INDENTURE

 

 

TABLE OF CONTENTS

 

Section			Page
PRELIMINARY STATEMENT			1
GRANTING CLAUSES			1
ARTICLE I                                   Definitions and Interpretation			4
1.1.                               Definitions			4
1.2.                              Assumptions as to Collateral Interests, Fees, Etc.			69
1.3.                              Rules of Construction			73
ARTICLE II                                 The Indenture Issued Notes			73
2.1.                               Forms Generally			73
2.2.                              Authorized Amount; Applicable Periodic Interest Rate; Stated Maturity Date; Denominations			75
2.3.                              Execution, Authentication, Delivery and Dating			76
2.4.                              Registration, Transfer and Exchange of Indenture Issued Notes			77
2.5.                              Mutilated, Defaced, Destroyed, Lost or Stolen Indenture Issued Notes			90
2.6.                               Payment of Principal and Interest; Rights Preserved			91
ARTICLE III                           Conditions Precedent			102
3.1.                              General Provisions			102
3.2.                              Security for the Indenture Issued Notes			105
3.3.                              Custodianship; Transfer of Collateral Interests and Eligible Investments			107
ARTICLE IV                           Satisfaction and Discharge			110
4.1.                              Satisfaction and Discharge of Indenture			110
4.2.                              Application of Trust Money			112
4.3.                              Repayment of Funds Held by Note Paying Agent			112
ARTICLE V                               Events of Default; Remedies			112
5.1.                              Events of Default			112
5.2.                              Acceleration of Maturity; Rescission and Annulment			115
5.3.                              Collection of Indebtedness and Suits for Enforcement by Trustee			116
5.4.                              Remedies			120
5.5.                              Preservation of Collateral			122
5.6.                              Trustee May Enforce Claims Without Possession			124
5.7.                              Application of Funds Collected			124
5.8.                              Limitation on Suits			125
5.9.                              Unconditional Rights of Rated Noteholders (other than the Class N Noteholders) to Receive Principal and Interest			125
5.10.                      Restoration of Rights and Remedies			126
5.11.                      Rights and Remedies Cumulative			126
5.12.                      Delay or Omission Not Waiver			126
5.13.                      Control by the Controlling Party			126
5.14.                      Waiver of Past Defaults			127

 

 

TABLE OF CONTENTS

(continued)

 

Section			Page
5.15.                      Undertaking for Costs			128
5.16.                      Waiver of Stay or Extension Laws			128
5.17.                      Sale of Collateral			128
5.18.                      Action on the Rated Notes			129
ARTICLE VI                           The Trustee			129
6.1.                              Certain Duties and Responsibilities			129
6.2.                              Notice of Default			132
6.3.                              Certain Rights of Trustee			132
6.4.                              Authenticating Agents			134
6.5.                              Not Responsible for Recitals or Issuance of Rated Notes			135
6.6.                              May Hold Rated Notes			135
6.7.                              Funds Held in Trust			135
6.8.                              Compensation and Reimbursement			135
6.9.                              Corporate Trustee Required; Eligibility			137
6.10.                      Resignation and Removal; Appointment of Successor			137
6.11.                      Acceptance of Appointment by Successor			139
6.12.                      Merger, Conversion, Consolidation or Succession to Business of Trustee			139
6.13.                      Co-Trustees			140
6.14.                      Certain Duties Related to Delayed Payment of Proceeds; Other Notices			141
6.15.                      Representations and Warranties of the Bank			141
6.16.                      Exchange Offers, Proposed Amendments etc.			142
6.17.                      Fiduciary for Rated Noteholders Only; Agent For Other Secured Parties			143
6.18.                      Withholding			143
ARTICLE VII                       Covenants			143
7.1.                              Payment of Principal and Interest			143
7.2.                              Maintenance of Office or Agency			144
7.3.                              Funds for Rated Note Payments to be Held in Trust			145
7.4.                              Existence of Co-Issuers			146
7.5.                              Protection of Collateral			147
7.6.                              Opinions as to Collateral			149
7.7.                              Performance of Obligations			149
7.8.                              Negative Covenants			151
7.9.                              Statement as to Compliance			152
7.10.                      Co-Issuers May Consolidate, Etc., Only on Certain Terms			152
7.11.                      Successor Substituted			156
7.12.                      No Other Business			156
7.13.                      Change or Withdrawal of Rating			157
7.14.                      Reporting			157
7.15.                      Rated Note Calculation Agent			157
7.16.                      Listing			158
7.17.                      Amendment of Certain Documents			158
7.18.                      Purchase of Collateral; Information Regarding Collateral; Rating Confirmation			158
7.19.                      Liquidity Tests			161

