Notes on the Irish Stock Exchange.

 

7.17.
       AMENDMENT OF CERTAIN DOCUMENTS

 

The
Issuer will not agree to any amendment to or modification of the Corporate
Services Agreement, the Collateral Advisory Agreement, the Account Control
Agreement or the Hedge Agreement at any time without obtaining Rating Agency
Confirmation with respect to any such modification and will not amend, modify
or waive any “non-petition” or “limited recourse” provisions of any Transaction

 

115

 

Document to which it is a party without obtaining a Rating Agency
Confirmation with respect to such modification. The Trustee shall provide each
of the Initial Hedge Counterparty, the Holders of Rated Notes of the
Controlling Class, the Collateral Advisor and the Rating Agencies with a copy
of any such amendment or modification within 10 Business Days before effecting
such amendment or modification. Prior to entering into any waiver in respect of
the any of the foregoing agreements, the Issuer will provide to each Rating
Agency and the Trustee with written notice of such waiver.

 

7.18.        PURCHASE OF COLLATERAL;
INFORMATION REGARDING COLLATERAL; RATING CONFIRMATION

 

(a)           The Issuer will use
reasonable efforts to purchase or enter into agreements to purchase, on or
before the Effective Date, Collateral Debt Securities having an aggregate
Principal Balance, together with the aggregate Principal Balance of all
Eligible Investments purchased with Collateral Principal Collections, of not
less than U.S.$400,000,000 (assuming, for these purposes, settlement (in
accordance with customary settlement procedures in the relevant markets) of all
agreements entered into by the Issuer to acquire Collateral Debt Securities
scheduled to settle on or following the Effective Date).

 

(b)           The Issuer (or the
Collateral Advisor on behalf of the Issuer) shall cause to be delivered to the
Trustee on the Effective Date an amended Schedule A listing all Collateral Debt
Securities purchased on or before the Effective Date, which schedule will
supersede any prior Schedule A delivered to the Trustee.

 

(c)           On or before the
Effective Date, the Issuer (or the Collateral Advisor on its behalf) shall
deliver an Officer’s certificate to the Trustee, the Holders of Rated Notes of
the Controlling Class, the Initial Hedge Counterparty and each Rating Agency
(in addition to any such Officer’s Certificate, the information set forth in
such Officer’s Certificate shall also be provided to S&P in a form that
complies with S&P’s Preferred Format) demonstrating compliance by the Issuer
with its obligations under Section 7.18(a) and satisfaction of each applicable
Collateral Quality Test (with the exception of S&P’s CDO Monitor Test), and
Coverage Test or, if on the Effective Date, the Issuer shall be in default in
the performance of its obligations under this Section 7.18 or any of the
Collateral Quality Tests (with the exception of S&P’s CDO Monitor Test) or
the specified Coverage Tests shall fail to be satisfied, the Issuer (or the
Collateral Advisor on its behalf) shall deliver an Officer’s certificate to the
Trustee, the Holders of Rated Notes of the Controlling Class, the Initial Hedge
Counterparty and each Rating Agency specifying the details of such default or
failure; provided that
the failure to satisfy any of the Collateral Quality Tests or Coverage Tests
does not constitute an Event of Default but such failure may result in a Rating
Confirmation Failure.

 

(d)           No later than fifteen
(15) Business Days after the Effective Date, the Issuer (or the Collateral
Advisor on its behalf) shall deliver or cause to be delivered to the Trustee an
accountant’s certificate (the Accountant’s Certificate) (i) confirming
the information with respect to each Collateral Debt Security set forth on the
amended schedule delivered pursuant to Section 7.18(b) as of the Effective
Date, and the information provided by the Issuer with respect to every other
asset included in the Collateral, (ii) certifying as of the Effective Date the
procedures applied and their associated findings with respect to the Coverage
Tests and the Collateral Quality Tests and (iii) specifying the procedures
undertaken to review data and computations relating to the foregoing clause
(ii) held by the Issuer on the Effective Date.

 

116

 

(e)           The Issuer (or the
Collateral Advisor on its behalf) shall request in writing that each of the
Rating Agencies confirm in writing (a Rating Confirmation), within thirty (30) Business Days
after the Effective Date, the ratings (including any private or confidential
ratings) assigned by it on the Closing Date to the Rated Notes. In the event
that the Issuer fails to obtain a Rating Confirmation within 30 days after the
Effective Date (a Rating Confirmation Failure), Collateral
Interest Collections and, to the extent Collateral Interest Collections are
insufficient therefor, Collateral Principal Collections shall be applied on the
first Payment Date and any succeeding Payment Dates, as applicable as provided
in Section 11.1 to the extent necessary for each of the Rating Agencies to
provide a Rating Confirmation.

 

(f)            No later than fifteen
(15) Business Days following the Effective Date, the Trustee shall (i) run the
S&P CDO Monitor and report to S&P whether or not the S&P CDO
Monitor Test has been satisfied and (ii) report the S&P scenario default
and break-even default rate for each Class of Notes.

 

ARTICLE VIII

 

SUPPLEMENTAL INDENTURES

 

8.1.          SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF RATED NOTEHOLDERS

 

Without the consent of the Holders of any Rated Notes, the Initial
Hedge Counterparty (except as specified below) or the Income Noteholders, the
Co-Issuers, when authorized by Board Resolutions, and the Trustee, at any time
and from time to time subject to the requirement provided below in this Section
8.1 with respect to the ratings of the Rated Notes and subject to Section 8.3,
may enter into one or more indentures supplemental hereto, in form satisfactory
to the Trustee, for certain limited purposes including, inter alia, to:

 

(a)           evidence the succession
of another Person to the Issuer 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 Rated Notes pursuant to Section 7.10 or 7.11;

 

(b)           add to the covenants of
the Co-Issuers or the Trustee for the benefit of the Holders of all of the
Rated Notes;

 

(c)           pledge any additional
property to the Trustee;

 

(d)           add to the conditions,
limitations or restrictions on the authorized amount, terms and purposes of the
issue, authentication and delivery of the Rated Notes;

 

(e)           effect the appointment
of a successor;

 

(f)            reduce the permitted
minimum denomination of the Rated Notes;

 

(g)           take any action
necessary or advisable to prevent the Issuer, any Note Paying Agent or the
Trustee from being subject to withholding or other taxes, fees or assessments
or to prevent the Issuer from being treated as engaged in a U.S. trade or
business or otherwise being subjected to U.S. federal, state or local income
tax on a net income tax basis; provided that such action will not cause the
Noteholders to experience any material change to the timing, character or
source of income from the Notes and will not be

 

117

 

considered a significant modification resulting in an exchange for
purposes of section 1.1001-3 of the U.S. Treasury regulations;

 

(h)           modify
the restrictions on and procedures for resale and other transfer of the Rated
Notes in accordance with any change in any applicable law or regulation (or the
interpretation thereof) or to enable the Co-Issuers to rely upon any less
restrictive exemption from registration under the Securities Act or the
Investment Company Act (in addition to that provided under Section 3(c)(7) thereunder)
or to remove restrictions on resale and transfer to the extent not required
thereunder;

 

(i)            grant,
convey, transfer, assign, mortgage or pledge any property to or with the
Trustee for the benefit of the Secured Parties;

 

(j)            correct
or amplify the description of any property at any time subject to the lien of
this Indenture, or to better assure, convey and confirm unto the Trustee any
property subject or required to be subjected to the lien of this Indenture
(including any and all actions necessary or desirable as a result of changes in
law or regulations) or to subject to the lien of this Indenture any additional
property;

 

(k)           make
any change required by the stock exchange on which any Class of Rated Note is
listed, if any, in order to permit or maintain such listing;

 

(1)           correct,
amend, cure any manifest error, inconsistency, defect or ambiguity or correct
any typographical error in this Indenture;

 

(m)          modify
this Indenture to conform the terms herein to the terms set forth in the then
current Offering Circular;

 

(n)           modify
any provision (other than in respect of a Reserved Matter), with respect to
restrictions upon the Issuer’s rights to acquire and dispose of Collateral Debt
Securities and other assets, that the Issuer or the Collateral Advisor
determines to be necessary or desirable in order for the Issuer to maintain any
desired exemption from registration of the Issuer under the Investment Company
Act or of the Notes under the Securities Act;

 

(o)           with
the consent of the Collateral Advisor, modify the calculation of the Collateral
Quality Tests and the definitions applicable thereto to correspond with
published or written changes in the guidelines, methodology or standards
established by the Rating Agencies;

 

(p)           agree
to any modification of the Indenture or any other Transaction Document (other
than in respect of a Reserved Matter), which is, in the opinion of the Trustee,
proper to make if, in the opinion of the Trustee (based upon an opinion of
counsel), such modification will not have a material adverse effect on the
interests of Holders of any Class or Classes of Notes or the Initial Hedge
Counterparty and which is of a formal, minor or technical nature or is to
correct a manifest error.

 

In addition, the Trustee may, but is not obligated to, without the
consent of the Rated Noteholders or of the Holders of any relevant Class or
Classes of Rated Notes, agree to any modification of any other Transaction
Document which is of a formal, minor or technical nature or is to correct a
manifest error and which is, in the opinion of the Trustee, proper to make, in
the opinion of the Trustee (based upon an opinion of counsel); provided such
modification will not have a material adverse effect on the interests of

 

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the Initial Hedge Counterparty or the Holders of any Class or Classes
of Notes. For so long as any Rated Notes are Outstanding, no such supplemental
indenture shall be effective unless and until Rating Agency Confirmation has
been received.

 

The Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations which may be therein contained, but the Trustee shall not be
obligated to enter into any such supplemental indenture which affects the Trustee’s
own rights, duties, liabilities or indemnities under this Indenture or
otherwise, except to the extent required by law.

 

Without obtaining the requisite consents of the applicable parties
pursuant to this Section 8.1, the Trustee shall not enter into any such
supplemental indenture if, as a result of such supplemental indenture, the
interests of the Initial Hedge Counterparty, any Holder of Rated Notes or of
the Income Noteholders would be materially and adversely affected thereby.
Unless notified by (i) a Majority of the then Aggregate Outstanding Amount of
any Class of Rated Notes that such Class will be materially and adversely
affected, (ii) a Majority of the aggregate principal amount of Income Notes
Outstanding that the Income Noteholders will be materially and adversely
affected or (iii) the Initial Hedge Counterparty (with respect to the Initial
Hedge Counterparty, only to the extent that its right to payments in accordance
with the Priority of Payments is adversely affected), the Trustee shall be
entitled to rely upon an Opinion of Counsel as to whether the interests of any
Holder of Rated Notes or of Income Notes would be materially and adversely
affected by any such supplemental indenture (after giving notice of such change
to the Income Note Paying Agent). The Collateral Advisor will not be bound by
any supplemental indenture that affects the obligations of the Collateral
Advisor unless the Collateral Advisor has consented thereto (which consent will
not be unreasonably withheld). The Co-Issuers will not consent to any
supplemental indenture that would have a material adverse effect on the Initial
Hedge Counterparty without the consent of the Initial Hedge Counterparty.

 

At the cost of the Co-Issuers, the Trustee shall provide to the Rated
Noteholders, the Income Note Paying Agent, the Initial Hedge Counterparty and
each Rating Agency a copy of any proposed supplemental indenture at least 10
days prior to the execution thereof by the Trustee and, for so long as any
Rated Notes are Outstanding, request a Rating Agency Confirmation from each
Rating Agency with respect to such supplemental indenture. As soon as
practicable after the execution by the Trustee and the Issuer of any such
supplemental indenture, the Trustee shall provide to the Rated Noteholders, the
Income Note Paying Agent, the Initial Hedge Counterparty and each Rating Agency
a copy of the executed supplemental indenture. For so long as any Rated Notes
are Outstanding, no supplemental indenture shall be effective unless and until
a Rating Agency Confirmation from each Rating Agency has been received.

 

8.2.          SUPPLEMENTAL INDENTURES WITH
CONSENT OF RATED NOTEHOLDERS

 

Except as provided below, with the prior written consent of the Initial
Hedge Counterparty (but only if the right of the Initial Hedge Counterparty to
payments in accordance with the Priority of Payments is adversely affected),
the Holders of not less than a majority of the aggregate principal amount of
the Outstanding Rated Notes of each Class (in principal amount) adversely affected
thereby and the written consent of Holders of not less than 662/3% of the aggregate
principal amount of the Outstanding Income Notes (if materially and adversely
affected thereby), the Trustee and the Co-Issuers may execute a supplemental
indenture to add provisions to, or change in any manner or eliminate any
provisions of, the Indenture or modify in any manner the rights of the Holders
of the Rated Notes of such Class or of the Income Notes or the Hedge
Counterparty under the Indenture.

 

With the written consent of the Holders of
not less than 75% of the then Aggregate Outstanding Amount of each adversely
affected Class of Rated Notes and the written consent of 75% of the Holders of

 

119

 

the aggregate principal amount of the Outstanding Income Notes if
materially and adversely affected thereby (which consent shall be evidenced by
an Officer’s certificate of the Issuer certifying that such consent has been
obtained), Rating Agency Confirmation and the written consent of the Initial
Hedge Counterparty (which shall be required only if the right of the Initial
Hedge Counterparty to payments in accordance with the Priority of Payments is
adversely affected), the Trustee and Co-Issuers may, subject to Section 8.3,
enter into one or more indentures supplemental hereto in order to:

 

(a)           change the applicable
Stated Maturity Date of the Rated Notes or scheduled redemption of the
principal of or the due date of any installment of interest on the Rated Notes,
reduce the principal amount thereof or the rate of interest thereon, or the
Redemption Price with respect thereto, or change the earliest date on which
Rated Notes may be redeemed, change the provisions of the Indenture relating to
the application of proceeds of any Collateral to the payment of principal of or
interest on the Rated Notes or change any place where, or the coin or currency
in which, Rated Notes or the principal thereof or interest thereon is payable,
or impair the right to institute suit for the enforcement of any such payment
on or after the Stated Maturity Date thereof (or, in the case of redemption, on
or after the Redemption Date);

 

(b)           reduce the percentage,
in principal amount, of Holders of Rated Notes of each Class, or the percentage
of Income Noteholders, whose consent is required for the authorization of any
supplemental indenture or for any waiver of compliance with certain provisions
of the Indenture or certain defaults thereunder or their consequences;

 

(c)           impair or adversely
affect the Collateral other than as permitted by the Indenture;

 

(d)           permit the creation of
any security interest ranking prior to or on a parity with the security
interest of the Indenture with respect to any part of the Collateral or
terminate such security interest on any property at any time subject thereto
(other than in accordance with the Indenture) or deprive the Holder of any
Rated Note or the Initial Hedge Counterparty of the security afforded by the
security interest of the Indenture;

 

(e)           reduce the percentage
of the aggregate principal amount of Holders of Rated Notes of each Class whose
consent is required to request the Trustee to preserve the Collateral or
rescind the Trustee’s election to preserve the Collateral pursuant to Section 5.5
or to sell or liquidate the Collateral pursuant to Section 5.4 or 5.5;

 

(f)            modify any of the
provisions of this Section 8.2, except to increase the percentage of the
aggregate principal amount of Outstanding Rated Notes of each Class whose
Holders’ consent is required for any such action or to provide that other
provisions of the Indenture cannot be modified or waived without the written
consent of the Holders of 75% of the then Aggregate Outstanding Amount of each
affected Class of Rated Notes Outstanding or the Initial Hedge Counterparty;

 

(g)           modify the definition
of the term “Outstanding” or Section 11.1;

 

(h)           modify any of the
provisions of the Indenture in such a manner as to affect the calculation of
the amount of any payment of interest or principal of any Rated Note on any
Payment Date or to affect the right of the Holders of Rated Notes or the
Initial Hedge Counterparty to the benefit of any provisions for the redemption
of such Rated Notes contained therein;

 

(i)            modify provisions
related to the bankruptcy or insolvency of the Co-Issuers; or

 

120

 

(j)                                     modify
provisions stating that the obligations of the Co-Issuers are joint and several
limited recourse obligations of the Co-Issuers payable solely from the
Collateral in accordance with the terms of the Indenture
(Section 8.2(a) through (j) collectively, the Reserved
Matters).

 

The Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations which may be therein contained, but the Trustee shall not be
obligated to enter into any such supplemental indenture which affects the
Trustee’s own rights, duties, liabilities or indemnities under this Indenture
or otherwise, except to the extent required by law.

 

Not later than 15 Business Days prior to the execution of any proposed
supplemental indenture pursuant to this Section 8.2, the Trustee, at the
expense of the Co-Issuers, shall mail to the Rated Noteholders, Income Note
Paying Agent, the Initial Hedge Counterparty, the Collateral Advisor and each
Rating Agency a copy of such proposed supplemental indenture (or a description
of the substance thereof) and shall request Rating Agency Confirmation with
respect to such supplemental indenture. If any Class of Rated Notes is
then rated by any Rating Agency, the Trustee shall not enter into any such
supplemental indenture if, as a result of such supplemental indenture, Rating
Agency Confirmation would not be received with respect to such supplemental
indenture, unless each Holder of Rated Notes of each Class whose rating will
be reduced or withdrawn has, after notice that the proposed supplemental
indenture would result in such reduction or withdrawal of the rating of the
Class of Rated Notes held by such Holder, consented to such supplemental
indenture. Without having obtained the consent of the applicable parties
pursuant to this Section 8.2, the Trustee shall not enter into any such
supplemental indenture if, as a result of such supplemental indenture, the
interests of the Initial Hedge Counterparty, any Holder of Rated Notes or of
the Income Noteholders would be materially and adversely affected thereby.
Unless notified by (i) the Holders of a Majority of the then Aggregate
Outstanding Amount of any Class of Rated Notes that such Class will
be materially and adversely affected or (ii) the Holders of a Majority of
aggregate principal amount of the Income Notes that the Income Noteholders will
be materially and adversely affected, the Trustee shall be entitled to rely
upon an Opinion of Counsel as to whether the interests of any Holder of Rated
Notes or of the Income Noteholders would be materially and adversely affected
by any such supplemental indenture (after giving notice of such change to the
Income Note Paying Agent).

 

It shall not be necessary for any Act of Rated Noteholders or any
consent of Income Noteholders under this Section 8.2 to approve the
particular form of any proposed supplemental indenture, but it shall be
sufficient if such Act or consent shall approve the substance thereof.

 

Promptly after the execution by the Co-Issuers and the Trustee of any
supplemental indenture pursuant to this Section 8.2, the Trustee, at the
expense of the Co-Issuers, shall mail or make available to the Rated
Noteholders, the Income Note Paying Agent (for forwarding to the Income Noteholders),
the Initial Hedge Counterparty, the Collateral Advisor and each Rating Agency a
copy thereof. Any failure of the Trustee to publish or mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture. In addition, the Issuer shall cause to be
delivered a copy of the executed supplemental indenture to the Repository for
posting on the Repository in the manner described in Section 14.3.

 

8.3.          EXECUTION OF
SUPPLEMENTAL INDENTURES

 

In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Section 8 or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to Sections 6.1 and 6.3) shall be fully protected in
relying in good faith

 

121

 

upon an Opinion of Counsel, stating that the execution of such
supplemental indenture is authorized, or permitted by this Indenture and that
all conditions precedent thereto have been complied with. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee’s own rights, duties or indemnities under this Indenture or
otherwise. Such supplemental indenture will not be binding on the Collateral
Advisor to the extent that it reduces the rights or increases the obligations
of the Collateral Advisor, unless such supplemental indenture is consented to
in writing by the Collateral Advisor.

 

8.4.          EFFECT OF
SUPPLEMENTAL INDENTURES

 

Upon the execution of any supplemental indenture under this
Section 8, this Indenture shall be modified in accordance therewith, and
such supplemental indenture shall form a part of this Indenture for all
purposes; and every Holder of Rated Notes theretofore and thereafter
authenticated and delivered hereunder shall be bound thereby.

 

8.5.          REFERENCE IN RATED NOTES
TO SUPPLEMENTAL INDENTURES

 

Rated Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Section 8 may, and if required by
the Trustee shall, bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Co-Issuers shall so
determine, new Rated Notes, so modified as to conform in the opinion of the
Trustee and the Co-Issuers to any such supplemental indenture, may be prepared
and executed by the Co-Issuers and authenticated and delivered by the Trustee
in exchange for Outstanding Rated Notes.

 

ARTICLE IX

 

REDEMPTION OF RATED NOTES

 

9.1.          REDEMPTION
OF RATED NOTES

 

The Rated Notes will be subject to redemption in whole but not in part
at their respective Redemption Prices, in each case, in accordance with the
procedures, and subject to the satisfaction of the conditions, in
Section 9.2 below, in the following circumstances:

 

(a)           on
or after the Payment Date occurring in April 2010 and continuing until the
Stated Maturity Date (the Call Period), at the direction of the Holders of
not less than 662/3% of the aggregate principal
amount of the Outstanding Income Notes (an Optional Redemption);

 

(b)           on
any Payment Date following the occurrence and during the continuation of a Tax
Event, (i) at the direction of the Holders of not less than 662/3% of the aggregate principal amount of
the Outstanding Income Notes or (ii) subject to the satisfaction of the
Income Note Redemption Approval Condition, at the direction of the Holders of a
Majority of the then Aggregate Outstanding Amount of the Controlling
Class (such a redemption, a Tax Redemption); and

 

(c)           automatically
and without any direction by any Person, (i) if the Notes have not been
redeemed in full on or after the Payment Date occurring in April 2017, and
(ii) if any of the conditions set forth in Sections 9.2(a) through
(d) below have not been met or if the highest bidder fails to pay the
purchase price within six (6) Business Days following such

 

122

 

Payment Date, the Payment Date thereafter, unless the Notes are redeemed
in full prior to the next Auction Date (such a redemption, an Auction Call
Redemption).

