INDENTURE

 

 

TABLE OF CONTENTS

 

Section			Page
PRELIMINARY STATEMENT			1
GRANTING CLAUSES			1
ARTICLE I	Definitions and Interpretation		2
1.1.		Definitions	2
1.2.		Assumptions as to Collateral Debt Securities, Fees, Etc.	64
1.3.		Rules of Construction	66
ARTICLE II	The Secured Notes		67
2.1.		Forms Generally	67
2.2.		Authorized Amount; Applicable Periodic Interest Rate; Stated Maturity Date; Denominations	68
2.3.		Execution, Authentication, Delivery and Dating	69
2.4.		Registration, Transfer and Exchange of Secured Notes	70
2.5.		Mutilated, Defaced, Destroyed, Lost or Stolen Secured Notes	78
2.6.		Payment of Principal and Interest; Rights Preserved	78
ARTICLE III	Conditions Precedent		85
3.1.		General Provisions	85
3.2.		Security for the Secured Notes	87
3.3.		Custodianship; Transfer of Collateral Debt Securities and Eligible Investments	89
ARTICLE IV	Satisfaction and Discharge		92
4.1.		Satisfaction and Discharge of Indenture	92
4.2.		Application of Trust Money	93
4.3.		Repayment of Funds Held by Note Paying Agent	93
ARTICLE V	Events of Default; Remedies		93
5.1.		Events of Default	93
5.2.		Acceleration of Maturity; Rescission and Annulment	95
5.3.		Collection of Indebtedness and Suits for Enforcement by Trustee	96
5.4.		Remedies	99
5.5.		Preservation of Collateral	100
5.6.		Trustee May Enforce Claims Without Possession	102
5.7.		Application of Funds Collected	102
5.8.		Limitation on Suits	102
5.9.		Unconditional Rights of Secured Noteholders to Receive Principal and Interest	103
5.10.		Restoration of Rights and Remedies	103
5.11.		Rights and Remedies Cumulative	103
5.12.		Delay or Omission Not Waiver	104
5.13.		Control by Controlling Class	104
5.14.		Waiver of Past Defaults	104
5.15.		Undertaking for Costs	105

 

i

 

TABLE OF CONTENTS

(continued)

 

Section			Page
5.16.		Waiver of Stay or Extension Laws	105
5.17.		Sale of Collateral	105
5.18.		Action on the Secured Notes	106
ARTICLE VI	The Trustee		106
6.1.		Certain Duties and Responsibilities	106
6.2.		Notice of Default	108
6.3.		Certain Rights of Trustee	108
6.4.		Authenticating Agents	110
6.5.		Not Responsible for Recitals or Issuance of Secured Notes	111
6.6.		May Hold Secured Notes	111
6.7.		Funds Held in Trust	111
6.8.		Compensation and Reimbursement	111
6.9.		Corporate Trustee Required; Eligibility	113
6.10.		Resignation and Removal; Appointment of Successor	113
6.11.		Acceptance of Appointment by Successor	114
6.12.		Merger, Conversion, Consolidation or Succession to Business of Trustee	114
6.13.		Co-Trustees	115
6.14.		Certain Duties Related to Delayed Payment of Proceeds; Other Notices	116
6.15.		Representations and Warranties of the Bank	116
6.16.		Exchange Offers, Proposed Amendments, etc.	117
6.17.		Fiduciary for Secured Noteholders Only; Agent For Other Secured Parties	117
6.18.		Withholding	117
ARTICLE VII	Covenants		118
7.1.		Payment of Principal and Interest	118
7.2.		Maintenance of Office or Agency	118
7.3.		Funds for Secured Note Payments to be Held in Trust	119
7.4.		Existence of Issuer	120
7.5.		Protection of Collateral	121
7.6.		Opinions as to Collateral	123
7.7.		Performance of Obligations	123
7.8.		Negative Covenants	124
7.9.		Statement as to Compliance	126
7.10.		Issuer May Consolidate, Etc., Only on Certain Terms	126
7.11.		Successor Substituted	128
7.12.		No Other Business	128
7.13.		Change or Withdrawal of Rating	128
7.14.		Reporting	128
7.15.		Secured Note Calculation Agent	129
7.16.		Listing	130
7.17.		Amendment of Certain Documents	130
7.18.		Purchase of Collateral; Information Regarding Collateral; Rating Confirmation	130

 

ii

 

TABLE OF CONTENTS

(continued)

 

Section						Page
ARTICLE VIII				Supplemental Indentures		132
8.1.			Supplemental Indentures Without Consent of Secured Noteholders			132
8.2.			Supplemental Indentures with Consent of Secured Noteholders			135
8.3.			Execution of Supplemental Indentures			137
8.4.			Effect of Supplemental Indentures			137
8.5.			Reference in Secured Notes to Supplemental Indentures			138
ARTICLE IX				Redemption of Secured Notes		138
9.1.			Redemption of Secured Notes			138
9.2.			Redemption Procedures; Auction			138
9.3.			Record Date; Notice to Trustee of Redemption			140
9.4.			Notice of Redemption			141
9.5.			Notice of Withdrawal			141
9.6.			Secured Notes Payable on Redemption Date			141
9.7.			Special Amortization			142
ARTICLE X				Accounts, Accountings and Releases		142
10.1.			Collection of Funds			142
10.2.			General Provisions Applicable to Accounts			143
10.3.			Collateral Account			144
10.4.			Uninvested Proceeds Account			144
10.5.			Interest Reserve Account			144
10.6.			Collection Account			145
10.7.			Expense Reserve Account			145
10.8.			Non-Monthly Pay Asset Interest Reserve Account			146
10.9.			Discretionary Ramp-Up Interest Reserve Account			146
10.10.			Payment Account			147
10.11.			Derivative Contract Counterparty Accounts			147
10.12.			Derivative Contract Issuer Account			148
10.13.			Reports by Trustee			149
10.14.			Accountings			150
10.15.			Release of Securities			155
10.16.			Reports by Independent Accountants			156
10.17.			Reports to Rating Agencies			157
10.18.			Tax Matters			157
10.19.			Tax Information			157
10.20.			Cure Advances			159
10.21.			Purchase of Related Senior Loans by Holders of Subordinate Mortgage Loan Interests or Mezzanine Loans			159
ARTICLE XI					Application of Monies	160
11.1.			Disbursements of Funds from Payment Account; Priority of Payments			160
ARTICLE XII					Purchase and Sale of Collateral Debt Securities	173
12.1.			Sale of Collateral Debt Securities			173
12.2.			Portfolio Characteristics			175
12.3.			Conditions Applicable to all Transactions Involving Sale or Grant			178

 

iii

 

TABLE OF CONTENTS

(continued)

 

Section				Page
ARTICLE XIII		Secured Parties’ Relations	179
13.1.	Subordination		179
13.2.	Standard of Conduct		185
ARTICLE XIV		Miscellaneous	185
14.1.	Form of Documents Delivered to Trustee		185
14.2.	Acts of Secured Noteholders		186
14.3.	Notices, etc., to Trustee, the Issuer and the Rating Agencies		187
14.4.	Notices and Reports to Secured Noteholders; Waiver		188
14.5.	Effect of Headings and Table of Contents		189
14.6.	Successors and Assigns		189
14.7.	Severability		189
14.8.	Benefits of Indenture		189
14.9.	Governing Law		190
14.10.	Submission to Jurisdiction		190
14.11.	Counterparts		190
14.12.	Waiver of Jury Trial		190
14.13.	Judgment Currency		190
14.14.	Confidential Treatment of Documents		191
ARTICLE XV		Assignment of Agreements, etc.	191
15.1.	Assignment		191
15.2.	No Impairment		191
15.3.	Termination, etc.		192
15.4.	Issuer Agreements, etc.		192
ARTICLE XVI		Hedge Agreements	192
16.1.	Hedge Agreements		192

 

Schedules
Schedule A	Schedule of Collateral Debt Securities as of the Closing Date
Schedule B	LIBOR Formula
Schedule C	Schedule of Temporary Ramp-Up Securities
Schedule D-1	S&P’s Recovery Rate Matrix
Schedule D-2	Moody’s Recovery Rate Matrix
Schedule E	Auction Procedures
Schedule F	S&P’s Notching Criteria
Schedule G	S&P’s Types of Asset-Backed Securities Ineligible for Notching
Schedule H	S&P’s Industry Classification Groups
Exhibits
Exhibit A-1	Form of Regulation S Global Note
Exhibit A-2	Form of Rule 144A Global Note
Exhibit B-1	Form of Definitive Retained Note
Exhibit C-1	Form of Rule 144A Transfer Certificate
Exhibit C-2	Form of Regulation S Transfer Certificate

 

iv

 

TABLE OF CONTENTS

(continued)

 

Section		Page
Exhibit C-3	Form of Definitive Retained Note Transfer Certificate
Exhibit D	Form of Funding Certificate
Exhibit E	Secured Noteholder’s Certificat
Exhibit F	Definitions for Use in Exhibit F and G; Form of Representations, Warranties and Covenants for Mortgage Loan Interests, Subordinate Mortgage Loan Interests and Mezzanine Loans; Schedule F-2 to Exhibit F; Form of Representations, Warranties and Covenants for Credit Lease Loans
Exhibit G	Form of Representations, Warranties and Covenants for certain CMBS Securities, REIT Debt Securities, Real Estate CDO Securities, Trust Preferred Securities and CRE Debt Obligations
Exhibit H	Form of Real Estate Interest Servicing Agreement
Exhibit I	Form of Asset Transfer Agreement
Exhibit J	Form of Master Trust Agreement

 

v

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

1.1.                               DEFINITIONS

 

Except as otherwise specified herein or as the context may otherwise require, the following terms have the respective meanings set forth below for all purposes of this Indenture. Whenever any reference is made to an amount the determination of which is governed by Section 1.2, the provisions of Section 1.2

 

2

 

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

 

Account means any of the Collection Account (including each Collateral Sub-Account established therein), the Collateral Account, the Uninvested Proceeds Account, the Payment Account, the Discretionary Ramp-Up Interest Reserve Account, the Non-Monthly Pay Asset Interest Reserve Account, the Expense Reserve Account (including each Collateral Sub-Account established therein), each Derivative Contract Issuer Account, if any, and each Derivative Contract Counterparty Account.

