INDENTURE

 

 

TABLE OF CONTENTS

 

Section			Page
PRELIMINARY STATEMENT			1
GRANTING CLAUSES			1
ARTICLE I Definitions and Interpretation			2
1.1.	Definitions		2
1.2.	Assumptions as to Collateral Debt Securities, Fees, Etc.		52
1.3.	Rules of Construction		54
ARTICLE II The Rated Notes			55
2.1.	Forms Generally		55
2.2.	Authorized Amount; Applicable Periodic Interest Rate; Stated Maturity Date; Denominations		56
2.3.	Execution, Authentication, Delivery and Dating		57
2.4.	Registration, Transfer and Exchange of Rated Notes		58
2.5.	Mutilated, Defaced, Destroyed, Lost or Stolen Rated Notes		66
2.6.	Payment of Principal and Interest; Rights Preserved		67
ARTICLE III Conditions Precedent			70
3.1.	General Provisions		70
3.2.	Security for the Rated Notes		73
3.3.	Custodianship; Transfer of Collateral Debt Securities and Eligible Investments		74
ARTICLE IV Satisfaction and Discharge			77
4.1.	Satisfaction and Discharge of Indenture		77
4.2.	Application of Trust Money		79
4.3.	Repayment of Funds Held by Note Paying Agent		79
ARTICLE V Events of Default; Remedies			79
5.1.	Events of Default		79
5.2.	Acceleration of Maturity; Rescission and Annulment		80
5.3.	Collection of Indebtedness and Suits for Enforcement by Trustee		82
5.4.	Remedies		84
5.5.	Preservation of Collateral		85
5.6.	Trustee May Enforce Claims Without Possession		87
5.7.	Application of Funds Collected		87
5.8.	Limitation on Suits		87
5.9.	Unconditional Rights of Rated Noteholders to Receive Principal and Interest		88
5.10.	Restoration of Rights and Remedies		88
5.11.	Rights and Remedies Cumulative		88
5.12.	Delay or Omission Not Waiver		89
5.13.	Control by Controlling Class		89
5.14.	Waiver of Past Defaults		89
5.15.	Undertaking for Costs		90
5.16.	Waiver of Stay or Extension Laws		90
5.17.	Sale of Collateral		90
5.18.	Action on the Rated Notes		91

 

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TABLE OF CONTENTS

(continued)

 

Section			Page
ARTICLE VI The Trustee			91
6.1.	Certain Duties and Responsibilities		91
6.2.	Notice of Default		93
6.3.	Certain Rights of Trustee		93
6.4.	Authenticating Agents		95
6.5.	Not Responsible for Recitals or Issuance of Rated Notes		96
6.6.	May Hold Rated Notes		96
6.7.	Funds Held in Trust		96
6.8.	Compensation and Reimbursement		96
6.9.	Corporate Trustee Required; Eligibility		98
6.10.	Resignation and Removal; Appointment of Successor		98
6.11.	Acceptance of Appointment by Successor		99
6.12.	Merger, Conversion, Consolidation or Succession to Business of Trustee		100
6.13.	Co-Trustees		100
6.14.	Certain Duties Related to Delayed Payment of Proceeds; Other Notices		101
6.15.	Representations and Warranties of the Bank		101
6.16.	Exchange Offers, Proposed Amendments etc.		102
6.17.	Fiduciary for Rated Noteholders Only; Agent For Other Secured Parties		102
6.18.	Withholding		102
ARTICLE VII Covenants			103
7.1.	Payment of Principal and Interest		103
7.2.	Maintenance of Office or Agency		103
7.3.	Funds for Rated Note Payments to be Held in Trust		104
7.4.	Existence of Co-Issuers		106
7.5.	Protection of Collateral		106
7.6.	Opinions as to Collateral		108
7.7.	Performance of Obligations		108
7.8.	Negative Covenants		109
7.9.	Statement as to Compliance		110
7.10.	Co-Issuers May Consolidate, Etc., Only on Certain Terms		111
7.11.	Successor Substituted		113
7.12.	No Other Business		114
7.13.	Change or Withdrawal of Rating		114
7.14.	Reporting		114
7.15.	Rated Note Calculation Agent		114
7.16.	Listing		115
7.17.	Amendment of Certain Documents		115
7.18.	Purchase of Collateral; Information Regarding Collateral; Rating Confirmation		116
ARTICLE VIII Supplemental Indentures			117
8.1.	Supplemental Indentures Without Consent of Rated Noteholders		117
8.2.	Supplemental Indentures with Consent of Rated Noteholders		119
8.3.	Execution of Supplemental Indentures		122
8.4.	Effect of Supplemental Indentures		122
8.5.	Reference in Rated Notes to Supplemental Indentures		122