 

9.2.          REDEMPTION PROCEDURES;
AUCTION

 

In connection with any Redemption, the Trustee and the Collateral
Advisor will, in accordance with the procedures set forth in Schedule E (the Auction
Procedures) and at the expense of the Issuer, conduct an auction (an Auction) of the
Collateral Debt Securities included in the Collateral on a date (each such
date, an Auction
Date) occurring no later than ten (10) Business Days prior to
any scheduled Redemption Date. Any of the Initial Purchasers, the Placement
Agent, the Collateral Advisor, the Income Noteholders, the Trustee or their
respective Affiliates may, but will not be required to, bid at the Auction.

 

(a)           Any
Redemption will be subject to the satisfaction of each of the following
conditions:

 

(1)           the
related Auction has been conducted in accordance with the Auction Procedures;

 

(2)           the
Trustee has received bids for the Collateral Debt Securities (or for each of
the related Subpools) from at least two Qualified Bidders (including the
winning Qualified Bidder) identified on a list of qualified bidders provided by
the Collateral Advisor to the Trustee;

 

(3)           the
Collateral Advisor certifies that the Highest Auction Price would result in the
Sale Proceeds from the Collateral Debt Securities (or the related Subpools) for
a purchase price (paid in cash) plus the Balance of all Eligible Investments and
cash held by the Issuer plus any termination payments payable by a Hedge Counterparty
to the Issuer (in excess of any amounts payable by the Issuer to a Hedge
Counterparty) resulting from the termination of the Hedge Agreement pursuant to
the Redemption being at least equal to the sum of (i) the aggregate
Redemption Prices of the Notes plus (ii) any accrued but unpaid fees and
expenses of the Issuer pursuant to Section 11.1(b)(1) and (15)
through (17) (including any termination payments payable by the Issuer
resulting from the termination of the Hedge Agreement pursuant to the Redemption)
plus (iii) (a) in
connection with a Tax Redemption at the direction of the Controlling
Class and (b) an Auction Call Redemption, any additional amounts
necessary to satisfy the Income Note Redemption Approval Condition; and

 

(4)           the
bidder(s) who offered the Highest Auction Price for the Collateral Debt
Securities (or the related Subpools) enter(s) into a written agreement
with the Issuer (which the Issuer will execute if the conditions set forth
above and in the Indenture are satisfied, which execution will constitute
certification by the Issuer that such conditions have been satisfied) that
obligates the highest bidder(s) (or the highest bidder for each Subpool)
to purchase all of the Collateral Debt Securities (or the relevant Subpool) and
provides for payment in full (in Cash) of the purchase price to the Trustee on
or prior to the sixth Business Day following the relevant Auction Date.

 

(b)           In
addition, any Optional Redemption requires the occurrence of the following:

 

(1)           at
least four (4) Business Days before the scheduled Redemption Date, the
Collateral Advisor has furnished to the Trustee evidence, in form satisfactory
to

 

123

 

the Trustee, that the Collateral Advisor on
behalf of the Issuer has entered into a binding agreement or agreements with an
institution or institutions (or guarantor or guarantors of the obligations):
(A) with regard to which Rating Agency Confirmation has been received; or
(B) whose long-term unsecured debt obligations (other than such
obligations whose rating is based on the credit of a person other than such
institution) have a credit rating from Fitch, if rated by Fitch, of “Fl” and of
at least “A-1” from S&P; and in each case, to sell, not later than the
Business Day immediately preceding the scheduled Redemption Date, in
immediately available funds, all or part of the Collateral Debt Securities at a
purchase price (paid in Cash) which together with the Balance of all Eligible
Investments and Cash held by the Issuer will be at least equal to the sum of
(i) the aggregate Redemption Prices of the Notes plus
(ii) any accrued but unpaid fees and expenses of the Issuer pursuant to
Section 11.1(b)(1) and (15) through (17) (including any termination
payments payable by the Issuer resulting from the termination of the Hedge
Agreement pursuant to the Redemption); or

 

(2)           prior
to selling any Collateral Debt Securities or any other collateral, the
Collateral Advisor certifies that the expected proceeds from such sale will, in
the aggregate, equal or exceed, in each case, the sum of (A) any amounts
payable in connection with an Optional Redemption pursuant to Section 9.2
of the Notes plus (B) all
expenses of such redemption and all other administrative fees and expenses
payable on the related Redemption Date.

 

Provided that all of the conditions set forth in
Section 9.2(a) through (d) have been met, the Trustee will sell
and transfer the Collateral Debt Securities (or each related Subpool), without
representation, warranty or recourse, to the bidder(s) who offered the
Highest Auction Price for the Collateral Debt Securities (or the related
Subpools) in accordance with and upon completion of the Auction Procedures. If
any of the conditions set forth in Section 9.2(a) through
(d) are not met, (i) the Redemption will not occur on the Payment
Date following the relevant Auction Date, (ii) the Trustee will give
notice of the withdrawal of the Redemption, (iii) subject to clause
(iv) below, the Trustee will decline to consummate such sale and may not
solicit any further bids or otherwise negotiate any further sale of Collateral
Debt Securities in relation to such Auction and (iv) unless the Rated
Notes are redeemed in full prior to the next succeeding Auction Date, the
Trustee will conduct another Auction on the next succeeding Auction Date.

 

The Trustee will deposit the purchase price for the Collateral Debt
Securities in the Collection Account, and the Rated Notes and, to the extent
funds are available therefor, the Income Notes, will be redeemed on the Payment
Date immediately following the relevant Auction Date in the order of priorities
set forth in Section 11.1. Any Redemption will only be effected on a
Payment Date. Installments of principal and interest due on or prior to a
Redemption Date shall continue to be payable to the Holders of such Rated Notes
as of the relevant Record Dates according to their terms.

 

9.3.          RECORD DATE; NOTICE TO
TRUSTEE OF REDEMPTION

 

(a)           The
Issuer shall set the Redemption Date and the applicable Record Date and give
notice thereof to the Trustee pursuant to Section 9.3(b) below and
shall issue an Issuer Request to the Trustee for the provision of the
information necessary for the Issuer to compile the Redemption Date Statement
in accordance with Section 10.10(b).

 

(b)           In
the event of any Redemption, the Issuer shall, at least 45 days (but not more
than 90 days) prior to the Redemption Date, notify the Trustee and the Initial
Hedge Counterparty

 

124

 

of such Redemption Date, the applicable Record Date, the principal
amount of each Class of Notes to be redeemed on such Redemption Date and
the Redemption Price of such Notes.

 

9.4.          NOTICE OF REDEMPTION

 

Notice of Redemption will be given by first-class mail, postage
prepaid, mailed not less than eight (8) Business Days prior to the
applicable Redemption Date, to the Initial Hedge Counterparty, each Rating
Agency and each Holder of Rated Notes at such Holder’s address in the Note
Register maintained by the Note Registrar in accordance with the provisions of
this Indenture and to the Collateral Advisor. Rated Notes called for Redemption
must be surrendered at the office of any Note Paying Agent appointed pursuant
to this Indenture in order to receive the Redemption Price. The Issuer will
also deliver notice of Redemption to the Irish Paying Agent if and so long as
any Class of Rated Notes to be redeemed is listed on the Irish Stock
Exchange.

 

All notices of redemption shall state:

 

(a)           the
applicable Redemption Date;

 

(b)           the
applicable Record Date;

 

(c)           the
Redemption Price;

 

(d)           that
all the Notes of the relevant Class are being redeemed in full and that
interest on the applicable principal amount of Notes shall cease to accrue on
the date specified in the notice; and

 

(e)           the
place or places where such Rated Notes are to be surrendered for payment of the
Redemption Price, which shall be the office or agency of the Note Paying Agent
to be maintained as provided in Section 7.2.

 

Notice of redemption shall be given by the Co-Issuers or, at the
Co-Issuers’ request, by the Trustee in the name and at the expense of the
Co-Issuers. Failure to give notice of redemption, or any defect therein, to any
Holder of any Note selected for redemption shall not impair or affect the
validity of the redemption of any other Notes.

 

9.5.          NOTICE OF WITHDRAWAL

 

With regard to an Optional Redemption or a Tax Redemption, any notice
of redemption may be withdrawn by the Issuer up to the fourth Business Day
prior to the Redemption Date by written notice to the Trustee and the
Collateral Advisor only if the Collateral Advisor is unable to deliver such
sale agreement or agreements or certifications, as the case may be, in form
satisfactory to the Trustee. With regard to any Redemption, notice of any
withdrawal pursuant to Section 9.2 shall be given by the Trustee to each
Holder of Rated Notes at such Holder’s address in the Note Register maintained
by the Note Registrar by overnight courier guaranteeing next day delivery (or
second day delivery outside the United States) sent not later than the third
Business Day prior to such Redemption Date. In addition, the Trustee will, if
any Class of Rated Notes to have been redeemed is listed on the Irish
Stock Exchange, deliver a notice of such withdrawal to the Irish Stock Exchange
not less than three (3) Business Days prior to such Redemption Date.

 

125

 

9.6.          RATED NOTES PAYABLE ON
REDEMPTION DATE

 

Notice of redemption having been given as aforesaid, the Notes so to be
redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after the Redemption Date
(unless the Issuer shall default in the payment of the Redemption Price) such
Rated Notes shall cease to bear interest. Upon final payment on a Note to be
redeemed, the Holder shall present and surrender such Note at the place
specified in the notice of redemption on or prior to such Redemption Date; provided that if
there is delivered to the Co-Issuers (i) such security or indemnity as may
be required by them to save each of them harmless and (ii) an undertaking
thereafter to surrender such Note, then, in the absence of notice to the
Co-Issuers that the applicable Note has been acquired by a bona fide purchaser,
such final payment shall be made without presentation or surrender.
Installments of interest on Rated Notes of a Class so to be redeemed whose
Stated Maturity Date is on or prior to the Redemption Date shall be payable to
the Holders of such Rated Notes, or one or more predecessor Rated Notes,
registered as such at the close of business on the relevant Record Date
according to the terms and provisions of Section 2.6(e).

 

If any Rated Note called for redemption shall not be paid upon
surrender thereof for redemption, the principal thereof shall, until paid, bear
interest from the Redemption Date at the Applicable Periodic Interest Rate for
each successive Interest Period the Rated Note remains Outstanding.

 

9.7.          SPECIAL
AMORTIZATION

 

Amounts constituting Collateral Principal Collections that are
(i) Sale Proceeds not reinvested in Substitute Collateral Debt Securities
during the applicable Sixty-Day Reinvestment Window (“Unreinvested Sale
Proceeds”), (ii) Collateral Principal Payments not reinvested in
Substitute Collateral Debt Securities during the applicable Sixty-Day
Reinvestment Window (“Unreinvested Collateral Principal Payments”), or
(iii) Collateral Principal Payments for any CPP Asset Type that are below
the Reinvestment Threshold Amount and as to which the Cash Release Conditions
are satisfied (“Unaccumulated Collateral Principal Payments”) shall, in each
case, be applied to the payment of principal on the Notes on the next
succeeding Payment Date in accordance with
Section 11.1(b)(13)(iii) hereof.

 

If on any Payment Date the Issuer is obligated to make payments of
principal on the Notes pursuant to Section 11.1(b)(13)(iii), then such payments
of principal shall be made:

 

(i)            pro rata to the
respective Classes of the Rated Notes pursuant to
Section 11.1(b)(13)(iii)(1) of the Priority of Principal Payments (a
“Special Amortization”) if the Special Amortization Pro Rata Condition is
satisfied, a Special Amortization Notice is delivered by the Collateral Advisor
to the Issuer and the Trustee and certain other criteria specified in the
Indenture are complied with; or

 

(ii)           sequentially to the
respective Classes of the Rated Notes pursuant to Section 11.1(b)(13)(iii)(2) of
the Priority of Principal Payments if the criteria for a Special Amortization
are not satisfied.

 

In order for amounts to be applied for a Special Amortization on any
Payment Date, the Collateral Advisor is required to deliver, to each of the
Trustee and each Rating Agency, advance written notice (which may be included
in the related Note Report) (each, a “Special Amortization Notice”) specifying
the identity and principal amount of each Class of Rated Notes to be paid
pursuant to such Special Amortization and (i) in the case of the
Unreinvested Sale Proceeds, that the Collateral Advisor has been unable to
identify for purchase by the Issuer Substitute Collateral Debt Securities that
comply with the Replacement Criteria and the other applicable requirements of
the Indenture, (ii) in the case of Unreinvested Collateral Principal
Payments, that the Collateral Advisor has been unable to identify for

 

126

 

purchase by the Issuer Substitute Collateral Debt Securities that
comply with the Reinvestment Criteria and the other applicable requirements of
the Indenture, and (iii) in the case of Unaccumulated Collateral Principal
Payments, that the Collateral Advisor has determined that identification of
Substitute Collateral Debt Securities of the required CPP Asset Type for
purchase by the Issuer, assuming that such Collateral Principal Payments were
to accumulate to the level of the Reinvestment Trigger Amount, would not be
practicable, that the Cash Release Conditions are satisfied and that all other
Indenture requirements for such Special Amortization are complied with.

 

On each Payment Date on which a Special Amortization occurs, each
related Hedge Agreement will be terminated in part in accordance with the terms
and conditions thereof, including compliance with any applicable requirement
that the Issuer receive Rating Agency Confirmation from S&P, and any
amounts due and payable pursuant to such Hedge Agreement in connection with such
termination thereof will be paid on such Payment Date in accordance with the
terms thereof subject to this Indenture.

 

ARTICLE X

 

ACCOUNTS, ACCOUNTINGS AND RELEASES

 

10.1.        COLLECTION OF FUNDS

 

(a)                                  Except
as otherwise expressly provided herein, the Trustee may demand payment or
delivery of, and shall receive and collect, directly and without intervention
or assistance of any fiscal agent or other intermediary, all funds and other
property payable to or receivable by the Trustee pursuant to this Indenture,
including all payments due on the Pledged Securities, in accordance with the
terms and conditions of such Pledged Securities. The Trustee shall segregate
and hold all such funds and property received by it in trust for the Secured
Parties and shall apply such funds as provided in this Indenture.

 

(b)                                 Each
of the parties hereto hereby agrees to cause the Custodian or any other
Securities Intermediary that holds any funds or other property for the Issuer
or the Co-Issuer in an Account to agree with the parties hereto that
(1) each Account is a Securities Account in respect of which the Trustee
is the Entitlement Holder, (2) each Account is held by a financial
institution that has a combined capital and surplus of at least
U.S.$250,000,000 and being subject to supervision or examination by federal or
state banking authority, (3) the Cash, Securities and other property
credited to any Account is to be treated as a Financial Asset under
Article 8 of the UCC and (4) the securities intermediary’s jurisdiction  (within the
meaning of Section 8-110 of the UCC) for that purpose will be the State of
New York. In no event may any Financial Asset held in any Account be registered
in the name of, payable to the order of, or specially Indorsed to, the Issuer
unless such Financial Asset has also been Indorsed in blank or to the Custodian
or other Securities Intermediary that holds such Financial Asset in such
Account. Each Account shall be held and maintained at an office located in
Minneapolis, Minnesota or Columbia, Maryland.

 

10.2.        GENERAL PROVISIONS
APPLICABLE TO ACCOUNTS

 

The Payment Account, Collateral Account, Uninvested Proceeds Account,
Collection Account (including each Collateral Sub-Account therein), Expense
Reserve Account, each Hedge Counterparty

 

127

 

Collateral Account and Interest Reserve Account shall remain at all
times with a financial institution having a long-term debt rating of at least
“BBB+” by S&P.

 

(a)                                  The
Trustee agrees to give the Issuer prompt notice (with a copy to the Hedge
Counterparty, the Collateral Advisor, each Rating Agency and the Income Note
Paying Agent) if any Account or any funds on deposit therein, or otherwise
standing to the credit of any Account, shall become subject to any writ, order,
judgment, warrant of attachment, execution or similar process.

 

(b)                                 The
Collateral Advisor shall direct the Trustee to invest and reinvest any funds on
deposit in any of the Accounts (other than the Payment Account). In the event
that the Collateral Advisor has not delivered investment instructions to the
Trustee or after the occurrence of an Event of Default, the Trustee shall
invest and reinvest any funds on deposit in any Account (other than the Payment
Account) as fully as practicable in investments described in clause
(vii) of the definition of Eligible Investments maturing not later than
the earlier of (i) 30 days after the date of such investment or
(ii) the Business Day immediately preceding the next Payment Date. With
respect to each Account, all interest and other income from Eligible
Investments purchased with funds on deposit in such Account shall be deposited
in such Account, any gain realized from such investments shall be credited to
such Account, and any loss resulting from such investments shall be charged to
such Account. Any gain or loss with respect to an Eligible Investment shall be
allocated in such a manner as to increase or decrease, respectively, Collateral
Principal Collections and/or Collateral Interest Collections in the proportion
that the amount of Collateral Principal Collections and/or Collateral Interest
Collections used to acquire such Eligible Investment bears to the purchase
price thereof. The Trustee shall not in any way be held liable by reason of any
insufficiency of any such Account resulting from any loss relating to any such
investment. Nothing herein shall be deemed to relieve the Bank or its
Affiliates from any duties or liabilities with respect to investments in
obligations of the Bank or any Affiliate thereof.

 

(c)                                  All
funds deposited from time to time in the Collection Account, the Expense
Reserve Account or the Interest Reserve Account pursuant to this Indenture
shall be held by the Trustee as part of the Collateral and shall be applied to
the purposes herein provided.

 

10.3.        COLLATERAL
ACCOUNT

 

The Trustee shall, prior to the Closing Date, cause the Custodian to
establish a Securities Account which shall be designated as the “Collateral
Account”, which shall be in the name of the Trustee as Entitlement Holder in
trust for the benefit of the Secured Parties and into which the Trustee shall
from time to time deposit Collateral. All Collateral from time to time
deposited in, or otherwise standing to the credit of, the Collateral Account
pursuant to this Indenture shall be held by the Trustee as part of the
Collateral and shall be applied to the purposes herein provided. The Co-Issuers
shall not have any legal, equitable or beneficial interest in the Collateral
Account other than in accordance with the Priority of Payments.

 

10.4.        UNINVESTED
PROCEEDS ACCOUNT

 

The Trustee shall, prior to the Closing Date, cause to be established a
Securities Account which shall be designated as the “Uninvested Proceeds
Account”, which shall be held in the name of the Trustee as Entitlement Holder
in trust for the benefit of the Secured Parties, into which the Trustee shall
deposit all Uninvested Proceeds (other than the organizational and structuring
fees and expenses of the Co-Issuers

 

128

 

(including, without limitation, the legal fees and expenses of counsel
to the Co-Issuers, Citigroup and the Collateral Advisor), the expenses of
offering the Rated Notes and the Income Notes and amounts deposited in the
Expense Reserve Account on such date). On or prior to the Effective Date, the
Collateral Advisor on behalf of the Issuer may direct the Trustee to, and upon
such direction the Trustee shall, apply funds in the Uninvested Proceeds
Account to purchase additional Collateral Debt Securities and, pending such
investment in additional Collateral Debt Securities, such funds will be
invested in Eligible Investments, as directed by the Collateral Advisor, with
stated maturities no later than the Business Day immediately preceding the next
Payment Date. The Trustee shall transfer any Uninvested Proceeds remaining on
deposit in the Uninvested Proceeds Account on the Effective Date to the
Collection Account to be treated as Collateral Principal Collections on the
first Payment Date and distributed in accordance with the Priority of Payments.

 

10.5.        COLLECTION
ACCOUNT AND CPP SUB-ACCOUNTS

 

(a)           Collection Account

 

(1)                                  The
Trustee shall, prior to the Closing Date, cause to be established a Securities
Account which shall be designated as the “Collection Account”, which shall be
held in the name of the Trustee as Entitlement Holder in trust for the benefit
of the Secured Parties. The Trustee shall cause to be established two
sub-accounts of the Collection Account. The Trustee shall deposit Collateral
Principal Collections into one sub-account (the Collateral Principal Collections Sub-Account) and Collateral
Interest Collections into the other sub-account. The Trustee shall cause to be
established within the Collateral Principal Collections Sub-Account seven
further sub-accounts, six of which shall constitute the “CPP Sub-Accounts”. At
the direction of the Issuer (or the Collateral Advisor on behalf of the
Issuer), the Trustee shall invest all funds on deposit in the Collection
Account (including the Collateral Principal Collection Sub-Account and each CPP
Sub-Account) in Eligible Investments or Substitute Collateral Debt Securities
in accordance with the requirements and limitations contained in
Section 12.1(c).

 

(2)                                  The
Trustee, within one Business Day after receipt of any Distribution or other
proceeds that are not Cash shall so notify the Issuer and the Issuer shall sell
such Distribution or other proceeds for Cash in accordance with
Section 12.1.