 

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

 

Accountants’ Report means a report of a firm of Independent certified public accountants of recognized national reputation appointed by the Issuer (or the Collateral Manager on its behalf) on the Closing Date pursuant to Section 10.16(a), which may be the firm of Independent accountants that reviews or performs procedures with respect to the financial reports prepared by the Issuer.

 

Accountholder means the holder of the Accounts pursuant to the Account Control Agreement.

 

Act has the meanings specified in Section 14.2.

 

Administrative Expenses means amounts (including any applicable indemnities) due from, or accrued for, the account of the Issuer with respect to any Payment Date to (i) the Trustee and the Underlying Trustee pursuant to the Master Trust Agreement; (ii) the Income Note Paying Agent pursuant to the Income Note Paying Agency Agreement; (iii) the Collateral Administrator pursuant to the Collateral Administration Agreement; (iv) the independent accountants, agents and counsel of the Issuer for fees and expenses (including tax reports); (v) the Rating Agencies for fees and expenses in connection with any Class of Notes rated by each such Rating Agency (including expenses for credit estimates and ongoing surveillance of the ratings of the Secured Notes); (vi) the Administrator pursuant to the Corporate Services Agreement; (vii) the Collateral Manager and its counsel for fees, expenses and indemnities under the Transaction Documents to the extent set forth therein (including amounts payable under the Collateral Management Agreement but excluding the Collateral Management Fee); (viii) any Servicer pursuant to the Servicing Agreement for expenses and indemnities set forth therein and any servicing fees to the extent not paid directly out of collections received pursuant to the terms of the Servicing Agreement; (ix) any other Person in respect of any governmental fee, charge or tax (including all filing, registration and annual return fees payable to the Cayman Islands’ government and registered office fees); and (x) any other Person in respect of any other fees or expenses permitted under the Indenture and the documents delivered pursuant to or in connection with this Indenture, the Income Note Paying Agency Agreement, the Collateral Management Agreement and the Notes; provided that Administrative Expenses may not include (a) any amounts due or accrued with respect to the actions taken on, or prior to, the Closing Date; (b) any amounts due as reimbursement for servicing advances pursuant to any Servicing Agreement or Cure Advances; or (c) any indemnities, servicing fees or expenses otherwise actually paid under any Servicing Agreement.

 

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

 

3

 

Affected Party has the meaning given to such term in the applicable Hedge Agreement or Synthetic Security.

 

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

 

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

 

Aggregate Fees and Expenses means, on any Payment Date, the sum of (i) the Trustee Fee with respect to such Payment Date and any unpaid Trustee Fee accrued with respect to a previous Payment Date, (ii) the Senior Collateral Management Fee and all expenses of the Collateral Manager payable by the Issuer pursuant to the Collateral Management Agreement with respect to such Payment Date and any unpaid Senior Collateral Management Fee and unpaid expenses of the Collateral Manager accrued with respect to a previous Payment Date, (iii) the Trustee Expenses and other expenses (including other Administrative Expenses) of the Issuer (including the fees to be paid to the Irish Stock Exchange), (iv) taxes payable by the Issuer, if any, and (v) all other expenses of the Issuer (including Administrative Expenses) payable on such Payment Date pursuant to Sections 11.1(a)(1) and 11.1(b)(1) (in each case to the extent not included in clauses (i) through (iv) above).

 

Aggregate Outstanding Amount means, when used with respect to any of the Secured Notes at any time, the aggregate principal amount of such Secured Notes Outstanding at such time. Except as otherwise provided herein, (i) the Aggregate Outstanding Amount of any Class C Notes at any time shall include the Class C Cumulative Applicable Periodic Interest Shortfall Amount with respect to such Class C Notes at such time, (ii) the Aggregate Outstanding Amount of any Class D Notes at any time shall include the D Cumulative Applicable Periodic Interest Shortfall Amount with respect to such Class D Notes at such time, (iii) the Aggregate Outstanding Amount of any Class E Notes at any time shall include the Class E Cumulative Applicable Periodic Interest Shortfall Amount with respect to such Class E Notes at such time, (iv) the Aggregate Outstanding Amount of any Class F Notes at any time shall include the Class F Cumulative Applicable Periodic Interest Shortfall Amount with respect to such Class F Notes at such time, (v) the Aggregate Outstanding Amount of any Class G Notes at any time shall include the Class G Cumulative Applicable Periodic Interest Shortfall Amount with respect to such Class G Notes at such time, (vi) the Aggregate Outstanding Amount of any Class H Notes at any time shall include the Class H Cumulative Applicable Periodic Interest Shortfall Amount with respect to such Class H Notes at such time, (vii) the Aggregate Outstanding Amount of any Class J Notes at any time shall include the Class J Cumulative Applicable Periodic Interest Shortfall Amount with respect to such Class J Notes at such time and (viii) the Aggregate Outstanding Amount of any Class K Notes at any time shall include the Class K Cumulative Applicable Periodic Interest Shortfall Amount with respect to such Class K Notes at such time.

 

Applicable Periodic Interest Rate means, for any Interest Period, (i) with respect to the Class A Notes, the applicable Class A Note Interest Rate, (ii) with respect to the Class B Notes, the applicable Class B Note Interest Rate, (iii) with respect to the Class C Notes, the applicable Class C Note Interest Rate, (iv) with respect to the Class D Notes, the applicable Class D Note Interest Rate, (v) with respect to the Class E Notes, the applicable Class E Note Interest Rate, (vi) with respect to the Class F Notes, the applicable Class F Note Interest Rate, (vii) with respect to the Class G Notes, the applicable Class G Note Interest Rate, (viii) with respect to the Class H Notes, the applicable Class H Note Interest Rate, (ix) with

 

4

 

respect to the Class J Notes, the applicable Class J Note Interest Rate and (x) with respect to the Class K Notes, the applicable Class K Note Interest Rate.

 

Applicable Recovery Rate means, with respect to any Collateral Debt Security on any Measurement Date, the Fitch Recovery Rate, the Moody’s Recovery Rate and the S&P Recovery Rate applicable to such Collateral Debt Security on such date.

 

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

 

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

 

Asset Purchase Agreement means any purchase agreement between (i) a seller of Real Estate Interests or, to the extent that the seller thereof is the Collateral Manager or any of its affiliates, CMBS Securities, CRE Debt Obligations, Real Estate CDO Securities, REIT Debt Securities or Trust Preferred Securities and (ii) the Issuer, which shall contain provisions regarding representations and warranties and remedies in case of a breach thereof substantially in the form set forth in Exhibit F in the case of Real Estate Interests and Exhibit G in the case of CMBS Securities, CRE Debt Obligations, Real Estate CDO Securities, REIT Debt Securities or Trust Preferred Securities.

 

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

 

Asset Transfer Agreement means any asset transfer agreement substantially in the form of Exhibit I entered into by the Issuer pursuant to which the seller will sell, transfer, or otherwise convey, assign or cause the assignment of certain Collateral Debt Securities to the Issuer.

 

Assumed Reinvestment Rate means, with respect to any Account or fund securing the Secured Notes, the greater of (i) LIBOR minus 0.50% and (ii) zero.

 

Auction has the meaning specified in Section 9.2.

 

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

 

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

 

Auction Procedures has the meaning specified in Section 9.2.

 

Auction Purchase Agreement has the meaning specified in Schedule E.

 

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

 

5

 

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

 

Available Funds means, with respect to any Payment Date, the amount of any positive balance (of Cash or Eligible Investments) in the Collection Account and, if the Trustee has been so directed by 100% of the Holders of the Income Notes, any amount designated by such Holders on deposit in the Interest Reserve Account, as of the Calculation Date relating to such Payment Date and, with respect to any other date, such amount as of that date.

 

Average Life means, on any Calculation Date with respect to any Collateral Debt Security, the quotient obtained by the Collateral Manager by dividing (i) the sum of the products of (a) the number of years (rounded to the nearest one tenth thereof) from such Calculation Date to the respective dates of each successive distribution of principal of such Collateral Debt Security (assuming that (1) no Collateral Debt Securities default or are sold, (2) any optional redemption of the Collateral Debt Securities occurs in accordance with their respective terms and (3) any extension of the Real Estate Interests is exercised) and (b) the respective amounts of principal of such scheduled distributions by (ii) the sum of all successive scheduled distributions of principal on such Collateral Debt Security.