 

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TABLE OF CONTENTS

(continued)

 

Section			Page
ARTICLE IX Redemption of Rated Notes			122
9.1.	Redemption of Rated Notes		122
9.2.	Redemption Procedures; Auction		123
9.3.	Record Date; Notice to Trustee of Redemption		124
9.4.	Notice of Redemption		125
9.5.	Notice of Withdrawal		125
9.6.	Rated Notes Payable on Redemption Date		126
9.7.	Special Amortization		126
ARTICLE X Accounts, Accountings and Releases			127
10.1.	Collection of Funds		127
10.2.	General Provisions Applicable to Accounts		127
10.3.	Collateral Account		128
10.4.	Uninvested Proceeds Account		129
10.5.	Collection Account and CPP Sub-Accounts		128
10.6.	Expense Reserve Account		130
10.7.	Interest Reserve Account		130
10.8.	Payment Account		131
10.9.	Reports by Trustee		131
10.10.	Accountings		132
10.11.	Release of Securities		137
10.12.	Reports by Independent Accountants		137
10.13.	Reports to Rating Agencies		138
10.14.	Tax Matters		138
10.15.	Tax Information		138
ARTICLE XI Application of Monies			139
11.1.	Disbursements of Funds from Payment Account; Priority of Payments		139
ARTICLE XII Purchase and Sale of Collateral Debt Securities			151
12.1.	Sale of Collateral Debt Securities		151
12.2.	Portfolio Characteristics		155
12.3.	Conditions Applicable to all Transactions Involving Sale or Grant		158
ARTICLE XIII Secured Parties’ Relations			159
13.1.	Subordination		159
13.2.	Standard of Conduct		162
ARTICLE XIV Miscellaneous			162
14.1.	Form of Documents Delivered to Trustee		162
14.2.	Acts of Rated Noteholders		163
14.3.	Notices, Etc., to Trustee, the Co-Issuers and the Rating Agencies		164
14.4.	Notices and Reports to Rated Noteholders; Waiver		165
14.5.	Effect of Headings and Table of Contents		166
14.6.	Successors and Assigns		166
14.7.	Severability		166
14.8.	Benefits of Indenture		166
14.9.	Governing Law		166
14.10.	Submission to Jurisdiction		166

 

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TABLE OF CONTENTS

(continued)

 

Section			Page
14.11.	Counterparts		167
14.12.	Waiver of Jury Trial		167
14.13.	Judgment Currency		167
14.14.	Confidential Treatment of Documents		168
ARTICLE XV Assignment of Agreements, Etc.			168
15.1.	Assignment		168
15.2.	No Impairment		168
15.3.	Termination, Etc.		168
15.4.	Issuer Agreements, Etc.		168
ARTICLE XVI Hedge Agreement			169
16.1.	Hedge Agreement		169

 

