Exhibit 10.24
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ARBOR REALTY MORTGAGE SECURITIES SERIES 2006-1, LTD.,
as Issuer,
ARBOR REALTY MORTGAGE SECURITIES SERIES 2006-1 LLC,
as Co-Issuer,
ARBOR REALTY SR, INC.,
as Advancing Agent
AND
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
as Trustee, Paying Agent, Calculation Agent, Transfer Agent,
Custodial Securities Intermediary, Backup Advancing Agent and Notes Registrar
INDENTURE
Dated as of December 14, 2006
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS
Section 1.1 Definitions.............................................. 2
Section 1.2 Assumptions as to Pledged Obligations.................... 91
Section 1.3 Interest Calculation Convention.......................... 93
Section 1.4 Rounding Convention...................................... 93
ARTICLE 2
THE NOTES
Section 2.1 Forms Generally.......................................... 93
Section 2.2 Forms of Notes and Certificate of Authentication......... 93
Section 2.3 Authorized Amount; Stated Maturity; and Denominations.... 95
Section 2.4 Execution, Authentication, Delivery and Dating........... 95
Section 2.5 Registration, Registration of Transfer and Exchange...... 96
Section 2.6 Mutilated, Defaced, Destroyed, Lost or Stolen Note....... 106
Section 2.7 Payment of Principal and Interest and Class A-1AR
Commitment Fee and Other Amounts; Principal and
Interest Rights Preserved............................. 107
Section 2.8 Persons Deemed Owners.................................... 117
Section 2.9 Cancellation............................................. 117
Section 2.10 Global Securities; Temporary Notes....................... 117
Section 2.11 U.S. Tax Treatment of Notes and the Issuer............... 119
Section 2.12 Authenticating Agents.................................... 119
Section 2.13 Forced Sale on Failure to Comply with Restrictions....... 120
Section 2.14 No Gross Up.............................................. 121
ARTICLE 3
CONDITIONS PRECEDENT; PLEDGED OBLIGATIONS
Section 3.1 General Provisions....................................... 121
Section 3.2 Security for Notes....................................... 124
Section 3.3 Transfer of Pledged Obligations.......................... 125
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ARTICLE 4
SATISFACTION AND DISCHARGE
Section 4.1 Satisfaction and Discharge of Indenture.................. 131
Section 4.2 Application of Trust Money............................... 133
Section 4.3 Repayment of Monies Held by Paying Agent................. 133
ARTICLE 5
REMEDIES
Section 5.1 Events of Default........................................ 134
Section 5.2 Acceleration of Maturity; Rescission and Annulment....... 137
Section 5.3 Collection of Indebtedness and Suits for Enforcement by 140
Trustee............................................... 143
Section 5.4 Remedies................................................. 144
Section 5.5 Preservation of Assets................................... 146
Section 5.6 Trustee May Enforce Claims Without Possession of Notes... 146
Section 5.7 Application of Money Collected........................... 146
Section 5.8 Limitation on Suits......................................
Section 5.9 Unconditional Rights of Noteholders to Receive Principal,
Interest and the Class A-1AR Commitment Fee........... 147
Section 5.10 Restoration of Rights and Remedies....................... 147
Section 5.11 Rights and Remedies Cumulative........................... 148
Section 5.12 Delay or Omission Not Waiver............................. 148
Section 5.13 Control by the Controlling Class......................... 148
Section 5.14 Waiver of Past Defaults.................................. 149
Section 5.15 Undertaking for Costs.................................... 149
Section 5.16 Waiver of Stay or Extension Laws......................... 150
Section 5.17 Sale of Assets........................................... 150
Section 5.18 Action on the Notes...................................... 151
ARTICLE 6
THE TRUSTEE
Section 6.1 Certain Duties and Responsibilities...................... 151
Section 6.2 Notice of Default........................................ 153
Section 6.3 Certain Rights of Trustee................................ 154
Section 6.4 Not Responsible for Recitals or Issuance of Notes........ 155
Section 6.5 May Hold Notes........................................... 156
Section 6.6 Money Held in Trust...................................... 156
Section 6.7 Compensation and Reimbursement........................... 156
Section 6.8 Corporate Trustee Required; Eligibility.................. 157
Section 6.9 Resignation and Removal; Appointment of Successor........ 158
Section 6.10 Acceptance of Appointment by Successor................... 159
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Section 6.11 Merger, Conversion, Consolidation or Succession to
Business of Trustee................................... 160
Section 6.12 Co-Trustees and Separate Trustee......................... 160
Section 6.13 Certain Duties of Trustee Related to Delayed Payment of
Proceeds.............................................. 161
Section 6.14 Representations and Warranties of the Trustee............ 162
Section 6.15 Requests for Consents.................................... 163
Section 6.16 Withholding.............................................. 163
ARTICLE 7
COVENANTS
Section 7.1 Payment of Principal and Interest and Class A-1AR
Commitment Fee........................................ 164
Section 7.2 Maintenance of Office or Agency.......................... 164
Section 7.3 Money for Note Payments to be Held in Trust.............. 165
Section 7.4 Existence of the Issuer and Co-Issuer.................... 167
Section 7.5 Protection of Assets..................................... 169
Section 7.6 Notice of Any Amendments................................. 170
Section 7.7 Performance of Obligations............................... 170
Section 7.8 Negative Covenants....................................... 171
Section 7.9 Statement as to Compliance............................... 173
Section 7.10 Issuer and Co-Issuer May Consolidate or Merge Only on
Certain Terms......................................... 173
Section 7.11 Successor Substituted.................................... 177
Section 7.12 No Other Business........................................ 177
Section 7.13 Reporting................................................ 177
Section 7.14 Calculation Agent........................................ 178
Section 7.15 Maintenance of Listing................................... 179
Section 7.16 Purchase of Assets....................................... 180
Section 7.17 Effective Date Actions................................... 180
Section 7.18 REIT Status.............................................. 181
ARTICLE 8
SUPPLEMENTAL INDENTURES
Section 8.1 Supplemental Indentures Without Consent of
Securityholders....................................... 182
Section 8.2 Supplemental Indentures with Consent of Securityholders.. 184
Section 8.3 Execution of Supplemental Indentures..................... 186
Section 8.4 Effect of Supplemental Indentures........................ 187
Section 8.5 Reference in Notes to Supplemental Indentures............ 187
Section 8.6 Certain Consents Required for all Supplemental
Indentures............................................ 187
ARTICLE 9
REDEMPTION OF SECURITIES; REDEMPTION PROCEDURES
Section 9.1 Clean-up Call; Tax Redemption and Optional Redemption.... 187
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Section 9.2 Auction Call Redemption.................................. 189
Section 9.3 Notice of Redemption..................................... 190
Section 9.4 Notice of Redemption or Maturity by the Issuer........... 191
Section 9.5 Notes Payable on Redemption Date......................... 191
Section 9.6 Mandatory Redemption..................................... 192
Section 9.7 Special Amortization..................................... 192
ARTICLE 10
ACCOUNTS, ACCOUNTINGS AND RELEASES
Section 10.1 Collection of Money; Custodial Account................... 193
Section 10.2 Collection Accounts...................................... 194
Section 10.3 Payment Account.......................................... 196
Section 10.4 Unused Proceeds Account.................................. 196
Section 10.5 Interest Reserve Account................................. 198
Section 10.6 Delayed Funding Obligations Account...................... 198
Section 10.7 Expense Account.......................................... 199
Section 10.8 Defeased Collateral Accounts............................. 200
Section 10.9 Interest Advances........................................ 201
Section 10.10 Reports by Parties....................................... 204
Section 10.11 Reports; Accountings..................................... 205
Section 10.12 Release of Pledged Collateral Debt Securities; Release
of Assets............................................. 214
Section 10.13 Reports by Independent Accountants....................... 215
Section 10.14 Reports to Rating Agencies............................... 216
Section 10.15 Certain Procedures....................................... 217
ARTICLE 11
APPLICATION OF MONIES
Section 11.1 Disbursements of Monies from Payment Account............. 218
Section 11.2 Trust Accounts........................................... 231
ARTICLE 12
SALE OF COLLATERAL DEBT SECURITIES
Section 12.1 Sales of Collateral Debt Securities...................... 231
Section 12.2 Reinvestment Criteria and Trading Restrictions........... 235
Section 12.3 Conditions Applicable to all Transactions Involving Sale
or Grant.............................................. 238
Section 12.4 Sale of Collateral Debt Securities with respect to an
Auction Call Redemption............................... 239
Section 12.5 Modifications to Collateral Quality Tests or Coverage
Tests................................................. 242
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ARTICLE 13
NOTEHOLDERS' RELATIONS
Section 13.1 Subordination............................................ 243
Section 13.2 Standard of Conduct...................................... 247
ARTICLE 14
MISCELLANEOUS
Section 14.1 Form of Documents Delivered to the Trustee............... 247
Section 14.2 Acts of Securityholders.................................. 248
Section 14.3 Notices, etc., to the Trustee, the Issuer, the Co-Issuer,
the Advancing Agent, the Collateral Manager, the
Initial Purchaser, each Hedge Counterparty, the Class
A-1AR Note Agent, each Rating Agency and MBIA......... 249
Section 14.4 Notices to Noteholders; Waiver........................... 251
Section 14.5 Effect of Headings and Table of Contents................. 252
Section 14.6 Successors and Assigns................................... 252
Section 14.7 Severability............................................. 252
Section 14.8 Benefits of Indenture.................................... 252
Section 14.9 Governing Law............................................ 253
Section 14.10 Submission to Jurisdiction............................... 253
Section 14.11 Counterparts............................................. 253
Section 14.12 Liability of Co-Issuers.................................. 253
ARTICLE 15
ASSIGNMENT OF COLLATERAL DEBT SECURITIES PURCHASE AGREEMENTS AND
COLLATERAL MANAGEMENT AGREEMENT
Section 15.1 Assignment of Collateral Debt Securities Purchase
Agreement and the Collateral Management Agreement..... 254
ARTICLE 16
HEDGE AGREEMENT; CURE RIGHTS; PURCHASE RIGHTS; SUBSEQUENT
COLLATERAL DEBT SECURITIES
Section 16.1 Issuer's Obligations under Hedge Agreement............... 256
Section 16.2 Collateral Debt Securities Purchase Agreements........... 260
Section 16.3 Cure Rights.............................................. 260
Section 16.4 Purchase Right; Holder of a Majority of the Preferred
Shares................................................ 261
Section 16.5 Representations and Warranties Related to Subsequent
Collateral Debt Securities............................ 262
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Section 16.6 Operating Advisor; Additional Debt....................... 264
ARTICLE 17
ADVANCING AGENT
Section 17.1 Liability of the Advancing Agent......................... 264
Section 17.2 Merger or Consolidation of the Advancing Agent........... 264
Section 17.3 Limitation on Liability of the Advancing Agent and
Others................................................ 264
Section 17.4 Representations and Warranties of the Advancing Agent.... 265
Section 17.5 Resignation and Removal; Appointment of Successor........ 266
Section 17.6 Acceptance of Appointment by Successor Advancing Agent... 267
ARTICLE 18
CLASS A-1AR NOTES
Section 18.1 Draws on the Class A-1AR Notes and Class A-1AR
Commitments........................................... 267
Section 18.2 Class A-1AR Interest and Class A-1AR Commitment Fee...... 269
Section 18.3 Prepayments of Class A-1AR Notes......................... 269
Section 18.4 Class A-1AR Ratings Criteria............................. 270
Section 18.5 Class A-1AR Holder Collateral Account.................... 270
SCHEDULES
Schedule A Moody's Matrix
Schedule B Moody's Recovery Rate Assumptions
Schedule C S&P Matrix
Schedule D S&P Recovery Matrix
Schedule E S&P Non-Eligible Notching Asset Types
Schedule F S&P Eligible Notching Asset Types
Schedule G Fitch Matrix
Schedule H Initial Fixed Rate Securities
Schedule I Schedule of Closing Date Collateral Debt Securities
Schedule J LIBOR
Schedule K List of Authorized Officers of Collateral Manager
Schedule L Form of Underlying Term Loan and Underlying Mortgage
Property Representations and Warranties
Schedule M Form of B Note Representations and Warranties
Schedule N Form of Participation Representations and Warranties
Schedule O Form of Mezzanine Loan Representations and Warranties
Schedule P Form of Preferred Equity Security Representations and Warranties
Schedule Q Form of CRE CDO Securities, CMBS Securities, REIT Debt Securities
and Rake Bonds Representations and Warranties
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EXHIBITS
Exhibit A-1 Form of Class A-1 Floating Rate Note
Exhibit A-2 Form of Class A-2 Floating Rate Note
Exhibit A-3 Form of Definitive Class A-1AR Note
Exhibit B Form of Class B Floating Rate Note
Exhibit C Form of Class C Floating Rate Note
Exhibit D Form of Class D Floating Rate Note
Exhibit E Form of Class E Floating Rate Note
Exhibit F Form of Class F Floating Rate Note
Exhibit G Form of Class G Floating Rate Note
Exhibit H Form of Class H Floating Rate Note
Exhibit I Form of Transfer Certificate for (1) Transfer at the Closing to a
Regulation S Global Security or (2) Subsequent Transfer
from a Rule 144A Global Security to a Regulation S Global Security
Exhibit J Form of Transfer Certificate for (1) Transfer at the Closing to a
Rule 144A Global Security or (2) Subsequent Transfer
from a Regulation S Global Security to a Rule 144A Global Security
Exhibit K Form of Transferee Certificate for Transfer of a Definitive
Class A-1AR Note (1) At the Closing and (2) After the Closing
Exhibit L Form of Transferor Certificate for Transfer of a Definitive Class
A-1AR Note (1) At the Closing and (2) After the Closing
Exhibit M Form of Trust Receipt
Exhibit N Form of Request for Release
Exhibit O Rating Agency Pool Contribution Analysis
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INDENTURE, dated as of December 14, 2006, by and between ARBOR REALTY
MORTGAGE SECURITIES SERIES 2006-1, LTD., a Cayman Islands exempted company with
limited liability (the "Issuer"), ARBOR REALTY MORTGAGE SECURITIES SERIES 2006-1
LLC, a limited liability company formed under the laws of Delaware (the
"Co-Issuer"), ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION, a national banking
association, as trustee (herein, together with its permitted successors and
assigns in the trusts hereunder, the "Trustee"), paying agent, calculation
agent, transfer agent, custodial securities intermediary, backup advancing agent
and notes registrar, and ARBOR REALTY SR, INC. (including any successor by
merger, the "Arbor Parent"), a Maryland corporation, as advancing agent (herein,
together with its permitted successors and assigns in the trusts hereunder, the
"Advancing Agent").
PRELIMINARY STATEMENT
Each of the Issuer and the Co-Issuer is duly authorized to execute and
deliver this Indenture to provide for the Notes issuable as provided in this
Indenture. All covenants and agreements made by the Issuer and Co-Issuer herein
are for the benefit and security of the Secured Parties. The Issuer, the
Co-Issuer, ▇▇▇▇▇ Fargo Bank, National Association, in its capacities other than
as Trustee, and the Advancing Agent are entering into this Indenture, and the
Trustee is accepting the trusts created hereby, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged.
All things necessary to make this Indenture a valid agreement of the
Issuer and Co-Issuer in accordance with this Indenture's terms have been done.
GRANTING CLAUSES
The Issuer hereby Grants to the Trustee, for the benefit and security
of the Secured Parties, all of its right, title and interest in, to and under,
in each case, whether now owned or existing, or hereafter acquired or arising
(other than Excepted Assets), (a) the Collateral Debt Securities listed in the
Schedule of Closing Date Collateral Debt Securities which the Issuer purchases
on the Closing Date and causes to be delivered to the Trustee (directly or
through an agent or bailee) herewith, all payments thereon or with respect
thereto and all Collateral Debt Securities which are delivered to the Trustee
(directly or through an agent or bailee) after the Closing Date pursuant to the
terms hereof (including the Collateral Debt Securities listed, as of the
Effective Date, on the Schedule of Closing Date Collateral Debt Securities
delivered by the Issuer pursuant to Section 7.17) and all payments thereon or
with respect thereto, (b) the rights of the Issuer under each Hedge Agreement,
(c) the Collection Accounts, the Payment Account, the Expense Account, the
Unused Proceeds Account, the Interest Reserve Account, the Delayed Funding
Obligations Account, the Custodial Account, each Hedge Termination Account, each
Hedge Collateral Account and the related security entitlements and all income
from the investment of funds in any of the foregoing, (d) the Eligible
Investments, (e) the rights of the Issuer under the Collateral Management
Agreement, the Class A-1AR Note Purchase Agreement, each Collateral Debt
Securities Purchase Agreement (including any Collateral Debt Securities Purchase
Agreement entered into after the Closing Date) and the Servicing Agreement, (f)
all Cash or Money delivered to the Trustee (or its bailee)
(directly or through a securities intermediary), (g) all other investment
property, accounts, instruments and general intangibles in which the Issuer has
an interest, other than the Excepted Assets and (h) all proceeds with respect to
the foregoing clauses (a) through (g). The collateral described in the foregoing
clauses (a) through (h) is referred to herein as the "Assets." Such Grants are
made, however, in trust, to secure the Notes and each Hedge Agreement, subject
to the Priority of Payments, equally and ratably without prejudice, priority or
distinction between any Note and any other Note by reason of difference in time
of issuance or otherwise, except as expressly provided in this Indenture, and to
secure (i) the payment of all amounts due on and in respect of the Notes and
each Hedge Agreement in accordance with their terms, (ii) the payment of all
other sums payable under this Indenture and (iii) compliance with the provisions
of this Indenture, all as provided in this Indenture. For the avoidance of
doubt, the Assets shall not include the Excepted Assets. The foregoing Grant
shall, for the purpose of determining the property subject to the lien of this
Indenture (but not for the purpose of determining compliance with any of the
Coverage Tests or compliance by the Issuer with any of the other provisions
hereof), be deemed to include any securities and any investments granted by or
on behalf of the Issuer to the Trustee for the benefit of the Secured Parties,
whether or not such securities or such investments satisfy the criteria set
forth in the definitions of "Collateral Debt Security" or "Eligible Investment,"
as the case may be.
Except to the extent otherwise provided in this Indenture, this
Indenture shall constitute a security agreement under the laws of the State of
New York applicable to agreements made and to be performed therein, for the
benefit of the Noteholders and each Hedge Counterparty. Upon the occurrence and
during the continuation of any Event of Default hereunder, and in addition to
any other rights available under this Indenture or any other Assets held for the
benefit and security of the Noteholders and each Hedge Counterparty or otherwise
available at law or in equity but subject to the terms hereof, the Trustee shall
have all rights and remedies of a secured party on default under the laws of the
State of New York and other applicable law to enforce the assignments and
security interests contained herein and, in addition, shall have the right,
subject to compliance with any mandatory requirements of applicable law and the
terms of this Indenture, to sell or apply any rights and other interests
assigned or pledged hereby in accordance with the terms hereof at public and
private sale.
The Trustee acknowledges such Grants, accepts the trusts hereunder in
accordance with the provisions hereof, and agrees to perform the duties herein
in accordance with, and subject to, the terms hereof, in order that the
interests of the Secured Parties may be adequately and effectively protected in
accordance with this Indenture.
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions.
Except as otherwise specified herein or as the context may otherwise
require, the following terms have the respective meanings set forth below for
all purposes of this Indenture, and the definitions of such terms are equally
applicable both to the singular and plural forms of such terms and to the
masculine, feminine and neuter genders of such terms. The word
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"including" and its variations shall mean "including without limitation."
Whenever any reference is made to an amount the determination of which is
governed by Section 1.2 hereof, the provisions of Section 1.2 shall be
applicable to such determination or calculation, whether or not reference is
specifically made to Section 1.2, unless some other method of calculation or
determination is expressly specified in the particular provision. All references
in this Indenture to designated "Articles," "Sections," "Subsections" and other
subdivisions are to the designated Articles, Sections, Subsections and other
subdivisions of this Indenture as originally executed. The words "herein,"
"hereof," "hereunder" and other words of similar import refer to this Indenture
as a whole and not to any particular Article, Section, Subsection or other
subdivision.
"10% Limit": The meaning specified in Section 12.1(b) hereof.
"A Note": A promissory note secured by a mortgage on commercial real
estate property that is not subordinate in right of payment to any separate
promissory note secured by a direct or beneficial interest in the same property.
"Above Cap Security": Any Collateral Debt Security, which initially
bore interest based upon a floating rate index subject to a cap (which, if
exceeded, would cause such Collateral Debt Security to bear interest at a fixed
rate) and which currently bears interest at a fixed rate as a result of such cap
being exceeded, but only for so long as such cap is exceeded.
"Accepted Loan Servicer": Any Approved Servicer or any other entity
that, among other things, is engaged in the business of servicing Whole Loans,
Mezzanine Loans, B Notes and/or Participations (with a minimum servicing
portfolio of U.S.$100,000,000) that are comparable to the Loans owned or to be
owned by the Issuer.
"Account": Any of the Interest Collection Account, the Principal
Collection Account, the Unused Proceeds Account, the Interest Reserve Account,
the Delayed Funding Obligations Account, the Payment Account, the Expense
Account, the Custodial Account, each Defeased Collateral Account, each Hedge
Termination Account, the Preferred Shares Distribution Account, each Hedge
Collateral Account and each Holder Subaccount and any subaccount thereof that
the Trustee deems necessary or appropriate.
"Accountants' Report": A report of a firm of Independent certified
public accountants of recognized national reputation appointed by the Issuer
pursuant to Section 10.13(a), which may be the firm of independent accountants
that reviews or performs procedures with respect to the financial reports
prepared by the Issuer or the Collateral Manager.
"Accounts Receivable": The meaning specified in Section 3.3(a)(vi)
hereof.
"Act" or "Act of Securityholders": The meaning specified in Section
14.2 hereof.
"Advancing Agent": Arbor Realty SR, Inc., unless a successor Person
shall have become the Advancing Agent pursuant to the applicable provisions of
this Indenture, and thereafter "Advancing Agent" shall mean such successor
Person.
"Advancing Agent Fee": The fee payable quarterly in arrears on each
Payment Date to the Advancing Agent in accordance with the Priority of Payments,
equal to 0.07% per
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annum on the Aggregate Outstanding Amount of the Class A Notes (assuming for
purposes of the calculation that the Class A-1AR Commitments are fully drawn)
and the Class B Notes on such Payment Date prior to giving effect to
distributions with respect to such Payment Date.
"Advisers Act": The Investment Advisers Act of 1940, as amended.
"Advisory Committee": The meaning specified in the Collateral
Management Agreement.
"Affiliate" or "Affiliated": With respect to a Person, (i) any other
Person who, directly or indirectly, is in control of, or controlled by, or is
under common control with, such Person or (ii) any other Person who is a
director, Officer or employee (a) of such Person, (b) of any subsidiary or
parent company of such Person or (c) of any Person described in clause (i)
above. For the purposes of this definition, control of a Person shall mean the
power, direct or indirect, (i) to vote more than 50% of the securities having
ordinary voting power for the election of directors of such Person, or (ii) to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise; provided that neither the Company
Administrator nor any other company, corporation or person to which the Company
Administrator provides directors and/or administrative services and/or acts as
share trustee shall be an Affiliate of the Issuer or Co-Issuer; provided,
further, that neither the Collateral Manager, the Arbor Parent nor any of the
Arbor Parent's subsidiaries shall be deemed to be Affiliates of the Issuer.
"Agent Members": Members of, or participants in, the Depository,
Clearstream, Luxembourg or Euroclear.
"Aggregate Class A-1AR Undrawn Amount": At any time, the excess, if
any, of the aggregate amount of the Class A-1AR Commitments over the Aggregate
Outstanding Amount of the Class A-1AR Notes.
"Aggregate Collateral Balance": The sum of (without duplication) (i)
the aggregate Principal Balance of Collateral Debt Securities (excluding for
purposes of this clause (i), for the avoidance of doubt, the then unfunded
portion of any Delayed Draw Term Loan), (ii) the sum of cash and the aggregate
Principal Balance of Eligible Investments held as Principal Proceeds, (iii) the
sum of cash and the aggregate Principal Balance of Eligible Investments held in
the Unused Proceeds Account that have not been designated as Interest Proceeds
by the Collateral Manager pursuant to Section 10.4(c) with respect to the
Effective Date, (iv) the sum of cash and the aggregate Principal Balance of
Eligible Investments held in the Delayed Funding Obligations Account and (v) the
Aggregate Class A-1AR Undrawn Amount.
"Aggregate Outstanding Amount": With respect to any Class or Classes
of the Notes, the aggregate principal balance (excluding any Class C Capitalized
Interest, Class D Capitalized Interest, Class E Capitalized Interest, Class F
Capitalized Interest, Class G Capitalized Interest and Class H Capitalized
Interest, as applicable) of such Class or Classes Outstanding at the date of
determination; provided that with respect to any action, consent, vote or waiver
by any Class or Classes of Noteholders, the Aggregate Outstanding Amount of the
Class A-1AR Notes shall include any unfunded Class A-1AR Commitments. Except as
provided
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in the foregoing sentence and as otherwise provided herein, the Aggregate
Outstanding Amount of the Notes at any time shall not include any unfunded Class
A-1AR Commitments.
"Aggregate Principal Balance": When used with respect to any Pledged
Collateral Debt Securities as of any date of determination, the sum of the
Principal Balances on such date of determination of all such Pledged Collateral
Debt Securities.
"Applicable Recovery Rate": The lowest of the Moody's Recovery Rate,
the Fitch Applicable Recovery Rate and the S&P Recovery Rate, as applicable;
provided that the Applicable Recovery Rate for any Collateral Debt Security with
respect to which substitute or additional collateral (in the form of Cash or
Eligible Investments) in an amount at least equal to the sum of the principal
amount of such Collateral Debt Security and the aggregate of all remaining
scheduled interest payments thereon through the earliest permissible prepayment
date has been delivered by or on behalf of the related obligor to the Trustee
and deposited into a Defeased Collateral Account (or to the Servicer in
accordance with the Servicing Agreement and deposited into an Eligible Account)
(by defeasance or otherwise) shall be 100%.
"Approved Lender": An entity (x) with a long-term, unsecured debt
rating of "A-" or higher from S&P and "A3" or higher from Moody's, or (y) with
respect to which the Rating Agency Condition has been satisfied.
"Approved Servicer": A commercial mortgage loan master or primary
servicer on S&P's Select Servicer List as a U.S. Commercial Mortgage Servicer or
Master Servicer, as applicable, and a commercial mortgage loan special servicer
on S&P's Select Servicer List as a U.S. Commercial Mortgage Special Servicer.
"Arbor Parent": The meaning specified in the first paragraph of this
Indenture.
"ARD Loan": A Loan with an anticipated repayment date, after which (if
not repaid in full by such anticipated repayment date) the loan provides for
changes in payments and accrual of interest.
"ARMS Equity": ARMS 2006-1 Equity Holdings LLC, a Delaware limited
liability company.
"Article 15 Agreement": The meaning specified in Section 15.1(a)
hereof.
"Asset Specific Hedge": Any agreement, in the form of an interest rate
exchange agreement, between the Issuer and a Hedge Counterparty that is entered
into by the Issuer in connection with the purchase or holding of (i) a Fixed
Rate Security or (ii) a Floating Rate Security that bears interest upon a
floating rate index other than LIBOR, and which, in each case, entitles the
Issuer to receive from the related Hedge Counterparty payments based on LIBOR at
prevailing market rates, as determined by the Collateral Manager at the date of
execution of such agreement. In addition to the foregoing, each Asset Specific
Hedge will be subject to the following conditions:
(a) the notional balance of each Asset Specific Hedge shall be equal
to the scheduled principal amount of the Collateral Debt Security to which it is
related;
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(b) each Asset Specific Hedge (A) will amortize according to the same
schedule as, and terminate no earlier than the Initial Maturity Date (or, in the
case of an ARD Loan, on the anticipated repayment date) of, the Collateral Debt
Security to which it is related and (B) any such amounts so payable shall be
paid in accordance with the Priority of Payments;
(c) the payment dates of the Asset Specific Hedge must match the
payment dates of the Collateral Debt Security to which it is related or
correspond to the Payment Dates for the Notes;
(d) if the Collateral Debt Security related to an Asset Specific Hedge
(i) is a Defaulted Security, or (ii) is sold by the Issuer, such Asset Specific
Hedge shall be terminated; provided that if any unscheduled Hedge Payment Amount
is payable by the Issuer under the related Hedge Agreement solely as a result of
the early termination of such Asset Specific Hedge and is not offset by any
amount payable by the relevant Hedge Counterparty, (A) such Asset Specific Hedge
may only be terminated if the Rating Agency Condition with respect to Moody's
and S&P shall have been satisfied in connection with such termination and if
Fitch shall have been given notice of such termination and, so long as MBIA is
deemed to be the Controlling Class hereunder, MBIA consents, unless, in either
case, there will be sufficient Interest Proceeds on the following Payment Date
to pay in full any termination payment due from the Issuer in connection
therewith plus all of the amounts required to be paid by the Issuer on such
Payment Date pursuant to clauses (1) through (28) of Section 11.1(a)(i) and (B)
such Hedge Payment Amount shall be paid in accordance with the Priority of
Payments;
(e) if the Collateral Debt Security related to such Asset Specific
Hedge is not a Defaulted Obligation and such Collateral Debt Security is called
or prepaid, such Asset Specific Hedge shall be terminated; provided that if any
unscheduled Hedge Payment Amount is payable by the Issuer solely as a result of
the early termination of such Asset Specific Hedge and is not offset by any
amount payable by the relevant Hedge Counterparty, (A) such Asset Specific Hedge
may only be terminated if the Rating Agency Condition with respect to Moody's
and S&P shall have been satisfied in connection with such termination and if
Fitch shall have been given notice of such termination and, so long as MBIA is
deemed to be the Controlling Class hereunder, MBIA consents, unless, in either
case, there will be sufficient Interest Proceeds on the following Payment Date
to pay in full any termination payment due from the Issuer in connection
therewith plus all of the amounts required to be paid by the Issuer on such
Payment Date pursuant to clauses (1) through (28) of Section 11.1(a)(i), (B) any
such Hedge Payment Amount shall first be paid from any call, redemption and
prepayment premiums received from such Collateral Debt Security, and (C) any
remaining amount so payable shall be paid in accordance with the Priority of
Payments; and
(f) each Asset Specific Hedge will contain appropriate limited
recourse and non-petition provisions equivalent (mutatis mutandis) to those
contained in this Indenture.
"Assets": The meaning specified in the first paragraph of the Granting
Clause of this Indenture.
"Assigned Rating": The Moody's Assigned Rating or the S&P Assigned
Rating, as applicable.
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"Assumed Portfolio": The portfolio with characteristics developed in
accordance with the Eligibility Criteria and Collateral Quality Tests for
purposes of determining the Class A-1A/A-1AR Break-Even Loss Rate, the Class A-2
Break-Even Loss Rate, the Class B Break-Even Loss Rate, the Class C Break-Even
Loss Rate, the Class D Break-Even Loss Rate, the Class E Break-Even Loss Rate
and the Class F Break-Even Loss Rate.
"Auction": Any auction conducted in connection with an Auction Call
Redemption.
"Auction Bid Date": The meaning specified in Section 12.4(b)(ii)
hereof.
"Auction Call Period": The meaning specified in Section 9.2(a) hereof.
"Auction Call Redemption": The meaning specified in Section 9.2(a)
hereof.
"Auction Call Redemption Date": The meaning specified in Section
9.2(a) hereof.
"Auction Date": The meaning specified in Section 12.4(a)(i) hereof.
"Auction Procedures": The required procedures with respect to an
Auction set forth in Section 12.4(b) hereof.
"Auction Purchase Agreement": The meaning specified in Section
12.4(a)(iii) hereof.
"Auction Purchase Closing Date": The meaning specified in Section
12.4(b)(v) hereof.
"Authenticating Agent": With respect to the Notes or a Class of the
Notes, the Person designated by the Trustee to authenticate such Notes on behalf
of the Trustee pursuant to Section 2.12 hereof.
"Authorized Officer": With respect to the Issuer or Co-Issuer, any
Officer (or attorney-in-fact appointed by the Issuer or the Co-Issuer) who is
authorized to act for the Issuer or Co-Issuer in matters relating to, and
binding upon, the Issuer or Co-Issuer. With respect to the Collateral Manager,
the persons listed on Schedule K attached hereto. With respect to the Trustee or
any other bank or trust company acting as trustee of an express trust or as
custodian, a Trust Officer. Each party may receive and accept a certification of
the authority of any other party as conclusive evidence of the authority of any
person to act, and such certification may be considered as in full force and
effect until receipt by such other party of written notice to the contrary.
"Average Life": On any Measurement Date with respect to any Collateral
Debt Security (other than a Defaulted Security), the quotient obtained by the
Collateral Manager by dividing (i) the sum of the products of (a) the number of
years (rounded to the nearest one tenth thereof) from such Measurement Date to
the respective dates of each successive expected distribution of principal of
such Collateral Debt Security and (b) the respective amounts of such
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expected distributions of principal by (ii) the sum of all successive expected
distributions of principal on such Collateral Debt Security.
"B Note": A promissory note secured by a mortgage on commercial real
estate property that is subordinate in right of payment to one or more separate
promissory notes secured by a direct interest in the same property.
"Backup Advancing Agent": ▇▇▇▇▇ Fargo Bank, National Association, a
national banking association, solely in its capacity as Backup Advancing Agent
hereunder, or any successor Backup Advancing Agent; provided that any such
successor Backup Advancing Agent must be a financial institution having a (i)
long-term debt rating from S&P at least equal to "A-" and a short-term debt
rating from S&P at least equal to "A-1," (ii) long-term debt rating from Moody's
at least equal to "A2" and a short-term debt rating from Moody's at least equal
to "P-1," and (iii) long-term debt rating from Fitch at least equal to "A-" and
a short-term debt rating from Fitch at least equal to "F1."
"Backup Advancing Agent Fee": The fee payable quarterly in arrears on
each Payment Date to the Backup Advancing Agent in accordance with the Priority
of Payments, equal to 0.00125% per annum on the Aggregate Outstanding Amount of
the Class A Notes (assuming for purposes of the calculation that the Class A-1AR
Commitments are fully drawn) and the Class B Notes on such Payment Date prior to
giving effect to distributions with respect to such Payment Date.
"Bailee Letter": The meaning specified in Section 12.4(b)(v) hereof.
"Bank": ▇▇▇▇▇ Fargo Bank, National Association, a national banking
association, in its individual capacity and not as Trustee and, if any Person is
appointed as a successor Trustee, such Person in its individual capacity and not
as Trustee.
"Bankruptcy Code": The federal Bankruptcy Code, Title 11 of the United
States Code, as amended.
"Bearer Securities": The meaning specified in Section 3.3(a)(iv)
hereof.
"Benefit Plan": The meaning specified in Section 2.5(h)(vi) hereof.
"Board of Directors": With respect to the Issuer, the directors of the
Issuer duly appointed in accordance with the Governing Documents of the Issuer
and, with respect to the Co-Issuer, the LLC Managers duly appointed by the sole
member of the Co-Issuer or otherwise.
"Board Resolution": With respect to the Issuer, a resolution of the
Board of Directors of the Issuer and, with respect to the Co-Issuer, a
resolution or unanimous written consent of the LLC Managers or the sole member
of the Co-Issuer.
"Business Day": Any day other than (i) a Saturday or Sunday and (ii) a
day on which commercial banks are authorized or required by applicable law,
regulation or executive order to close in New York, New York or the location of
the Corporate Trust Office; provided that, if any action is required of the
Irish Paying Agent, then, for purposes of determining when
-8-
such Irish Paying Agent action is required, Dublin, Ireland will be considered
in determining "Business Day."
"Buy/Sell Interest": A Collateral Debt Security for which one of the
participants has exercised its right to purchase its corresponding participant's
interest, or sell its interest to such corresponding participant for the same
price, in accordance with the related Underlying Instrument.
"Calculation Agent": The meaning specified in Section 7.14(a) hereof.
"Calculation Amount": With respect to any Collateral Debt Security, at
any time, the lesser of (i) the Market Value of such Collateral Debt Security
and (ii) the Applicable Recovery Rate multiplied by the Principal Balance of
such Collateral Debt Security.
"Capitalized Interest": Collectively, the Class C Capitalized
Interest, the Class D Capitalized Interest, the Class E Capitalized Interest,
the Class F Capitalized Interest, the Class G Capitalized Interest and the Class
H Capitalized Interest.
"Cash": Such coin or currency of the United States of America as at
the time shall be legal tender for payment of all public and private debts.
"Cash Flow Swap Agreement": Any Hedge Agreement entered into by the
Issuer with a Hedge Counterparty to manage potential mismatches between the
timing of receipts of interest on the Collateral Debt Securities and Eligible
Investments and the timing of interest payments due on the Notes, including an
agreement to convert the periodicity of payments on Collateral Debt Securities,
pursuant to which the Issuer shall be entitled to receive payments from the
related Hedge Counterparty on a certain date in exchange for the Issuer's
obligation to make payments to such Hedge Counterparty on one or more Payment
Dates to the extent that funds are available therefor pursuant to Section
11.1(a).
"Cash Flow Swap Counterparty": Any Hedge Counterparty with whom the
Issuer enters into a Cash Flow Swap Agreement.
"Certificate of Authentication": The meaning specified in Section 2.1
hereof.
"Certificated Notes": The meaning specified in Section 2.10(b) hereof.
"Certificated Security": A "certificated security" as defined in
Section 8-102(a)(4) of the UCC.
"Class": The Class A-1A Notes, the Class A-1AR Notes, the Class A-2
Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes, the Class F Notes, the Class G Notes or the Class H Notes, as applicable.
"Class A Defaulted Interest Amount": Collectively, the Class A-1A
Defaulted Interest Amount, the Class A-1AR Defaulted Interest Amount and the
Class A-2 Defaulted Interest Amount.
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"Class A Interest Distribution Amount": Collectively, the Class A-1A
Interest Distribution Amount, the Class A-1AR Interest Distribution Amount and
the Class A-2 Interest Distribution Amount.
"Class A Notes": The Class A-1 Notes and the Class A-2 Notes,
collectively.
"Class A-1 Defaulted Interest Amount": Collectively, the Class A-1A
Defaulted Interest Amount and the Class A-1AR Defaulted Interest Amount.
"Class A-1 Interest Distribution Amount": Collectively, the Class A-1A
Interest Distribution Amount and the Class A-1AR Interest Distribution Amount.
"Class A-1 Notes": Collectively, the Class A-1A Notes and the Class
A-1AR Notes.
"Class A-1A Defaulted Interest Amount": With respect to the Class A-1A
Notes as of each Payment Date, the accrued and unpaid amount due to Holders of
the Class A-1A Notes on account of any shortfalls in the payment of the Class
A-1A Interest Distribution Amount with respect to any preceding Payment Date or
Payment Dates, together with interest accrued thereon (to the extent lawful).
"Class A-1A Interest Distribution Amount": On each Payment Date, the
amount due to Holders of the Class A-1A Notes on account of interest equal to
the product of (i) the Aggregate Outstanding Amount of the Class A-1A Notes with
respect to the related Interest Accrual Period, (ii) the actual number of days
in such Interest Accrual Period divided by 360 and (iii) the Class A-1A Rate.
"Class A-1A Notes": The Class A-1A Senior Secured Floating Rate Term
Notes due 2042, issued by the Issuer and the Co-Issuer pursuant to this
Indenture.
"Class A-1A Rate": With respect to any Class A-1A Note, the per annum
rate at which interest accrues on such Note for any Interest Accrual Period,
which shall be equal to (a) three-month LIBOR for the related Interest Accrual
Period plus (b) 0.28% per annum.
"Class A-1A/A-1AR Break-Even Loss Rate": At any time, the maximum
percentage of defaults that the Assumed Portfolio should be able to sustain,
which after giving effect to S&P's assumptions on recoveries and timing and to
the Priority of Payments, will result in sufficient funds remaining for the
timely payment of interest and the ultimate payment of principal of the Class
A-1A and the Class A-1AR Notes.
"Class A-1A/A-1AR Loss Differential": At any time, the rate calculated
by subtracting the Class A-1A/A-1AR Scenario Loss Rate from the Class A-1A/A-1AR
Break-Even Loss Rate at such time.
"Class A-1A/A-1AR Pro Rata Allocation": With respect to any Payment
Date and in the case of a redemption of the Notes in full or the acceleration of
the Notes following an Event of Default, the allocation based on the Aggregate
Outstanding Amount of each of the Class A-1A Notes and the Class A-1AR Notes as
of the related Determination Date.
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"Class A-1A/A-1AR Scenario Loss Rate": At any time, an estimate of the
cumulative default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then-current rating of the Class A-1A Notes and
the Class A-1AR Notes by S&P, determined by application of the S&P CDO Monitor
at such time (which rate, for the avoidance of doubt, will vary depending on the
then-current levels of the other variables included in the S&P Matrix).
"Class A-1AR Breakage Costs": With respect to any Due Period, the
amount, as determined by the Class A-1AR Note Agent and as set forth in a
certificate with respect to a Holder of Class A-1AR Notes delivered to the
Issuer and the Trustee by the Class A-1AR Note Agent on or prior to the related
Determination Date, of "breakage costs," if any, incurred by a Holder of Class
A-1AR Notes as a result of prepayment of amounts under the Class A-1AR Notes on
a day other than a Payment Date and calculated as provided in the Class A-1AR
Note Purchase Agreement.
"Class A-1AR Commitment": With respect to each Holder of a Class A-1AR
Note, the maximum aggregate outstanding principal amount of advances (whether at
the time funded or unfunded) that the Holder of such Class A-1AR Note (or the
related Liquidity Provider) is obligated to make to the Issuer from time to time
under the Class A-1AR Note Purchase Agreement.
"Class A-1AR Commitment Fee": On each Payment Date, the amount due in
arrears to the Holders of the Class A-1AR Notes equal to the product of (i) the
result obtained by subtracting the Weighted Average Drawn Class A-1AR Note
Portion for such Payment Date from the Maximum Class A-1AR Commitment as of such
Payment Date, (ii) the actual number of days in such Interest Accrual Period
divided by 360 and (iii) 0.22%.
"Class A-1AR Defaulted Interest Amount": With respect to the Class
A-1AR Notes, as of each Payment Date, the accrued and unpaid amount due to
Holders of the Class A-1AR Notes on account of any shortfalls in the payment of
the Class A-1AR Interest Distribution Amount with respect to any preceding
Payment Date or Payment Dates, together with interest accrued thereon (to the
extent lawful).
"Class A-1AR Draw": An advance by a Holder of a Class A-1AR Note made
in accordance with Section 18.1(a) hereof.
"Class A-1AR Draw Date": The meaning specified in Section 18.1(a)
hereof.
"Class A-1AR Eligible Investments": The meaning specified in Section
18.5(f) hereof.
"Class A-1AR Holder Collateral Account": The meaning specified in
Section 18.5(a) hereof.
"Class A-1AR Interest Allocation Percentage": For each Interest
Accrual Period and with respect to each Holder of Class A-1AR Notes, a fraction,
expressed as a percentage, (i) the numerator of which is the Weighted Average
Drawn Class A-1AR Note Portion of such
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Holder and (ii) the denominator of which is the Weighted Average Drawn Class
A-1AR Note Portion of all of the Holders of Class A-1AR Notes.
"Class A-1AR Interest Distribution Amount": On each Payment Date, the
amount due to Holders of the Class A-1AR Notes on account of interest equal to
the product of (i) the Weighted Average Drawn Class A-1AR Note Portion of the
Class A-1AR Notes with respect to the related Interest Accrual Period (or each
related Interest Accrual Period, if there were multiple Class A-1AR Draws since
the prior Payment Date or Closing Date, as applicable), (ii) the actual number
of days in such Interest Accrual Period divided by 360 and (iii) the Class A-1AR
Rate; provided that interest accrued in respect of amounts borrowed under the
Class A-1AR Notes during the period following the Determination Date through
such Payment Date will be payable (without penalty interest thereon) on the next
succeeding Payment Date.
"Class A-1AR Note Agent": ▇▇▇▇▇ Fargo Bank, National Association.
"Class A-1AR Note Purchase Agreement": The Class A-1AR Note Purchase
Agreement, dated as of the Closing Date, by and among the Issuer, the Co-Issuer,
the Class A-1AR Note Agent and the Holders from time to time of the Class A-1AR
Notes, as amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Class A-1AR Notes": The Class A-1AR Revolving Senior Secured Floating
Rate Term Notes due 2042, issued by the Issuer and the Co-Issuer pursuant to
this Indenture.
"Class A-1AR Prepayment": Any payment of principal of the Class A-1AR
Notes prior to the Stated Maturity of the Class A-1AR Notes.
"Class A-1AR Prepayment Date": The date of any Class A-1AR Prepayment.
"Class A-1AR Proportion": 30.303%.
"Class A-1AR Rate": With respect to any Class A-1AR Note, the per
annum rate at which interest accrues on such Note for any Interest Accrual
Period, which shall be equal to (a) three-month (or such shorter period as is
applicable) LIBOR for the related Interest Accrual Period plus (b) 0.31% per
annum; provided that interest accrued in respect of amounts borrowed under the
Class A-1AR Notes during the period following the Determination Date through the
related Payment Date will be payable (without interest thereon) on the next
succeeding Payment Date.
"Class A-1AR Ratings Criteria": The criteria set forth below which, if
satisfied with respect to any Holder of Class A-1AR Notes (or prospective
transferee) at the time such Class A-1AR Notes are purchased (or transferred),
will make such Holder (or prospective transferee) eligible to purchase (or
receive) such Class A-1AR Notes:
(a) such Holder of Class A-1AR Notes (or prospective transferee) has
(i) unless the Rating Agency Condition with respect to ▇▇▇▇▇'▇ is
satisfied, a long-term senior unsecured debt rating of (x) "Aa3" to the
extent such holder (or prospective transferee) has a long-term rating only
or (y) "A-1" to the extent such Holder (or prospective transferee) has both
a long-term and short-term rating and the short-term
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debt, deposit or similar obligations rating is "P-1," (ii) a short-term
debt, deposit or similar obligations rating of at least "A-1" by S&P and
(iii) a short-term debt, deposit or similar obligations rating of least
"F1" by Fitch;
(b) the obligations of such Holder of Class A-1AR Notes (or
prospective transferee) under the Class A-1AR Note Purchase Agreement are
guaranteed (pursuant to a guarantee which complies with the then-current
S&P criteria regarding guarantees) by an entity meeting the Class A-1AR
Ratings Criteria set forth in clause (a) above; or
(c) such Holder of Class A-1AR Notes (or prospective transferee) is
then entitled under a Liquidity Facility to borrow from, or sell an
interest in assets to, a Liquidity Provider so long as:
(i) each such Liquidity Provider has (1) unless the Rating Agency
Condition with respect to ▇▇▇▇▇'▇ is satisfied, a long-term senior
unsecured debt rating of (x) "Aa3" to the extent such Liquidity
Providers have a long-term rating only or (y) "A-1" to the extent such
Liquidity Providers have both a long-term and short-term rating and
the short-term debt, deposit or similar obligations rating is "P-1,"
(2) a short-term debt, deposit or similar obligations rating of at
least "A-1" by S&P and (3) a short-term debt, deposit or similar
obligations rating of least "F1" by Fitch; and
(ii) the aggregate amount of commitments to make loans or
purchase interests in assets under such Liquidity Facility (1) are
held by Liquidity Providers who meet the rating requirements set forth
above and (2) is not less than the Class A-1AR Commitment in respect
of the Class A-1AR Notes held by such Holder of Class A-1AR Notes (or
prospective transferee).
"Class A-2 Break-Even Loss Rate": At any time, the maximum percentage
of defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P's assumptions on recoveries and timing and to the Priority
of Payments, will result in sufficient funds remaining for the timely payment of
interest on and the ultimate payment of principal of the Class A-2 Notes.
"Class A-2 Defaulted Interest Amount": With respect to the Class A-2
Notes as of each Payment Date, the accrued and unpaid amount due to Holders of
the Class A-2 Notes on account of any shortfalls in the payment of the Class A-2
Interest Distribution Amount with respect to any preceding Payment Date or
Payment Dates, together with interest accrued thereon (to the extent lawful).
"Class A-2 Interest Distribution Amount": On each Payment Date, the
amount due to Holders of the Class A-2 Notes on account of interest equal to the
product of (i) the Aggregate Outstanding Amount of the Class A-2 Notes with
respect to the related Interest Accrual Period, (ii) the actual number of days
in such Interest Accrual Period divided by 360 and (iii) the Class A-2 Rate.
"Class A-2 Loss Differential": At any time, the rate calculated by
subtracting the Class A-2 Scenario Loss Rate from the Class A-2 Break-Even Loss
Rate at such time.
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"Class A-2 Notes": The Class A-2 Second Priority Senior Secured
Floating Rate Term Notes due 2042, issued by the Issuer and the Co-Issuer
pursuant to this Indenture.
"Class A-2 Rate": With respect to any Class A-2 Note, the per annum
rate at which interest accrues on such Note for any Interest Accrual Period,
which shall be equal to (a) three-month LIBOR for the related Interest Accrual
Period plus (b) 0.31% per annum.
"Class A-2 Scenario Loss Rate": At any time, an estimate of the
cumulative default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then-current rating of the Class A-2 Notes by
S&P, determined by application of the S&P CDO Monitor at such time (which rate,
for the avoidance of doubt, will vary depending on the then-current levels of
the other variables included in the S&P Matrix).
"Class A-2 Subordinate Interests": The meaning specified in Section
13.1(a) hereof.
"Class A/B Coverage Tests": The Class A/B Par Value Test and the Class
A/B Interest Coverage Test.
"Class A/B Interest Coverage Ratio": The meaning specified in the
definition of "Interest Coverage Ratio."
"Class A/B Interest Coverage Test": The test that will be deemed met
as of any Measurement Date prior to the Effective Date and will be met as of any
Measurement Date on which any Class A Notes or any Class B Notes remain
Outstanding if the Class A/B Interest Coverage Ratio as of such Measurement Date
is equal to or greater than 126.65%.
"Class A/B Par Value Ratio": As of any Measurement Date, the
number (expressed as a percentage) calculated by dividing (a) the sum of the Net
Outstanding Portfolio Balance and the Aggregate Class A-1AR Undrawn Amount
(without duplication), in each case, on such Measurement Date by (b) the sum of
the Aggregate Outstanding Amount of the Class A Notes (assuming for purposes of
the calculation that the Class A-1AR Commitments are fully drawn) and the Class
B Notes and the amount of any unreimbursed Interest Advances.
"Class A/B Par Value Test": The test that will be deemed met as of any
Measurement Date prior to the Effective Date and will be met as of any
Measurement Date on or after the Effective Date on which any Class A Notes or
Class B Notes remain Outstanding if the Class A/B Par Value Ratio on such
Measurement Date is equal to or greater than 126.65%.
"Class B Break-Even Loss Rate": At any time, the maximum percentage of
defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P's assumptions on recoveries and timing and to the Priority
of Payments, will result in sufficient funds remaining for the timely payment of
interest on and the ultimate payment of principal of the Class B Notes.
"Class B Defaulted Interest Amount": With respect to the Class B Notes
as of each Payment Date, the accrued and unpaid amount due to Holders of the
Class B Notes on account of any shortfalls in the payment of the Class B
Interest Distribution Amount with respect
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to any preceding Payment Date or Payment Dates, together with interest accrued
thereon (to the extent lawful).
"Class B Interest Distribution Amount": On each Payment Date, the
amount due to Holders of the Class B Notes on account of interest equal to the
product of (i) the Aggregate Outstanding Amount of the Class B Notes with
respect to the related Interest Accrual Period, (ii) the actual number of days
in such Interest Accrual Period divided by 360 and (iii) the Class B Rate.
"Class B Loss Differential": At any time, the rate calculated by
subtracting the Class B Scenario Loss Rate from the Class B Break-Even Loss Rate
at such time.
"Class B Notes": The Class B Third Priority Floating Rate Term Notes
due 2042, issued by the Issuer and the Co-Issuer pursuant to this Indenture.
"Class B Rate": With respect to any Class B Note, the per annum rate
at which interest accrues on such Note for any Interest Accrual Period, which
shall be equal to (a) three-month LIBOR for the related Interest Accrual Period
plus (b) 0.39% per annum.
"Class B Scenario Loss Rate": At any time, an estimate of the
cumulative default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then-current rating of the Class B Notes by S&P,
determined by application of the S&P CDO Monitor at such time (which rate, for
the avoidance of doubt, will vary depending on the then-current levels of the
other variables included in the S&P Matrix).
"Class B Subordinate Interests": The meaning specified in Section
13.1(b) hereof.
"Class C Break-Even Loss Rate": At any time, the maximum percentage of
defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P's assumptions on recoveries and timing and to the Priority
of Payments, will result in sufficient funds remaining for the ultimate payment
of interest on and principal of the Class C Notes.
"Class C Capitalized Interest": The meaning specified in Section
2.7(e) hereof.
"Class C Defaulted Interest Amount": With respect to the Class C
Notes, on or after any Payment Date on which no Class A Notes or Class B Notes
are Outstanding, any interest on the Class C Notes (other than Class C
Capitalized Interest) that is due and payable but is not punctually paid or duly
provided for on or prior to the due date therefor and which remains unpaid,
together with interest accrued thereon (to the extent lawful).
"Class C Interest Distribution Amount": On each Payment Date, the
amount due to Holders of the Class C Notes on account of interest equal to the
product of (i) the Aggregate Outstanding Amount (including the current balance
of any Class C Capitalized Interest) of the Class C Notes with respect to the
related Interest Accrual Period, (ii) the actual number of days in such Interest
Accrual Period divided by 360 and (iii) the Class C Rate.
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"Class C Loss Differential": At any time, the rate calculated by
subtracting the Class C Scenario Loss Rate from the Class C Break-Even Loss Rate
at such time.
"Class C Notes": The Class C Fourth Priority Floating Rate Capitalized
Interest Term Notes due 2042, issued by the Issuer and the Co-Issuer pursuant to
this Indenture.
"Class C Rate": With respect to any Class C Note, the per annum rate
at which interest accrues on such Note for any Interest Accrual Period, which
shall be equal to (a) three-month LIBOR for the related Interest Accrual Period
plus (b) 0.60% per annum.