 

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

 

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

 

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

 

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

 

6

 

Benefit Plan Investor means (i) an “employee benefit plan” (as defined in Section 3(3) of ERISA), that is subject to part 4 of Title I of ERISA, (ii) a “plan” (as defined in Section 4975(e)(1) of the Code), including, without limitation, individual retirement accounts and Keogh plans or (iii) an entity whose underlying assets include plan assets by reason of such an employee benefit plan’s or plan’s investment in such entity, including, without limitation, as applicable, an insurance company general account.

 

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

 

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

 

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

 

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

 

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

 

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

 

Cashflow Hedge Agreement means any Hedge Agreement entered into for the purpose of protecting the Issuer against a cashflow timing mismatch with respect to one or more Collateral Debt Securities.

 

CDO of CDO Securities means securities that entitle the Holders thereof to receive payments that depend on the cash flow from a portfolio of assets, the majority in principal amount of which are collateralized debt obligations.

 

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

 

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

 

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

 

7

 

Class  means each of the classes comprised of the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes, the Class F Notes, the Class G Notes, the Class H Notes, the Class J Notes, the Class K Notes and the Income Notes.

 

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

 

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

 

Class A Note Interest Rate means the Class A-1 Note Interest Rate, the Class A-2 Note Interest Rate or the Class A-3 Note Interest Rate, as applicable.

 

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

 

Class A Notes means the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes.

 

Class A-1 Note Interest Rate means LIBOR plus 0.255%.

 

Class A-1 Notes means the U.S.$512,000,000 aggregate principal amount of Class A-1 Floating Rate Notes due 2052.

 

Class A-2 Note Interest Rate means LIBOR plus 0.28%.

 

Class A-2 Notes means the U.S.$96,000,000 aggregate principal amount of Class A-2 Floating Rate Notes due 2052.

 

Class A-3 Note Interest Rate means LIBOR plus 0.30%.

 

Class A-3 Notes means the U.S.$48,000,000 aggregate principal amount of Class A-3 Floating Rate Notes due 2052.

 

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

 

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

 

Class A/B Interest Coverage Test means, for so long as any Class A Notes or Class B Notes remain Outstanding, a test that is satisfied as of any Measurement Date if the Class A/B Interest Coverage Ratio as of such date of determination is equal to or greater than 117.75%; provided that for any

 

8

 

Measurement Date occurring on the Effective Date through the Payment Date immediately subsequent to the Effective Date, the Class A/B Interest Coverage Test will be satisfied if Class A/B Interest Coverage Ratio is equal to or greater than 100%.

 

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

 

Class A/B Principal Coverage Test means, for so long as any Class A Notes or Class B Notes remain Outstanding, a test satisfied on any Measurement Date if the Class A/B Principal Coverage Ratio as of such date of determination is equal to or greater than 108.72%.

 

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

 

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

 

Class B Note Interest Rate means LIBOR plus 0.35%.

 

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

 

Class B Notes means the U.S.$37,280,000 aggregate principal amount of Class B Floating Rate Notes due 2052.

 

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

 

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

 

Class C/D/E Coverage Tests means the Class C/D/E Interest Coverage Test and the Class C/D/E Principal Coverage Test.

 

Class C/D/E Interest Coverage Ratio means, on any Measurement Date, the ratio (expressed as a percentage) of (x) to (y), where (x) is equal to the Interest Coverage Amount as of such Measurement Date and where (y) is the sum of the Periodic Interest for the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes for the Payment Date immediately following such

 

9

 

Measurement Date; provided that the Interest Coverage Amount shall be calculated after giving effect to any scheduled payment to the Non-Monthly Pay Asset Interest Reserve Account for the Payment Date immediately following such Measurement Date.

 

Class C/D/E Interest Coverage Test means, for so long as any Class A Notes, Class B Notes, Class C Notes, Class D Notes or Class E Notes remain Outstanding, a test that is satisfied as of any Measurement Date if the Class C/D/E Interest Coverage Ratio as of such date of determination is equal to or greater than 106.60%; provided that for any Measurement Date occurring on the Effective Date through the Payment Date immediately subsequent to the Effective Date, the Class C/D/E Interest Coverage Test will be satisfied if Class C/D/E Interest Coverage Ratio is equal to or greater than 100%.

 

Class C/D/E Principal Coverage Ratio means, on any Measurement Date, the ratio (expressed as a percentage) of (x) to (y), where (x) is the Principal Coverage Amount as of such Measurement Date and (y) is the sum of the aggregate principal amount of the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes Outstanding as of such Measurement Date.

 

Class C/D/E Principal Coverage Test means, for so long as any Class A Notes, Class B Notes, Class C Notes, Class D Notes or Class E Notes remain Outstanding, a test satisfied on any Measurement Date if the Class C/D/E Principal Coverage Ratio as of such date of determination is equal to or greater than 104.86%.

 

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

 

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

 

Class C Note Interest Rate means 5.7891%.

 

Class C Notes means the U.S.$12,800,000 aggregate principal amount of Class C Deferrable Fixed Rate Notes due 2052.

 

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

 

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

 

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

 

10

 

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

 

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

 

Class F Note Interest Rate means LIBOR plus 1.05%.

 

Class F Notes means the U.S.$3,600,000 aggregate principal amount of Class F Deferrable Floating Rate Notes due 2052.

 

Class F/G/H Coverage Tests means the Class F/G/H Interest Coverage Test and the Class F/G/H Principal Coverage Test.

 

Class F/G/H Interest Coverage Ratio means, on any Measurement Date, the ratio (expressed as a percentage) of (x) to (y), where (x) is equal to the Interest Coverage Amount as of such Measurement Date and where (y) is the sum of the Periodic Interest for the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes, the Class F Notes, the Class G Notes and the Class H Notes for the Payment Date immediately following such Measurement Date; provided that the Interest Coverage Amount shall be calculated after giving effect to any scheduled payment to the Non- Monthly Pay Asset Interest Reserve Account for the Payment Date immediately following such Measurement Date.

 

Class F/G/H Interest Coverage Test means, for so long as any Class A Notes, Class B Notes, Class C Notes, Class D Notes, Class E Notes, Class F Notes, Class G Notes or Class H Notes remain Outstanding, a test that is satisfied as of any Measurement Date if the Class F/G/H Interest Coverage Ratio as of such date of determination is equal to or greater than 101.00%; provided that for any Measurement Date occurring on the Effective Date through the Payment Date immediately subsequent to the Effective Date, the Class F/G/H Interest Coverage Test will be satisfied if Class F/G/H Interest Coverage Ratio is equal to or greater than 100%.

 

Class F/G/H Principal Coverage Ratio means, on any Measurement Date, the ratio (expressed as a percentage) of (x) to (y), where (x) is the Principal Coverage Amount as of such Measurement Date and (y) is the sum of the aggregate principal amount of the Class A Notes, Class B Notes, Class C Notes, Class D Notes, Class E Notes, Class F Notes, the Class G Notes and the Class H Notes Outstanding as of such Measurement Date.

 

Class F/G/H Principal Coverage Test means, for so long as any Class A Notes, Class B Notes, Class C Notes, Class D Notes, Class E Notes, Class F Notes, Class G Notes or Class H Notes remain Outstanding, a test satisfied on any Measurement Date if the Class F/G/H Principal Coverage Ratio as of such date of determination is equal to or greater than 102.84%.

 

Class F Note Break-Even Default Rate means the maximum percentage of defaults that the portfolio of Collateral Debt Securities can sustain, as determined by application of the S&P CDO Monitor, after giving effect to S&P’s assumptions on recoveries, defaults and timing and to the Priority of

 

12

 

Payments such that sufficient funds will remain for the payment of principal of the Class F Notes in full by their Stated Maturity Date and the ultimate payment of interest on such Class F Notes by their Stated Maturity Date.

 

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

 

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

 

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

 

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

 

Class G Note Interest Rate means LIBOR plus 1.30%.

 

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

 

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

 

Class G Notes means the U.S.$14,080,000 aggregate principal amount of Class G Deferrable Floating Rate Notes due 2052.

 

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

 

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

 

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

 

13

 

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

 

Class H Note Interest Rate means LIBOR plus 1.60%.

 

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

 

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

 

Class H Notes means the U.S.$7,200,000 aggregate principal amount of Class H Deferrable Floating Rate Notes due 2052.

 

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

 

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

 

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

 

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

 

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

 

Class J Note Interest Rate means 7.8016% per annum.

 

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

 

14

 

Class J Notes means the U.S.$7,040,000 aggregate principal amount of Class J Deferrable Fixed Rate Notes due 2052.

 

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

 

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

 

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

 

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

 

Class K Note Interest Rate means 8.4305% per annum.

 

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

 

Class K Notes means the U.S.$6,000,000 aggregate principal amount of Class K Deferrable Fixed Rate Notes due 2052.

 

Clearing Agency means DTC, Euroclear or Clearstream.

 

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

 

Clearstream means Clearstream Banking, société anonyme.

 

CLO Securities means securities that entitle the holders thereof to receive payments that depend (except for rights and other assets designed to assure the servicing or timely distribution of proceeds to holders of the CLO Securities) on the cashflow from a portfolio of primarily commercial loans.

 

Closing Date means February 28, 2007.

 

CMBS Conduit Securities means Commercial Mortgage Backed Securities (a) issued by a single-seller or multi-seller conduit under which the holders of such Commercial Mortgage Backed Securities have recourse to a specified pool of assets (but not other assets originated by the conduit that support payments on other series of securities) and (b) that entitle the holders thereof to receive payments

 

15

 

that depend (except for rights or other assets designed to assure the servicing or timely distribution of proceeds to holders of the Commercial Mortgage Backed Securities) on the cash flow from a pool of commercial mortgage loans.