Schedules
Schedule A	Schedule of Collateral Debt Securities as of the Closing Date
Schedule B	LIBOR Formula
Schedule C	Schedule of Temporary Ramp-Up Securities
Schedule D	S&P’s Recovery Rate Matrix
Schedule E	Auction Procedures
Schedule F	S&P’s Notching Criteria
Schedule G	S&P’s Types of Asset-Backed Securities ineligible for Notching
Schedule H	S&P’s Industry Classification Groups
Schedule I	Fitch Industry Classification Groups
Exhibits
Exhibit A-1	Form of Regulation S Global Note
Exhibit A-2	Form of Rule 144A Global Note
Exhibit B	Form of Definitive Class D Note
Exhibit C-1	Form of Rule 144A Transfer Certificate
Exhibit C-2	Form of Regulation S Transfer Ccrtificate
Exhibit C-3	Form of Definitive Class D Note Transfer Certificate
Exhibit D	Form of Funding Certificate
Exhibit E-1	Form of Opinion of Clifford Chance US LLP
Exhibit E-2	Form of Opinion of Walkers
Exhibit F	Form of Opinion of Kennedy Covington Lobdell & Hickman, L.L.P.
Exhibit G	Form of Opinion of Thacher Profitt & Wood LLP
Exhibit H	Form of Opinion of In-House Counsel to Initial Hedge Counterpart
Exhibit I	Rated Noteholder’s Certificate

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

1.1.           DEFINITIONS

 

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

 

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

 

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

 

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

 

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

 

Act has the meanings specified in Section 14.2.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Auction has the meaning specified in Section 9.2.

 

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

 

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

 

Auction Procedures has the meaning specified in Section 9.2.

 

Auction Purchase Agreement has the meaning specified in Schedule E.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Citigroup means Citigroup Global Markets Inc.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Class B Note Interest Rate means LIBOR plus 0.85%.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Class D Note Interest Rate means 6.458%.

 

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

 

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

 

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

 

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

 

Clearing Agency means DTC, Euroclear or Clearstream.

 

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

 

Clearstream means Clearstream Banking, société anonyme.

 

Closing Date means March 10, 2005.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Co-Issuers means the Issuer and Co-Issuer.

 

Collateral has the meaning specified in the Granting Clauses.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(14)          the Weighted Average Life Test is satisfied;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Commission means the United States Securities and Exchange Commission.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Eligibility Criteria has the meaning specified in Section 12.2.

 

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

 

(i)             cash;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Event of Default has the meaning specified in Section 5.1.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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Fitch Rating		Fitch Rating Factor		Fitch Rating		Fitch Rating Factor
AAA		.019		BB		13.53
AA+		.057		BB-		18.46
AA		.089		B+		22.84
AA-		1.15		B		27.67
A+		1.65		B-		34.98
A		1.85		CCC+		43.36
A-		2.44		CCC		48.52
BBB+		3.13		CC		77.00
BBB		3.74		C		95.00
BBB-		7.26		DDD-D		100.00
BB+		10.18

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Income Note Redemption Approval Condition means, in connection with a Tax Redemption at the direction of the Controlling Class and an Auction Call Redemption, the requirement that, unless and to the extent the Holders of 66 2 / 3 % of the aggregate principal amount of the Outstanding Income Notes have waived payment in full of the aggregate principal amount of the Income Notes, the Income Noteholders receive in connection with such Tax Redemption or Auction Call Redemption an amount equal to (x) the Income Notes Stated Amount minus (y) the aggregate amount of all cash distributions on the Income Notes (whether in respect of distributions or redemption payments made to the Income Note Paying Agent for distribution to the Income Noteholders) on or prior to the relevant Auction Date.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

LIBOR Calculation Date has the meaning specified in Schedule B.

 

Listed Bidders has the meaning specified in Schedule E.

 

London Banking Day has the meaning specified in Schedule B.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Notes means the Rated Notes and the Income Notes.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Reference Banks has the meaning specified in Schedule B.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Replacement Criteria means, with respect to any reinvestment of Sales Proceeds in accordance with Section 12.1(b) hereof, the following criteria:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(ix)            The Average Life of the Substitute Collateral Debt Security must be the same or lower than that of the Collateral Debt Security being replaced as of the date of the Issuer’s sale thereof.