"Class C Scenario Loss Rate": At any time, an estimate of the
cumulative default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then-current rating of the Class C Notes by S&P,
determined by application of the S&P CDO Monitor at such time (which rate, for
the avoidance of doubt, will vary depending on the then-current levels of the
other variables included in the S&P Matrix).
"Class C Subordinate Interests": The meaning specified in Section
13.1(c) hereof.
"Class C/D/E Coverage Tests": The Class C/D/E Par Value Test and the
Class C/D/E Interest Coverage Test.
"Class C/D/E Interest Coverage Ratio": The meaning specified in the
definition of "Interest Coverage Ratio."
"Class C/D/E Interest Coverage Test": The test that will be deemed met
as of any Measurement Date prior to the Effective Date and will be met as of any
Measurement Date on or after the Effective Date on which any Class C Notes,
Class D Notes or Class E Notes remain Outstanding if the Class C/D/E Interest
Coverage Ratio as of such Measurement Date is equal to or greater than 112.80%.
"Class C/D/E Par Value Ratio": As of any Measurement Date, the number
(expressed as a percentage) calculated by dividing (a) the sum of the Net
Outstanding Portfolio Balance and the Aggregate Class A-1AR Undrawn Amount
(without duplication), in each case, on such Measurement Date by (b) the sum of
the Aggregate Outstanding Amount (including any Class C Capitalized Interest,
Class D Capitalized Interest and Class E Capitalized Interest) of the Class A
Notes (assuming for purposes of the calculation that the Class A-1AR Commitments
are fully drawn), the Class B Notes, the Class C Notes, the Class D and the
Class E Notes and the amount of any unreimbursed Interest Advances.
"Class C/D/E Par Value Test": The test that will be deemed met as of
any Measurement Date prior to the Effective Date and will be met as of any
Measurement Date on or after the Effective Date on which any Class C Notes,
Class D Notes or Class E Notes remain Outstanding if the Class C/D/E Par Value
Ratio on such Measurement Date is equal to or greater than 112.80%.
"Class D Break-Even Loss Rate": At any time, the maximum percentage of
defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P's
-16-
assumptions on recoveries and timing and to the Priority of Payments, will
result in sufficient funds remaining for the ultimate payment of interest on and
principal of the Class D Notes.
"Class D Capitalized Interest": The meaning specified in Section
2.7(f) hereof.
"Class D Defaulted Interest Amount": With respect to the Class D
Notes, on or after any Payment Date on which no Class A Notes, Class B Notes or
Class C Notes are Outstanding, any interest on the Class D Notes (other than
Class D Capitalized Interest) that is due and payable but is not punctually paid
or duly provided for on or prior to the due date therefor and which remains
unpaid, together with interest accrued thereon (to the extent lawful).
"Class D Interest Distribution Amount": On each Payment Date, the
amount due to Holders of the Class D Notes on account of interest equal to the
product of (i) the Aggregate Outstanding Amount (including the current balance
of any Class D Capitalized Interest) of the Class D Notes with respect to the
related Interest Accrual Period, (ii) the actual number of days in such Interest
Accrual Period divided by 360 and (iii) the Class D Rate.
"Class D Loss Differential": At any time, the rate calculated by
subtracting the Class D Scenario Loss Rate from the Class D Break-Even Loss Rate
at such time.
"Class D Notes": The Class D Fifth Priority Floating Rate Capitalized
Interest Term Notes due 2042, issued by the Issuer and the Co-Issuer pursuant to
this Indenture.
"Class D Rate": With respect to any Class D Note, the per annum rate
at which interest accrues on such Note for any Interest Accrual Period, which
shall be equal to (a) three-month LIBOR for the related Interest Accrual Period
plus (b) 0.70% per annum.
"Class D Scenario Loss Rate": At any time, an estimate of the
cumulative default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then-current rating of the Class D Notes by S&P,
determined by application of the S&P CDO Monitor at such time (which rate, for
the avoidance of doubt, will vary depending on the then-current levels of the
other variables included in the S&P Matrix).
"Class D Subordinate Interests": The meaning specified in Section
13.1(d) hereof.
"Class E Break-Even Loss Rate": At any time, the maximum percentage of
defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P's assumptions on recoveries and timing and to the Priority
of Payments, will result in sufficient funds remaining for the ultimate payment
of interest on and principal of the Class E Notes.
"Class E Capitalized Interest": The meaning specified in Section
2.7(g) hereof.
"Class E Defaulted Interest Amount": With respect to the Class E Notes
on or after any Payment Date on which no Class A Notes, Class B Notes, Class C
Notes or Class D Notes are Outstanding, any interest on the Class E Notes (other
than Class E Capitalized Interest) that is due and payable but is not punctually
paid or duly provided for on or prior to the due date therefor and which remains
unpaid, together with interest accrued thereon (to the extent lawful).
-17-
"Class E Interest Distribution Amount": On each Payment Date, the
amount due to Holders of the Class E Notes on account of interest equal to the
product of (i) the Aggregate Outstanding Amount (including the current balance
of any Class E Capitalized Interest) of the Class E Notes with respect to the
related Interest Accrual Period, (ii) the actual number of days in such Interest
Accrual Period divided by 360 and (iii) the Class E Rate.
"Class E Loss Differential": At any time, the rate calculated by
subtracting the Class E Scenario Loss Rate from the Class E Break-Even Loss Rate
at such time.
"Class E Notes": The Class E Sixth Priority Floating Rate Capitalized
Interest Term Notes due 2042, issued by the Issuer and the Co-Issuer pursuant to
this Indenture.
"Class E Rate": With respect to any Class E Note, the per annum rate
at which interest accrues on such Note for any Interest Accrual Period, which
shall be equal to (a) three-month LIBOR for the related Interest Accrual Period
plus (b) 0.80% per annum.
"Class E Scenario Loss Rate": At any time, an estimate of the
cumulative default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then-current rating of the Class E Notes by S&P,
determined by application of the S&P CDO Monitor at such time (which rate, for
the avoidance of doubt, will vary depending on the then-current levels of the
other variables included in the S&P Matrix).
"Class E Subordinate Interests": The meaning specified in Section
13.1(e) hereof.
"Class F Break-Even Loss Rate": At any time, the maximum percentage of
defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P's assumptions on recoveries and timing and to the Priority
of Payments, will result in sufficient funds remaining for the ultimate payment
of interest on and principal of the Class F Notes.
"Class F Capitalized Interest": The meaning specified in Section
2.7(h) hereof.
"Class F Defaulted Interest Amount": With respect to the Class F Notes
on or after any Payment Date on which no Class A Notes, Class B Notes, Class C
Notes, Class D Notes or Class E Notes are Outstanding, any interest on the Class
F Notes (other than Class F Capitalized Interest) that is due and payable but is
not punctually paid or duly provided for on or prior to the due date therefor
and which remains unpaid, together with interest accrued thereon (to the extent
lawful).
"Class F Interest Distribution Amount": On each Payment Date, the
amount due to Holders of the Class F Notes on account of interest equal to the
product of (i) the Aggregate Outstanding Amount (including the current balance
of any Class F Capitalized Interest) of the Class F Notes with respect to the
related Interest Accrual Period, (ii) the actual number of days in such Interest
Accrual Period divided by 360 and (iii) the Class F Rate.
"Class F Loss Differential": At any time, the rate calculated by
subtracting the Class F Scenario Loss Rate from the Class F Break-Even Loss Rate
at such time.
-18-
"Class F Notes": The Class F Seventh Priority Floating Rate
Capitalized Interest Term Notes due 2042, issued by the Issuer and the Co-Issuer
pursuant to this Indenture.
"Class F Rate": With respect to any Class F Note, the per annum rate
at which interest accrues on such Note for any Interest Accrual Period, which
shall be equal to (a) three-month LIBOR for the related Interest Accrual Period
plus (b) 1.05% per annum.
"Class F Scenario Loss Rate": At any time, an estimate of the
cumulative default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then-current rating of the Class F Notes by S&P,
determined by application of the S&P CDO Monitor at such time (which rate, for
the avoidance of doubt, will vary depending on the then-current levels of the
other variables included in the S&P Matrix).
"Class F Subordinate Interests": The meaning specified in Section
13.1(f) hereof.
"Class F/G/H Coverage Tests": The Class F/G/H Par Value Test and the
Class F/G/H Interest Coverage Test.
"Class F/G/H Interest Coverage Ratio": The meaning specified in the
definition of "Interest Coverage Ratio."
"Class F/G/H Interest Coverage Test": The test that will be deemed met
as of any Measurement Date prior to the Effective Date and will be met as of any
Measurement Date on or after the Effective Date on which any Class F Notes,
Class G Notes or Class H Notes remain Outstanding if the Class F/G/H Interest
Coverage Ratio as of such Measurement Date is equal to or greater than 105.60%.
"Class F/G/H Par Value Ratio": As of any Measurement Date, the number
(expressed as a percentage) calculated by dividing (a) the sum of the Net
Outstanding Portfolio Balance and the Aggregate Class A-1AR Undrawn Amount
(without duplication), in each case, on such Measurement Date by (b) the sum of
the Aggregate Outstanding Amount (including any Class C Capitalized Interest,
Class D Capitalized Interest, Class E Capitalized Interest, Class F Capitalized
Interest, Class G Capitalized Interest and Class H Capitalized Interest) of the
Class A Notes (assuming for purposes of the calculation that the Class A-1AR
Commitments are fully drawn), the Class B Notes, the Class C Notes, the Class D
Notes, the Class E Notes, the Class F Notes, the Class G Notes and the Class H
Notes and the amount of any unreimbursed Interest Advances.
"Class F/G/H Par Value Test": The test that will be deemed met as of
any Measurement Date prior to the Effective Date and will be met as of any
Measurement Date on or after the Effective Date on which any Class F Notes,
Class G Notes or Class H Notes remain Outstanding if the Class F/G/H Par Value
Ratio on such Measurement Date is equal to or greater than 105.60%.
"Class G Capitalized Interest": The meaning specified in Section
2.7(i) hereof.
-19-
"Class G Defaulted Interest Amount": With respect to the Class G
Notes, on or after any Payment Date on which no Class A Notes, Class B Notes,
Class C Notes, Class D Notes, Class E Notes or Class F Notes are Outstanding,
any interest on the Class G Notes (other than Class G Capitalized Interest) that
is due and payable but is not punctually paid or duly provided for on or prior
to the due date therefor and which remains unpaid, together with interest
accrued thereon (to the extent lawful).
"Class G Interest Distribution Amount": On each Payment Date, the
amount due to Holders of the Class G Notes on account of interest equal to the
product of (i) the Aggregate Outstanding Amount (including the current balance
of any Class G Capitalized Interest) of the Class G Notes with respect to the
related Interest Accrual Period, (ii) the actual number of days in such Interest
Accrual Period divided by 360 and (iii) the Class G Rate.
"Class G Notes": The Class G Eighth Priority Floating Rate Capitalized
Interest Term Notes due 2042, issued by the Issuer and the Co-Issuer pursuant to
this Indenture.
"Class G Rate": With respect to any Class G Note, the per annum rate
at which interest accrues on such Note for any Interest Accrual Period, which
shall be equal to (a) three-month LIBOR for the related Interest Accrual Period
plus (b) 1.45% per annum.
"Class G Subordinate Interests": The meaning specified in Section
13.1(g), hereof.
"Class H Capitalized Interest": The meaning specified in Section
2.7(j) hereof.
"Class H Defaulted Interest Amount": With respect to the Class H
Notes, on or after any Payment Date on which no Class A Notes, Class B Notes,
Class C Notes, Class D Notes, Class E Notes, Class F Notes or Class G Notes are
Outstanding, any interest on the Class H Notes (other than Class H Capitalized
Interest) that is due and payable but is not punctually paid or duly provided
for on or prior to the due date therefor and which remains unpaid, together with
interest accrued thereon (to the extent lawful).
"Class H Interest Distribution Amount": On each Payment Date, the
amount due to Holders of the Class H Notes on account of interest equal to the
product of (i) the Aggregate Outstanding Amount (including the current balance
of any Class H Capitalized Interest) of the Class H Notes with respect to the
related Interest Accrual Period, (ii) the actual number of days in such Interest
Accrual Period divided by 360 and (iii) the Class H Rate.
"Class H Notes": The Class H Ninth Priority Floating Rate Capitalized
Interest Term Notes due 2042, issued by the Issuer and the Co-Issuer pursuant to
this Indenture.
"Class H Rate": With respect to any Class H Note, the per annum rate
at which interest accrues on such Note for any Interest Accrual Period, which
shall be equal to (a) three-month LIBOR for the related Interest Accrual Period
plus (b) 1.85% per annum.
"Class H Subordinate Interests": The meaning specified in Section
13.1(h) hereof.
-20-
"Clean-up Call": The meaning specified in Section 9.1 hereof.
"Clean-up Call Date": The meaning specified in Section 9.1 hereof.
"Clearing Agency": An organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"Clearing Corporation": The meaning specified in Section 8-102(a)(5)
of the UCC.
"Clearing Corporation Security": A security subject to book-entry
transfers and pledges deposited with the Clearing Agency.
"Clearstream, Luxembourg": Clearstream Banking, societe anonyme, a
limited liability company organized under the laws of the Grand Duchy of
Luxembourg.
"Closing": The transfer of any Note to the initial registered Holder
of such Note.
"Closing Date": December 14, 2006.
"CMBS Conduit Securities": Collateral Debt Securities (A) issued by a
single-seller or multi-seller conduit under which the holders of such Collateral
Debt Securities have recourse to a specified pool of assets (but not other
assets held by the conduit that support payments on other series of securities)
and (B) that entitle the holders thereof to receive payments that depend (except
for rights or other assets designed to assure the servicing or timely
distribution of proceeds to holders of the Collateral Debt Securities) on the
cash flow from a pool of commercial mortgage loans generally having the
following characteristics: (i) the commercial mortgage loans have varying
contractual maturities; (ii) the commercial mortgage loans are secured by real
property purchased or improved with the proceeds thereof (or to refinance an
outstanding loan the proceeds of which were so used); (iii) the commercial
mortgage loans are obligations of a relatively limited number of obligors (with
the creditworthiness of individual obligors being less material than for CMBS
Large Loan Securities) and accordingly represent a relatively undiversified pool
of obligor credit risk; (iv) upon original issuance of such Collateral Debt
Securities no five commercial mortgage loans account for more than 20% of the
aggregate principal balance of the entire pool of commercial mortgage loans
supporting payments on such securities; and (v) repayment thereof can vary
substantially from the contractual payment schedule (if any), with early
prepayment of individual loans depending on numerous factors specific to the
particular obligors and upon whether, in the case of loans bearing interest at a
fixed rate, such loans or securities include an effective prepayment premium.
"CMBS Large Loan Securities": Collateral Debt Securities (other than
CMBS Conduit Securities) that entitle the holders thereof to receive payments
that depend (except for rights or other assets designed to assure the servicing
or timely distribution of proceeds to holders of the Collateral Debt Securities)
on the cash flow from a pool of commercial mortgage loans made to finance the
acquisition, construction and improvement of properties. They generally have the
following characteristics: (i) the commercial mortgage loans have varying
contractual maturities; (ii) the commercial mortgage loans are secured by real
property purchased or improved with the proceeds thereof (or to refinance one or
more outstanding loans the
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proceeds of which were so used); (iii) the commercial mortgage loans are
obligations of a relatively limited number of obligors and accordingly represent
a relatively undiversified pool of obligor credit risk; (iv) repayment thereof
can vary substantially from the contractual payment schedule (if any), with
early prepayment of individual loans depending on numerous factors specific to
the particular obligors and upon whether, in the case of loans bearing interest
at a fixed rate, such loans or securities include an effective prepayment
premium; and (v) the valuation of individual properties securing the commercial
mortgage loans is the primary factor in any decision to invest in those
securities.
"CMBS Security": A CMBS Conduit Security or a CMBS Large Loan
Security, as the case may be, but excluding any Single Asset Mortgage Security,
Single Borrower Mortgage Security or Rake Bond.
"Co-Issuer": Arbor Realty Mortgage Securities Series 2006-1 LLC, a
limited liability company formed under the laws of the State of Delaware, until
a successor Person shall have become the Co-Issuer pursuant to the applicable
provisions of this Indenture, and thereafter "Co-Issuer" shall mean such
successor Person.
"Co-Issuers": The Issuer and the Co-Issuer.
"Code": The United States Internal Revenue Code of 1986, as amended.
"Collateral Debt Securities Purchase Agreement": Any collateral debt
securities purchase agreement entered into on or about the Closing Date and any
other collateral debt securities purchase agreement entered into after the
Closing Date if a purchase agreement is necessary to comply with this Indenture,
which agreement is assigned to the Trustee pursuant to this Indenture.
"Collateral Debt Security" and "Collateral Debt Securities": Any loan,
security or other obligation (other than Eligible Investments) purchased by the
Issuer (including those acquired after the Closing Date) that complied with the
Eligibility Criteria at the time the Issuer entered into the commitment to
acquire such loan, security or obligation.
"Collateral Management Agreement": The Collateral Management
Agreement, dated as of the Closing Date, by and between the Issuer and the
Collateral Manager, as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
"Collateral Management Fee": The Senior Collateral Management Fee and
the Subordinate Collateral Management Fee.
"Collateral Manager" or "ARCM": Arbor Realty Collateral Management,
LLC, each of Arbor Realty Collateral Management, LLC's permitted successors and
assigns or any successor Person that shall have become the Collateral Manager
pursuant to the provisions of the Collateral Management Agreement and thereafter
"Collateral Manager" shall mean such successor Person.
"Collateral Manager Servicing Standard": With respect to the
Collateral Manager, to manage the Collateral Debt Securities that such Person is
obligated to service and
-22-
administer pursuant to this Indenture and the Collateral Management Agreement
(i) in accordance with (A) the higher of the following standards of care: (1)
customary and usual standards of practice of prudent institutional commercial
mortgage lenders servicing their own mortgage loans and (2) the same manner in
which, and with the same care, skill, prudence and diligence with which, the
Arbor Parent manages securities comparable to the Collateral Debt Securities for
its own account; (B) applicable law and (C) the terms of this Indenture, the
Collateral Management Agreement and the terms of the Collateral Debt Security
and the related Underlying Instruments and (ii) without regard to (A) any
relationship, including as lender on any other debt, that the Collateral Manager
or any Affiliate of the Collateral Manager, may have with the underlying
borrower, or any Affiliate of the borrower, or any other party to this Indenture
(or any agreements relating to this Indenture); (B) the obligation of the
Collateral Manager to make Cure Advances; (C) the right of the Collateral
Manager or any Affiliate thereof, to receive compensation or reimbursement of
costs hereunder generally or with respect to any particular transaction
(including, without limitation, any transaction related to the Collateral
Management Agreement); and (D) the ownership, servicing or management for others
of any security not subject to this Indenture by the Collateral Manager or any
Affiliate thereof or the obligation of any Affiliate of the Collateral Manager
to repurchase the Collateral Debt Security.
"Collateral Quality Test Modification": The meaning specified in
Section 12.5 hereof.
"Collateral Quality Tests": The tests that are satisfied if, as of any
Measurement Date, in the aggregate, the Collateral Debt Securities purchased or
irrevocably committed to be purchased (and not sold) comply with all of the
requirements set forth below:
(i) not more than 5% of the Aggregate Collateral Balance of
Collateral Debt Securities with payments less frequently than
quarterly are not covered by a Cash Flow Swap Agreement obtained by
the Collateral Manager for the Issuer;
(ii) not more than 20% of the Aggregate Collateral Balance
consists of Collateral Debt Securities (other than CRE CDO Securities
and REIT Debt Securities) backed or otherwise invested in properties
located in any single U.S. state, except that (A) up to 55% of the
Aggregate Collateral Balance may consist of Collateral Debt Securities
(other than CRE CDO Securities and REIT Debt Securities) backed or
otherwise invested in properties located in the State of New York, (B)
up to 50% of the Aggregate Collateral Balance may consist of
Collateral Debt Securities (other than CRE CDO Securities and REIT
Debt Securities) backed or otherwise invested in properties located in
the State of California, (C) up to 35% of the Aggregate Collateral
Balance may consist of Collateral Debt Securities (other than CRE CDO
Securities and REIT Debt Securities) backed or otherwise invested in
properties located in the northern region of the State of California,
(D) up to 35% of the Aggregate Collateral Balance may consist of
Collateral Debt Securities (other than CRE CDO Securities and REIT
Debt Securities) backed or otherwise invested in properties located in
the southern region of the State of California, (E) up to 30% of the
-23-
Aggregate Collateral Balance may consist of Collateral Debt Securities
(other than CRE CDO Securities and REIT Debt Securities) backed or
otherwise invested in properties located in the District of Columbia
and (F) up to 30% of the Aggregate Collateral Balance may consist of
Collateral Debt Securities (other than CRE CDO Securities and REIT
Debt Securities) backed or otherwise invested in properties located in
the State of Florida; provided that, for purposes of this clause (ii),
any Collateral Debt Security described in the proviso to the
definition of "Applicable Recovery Rate" shall be treated as if such
Collateral Debt Security were Cash or an Eligible Investment, as
applicable, and not as a Collateral Debt Security backed or otherwise
invested in properties;
(iii) not more than 10% of the Aggregate Collateral Balance
consists of CMBS Securities;
(iv) not more than 5% of the Aggregate Collateral Balance
consists of CRE CDO Securities;
(v) not more than 10% of the Aggregate Collateral Balance
consists of CMBS Securities and CRE CDO Securities;
(vi) not more than 5% of the Aggregate Collateral Balance
consists of REIT Debt Securities;
(vii) not more than 10% of the Aggregate Collateral Balance
consists of Collateral Debt Securities issued by any single issuer;
provided that, for avoidance of doubt, with respect to any Loan, the
issuer of such Loan shall be deemed to be the borrower of such Loan;
(viii) (A) not more than 50% of the Aggregate Collateral Balance
may consist of Collateral Debt Securities (other than CRE CDO
Securities and REIT Debt Securities but including any REIT Debt
Security the related issuer of which is required pursuant to its
governing documents to invest substantially all of its assets in Urban
Office Properties or Suburban Office Properties) that are
collateralized or backed by interests on any Urban Office Properties
or Suburban Office Properties; (B) not more than 40% of the Aggregate
Collateral Balance may consist of Collateral Debt Securities (other
than CRE CDO Securities and REIT Debt Securities but including any
REIT Debt Security the related issuer of which is required pursuant to
its governing documents to invest substantially all of its assets in
Multi-Family Properties) that are collateralized or backed by
interests on any Multi-Family Properties; (C) not more than 30% of the
Aggregate Collateral Balance may consist of Collateral Debt Securities
(other than CRE CDO Securities and REIT Debt Securities but including
any REIT Debt Security the related issuer of which is required
pursuant to its governing documents to invest substantially all of its
assets in Retail Properties) that are collateralized or backed by
interests on Retail Properties; (D) not more than 25% of the Aggregate
Collateral Balance may consist of Collateral Debt Securities (other
than CRE CDO Securities and REIT Debt Securities but including any
REIT Debt Security
-24-
the related issuer of which is required pursuant to its governing
documents to invest substantially all of its assets in Industrial
Properties) that are collateralized or backed by interests on
Industrial Properties; (E) not more than 35% of the Aggregate
Collateral Balance may consist of Collateral Debt Securities (other
than CRE CDO Securities and REIT Debt Securities but including any
REIT Debt Security the related issuer of which is required pursuant to
its governing documents to invest substantially all of its assets in
Hospitality Properties) that are collateralized or backed by interests
on Hospitality Properties; (F) not more than 30% of the Aggregate
Collateral Balance may consist of Collateral Debt Securities (other
than CRE CDO Securities and REIT Debt Securities but including any
REIT Debt Security the related issuer of which is required pursuant to
its governing documents to invest substantially all of its assets in
Condo Conversion Properties) that are collateralized or backed by
interests on Condo Conversion Properties; (G) not more than 20% of the
Aggregate Collateral Balance may consist of Collateral Debt Securities
(other than CRE CDO Securities and REIT Debt Securities) that are
collateralized or backed by interests on Condo Conversion Properties
with respect to which the aggregate purchase price relating to signed
contracts is less than the outstanding principal amount of the related
Collateral Debt Securities; (H) not more than 25% of the Aggregate
Collateral Balance may consist of Collateral Debt Securities (other
than CRE CDO Securities and REIT Debt Securities but including any
REIT Debt Security the related issuer of which is required pursuant to
its governing documents to invest substantially all of its assets in
Mixed Use Properties) that are collateralized or backed by interests
on Mixed Use Properties; (I) not more than 15% of the Aggregate
Collateral Balance may consist of Collateral Debt Securities (other
than CRE CDO Securities and REIT Debt Securities but including any
REIT Debt Security the related issuer of which is required pursuant to
its governing documents to invest substantially all of its assets in
Warehouse Properties) that are collateralized or backed by interests
on Warehouse Properties; (J) not more than 15% of the Aggregate
Collateral Balance may consist of Collateral Debt Securities (other
than CRE CDO Securities and REIT Debt Securities but including any
REIT Debt Security the related issuer of which is required pursuant to
its governing documents to invest substantially all of its assets in
Land) that are collateralized or backed by interests on Land; and (K)
not more than 10% of the Aggregate Collateral Balance may consist of
Collateral Debt Securities (other than CRE CDO Securities and REIT
Debt Securities) that are collateralized or backed by interests on
Other Properties; provided that for purposes of this subclause (K) of
this clause (viii) not more than 5% of the Aggregate Collateral
Balance may consist of Collateral Debt Securities (other than CRE CDO
Securities and REIT Debt Securities but including any REIT Debt
Security the related issuer of which is required pursuant to its
governing documents to invest substantially all of its assets in any
single property type included in the definition of "Other Properties")
that are collateralized or backed by interests on any single property
type included in the definition of "Other Properties"; provided,
further, that, for purposes of this clause (viii), any Collateral Debt
Security described in the proviso to the definition of "Applicable
Recovery Rate" shall be treated as if
-25-
such Collateral Debt Security were Cash or an Eligible Investment, as
applicable, and not as a Collateral Debt Security collateralized or
backed by any particular Property Type;
(ix) not more than 6.50% of the Aggregate Collateral Balance
consists of Fixed Rate Securities that are not subject to Asset
Specific ▇▇▇▇▇▇;
(x) not more than 5% of the Aggregate Collateral Balance consists
of CMBS Securities and CRE CDO Securities that have a stated maturity
date or rated final distribution date later than the Stated Maturity;
provided that such 5% limitation may be increased after the Closing
Date if the Rating Agency Condition has been satisfied with respect
thereto and, so long as MBIA is deemed to be the Controlling Class
hereunder, MBIA consents;
(xi) not more than 5% of the Aggregate Collateral Balance
consists of CMBS Securities that have a stated maturity later than the
Stated Maturity;
(xii) not more than 5% of the Aggregate Collateral Balance
consists of CRE CDO Securities that have a stated maturity later than
the Stated Maturity;
(xiii) not more than 3.5% of the Aggregate Collateral Balance
consists of CRE CDO Securities and CMBS Securities issued by any
single issuer;
(xiv) not more than 10% of the Aggregate Collateral Balance
consists of Loans or Preferred Equity Securities that are secured by
or relate to collateral more than 10% of the value of which is located
outside of the United States or a commonwealth, territory or
possession of the United States; provided that not more than 5% of the
Aggregate Collateral Balance consists of Loans or Preferred Equity
Securities that are secured by or relate to collateral more than 10%
of the value of which is located in any one of the following: Aruba,
the Bahamas, Bermuda, the British Virgin Islands, Canada, the Cayman
Islands, Guernsey, Jersey, Luxembourg, Mexico, or the Netherlands
Antilles;
(xv) not more than 10% of the Aggregate Collateral Balance
consists of Loans or Preferred Equity Securities that are issued by an
issuer incorporated or organized outside of the United States or a
commonwealth, territory or possession of the United States; provided
that not more than 5% of the Aggregate Collateral Balance consists of
Loans or Preferred Equity Securities that are issued by issuers
incorporated or organized under the laws of any one of the following:
Aruba, the Bahamas, Bermuda, the British Virgin Islands, Canada, the
Cayman Islands, Guernsey, Jersey, Luxembourg, Mexico, or the
Netherlands Antilles;
(xvi) not more than 5% of the Aggregate Collateral Balance
consists of Floating Rate Securities that bear interest based upon a
floating index other than LIBOR that are not subject to Asset Specific
▇▇▇▇▇▇;
(xvii) not more than 5% of the Aggregate Collateral Balance
consists of Interest Only Securities;
-26-
(xviii) not more than 10% of the Aggregate Collateral Balance
consists of Loans that are serviced by Accepted Loan Servicers that
are not Approved Servicers;
(xix) on or after the date that is 61 days after the Closing
Date, not more than 10% of the Aggregate Collateral Balance consists
of Loans in the form of participations with respect to which the
Participating Institution is a "qualified institutional lender" as
typically defined in the Underlying Instruments related to
Participations and is not either a "special purpose entity" meeting
S&P's then published criteria for bankruptcy-remote special purpose
entities (but excluding any such criteria requiring non-consolidation
opinions) or an entity that has a long-term unsecured debt rating of
"A-" or higher by S&P and a long-term unsecured debt rating of "A3" or
higher by Moody's; provided that, notwithstanding anything herein to
the contrary, each of a securitization trust, a CDO issuer or a
similar securitization vehicle and Arbor Realty Participation, LLC, a
Delaware limited liability company, for so long as the separateness
provisions of its organizational documents have not been amended
(unless the Rating Agency Condition was satisfied in connection with
such amendment), will be deemed a "special purpose entity" meeting
S&P's then-published criteria for bankruptcy-remote special purpose
entities for purposes of the Eligibility Criteria and the Collateral
Quality Tests;
(xx) the Moody's Maximum Tranched Rating Factor Test is
satisfied;
(xxi) the Moody's Weighted Average Extended Maturity Test is
satisfied;
(xxii) the Moody's Recovery Rate Test is satisfied;
(xxiii) the ▇▇▇▇▇▇▇▇▇▇ Diversity Test is satisfied;
(xxiv) the Minimum Weighted Average Coupon Test is satisfied;
(xxv) the Minimum Weighted Average Spread Test is satisfied;
(xxvi) the Weighted Average Life Test is satisfied;
(xxvii) the S&P CDO Monitor Test is satisfied;
(xxviii) the S&P Recovery Test is satisfied;
(xxix) the Fitch Loan Diversity Index Test is satisfied; and
(xxx) the Fitch Poolwide Expected Loss Test is satisfied.
For the avoidance of doubt, for purposes of the foregoing clauses (ii)
and (viii) above, such percentage determinations will be made by
"looking-through" the CMBS Securities included in the Collateral Debt
Securities; provided that such determinations shall be based
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solely on publicly available information in respect of such securities or other
information available to the Collateral Manager without undue expense.
Notwithstanding the foregoing, during the Ramp-Up Period, the
Collateral Quality Tests need not be met.
"Collection Accounts": The trust accounts so designated and
established pursuant to Section 10.2(a) hereof.
"Commitment Termination Time": The date on which any of the following
first occurs: (i) the date on which the Delayed Funding Amounts are reduced to
zero and the Collateral Manager has notified the Trustee in writing that it will
not cause the Issuer to acquire any further Delayed Draw Term Loans; (ii) the
date on which the Aggregate Outstanding Amount of each of the Class A-1A Notes
and the Class A-1AR Notes has been paid in full; (iii) the occurrence of the
Mandatory Class A-1AR Draw Date (immediately after the mandatory draw required
on such date); or (iv) the Redemption Date.
"Company Administration Agreement": The administration agreement,
dated on or about the Closing Date, by and among the Issuer and the Company
Administrator, as modified and supplemented and in effect from time to time.
"Company Administrative Expenses": All fees, expenses and other
amounts due or accrued with respect to any Payment Date and payable by the
Issuer or the Co-Issuer to (i) the Trustee pursuant to Section 6.7 hereof or any
co-trustee appointed pursuant to this Indenture (including amounts payable by
the Issuer as indemnification pursuant to this Indenture) and the Class A-1AR
Note Agent pursuant to the Class A-1AR Note Purchase Agreement (including
amounts payable by the Issuer as indemnification pursuant to the Class A-1AR
Note Purchase Agreement and any fee to a successor Class A-1AR Note Agent), (ii)
the Company Administrator under the Company Administration Agreement (including
amounts payable by the Issuer as indemnification pursuant to the Company
Administration Agreement) and to provide for the costs of liquidating the Issuer
following redemption of the Notes, (iii) the LLC Managers (including
indemnification), (iv) the Independent accountants, agents and counsel of the
Issuer for reasonable fees and expenses (including amounts payable in connection
with the preparation of tax forms on behalf of the Issuer and the Co-Issuer) and
any registered office and government filing fees, (v) the Rating Agencies for
fees and expenses in connection with any rating (including the annual fee
payable with respect to the monitoring of any rating) of the Notes, including
fees and expenses due or accrued in connection with any credit estimate or
rating of the Collateral Debt Securities, (vi) the Collateral Manager under this
Indenture and the Collateral Management Agreement (including any interest on
Collateral Management Fees deferred due to the operation of the Priority of
Payments), (vii) the Collateral Manager or other Persons as indemnification
pursuant to the Collateral Management Agreement, (viii) the Advancing Agent or
other Persons as indemnification pursuant to Section 17.3, (ix) each member of
the Advisory Committee (including amounts payable as indemnification) under each
agreement between such Advisory Committee member and the Issuer (and the amounts
payable by the Issuer to each member of the Advisory Committee as
indemnification pursuant to each such agreement); (x) the Preferred Shares
Paying Agent and the Share Registrar under the Preferred Shares Paying Agency
Agreement (including amounts payable as indemnification), (xi) any other Person
in
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respect of any governmental fee, charge or tax in relation to the Issuer or the
Co-Issuer (in each case as certified by an Authorized Officer of the Issuer or
the Co-Issuer to the Trustee), and (xii) any other Person in respect of any
other fees or expenses (including indemnifications) permitted under this
Indenture (including, without limitation, any costs or expenses incurred in
connection with certain modeling systems and services) and the documents
delivered pursuant to or in connection with this Indenture and the Notes and any
amendment or other modification of any such documentation, in each case unless
expressly prohibited under this Indenture (including, without limitation, the
payment of all transaction fees and all legal and other fees and expenses
required in connection with the purchase of any Collateral Debt Securities or
any other transaction authorized by this Indenture and any amounts due in
respect of the listing of any Notes on the Irish Stock Exchange); provided that
Company Administrative Expenses shall not include (a) amounts payable in respect
of the Notes, (b) amounts payable under any Hedge Agreement, (c) any Collateral
Management Fee payable pursuant to the Collateral Management Agreement and (d)
any Class A-1AR Commitment Fees or Class A-1AR Breakage Costs.
"Company Administrator": ▇▇▇▇▇▇ Finance Limited, a licensed trust
company incorporated in the Cayman Islands, as administrator pursuant to the
Company Administration Agreement, unless a successor Person shall have become
administrator pursuant to the Company Administration Agreement, and thereafter,
Company Administrator shall mean such successor Person.
"Construction Loan": Any Loan with respect to which a material portion
of the related property securing such Loan is subject to "ground up"
construction of new improvements, including, without limitation, new
foundations, new structural steel or wood frame, and new mechanical, electrical
and plumbing systems and either (a) the related future funding obligation
represented more than 30% of the total committed amount of the underlying loan
as of the date the Issuer acquired such Future Advance Loan or (b) the related
future funding obligation represented more than 40% of the total committed
amount of the underlying loan as of the date of origination of such Future
Advance Loan.
"Controlling Class": The Class A-1 Notes, so long as any Class A-1
Notes are Outstanding, then the Class A-2 Notes, so long as any Class A-2 Notes
are Outstanding, then the Class B Notes, so long as Class B Notes are
Outstanding, then the Class C Notes, so long as any Class C Notes are
Outstanding, then the Class D Notes, so long as any Class D Notes are
Outstanding, then the Class E Notes, so long as any Class E Notes are
Outstanding, then the Class F Notes, so long as any Class F Notes are
Outstanding, then the Class G Notes, so long as any Class G Notes are
Outstanding, then the Class H Notes, so long as any Class H Notes are
Outstanding, and then the Preferred Shares; provided that so long as MBIA is
providing credit enhancement with respect to any of the Class A Notes, whether
in the form of a negative basis swap, a standby letter of credit, a surety bond,
an insurance policy, a credit default swap or any other form of credit insurance
or risk management, MBIA will be deemed to be the "Controlling Class" for all
purposes under this Indenture.
"Corporate Trust Office": The principal corporate trust office of the
Trustee, currently located at (i) for Note transfer purposes, ▇▇▇▇▇ Fargo
Center, Sixth Street and Marquette Avenue, Minneapolis, Minnesota, Attention:
Corporate Trust Services Group, Arbor Realty Mortgage Securities Series 2006-1
and (ii) for all other purposes, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
-▇▇-
▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: CDO Trust Services Group, Arbor
Realty Mortgage Securities Series 2006-1, telephone number (▇▇▇) ▇▇▇-▇▇▇▇, or
such other address as the Trustee may designate from time to time by notice to
the Noteholders, the Holder of the Preferred Shares, the Collateral Manager, the
Rating Agencies, the Issuer and each Hedge Counterparty or the principal
corporate trust office of any successor Trustee.
"Coverage Test Modification": The meaning specified in Section 12.5
hereof.
"Coverage Tests": The Class A/B Coverage Tests, the Class C/D/E
Coverage Tests and the Class F/G/H Coverage Tests.
"Covered Fixed Rate Security": Any Fixed Rate Security included in the
Initial Collateral Debt Securities (or otherwise identified on Schedule H
hereto) and any other Fixed Rate Security (including any Above Cap Security) (i)
for which the Issuer has entered into one or more Interest Rate Swap Agreements
(either individually or together with other Collateral Debt Securities), which
(A) is a market rate swap that does not require the related Hedge Counterparty
to make any upfront payments, (B) has a term which is at least as long as the
Initial Maturity Date of such Fixed Rate Security, (C) requires the related
Hedge Counterparty to make floating rate payments to the Issuer based on the
related notional amount based on the London interbank offered rate for U.S.
Dollar deposits in Europe and (D) requires the Issuer to make fixed rate
payments to the related Hedge Counterparty or (ii) that is subject to an Asset
Specific Hedge. For the avoidance of doubt, any Fixed Rate Security with respect
to which the Issuer has entered into an Interest Rate Swap Agreement that has a
term expiring prior to the Initial Maturity Date of such Fixed Rate Security
will not be a Covered Fixed Rate Security.
"Covered Unfunded Other Loan": Any Unfunded Other Loan owned by any
CDO issuer with respect to which the remaining future funding obligation in
respect of such Unfunded Other Loan is covered dollar-for-dollar by (x) cash on
deposit in a segregated account maintained by the related trustee, (y) undrawn
capacity under a revolving note purchase agreement or (z) a combination of (x)
and (y).
"CRE CDO Securities": Collateralized debt obligations, collateralized
bond obligations or collateralized loan obligations (including, without
limitation, any synthetic collateralized debt obligations or synthetic
collateralized loan obligations) that entitle the holders thereof to receive
payments that depend (except for rights or other assets designed to assure the
servicing or timely distribution of proceeds to holders of such CRE CDO
Securities) on the cash flow from (and not the market value of) a portfolio of
securities related to commercial mortgage property.
"Credit Risk/Defaulted Security Cash Purchase": The meaning specified
in Section 12.1(b) hereof.
"Credit Risk Security": Any Collateral Debt Security that, in the
Collateral Manager's reasonable business judgment, has a significant risk of
declining in credit quality or, with a lapse of time, becoming a Defaulted
Security.
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"Cure Advance": An advance by the Collateral Manager, in connection
with the exercise of a cure right by the Issuer, as controlling holder or
directing holder or other similar function, with respect to a Collateral Debt
Security.
"Current Portfolio": The portfolio of Collateral Debt Securities and
Eligible Investments prior to giving effect to a proposed reinvestment in a
Substitute Collateral Debt Security.
"Custodial Account": An account at the Custodial Securities
Intermediary in the name of the Trustee pursuant to Section 10.1(b) hereof.
"Custodial Securities Intermediary": The meaning specified in Section
3.3(a) hereof.
"Dealer": Each of Credit Suisse Securities (USA) LLC and Wachovia
Capital Markets, LLC.
"Default": Any Event of Default or any occurrence that is, or with
notice or the lapse of time or both would become, an Event of Default.
"Defaulted Interest Amount": The Class A-1A Defaulted Interest Amount,
the Class A-1AR Defaulted Interest Amount, the Class A-2 Defaulted Interest
Amount, the Class B Defaulted Interest Amount, the Class C Defaulted Interest
Amount, the Class D Defaulted Interest Amount, the Class E Defaulted Interest
Amount, the Class F Defaulted Interest Amount, the Class G Defaulted Interest
Amount and/or the Class H Defaulted Interest Amount, as the context requires.
"Defaulted Security": Any Collateral Debt Security or any other
security included in the Assets:
(i) with respect to a Preferred Equity Security (1) with
respect to which there has occurred and is continuing a payment
default (after giving effect to any applicable grace period but
without giving effect to any waiver); provided, however, that
notwithstanding the foregoing, a Preferred Equity Security shall not
be deemed to be a Defaulted Security as a result of (A) the related
issuer's failure to pay dividends or distributions on the initial due
date therefor, if the Collateral Manager, on behalf of the Issuer,
(subject to the applicable provisions of the Servicing Agreement)
consents to extend the due date when such dividend or distribution is
due and payable, and such dividend or distribution is paid on or
before such extended due date (provided that such dividend or
distribution is paid not more than 60 days (or 30 days if such
dividend or distribution was previously paid 60 days after the initial
date that it was due as a result of the Collateral Manager, on behalf
of the Issuer, previously consenting to extend such due date) after
the initial date that it was due), or (B) the failure of the issuer or
affiliate of the issuer of the Preferred Equity Security to redeem or
purchase such Preferred Equity Security on the date when such
redemption or purchase is required pursuant to the terms of the
agreement setting forth the rights of the holder of that Preferred
Equity Security (after giving effect to all extensions
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of such redemption or purchase date that the issuer or affiliate of
the issuer of the Preferred Equity Security had the right to elect and
did elect under the terms of the agreement setting forth the rights of
the holder of that Preferred Equity Security), if the Collateral
Manager, on behalf of the Issuer, (subject to the applicable
provisions of the Servicing Agreement) consents to extend such
redemption or purchase date; provided that such consent does not
extend the redemption or purchase date by more than two (2) years
after the redemption or purchase date required under such agreement
(that is, the original redemption or purchase date under such
agreement as extended by all extensions of such date that the issuer
or affiliate of the issuer of the Preferred Equity Security had the
right to elect and did elect under the terms of such agreement) and
the amount required to be paid in connection with such redemption or
purchase is paid on or before such extended redemption or purchase
date, or (2) with respect to which there is known to the Issuer or the
Collateral Manager a default (other than any payment default) which
default entitles the holders thereof to accelerate the maturity of all
or a portion of the principal amount of such obligation; provided,
however, that, in each case, if such default is cured or waived then
such asset shall no longer be a Defaulted Security or (3) with respect
to which it is known to the Collateral Manager that (A) any
bankruptcy, insolvency or receivership proceeding has been initiated
in connection with the issuer of such Preferred Equity Security, or
(B) there has been proposed or effected any distressed exchange or
other debt restructuring where the issuer of such Preferred Equity
Security has offered the debt holders a new security or package of
securities that either (x) amounts to a diminished financial
obligation or (y) has the purpose of helping the issuer to avoid
default, or (4) that has been rated "CC," "D" or "SD" or below by S&P
or "CC" or below by Fitch, or (5) there is known to the Collateral
Manager that the issuer of such Preferred Equity Security is in
default (without giving effect to any applicable grace period or
waiver) as to payment of principal and/or interest on another
obligation (and such default has not been cured or waived) which is
senior or pari passu in right of payment to such Preferred Equity
Security, except that a Preferred Equity Security will not constitute
a "Defaulted Security" under this clause (5) if each of the Rating
Agencies has confirmed in writing that such event shall not result in
the reduction, qualification or withdrawal of any rating of the Notes;
(ii) with respect to a Loan (other than a Single Asset
Mortgage Security, a Single Borrower Mortgage Security or a Rake
Bond), if a foreclosure or default (whether or not declared) with
respect to the related commercial mortgage loan has occurred;
provided, however, that notwithstanding the foregoing, a Loan shall
not be deemed to be a Defaulted Security as a result of (1) the
related borrower's failure to pay interest on such Loan or on the
related commercial mortgage loan on the initial due date therefor, if
the related lender or holder of such Loan or of the related commercial
mortgage loan consents to extend the due date when such interest is
due and payable, and such interest is paid on or before such extended
due date (provided that such interest is paid not more than 60 days
(or 30 days if such interest was previously paid 60 days after the
initial date that it was due) as a result of the Collateral Manager,
on behalf of
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the Issuer, (subject to the applicable provisions of the Servicing
Agreement) previously consenting to extend such due date after the
initial date that it was due) after the initial date that it was due),
or (2) the related borrower's failure to pay principal on such Loan or
the related commercial mortgage loan on the original maturity date
thereof (as defined below), if the related lender or holder of such
Loan or of the related commercial mortgage loan consents to extend
such maturity date (so long as the Maturity Extension Requirements are
met) and such principal is paid on or before such extended maturity
date, or (3) the occurrence of any default other than a payment
default with respect to such Loan or the related commercial mortgage
loan, unless and until the earlier of (A) the declaration of default
and acceleration of the maturity of the Loan by the lender or holder
thereof and (B) the continuance of such default uncured for 60 days
after such default became known to the Collateral Manager or the
Servicer or, subject to the satisfaction of the Rating Agency
Condition and, so long as MBIA is deemed to be the Controlling Class
hereunder, the consent of MBIA, such longer period as the Collateral
Manager (subject to the applicable provisions of the Servicing
Agreement) determines. As used above, the term "original maturity
date" means the maturity date of a Loan or the related commercial
mortgage loan as extended by all extensions thereof which the related
borrower had the right to elect and did elect under the terms of the
instruments and agreements relating to such Loan or to the related
commercial mortgage loan, but before taking into account any
additional extensions thereof that are consented to by the lender or
holder of such Loan or of the related commercial mortgage loan; and
(iii) with respect to a CMBS Security, a CRE CDO Security, a
REIT Debt Security, a Single Asset Mortgage Security, a Single
Borrower Mortgage Security or a Rake Bond (1) as to which there has
occurred and is continuing a principal payment default (without giving
effect to any applicable grace period or waiver) or (2) as to which
there is known to the Collateral Manager a default (other than any
payment default) which default entitles the holders thereof to
accelerate the maturity of all or a portion of the principal amount of
such obligation; provided, however, that, in each case, if such
default is cured or waived then such asset shall no longer be a
Defaulted Security, or (3) as to which it is known to the Collateral
Manager that (A) any bankruptcy, insolvency or receivership proceeding
has been initiated in connection with the issuer of such security, or
(B) there has been proposed or effected any distressed exchange or
other debt re-structuring where the issuer of such security has
offered the debt holders a new security or package of securities that
either (x) amounts to a diminished financial obligation or (y) has the
purpose of helping the issuer to avoid default, or (4) that has been
rated "CC," "D" or "SD" or below by S&P, "CC" or below by Fitch, or
"Ca" or "C" by Moody's, or with respect to REIT Debt Securities, the
issuer of which has a credit rating of "D" or "SD" or as to which S&P
has withdrawn its rating, or (5) as to which it is known to the
Collateral Manager that the issuer thereof is in default (without
giving effect to any applicable grace period or waiver) as to payment
of principal and/or interest on another obligation (and such default
has not been cured or waived) which is senior or pari passu in right
of payment to such security, except that any such
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security will not constitute a "Defaulted Security" under this clause
(5) if each of the Rating Agencies has confirmed in writing that such
event shall not result in the reduction, qualification or withdrawal
of any rating of the Notes, or (6)(A) as to which there has been a
failure to pay interest in whole or in part for the lesser of (x) six
months or (y) three payment periods (if such security is rated (or
privately rated for purposes of the issuance of the Securities) below
"Baa3" by Moody's or "BBB-" by S&P or Fitch); provided, however, that
if the Rating Agency Condition for such security is satisfied with
respect to S&P and Moody's and, so long as MBIA is deemed to be the
Controlling Class hereunder, MBIA has consented, the Collateral
Manager may choose not to treat such security as a Defaulted Security
or (B) as to which there has been a failure to pay interest in whole
or in part for the lesser of (x) one year or (y) six consecutive
payment periods (if such security is rated (or privately rated for
purposes of the issuance of the Securities) "BBB-" or higher by S&P or
Fitch, or "Baa3" or higher by Moody's) even if by its terms it
provides for the deferral and capitalization of interest thereon;
provided that any Collateral Debt Security which has sustained a write-down of
Principal Balance in accordance with its terms will not necessarily be
considered a Defaulted Security solely due to such writedown; provided, further,
that, for purposes of calculating the Par Value Ratios, any Collateral Debt
Security that has sustained an implied reduction of principal balance due to an
appraisal reduction will not necessarily be considered a Defaulted Security
solely due to such implied reduction.
For purposes of calculating the Par Value Ratios, an appraisal reduction of a
Collateral Debt Security will be assumed to result in an implied reduction of
principal balance for such Collateral Debt Security only if such appraisal
reduction is intended to reduce the interest payable on such Collateral Debt
Security and only in proportion to such interest reduction. The Collateral
Manager shall notify the Trustee of any appraisal reductions of Collateral Debt
Securities if the Collateral Manager has actual knowledge thereof.
For purposes of the definition of "Defaulted Security," the "Maturity Extension
Requirements" will be satisfied with respect to any extension if the maturity
date is extended (i) in the case of Loans other than ARD Loans, to a new
maturity date that is (A) not more than two years after the original maturity
date and (B) not less than ten years prior to the Stated Maturity and (ii) in
the case of ARD Loans, such that (A) the anticipated repayment date will not be
less than 20 years prior to the Stated Maturity and (B) the new maturity date is
not less than three years prior to the Stated Maturity; provided, however, that
notwithstanding the requirements in the foregoing clauses (i) and (ii),
"Maturity Extension Requirements" will be deemed satisfied with respect to any
extensions as to which the Rating Agency Condition has been satisfied and, so
long as MBIA is deemed to be the Controlling Class hereunder, MBIA has
consented.
For the avoidance of doubt, the parties hereto understand and agree that any
initial permissible 60 day extension period described in paragraphs (i) and (ii)
of this definition shall in no event be combined with any subsequent permissible
30 day extension period described in paragraphs (i) and (ii) of this definition.
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"Defeased Collateral Accounts": The trust accounts so designated and
established pursuant to Section 10.8(a) hereof.
"Definitive Class A-1AR Note": The meaning specified in Section
2.2(b)(iii) hereof.
"Delayed Draw Term Loan": Any Loan that is fully committed on the
initial funding date of such Loan but is required to be fully funded in one or
more installments and which, once all such installments have been made, has the
characteristics of a term loan; provided that no Loan with respect to which any
additional funding obligation is held separately outside the Issuer by the
Seller or an affiliate of the Seller or by an unaffiliated third party shall be
deemed to be a "Delayed Draw Term Loan" under this Indenture; provided, further,
that for purposes of each of the separate tests included within the Collateral
Quality Tests, the Moody's Post-Acquisition Compliance Test and the S&P
Post-Acquisition Compliance Test, the Principal Balance of a Delayed Draw Term
Loan, as of any date of determination, refers to the sum of (i) the outstanding
principal balance of such Delayed Draw Term Loan and (ii) the amount of the
unfunded portion of such Delayed Draw Term Loan.
"Delayed Funding Advance": With respect to Delayed Draw Term Loans,
one or more future advances that the Issuer is required to make to the obligor
under the Underlying Instruments relating thereto, subject to satisfaction of
conditions precedent specified therein.
"Delayed Funding Amount": With respect to Delayed Draw Term Loans, the
amounts obtained pursuant to the related Delayed Funding Advance (which amounts
were determined at the time the related Delayed Draw Term Loan was originated),
to be applied to one or more purposes, including taxes and insurance, capital
expenditures for renovation of the related mortgaged property, tenant
improvements and leasing commissions, or debt service.
"Delayed Funding Obligations Account": The account established
pursuant to Section 10.6(a) hereof.
"Deposit": Any Cash or money deposited with the Trustee by the Issuer
on the Closing Date for inclusion as Assets and deposited by the Trustee in the
Unused Proceeds Account on the Closing Date, which shall be equal to
$123,316,156.50.
"Deposit Accounts": The meaning specified in Section 3.3(e)(xii)
hereof.
"Depository" or "DTC": The Depository Trust Company, its nominees, and
their respective successors.
"Determination Date": With respect to the initial Payment Date, April
20, 2007, and thereafter quarterly on each January 20, April 20, July 20 and
October 20 (or if such date is not a Business Day, then the next succeeding
Business Day).
"Disqualified Transferee": The meaning specified in Section 2.5(l)
hereof.
"Dollar," "U.S. $" or "$": A U.S. dollar or other equivalent unit in
Cash.
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"Due Date": Each date on which a Scheduled Distribution is due on a
Pledged Obligation.
"Due Period": With respect to any Payment Date, the period commencing
on the day immediately succeeding the second preceding Determination Date (or
commencing on the Closing Date, in the case of the Due Period relating to the
first Payment Date) and ending on and including the Determination Date
immediately preceding such Payment Date.
"Effective Date": The date which is the earlier of (i) the 270th day
after the Closing Date and (ii) the first date on which the Aggregate Principal
Balance of the Pledged Collateral Debt Securities (including for this purpose
the unfunded portion of the Delayed Draw Term Loans) is at least equal to the
Minimum Ramp-Up Amount.