 

CMBS Credit Tenant Lease Securities means Commercial Mortgage Backed Securities (other than CMBS Large Loan Securities and CMBS Conduit Securities but including Tenant Lease Loan Interests) that (i) have a public rating from a Rating Agency, (ii) incorporate a servicer or similar party to service the related leased property in a manner that satisfies Rating Agency servicing criteria for the servicing of commercial mortgage loans of this type and (iii) entitle the holders thereof to receive payments that depend on the cash flow from a single or a pool of commercial mortgage loans made to finance the acquisition, construction and improvement of properties leased to corporate tenants (or on the cash flow from such leases); provided that such dependence may in addition be conditioned upon rights or additional assets designed to assure the servicing or timely distribution of proceeds to holders of the CMBS Securities such as a financial guaranty insurance policy.

 

CMBS Franchise Securities means Commercial Mortgage Backed Securities that entitle the holders thereof to receive payments that depend (except for rights or other assets designed to assure the servicing or timely distribution of proceeds to holders of such Commercial Mortgage Backed Securities) on the cash flow from a pool of (substantially all) mortgage loans made to operators of franchises that provide oil, gasoline, restaurant or food services and provide other services related thereto.

 

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

 

CMBS Re-REMIC Securities means any security that is secured directly by, referenced to or representing ownership of, a pool at least 85% of which consists of CMBS Conduit Securities, other CMBS Securities or certificates representing a beneficial interest therein, but not including any Synthetic Security. For the avoidance of doubt, a CMBS Re-REMIC Security shall include any security backed by more than one credit default swap or referencing more than one Reference Obligation or a synthetic collateralized debt obligation or a synthetic resecuritization that (in each case) primarily references more than one CMBS Conduit Security or other CMBS Security or certificates representing a beneficial interest therein.

 

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

 

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

 

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

 

Collateral has the meaning specified in the granting clauses.

 

16

 

Collateral Account has the meaning specified in Section 10.3.

 

Collateral Administration Agreement means the Collateral Administration Agreement, dated, February 28, 2007, by and among the Issuer, the Collateral Manager and the Collateral Administrator, as the same may be amended and modified from time to time in accordance with its terms.

 

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

 

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

 

Collateral Concentration Limitations will be satisfied if, as of any Measurement Date after the Effective Date, and after giving effect to each purchase of a Collateral Debt Security, each of the following conditions (collectively, the Collateral Concentration Limitations) is satisfied in the aggregate (or, in the case of a Collateral Concentration Limitation not satisfied immediately prior to such purchase, such purchase maintains or improves compliance with such Collateral Concentration Limitation):

 

(i)                                           General Limitations

 

(a)                                   the aggregate Principal Balance of all Collateral Debt Securities that are PIK Bonds (excluding the Collateral Debt Securities identified on Annex B as KDIAK 2006-1 and ANSONIA 2006-1) does not exceed the greater of 7.5% of the CDS Principal Balance or U.S.$60,000,000;

 

(b)                                  the aggregate amount of the CDS Principal Balance for which no related interest rate Hedge Agreement is in place does not exceed 5% of the amount equal to (a) the principal amount of the Floating Rate Notes on the first day of the related Due Period minus (b) the aggregate Principal Balance of the Floating Rate Collateral Debt Securities on the first day of such Due Period;

 

(c)                                   the aggregate Principal Balance of all Collateral Debt Securities that provide for periodic payments of interest in cash less frequently than monthly (other than Collateral Debt Securities that are the subject of a Cash Flow Hedge Agreement) does not exceed 35% of the CDS Principal Balance;

 

(d)                                  the aggregate Principal Balance of all Collateral Debt Securities having a stated maturity date or rated final distribution date later than the Stated Maturity Date does not exceed 10% of the CDS Principal Balance (the “10% bucket”) , provided , that in no event may the stated maturity date or rated final distribution date of any CMBS Security or Real Estate CDO Security be more than 10 years later than the Stated Maturity Date and of any Real Estate Interest be more than 5 years prior to the Stated Maturity Date; provided, further , that for the CMBS Securities that fall into the 10% bucket, on a look-through basis, none of the underlying loans may mature (with extension options) later than 5 years prior to the Stated Maturity Date; provided, further , that in no event may the stated maturity date or rated final distribution date of any REIT Debt Security or CRE

 

17

 

Debt Obligation be later than the Stated Maturity Date; provided further, that in no event may the stated maturity date or rated final distribution date of any Trust Preferred Security be more than 5 years later than the Stated Maturity Date.

 

(ii)                                        Collateral Debt Security Type Limitations

 

(a)                                   the aggregate Principal Balance of all Collateral Debt Securities that are CMBS Securities does not exceed the greater of 85% of the CDS Principal Balance or U.S.$680,000,000; provided that no more than the greater of 50% of the CDS Principal Balance or U.S.$400,000,000 shall consist of CMBS Large Loan Securities, not more than the greater of 10% of the CDS Principal Balance or U.S.$80,000,000 shall consist of CMBS Credit Tenant Lease Securities and not more than the greater of 20% of the CDS Principal Balance or U.S.$ 160,000,000, shall consist of CMBS Re-REMIC Securities;

 

(b)                                  the sum of the aggregate Principal Balances of all REIT Debt Securities, Trust Preferred Securities and CRE Debt Obligations does not exceed the greater of 30% of the CDS Principal Balance or U.S.$240,000,000; provided that not more than the greater of 4.0% of the CDS Principal Balance or U.S.$32,000,000 shall consist of Trust Preferred Securities and not more than the greater of 20% of the CDS Principal Balance or U.S.$160,000,000 shall consist of CRE Debt Obligations;

 

(c)                                   the aggregate Principal Balance of all Collateral Debt Securities that are Real Estate CDO Securities does not exceed the greater of 20% of the CDS Principal Balance or U.S.$ 160,000,000;

 

(d)                                  the aggregate Principal Balance of all Collateral Debt Securities that are Real Estate Interests does not exceed the greater of 5.0% of the CDS Principal Balance or U.S.$40,000,000;

 

(e)                                   the aggregate Principal Balance of all Collateral Debt Securities that are Synthetic Securities does not exceed the greater of 20% of the CDS Principal Balance or U.S.$ 160,000,000;

 

(iii)             Single Issue Limitations

 

(a)                                   the aggregate Principal Balance of all Collateral Debt Securities that are part of the same Issue does not exceed the greater of 3.5% of the CDS Principal Balance or U.S.$28,000,000, except for up to 4 Issues not to exceed the greater of 5.0% of the CDS Principal Balance or U.S.$40,000,000;

 

(iv)                                    Property Type Limitations: the aggregate Principal Balance of all CMBS Conduit Securities, CMBS Large Loan Securities, CMBS Credit Tenant Lease Securities, CMBS Franchise Securities and Real Estate Interests related to Mortgaged Properties that are classified as: (A) multifamily properties does not exceed the greater of 50% of the CDS Principal Balance or U.S.$400,000,000; (B) retail properties does not exceed the greater of 40% of the CDS Principal Balance or U.S.$320,000,000; (C) office properties does not exceed the greater of 40% of the CDS Principal Balance or U.S.$320,000,000; (D) lodging properties does not exceed the greater of 30% of the CDS Principal Balance or U.S.$240,000,000; (E) healthcare properties does not exceed the greater of 20% of the CDS Principal Balance or U.S.$160,000,000 (provided, further, that skilled-nursing healthcare properties does not exceed the greater of 10% of the CDS Principal Balance or U.S.$80,000,000 and assisted living health care properties does not exceed

 

18

 

the greater of 10% of the CDS Principal Balance or U.S.$ 80,000,000); (F) industrial properties does not exceed the greater of 25% of the CDS Principal Balance or U.S.$200,000,000; (G) self storage properties does not exceed the greater of 10% of the CDS Principal Balance or U.S.$80,000,000; and (H) any other property type other than those specified in clauses (A) through (G) above does not exceed the greater of 10% of the CDS Principal Balance or U.S.$80,000,000;

 

(v)                                       Geographic Limitations: the aggregate Principal Balance of all CMBS Conduit Securities, CMBS Large Loan Securities, CMBS Credit Tenant Lease Securities, CMBS Franchise Securities and Real Estate Interests related to Mortgaged Properties located in: (A) California does not exceed the greater of 40% of the CDS Principal Balance or U.S.$320,000,000; (B) New York does not exceed the greater of 40% of the CDS Principal Balance or U.S.$320,000,000; (C)   Texas does not exceed the greater of 25% of the CDS Principal Balance or U.S.$200,000,000; (D)  Florida does not exceed the greater of 30% of the CDS Principal Balance or U.S.$240,000,000; and (E) any other single state other than California, New York, Texas and Florida does not exceed the greater of 20% of the CDS Principal Balance or U.S.$160,000,000;

 

For purposes of determining compliance with any Collateral Concentration Limitation, (a) all calculated percentages will be rounded to the nearest hundredth of 1% (e.g., 5.13%), (b) Temporary Ramp-Up Securities will be excluded from the calculation of the Collateral Concentration Limitations and (c) with respect to each Synthetic Security, satisfaction of the Collateral Concentration Limitations, for purposes of clauses (i)(a), (ii)(a)-(d), (iii), (iv) and (v) above, shall be based on the related Reference Obligation and, for purposes of clauses (i)(b)-(d) and (ii)(e) above, shall be based on the Synthetic Security itself; provided that if the Collateral Manager determines that a Synthetic Security should, for purposes of clause (i)(a) above, be based instead on the Synthetic Security, the Collateral Manager may seek Rating Agency Confirmation from S&P with respect to the treatment of such Synthetic Security and any similar Synthetic Security entered into subsequently.