 

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

 

Requisite Noteholders means the Holders of 66 2 / 3 % or more of the then Aggregate Outstanding Amount of (i) the Class A-1 Notes, so long as any Class A-1 Notes remain Outstanding, (ii) thereafter the Class A-2 Notes so long as any Class A-2 Notes remain Outstanding, (iii) thereafter the Class B Notes so long as any Class B Notes remain Outstanding, (iv) thereafter the Class C-1 Notes so long as any Class C-1 Notes remain Outstanding, (v) thereafter the Class C-2 Notes so long as any Class C-2 Notes remain Outstanding and (vi) thereafter the Class D Notes so long as any Class D Notes remain Outstanding.

 

Reserved Matters has the meaning specified in Section 8.2(j).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

S&P CDO Monitor means the dynamic, analytical computer model provided by S&P to the Collateral Advisor and the Trustee (together with such instructions and assumptions as are necessary to run such model) on or prior to the Effective Date used to determine the credit risk of a portfolio of Collateral Debt Securities, as may be modified by S&P from time to time.

 

S&P CDO Monitor Test means the test which is satisfied, as of any Calculation Date, if each of the Class A-1 Note Default Differential, the Class A-2A Note Default Differential, the Class A-2B Note Default Differential, the Class B Note Default Differential, the Class C-1A Note Default Differential, the Class C-1B Note Default Differential, the Class C-2A Note Default Differential, the Class C-2B Note Default Differential and the Class D Note Default Differential of the Current Portfolio or the Proposed Portfolio, as applicable, is positive. The S&P CDO Monitor Test will be considered to be improved if the Class A-1 Note Default Differential of the Proposed Portfolio is greater than the Class A-1 Note Default Differential of the Current Portfolio, the Class A-2A Note Default Differential of the Proposed Portfolio is greater than the Class A-2A Note Default Differential of the Current Portfolio, the Class A-2B Note Default Differential of the Proposed Portfolio is greater than the Class A-2B Note Default Differential of the Current Portfolio, the Class B Note Default Differential of the Proposed Portfolio is greater than the Class B Note Default Differential of the Current Portfolio, the Class C-1A Note Default Differential of the Proposed Portfolio is greater than the Class C-1A Note Default Differential of the Current Portfolio, the Class C-1B Note Default Differential of the Proposed Portfolio is greater than the Class C-1B Note Default Differential of the Current Portfolio, the Class C-2A Note Default Differential of the Proposed Portfolio is greater than the Class C-2A Note Default Differential of the Current Portfolio, the Class C-2B Note Default Differential of the Proposed Portfolio is greater than the Class C-2B Note Default Differential of the Current Portfolio, and the Class D Note Default Differential of the Proposed Portfolio is greater than the Class D Note Default Differential of the Current Portfolio.

 

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

 

S&P Minimum Average Recovery Rate Test means a test that will be satisfied as of any Measurement Date if the S&P Weighted Average Recovery Rate is greater than or equal to (i) 24.6% with respect to the Class A-1 Notes, (ii) 26.2% with respect to the Class A-2 Notes, (iii) 30.1% with respect to the Class B Notes, (iv) 36.3% with respect to the Class C Notes and (v) 41.7% with respect to the Class D Notes.