"Eligibility Criteria": The criteria set forth below, which if
satisfied with respect to a loan, security or other obligation at the time it is
purchased, as evidenced by an Officer's Certificate of the Collateral Manager
delivered to the Trustee as of the date of such acquisition, will make such
loan, security or other obligation eligible for purchase by the Issuer as a
Collateral Debt Security:
(i) it is a Loan or security related to commercial real estate;
(ii) it is issued by an issuer incorporated or organized under
the laws of, and if it is a Loan or a Preferred Equity Security it is
secured by or related to property located in, (A) the United States
(or a commonwealth, territory or possession of the United States) or
Canada, or (B) except with respect to Mezzanine Loans, Participations,
Preferred Equity Securities and REIT Debt Securities, under the laws
of Aruba, the Bahamas, Bermuda, the British Virgin Islands, the Cayman
Islands, Guernsey, Jersey, Luxembourg, Mexico or the Netherlands
Antilles; provided that, in the case of any Loan or Preferred Equity
Security described in clause (B) of this paragraph (ii), (a) the
Issuer (or the Trustee or the related servicer, as applicable) is
permitted, under the relevant laws of the related jurisdiction, to
foreclose on the collateral securing such Loan, (b) the Issuer
obtains, and maintains at all times in connection with its ownership
of such Collateral Debt Security, political risk insurance in an
amount not less than the outstanding principal balance of such
Collateral Debt Security, (c) the underlying documents require the
owner of the foreign property securing the Collateral Debt Security to
have insurance against those risks (including, without limitation,
windstorm insurance, if applicable) which at the time of origination
of such loan was consistent with prudent commercial lending practices
with respect to like properties in the same locality and (d) the
issuer under such Collateral Debt Security is obligated, under the
relevant underlying documents, to sweep at least weekly all rent
and/or other collections related to the property securing such
Collateral Debt Security, to one or more lockbox accounts held in the
United States;
(iii) with respect to each CMBS Security, REIT Debt Security, or
CRE CDO Security either (a) substantially all the loans or other
assets backing such
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Collateral Debt Security are secured by collateral substantially all
of which is located in the United States or a commonwealth, territory
or possession of the United States or (b) such CMBS Security, REIT
Debt Security, or CRE CDO Security is rated by each of the Rating
Agencies;
(iv) it provides for periodic payments of interest (or, in the
case of Preferred Equity Securities, dividends or other distributions)
no less frequently than semi-annually;
(v) it has a ▇▇▇▇▇'▇ Rating, a Fitch Rating (except for Loans and
Preferred Equity Securities) and a S&P Rating (and, unless otherwise
agreed by S&P, such S&P Rating does not include the subscript "t");
provided that to the extent permitted under Section 12.2, Loans may be
acquired by the Issuer based on an Estimated Rating;
(vi) its acquisition would not cause the Issuer, the Co-Issuer or
the pool of Pledged Obligations to be required to register as an
investment company under the Investment Company Act; and if the issuer
of such Collateral Debt Security is excepted from the definition of an
"investment company" solely by reason of Section 3(c)(1) of the
Investment Company Act, then either (a) such Collateral Debt Security
does not constitute a "voting security" for purposes of the Investment
Company Act or (b) the aggregate amount of such Collateral Debt
Security held by the Issuer is less than 10% of the entire issue of
such Collateral Debt Security;
(vii) (a) if it is a Loan (including a Mezzanine Loan and a Rake
Bond but excluding an ARD Loan), no commercial mortgage loan
underlying, securing or constituting such Collateral Debt Security has
a maturity date (including any extension option) that is later than
ten years prior to the Stated Maturity, (b) if it is a REIT Debt
Security, such REIT Debt Security (without regard to the maturities of
any collateral underlying such REIT Debt Security) does not have a
stated final maturity date or rated final distribution date later than
the Stated Maturity, (c) if it is an ARD Loan, (i) the anticipated
repayment date of such ARD Loan is not later than 20 years prior to
the Stated Maturity and (ii) the maturity date of such ARD Loan is not
less than three years prior to the Stated Maturity and (d) if it is a
Preferred Equity Security, the date (after giving effect to all
permissible extensions thereof) by which all distributions on such
Preferred Equity Security attributable to the return of capital by its
governing documents are required to be made is not later than ten
years prior to the Stated Maturity (after giving effect to all
anticipated settlement concerns in connection with such return of
capital);
(viii) it is not prohibited under its Underlying Instruments from
being purchased by the Issuer and pledged to the Trustee;
(ix) it is not, and does not provide for conversion or exchange
into, "margin stock" (as defined under Regulations T, U or X by the
Board of Governors of the Federal Reserve System) at any time over its
life;
-37-
(x) it is not the subject of (a) any Offer by the issuer of such
security or by any other person made to all of the holders of such
security to purchase or otherwise acquire such security (other than
pursuant to any redemption in accordance with the terms of the related
Underlying Instruments) or to convert or exchange such security into
or for Cash, securities or any other type of consideration or (b) any
solicitation by an issuer of such security or any other person to
amend, modify or waive any provision of such security or any related
Underlying Instruments, and has not been called for redemption;
(xi) it is not an Equity Security, Principal Only Security,
Step-Up Security, Market Value Collateralized Debt Obligation or any
security the repayment of which is subject to substantial non-credit
related risk, as determined by the Collateral Manager in its
reasonable business judgment;
(xii) except with respect to Preferred Equity Securities, it is
not a security that by the terms of its Underlying Instruments
provides for conversion or exchange (whether mandatory or at the
option of the issuer or the holder thereof) into an Equity Security at
any time prior to its maturity;
(xiii) it is not a financing by a debtor-in-possession in any
insolvency proceeding;
(xiv) except with respect to Delayed Draw Term Loans, it will not
require the Issuer to make any future payments after the initial
purchase thereof;
(xv) if it is a Delayed Draw Term Loan, an amount equal to the
excess, if any, of the sum of (x) the aggregate amount of the Issuer's
remaining future funding obligations with respect to such Delayed Draw
Term Loan and (y) the aggregate of the Issuer's future funding
obligations in respect of all other Delayed Draw Term Loans then
currently owned by the Issuer, over the Aggregate Class A-1AR Undrawn
Amount is deposited into the Delayed Draw Funding Obligations Account
on the date such Delayed Draw Term Loan is acquired by the Issuer;
(xvi) its acquisition will be in compliance with Section 206 of
the Advisers Act;
(xvii) except with respect to Partially Deferred Loans, it does
not have any outstanding deferred or capitalized interest;
(xviii) it is not a security that, in the Collateral Manager's
reasonable business judgment, has a significant risk of declining in
credit quality or, with lapse of time or notice, becoming a Defaulted
Security;
(xix) it is not a Defaulted Security (as determined by the
Collateral Manager after reasonable inquiry);
-38-
(xx) if it is a Participation, (a) it is a real estate related
Participation, that is subject to the Servicing Agreement, (b) either
(i) the Underlying Term Loan, A Note or B Note has been included in a
transaction that would be classified as a CMBS Conduit Security or a
CMBS Large Loan Security or (ii) the Underlying Term Loan is serviced
by an Accepted Loan Servicer pursuant to a commercial mortgage
servicing arrangement, which includes the standard servicing
provisions found in CMBS Securities transactions, (c) the requirements
regarding the representations and warranties with respect to the
Underlying Term Loan, the Underlying Mortgage Property (as applicable)
and the Participation set forth in Section 16.5 hereof have been met
and (d) the terms of the Underlying Instruments are consistent with
the terms of similar Underlying Instruments in the CMBS Securities
industry; (provided that, in the case of any Participation with
respect to which the aggregate principal balance of such Loan and all
other mortgage loans and mezzanine loans, as applicable, secured by or
related to the same real estate asset is below U.S.$30,000,000, it is
presumed that such terms do not include requirements for independent
managers or non-consolidation opinions in respect of the borrower);
(xxi) if it is a B Note, (a) it is a real estate related B Note
that is subject to the Servicing Agreement, (b) either (i) the related
A Note has been included in a transaction that would be classified as
a CMBS Conduit Security or a CMBS Large Loan Security or (ii) the B
Note is serviced by an Accepted Loan Servicer pursuant to a commercial
mortgage servicing arrangement, which includes the standard servicing
provisions found in CMBS Securities transactions, (c) the requirements
regarding the representations and warranties with respect to the
Underlying Term Loan, the Underlying Mortgage Property (as applicable)
and the B Note set forth in Section 16.5 hereof have been met and (d)
the terms of the Underlying Instruments are consistent with the terms
of similar Underlying Instruments in the CMBS Securities industry;
(provided that, in the case of any B Note with respect to which the
aggregate principal balance of such Loan and all other mortgage loans
and mezzanine loans, as applicable, secured by or related to the same
real estate asset is below U.S.$30,000,000, it is presumed that such
terms do not include requirements for independent managers or
non-consolidation opinions in respect of the borrower);
(xxii) if it is a Mezzanine Loan, (a) it is serviced by an
Accepted Loan Servicer pursuant to the Servicing Agreement, (b) in the
case of any Mezzanine Loan in the form of a participation, the
underlying mezzanine loan is serviced by an Accepted Loan Servicer
pursuant to a commercial mortgage servicing arrangement, which
includes the standard servicing provisions found in CMBS transactions,
(c) the requirements regarding the representations and warranties with
respect to the Underlying Term Loan, the Underlying Mortgage Property
(as applicable) and the Mezzanine Loan set forth in Section 16.5
hereof have been met (including, in the case of a Mezzanine Loan in
the form of a participation, any additional representations and
warranties applicable thereto) and (d) the terms of the Underlying
Instruments are consistent with the terms of similar Underlying
Instruments in the CMBS Securities industry with respect to Mezzanine
Loans;
-39-
(provided that, in the case of any Mezzanine Loan with respect to
which the principal balance of such Loan and all other mortgage loans
and mezzanine loans, as applicable secured by or related to the same
real estate asset is below U.S.$30,000,000, it is presumed that such
terms do not include requirements for independent managers or
non-consolidation opinions in respect of the borrower);
(xxiii) if it is a Whole Loan, (a) it is a real estate related
Whole Loan that is serviced by an Accepted Loan Servicer pursuant to
the Servicing Agreement, (b) in the case of any Whole Loan in the form
of a participation, the Underlying Term Loan is serviced by an
Accepted Loan Servicer pursuant to a commercial mortgage servicing
arrangement, which includes the standard servicing provisions found in
CMBS transactions, (c) the requirements regarding the representations
and warranties with respect to the Loan and the Underlying Mortgage
Property (as applicable) set forth in Section 16.5 hereof have been
met (including, in the case of a Whole Loan in the form of a
participation, any additional representations and warranties
applicable thereto) and (d) unless the Rating Agency Condition is
satisfied, the terms of the Underlying Instruments are consistent with
the terms of similar Underlying Instruments in the CMBS Securities
industry; (provided that, in the case of any Whole Loan with respect
to which the aggregate principal balance of such Loan and all other
mortgage loans and mezzanine loans, as applicable, secured by or
related to the same real estate asset is below U.S.$30,000,000, it is
presumed that such terms do not include requirements for independent
managers or non-consolidation opinions in respect of the borrower);
(xxiv) if it is a Preferred Equity Security, (a) it is serviced
by an Accepted Loan Servicer pursuant to the Servicing Agreement and
(b) the requirements set forth in Section 16.5 hereof regarding the
representations and warranties with respect to the Preferred Equity
Security and the underlying real estate assets (as applicable) have
been met;
(xxv) if it is a Participation, or any other Loan in the form of
a participation, except with respect to any Loan with respect to which
the Rating Agency Condition with respect to S&P has been satisfied,
the related Participating Institution is either a "special purpose
entity" meeting S&P's then-published criteria for bankruptcy-remote
special purpose entities (but excluding any such criteria requiring
non-consolidation opinions) or a "qualified institutional lender" as
such terms are typically defined in the Underlying Instruments related
to participations or an entity that has a long-term unsecured debt
rating from S&P of "A-" or higher and a long-term unsecured debt
rating from Moody's of "A3" or higher; provided that, notwithstanding
anything herein the contrary, each of a securitization trust, a CDO
issuer or a similar securitization vehicle and Arbor Realty
Participation, LLC, a Delaware limited liability company, for so long
as the separateness provisions of its organizational documents have
not been amended (unless the Rating Agency Condition was satisfied in
connection with such amendment), will be deemed a "special purpose
entity" meeting S&P's then-published criteria for bankruptcy-remote
special purpose entities for purposes of the Eligibility Criteria and
the Collateral Quality Tests;
-40-
(xxvi) it is U.S. Dollar denominated and may not be converted
into a security payable in any other currencies;
(xxvii) it is one of the Specified Types;
(xxviii) if it is a Loan or CMBS Security, the principal balance
of the Loan or CMBS Security has not been reduced by a realized loss,
expected loss, appraisal event, appraisal reduction or similar item
since initial issuance, other than a Loan as to which a workout or
other restructuring has occurred but as to which no such reduction has
occurred since the completion of such workout or restructuring;
(xxix) any requirements regarding opinions with respect to
certain purchases of Collateral Debt Securities as provided in this
Indenture have been met;
(xxx) if it is a CMBS Security or a CRE CDO Security, at the time
of its acquisition by the Issuer, it was rated investment grade by at
least one Rating Agency;
(xxxi) except with respect to CMBS Securities, CRE CDO Securities
and REIT Debt Securities, it may not be collateralized or backed by
interests on Healthcare Properties;
(xxxii) its acquisition, ownership, enforcement and disposition
will not cause the Issuer to fail to be a Qualified REIT Subsidiary
unless an appropriate tax opinion is delivered by Cadwalader,
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP or another nationally recognized tax counsel
experienced in such matters that the Issuer will be treated as a
foreign corporation that is not engaged in a trade or business in the
United States for U.S. federal income tax purposes;
(xxxiii) if it is a CMBS Security or a CRE CDO Security, it does
not have a stated maturity or a rated final distribution date
scheduled to occur more than five (5) years later than the Stated
Maturity; provided that, with respect to any such security that has a
stated maturity or a rated final distribution date scheduled to occur
later than the Stated Maturity, (a) if it is a CMBS Security, such
CMBS Security is rated at least "A3" by Moody's (and, if rated "A3,"
it is not on credit watch with negative implications), and (b) if it
is a CRE CDO Security, such CRE CDO Security is rated at least "Aa2"
by Moody's (and, if rated "Aa2," it is not on credit watch with
negative implications);
(xxxiv) if such Collateral Debt Security has attached reciprocal
"buy/sell" rights as a dispute resolution mechanism, such rights in
favor of the Issuer are freely assignable by the Issuer to any of its
affiliates;
(xxxv) if it is a CRE CDO Security, (a) it is rated at least "AA"
by S&P (and, if rated "AA," it is not on credit watch with negative
implications) and (b) the Underlying Instruments related to such CRE
CDO Security do not (1) permit
-41-
the payment of interest thereon to be deferred or capitalized or (2)
allow for the issuance of identical securities in place of payments of
interest in Cash;
(xxxvi) except with respect to an Interest Only Security, it
provides for the repayment of principal at not less than par no later
than upon its maturity or upon redemption, acceleration or its full
prepayment;
(xxxvii) if it is a CRE CDO Security, neither the Collateral
Manager nor any of its affiliates is acting as a collateral manager
for the related issuer;
(xxxviii) it does not provide for any payments which are or will
be subject to deduction or withholding for or on account of any
withholding or similar tax, unless the issuer of such security is
required to make "gross up" payments that ensure that the net amount
actually received by the Issuer (free and clear of taxes, whether
assessed against such obligor or the Issuer) will equal the full
amount that the Issuer would have received had no such deduction or
withholding been required; and
(xxxix) if it is a Future Advance Loan other than the Homewood
Mountain Resort Loan, either (A) the Rating Agency Condition has been
satisfied with respect thereto, or (B) each related Unfunded Other
Loan is either (x) held by an entity with a long-term unsecured debt
rating of "A-" or higher from S&P and "A3" or higher from Moody's,
each of the conditions set forth in clauses (C)(ii), (iii) and (iv)
below are satisfied and the Arbor Parent has agreed to indemnify the
Issuer with respect to losses arising from the failure of such party
to fulfill its future funding obligations under the related Other Loan
in accordance with the related loan documents or (y) held by a CDO
issuer, one or more of the debt obligations of which is rated by S&P
and Moody's, the condition set forth in clause (C)(ii) below is
satisfied and either (1) the condition set forth in clause (C)(iii)
below is satisfied or (2) an entity with a long-term unsecured debt
rating of "A-" or higher from S&P and "A3" of higher from Moody's has
agreed to indemnify the Issuer with respect to losses arising from the
failure of such party to fulfill its future funding obligations under
the related Other Loan in accordance with the related loan documents,
and in any case under clause (y), at the time the Issuer acquires the
Future Advance Loan, the related Seller represents to the Issuer (to
the best of its knowledge based on documentation available to such
Seller) that the Unfunded Other Loan is a Covered Unfunded Other Loan,
or (C) all of the following conditions are satisfied:
(i) the holder of the Other Loan (the "Future Advance
Funder") is Arbor Realty Limited Partnership, the Arbor Parent, Arbor
Realty Funding LLC, Arbor Realty Mezzanine LLC or a special purpose
entity directly or indirectly wholly owned by the Arbor Parent;
(ii) the Issuer does not have any additional funding
obligation under the related Other Loan by virtue of holding the
Future Advance Loan;
-42-
(iii) the borrower under the Future Advance Loan has agreed
(a) to request such advances under the related Other Loan solely from
a Person other than the Issuer (so long as the Issuer does not own the
related Other Loan) and (b) not to assert any defense to, or any right
of offset against, payment of the Future Advance Loan as the result of
any breach by the maker or holder of the related Other Loan in
connection with the future funding obligation, and unless the holder
of the Future Advance Loan and the related Other Loan are then the
same Person, not to assert any claim against the holder of the Future
Advance Loan in connection with the future funding obligation under
the related Other Loan;
(iv) the Future Advance Funder has agreed in writing with
the Issuer not to transfer the related Other Loan, except in
connection with a financing, or an Approved Lender's rights, under any
Warehouse Facility of the Future Advance Funder pursuant to which such
Other Loan has been sold or pledged (or in satisfaction or settlement
of such lender's rights currently or in the future), without
satisfaction of the Rating Agency Condition unless such transferee
either (x) is a CDO issuer one or more of the debt obligations of
which is rated by S&P and ▇▇▇▇▇'▇, or (y) has a long-term unsecured
debt rating of "A-" or higher from S&P or is otherwise approved by S&P
and a long-term unsecured debt rating of "A3" or higher from ▇▇▇▇▇'▇
or is otherwise approved by ▇▇▇▇▇'▇;
(v) an indemnitor (which may, but need not, be the Arbor
Parent or the holder of the Other Loan) has agreed to guarantee the
funding of such obligation and indemnify the Issuer with respect to
any losses arising from the failure of such party to fulfill its
future funding obligations under the related Other Loan in accordance
with the related loan documents; provided that such indemnitor (i) has
a long-term unsecured debt rating of "A-" or higher from S&P and a
long-term unsecured debt rating of "A3" or higher from ▇▇▇▇▇'▇, or
(ii) has obtained and delivered to the Issuer a Qualified Letter of
Credit in an amount not less than the amount of the aggregate future
funding obligation under the related Other Loan; and
(vi) after acquiring such Future Advance Loan the aggregate
Principal Balance of all Future Advance Loans (other than any Future
Advance Loan with respect to which the Rating Agency Condition with
respect to ▇▇▇▇▇'▇ has been satisfied) owned by the Issuer with
respect to which the related Unfunded Other Loans are Construction
Loans will be less than or equal to 10% of the Aggregate Collateral
Balance.
Notwithstanding the foregoing provisions of this definition, with
respect to any Collateral Debt Security acquired by the Issuer on or prior to
the Closing Date, if any of the Eligibility Criteria above pertains to the
subject matter of a representation and warranty under the related Collateral
Debt Securities Purchase Agreement as to which an exception has been disclosed
in the related exception schedule, such Collateral Debt Security shall be deemed
to satisfy such criterion notwithstanding such exception.
-43-
"Eligible Account": The meaning given to such term in the Servicing
Agreement.
"Eligible Investments": Any Dollar-denominated investment that, at the
time it is Granted to the Trustee (directly or through a Securities Intermediary
or bailee), is Registered and is one or more of the following obligations or
securities:
(i) direct obligations of, and obligations the timely payment of
principal of and interest on which is fully and expressly guaranteed
by, the United States, or any agency or instrumentality of the United
States, the obligations of which are expressly backed by the full
faith and credit of the United States;
(ii) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by, or federal funds sold by, any
depository institution or trust company incorporated under the laws of
the United States or any state thereof or the District of Columbia
(including the Trustee or the commercial department of any successor
Trustee, as the case may be; provided that such successor otherwise
meets the criteria specified herein) and subject to supervision and
examination by federal and/or state banking authorities so long as the
commercial paper and/or the debt obligations of such depositary
institution or trust company (or, in the case of the principal
depositary institution in a holding company system, the commercial
paper or debt obligations of such holding company) at the time of such
investment or contractual commitment providing for such investment
have a credit rating not less than "A1" by ▇▇▇▇▇'▇, "A+" by Fitch and
"AA-" by S&P, in the case of long-term debt obligations, and "P-1" by
▇▇▇▇▇'▇, "F1" by Fitch and "A-1+" by S&P for Eligible Investments
which have a maturity of 30 days or less;
(iii) unleveraged repurchase or forward purchase obligations with
respect to (a) any security described in clause (i) above or (b) any
other security issued or guaranteed by an agency or instrumentality of
the United States of America, in either case entered into with a
depository institution or trust company (acting as principal)
described in clause (ii) above (including the Trustee or the
commercial department of any successor Trustee, as the case may be;
provided that such person otherwise meets the criteria specified
herein) or entered into with a corporation (acting as principal) whose
long-term rating is not less than "Aa2" by ▇▇▇▇▇'▇, "AA" by Fitch and
"AAA" by S&P (for so long as any Notes rated by S&P are Outstanding)
or whose short-term credit rating is not less than "P-1" by ▇▇▇▇▇'▇,
"F1" by Fitch and "A-1+" by S&P for Eligible Investments which have a
maturity of 30 days or less (for so long as any Notes rated by S&P are
Outstanding); provided that the issuer thereof must also have at the
time of such investment a long-term credit rating of not less than
"Aa2" by ▇▇▇▇▇'▇, "A+" by Fitch and "AAA" by S&P (for so long as any
Notes rated by S&P are Outstanding);
(iv) registered securities bearing interest or sold at a discount
issued by any corporation incorporated under the laws of the United
States or any state thereof or the District of Columbia that has a
credit rating of not less than "Aa2"
-44-
by ▇▇▇▇▇'▇, "AA" by Fitch and "AAA" by S&P (for so long as any Notes
rated by S&P are Outstanding) at the time of such investment or
contractual commitment providing for such investment;
(v) commercial paper or other similar short-term obligations
(including that of the Trustee or the commercial department of any
successor Trustee, as the case may be, or any affiliate thereof;
provided that such person otherwise meets the criteria specified
herein) having at the time of such investment a credit rating of "P-1"
by ▇▇▇▇▇'▇, "F1+" by Fitch and "A-1+" by S&P (for so long as any Notes
rated by S&P are Outstanding); provided, further, that the issuer
thereof must also have at the time of such investment a senior
long-term debt rating of not less than "Aa3" by ▇▇▇▇▇'▇, "AA" by Fitch
and "AA" by S&P (for so long as any Notes rated by S&P are
Outstanding);
(vi) a reinvestment agreement issued by any bank (if treated as a
deposit by such bank), or a Registered guaranteed investment or
reinvestment agreement issued by an insurance company or other
corporation or entity, in each case that has a credit rating of not
less than "P-1" by ▇▇▇▇▇'▇, "F1+" by Fitch and "A-1+" by S&P or "A-1"
by S&P for Eligible Investments which have a maturity of 30 days or
less (for so long as any Notes rated by S&P are Outstanding); provided
that the issuer thereof must also have at the time of such investment
a long-term credit rating of not less than "Aa2" by ▇▇▇▇▇'▇, "AA" by
Fitch and "AAA" by S&P (for so long as any Notes rated by S&P are
Outstanding); and
(vii) any other investment similar to those described in clauses
(i) through (vi) above that (1) each of ▇▇▇▇▇'▇ and S&P has confirmed
may be included in the portfolio of Pledged Obligations as an Eligible
Investment without adversely affecting its then-current ratings on the
Notes and (2) has a long-term credit rating of not less than "Aa2" by
▇▇▇▇▇'▇, "AA" by Fitch and "AAA" by S&P (for so long as any Notes
rated by S&P are Outstanding) or a credit rating of not less than
"P-1" by ▇▇▇▇▇'▇, "F1" by Fitch and "A-1+" by S&P or "A-1" by S&P for
Eligible Investments which have a maturity of 30 days or less (for so
long as any Notes rated by S&P are Outstanding);
provided that mortgage-backed securities and Interest Only Securities shall not
constitute Eligible Investments; and provided, further, that (a) Eligible
Investments acquired with funds in the Collection Accounts shall include only
such obligations or securities as mature no later than the Business Day prior to
the next Payment Date succeeding the acquisition of such obligations or
securities, (b) Eligible Investments shall not include obligations bearing
interest at inverse floating rates, (c) Eligible Investments shall be treated as
indebtedness for U.S. federal income tax purposes and such investment shall not
cause the Issuer to fail to be treated as a Qualified REIT Subsidiary (unless
the Issuer has previously received an opinion of Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
LLP or another nationally recognized tax counsel experienced in such matters
opining that the Issuer will be treated as a foreign corporation that will not
be treated as engaged in a trade or business in the United States for U.S.
federal income tax purposes, in which case the investment will not cause the
Issuer to be treated as a foreign corporation that will
-45-
be treated as engaged in a trade or business in the United States for U.S.
federal income tax purposes), (d) Eligible Investments shall not be subject to
deduction or withholding for or on account of any withholding or similar tax,
unless the payor is required to make "gross up" payments that ensure that the
net amount actually received by the Issuer (free and clear of taxes, whether
assessed against such obligor or the Issuer) will equal the full amount that the
Issuer would have received had no such deduction or withholding been required,
(e) Eligible Investments shall not be purchased for a price in excess of par,
shall not have an S&P rating which contains a subscript "r," "t," "p," "pi" or
"q" and (f) Eligible Investments shall not include Margin Stock. Eligible
Investments may be obligations of, and may be purchased from, the Trustee and
its Affiliates, and may include obligations for which the Trustee or an
Affiliate thereof receives compensation for providing services.
For the avoidance of doubt, all credit ratings by Fitch required under
this definition shall be deemed to be Fitch Ratings for all purposes under this
Indenture.
"Entitlement Order": The meaning specified in Section 8-102(a)(8) of
the UCC.
"Equity Security": Any security (other than any Preferred Equity
Security or any asset-backed security structured as a certificate or other form
of beneficial interest) that does not entitle the holder thereof to receive
periodic payments of interest and one or more installments of principal.
"ERISA": The United States Employee Retirement Income Security Act of
1974, as amended.
"Estimated Rating": The ▇▇▇▇▇'▇ Estimated Rating or the S&P Estimated
Rating, as applicable.
"Euroclear": Euroclear Bank S.A./N.V., as operator of the Euroclear
system.
"Event of Default": The meaning specified in Section 5.1 hereof.
"Excepted Assets": (i) The $250 of capital contributed by ARMS Equity
as the holder of the ordinary shares of the Issuer, the $250 transaction fee
paid to the Issuer, together with, in each case, any interest earned thereon and
the bank account in which such monies are held and (ii) the Preferred Shares
Distribution Account and all of the funds and other property from time to time
deposited in or credited to the Preferred Shares Distribution Account.
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"Exchange Security": The meaning specified in Section 12.1(b) hereof.
"Expense Account": The account established pursuant to Section 10.7(a)
hereof.
"Extended Maturity Date": With respect to any Collateral Debt
Security, the maturity date of such Collateral Debt Security, assuming the
exercise of all extension options (if any) that are exercisable at the option of
the related borrower under the terms of such Collateral Debt Security.
-46-
"Extended Weighted Average Maturity": As of any Measurement Date with
respect to the Collateral Debt Securities (other than Defaulted Securities), the
number obtained by (i) summing the products obtained by multiplying (a) the
remaining term to maturity (in years, rounded to the nearest one tenth thereof,
and based on the Extended Maturity Date) of each Collateral Debt Security (other
than Defaulted Securities) by (b) the outstanding Principal Balance at such time
of such Collateral Debt Security and (ii) dividing the sum by the Aggregate
Principal Balance at such time of all Collateral Debt Securities (other than
Defaulted Securities).
"Financial Asset": The meaning specified in Section 8-102(a)(9) of the
UCC.
"Financing Statements": Financing statements relating to the Assets
naming the Issuer, as debtor, and the Trustee, on behalf of the Secured Parties,
as secured party.
"Fitch": Fitch, Inc., Fitch Ratings, Ltd. and their subsidiaries
including Derivative Fitch, Inc. and Derivative Fitch Ltd. and any successor or
successors thereto.
"Fitch Applicable Recovery Rate": With respect to any Collateral Debt
Security that is a CMBS Security, a CRE CDO Security or a REIT Debt Security on
any Measurement Date, an amount equal to the percentage corresponding to the
domicile, original rating, seniority and tranche thickness of such Collateral
Debt Security, as applicable, as currently set forth in the Fitch Recovery Rate
matrix available in the latest version of Fitch's Default Vector model, that can
be downloaded from ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
"Fitch Fixed Rate Excess": As of any Measurement Date, a fraction
(expressed as a percentage) the numerator of which is equal to the product of
(i) the greater of zero and the excess, if any, of the Weighted Average Coupon
over the percentage set forth in the Weighted Average Coupon row in the
applicable column of the Fitch Matrix (which percentage, for the avoidance of
doubt, will vary depending on the then-current levels of the other variables
included in the Fitch Matrix) and (ii) the Aggregate Principal Balance of all
Collateral Debt Securities that are Fixed Rate Securities (excluding all
Defaulted Securities and Written Down Securities) and the denominator of which
is the Aggregate Principal Balance of all Collateral Debt Securities that are
Floating Rate Securities (excluding all Defaulted Securities and Written Down
Securities), multiplying the resulting figure by 360 and then dividing by 365.
As used in this definition, "applicable column" means the column corresponding
to the numbered scenario in the Fitch Matrix, the use of the applicable numbers
or percentages set forth in which would result in satisfaction of the related
Collateral Quality Tests.
"Fitch Loan Diversity Index Score": The amount, determined by the
Collateral Manager on any Measurement Date, equal to the sum of the series of
products obtained for each Collateral Debt Security, by squaring the quotient of
(x) the Principal Balance on such Measurement Date of each such Collateral Debt
Security (and each Cash Security Exposure, if any) and (y) the Aggregate
Principal Balance of all Collateral Debt Securities (and all Cash Security
Exposures, if any) on such Measurement Date, multiplied by 10,000. For purposes
of this definition, on the relevant Measurement Date, the sum of the aggregate
amount held in cash in any account other than the Delayed Funding Obligations
Account plus the excess, if any, of the Aggregate Class A-1AR Undrawn Amount
over the Minimum Class A-1AR Commitment (such sum, the "Available Amount"), will
be divided into one or more "Cash Security
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Exposures." Each Cash Security Exposure will be sized in an amount equal to the
result obtained by averaging the Principal Balance of all Collateral Debt
Securities on such Measurement Date; provided, that if the Available Amount on
such Measurement Date is less than such average, or if there is a portion of the
Available Amount remaining in an amount less than such average, the Cash
Security Exposure or the additional Cash Security Exposure, as applicable,
represented thereby will be sized in the actual amount of such Available Amount
or portion thereof.
"Fitch Loan Diversity Index Test": A test that will be satisfied on
any Measurement Date if the Fitch Loan Diversity Index Score for the Collateral
Debt Securities on such Measurement Date is less than or equal to 500.
"Fitch Matrix": The matrix set forth in Schedule G attached hereto.
"Fitch Minimum Weighted Average Coupon Test": A test that will be
satisfied on any Measurement Date if the Weighted Average Coupon plus the Fitch
Spread Excess, if any, is greater than or equal to the number set forth in the
Weighted Average Coupon row in the applicable column of the Fitch Matrix (which
number, for the avoidance of doubt, will vary depending on the then-current
levels of the other variables included in the Fitch Matrix). As used in this
definition, "applicable column" means the column corresponding to the numbered
scenario in the Fitch Matrix, the use of the applicable numbers or percentages
set forth in which would result in satisfaction of the related Collateral
Quality Tests.
"Fitch Minimum Weighted Average Spread Test": A test that will be
satisfied as of any Measurement Date if the Weighted Average Spread plus the
Fitch Fixed Rate Excess, if any, is greater than or equal to the number set
forth in the Weighted Average Spread row in the applicable column of the Fitch
Matrix (which number, for the avoidance of doubt, will vary depending on the
then-current levels of the other variables included in the Fitch Matrix). As
used in this definition, "applicable column" means the column corresponding to
the numbered scenario in the Fitch Matrix, the use of the applicable numbers or
percentages set forth in which would result in satisfaction of the related
Collateral Quality Tests.
"Fitch Poolwide Expected Loss": The output generated using Fitch's
CREL Surveyor model as applied to all Collateral Debt Securities that are Loans.
"Fitch Poolwide Expected Loss Test": A test that will be satisfied on
any Measurement Date if the Fitch Poolwide Expected Loss is equal to or less
than the percentage set forth in the Fitch Poolwide Expected Loss row in the
applicable column of the Fitch Matrix (which percentage, for the avoidance of
doubt, will vary depending on the then-current levels of the other variables
included in the Fitch Matrix). As used in this definition, "applicable column"
means the column corresponding to the numbered scenario in the Fitch Matrix, the
use of the applicable numbers or percentages set forth in which would result in
satisfaction of the related Collateral Quality Tests.
"Fitch Rating": With respect to any Collateral Debt Security,
(i) if such Collateral Debt Security is rated by Fitch, the Fitch
Rating shall be such rating;
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(ii) if such Collateral Debt Security is not rated by Fitch and a
rating is published by both S&P and ▇▇▇▇▇'▇, the ▇▇▇▇▇ Rating shall be
the lower of such ratings; and, except with respect to any Loan, if a
rating is published by only one of S&P and ▇▇▇▇▇'▇, the Fitch Rating
shall be that published rating by S&P or ▇▇▇▇▇'▇, as the case may be;
or
(iii) if the Fitch Rating cannot be assigned in accordance with
clauses (i) or (ii) above, the Issuer (or the Collateral Manager on
behalf of the Issuer) shall apply to Fitch for a credit assessment
which thereafter shall be the Fitch Rating;
provided that (x) 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 rating subcategory below such rating by that Rating Agency,
and (y) 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 (z) notwithstanding the
rating definition described above, Fitch reserves the right to issue a rating
estimate for any Collateral Debt Security at any time.
"Fitch Spread Excess": As of any Measurement Date, a fraction
(expressed as a percentage), the numerator of which is equal to the product of
(i) the greater of zero and the excess, if any, of the Weighted Average Spread
over the percentage set forth in the Weighted Average Spread row in the
applicable column of the Fitch Matrix (which percentage, for the avoidance of
doubt, will vary depending on the then-current levels of the other variables
included in the Fitch Matrix) and (ii) the Aggregate Principal Balance of all
Collateral Debt Securities that are Floating Rate Securities (excluding all
Defaulted Securities and Written Down Securities) and the denominator of which
is the Aggregate Principal Balance of all Collateral Debt Securities that are
Fixed Rate Securities (excluding all Defaulted Securities and Written Down
Securities), multiplying the resulting figure by 365 and then dividing by 360.
As used in this definition, "applicable column" means the column corresponding
to the numbered scenario in the Fitch Matrix, the use of the applicable numbers
or percentages set forth in which would result in satisfaction of the related
Collateral Quality Tests.
"Fixed Rate Excess": The ▇▇▇▇▇'▇ Fixed Rate Excess, the S&P Fixed Rate
Excess or the Fitch Fixed Rate Excess, as the context requires.
"Fixed Rate Security": Any Collateral Debt Security (including,
without limitation, an Above Cap Security) other than a Floating Rate Security.
"Floating Rate Security": Any Collateral Debt Security which bears
interest based upon a floating rate index (including a floating rate index
subject to a cap but other than an Above Cap Security); provided that, for
purposes of calculating each Fixed Rate Excess, each Spread Excess, the Weighted
Average Coupon and the Weighted Average Spread, any Covered Fixed Rate Security
shall be deemed to be a Floating Rate Security and that, for purposes of
calculating each Spread Excess and the Weighted Average Spread, such Covered
Fixed Rate
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Security shall be assumed to have a spread above LIBOR equal to the spread over
the London interbank offered rate for U.S. Dollar deposits in Europe for the
related swap agreement.
"Form-Approved Asset Specific Hedge": Any Asset Specific Hedge (a) the
documentation of which conforms (but for the amount and timing of periodic
payments, the notional amount, the effective date, the termination date and
other similarly necessary changes) to a form for which satisfaction of the
Rating Agency Condition was previously received (as certified to the Trustee by
the Collateral Manager); provided that any Rating Agency may withdraw its
approval of a form at any time (which, for the avoidance of doubt, will not
affect any Form-Approved Asset Specific Hedge entered into prior to the time of
such withdrawal) and (b) as to which there are no upfront payments required to
be made thereunder by the Issuer.
"Future Advance Funder": The meaning specified in clause (xxxix)(C)(i)
of the definition of Eligibility Criteria.
"Future Advance Loan": Any Loan acquired by the Issuer by purchase
(referred to solely for purposes of this definition as the "Issuer's Loan") with
respect to which, at the time of such acquisition and for so long as the Issuer
owns such Loan, there is outstanding and owned by a Person other than the Issuer
one or more other Loans to the same borrower that was made by the maker of the
Issuer's Loan (each such Loan, an "Other Loan") if with respect to such Other
Loan both (i) either it (A) is secured by the same mortgage or deed of trust on
the same underlying mortgage property as the Issuer's Loan or (B) if the
Issuer's Loan is a participation interest in a Mezzanine Loan, is secured by the
same pledged collateral, and (ii) there exists a continuing obligation on the
part of the holder of at least one Other Loan after the Closing Date to provide
additional funding to the borrower under such Other Loan, upon the terms and
conditions of the underlying loan documents for such Other Loan (each such Other
Loan, an "Unfunded Other Loan").
"GAAP": The meaning specified in Section 6.3(k) hereof.
"General Intangible": The meaning specified in Section 9-102(a)(42) of
the UCC.
"Global Securities": The Rule 144A Global Securities and the
Regulation S Global Securities.
"Governing Documents": With respect to (i) the Issuer, the memorandum
and articles of association of the Issuer, as amended and restated and/or
supplemented and in effect from time to time and certain resolutions of its
Board of Directors and (ii) all other Persons, the articles of incorporation,
certificate of incorporation, by-laws, certificate of limited partnership,
limited partnership agreement, limited liability company agreement, certificate
of formation, articles of association and similar charter documents, as
applicable to any such Person.
"Government Items": A security (other than a security issued by the
Government National Mortgage Association) issued or guaranteed by the United
States of America or an agency or instrumentality thereof representing a full
faith and credit obligation of the United States of America and, with respect to
each of the foregoing, that is maintained in book-entry form on the records of a
Federal Reserve Bank.
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"Grant": To grant, bargain, sell, warrant, alienate, remise, demise,
release, convey, assign, transfer, mortgage, pledge, create and grant a security
interest in and right of set-off against, deposit, set over and confirm. A Grant
of the Pledged Obligations or of any other security or instrument shall include
all rights, powers and options (but none of the obligations) of the granting
party thereunder, including without limitation the immediate continuing right to
claim, collect, receive and take receipt for principal and interest payments in
respect of the Pledged Obligations (or any other security or instrument), and
all other Monies payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights and
options, to bring Proceedings in the name of the granting party or otherwise,
and generally to do and receive anything that the granting party is or may be
entitled to do or receive thereunder or with respect thereto.
"Hedge Agreement": Collectively, one or more interest rate cap
agreements, interest rate floor agreements, interest rate basis swap agreements,
Interest Rate Swap Agreements (including Asset Specific ▇▇▇▇▇▇), Cash Flow Swap
Agreements or similar agreements, including any related ISDA Master Agreement
(including any schedule and Hedge Counterparty Credit Support thereto) and
confirmations, entered into between the Issuer and one or more Hedge
Counterparties from time to time and any additional or replacement interest rate
cap or swap agreements or other agreements that address interest rate exposure,
basis risk or payment frequency exposure entered into from time to time between
the Issuer and each Hedge Counterparty in accordance with the terms hereof, as
the same may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Hedge Collateral Account": Each trust account established pursuant to
Section 16.1(e) hereof.
"Hedge Counterparty": Any institution or institutions with whom the
Issuer enters into any Hedge Agreements.
"Hedge Counterparty Collateral Threshold Rating": With respect to a
person as an issuer or with respect to the debt of such person, as the case may
be, (i) with respect to a Person as an issuer or with respect to the long-term
senior unsecured debt of such Person, "A" and the short-term debt of such Person
is rated at least "F1", in each case by Fitch (for so long as any Notes are
Outstanding and are rated by Fitch); (ii) with respect to a Person as an issuer
or with respect to the long-term senior unsecured debt of such ▇▇▇▇▇▇, "▇▇" and
not on "watch for downgrade" (and the short-term debt of such Person is rated
"P-1" and not on "watch for downgrade") or "Aa3" and not on "watch for
downgrade" (if only the long-term debt obligations of such Person are rated by
▇▇▇▇▇'▇) (for so long as any Notes are Outstanding and rated by ▇▇▇▇▇'▇); and
(iii) a short-term debt rating of "A-1" by S&P, or, if such Person does not have
a short-term debt rating, with respect to such Person as an issuer or with
respect to the long-term senior unsecured debt of such Person, "A+" by S&P (for
so long as any Notes are Outstanding and are rated by S& P); provided that,
should a Rating Agency effect an overall downward adjustment of its short-term
or long-term ratings, then the applicable Hedge Counterparty Collateral
Threshold Rating shall be downwardly adjusted accordingly; provided, further,
that any such adjustment to a rating shall be subject to the prior written
consent of the applicable Rating Agency.
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"Hedge Counterparty Credit Support": With respect to a Hedge
Agreement, the agreement to provide collateral, if necessary, substantially in
the form of the ISDA Credit Support Annex attached to the related Hedge
Agreement.
"Hedge Counterparty Credit Support Provider": The meaning specified in
Section 16.1(a) hereof.
"Hedge Counterparty Required Rating": (i) with respect to a Person as
an issuer or with respect to long-term senior unsecured debt of such Person, (a)
"A1" by ▇▇▇▇▇'▇ to the extent such Person has a long-term rating only (for so
long as any Notes are Outstanding and are rated by ▇▇▇▇▇'▇); or (b) "A2" by
▇▇▇▇▇'▇ to the extent such Person has both a long-term and short-term rating and
the short-term rating is "P-1" (for so long as any Notes are Outstanding and are
rated by ▇▇▇▇▇'▇); (ii) with respect to a Person as an issuer or with respect to
long-term senior unsecured debt of such Person, "BBB+" by Fitch (for so long as
any Notes are Outstanding and are rated by Fitch) and short-term rating of such
Person, of at least "F2" (for so long as any Notes are Outstanding and are rated
by Fitch); and (iii) with respect to a Person as an issuer or with respect to
long-term senior unsecured debt of such Person, "BBB-" by S&P (for so long as
any Notes are Outstanding and are rated by S&P), or short-term rating of such
Person, of "A-3" by S&P (for so long as any Notes are Outstanding and are rated
by S&P); provided that should a Rating Agency effect an overall downward
adjustment of its short-term or long-term ratings, then the applicable Hedge
Counterparty Required Rating shall be downwardly adjusted accordingly; provided,
further, that any adjustment to a rating shall be subject to the prior written
consent of the applicable Rating Agency.
"Hedge Payment Amount": With respect to each Asset Specific Hedge, the
amount of any payment then due and payable thereunder by the Issuer to each
Hedge Counterparty, including without limitation any payments due and payable
upon a termination of such Hedge Agreement.
"Hedge Termination Account": Each trust account established pursuant
to Section 16.1(g) hereof.
"▇▇▇▇▇▇▇▇▇▇ Diversity Test": A test that will be satisfied on any
Measurement Date if the ▇▇▇▇▇▇▇▇▇▇ Score for the Collateral Debt Securities on
such Measurement Date is greater than or equal to the number set forth in the
▇▇▇▇▇▇▇▇▇▇ Score row in the applicable column of the Moody's Matrix (which
number, for the avoidance of doubt, will vary depending on the then current
levels of the other variables included in the Moody's Matrix). As used in this
definition, "applicable column" means the column corresponding to the numbered
scenario in the Moody's Matrix, the use of the applicable numbers or percentages
set forth in which would result in satisfaction of the related Collateral
Quality Tests.
"▇▇▇▇▇▇▇▇▇▇ Score": The amount determined by the Collateral Manager on
any Measurement Date, by dividing (i) one by (ii) the sum of the series of
products obtained for each Collateral Debt Security, by squaring the quotient of
(x) the Principal Balance on such Measurement Date of each such Collateral Debt
Security and (y) the aggregate Principal Balance of all Collateral Debt
Securities on such Measurement Date. For purposes of calculating the ▇▇▇▇▇▇▇▇▇▇
Score, each $1,000,000 increment of all amounts held in cash in any account
other
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than the Delayed Funding Obligations Account plus the excess, if any, of the
Aggregate Class A-1AR Undrawn Amount over the Minimum Class A-1AR Commitment,
shall be treated as a single Collateral Debt Security.
"Highest Auction Price": The meaning specified in Section 12.4(b)(iv)
hereof.
"Holder" or "Securityholder": With respect to any Note, the Person in
whose name such Note is registered in the Notes Register. With respect to any
Preferred Share, the Person in whose name such Preferred Share is registered in
the register maintained by the Share Registrar.
"Holder Subaccount": The meaning specified in Section 18.4 hereof.
"Indenture": This instrument as originally executed and, if from time
to time supplemented or amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof, as so supplemented or
amended.
"Independent": As to any Person, any other Person (including, in the
case of an accountant, or lawyer, a firm of accountants or lawyers and any
member thereof or an investment bank and any member thereof) who (i) does not
have and is not committed to acquire any material direct or any material
indirect financial interest in such Person or in any Affiliate of such Person,
and (ii) is not connected with such Person as an Officer, employee, promoter,
underwriter, voting trustee, partner, director or Person performing similar
functions. "Independent" when used with respect to any accountant may include an
accountant who audits the books of such Person if in addition to satisfying the
criteria set forth above the accountant is independent with respect to such
Person within the meaning of Rule 101 of the Code of Ethics of the American
Institute of Certified Public Accountants.
Whenever any Independent Person's opinion or certificate is to be
furnished to the Trustee such opinion or certificate shall state that the signer
has read this definition and that the signer is Independent within the meaning
hereof.
"Initial Collateral Debt Securities": The Collateral Debt Securities
listed on Schedule I attached hereto.
"Initial Maturity Date": With respect to any Collateral Debt Security,
the maturity date of such Collateral Debt Security without giving effect to any
extension options available under the terms of such Collateral Debt Security.
"Initial Purchaser": Wachovia Capital Markets, LLC, as initial
purchaser of the Notes (other than the Class A-1AR Notes).
"Instrument": The meaning specified in Section 9-102(a)(47) of the
UCC.
"Interest Accrual Period": (a) With respect to the Notes (other than
the Class A-1AR Notes), (i) with respect to the first Payment Date, the period
from and including the Closing Date to but excluding the initial Payment Date in
April 2007 and (ii) with respect to each successive Payment Date, the period
from and including the immediately preceding Payment
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Date to, but excluding, such Payment Date and (b) with respect to the Class
A-1AR Notes and any Class A-1AR Draw, (i) initially the period from and
including the date of any Class A-1AR Draw to, but excluding, the first Payment
Date immediately following such Class A-1AR Draw and (ii) with respect to each
successive Payment Date, the period from and including the immediately preceding
Payment Date to, but excluding, such Payment Date.
"Interest Advance": The meaning specified in Section 10.9(a) hereof.
"Interest Collection Account": The trust account established pursuant
to Section 10.2(a) hereof.
"Interest Coverage Ratio": With respect to the Class A Notes and the
Class B Notes (the "Class A/B Interest Coverage Ratio"), the Class C Notes, the
Class D Notes and the Class E Notes (the "Class C/D/E Interest Coverage Ratio")
or the Class F Notes, the Class G Notes and the Class H Notes (the "Class F/G/H
Interest Coverage Ratio") as of any Measurement Date, the ratio calculated by
dividing:
(1) (i) the sum of (A) Cash standing to the credit of the Expense Account,
plus (B) the Scheduled Distributions of interest (or, in the case of
the Preferred Equity Securities, the scheduled payments of dividends
or other distributions not attributable to the return of capital by
their governing documents) due (in each case regardless of whether the
due date for any such interest (or dividend or other distribution)
payment has yet occurred) in the Due Period in which such Measurement
Date occurs on (x) the Collateral Debt Securities (excluding accrued
and unpaid interest on Defaulted Securities); provided that no
interest (or dividends or other distributions) will be included with
respect to any Collateral Debt Security (including, without
limitation, the deferred or capitalized interest component of a
Partially Deferred Loan) to the extent that such Collateral Debt
Security does not provide for the scheduled payment of interest (or
dividends or other distributions) in Cash and (y) the Eligible
Investments held in the Payment Account, the Collection Accounts, the
Interest Reserve Account, the Delayed Funding Obligations Account and
the Expense Account (whether purchased with Interest Proceeds or
Principal Proceeds), plus (C) any net amount (other than any
termination payments) scheduled to be received by the Issuer from any
Hedge Counterparty under any related Hedge Agreement on or before the
following Payment Date, plus (D) Interest Advances, if any, advanced
by the Advancing Agent or the Backup Advancing Agent, with respect to
the related Payment Date, minus (ii) the sum of (A) any net amount
(other than any termination payments) scheduled to be paid by the
Issuer to any Hedge Counterparty under any related Hedge Agreement on
or before the following Payment Date, plus, without duplication, (B)
any amounts scheduled to be paid pursuant to Section 11.1(a)(i)(1)
through (5) (other than any Senior Collateral Management Fees that the
Collateral Manager has agreed to waive permanently in accordance with
the Collateral Management Agreement); by
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(2) (i) in the case of the Class A/B Interest Coverage Ratio, the sum of
the scheduled interest on the Class A-1 Notes, the Class A-2 Notes and
the Class B Notes payable on the Payment Date immediately following
such Measurement Date plus any Class A-1 Defaulted Interest Amount,
any Class A-2 Defaulted Interest Amount and any Class B Defaulted
Interest Amount payable on the Payment Date immediately following such
Measurement Date plus the Class A-1AR Commitment Fee payable on the
Payment Date immediately following such Measurement Date; (ii) in the
case of the Class C/D/E Interest Coverage Ratio, the amount determined
by the foregoing clause (i) plus the scheduled interest on the Class C
Notes, the Class D Notes and the Class E Notes payable on the Payment
Date immediately following such Measurement Date (including interest
on the Class C Capitalized Interest, the Class D Capitalized Interest
and the Class E Capitalized Interest) plus, without duplication, any
Class C Defaulted Interest Amount, Class D Defaulted Interest Amount
and Class E Defaulted Interest Amount payable on the Payment Date
immediately following such Measurement Date; or (iii) in the case of
the Class F/G/H Interest Coverage Ratio, the amount determined by the
foregoing clause (ii) plus the scheduled interest on the Class F
Notes, the Class G Notes and the Class H Notes payable on the Payment
Date immediately following such Measurement Date (including interest
on the Class F Capitalized Interest, the Class G Capitalized Interest
and the Class H Capitalized Interest) plus, without duplication, any
Class F Defaulted Interest Amount, Class G Defaulted Interest Amount
and Class H Defaulted Interest Amount payable on the Payment Date
immediately following such Measurement Date.
"Interest Coverage Test": Each of the Class A/B Interest Coverage
Test, the Class C/D/E Interest Coverage Test and the Class F/G/H Interest
Coverage Test.
"Interest Distribution Amount": Each of the Class A-1A Interest
Distribution Amount, Class A-1AR Interest Distribution Amount, Class A-2
Interest Distribution Amount, Class B Interest Distribution Amount, Class C
Interest Distribution Amount, Class D Interest Distribution Amount, Class E
Interest Distribution Amount, Class F Interest Distribution Amount, Class G
Interest Distribution Amount and Class H Interest Distribution Amount.
"Interest Only Security": Any security that by its terms provides for
periodic payments of interest on a notional amount and does not provide for the
repayment of a principal amount.
"Interest Proceeds": With respect to any Payment Date, (A) the sum
(without duplication) of (1) all Cash payments of interest (including any
deferred interest and any amount representing the accreted portion of a discount
from the face amount of an Eligible Investment) or dividends and other
distributions (but excluding distributions on Preferred Equity Securities
attributable to the return of capital by their governing documents) received
during the related Due Period on all Collateral Debt Securities other than
Defaulted Securities) (net of the Servicing Fee and other amounts payable in
accordance with the Servicing Agreement) and
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Eligible Investments, including, in the Collateral Manager's commercially
reasonable discretion (exercised as of the trade date), the accrued interest
received in connection with a sale of such Collateral Debt Securities or
Eligible Investments (to the extent such accrued interest was not applied to the
purchase of Substitute Collateral Debt Securities), in each case, excluding any
accrued interest included in Principal Proceeds pursuant to clause (A)(4), (5)
or (7) of the definition of Principal Proceeds, (2) all make whole premiums,
yield maintenance or any interest amount paid in excess of the stated interest
amount of a Collateral Debt Security received during the related Due Period, (3)
all amendment and waiver fees, late payment fees, commitment fees, exit fees,
extension fees and other fees and commissions received by the Issuer during such
Due Period in connection with such Collateral Debt Securities and Eligible
Investments (other than, in each such case, fees and commissions received in
connection with the restructuring of a Defaulted Security or default of
Collateral Debt Securities and Eligible Investments), (4) all payments pursuant
to any Hedge Agreement for the Payment Date immediately following such Due
Period (excluding any amounts payable to the Issuer upon a termination under any
Hedge Agreement during such Due Period), (5) funds in the Unused Proceeds
Account designated as Interest Proceeds by the Collateral Manager pursuant to
Section 10.4(c), (6) funds in the Expense Account designated as Interest
Proceeds by the Collateral Manager pursuant to Section 10.7(a), (7) funds
remaining on deposit in the Expense Account upon redemption of the Notes in
whole, pursuant to Section 10.7(a), (8) except for distributions on Preferred
Equity Securities attributable to the return of capital by their governing
documents and other than as specified in item (1) above, all proceeds received
in respect of equity features, if any, of the Collateral Debt Securities, (9)
Interest Advances, if any, advanced by the Advancing Agent or the Backup
Advancing Agent, with respect to such Payment Date, (10) all payments of
principal on Eligible Investments purchased with proceeds of items (A)(1), (2)
and (3) of this definition, (11) all amounts to be transferred by the Trustee
from each Defeased Collateral Account to the Interest Collection Account in
respect of such Payment Date as directed by the Issuer (or the Collateral
Manager on the Issuer's behalf), (12) any excess proceeds received in respect of
a Collateral Debt Security after required fixed payments are made on the other
classes of securities senior to such Collateral Debt Security to the extent such
proceeds are designated "Interest Proceeds" by the Collateral Manager in its
sole discretion with notice to the Trustee on or before the related
Determination Date and (13) on any Payment Date, all or a portion of the
amounts, as determined by the Collateral Manager in its sole discretion, then on
deposit in the Interest Reserve Account; provided that Interest Proceeds will in
no event include any payment or proceeds specifically defined as "Principal
Proceeds" in the definition thereof, minus (B) (x) the aggregate amount of any
Nonrecoverable Interest Advances that were previously reimbursed to the
Advancing Agent or the Backup Advancing Agent, and the aggregate amount of any
Nonrecoverable Cure Advances reimbursed to the Collateral Manager during the
related Due Period from Interest Proceeds and (y) the aggregate amount of any
Hedge Payment Amounts that were previously paid to the applicable Hedge
Counterparty from Interest Proceeds during the related Due Period as a result of
the early termination of the related Asset Specific Hedge from any call,
redemption and prepayment premiums in accordance with clause (e) of the
definition of Asset Specific Hedge.