 

Notwithstanding the foregoing, during the Ramp-Up Period the Collateral Quality Tests need not be met. At all times, the dollar amount limitation set forth in any individual Collateral Concentration Limitation will be disregarded for the purposes of the Reinvestment Criteria, but will be taken into account solely for purposes of any reports to be prepared under the Indenture.

 

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

 

Collateral Interest Collections means, with respect to any Due Period and the related Payment Date, without duplication, the sum of (i) (a) all cash payments of interest with respect to any Collateral Debt Securities and Eligible Investments included in the Collateral (including any Sale Proceeds of a Collateral Debt Security sold at a price greater than or equal to its Principal Balance representing unpaid interest accrued thereon to the date of the sale thereof to the extent not treated as Collateral Principal Collections at the option of the Collateral Manager) and (b) all Synthetic Security Periodic Payments payable to the Issuer under a Synthetic Security, net, in the case of a Derivative Contract, of any Synthetic Security Periodic Payments payable by the Issuer to the Derivative Contract Counterparty during the related Collection Period, but excluding in the case of the foregoing clauses (a) and (b): (1) all funds received on a Defaulted Security (including any unpaid interest) and any unpaid interest accrued on a Deferred Interest PIK Bond or a Written Down Security to the date of sale which are received during the related Due Period, and (2) any servicing fees and other fees, expenses or indemnities paid directly to any Servicer pursuant to any Servicing Agreement and any other amounts paid out of collections of interest pursuant to any Servicing Agreement to reimburse the related Servicer for servicing advances made by it thereunder which are received during the related Due Period, (ii) all payments on Eligible Investments

 

19

 

purchased with Collateral Interest Collections, (iii) payments received or scheduled to be received from a Hedge Counterparty under any Hedge Agreement (including the Initial Hedge Agreement) on the related Payment Date, excluding any payments received from a Hedge Counterparty upon reduction of the notional amount and any termination payments (provided that so long as the Notes are Outstanding, any termination payments received from a Hedge Counterparty will be used to enter into a substitute Hedge Agreement to the extent required to maintain the then-current rating of the Notes by each Rating Agency), (iv) all amendment and waiver fees, all late payment fees and all other fees and commissions received during the related Due Period (other than fees and commissions received in connection with the sale, restructuring, workout or default of Collateral Debt Securities or in connection with Defaulted Securities or Written Down Securities) (excluding any payments representing exit fees, extension fees or prepayment premiums paid in connection with Real Estate Interests), (v) the Principal Balance of any Eligible Investments purchased with Collateral Interest Collections, (vi) all interest accrued on the Closing Date on Collateral Debt Securities included in the Collateral, (vii) any amounts on deposit in the Non-Monthly Pay Asset Interest Reserve Account, (viii) any amounts in the Discretionary Ramp-Up Interest Reserve Account and the Interest Reserve Account that are transferred to the Payment Account, (ix) after the Effective Date, at the option of the Collateral Manager, any amount on deposit in the Expense Reserve Account in excess of U.S.$25,000, (x) all income received during the related Due Period on any Eligible Investments then in any Derivative Contract Counterparty Accounts, to the extent transferred to the Collection Account pursuant to and in accordance with Section 10.11 and (xi) all proceeds from the foregoing; provided, however, that Collateral Interest Collections shall not include (i) the funds and other property (including the paid-up share capital of the Issuer) with respect to the Income Notes and the bank account in which such funds and the proceeds thereof are held, (ii) principal of any Collateral Debt Security representing capitalized interest after the date of purchase thereof by the Issuer, (iii) Purchased Accrued Interest or (iv) any amounts contributed by the Income Noteholders as capital contributions pursuant to Section 4.5 of the Income Note Paying Agency Agreement.

 

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

 

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

 

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

 

Collateral Principal Collections means, (i) with respect to any Due Period and the related Payment Date, all amounts received by the Issuer during such Due Period that do not constitute Collateral Interest Collections minus (ii) any amounts paid directly out of collections of principal pursuant to any Servicing Agreement to reimburse the related Servicer for servicing advances made by it and other amounts due to any Servicer and not paid out of Collateral Interest Collections. Collateral Principal Collections shall include, without limitation, (A) principal of any Collateral Debt Security representing capitalized interest after the date of purchase thereof by the Issuer, (B) any Uninvested Proceeds which have not been invested on or prior to the Effective Date and (C) any amounts contributed by the Income Noteholders as capital contributions pursuant to Section 4.5 of the Income Note Paying Agency Agreement.

 

Collateral Principal Collections Sub-Account has the meaning specified in Section 10.6(a) hereof.

 

20

 

Controlling Class  means the Class A-1 Notes voting as a single Class, so long as any Class A-1 Notes are Outstanding, and then the Class A-2 Notes, so long as any Class A-2 Notes are Outstanding, and then the Class A-3 Notes, so long as any Class A-3 Notes are Outstanding, and then the Class B Notes, so long as any Class B Notes are Outstanding, and then the Class C Notes, so long as any Class C Notes are Outstanding, and then the Class D Notes, so long as any Class D Notes are Outstanding, and then the Class E Notes, so long as any Class E Notes are Outstanding, and then the Class F Notes, so long as any Class F Notes are Outstanding, and then the Class G Notes, so long as any Class G Notes are Outstanding, and then the Class H Notes, so long as any Class H Notes are Outstanding, and then the Class J Notes, so long as any Class J Notes are Outstanding, and then the Class K Notes, so long as the K Notes are Outstanding, based on the Aggregate Outstanding Amount thereof.

 

Controlling Class Objection means written notice to the Collateral Manager by the Holders of a majority in aggregate principal amount of Outstanding Notes of the Controlling Class objecting in their reasonable discretion to a proposed replacement Key Manager.

 

Controlling Person means any other person (other than a Benefit Plan Investor) that has discretionary authority or control with respect to the assets of the Issuer, a person who provides investment advice for a fee (direct or indirect) with respect to the assets of the Issuer, or any “affiliate” (within the meaning of 29 C.F.R. Section 2510.3-101(0(3)) of any such person.

 

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

 

Corporate Trust Office means the designated corporate trust office of the Trustee, currently located at 181 West Madison Street, 32 nd  Floor, Chicago, Illinois 60602, Attention: CDO Trust Services Group – N-Star Real Estate CDO IX, Ltd., telephone number 312-904-0467, fax number 312-602-3935, or such other address as the Trustee may designate from time to time by notice to the Secured Noteholders, the Income Noteholders, the Collateral Manager and the Issuer or the principal corporate trust office of any successor Trustee.

 

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

 

Coverage Ratios means the Interest Coverage Ratios and the Principal Coverage Ratios.

 

CRE Debt Obligations means (i) a loan, security or similar full recourse obligation made by a bank or other financial institution based on the credit of the operating entity obligor or (ii) any participation interest in, or assignment of, an asset which satisfies the criteria in clause (i) of this definition, which obligor in the case of clauses (i) and (ii) is a real estate operating company, real estate development company, homebuilding company or any other company whose business is significantly related to real estate, or any subsidiary thereof; provided that no Real Estate Interests, REIT Debt Securities or Trust Preferred Securities shall constitute CRE Debt Obligations.

 

Credit Improved Security means a Collateral Debt Security or, with respect to a Synthetic Security, the Reference Obligation thereof, that, since the date of purchase by the Issuer, in the Collateral Manager’s reasonable business judgment, has improved in credit quality.

 

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

 

22

 

Credit Risk Event means, with respect to any Collateral Debt Security an event or circumstance that constitutes a change in the condition of the issuer of such Collateral Debt Security (or of available information with respect to such issuer) that evidences, in the good faith judgment of the Collateral Manager, (A) a significant risk of such Collateral Debt Security materially declining in credit quality, or (B) a significant risk, with a lapse of time, of such Collateral Debt Security becoming a Defaulted Security or a Written Down Security.

 

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

 

Credit Support Annex means the ISDA Credit Support Annex to a Hedge Agreement between a Hedge Counterparty and the Issuer.

 

Cure Advance means, in respect of any Real Estate Interest that is a Subordinate Loan Interest or a Mezzanine Loan, amounts advanced by a Holder of Income Notes pursuant to the Income Note Paying Agency Agreement to permit the Issuer to exercise its right to cure monetary defaults with respect to any commercial mortgage loan or mezzanine loan that ranks senior in priority to the related Real Estate Interest in respect of the related commercial property, in each case in accordance with the applicable Underlying Instrument.

 

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

 

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

 

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

 

Deemed Floating Asset Hedge means, with respect to a Fixed Rate Collateral Debt Security, an interest rate swap having (i) a notional schedule equal to the Principal Balance as it is reduced by expected amortization of such Fixed Rate Collateral Debt Security over time and (ii) payment dates identical to the Payment Dates of the Issuer under the Indenture; provided that, (w) at the time of entry into the Deemed Floating Asset Hedge, (i) the expected principal payments on the Fixed Rate Collateral Debt Security comprising a Deemed Floating Rate Collateral Debt Security will not extend beyond the Stated Maturity Date and (ii) the scheduled notional amount of such Deemed Floating Asset Hedge at any time is equal to the expected principal amount of the related Fixed Rate Collateral Debt Security (as calculated at such time), (x) the Rating Agencies and the Trustee are notified prior to the Issuer’s entry into a Deemed Floating Asset Hedge, and each will be provided with the identity of the proposed hedge counterparty and copies of the hedge documentation and notional schedule, (y) such Deemed Floating Asset Hedge will require Rating Agency Confirmation from S&P and Moody’s to the extent it is not a Form-Approved Hedge Agreement and (z) such Deemed Floating Asset Hedge is priced at then-current market rates.