 

S&P’s Preferred Format means an electronic spreadsheet file to be provided to S&P, which file shall include the following information, if available (to the extent such information is not confidential) with respect to each Collateral Debt Security: (a) the name and country of domicile of the issuer thereof and the particular issue held by the Issuer, (b) the CUSIP or other applicable identification number associated with such Collateral Debt Security, (c) the par value of such Collateral Debt Security, (d) the type of issue (including, by way of example, whether such Collateral Debt Security is a bond, loan or asset-backed security), using such abbreviations as may be selected by the Trustee, (e) a description of the index or

 

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other applicable benchmark upon which the interest payable on such Collateral Debt Security is based (including, by way of example, fixed rate, step-up rate, zero coupon and LIBOR), (f) the coupon (in the case of a Collateral Debt Security which bears interest at a fixed rate) or the spread over the applicable index (in the case of a Collateral Debt Security which bears interest at a floating rate), (g) the S&P Industry Classification Group for such Collateral Debt Security, (h) the Stated Maturity Date of such Collateral Debt Security, (i) the S&P Rating of such Collateral Debt Security or the issuer thereof, as applicable, (j) the priority category assigned by S&P to such Collateral Debt Security, if available, and (k) such other information as the Trustee may determine to include in such file.

 

S&P Rating means the rating by S&P of any Collateral Debt Security determined as follows:

 

(a)            if S&P has assigned a rating to such Collateral Debt Security either publicly or privately (in the case of a private rating, with the written consent of the issuer of such Collateral Debt Security for use of such private rating and provided a copy of such consent has been delivered to S&P), the S&P’s Rating shall be the rating assigned thereto by S&P; provided that, solely for purposes of determining compliance with the S&P CDO Monitor Test, if such Collateral Debt Security is placed on a watch list for possible upgrade or downgrade by S&P, the S&P Rating applicable to such Collateral Debt Security shall be one rating subcategory above or below, respectively, the S&P Rating applicable to such Collateral Debt Security immediately prior to such Collateral Debt Security being placed on such watch list;

 

(b)            if such Collateral Debt Security is not rated by S&P but the Issuer or the Collateral Advisor on behalf of the Issuer has requested that S&P assign a rating to such Collateral Debt Security, the S&P Rating shall be the rating so assigned by S&P; provided that pending receipt from S&P of such rating, if such Collateral Debt Security is not eligible for notching in accordance with Schedule G, such Collateral Debt Security shall have a Rating of “CCC-”, otherwise such S&P Rating shall be the rating assigned according to Schedule F until such time as S&P shall have assigned a rating thereto; or

 

(c)            if any Collateral Debt Security is a Collateral Debt Security that has not been assigned a rating by S&P and is not a Collateral Debt Security listed in Schedule G, as identified by the Collateral Advisor, the S&P Rating of such Collateral Debt Security shall be the rating determined by reference to Schedule F; provided that (i) if any Collateral Debt Security shall, at the time of its purchase by the Issuer, be listed for a possible upgrade or downgrade on either Fitch or Fitch then current credit rating watch list, then the S&P Rating of such Collateral Debt Security shall be one subcategory above or below, respectively, the rating then assigned to such item as set forth in Schedule A, (ii) for purposes of determining compliance with S&P CDO Monitor Test, if the rating assigned to such Collateral Debt Security pursuant to this subparagraph (c) is placed on a watch list for possible upgrade or downgrade by any Rating Agency, the S&P Rating applicable to such Collateral Debt Security shall be one rating subcategory above or below, respectively, the S&P Rating applicable to such Collateral Debt Security immediately prior to such Collateral Debt Security being placed on such watch list and (iii) the aggregate Principal Balance that may be given a rating based on this subparagraph (c) may not exceed 20% of the aggregate Principal Balance of all Collateral Debt Securities; provided that if any Collateral Debt Security has not been assigned a rating by S&P and is a type of Collateral Debt Security not listed on Schedule G, subsequent to the Closing Date, the acquisition of any such Collateral Debt Security will require an estimate or shadow rating from S&P, the assignment of an S&P Recovery Rate to such Collateral Debt Security and receipt of Rating Agency Confirmation from S&P prior to the acquisition by the Issuer of such Collateral Debt Security.