"Interest Rate Swap Agreement": An interest rate swap agreement,
including any related ISDA Master Agreement and confirmations, for purposes of
managing the Issuer's interest rate exposure related to the variable rate of
interest applicable to the Notes.
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"Interest Reserve Account": The trust account established pursuant to
Section 10.5 hereof.
"Interest Shortfall": The meaning set forth in Section 10.9(a) hereof.
"Investment Company Act": The United States Investment Company Act of
1940, as amended.
"Irish Paying Agent": J&E Davy, or any successor Irish Paying Agent
under the Irish Paying Agent Agreement.
"Irish Paying Agent Agreement": The agreement between the Issuer and
J&E Davy that will be entered into in the event that the listing of the Notes on
the Irish Stock Exchange is obtained.
"Irish Stock Exchange": The Irish Stock Exchange Limited.
"ISDA": The International Swaps and Derivatives Association, Inc.
"ISDA Credit Support Annex": The credit support annex to the ISDA
Master Agreement.
"ISDA Master Agreement": The 1992 ISDA Master Agreement
(Multicurrency--Cross Border).
"Issuer": Arbor Realty Mortgage Securities Series 2006-1, Ltd., an
exempted company incorporated with limited liability under the laws of the
Cayman Islands, until a successor Person shall have become the Issuer pursuant
to the applicable provisions of this Indenture, and thereafter "Issuer" shall
mean such successor Person.
"Issuer Order" and "Issuer Request": A written order or request (which
may be in the form of a standing order or request) dated and signed in the name
of the Issuer (and the Co-Issuer, if applicable) by an Authorized Officer of the
Issuer (and by an Authorized Officer of the Co-Issuer, if applicable), or by an
Authorized Officer of the Collateral Manager.
"Issuer's Loan": The meaning specified in the definition of Future
Advance Loan.
"LIBOR": The meaning set forth in Schedule J attached hereto.
"LIBOR Determination Date": The meaning set forth in Schedule J
attached hereto.
"Liquidity Facility": A liquidity loan agreement, credit facility
and/or purchase agreement providing for the several commitments of the Liquidity
Providers party thereto in the aggregate to make loans to, or acquire interests
in the assets of, a Holder of Class A-1AR Notes in an aggregate principal amount
at any one time outstanding at least equal to the Class A-1AR Commitment of such
Holder.
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"Liquidity Provider": A bank or other institution or entity that a
Holder of a Class A-1AR Note (or prospective transferee) is entitled under a
Liquidity Facility to borrow from, or sell an interest in assets to.
"List": The meaning specified in Section 12.4(a)(ii) hereof.
"Listed Bidders": The meaning specified in Section 12.4(a)(ii) hereof.
"LLC Managers": The managers of the Co-Issuer duly appointed by the
sole member of the Co-Issuer (or, if there is only one manager of the Co-Issuer
so duly appointed, such sole manager).
"Loan": Any U.S. Dollar-denominated interest in a senior secured or
senior unsecured or senior or junior subordinated loan (including, without
limitation, a mortgage loan, a Whole Loan, an ARD Loan, a Delayed Draw Term
Loan, or a B Note (or other interest in a split loan structure)) or any
Participation interest therein, or any Mezzanine Loan, Single Asset Mortgage
Security, Single Borrower Mortgage Security or Rake Bond.
"London Banking Day": The meaning set forth in Schedule J attached
hereto.
"Majority": With respect to:
(i) any Class of Notes, the Holders of more than 50% of the Aggregate
Outstanding Amount of the Notes of such Class; and
(ii) the Preferred Shares, the Preferred Shareholders representing
more than 50% of the aggregate Notional Amount of the outstanding Preferred
Shares, which are issued and have not been redeemed.
"Mandatory Class A-1AR Draw Date": The earliest to occur of the
following: (i) the last day of the Reinvestment Period; (ii) the occurrence of
an Event of Default described in Section 5.1(f) or 5.1(g); and (iii) the date on
which the Notes are accelerated following any other Event of Default.
"Mandatory Redemption": The meaning specified in Section 9.6 hereof.
"Margin Stock": As defined under Regulation U issued by the Board of
Governors of the Federal Reserve System.
"Market Value": With respect to any date of determination and any
Collateral Debt Security or Eligible Investment, an amount equal to (i) the
median of the bona fide bids for such Collateral Debt Security obtained by the
Collateral Manager at such time from any three nationally recognized dealers,
which dealers are Independent from one another and from the Collateral Manager,
(ii) if the Collateral Manager is in good faith unable to obtain bids from three
such dealers, the lesser of the bona fide bids for such Collateral Debt Security
obtained by the Collateral Manager at such time from any two nationally
recognized dealers chosen by the Collateral Manager, which dealers are
Independent from each other and the Collateral Manager, or (iii) if the
Collateral Manager is in good faith unable to obtain bids from two such dealers,
the
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bona fide bid for such Collateral Debt Security obtained by the Collateral
Manager at such time from any nationally recognized dealer chosen by the
Collateral Manager, which dealer is Independent from the Collateral Manager.
"Market Value Collateralized Debt Obligation": Any collateralized debt
obligation that is valued on the basis of the market value of the underlying
debt obligations rather than the cash flow related to the underlying debt
obligations.
"Maturity": With respect to any Note, the date on which the unpaid
principal of such Note becomes due and payable as therein or herein provided,
whether at the Stated Maturity or by declaration of acceleration or otherwise.
"Maximum Class A-1AR Commitment": The maximum aggregate Class A-1AR
Commitments, which shall equal $100,000,000 on the Closing Date, as such amount
may be decreased as a result of Mandatory Redemptions, Special Amortizations or
redemptions in connection with Rating Confirmation Failures as described in
Section 18.1(e).
"MBIA": MBIA Insurance Corporation or any successor or assignee
thereto.
"Measurement Date": Any of the following: (i) the Closing Date, (ii)
the date of acquisition or disposition of any Collateral Debt Security, (iii)
any date on which any Collateral Debt Security becomes a Defaulted Security,
(iv) each Determination Date, (v) the last Business Day of each calendar month
(other than any calendar month in which a Determination Date occurs) and (vi)
with reasonable notice to the Issuer and the Trustee, any other Business Day
that any Rating Agency or the Holders of at least 66-2/3% of the Aggregate
Outstanding Amount of any Class of Notes requests be a "Measurement Date";
provided that, if any such date would otherwise fall on a day that is not a
Business Day, the relevant Measurement Date will be the immediately preceding
Business Day.
"Mezzanine Loan": A Loan secured by one or more direct or indirect
ownership interests in a company, partnership or other entity owning, operating
or controlling, directly or through subsidiaries or affiliates, one or more
commercial properties, including a participation interest therein.
"Minimum Class A-1AR Commitment": As of any date, the excess, if any,
of (i) the Total Unfunded Delayed Funding Amount over (ii) the amount then on
deposit in the Delayed Funding Obligations Account.
"Minimum Ramp-Up Amount": An amount equal to $600,000,000.
"Minimum Weighted Average Coupon Test": A test that will be satisfied
on any Measurement Date if each of the Moody's Minimum Weighted Average Coupon
Test, the S&P Minimum Weighted Average Coupon Test and the Fitch Minimum
Weighted Average Coupon Test is satisfied as of such Measurement Date.
"Minimum Weighted Average Spread Test": A test that will be satisfied
as of any Measurement Date if each of the Moody's Minimum Weighted Average
Spread Test, the S&P
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Minimum Weighted Average Spread Test and the Fitch Minimum Weighted Average
Spread Test is satisfied as of such Measurement Date.
"Minnesota Collateral": The meaning specified in Section 3.3(a)(v)
hereof.
"Money": The meaning specified in Section 1-201(24) of the UCC.
"Monthly Report": The meaning specified in Section 10.11(c) hereof.
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc., and its successors in
interest.
"Moody's Assigned Rating": A rating determined in accordance with the
definition of "▇▇▇▇▇'▇ Rating" other than the Moody's Estimated Rating.
"Moody's Estimated Rating": The estimated rating for a Collateral Debt
Security determined by the Collateral Manager in accordance with clause (v) of
the definition of "▇▇▇▇▇'▇ Rating,"
"Moody's Fixed Rate Excess": As of any Measurement Date, a fraction
(expressed as a percentage) the numerator of which is equal to the product of
(a) the greater of zero and the excess, if any, of the Weighted Average Coupon
over the percentage set forth in the Weighted Average Coupon row in the
applicable column of the Moody's Matrix (which percentage, for the avoidance of
doubt, will vary depending on the then-current levels of the other variables
included in the Moody's Matrix) and (b) the Aggregate Principal Balance of all
Collateral Debt Securities that are Fixed Rate Securities (excluding all
Defaulted Securities and Written Down Securities) and the denominator of which
is the Aggregate Principal Balance of all Collateral Debt Securities that are
Floating Rate Securities (excluding all Defaulted Securities and Written Down
Securities), multiplying the resulting figure by 360 and then dividing by 365.
As used in this definition, "applicable column" means the column corresponding
to the numbered scenario in the Moody's Matrix, the use of the applicable
numbers or percentages set forth in which would result in satisfaction of the
related Collateral Quality Tests.
"Moody's Matrix": The matrix set forth in Schedule A attached hereto.
"Moody's Maximum Tranched Rating Factor Test": A test that will be
satisfied on any Measurement Date if the Weighted Average ▇▇▇▇▇'▇ Rating Factor
does not exceed the number set forth in the Weighted Average ▇▇▇▇▇'▇ Rating
Factor row in the applicable column of the Moody's Matrix (which number, for the
avoidance of doubt, will vary depending on the then-current levels of the other
variables included in the Moody's Matrix). As used in this definition,
"applicable column" means the column corresponding to the numbered scenario in
the Moody's Matrix, the use of the applicable numbers or percentages set forth
in which would result in satisfaction of the related Collateral Quality Tests.
"Moody's Minimum Weighted Average Coupon Test": A test that will be
satisfied on any Measurement Date if the Weighted Average Coupon plus the
Moody's Spread Excess, if any, is greater than or equal to 7%.
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"Moody's Minimum Weighted Average Spread Test": A test that will be
satisfied as of any Measurement Date if the Weighted Average Spread plus the
Moody's Fixed Rate Excess, if any, is greater than or equal to the number set
forth in the Weighted Average Spread row in the applicable column of the Moody's
Matrix (which number, for the avoidance of doubt, will vary depending on the
then-current levels of the other variables included in the Moody's Matrix). As
used in this definition, "applicable column" means the column corresponding to
the numbered scenario in the Moody's Matrix, the use of the applicable numbers
or percentages set forth in which would result in satisfaction of the related
Collateral Quality Tests.
"Moody's Post-Acquisition Compliance Test": With respect to any
Substitute Collateral Debt Security which did not have a Moody's Assigned Rating
at the time it was acquired by the Issuer, the test that is satisfied if (a) the
Moody's Assigned Rating subsequently determined for such Substitute Collateral
Debt Security is equal to or higher than its Moody's Estimated Rating, (b) as of
the date such Substitute Collateral Debt Security was acquired by the Issuer,
the Moody's Maximum Tranched Rating Factor Test would have been satisfied using
the Moody's Assigned Rating subsequently determined for such Substitute
Collateral Debt Security, or, if such test was not satisfied immediately prior
to such acquisition, the extent of compliance with such test would have been
maintained or improved, or (c) the Moody's Maximum Tranched Rating Factor Test
is satisfied.
"Moody's Post-Acquisition Failure": The meaning specified in Section
12.2(c) hereof.
"▇▇▇▇▇'▇ Rating": Of any Collateral Debt Security will be determined
as follows:
(i) (x) if such Collateral Debt Security is publicly rated by
Moody's, the ▇▇▇▇▇'▇ Rating will be such rating, or, (y) if such
Collateral Debt Security is not publicly rated by Moody's, but the
Issuer has requested that Moody's assign a rating to such Collateral
Debt Security, the ▇▇▇▇▇'▇ Rating will be the rating so assigned by
Moody's;
(ii) with respect to a CMBS Security or REIT Debt Security, if
such CMBS Security or REIT Debt Security is not rated by Moody's, then
the ▇▇▇▇▇'▇ Rating of such CMBS Security or REIT Debt Security may be
determined using any one of the methods below:
(A) with respect to any REIT Debt Security not publicly
rated by Moody's that is a REIT Debt Securities--Diversified;
REIT Debt Securities--Health Care; REIT Debt Securities--Hotel;
REIT Debt Securities--Industrial; REIT Debt
Securities--Multi-Family; REIT Debt Securities--Office; REIT Debt
Securities--Residential; REIT Debt Securities--Retail; or REIT
Debt Securities--Storage, if such REIT Debt Security is publicly
rated by S&P, then the ▇▇▇▇▇'▇ Rating thereof will be (1) one
subcategory below the Moody's equivalent rating assigned by S&P
if the rating assigned by S&P is "BBB" or greater and (2) two
rating
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subcategories below the Moody's equivalent rating assigned by S&P
if the rating assigned by S&P is below "BBB-";
(B) with respect to any CMBS Conduit Security not publicly
rated by Moody's, (x) if Moody's has rated a tranche or class of
CMBS Conduit Security senior to the relevant issue, then the
▇▇▇▇▇'▇ Rating thereof will be one and one-half rating
subcategories below the Moody's equivalent of the lower of the
rating assigned by S&P and Fitch for purposes of determining the
▇▇▇▇▇'▇ Rating Factor and one rating subcategory below the
Moody's equivalent of the lower rating assigned by S&P and Fitch
for all other purposes and (y) if Moody's has not rated any such
tranche or class and S&P and Fitch have rated the subject CMBS
Conduit Security, then the ▇▇▇▇▇'▇ Rating thereof will be two
rating subcategories below the Moody's equivalent of the lower of
the rating assigned by S&P and Fitch;
(C) with respect to any CMBS Large Loan Security not rated
by Moody's, the Issuer (or the Collateral Manager on behalf of
the Issuer)will request Moody's to assign a rating to such CMBS
Large Loan Security on a case-by-case basis; and
(D) with respect to any other type of CMBS Security or REIT
Debt Securities of a Specified Type not referred to in clauses
(A) through (C) above, will be determined pursuant to subclause
(y) of clause (i) above;
(iii) with respect to corporate guarantees on REIT Debt
Securities, if such corporate guarantees are not publicly rated by
Moody's but another security or obligation of the guarantor or obligor
(an "other security") is publicly rated by Moody's, and no rating has
been assigned in accordance with clause (i) above, the ▇▇▇▇▇'▇ Rating
of such Collateral Debt Security will be determined as follows:
(A) if the corporate guarantee is a senior secured obligation of
the guarantor or obligor and the other security is also a senior
secured obligation, the ▇▇▇▇▇'▇ Rating of such Collateral Debt
Security will be the rating of the other security;
(B) if the corporate guarantee is a senior unsecured obligation
of the guarantor or obligor and the other security is a senior secured
obligation, the ▇▇▇▇▇'▇ Rating of such Collateral Debt Security will
be one rating subcategory below the rating of the other security;
(C) if the corporate guarantee is a subordinated obligation of
the guarantor or obligor and the other security is a senior secured
obligation that is: (1) rated "Ba3" or higher by Moody's, the ▇▇▇▇▇'▇
Rating of such corporate guarantee will be three rating subcategories
below the rating of the other security; or (2) rated "B1" or lower by
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Moody's, the ▇▇▇▇▇'▇ Rating of such corporate guarantee will be two
rating subcategories below the rating of the other security;
(D) if the corporate guarantee is a senior secured obligation of
the guarantor or obligor and the other security is a senior unsecured
obligation that is: (1) rated "Baa3" or higher by Moody's, the ▇▇▇▇▇'▇
Rating of such corporate guarantee will be the rating of the other
security; or (2) rated "Ba1" or lower by Moody's, the ▇▇▇▇▇'▇ Rating
of such corporate guarantee will be one rating subcategory above the
rating of the other security;
(E) if the corporate guarantee is a senior unsecured obligation
of the guarantor or obligor and the other security is also a senior
unsecured obligation, the ▇▇▇▇▇'▇ Rating of such corporate guarantee
will be the rating of the other security;
(F) if the corporate guarantee is a subordinated obligation of
the guarantor or obligor and the other security is a senior unsecured
obligation that is: (1) rated "B1" or higher by Moody's, the ▇▇▇▇▇'▇
Rating of such corporate guarantee will be two rating subcategories
below the rating of the other security; or (2) rated "B2" or lower by
Moody's, the ▇▇▇▇▇'▇ Rating of such corporate guarantee will be one
rating subcategory below the rating of the other security;
(G) if the corporate guarantee is a senior secured obligation of
the guarantor or obligor and the other security is a subordinated
obligation that is: (1) rated "Baa3" or higher by Moody's, the ▇▇▇▇▇'▇
Rating of such corporate guarantee will be one rating subcategory
above the rating of the other security; (2) rated below "Baa3" but not
rated "B3" by Moody's, the ▇▇▇▇▇'▇ Rating of such corporate guarantee
will be two rating subcategories above the rating of the other
security; or (3) rated "B3" by Moody's, the ▇▇▇▇▇'▇ Rating of such
corporate guarantee will be "B2";
(H) if the corporate guarantee is a senior unsecured obligation
of the guarantor or obligor and the other security is a subordinated
obligation that is: (1) rated "Baa3" or higher by Moody's, the ▇▇▇▇▇'▇
Rating of such corporate guarantee will be one rating subcategory
above the rating of the other security; or (2) rated "Ba1" or lower by
Moody's, the ▇▇▇▇▇'▇ Rating of such corporate guarantee will also be
one rating subcategory above the rating of the other security; and
(I) if the REIT Debt Security is a subordinated obligation of the
guarantor or obligor and the other security is also a subordinated
obligation, the ▇▇▇▇▇'▇ Rating of such corporate guarantee will be the
rating of the other security;
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(iv) if such Collateral Debt Security is a Mezzanine Loan or a
CRE CDO Security, no notching is permitted and the ▇▇▇▇▇'▇ Rating will
be the rating so assigned by Moody's; or
(v) to the extent permitted under Section 12.2, with respect to
any Loan acquired during the Reinvestment Period, until a rating is
determined in accordance with clauses (i) through (iv) above, the
▇▇▇▇▇'▇ Rating will be the rating determined by the Collateral Manager
based on its estimate of the rating that would be assigned by Moody's;
provided that (x) the rating of either S&P or Fitch used to determine the
▇▇▇▇▇'▇ Rating pursuant to any of clauses (ii) or (iii) above will be (a) a
public rating that addresses the obligation of the obligor (or guarantor, where
applicable) to pay principal of and interest on the relevant Collateral Debt
Security in full and is monitored on an ongoing basis by the relevant Rating
Agency or (b) if no such public rating is available, a rating determined
pursuant to a method determined by Moody's on a case-by-case basis and (y) the
Aggregate Principal Balance of Collateral Debt Securities the ▇▇▇▇▇'▇ Rating of
which is based on an S&P rating or a Fitch rating may not exceed 20% of the
Aggregate Principal Balance of all Collateral Debt Securities; provided,
further, that the ▇▇▇▇▇'▇ Rating of any Collateral Debt Security will be reduced
one subcategory to the extent it is on credit watch with negative implications
and increased one subcategory to the extent it is on credit watch with positive
implications.
"▇▇▇▇▇'▇ Rating Factor": Relating to any Collateral Debt Security, the
number set forth in the table below opposite the ▇▇▇▇▇'▇ Rating of such
Collateral Debt Security:
▇▇▇▇▇'▇ RATING ▇▇▇▇▇'▇ RATING FACTOR ▇▇▇▇▇'▇ RATING ▇▇▇▇▇'▇ RATING FACTOR
-------------- --------------------- -------------- ---------------------
Aaa 1 Ba1 940
Aa1 10 Ba2 1,350
Aa2 20 Ba3 1,766
Aa3 40 B1 2,220
A1 70 B2 2,720
A2 120 B3 3,490
A3 180 Caa1 4,770
Baa1 260 Caa2 6,500
Baa2 360 Caa3 8,070
Baa3 610 Ca or lower 10,000
"Moody's Recovery Rate": With respect to any Collateral Debt Security
on any Measurement Date, an amount equal to (A) if the Specified Type of
Collateral Debt Security is included in the table attached as Schedule B (the
Moody's Recovery Rate Assumptions) hereto, the percentage for such Collateral
Debt Security set forth in Schedule B (the Moody's Recovery Rate Assumptions)
attached hereto in (x) the table corresponding to the relevant Specified Type of
Collateral Debt Security, (y) the column in such table setting forth the ▇▇▇▇▇'▇
Rating of such Collateral Debt Security on such Measurement Date and (z) the row
in such table opposite the percentage of the issue of which such Collateral Debt
Security is a part relative to the total
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capitalization of (including both debt and equity securities issued by) the
relevant issuer of or obligor on such Collateral Debt Security determined on the
date on which such Collateral Debt Security was originally issued or (B) if the
Specified Type of Collateral Debt Security is not included in the table attached
as Schedule B (the Moody's Recovery Rate Assumptions) hereto, the Recovery Rate
set forth following such table with respect to the applicable Specified Type.
"Moody's Recovery Rate Test": A test that will be satisfied as of any
Measurement Date, if the Moody's Weighted Average Recovery Rate is greater than
or equal to the number set forth in the Moody's Weighted Average Recovery Rate
row in the applicable column of the Moody's Matrix (which number, for the
avoidance of doubt, will vary depending on the then current levels of the other
variables included in the Moody's Matrix). As used in this definition,
"applicable column" means the column corresponding to the numbered scenario in
the Moody's Matrix, the use of the applicable numbers or percentages set forth
in which would result in satisfaction of the related Collateral Quality Tests.
"Moody's Special Amortization Pro Rata Condition": A condition that
will be satisfied with respect to any Payment Date if either (i)(a) the
Aggregate Principal Balance of the Collateral Debt Securities as of the related
Determination Date is greater than an amount equal to 50% of the Aggregate
Principal Balance of the Collateral Debt Securities on the Effective Date and
(b) the Collateral Quality Tests (other than the Minimum Weighted Average Coupon
Test, the Minimum Weighted Average Spread Test and the S&P CDO Monitor Test) are
satisfied as of the related Determination Date or (ii) the Rating Agency
Condition has been satisfied with respect to Moody's and, so long as MBIA is
deemed to be the Controlling Class hereunder, MBIA consents.
"Moody's Spread Excess": As of any Measurement Date, a fraction
(expressed as a percentage), the numerator of which is equal to the product of
(a) the greater of zero and the excess, if any, of the Weighted Average Spread
over the percentage set forth in the Weighted Average Spread row in the
applicable column of the Moody's Matrix (which percentage, for the avoidance of
doubt, will vary depending on the then-current levels of the other variables
included in the Moody's Matrix) and (b) the Aggregate Principal Balance of all
Collateral Debt Securities that are Floating Rate Securities (excluding all
Defaulted Securities and Written Down Securities) and the denominator of which
is the Aggregate Principal Balance of all Collateral Debt Securities that are
Fixed Rate Securities (excluding all Defaulted Securities and Written Down
Securities), multiplying the resulting figure by 365 and then dividing by 360.
As used in this definition, "applicable column" means the column corresponding
to the numbered scenario in the Moody's Matrix, the use of the applicable
numbers or percentages set forth in which would result in satisfaction of the
related Collateral Quality Tests.
"Moody's Weighted Average Extended Maturity Test": A test that will be
satisfied on any Measurement Date if the Extended Weighted Average Maturity of
the Collateral Debt Securities as of such Measurement Date is (i) from the
Closing Date through and including January 26, 2011, 6.0 years or less or (ii)
thereafter, 5.0 years or less.
"Moody's Weighted Average Recovery Rate": The number obtained as of
any Measurement Date by summing the products obtained by multiplying the
Principal Balance of each Collateral Debt Security (other than a Defaulted
Security) by its Moody's Recovery Rate,
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dividing such sum by the aggregate Principal Balance of all such Collateral Debt
Securities and rounding up to the first decimal place.
"Net Outstanding Portfolio Balance": On any Measurement Date, the sum
(without duplication) of:
(i) the Aggregate Principal Balance on such Measurement Date of
the Collateral Debt Securities (other than Defaulted Securities);
(ii) the Aggregate Principal Balance of all Principal Proceeds
held as Cash and Eligible Investments, all Cash and Eligible
Investments held in the Unused Proceeds Account that have not been
designated as Interest Proceeds by the Collateral Manager with respect
to the Effective Date and all Cash and Eligible Investments held in
the Delayed Funding Obligations Account; and
(iii) with respect to each Defaulted Security, the Calculation
Amount of such Defaulted Security;
provided, however, for purposes of any Par Value Test, any deferred or
capitalized interest component of a Partially Deferred Loan shall be excluded
from such calculation.
"Non-Advancing Collateral Debt Security": Any Collateral Debt
Security, other than a CMBS Security, a CRE CDO Security or a REIT Debt
Security, with respect to which no servicer or other party is required under the
terms of the Underlying Instruments governing such Collateral Debt Security to
make any liquidity advances to ensure the timely receipt of interest by and for
the benefit of the holder of such Collateral Debt Security.
"Non-call Period": The period from the Closing Date to and including
the Business Day immediately preceding the Payment Date in January 2010 during
which the Issuer is not permitted to exercise an Optional Redemption as
described in Section 9.1(c) hereof.
"Non-Core Property Type": Each of Land and Other Properties.
"Non-Permitted Holder": The meaning specified in Section 2.13(b)
hereof.
"Nonrecoverable Cure Advance": Any Cure Advance previously made or
proposed to be made pursuant to Section 16.3 hereof with respect to any
Collateral Debt Security, which in the judgment of the Collateral Manager,
subject to the Collateral Manager Servicing Standard and to the applicable
provisions of the Servicing Agreement, will not be ultimately recoverable from
collections from such Collateral Debt Security.
"Nonrecoverable Interest Advance": Any Interest Advance previously
made or proposed to be made pursuant to Section 10.9 hereof that the Advancing
Agent or the Backup Advancing Agent, as applicable, has determined in its sole
discretion, exercised in good faith, that the amount so advanced or proposed to
be advanced plus interest expected to accrue thereon, will not be ultimately
recoverable from subsequent payments or collections with respect to the
Collateral Debt Securities.
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"Note Liquidation Event": The meaning specified in Section 12.1(e)
hereof.
"Noteholder": The Person in whose name such Note is registered in the
Notes Register.
"Note Interest Rate": With respect to the Class A-1A Notes, the Class
A-1AR Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes, the Class F Notes, the Class G Notes and the
Class H Notes, the Class A-1A Rate, the Class A-1AR Rate, the Class A-2 Rate,
the Class B Rate, the Class C Rate, the Class D Rate, the Class E Rate, the
Class F Rate, the Class G Rate and the Class H Rate, respectively.
"Notes": The Class A-1A Notes, the Class A-1AR Notes, the Class A-2
Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes, the Class F Notes, the Class G Notes and the Class H Notes, collectively,
authorized by, and authenticated and delivered under, this Indenture or any
supplemental indenture.
"Notes Register" and "Notes Registrar": The respective meanings
specified in Section 2.5(a) hereof.
"Notes Valuation Report": The meaning specified in Section 10.11(e)
hereof.
"Notional Amount": In respect of the Preferred Shares, the per share
notional amount of $1.00. The aggregate Notional Amount of the Preferred Shares
on the Closing Date will be $52,500,000.
"Offer": With respect to any security, (i) any offer by the issuer of
such security or by any other person or entity made to all of the holders of
such security to purchase or otherwise acquire such security (other than
pursuant to any redemption in accordance with the terms of the related
Underlying Instruments) or to convert or exchange such security into or for
Cash, securities or any other type of consideration or (ii) any solicitation by
the issuer of such security or any other person or entity to amend, modify or
waive any provision of such security or any related Underlying Instrument.
"Offering Memorandum": The Offering Memorandum, dated December 12,
2006, as supplemented by the Supplement to Offering Memorandum, dated December
13, 2006, relating to the offering of the Notes.
"Officer": With respect to any corporation or limited liability
company, including the Issuer, the Co-Issuer and the Collateral Manager, any
Director, the Chairman of the Board of Directors, the President, any Senior Vice
President any Vice President, the Secretary, any Assistant Secretary, the
Treasurer, any Assistant Treasurer, General Partner of such entity; and with
respect to the Trustee, any Trust Officer.
"Officer's Certificate": With respect to the Issuer, the Co-Issuer and
the Collateral Manager, any certificate executed by an Officer thereof.
"Operating Statement Analysis Report": The year-end report prepared by
the Issuer (or the Collateral Manager on behalf of the Issuer) for each
Collateral Debt Security.
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"Opinion of Counsel": A written opinion addressed to the Trustee and
each Rating Agency in form and substance reasonably satisfactory to the Trustee,
each Rating Agency and each Hedge Counterparty of an attorney at law admitted to
practice before the highest court of any state of the United States or the
District of Columbia (or the Cayman Islands, in the case of an opinion relating
to the laws of the Cayman Islands), which attorney may, except as otherwise
expressly provided in this Indenture, be counsel for the Issuer, and which
attorney shall be reasonably satisfactory to the Trustee. Whenever an Opinion of
Counsel is required hereunder, such Opinion of Counsel may rely on opinions of
other counsel who are so admitted and so satisfactory which opinions of other
counsel shall accompany such Opinion of Counsel and shall either be addressed to
the Trustee and each Rating Agency or shall state that the Trustee and each
Rating Agency shall be entitled to rely thereon.
"Optional Redemption": The meaning specified in Section 9.1(c) hereof.
"Optional Redemption Date": Any Payment Date occurring after the end
of the Non-call Period, where the Issuer and the Co-Issuer may redeem the Notes
and the Issuer may redeem the Preferred Shares in accordance with Section 9.1(c)
hereof.
"Other Loan": The meaning specified in the definition of Future
Advance Loan.
"Outstanding": With respect to the Notes, as of any date of
determination, all of the Notes or any Class of Notes, as the case may be,
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore canceled by the Notes Registrar or
delivered to the Notes Registrar for cancellation;
(ii) Notes or portions thereof for whose payment or redemption
funds in the necessary amount have been theretofore irrevocably
deposited with the Trustee or the Paying Agent in trust for the
Holders of such Notes pursuant to Section 4.1(a)(ii); provided that,
if such Notes or portions thereof are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
(iii) Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to this Indenture, unless
proof satisfactory to the Trustee is presented that any such Notes are
held by a holder in due course; and
(iv) Notes alleged to have been mutilated, destroyed, lost or
stolen for which replacement Notes have been issued as provided in
Section 2.6;
provided that in determining whether the Noteholders of the requisite Aggregate
Outstanding Amount have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, (x) Notes owned by the Issuer, the
Co-Issuer or any Affiliate thereof shall be disregarded and deemed not to be
Outstanding and (y) in relation to (1) any amendment or other modification of,
or assignment or termination of, any of the express rights or obligations of the
Collateral Manager under the Collateral Management Agreement or this Indenture
(including the
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exercise of any rights to remove the Collateral Manager or terminate the
Collateral Management Agreement or approve or object to a replacement for the
Collateral Manager except as specifically provided in the Collateral Management
Agreement with respect to the termination of the Collateral Manager without
cause and with respect to the replacement of the Collateral Manager in instances
where the Collateral Manager has not been terminated for cause or where such
replacement is not an Affiliate of the Collateral Manager) and (2) the exercise
by the Noteholders of their right, in connection with certain Events of Default,
to accelerate amounts due under the Notes, Notes owned by the Collateral Manager
or any of its Affiliates, or by any accounts managed by them, shall be
disregarded and deemed not to be Outstanding. In determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes that the Trustee knows to be so
owned shall be so disregarded. Notes so owned that have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Issuer, the Collateral Manager or any
other obligor upon the Notes or any Affiliate of the Issuer, the Collateral
Manager or such other obligor.
"Par Value Ratio": Each of the Class A/B Par Value Ratio, the Class
C/D/E Par Value Ratio and the Class F/G/H Par Value Ratio.
"Par Value Test": Each of the Class A/B Par Value Test, the Class
C/D/E Par Value Test and the Class F/G/H Par Value Test.
"Partially Deferred Loan": A Loan which by its terms provides for the
payment of interest in two components, one of which is payable currently on each
due date under the Loan and the other of which is either deferred or capitalized
until maturity.
"Participating Institution": With respect to any participation, the
entity that holds legal title to the participated asset.
"Participation": A participation interest in all or part of a Loan
that is subordinate to other interests in such Loan or a sub-participation
interest in any such participation interest.
"Paying Agent": Any Person authorized by the Issuer and the Co-Issuer
to pay the principal of or interest on any Notes on behalf of the Issuer and the
Co-Issuer as specified in Section 7.2 hereof.
"Payment Account": The payment account of the Trustee in respect of
the Notes established pursuant to Section 10.3 hereof.
"Payment Date": With respect to each Class of Notes, April 26, 2007
and thereafter quarterly on each January 26, April 26, July 26 and October 26
(or if such day is not a Business Day, the next succeeding Business Day) to and
including the Stated Maturity related to such Class unless redeemed or repaid
prior thereto.
"Permitted Transfer": A transfer, in whole but not in part, to a party
that meets the following requirements:
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(a) the transferee is a recognized dealer in interest rate swaps
organized under the laws of the United States of America or a jurisdiction
located in the United States of America (or another jurisdiction reasonably
acceptable to the Issuer and the Trustee under this Indenture) that, at the
time of the transfer, maintains (or its proposed guarantor maintains) the
Hedge Counterparty Collateral Threshold Rating from each Rating Agency on
its unsecured and unsubordinated debt, deposit or letter of credit
obligations;
(b) each Rating Agency confirms in writing that such transfer will not
result in a reduction or withdrawal of its then current rating of any
outstanding Class of Notes under this Indenture with respect to which it
has previously issued a rating;
(c) the transferee executes and delivers a written agreement
reasonably satisfactory to the Issuer and the Trustee under this Indenture
in which the transferee, among other things, legally and effectively
accepts all the rights and assumes all the obligations under the related
swap documents; and
(d) such transfer otherwise complies with the terms of this Indenture.
"Person": An individual, corporation (including a business trust),
partnership, limited liability company, joint venture, association, joint stock
company, trust (including any beneficiary thereof), unincorporated association
or government or any agency or political subdivision thereof.
"Placement Agent": Wachovia Capital Markets, LLC, in its capacity as
the placement agent with respect to the Class A-1AR Notes.
"Pledged Collateral Debt Security": On any date of determination, any
Collateral Debt Security that has been Granted to the Trustee and not been
released from the lien of this Indenture pursuant to Section 10.12 hereof.
"Pledged Obligations": On any date of determination, any Pledged
Collateral Debt Securities and the Eligible Investments that have been Granted
to the Trustee for the benefit of the Noteholders and each Hedge Counterparty
and which form part of the Assets.
"Preferred Equity Security": A security, providing for regular
payments of dividends or other distributions, representing an equity interest in
an entity (including, without limitation, a partnership or a limited liability
company) that is a borrower under a mortgage loan secured by commercial
properties (or in an entity operating or controlling, directly or through
affiliates, such commercial properties), which is generally senior with respect
to the payments of dividends and other distributions, redemption rights and
rights upon liquidation to such entity's common equity.
"Preferred Shareholder": A registered owner of Preferred Shares as set
forth in the share register maintained by the Share Registrar.
"Preferred Shares": The preferred shares issued by the Issuer
concurrently with the issuance of the Notes.
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"Preferred Shares Distribution Account": A segregated account
established and designated as such by the Preferred Shares Paying Agent pursuant
to the Preferred Shares Paying Agency Agreement.
"Preferred Shares Distribution Amount": Any remaining Interest
Proceeds and Principal Proceeds, if any, to be released from the lien of this
Indenture and paid (upon standing order of the Issuer) to the Preferred Shares
Paying Agent for deposit into the Preferred Shares Distribution Account for
distribution to the holders of the Preferred Shares after payment by the Trustee
of all distributions which take priority pursuant to Section 11.1(a).
"Preferred Shares Paying Agency Agreement": The Preferred Shares
Paying Agency Agreement, dated as of the Closing Date, among the Issuer, the
Preferred Shares Paying Agent relating to the Preferred Shares and the Share
Registrar, as amended from time to time in accordance with the terms thereof.
"Preferred Shares Paying Agent": The Bank, solely in its capacity as
Preferred Shares Paying Agent under the Preferred Shares Paying Agency Agreement
and not individually, unless a successor Person shall have become the Preferred
Shares Paying Agent pursuant to the applicable provisions of the Preferred
Shares Paying Agency Agreement, and thereafter Preferred Shares Paying Agent
shall mean such successor Person.
"Principal Balance" or "par": With respect to any Collateral Debt
Security or Eligible Investment, as of any date of determination, the
outstanding principal amount of such Collateral Debt Security or Eligible
Investment; provided that:
(i) the Principal Balance of a Collateral Debt Security received
upon acceptance of an Offer for another Collateral Debt Security,
which Offer expressly states that failure to accept such Offer may
result in a default under the Underlying Instruments, will be deemed
to be the Calculation Amount of such other Collateral Debt Security
until such time as Interest Proceeds and Principal Proceeds, as
applicable, are received when due with respect to such other
Collateral Debt Security;
(ii) the Principal Balance of any Eligible Investment that does
not pay Cash interest on a current basis will be the accreted value
thereof;
(iii) the Principal Balance of any Preferred Equity Security will
be equal to the component of the liquidation price thereof that is
attributable to the return of capital by its governing documents;
(iv) the Principal Balance of any Written Down Security will
exclude any portion of the principal balance of such security that (a)
has been written down as a result of a "realized loss," "collateral
support deficit," "additional trust fund expense" or other event that
under the terms of such security results in a write-down of principal
balance or (b) would be affected by an appraisal reduction; and
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(v) the Principal Balance of any Partially Deferred Loan will
exclude the portion of the principal amount thereof attributable to
deferred or capitalized interest;
provided that, for purposes of determining compliance with each of the
separate tests included within the Collateral Quality Tests, the Moody's
Post-Acquisition Compliance Test and the S&P Post-Acquisition Compliance Test,
the Principal Balance of a Delayed Draw Term Loan also will be deemed to include
the unfunded portion of such Delayed Draw Term Loan.
"Principal Collection Account": The trust account established pursuant
to Section 10.2(a) hereof.
"Principal Only Security": Any security (other than a Step-Up
Security) that does not provide for payment of interest or provides that all
payments of interest will be deferred until the final maturity thereof.
"Principal Proceeds": With respect to any Payment Date, (A) the sum
(without duplication) of (1) all principal payments (including prepayments and
Unscheduled Principal Payments) received during the related Due Period
(excluding those previously reinvested or designated by the Collateral Manager
for reinvestment in Collateral Debt Securities) on (a) Eligible Investments
(other than Eligible Investments purchased with Interest Proceeds, Eligible
Investments in the Expense Account, Eligible Investments in the Interest Reserve
Account, Eligible Investments in the Unused Proceeds Account designated as
Interest Proceeds by the Collateral Manager with respect to the Effective Date
and Eligible Investments in the Delayed Funding Obligations Account and any
amount representing the accreted portion of a discount from the face amount of
an Eligible Investment) and (b) Collateral Debt Securities as a result of (i) a
maturity, scheduled amortization, mandatory prepayment or mandatory sinking fund
payment on a Collateral Debt Security, (ii) optional redemptions, prepayments,
exchange offers or tender offers made at the option of the issuer thereof, (iii)
recoveries on Defaulted Securities or (iv) any other principal payments with
respect to Collateral Debt Securities (not included in Sale Proceeds), (2) all
distributions on Preferred Equity Securities attributable to the return of
capital by their governing documents, (3) all fees and commissions received
during such Due Period in connection with Defaulted Securities and Eligible
Investments and the restructuring or default of such Defaulted Securities and
Eligible Investments, (4) any interest received during such Due Period on such
Collateral Debt Securities or Eligible Investments to the extent such interest
constitutes proceeds from accrued interest purchased with Principal Proceeds
other than accrued interest purchased by the Issuer on or prior to the Closing
Date and interest included in clause (A)(1) of the definition of Interest
Proceeds, (5) Sale Proceeds received during such Due Period in respect of sales
(excluding those previously reinvested or currently being reinvested in
Collateral Debt Securities in accordance with the Transaction Documents and
excluding accrued interest included in Sale Proceeds (unless such accrued
interest was purchased with Principal Proceeds) that are designated by the
Collateral Manager as Interest Proceeds in accordance with clause (A)(1) of the
definition of Interest Proceeds), (6) all Cash payments of interest or dividends
received during such Due Period on Defaulted Securities, (7) any interest
received during such Due Period on a Written Down Security to the extent such
interest constitutes accrued interest on the excess of the principal amount of
such Written Down Security over the
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Principal Balance of such Written Down Security, (8) any proceeds resulting from
(a) the termination (in whole or in part) of any Hedge Agreement during such Due
Period to the extent such proceeds are received from the related Hedge
Counterparty and, to the extent such proceeds exceed the cost of entering into a
replacement Hedge Agreement in accordance with the requirements set forth in
Section 16.1(a) hereof, (b) payments received from a replacement Hedge
Counterparty to the extent such proceeds exceed the amount owed to a previous
Hedge Counterparty in connection with the termination of the related Hedge
Agreement and (c) all amounts transferred from each Hedge Termination Account
pursuant to Section 16.1(g) hereof, (9) during the Reinvestment Period, the
Special Amortization Amount, if any, (10) on the first Payment Date following
the Effective Date, if a Rating Confirmation Failure has not occurred, funds in
the Unused Proceeds Account to the extent the Collateral Manager has not
designated such amounts as Interest Proceeds pursuant to Section 10.4(c) hereof,
(11) funds transferred to the Principal Collection Account from the Delayed
Funding Obligations Account in respect of amounts previously held on deposit in
respect of unfunded commitments for Delayed Draw Term Loans that have been sold
or otherwise disposed of before such commitments thereunder have been drawn or
as to which excess funds remain, (12) any Class A-1AR Draw Amount not previously
applied during the Due Period (including amounts received from a Holder
Subaccount upon the failure of the applicable holder of Class A-1AR Notes to
advance funds to the Issuer as required pursuant to the applicable Class A-1AR
Note Purchase Agreement), (13) all other payments received in connection with
the Collateral Debt Securities and Eligible Investments that are not included in
Interest Proceeds, (14) all amounts to be transferred by the Trustee from each
Defeased Collateral Account to the Principal Collection Account in respect of
such Payment Date as directed by the Issuer (or the Collateral Manager on the
Issuer's behalf) and (15) any excess proceeds received in respect of a
Collateral Debt Security after required fixed payments are made on the other
classes of securities senior to such Collateral Debt Security to the extent such
proceeds are designated "Principal Proceeds" by the Collateral Manager in its
sole discretion with notice to the Trustee on or before the related
Determination Date; provided that in no event will Principal Proceeds include
any proceeds from the Excepted Assets minus (B) (x) the aggregate amount of any
Nonrecoverable Interest Advances that were previously reimbursed to the
Advancing Agent or the Backup Advancing Agent, and the aggregate amount of any
Nonrecoverable Cure Advances reimbursed to the Collateral Manager during the
related Due Period from Principal Proceeds and (y) the aggregate amount of any
Hedge Payment Amounts that were previously paid to the applicable Hedge
Counterparty from Principal Proceeds during the related Due Period as a result
of the early termination of the related Asset Specific Hedge from any call,
redemption and prepayment premiums in accordance with clause (e) of the
definition of Asset Specific Hedge.
"Priority of Payments": The meaning specified in Section 11.1(a)
hereof.
"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"Property Type": Each of the following types of mortgaged property
(each of which, for the avoidance of doubt, shall be considered commercial real
estate property for purposes of this Indenture):
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(i) "Condo Conversion Properties" means properties that have
been, or are expected to be, converted to condominium form of
ownership for the purpose of re-development and sales during the term
of the Loan in whole or in part, as residential condominium apartments
or time share units;
(ii) "Diversified Properties" means properties used by businesses
for diverse purposes and other similar property interests;
(iii) "Healthcare Properties" means hospitals, clinics, sports
clubs, spas and other health care facilities and other similar real
property interests used in one or more similar businesses (but
excluding medical offices);
(iv) "Hospitality Properties" means hotels, motels, youth
hostels, bed and breakfasts and other similar real property interests
used in one or more similar businesses;
(v) "Industrial Properties" means factories, refinery plants,
breweries and other similar real property interests used in one or
more similar businesses;
(vi) "Mixed Use Properties" means real estate property used by
businesses for diverse business purposes and any similar property
interests;
(vii) "Multi-Family Properties" means multi-family dwellings such
as apartment blocks, condominiums and cooperative owned buildings;
(viii) "Retail Properties" means retail stores, restaurants,
bookstores, clothing stores and other similar real property interests
used in one or more similar businesses;
(ix) "Self-Storage Properties" means self-storage facilities and
other similar real property interests used in one or more similar
businesses;
(x) "Suburban Office Properties" means office buildings
(including medical offices), conference facilities and other similar
real property interests used in the commercial real estate business in
suburban areas;
(xi) "Urban Office Properties" means office buildings (including
medical offices), conference facilities and other similar real
property interests used in the commercial real estate business in
urban areas;
(xii) "Warehouse Properties" means warehouse facilities and other
similar real property interests;
(xiii) "Land" means undeveloped real estate intended to be
developed into single family residences or commercial, multi-family or
condominium property; and
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(xiv) "Other Properties" means any other property other than
Diversified Properties, Hospitality Properties, Industrial Properties,
Multi-Family Properties, Urban Office Properties, Suburban Office
Properties, Retail Properties, Self-Storage Properties, Healthcare
Properties, Mixed Use Properties, Warehouse Properties, Land and Condo
Conversion Properties.
"Proposal": The meaning specified in Section 7.17 hereof.
"Proposed Portfolio": The portfolio of Collateral Debt Securities and
Eligible Investments resulting from the disposition of a Collateral Debt
Security or a proposed reinvestment of Principal Proceeds in a Substitute
Collateral Debt Security, as the case may be.
"Pro Rata Special Amortization Modification": The meaning specified in
Section 12.5 hereof.
"Purchase Agreement": The purchase and placement agreement relating to
the Notes dated as of the Closing Date by and among the Issuer, the Co-Issuer
and the Dealers.
"Purchase Option Purchase Price": The meaning specified in Section
16.4 hereof.
"Purchase Price": The purchase price identified for each Collateral
Debt Security against its name in Schedule I attached hereto.
"QIB": A "qualified institutional buyer" as defined in Rule 144A.
"Qualified Letter of Credit": An unconditional, irrevocable letter of
credit issued by a domestic bank or the U.S. agency or branch of a foreign bank
with a long-term unsecured debt rating of at least "A3" by Moody's and at least
"A-" by S&P and meeting S&P's published criteria found in Section 1 of S&P's
publication entitled "U.S. CMBS Legal and Structured Finance Criteria," dated as
of May 1, 2003.
"Qualified Purchaser": A "qualified purchaser" within the meaning of
Section 2(a)(51) of the Investment Company Act.
"Qualified REIT Subsidiary": A corporation that, for U.S. federal tax
purposes, is wholly-owned by a real estate investment trust under Section
856(i)(2) of the Internal Revenue Code of 1986, as amended.
"Rake Bond": A loan-specific commercial mortgage pass-through
certificate or similar security backed by only one of the mortgage loans
included in a pooled securitization transaction, typically representing a
non-pooled component of the related mortgage loan that is subordinate to the
pooled component with respect to the right to receive distributions of
collections on such mortgage loan.
"Ramp-Up Period": The period commencing on the Closing Date and ending
on the Effective Date.
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"Rating Agency": Each of ▇▇▇▇▇'▇, Fitch and S&P and any successor
thereto, or, with respect to Pledged Obligations generally, if at any time
Moody's, Fitch or S&P or any such successor ceases to provide rating services
with respect to the Notes or certificates similar to the Notes, any other
nationally recognized investment rating agency selected by the Issuer and
reasonably satisfactory to each Hedge Counterparty and a Majority of the Notes
voting as a single Class.
"Rating Agency Condition": With respect to any proposed action or
matter, the receipt by the Trustee of confirmation in writing from the
applicable Rating Agencies that the then-current ratings on the Notes, as
applicable, shall not be reduced, qualified or withdrawn as a result of such
action or matter; provided, however, that, for purposes of this definition,
"Rating Agencies" shall be deemed not to include Fitch unless the proposed
action or matter relates to any amendment or modification, or any proposed
amendment or modification, to any Transaction Document, and in any such case
notification shall be made to Fitch within 30 days following such amendment or
modification.
"Rating Confirmation Failure": The meaning specified in Section
7.17(b) hereof.
"Record Date": The date on which the Holders of Notes entitled to
receive a payment in respect of principal or interest on the succeeding Payment
Date is determined, such date as to any Payment Date being the 15th day (whether
or not a Business Day) prior to the applicable Payment Date.
"Redemption Date": Any Payment Date specified for a redemption of the
Securities pursuant to Section 9.1 or 9.2 hereof.
"Redemption Date Statement": The meaning specified in Section 10.11(i)
hereof.
"Redemption Price": The Redemption Price of each Class of Notes and
the Preferred Shares will be calculated as follows:
Class A-1A Notes. The redemption price of the Class A-1A Notes will be
calculated on the related Determination Date and will be equal to the Aggregate
Outstanding Amount of the Class A-1A Notes to be redeemed, together with the
Class A-1A Interest Distribution Amount (plus any Class A-1A Defaulted Interest
Amount) due on the applicable Redemption Date;
Class A-1AR Notes. The redemption price of the Class A-1AR Notes will
be calculated on the related Determination Date and will be equal to the sum of
(i) the Aggregate Outstanding Amount of the Class A-1AR Notes to be redeemed,
together with the Class A-1AR Interest Distribution Amount (plus any Class A-1AR
Defaulted Interest Amount) due on the applicable Redemption Date, and (ii) any
accrued and unpaid Class A-1AR Commitment Fees due on the applicable Redemption
Date;
Class A-2 Notes. The redemption price of the Class A-2 Notes will be
calculated on the related Determination Date and will be equal to the Aggregate
Outstanding Amount of the Class A-2 Notes to be redeemed, together with the
Class A-2 Interest Distribution Amount (plus any Class A-2 Defaulted Interest
Amount) due on the applicable Redemption Date;
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Class B Notes. The redemption price of the Class B Notes will be
calculated on the related Determination Date and will be equal to the Aggregate
Outstanding Amount of the Class B Notes to be redeemed, together with the Class
B Interest Distribution Amount (plus any Class B Defaulted Interest Amount) due
on the applicable Redemption Date;
Class C Notes. The redemption price of the Class C Notes will be
calculated on the related Determination Date and will be equal to the Aggregate
Outstanding Amount of the Class C Notes to be redeemed, together with the Class
C Interest Distribution Amount (plus any Class C Capitalized Interest and any
Class C Defaulted Interest Amount) due on the applicable Redemption Date;
Class D Notes. The redemption price of the Class D Notes will be
calculated on the related Determination Date and will be equal to the Aggregate
Outstanding Amount of the Class D Notes to be redeemed, together with the Class
D Interest Distribution Amount (plus any Class D Capitalized Interest and any
Class D Defaulted Interest Amount) due on the applicable Redemption Date;
Class E Notes. The redemption price of the Class E Notes will be
calculated on the related Determination Date and will be equal to the Aggregate
Outstanding Amount of the Class E Notes to be redeemed, together with the Class
E Interest Distribution Amount (plus any Class E Capitalized Interest and any
Class E Defaulted Interest Amount) due on the applicable Redemption Date;
Class F Notes. The redemption price of the Class F Notes will be
calculated on the related Determination Date and will be equal to the Aggregate
Outstanding Amount of the Class F Notes to be redeemed, together with the Class
F Interest Distribution Amount (plus any Class F Capitalized Interest and any
Class F Defaulted Interest Amount) due on the applicable Redemption Date;
Class G Notes. The redemption price of the Class G Notes will be
calculated on the related Determination Date and will be equal to the Aggregate
Outstanding Amount of the Class G Notes to be redeemed, together with the Class
G Interest Distribution Amount (plus any Class G Capitalized Interest and any
Class G Defaulted Interest Amount) due on the applicable Redemption Date;
Class H Notes. The redemption price of the Class H Notes will be
calculated on the related Determination Date and will be equal to the Aggregate
Outstanding Amount of the Class H Notes to be redeemed, together with the Class
H Interest Distribution Amount (plus any Class H Capitalized Interest and any
Class H Defaulted Interest Amount) due on the applicable Redemption Date; and
Preferred Shares. The redemption price for the Preferred Shares will
be calculated on the related Determination Date and will be equal to the sum of
all net proceeds from the sale of the Collateral Debt Securities in accordance
with Article 12 hereof and Cash and proceeds from Eligible Investments (other
than the Issuer's rights, title and interest in the property described in clause
(i) of the definition of "Excepted Assets"), if any, remaining after payments of
all amounts and expenses, including payments made in respect of the Notes,
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described under clauses (1) through (23), (25), (26), (27), and (28) of Section
11.1(a)(i) and clauses (1) through (14) of Section 11.1(a)(ii); provided that,
if there are no such net proceeds, Cash or proceeds from Eligible Investments
remaining, the redemption price for the Preferred Shares shall be equal to $0.
"Reference Banks": The meaning set forth in Schedule J attached
hereto.