 

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

 

23

 

Pursuant to this Indenture, a Deemed Floating Rate Collateral Debt Security will be deemed a Floating Rate Collateral Debt Security with a spread over LIBOR equal to the related Deemed Floating Spread.

 

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

 

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

 

Defaulted Derivative Contract Counterparty Termination Payment means an amount payable by the Issuer to a Derivative Contract Counterparty that is due following the designation of an “Early Termination Date” (as such term is defined in the related Derivative Contract) (other than in respect of an “Illegality” or a “Tax Event” (as each such term is defined in the related Derivative Contract)), in respect of which the related Derivative Contract Counterparty is the “Defaulting Party” or the sole “Affected Party”.

 

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

 

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

 

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

 

(i)                                     as to which (a) the issuer thereof has defaulted in the payment of principal or interest (without giving effect to any applicable notice or grace period or waiver, unless the Collateral Manager certifies to the Trustee that in the Collateral Manager’s reasonable judgment such default of up to the lesser of (1) three Business Days and (2) the grace period provided for in the Underlying Instruments is due solely to non-credit and non-fraud related reasons and the Collateral Manager has so certified in writing to the Trustee or (b) pursuant to its Underlying Instruments, there has occurred any default or event of default which entitles the holders thereof, with notice or passage of time or both, to accelerate the maturity (whether by mandatory prepayments, mandatory redemption or otherwise) of all or a portion of the outstanding principal amount of such security, unless (1) in the case of a default or event of default consisting of a failure of the obligor on such security to make required interest payments and/or scheduled principal payments, such security has resumed current payments of interest and scheduled principal in cash (including all past due interest and scheduled principal) and, in the Collateral Manager’s reasonable judgment, will continue to make such current payments of interest in cash (provided that no restructuring has been effected) or (2) in the case of any other default or event of default, such default or event of

 

24

 

default is no longer continuing ( provided that no event of default has been waived with respect to (A) a default in the payment of principal or interest or (B) insolvency in the event that all outstanding amounts have not been paid) and such security satisfies the criteria for inclusion of securities in the definition of “Collateral Debt Security”;

 

(ii)                                  that ranks pari passu with or subordinate to any other indebtedness for borrowed money owing by the issuer of such security, if any (for purposes hereof, Other Indebtedness ; provided, however , that such Other Indebtedness of such issuer will not include series of such Other Indebtedness that may be issued or owing by a separate special purpose entity and is not guaranteed by the issuer) if such issuer had defaulted in the payment of principal or interest in respect of such Other Indebtedness (without giving effect to any applicable notice or grace period or waiver, unless the Collateral Manager certifies to the Trustee that in the Collateral Manager’s reasonable judgment such default of up to the lesser of (a) three Business Days and (b) the grace period provided for in the Underlying Instruments is due solely to non-credit and non-fraud related reasons and the Collateral Manager has so certified in writing to the Trustee), unless, in the case of a default or event of default consisting of a failure of the obligor on such security to make required interest payments and/or scheduled principal payments, such Other Indebtedness has resumed current payments of interest and scheduled principal (including all due interest and scheduled principal) in cash (whether or not any waiver or restructuring has been effected) and, in the Collateral Manager’s reasonable judgment, will continue to make such current payments of interest and scheduled principal in cash; provided that a security shall be considered a Defaulted Security pursuant to this clause (ii) only if the Collateral Manager knows, after due inquiry as required pursuant to the Collateral Management Agreement, that the issuer thereof is (or is reasonably expected by the Collateral Manager to be, as of the next scheduled payment distribution date) in default (without giving effect to any applicable grace period or waiver) as to payment of principal and/or interest on another obligation (and such default has not been cured or waived) which is senior or pari passu in right of payment to such Collateral Debt Security;

 

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

 

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

 

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

 

(vi)                              that is a Synthetic Security (A) that has a single Reference Obligation which would (if owned by the Issuer) constitute a Defaulted Security or (B)   with respect to which the Derivative Contract Counterparty is a “Defaulting Party” or the sole “Affected Party” (as such terms are defined therein) thereunder; or

 

25

 

(vii)                           any Trust Preferred Security with respect to which interest has been deferred or capitalized and remains outstanding.

 

Defaulting Party has the meaning given to such term in the applicable Hedge Agreement or Synthetic Security.

 

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

 

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

 

Definitive Offered Note has the meaning specified in Section 2.1(c).

 

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

 

Definitive Retained Note Transfer Certificate has the meaning specified in Section 2.4(d)(1).

 

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

 

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

 

Derivative Contract means a credit derivative, total return swap or other similar contract or agreement that satisfies the other requirements set forth in the definition of “Synthetic Security” and is executed by the Issuer with a Derivative Contract Counterparty, in respect of which the Issuer has exposure synthetically through such contract to one or more (including a pool of) Reference Obligations or obligors; provided that any Derivative Contract executed by the Issuer shall (i) contain appropriate limited recourse and non-petition provisions equivalent (mutatis mutandis) to those set forth herein and Rating Agency Confirmation from S&P shall have been obtained before entering into such Derivative Contract and (ii) require the Issuer to deposit into the Derivative Contract Counterparty Account an amount equal to its maximum potential exposure under such Derivative Contract.

 

Derivative Contract Counterparty means an entity required to make periodic premium payments to the Issuer pursuant to the terms of a Derivative Contract and which satisfies the Derivative Contract Counterparty Rating Requirement.

 

Derivative Contract Counterparty Account means each account established for the benefit of a Derivative Contract Counterparty in connection with a Derivative Contract pursuant to Section 10.11 hereof.

 

26

 

Derivative Contract Counterparty Rating Requirement means with respect to any Derivative Contract Counterparty, that such entity has (or its guarantor under a guarantee meeting S&P’s then-current criteria for guarantees has) (A) (i) a long term debt rating of at least “Aa3” by Moody’s or (ii) a long term debt rating of at least “Al” by Moody’s and a short-term debt rating of “P-1” and (B) a short term rating of at least “A-1+” by S&P (or “A-1” by S&P if the premium (and any other relevant amount (such as coupon) required under the relevant Derivative Contract) to be paid by such Derivative Contract Counterparty is posted at least one payment period in advance for the term of the Derivative Contract) and is not on negative watch.

 

Derivative Contract Issuer Account means each account established for the benefit of the Issuer in connection with a Derivative Contract pursuant to Section 10.12 hereof

 

Derivative Security means a security in the form of a credit-linked note, trust certificate, collateralized bond obligation or collateralized loan or similar obligation that satisfies the other requirements set forth in the definition of “Synthetic Security” and is in respect of which the Issuer has exposure synthetically to one or more (including a pool of) Reference Obligations or obligors through a swap or other agreement executed by the issuer of such security with a person other than the Issuer and in respect of which the Issuer has no ongoing payment obligations; provided, however, that a Derivative Security shall not include any security backed by more than one credit default swap or referencing more than one Reference Obligation or a synthetic collateralized debt obligation or synthetic resecuritization that (in each case) primarily references CMBS Conduit Securities or other CMBS Securities or certificates representing a beneficial interest therein (which, for the avoidance of doubt, shall (in each case) be treated as a CMBS Re-REMIC Security).

 

Discretionary Ramp-Up Interest Reserve Account means the Securities Account designated the “Discretionary Ramp-Up Interest Reserve Account” and established in the name of the Trustee pursuant to Section 10.9.

 

Discretionary Ramp-Up Interest Reserve Amount means, on the Closing Date, the amount equal to approximately U.S.$1,000,000.

 

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

 

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

 

DTC means The Depository Trust Company and its nominees and their respective successors.

 

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

 

Due Period means, with respect to each Payment Date, the period beginning on the day following the last day of the preceding Due Period relating to the preceding Payment Date (or, in the case of the Due Period that is applicable to the first Payment Date, beginning on the Closing Date) and ending on the close of business on the fourth Business Day preceding such Payment Date; provided that, if the occurrence of a non-business day causes a scheduled distribution on any Collateral Debt Security or other security held as Collateral to be received during the period between the end of the Due Period in which such payment would otherwise have been received and the related Payment Date, such payment will be deemed to have been received during such Due Period.

 

27

 

Effective Date means the date that is the earliest of (i) the 270 days following the Closing Date, (ii) the date on which the Issuer has purchased Collateral Debt Securities, excluding Temporary Ramp-Up Securities, having an aggregate par amount of U.S.$ 800,000,000 or (iii) such earlier date (if any) that is designated by the Collateral Manager by notice to the Trustee under the Indenture; provided that in the event that such day does not fall on a Business Day, the Effective Date shall be the next succeeding Business Day.

 

Eligibility Criteria has the meaning specified in Section 12.2.