 

(3)                                  The
Trustee shall transfer to the Payment Account for application pursuant to
Section 11.1(a) and in accordance with the calculations and the
instructions contained in the Note Valuation Report prepared by the Issuer
pursuant to Section 10.10(a), on or prior to the Business Day prior to
each Payment Date, funds on deposit in the Collection Account (including
reinvestment income) other than Collections received after the end of the Due
Period with respect to such Payment Date.

 

(4)                                  The
Trustee shall withdraw and apply amounts on deposit in the Collection Account
in accordance with any Redemption Date Statement delivered to the Trustee in
connection with the redemption of Rated Notes pursuant to Section 9.1.

 

(b)                                 CPP Sub-Accounts. The
Trustee shall, prior to the Closing Date, cause to be established, within the
Collateral Principal Collections Sub-Account (and as 

 

129

 

sub-sub-accounts of the Collection Account) six Securities Accounts to
be designated each individually as a “CPP Sub-Account” and all collectively as
the “CPP Sub-Accounts”. Each CPP Sub-Account shall be established in the name
of the Trustee as Entitlement Holder and held in trust for the benefit of the
Secured Parties. Each CPP Sub-Account shall contain Collateral Principal
Payments received from time to time with respect to the Collateral Debt
Securities of one particular CPP Asset Type. The CPP Sub-Accounts shall be
named respectively as follows: (i) “CPP Sub-Account – REIT Debt
Securities-Fixed Rate”, (ii) “CPP Sub-Account – REIT Debt Securities -
Floating Rate”, (iii) “CPP Sub-Account — CMBS Securities - Fixed Rate”,
(iv) “CPP Sub-Account – CMBS Securities – Floating Rate”, (v) “CPP
Sub-Account – Real Estate CDO Securities - Fixed Rate”, and (vi) “CPP
Sub-Account – Real Estate CDO Securities - Floating Rate”. During the
Reinvestment Period, the Trustee will deposit the Collateral Principal Payments
received by it with respect to all Collateral Debt Securities of a particular
CPP Asset Type into the CPP Sub-Account for such CPP Asset Type.

 

10.6.        EXPENSE
RESERVE ACCOUNT

 

The Trustee shall, prior to the Closing Date, cause to be established a
Securities Account which shall be designated as the “Expense Reserve Account”,
which shall be held in the name of the Trustee as Entitlement Holder in trust
for the benefit of the Secured Parties. Any and all funds at any time on
deposit in, or otherwise standing to the credit of, the Expense Reserve Account
shall be held in trust by the Trustee for the benefit of the Secured Parties.
On the Closing Date, the Trustee shall deposit into the Expense Reserve Account
an amount equal to U.S.$25,000 together with an amount sufficient to pay any
outstanding fees and expenses of the Issuer in relation to the offering of the
Rated Notes and the Income Notes which are not paid on the Closing Date. At the
direction of the Issuer (or the Collateral Advisor on behalf of the Issuer),
the Trustee shall invest all funds on deposit in the Expense Reserve Account in
Eligible Investments. Any amounts held in the Expense Reserve Account in excess
of U.S.$25,000 on the day which is 60 days following the Closing Date (or, if
such day is not a Business Day, the next following Business Day) shall be
transferred by the Trustee into the Uninvested Proceeds Account. Thereafter,
the Trustee shall transfer to the Expense Reserve Account from the Payment
Account amounts required to be deposited therein pursuant to
Section 11.1(a) and in accordance with the calculations and the
instruction contained in the Note Valuation Report prepared by the Issuer pursuant
to Section 10.10(a). Except as provided in Section 11.1, the only permitted
withdrawal from or application of funds on deposit in, or otherwise standing to
the credit of, the Expense Reserve Account shall be to pay (on any day other
than a Payment Date) accrued and unpaid Administrative Expenses of the
Co-Issuers; provided
that the Trustee shall deposit all amounts remaining on deposit in
the Expense Reserve Account at the time when substantially all of the Issuer’s
assets have been sold or otherwise disposed of into the Collections Account for
application as Collateral Interest Collections on the immediately succeeding
Payment Date.

 

10.7.        INTEREST
RESERVE ACCOUNT

 

The Trustee shall, prior to the Closing Date, cause to be established a
Securities Account which shall be designated as the “Interest Reserve Account”,
which shall be held in the name of the Trustee as Entitlement Holder in trust
for the benefit of the Secured Parties. Any and all funds at any time on
deposit in, or otherwise standing to the credit of, the Interest Reserve
Account shall be held in trust by the Trustee for the benefit of the Secured
Parties. At the direction of the Issuer (or the Collateral Advisor on behalf of
the Issuer), the Trustee shall invest all funds on deposit in the Interest Reserve
Account in Eligible Investments. On each Payment Date, in accordance with the
Priority of Payments, the Trustee will deposit the Interest Reserve Amount, if
any, into the Interest Reserve Account. The only permitted withdrawal from or
application of funds on deposit in, or otherwise standing to the credit of, the
Interest

 

130

 

Reserve Account shall be to deposit into the Payment Account, on the
Business Day prior to each Payment Date, the Balance of the Interest Reserve
Account (including reinvestment income) for distribution as Collateral Interest
Collections in accordance with the Priority of Payments on the related Payment
Date.

 

10.8.        PAYMENT
ACCOUNT

 

The Trustee shall, prior to the Closing Date, establish a Securities
Account which shall be designated as the “Payment Account”, which shall be held
in the name of the Trustee as Entitlement Holder in trust for the benefit of
the Secured Parties. Any and all funds at any time on deposit in, or otherwise
standing to the credit of, the Payment Account shall be held in trust by the
Trustee for the benefit of the Secured Parties. Except as provided in
Section 11.1, the only permitted withdrawal from or application of funds
on deposit in, or otherwise standing to the credit of, the Payment Account
shall be to pay the interest on and the principal of the Rated Notes in
accordance with their terms and the provisions of this Indenture and, upon
Issuer Order, to pay Administrative Expenses and other amounts specified
therein, each in accordance with the Priority of Payments. The Co-Issuers shall
not have any legal, equitable or beneficial interest in the Payment Account
other than in accordance with the Priority of Payments.

 

10.9.        REPORTS BY
TRUSTEE

 

The Trustee shall supply, in a timely fashion to each Rating Agency (so
long as any Rated Notes are rated by such Rating Agency), the Initial Hedge
Counterparty, the Holders of Rated Notes of the Controlling Class, the
Collateral Advisor, the Income Note Paying Agent, the Initial Purchasers, the
Placement Agent and the Issuer any information regularly maintained by the
Trustee that each such Person may from time to time request with respect to the
Pledged Securities or the Accounts reasonably needed to complete the Note
Valuation Report or to provide any other information reasonably available to
the Trustee by reason of its acting as Trustee hereunder and required to be
provided by Section 10.10.

 

The Trustee shall forward to the Collateral Advisor, the Holders of
Rated Notes of the Controlling Class, or upon request therefor, any Holder of a
Rated Note shown on the Note Register, the Initial Purchasers, the Placement
Agent, the Initial Hedge Counterparty or the Income Note Paying Agent, copies
of notices and other writings received by it from the issuer of any Collateral
Debt Security or from any Clearing Agency with respect to any Collateral Debt
Security advising the holders of such security of any rights that the holders
might have with respect thereto (including notices of calls and redemptions of
securities) as well as all periodic financial reports received from such issuer
and Clearing Agencies with respect to such issuer; provided that the
Trustee shall not disclose any unpublished S&P Rating assigned by S&P
with respect to any Collateral Debt Security without the prior consent of
S&P.

 

So long as any Class of Rated Notes is listed on the Irish Stock
Exchange, the Irish Paying Agent shall notify the Irish Stock Exchange not
later than the Business Day preceding each Payment Date of the amount of
principal payments to be made on the Rated Notes of each Class on such
Payment Date, any Class B Cumulative Applicable Periodic Interest
Shortfall Amount, any Class C Cumulative Periodic Interest Shortfall Amount,
any Class D Cumulative Periodic Interest Shortfall Amount and the
Aggregate Outstanding Amount of the Rated Notes of each Class and as a
percentage of the original Aggregate Outstanding Amount of the Rated Notes of
such Class after giving effect to the principal payments, if any, on such
Payment Date.

 

As promptly as possible following the delivery of each Note Valuation
Report to the Trustee pursuant to Section 10.10(a) or (b), as
applicable, the Issuer shall cause a copy of such report to be delivered the
Repository for posting on the Repository in the manner described in
Section 14.3. In

 

131

 

connection therewith, each of the Co-Issuers acknowledges and agrees
that each Note Valuation Report shall be posted to the Repository for use in
the manner described in the section headed “Terms of Use” on the Repository.

 

10.10.      ACCOUNTINGS

 

(a)                                  Payment Date Accounting. The
Issuer shall, not later than the related Payment Date and after the
reconciliation process described in this Section 10.10, render an
accounting (a Note
Valuation Report), determined as of each Calculation Date,
and deliver the Note Valuation Report to each Rating Agency, the Trustee and
the Collateral Advisor and make available via the Trustee’s internet website,
initially located at www.cdolink.com to the Trustee, the Irish Paying Agent,
the Initial Hedge Counterparty, the Income Note Paying Agent, each Note
Transfer Agent, Citigroup and, upon written request therefor, any Holder of a
Rated Note shown on the Note Register. The Note Valuation Report shall contain
the following information (which shall, in the case of any Note Valuation
Report delivered to S&P, be presented in a form that complies with
S&P’s Preferred Format) determined, unless otherwise specified below, as of
the related Calculation Date:

 

(1)                                  the
calculation showing compliance with each of the Coverage Tests, accompanied by
a list setting forth the applicable maximum or minimum value, percentage or
ratio which must be maintained pursuant to this Agreement with respect to each
of the Coverage Tests and a list setting forth the results of the calculation
of each of the Coverage Tests with respect to the Collateral Debt Securities,
the calculation showing whether the S&P CDO Monitor Test is satisfied
(including the weighted average rating, the default measure, variability
measure and correlation measure, the scenario default rate and/or such other
information required to be computed with respect to the S&P CDO Monitor
Test), and the calculation showing the Fitch Weighted Average Rating Factor,
the Weighted Average Fixed Rate Coupon, the Weighted Average Spread, the
Weighted Average Life and the S&P Weighted Average Recovery Rate;

 

(2)                                  the
estimated remaining Average Life of each of the Collateral Debt Securities;

 

(3)                                  the
Applicable Periodic Interest Rate in respect of each Class of Notes and
the amount of Periodic Interest payable to the Holders of the Notes for such
Payment Date (in the aggregate and by Class);

 

(4)                                  the
amount (if any) payable to each Hedge Counterparty pursuant to the related
Hedge Agreement;

 

(5)                                  the
amount (if any) payable by each Hedge Counterparty pursuant to the related
Hedge Agreement:

 

(6)                                  the
Aggregate Fees and Expenses payable on the next Payment Date on an itemized
basis;

 

(7)                                  the
Aggregate Fees and Expenses paid during a period of twelve (12) months ending
on the next Payment Date on an itemized basis;

 

(8)                                  for
the Collection Account:

 

132

 

(i)                                     the
Balance on deposit in the Collection Account, the Collateral Principal
Collections Sub-Account and each of the respective CPP Sub-Accounts at the end
of the related Due Period;

 

(ii)                                  the
nature and source of any Collections in the Collection Account, the Collateral
Principal Collections Sub-Account and each of the respective CPP Sub-Accounts,
including Collections received since the date of the last Note Valuation
Report;

 

(iii)                               the
amounts payable from the Collection Account in accordance with the priority set
forth in Section 11.1 on the next Payment Date; and

 

(iv)                              the
Balance remaining in the Collection Account immediately after all payments and
deposits to be made on such Payment Date;

 

(v)                                 the
Balance on deposit in the Collateral Principal Collections Sub-Account and each
of the respective CPP Sub-Accounts.

 

(9)                                  for
the Interest Reserve Account:

 

(i)                                     the
balance on deposit in the Interest Reserve Account at the end of the related
Due Period;

 

(ii)                                  the
amount payable from the Interest Reserve Account pursuant to the Priority of Payments
on the next Payment Date;

 

(iii)                               the
Interest Reserve Amount to be paid into the Interest Reserve Account on the
next Payment Date; and

 

(iv)                              the
Balance remaining in the Interest Reserve Account immediately after all
payments and deposits to be made on such Payment Date;

 

(10)                            for
the Expense Reserve Account:

 

(i)                                     the
amount to be paid into the Expense Reserve Account on the next Payment Date;
and

 

(ii)                                  the
Balance remaining in the Expense Reserve Account immediately after all payments
and deposits to be made on such Payment Date;

 

(11)                            the
Hedge Receipt Amount or the Hedge Payment Amount for the related Payment Date,
and for each Hedge Agreement, the outstanding notional amount of such Hedge
Agreement and the amounts, if any, scheduled to be received or paid, as the
case may be, by the Issuer pursuant to such Hedge Agreement for the related
Payment Date, separately stating the portion payable in accordance with
Section 11.1;

 

(12)                            the
amount of Income Note Excess Funds on the related Payment Date;

 

(13)                            the
amount of the Senior Collateral Advisory Fee and the amount of the Subordinate
Collateral Advisory Fee;

 

133

 

(14)                            such
other information as the Collateral Advisor, the Initial Purchasers, the Placement
Agent, the Trustee, S&P, Fitch or any Hedge Counterparty may reasonably
request;

 

(15)                            with
respect to each Collateral Debt Security, the Principal Balance, the annual
coupon rate or spread to the relevant floating rate index, the frequency of
coupon payments, the amount of principal payments received, the maturity date,
the issuer, the country in which the issuer is incorporated or organized, the
S&P Industry Classification Group, the Fitch Industry Classification Group,
the S&P Recovery Rate, the S&P Rating and the Fitch Rating (provided that if any Fitch Rating for any Collateral Debt
Security is an “estimated” or “shadow” rating, such rating shall be identified
as “estimated” or “shadow rated”, shall be disclosed with an asterisk in the
place of the applicable estimated or shadow rating and shall include the date
as of which such rating was first provided by Fitch to the Issuer); and any
S&P Rating which is determined from an implied rating, a credit estimate, a
confidential rating or another non-public rating, shall not be distinguished
and shall either (i) be reported in a single column with the public
ratings of S&P (without distinguishing the source) or (ii) be reported
in a separate column labeled “Non-public and Implied S&P Rating.”

 

(16)                            the
Principal Balance, the maturity date, the S&P Rating, the Fitch Rating and
the issuer of each Eligible Investment included in the Collateral;

 

(17)                            (A) the
identity and Principal Balance of each Collateral Debt Security that became a
Credit Risk Security, a Defaulted Security, an Equity Security, a Written Down
Security, a Withholding Tax Security, a Deferred Interest PIK Bond,
(B) the date, as provided by the Collateral Advisor, on which any
Collateral Debt Security became a Credit Risk Security, a Defaulted Security,
an Equity Security, a Written Down Security or a Withholding Tax Security,
(C) the date by which the Issuer or the Collateral Advisor is required to
declare its intention to sell or to hold such Collateral Debt Security,
(D) whether the Collateral Advisor has directed the Issuer to sell or not
to sell such Collateral Debt Security, and (E) the date by which any such
sale must occur;

 

(18)                            the
identity of each Collateral Debt Security that was upgraded or downgraded or
placed on watch for upgrade or downgrade by any Rating Agency since the date of
the last Note Valuation Report;

 

(19)                            the
Principal Balance and identity of each Collateral Debt Security that was
released for sale indicating the reason for such sale and the amount and
identity of each Collateral Debt Security that was granted since the date of
the last Note Valuation Report;

 

(20)                            the
identity and Principal Balance of each Collateral Debt Security that was a
Credit Risk Security, a Defaulted Security, an Equity Security, a Written Down Security,
a Withholding Tax Security or a Deferred Interest PIK Bond;

 

(21)                            the
purchase price of each Pledged Security granted and the sale price of each
Pledged Security subject to a sale since the date of the last Note Valuation
Report; and whether such Pledged Security is a Collateral Debt Security, an
Eligible Investment or proceeds in the Collection Account;

 

134

 

(22)                          the amount of
Purchased Accrued Interest;

 

(23)                          a description
of any transactions with the Collateral Advisor, the Issuer, the Collateral
Administrator and the Trustee and any Affiliates thereof;

 

(24)                          the Class A-1
Note Break-Even Default Rate, the Class A-2A Note Break-Even Default Rate,
the Class A-2A Note Break-Even Default Rate, the Class B Note
Break-Even Default Rate, the Class C-1A Note Break-Even Default Rate, the Class C-1B
Note Break-Even Default Rate, the Class C-2A Note Break-Even Default Rate,
the Class C-2B Note Break-Even Default Rate and the Class D Note
Break-Even Default Rate;

 

(25)                          the Class A-1
Note Default Differential, the Class A-2A Note Default Differential, the Class A-2B
Note Default Differential, the Class B Note Default Differential, the Class C-lA
Note Default Differential, the Class C-1B Note Default Differential, the Class C-2A
Note Default Differential, the Class C-2B Note Default Differential and
the Class D Note Default Differential; and

 

(26)                          the Class A-1
Note Scenario Default Rate, the Class A-2A Note Scenario Default Rate, the
Class A-2B Note Scenario Default Rate, the Class B Note Scenario
Default Rate, the Class C-lA Note Scenario Default Rate, the Class C-1B
Note Scenario Default Rate, the Class C-2A Note Scenario Default Rate, the
Class C-2B Note Scenario Default Rate and the Class D Note Scenario
Default Rate.

 

Upon
receipt of each Note Valuation Report, the Trustee and the Collateral Advisor
shall compare the information contained therein to the information contained in
their respective records with respect to the Collateral and shall, within two (2) Business
Days after receipt of such Note Valuation Report, notify each of the Issuer,
the Initial Hedge Counterparty, the Collateral Advisor, the Trustee, Fitch and
S&P if the information contained in the Note Valuation Report does not
conform to the information maintained by the Trustee or the Collateral Advisor
as applicable, with respect to the Collateral, and detail any discrepancies. In
the event that any discrepancy exists, the Trustee and the Issuer, or the
Collateral Advisor shall attempt to promptly resolve the discrepancy. If such
discrepancy cannot be promptly resolved, the Trustee shall within five (5) Business
Days after discovery of such discrepancy cause the Independent Accountants of
recognized international reputation to review such Note Valuation Report and
the Trustee’s and the Collateral Advisor’s records to determine the cause of
such discrepancy. If such review reveals an error in the Note Valuation Report
or the records of the Trustee or the Collateral Advisor, as the case may be,
such item shall be revised accordingly and, as so revised, shall be utilized in
making further calculations.

 

Subject
to the terms of this Agreement, the Trustee shall be entitled to rely on the
information supplied by the Collateral Advisor in relation to the preparation
of the Note Valuation Report and shall not be liable for the accuracy or
completeness of such information or the lack thereof.

 

In
addition to the foregoing information, each Note Valuation Report shall include
a statement to the following effect:

 

“The
Notes have not been and will not be registered under the United States
Securities Act of 1933, as amended (the Securities Act), or under any state securities laws, and the
Co-Issuers have not been and will not be registered under the United States
Investment Company Act of 1940, as amended (the 1940 Act). Each Holder of the Notes, other than those
Holders that are not “U.S. persons” (U.S.
Person)  within the
meaning of Regulation S (Regulation S)  under the Securities Act and
have

 

135

 

acquired
their Notes outside the United States pursuant to Regulation S, is required to
be both (i) (A) with respect to any Rated Note, a “qualified
institutional buyer” as defined in Rule 144A under the Securities Act (Qualified Institutional Buyer), (B) solely with respect to the Class D
Notes, either (1) an “accredited investor” as defined in paragraphs (1),
(2), (3) or (7) of Rule 501(A) under the Securities Act
(each an Institutional
Accredited Investor)
or (2) any of NS CDO Holdings III, LLC, NS
Advisors, LLC or any “affiliate” thereof within the meaning of Rule 405
under the Securities Act that is an “accredited investor” within the meaning of
Rule 501(A) under the Securities Act (each of the foregoing, a Permitted NS Purchaser)  or (C) solely with respect to the Income Notes,
a Permitted NS Purchaser and a “qualified purchaser” (Qualified Purchaser)  within the
meaning of Section 3(c)(7) of the 1940 Act, purchasing for its own
account or for the account of another Qualified Purchaser, that can make all of
the representations in the Indenture applicable to a holder that is a U.S.
Person. The beneficial interest in the Notes may be transferred only to a
transferee that meets both of the criteria in clauses (i) and (ii) above
and can make all of the representations in the Indenture applicable to a Holder
that is a U.S. Person, except that any such transfer in reliance on Regulation
S can be made only to a transferee that is not a U.S. Person. The Issuer has
the right to compel any Holder that does not meet the qualifications and the
transfer restrictions set forth in the Indenture to sell its interest in the
Notes, or may sell such interest on behalf of such owner, pursuant to the
Indenture.”

 

(b)                               Redemption Date Instructions. Not less than five Business
Days after receiving an Issuer Request requesting information regarding a
redemption pursuant to Section 9.1 of the Rated Notes of a Class as
of a proposed Redemption Date set forth in such Issuer Request, the Trustee
shall provide the necessary information (to the extent it is available to the
Trustee) to the Issuer, and the Issuer shall compute the following information
and provide such information in a statement (the Redemption Date Statement)  delivered to the Trustee:

 

(1)                                the Aggregate
Outstanding Amount of the Rated Notes of the Class or Classes to be
redeemed as of such Redemption Date;

 

(2)                                the amount of
accrued interest due on such Rated Notes as of the last day of the Interest
Period immediately preceding such Redemption Date; and

 

(3)                                the amount in
the Collection Account available for application to the redemption of such
Rated Notes.