"Registered": With respect to any debt obligation, a debt obligation
that is issued after July 18, 1984, and that is in registered form for purposes
of the Code.
"Registered Security": The meaning specified in Section 3.3(a)(iii)
hereof.
"Regulation S": Regulation S under the Securities Act.
"Regulation S Global Security": The meaning specified in Section
2.2(b)(ii) hereof.
"Reimbursement Interest": Interest accrued on the amount of any
Interest Advance made by the Advancing Agent or the Backup Advancing Agent, for
so long as it is outstanding, at the Reimbursement Rate.
"Reimbursement Rate": A rate per annum equal to the "prime rate" as
published in the "Money Rates" section of the Wall Street Journal, as such
"prime rate" may change from time to time. If more than one "prime rate" is
published in The Wall Street Journal for a day, the average of such "prime
rates" will be used, and such average will be rounded up to the nearest one
eighth of one percent (0.125%). If the "prime rate" contained in The Wall Street
Journal is not readily ascertainable, the Collateral Manager will select an
equivalent publication that publishes such "prime rate," and if such "prime
rates" are no longer generally published or are limited, regulated or
administered by a governmental authority or quasigovernmental body, then the
Collateral Manager will select, in its reasonable discretion, a comparable
interest rate index.
"Reinvestment Criteria": The meaning specified in Section 12.2(a)
hereof.
"Reinvestment Income": Any interest or other earnings on the funds on
deposit in the Unused Proceeds Account that have not been designated as Interest
Proceeds by the Collateral Manager with respect to the Effective Date.
"Reinvestment Period": The period beginning on the Closing Date and
ending on and including the first to occur of the following events or dates: (i)
the end of the Due Period related to the Payment Date in January 2012; (ii) the
end of the Due Period related to the Payment Date immediately following the date
on which the Collateral Manager (with the written consent of Holders of the
Majority of the Preferred Shares) notifies the Trustee that, in light of the
composition of Collateral Debt Securities, general market conditions and other
factors, investments in additional Collateral Debt Securities within the
foreseeable future would be either impractical or not beneficial to the Issuer
and the Holder of the Preferred Shares; (iii) the end of the Due Period related
to the date on which all of the Securities are redeemed as described herein
under Section 9.1; and (iv) the date on which the principal of and accrued and
unpaid interest on
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the Notes are declared immediately due and payable following the occurrence of
an Event of Default which is neither cured nor waived.
"REIT": A real estate investment trust under the Code.
"REIT Debt Securities": REIT Debt Securities--Diversified, REIT Debt
Securities--Health Care, REIT Debt Securities--Hotel, REIT Debt
Securities--Industrial, REIT Debt Securities--Mortgage, REIT Debt
Securities--Multi-Family, REIT Debt Securities--Office, REIT Debt
Securities--Retail and REIT Debt Securities--Storage.
"REIT Debt Securities--Diversified": Collateral Debt Securities issued
by a real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of mortgages on a portfolio of diverse real
property interests; provided that (a) any Collateral Debt Security falling
within this definition will be excluded from the definition of each other
Specified Type of Collateral Debt Security and (b) any Collateral Debt Security
falling within any other REIT Debt Security description set forth herein will be
excluded from this definition.
"REIT Debt Securities--Health Care": Collateral Debt Securities issued
by a real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of mortgages on hospitals, clinics, sport
clubs, spas and other health care facilities and other similar real property
interests used in one or more similar businesses; provided that any Collateral
Debt Security falling within this definition will be excluded from the
definition of each other Specified Type of Collateral Debt Security.
"REIT Debt Securities--Hotel": Collateral Debt Securities issued by a
real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of mortgages on hotels, motels, youth
hostels, bed and breakfasts and other similar real property interests used in
one or more similar businesses; provided that any Collateral Debt Security
falling within this definition will be excluded from the definition of each
other Specified Type of Collateral Debt Security.
"REIT Debt Securities--Industrial": Collateral Debt Securities issued
by a real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of mortgages on factories, refinery plants,
breweries and other similar real property interests used in one or more similar
businesses; provided that any Collateral Debt Security falling within this
definition will be excluded from the definition of each other Specified Type of
Collateral Debt Security.
"REIT Debt Securities--Mortgage": Collateral Debt Securities issued by
a real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely
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distribution of proceeds to holders of the Collateral Debt Securities) of
mortgages, commercial mortgage backed securities, collateralized mortgage
obligations and other similar mortgage related securities (including Collateral
Debt Securities issued by a hybrid form of such trust that invests in both
commercial real estate and commercial mortgages); provided that any Collateral
Debt Security falling within this definition will be excluded from the
definition of each other Specified Type of Collateral Debt Security.
"REIT Debt Securities--Multi-Family": Collateral Debt Securities
issued by a real estate investment trust (as defined in Section 856 of the Code
or any successor provision) whose assets consist (except for rights or other
assets designed to assure the servicing or timely distribution of proceeds to
holders of the Collateral Debt Securities) of residential mortgages on
multi-family dwellings such as apartment blocks, condominiums and co-operative
owned buildings; provided that any Collateral Debt Security falling within this
definition will be excluded from the definition of each other Specified Type of
Collateral Debt Security.
"REIT Debt Securities--Office": Collateral Debt Securities issued by a
real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of mortgages on office buildings, conference
facilities and other similar real property interests used in the commercial real
estate business; provided that any Collateral Debt Security falling within this
definition will be excluded from the definition of each other Specified Type of
Collateral Debt Security.
"REIT Debt Securities--Retail": Collateral Debt Securities issued by a
real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of mortgages on retail stores, restaurants,
bookstores, clothing stores and other similar real property interests used in
one or more similar businesses; provided that any Collateral Debt Security
falling within this definition will be excluded from the definition of each
other Specified Type of Collateral Debt Security.
"REIT Debt Securities--Storage": Collateral Debt Securities issued by
a real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of storage facilities and other similar real
property interests used in one or more similar businesses; provided that any
Collateral Debt Security falling within this definition will be excluded from
the definition of each other Specified Type of Collateral Debt Security.
"Repurchase Price": The meaning specified in Section 16.5(c) hereof.
"Rule 144A": Rule 144A under the Securities Act.
"Rule 144A Global Security": The meaning specified in Section
2.2(b)(i) hereof.
"Rule 144A Information": The meaning specified in Section 7.13 hereof.
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"S&P": Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and its successors in interest.
"S&P Assigned Rating": A rating determined in accordance with the
definition of "S&P Rating," other than an S&P Estimated Rating.
"S&P CDO Monitor": A dynamic, analytical computer model provided prior
to the initial Payment Date by S&P to the Collateral Manager and the Trustee,
with written instructions and assumptions to be applied when running such
computer model, for the purpose of estimating the default risk of a pool of
Collateral Debt Securities and Eligible Investments.
"S&P CDO Monitor Test": A test that will be satisfied on any
Measurement Date if, after giving effect to any purchase or sale of a Collateral
Debt Security (or both), as the case may be, (i) the Class A-1A/A-1AR Loss
Differential, the Class A-2 Loss Differential, the Class B Loss Differential,
the Class C Loss Differential, the Class D Loss Differential, the Class E Loss
Differential and the Class F Loss Differential, as the case may be, of the
Proposed Portfolio is equal to or greater than zero or (ii) the Class A-1A/A-1AR
Loss Differential, the Class A-2 Loss Differential, the Class B Loss
Differential, the Class C Loss Differential, the Class D Loss Differential, the
Class E Loss Differential and the Class F Loss Differential, as the case may be,
of the Proposed Portfolio is greater than or equal to the Class A-1A/A-1AR Loss
Differential, the Class A-2 Loss Differential, the Class B Loss Differential,
the Class C Loss Differential, the Class D Loss Differential, the Class E Loss
Differential and the Class F Loss Differential, as the case may be, of the
Current Portfolio.
"S&P Estimated Rating": The estimated rating for a Collateral Debt
Security determined by the Collateral Manager in accordance with clause (iv) of
the definition of "S&P Rating."
"S&P Fixed Rate Excess": As of any Measurement Date, a fraction
(expressed as a percentage) the numerator of which is equal to the product of
(a) the greater of zero and the excess, if any, of the Weighted Average Coupon
over the percentage set forth in the Weighted Average Coupon row in the
applicable column of the S&P Matrix (which percentage, for the avoidance of
doubt, will vary depending on the then-current levels of the other variables
included in the S&P Matrix) and (b) the Aggregate Principal Balance of all
Collateral Debt Securities that are Fixed Rate Securities (excluding all
Defaulted Securities and Written Down Securities) and the denominator of which
is the Aggregate Principal Balance of all Collateral Debt Securities that are
Floating Rate Securities (excluding all Defaulted Securities and Written Down
Securities), multiplying the resulting figure by 360 and then dividing by 365.
As used in this definition, "applicable column" means the column corresponding
to the numbered scenario in the S&P Matrix, the use of the applicable numbers or
percentages set forth in which would result in satisfaction of the related
Collateral Quality Tests.
"S&P Matrix": The matrix set forth in Schedule C attached hereto.
"S&P Minimum Weighted Average Coupon Test": A test that will be
satisfied on any Measurement Date if the Weighted Average Coupon plus the S&P
Spread Excess, if any, is greater than or equal to the number set forth in the
Weighted Average Coupon row in the
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applicable column of the S&P Matrix (which number, for the avoidance of doubt,
will vary depending on the then-current levels of the other variables included
in the S&P Matrix). As used in this definition, "applicable column" means the
column corresponding to the numbered scenario in the S&P Matrix, the use of the
applicable numbers or percentages set forth in which would result in
satisfaction of the related Collateral Quality Tests.
"S&P Minimum Weighted Average Spread Test": A test that will be
satisfied as of any Measurement Date if the Weighted Average Spread plus the S&P
Fixed Rate Excess, if any, is greater than or equal to the number set forth in
the Weighted Average Spread row in the applicable column of the S&P Matrix
(which number, for the avoidance of doubt, will vary depending on the
then-current levels of the other variables included in the S&P Matrix). As used
in this definition, "applicable column" means the column corresponding to the
numbered scenario in the S&P Matrix, the use of the applicable numbers or
percentages set forth in which would result in satisfaction of the related
Collateral Quality Tests.
"S&P Post-Acquisition Compliance Test": With respect to any Substitute
Collateral Debt Security which did not have an S&P Assigned Rating at the time
it was acquired by the Issuer, the test that is satisfied if (a) the S&P
Assigned Rating subsequently determined for such Substitute Collateral Debt
Security is equal to or higher than its S&P Estimated Rating, (b) as of the date
such Substitute Collateral Debt Security was acquired by the Issuer, the S&P CDO
Monitor Test would have been satisfied using the S&P Assigned Rating
subsequently determined for such Substitute Collateral Debt Security, or, if
such test was not satisfied immediately prior to such acquisition, the extent of
compliance with such test would have been maintained or improved, or (c) the S&P
CDO Monitor Test is satisfied.
"S&P Post-Acquisition Failure": The meaning specified in Section
12.2(d) hereof.
"S&P Rating": Of any Collateral Debt Security will be determined as
follows:
(i) if S&P has assigned a rating to such Collateral Debt Security
either publicly or privately (in the case of a private rating, with
the appropriate consents for the use of such private rating), the S&P
Rating shall be the rating assigned thereto by S&P (or, in the case of
a REIT Debt Security, the issuer credit rating assigned by S&P);
provided that, notwithstanding the foregoing, if any Collateral Debt
Security shall, at the time of its purchase by the Issuer, be listed
for a possible upgrade or downgrade on S&P's then-current credit
rating watch list, then the S&P Rating of such Collateral Debt
Security shall be one subcategory above or below, respectively, the
rating then assigned to such Collateral Debt Security by S&P, as
applicable; provided that, if such Collateral Debt Security is removed
from such list at any time, it shall be deemed to have its actual
rating by S&P;
(ii) if such Collateral Debt Security is not rated by S&P but the
Issuer (or the Collateral Manager on behalf of the Issuer) has
requested that S&P assign a rating to such Collateral Debt Security,
the S&P Rating shall be the rating so assigned by S&P; provided that,
pending receipt from S&P of such rating, if such
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Collateral Debt Security is of a type listed on Schedule E attached
hereto or is not eligible for notching in accordance with Schedule D
attached hereto, such Collateral Debt Security shall have an S&P
Rating of "CCC-," otherwise such S&P Rating shall be the rating
assigned according to Annex 1 of Schedule F attached hereto until such
time as S&P shall have assigned a rating thereto;
(iii) if any Collateral Debt Security is a Collateral Debt
Security that has not been assigned a rating by S&P and is not a
Collateral Debt Security listed in Schedule E attached hereto, as
identified by the Collateral Manager, the S&P Rating shall be the
rating assigned according to Schedule F attached hereto; provided
that, if any Collateral Debt Security shall, at the time of its
purchase by the Issuer, be listed for a possible upgrade or downgrade
on either Moody's or ▇▇▇▇▇'▇ 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 Collateral Debt Security in accordance with Schedule F attached
hereto; provided, further, that the Aggregate Principal Balance that
may be given a rating based on this paragraph (c) may not exceed 20%,
of the Aggregate Principal Balance of all Collateral Debt Securities;
or
(iv) to the extent permitted under this Indenture, with respect
to any Loan acquired during the Reinvestment Period, until a rating is
determined in accordance with clauses (i) through (iii) above, the S&P
Rating will be determined by the Collateral Manager based on its
estimate of the rating that would be assigned by S&P.
"S&P Recovery Rate": With respect to any Collateral Debt Security on
any Measurement Date, an amount equal to the percentage for such Collateral Debt
Security set forth in Schedule D (the S&P Recovery Matrix) hereto (or, in the
case of a Defaulted Security under Clause A of Schedule D (the S&P Recovery
Matrix) attached hereto, corresponding to the S&P Rating at the time of issuance
of such Collateral Debt Security) or such lower percentage as may be expressly
agreed to by S&P and the Issuer (or the Collateral Manager on behalf of the
Issuer) with respect to such Collateral Debt Security; provided that, if the
Issuer owns one or more B Notes and the related A Note also is included in the
Assets, the "S&P Recovery Rate" for such B Note(s) shall be the rate applicable
to the related A Note, but only if S&P modeled such B Note(s) as a Whole Loan
and provided to the Issuer a private rating with respect to such B Note(s) on
the basis thereof; provided, further, that if the Issuer owns one or more
subordinated B Notes and the related senior B Note also is included in the
Assets, the "S&P Recovery Rate" for such subordinated B Note(s) will be the rate
applicable to the related senior B Note, but only if S&P modeled such
subordinated B Note(s) as a senior B Note and provided to the Issuer a private
rating with respect to such subordinated B Note(s) on the basis thereof; and
provided, further, that the S&P Recovery Rate for any Collateral Debt Security
with respect to which substitute or additional collateral (in the form of Cash
or Eligible Investments) in an amount at least equal to the sum of the principal
amount of such Collateral Debt Security and the aggregate of all scheduled
remaining interest payments thereon through the earliest permissible prepayment
date has been delivered by or on behalf of the related obligor to the Trustee
and deposited into the Defeased Collateral Account (or to the Servicer in
accordance with the Servicing Agreement and deposited into an Eligible Account)
(by defeasance or otherwise) shall be 100%.
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"S&P Recovery Test": A test that will be satisfied on any Measurement
Date if the S&P Weighted Average Recovery Rate (based upon the Principal Balance
of the Collateral Debt Securities) for each Class of Notes falls within one of
the permissible scenarios (which scenarios, for the avoidance of doubt, will
vary depending on the then-current levels of the variables included in the S&P
Matrix) for each such Class; provided that, in the event Cash has been received
in respect of Principal Proceeds of any Collateral Debt Security in connection
with a prepayment or sale of such Collateral Debt Security, but such Cash has
not been reinvested in additional Collateral Debt Securities as of such
Measurement Date, such Cash will be included in calculating the S&P Weighted
Average Recovery Rate and the Principal Balance and Recovery Rate associated
with such Cash will be the Principal Balance and Recovery Rate of such
Collateral Debt Security immediately prior to prepayment or sale, as applicable;
provided, further, that, with respect to any such Collateral Debt Security that
was sold for less than its outstanding principal balance, the "Principal
Balance" associated with such Cash will equal the amount of Sale Proceeds
received by the Issuer in connection with such sale.
"S&P Special Amortization Pro Rata Condition": A condition that will
be satisfied with respect to any Payment Date if either (i)(a) the Aggregate
Principal Balance of the Collateral Debt Securities as of the related
Determination Date is greater than an amount equal to 50% of the Aggregate
Principal Balance of the Collateral Debt Securities on the Effective Date and
the S&P CDO Monitor Test is satisfied as of such Determination Date and (b) no
Par Value Test has failed to be satisfied on two or more Determination Dates,
unless, subsequent to such failure, the Par Value Ratio related to such Par
Value Test has equaled or exceeded the Par Value Ratio in existence on the
Effective Date or (ii) the Rating Agency Condition has been satisfied with
respect to S&P and, so long as MBIA is deemed to be the Controlling Class
hereunder, MBIA consents.
"S&P Spread Excess": As of any Measurement Date, a fraction (expressed
as a percentage), the numerator of which is equal to the product of (a) the
greater of zero and the excess, if any, of the Weighted Average Spread over the
percentage set forth in the Weighted Average Spread row in the applicable column
of the S&P Matrix (which percentage, for the avoidance of doubt, will vary
depending on the then-current levels of the other variables included in the S&P
Matrix) and (b) the Aggregate Principal Balance of all Collateral Debt
Securities that are Floating Rate Securities (excluding all Defaulted Securities
and Written Down Securities) and the denominator of which is the Aggregate
Principal Balance of all Collateral Debt Securities that are Fixed Rate
Securities (excluding all Defaulted Securities and Written Down Securities),
multiplying the resulting figure by 365 and then dividing by 360. As used in
this definition, "applicable column" means the column corresponding to the
numbered scenario in the S&P Matrix, the use of the applicable numbers or
percentages set forth in which would result in satisfaction of the related
Collateral Quality Tests.
"S&P Weighted Average Recovery Rate": With respect to the Collateral
Debt Securities, as of any Measurement Date, the number obtained by summing the
products obtained by multiplying the Principal Balance of each Collateral Debt
Security, other than a Defaulted Security, by its S&P Recovery Rate, and
dividing such sum by the Aggregate Principal Balance of all such Collateral Debt
Securities and rounding up to the first decimal place.
"Sale": The meaning specified in Section 5.17(a) hereof.
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"Sale Proceeds": All proceeds (including accrued interest) received
with respect to Collateral Debt Securities and Eligible Investments as a result
of sales of such Collateral Debt Securities and Eligible Investments, net of any
reasonable out-of-pocket expenses of the Collateral Manager or the Trustee in
connection with any such sale.
"Schedule of Closing Date Collateral Debt Securities": The Collateral
Debt Securities listed on Schedule I attached hereto, which Schedule shall
include the Principal Balance, interest rate (if the security bears interest at
a fixed rate) or the spread and the relevant floating reference rate (if the
security bears interest at a floating rate), the maturity date, the ▇▇▇▇▇'▇
Rating, S&P Rating and Fitch Rating, if any, of each such Collateral Debt
Security.
"Scheduled Distribution": With respect to any Pledged Obligation, for
each Due Date, the scheduled payment of principal, interest or fee or any
dividend or premium payment due on such Due Date or any other distribution with
respect to such Pledged Obligation, determined in accordance with the
assumptions specified in Section 1.2 hereof.
"SEC": The Securities and Exchange Commission.
"Secured Parties": Collectively, the Trustee, the Noteholders, each
Hedge Counterparty and the Collateral Manager, each as their interests appear in
applicable Transaction Documents.
"Securities": Collectively, the Notes and the Preferred Shares.
"Securities Account": The meaning specified in Section 8-501(a) of the
UCC.
"Securities Account Control Agreement": The meaning specified in
Section 3.3(a) hereof.
"Securities Act": The Securities Act of 1933, as amended.
"Securities Intermediary": The meaning specified in Section
8-102(a)(14) of the UCC.
"Security Entitlement": The meaning specified in Section 8-102(a)(17)
of the UCC.
"Seller": The meaning specified in the applicable Collateral Debt
Securities Purchase Agreement.
"Senior Collateral Management Fee": The fee payable quarterly in
arrears on each Payment Date to the Collateral Manager pursuant to this
Indenture and the Collateral Management Agreement, equal to 0.10% per annum (or,
if ARCM is replaced as Collateral Manager, such higher percentage not to exceed
0.15% per annum, as may be agreed to by the holders of a Majority of the
Controlling Class) of the sum of the Net Outstanding Portfolio Balance and the
Aggregate Class A-1AR Undrawn Amount (without duplication) for such Payment
Date, to the extent funds are available for such purpose in accordance with the
Priority of Payments.
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"Senior Tranche": (i) With respect to a Participation or B Note, any
senior interest in the same Underlying Term Loan as a Participation or any
senior debt secured by the same Underlying Mortgage Property as a B Note or
Participation and (ii) with respect to a Mezzanine Loan, any commercial mortgage
loan related to the same Underlying Mortgage Property or Properties as the
Mezzanine Loan.
"Servicer": Arbor Commercial Mortgage, LLC, each of Arbor Commercial
Mortgage, LLC's permitted successors and assigns or any successor Person that
shall have become the Servicer pursuant to the provisions of the Servicing
Agreement.
"Servicing Agreement": The Servicing Agreement, dated as of the
Closing Date, by and among the Issuer, the Trustee, the Collateral Manager and
the Servicer, as amended, supplemented or otherwise modified from time to time
in accordance with its terms.
"Servicing Fee": With respect to each Due Period, the aggregate amount
of all servicing fees payable to the Servicer under the Servicing Agreement and
any backup servicer named therein or in any backup servicing agreement to which
the Issuer is a party during such Due Period.
"Share Registrar": ▇▇▇▇▇▇ Finance Limited, unless a successor Person
shall have become the Share Registrar pursuant to the applicable provisions of
the Preferred Shares Paying Agency Agreement, and thereafter "Share Registrar"
shall mean such successor Person.
"Similar Law": The meaning specified in Section 2.5(h)(vi) hereof.
"Single Asset Mortgage Security": A commercial mortgage pass-through
certificate or similar security backed primarily by a single mortgage loan on
one or more commercial properties included in a property-specific securitization
transaction.
"Single Borrower Mortgage Security": A commercial mortgage
pass-through certificate or similar security backed primarily by one or more
mortgage loans to the same borrower (or affiliated borrowers) on one or more
commercial properties included in a securitization.
"Special Amortization": The meaning specified in Section 9.7 hereof.
"Special Amortization Amount": The meaning specified in Section 9.7
hereof.
"Specified Person": The meaning specified in Section 2.6(a) hereof.
"Specified Type": Each of a Loan, CMBS Security, CRE CDO Security,
REIT Debt Security, and Preferred Equity Security.
"Spread Excess": The Moody's Spread Excess, the S&P Spread Excess or
the Fitch Spread Excess, as the context requires.
"Stated Maturity": The Payment Date occurring in January 2042.
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"Step-Down Bond": A security which by the terms of the related
Underlying Instruments provides for a decrease, in the case of a Fixed Rate
Security, in the per annum interest rate on such security or, in the case of a
Floating Rate Security, in the spread over the applicable index or benchmark
rate, solely as a function of the passage of time; provided that, for purposes
of measuring compliance with the Collateral Quality Tests, the interest rate or
spread, as applicable, associated with any Step-Down Bond included in the Assets
shall be the lowest possible applicable interest rate or spread, as applicable,
as set forth in the related Underlying Instruments; provided, further, that the
term Step-Down Bond shall not include any such security providing for payment of
a constant rate of interest at all times after the date of acquisition by the
Issuer or any Loan or Preferred Equity Security.
"Step-Up Security": A security with a current interest rate of zero
percent per annum at the time of purchase but which increases to predetermined
levels on specific dates; provided that the term Step-Up Security shall not
include any Loan or Preferred Equity Security.
"Subordinate Collateral Management Fee": The fee payable quarterly in
arrears on each Payment Date to the Collateral Manager pursuant to this
Indenture and the Collateral Management Agreement, in an amount equal to 0.15%
per annum of the sum of the Net Outstanding Portfolio Balance and the Aggregate
Class A-1AR Undrawn Amount (without duplication) for such Payment Date, to the
extent funds are available for such purpose in accordance with the Priority of
Payments.
"Subordinate Interests": The Class A-2 Subordinate Interests, the
Class B Subordinate Interests, the Class C Subordinate Interests, the Class D
Subordinate Interests, the Class E Subordinate Interests, the Class F
Subordinate Interests, the Class G Subordinate Interests and the Class H
Subordinate Interests, as the context may require.
"Subsequent Collateral Debt Security": Any Collateral Debt Security
that is acquired after the Closing Date.
"Substitute Collateral Debt Security": A Collateral Debt Security that
is acquired by the Issuer in substitution for Collateral Debt Securities
previously pledged to the Trustee in accordance herewith.
"Successful Auction": (i) An Auction which is conducted in accordance
with Section 9.2(b) or (ii) the purchase of Collateral Debt Securities by the
Holder of the Preferred Shares or its Affiliates for a price equal to the Total
Redemption Price pursuant to Section 12.4(c).
"Tax Event": (i) Any obligor is, or on the next scheduled payment date
under any Collateral Debt Security, will be, required to deduct or withhold from
any payment under any Collateral Debt Security to the Issuer for or on account
of any tax for whatever reason and such obligor is not required to pay to the
Issuer such additional amount as is necessary to ensure that the net amount
actually received by the Issuer (free and clear of taxes, whether assessed
against such obligor or the Issuer) will equal the full amount that the Issuer
would have received had no such deduction or withholding been required, (ii) any
jurisdiction imposes net income, profits, or similar tax on the Issuer, (iii)
the Issuer is required to deduct or withhold from any payment
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under any Hedge Agreement for or on account of any tax and the Issuer is
obligated to make a gross up payment (or otherwise pay additional amounts) to
any Hedge Counterparty, (iv) any Hedge Counterparty is required to deduct or
withhold from any payment under any Hedge Agreement for or on account of any tax
for whatever reason and such Hedge Counterparty is not required to pay to the
Issuer such additional amount as is necessary to ensure that the net amount
actually received by the Issuer (free and clear of taxes, whether assessed
against such obligor or the Issuer) will equal the full amount that the Issuer
would have received had no such deduction or withholding been required or (v)
the Issuer fails to maintain its status as a Qualified REIT Subsidiary and has
not received an Opinion of Counsel that the Issuer will be treated as a foreign
corporation that is not engaged in a trade or business in the United States for
U.S. federal income tax purposes.
"Tax Materiality Condition": The condition that will be satisfied if
either (i) as a result of the occurrence of a Tax Event, a tax or taxes are
imposed on the Issuer or withheld from payments to the Issuer and with respect
to which the Issuer receives less than the full amount that the Issuer would
have received had no such deduction occurred and such amount exceeds, in the
aggregate, U.S. $1 million during any 12-month period or (ii) the Issuer fails
to maintain its status as a Qualified REIT Subsidiary and has not received an
Opinion of Counsel that the Issuer will be treated as a foreign corporation that
is not engaged in a trade or business in the United States for U.S. federal
income tax purposes.
"Tax Redemption": The meaning specified in Section 9.1(b) hereof.
"Total Redemption Price": The amount equal to funds sufficient to pay
all amounts and expenses described under clauses (1) through (5), (25), (26),
(27) and (28) of Section 11.1(a)(i) and to redeem all Notes at their applicable
Redemption Prices.
"Total Unfunded Delayed Funding Amount": For all Delayed Draw Term
Loans, the aggregate amount of the Unfunded Delayed Funding Amounts.
"Transaction Documents": This Indenture, the Collateral Management
Agreement, the Collateral Debt Securities Purchase Agreements, the Class A-1AR
Note Purchase Agreement, the Company Administration Agreement, the Preferred
Shares Paying Agency Agreement, the Servicing Agreement and each Hedge
Agreement.
"Transfer Agent": The Person or Persons, which may be the Issuer,
authorized by the Issuer to exchange or register the transfer of Notes.
"Treasury Regulations": Temporary or final regulations promulgated
under the Code by the United States Treasury Department.
"Trust Officer": When used with respect to the Trustee, any officer
within the CDO Trust Services Group of the Corporate Trust Office (or any
successor group of the Trustee) including any vice president, assistant vice
president or officer of the Trustee customarily performing functions similar to
those performed by the persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred at the CDO Trust
Services Group of the Corporate Trust Office because of his knowledge of and
familiarity with the particular subject and who is directly responsible for the
administration of this Indenture.
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"Trustee": ▇▇▇▇▇ Fargo Bank, National Association, a national banking
association, solely in its capacity as trustee hereunder, unless a successor
Person shall have become the Trustee pursuant to the applicable provisions of
this Indenture, and thereafter "Trustee" shall mean such successor Person.
"UCC": The applicable Uniform Commercial Code.
"UCC Account": "Account," as such term is defined in Section
9-102(a)(2) of the UCC.
"Uncertificated Security": The meaning specified in Section 3.3(a)(ii)
hereof.
"Underlying Instruments": The indenture, loan agreement, note,
mortgage, intercreditor agreement, pooling and servicing agreement,
participation agreement or other agreement pursuant to which a Collateral Debt
Security or Eligible Investment has been issued or created and each other
agreement that governs the terms of or secures the obligations represented by
such Collateral Debt Security or Eligible Investment or of which holders of such
Collateral Debt Security or Eligible Investment are the beneficiaries.
"Underlying Mortgage Property": With respect to (i) a Loan (other than
a Participation or Mezzanine Loan), the commercial mortgage property or
properties securing the Loan, (ii) a Participation, the commercial mortgage
property or properties securing the Underlying Term Loan, or (iii) a Mezzanine
Loan or a Preferred Equity Security, the commercial mortgage property or
properties related to the Mezzanine Loan or Preferred Equity Security, as the
case may be.
"Underlying Term Loan": With respect to (i) a Loan (other than a
Participation or a Mezzanine Loan), such Loan or (ii) a Participation, the
underlying commercial mortgage loan.
"Unfunded Delayed Funding Amount": With respect to any Delayed Draw
Term Loan and any Determination Date, any Delayed Funding Amount not yet funded
(by the Issuer or any other entity) pursuant to the terms of such Delayed Draw
Term Loan.
"Unfunded Other Loan": The meaning specified in the definition of
Future Advance Loan.
"United States" and "U.S.": The United States of America, including
any state and any territory or possession administered thereby.
"Unregistered Securities": The meaning specified in Section 5.17(c)
hereof.
"Unscheduled Principal Payments": Any proceeds received by the Issuer
from an unscheduled prepayment or redemption (in whole but not in part) by the
obligor of a Collateral Debt Security prior to the stated maturity date of such
Collateral Debt Security.
"Unused Proceeds Account": The trust account established pursuant to
Section 10.4(a) hereof.
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"U.S. Person": The meaning specified in Regulation S.
"Warehouse Facility": A repurchase agreement or other warehouse
facility with an Approved Lender.
"Weighted Average Coupon": As of any Measurement Date, the number
obtained (rounded up to the next 0.001%) by (i) summing the products obtained by
multiplying (x) the current interest rate (net of any servicing fees and
expenses) on each Collateral Debt Security that is a Fixed Rate Security (other
than a Defaulted Security or Written Down Security) by (y) the Principal Balance
of each such Collateral Debt Security and (ii) dividing such sum by the
aggregate Principal Balance of all Collateral Debt Securities that are Fixed
Rate Securities (excluding all Defaulted Securities and Written Down
Securities). For the avoidance of doubt, any capitalized or deferred interest in
respect of any Partially Deferred Loan will be disregarded for purposes of
calculating the Weighted Average Coupon.
"Weighted Average Drawn Class A-1AR Note Portion": With respect to any
Payment Date or Class A-1AR Prepayment Date, the weighted average Aggregate
Outstanding Amount of the Class A-1AR Notes during the related Interest Accrual
Period (adjusted as necessary if multiple Class A-1AR Draws occur within such
Interest Accrual Period).
"Weighted Average Life": As of any Measurement Date with respect to
the Collateral Debt Securities (other than Defaulted Securities), the number
obtained by (i) summing the products obtained by multiplying (a) the Average
Life at such time of each Collateral Debt Security (other than Defaulted
Securities) by (b) the outstanding Principal Balance of such Collateral Debt
Security and (ii) dividing such sum by the Aggregate Principal Balance at such
time of all Collateral Debt Securities (other than Defaulted Securities).
"Weighted Average Life Test": With respect to any Collateral Debt
Securities, a test that will be satisfied as of any Measurement Date if the
Weighted Average Life of such Collateral Debt Securities as of such Measurement
Date is less than or equal to eight years.
"Weighted Average ▇▇▇▇▇'▇ Rating Factor": The amount determined by
summing the products obtained by multiplying the Principal Balance of each
Collateral Debt Security (excluding Defaulted Securities) and Eligible
Investment by its ▇▇▇▇▇'▇ Rating Factor, dividing such sum by the Aggregate
Principal Balance of all such obligations and rounding the result up to the
nearest whole number.
"Weighted Average Spread": As of any Measurement Date, the number
obtained (rounded up to the next 0.001%), by (i) summing the products obtained
by multiplying (x) the current stated spread above LIBOR (net of any servicing
fees and expenses) at which interest accrues on each Collateral Debt Security
that is a Floating Rate Security (other than a Defaulted Security or Written
Down Security) (or, in the case of any Floating Rate Security (other than a
Defaulted Security or Written Down Security) which provides for a minimum
interest rate (net of any servicing fees and expenses) payable thereunder, the
excess, if any, of the minimum interest rate applicable to such Collateral Debt
Security over LIBOR, if such result is greater than the related stated spread
above LIBOR) as of such date by (y) the Principal Balance of such Collateral
Debt Security as of such date, and (ii) dividing such sum by the aggregate
Principal
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Balance of all Collateral Debt Securities that are Floating Rate Securities
(excluding all Defaulted Securities and Written Down Securities). For purposes
of this definition, a Fixed Rate Security that is a Covered Fixed Rate Security
will be deemed to be a Floating Rate Security and the floating rate applicable
thereto shall be the rate payable taking into account the related Asset Specific
Hedge. For the avoidance of doubt, any capitalized or deferred interest in
respect of any Partially Deferred Loan will be disregarded for purposes of
calculating the Weighted Average Spread.
"Whole Loan": A whole loan (including, without limitation, an A Note)
secured by a mortgage on a multi-family property or a senior interest therein or
commercial real estate property or a senior interest therein (in either case,
including senior and pari passu participations).
"Written Down Security": As of any date of determination, any
Collateral Debt Security as to which the aggregate par amount of the entire
issue of such Collateral Debt Security and all other securities secured by the
same pool of collateral and that rank senior in priority of payment to such
issue exceeds the aggregate par amount of all collateral (giving effect to any
appraisal reductions) securing such issue (excluding defaulted collateral).
Section 1.2 Assumptions as to Pledged Obligations.
(a) In connection with all calculations required to be made pursuant
to this Indenture with respect to Scheduled Distributions on any Pledged
Obligation, or any payments on any other assets included in the Assets, and with
respect to the income that can be earned on Scheduled Distributions on such
Pledged Obligations and on any other amounts that may be received for deposit in
the applicable Collection Account, the provisions set forth in this Section 1.2
shall be applied.
(b) All calculations with respect to Scheduled Distributions on the
Pledged Obligations securing the Notes shall be made on the basis of information
as to the terms of each such Pledged Obligation and upon report of payments, if
any, received on such Pledged Obligation that are furnished by or on behalf of
the issuer of such Pledged Obligation and, to the extent they are not manifestly
in error, such information or report may be conclusively relied upon in making
such calculations.
(c) For each Due Period, the Scheduled Distribution on any Pledged
Obligation (other than a Defaulted Security, which, except as otherwise provided
herein, shall be assumed to have a Scheduled Distribution of zero) shall be the
sum of (i) the total amount of payments and collections in respect of such
Pledged Obligation (including all Sales Proceeds received during the Due Period
and not reinvested in Substitute Collateral Debt Securities or retained in the
Principal Collection Account for subsequent reinvestment) that, if paid as
scheduled, will be available in the Collection Accounts at the end of such Due
Period for payment on the Notes and of expenses of the Issuer and the Co-Issuer
pursuant to the Priority of Payments and (ii) any such amounts received in prior
Due Periods that were not disbursed on a previous Payment Date and do not
constitute amounts which have been used as reimbursement with respect to a prior
Interest Advance pursuant to the terms of this Indenture.
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(d) With respect to any Collateral Debt Security as to which any
interest or other payment thereon is subject to withholding tax of any relevant
jurisdiction, each Scheduled Distribution thereon shall, for purposes of the
Coverage Tests and the Collateral Quality Tests, be deemed to be payable net of
such withholding tax unless the issuer thereof or obligor thereon is required to
make additional payments to fully compensate the Issuer for such withholding
taxes (including in respect of any such additional payments). On any date of
determination, the amount of any Scheduled Distribution due on any future date
shall be assumed to be made net of any such uncompensated withholding tax based
upon withholding tax rates in effect on such date of determination.
(e) For purposes of calculating any Interest Coverage Ratio, the
expected interest income on floating rate Collateral Debt Securities and
Eligible Investments and under each Hedge Agreement and the expected interest
payable on the Notes shall be calculated using (i) the interest rates applicable
thereto on the applicable Measurement Date and (ii) accrued original issue
discount on Eligible Investments shall be deemed to be Scheduled Distributions
of interest due on the date such original issue discount is scheduled to be
paid. Notwithstanding the foregoing, for the purposes of calculating any
Interest Coverage Ratio, there shall be excluded all scheduled or deferred
payments of interest on or principal of Collateral Debt Securities and any
payment, including any amount payable to the Issuer by each Hedge Counterparty,
which the Collateral Manager has determined in its reasonable judgment shall not
be made in Cash or received when due.
(f) Each Scheduled Distribution receivable with respect to a Pledged
Obligation shall be assumed to be received on the applicable Due Date, and each
such Scheduled Distribution shall be assumed to be immediately deposited in the
applicable Collection Account except to the extent the Collateral Manager has a
reasonable expectation that such Scheduled Distribution will not be received on
the applicable Due Date. All such funds shall be assumed to continue to earn
interest until the date on which they are required to be available in the
applicable Collection Account for transfer to the Payment Account for
application, in accordance with the terms hereof, to payments of principal of or
interest on the Notes and, in the case of the Class A-1AR Notes, the Class A-1AR
Commitment Fee or other amounts payable pursuant to this Indenture.
(g) All calculations required to be made and all reports which are to
be prepared pursuant to this Indenture with respect to the Pledged Obligations,
shall be made on the basis of the date on which the Issuer makes a binding
commitment to purchase or sell an asset (the "trade date"), not the settlement
date.
(h) For purposes of calculating the Par Value Ratio, an appraisal
reduction of a Collateral Debt Security will be assumed to result in an implied
reduction of Principal Balance for such Collateral Debt Security only if such
appraisal reduction is intended to reduce the interest payable on such
Collateral Debt Security and only in proportion to such interest reduction. For
purposes of the Par Value Ratio, any Collateral Debt Security that has sustained
an implied reduction of Principal Balance due to an appraisal reduction will not
be considered a Defaulted Security solely due to such implied reduction. The
Collateral Manager will notify the Trustee of any appraisal reductions of
Collateral Debt Securities if the Collateral Manager has actual knowledge
thereof.
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Section 1.3 Interest Calculation Convention.
All calculations of interest hereunder that are made with respect to
the Notes shall be made on the basis of the actual number of days during the
related Interest Accrual Period divided by 360.
Section 1.4 Rounding Convention.
Unless otherwise specified herein, test calculations that evaluate to
a percentage will be rounded to the nearest ten thousandth of a percentage point
and test calculations that evaluate to a number or decimal will be rounded to
the nearest one hundredth of a percentage point.
ARTICLE 2
THE NOTES
Section 2.1 Forms Generally.
The Notes and the Trustee's or Authenticating Agent's certificate of
authentication thereon (the "Certificate of Authentication") shall be in
substantially the forms required by this Article 2, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon, as may be
consistent herewith, determined by the Authorized Officers of the Issuer and the
Co-Issuer, executing such Notes as evidenced by their execution of such Notes.
Any portion of the text of any Note may be set forth on the reverse thereof,
with an appropriate reference thereto on the face of the Note.
Section 2.2 Forms of Notes and Certificate of Authentication.
(a) Form. The form of each Class of Notes including the Certificate of
Authentication, shall be substantially as set forth in Exhibits ▇-▇, ▇-▇, ▇-▇,
B, C, D, E, F, G and H hereto.
(b) Global Securities and Definitive Notes.
(i) The Notes (other than the Class A-1AR Notes) initially offered and
sold in the United States to (or to U.S. Persons who are) QIBs shall be
represented by one or more permanent global notes in definitive, fully
registered form without interest coupons with the applicable legend set
forth in Exhibits ▇-▇, ▇-▇, ▇, ▇, ▇, ▇, ▇, ▇ and H hereto added to the form
of such Notes (each, a "Rule 144A Global Security"), which shall be
registered in the name of the nominee of the Depository and deposited with
the Trustee, at its Corporate Trust Office, as custodian for the
Depository, duly executed by the Issuer and the Co-Issuer and authenticated
by the Trustee as hereinafter provided. The aggregate principal amount of
the Rule 144A Global Securities may from time to time be
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increased or decreased by adjustments made on the records of the Trustee or
the Depository or its nominee, as the case may be, as hereinafter provided.
(ii) The Notes (other than the Class A-1AR Notes) initially sold in
offshore transactions in reliance on Regulation S shall be represented by
one or more permanent global notes in definitive, fully registered form
without interest coupons with the applicable legend set forth in Exhibits
▇-▇, ▇-▇, ▇, ▇, ▇, ▇, ▇, ▇ and H, hereto added to the form of such Notes
(each, a "Regulation S Global Security"), which shall be deposited on
behalf of the subscribers for such Notes represented thereby with the
Trustee as custodian for the Depository and registered in the name of a
nominee of the Depository for the respective accounts of Euroclear and
Clearstream, Luxembourg or their respective depositories, duly executed by
the Issuer and the Co-Issuer and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the Regulation S
Global Securities may from time to time be increased or decreased by
adjustments made on the records of the Trustee or the Depository or its
nominee, as the case may be, as hereinafter provided.
(iii) Definitive Class A-1AR Notes. The Class A-1AR Notes initially
offered and sold (A) in the United States to (or to U.S. Persons who are)
QIBs and (B) in offshore transactions in reliance on Regulation S shall be
issued only in definitive, fully registered, certificated form without
interest coupons with the applicable legend set forth in Exhibit A-3 hereto
added to the form of such Notes (each, a "Definitive Class A-1AR Note")
registered in the name of the beneficial owner thereof unless otherwise
authorized by the Issuer on the date of issuance. The Class A-1AR Notes
will not be eligible for clearance and settlement through the facilities of
the Depository, Euroclear or Clearstream, Luxembourg.
(c) Book-Entry Provisions. This Section 2.2(c) shall apply only to
Global Securities deposited with or on behalf of the Depository.
Each of the Issuer and Co-Issuer shall execute and the Trustee shall,
in accordance with this Section 2.2(c), authenticate and deliver initially one
or more Global Securities that shall be (i) registered in the name of the
nominee of the Depository for such Global Security or Global Securities and (ii)
delivered by the Trustee to such Depository or pursuant to such Depository's
instructions or held by the Trustee's agent as custodian for the Depository.
Agent Members shall have no rights under this Indenture with respect
to any Global Security held on their behalf by the Trustee, as custodian for the
Depository or under the Global Security, and the Depository may be treated by
the Issuer, the Co-Issuer, the Trustee, and any agent of the Issuer, the
Co-Issuer or the Trustee as the absolute owner of such Global Security for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Issuer, the Co-Issuer, the Trustee, or any agent of the Issuer, the
Co-Issuer or the Trustee, from giving effect to any written certification, proxy
or other authorization furnished by the Depository or impair, as between the
Depository and its Agent Members, the operation of customary practices governing
the exercise of the rights of a Holder of any Global Security.
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(d) Delivery of Certificated Notes in Lieu of Global Securities.
Except as provided in Section 2.10 hereof, owners of beneficial interests in a
Class of Global Securities shall not be entitled to receive physical delivery of
a Certificated Note.
Section 2.3 Authorized Amount; Stated Maturity; and Denominations.
(a) The aggregate principal amount of Notes that may be authenticated
and delivered under this Indenture is limited to $547,500,000, except for Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes pursuant to Section 2.5, 2.6 or 8.5 hereof.
Such Notes shall be divided into ten Classes having designations and
original principal amounts as follows:
ORIGINAL
PRINCIPAL
DESIGNATION AMOUNT
----------- ------------
Class A-1A Senior Secured Floating Rate Term Notes Due 2042...... $230,000,000
Class A-1AR Revolving Senior Secured Floating Rate Term Notes
Due 2042...................................................... $100,000,000
Class A-2 Second Priority Senior Secured Floating Rate Term
Notes Due 2042................................................ $ 72,900,000
Class B Third Priority Senior Secured Floating Rate Term Notes
Due 2042...................................................... $ 41,100,000
Class C Fourth Priority Floating Rate Capitalized Interest Term
Notes Due 2042................................................ $ 31,200,000
Class D Fifth Priority Floating Rate Capitalized Interest Term
Notes Due 2042................................................ $ 13,350,000
Class E Sixth Priority Floating Rate Capitalized Interest Term
Notes Due 2042................................................ $ 14,250,000
Class F Seventh Priority Floating Rate Capitalized Interest
Term Notes Due 2042........................................... $ 13,650,000
Class G Eighth Priority Floating Rate Capitalized Interest Term
Notes Due 2042................................................ $ 16,950,000
Class H Ninth Priority Floating Rate Capitalized Interest Term
Notes Due 2042................................................ $ 14,100,000
(b) The Notes shall be issuable in minimum denominations of $500,000
and integral multiples of $500 in excess thereof (plus any residual amount).
Section 2.4 Execution, Authentication, Delivery and Dating.
The Notes shall be executed on behalf of the Issuer and the Co-Issuer
by an Authorized Officer of the Issuer and the Co-Issuer, respectively. The
signature of such Authorized Officers on the Notes may be manual or facsimile.
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Notes bearing the manual or facsimile signatures of individuals who
were at any time the Authorized Officers of the Issuer or the Co-Issuer shall
bind the Issuer or the Co-Issuer, as the case may be, notwithstanding the fact
that such individuals or any of them have ceased to hold such offices prior to
the authentication and delivery of such Notes or did not hold such offices at
the date of issuance of such Notes.
At any time and from time to time after the execution and delivery of
this Indenture, the Issuer and the Co-Issuer may deliver Notes executed by the
Issuer and the Co-Issuer to the Trustee or the Authenticating Agent for
authentication and the Trustee or the Authenticating Agent, upon Issuer Order,
shall authenticate and deliver such Notes as provided in this Indenture and not
otherwise.
Each Note authenticated and delivered by the Trustee or the
Authenticating Agent upon Issuer Order on the Closing Date shall be dated as of
the Closing Date. All other Notes that are authenticated after the Closing Date
for any other purpose under this Indenture shall be dated the date of their
authentication.
Notes issued upon transfer, exchange or replacement of other Notes
shall be issued in authorized denominations reflecting the original aggregate
principal amount of the Notes so transferred, exchanged or replaced, but shall
represent only the current outstanding principal amount of the Notes so
transferred, exchanged or replaced. In the event that any Note is divided into
more than one Note in accordance with this Article 2, the original principal
amount of such Note shall be proportionately divided among the Notes delivered
in exchange therefor and shall be deemed to be the original aggregate principal
amount of such subsequently issued Notes.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
Certificate of Authentication, substantially in the form provided for herein,
executed by the Trustee or by the Authenticating Agent by the manual signature
of one of their Authorized Officers, and such certificate upon any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
Section 2.5 Registration, Registration of Transfer and Exchange.
(a) The Issuer and the Co-Issuer shall cause to be kept a register
(the "Notes Register") in which, subject to such reasonable regulations as it
may prescribe, the Issuer and the Co-Issuer shall provide for the registration
of Notes and the registration of transfers and exchanges of Notes. The Trustee
is hereby initially appointed "Notes Registrar" for the purpose of registering
Notes and transfers and exchanges of such Notes with respect to the Notes
Register kept in the United States as herein provided. Upon any resignation or
removal of the Notes Registrar, the Issuer and the Co-Issuer shall promptly
appoint a successor or, in the absence of such appointment, assume the duties of
Notes Registrar.
If a Person other than the Trustee is appointed by the Issuer and the
Co-Issuer as Notes Registrar, the Issuer and the Co-Issuer shall give the
Trustee prompt written notice of the appointment of a successor Notes Registrar
and of the location, and any change in the location,
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of the Notes Register, and the Trustee shall have the right to inspect the Notes
Register at all reasonable times and to obtain copies thereof and the Trustee
shall have the right to rely upon a certificate executed on behalf of the Notes
Registrar by an Officer thereof as to the names and addresses of the Holders of
the Notes and the principal amounts and numbers of such Notes.
Subject to this Section 2.5, upon surrender for registration of
transfer of any Notes at the office or agency of the Issuer to be maintained as
provided in Section 7.2, the Issuer and the Co-Issuer shall execute, and the
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Notes of any authorized denomination and of a
like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for Notes of like
terms, in any authorized denominations and of like aggregate principal amount,
upon surrender of the Notes to be exchanged at the office or agency of the
Issuer to be maintained as provided in Section 7.2. Whenever any Note is
surrendered for exchange, the Issuer and the Co-Issuer shall execute, and the
Trustee shall authenticate and deliver, the Notes that the Noteholder making the
exchange is entitled to receive.
All Notes issued and authenticated upon any registration of transfer
or exchange of Notes shall be the valid obligations of the Issuer and the
Co-Issuer, evidencing the same debt, and entitled to the same benefits under
this Indenture, as the Notes surrendered upon such registration of transfer or
exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Issuer and the Notes Registrar duly
executed by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
None of the Notes Registrar, the Issuer or the Co-Issuer shall be
required (i) to issue, register the transfer of or exchange any Note during a
period beginning at the opening of business 15 days before any selection of
Notes to be redeemed and ending at the close of business on the day of the
mailing of the relevant notice of redemption, or (ii) to register the transfer
of or exchange any Note so selected for redemption.
(b) No Note may be sold or transferred (including, without limitation,
by pledge or hypothecation) unless such sale or transfer is exempt from the
registration requirements of the Securities Act and is exempt from the
registration requirements under applicable state securities laws.
(c) No Note may be offered, sold, resold or delivered, within the
United States or to, or for the benefit of, U.S. Persons except in accordance
with Section 2.5(e) below and in accordance with Rule 144A to QIBs who are
Qualified Purchasers purchasing for their own account or for the accounts of one
or more QIBs who are Qualified Purchasers, for which the purchaser is acting as
fiduciary or agent. The Notes may be offered, sold, resold or
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delivered, as the case may be, in offshore transactions to non-U.S. Persons in
reliance on Regulation S. None of the Issuer, the Co-Issuer, the Trustee or any
other Person may register the Notes under the Securities Act or any state
securities laws.
(d) Upon final payment due on the Stated Maturity of a Note, the
Holder thereof shall present and surrender such Note at the Corporate Trust
Office of the Trustee or at the office of the Paying Agent (outside the United
States if then required by applicable law in the case of a Note in definitive
form issued in exchange for a beneficial interest in a Regulation S Global
Security pursuant to Section 2.10).
(e) Transfers of Global Securities. Notwithstanding any provision to
the contrary herein, so long as a Global Security remains outstanding and is
held by or on behalf of the Depository, transfers of a Global Security, in whole
or in part, shall be made only in accordance with Section 2.2(c) and this
Section 2.5(e).
(i) Subject to clauses (ii) through (iv) of this Section 2.5(e),
transfers of a Global Security shall be limited to transfers of such Global
Security in whole, but not in part, to nominees of the Depository or to a
successor of the Depository or such successor's nominee.
(ii) Regulation S Global Security to Rule 144A Global Security. If a
holder of a beneficial interest in a Regulation S Global Security wishes to
transfer all or a part of its interest in such Regulation S Global Security
to a Person who wishes to take delivery thereof in the form of a Rule 144A
Global Security, such holder may, subject to the terms hereof and the rules
and procedures of Euroclear, Clearstream, Luxembourg or the Depository, as
the case may be, exchange or cause the exchange of such interest for an
equivalent beneficial interest in a Rule 144A Global Security of the same
Class. Upon receipt by the Trustee, as Notes Registrar, of (A) instructions
from Euroclear, Clearstream, Luxembourg or the Depository, as the case may
be, directing the Trustee, as Notes Registrar, to cause such Rule 144A
Global Security to be increased by an amount equal to such beneficial
interest in such Regulation S Global Security but not less than the minimum
denomination applicable to the related Class of Notes, and (B) a
certificate substantially in the form of Exhibit J hereto given by the
prospective transferee of such beneficial interest and stating, among other
things, that such transferee acquiring such interest in a Rule 144A Global
Security is a QIB and a Qualified Purchaser, is obtaining such beneficial
interest in a transaction pursuant to Rule 144A and in accordance with any
applicable securities laws of any state of the United States or any other
applicable jurisdiction, then Euroclear, Clearstream, Luxembourg or the
Trustee, as Notes Registrar, as the case may be, shall approve the
instruction at the Depository to reduce such Regulation S Global Security
by the aggregate principal amount of the interest in such Regulation S
Global Security to be transferred and increase the Rule 144A Global
Security specified in such instructions by an Aggregate Outstanding Amount
equal to such reduction in such principal amount of the Regulation S Global
Security.
(iii) Rule 144A Global Security to Regulation S Global Security. If a
holder of a beneficial interest in a Rule 144A Global Security wishes to
transfer all or a part of its interest in such Rule 144A Global Security to
a Person who wishes to take delivery
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thereof in the form of a Regulation S Global Security, such holder may,
subject to the terms hereof and the rules and procedures of Euroclear,
Clearstream, Luxembourg or the Depository, as the case may be, exchange or
cause the exchange of such interest for an equivalent beneficial interest
in a Regulation S Global Security of the same Class. Upon receipt by the
Trustee, as Notes Registrar, of (A) instructions from Euroclear,
Clearstream, Luxembourg or the Depository, as the case may be, directing
the Trustee, as Notes Registrar, to cause such Regulation S Global Security
to be increased by an amount equal to the beneficial interest in such Rule
144A Global Security but not less than the minimum denomination applicable
to the related Class of Notes to be exchanged, and (B) a certificate
substantially in the form of Exhibit I hereto given by the prospective
transferee of such beneficial interest and stating, among other things,
that such transferee acquiring such interest in a Regulation S Global
Security is a not a U.S. Person and that such transfer is being made
pursuant to Rule 903 or 904 under Regulation S, then Euroclear,
Clearstream, Luxembourg or the Trustee, as Notes Registrar, as the case may
be, shall approve the instruction at the Depository to reduce such Rule
144A Global Security by the aggregate principal amount of the interest in
such Rule 144A Global Security to be transferred and increase the
Regulation S Global Security specified in such instructions by an Aggregate
Outstanding Amount equal to such reduction in the principal amount of the
Rule 144A Global Security.