 

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

 

(i)                                     cash;

 

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

 

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

 

(a)                                  in the case of long-term debt obligations, not less than “Aa2” by Moody’s, “AA+” by S&P and “AA” if rated by Fitch; or

 

(b)                                 in the case of commercial paper and short-term debt obligations including time deposits, “P-1” by Moody’s, “A-1+” by S&P and “F1” if rated by Fitch ( provided that, in the case of commercial paper and short-term debt obligations with a maturity of longer than 91 days, the issuer thereof must also have at the time of such investment a long-term credit rating of not less than “AA+” by S&P and a long-term credit rating of not less than “AA”, if rated by Fitch; provided, however, that (1) so long as LaSalle Bank National Association is rated at least “A-1” by S&P and not on negative watch and (2) LaSalle Bank National Association is the Trustee, overnight time deposits with LaSalle Bank National Association shall be an Eligible Investment);

 

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

 

(v)                                 unleveraged repurchase obligations (if treated as debt for tax purposes by the issuer) with respect to any security described in clause (ii) above, entered into with a depository institution or trust company (acting as principal) described in clause (iii) or entered into with broker-dealers registered with the Commission (acting as principal) whose short-term debt has a credit rating of

 

28

 

“P-1” by Moody’s, “A-1+” by S&P and “F1+” if rated by Fitch at the time of such investment in the case of any repurchase obligation for a security having a maturity not more than 183 days from the date of its issuance and whose long-term debt has a credit rating of at least “Aa2” by Moody’s, “AA+” by S&P and “AA” if rated by Fitch at the time of such investment in the case of any repurchase obligation for a security having a maturity more than 183 days from the date of its issuance;

 

(vi)                              commercial paper or other short-term obligations having at the time of such investment a credit rating of (a) (1)“F1” by Fitch and that have a maturity of not more than 30 days from its date of issuance or (2) “F1+” by Fitch and that have a maturity of more than 30 days but less than one year from its date of issuance and (b) “P-1” by Moody’s and “A-1+” by S&P that are registered and are either bearing interest or are sold at a discount from the face amount thereof and that have a maturity of not more than 183 days from its date of issuance; provided that in the case of commercial paper with a maturity of longer than 91 days, the issuer of such commercial paper (or, in the case of a principal depository institution in a holding company system, the holding company of such system), if rated by the Rating Agencies, must also have at the time of such investment a long-term credit rating of at least “Aa2” by Moody’s, “AA+” by S&P and “AA” if rated by Fitch;

 

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

 

(viii)                        in the case of Eligible Investments held in the Uninvested Proceeds Account only, Temporary Ramp Up Securities; and

 

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

 

provided that (a) Eligible Investments purchased with funds in any account will be held until maturity except as otherwise specifically provided herein and will include only such obligations or securities as mature no later than the Business Day prior to the Payment Date next succeeding the date of investment in such obligations or securities, unless such Eligible Investments are investments of the type described in clause (i) or (iii) above, in which event such Eligible Investments may mature on such Payment Date and (b) none of the foregoing obligations or securities will constitute Eligible Investments if all, or substantially all, of the remaining amounts payable thereunder will consist of interest and not principal payments, if such security is purchased at a price in excess of 100% of par, if such security is subject to substantial non-credit related risk, as determined by the Collateral Manager in its judgment, if any income from or proceeds of disposition of the obligation or security is or will be subject to deduction or withholding for or on account of any withholding or similar tax or the acquisition (including the manner of acquisition), ownership, enforcement or disposition of the obligation or security will subject the Issuer to net income tax in any jurisdiction outside its jurisdiction of incorporation, or if such security has an assigned rating with an “r”, “t”, “p”, “pi” or “q” subscript, or if such security is a mortgage-backed security or if such security is subject to an Offer; provided, further, that, notwithstanding the foregoing, Eligible Investments with a maturity greater than one Business Day and a rating of “A-1” by S&P may only be held by the Issuer in an amount up to 20% of the aggregate Principal Balance of the Notes Outstanding.

 

29

 

available at www.fitchratings.com and www.derivativefitch.com. Fitch may, from time to time, modify or replace this criteria which may have modified or replaced this report if Fitch provides notice thereof to the Issuer, the Collateral Manager and the Trustee.

 

Fitch Rating means (A) with respect to any Collateral Debt Security other than a Trust Preferred Security, for determining the Fitch Rating as of any date of determination:

 

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

 

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

 

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

 

(B)                                with respect to any Collateral Debt Security that is a Trust Preferred Security, (i) if the issuing entity (or the direct or indirect parent of such issuing entity) of such Trust Preferred Security has a public rating by Fitch, that public rating shall apply, or (ii) if such Trust Preferred Security has no public rating by Fitch, it shall be the private rating assigned by Fitch upon request of the Collateral Manager.

 

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

 

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

 

Fitch Rating		Fitch Rating Factor		Fitch Rating		Fitch Rating Factor
AAA		.019		BB		13.53
AA+		.057		BB-		18.46
AA		.089		B+		22.84
AA-		1.15		B		27.67
A+		1.65		B-		34.98
A		1.85		CCC+		43.36
A-		2.44		CCC		48.52
BBB+		3.13		CC		77.00
BBB		3.74		C		95.00

 

31

 

Fitch Rating		Fitch Rating Factor		Fitch Rating		Fitch Rating Factor
BBB-		7.26		DDD-D		100.00
BB+		10.18

 

Fitch Recovery Rate means, with respect to a Collateral Debt Security on any Calculation Date, an amount equal to the percentage corresponding to the domicile, original rating, seniority and tranche thickness of such item of Collateral Debt Security as currently set forth in the Fitch Recovery Rate Matrix available in the last version of Fitch’s Default Vector Model, which can be downloaded from www.Derivativefitch.com and www.fitchratings.com. Fitch may, from time to time, modify or replace this criteria and Fitch may apply the current criteria which may have modified or replaced this report if Fitch provides notice thereof to the Issuer, the Collateral Manager and the Trustee.

 

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

 

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

 

Fixed Rate Excess means, as of any Measurement Date, a fraction (expressed as a percentage), the numerator of which is equal to the product of (a) the greater of zero and the excess, if any, of the Weighted Average Fixed Rate Coupon for such Measurement Date over 5.95%, and (b) the aggregate Principal Balance of all Collateral Debt Securities that are Fixed Rate Collateral Debt Securities (excluding, in each case, Defaulted Securities, Written Down Securities, Deferred Interest PIK Bonds and Deemed Floating Rate Collateral Debt Securities) and the denominator of which is the aggregate Principal Balance of all Collateral Debt Securities that are Floating Rate Collateral Debt Securities or Deemed Floating Rate Collateral Debt Securities (excluding, in each case, Defaulted Securities, Written Down Securities and Deferred Interest PIK Bonds).

 

Fixed Rate Notes means the Class C Notes, the Class J Notes and the Class K Notes.

 

Floating Rate Collateral Debt Security means any Collateral Debt Security which bears interest based upon LIBOR, prime rate or another floating rate index.

 

Floating Rate Notes means, collectively, the Class A Notes, the Class B Notes, the Class D Notes, the Class E Notes, the Class F Notes, the Class G Notes and the Class H Notes.

 

32

 

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

 

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

 

Franchise Loan Securities means securities that entitle the holders thereof to receive payments that depend (except for rights or other assets designed to assure the servicing or timely distribution of proceeds to holders of such securities) on the cashflow from a pool of franchise loans made to operators of franchises which, for the avoidance of doubt, do not include CMBS Franchise Securities.

 

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

 

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

 

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

 

Hedge Agreement means, collectively, any of one or more interest rate protection agreements (including the Initial Hedge Agreements) or any Cashflow Hedge Agreement, as amended from time to time, together with any replacement hedge agreements on substantially identical terms (or that otherwise satisfies the conditions of Section 16.1(d)), entered into pursuant to Section 16.1 or a Deemed Floating Asset Hedge.

 

33

 

Hedge Counterparty means (a) with respect to each Initial Hedge Agreement entered into on the Closing Date, the Initial Hedge Counterparty (or any permitted assignee or successor) and (b) any hedge counterparty (or any permitted assignee or successor) under a Hedge Agreement (including under a Deemed Floating Asset Hedge or any Cashflow Hedge Agreement) that satisfies the Hedge Counterparty Ratings Requirement.

 

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

 

Hedge Counterparty Ratings Requirement means, with respect to any Hedge Ratings Determining Party: (a) either (i) the short-term rating of the Hedge Ratings Determining Party by Moody’s is not lower than “P1” and the long-term rating of such Hedge Ratings Determining Party is not lower than “A2”, or (ii) if the Hedge Ratings Determining Party does not have a short-term rating from Moody’s, the long term rating of such Hedge Ratings Determining Party is not lower than “Al”; (b) both (x) the short-term rating of such Hedge Ratings Determining Party by Fitch is not lower than “F1” and (y) the long-term rating of such Hedge Ratings Determining Party by Fitch is not withdrawn, suspended or downgraded below “A”; or if there is no short-term rating by Fitch, the long-term rating of such Hedge Ratings Determining Party by Fitch is not lower than “A”; and (c) either (i) the short-term rating of such Hedge Ratings Determining Party is not lower than “A-1” by S&P or (ii) if such Hedge Ratings Determining Party does not have a short-term rating from S&P, the long-term rating of such Hedge Ratings Determining Party by S&P is not lower than “A+”.

 

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

 

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

 

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

 

Herfindahl Index means an index calculated by the Collateral Manager by dividing (i) one by (ii) the sum of, with respect to each Collateral Debt Security, (x) the aggregate Principal Balance of all Collateral Debt Securities issued by a single obligor divided by (y) the CDS Principal Balance, raised to the second power. For purposes of calculating the Herfindahl Index, (i) all certificated Collateral Debt Securities of a single Issue will be treated as a single Collateral Debt Security and (ii) each U.S.$ 500,000 increment of cash in any Account shall be treated as a single Collateral Debt Security.