 

(c)                                  If the Trustee
shall not have received any accounting provided for in this Section 10.10 on
the first Business Day after the date on which such accounting is due to the
Trustee, the Trustee shall use reasonable efforts to cause such accounting to
be made by the applicable Payment Date or Redemption Date. To the extent the
Trustee is required to provide any information or reports pursuant to this Section 10.10
as a result of the failure of the Issuer to provide such information or
reports, the Trustee shall be entitled to retain an Independent certified
public accountant in connection therewith and the reasonable costs incurred by
the Trustee for such Independent certified public accountant shall be
reimbursed pursuant to Section 6.8.

 

The
Trustee will make the Note Valuation Report available via its internet website
initially located at www.cdolink.com. All information made
available on the Trustee’s website will be restricted and the Trustee will only
provide access to such reports to those parties entitled thereto pursuant to
the Indenture. In connection with providing access to its website, the Trustee
may require registration and the acceptance of a disclaimer.

 

136

 

Questions
regarding the Trustee’s website can be directed to the Trustee’s customer
service desk at phone number 301-815-6600.

 

10.11.
               RELEASE
OF SECURITIES

 

(a)                                  If no Event of
Default has occurred and is continuing and subject to Section 12, the
Issuer shall, in connection with any sale required pursuant to Section 12.1,
by Issuer Order executed by an Authorized Officer of the Issuer and delivered
to the Trustee at least two Business Days prior to the settlement date for any
sale of a security certifying that the conditions set forth in Section 12.1
are satisfied, direct the Trustee to release such security from the lien of
this Indenture against receipt of payment therefor.

 

(b)                                 The Issuer
shall, if notified that the issuer of the Pledged Security requires delivery of
such Pledged Security as a condition to redemption or payment in full, by
Issuer Order executed by an Authorized Officer of the Issuer and delivered to
the Trustee at least two Business Days prior to the date set for redemption or
payment in full of a Pledged Security, certifying that such security is being
redeemed or paid in full, direct the Trustee or, at the Trustee’s instructions,
the Custodian, to deliver such security, if in physical form, duly endorsed,
or, if such security is a Clearing Corporation Security, to cause it to be
presented, to the appropriate paying agent therefor on or before the date set
for redemption or payment, in each case against receipt of the redemption price
or payment in full thereof.

 

(c)                                  The Trustee
shall deposit any proceeds received by it from the disposition of a Pledged
Security in the appropriate CPP Sub-Account.

 

(d)                                 The Trustee
shall, upon receipt of an Issuer Order at such time as there are no Rated Notes
Outstanding and all obligations of the Co-Issuers hereunder have been
satisfied, release the Collateral from the lien of this Indenture.

 

(e)                                  The Issuer may
retain agents (including the Collateral Advisor) to assist the Issuer in
preparing any notice or other report required under Section 10.11 and this
Section 10.12.

 

10.12.
               REPORTS
BY INDEPENDENT ACCOUNTANTS

 

(a)                                  At the Closing
Date the Issuer (or the Collateral Advisor on its behalf) shall appoint a firm
of Independent certified public accountants of recognized national reputation
for purposes of preparing and delivering the reports or certificates of such
accountants required by this Indenture. Upon any resignation by such firm, the
Issuer shall (after consultation with the Collateral Advisor) propose a
replacement firm meeting the criteria set forth in the preceding sentence for
approval by a Majority of the Controlling Class. Upon approval by a Majority of
the Controlling Class, the Issuer shall promptly appoint such firm by Issuer
Order delivered to the Trustee, the Initial Hedge Counterparty, the Collateral
Advisor and each Rating Agency. If the Issuer shall fail to appoint a successor
to a firm of Independent certified public accountants which has resigned within
30 days after such resignation, the Issuer shall promptly notify the Trustee of
such failure in writing. The fees of such Independent certified public accountants
and its successor shall be payable by the Issuer as provided in Section 11.1.

 

(b)                                 On or before May 31
of each year (commencing with May 31, 2006), the Issuer shall cause to be
delivered to the Trustee, the Income Note Paying Agent and each Rating

 

137

 

Agency
an Accountants’ Report specifying the procedures applied and their associated
findings with respect to the Note Valuation Reports and any Redemption Date
Statements prepared in the preceding year. At least 60 days prior to the
Payment Date in May 2006 (and, if at any time a successor firm of
Independent certified public accountants is appointed, prior to the Payment
Date in August following the date of such appointment), the Issuer shall
deliver to the Trustee an Accountant’s Report specifying in advance the
procedures that such firm will apply in making the aforementioned findings
throughout the term of its service as accountants to the Issuer. The Trustee
shall promptly forward a copy of such Accountant’s Report to the Initial Hedge
Counterparty, the Rating Agencies, the Income Note Paying Agent and each Holder
of Class A Notes (or, if no Class A Notes are Outstanding, each
Holder of Class B Notes or, if no Class B Notes are Outstanding, each
Holder of Class C Notes), at the address shown on the Note Register. The
Issuer shall not approve the institution of such procedures if a Majority of
the Controlling Class or the Collateral Advisor, by notice to the Issuer
and the Trustee within 30 days after the date of the related notice to the
Trustee, object thereto.

 

(c)                                  Any statement
delivered to the Trustee pursuant to Section 10.12(b) above shall be
made available by the Trustee to any Holder of a Rated Note shown on the Note
Register upon written request therefor.

 

10.13.
               REPORTS
TO RATING AGENCIES

 

In
addition to the information and reports specifically required to be provided to
the Rating Agencies, the Income Note Paying Agent, the Holders of Rated Notes
of the Controlling Class, and the Initial Hedge Counterparty pursuant to the
terms of this Indenture, the Income Note Paying Agency Agreement or the Hedge
Agreement (as the case may be), the Issuer shall provide or procure to provide
the Rating Agencies and the Initial Hedge Counterparty with (a) all information
or reports delivered to the Trustee hereunder and (b) such additional
information as the Rating Agencies, the Income Note Paying Agent or the Initial
Hedge Counterparty may from time to time reasonably request and such
information may be obtained and provided without unreasonable burden or
expense. The Issuer shall promptly notify the Trustee, the Income Note Paying
Agent and the Initial Hedge Counterparty if the rating of any Class of
Rated Notes has been, or it is known by the Issuer that such rating will be,
changed or withdrawn. The Issuer shall notify each Rating Agency in the case of
(i) termination or amendment of any Transaction Document or organizational
document of the Issuer or Co-Issuer, (ii) termination or change of party
to any of the Transaction Documents or (iii) material breach of any of the
Transaction Documents by any party thereto.

 

10.14.
               TAX
MATTERS

 

The
Issuer and the Co-Issuer agree to treat, and hereby notify the Trustee to
treat, and, by accepting a Rated Note, each Holder of the Rated Notes agrees to
treat, the Rated Notes, for U.S. federal, state and local income tax purposes,
as indebtedness of the Issuer (and not as obligations of the Co-Issuer), to
report all income (or loss) in accordance with such treatment and not to take
any action inconsistent with such treatment except as otherwise required by any
taxing authority under applicable law. The Issuer agrees not to elect to be
treated as other than a corporation for U.S. federal income tax purposes.

 

10.15.
               TAX
INFORMATION

 

The
Issuer will furnish to any Holder of Rule 144A Definitive Notes (or its
designee), Rule 144A Global Notes (or its designees), and Definitive Class D
Notes (or its designee), upon the request of any

 

138

 

such
Holder, the necessary information, and will permit such Holder reasonable
access to its books of account, in order to allow such Holder to make a
“qualifying electing fund” election pursuant to Section 1295 of the Code.

 

The
Issuer shall provide on a timely basis to any holder of a beneficial interest
in Rule 144A Definitive Notes (or its designee), Rule 144A Global
Notes (or its designees), and Definitive Class D Notes (or its designee),
upon written request therefor certifying that it is such a holder, (i) all
information that a U.S. shareholder making a “qualified electing fund” election
(as defined in the Code) is required to obtain for U.S. federal income tax
purposes and (ii) a “PFIC Annual Information Statement” as described in
Treasury Regulation 1.1295-1 (or any successor Internal Revenue Service release
or Treasury Regulation), including all representations and statements required
by such statement, and will take any other steps necessary to facilitate such
election by a holder of a beneficial interest in any Rule 144A Definitive
Notes, Rule 144A Global Notes, and Definitive Class D Notes. The
Issuer shall also provide, upon request of a Holder of, or a holder of a
beneficial interest in, any Rule 144A Definitive Notes, Rule 144A
Global Notes, and Definitive Class D Notes, any information that such
Holder or holder of a beneficial interest reasonably requests to assist such
Holder or holder of a beneficial interest with regard to any filing
requirements the Holder or holder of a beneficial interest may have as a result
of the controlled foreign corporation rules under the Code. The cost and
expense of the preparation and delivery of the PFIC Annual Information
Statement shall be at the expense of the Issuer.

 

ARTICLE XI

 

APPLICATION OF MONIES

 

11.1.
                     DISBURSEMENTS
OF FUNDS FROM PAYMENT ACCOUNT; PRIORITY OF PAYMENTS

 

(a)                                  Collateral Interest Collections. On any Payment Date that is
not a Redemption Date or a Payment Date following the occurrence and
continuation of an acceleration of the Rated Notes in connection with an Event
of Default, in accordance with a Note Valuation Report prepared by the
Collateral Administrator as of the last day of the Due Period preceding such
Payment Date, Collateral Interest Collections, to the extent of Available Funds
in the Collection Account, will be applied by the Trustee in the following
order of priority:

 

(1)                                  to pay, in the
following order:

 

(i)                                   taxes and
filing fees and registration fees (including, without limitation, annual return
fees) payable by the Co-Issuers, if any; and then,

 

(ii)                                pro rata the amount of any due and unpaid Trustee Fee and
Income Note Paying Agent Fee; and then,

 

(iii)                             the amount of
any due and unpaid fees to the Administrator; and then,

 

(iv)                            the amount of
any due and unpaid Trustee Expenses; and then,

 

(v)                               the amount of
any due and unpaid fees and expenses of the Rating Agencies; and then,

 

(vi)                            the amount of
any due and unpaid expenses of the Administrator and any due and unpaid
Administrative Expenses not included in (iii), (iv) and

 

139

 

(v) above, including amounts payable to the Collateral Advisor under
the Collateral Advisory Agreement but excluding the Collateral Advisory Fee;
and then,

 

(vii)                         to deposit to
the Expense Reserve Account the amount needed to bring the amount on deposit
therein to U.S.$25,000 (unless the Collateral Advisor directs that a lesser
amount be deposited to the Expense Reserve Account);

 

provided that the cumulative amount
paid under (iii) through (vii) above (excluding any Administrative
Expenses due or accrued with respect to the actions taken on or prior to the
Closing Date and accounting fees that the Trustee is required to pay (other
than certain accountants’ fees related to annual reviews) and fees the Trustee
pays in connection with any Event of Default and any default of the Collateral
Debt Securities) may not exceed U.S.$250,000 in the aggregate in any
consecutive 12-month period;

 

(2)                                  to pay the
Senior Collateral Advisory Fee with respect to such Payment Date and any Senior
Collateral Advisory Fee with respect to a previous Payment Date that was not
paid on a previous Payment Date;

 

(3)                                  to pay any
Hedge Counterparty, any amounts due to such Hedge Counterparty under any Hedge
Agreement, pro rata, including any
termination payments other than any termination payments payable under Section 11.1(a)(20) below;

 

(4)                                  to pay Periodic
Interest on the Class A-1 Notes and any Defaulted Interest;

 

(5)                                  to pay Periodic
Interest on the Class A-2 Notes and any Defaulted Interest;

 

(6)                                  if either of
the Class A Coverage Tests is not satisfied as of the preceding
Calculation Date, to pay principal of the Class A-1 Notes then Outstanding
until such Class A Coverage Test is satisfied as of such Calculation Date
or until the Class A-1 Notes are paid in full, and then to pay principal
of the Class A-2 Notes then Outstanding until such Class A Coverage
Test is satisfied as of such Calculation Date or until the Class A-2 Notes
are paid in full; provided that for
purposes of determining if the Class A Principal Coverage Test is
satisfied after giving effect to any payments under this Section 11.1(a)(6),
the denominator of the Class A Principal Coverage Ratio shall be
calculated after giving effect to any payments of principal on the Class A
Notes to be made pursuant to this Section 11.1(a)(6);

 

(7)                                  to pay an
amount equal to the Interest Reserve Amount for deposit into the Interest
Reserve Account; 

 

(8)                                  if a Ratings
Confirmation Failure occurs, on each Payment Date commencing with the Payment
Date immediately following the Effective Date, to pay principal on the Class A-1
Notes, the Class A-2 Notes, the Class B Notes, the Class C-1
Notes, the Class C-2 Notes and the Class D Notes, in that order, in
the amounts necessary for each Rating Agency to confirm its respective ratings
of the Notes assigned on the Closing Date or until each Class of Notes is
paid in full;

 

140

 

(9)                                  to pay Periodic
Interest on the Class B Notes and, if no Class A Notes are
Outstanding, any Defaulted Interest on the Class B Notes;

 

(10)                            if either of
the Class B Coverage Tests is not satisfied as of the preceding
Calculation Date, to pay principal of the most senior Class of Notes then
Outstanding until such Class B Coverage Test is satisfied as of such
Calculation Date or until such most senior Class of Notes is paid in full,
and then to pay principal of the next most senior Class of Notes
Outstanding until such Class B Coverage Test is satisfied as of such
Calculation Date or until such next most senior Class of Notes is paid in
full and so on, until such Class B Coverage Test is satisfied or until the
Class B Notes are paid in full; provided that for purposes of
determining if the Class B Principal Coverage Test is satisfied after
giving effect to any payments under this Section 11.1(a)(10), the
denominator of the Class B Principal Coverage Ratio shall be calculated
after giving effect to any payments of principal on the Notes made pursuant to
any of the clauses above and pursuant to this Section 11.1(a)(10) on
the related Payment Date; provided,
further, that with respect to the Class B Notes, payment
of principal not constituting Class B Cumulative Applicable Periodic
Interest Shortfall Amount shall be paid before principal constituting the Class B
Cumulative Applicable Periodic Interest Shortfall Amount, if any;

 

(11)                            to pay the Class B
Cumulative Applicable Periodic Interest Shortfall Amount, if any;

 

(12)                            to pay Periodic
Interest on the Class C-1 Notes and, if no Class A Notes and no Class B
Notes are Outstanding, any Defaulted Interest on the Class C-1 Notes;

 

(13)                            to pay Periodic
Interest on the Class C-2 Notes and, if no Class A Notes, no Class B
Notes and no Class C-1 Notes are Outstanding, any Defaulted Interest on
the Class C-2 Notes;

 

(14)                            if either of
the Class C Coverage Tests is not satisfied as of the preceding
Calculation Date to pay principal (including any Class B Cumulative
Applicable Periodic Interest Shortfall Amount, Class C-1 Cumulative
Applicable Periodic Interest Shortfall Amount or Class C-2 Cumulative
Applicable Periodic Interest Shortfall Amount, as applicable) of the most
senior Class of Notes then Outstanding until such Class C Coverage
Test is satisfied as of such Calculation Date or until such most senior Class of
Notes is paid in full, and then to pay principal of the next most senior Class of
Notes Outstanding until such Class C Coverage Test is satisfied as of such
Calculation Date or until such next most senior Class of Notes is paid in
full and so on, until such Class C Coverage Test is satisfied or until the
Class C-1 Notes and then the Class C-2 Notes, in that order, are paid
in full; provided that for
purposes of determining if the Class C Principal Coverage Test is
satisfied after giving effect to any payments under this Section 11.1(a)(14),
the denominator of the Class C Principal Coverage Ratio shall be
determined after giving effect to any payments of principal on the Notes
pursuant to any of the clauses above and pursuant to this Section 11.1(a)(14)
on the related Payment Date; provided, further, that with respect to (i) the
Class B Notes, payment of principal not constituting Class B
Cumulative Applicable Periodic Interest Shortfall Amount shall be paid before
principal constituting Class B Cumulative Applicable Periodic Interest
Shortfall Amount, if any;

 

141

 

(ii) the Class C-1 Notes, payment of principal
not constituting Class C-1 Cumulative Applicable Periodic Interest
Shortfall Amount shall be paid before principal constituting the Class C-1
Cumulative Applicable Periodic Interest Shortfall Amount, if any; and (iii) the
Class C-2 Notes, payment of principal not constituting Class C-2
Cumulative Applicable Periodic Interest Shortfall Amount shall be paid before
principal constituting Class C-2 Cumulative Applicable Periodic Interest
Shortfall Amount, if any;

 

(15)                            to pay the Class C-1 Cumulative Applicable Periodic Interest
Shortfall Amount, if any;

 

(16)                            to pay the Class C-2 Cumulative Applicable Periodic Interest
Shortfall Amount, if any;

 

(17)                            to pay Periodic Interest on the Class D  Notes and, if no Class A Notes, no Class B Notes and no Class C
Notes are Outstanding, any Defaulted Interest on the Class D Notes;

 

(18)                            if either of the Class D Coverage Tests is not satisfied as of the
preceding Calculation Date to pay principal (including any Class B
Cumulative Applicable Periodic Interest Shortfall Amount, Class C-1
Cumulative Applicable Periodic Interest Shortfall Amount, Class C-2
Cumulative Applicable Periodic Interest Shortfall Amount or Class D
Cumulative Applicable Periodic Interest Shortfall Amount, as applicable) of the
most senior Class of Notes then Outstanding until such Class D
Coverage Test is satisfied as of such Calculation Date or until such most
senior Class of Notes is paid in full, and then to pay principal of the
next most senior Class of Notes Outstanding until such Class D
Coverage Test is satisfied as of such Calculation Date or until such next most
senior Class of Notes is paid in full and so on, until such Class D
Coverage Test is satisfied or until the Class D Notes are paid in full; provided that for
purposes of determining if the Class D Principal Coverage Test is
satisfied after giving effect to any payments under this Section 11.1(a)(18),
the denominator of the Class D Principal Coverage Ratio shall be
determined after giving effect to any payments of principal on the Notes
pursuant to any of the clauses above and pursuant to this Section 11.1(a)(18)
on the related Payment Date; provided, further, that
with respect to (i) the Class B Notes, payment of principal not
constituting the Class B Cumulative Applicable Periodic Interest Shortfall
Amount shall be paid before principal constituting the Class B Cumulative
Applicable Periodic Interest Shortfall Amount, if any; (ii) the Class C-1
Notes, payment of principal not constituting the Class C-1 Cumulative
Applicable Periodic Interest Shortfall Amount shall be paid before principal
constituting the Class C-1 Cumulative Applicable Periodic Interest
Shortfall Amount, if any; (iii) the Class C-2 Notes, payment of
principal not constituting the Class C-2 Cumulative Applicable Periodic
Interest Shortfall Amount shall be paid before principal constituting the Class C-2
Cumulative Applicable Periodic Interest Shortfall Amount, if any; and (iv) the
Class D Notes, payment of principal not constituting the Class D
Cumulative Applicable Periodic Interest Shortfall Amount shall be paid before
principal constituting the Class D Cumulative Applicable Periodic Interest
Shortfall Amount, if any;

 

142

 

(19)                            to pay the Class D
Cumulative Applicable Periodic Interest Shortfall Amount, if any;

 

(20)                            to pay
termination payments payable to any Hedge Counterparty upon the termination of
the related Hedge Agreement, pro rata, if such termination occurred solely as the result of
an event of default or a termination event with respect to any Hedge
Counterparty as Defaulting Party or sole Affected Party, as the case may be;

 

(21)                            to pay, in the
following order:

 

(i)                                     any due and
unpaid Trustee Fee, Trustee Expenses and any due Income Note Paying Agent Fee
and unpaid Administrative Expenses, including amounts payable to the Collateral
Advisor under the Collateral Advisory Agreement but excluding the Collateral
Advisory Fee, in each case, in the same order of priority as provided in Section
11.1(a)(1) above and to the extent not paid in full under Section 11.1(a)(1) above
without regard to any limitation on any maximum amounts payable on such date
contained therein; and

 

(ii)                                  on a pro
rata basis, any due and unpaid expenses and other liabilities of the
Co-Issuers to the extent not paid under clause (1) above, whether as a
result of an amount limitation imposed thereunder or otherwise;

 

(22)                            to pay the
Subordinate Collateral Advisory Fee with respect to such Payment Date and any
due and unpaid Subordinate Collateral Advisory Fee with respect to a previous
Payment Date that was not paid on a previous Payment Date;

 

(23)                            after the
Payment Date occurring in April 2017, to pay from remaining Collateral Interest
Collections on any Payment Date the principal on the Class D Notes, until
paid in full, then the principal on the Class C-2 Notes, until paid in
full, then the principal of the Class C-1 Notes, until paid in full, then
the principal on the Class B Notes, until paid in full, then the principal
on the Class A-2 Notes until paid in full and then the principal on the Class A-1
Notes until paid in full; and

 

(24)                            all Income Note
Excess Funds to the Income Note Paying Agent, on behalf of the Issuer, for
distributions on the Income Notes in accordance with the Income Note Paying
Agency Agreement.