(iv) Other Exchanges. In the event that, pursuant to Section 2.10
hereof, a Global Security is exchanged for Certificated Notes, such Notes
may be exchanged for one another only in accordance with such procedures as
are substantially consistent with the provisions above (including
certification requirements intended to ensure that such transfers are to a
QIB who is also a Qualified Purchaser or are to a non-U.S. Person, or
otherwise comply with Rule 144A or Regulation S, as the case may be) and as
may be from time to time adopted by the Issuer, the Co-Issuer and the
Trustee.
(f) Transfers of Definitive Class A-1AR Notes. Each Person who becomes
an owner of the Definitive Class A-1AR Notes will be required to make the
representations set forth in Section 2.5(h)(ii) through (xx) and to further
represent and agree as follows:
(i) the owner is one of the following:
(1) (A) a Qualified Purchaser, (B) a QIB, (C) is aware that the
sale of the Definitive Class A-1AR Notes to it is being made in
reliance on the exemption from registration provided by Rule 144A, (D)
is acquiring the Definitive Class A-1AR Notes for its own account or
for one or more accounts, each of which is a QIB who is a Qualified
Purchaser, and as to each of which the owner exercises sole investment
discretion, and (E) is acquiring the Definitive Class A-1AR Notes in a
minimum principal amount of not less than $500,000 for each such
account; or
(2) (A) is not a U.S. Person, (B) is aware that the sale of the
Definitive Class A-1AR Notes to it is being made in reliance on the
exemption from registration provided by Regulation S and (C)
understands that the Definitive
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Class A-1AR Notes offered in reliance on Regulation S will bear the
legend set forth in Exhibit A-3;
and in each case the owner has such knowledge and experience in
financial and business matters as to be capable of evaluating the
merits and risks of its investment in the Definitive Class A-1AR Notes
and the owner and any accounts for which it is acting are each able to
bear the economic risk of the investment; and
(ii) before any interest in a Definitive Class A-1AR Note may be
offered, resold, pledged or otherwise transferred, the transferee and
transferor shall be required to provide the Trustee, with a written
certification substantially in the forms of Exhibit K and L hereto as to
compliance with the transfer restrictions and the owner must inform a
prospective transferee of the transfer restrictions.
(g) Removal of Legend. If Notes are issued upon the transfer, exchange
or replacement of Notes bearing the applicable legends set forth in Exhibits
▇-▇, ▇-▇, ▇-▇, B, C, D, E, F, G and H hereto, and if a request is made to remove
such applicable legend on such Notes, the Notes so issued shall bear such
applicable legend, or such applicable legend shall not be removed, as the case
may be, unless there is delivered to the Issuer and the Co-Issuer such
satisfactory evidence, which may include an Opinion of Counsel of an attorney at
law licensed to practice law in the State of New York (and addressed to the
Issuer and the Trustee), as may be reasonably required by the Issuer and the
Co-Issuer, if applicable, to the effect that neither such applicable legend nor
the restrictions on transfer set forth therein are required to ensure that
transfers thereof comply with the provisions of Rule 144A or Regulation S, as
applicable, the Investment Company Act or ERISA. So long as the Issuer or the
Co-Issuer is relying on an exemption under or promulgated pursuant to the
Investment Company Act, the Issuer or the Co-Issuer shall not remove that
portion of the legend required to maintain an exemption under or promulgated
pursuant to the Investment Company Act. Upon provision of such satisfactory
evidence, as confirmed in writing by the Issuer and the Co-Issuer, if
applicable, to the Trustee, the Trustee, at the direction of the Issuer and the
Co-Issuer, if applicable, shall authenticate and deliver Notes that do not bear
such applicable legend.
(h) Each beneficial owner of Rule 144A Global Securities shall be
deemed to represent and agree as follows (terms used in this paragraph that are
defined in Rule 144A are used herein as defined therein):
(i) In the case of a Rule 144A Global Security, the owner is (A) a QIB
and a Qualified Purchaser, (B) is aware that the sale of the Notes to it
(other than the initial sale by the Issuer and the Co-Issuer, as
applicable,) is being made in reliance on the exemption from registration
provided by Rule 144A, (C) is acquiring the Notes for its own account or
for one or more accounts, each of which is a QIB and a Qualified Purchaser,
and as to each of which the owner exercises sole investment discretion, and
(D) is acquiring the Notes in a principal amount of not less than $100,000,
for each such account.
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(ii) The owner understands that the Notes are being offered only in a
transaction not involving any public offering in the United States within
the meaning of the Securities Act, the Notes have not been and shall not be
registered under the Securities Act, and, if in the future the owner
decides to offer, resell, pledge or otherwise transfer the Notes, such
Notes may only be offered, resold, pledged or otherwise transferred only in
accordance with this Indenture and the applicable legend on such Notes set
forth in Exhibits ▇-▇, ▇-▇, ▇-▇, B, C, D, E, F, G and H. The owner
acknowledges that no representation is made by the Issuer, the Co-Issuer or
the Dealers, as the case may be, as to the availability of any exemption
under the Securities Act or any state securities laws for resale of the
Notes.
(iii) The owner is not purchasing the Notes with a view to the resale,
distribution or other disposition thereof in violation of the Securities
Act. The owner understands that an investment in the Notes involves certain
risks, including the risk of loss of all or a substantial part of its
investment under certain circumstances. The owner has had access to such
financial and other information concerning the Issuer, the Co-Issuer and
the Notes as it deemed necessary or appropriate in order to make an
informed investment decision with respect to its purchase of the Notes,
including, without limitation, an opportunity to ask questions of and
request information from the Collateral Manager, the Initial Purchaser, the
Issuer and the Co-Issuer and access to such legal and tax representation or
counsel as the owner deemed necessary or appropriate.
(iv) In connection with the purchase of the Notes (A) none of the
Issuer, the Co-Issuer, the Dealers, the Collateral Manager or the Trustee
is acting as a fiduciary or financial or investment adviser for the owner;
(B) the owner is not relying (for purposes of making any investment
decision or otherwise) upon any advice, counsel or representations (whether
written or oral) of the Issuer, the Co-Issuer, the Dealers, the Collateral
Manager or the Trustee other than in a current final offering memorandum
for such Notes and any representations expressly set forth in a written
agreement with such party; (C) none of the Issuer, the Co-Issuer, the
Dealers, the Collateral Manager or the Trustee has given to the owner
(directly or indirectly through any other person) any assurance, guarantee,
or representation whatsoever as to the expected or projected success,
profitability, return, performance, result, effect, consequence, or benefit
(including legal, regulatory, tax, financial, accounting, or otherwise) of
its purchase; (D) the owner has consulted with its own legal, regulatory,
tax, business, investment, financial, and accounting advisers to the extent
it has deemed necessary, and it has made its own investment decisions
(including decisions regarding the suitability of any transaction pursuant
to this Indenture) based upon its own judgment and upon any advice from
such advisers as it has deemed necessary and not upon any view expressed by
the Issuer, the Co-Issuer, the Dealers, the Collateral Manager or the
Trustee; and (E) the owner is purchasing the Notes with a full
understanding of all of the terms, conditions and risks thereof (economic
and otherwise), and is capable of assuming and willing to assume
(financially and otherwise) these risks.
(v) The owner understands that the Notes shall bear the applicable
legend set forth in Exhibits ▇-▇, ▇-▇, ▇-▇, B, C, D, E, F, G and H. The
Rule 144A Global Securities may not at any time be held by or on behalf of
any U.S. Person that is not a
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QIB who is a Qualified Purchaser. The owner must inform a prospective
transferee of the transfer restrictions.
(vi) The Notes will bear the applicable legend set forth in Exhibits
▇-▇, ▇-▇, ▇-▇, B, C, D, E, F, G and H unless the Issuer and the Co-Issuer
determine otherwise in compliance with applicable law.
(vii) Unless a prospective Holder of a Note otherwise provides another
representation acceptable to the Trustee, the Collateral Manager, the
Issuer and the Co-Issuer, each Holder of a Global Security, by its
acquisition thereof, shall be deemed to have represented to the Issuer, the
Co-Issuer, the Collateral Manager and the Trustee that either (A) no part
of the funds being used to pay the purchase price for such Notes
constitutes an asset of any "employee benefit plan" (as defined in Section
3(3) of ERISA) or "plan" (as defined in Section 4975(e)(1) of the Code)
that is subject to Title I of ERISA or Section 4975 of the Code or any
other employee benefit plan or plan which is subject to any federal, state
or local law ("Similar Law") that is substantially similar to Section 406
of ERISA or Section 4975 of the Code (each a "Benefit Plan", or an entity
whose underlying assets include plan assets of any such Benefit Plan, or
(B) if the funds being used to pay the purchase price for such Notes
include plan assets of any Benefit Plan, its purchase and holding will not
constitute or result in a non-exempt prohibited transaction under Section
406 of ERISA or Section 4975 of the Code, or in the case of any Benefit
Plan subject to Similar Law, do not result in a non-exempt violation of
Similar Law.
(viii) The owner shall not, at any time, offer to buy or offer to sell
the Notes by any form of general solicitation or advertising, including,
but not limited to, any advertisement, article, notice or other
communication published in any newspaper, magazine or similar medium or
broadcast over television or radio or at a seminar or meeting whose
attendees have been invited by general solicitations or advertising.
(ix) The owner is not a member of the public in the Cayman Islands,
within the meaning of Section 194 of the Cayman Islands Companies Law (2004
Revision).
(x) The owner understands that the Issuer, the Co-Issuer, the Trustee
or the Paying Agent shall require certification acceptable to it (A) as a
condition to the payment of principal of and interest on (and commitment
fees in respect of) any Notes without, or at a reduced rate of, U.S.
withholding or backup withholding tax, and (B) to enable the Issuer, the
Co-Issuer, the Trustee and the Paying Agent to determine their duties and
liabilities with respect to any taxes or other charges that they may be
required to pay, deduct or withhold from payments in respect of such Notes
or the Holder of such Notes under any present or future law or regulation
of the Cayman Islands or the United States or any present or future law or
regulation of any political subdivision thereof or taxing authority therein
or to comply with any reporting or other requirements under any such law or
regulation. Such certification may include U.S. federal income tax forms
(such as IRS Form W-8BEN (Certification of Foreign Status of Beneficial
Owner), IRS Form W-8IMY (Certification of Foreign Intermediary Status), IRS
Form W-9 (Request for Taxpayer Identification Number and Certification), or
IRS Form W-8ECI (Certification
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of Foreign Person's Claim for Exemption from Withholding on Income
Effectively Connected with Conduct of a U.S. Trade or Business) or any
successors to such IRS forms). In addition, the Issuer, the Co-Issuer, the
Trustee or the Paying Agent may require certification acceptable to it to
enable the Issuer to qualify for a reduced rate of withholding in any
jurisdiction from or through which the Issuer receives payments on its
assets. Each owner agrees to provide any certification requested pursuant
to this paragraph and to update or replace such form or certification in
accordance with its terms or its subsequent amendments.
(xi) The owner hereby acknowledges that it is its intent and that it
understands it is the intent of the Issuer that, for purposes of U.S.
federal, state and local income and franchise tax and any other income
taxes, for so long as a direct or indirect wholly-owned subsidiary of the
Arbor Parent owns 100% of the Preferred Shares and the ordinary shares of
the Issuer, the Issuer will be treated as a Qualified REIT Subsidiary and
the Notes will be treated as indebtedness solely of the Arbor Parent, and
(B) the Preferred Shares will be treated as equity; the owner agrees to
such treatment and agrees to take no action inconsistent with such
treatment.
(xii) The owner, if not a "United States person" (as defined in
Section 7701(a)(30) of the Code), either: (A) is not a bank (within the
meaning of Section 881(c)(3)(A) of the Code) (and see (C) below); (B) is a
bank that has provided an IRS Form W-8ECI representing that all payments
received or to be received by it from the Issuer are effectively connected
with the conduct of a trade or business in the United States; or (C) is a
bank and is, or is not a bank (within the meaning of Section 881(c)(3)(A)
of the Code) but with respect to commitment fees is, eligible for benefits
under an income tax treaty with the United States that eliminates U.S.
federal income taxation of U.S. source interest and commitment fees not
attributable to a permanent establishment in the United States and the
Issuer is treated as a fiscally transparent entity (as defined in Treasury
Regulations section 1.894-1(d)(3)(iii)) under the laws of owner's
jurisdiction with respect to payments made on the Collateral Debt
Securities held by the Issuer.
(xiii) The owner understands that the Notes have not been approved or
disapproved by the SEC or any other governmental authority or agency or any
jurisdiction and that neither the SEC nor any other governmental authority
or agency has passed upon the accuracy of the final offering memorandum
relating to the Notes. The owner further understands that any
representation to the contrary is a criminal offense.
(xiv) The owner will, prior to any sale, pledge or other transfer by
such owner of any Note (or interest therein), obtain from the prospective
transferee, and deliver to the Trustee, a duly executed transferee
certificate addressed to each of the Trustee, the Issuer, the Co-Issuer and
the Collateral Manager in the form of the relevant exhibit attached hereto,
and such other certificates and other information as the Issuer, the
Co-Issuer, the Collateral Manager or the Trustee may reasonably require to
confirm that the proposed transfer complies with the transfer restrictions
contained herein.
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(xv) The owner agrees that no Note may be purchased, sold, pledged or
otherwise transferred in an amount less than the minimum denomination set
forth in this Indenture. In addition, the owner understands that the Notes
will be transferable only upon registration of the transferee in the Note
Register of the Issuer following delivery to the Note Registrar of a duly
executed transfer certificate (and with respect to the Class A-1AR Notes,
the Definitive Class A-1AR Notes to be transferred), and any other
certificates and other information required by this Indenture.
(xvi) The owner is aware and agrees that no Note (or beneficial
interest therein) may be offered or sold, pledged or otherwise transferred
(i) to a transferee taking delivery of such Note represented by a Rule 144A
Global Security except (A) to a transferee that the owner reasonably
believes is a QIB, purchasing for its account, to which notice is given
that the resale, pledge or other transfer is being made in reliance on the
exemption from the registration requirements of the Securities Act provided
by Rule 144A or another Person the sale to which is exempt under the
Securities Act, (B) to a transferee that is a Qualified Purchaser, and (C)
if such transfer is made in accordance with any applicable securities laws
of any state of the United States and any other relevant jurisdiction, (ii)
to a transferee taking delivery of such Note represented by a Regulation S
Global Security except (A) to a transferee that is acquiring such interest
in an offshore transaction in accordance with Rule 904 of Regulation S, (B)
to a transferee that is not a U.S. resident (within the meaning of the
Investment Company Act) unless such transferee is a Qualified Purchaser,
(C) such transfer is made in compliance with the other requirements set
forth in this Indenture and (D) if such transfer is made in accordance with
any applicable securities laws of any state of the United States and any
other jurisdiction or (iii) if such transfer would have the effect of
requiring the Issuer or the Collateral to register as an "investment
company" under the Investment Company Act.
(xvii) The owner understands that there is no market for the Notes and
that no assurances can be given as to the liquidity of any trading market
for the Notes and that it is unlikely that a trading market for the Notes
will develop. The owner further understands that, although the Dealers may
from time to time make a market in the Notes, the Dealers are not under any
obligation to do so and, following the commencement of any market-making,
may discontinue the same at any time. Accordingly, the owner must be
prepared to hold the Notes until the Stated Maturity.
(xviii) The owner agrees that (i) any sale, pledge or other transfer
of a Note (or any beneficial interest therein) made in violation of the
transfer restrictions contained in this Indenture, or made based upon any
false or inaccurate representation made by the owner or a transferee to the
Issuer, the Trustee or the Note Registrar, will be void and of no force or
effect and (ii) none of the Issuer, the Trustee and the Note Registrar has
any obligation to recognize any sale, pledge or other transfer of a Note
(or any beneficial interest therein) made in violation of any such transfer
restriction or made based upon any such false or inaccurate representation.
(xix) The owner approves and consents to any direct trades between the
Issuer and the Collateral Manager and/or its affiliates that is permitted
under the terms of this Indenture and the Collateral Management Agreement.
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(xx) The owner acknowledges that the Issuer, the Co-Issuer, the
Trustee, the Note Registrar, the Collateral Manager, the Dealers and others
will rely upon the truth and accuracy of the foregoing acknowledgments,
representations and agreements and agrees that, if any of the
acknowledgments, representations or warranties made or deemed to have been
made by it in connection with its purchase of the Notes are no longer
accurate, the owner will promptly notify the Issuer, the Co-Issuer, the
Trustee, Note Registrar, the Collateral Manager and the Dealers.
(i) Each beneficial owner of Regulation S Global Securities shall be
deemed to have made the representations set forth in clauses (ii) through (iv)
and (vi) through (xx) of Section 2.5(h) and shall be deemed to have further
represented and agreed as follows:
The owner is aware that the sale of such Notes to it is being made in
reliance on the exemption from registration provided by Regulation S and
understands that the Notes offered in reliance on Regulation S will bear the
appropriate legend set forth in Exhibits ▇-▇, ▇-▇, ▇, ▇, ▇, ▇, ▇, ▇ and H
hereto, and be represented by one or more Regulation S Global Securities. The
Notes so represented may not at any time be held by or on behalf of U.S.
Persons. Each of the owner and the related Holder is not, and shall not be, a
U.S. Person. Before any interest in a Regulation S Global Security may be
offered, resold, pledged or otherwise transferred to a person who takes delivery
in the form of a Rule 144A Global Security, the transferee shall be required to
provide the Trustee with a written certification substantially in the form of
Exhibits K and L (as applicable) hereto as to compliance with the transfer
restrictions. The owner must inform a prospective transferee of the transfer
restrictions.
(j) Any purported transfer of a Note not in accordance with this
Section 2.5 shall be null and void and shall not be given effect for any purpose
hereunder.
(k) Notwithstanding anything contained in this Indenture to the
contrary, neither the Trustee nor the Notes Registrar (nor any other Transfer
Agent) shall be responsible or liable for compliance with applicable federal or
state securities laws (including, without limitation, the Securities Act or Rule
144A or Regulation S promulgated thereunder), the Investment Company Act, ERISA
or the Code (or any applicable regulations thereunder); provided, however, that
if a specified transfer certificate or Opinion of Counsel is required by the
express terms of this Section 2.5 to be delivered to the Trustee or Notes
Registrar prior to registration of transfer of a Note, the Trustee and/or Notes
Registrar, as applicable, is required to request, as a condition for registering
the transfer of the Note, such certificate or Opinion of Counsel and to examine
the same to determine whether it conforms on its face to the requirements hereof
(and the Trustee or Notes Registrar, as the case may be, shall promptly notify
the party delivering the same if it determines that such certificate or Opinion
of Counsel does not so conform).
(l) If the Trustee determines or is notified by the Issuer, the
Co-Issuer or the Collateral Manager that (i) a transfer or attempted or
purported transfer of any interest in any Note was consummated in compliance
with the provisions of this Section 2.5 on the basis of a materially incorrect
certification from the transferee or purported transferee, (ii) a transferee
failed to deliver to the Trustee any certification required to be delivered
hereunder or (iii) the holder of any interest in a Note is in breach of any
representation or agreement set forth in any
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certification or any deemed representation or agreement of such holder, the
Trustee shall not register such attempted or purported transfer and if a
transfer has been registered, such transfer shall be absolutely null and void ab
initio and shall vest no rights in the purported transferee (such purported
transferee, a "Disqualified Transferee") and the last preceding holder of such
interest in such Note that was not a Disqualified Transferee shall be restored
to all rights as a Holder thereof retroactively to the date of transfer of such
Note by such Holder.
In addition, the Trustee may require that the interest in the Note
referred to in (i), (ii) or (iii) in the preceding paragraph be transferred to
any person designated by the Issuer or the Collateral Manager at a price
determined by the Issuer or the Collateral Manager, as applicable, based upon
its estimation of the prevailing price of such interest and each Holder, by
acceptance of an interest in a Note, authorizes the Trustee to take such action.
In any case, the Trustee shall not be held responsible for any losses that may
be incurred as a result of any required transfer under this Section 2.5(l).
(m) Each Holder of Notes approves and consents to (i) the initial
purchase of the Collateral Debt Securities by the Issuer from Affiliates of the
Collateral Manager on or prior to the Closing Date and (ii) any other
transaction between the Issuer and the Collateral Manager or its Affiliates that
are permitted under the terms of this Indenture or the Collateral Management
Agreement.
Section 2.6 Mutilated, Defaced, Destroyed, Lost or Stolen Note.
If (a) any mutilated or defaced Note is surrendered to a Transfer
Agent, or if there shall be delivered to the Issuer, the Co-Issuer, the Trustee
and the relevant Transfer Agent (each a "Specified Person") evidence to their
reasonable satisfaction of the destruction, loss or theft of any Note, and (b)
there is delivered to the Specified Person such security or indemnity as may be
required by each Specified Person to save each of them and any agent of any of
them harmless (an unsecured indemnity agreement delivered to the Trustee by an
institutional investor with a net worth of at least $200,000,000 being deemed
sufficient to satisfy such security or indemnity requirement), then, in the
absence of notice to the Specified Persons that such Note has been acquired by a
bona fide purchaser, the Issuer and the Co-Issuer shall execute and, upon Issuer
Request, the Trustee shall authenticate and deliver, in lieu of any such
mutilated, defaced, destroyed, lost or stolen Note, a new Note, of like tenor
(including the same date of issuance) and equal principal amount, registered in
the same manner, dated the date of its authentication, bearing interest from the
date to which interest has been paid on the mutilated, defaced, destroyed, lost
or stolen Note and bearing a number not contemporaneously outstanding.
If, after delivery of such new Note, a bona fide purchaser of the
predecessor Note presents for payment, transfer or exchange such predecessor
Note, any Specified Person shall be entitled to recover such new Note from the
Person to whom it was delivered or any Person taking therefrom, and each
Specified Person shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
such Specified Person in connection therewith.
In case any such mutilated, defaced, destroyed, lost or stolen Note
has become due and payable, the Issuer and the Co-Issuer, if applicable, in
their discretion may, instead of
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issuing a new Note, pay such Note without requiring surrender thereof except
that any mutilated or defaced Note shall be surrendered.
Upon the issuance of any new Note under this Section 2.6, the Issuer
and the Co-Issuer, if applicable, may require the payment by the registered
Holder thereof of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section 2.6 in lieu of any
mutilated, defaced, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer and the Co-Issuer, if
applicable, and such new Note shall be entitled, subject to the second paragraph
of this Section 2.6, to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section 2.6 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, defaced, destroyed, lost or stolen Notes.
Section 2.7 Payment of Principal and Interest and Class A-1AR
Commitment Fee and Other Amounts; Principal and Interest Rights Preserved.
(a) The Class A-1A Notes shall accrue interest during each Interest
Accrual Period at the Class A-1A Rate. Interest on each Class A-1A Note shall be
due and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class A-1A Note bears to the Aggregate Outstanding Amount of all Class A-1A
Notes; provided, however, that the payment of interest on the Class A-1A Notes
is subordinated to the payment on each Payment Date of certain amounts in
accordance with the Priority of Payments.
(b) The Class A-1AR Notes shall accrue interest during each Interest
Accrual Period at the Class A-1AR Rate. In addition, the Class A-1AR Notes shall
accrue the Class A-1AR Commitment Fee in accordance with the definition of such
term. Except as described in Section 18.2 of this Indenture, interest on each
Class A-1AR Note shall be due and payable on each Payment Date immediately
following the related Interest Accrual Period in the proportion determined in
accordance with the Class A-1AR Interest Allocation Percentage; provided that
accrued interest in respect of amounts borrowed under the Class A-1AR Notes
during the period following the Determination Date through the related Payment
Date will be payable without additional interest thereon on the next succeeding
Payment Date; and provided, further, however, that the payment of interest on
the Class A-1AR Notes is subordinated to the payment on each Payment Date of
certain amounts in accordance with the Priority of Payments.
(c) The Class A-2 Notes shall accrue interest during each Interest
Accrual Period at the Class A-2 Rate. Interest on each Class A-2 Note shall be
due and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class A-2 Note bears to the Aggregate Outstanding Amount of all Class A-2 Notes;
provided, however, that the payment of interest on the Class A-2 Notes is
subordinated to the payment on each Payment Date of the interest due and payable
on
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the Class A-1 Notes (including any Class A-1 Defaulted Interest Amount) and the
Class A-1AR Commitment Fee and certain other amounts in accordance with the
Priority of Payments.
(d) The Class B Notes shall accrue interest during each Interest
Accrual Period at the Class B Rate. Interest on each Class B Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class B Note bears to the Aggregate Outstanding Amount of all Class B Notes;
provided, however, that the payment of interest on the Class B Notes is
subordinated to the payment on each Payment Date of the interest due and payable
on the Class A Notes (including any Class A Defaulted Interest Amount) and the
Class A-1AR Commitment Fee and certain other amounts in accordance with the
Priority of Payments.
(e) The Class C Notes shall accrue interest during each Interest
Accrual Period at the Class C Rate. Interest on each Class C Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class C Note bears to the Aggregate Outstanding Amount of all Class C Notes;
provided, however, that the payment of interest on the Class C Notes is
subordinated to the payment on each Payment Date of the interest due and payable
on the Class A Notes and the Class B Notes (including any Class A Defaulted
Interest Amount and Class B Defaulted Interest Amount) and the Class A-1AR
Commitment Fee and certain other amounts in accordance with the Priority of
Payments.
For so long as any Class B Notes are Outstanding, any payment of
interest due on the Class C Notes which is not available to be paid (the "Class
C Capitalized Interest") in accordance with the Priority of Payments on any
Payment Date shall not be considered "due and payable" for the purpose of
Section 5.1(a) hereof (and the failure to pay such Class C Capitalized Interest
shall not be an Event of Default) until the Payment Date on which funds are
available to pay all or any portion of such Class C Capitalized Interest in
accordance with the Priority of Payments. On or after such Payment Date, only
such portion of any payment of Class C Capitalized Interest for which funds are
available in accordance with the Priority of Payments shall be considered "due
and payable" and the failure to pay such portion of Class C Capitalized Interest
shall be an Event of Default. Class C Capitalized Interest shall be added to the
principal amount of the Class C Notes, shall bear interest thereafter at the
Class C Rate (to the extent lawful) and shall be payable on the first Payment
Date on which funds are permitted to be used for such purpose in accordance with
the Priority of Payments. On or after the Payment Date on which the Class B
Notes are no longer Outstanding, to the extent interest is due (excluding any
previously deferred Class C Capitalized Interest) but not paid on the Class C
Notes, the failure to pay such interest shall constitute an Event of Default
hereunder.
(f) The Class D Notes shall accrue interest during each Interest
Accrual Period at the Class D Rate. Interest on each Class D Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class D Note bears to the Aggregate Outstanding Amount of all Class D Notes;
provided, however, that, except to the extent set forth in the Priority of
Payments, the payment of interest on the Class D Notes is subordinated to the
payment on each Payment Date of the interest due and payable on the Class A
Notes, the Class B Notes and the Class C Notes (including any Class A Defaulted
Interest Amount, Class B
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Defaulted Interest Amount, Class C Defaulted Interest Amount and Class C
Capitalized Interest) and the Class A-1AR Commitment Fee and certain other
amounts in accordance with the Priority of Payments.
For so long as any Class C Notes are Outstanding, any payment of
interest due on the Class D Notes which is not available to be paid ("Class D
Capitalized Interest") in accordance with the Priority of Payments on any
Payment Date shall not be considered "due and payable" for the purpose of
Section 5.1(a) hereof (and the failure to pay such Class D Capitalized Interest
shall not be an Event of Default) until the Payment Date on which funds are
available to pay all or any portion of such Class D Capitalized Interest in
accordance with the Priority of Payments. On or after such Payment Date, only
such portion of any payment of Class D Capitalized Interest for which funds are
available in accordance with the Priority of Payments shall be considered "due
and payable" and the failure to pay such portion of Class D Capitalized Interest
shall be an Event of Default. Class D Capitalized Interest shall be added to the
principal amount of the Class D Notes, shall bear interest thereafter at the
Class D Rate (to the extent lawful) and shall be payable on the first Payment
Date on which funds are permitted to be used for such purpose in accordance with
the Priority of Payments. On or after the Payment Date on which the Class C
Notes are no longer Outstanding, to the extent interest is due (excluding any
previously deferred Class D Capitalized Interest) but not paid on the Class D
Notes, the failure to pay such interest shall constitute an Event of Default
hereunder.
(g) The Class E Notes shall accrue interest during each Interest
Accrual Period at the Class E Rate. Interest on each Class E Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class E Note bears to the Aggregate Outstanding Amount of all Class E Notes;
provided, however, that, except to the extent set forth in the Priority of
Payments, the payment of interest on the Class E Notes is subordinated to the
payment on each Payment Date of the interest due and payable on the Class A
Notes, the Class B Notes, the Class C Notes and the Class D Notes (including any
Class A Defaulted Interest Amount, Class B Defaulted Interest Amount, Class C
Defaulted Interest Amount, Class C Capitalized Interest, Class D Defaulted
Interest Amount and Class D Capitalized Interest) and the Class A-1AR Commitment
Fee and certain other amounts in accordance with the Priority of Payments.
For so long as any Class D Notes are Outstanding, any payment of
interest due on the Class E Notes which is not available to be paid (the "Class
E Capitalized Interest") in accordance with the Priority of Payments on any
Payment Date shall not be considered "due and payable" for the purpose of
Section 5.1(a) hereof (and the failure to pay such Class E Capitalized Interest
shall not be an Event of Default) until the Payment Date on which funds are
available to pay all or any portion of such Class E Capitalized Interest in
accordance with the Priority of Payments. On or after such Payment Date, only
such portion of any payment of Class E Capitalized Interest for which funds are
available in accordance with the Priority of Payments shall be considered "due
and payable" and the failure to pay such portion of Class E Capitalized Interest
shall be an Event of Default. Class E Capitalized Interest shall be added to the
principal amount of the Class E Notes, shall bear interest thereafter at the
Class E Rate (to the extent lawful) and shall be payable on the first Payment
Date on which funds are permitted to be used for such purpose in accordance with
the Priority of Payments. On or after the Payment Date on
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which the Class D Notes are no longer Outstanding, to the extent interest is due
(excluding any previously deferred Class E Capitalized Interest) but not paid on
the Class E Notes, the failure to pay such interest shall constitute an Event of
Default hereunder.
(h) The Class F Notes shall accrue interest during each Interest
Accrual Period at the Class F Rate. Interest on each Class F Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class F Note bears to the Aggregate Outstanding Amount of all Class F Notes;
provided, however, that, except to the extent set forth in the Priority of
Payments, the payment of interest on the Class F Notes is subordinated to the
payment on each Payment Date of the interest due and payable on the Class A
Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E
Notes (including any Class A Defaulted Interest Amount, Class B Defaulted
Interest Amount, Class C Defaulted Interest Amount, Class C Capitalized
Interest, Class D Defaulted Interest Amount, Class D Capitalized Interest, Class
E Defaulted Interest Amount and Class E Capitalized Interest) and the Class
A-1AR Commitment Fee and certain other amounts in accordance with the Priority
of Payments.
For so long as any Class E Notes are Outstanding, any payment of
interest due on the Class F Notes which is not available to be paid ("Class F
Capitalized Interest") in accordance with the Priority of Payments on any
Payment Date shall not be considered "due and payable" for the purpose of
Section 5.1(a) hereof (and the failure to pay such Class F Capitalized Interest
shall not be an Event of Default) until the Payment Date on which funds are
available to pay all or any portion of such Class F Capitalized Interest in
accordance with the Priority of Payments. On or after such Payment Date, only
such portion of any payment of Class F Capitalized Interest for which funds are
available in accordance with the Priority of Payments shall be considered "due
and payable" and the failure to pay such portion of Class F Capitalized Interest
shall be an Event of Default. Class F Capitalized Interest shall be added to the
principal amount of the Class F Notes, shall bear interest thereafter at the
Class F Rate (to the extent lawful) and shall be payable on the first Payment
Date on which funds are permitted to be used for such purpose in accordance with
the Priority of Payments. On or after the Payment Date on which the Class E
Notes are no longer Outstanding, to the extent interest is due (excluding any
previously deferred Class F Capitalized Interest) but not paid on the Class F
Notes, the failure to pay such interest shall constitute an Event of Default
hereunder.
(i) The Class G Notes shall accrue interest during each Interest
Accrual Period at the Class G Rate. Interest on each Class G Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class G Note bears to the Aggregate Outstanding Amount of all Class G Notes;
provided, however, that, except to the extent set forth in the Priority of
Payments, the payment of interest on the Class G Notes is subordinated to the
payment on each Payment Date of the interest due and payable on the Class A
Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes and the Class F Notes (including any Class A Defaulted Interest Amount,
Class B Defaulted Interest Amount, Class C Defaulted Interest Amount, Class C
Capitalized Interest, Class D Defaulted Interest Amount, Class D Capitalized
Interest, Class E Defaulted Interest Amount, Class E Capitalized Interest, Class
F
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Defaulted Interest Amount and Class F Capitalized Interest) and the Class A-1AR
Commitment Fee and certain other amounts in accordance with the Priority of
Payments.
For so long as any Class F Notes are Outstanding, any payment of
interest due on the Class G Notes which is not available to be paid (the "Class
G Capitalized Interest") in accordance with the Priority of Payments on any
Payment Date shall not be considered "due and payable" for the purpose of
Section 5.1(a) hereof (and the failure to pay such Class G Capitalized Interest
shall not be an Event of Default) until the Payment Date on which funds are
available to pay all or any portion of such Class G Capitalized Interest in
accordance with the Priority of Payments. On or after such Payment Date, only
such portion of any payment of Class G Capitalized Interest for which funds are
available in accordance with the Priority of Payments shall be considered "due
and payable" and the failure to pay such portion of Class G Capitalized Interest
shall be an Event of Default. Class G Capitalized Interest shall be added to the
principal amount of the Class G Notes, shall bear interest thereafter at the
Class G Rate (to the extent lawful) and shall be payable on the first Payment
Date on which funds are permitted to be used for such purpose in accordance with
the Priority of Payments. On or after the Payment Date on which the Class F
Notes are no longer Outstanding, to the extent interest is due (excluding any
previously deferred Class G Capitalized Interest) but not paid on the Class G
Notes, the failure to pay such interest shall constitute an Event of Default
hereunder.
(j) The Class H Notes shall accrue interest during each Interest
Accrual Period at the Class H Rate. Interest on each Class H Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class H Note bears to the Aggregate Outstanding Amount of all Class H Notes;
provided, however, that, except to the extent set forth in the Priority of
Payments, the payment of interest on the Class H Notes is subordinated to the
payment on each Payment Date of the interest due and payable on the Class A
Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes, the Class F Notes and the Class G Notes (including any Class A Defaulted
Interest Amount, Class B Defaulted Interest Amount, Class C Defaulted Interest
Amount, Class C Capitalized Interest, Class D Defaulted Interest Amount, Class D
Capitalized Interest, Class E Defaulted Interest Amount, Class E Capitalized
Interest, Class F Defaulted Interest Amount, Class F Capitalized Interest, Class
G Defaulted Interest Amount and Class G Capitalized Interest) and the Class
A-1AR Commitment Fee and certain other amounts in accordance with the Priority
of Payments.
For so long as any Class G Notes are Outstanding, any payment of
interest due on the Class H Notes which is not available to be paid ("Class H
Capitalized Interest") in accordance with the Priority of Payments on any
Payment Date shall not be considered "due and payable" for the purpose of
Section 5.1(a) hereof (and the failure to pay such Class H Capitalized Interest
shall not be an Event of Default) until the Payment Date on which funds are
available to pay all or any portion of such Class H Capitalized Interest in
accordance with the Priority of Payments. On or after such Payment Date, only
such portion of any payment of Class H Capitalized Interest for which funds are
available in accordance with the Priority of Payments shall be considered "due
and payable" and the failure to pay such portion of Class H Capitalized Interest
shall be an Event of Default. Class H Capitalized Interest shall be added to the
principal amount of the Class H Notes, shall bear interest thereafter at the
Class H Rate (to the extent lawful) and shall be payable on the first Payment
Date on which funds are permitted to be used
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for such purpose in accordance with the Priority of Payments. On or after the
Payment Date on which the Class G Notes are no longer Outstanding, to the extent
interest is due (excluding any previously deferred Class H Capitalized Interest)
but not paid on the Class H Notes, the failure to pay such interest shall
constitute an Event of Default hereunder.
(k) Upon any Optional Redemption, Tax Redemption, Auction Call
Redemption or Clean-up Call, all net proceeds remaining after the sale of the
Collateral Debt Securities in accordance with Article 12 hereof and Cash and
proceeds from Eligible Investments (other than the Issuer's right, title and
interest in the property described in clause (i) of the definition of "Excepted
Assets"), after the payment of the amounts referred to in clauses (1) through
(23), (25), (26), (27) and (28) of Section 11.1(a)(i) and clauses (1) through
(14) of Section 11.1(a)(ii) will be distributed by the Trustee to the Preferred
Shares Paying Agent for distribution to the Holders of the Preferred Shares in
accordance with the Preferred Shares Paying Agency Agreement, whereupon the
Preferred Shares will be cancelled and deemed paid in full for all purposes.
(l) Interest shall cease to accrue on each Class of Notes, or in the
case of a partial repayment, on such part, from the date of repayment or Stated
Maturity unless payment of principal is improperly withheld or unless a Default
has occurred with respect to such payments of principal.
(m) The principal of each Class of Notes matures at par and is due and
payable on the Stated Maturity, unless the unpaid principal of such Class of
Notes becomes due and payable at an earlier date by declaration of acceleration,
call for redemption or otherwise; provided, however, that the payment of
principal of the Class A-2 Notes (other than payment of principal pursuant to
Section 9.6 or Section 9.7) may only occur after the principal of the Class A-1A
Notes and the Class A-1AR Notes have been paid in full and the Class A-1AR
Commitments have been terminated and is subordinated to the payment on each
Payment Date of the principal and interest due and payable on the Class A-1A
Notes and the Class A-1AR Notes, and payment of the Class A-1AR Commitment Fee,
and other amounts in accordance with the Priority of Payments and any payment of
principal of the Class A-2 Notes which is not paid, in accordance with the
Priority of Payments, on any Payment Date, shall not be considered "due and
payable" solely for purposes of Section 5.1(b) until the Payment Date on which
such principal may be paid in accordance with the Priority of Payments or all of
the Class A-1A Notes and the Class A-1AR Notes have been paid in full and the
Class A-1AR Commitments have been terminated; provided, further, that the
payment of principal of the Class B Notes (other than payment of principal
pursuant to Section 9.6 or Section 9.7) may only occur after the principal of
the Class A Notes has been paid in full and the Class A-1AR Commitments have
been terminated and is subordinated to the payment on each Payment Date of the
principal and interest due and payable on the Class A Notes, and in the case of
the Class A-1AR Notes, payment of the Class A-1AR Commitment Fee, and other
amounts in accordance with the Priority of Payments and any payment of principal
of the Class B Notes which is not paid, in accordance with the Priority of
Payments, on any Payment Date, shall not be considered "due and payable" solely
for purposes of Section 5.1(b) until the Payment Date on which such principal
may be paid in accordance with the Priority of Payments or all of the Class A
Notes have been paid in full and the Class A-1AR Commitments have been
terminated; provided, further, that the payment of principal of the Class C
Notes (other than payment of the amounts constituting Class C
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Capitalized Interest, notwithstanding that such Class C Capitalized Interest may
be deemed to constitute additions to principal, and other than the payment of
principal pursuant to Section 9.6 or Section 9.7) may only occur after the
principal of the Class A Notes and the Class B Notes has been paid in full and
the Class A-1AR Commitments have been terminated and is subordinated to the
payment on each Payment Date of the principal and interest due and payable on
the Class A Notes, and in the case of the Class A-1AR Notes, payment of the
Class A-1AR Commitment Fee, the Class B Notes and other amounts in accordance
with the Priority of Payments and any payment of principal of the Class C Notes
which is not paid, in accordance with the Priority of Payments, on any Payment
Date, shall not be considered "due and payable" solely for purposes of Section
5.1(b) until the Payment Date on which such principal may be paid in accordance
with the Priority of Payments or all of the Class A Notes and the Class B Notes
have been paid in full and the Class A-1AR Commitments have been terminated;
provided, further, that the payment of principal of the Class D Notes (other
than payment of the amounts constituting Class D Capitalized Interest,
notwithstanding that such Class D Capitalized Interest may be deemed to
constitute additions to principal, and other than the payment of principal
pursuant to Section 9.6 or Section 9.7) may only occur after the principal of
the Class A Notes, the Class B Notes and the Class C Notes has been paid in full
and the Class A-1AR Commitments have been terminated and is subordinated to the
payment on each Payment Date of the principal and interest due and payable on
the Class A Notes, and in the case of the Class A-1AR Notes, payment of the
Class A-1AR Commitment Fee, the Class B Notes, the Class C Notes and other
amounts in accordance with the Priority of Payments and any payment of principal
of the Class D Notes which is not paid, in accordance with the Priority of
Payments, on any Payment Date, shall not be considered "due and payable" solely
for purposes of Section 5.1(b) until the Payment Date on which such principal
may be paid in accordance with the Priority of Payments or all of the Class A
Notes, the Class B Notes and the Class C Notes have been paid in full and the
Class A-1AR Commitments have been terminated; provided, further, that the
payment of principal of the Class E Notes (other than payment of the amounts
constituting Class E Capitalized Interest, notwithstanding that such Class E
Capitalized Interest may be deemed to constitute additions to principal, and
other than the payment of principal pursuant to Section 9.6 or Section 9.7) may
only occur after the principal of the Class A Notes, the Class B Notes, the
Class C Notes and the Class D Notes has been paid in full and the Class A-1AR
Commitments have been terminated and is subordinated to the payment on each
Payment Date of the principal and interest due and payable on the Class A Notes,
and in the case of the Class A-1AR Notes, the Class A-1AR Commitment Fee, the
Class B Notes, the Class C Notes, the Class D Notes and other amounts in
accordance with the Priority of Payments and any payment of principal of the
Class E Notes which is not paid, in accordance with the Priority of Payments, on
any Payment Date, shall not be considered "due and payable" solely for purposes
of Section 5.1(b) until the Payment Date on which such principal may be paid in
accordance with the Priority of Payments or all of the Class A Notes, the Class
B Notes, the Class C Notes and the Class D Notes have been paid in full and the
Class A-1AR Commitments have been terminated; provided, further, that the
payment of principal of the Class F Notes (other than payment of the amounts
constituting Class F Capitalized Interest, notwithstanding that such Class F
Capitalized Interest may be deemed to constitute additions to principal, and
other than the payment of principal pursuant to Section 9.6 or Section 9.7) may
only occur after the principal of the Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes and the Class E Notes has been paid in full and
the Class A-1AR Commitments have been terminated and is subordinated to the
payment on each
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Payment Date of the principal and interest due and payable on the Class A Notes,
and in the case of the Class A-1AR Notes, the Class A-1AR Commitment Fee, the
Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes and other
amounts in accordance with the Priority of Payments and any payment of principal
of the Class F Notes which is not paid, in accordance with the Priority of
Payments, on any Payment Date, shall not be considered "due and payable" solely
for purposes of Section 5.1(b) until the Payment Date on which such principal
may be paid in accordance with the Priority of Payments or all of the Class A
Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E
Notes have been paid in full and the Class A-1AR Commitments have been
terminated; provided, further, that the payment of principal of the Class G
Notes (other than payment of the amounts constituting Class G Capitalized
Interest, notwithstanding that such Class G Capitalized Interest may be deemed
to constitute additions to principal, and other than the payment of principal
pursuant to Section 9.6 or Section 9.7) may only occur after the principal of
the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes, the
Class E Notes and the Class F Notes has been paid in full and the Class A-1AR
Commitments have been terminated and is subordinated to the payment on each
Payment Date of the principal and interest due and payable on the Class A Notes,
and in the case of the Class A-1AR Notes, the Class A-1AR Commitment Fee the
Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes, the
Class F Notes and other amounts in accordance with the Priority of Payments and
any payment of principal of the Class G Notes which is not paid, in accordance
with the Priority of Payments, on any Payment Date, shall not be considered "due
and payable" solely for purposes of Section 5.1(b) until the Payment Date on
which such principal may be paid in accordance with the Priority of Payments or
all of the Class A Notes, the Class B Notes, the Class C Notes, the Class D
Notes, the Class E Notes and the Class F Notes have been paid in full and the
Class A-1AR Commitments have been terminated; provided, further, that the
payment of principal of the Class H Notes (other than payment of the amounts
constituting Class H Capitalized Interest, notwithstanding that such Class H
Capitalized Interest may be deemed to constitute additions to principal, and
other than the payment of principal pursuant to Section 9.6 or Section 9.7) may
only occur after the principal of the Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes, the Class F Notes and the
Class G Notes has been paid in full and the Class A-1AR Commitments have been
terminated and is subordinated to the payment on each Payment Date of the
principal and interest due and payable on the Class A Notes, and in the case of
the Class A-1AR Notes, the Class A-1AR Commitment Fee, the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes, the Class F Notes, the
Class G Notes and other amounts in accordance with the Priority of Payments and
any payment of principal of the Class H Notes which is not paid, in accordance
with the Priority of Payments, on any Payment Date, shall not be considered "due
and payable" solely for purposes of Section 5.1(b) until the Payment Date on
which such principal may be paid in accordance with the Priority of Payments or
all of the Class A Notes, the Class B Notes, the Class C Notes, the Class D
Notes, the Class E Notes, the Class F Notes and the Class G Notes have been paid
in full and the Class A-1AR Commitments have been terminated.
(n) As a condition to the payment of principal of and interest on any
Note without the imposition of U.S. withholding tax, the Issuer shall require
certification acceptable to it to enable the Issuer, the Co-Issuer, the Trustee,
the Preferred Shares Paying Agent and the Paying Agent to determine their duties
and liabilities with respect to any taxes or other charges that they may be
required to deduct or withhold from payments in respect of such Security under
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any present or future law or regulation of the United States or any present or
future law or regulation of any political subdivision thereof or taxing
authority therein or to comply with any reporting or other requirements under
any such law or regulation. Such certification may include U.S. federal income
tax forms (such as IRS Form W-8BEN (Certification of Foreign Status of
Beneficial Owner), Form W-8IMY (Certification of Foreign Intermediary Status),
IRS Form W-9 (Request for Taxpayer Identification Number and Certification), or
IRS Form W-8ECI (Certification of Foreign Person's Claim for Exemption from
Withholding on Income Effectively Connected with Conduct of a U.S. Trade or
Business) or any successors to such IRS forms). In addition, each of the Issuer,
Co-Issuer, the Trustee, Preferred Shares Paying Agent or any Paying Agent may
require certification acceptable to it to enable the Issuer to qualify for a
reduced rate of withholding in any jurisdiction from or through which the Issuer
receives payments on its assets. Each Holder and each beneficial owner of Notes
agree to provide any certification requested pursuant to Section 2.7(n) and to
update or replace such form or certification in accordance with its terms or its
subsequent amendments.
(o) Payments in respect of interest on and principal of the Notes
shall be payable by wire transfer in immediately available funds to a Dollar
account maintained by the Holder or its nominee; provided that the Holder has
provided wiring instructions to the Trustee on or before the related Record Date
or, if wire transfer cannot be effected, by a Dollar check drawn on a bank in
the United States, or by a Dollar check mailed to the Holder at its address in
the Notes Register. The Issuer expects that the Depository or its nominee, upon
receipt of any payment of principal or interest in respect of a Global Security
held by the Depository or its nominee, shall immediately credit the applicable
Agent Members' accounts with payments in amounts proportionate to the respective
beneficial interests in such Global Security as shown on the records of the
Depository or its nominee. The Issuer also expects that payments by Agent
Members to owners of beneficial interests in such Global Security held through
Agent Members will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers registered
in the names of nominees for such customers. Such payments will be the
responsibility of the Agent Members. Upon final payment due on the Maturity of a
Note, the Holder thereof shall present and surrender such Note at the Corporate
Trust Office of the Trustee or at the office of the Paying Agent (outside of the
United States if then required by applicable law in the case of a Certificated
Note issued in exchange for a beneficial interest in the Regulation S Global
Security) on or prior to such Maturity. None of the Issuer, the Co-Issuer, the
Trustee or the Paying Agent will have any responsibility or liability with
respect to any records maintained by the Holder of any Note with respect to the
beneficial holders thereof or payments made thereby on account of beneficial
interests held therein. In the case where any final payment of principal and
interest is to be made on any Note (other than on the Stated Maturity thereof)
the Issuer or, upon Issuer Request, the Trustee, in the name and at the expense
of the Issuer, shall not more than 30 nor fewer than five Business Days prior to
the date on which such payment is to be made, mail to the Persons entitled
thereto at their addresses appearing on the Notes Register, a notice which shall
state the date on which such payment will be made and the amount of such payment
per $500,000 initial principal amount of Notes and shall specify the place where
such Notes may be presented and surrendered for such payment.
(p) Subject to the provisions of Sections 2.7(a) through (m) and
Section 2.7(u) hereof, Holders of Notes as of the Record Date in respect of a
Payment Date shall be entitled to
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the interest accrued and payable in accordance with the Priority of Payments and
principal payable in accordance with the Priority of Payments on such Payment
Date. All such payments that are mailed or wired and returned to the Paying
Agent shall be held for payment as herein provided at the office or agency of
the Issuer and the Co-Issuer to be maintained as provided in Section 7.2 (or
returned to the Trustee).
(q) Interest on any Note which is payable, and is punctually paid or
duly provided for, on any Payment Date shall be paid to the Person in whose name
that Note (or one or more predecessor Notes) is registered at the close of
business on the Record Date for such interest.
(r) Payments of principal to Holders of the Notes of each Class shall
be made in the proportion that the Aggregate Outstanding Amount of the Notes of
such Class registered in the name of each such Holder on such Record Date bears
to the Aggregate Outstanding Amount of all Notes of such Class on such Record
Date.
(s) Interest accrued with respect to the Notes shall be calculated as
described in the applicable form of Note attached hereto.
(t) All reductions in the principal amount of a Note (or one or more
predecessor Notes) effected by payments of installments of principal made on any
Payment Date, Redemption Date or upon Maturity shall be binding upon all future
Holders of such Note and of any Note issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof, whether or not such payment
is noted on such Note.
(u) Notwithstanding anything contained in this Indenture to the
contrary, the obligations of the Issuer and the Co-Issuer under the Notes, this
Indenture and the other Transaction Documents are non-recourse obligations of
the Issuer and the Co-Issuer payable solely from the Assets and following
realization of the Assets, all obligations of the Co-Issuers and any claims of
the Noteholders, the Trustee or any other parties to any Transaction Documents
shall be extinguished and shall not thereafter revive. No recourse shall be had
for the payment of any amount owing in respect of the Notes against any Officer,
director, employee, shareholder, limited partner or incorporator of the Issuer,
the Co-Issuer or any of their respective successors or assigns for any amounts
payable under the Notes or this Indenture. It is understood that the foregoing
provisions of this paragraph shall not (i) prevent recourse to the Assets for
the sums due or to become due under any security, instrument or agreement which
is part of the Assets or (ii) constitute a waiver, release or discharge of any
indebtedness or obligation evidenced by the Notes or secured by this Indenture
(to the extent it relates to the obligation to make payments on the Notes) until
such Assets have been realized, whereupon any outstanding indebtedness or
obligation in respect of the Notes, this Indenture and the other Transaction
Documents shall be extinguished and shall not thereafter revive. It is further
understood that the foregoing provisions of this paragraph shall not limit the
right of any Person to name the Issuer or the Co-Issuer as a party defendant in
any Proceeding or in the exercise of any other remedy under the Notes or this
Indenture, so long as no judgment in the nature of a deficiency judgment or
seeking personal liability shall be asked for or (if obtained) enforced against
any such Person or entity.
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(v) Subject to the foregoing provisions of this Section 2.7, each Note
delivered under this Indenture and upon registration of transfer of or in
exchange for or in lieu of any other Note shall carry the rights of unpaid
interest and principal that were carried by such other Note.
(w) Notwithstanding any of the foregoing provisions with respect to
payments of principal of and interest on the Notes (but subject to Sections
2.7(m) and (u)), if the Notes have become or been declared due and payable
following an Event of Default and such acceleration of Maturity and its
consequences have not been rescinded and annulled and the provisions of Section
5.5 are not applicable, then payments of principal of and interest on such Notes
shall be made in accordance with Section 5.7 hereof.
(x) Payments in respect of the Preferred Shares as contemplated by
Sections 11.1(a)(i)(29) and 11.1(a)(ii)(15) shall be made by the Trustee to the
Preferred Shares Paying Agent.
Section 2.8 Persons Deemed Owners.
The Issuer, the Co-Issuer, the Trustee, and any agent of the Issuer,
the Co-Issuer or the Trustee may treat as the owner of a Note the Person in
whose name such Note is registered on the Notes Register on the applicable
Record Date for the purpose of receiving payments of principal of and interest
and other amounts on such Note and on any other date for all other purposes
whatsoever (whether or not such Note is overdue), and none of the Issuer, the
Co-Issuer or the Trustee nor any agent of the Issuer, the Co-Issuer or the
Trustee shall be affected by notice to the contrary; provided, however, that the
Depository, or its nominee, shall be deemed the owner of the Global Securities,
and owners of beneficial interests in Global Securities will not be considered
the owners of any Notes for the purpose of receiving notices. With respect to
the Preferred Shares, on any Payment Date, the Trustee shall deliver to the
Preferred Shares Paying Agent the distributions thereon for distribution to the
Preferred Shareholders.
Section 2.9 Cancellation.