 

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

 

34

 

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

 

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

 

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

 

Income Note Excess Funds means all remaining Collateral Interest Collections and Collateral Principal Collections as set forth in Sections 11.1(a)(34) and 11.1(b)(28).

 

Income Note Paying Agency Agreement means that certain Income Note Paying Agency Agreement, dated as of the date hereof, as the same may be amended or supplemented from time to time, between the Issuer and the Income Note Paying Agent.

 

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

 

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

 

Income Note Redemption Approval Condition means, in connection with a Tax Redemption at the direction of the Controlling Class or an Auction Call Redemption, the requirement that, unless and to the extent the Holders of not less than 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 Note Register means, with respect to the Income Notes, the Income Note Register maintained by the Income Note Registrar.

 

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

 

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

 

Income Notes means the U.S.$28,000,000 Income Notes due 2052.

 

Income Notes Stated Amount means U.S.$28,000,000.

 

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

 

35

 

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

 

Initial Hedge Agreements mean, collectively, each of the interest rate swap agreements entered into between the Issuer and the Initial Hedge Counterparty on the Closing Date.

 

Initial Hedge Counterparty means Citigroup Financial Products Inc. under the Initial Hedge Agreement and any of its successors, assigns or replacements under the Initial Hedge Agreement appointed in accordance with the terms of this Indenture and the Initial Hedge Agreement.

 

Initial Payment Date means the Payment Date occurring in June 7, 2007.

 

Initial Purchaser means Citigroup Global Markets Inc, as initial purchaser of the Offered Notes.

 

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

 

Interest Coverage Amount means, as of any Measurement Date, an amount equal to (i) the amount received or scheduled to be received as Collateral Interest Collections during the related Due Period, less (ii)(a) the amount payable as Aggregate Fees and Expenses on the related Payment Date, (b) any amounts paid or scheduled to be paid to the Hedge Counterparty on the related Payment Date (excluding any termination payments) and (c) for purposes of calculating the Class A/B Interest Coverage Ratio, the Class C/D/E Interest Coverage Ratio and the Class F/G/H Interest Coverage Ratio, any amounts scheduled to be paid to the Non-Monthly Pay Asset Interest Reserve Account on the related Payment Date; provided that (a) following the date on which a Collateral Debt Security becomes a Defaulted Security, scheduled Collateral Interest Collections shall not include any amount scheduled to be received on Defaulted Securities or any amount scheduled to be received on securities that are currently deferring interest until (1) such scheduled amounts are actually received in cash, or (2) the cumulative aggregate amounts actually received on a Defaulted Security exceed the Principal Balance of such Defaulted Security, (b) the expected interest income on Floating Rate Collateral Debt Securities and Eligible Investments shall be calculated using the then-current interest rate applicable thereto and (c) with respect to any Written Down Security, the Interest Coverage Amount shall exclude any interest accrued on any Written Down Amount.

 

Interest Coverage Ratios means the Class A/B Interest Coverage Ratio, the Class C/D/E Interest Coverage Ratio and the Class F/G/H Interest Coverage Ratio.

 

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

 

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

 

36

 

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

 

Interest Reserve Account means the account established by the Trustee, held in the name of the Trustee for the benefit and on behalf of the Holders of the Income Notes (i) into which the Trustee will deposit, at the request of 100% of the Holders of the Income Notes, on each Payment Date, any Income Note Excess Funds designated by such Holders in accordance with the Priority of Payments and (ii) from which any unused amounts on deposit therein will be distributed in accordance with the directions of 100% of the Holders of the Income Notes as described in Section 10.5.

 

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

 

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

 

Irish Paying Agent means NCB Stockbrokers Limited.

 

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

 

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

 

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

 

Key Manager means any of David T. Hamamoto, Jean-Michel (Mitch) Wasterlain or any such other additional person as may be appointed Key Managers in accordance with the Collateral Management Agreement (or if David T. Hamamoto, Jean-Michel (Mitch) Wasterlain or any such additional Key Managers have been replaced with one or more Approved Replacement Persons, such Approved Replacement Persons).

 

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

 

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

 

LIBOR Calculation Date has the meaning specified in Schedule B.

 

37

 

Listed Bidders has the meaning specified in Schedule E.

 

London Banking Day has the meaning specified in Schedule B.

 

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

 

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

 

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

 

Market Value CDO Securities means collateralized debt obligation securities with respect to which the coverage ratios are primarily determined by reference to the market value of the underlying portfolio of investments as prescribed by the applicable rating agencies.

 

Measurement Date means any of the following: (a) the Effective Date; (b) any date after the Effective Date upon which the Issuer disposes or acquires (which date of acquisition shall be deemed to be the date on which the Issuer enters into binding commitments to acquire such Collateral Debt Security) any Collateral Debt Security; (c) each Calculation Date; (d) the last Business Day of each calendar month (other than the calendar month preceding the month in which a Calculation Date occurs and any calendar month prior to and including the month in which the Effective Date occurs); and (e) with reasonable notice to the Issuer, the Collateral Manager and the Trustee, any other Business Day that any Rating Agency or Holders of more than 50% of the then Aggregate Outstanding Amount of any Class of Secured Notes requests to be a “Measurement Date”; provided that if any such date would otherwise fall on a day that is not a Business Day, the relevant Measurement Date will be the next succeeding day that is a Business Day; provided, further that for the purposes of determining the Issuer’s compliance with any Coverage Test, the Measurement Date will be on or subsequent to the Effective Date.

 

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

 

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

 

38

 

(iii)                               with respect to corporate guarantees on any REIT Debt Security, if such corporate guarantees are not publicly rated by Moody’s but another security or obligation of the guarantor or obligor (an Other Security) is publicly rated by Moody’s, and no rating has been assigned in accordance with clause (i) above, the Moody’s Rating of such Collateral Debt Security will be determined as follows:

 

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

 

(B)                                if the corporate guarantee is a senior unsecured obligation of the guarantor or obligor and the other security is a senior secured obligation, the Moody’s Rating of such Collateral Debt Security will be one rating subcategory below the rating of the other security;

 

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

 

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

 

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

 

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

 

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

 

(H)                               if the corporate guarantee is a senior unsecured obligation of the guarantor or obligor and the other security is a subordinated obligation that is: (1) rated

 

40

 

“Baa3” or higher by Moody’s, the Moody’s Rating of such corporate guarantee will be one rating subcategory above the rating of the other security; or (2) rated “Bal” or lower by Moody’s, the Moody’s Rating of such corporate guarantee will also be one rating subcategory above the rating of the other security; and

 

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

 

(iv)                              with respect to a Real Estate Interest, if such Real Estate Interest is not rated by Moody’s, the Moody’s Rating will be the rating so assigned by Moody’s; or

 

(v)                                 if such Collateral Debt Security is a Real Estate CDO Security, no notching is permitted and the Moody’s Rating will be the rating so assigned by Moody’s.

 

Notwithstanding the foregoing, the aggregate Principal Balance of all Collateral Debt Securities rated pursuant to clauses (ii) and (iii) above shall not exceed 20% of the CDS Principal Balance.

 

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

 

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

 

Moody’s Recovery Rate means, with respect to a Collateral Debt Security on any Calculation Date, an amount equal to the percentage for such Collateral Debt Security set forth in the Moody’s Recovery Rate Matrix attached as Schedule D-2 hereto.

 

Moody’s Recovery Rate Test means a test that will be satisfied as of any Measurement Date if the Moody’s Weighted Average Recovery Rate is at least 20%.

 

Moody’s WARF means, as of any Measurement Date, the number obtained by summing the products obtained by multiplying the Principal Balance of each Collateral Debt Security which is not a Defaulted Security held by the Issuer as of such Measurement Date by its Moody’s Rating Factor, dividing such sum by the aggregate Principal Balance of all such Collateral Debt Securities (excluding Defaulted Securities) and rounding the result to the nearest whole number.

 

Moody’s WARF Test means a test that will be satisfied on the Effective Date and on any Measurement Date thereafter if the WARF is not more than 825.

 

41

 

Moody’s Weighted Average Recovery Rate means the rate on any Measurement Date calculated as a fraction (expressed as a percentage rounded to the nearest 0.1%) the numerator of which is the sum of the products obtained by multiplying the Principal Balance of each Collateral Debt Security (excluding Defaulted Securities) by the applicable Moody’s Recovery Rate and the denominator of which is the CDS Principal Balance (excluding Defaulted Securities).

 

Mortgaged Property means with respect to any CMBS Conduit Security, CMBS Large Loan Security, CMBS Credit Tenant Lease Security, Real Estate Interest or any other applicable CMBS Security, the real property encumbered by any mortgage, deed of trust or other similar security instrument securing such loan and creating a lien on the related borrower’s fee estate or leasehold estate in one or more properties.

 

Non-Monthly Pay Asset Interest Reserve Account means the account established by the Trustee, held in the name of the Trustee for the benefit and on behalf of the Secured Parties and into which the Trustee will deposit, on each Payment Date, the Non-Monthly Pay Asset Interest Reserve Amount, if any, in accordance with the Priority of Payments or, at the request of 100% of the Holders of the Income Notes, from any Income Note Excess Funds designated by such Holders pursuant to Section 10.8.

 

N