 

(b)                                 Collateral Principal Collections. On any Payment
Date that is not a Redemption Date or a Payment Date following the occurrence
and continuation of an acceleration of the Rated Notes in connection with an
Event of Default, in accordance with a Note Valuation Report prepared by the
Collateral Administrator as of the last day of the Due Period preceding such
Payment Date, Collateral Principal Collections, to the extent of Available
Funds in the Collection Account, will be applied by the Trustee in the
following order of priority:

 

(1)                                  to the payment
of the amounts referred to in Section 11.1(a)(1) through (5), in the same
order of priority specified therein, but only to the extent not paid in full
thereunder;

 

143

 

(2)                                  if either of
the Class A Coverage Tests is not satisfied as of the preceding
Calculation Date and to the extent that the amounts paid pursuant to Section 11.1(a)(6) are
insufficient to cause the Class A Coverage Tests to be satisfied, to pay
principal of the Class A-1 Notes then Outstanding until such Class A
Coverage Test is satisfied as of such Calculation Date or until the Class A-1
Notes are paid in full, and then to pay principal of the Class A-2 Notes
then Outstanding until such Class A Coverage Test is satisfied as of such
Calculation Date or until the Class A-2 Notes are paid in full; provided that for purposes of
determining if the Class A Principal Coverage Test is satisfied after
giving effect to any payments under this Section 11.1(b)(2), the
denominator of the Class A Principal Coverage Ratio shall be calculated
after giving effect to any payments of principal on the Class A Notes made
pursuant to any clause or subclause of Section 11.1(a) and pursuant
to this Section 11.1(b)(2); provided, further, that the numerator of the Class A
Principal Coverage Ratio shall be calculated after giving effect to any
Collateral Principal Collections applied pursuant to Section 11.1(b)(1) and
pursuant to this Section 11.1(b)(2) on the related Payment Date;

 

(3)                                  If the Class A
Notes are no longer Outstanding, to pay, in the following order, Periodic
Interest on the Class B Notes and any Defaulted Interest on the Class B
Notes, to the extent that the amounts paid pursuant to Section 11.1(a)(9) are
insufficient to pay such amounts in full;

 

(4)                                  if either of
the Class B Coverage Tests is not satisfied as of the preceding
Calculation Date and to the extent that the amounts paid pursuant to Section 11.1(a)(10) are
insufficient to cause the Class B Coverage Tests to be satisfied, to pay
principal of the most senior Class of Notes then Outstanding until such Class B
Coverage Test is satisfied as of such Calculation Date or until such most
senior Class of Notes is paid in full, and then to pay principal of the
next most senior Class of Notes Outstanding until such Class B Coverage
Test is satisfied as of such Calculation Date or until such next most senior Class of
Notes is paid in full and so on, until such Class B Coverage Test is
satisfied or until the Class B Notes are paid in full; provided that for purposes of
determining if the Class B Principal Coverage Test is satisfied after
giving effect to any payments under this Section 11.1(b)(4), the
denominator of the Class B  Principal
Coverage Ratio shall be calculated after giving effect to any payments of
principal on the Notes made pursuant to any clause or subclause of Section 11.1(a)
on the related Payment Date and pursuant to Section 11.1(b)(2) above and this
clause (4); provided,
further, that the numerator of the Class B Principal
Coverage Ratio shall be calculated after giving effect to any Collateral
Principal Collections applied pursuant to any of the clauses above and pursuant
to this Section 11.1(b)(4) on the related Payment Date; provided, further, that with respect to the Class B  Notes, payments
of principal not constituting Class B  Cumulative
Applicable Periodic Interest Shortfall Amount shall be paid before principal
constituting the Class B Cumulative Applicable Periodic Interest Shortfall
Amount, if any;

 

(5)                                  If the Class A
Notes are no longer Outstanding, the Class B  Cumulative
Applicable Periodic Interest Shortfall Amount, to the extent that the amounts
paid pursuant to Section 11.1(a)(11) are insufficient to pay such amounts
in full thereunder;

 

144

 

(6)                                If the Class A
Notes and the Class B Notes are no longer Outstanding, to pay Periodic
Interest on the Class C-1 Notes and any Defaulted Interest on the Class C-1
Notes, to the extent that the amounts paid pursuant to Section 11.1(a)(12)
are insufficient to pay such amounts in full thereunder;

 

(7)                                If the Class A
Notes, the Class B Notes, and the Class C-1 Notes are no longer
Outstanding, to pay Periodic Interest on the Class C-2 Notes and any
Defaulted Interest on the Class C-2 Notes, to the extent that the amounts
paid pursuant to Section 11.1(a)(13) are insufficient to pay such amounts
in full thereunder;

 

(8)                                if either of
the Class C Coverage Tests is not satisfied as of the preceding
Calculation Date and to the extent that the amounts paid pursuant to Section 11.1(a)(14)
are insufficient to cause the Class C Coverage Tests to be satisfied, to
pay principal (including any Class B  Cumulative Applicable Periodic
Interest Shortfall Amount, Class C-1 Cumulative Applicable Periodic
Interest Shortfall Amount or Class C-2 Cumulative Applicable Periodic
Interest Shortfall Amount as applicable) of the most senior Class of Notes
then Outstanding until such Class C Coverage Test is satisfied as of such
Calculation Date or until such most senior Class of Notes is paid in full,
and then to pay principal of the next most senior Class of Notes
Outstanding until such Class C Coverage Test is satisfied as of such
Calculation Date or until such next most senior Class of Notes is paid in
full and so on, until such Class C Coverage Test is satisfied or until the
Class C-1 Notes and then the Class C-2 Notes, in that order are paid
in full; provided that for
purposes of determining if the Class C Principal Coverage Test is
satisfied after giving effect to any payments under this Section 11.1(b)(8),
the denominator of the Class C Principal Coverage Ratio shall be
determined after giving effect to any payments of principal on the Notes made
pursuant to any clause or subclause of Section 11.1(a) on the related
Payment Date and pursuant to any clause above and this Section 11.1(b)(8);
provided, further, that for
purposes of determining if the Class C Principal Coverage Test is
satisfied, the numerator of the Class C Principal Coverage Ratio shall be
calculated after giving effect to any Collateral Principal Collections to be
applied pursuant to any clause above and this Section 11.1(b)(8) on
the related Payment Date; and provided,
further, that with respect to (i) the Class B Notes,
payment of principal not constituting Class B Cumulative Applicable
Periodic Interest Shortfall Amount shall be paid before principal constituting Class B
Cumulative Applicable Periodic Interest Shortfall Amount; (ii) the Class C-1
Notes, payment of principal not constituting Class C-1 Cumulative Applicable
Periodic Interest Shortfall Amount shall be paid before principal constituting
the Class C-1 Cumulative Applicable Periodic Interest Shortfall Amount, if
any; and (iii) the Class C-2 Notes, payment of principal not
constituting Class C-2 Cumulative Applicable Periodic Interest Shortfall
Amount shall be paid before principal constituting Class C-2 Cumulative
Applicable Periodic Interest Shortfall Amount, if any;

 

(9)                                If the Class A
Notes and the Class B  Notes are no longer Outstanding, to
pay, in the following order:

 

(i)                                    the Class C-1
Cumulative Applicable Periodic Interest Shortfall Amount, to the extent that
the amounts paid pursuant to Section 11.1(a)(15) are insufficient to pay
such amounts in full thereunder; and

 

145

 

(ii)                                 if the Class A
Notes, Class B Notes and the Class C-1 Notes are no longer
Outstanding, the Class C-2 Cumulative Applicable Periodic Interest
Shortfall Amount, to the extent that the amounts paid pursuant to Section 11.1(a)(16)
are insufficient to pay such amounts in full thereunder;

 

(10)                          If the Class A
Notes, the Class B Notes and the Class C Notes are no longer
Outstanding, to pay Periodic Interest on the Class D Notes and any
Defaulted Interest on the Class D Notes, to the extent that the amounts
paid pursuant to Section 11.1(a)(17) are insufficient to pay such amounts
in full thereunder;

 

(11)                          If either of
the Class D Coverage Tests is not satisfied as of the preceding
Calculation Date and to the extent that amounts paid pursuant to Section 11.1(a)(18)
of Section 11.1(a) are insufficient to cause the Class D
Coverage Tests to be satisfied, to pay principal (including any Class B
Cumulative Applicable Periodic Interest Shortfall Amount, Class C-1
Cumulative Applicable Periodic Interest Shortfall Amount, Class C-2
Cumulative Applicable Periodic Interest Shortfall Amount or Class D
Cumulative Applicable Periodic Interest Shortfall Amount, as applicable) of the
most senior Class of Notes then Outstanding until such Class D
Coverage Test is satisfied as of such Calculation Date or until such next most
senior Class of Notes is paid in full and so on, until such Class D
Coverage Test is satisfied or until the Class D Notes are paid in full; provided that for purposes of determining if the Class D
Principal Coverage Test is satisfied after giving effect to any payments under
this Section 11.1(b)(11), the denominator of the Class D Principal
Coverage Ratio shall be determined after giving effect to any payment of
principal on the Notes made pursuant to any clause or subclause of Section 11.1(a) on
the related Payment Date and pursuant to any clause or subclause above and this
Section 11.1(b)(11); provided, further, that for
purposes of determining if the Class D Principal Coverage Test is satisfied,
the numerator of the Class D Principal Coverage Ratio shall be calculated
after giving effect to any Collateral Principal Collections to be applied
pursuant to any clause or subclause above and this Section 11.1(b)(11) on
the related Payment Date; and provided,
further, that with respect to (i) the Class B  Notes, payment
of principal not constituting Class B Cumulative Applicable Periodic
Interest Shortfall Amount shall be paid before principal constituting the Class B
Cumulative Applicable Periodic Interest Shortfall Amount; (ii) the Class C-1
Notes, payment of principal not constituting Class C-1 Cumulative
Applicable Periodic Interest Shortfall Amount shall be paid before principal
constituting the Class C-1 Cumulative Applicable Periodic Interest
Shortfall Amount, if any; (iii) the Class C-2 Notes, payment of principal
not constituting Class C-2 Cumulative Applicable Periodic Interest
Shortfall Amount shall be paid before principal constituting Class C-2
Cumulative Applicable Periodic Interest Shortfall Amount, if any; and (iv) the
Class D Notes, payment of principal not constituting Class D
Cumulative Applicable Periodic Interest Shortfall Amount shall be paid before
principal constituting the Class D Cumulative Applicable Periodic Interest
Shortfall Amount, if any;

 

(12)                          if the Class A
Notes, the Class B Notes, and the Class C Notes are no longer Outstanding,
to pay the Class D Cumulative Applicable Periodic Interest

 

146

 

Shortfall
Amount, to the extent that amounts paid pursuant to Section 11.1(a)(19) of
Section 11.1(a) are insufficient to pay such amounts in full thereunder;

 

(13)                          to pay, in the
following order:

 

(i)                                    on each Payment
Date through and including the last Payment Date during the Reinvestment
Period, to pay to the Collection Account:

 

(A)                              to the extent
the accumulated Collateral Principal Payments for a CPP Asset Type have not
reached an aggregate amount that is equal to or greater than the Reinvestment
Threshold Amount, (x) if the Issuer, acting through the Collateral
Advisor, delivers notice that the Cash Release Conditions are satisfied with
respect to such Collateral Principal Payments for such CPP Asset Type, then to
apply all such Collateral Principal Payments in accordance with subclause (iii) below
or (y) in the absence of such notice, then to hold such amounts for
further accumulation and eventual reinvestment or application hereunder on a
later Payment Date; and

 

(B)                                to the extent
the accumulated Collateral Principal Payments for a CPP Asset Type have reached
an aggregate amount that is equal to or greater than the Reinvestment Threshold
Amount with respect to such CPP Asset Type;

 

1)                                      during the
Sixty-Day Reinvestment Window applicable to such Collateral Principal Payments
for such CPP Asset Type, to remain available in the applicable CPP Sub-Account
for application to the purchase of one or more Substitute Collateral Debt
Securities in an aggregate amount equal to the lesser of (x) the amount of
such Collateral Principal Payments and (y) the amount of such funds
available in the Collection Account; or

 

2)                                      after the
Sixty-Day Reinvestment Window applicable to such Collateral Principal Payments
for such CPP Asset Type, then to apply any remaining amount of such Collateral
Principal Payments in accordance with subclause (iii) below;

 

(ii)                                  on each Payment
Date through and including the last Payment Date  during the Three-Year Period, with respect to
the Sale Proceeds received in respect of any Credit Risk Security, Defaulted
Security, Equity Security, Withholding Tax Security or Written Down Security,
to pay to the Collection Account,

 

(A)                              during the
Sixty-Day Reinvestment Window applicable to such Sale Proceeds, to remain
available for application to the purchase of one or more Substitute Collateral
Debt Securities, an aggregate amount equal to the lesser of (x) such Sale
Proceeds

 

147

 

and (y) the amount of such funds available in the
Collection Account, or

 

(B)                                after the Sixty-Day Reinvestment Window applicable to such Sale Proceeds,
to apply any remaining amount of such Sale Proceeds in accordance with
subclause (iii) below;

 

(iii)                             (A)                                on each Payment Date through and including the last Payment Date during
the Reinvestment Period, to pay each Class of Rated Notes in full, pro rata, if the Special Amortization Pro Rata Condition is satisfied; and

 

(B)                                 otherwise, if the Special
Amortization Pro Rata Condition is not satisfied, to pay:

 

1)                                     first to the Class A-1 Notes,
until the Class A-1 Notes have been paid in full;

 

2)                                     second, to the Class A-2 Notes,
until the Class A-2 Notes have been paid in full;

 

3)                                     third, to the Class B Notes, until
the Class B Notes have been paid in full;

 

4)                                     fourth, to the Class C-1 Notes,
until the Class C-1 Notes have been paid in full;

 

5)                                     fifth, to the Class C-2 Notes,
until the Class C-2 Notes have been paid in full; and

 

6)                                     sixth, to the Class D Notes, until
the Class D Notes have been paid in full;

 

(14)                          after the end of the Reinvestment Period,
to pay each Class of Rated Notes:

 

(i)                                   first to the Class A-1 Notes, until the Class A-1 Notes have been paid in full;

 

(ii)                                second, to the
Class A-2 Notes, until the Class A-2 Notes have been paid in full;

 

(iii)                             third, to the
Class B Notes, until the Class B Notes have been paid in full;

 

(iv)                            fourth, to the
Class C-1 Notes, until the Class C-1 Notes have been paid in full;

 

(v)                               fifth, to the
Class C-2 Notes, until the Class C-2 Notes have been paid in full;
and

 

(vi)                            sixth, to the
Class D Notes, until the Class D Notes
have been paid in full;

 

148

 

(15)                          to pay
termination payments payable to any Hedge Counterparty upon the termination of
the related Hedge Agreement, pro rata, if such termination occurred
solely as the result of an event of default or a termination event with respect
to any Hedge Counterparty as Defaulting Party or sole Affected Party, as the
case may be, to the extent that the amounts paid pursuant to Section 11.1(a)(20)
are insufficient to pay such amounts in full thereunder;

 

(16)                          to pay, in the following order:

 

(i)                                   any due and
unpaid Trustee Fee, Trustee Expenses, and any due Income Note Paying Agent Fee
and any other unpaid Administrative Expenses, including amounts payable to the
Collateral Advisor under the Collateral Advisory Agreement but excluding the
Collateral Advisory Fee, in each case, in the same order of priority as
provided in Section 11.1(b)(1) above and to the extent not paid in
full under clause (1) above and to the extent that the amounts paid
pursuant to Section 11.1(a)(1) and (21) are insufficient to pay such
amounts in full thereunder; and

 

(ii)                                on a pro rata basis, any due and unpaid
expenses and other liabilities of the Co-Issuers to the extent not paid under Section 11.1(b)(1) above
and to the extent that the amounts paid pursuant to Section 11.1(a)(1) and
(21) are insufficient to pay such amounts in full thereunder, whether as a
result of an amount limitation imposed thereunder or otherwise;

 

(17)                          to pay the
Subordinate Collateral Advisory Fee with respect to such Payment Date and any
due and unpaid Subordinate Collateral Advisory Fee with respect to a previous
Payment Date that was not paid on a previous Payment Date, to the extent that
the amounts paid pursuant to Section 11.1(a)(22) are insufficient to pay
such amounts in full thereunder; and

 

(18)                          all Income Note
Excess Funds to the Income Note Paying Agent, on behalf of the Issuer, for
distributions on the Income Notes in accordance with the Income Note Paying
Agency Agreement.

 

(c)                                  If an Event of
Default has occurred and is continuing, on the date or dates determined by the
Trustee, the Trustee will pay, from all collections from, and proceeds of the
sale or liquidation of, the Collateral, in the following order:

 

(1)                              amounts corresponding
to the amounts set forth in clauses Section 11.1(a)(1) through (3),
and (to the extent not covered by Section 11.1(a)(1) through (3)) Section 11.1(b)(1);

 

(2)                              the Periodic
Interest on the Class A-1 Notes (including Defaulted Interest on such Class A-1
Notes, if any);

 

(3)                              the Periodic
Interest on the Class A-2 Notes (including Defaulted Interest on such Class A-2
Notes, if any);

 

(4)                              outstanding
principal on the Class A-1 Notes until paid in full;

 

(5)                              outstanding
principal on the Class A-2 Notes until paid in full; 

 

149

 

(6)                              the Periodic
Interest on the Class B Notes (including Defaulted Interest on the Class B
Notes, if any) and then outstanding principal on the Class B Notes
(including the Class B Cumulative Applicable Periodic Interest Shortfall
Amount, if any) until paid in full;

 

(7)                              the Periodic
Interest on the Class C-1 Notes (including Defaulted Interest on the Class C-1
Notes, if any) and then outstanding principal on the Class C-1 Notes (including
Class C-1 Cumulative Applicable Periodic Interest Shortfall Amount, if
any) until paid in full;

 

(8)                              the Periodic
Interest on the Class C-2 Notes (including Defaulted Interest on the Class C-2
Notes, if any) and then outstanding principal on the Class C-2 Notes
(including Class C-2 Cumulative Applicable Periodic Interest Shortfall
Amount, if any) until paid in full;

 

(9)                              the Periodic
Interest on the Class D Notes (including Defaulted Interest on the Class D
Notes, if any) and then outstanding principal on the Class D Notes
(including Class D Cumulative Applicable Periodic Interest Shortfall
Amount, if any) until paid in full;

 

(10)                        amounts
corresponding to the amounts set forth in Section 11.1(a)(20) through
(22), and Section 11.1(b)(15) through (17); and

 

(11)                        to the Income
Note Paying Agent, any remaining amounts for distributions on the Income Notes
as set forth in Section 11.1(a)(24) and Section 11.1(b)(18).

 

(d)                            Not later than
12:00 p.m., New York time, on or before the Business Day preceding each Payment
Date, the Issuer shall, pursuant to Section 10, remit or cause to be
remitted to the Trustee for deposit in the Payment Account an amount of Cash
sufficient to pay the amounts described in Section 11.1(a) and 11.1(b) required
to be paid on such Payment Date.

 

(e)                             If, on any
Payment Date, the amount available in the Payment Account from amounts received
in the related Due Period is insufficient to make the full amount of the
disbursements required by the statements furnished by the Issuer pursuant to Section 10.11(b),
the Trustee shall make the disbursements called for in the order and according
to the priority set forth under Section 11.1(a) and 11.1(b), subject
to Section 13.1, to the extent funds are available therefor.

 

(f)                               Except as
otherwise expressly provided in this Section 11.1, if on any Payment Date
the amount of funds is insufficient to make the full amount of the
disbursements required by any clause or subclause of Section 11.1(a) or
11.1(b) to different Persons, the Trustee shall make the disbursements
called for by such clause or subclause ratably in accordance with the
respective amounts of such disbursements then due and payable to the extent
funds are available therefor.

 

(g)                            With respect to
principal payments of the Class B Notes and Class C Notes in
connection with a mandatory redemption pursuant to Section 11.1(a)(10),
(14) or (18) and pursuant to Section 11.1(b)(4), (8) or (11), payment
of principal not constituting the Class B Cumulative Applicable Periodic
Interest Shortfall Amount shall be paid before principal constituting the Class B
Cumulative Applicable Periodic Interest Shortfall Amount, if

 

150

 

any, and payment of principal not constituting the Class C
Cumulative Applicable Periodic Interest Shortfall Amount shall be paid before
principal constituting the Class C Cumulative Applicable Periodic Interest
Shortfall Amount, if any.

 

(h)                            Any amounts to be paid to the Income Note
Paying Agent pursuant to Section 11.1(a)(24) or to Section 11.1(b)(18)
will be released from the lien of this Indenture.

 

(i)                                No Collateral Principal Collections will be paid to a Class of Rated
Notes in accordance with the Priority of Payments on a Payment Date if, after
giving effect to such payment, any Principal Coverage Test for a more Senior Class of
Rated Notes would have failed.

 

ARTICLE XII

 

PURCHASE AND SALE OF COLLATERAL DEBT SECURITIES 

 

12.1.                       SALE OF COLLATERAL DEBT SECURITIES

 

(a)                                  Sale of Collateral Debt Securities.