 

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TABLE OF CONTENTS
(continued)

Section			Page
ARTICLE VIII                   Supplemental Indentures			162
8.1.                               Supplemental Indentures Without Consent of Rated Noteholders			162
8.2.                              Supplemental Indentures with Consent of Rated Noteholders			165
8.3.                              Execution of Supplemental Indentures			168
8.4.                              Effect of Supplemental Indentures			168
8.5.                              Reference in Indenture Issued Notes to Supplemental Indentures			168
ARTICLE IX                          Redemption of Rated Notes			169
9.1.                              Redemption of Rated Notes			169
9.2.                              Redemption Procedures; Auction			169
9.3.                              Record Date; Notice to Trustee of Redemption			171
9.4.                              Notice of Redemption			172
9.5.                              Notice of Withdrawal			172
9.6.                              Rated Notes Payable on Redemption Date			173
9.7.                              Special Amortization			173
ARTICLE X                              Accounts, Accountings and Releases			174
10.1.                      Collection of Funds			174
10.2.                      General Provisions Applicable to Accounts			175
10.3.                      Collateral Account			176
10.4.                      Uninvested Proceeds Account			176
10.5.                      Collection Account			176
10.6.                      Expense Reserve Account			178
10.7.                      Interest Reserve Account			178
10.8.                      Future Funding Asset Account			179
10.9.                      Payment Account			180
10.10.                Reports by Trustee			180
10.11.                Accountings			181
10.12.                   Release of Securities			187
10.13.                Reports by Independent Accountants			187
10.14.                Reports to Rating Agencies			189
10.15.                Tax Matters			189
10.16.                [Reserved]			190
10.17.                Interest Advances			190
10.18.                Cure Advances			194
10.19.                Future Funding Reserve Account			194
10.20.                Suspense Account			195
ARTICLE XI                             Application of Monies			195
11.1.                      Disbursements of Funds from Payment Account; Priority of Payments			195
ARTICLE XII                      Purchase and Sale of Collateral Interests			212
12.1.                      Sale of Collateral Interests			212
12.2.                      Portfolio Characteristics			216
12.3.                      Conditions Applicable to all Transactions Involving Sale or Grant			222

 

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TABLE OF CONTENTS
(continued)

 

Section			Page
ARTICLE XIII                  Secured Parties’ Relations			223
13.1.                      Subordination			223
13.2.                      Standard of Conduct			232
ARTICLE XIV                  Miscellaneous			233
14.1.                      Form of Documents Delivered to Trustee			233
14.2.                      Acts of Rated Noteholders			234
14.3.                      Notices, Etc., to Trustee, the Co-Issuers and the Rating Agencies			234
14.4.                      Notices and Reports to Rated Noteholders; Waiver			236
14.5.                      Effect of Headings and Table of Contents			237
14.6.                      Successors and Assigns			237
14.7.                      Severability			237
14.8.                      Benefits of Indenture			237
14.9.                      Governing Law			238
14.10.                Submission to Jurisdiction			238
14.11.                Counterparts			238
14.12.                Waiver of Jury Trial			238
14.13.                Judgment Currency			238
14.14.                Confidential Treatment of Documents			239
ARTICLE XV                      Assignment of Agreements, Etc.			239
15.1.                      Assignment			239
15.2.                      No Impairment			240
15.3.                      Termination, Etc.			240
15.4.                      Issuer Agreements, Etc.			240
ARTICLE XVI                  Hedge Agreements			240
16.1.                      Hedge Agreements			240
ARTICLE XVII     Class A-R Notes			243
17.1.                      Draws on the Class A-R Notes and Class A-R Commitment			243
17.2.                      Class A-R Interest and Class A-R Commitment Fee			244
17.3.                      Prepayments of Class A-R Notes			245
17.4.                      Class A-R Rating Criteria			246
17.5.                      Class A-R Holder Collateral Account			246

 