All Notes surrendered for payment, registration of transfer, exchange
or redemption, or deemed lost or stolen, shall, if surrendered to any Person
other than the Trustee, be delivered to the Trustee, and shall be promptly
canceled by the Trustee and may not be reissued or resold. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section 2.9, except as expressly permitted by this Indenture. All canceled
Notes held by the Trustee shall be destroyed or held by the Trustee in
accordance with its standard retention policy unless the Issuer and the
Co-Issuer shall direct by an Issuer Order that they be returned to them.
Section 2.10 Global Securities; Temporary Notes.
(a) In the event that the Depository notifies the Issuer and the
Co-Issuer that it is unwilling or unable to continue as Depository for a Global
Security or if at any time such Depository ceases to be a "Clearing Agency"
registered under the Exchange Act and a successor depository is not appointed by
the Issuer within 90 days of such notice, the Global Securities
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deposited with the Depository pursuant to Section 2.2 hereof shall be
transferred to the beneficial owners thereof subject to the procedures and
conditions set forth in this Section 2.10.
(b) Any Global Security that is transferable to the beneficial owners
thereof pursuant to Section 2.10(a) above shall be surrendered by the Depository
to the Trustee's Corporate Trust Office together with necessary instruction for
the registration and delivery of Class A-1A Notes, the Class A-2 Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F Notes, Class G Notes
and Class H Notes in definitive registered form without interest coupons (each,
a "Certificated Note") to the beneficial owners (or such owner's nominee)
holding the ownership interests in such Global Security. Any such transfer shall
be made, without charge, and the Trustee shall authenticate and deliver, upon
such transfer of each portion of such Global Security, an equal aggregate
principal amount of Certificated Notes of the same Class and authorized
denominations. Any Certificated Notes delivered in exchange for an interest in a
Global Security shall, except as otherwise provided by Section 2.5(g), bear the
applicable legend set forth in Exhibits ▇-▇, ▇-▇, ▇, ▇, ▇, ▇, ▇, ▇ and H, and
shall be subject to the transfer restrictions referred to in such applicable
legend. The Holder of each such registered individual Global Security may
transfer such Global Security by surrendering it at the Corporate Trust Office
of the Trustee, or at the office of the Paying Agent or Irish Paying Agent.
(c) Subject to the provisions of Section 2.10(b) above, the registered
Holder of a Global Security may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Notes.
(d) In the event of the occurrence of either of the events specified
in Section 2.10(a) above, the Issuer and the Co-Issuer shall promptly make
available to the Trustee a reasonable supply of Certificated Notes.
Pending the preparation of Certificated Notes pursuant to this Section
2.10, the Issuer and the Co-Issuer may execute and, upon Issuer Order, the
Trustee shall authenticate and deliver, temporary Class A-1A Notes, Class A-2
Notes, Class B Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes or Class H Notes that are printed, lithographed,
typewritten, mimeographed or otherwise reproduced, in any authorized
denomination, substantially of the tenor of the Certificated Notes in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the Officers executing such Certificated
Notes may determine, as conclusively evidenced by their execution of such
Certificated Notes.
If temporary Certificated Notes are issued, the Issuer and the
Co-Issuer shall cause permanent Certificated Notes to be prepared without
unreasonable delay. The Certificated Notes shall be printed, lithographed,
typewritten or otherwise reproduced, or provided by any combination thereof, or
in any other manner permitted by the rules and regulations of any applicable
notes exchange, all as determined by the Officers executing such Certificated
Notes. After the preparation of Certificated Notes, the temporary Notes shall be
exchangeable for Certificated Notes upon surrender of the applicable temporary
Class A-1 Notes, Class A-2 Notes, Class B Notes, Class C Notes, Class D Notes,
Class E Notes, Class F Notes, Class G Notes or Class H Notes at the office or
agency maintained by the Issuer and the Co-Issuer for such
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purpose, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Class A-1A Notes, Class A-2 Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes, Class G Notes or Class H
Notes, the Issuer and the Co-Issuer shall execute, and the Trustee shall
authenticate and deliver, in exchange therefor the same aggregate principal
amount of Certificated Notes of authorized denominations. Until so exchanged,
the temporary Class A-1A Notes, Class A-2 Notes, Class B Notes, Class C Notes,
Class D Notes, Class E Notes, Class F Notes, Class G Notes or Class H Notes
shall in all respects be entitled to the same benefits under this Indenture as
Certificated Notes.
Section 2.11 U.S. Tax Treatment of Notes and the Issuer.
(a) Each of the Issuer and the Co-Issuer intends that, for U.S.
federal income tax purposes, the Notes be treated as debt and that the Issuer be
treated as a Qualified REIT Subsidiary. Each prospective purchaser and any
subsequent transferee of a Note or any interest therein shall, by virtue of its
purchase or other acquisition of such Note or interest therein, be deemed to
have agreed to treat such Note in a manner consistent with the preceding
sentence for U.S. federal income tax purposes.
(b) The Issuer and the Co-Issuer shall account for the Notes and
prepare any reports to Noteholders and tax authorities consistent with the
intentions expressed in Section 2.11(a) above.
(c) Each Holder of Notes shall timely furnish to the Issuer, the
Co-Issuer or its agents any U.S. federal income tax form or certification (such
as IRS Form W-8BEN (Certification of Foreign Status of Beneficial Owner) (with
Part III marked), IRS Form W-8IMY (Certification of Foreign Intermediary
Status), IRS Form W-9 (Request for Taxpayer Identification Number and
Certification), or IRS Form W-8ECI (Certification of Foreign Person's Claim for
Exemption from Withholding on Income Effectively Connected with Conduct of a
U.S. Trade or Business) or any successors to such IRS forms that the Issuer, the
Co-Issuer or its agents may reasonably request and shall update or replace such
forms or certification in accordance with its terms or its subsequent
amendments.
Section 2.12 Authenticating Agents.
Upon the request of the Issuer and the Co-Issuer, the Trustee shall,
and if the Trustee so chooses the Trustee may, pursuant to this Indenture,
appoint one or more Authenticating Agents with power to act on its behalf and
subject to its direction in the authentication of Notes in connection with
issuance, transfers and exchanges under Sections 2.4, 2.5, 2.6 and 8.5 hereof,
as fully to all intents and purposes as though each such Authenticating Agent
had been expressly authorized by such Sections to authenticate such Notes. For
all purposes of this Indenture, the authentication of Notes by an Authenticating
Agent pursuant to this Section 2.12 shall be deemed to be the authentication of
Notes by the Trustee.
Any corporation or banking association into which any Authenticating
Agent may be merged or converted or with which it may be consolidated, or any
corporation or banking association resulting from any merger, consolidation or
conversion to which any Authenticating Agent shall be a party, or any
corporation succeeding to the corporate trust business of any
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Authenticating Agent, shall be the successor of such Authenticating Agent
hereunder, without the execution or filing of any further act on the part of the
parties hereto or such Authenticating Agent or such successor corporation. Any
Authenticating Agent may at any time resign by giving written notice of
resignation to the Trustee, the Issuer and the Co-Issuer. The Trustee may at any
time terminate the agency of any Authenticating Agent by giving written notice
of termination to such Authenticating Agent, the Issuer and the Co-Issuer. Upon
receiving such notice of resignation or upon such a termination, the Trustee
shall promptly appoint a successor Authenticating Agent and shall give written
notice of such appointment to the Issuer.
The Trustee agrees to pay to each Authenticating Agent appointed by it
from time to time reasonable compensation for its services, and reimbursement
for its reasonable expenses relating thereto and the Trustee shall be entitled
to be reimbursed for such payments, subject to Section 6.7 hereof. The
provisions of Sections 2.9, 6.4 and 6.5 hereof shall be applicable to any
Authenticating Agent.
Section 2.13 Forced Sale on Failure to Comply with Restrictions.
(a) Notwithstanding anything to the contrary elsewhere in this
Indenture, any transfer of a Note or interest therein to a U.S. Person who is
determined not to have been both a QIB and a Qualified Purchaser at the time of
acquisition of the Note or interest therein shall be null and void and any such
proposed transfer of which the Issuer, the Co-Issuer or the Trustee shall have
notice may be disregarded by the Issuer, the Co-Issuer and the Trustee for all
purposes.
(b) If the Issuer determines that any Holder of a Note has not
satisfied the applicable requirement described in Section 2.13(a) above (any
such person a "Non-Permitted Holder"), then the Issuer shall promptly after
discovery that such Person is a Non-Permitted Holder by the Issuer, the
Co-Issuer or the Trustee (and notice by the Trustee or the Co-Issuer to the
Issuer, if either of them makes the discovery), send notice (or procure that
notice is sent) to such Non-Permitted Holder demanding that such Non-Permitted
Holder transfer its interest to a Person that is not a Non-Permitted Holder
within 30 days of the date of such notice. If such Non-Permitted Holder fails to
so transfer its Note or interest therein, the Issuer shall have the right,
without further notice to the Non-Permitted Holder, to sell such Note or
interest therein to a purchaser selected by the Issuer that is not a
Non-Permitted Holder on such terms as the Issuer may choose. The Issuer, or the
Trustee acting on behalf of the Issuer, may select the purchaser by soliciting
one or more bids from one or more brokers or other market professionals that
regularly deal in securities similar to the Note, and selling such Note to the
highest such bidder. However, the Issuer or the Trustee may select a purchaser
by any other means determined by it in its sole discretion. The Holder of such
Note, the Non-Permitted Holder and each other Person in the chain of title from
the Holder to the Non-Permitted Holder, by its acceptance of an interest in the
Note, agrees to cooperate with the Issuer and the Trustee to effect such
transfers. The proceeds of such sale, net of any commissions, expenses and taxes
due in connection with such sale shall be remitted to the Non-Permitted Holder.
The terms and conditions of any sale under this Section 2.13(b) shall be
determined in the sole discretion of the Issuer, and the Issuer shall not be
liable to any Person having an interest in the Note sold as a result of any such
sale of exercise of such discretion.
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Section 2.14 No Gross Up.
The Issuer shall not be obligated to pay any additional amounts to the
Holders or beneficial owners of the Notes as a result of any withholding or
deduction for, or on account of, any present or future taxes, duties,
assessments or governmental charges.
ARTICLE 3
CONDITIONS PRECEDENT; PLEDGED OBLIGATIONS
Section 3.1 General Provisions.
The Notes to be issued on the Closing Date shall be executed by the
Issuer and the Co-Issuer upon compliance with Section 3.2 and shall be delivered
to the Trustee for authentication and thereupon the same shall be authenticated
and delivered by the Trustee upon Issuer Request and upon receipt by the Trustee
of the items described below:
(a) an Officer's Certificate of the Issuer (i) evidencing the
authorization by Board Resolution of the execution and delivery of this
Indenture, the Collateral Management Agreement, each Hedge Agreement and related
documents, the execution, authentication and delivery of the Notes and
specifying the Stated Maturity of each Class of Notes, the principal amount of
each Class of Notes and the applicable Note Interest Rate of each Class of Notes
to be authenticated and delivered, and (ii) certifying that (A) the attached
copy of the Board Resolution is a true and complete copy thereof, (B) such
resolutions have not been rescinded and are in full force and effect on and as
of the Closing Date, (C) the Directors authorized to execute and deliver such
documents hold the offices and have the signatures indicated thereon and (D) at
least $52,500,000 of proceeds on account of the sale on the Closing Date of the
Preferred Shares shall have been received;
(b) an Officer's Certificate of the Co-Issuer (i) evidencing the
authorization by Board Resolution of the execution and delivery of this
Indenture and related documents, the execution, authentication and delivery of
the Notes and specifying the Stated Maturity of each Class of Notes, the
principal amount of each Class of Notes and the applicable Note Interest Rate of
each Class of Notes to be authenticated and delivered, and (ii) certifying that
(A) the attached copy of the Board Resolution is a true and complete copy
thereof, (B) such resolutions have not been rescinded and are in full force and
effect on and as of the Closing Date and (C) the Officers authorized to execute
and deliver such documents hold the offices and have the signatures indicated
thereon;
(c) (i) either (A) certificates of the Issuer or other official
document evidencing the due authorization, approval or consent of any
governmental body or bodies, at the time having jurisdiction in the premises,
together with an Opinion of Counsel of the Issuer that no other authorization,
approval or consent of any governmental body is required for the valid issuance
of such Notes, or (B) an Opinion of Counsel of the Issuer reasonably
satisfactory in form and substance to the Trustee that no such authorization,
approval or consent of any governmental body is required for the valid issuance
of such Notes except as may have been given; and
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(ii) either (A) certificates of the Co-Issuer or other official
document evidencing the due authorization, approval or consent of any
governmental body or bodies, at the time having jurisdiction in the
premises, together with an Opinion of Counsel of the Co-Issuer that no
other authorization, approval or consent of any governmental body is
required for the valid issuance of such Notes, or (B) an Opinion of Counsel
of the Co-Issuer reasonably satisfactory in form and substance to the
Trustee that no such authorization, approval or consent of any governmental
body is required for the valid issuance of such Notes except as may have
been given;
(d) opinions of Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, special U.S.
counsel to the Issuer and the Co-Issuer (which opinions may be limited to the
laws of the State of New York and the federal law of the United States and may
assume, among other things, the correctness of the representations and
warranties made or deemed made by the owners of Notes pursuant to Section 2.5(h)
and (j)) dated the Closing Date in a form satisfactory to the Initial Purchaser
and the Trustee;
(e) an opinion of ▇▇▇▇▇▇ and Calder, Cayman Islands counsel to the
Issuer (which opinion shall be limited to the laws of the Cayman Islands), dated
the Closing Date in a form satisfactory to the Initial Purchaser and the
Trustee;
(f) an opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, special
tax counsel to the Arbor Parent regarding its qualification and taxation as a
REIT in a form satisfactory to the Initial Purchaser and the Trustee;
(g) an Officer's Certificate, given on behalf of the Issuer and
without personal liability, stating that the Issuer is not in Default under this
Indenture and that the issuance of the Securities will not result in a breach of
any of the terms, conditions or provisions of, or constitute a Default under,
the Governing Documents of the Issuer, any indenture or other agreement or
instrument to which the Issuer is a party or by which it is bound, or any order
of any court or administrative agency entered in any Proceeding to which the
Issuer is a party or by which it may be bound or to which it may be subject;
that all conditions precedent provided in this Indenture relating to the
authentication and delivery of the Notes applied for and all conditions
precedent provided in the Preferred Shares Paying Agency Agreement relating to
the issuance by the Issuer of the Preferred Shares have been complied with;
(h) an Officer's Certificate stating that the Co-Issuer is not in
Default under this Indenture and that the issuance of the Notes will not result
in a breach of any of the terms, conditions or provisions of, or constitute a
Default under, the Governing Documents of the Co-Issuer, any indenture or other
agreement or instrument to which the Co-Issuer is a party or by which it is
bound, or any order of any court or administrative agency entered in any
Proceeding to which the Co-Issuer is a party or by which it may be bound or to
which it may be subject; that all conditions precedent provided in this
Indenture relating to the authentication and delivery of the Notes applied for
have been complied with; and that all expenses due or accrued with respect to
the offering or relating to actions taken on or in connection with the Closing
Date have been paid;
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(i) an executed counterpart of each initial Collateral Debt Securities
Purchase Agreement and the Collateral Management Agreement;
(j) an executed copy of each Hedge Agreement;
(k) an executed counterpart of the Preferred Shares Paying Agency
Agreement;
(l) an opinion of counsel to each Hedge Counterparty dated the Closing
Date, in a form satisfactory to the Initial Purchaser and the Trustee;
(m) (i) an opinion of ▇▇▇▇▇▇ Godward Kronish LLP, special counsel to
the Collateral Manager, the Arbor Parent and the Advancing Agent, dated the
Closing Date in a form satisfactory to the Initial Purchaser and the Trustee,
and (ii) an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, special counsel (regarding
certain Investment Company Act issues) to the Arbor Parent, dated the Closing
Date in a form satisfactory to the Initial Purchaser and the Trustee;
(n) an opinion of counsel to the Trustee dated the Closing Date in a
form satisfactory to the Initial Purchaser and the Trustee;
(o) an opinion of counsel to each Seller dated the Closing Date in a
form satisfactory to the Initial Purchaser and the Trustee;
(p) an Accountants' Report confirming the following information as of
the Closing Date: (i) the information (other than the Principal Balance and the
Purchase Price) with respect to each Collateral Debt Security set forth on the
Schedule of Closing Date Collateral Debt Securities attached hereto as Schedule
I by reference to such sources as shall be specified therein and (ii) specifying
the procedures undertaken by the accountants to review data and computations
relating to the foregoing;
(q) an Officer's Certificate from the Collateral Manager (i)
confirming that each Collateral Debt Security set forth on the Schedule I
attached hereto meets the Eligibility Criteria and that Schedule I correctly
lists the Collateral Debt Securities to be Granted to the Trustee on the Closing
Date, and (ii) stating the Aggregate Principal Amount of the Collateral Debt
Securities;
(r) evidence of preparation for filing at the appropriate filing
office in the District of Columbia of a financing statement, on behalf of the
Issuer, relating to the perfection of the lien of this Indenture;
(s) an Issuer Order executed by the Issuer and the Co-Issuer directing
the Trustee to (i) authenticate the Notes specified therein, in the amounts set
forth therein and registered in the name(s) set forth therein and (ii) deliver
the authenticated Notes as directed by the Issuer and the Co-Issuer; and
(t) such other documents as the Trustee may reasonably require.
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Section 3.2 Security for Notes.
Prior to the issuance of the Notes on the Closing Date, the Issuer
shall cause the following conditions to be satisfied:
(a) Grant of Security Interest; Delivery of Collateral Debt
Securities. The Grant pursuant to the Granting Clauses of this Indenture of all
of the Issuer's right, title and interest in and to the Assets and the transfer
of all Collateral Debt Securities acquired in connection therewith purchased by
the Issuer on the Closing Date (as set forth in the Schedule of Closing Date
Collateral Debt Securities) to the Trustee, without recourse (except as
expressly provided in each applicable Collateral Debt Security Purchase
Agreement), in the manner provided in Section 3.3(a) and the crediting to the
Custodial Account by the Custodial Securities Intermediary of such Collateral
Debt Securities shall have occurred;
(b) Certificate of the Issuer. A certificate of an Authorized Officer
of the Issuer given on behalf of the Issuer and without personal liability,
dated as of the Closing Date, delivered to the Trustee, to the effect that, in
the case of each Collateral Debt Security pledged to the Trustee for inclusion
in the Assets on the Closing Date and immediately prior to the delivery thereof
on the Closing Date:
(i) the Issuer is the owner of such Collateral Debt Security free and
clear of any liens, claims or encumbrances of any nature whatsoever except
for those which are being released on the Closing Date;
(ii) the Issuer has acquired its ownership in such Collateral Debt
Security in good faith without notice of any adverse claim, except as
described in paragraph (i) above;
(iii) the Issuer has not assigned, pledged or otherwise encumbered any
interest in such Collateral Debt Security (or, if any such interest has
been assigned, pledged or otherwise encumbered, it has been released) other
than interests Granted pursuant to this Indenture;
(iv) the Underlying Instrument with respect to such Collateral Debt
Security does not prohibit the Issuer from Granting a security interest in
and assigning and pledging such Collateral Debt Security to the Trustee;
(v) the information set forth with respect to such Collateral Debt
Security in the Schedule of Closing Date Collateral Debt Securities is
correct;
(vi) the Collateral Debt Securities included in the Assets satisfy the
requirements of the definition of Eligibility Criteria and the requirements
of Section 3.2(a); and
(vii) the Grant pursuant to the Granting Clauses of this Indenture
shall result in a first priority security interest in favor of the Trustee
for the benefit of the Secured Parties in all of the Issuer's right, title
and interest in and to the Collateral Debt Securities pledged to the
Trustee for inclusion in the Assets on the Closing Date.
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(c) Rating Letters. The Trustee's receipt of a letter signed by each
Rating Agency and confirming that (i) the Class A-1A Notes have been rated "Aaa"
by Moody's and "AAA" by S&P and Fitch, (ii) the Class A-1AR Notes have been
rated "Aaa" by Moody's and "AAA" by S&P and Fitch, (iii) the Class A-2 Notes
have been rated "Aaa" by Moody's and "AAA" by S&P and Fitch, (iv) the Class B
Notes have been rated at least "Aa2" by Moody's and "AA" by S&P and Fitch, (v)
the Class C Notes have been rated at least "A1" by Moody's and "A+" by S&P and
Fitch, (vi) the Class D Notes have been rated at least "A2" by Moody's and "A"
by S&P and Fitch, (vii) the Class E Notes have been rated at least "A3" by
Moody's and "A-" by S&P and Fitch, (viii) the Class F Notes have been rated at
least "Baa1" by Moody's and "BBB+" by S&P and Fitch, (ix) the Class G Notes have
been rated at least "Baa2" by Moody's and "BBB" by Fitch and (x) the Class H
Notes have been rated at least "Baa3" by Moody's and "BBB-" by Fitch and that
such ratings are in full force and effect on the Closing Date.
(d) Accounts. Evidence of the establishment of the Payment Account,
the Collection Account, the Unused Proceeds Account, the Interest Reserve
Account, the Delayed Funding Obligations Account, the Expense Account, each
Defeased Collateral Account, each Hedge Collateral Account, each Hedge
Termination Account, the Preferred Shares Distribution Account and the Custodial
Account.
(e) Deposit to Expense Account. On the Closing Date, the Issuer shall
deposit into the Expense Account from the gross proceeds of the offering of the
Securities, $976,869.50.
(f) Deposit to Delayed Funding Obligations Account. On the Closing
Date, the Issuer or the applicable Sellers shall deposit into the Delayed
Funding Obligations Account $19,236,184.85.
(g) Deposit to Unused Proceeds Account. On the Closing Date, the
Issuer shall deposit into the Unused Proceeds Account, $123,316,156.50.
(h) Issuance of Preferred Shares. The Issuer shall have delivered to
the Trustee evidence that the Preferred Shares have been, or contemporaneously
with the issuance of the Notes will be, (i) issued by the Issuer and (ii)
acquired in their entirety by ARMS Equity.
Section 3.3 Transfer of Pledged Obligations.
(a) ▇▇▇▇▇ Fargo Bank, National Association is hereby appointed as
Securities Intermediary (in such capacity, the "Custodial Securities
Intermediary") to hold all Pledged Obligations delivered to it in physical form
at its office in Minneapolis, Minnesota. Any successor to such Securities
Intermediary shall be a U.S. state or national bank or trust company that is not
an Affiliate of the Issuer or the Co-Issuer and has capital and surplus of at
least $100,000,000. Subject to the limited right to relocate Pledged Obligations
set forth in Section 7.5(b), the Custodial Securities Intermediary, as a
Securities Intermediary, shall hold all Collateral Debt Securities in the
Custodial Account, all Eligible Investments and other investments purchased in
accordance with this Indenture in the respective Accounts in which the funds
used to purchase such investments are held in accordance with Article 10 and, in
respect of each Account (other than the Payment Account and the Preferred Shares
Distribution Account), the Trustee shall have entered into an agreement with the
Issuer and the Custodial Securities
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Intermediary (the "Securities Account Control Agreement") providing, inter alia,
that the establishment and maintenance of such Account will be governed by a law
satisfactory to the Issuer, the Trustee and the Custodial Securities
Intermediary. To the maximum extent feasible, Pledged Obligations shall be
transferred to the Trustee as Security Entitlements in the manner set forth in
clause (i) below. In the event that the measures set forth in clause (i) below
cannot be taken as to any Pledged Obligations, such Pledged Obligation may be
transferred to the Trustee in the manner set forth in clauses (ii) through (vii)
below, as appropriate. The security interest of the Trustee in Pledged
Obligations shall be perfected and otherwise evidenced as follows:
(i) in the case of such Pledged Obligations consisting of Security
Entitlements, by the Issuer (A) causing the Custodial Securities
Intermediary, in accordance with the Securities Account Control Agreement,
to indicate by book entry that a Financial Asset has been credited to the
Custodial Account and (B) causing the Custodial Securities Intermediary to
agree pursuant to the Securities Account Control Agreement that it will
comply with Entitlement Orders originated by the Trustee with respect to
each such Security Entitlement without further consent by the Issuer;
(ii) in the case of Pledged Obligations that are "uncertificated
securities" (as such term is defined in the UCC), to the extent that any
such uncertificated securities do not constitute Financial Assets forming
the basis of Security Entitlements by the Trustee pursuant to clause (i)
(the "Uncertificated Securities"), by the Issuer (A) causing the issuer(s)
of such Uncertificated Securities to register on their respective books the
Trustee as the registered owner thereof upon original issue or transfer
thereof or (B) causing another Person, other than a Securities
Intermediary, either to become the registered owner of such Uncertificated
Securities on behalf of the Trustee, or such Person having previously
become the registered owner, to acknowledge that it holds such
Uncertificated Securities for the Trustee;
(iii) in the case of Pledged Obligations consisting of Certificated
Securities in registered form to the extent that any such Certificated
Securities do not constitute Financial Assets forming the basis of Security
Entitlements acquired by the Trustee pursuant to clause (i) (the
"Registered Securities"), by the Issuer (A) causing (1) the Trustee to
obtain possession of such Registered Securities in the State of Minnesota
or (2) another Person, other than a Securities Intermediary, either to
acquire possession of such Registered Securities on behalf of the Trustee,
or having previously acquired such Registered Securities, in either case,
in the State of Minnesota, to acknowledge that it holds such Registered
Securities for the Trustee and (B) causing (1) the endorsement of such
Registered Securities to the Trustee by an effective endorsement or (2) the
registration of such Registered Securities in the name of the Trustee by
the issuer thereof upon its original issue or registration of transfer;
(iv) in the case of Pledged Obligations consisting of Certificated
Securities in bearer form, to the extent that any such Certificated
Securities do not constitute Financial Assets forming the basis of Security
Entitlements acquired by the Trustee pursuant to clause (i) (the "Bearer
Securities"), by the Issuer causing (A) the Trustee to obtain possession of
such Bearer Securities in the State of Minnesota or (B) another Person,
other than a Securities Intermediary, either to acquire possession of such
Bearer
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Securities on behalf of the Trustee or, having previously acquired
possession of such Bearer Securities, in either case, in the State of
Minnesota, to acknowledge that it holds such Bearer Securities for the
Trustee;
(v) in the case of Pledged Obligations that consist of Money or
Instruments (the "Minnesota Collateral"), to the extent that any such
Minnesota Collateral does not constitute a Financial Asset forming the
basis of a Security Entitlement acquired by the Trustee pursuant to clause
(i), by the Issuer causing (A) the Trustee to acquire possession of such
Minnesota Collateral in the State of Minnesota or (B) another Person (other
than the Issuer or a Person controlling, controlled by, or under common
control with, the Issuer) (1) to (x) take possession of such Minnesota
Collateral in the State of Minnesota and (y) authenticate a record
acknowledging that it holds such possession for the benefit of the Trustee
or (2) to (x) authenticate a record acknowledging that it will hold
possession of such Minnesota Collateral for the benefit of the Trustee and
(y) take possession of such Minnesota Collateral in the State of Minnesota;
(vi) in the case of Pledged Obligations that consist of UCC Accounts
or General Intangibles ("Accounts Receivable"), by the Issuer (A)
notifying, or causing the notification of, the account debtors (as such
term is defined in Section 9-102(a) of the UCC) for such Accounts
Receivable of the security interest of the Trustee in such Accounts
Receivable and causing the Securities Intermediary to credit such Accounts
Receivable to the Custodial Account and to treat such Accounts Receivable
as Financial Assets within the meaning of Article 8 of the UCC and (B) to
the extent that doing so would be effective to perfect a security interest
in such Accounts Receivable under the UCC as in effect at the time of
transfer of such Accounts Receivable to the Trustee hereunder, filing or
causing the filing of a UCC financing statement that encompasses such
Accounts Receivable with the Recorder of Deeds of the District of Columbia
and such other offices as applicable; and
(vii) to the maximum extent reasonably possible, in the case of any
Loans, Preferred Equity Securities or Participations that are not evidenced
by Instruments, Certificated Securities or Uncertificated Securities, by
the Issuer (A) taking all steps necessary (including obtaining any
necessary consents to the transfer of such Loan, Participation or Preferred
Equity Security, as applicable) to make the Custodial Securities
Intermediary the registered owner thereof, (B) causing the Custodial
Securities Intermediary to credit such Loans, Participations or Preferred
Equity Securities, as applicable, to the Custodial Account and to treat
such Loans, Participations or Preferred Equity Securities, as applicable,
as Financial Assets within the meaning of Article 8 of the UCC and (C) to
the extent that doing so would be effective to perfect a security interest
in such Loans, Participations or Preferred Equity Securities, as
applicable, under the UCC as in effect at the time of transfer of such
Loans, Participations or Preferred Equity Securities to the Trustee
hereunder, filing or causing the filing of a UCC financing statement that
encompasses such Loans, Participations or Preferred Equity Securities, as
applicable, with the Recorder of Deeds of the District of Columbia and such
other offices as applicable.
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(b) The Issuer hereby authorizes the filing of UCC financing
statements describing as the collateral covered thereby "all of the debtor's
personal property and assets," or words to that effect, notwithstanding that
such wording may be broader in scope than the Assets described in this
Indenture.
(c) Without limiting the foregoing, the Issuer and the Trustee on
behalf of the Bank agree, and the Bank shall cause the Custodial Securities
Intermediary, to take such different or additional action as the Trustee may
reasonably request in order to maintain the perfection and priority of the
security interest of the Trustee in the event of any change in applicable law or
regulation, including Articles 8 and 9 of the UCC and Treasury Regulations
governing transfers of interests in Government Items (it being understood that
the Trustee shall be entitled to rely upon an Opinion of Counsel, including an
Opinion of Counsel delivered in accordance with Section 3.1(d), as to the need
to file any financing statements or continuation statements, the dates by which
such filings are required to be made and the jurisdictions in which such filings
are required to be made).
(d) Without limiting any of the foregoing,
(i) in connection with each Grant of a Collateral Debt Security
hereunder, the Issuer shall deliver (or cause to be delivered by the
applicable Seller) to the Custodial Securities Intermediary (A) the
original of any note (or a copy of such note together with a lost note
affidavit and indemnity), certificate or other instrument constituting or
evidencing such Collateral Debt Security and any other Underlying
Instrument related to such Collateral Debt Security, the delivery of which
is necessary in order to perfect the security interest of the Trustee in
such Collateral Debt Security granted pursuant to this Indenture, (B)
copies of the other Underlying Instruments then in possession of the Issuer
and (C) any other agreements, documents, certificates or instruments not
specifically covered in the foregoing subclauses (A) and (B) of this clause
(i) to the extent such other agreements, documents, certificates or
instruments are required to be delivered to the Issuer pursuant to the
related Collateral Debt Securities Purchase Agreement;
(ii) from time to time upon the request of the Trustee, Collateral
Manager or Servicer, the Issuer shall deliver (or cause to be delivered) to
the Custodial Securities Intermediary any Underlying Instrument in the
possession of the Issuer and not previously delivered hereunder (including
originals of Underlying Instruments not previously required to be delivered
as originals) and as to which the Trustee, Collateral Manager or Servicer,
as applicable, shall have reasonably determined to be necessary or
appropriate for the administration of such Collateral Debt Security
hereunder or under the Collateral Management Agreement or under the
Servicing Agreement or for the protection of the security interest of the
Trustee under this Indenture;
(iii) in connection with any delivery of documents to the Custodial
Securities Intermediary pursuant to clauses (i) and (ii) above, the Trustee
shall deliver to the Collateral Manager and the Servicer, on behalf of the
Issuer, a Trust Receipt in the form of Exhibit M acknowledging the receipt
of such documents by the Custodial Securities Intermediary and that it is
holding such documents subject to the terms of this Indenture;
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(iv) from time to time upon request of the Collateral Manager or the
Servicer, the Custodial Securities Intermediary shall, upon delivery by the
Collateral Manager or the Servicer of a duly completed Request for Release
in the form of Exhibit N hereto, release to the Collateral Manager or the
Servicer such of the Underlying Instruments then in its custody as the
Collateral Manager or the Servicer reasonably so requests. By submission of
any such Request for Release, the Collateral Manager or the Servicer, as
applicable, shall be deemed to have represented and warranted that it has
determined in accordance with the Collateral Manager Servicing Standard or
the Servicing Standard set forth in the Servicing Agreement, as the case
may be, that the requested release is necessary for the administration of
such Collateral Debt Security hereunder or under the Collateral Management
Agreement or under the Servicing Agreement or for the protection of the
security interest of the Trustee under this Indenture. The Collateral
Manager or the Servicer shall return to the Custodial Securities
Intermediary each Underlying Instrument released from custody pursuant to
this clause (iv) within 20 Business Days of receipt thereof (except such
Underlying Instruments as are released in connection with a sale, exchange
or other disposition, in each case only as permitted under this Indenture,
of the related Collateral Debt Security that is consummated within such
20-day period). Notwithstanding the foregoing provisions of this clause
(iv), (A) any note, certificate or other instrument evidencing a Pledged
Collateral Debt Security shall be released only for the purpose of (1) a
sale, exchange or other disposition of such Pledged Collateral Debt
Security that is permitted in accordance with the terms of this Indenture,
(2) presentation, collection, renewal or registration of transfer of such
Collateral Debt Security or (3) in the case of any note, in connection with
a payment in full of all amounts owing under such note, and (B) the
Custodial Securities Intermediary may refuse to honor any Request for
Release following the occurrence of an Event of Default under this
Indenture; and
(v) to the extent the Collateral Manager deems necessary or advisable
in accordance with the Collateral Manager Servicing Standard, the Issuer
may, at the direction of the Collateral Manager (but only upon disclosure
to, and with the prior consent of, the Advisory Committee), assign its
right to purchase under a "buy/sell" arrangement in respect of a Collateral
Debt Security to the Holder of the Preferred Shares or any Affiliate
thereof.
(e) As of the Closing Date (with respect to the Assets owned or
existing as of the Closing Date) and each date on which an Asset is acquired
(only with respect to each Asset so acquired or arising after the Closing Date),
the Issuer represents and warrants as follows:
(i) this Indenture creates a valid and continuing security interest
(as defined in the UCC) in the Assets in favor of the Trustee for the
benefit of the Secured Parties, which security interest is prior to all
other liens, and is enforceable as such against creditors of and purchasers
from the Issuer;
(ii) the Issuer owns and has good and marketable title to such Assets
free and clear of any lien, claim or encumbrance of any Person;
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(iii) in the case of each Asset, the Issuer has acquired its ownership
in such Asset in good faith without notice of any adverse claim as defined
in Section 8-102(a)(1) of the UCC as in effect on the date hereof;
(iv) other than the security interest granted to the Trustee for the
benefit of the Secured Parties pursuant to this Indenture, the Issuer has
not pledged, assigned, sold, granted a security interest in, or otherwise
conveyed any of the Assets;
(v) the Issuer has not authorized the filing of, and is not aware of,
any financing statements against the Issuer that include a description of
collateral covering the Assets other than any financing statement (x)
relating to the security interest granted to the Trustee for the benefit of
the Secured Parties hereunder or (y) that has been terminated; the Issuer
is not aware of any judgment lien, Pension Benefit Guarantee Corporation
lien or tax lien filings against the Issuer;
(vi) the Issuer has received all consents and approvals required by
the terms of each Asset and the Underlying Instruments to grant to the
Trustee its interest and rights in such Asset hereunder;
(vii) the Issuer has caused or will have caused, within ten days, the
filing of all appropriate financing statements in the proper filing office
in the appropriate jurisdictions under applicable law in order to perfect
the security interest in the Assets granted to the Trustee for the benefit
of the Secured Parties hereunder;
(viii) each Asset is an Instrument, a General Intangible, a
Certificated Security or an Uncertificated Security, or has been or will
have been credited to a Securities Account;
(ix) the Custodial Securities Intermediary has agreed to treat all
assets credited to the Securities Account as Financial Assets;
(x) the Issuer has delivered a fully executed Securities Account
Control Agreement pursuant to which the Custodial Securities Intermediary
has agreed to comply with all instructions originated by the Trustee
relating to the Custodial Account without further consent of the Issuer;
the Custodial Account is not in the name of any person other than the
Issuer or the Trustee; the Issuer has not consented to the Securities
Intermediary of the Custodial Account to comply with Entitlement Orders of
any person other than the Trustee;
(xi) (A) all original executed copies of each promissory note or other
writings that constitute or evidence any pledged obligation that
constitutes an Instrument have been delivered to the Custodial Securities
Intermediary for the benefit of the Trustee, (B) the Issuer has received a
written acknowledgement from the Custodial Securities Intermediary that the
Custodial Securities Intermediary is acting solely as agent of the Trustee
and (C) none of the promissory notes or other writings that constitute or
evidence such collateral has any marks or notations indicating that they
have been pledged, assigned or otherwise conveyed by the Issuer to any
Person other than the Trustee;
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(xii) (A) the Collection Accounts, the Unused Proceeds Account, the
Interest Reserve Account, the Delayed Funding Obligations Account, each
Defeased Collateral Account, each Hedge Termination Account, each Hedge
Collateral Account, the Expense Account and the Payment Account
(collectively, the "Deposit Accounts") constitute "deposit accounts" within
the meaning of the UCC, (B) the Issuer has taken all steps necessary to
cause the Trustee to become the customer and account holder of the Deposit
Accounts, (C) other than the security interest granted to the Trustee
pursuant to this Indenture, the Issuer has not pledged, assigned, sold,
granted a security interest in, or otherwise conveyed any of the Deposit
Accounts, and (D) the Deposit Accounts are not in the name of any person
other than the Issuer or the Trustee. The Issuer has not consented to the
bank maintaining the Deposit Accounts to comply with the instructions of
any person other than the Trustee; and
(xiii) the Issuer has established procedures such that any Eligible
Investments purchased with funds withdrawn from the Deposit Accounts will
be (i) credited to a Securities Account over which the Trustee will have a
first priority perfected security interest, (ii) purchased in the name of
the Trustee, or (iii) held in another manner sufficient to establish the
Trustee's first priority perfected security interest over such Eligible
Investments.
(f) The Trustee shall only invest in Eligible Investments which the
applicable Custodial Securities Intermediary agrees to credit to the applicable
account. To the extent any Eligible Investment shall not be delivered to the
Trustee by causing the Custodial Securities Intermediary to create a Security
Entitlement in the Securities Account in favor of the Trustee, the Issuer shall
deliver an Opinion of Counsel to the Trustee to the effect that any other
delivery will effect a first priority security interest in favor of the Trustee
in such Eligible Instrument.
ARTICLE 4
SATISFACTION AND DISCHARGE
Section 4.1 Satisfaction and Discharge of Indenture.
This Indenture shall be discharged and shall cease to be of further
effect with respect to the Assets securing the Notes and the Issuer's
obligations under each Hedge Agreement except as to (i) the rights of
registration of transfer and exchange, (ii) the substitution of mutilated,
defaced, destroyed, lost or stolen Notes, (iii) the rights of Noteholders to
receive payments of principal thereof and interest thereon, and in the case of
the Class A-1AR Commitments, the Class A-1AR Commitment Fee thereon, as provided
herein, (iv) the rights, obligations and immunities of the Trustee on behalf of
the Noteholders hereunder and (v) the rights of Noteholders as beneficiaries
hereof with respect to the property deposited with the Trustee on their behalf
and payable to all or any of them, and the Trustee, on demand of and at the
expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when:
(a) either:
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(i) all Notes theretofore authenticated and delivered (other than (A)
Notes which have been mutilated, defaced, destroyed, lost or stolen and
which have been replaced or paid as provided in Section 2.6 and (B) Notes
for which payment Money has theretofore irrevocably been deposited in trust
and thereafter repaid to the Issuer or discharged from such trust, as
provided in Section 7.3) have been delivered to the Trustee for
cancellation; or
(ii) all Notes not theretofore delivered to the Trustee for
cancellation (A) have become due and payable, or (B) will become due and
payable at their Stated Maturity within one year, or (C) are to be called
for redemption pursuant to Section 9.1 or Section 9.2 under an arrangement
satisfactory to the Trustee for the giving of notice of redemption by the
Issuer and the Co-Issuer pursuant to Section 9.4 and the Issuer or the
Co-Issuer, in the case of clauses (A), (B) or (C) of this Section
4.1(a)(ii), has irrevocably deposited or caused to be deposited with the
Trustee, in trust for such purpose, Cash or non-callable direct obligations
of the United States of America; provided that the obligations are entitled
to the full faith and credit of the United States of America or are debt
obligations which are rated "Aaa" by ▇▇▇▇▇'▇, "AAA" by Fitch and "AAA" by
S&P in an amount sufficient, as verified by a firm of certified public
accountants which are nationally recognized, to pay and discharge the
entire indebtedness (including, in the case of a redemption pursuant to
Section 9.1 or Section 9.2, the Redemption Price) on such Notes not
theretofore delivered to the Trustee for cancellation, for principal and
interest to the date of such deposit (in the case of Notes which have
become due and payable), or to the Stated Maturity or the Redemption Date,
as the case may be (and in each case in respect of the Notes, subject to
the Priority of Payments); provided, further, that any such deposit of
funds with the Trustee in satisfaction of this Indenture shall be subject
to the Rating Agency Condition and, so long as MBIA is deemed to be the
Controlling Class hereunder, the consent of MBIA; provided, however, this
Section 4.1(a)(ii) shall not apply if an election to act in accordance with
the provisions of Section 5.5(a) shall have been made and is not rescinded;
(b) (i) the Issuer has paid or caused to be paid or provided for (to
the satisfaction of the Person entitled thereto) all other sums payable
hereunder and under the Collateral Management Agreement, the Servicing
Agreement, the Preferred Shares Paying Agency Agreement and the Company
Administration Agreement, and (ii) all Hedge Agreements then in effect have been
terminated and Issuer has paid all amounts, including payments due and payable
in connection with such termination and has paid all other outstanding amounts,
including any outstanding payments due and payable for any previously terminated
Hedge Agreement.
(c) Each of the Issuer and the Co-Issuer has delivered to the Trustee
an Officer's Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
rights and obligations of the Issuer, the Co-Issuer, the Trustee, and, if
applicable, the Noteholders, as the case may be, under Sections 2.7, 4.2,
5.4(d), 5.9, 5.18, 6.7, 7.3 and 14.12 hereof shall survive.
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Section 4.2 Application of Trust Money.
All Monies deposited with the Trustee pursuant to Section 4.1 shall be
held in trust and applied by it in accordance with the provisions of the Notes
and this Indenture to the payment of the principal and interest, either directly
or through the Paying Agent, as the Trustee may determine, and in the case of
the Class A-1AR Notes, to the payment of the Class A-1AR Commitment Fee to the
Person entitled thereto for whose payment such Money has been deposited with the
Trustee; but such Money need not be segregated from other funds except to the
extent required herein or when commingling of funds is prohibited by law.
Section 4.3 Repayment of Monies Held by Paying Agent.
In connection with the satisfaction and discharge of this Indenture
with respect to the Notes, all Monies then held by the Paying Agent other than
the Trustee under the provisions of this Indenture shall, upon demand of the
Issuer and the Co-Issuer, be paid to the Trustee to be held and applied pursuant
to Section 7.3 hereof and, in the case of Monies payable on the Notes, in
accordance with the Priority of Payments and thereupon such Paying Agent shall
be released from all further liability with respect to such Monies.
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ARTICLE 5
REMEDIES
Section 5.1 Events of Default.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(a) (1) a default in the payment of any interest on any Note when the
same becomes due and payable (provided that (a) if any Class A Notes or Class B
Notes are Outstanding, solely for the purposes of this Section 5.1(a), no
interest shall be "due and payable" on any Class C Notes, Class D Notes, Class E
Notes, Class F Notes, Class G Notes or Class H Notes, (b) if any Class C Notes
are Outstanding, solely for the purposes of this Section 5.1(a), no interest
shall be "due and payable" on any Class D Notes, Class E Notes, Class F Notes,
Class G Notes or Class H Notes, (c) if any Class D Notes are Outstanding, solely
for the purposes of this Section 5.1(a), no interest shall be "due and payable"
on any Class E Notes, Class F Notes, Class G Notes or Class H Notes, (d) if any
Class E Notes are Outstanding, solely for the purposes of this Section 5.1(a),
no interest shall be "due and payable" on any Class F Notes, Class G Notes or
Class H Notes, (e) if any Class F Notes are Outstanding, solely for the purposes
of this Section 5.1(a), no interest shall be "due and payable" on any Class G
Notes or Class H Notes and (f) if any Class G Notes are Outstanding, solely for
the purposes of this Section 5.1(a), no interest shall be "due and payable" on
any Class H Notes), or (2) a default in a payment of the Class A-1AR Commitment
Fee, in each case, which default continues for a period of three Business Days
or, in the case of a default in payment due to an administrative error or
omission by the Trustee or Paying Agent, which default continues for seven (7)
Business Days;
(b) a default in the payment of principal (or the related Redemption
Price, if applicable) of any Class A-1 Note when the same becomes due and
payable, at its Stated Maturity or any Redemption Date, or if there are no Class
A-1 Notes Outstanding, a default in the payment of principal (or the related
Redemption Price, if applicable) of any Class A-2 Note when the same becomes due
and payable, at its Stated Maturity or any Redemption Date, or if there are no
Class A-2 Notes Outstanding, a default in the payment of principal (or the
related Redemption Price, if applicable) of any Class B Note when the same
becomes due and payable at its Stated Maturity or any Redemption Date, or if
there are no Class B Notes Outstanding, a default in the payment of principal
(or the related Redemption Price, if applicable) of any Class C Note (plus any
Class C Capitalized Interest) when the same becomes due and payable at its
Stated Maturity or any Redemption Date, or if there are no Class C Notes
Outstanding, a default in the payment of principal (or the related Redemption
Price, if applicable) of any Class D Note (plus any Class D Capitalized
Interest) when the same becomes due and payable at its Stated Maturity or any
Redemption Date, or if there are no Class D Notes Outstanding, a default in the
payment of principal (or the related Redemption Price, if applicable) of any
Class E Note (plus any Class E Capitalized Interest) when the same becomes due
and payable at its Stated Maturity or any Redemption Date, or if there are no
Class E Notes Outstanding, a default in the payment
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of principal (or the related Redemption Price, if applicable) of any Class F
Note (plus any Class F Capitalized Interest) when the same becomes due and
payable at its Stated Maturity or any Redemption Date, or if there are no Class
F Notes Outstanding, a default in the payment of principal (or the related
Redemption Price, if applicable) of any Class G Note (plus any Class G
Capitalized Interest) when the same becomes due and payable at its Stated
Maturity or any Redemption Date, or if there are no Class G Notes Outstanding, a
default in the payment of principal (or the related Redemption Price, if
applicable) of any Class H Note (plus any Class H Capitalized Interest) when the
same becomes due and payable at its Stated Maturity or any Redemption Date;
provided that in the case of any default in payment described in this Section
5.1(b) that is due to any administrative error or omission by the Trustee or the
Paying Agent, such default shall be an Event of Default only if such default
continues for seven (7) Business Days;
(c) the failure on any Payment Date to disburse amounts available in
the Payment Account in accordance with the Priority of Payments set forth under
Section 11.1(a) (other than (i) a default in payment described in clause (a) or
(b) above and (ii) unless the holders of the Preferred Shares object, a failure
to disburse any amounts to the Preferred Shares Paying Agent for distribution to
the holders of the Preferred Shares), which failure continues for a period of
three Business Days or, in the case of a failure to disburse such amounts due to
an administrative error or omission by the Trustee or Paying Agent, which
failure continues for seven (7) Business Days;
(d) either the Issuer, the Co-Issuer or the pool of Assets becomes an
investment company required to be registered under the Investment Company Act;
(e) a default in the performance, or breach, of any other covenant or
other agreement (other than the covenant to meet or improve the Collateral
Quality Tests or the Coverage Tests) of the Issuer or the Co-Issuer hereunder or
any representation or warranty of the Issuer or the Co-Issuer hereunder or in
any certificate or other writing delivered pursuant hereto or in connection
herewith proves to be incorrect in any material respect when made, and the
continuation of such default or breach for a period of 30 days (or, if such
default, breach or failure has an adverse effect on the validity, perfection or
priority of the security interest granted hereunder, 15 days) after either the
Issuer, the Co-Issuer or the Collateral Manager has actual knowledge thereof or
after notice thereof to the Issuer, the Co-Issuer and the Collateral Manager by
the Trustee or to the Issuer, the Co-Issuer, the Collateral Manager and the
Trustee by Holders of at least 25% of the Aggregate Outstanding Amount of the
Controlling Class (which shall be deemed to be MBIA so long as it is the
Controlling Class hereunder); provided that a default in the performance by the
Issuer of the obligations imposed on it by this Indenture in connection with the
entry into a replacement Hedge Agreement upon the early termination of a Hedge
Agreement shall not be an Event of Default if the Rating Agency Condition has
been satisfied;
(f) the entry of a decree or order by a court having competent
jurisdiction adjudging the Issuer or the Co-Issuer as bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Issuer or the Co-Issuer under
the Bankruptcy Code, or any bankruptcy, insolvency, reorganization or similar
law enacted under the laws of the Cayman Islands or any other applicable law, or
appointing a receiver, liquidator, assignee, or sequestrator (or other similar
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official) of the Issuer or the Co-Issuer or of any substantial part of its
property, respectively, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order unstayed and in effect
for a period of 60 consecutive days;
(g) the institution by the Issuer or the Co-Issuer of proceedings to
be adjudicated as bankrupt or insolvent, or the consent by it to the institution
of bankruptcy or insolvency proceedings against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under the
Bankruptcy Code, or any bankruptcy, insolvency, reorganization or similar law
enacted under the laws of the Cayman Islands or any other similar applicable
law, or the consent by it to the filing of any such petition or to the
appointment of a receiver, liquidator, assignee, trustee or sequestrator (or
other similar official) of the Issuer or the Co-Issuer or of any substantial
part of its property, respectively, or the making by it of an assignment for the
benefit of creditors, or the admission by it in writing of its inability to pay
its debts generally as they become due, or the taking of any action by the
Issuer in furtherance of any such action;
(h) one or more final judgments being rendered against the Issuer or
the Co-Issuer which exceed, in the aggregate, $1,000,000 (or such lesser amount
as any Rating Agency may specify) and which remain unstayed, undischarged and
unsatisfied for 30 days after such judgment(s) becomes nonappealable, unless
adequate funds have been reserved or set aside for the payment thereof, and
unless (except as otherwise specified in writing by each Rating Agency) the
Rating Agency Condition shall have been satisfied and, so long as MBIA is deemed
to be the Controlling Class hereunder, MBIA consents;
(i) the Issuer loses its status as a Qualified REIT Subsidiary, unless
(A) within 90 days, the Issuer either (1) delivers an opinion of tax counsel of
nationally recognized standing in the United States experienced in such matters
to the effect that, notwithstanding the Issuer's loss of Qualified REIT
Subsidiary status, the Issuer is not, and has not been, an association (or
publicly traded partnership) taxable as a corporation, or is not, and has not
been, otherwise subject to U.S. federal income tax on a net basis and the
Noteholders are not otherwise materially adversely affected by the loss of
Qualified REIT Subsidiary status or (2) receives an amount from the Preferred
Shareholders sufficient to discharge in full the amounts then due and unpaid on
the Notes and amounts and expenses described in clauses (1) through (5), (25),
(26), (27) and (28) under Section 11.1(a)(i) in accordance with the Priority of
Payments or (B) all Classes of the Notes are subject to a Tax Redemption
announced by the Issuer in compliance with this Indenture, and such redemption
has not been rescinded; or
(j) so long as MBIA is deemed to be the Controlling Class hereunder,
the Class A/B Par Value Ratio is less than 100% on any Measurement Date.
Upon becoming aware of the occurrence of an Event of Default, the
Issuer, shall promptly notify (or shall procure the prompt notification of) the
Trustee, the Collateral Manager, the Class A-1AR Note Agent, the Noteholders,
the Preferred Shares Paying Agent, the Preferred Shareholders, each Rating
Agency, each Hedge Counterparty, so long as MBIA is deemed to be the Controlling
Class hereunder, MBIA and, for so long as any Notes are listed on the Irish
Stock Exchange, the Irish Paying Agent in writing. If the Collateral Manager has
actual knowledge of the occurrence of an Event of Default, the Collateral
Manager shall promptly notify, in writing,
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the Trustee, the Class A-1AR Note Agent, the Noteholders, each Rating Agency and
each Hedge Counterparty of the occurrence of such Event of Default.
Section 5.2 Acceleration of Maturity; Rescission and Annulment.
(a) If an Event of Default shall occur and be continuing (other than
the Events of Default specified in Section 5.1(f) or 5.1(g)), the Trustee may
(and shall at the direction of (x) in the case of an Event of Default specified
in Section 5.1(a), 5.1(b) or 5.1(j), so long as MBIA is deemed to be the
Controlling Class hereunder, MBIA or (y) in any other case, a Majority, by
outstanding principal amount, of each Class of Notes voting as a separate Class
(excluding any Notes owned by the Collateral Manager or any of its Affiliates or
by any accounts managed by them), declare the principal of and accrued and
unpaid interest on all the Notes to be immediately due and payable (and any such
acceleration shall automatically terminate the Reinvestment Period). If an Event
of Default described in Section 5.1(f) or 5.1(g) above occurs, such an
acceleration shall occur automatically and without any further action and any
such acceleration shall automatically terminate the Reinvestment Period. If the
Notes are accelerated, payments shall be made in the order and priority set
forth in Section 11.1(a) hereof. If an Event of Default shall occur and be
continuing, no Class A-1AR Draw may be made except with respect to Class A-1AR
Draws to be applied to fund Delayed Funding Amounts related to Delayed Draw Term
Loans; provided, however, that if an Event of Default specified in Section
5.1(f) or 5.1(g) occurs, the undrawn Class A-1AR Commitments shall terminate
automatically without need for further action. The Trustee will provide notice
of any such default to the Class A-1AR Note Agent. If the Notes are accelerated
(whether such acceleration is automatic or otherwise), the Issuer (or the
Collateral Manager on its behalf) shall take the actions described in Section
18.1(c) herein. Immediately following such draw, the Class A-1AR Commitments
shall terminate.