 

(1)                                Subject to the satisfaction of the conditions specified in Section 10.11
as applicable, if the Collateral Advisor, on behalf of the Issuer, pursuant to
this Article 12, shall direct the Trustee to sell any Temporary Ramp-Up
Security, Defaulted Security, Equity Security, Credit Risk Security, Written
Down Security or Withholding Tax Security, the Trustee shall sell in the manner
directed by the Collateral Advisor, any Temporary Ramp-Up Security, Defaulted
Security, Equity Security, Credit Risk Security, Written Down Security or
Withholding Tax Security.

 

(2)                                During the Ramp-Up Period, and in any event, no later than the Effective
Date, the Collateral Advisor shall direct the Issuer to sell or otherwise
dispose of all Temporary Ramp-Up Securities. Sale Proceeds received with respect
to Temporary Ramp-Up Securities shall be reinvested only in Ramp-Up Collateral
Debt Securities that are Fixed Rate Collateral Debt Securities, provided that any Sale Proceeds received
with respect to Temporary Ramp-Up Securities that are not reinvested in Fixed
Rate Collateral Debt Securities, other than not more than U.S.$500,000 of such
Sale Proceeds that may be reinvested in Substitute Collateral Debt Securities
that are not Fixed Rate Collateral Debt Securities, shall be treated as
Collateral Principal Collections and shall be applied by the Issuer to the
making of payments on the Notes, subject to and in accordance with the Priority
of Payments, on the Payment Date immediately following the Effective Date.

 

(3)                                The Collateral Advisor shall direct the Issuer to sell or otherwise
dispose of any Collateral Debt Security that is an Equity Security as soon as
practicable after such Collateral Debt Security becomes an Equity Security. The
Collateral Advisor may direct the Issuer to sell or otherwise dispose of all or
a portion of any Collateral Debt Security that is a Defaulted Security, a
Written Down Security or a Withholding Tax Security; provided
that the Collateral Advisor shall have (i) certified
that such Collateral Debt Security is a Defaulted Security, a Written Down
Security or a Withholding Tax Security and (ii) declared within five (5) Business
Days following such Collateral Debt Security becoming a

 

151

 

Defaulted
Security, a Written Down Security or a Withholding Tax Security whether it has
elected to direct the Issuer to sell or otherwise dispose of all or a specified
portion of such Collateral Debt Security. No such sale or other disposition is
permitted for the primary purpose of recognizing gains or decreasing losses
resulting from market value changes, or if the Issuer or the Collateral Advisor
believes that any such sale or other disposition would result, and no such sale
or disposition does result, in the reduction or withdrawal of the then-current
rating on any Class of Rated Notes by any Rating Agency. If the Collateral
Advisor elects to direct the Issuer to sell or otherwise dispose of any
Defaulted Security, Written Down Security or Withholding Tax Security as
described above, such Collateral Debt Security (or specified portion thereof)
is required to be sold or otherwise disposed of within twelve (12) months
following such election. If the Collateral Advisor does not elect within such
five (5) Business Days to direct the Issuer to sell or otherwise dispose
of any Defaulted Security, Written Down Security or Withholding Tax Security,
such Collateral Debt Security shall not be sold or otherwise disposed of and
shall remain part of the Collateral. Any decision by the Collateral Advisor to
sell or not to sell any Collateral Debt Security within five (5) Business
Days of such Collateral Debt Security first becoming either a Defaulted
Security or a Written Down Security or a Withholding Tax Security shall not
thereafter be changed by the Collateral Advisor or the Issuer for any reason.

 

(4)                                The Collateral
Advisor may direct the Issuer to sell or otherwise dispose of all or any
portion of any Collateral Debt Security that is a Credit Risk Security; provided that the
Collateral Advisor shall have (i) certified that a Credit Risk Event has
occurred and (ii) declared within five (5) Business Days following
the occurrence of any such Credit Risk Event that it has elected to direct the
Issuer to sell or otherwise dispose of all or a portion of such Collateral Debt
Security. No such sale or other disposition is permitted for the primary
purpose of recognizing gains or decreasing losses resulting from market value
changes, or if the Issuer or the Collateral Advisor believes that any such sale
or other disposition would result, and no such sale or disposition does result,
in the reduction or withdrawal of the then-current rating on any Class of
Rated Notes by any Rating Agency. If the Collateral Advisor elects to direct
the Issuer to sell or otherwise dispose of any Credit Risk Security as
described above, such Collateral Debt Security is required to be sold or
otherwise disposed of as soon as reasonably practicable and in any event within
30 days following such election. If the Collateral Advisor does not elect
within such five (5) Business Days following any Credit Risk Event to
direct the Issuer to sell or otherwise dispose of any Collateral Debt Security,
such Credit Risk Security shall not be sold or otherwise disposed of and shall
remain part of the Collateral, unless a subsequent Credit Risk Event occurs
with respect to such Collateral Debt Security (or such Collateral Debt Security
subsequently becomes a Defaulted Security, Written Down Security or Withholding
Tax Security) and the Collateral Advisor shall have made the certifications and
declarations described above.

 

(5)                                In the event of
a Redemption, the Collateral Advisor shall direct the Trustee to sell
Collateral Debt Securities without regard to the foregoing limitations; provided that the Sale
Proceeds therefrom and other amounts available therefor will be at least
sufficient to pay certain expenses, including all amounts due under any Hedge
Agreements, and redeem, in whole but not in part, the Notes at

 

152

 

the
applicable Redemption Prices; and provided, further, that such Sale Proceeds are
used to make such a Redemption.

 

(6)                                The Collateral
Advisor shall sell any Collateral Debt Security pursuant to this Section 12
only at a price that, in its judgment, is not substantially less than the
market value of such Collateral Debt Security at the time of such sale.

 

(b)                            Reinvestment of Sale Proceeds and Replacement of Collateral Debt
Securities. Following the Closing Date and during (i) the
Ramp-Up Period, subject to the Ramp-Up Criteria, and (ii) the Three-Year
Period, and subject to the satisfaction of the Eligibility Criteria and the
Replacement Criteria in all cases during the periods set forth in (i) and (ii) above,
the Collateral Advisor, acting on behalf of the Issuer shall be required, on a
best efforts basis, to instruct the Trustee, within the Sixty-Day Reinvestment
Window, to reinvest Sale Proceeds received at any time from the sale of
Collateral Debt Securities that are Defaulted Securities, Equity Securities,
Credit Risk Securities, Written Down Securities or Withholding Tax Securities
in Substitute Collateral Debt Securities with an aggregate purchase price up to
the amount of the Sale Proceeds; provided, however, that prior to any such
acquisition of Substitute Collateral Debt Securities by or on behalf of the
Issuer in the manner described above, the following conditions are satisfied on
the date of such acquisition:

 

(1)                                the cumulative
amount reinvested in Substitute Collateral Debt Securities with Sale Proceeds
received in the manner specified above does not exceed the Five Percent Limit;

 

(2)                                any such
acquisition is not for the primary purpose of recognizing gains or decreasing
losses resulting from market value changes;

 

(3)                                neither the
Issuer nor the Collateral Advisor believes that any such acquisition will
result, and no such acquisition does result, in a reduction or withdrawal of
the then-current rating on any Class of Rated Notes by any Rating Agency;

 

(4)                                the rating by
any Rating Agency on (A) the Class A Notes is one or more notches
below the rating assigned to the Class A Notes by such Rating Agency on
the Closing Date; or (B) any other Class of Rated Notes is two or
more notches below the rating assigned to such Class of Rated Notes by
such Rating Agency on the Closing Date; and

 

(5)                                the Replacement
Criteria are satisfied;

 

In
addition, on each date of purchase of a Substitute Collateral Debt Security,
each of the Coverage Tests and the Collateral Quality Tests will be required to
remain satisfied after giving effect to the purchase of such Substitute
Collateral Debt Security (which date of purchase shall be deemed to be the date
on which the Issuer enters into commitments to purchase such Substitute
Collateral Debt Security), or, if immediately prior to giving effect to such
purchase any of the foregoing tests was not satisfied, no such tests that were
not satisfied shall be made worse after giving effect to such proposed purchase
and no such Coverage Tests or Collateral Quality Tests that were satisfied
shall fail to be satisfied after giving effect to such purchase.

 

153

 

If
all such Sale Proceeds related to the sale of any Defaulted Securities, Equity
Securities, Credit Risk Securities, Written Down Securities or Withholding Tax
Securities are not reinvested in Substitute Collateral Debt Securities as
described above for any reason within the Sixty Day Reinvestment Window, the
Issuer will be obligated to reinvest such Sale Proceeds in Eligible Investments
until the next succeeding Payment Date, at which time the Trustee on behalf of
the Issuer will distribute such Sale Proceeds in accordance with Section 11.1
of this Indenture.

 

(c)                                  Collateral Debt Security Principal Payments and
Reinvestment Criteria. Prior to the end of the Reinvestment Period,
the Issuer will use its best efforts to reinvest the Collateral Principal Payments
in the applicable CPP Sub-Account which were in such CPP Sub-Account at the
time the Reinvestment Threshold Amount was satisfied for any particular CPP
Asset Type in accordance with the Reinvestment Criteria during the Sixty-Day
Reinvestment Window following any date on which the amount of Collateral
Principal Payments in such CPP Sub-Account becomes equal to or greater than the
Reinvestment Threshold Amount.

 

To
the extent accumulated Collateral Principal Payments for any CPP Asset Type
that are on deposit with the Trustee and as to which the Reinvestment Trigger
Date has not occurred are below the Reinvestment Threshold Amount, within five (5) Business
Days subsequent to receipt of any Collateral Principal Payment for such CPP
Asset Type, in the event the Collateral Advisor on behalf of the Issuer
determines that any reinvestment in Substitute Collateral Debt Securities of
the same CPP Asset Type (i) would not at such time be practicable on
commercially reasonably terms or (ii) would decrease compliance with any
of the Coverage Tests or the Collateral Quality Tests of the portfolio of the
Collateral Debt Securities ((i) and (ii) collectively, the Cash Release Conditions), the Issuer will
have the right to elect that all (but not less than all) of such Collateral
Principal Payments not be accumulated for reinvestment in Substitute Collateral
Debt Securities and instead be reinvested in Eligible Investments until the
next succeeding Payment Date, whereupon the Issuer will distribute such
Collateral Principal Payments in accordance with the Priority of Payments.
Where the Cash Release Conditions are not satisfied, such Collateral Principal
Payments will be held in the applicable CPP Sub-Account corresponding to such
CPP Asset Type until the Reinvestment Threshold Amount for the applicable CPP
Asset Type is satisfied, and prior to such time will not be distributed.

 

If
accumulated Collateral Principal Payments exceed the Reinvestment Threshold
Amount for a CPP Asset Type, the Collateral Advisor will be required to use its
best efforts to direct the Issuer to reinvest, within 60 calendar days of the
Reinvestment Trigger Date, such Collateral Principal Payments in Substitute
Collateral Debt Securities (which shall in all cases satisfy the Eligibility
Criteria) in accordance with the Reinvestment Criteria; provided, however, that Collateral Principal
Payments comprised of Collateral Principal Collections from Substitute
Collateral Debt Securities may not be invested further in Substitute Collateral
Debt Securities and must instead be reinvested in Eligible Investments until
the next succeeding Payment Date, whereupon the Issuer will distribute such
Collateral Principal Payments as Collateral Principal Collections in accordance
with Section 11.1 hereof; and provided, further, that (i) Collateral
Principal Payments may not be reinvested in any Substitute Collateral Debt
Securities to the extent that on any date the cumulative amount of proceeds
from Collateral Principal Payments that have been reinvested through such date
would exceed an amount equal to 35% of the CDS Principal Balance as of the
Effective Date, in which case the Issuer will distribute

 

154

 

such
excess of Collateral Principal Payments (and any subsequent Collateral
Principal Payments) in accordance with Section 11.1(b), and (ii) a
reinvestment of any Collateral Principal Payment in any Substitute Collateral
Debt Security is only permitted to occur on any date if (A) any such
acquisition is not for the primary purpose of recognizing gains or decreasing
losses resulting from market value changes and (B) neither the Issuer nor
the Collateral Advisor believes that any such acquisition will result, and no
such acquisition does result, in a reduction or withdrawal of the then-current
rating on any Class of Rated Notes by any Rating Agency. Unless otherwise
notified by the Collateral Advisor, the Trustee will be entitled to act on the
basis that no such acquisition will result in a reduction or withdrawal of the
then-current rating on any Class of Rated Note by any Rating Agency.

 

In
addition, on each date of purchase of a Substitute Collateral Debt Security,
each of the Coverage Tests and the Collateral Quality Tests will be required to
remain satisfied after giving effect to the purchase of such Substitute
Collateral Debt Security (which date of purchase shall be deemed to be the date
on which the Issuer enters into commitments to purchase such Substitute
Collateral Debt Security), or if immediately prior to giving effect to such
purchase any of the foregoing tests was not satisfied, no such tests that were
not satisfied shall be made worse after giving effect to such proposed purchase
and no such Coverage Tests or Collateral Quality Tests that were satisfied shall
fail to be satisfied after giving effect to such purchase.

 

If
all Collateral Principal Payments for which the Reinvestment Trigger Date has
occurred are not reinvested in Substitute Collateral Debt Securities as
described above for any reason within the Sixty-Day Reinvestment Window, then
such Collateral Principal Payments will be required to be reinvested in
Eligible Investments until the Business Day immediately preceding the next
succeeding Payment Date, whereupon the Issuer will be required to transfer such
amounts to the Payment Account (which amounts will at such time become fungible
with all other amounts contained in the Payment Account) and distribute such
amounts in accordance with Section 11.1(b).

 

In
the event of an Optional Redemption, Auction Call Redemption or Tax Redemption
of the Notes in whole, but not in part, the Collateral Advisor will direct the
Trustee to sell Collateral Debt Securities without regard to the foregoing
limitations; provided that such sales
are conducted in accordance with the Auction Procedures and Section 9.2.

 

12.2.     PORTFOLIO CHARACTERISTICS

 

Except
as provided in Section 12.3(c), a security will be eligible for inclusion
in the Collateral as a Pledged Collateral Debt Security only if, as evidenced
by an Officer’s certificate from the Collateral Advisor to the Trustee, each of
the following eligibility criteria is satisfied immediately after the Issuer
Grants such Collateral Debt Security to the Trustee (collectively, the Eligibility Criteria):

 

(a)                            it is issued by
an issuer incorporated or organized under the laws of the United States, the Bahamas,
Bermuda, the Cayman Islands, the British Virgin Islands, the Netherlands
Antilles, Jersey, Guernsey or Luxembourg or, it is issued by a Qualifying
Foreign Obligor;

 

(b)                           it is U.S.
Dollar-denominated, and it is not convertible into, or payable in, any other currency;

 

155

 

(c)                            it is one of
the Specified Types of Collateral Debt Securities;

 

(d)                           it has an
S&P Rating (which rating does not include a “p”, “pi”, “q”, “t” or “r”
subscript) and a Fitch Rating;

 

(e)                            the
acquisition, ownership, enforcement and disposition of such security will not
cause the Issuer to be treated as engaged in a U.S. trade or business for U.S.
federal income tax purposes or otherwise to be subject to tax on a net income
basis in any jurisdiction outside the Issuer’s jurisdiction of incorporation
(other than as attributable to property received in connection with a
foreclosure, as permitted under the Transaction Documents);

 

(f)                              the payments on
such security are not subject to withholding tax unless the issuer thereof or
the obligor thereon is required to make additional payments sufficient to cover
any withholding tax imposed at any time on payments made to the Issuer with
respect thereto;

 

(g)                           its acquisition
would not cause the Issuer or the pool of Collateral to be required to register
as an investment company under the Investment Company Act;

 

(h)                           it is not a
security that is ineligible under its Underlying Instruments to be purchased by
the Issuer and pledged to the Trustee;

 

(i)                               it is not an
insurance-linked debt instrument containing a provision pursuant to which the
issuer’s obligation to pay interest or principal is deferred or forgiven in the
event of loss due to certain natural catastrophes specified in the Underlying
Instruments;

 

(j)                               it provides for
the payment of principal at not less than par upon maturity;

 

(k)                            its Underlying
Instruments do not obligate the Issuer to make any future advances or any other
payment except the purchase price thereof;

 

(1)                            it is not a
security with respect to which, in the reasonable judgment of the Collateral Advisor,
the timely repayment of principal and interest is subject to substantial
non-credit related risks;

 

(m)                         it is not an
Interest Only Security;

 

(n)                           it is not a
security issued by an Emerging Market Issuer;

 

(o)                           it is not a
security that has an S&P Rating lower than “B-” or a Fitch Rating lower
than “B-”at the time of purchase;

 

(p)                           it is not a
security that has, at the time of purchase, any deferred or capitalized
interest;

 

(q)                           it is not a
security that, at the time it is purchased, is a Credit Risk Security, a
Defaulted Security, a Written Down Security or a Deferred Interest PIK Bond;

 

(r)                              it is not a
Synthetic Security;

 

(s)                            at the time the
security is purchased by the Issuer:

 

156

 

(1)                            it is not a
security issued by an issuer located in a country that imposes foreign exchange
controls that effectively limit the availability or use of U.S. Dollars to make
when due the scheduled payments of principal and interest on such security;

 

(2)                            it is not, and
does not provide for conversion or exchange into, Margin Stock at any time over
its life;

 

(3)                            it is not an
obligation which (1) was incurred in connection with a merger,
acquisition, consolidation or sale of all or substantially all of the assets of
a person or entity or similar transaction (except in the case of one REIT Debt
Security acquired on or before the Closing Date for an amount not exceeding
U.S.$8,000,000) and (2) by its terms is required to be repaid within one
year of the incurrence thereof with proceeds from additional borrowings or
other refinancing;

 

(4)                            it is not the
subject of (1) any offer by the issuer of such security or by any other
person made to all of the holders of such security to purchase or otherwise
acquire such security (other than pursuant to any redemption in accordance with
the terms of the related underlying instruments) or to convert or exchange such
security into or for cash, securities or any other type of consideration or (2) any
solicitation by an issuer of such security or any other person to amend, modify
or waive any provision of such security or any related underlying instrument,
and has not been called for redemption;

 

(5)                            it is not an
Equity Security;

 

(6)                            it is not a
security that by the terms of its underlying instruments provides for
conversion or exchange (whether mandatory or at the option of the issuer or the
holder thereof) into equity capital at any time prior to its maturity;

 

(7)                            it is not a
financing by a debtor-in-possession in any insolvency proceeding;

 

(8)                            it is not a
first loss tranche of any securitization that does not have an S&P Rating
(as defined in clause (i) of the definition of S&P Rating) that addresses
the obligation of the obligor (or guarantor, if applicable) to pay principal of
and interest on the relevant Collateral Debt Security in full, which ratings
are monitored on an ongoing basis by the relevant Rating Agency;

 

(9)                            it is not a
security that provides for the payment of interest in cash less frequently than
semi-annually;

 

(10)                       if it is a
mezzanine loan secured by ownership interests in entities owning commercial
properties (each, a Mezzanine Loan), (a) the
Mezzanine Loan is subject to servicing, custodial and/or similar arrangements
customary for Mezzanine Loans as determined by the Collateral Advisor in its
reasonable discretion, (b) the requirements set forth in the Indenture
regarding the representations and warranties with respect to the underlying
mortgaged property and the Mezzanine Loan have been met and (c) the terms
of the Underlying Instruments are consistent with the terms of similar
Underlying Instruments with

 

157

 

respect
to Mezzanine Loans as determined by the Collateral Advisor in its reasonable
discretion; and

 

(11)                          if it is a
Deemed Floating Rate Collateral Debt Security, the Deemed Floating Asset Hedge
entered into with respect to such Deemed Floating Rate Collateral Debt Security
conforms to all requirements set forth in the definition of “Deemed Floating
Asset Hedge”;

 

provided that notwithstanding
anything to the contrary herein, the Issuer may, while attempting to dispose of
property acquired in foreclosure or similar circumstances, make an election
under Section 882(d) of the Code to treat the income related to real
property located in the United States as income that is effectively connected
with a U.S. trade or business; provided
further that except for property acquired by the Issuer in
foreclosure or similar circumstances and for property expressly permitted to be
acquired by the Issuer, the Issuer may not purchase, acquire or hold (whether
as part of a unit with a Collateral Debt Security, in exchange for a Collateral
Debt Security or otherwise) any asset unless the underlying documents for such
asset specify, or the Issuer has received advice of tax counsel of nationally
recognized standing in the United States experienced in such matters to the
effect that, under the relevant facts and circumstances with respect to such
transaction, for U.S. federal income tax purposes, (i) the obligation or
security is indebtedness, (ii) all obligors and issuers of asset are
classified as corporations (and no elections have been made to the contrary), (iii) no
obligor on or issuer of the asset is engaged in the conduct of a trade or
business within the United States, or (iv) all obligors and issuers of the
asset qualify as “grantor trusts”, and all of the assets of the obligors and
issuers of the asset consist of obligations or securities that the Issuer could
have directly acquired and held as assets (but for restrictions related to
withholding taxes) and, notwithstanding anything to the contrary herein, the
Issuer shall not purchase, acquire or hold any asset the gain from the
disposition of which will be subject to U.S. federal income or withholding tax
under Section 897 or Section 1445 of the Code and the Treasury
regulations promulgated thereunder.