 

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Notwithstanding the foregoing, if any Collateral Debt Security shall, at the time of its purchase by the Issuer, be listed for a possible upgrade or downgrade by S&P’s then current credit rating watch list, then the S&P Rating of such Collateral Debt Security shall be one subcategory above or below, respectively, the rating then assigned to such item by S&P, as applicable; provided that if such Collateral Debt Security is removed from such list at any time, it shall be deemed to have its then-current actual rating by S&P.

 

S&P Recovery Rate means, with respect to a Collateral Debt Security on any Calculation Date, an amount equal to the percentage for such Collateral Debt Security set forth in the S&P Recovery Rate Matrix attached as Schedule D (determined in accordance with procedures prescribed by S&P for such Collateral Debt Security on such Calculation Date or, in the case of Defaulted Securities, the S&P Rating immediately prior to default).

 

S&P Weighted Average Recovery Rate means, as of any Calculation Date, a rate expressed as a percentage equal to the number obtained by (i) summing the products obtained by multiplying the Principal Balance of each Collateral Debt Security by its S&P Recovery Rate and (ii) dividing such sum by the aggregate Principal Balance of the Collateral Debt Securities and (iii) rounding up to the first decimal place. For this purpose, the Principal Balance of a Defaulted Security or Deferred Interest PIK Bond will be deemed to be equal to its outstanding principal amount (excluding any capitalized interest thereon).

 

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

 

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

 

Schedule of Collateral Debt Securities means the list of Collateral Debt Securities securing the Rated Notes that is attached as Schedule A.

 

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

 

Second Currency has the meaning specified in Section 14.13.

 

Secured Parties means the Trustee, for the benefit of the Rated Noteholders, the Collateral Advisor and the Initial Hedge Counterparty.

 

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

 

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

 

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

 

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

 

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

 

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Semi-Annual Pay Security Interest Reserve Amount means, with respect to each Collateral Debt Security that is a Semi-Annual Pay Security, as of any Calculation Date, the amount equal to (i) the amount of interest received by the Issuer on the most recent payment date with respect to such Semi-Annual Pay Security multiplied by (ii) (A) six (6) minus the number of months since the most recent payment date with respect to such Semi-Annual Pay Security (rounded up to the nearest whole number) divided by (B) six (6); provided that for any Semi-Annual Pay Security with respect to which no scheduled interest payments remain, the Semi-Annual Pay Security Interest Reserve Amount shall be zero.

 

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

 

Senior Structuring Fee means, with respect to each Payment Date, an amount equal to 0.05% per annum of the Fee Basis Amount payable to the Collateral Advisor pursuant to the Collateral Advisory Agreement.

 

Single B Excess Percentage means, on any Measurement Date, the greater of (a) zero; and (b) (i) the aggregate Principal Balance of all Collateral Debt Securities with an S&P Rating lower than BB- and higher than CCC+ (expressed as a percentage of the CDS Principal Balance) minus (ii) 10%.

 

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

 

Sixty-Day Reinvestment Window means (i) with respect to Sale Proceeds received in respect of any Credit Risk Security, Defaulted Security, Equity Security, Withholding Tax Security, Credit-Improved Security or Written Down Security, the period from (and including) the date of receipt of such Sale Proceeds by the Issuer to (but including) the sixtieth (60th) calendar day thereafter and (ii) with respect to Collateral Principal Payments received in respect of any CPP Asset Type, the period from (and including) the date on which the cumulative amount of such Collateral Principal Payments for such CPP Asset Type equals or exceeds the Reinvestment Threshold Amount for such CPP Asset Type, to (but including) the sixtieth (60th) calendar day thereafter.

 

Special Amortization Pro Rata Condition means with respect to any Payment Date that either:

 

(A)           (I)(x) the aggregate CDS Principal Balance as of the related Calculation Date is at least equal to 50% of the aggregate CDS Principal Balance on the Closing Date and (y) the S&P CDO Monitor Test has been satisfied and (II) the Collateral Quality Tests (except the items specified in clauses (xiii), (xiv) and (xv) of the definition thereof) are satisfied; or

 

(B)