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Schedules
Schedule A		Schedule of Collateral Interests as of the Closing Date
Schedule B		LIBOR Formula
Schedule C		Moody’s Recovery Rate Matrix
Schedule D		Auction Procedures
Schedule E-1		Form of representations, warranties and covenants Mortgage Loan Interests, Subordinate Mortgage Loan Interests and Mezzanine Loans
Schedule E-2		Form of representations, warranties and covenants for Credit Lease Loans and Tenant Lease Loan Interests
Schedule E-3		Form of representations, warranties and covenants for Preferred Equity Securities
Exhibits
Exhibit A-1		Form of Regulation S Global Note
Exhibit A-2		Form of Rule 144A Global Note
Exhibit B		Form of Certificated Note
Exhibit C-1		Form of Rule 144A Transfer Certificate
Exhibit C-2		Form of Regulation S Transfer Certificate
Exhibit C-3		Form of Certificated Note Transfer Certificate
Exhibit C-4		Form of ERISA Restriction Certificate
Exhibit D		Form of Funding Certificate
Exhibit E- 1		Form of Opinion of Thacher Proffitt & Wood LLP
Exhibit E-2		Form of Opinion of Walkers
Exhibit F		Form of Opinion of Kennedy Covington Lobdell & Hickman, L.L.P.
Exhibit G		Form of Opinion of Thacher Proffitt & Wood LLP
Exhibit H		Rated Noteholder’s Certificate
Exhibit I		Form of Class L Note or Class M Note Tax Transfer Certificate

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

1.1.                          DEFINITIONS

 

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

 

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

 

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

 

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

 

Act has the meanings specified in Section 14.2.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)                                   the greater of

 

(1)                                   the product of

 

(A)                               the quotient of

 

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

 

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

 

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

 

(2)                                   zero and

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Auction has the meaning specified in Section 9.2.

 

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

 

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

 

Auction Procedures has the meaning specified in Section 9.2.

 

Auction Purchase Agreement has the meaning specified in Schedule D.

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Class B Note Interest Rate means LIBOR plus 0.420%.

 

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

 

Class C Note Interest Rate means LIBOR plus 0.470%.

 

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

 

Class D Note Interest Rate means LIBOR plus 0.550%.

 

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

 

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

 

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

 

Class E Note Interest Rate means LIBOR plus 0.750%.

 

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

 

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

 

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

 

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

 

Class F Note Interest Rate means LIBOR plus 0.850%.

 

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

 

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

 

15

 

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

 

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

 

Class G Note Interest Rate means LIBOR plus 0.950%.

 

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

 

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

 

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

 

Class H Note Interest Rate means LIBOR plus 1.330%.

 

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

 

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

 

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

 

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

 

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Class J Note Interest Rate means LIBOR plus 1.650%.

 

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

 

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

 

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

 

Class K Note Interest Rate means LIBOR plus 1.950%.

 

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

 

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

 

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

 

Class L Note Interest Rate means LIBOR plus 3.250%.

 

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

 

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

 

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

 

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

 

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

 

Class M Note Interest Rate means LIBOR plus 3.750%.

 

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

 

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

 

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

 

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

 

Class N Note Interest Rate means LIBOR plus 4.250%.

 

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

 

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

 

Clearing Agency means DTC, Euroclear or Clearstream.

 

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

 

Clearstream means Clearstream Banking, société anonyme.

 

Closing Date means December 7, 2006.

 

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

 

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

 

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

 

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

 

Co-Issuers means the Issuer and Co-Issuer.

 

Collateral has the meaning specified in the Granting Clauses.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Commission means the United States Securities and Exchange Commission.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Eligibility Criteria has the meaning specified in Section 12.2.

 

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

 

(i)                                    cash;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Income Note Redemption Approval Condition means, in connection with a Tax Redemption at the direction of the Controlling Party and an Auction Call Redemption, the requirement that, unless and to the extent the Holders of not less than 66 2 / 3 % of the aggregate principal amount of the Outstanding Income Notes have waived payment in full of the Income Notes Stated Amount, the Income Noteholders receive in connection with such Tax Redemption or Auction Call Redemption an amount equal to (x) the Income Notes Stated Amount minus (y) the aggregate amount of all cash distributions on the Income Notes (whether in respect of distributions or redemption payments made to the Income Note Paying Agent for distribution to the Income Noteholders) on or prior to the relevant Auction Date.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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LIBOR Calculation Date has the meaning specified in Schedule B.

 

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

 

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

 

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

 

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

 

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

 

Listed Bidders has the meaning specified in Schedule D.

 

London Banking Day has the meaning specified in Schedule B.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

		Moody’s Rating		Moody’s		Moody’s Rating
Moody’s Rating		Factor		Rating		Factor
Aaa		1		Ba1		940
Aa1		10		Ba2		1,350
Aa2		20		Ba3		1,766
Aa3		40		B1		2,220
A1		70		B2		2,720
A2		120		B3		3,490
A3		180		Caa1		4,770
Baa1		260		Caa2		6,500
Baa2		360		Caa3		8,070
Baa3		610		Ca or lower		10,000