 

12.3.        CONDITIONS APPLICABLE TO
ALL TRANSACTIONS INVOLVING SALE OR GRANT

 

(a)                                  Any transaction
effected under Section 5, Section 9, Section 10.2 or Section 12.1
shall be conducted on an arms’ length basis and if effected with the Issuer, the
Trustee, the Collateral Advisor or any Affiliate of any of the foregoing, shall
be effected in a secondary market transaction on terms at least as favorable to
the Rated Noteholders as would be the case if such Person were not so
Affiliated; provided that any
disposition of a Collateral Debt Security in accordance with Section 12.1
shall be deemed to comply with this Section 12.3(a). The Trustee shall
have no responsibility to oversee compliance with this clause by the other
parties.

 

(b)                                 Upon any purchase
or substitution pursuant to this Section 12, all of the Issuer’s right,
title and interest to the Pledged Security or Securities shall be, and hereby
is, Granted to the Trustee pursuant to this Indenture, such Pledged Security or
Securities shall be registered in the name of the Trustee, and, if applicable,
the Trustee shall receive such Pledged Security or Securities. The Trustee
shall receive, not later than the date of delivery of any Pledged Security
pursuant to a purchase under this Section 12, (a) an Officer’s
Certificate of the Collateral Advisor certifying (1) compliance with the
Reinvestment Criteria in accordance with Section 12.1(d), (2) that
the Collateral Debt Security to be sold constitutes an Equity Security, a
Defaulted Security, a Credit Risk Security, a Withholding Tax Security or a
Written Down Security and (3) that any security to be purchased satisfies
the definition of Collateral Debt Security and (b) an

 

158

 

Officer’s
Certificate of the Collateral Advisor on behalf of the Issuer containing the
statements set forth in Section 3.2(b)(2) through (4), (6) and
(7).

 

(c)                             Notwithstanding
anything contained in this Section 12 to the contrary, the Issuer shall,

subject to Section 12.3(d), have the right to effect any transaction to
which the Initial Hedge Counterparty and Holders of Rated Notes evidencing 100%
of the Aggregate Outstanding Amount of each Class of Rated Notes, and each
Income Noteholder has consented, and of which each Rating Agency has been
notified in advance.

 

(d)                            Except as
specifically provided in this Indenture, in no event may the Issuer (i) engage
in

any business or activity that would cause the Issuer to be treated as engaged
in a U.S. trade or business for U.S. federal income tax purposes or (ii) acquire
or hold any asset that is an equity interest in an entity that is treated as a
partnership engaged in a U.S. trade or business for U.S. federal income tax
purposes or the acquisition or ownership of which otherwise would subject the
Issuer to net income tax in any jurisdiction outside its jurisdiction of
incorporation. The foregoing shall not, however, preclude the Issuer from
holding Equity Securities or securities received in an Offer pending their sale
in accordance with Section 12.1(c).

 

ARTICLE XIII

 

SECURED PARTIES’ RELATIONS

 

13.1.        SUBORDINATION

 

(a)                                  Anything in
this Indenture or the Rated Notes to the contrary notwithstanding, the Issuer
and the Holders of the Rated Notes agree for the benefit of the Initial Hedge
Counterparty that the Rated Notes and the Issuer’s rights in and to the
Collateral (solely with respect to all amounts payable to such Initial Hedge
Counterparty pursuant to Section 11.1(a)(3)), the Subordinate Interests)  shall be
subordinate and junior to the rights of such Hedge Counterparty with respect to
payments to be made to such Initial Hedge Counterparty pursuant to the initial
Hedge Agreement to the extent and in the manner set forth in Section 11.1(a)(3) and
hereinafter provided. If any Event of Default (including an Event of Default
specified in Section 5.1(g) or (h)) has occurred and has not been
cured or waived all amounts payable to the Initial Hedge Counterparty pursuant
to Section 11.1(a)(3) shall be paid in Cash or, to the extent the
Initial Hedge Counterparty consents, other than in Cash, before any further
payment or distribution is made on account of the Subordinate Interests.

 

(b)                                 Anything in
this Indenture or the Rated Notes to the contrary notwithstanding, the Issuer
and the Holders of the Class A-2 Notes, the Class B Notes, the Class C
Notes and the Class D Notes agree for the benefit of the Holders of the Class A-1
Notes that the Class A-2 Notes, the Class B Notes, the Class C
Notes and the Class D Notes and the Issuer’s rights in and to the
Collateral (with respect to the Class A-1 Notes, the Subordinate
Interests) shall be subordinate and junior to the Class A-1 Notes to the
extent and in the manner set forth in this Indenture, including as set forth in
Section 11.1(a) and hereinafter provided. If any Event of Default
(including an Event of Default specified in Section 5.1(g) or (h))
has occurred and has not been cured or waived, the Class A-1 Notes shall
be paid in full in Cash or, to the extent a Majority of the Class A-1
Notes consent, other than in Cash, before any further payment or distribution
is made on account of the Subordinate Interests. The Holders of Rated Notes
evidencing Subordinate Interests and

 

159

 

the
holders of equity in the Issuer and the Co-Issuer agree, for the benefit of the
Holders of the Class A-1 Notes, not to cause the filing of a petition in
bankruptcy against the Issuer or the Co-Issuer for failure to pay to them
amounts due under the Rated Notes evidencing such Subordinate Interests or
hereunder until the payment in full of the Class A-1 Notes and not before
one year and one day has elapsed since such payment or, if longer, the
applicable preference period then in effect, including any period established
pursuant to the laws of the Cayman Islands.

 

(c)                                  Anything in
this Indenture or the Rated Notes to the contrary notwithstanding, the Issuer
and the Holders of the Class C Notes and the Class D Notes agree for
the benefit of the Holders of the Class A Notes and the Class B Notes
that the Class C Notes and the Class D Notes and the Issuer’s rights
in and to the Collateral (with respect to the Class A Notes and the Class B
Notes the Subordinate Interests)  shall be
subordinate and junior to the Class A Notes to the extent and in the
manner set forth in this Indenture, including as set forth in Section 11.1(a) and
hereinafter provided. If any Event of Default (including an Event of Default
specified in Section 5.1(g) or (h)) has occurred and has not been
cured or waived, the Class A Notes shall be paid in full in Cash or, to
the extent a Majority of the Class A Notes and the Class B Notes
consent, other than in Cash, before any further payment or distribution is made
on account of the Subordinate Interests. The Holders of Rated Notes evidencing
Subordinate Interests and the holders of equity in the Issuer and the Co-Issuer
agree, for the benefit of the Holders of the Class A Notes and the Class B
Notes, not to cause the filing of a petition in bankruptcy against the Issuer
or the Co- Issuer for failure to pay to them amounts due under the Rated Notes
evidencing such Subordinate Interests or hereunder until the payment in full of
the Class A Notes and the Class B Notes and not
before one year and one day has elapsed since such payment or, if longer, the
applicable preference period then in effect, including any period established
pursuant to the laws of the Cayman Islands.

 

(d)                                 Anything in
this Indenture or the Rated Notes to the contrary notwithstanding, the Issuer
and the Holders of the Class C Notes and the Class D Notes agree for
the benefit of the Holders of the Class A Notes and the Class B Notes
that the Class C Notes and the Class D Notes and the Issuer’s rights
in and to the Collateral (with respect to the Class A Notes and the Class B
Notes, the Subordinate Interests)  shall be
subordinate and junior to the Class A Notes and the Class B Notes to
the extent and in the manner set forth in this Indenture including as set forth
in Section 11.1(a) and hereinafter provided. If any Event of Default
(including an Event of Default specified in Section 5.1(g) or (h))
has occurred and has not been cured or waived the Class A Notes shall be
paid in full in Cash or, to the extent a Majority of the Class A Notes and
the Class B Notes consent, other than in Cash, before any further payment
or distribution is made on account of the Subordinate Interests. The Holders of
Rated Notes evidencing Subordinate Interests and the holders of equity in the
Issuer and the Co-Issuer agree, for the benefit of the Holders of the Class A
Notes and the Class B Notes, not to cause the filing of a petition in
bankruptcy against the Issuer or the Co-Issuer for failure to pay to them
amounts due under the Rated Notes evidencing such Subordinate Interests or
hereunder until the payment in full of the Class A Notes and the Class B Notes and not
before one year and one day has elapsed since such payment or, if longer, the
applicable preference period then in effect, including any period established
pursuant to the laws of the Cayman Islands.

 

(e)                                  Anything in
this Indenture or the Rated Notes to the contrary notwithstanding, the Issuer
and the Holders of the Class C-2 Notes and the Class D Notes agree
for the benefit of the

 

160

 

Holders
of the Class A Notes, the Class B Notes and the Class C-1 Notes
that the Class A Notes, the Class B Notes and the Class C-1
Notes and the Issuer’s rights in and to the Collateral (with respect to the Class C-2
Notes, the Subordinate Interests) shall be subordinate and junior to the Class A
Notes, the Class B Notes and the Class C-1 Notes to the extent and in
the manner set forth in this Indenture including as set forth in Section 11.1(a) and
hereinafter provided. If any Event of Default (including an Event of Default
specified in Section 5.1(g) or (h)) has occurred and has not been
cured or waived the Class A Notes, the Class B Notes and the Class C-1
Notes shall be paid in full in Cash or, to the extent a Majority of each of the
Class A Notes, the Class B Notes and the Class C-1 Notes
consent, other than in Cash, before any further payment or distribution is made
on account of the Subordinate Interests. The Holders of Rated Notes evidencing
Subordinate Interests and the holders of equity in the Issuer and the Co-Issuer
agree, for the benefit of the Holders of the Class A Notes, the Class B
Notes and the Class C-1 Notes, not to cause the filing of a petition in
bankruptcy against the Issuer or the Co-Issuer for failure to pay to them amounts
due under the Rated Notes evidencing such Subordinate Interests or hereunder
until the payment in full of the Class A Notes, the Class B Notes and
the Class C-1 Notes and not before one year and one day has elapsed since
such payment or, if longer, the applicable preference period then in effect,
including any period established pursuant to the laws of the Cayman Islands.

 

(f)                                    Anything in
this Indenture or the Rated Notes to the contrary notwithstanding, the Issuer
and the Holders of the Class D Notes agree for the benefit of the Holders
of the Class A Notes, the Class B Notes and the Class C Notes
that the Class D Notes and the Issuer’s rights in and to the Collateral
(with respect to the Class A Notes, the Class B Notes and the Class C
Notes, the Subordinate
Interests)  shall be
subordinate and junior to the Class A Notes, the Class B Notes to the
extent and in the manner set forth in this Indenture including as set forth in Section 11.1(a) and
hereinafter provided. If any Event of Default (including an Event of Default
specified in Section 5.1(g) or (h)) has occurred and has not been
cured or waived the Class A Notes, the Class B Notes and the Class C
Notes shall be paid in full in Cash or, to the extent a Majority of each of Class A
Notes, the Class B Notes and the Class C Notes consent, other than in
Cash, before any further payment or distribution is made on account of the
Subordinate Interests. The Holders of Rated Notes evidencing Subordinate
Interests and the holders of equity in the Issuer and the Co-Issuer agree, for
the benefit of the Holders of the Class A Notes, the Class B Notes
and the Class C Notes, not to cause the filing of a petition in bankruptcy
against the Issuer or the Co-Issuer for failure to pay to them amounts due
under the Rated Notes evidencing such Subordinate Interests or hereunder until
the payment in full of the Class A Notes, the Class B Notes and the Class C
Notes and not before one year and one day has elapsed since such payment or, if
longer, the applicable preference period then in effect, including any period
established pursuant to the laws of the Cayman Islands.

 

(g)                                 In the event that notwithstanding the provisions of this Indenture, any
Holder of any Subordinate Interests shall have received any payment or
distribution in respect of such Subordinate Interests contrary to the
provisions of this Indenture, then, unless and until all amounts payable to the
Initial Hedge Counterparty pursuant to Section 11.1(a)(3) or to the Class A
Notes, the Class B Notes, the Class C Notes or the Class D Notes
as the case may be, shall have been paid in full in Cash or, to the extent the
Initial Hedge Counterparty or a Majority of the Class A Notes, the Class B
Notes, the Class C Notes or the Class D Notes, as the case may be,
consent, other than in Cash in accordance with this Indenture, such payment or
distribution shall be received and held in trust for the benefit of, and shall
forthwith be paid over and delivered to, the Trustee, which shall pay and

 

161

 

deliver the same to such Initial Hedge Counterparty or the Holders of
the Class A Notes, the Class B Notes, the Class C Notes or the Class D
Notes, as the case may be, in accordance with this Indenture; provided that, if
any such payment or distribution is made other than in Cash, it shall be held
by the Trustee as part of the Collateral and subject in all respects to the
provisions of this Indenture, including this Section 13.1.

 

(h)                                 Each Holder of
Subordinate Interests agrees with the Initial Hedge Counterparty and all Holders
of the Class A Notes, the Class B Notes, the Class C Notes or
the Class D Notes, as the case may be, that such Holder of Subordinate
Interests shall not demand, accept, or receive any payment or distribution in
respect of such Subordinate Interests in violation of the provisions of this
Indenture including this Section 13.1; provided that after all amounts
payable pursuant to Section 11.1(a)(3) and all amounts payable in
respect of the Class A Notes, the Class B Notes, the Class C
Notes or the Class D Notes, as the case may be, have been paid in full,
the Holders of Subordinate Interests shall be fully subrogated to the rights of
the Initial Hedge Counterparty or the Holders of the Class A Notes, the Class B Notes, the Class C
Notes or the Class D Notes, as the case may be. Nothing in this Section 13.1
shall affect the obligation of the Issuer to pay Holders of Subordinate
Interests.

 

13.2.      STANDARD OF
CONDUCT

 

In
exercising any of its or their voting rights, rights to direct and consent or
any other rights as a Secured Party under this Indenture, subject to the terms
and conditions of this Indenture, including Section 5.9, a Secured Party
or Secured Parties shall not have any obligation or duty to any Person or to
consider or take into account the interests of any Person and shall not be
liable to any Person for any action taken by it or them or at its or their
direction or any failure by it or them to act or to direct that an action be
taken, without regard to whether such action or inaction benefits or adversely
affects any Secured Party, the Issuer, or any other Person.

 

ARTICLE
XIV

 

MISCELLANEOUS

 

14.1.      FORM OF DOCUMENTS DELIVERED TO TRUSTEE

 

In
any case where several matters are required to be certified by, or covered by
an opinion of, any specified Person, it is not necessary that all such matters
be certified by, or covered by the opinion of, only one such Person, or that
they be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.

 

Any
certificate or opinion of an Authorized Officer of the Issuer, the Co-Issuer or
the Collateral Advisor may be based, insofar as it relates to legal matters,
upon a certificate or opinion of, or representations by, counsel, unless such
Authorized Officer knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to the matters
upon which his certificate or opinion is based are erroneous. Any such
certificate of an Authorized Officer of the Issuer, the Co-Issuer or the
Collateral Advisor or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
Authorized Officer of the Issuer, the Co-Issuer, the Collateral Advisor 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 Advisor or
such other

 

162

 

Person,
unless such Authorized Officer of the Issuer, the Co-Issuer or the Collateral
Advisor or such counsel knows that the certificate or opinion or
representations with respect to such matters are erroneous. Any Opinion of
Counsel may also be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an Authorized Officer of the
Issuer, the Co-Issuer or the Collateral Advisor, stating that the information
with respect to such matters is in the possession of the Issuer, the Co-Issuer
or the Collateral Advisor, unless such counsel knows that the certificate or
opinion or representations with respect to such matters are erroneous.

 

Where
any Person is required to make, give or execute two or more applications,
requests, consents, certificates, statements, opinions or other instruments
under this Indenture, they may, but need not, be consolidated and form one
instrument.

 

Whenever
in this Indenture it is provided that the absence of the occurrence and
continuation of a Default is a condition precedent to the taking of any action
by the Trustee at the request or direction of the Issuer or the Co-Issuer, then
notwithstanding that the satisfaction of such condition is a condition
precedent to the Co-Issuers’ rights to make such request or direction, the
Trustee shall be protected in acting in accordance with such request or
direction if it does not have actual knowledge of the occurrence and
continuation of such Default as provided in Section 6.1(d).

 

14.2.        ACTS OF RATED
NOTEHOLDERS

 

(a)                                       Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Rated Noteholders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Rated Noteholders in person or by an agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee, and, where it is hereby expressly required, to the Issuer. Such
instrument or instruments (and the action or actions embodied therein and
evidenced thereby) are herein sometimes referred to as the Act  of the Rated Noteholders, signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Co-Issuers, if made in
the manner provided in this Section 14.2.

 

(b)                                      The fact and
date of the execution by any Person of any such instrument or writing may be
proved in any manner which the Trustee deems sufficient.

 

(c)                                       The principal
amount and registered numbers of Rated Notes held by any Person, and the date
of his holding the same, shall be proved by the Note Register.

 

(d)                                      Any request,
demand, authorization, direction, notice, consent, waiver or other action by
the Holder of any Rated Notes shall bind the Holder (and any transferee
thereof) of such Rated Note and of every Rated Note issued upon the
registration thereof or in exchange therefor or in lieu thereof, in respect of
anything done, omitted or suffered to be done by the Trustee or the Co-Issuers
in reliance thereon, whether or not notation of such action is made upon such
Rated Note.

 

163

 

14.3.                      NOTICES, ETC., TO TRUSTEE,
THE CO-ISSUERS AND THE RATING AGENCIES

 

Any request, demand, authorization, direction, notice,
consent, waiver or Act of Rated Noteholders or other documents provided or
permitted by this Indenture to be made upon, given or furnished to, or filed
with:

 

(a)                                 the Trustee or the Income
Note Paying Agent by any Rated Noteholder or by the Issuer or the Co-Issuer
shall be sufficient for every purpose hereunder if in writing and sent by
facsimile in legible form and confirmed by overnight courier service guaranteed
next day delivery to the Trustee or the Income Note Paying Agent addressed to
it at 9062 Old Annapolis Road, Columbia, Maryland 21045, Attn: CDO Trust
Services—N-Star III, telephone number 410-884-2000, fax number 410-715-3748 or
at any other address previously furnished in writing to the Co-Issuers or Rated
Noteholder by the Trustee or Income Note Paying Agent;

 

(b)                                the Issuer by the Trustee
or by any Rated Noteholder shall be sufficient for every purpose hereunder
(unless otherwise herein expressly provided) if in writing and mailed, first
class postage prepaid, hand delivered, sent by overnight courier service or by
facsimile in legible form, to the Issuer addressed to it at c/o Walkers SPV
Limited, P.O. Box 908 GT, Walker House, Mary Street, George Town, Grand
Cayman, Cayman Islands, Attention: The Directors, or at any other address
previously furnished in writing to the Trustee by the Issuer;

 

(c)                                 the Co-Issuer by the
Trustee or by any Rated Noteholder shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided) if in writing and
mailed, first-class postage prepaid, hand delivered, sent by overnight courier
service or by facsimile in legible form, to the Co-Issuer addressed to it at
c/o Puglisi & Associates, 850 Library Avenue, Suite 204, Newark,
Delaware 19711, Attention: Donald Puglisi, Esq., facsimile no.
302-738-7210, or at any other address previously furnished in writing to the
Trustee by the Co-Issuer;

 

(d)                                the Rating Agencies by the
Co-Issuers or the Trustee shall be sufficient for every purpose hereunder
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, hand delivered, sent by overnight courier service
or by facsimile in legible form, (i) in the case of Fitch, addressed to
Fitch Ratings, One State Street Plaza, New York, New York 10041, facsimile no.
212-558-2618, Attention: CDO Surveillance (e-mail:
cdo.surveillance@fitchratings.com); and (ii) in the case of S&P,
addressed to S&P, 55 Water Street, 41st Floor, New York, New York, 10041,
Attention: CDO Surveillance and all Note Valuation Reports shall be sent to
S&P electronically at cdo_surveillance@sandp.com; or

 

(e)                                 the Initial Hedge
Counterparty by the Co-Issuers or the Trustee shall be sufficient for every
purpose hereunder (unless otherwise herein expressly provided) if in writing
and mailed, first class postage prepaid, hand delivered or sent by overnight
courier service or by facsimile in legible form to the Initial Hedge Counterparty
addressed to it at the address specified in the initial Hedge Agreement or at
any other address previously furnished in writing to the Issuer or the Trustee
by the Initial Hedge Counterparty;

 

(f)                                   the Collateral Advisor by
the Co-Issuers or by the Trustee or a Majority of the Controlling Class, or by
the Collateral Administrator shall be sufficient for every purpose hereunder
(unless otherwise herein expressly provided) if in writing and sent by
facsimile

 

164

 

in legible form and confirmed by overnight courier service
guaranteed next day delivery, or by electronic mail (where expressly provided
herein) to the Collateral Advisor addressed to it at the address specified in
the Collateral Advisory Agreement or at any other address previously furnished
in writing to the Co-Issuers or the Trustee by the Collateral Advisor;

 

(g)                                the Income Note Paying
Agent by the Trustee in writing sent by facsimile confirmed by overnight
courier guaranteed next day delivery;

 

(h)                                Citigroup by the
Co-Issuers, the Collateral Advisor or the Trustee shall be sufficient for every
purpose hereunder (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid, hand delivered, sent by overnight
courier service or by telecopy in legible form, to Citigroup addressed to
Citigroup Global Markets, Inc., 390 Greenwich Street, 4th Floor, New York,
NY 10013, telecopy no. 212-723-8671, Attention: Global Structured Products; and

 

(i)                                    to the Repository by the
Issuer pursuant to this Indenture shall be made available to the Repository by
electronic mail as a pdf (portable document format) file to CDO Library, c/o
The Bond Market Association, 360 Madison Avenue (18th Floor), New York, NY
10017; Electronic mail address: admin@cdolibrary.com.

 

Delivery of any request, demand, authorization, direction,
notice, consent, waiver or Act of Rated Noteholders or other documents made as
provided above will be deemed effective: (i) if in writing and delivered
in person or by overnight courier service, on the date it is delivered; (ii) if
sent by facsimile transmission, on the date that transmission is received by
the recipient in legible form (as evidenced by the sender’s written record of a
telephone call to the recipient in which the recipient acknowledged receipt of
such facsimile transmission); and (iii) if sent by mail, on the date that
mail is delivered or its delivery is attempted; in each case, unless the date
of that delivery (or attempted delivery) or that receipt, as applicable, is not
a Business Day or that communication is delivered (or attempted) or received,
as applicable, after the close of business on a Business Day, in which case
that communication shall be deemed given and effective on the first following
day that is a Business Day.

 

14.4.                      NOTICES AND
REPORTS TO RATED NOTEHOLDERS; WAIVER

 

Except as otherwise expressly provided herein, where this
Indenture provides for a report to Holders or for a notice to Holders of Rated
Notes of any event, such notice shall be sufficiently given to Holders of Rated
Notes if in writing and mailed, first-class postage prepaid, to each Holder of
a Rated Note affected by such event, at the address of such Holder as it
appears in the Note Register, not earlier than the earliest date and not later
than the latest date, prescribed for the giving of such report or notice and
such report or notice shall be in the English language. Notwithstanding any
provision to the contrary contained herein or in any agreement or document related
hereto, any report, statement or other information to be provided by the
Trustee may be provided by providing access to the Trustee’s website containing
such information. Such reports and notices will be deemed to have been given on
the date of such mailing.

 

The Trustee will deliver to the Holder of any Rated Note
shown on the Note Register any readily available information or notice
requested to be so delivered, at the expense of the Issuer. In addition, for so
long as any Class of Rated Notes is listed on the Irish Stock Exchange and
so long as the rules of such exchange so require, notices to the Holders
of such Rated Notes shall also be given by the Trustee to the Irish Paying
Agent for delivery to the Company Announcements Office of the Irish Stock
Exchange.

 

165

 

Neither the failure to mail any notice, nor any defect in any notice so
mailed, to any particular Holder of a Rated Note shall affect the sufficiency
of such notice with respect to other Holders of Rated Notes.

 

Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Rated Noteholders shall be filed with the Trustee
but such filing shall not be a condition precedent to the validity of any
action taken in reliance upon such waiver.

 

In the event that, by reason of the suspension of the regular mail service
as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Rated Noteholders when such notice
is required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Trustee shall be
deemed to be a sufficient giving of such notice.

 

14.5.                      EFFECT OF
HEADINGS AND TABLE OF CONTENTS

 

The Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.

 

14.6.                      SUCCESSORS
AND ASSIGNS

 

All covenants and agreements in this Indenture by the Co-Issuers shall
bind their respective successors and assigns, whether so expressed or not.
Written notice of any assignment shall be promptly provided by the Issuer to
the Initial Hedge Counterparty, the Holders of Notes of the Controlling Class and
each Rating Agency.

 

14.7.                      SEVERABILITY

 

In case any provision in this Indenture or in the Rated Notes shall be
invalid, illegal or unenforceable, the validity, legality, and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.

 

14.8.                      BENEFITS OF
INDENTURE

 

The Rated Noteholders, the Initial Hedge Counterparty and each Income
Noteholder is an express third-party beneficiary of this Indenture. Nothing in
this Indenture or in the Rated Notes, expressed or implied, shall give to any
Person, other than the parties hereto and their successors hereunder, the Rated
Noteholders, the Initial Hedge Counterparty and each Income Noteholder, any
benefit or any legal or equitable right, remedy or claim under this Indenture.

 

14.9.                      GOVERNING
LAW

 

This Indenture and each Rated Note shall be governed by, and construed
in accordance with, the law of the State of New York.

 

14.10.                SUBMISSION TO
JURISDICTION

 

The Co-Issuers hereby irrevocably submit to the non-exclusive
jurisdiction of the Supreme Court of the State of New York sitting in Manhattan
and the U.S. District Court for the Southern District of

 

166

 

New York, and any court of appeal therefrom, in any action or
proceeding arising out of or relating to the Rated Notes or this Indenture, and
the Co-Issuers hereby irrevocably agree that all claims in respect of such
action or proceeding may be heard and determined in such New York State or
federal court. The Co-Issuers hereby irrevocably waive, to the fullest extent
that they may legally do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. The Co-Issuers hereby irrevocably
appoint and designate CT Corporation, 111 Eighth Avenue, 13th Floor, New York, New York 10011, or any other
Person having and maintaining a place of business in the State of New York whom
the Co-Issuers may from time to time hereafter designate as the true and lawful
attorney and duly authorized agent for acceptance of service of legal process
of the Co-Issuers. The Co-Issuers agree that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.

 

14.11.                COUNTERPARTS

 

This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.

 

14.12.                WAIVER OF JURY TRIAL

 

EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
PROCEEDING. Each party hereby (i) certifies that no representative, agent
or attorney of the other has represented, expressly or otherwise, that the
other would not, in the event of a Proceeding, seek to enforce the foregoing
waiver and (ii) acknowledges that it has been induced to enter into this
Indenture by, among other things, the mutual waivers and certifications in this
paragraph.

 

14.13.                JUDGMENT CURRENCY

 

This is an international financing transaction in which the
specification of Dollars (the Specified Currency), and the specification of the
place of payment, as the case may be (the Specified Place),  is
of the essence, and the Specified Currency shall be the currency of account in
all events relating to payments of or on the Rated Notes. The payment
obligations of the Co-Issuers under this Indenture and the Rated Notes shall
not be discharged by an amount paid in another currency or in another place,
whether pursuant to a judgment or otherwise, to the extent that the amount so
paid on conversion to the Specified Currency and transfer to the Specified
Place under normal banking procedures does not yield the amount of the
Specified Currency at the Specified Place. If for the purpose of obtaining
judgment in any court it is necessary to convert a sum due hereunder or the
Rated Notes in the Specified Currency into another currency (the Second Currency),  the rate of exchange which shall
be applied shall be that at which in accordance with normal banking procedures
the Trustee could purchase the Specified Currency with the Second Currency on
the Business Day next preceding that on which such judgment is rendered. The
obligation of the Co-Issuers in respect of any such sum due from the Co-Issuers
hereunder shall, notwithstanding the rate of exchange actually applied in
rendering such judgment, be discharged only to the extent that on the Business
Day following receipt by the Trustee of any sum adjudged to be due hereunder or
under the Rated Notes in the Second Currency the Trustee may in accordance with
normal banking procedures purchase and transfer to the Specified Place the
Specified Currency with the amount of the Second Currency so adjudged to be
due; and the Co-Issuers hereby, as a separate obligation and notwithstanding
any such judgment (but subject to the Priority of Payments as if such separate
obligation in respect of each Class of Rated Notes constituted additional
principal owing in respect of such Class of Rated Notes), agree to
indemnify the Trustee and each Rated Noteholder against, and to pay the Trustee
or such Rated Noteholder, as the case may be, on demand in the Specified
Currency, any difference

 

167

 

between the sum originally due to the Trustee or such Rated Noteholder,
as the case may be, in the Specified Currency and the amount of the Specified
Currency so purchased and transferred.

 

14.14.                CONFIDENTIAL
TREATMENT OF DOCUMENTS

 

Except as otherwise provided in this Indenture or as required by law or
as required to maintain the listing of the Class A Notes, Class B
Notes, the Class C Notes and the Class D Notes on the Irish Stock
Exchange, this Indenture and the Hedge Agreement shall be treated by the
Trustee and the Collateral Advisor as confidential. The Trustee shall provide a
copy of this Indenture to the Income Note Paying Agent and to any Holder of a
beneficial interest in any Rated Note upon written request therefor certifying
that it is such a Holder.

 

ARTICLE XV

 

ASSIGNMENT OF AGREEMENTS, ETC.

 

15.1.                      ASSIGNMENT

 

The Issuer, in furtherance of the covenants of this Indenture and as
security for the Rated Notes and amounts payable to the Rated Noteholders
hereunder and the performance and observance of the provisions hereof, hereby
assigns, transfers, conveys and sets over to the Trustee, for the benefit of
the Secured Parties, all of the Issuer’s estate, right, title and interest in,
to and under the Corporate Services Agreement, the Collateral Advisory
Agreement and the Hedge Agreement, including (i) the right to give all
notices, consents and releases thereunder, (ii) the right to give all
notices of termination, including the commencement, conduct and consummation of
proceedings at law or in equity, (iii) the right to receive all notices,
accountings, consents, releases and statements thereunder and (iv) the
right to do any and all other things whatsoever that the Issuer is or may be
entitled to do thereunder; provided that nothing herein shall obligate
the Trustee to determine independently whether “cause” exists for the removal
of the Collateral Advisor pursuant to the Collateral Advisory Agreement. For
the avoidance of doubt, in no event shall the Trustee be required to perform
the obligations of the Collateral Advisor under the Collateral Advisory
Agreement.

 

15.2.                      NO
IMPAIRMENT

 

The assignment made hereby is executed as collateral security, and the
execution and delivery hereby shall not in any way impair or diminish the
obligations of the Issuer under the provisions of the Corporate Services
Agreement, the Collateral Advisory Agreement or the Hedge Agreement.

 

15.3.                      TERMINATION,
ETC.

 

Upon the redemption and cancellation of the Rated Notes and the payment
of all other Secured Obligations and the release of the Collateral from the
lien of this Indenture, this assignment and all rights herein assigned to the
Trustee for the benefit of the Secured Parties shall cease and terminate and
all the estate, right, title and interest of the Trustee in, to and under the
Corporate Services Agreement, the Collateral Advisory Agreement and the Hedge
Agreement shall revert to the Issuer and no further instrument or act shall be
necessary to evidence such termination and reversion.

 

15.4.                 ISSUER
AGREEMENTS, ETC

 

The Issuer represents that it has not executed any other assignment of
the Collateral Administration Agreement, the Collateral Advisory Agreement or
any Hedge Agreement. The Issuer

 

168

 

agrees that this assignment is irrevocable, and that it will not take
any action which is inconsistent with this assignment or make any other assignment
inconsistent herewith. The Issuer will, from time to time upon the request of
the Trustee, execute all instruments of further assurance and all such
supplemental instruments with respect to this assignment as the Trustee may
reasonably specify.

 

ARTICLE XVI

 

HEDGE AGREEMENT

 

16.1.                      HEDGE
AGREEMENT

 

On the Closing Date (or any date on which the Issuer enters into a
replacement Hedge Agreement), (i) the Hedge Counterparty entering into
such Hedge Agreement shall satisfy the Hedge Counterparty Ratings Requirement
and (ii) the Issuer shall assign such Hedge Agreement to the Trustee
pursuant to this Indenture and the Collateral Assignment of Hedge Agreement.

 

(a)                                 The
Trustee shall, on behalf of the Issuer and in accordance with the Note
Valuation Report, pay amounts due to the Hedge Counterparty under the Hedge
Agreement on any Payment Date in accordance with Section 11.1.

 

(b)                                If
a Collateralization Event occurs, the Hedge Counterparty shall within 30 days
of the occurrence of such Collateralization Event either (i) enter into a
Credit Support Annex and post collateral of such types, in such amounts and at
such times as are sufficient to maintain the then-current rating of each Class of
Rated Notes by each Rating Agency, (ii) find a replacement Hedge Counterparty
as permitted under the Hedge Agreement that satisfies the Hedge Counterparty
Ratings Requirement, (iii) obtain a guarantor with such form of guarantee
meeting S&P’s then-current published criteria with respect to guarantees
for the obligations of the Hedge Counterparty under the Hedge Agreement with a
long-term issuer credit rating from S&P of at least “A+” or a short term
issuer credit rating from S&P of at least “A-1” and with a long-term
unsecured debt rating from Fitch of at least “A” and a short-term unsecured
debt rating from Fitch, if rated by Fitch, of at least “F1 “ or (iv) take
such other steps as each Rating Agency that has downgraded the Hedge
Counterparty may require (as confirmed to the Collateral Advisor in writing) to
ensure that the then-current ratings on the Rated Notes by either Rating Agency
are not reduced or withdrawn. If the Hedge Counterparty has not, within 30 days
of the occurrence of such Collateralization Event, taken any of the actions
required above, a Substitution Event will be deemed to have occurred and any
action is taken at its own expense.

 

(c)                                 If
at any time a Substitution Event has occurred and is continuing, then the Hedge
Counterparty will, (x) in the case of a Substitution Event referred to in
sub-clause (b) of the definition thereof, within thirty (30) days
following such Substitution Event or (y) in the case of a Substitution
Event referred to in sub-clause (a) and (c) of the definition
thereof, within ten (10) Business Days following such Substitution Event,
assign its rights and obligations under the Hedge Agreement, at no cost to the
Issuer, to a party (the Substitute Party)  selected
by the Hedge Counterparty that (i) satisfies the Hedge Counterparty
Ratings Requirement, (ii) with respect to which a Rating Agency
Confirmation has been obtained and (iii) that assumes all of the Hedge
Counterparty’s obligations under the Hedge Agreement pursuant to an agreement
satisfactory to the Issuer. If the Hedge Counterparty fails to assign its
rights and obligations under the Hedge Agreement to a Substitute Party within
30 days following such Substitution Event

 

169

 

(in the case of a Substitution Event referred to in sub-clauses (b) of
the definition thereof) or within ten (10) Business Days following such
Substitution Event (in the case of a Substitution Event referred to in
sub-clauses (a) and (c) of the definition thereof), then (x) the
Hedge Counterparty shall, while it continues in good faith to search for an
eligible Substitute Party, post and maintain, or continue to maintain, as the
case may be, collateral in accordance with a Credit Support Annex of such
types, in such amounts and at such times as are sufficient to maintain the
then-current rating of each Class of Rated Notes by each Rating Agency,
and (y) the Issuer shall have the right to terminate the Hedge Agreement
with all costs of such termination to be paid by the Hedge Counterparty.

 

(d)                                The
Issuer may, after the Closing Date, enter into additional Hedge Agreements
(including one or more Deemed Floating Asset Hedges) with additional Hedge
Counterparties as the Issuer may elect in its sole discretion, in each case (i) subject
to Rating Agency Confirmation, (ii) in the event a proposed additional
Hedge Agreement has an initial notional amount which exceeds U.S.$25,000,000,
with the prior consent of Bank of America, N.A. (so long as it continues to act
as the Initial Hedge Counterparty), and (iii) in the case of additional
Hedge Counterparties, with the delivery to the Issuer of an Opinion of Counsel
to the additional Hedge Counterparty; provided that the Issuer will not be required to
obtain Rating Agency Confirmation in connection with entering into any Deemed
Floating Asset Hedges which are Form-Approved Hedge Agreements with a Hedge
Counterparty that satisfies the Hedge Counterparty Ratings Requirement.

 

(e)                                 The
Trustee shall, prior to the Closing Date in respect of the initial Hedge
Agreement, cause the Custodian to establish a segregated, non-interest bearing
Securities Account which shall be designated as a “Hedge Counterparty
Collateral Account” with respect to the Hedge Counterparty in respect of which
the Trustee shall be the Entitlement Holder and which the Trustee shall hold in
trust for the benefit of the Secured Parties. The Trustee shall deposit all
collateral received from such Hedge Counterparty under the Hedge Agreement in
such Hedge Counterparty Collateral Account. Any and all funds at any time on
deposit in, or otherwise standing to the credit of, each Hedge Counterparty
Collateral Account shall be held in trust by the Trustee for the benefit of the
Secured Parties. The only permitted withdrawal from or application of funds on
deposit in, or otherwise standing to the credit of, each Hedge Counterparty
Collateral Account shall be (i) for application to obligations of the
Hedge Counterparty to the Issuer under the Hedge Agreement that are not paid
when due (whether when scheduled or upon early termination) or (ii) to
return collateral to the Hedge Counterparty when and as required by the Hedge
Agreement in each case upon the direction of the Issuer pursuant to an Issuer
Order. No assets credited to any Hedge Counterparty Collateral Account shall be
considered an asset of the Issuer for purposes of any of the Coverage Tests
unless and until the Issuer or the Trustee on its behalf is entitled to
foreclose on such assets in accordance with the terms of the Hedge Agreement.

 

(f)                                   Upon
its receipt of notice that the Hedge Counterparty has defaulted in the payment
when due of its obligations to the Issuer under any Hedge Agreement (or, if
earlier, when the Trustee becomes aware of such default) the Trustee shall make
a demand on such Hedge Counterparty, or any guarantor, if applicable, demanding
payment forthwith. The Trustee shall give notice to the Rated Noteholders and
each Rating Agency upon the continuance of the failure by such Hedge
Counterparty to perform its obligations for two Business Days following a
demand made by the Trustee on such Hedge Counterparty.

 

170

 

(g)                                If
at any time the Hedge Agreement becomes subject to early termination due to the
occurrence of an “event of default” or a “termination event” (each as defined
in the Hedge Agreement) solely attributable to the Hedge Counterparty or other
comparable event, the Issuer and the Trustee shall take such actions (following
the expiration of any applicable grace period) to enforce the rights of the
Issuer and the Trustee thereunder and under the Collateral Assignment of Hedge
Agreement as may be permitted by the terms of such Hedge Agreement and
consistent with the terms hereof, and shall apply any proceeds of any such
actions (including the proceeds of the liquidation of any collateral pledged by
the Hedge Counterparty) to enter into a replacement Hedge Agreement on
substantially identical terms or on such other terms as to which each Rating
Agency shall have provided a Rating Agency Confirmation with a Substitute Party
with respect to which the Hedge Counterparty Ratings Requirement is satisfied
and each Rating Agency shall have provided a Rating Agency Confirmation. If the
Issuer is the sole non-Affected Party or the sole non-Defaulting Party with
respect to such “event of default” or “termination event”, the Issuer will
(with the assistance of the Collateral Advisor) obtain quotations with respect
to such replacement Hedge Agreement from five prospective counterparties
Independent from the Issuer, the Collateral Advisor and each other that satisfy
the Hedge Counterparty Ratings Requirement and with respect to which a Rating
Agency Confirmation shall have been obtained and enter into a replacement Hedge
Agreement with the prospective counterparty that provides the lowest quotation
(if the Issuer is required to make a payment to such replacement counterparty)
or the highest quotation (if such replacement counterparty is required to make
a payment to the Issuer).

 

(h)                                The
Issuer shall notify each Rating Agency if at any time the Hedge Counterparty is
required to post collateral or assign its rights and obligations in and under
the Hedge Agreement.

 

(i)                                    The
Hedge Agreement may not be amended or modified at any time other than to effect
the appointment of a substitute Hedge Counterparty or to effect a modification
which is of a formal, minor or technical nature or is to correct a manifest
error and which, in the opinion of the Trustee (based upon an Opinion of
Counsel) would not have a material adverse effect on the interests of Holders
of the Rated Notes or of Holders of any Class or Classes of Rated Notes or
the Holders of the Income Notes; provided that the Issuer has obtained Rating
Agency Confirmation with respect to any such modification. The Trustee shall
provide the Collateral Advisor and the Rating Agencies with a copy of any such
modification within 10 Business Days before effecting such modification.

 

(j)                                    The
Issuer shall enter into a Hedge Agreement only if the payments from the Hedge
Counterparty thereunder are not subject to withholding tax or if the Hedge
Counterparty shall be required in accordance with the terms of the Hedge
Agreement to pay additional amounts to the Issuer sufficient to cover any
withholding tax due on payments made by the Hedge Counterparty to the Issuer
under such Hedge Agreement, subject to the Issuer making customary payee tax
representations and providing customary tax documentation. The Issuer shall not
enter into any Hedge Agreement the acquisition (including the manner of
acquisition), ownership, enforcement or disposition of which would subject the
Issuer to tax on a net income basis in any jurisdiction outside the Issuer’s
jurisdiction of incorporation.

 

(k)                                 The
Issuer will not terminate or amend any Hedge Agreement without receiving Rating
Agency Confirmation with respect to such termination or amendment.

 

171

 

IN WITNESS
WHEREOF, we have set
our hands as of the date first above written.

 

 

	
  Executed as a Deed by

  
	
  N-STAR
  REAL ESTATE CDO III LTD.,

  
	
   

  	
  as Issuer

  

 

 

	
  By:

  	
              /s/
  Derrie Boggess

  	
   

  
	
   

  	
  Name:

  	
  Derrie Boggess

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  
					

 

 

	
  N-STAR REAL ESTATE CDO III CORP., 

  
	
   

  	
  as
  Co-Issuer

  

 

 

	
  By:

  	
         /s/ Donald J. Puglisi

  	
   

  
	
   

  	
  Name:

  	
  Donald J. Puglisi

  
	
   

  	
  Title:

  	
  President

  
				

 

 

	
  WELLS FARGO BANK, NATIONAL ASSOCIATION, 

  
	
   

  	
  as
  Trustee

  

 

 

	
  By:

  	
  Randall S. Reids

  	
   

  
	
   

  	
  Name:

  	
  Randall S. Reids

  
	
   

  	
  Title:

  	
  Vice President

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