(b) At any time after such a declaration of acceleration of Maturity
of the Notes has been made, and before a judgment or decree for payment of the
Money due has been obtained by the Trustee as hereinafter provided in this
Article 5, a Majority of each Class of Notes (voting as a separate Class), other
than with respect to an Event of Default specified in Section 5.1(d), 5.1(e),
5.1(h), 5.1(i) or 5.1(j), which may be rescinded only by MBIA so long as MBIA is
deemed to be the Controlling Class hereunder, by written notice to the Issuer,
the Co-Issuer, the Trustee and each Hedge Counterparty, may rescind and annul
such declaration and its consequences if:
(i) the Issuer or the Co-Issuer has paid or deposited with the Trustee
a sum sufficient to pay:
(A) all unpaid installments of interest on and principal of
the Notes, and in the case of the Class A-1AR Notes, the Class
A-1AR Commitment Fee, that would be due and payable hereunder if
the Event of Default giving rise to such acceleration had not
occurred;
(B) to the extent that payment of such interest is lawful,
interest on the Class C Capitalized Interest at the Class C Rate,
interest on the Class D Capitalized Interest at the Class D Rate,
interest on the Class E
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Capitalized Interest at the Class E Rate, interest on the Class F
Capitalized Interest at the Class F Rate, interest on the Class G
Capitalized Interest at the Class G Rate and interest on the
Class H Capitalized Interest at the Class H Rate;
(C) all unpaid taxes of the Issuer and the Co-Issuer,
Company Administrative Expenses and other sums paid or advanced
by or otherwise due and payable to the Trustee hereunder;
(D) with respect to each Hedge Agreement, any amount then
due and payable thereunder;
(E) with respect to the Advancing Agent and the Backup
Advancing Agent, any amount due and payable for unreimbursed
Interest Advances and Reimbursement Interest;
(F) with respect to the Collateral Manager, any amount due
and payable for unreimbursed Cure Advances; and
(G) with respect to the Collateral Management Agreement, any
Senior Collateral Management Fee then due and any Company
Administrative Expense due and payable to the Collateral Manager
thereunder;
(ii) the Hedge Agreements in effect immediately prior to the
declaration of such acceleration shall remain in effect or, if such Hedge
Agreements shall have become subject to early termination after the
declaration of such acceleration, the Issuer shall have entered into a
replacement Hedge Agreement for the terminated Hedge Agreement in
accordance with Section 16.1; and
(iii) the Trustee has determined that all Events of Default of which
it has actual knowledge, other than the non-payment of the interest and
principal on the Notes that have become due solely by such acceleration,
have been cured and a Majority of the Controlling Class, by written notice
to the Trustee and each Hedge Counterparty has agreed with such
determination (which agreement shall not be unreasonably withheld or
delayed) or waived as provided in Section 5.14.
At any such time that the Trustee, subject to Section 5.2(b), shall
rescind and annul such declaration and its consequences as permitted
hereinabove, the Trustee shall preserve the Assets in accordance with the
provisions of Section 5.5 with respect to the Event of Default that gave rise to
such declaration; provided, however, that if such preservation of the Assets is
rescinded pursuant to Section 5.5, the Notes may be accelerated pursuant to the
first paragraph of this Section 5.2, notwithstanding any previous rescission and
annulment of a declaration of acceleration pursuant to this paragraph.
No such rescission shall affect any subsequent Default or impair any
right consequent thereon. In addition, no such rescission shall affect any Hedge
Agreement if it has been terminated in accordance with its terms.
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(c) Subject to Sections 5.4 and 5.5, a Majority of the Controlling
Class shall have the right to direct the Trustee in the conduct of any
Proceedings for any remedy available to the Trustee or in the sale of any or all
of the Assets; provided that (i) such direction will not conflict with any rule
of law or this Indenture; (ii) the Trustee may take any other action not
inconsistent with such direction; (iii) the Trustee determines that such action
will not involve it in liability (unless the Trustee has received satisfactory
indemnity or reasonable security against any such liability); and (iv) any
direction to undertake a sale of the Assets may be made only as described in
Section 5.17. Notwithstanding the foregoing, so long as MBIA is deemed to be the
Controlling Class hereunder, MBIA in all cases shall have the right to direct
the Trustee in the conduct of any proceedings or in the sale of any or all of
the Assets following an Event of Default specified in Section 5.1(j) or a
default with respect to the payment of principal of or interest on the Class A
Notes, which default also constitutes an Event of Default specified in Section
5.1(a) or 5.1(b), and a subsequent acceleration of the Notes but only if (i)
such direction will not conflict with any rule of law or this Indenture
(including the limitations described in Section 5.5 but excluding any
requirement requiring sufficient proceeds to pay in full the amounts then due
and unpaid on any of the Notes) and (ii) the Trustee determines that such action
will not involve it in liability (unless the Trustee has received satisfactory
indemnity or reasonable security against any such liability or expense). The
Trustee shall provide written notice of the receipt of such direction to each
Hedge Counterparty promptly after receipt thereof.
(d) As security for the payment by the Issuer of the compensation and
expenses of the Trustee and any sums the Trustee may be entitled to receive as
indemnification by the Issuer, the Issuer hereby grants the Trustee a lien on
the Assets, which lien is senior to the lien of the Noteholders. The Trustee's
lien shall be subject to the Priority of Payments and exercisable by the Trustee
only if the Notes have been declared due and payable following an Event of
Default and such acceleration has not been rescinded or annulled.
(e) A Majority of the Controlling Class, may, prior to the time a
judgment or decree for the payment of money due has been obtained by the
Trustee, waive any past Default on behalf of the holders of all the Notes and
its consequences in accordance with Section 5.14.
(f) In determining whether the holders of the requisite percentage of
Notes have given any direction, notice or consent hereunder, (i) Notes owned by
the Issuer, the Co-Issuer or any Affiliate thereof shall be disregarded and
deemed not to be Outstanding and (ii) in relation to (x) any amendment or other
modification of, or assignment or termination of, any of the express rights or
obligations of the Collateral Manager under the Collateral Management Agreement
or this Indenture (including the exercise of any rights to remove the Collateral
Manager or terminate the Collateral Management Agreement or approve or object to
a replacement for the Collateral Manager except as specifically provided in the
Collateral Management Agreement with respect to the termination of the
Collateral Manager without cause and with respect to the replacement of the
Collateral Manager in instances where the Collateral Manager has not been
terminated for cause or where such replacement is not an Affiliate of the
Collateral Manager) and (y) the exercise by the Noteholders of their right, in
connection with certain Events of Default, to accelerate amounts due under the
Notes, Notes owned by the Collateral Manager or any of its Affiliates, or by any
accounts managed by them, shall be disregarded and deemed not to be Outstanding.
The Collateral Manager and its Affiliates shall
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be entitled to vote Notes held by them, and by accounts managed by them, with
respect to all other matters other than those described in clause (ii).
Section 5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Issuer covenants that if a Default shall occur in respect of the payment of
any interest on any Class A Note, or in the case of the Class A-1AR Notes, any
Class A-1AR Commitment Fee, the payment of principal on any Class A Note (but
only after interest with respect to the Class A Notes and any amounts payable
pursuant to Section 11.1(a) having a higher priority have been paid in full),
the payment of interest on any Class B Note (but only after interest with
respect to the Class A Notes and the Class A-1AR Commitment Fee and any amounts
payable pursuant to Section 11.1(a) having a higher priority have been paid in
full), the payment of principal on any Class B Note (but only after interest and
principal with respect to the Class A Notes, the Class A-1AR Commitment Fee and
interest with respect to the Class B Notes and any amounts payable pursuant to
Section 11.1(a) having a higher priority have been paid in full), the payment of
interest on any Class C Note (but only after interest with respect to the Class
A Notes, the Class A-1AR Commitment Fee and the Class B Notes and any amounts
payable pursuant to Section 11.1(a) having a higher priority have been paid in
full), the payment of principal on any Class C Note (but only after interest and
principal with respect to the Class A Notes, the Class A-1AR Commitment Fee and
the Class B Notes and interest with respect to the Class C Notes and any amounts
payable pursuant to Section 11.1(a) having a higher priority have been paid in
full), the payment of interest on any Class D Note (but only after interest with
respect to the Class A Notes, the Class A-1AR Commitment Fee, the Class B Notes
and the Class C Notes and any amounts payable pursuant to Section 11.1(a) having
a higher priority have been paid in full), the payment of principal on any Class
D Note (but only after interest and principal with respect to the Class A Notes,
the Class A-1AR Commitment Fee, the Class B Notes and the Class C Notes and
interest with respect to the Class D Notes and any amounts payable pursuant to
Section 11.1(a) having a higher priority have been paid in full), the payment of
interest on any Class E Note (but only after interest with respect to the Class
A Notes, the Class A-1AR Commitment Fee, the Class B Notes, the Class C Notes
and the Class D Notes and any amounts payable pursuant to Section 11.1(a) having
a higher priority have been paid in full), the payment of principal on any Class
E Note (but only after interest and principal with respect to the Class A Notes,
the Class A-1AR Commitment Fee, the Class B Notes, the Class C Notes and the
Class D Notes and interest with respect to the Class E Notes and any amounts
payable pursuant to Section 11.1(a) having a higher priority have been paid in
full), the payment of interest on any Class F Note (but only after interest with
respect to the Class A Notes, the Class A-1AR Commitment Fee, the Class B Notes,
the Class C Notes, the Class D Notes and the Class E Notes and any amounts
payable pursuant to Section 11.1(a) having a higher priority have been paid in
full), the payment of principal on any Class F Note (but only after interest and
principal with respect to the Class A Notes, the Class A-1AR Commitment Fee, the
Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes and
interest with respect to the Class F Notes and any amounts payable pursuant to
Section 11.1(a) having a higher priority have been paid in full), the payment of
interest on any Class G Note (but only after interest with respect to the Class
A Notes, the Class A-1AR Commitment Fee, the Class B Notes, the Class C Notes,
the Class D Notes, the Class E Notes and the Class F Notes and any amounts
payable pursuant to Section 11.1(a) having a higher priority have been paid in
full), the payment of principal on any Class G Note (but only after interest and
principal with respect to the Class A
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Notes, the Class A-1AR Commitment Fee, the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes and the Class F Notes and interest with respect
to the Class G Notes and any amounts payable pursuant to Section 11.1(a) having
a higher priority have been paid in full), the payment of interest on any Class
H Note (but only after interest with respect to the Class A Notes, the Class
A-1AR Commitment Fee, the Class B Notes, the Class C Notes, the Class D Notes,
the Class E Notes, the Class F Notes and the Class G Notes and any amounts
payable pursuant to Section 11.1(a) having a higher priority have been paid in
full) or the payment of principal on any Class H Note (but only after interest
and principal with respect to the Class A Notes, the Class A-1AR Commitment Fee,
the Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes, the
Class F Notes and the Class G Notes and interest with respect to the Class H
Notes and any amounts payable pursuant to Section 11.1(a) having a higher
priority have been paid in full), the Issuer and Co-Issuer shall, upon demand of
the Trustee or any affected Noteholder, pay to the Trustee, for the benefit of
the Holder of such Note, the whole amount, if any, then due and payable on such
Note for principal and interest or other payment with interest on the overdue
principal and, to the extent that payments of such interest shall be legally
enforceable, upon overdue installments of interest, at the applicable interest
rate and, in addition thereto, such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee and such
Noteholder and their respective agents and counsel.
If the Issuer or the Co-Issuer fails to pay such amounts forthwith
upon such demand, the Trustee, in its own name and as Trustee of an express
trust, may institute a Proceeding for the collection of the sums so due and
unpaid, and may prosecute such Proceeding to judgment or final decree, and may
enforce the same against the Issuer and the Co-Issuer or any other obligor upon
the Notes and collect the Monies adjudged or decreed to be payable in the manner
provided by law out of the Assets.
If an Event of Default occurs and is continuing, the Trustee shall
proceed to protect and enforce its rights and the rights of the Noteholders by
such Proceedings (x) as directed by a Majority of the Controlling Class or (y)
in the absence of direction by a Majority of the Controlling Class, as deemed
most effectual by the Trustee. Such Proceedings shall be used for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or
legal or equitable right vested in the Trustee by this Indenture or by law.
In the case where (x) there shall be pending Proceedings relative to
the Issuer or the Co-Issuer under the Bankruptcy Code, any bankruptcy,
insolvency, reorganization or similar law enacted under the laws of the Cayman
Islands, or any other applicable bankruptcy, insolvency or other similar law,
(y) a receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for or taken
possession of the Issuer or the Co-Issuer, or their respective property, or (z)
there shall be any other comparable Proceedings relative to the Issuer or the
Co-Issuer, or the creditors or property of the Issuer or the Co-Issuer,
regardless of whether the principal of any Notes shall then be due and payable
as therein expressed or by declaration, or otherwise and regardless of whether
the Trustee shall have made any demand pursuant to the provisions of this
Section 5.3, the Trustee shall be entitled and empowered, by intervention in
such Proceedings or otherwise:
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(a) to file and prove a claim or claims for the whole amount of
principal and interest and the Class A-1AR Commitment Fee owing and unpaid in
respect of the Notes and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including any
claim for reasonable compensation to the Trustee and each predecessor Trustee,
and their respective agents, attorneys and counsel, and for reimbursement of all
expenses and liabilities incurred, and all advances made, by the Trustee and
each predecessor Trustee, except as a result of negligence or bad faith) and of
the Noteholders allowed in any Proceedings relative to the Issuer, the Co-Issuer
or other obligor upon the Notes or to the creditors or property of the Issuer,
the Co-Issuer or such other obligor;
(b) unless prohibited by applicable law and regulations, to vote on
behalf of the Noteholders in any election of a trustee or a standby trustee in
arrangement, reorganization, liquidation or other bankruptcy or insolvency
proceedings or of a Person performing similar functions in comparable
Proceedings; and
(c) to collect and receive any Monies or other property payable to or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of the Noteholders and of the Trustee on their behalf; and
any trustee, receiver or liquidator, custodian or other similar official is
hereby authorized by each of the Noteholders to make payments to the Trustee,
and, in the event that the Trustee shall consent to the making of payments
directly to the Noteholders, to pay to the Trustee such amounts as shall be
sufficient to cover reasonable compensation to the Trustee, each predecessor
Trustee and their respective agents, attorneys and counsel, and all other
reasonable expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee except as a result of its own negligence,
willful misconduct or bad faith.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize, consent to, vote for, accept or adopt, on behalf of any Noteholder,
any plan of reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder thereof, or to authorize the Trustee to vote
in respect of the claim of any Noteholder in any such Proceeding except, as
aforesaid, to vote for the election of a trustee in bankruptcy or similar
Person.
All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Trustee without the possession of
any of the Notes or the production thereof in any trial or other Proceedings
relative thereto, and any action or Proceedings instituted by the Trustee shall
be brought in its own name as trustee of an express trust, and any recovery of
judgment, shall be applied as set forth in Section 5.7.
In any Proceedings brought by the Trustee on behalf of the
Noteholders, the Trustee shall be held to represent all the Holders of the
Notes.
Notwithstanding anything in this Section 5.3 to the contrary, the
Trustee may not sell or liquidate the Assets or institute Proceedings in
furtherance thereof pursuant to this Section 5.3 unless the conditions specified
in Section 5.5(a) are met.
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Section 5.4 Remedies.
(a) If an Event of Default has occurred and is continuing, and the
Notes have been declared due and payable and such declaration and its
consequences have not been rescinded and annulled, the Issuer and the Co-Issuer
agree that the Trustee may, after notice to the Noteholders and each Hedge
Counterparty, and shall, upon direction by a Majority of the Controlling Class,
to the extent permitted by applicable law, exercise one or more of the following
rights, privileges and remedies:
(i) institute Proceedings for the collection of all amounts then
payable on the Notes or otherwise payable under this Indenture (whether by
declaration or otherwise), enforce any judgment obtained and collect from
the Assets any Monies adjudged due;
(ii) sell all or a portion of the Assets or rights of interest
therein, at one or more public or private sales called and conducted in any
manner permitted by law and in accordance with Section 5.17 hereof;
(iii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Assets;
(iv) exercise any remedies of a secured party under the UCC and take
any other appropriate action to protect and enforce the rights and remedies
of the Secured Parties hereunder; and
(v) exercise any other rights and remedies that may be available at
law or in equity;
provided, however, that the Trustee may not sell or liquidate the Assets or
institute Proceedings in furtherance thereof pursuant to this Section 5.4 unless
either of the conditions specified in Section 5.5(a) is met.
The Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking firm of national reputation with demonstrated
capabilities in structuring and distributing notes or certificates similar to
the Notes as to the feasibility of any action proposed to be taken in accordance
with this Section 5.4 and as to the sufficiency of the proceeds and other
amounts receivable with respect to the Assets to make the required payments of
principal of and interest on the Notes and other amounts payable hereunder,
which opinion shall be conclusive evidence as to such feasibility or
sufficiency.
(b) If an Event of Default as described in Section 5.1(e) hereof shall
have occurred and be continuing, the Trustee may, and at the request of the
Holders of not less than 25% of the Aggregate Outstanding Amount of the
Controlling Class (which shall be deemed to be MBIA so long as it is the
Controlling Class hereunder) shall, institute a Proceeding solely to compel
performance of the covenant or agreement or to cure the representation or
warranty, the breach of which gave rise to the Event of Default under such
Section, and enforce any equitable decree or order arising from such Proceeding.
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(c) Upon any Sale, whether made under the power of sale hereby given
or by virtue of judicial proceedings, any Noteholder, Preferred Shareholder or
the Collateral Manager or any of its Affiliates may bid for and purchase the
Assets or any part thereof and, upon compliance with the terms of Sale, may
hold, retain, possess or dispose of such property in its or their own absolute
right without accountability; and any purchaser at any such Sale may, in paying
the purchase Money, turn in any of the Notes in lieu of Cash equal to the amount
which shall, upon distribution of the net proceeds of such sale, be payable on
the Notes so turned in by such Holder (taking into account the Class of such
Notes). Such Notes, in case the amounts so payable thereon shall be less than
the amount due thereon, shall be returned to the Holders thereof after proper
notation has been made thereon to show partial payment.
Upon any Sale, whether made under the power of sale hereby given or by
virtue of judicial proceedings, the receipt of the Trustee or of the Officer
making a sale under judicial proceedings shall be a sufficient discharge to the
purchaser or purchasers at any sale for its or their purchase Money and such
purchaser or purchasers shall not be obliged to see to the application thereof.
Any such Sale, whether under any power of sale hereby given or by
virtue of judicial proceedings, shall (x) bind the Issuer, the Co-Issuer, the
Trustee, the Noteholders and the Preferred Shareholders, shall operate to divest
all right, title and interest whatsoever, either at law or in equity, of each of
them in and to the property sold and (y) be a perpetual bar, both at law and in
equity, against each of them and their successors and assigns, and against any
and all Persons claiming through or under them.
(d) Notwithstanding any other provision of this Indenture or any other
Transaction Document, none of the Advancing Agent, the Trustee or any other
Secured Party, any other party to any Transaction Document or third party
beneficiary of this Indenture may, prior to the date which is one year and one
day, or, if longer, the applicable preference period then in effect (including
any period established pursuant to the laws of the Cayman Islands) after the
payment in full of all Notes, institute against, or join any other Person in
instituting against, the Issuer or the Co-Issuer any bankruptcy, reorganization,
arrangement, insolvency, moratorium or liquidation proceedings, or other
proceedings under federal or State bankruptcy or similar laws of any
jurisdiction. Nothing in this Section 5.4 shall preclude, or be deemed to stop,
the Advancing Agent, the Trustee or any other Secured Party or any other party
to any Transaction Document (i) from taking any action prior to the expiration
of the aforementioned one year and one day period, or, if longer, the applicable
preference period then in effect (including any period established pursuant to
the laws of the Cayman Islands) period in (A) any case or proceeding voluntarily
filed or commenced by the Issuer or the Co-Issuer or (B) any involuntary
insolvency proceeding filed or commenced by a Person other than the Trustee or
any other Secured Party or any other party to any Transaction Document, or (ii)
from commencing against the Issuer or the Co-Issuer or any of their respective
properties any legal action which is not a bankruptcy, reorganization,
arrangement, insolvency, moratorium or liquidation proceeding.
Section 5.5 Preservation of Assets.
(a) Notwithstanding anything to the contrary herein, if an Event of
Default shall have occurred and be continuing when any of the Notes are
Outstanding, the Trustee shall
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retain the Assets securing the Notes, collect and cause the collection of the
proceeds thereof and make and apply all payments and deposits and maintain all
accounts in respect of the Assets and the Notes in accordance with the Priority
of Payments and the provisions of Articles 10, 12 and 13 unless either:
(i) in the case of an Event of Default specified in Section 5.1(j) or
a default with respect to the payment of principal of or interest on the
Class A Notes, which default also constitutes an Event of Default specified
in Section 5.1(a) or 5.1(b), so long as MBIA is the Controlling Class under
this Indenture, MBIA directs the Trustee to sell or otherwise liquidate the
Assets;
(ii) the Trustee, pursuant to Section 5.5(c), determines that the
anticipated proceeds of a sale or liquidation of the Assets (after
deducting the reasonable expenses of such sale or liquidation) would be
sufficient to discharge in full the amounts then due and unpaid on the
Notes (including the Class A-1AR Commitment Fee), Company Administrative
Expenses due and payable pursuant to clauses (3) and (26) of Section
11.1(a)(i) and clauses (1) and (10) of Section 11.1(a)(ii), the Senior
Collateral Management Fees due and payable pursuant to clause (4) of
Section 11.1(a)(i), the Subordinate Collateral Management Fees due and
payable pursuant to clause (27) of Section 11.1(a)(i), any amounts due and
unpaid to each Hedge Counterparty, including without limitation, any
payments (however described) due and payable by the Issuer under each Hedge
Agreement upon a termination of such Hedge Agreement (including any
interest that may accrue thereon) and amounts due and payable to the
Advancing Agent and the Backup Advancing Agent, in respect of unreimbursed
Interest Advances and Reimbursement Interest, and the holders of a Majority
of the Controlling Class (which shall be deemed to be MBIA so long as it is
the Controlling Class hereunder) agrees with such determination; or
(iii) the Holders of at least 66- 2/3% of the Aggregate Outstanding
Amount of each Class of Notes (each voting as a separate Class) (and each
Hedge Counterparty, unless each shall be paid in full the amounts due and
unpaid, including, without limitation, any payments (however described) due
and payable by the Issuer under each Hedge Agreement upon a termination of
such Hedge Agreement (including any interest that may accrue thereon)),
direct, subject to the provisions of this Indenture, the sale and
liquidation of the Assets.
The Trustee shall give written notice of the retention of the Assets
to the Issuer, the Co-Issuer, the Collateral Manager, each Hedge Counterparty
and the Rating Agencies. So long as such Event of Default is continuing, any
such retention pursuant to this Section 5.5(a) may be rescinded at any time when
the conditions specified in clause (i) or (ii) above exist.
(b) Nothing contained in Section 5.5(a) shall be construed to require
the Trustee to sell the Assets securing the Notes if the conditions set forth in
Section 5.5(a) are not satisfied. Nothing contained in Section 5.5(a) shall be
construed to require the Trustee to preserve the Assets securing the Notes if
prohibited by applicable law.
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(c) To assist the Trustee in determining whether the condition
specified in Section 5.5(a)(i) exists, the Collateral Manager shall obtain bid
prices with respect to each Pledged Collateral Debt Security from two dealers
(Independent of the Collateral Manager and any of its Affiliates) at the time
making a market in such Pledged Collateral Debt Securities (or, if there is only
one market maker, then the Collateral Manager shall obtain a bid price from that
market maker or, if no market maker, from a pricing service). The Collateral
Manager shall compute the anticipated proceeds of sale or liquidation on the
basis of the lowest of such bid prices for each such Pledged Collateral Debt
Security and provide the Trustee with the results thereof. For the purposes of
determining issues relating to the Market Value of any Pledged Collateral Debt
Security and the execution of a sale or other liquidation thereof, the Trustee
may, but need not, retain at the expense of the Issuer and rely on an opinion of
an Independent investment banking firm of national reputation in connection with
a determination (notwithstanding that such opinion will not be the basis for
such determination) as to whether the condition specified in Section 5.5(a)(i)
exists.
The Trustee shall promptly deliver to the Noteholders and each Hedge
Counterparty a report stating the results of any determination required to be
made pursuant to Section 5.5(a)(i). If requested by a Majority of the
Controlling Class, the Trustee shall make the determinations required by Section
5.5(a)(i) within 30 days of such request.
Section 5.6 Trustee May Enforce Claims Without Possession of Notes.
All rights of action and claims under this Indenture or under any of
the Notes may be prosecuted and enforced by the Trustee without the possession
of any of the Notes or the production thereof in any trial or other Proceeding
relating thereto, and any such action or Proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust. Any recovery of
judgment in respect of the Notes shall be applied as set forth in Section 5.7
hereof.
In any Proceedings brought by the Trustee (and in any Proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) in respect of the Notes, the Trustee shall be held to
represent all the Holders of the Notes.
Section 5.7 Application of Money Collected.
Any Money collected by the Trustee with respect to the Notes pursuant
to this Article 5 and any Money that may then be held or thereafter received by
the Trustee with respect to the Notes hereunder shall be applied subject to
Section 13.1 hereof and in accordance with the Priority of Payments set forth in
Section 11.1 hereof, at the date or dates fixed by the Trustee.
Section 5.8 Limitation on Suits.
No Holder of any Notes shall have any right to institute any
Proceedings, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(a) such Holder has previously given to the Trustee written notice of
an Event of Default;
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(b) except as otherwise provided in Section 5.9 hereof, the Holders of
at least 25% of the then Aggregate Outstanding Amount of the Controlling Class
shall have made written request to the Trustee to institute Proceedings in
respect of such Event of Default in its own name as Trustee hereunder and such
Holders have offered to the Trustee reasonable indemnity against the costs,
expenses and liabilities to be incurred in compliance with such request;
(c) the Trustee for 30 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such Proceeding; and
(d) no direction inconsistent with such written request has been given
to the Trustee during such 30-day period by a Majority of the Controlling Class;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatsoever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Notes of the same Class or to obtain or to seek to obtain
priority or preference over any other Holders of the Notes of the same Class or
to enforce any right under this Indenture, except in the manner herein provided
and for the equal and ratable benefit of all the Holders of Notes of the same
Class subject to and in accordance with Section 13.1 hereof and the Priority of
Payments.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of the Controlling
Class, each representing less than a Majority of the Controlling Class, the
Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.
Section 5.9 Unconditional Rights of Noteholders to Receive Principal,
Interest and the Class A-1AR Commitment Fee.
Notwithstanding any other provision in this Indenture (except for
Section 2.7(l) and 2.7(u)), the Holder of any Class of Note shall have the
right, which is absolute and unconditional, to receive payment of the principal
of and interest (and the Class A-1AR Commitment Fee, as applicable) on such
Class of Note as such principal, interest (and the Class A-1AR Commitment Fee,
as applicable) and other amounts become due and payable in accordance with the
Priority of Payments and Section 13.1, and, subject to the provisions of
Sections 5.4 and 5.8 to institute Proceedings for the enforcement of any such
payment, and such right shall not be impaired without the consent of such
Holder; provided, however, that the right of such Holder to institute
proceedings for the enforcement of any such payment shall not be subject to the
25% threshold requirement set forth in Section 5.8(b).
Section 5.10 Restoration of Rights and Remedies.
If the Trustee or any Noteholder has instituted any Proceeding to
enforce any right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Noteholder, then (and in every such case) the Issuer, the
Co-Issuer, the Trustee, and the Noteholder shall, subject to any determination
in such Proceeding, be restored severally and respectively to their former
positions
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hereunder, and thereafter all rights and remedies of the Trustee and the
Noteholders shall continue as though no such Proceeding had been instituted.
Section 5.11 Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the Trustee or
to the Noteholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.12 Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Noteholder to exercise
any right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein or a waiver of a subsequent Event of Default. Every right
and remedy given by this Article 5 or by law to the Trustee, or to the
Noteholders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee, or by the Noteholders, as the case may be.
Section 5.13 Control by the Controlling Class.
Notwithstanding any other provision of this Indenture, if an Event of
Default shall have occurred and be continuing when any of the Notes are
Outstanding, a Majority of the Controlling Class (which shall be deemed to be
MBIA so long as it is the Controlling Class hereunder) shall have the right to
cause the institution of and direct the time, method and place of conducting any
Proceeding for any remedy available to the Trustee for exercising any trust,
right, remedy or power conferred on the Trustee in respect of the Notes;
provided that:
(a) such direction shall not conflict with any rule of law or with
this Indenture;
(b) the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with such direction; provided, however, that, subject
to Section 6.1, the Trustee need not take any action that it determines might
involve it in liability (unless the Trustee has received satisfactory indemnity
against such liability as set forth below);
(c) the Trustee shall have been provided with indemnity satisfactory
to it; and
(d) any direction to the Trustee to undertake a Sale of the Assets
shall be by the Holders of Notes secured thereby representing at least 66 2/3%
of the Aggregate Outstanding Amount of each Class of Notes or to the extent
required pursuant to Section 5.5, MBIA, so long as it is deemed to be the
Controlling Class hereunder.
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Section 5.14 Waiver of Past Defaults.
Prior to the time a judgment or decree for payment of the Money due
has been obtained by the Trustee, as provided in this Article 5, so long as MBIA
is deemed to be the Controlling Class hereunder, MBIA may (with the consent of
the Hedge Counterparty if such Hedge Counterparty is materially and adversely
affected by the default with respect to the Notes), waive any Event of Default
specified in Section 5.1(d), 5.1(e), 5.1(h), 5.1(i), or 5.1(j) with respect to
the Notes and its consequences; thereafter, a Majority of each and every Class
of Notes (voting as a separate Class) may, on behalf of the Holders of all the
Notes, waive any past Default in respect of the Notes and its consequences,
except a Default:
(a) in the payment of principal of any Note;
(b) in the payment of interest in respect of the Controlling Class;
(c) in the payment of the Class A-1AR Commitment Fee in respect of the
Class A-1AR Notes;
(d) in respect of a covenant or provision hereof that, under Section
8.2, cannot be modified or amended without the waiver or consent of the Holder
of each Outstanding Note and each Hedge Counterparty adversely affected thereby;
(e) in respect of any covenant or provision hereof for the individual
protection or benefit of the Trustee, without the Trustee's express written
consent thereto; or
(f) a default that also materially adversely affects a Hedge
Counterparty unless such Hedge Counterparty also agrees to such default.
In the case of any such waiver, the Issuer, the Co-Issuer, the
Trustee, and the Holders of the Notes shall be restored to their respective
former positions and rights hereunder, but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereto. The Trustee
shall promptly give written notice of any such waiver to the Collateral Manager,
each Noteholder and each Hedge Counterparty.
Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture, but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereto.
Section 5.15 Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Note by
its acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party
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litigant; but the provisions of this Section 5.15 shall not apply to any suit
instituted by (x) the Trustee, (y) any Noteholder, or group of Noteholders,
holding in the aggregate more than 10% of the Aggregate Outstanding Amount of
the Controlling Class or (z) any Noteholder for the enforcement of the payment
of the principal of or interest, or the Class A-1AR Commitment Fee, as
applicable, on any Note or any other amount payable hereunder on or after the
Stated Maturity (or, in the case of redemption, on or after the applicable
Redemption Date).
Section 5.16 Waiver of Stay or Extension Laws.
Each of the Issuer and the Co-Issuer covenants (to the extent that it
may lawfully do so) that it will not at any time insist upon, plead or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force (including
but not limited to filing a voluntary petition under Chapter 11 of the
Bankruptcy Code and by the voluntary commencement of a proceeding or the filing
of a petition seeking winding up, liquidation, reorganization or other relief
under any bankruptcy, insolvency, reorganization, moratorium, receivership,
conservatorship or other similar laws now or hereafter in effect), which may
affect the covenants, the performance of or any remedies under this Indenture;
and each of the Issuer and the Co-Issuer (to the extent that it may lawfully do
so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
Section 5.17 Sale of Assets.
(a) The power to effect any sale (a "Sale") of any portion of the
Assets pursuant to Sections 5.4 and 5.5 hereof shall not be exhausted by any one
or more Sales as to any portion of such Assets remaining unsold, but shall
continue unimpaired until all amounts secured by the Assets shall have been paid
or if there are insufficient proceeds to pay such amount until the entire Assets
shall have been sold. The Trustee may, upon notice to the Securityholders and
each Hedge Counterparty, and shall, upon direction of a Majority of the
Controlling Class, from time to time postpone any Sale by public announcement
made at the time and place of such Sale; provided, however, that if the Sale is
rescheduled for a date more than three Business Days after the date of the
determination by the Trustee pursuant to Section 5.5(a)(i) hereof, such Sale
shall not occur unless and until the Trustee has again made the determination
required by Section 5.5(a)(i) hereof. The Trustee hereby expressly waives its
rights to any amount fixed by law as compensation for any Sale; provided that
the Trustee shall be authorized to deduct the reasonable costs, charges and
expenses incurred by it in connection with such Sale from the proceeds thereof
notwithstanding the provisions of Section 6.7 hereof.
(b) The Trustee may bid for and acquire any portion of the Assets in
connection with a public Sale thereof, and may pay all or part of the purchase
price by crediting against amounts owing on the Notes or other amounts secured
by the Assets, all or part of the net proceeds of such Sale after deducting the
reasonable costs, charges and expenses incurred by the Trustee in connection
with such Sale notwithstanding the provisions of Section 6.7 hereof. The Notes
need not be produced in order to complete any such Sale, or in order for the net
proceeds of such Sale to be credited against amounts owing on the Notes. The
Trustee may hold, lease,
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operate, manage or otherwise deal with any property so acquired in any manner
permitted by law in accordance with this Indenture.
(c) If any portion of the Assets consists of securities issued without
registration under the Securities Act ("Unregistered Securities"), the Trustee
may seek an Opinion of Counsel, or, if no such Opinion of Counsel can be
obtained and with the consent of a Majority of the Controlling Class, seek a no
action position from the SEC or any other relevant federal or State regulatory
authorities, regarding the legality of a public or private Sale of such
Unregistered Securities. In no event shall the Trustee be required to register
Unregistered Securities under the Securities Act.
(d) The Trustee shall execute and deliver an appropriate instrument of
conveyance transferring its interest in any portion of the Assets in connection
with a Sale thereof. In addition, the Trustee is hereby irrevocably appointed
the agent and attorney in fact of the Issuer to transfer and convey its interest
in any portion of the Assets in connection with a Sale thereof, and to take all
action necessary to effect such Sale. No purchaser or transferee at such a Sale
shall be bound to ascertain the Trustee's authority, to inquire into the
satisfaction of any conditions precedent or to see to the application of any
Monies.
(e) In the event of any Sale of the Assets pursuant to Section 5.4 or
Section 5.5, payments shall be made in the order and priority set forth in
Section 11.1(a) in the same manner as if the Notes had been accelerated.
Section 5.18 Action on the Notes.
The Trustee's right to seek and recover judgment on the Notes or under
this Indenture shall not be affected by the application for or obtaining of any
other relief under or with respect to this Indenture. Neither the lien of this
Indenture nor any rights or remedies of the Trustee or the Noteholders shall be
impaired by the recovery of any judgment by the Trustee against the Issuer or
the Co-Issuer or by the levy of any execution under such judgment upon any
portion of the Assets or upon any of the assets of the Issuer or the Co-Issuer.
ARTICLE 6
THE TRUSTEE
Section 6.1 Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such duties
as are set forth in this Indenture, and no implied covenants or obligations
shall be read into this Indenture against the Trustee; and
(ii) in the absence of manifest error, or bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming
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to the requirements of this Indenture; provided, however, that in the case
of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not they
substantially conform to the requirements of this Indenture and shall
promptly, but in any event within three Business Days in the case of an
Officer's Certificate furnished by the Collateral Manager, notify the party
delivering the same if such certificate or opinion does not conform. If a
corrected form shall not have been delivered to the Trustee within 15 days
after such notice from the Trustee, the Trustee shall so notify the
Noteholders.
(b) In case an Event of Default known to the Trustee has occurred and
is continuing, the Trustee shall, prior to the receipt of directions, if any,
from a Majority of the Controlling Class (or other Noteholders to the extent
provided in Article 5 hereof)), exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in its exercise
as a prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs.
(c) If, in performing its duties under this Indenture, the Trustee is
required to decide between alternative courses of action, the Trustee may
request written instructions from the Collateral Manager as to courses of action
desired by it. If the Trustee does not receive such instructions within two
Business Days after it has requested them, it may, but shall be under no duty
to, take or refrain from taking such action. The Trustee shall act in accordance
with instructions received after such two-Business Day period except to the
extent it has already taken, or committed itself to take, action inconsistent
with such instructions. The Trustee shall be entitled to rely on the advice of
legal counsel and Independent accountants in performing its duties hereunder and
be deemed to have acted in good faith if it acts in accordance with such advice.
(d) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect of
Section 6.1(a);
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it shall be proven that the Trustee
was negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Issuer in accordance with this Indenture and/or the Controlling
Class relating to the time, method and place of conducting any Proceeding
for any remedy available to the Trustee in respect of any Note or
exercising any trust or power conferred upon the Trustee under this
Indenture;
(iv) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers contemplated hereunder,
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if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not
reasonably assured to it (if the amount of such funds or risk or liability
does not exceed the amount payable to the Trustee pursuant to Section
11.1(a)(i)(3) and Section 11.1(a)(ii)(1) net of the amounts specified in
Section 6.7(a)(i), the Trustee shall be deemed to be reasonably assured of
such repayment) unless such risk or liability relates to its ordinary
services under this Indenture, except where this Indenture provides
otherwise; and
(v) the Trustee shall not be liable to the Noteholders for any action
taken or omitted by it at the direction of the Issuer, the Co-Issuer, the
Collateral Manager, the Controlling Class and/or a Noteholder under
circumstances in which such direction is required or permitted by the terms
of this Indenture.
(e) For all purposes under this Indenture, the Trustee shall not be
deemed to have notice or knowledge of any Event of Default described in Section
5.1(d), 5.1(f), 5.1(g), 5.1(h) or 5.1(i) or any Default described in Section
5.1(e) unless a Trust Officer assigned to and working in the Corporate Trust
Office has actual knowledge thereof or unless written notice of any event which
is in fact such an Event of Default or Default is received by the Trustee at the
Corporate Trust Office, and such notice references, as applicable, the Notes
generally, the Issuer, the Assets or this Indenture. For purposes of determining
the Trustee's responsibility and liability hereunder, whenever reference is made
in this Indenture to such an Event of Default or a Default, such reference shall
be construed to refer only to such an Event of Default or Default of which the
Trustee is deemed to have notice as described in this Section 6.1.
(f) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
Sections 6.1(a), (b), (c), (d) and (e).
(g) The Trustee shall, upon reasonable prior written notice to the
Trustee, permit the Issuer, the Co-Issuer, the Collateral Manager or the Rating
Agencies, during the Trustee's normal business hours, to examine all books of
account, records, reports and other papers of the Trustee relating to the Notes,
to make copies and extracts therefrom (the reasonable out-of-pocket expenses
incurred in making any such copies or extracts to be reimbursed to the Trustee
by such Person) and to discuss the Trustee's actions, as such actions relate to
the Trustee's duties with respect to the Notes, with the Trustee's officers and
employees responsible for carrying out the Trustee's duties with respect to the
Notes.
Section 6.2 Notice of Default.
Promptly (and in no event later than three Business Days) after the
occurrence of any Default known to the Trustee or after any declaration of
acceleration has been made or delivered to the Trustee pursuant to Section 5.2,
the Trustee shall transmit by mail to the Collateral Manager, the Class A-1AR
Note Agent, the Irish Paying Agent (for so long as any Notes are listed on the
Irish Stock Exchange), each Hedge Counterparty, each Rating Agency (for so long
as any Class of Notes is Outstanding and rated by such Rating Agency), so long
as MBIA is deemed to be the Controlling Class hereunder, MBIA, and to all
Holders of Notes as
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their names and addresses appear on the Notes Register, notice of all Defaults
hereunder known to the Trustee, unless such Default shall have been cured or
waived.
Section 6.3 Certain Rights of Trustee.
Except as otherwise provided in Section 6.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, note or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request or direction of the Issuer or the Co-Issuer mentioned
herein shall be sufficiently evidenced by an Issuer Request or Issuer Order, as
the case may be;
(c) whenever in the administration of this Indenture the Trustee shall
(i) deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate or (ii) be required to determine the value of
any Assets or funds hereunder or the cash flows projected to be received
therefrom, the Trustee may, in the absence of bad faith on its part, rely on
reports of nationally recognized accountants, investment bankers or other
persons qualified to provide the information required to make such
determination, including nationally recognized dealers in securities of the type
being valued and securities quotation services;
(d) as a condition to the taking or omitting of any action by it
hereunder, the Trustee may consult with counsel and the advice of such counsel
or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or omitted by it hereunder in good
faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise or to honor
any of the rights or powers vested in it by this Indenture at the request or
direction of any of the Noteholders pursuant to this Indenture, unless such
Noteholders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might reasonably be incurred
by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, note or other paper
documents, but the Trustee, in its discretion, may and, upon the written
direction of a Majority of the Controlling Class or of a Rating Agency, shall
make such further inquiry or investigation into such facts or matters as it may
see fit or as it shall be directed and shall have received indemnification
reasonably acceptable to the Trustee, and, the Trustee shall be entitled, on
reasonable prior notice to the Issuer, the Co-Issuer, the Collateral Manager and
the Servicer, to examine the books and records relating to the Notes and the
Assets, as applicable, at the premises of the Issuer, the Co-Issuer and the
Collateral Manager, personally or by agent or attorney during the Issuer's, the
Co-Issuer's or the Collateral Manager's normal business hours upon not less than
three Business Days' prior written notice; provided that the Trustee shall, and
shall cause its agents to, hold in
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confidence all such information, except (i) to the extent disclosure may be
required by law by any regulatory authority and (ii) to the extent that the
Trustee, in its sole judgment, may determine that such disclosure is consistent
with its obligations hereunder;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder (except with respect to its duty to make any
Interest Advance under the circumstances specified in Section 10.9) either
directly or by or through agents or attorneys; provided that the Trustee shall
not be responsible for any willful misconduct or negligence on the part of any
agent appointed and supervised, or attorney appointed, with due care by it
hereunder;
(h) the Trustee shall not be liable for any action it takes or omits
to take in good faith that it reasonably and prudently believes to be authorized
or within its rights or powers hereunder;
(i) the Trustee shall not be responsible for the accuracy of the books
or records of, or for any acts or omissions of, the Depository, any Transfer
Agent (other than the Trustee itself acting in that capacity), Clearstream,
Luxembourg, Euroclear, any Calculation Agent (other than the Trustee itself
acting in that capacity) or any Paying Agent (other than the Trustee itself
acting in that capacity);
(j) the Trustee shall not be liable for the actions or omissions of
the Collateral Manager; and without limiting the foregoing, the Trustee shall
not (except to the extent, if at all, otherwise expressly stated in this
Indenture) be under any obligation to monitor, evaluate or verify compliance by
the Collateral Manager with the terms hereof or the Collateral Management
Agreement, or to verify or independently determine the accuracy of information
received by it from the Collateral Manager (or from any selling institution,
agent bank, trustee or similar source) with respect to the Collateral Debt
Securities; and
(k) to the extent any defined term hereunder, or any calculation
required to be made or determined by the Trustee hereunder, is dependent upon or
defined by reference to generally accepted accounting principles in the United
States in effect from time to time ("GAAP"), the Trustee shall be entitled to
request and receive (and rely upon) instruction from the Issuer or the
accountants appointed pursuant to Section 10.12 as to the application of GAAP in
such connection, in any instance.
Section 6.4 Not Responsible for Recitals or Issuance of Notes.
The recitals contained herein and in the Notes, other than the
Certificate of Authentication thereon, shall be taken as the statements of the
Issuer and the Co-Issuer, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representation as to the validity or
sufficiency of this Indenture (except as may be made with respect to the
validity of the Trustee's obligations hereunder), the Assets or the Notes. The
Trustee shall not be accountable for the use or application by the Issuer or the
Co-Issuer of the Notes or the proceeds thereof or any Money paid to the Issuer
or the Co-Issuer pursuant to the provisions hereof.
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Section 6.5 May Hold Notes.
The Trustee, the Paying Agent, the Notes Registrar or any other agent
of the Issuer or the Co-Issuer, in its individual or any other capacity, may
become the owner or pledgee of Notes and may otherwise deal with the Issuer and
the Co-Issuer with the same rights it would have if it were not Trustee, Paying
Agent, Notes Registrar or such other agent.
Section 6.6 Money Held in Trust.
Money held by the Trustee hereunder shall be held in trust to the
extent required herein. The Trustee shall be under no liability for interest on
any Money received by it hereunder except as otherwise agreed upon with the
Issuer and except to the extent of income or other gain on investments which are
deposits in or certificates of deposit of the Trustee in its commercial capacity
and income or other gain actually received by the Trustee on Eligible
Investments.
Section 6.7 Compensation and Reimbursement.
(a) The Issuer agrees:
(i) to pay the Trustee on each Payment Date in accordance with the
Priority of Payments reasonable compensation for all services rendered by
it hereunder (which compensation shall not be limited by any provision of
law in regard to the compensation of a trustee of an express trust);
(ii) except as otherwise expressly provided herein, to reimburse the
Trustee (subject to any written agreement between the Issuer and the
Trustee) in a timely manner upon its request for all reasonable expenses,
disbursements and advances (except as otherwise provided herein with
respect to Interest Advances) incurred or made by the Trustee in accordance
with any provision of this Indenture (including securities transaction
charges to the extent not waived due to the Trustee's receipt of payments
from a financial institution with respect to certain Eligible Investments,
as specified by the Collateral Manager and the reasonable compensation and
expenses and disbursements of its agents and legal counsel and of any
accounting firm or investment banking firm employed by the Trustee pursuant
to Section 5.4, 5.5, 10.11 or 10.13 hereof, except any such expense,
disbursement or advance as may be attributable to its negligence, willful
misconduct or bad faith);
(iii) to indemnify the Trustee and its Officers, directors, employees
and agents for, and to hold them harmless against, any loss, liability or
expense incurred without negligence, willful misconduct or bad faith on
their part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
themselves against any claim or liability in connection with the exercise
or performance of any of their powers or duties hereunder; and
(iv) to pay the Trustee reasonable additional compensation together
with its expenses (including reasonable counsel fees) for any collection
action taken pursuant to Section 6.13 hereof.
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(b) The Issuer may remit payment for such fees and expenses to the
Trustee or, in the absence thereof, the Trustee may from time to time deduct
payment of its fees and expenses hereunder from Monies on deposit in the Payment
Account in accordance with the Priority of Payments.
(c) The Trustee, in its capacity as Trustee, Paying Agent, Calculation
Agent, Transfer Agent, Custodial Securities Intermediary, Backup Advancing Agent
and Notes Registrar, hereby agrees not to cause the filing of a petition in
bankruptcy against the Issuer or the Co-Issuer until at least one year and one
day (or, if longer, the applicable preference period then in effect) after the
payment in full of all Notes issued under this Indenture. This provision shall
survive termination of this Indenture.
(d) The Trustee agrees that the payment of all amounts to which it is
entitled pursuant to Sections 6.7(a)(i), (a)(ii), (a)(iii) and (a)(iv) shall be
subject to the Priority of Payments, shall be payable only to the extent funds
are available in accordance with such Priority of Payments, shall be payable
solely from the Assets and following realization of the Assets, any such claims
of the Trustee against the Issuer, and all obligations of the Issuer, shall be
extinguished. The Trustee will have a lien upon the Assets to secure the payment
of such payments to it in accordance with the Priority of Payments; provided
that the Trustee shall not institute any proceeding for enforcement of such lien
except in connection with an action taken pursuant to Section 5.3 hereof for
enforcement of the lien of this Indenture for the benefit of the Noteholders.
Fees shall be accrued on the actual number of days in the related
Interest Accrual Period. The Trustee shall receive amounts pursuant to this
Section 6.7 and Section 11.1(a) only to the extent that such payment is made in
accordance with the Priority of Payments and the failure to pay such amounts to
the Trustee will not, by itself, constitute an Event of Default. Subject to
Section 6.9, the Trustee shall continue to serve as Trustee under this Indenture
notwithstanding the fact that the Trustee shall not have received amounts due to
it hereunder. No direction by a Majority of the Controlling Class shall affect
the right of the Trustee to collect amounts owed to it under this Indenture.
If on any Payment Date when any amount shall be payable to the Trustee
pursuant to this Indenture is not paid because there are insufficient funds
available for the payment thereof, all or any portion of such amount not so paid
shall be deferred and payable on any later Payment Date on which a fee shall be
payable and sufficient funds are available therefor in accordance with the
Priority of Payments.
Section 6.8 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America or of any State thereof, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$200,000,000, subject to supervision or examination by federal or State
authority, having a rating of at least "A2" by Moody's, a rating of at least
"BBB" by Fitch and a long-term senior unsecured debt rating of at least "A+" and
a short-term debt rating of at least "A-1" by S&P and having an office within
the United States. If such corporation publishes
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reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section 6.8, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 6.8, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article 6.
Section 6.9 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article 6 shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.10.
(b) The Trustee may resign at any time by giving written notice
thereof to the Issuer, the Co-Issuer, the Collateral Manager, the Class A-1AR
Note Agent, each Hedge Counterparty, the Noteholders, each Rating Agency and so
long as MBIA is deemed to be the Controlling Class hereunder, MBIA. Upon
receiving such notice of resignation, the Issuer and the Co-Issuer shall
promptly appoint a successor trustee or trustees by written instrument, in
duplicate, executed by an Authorized Officer of the Issuer and an Authorized
Officer of the Co-Issuer, one copy of which shall be delivered to the Trustee so
resigning and one copy to the successor Trustee or Trustees, together with a
copy to each Noteholder, the Class A-1AR Note Agent, each Hedge Counterparty and
the Collateral Manager; provided that such successor Trustee shall be appointed
only upon the written consent of a Majority of the Notes (or if there are no
Notes Outstanding, a Majority of the Preferred Shares) or, at any time when an
Event of Default shall have occurred and be continuing or when a successor
Trustee has been appointed pursuant to Section 6.10, by Act of a Majority of the
Controlling Class. If no successor Trustee shall have been appointed and an
instrument of acceptance by a successor Trustee shall not have been delivered to
the Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee, the Controlling Class of Notes or any Holder of a Note, on
behalf of himself and all others similarly situated, may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed (i) at any time by Act of at least
66-2/3% of the Notes (or if there are no Notes Outstanding, a Majority of the
Preferred Shares); provided that, so long as MBIA is deemed to be the
Controlling Class hereunder, MBIA consents to such removal or (ii) at any time
when an Event of Default shall have occurred and be continuing or when a
successor Trustee has been appointed pursuant to Section 6.10, by Act of a
Majority of the Controlling Class, in each case, upon written notice delivered
to the Trustee and to the Issuer and the Co-Issuer.
(d) If at any time:
(i) the Trustee shall cease to be eligible under Section 6.8 and shall
fail to resign after written request therefor by the Issuer, the Co-Issuer,
or by any Holder; or
(ii) the Trustee shall become incapable of acting or there shall be
instituted any proceeding pursuant to which it could be adjudged as
bankrupt or insolvent or a
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receiver or liquidator of the Trustee or of its property shall be appointed
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation;
then, in any such case (subject to Section 6.9(a)), (a) the Issuer or the
Co-Issuer, by Issuer Order, subject to the written consent of each Hedge
Counterparty, may remove the Trustee or (b) subject to Section 5.15, a Majority
of the Controlling Class or any Holder may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any reason,
the Issuer and the Co-Issuer, by Issuer Order, subject to the written consent of
each Hedge Counterparty and the Collateral Manager, shall promptly appoint a
successor Trustee. If the Issuer and the Co-Issuer shall fail to appoint a
successor Trustee within 60 days after such resignation, removal or incapability
or the occurrence of such vacancy, a successor Trustee may be appointed by Act
of a Majority of the Controlling Class delivered to the Issuer, the Co-Issuer,
the Collateral Manager and the retiring Trustee. The successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede any successor Trustee proposed by the Issuer and
the Co-Issuer. If no successor Trustee shall have been so appointed by the
Issuer and the Co-Issuer or a Majority of the Controlling Class and shall have
accepted appointment in the manner hereinafter provided, subject to Section
5.15, each Hedge Counterparty, the Controlling Class or any Holder may, on
behalf of itself or himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(f) The Issuer and the Co-Issuer shall give prompt notice of each
resignation and each removal of the Trustee and each appointment of a successor
Trustee by mailing written notice of such event by first class mail, postage
prepaid, to each Rating Agency, each Hedge Counterparty, the Preferred Shares
Paying Agent, the Collateral Manager and to the Holders of the Notes as their
names and addresses appear in the Notes Register. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office. If
the Issuer or the Co-Issuer fail to mail such notice within ten days after
acceptance of appointment by the successor Trustee, the successor Trustee shall
cause such notice to be given at the expense of the Issuer or the Co-Issuer, as
the case may be.
Section 6.10 Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Issuer, the Co-Issuer, the Class A-1AR Note Agent, each Hedge
Counterparty, the Collateral Manager, the Servicer, so long as MBIA is deemed to
be the Controlling Class hereunder, MBIA, and the retiring Trustee an instrument
accepting such appointment. Upon delivery of the required instruments, the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts, duties and obligations of the
retiring Trustee; but, on request of the Issuer and the Co-Issuer or a Majority
of the Controlling Class or the Collateral Manager or the successor Trustee,
such retiring Trustee shall, upon payment of its charges then unpaid, execute
and deliver an instrument transferring to such successor Trustee all
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the rights, powers and trusts of the retiring Trustee, and shall duly assign,
transfer and deliver to such successor Trustee all property and Money held by
such retiring Trustee hereunder, subject nevertheless to its lien, if any,
provided for in Section 6.7(d). Upon request of any such successor Trustee, the
Issuer and the Co-Issuer shall execute any and all instruments for more fully
and certainly vesting in and confirming to such successor Trustee all such
rights, powers and trusts.
No successor Trustee shall accept its appointment unless (a) at the
time of such acceptance such successor shall be qualified and eligible under
this Article 6, (b) such successor shall have long term debt rated within the
four highest rating categories by each Rating Agency, and (c) the Rating Agency
Condition is satisfied and, so long as MBIA is deemed to be the Controlling
Class hereunder, MBIA consents with respect thereto.
Section 6.11 Merger, Conversion, Consolidation or Succession to
Business of Trustee.
Any corporation or banking association into which the Trustee may be
merged or converted or with which it may be consolidated, or any corporation or
banking association resulting from any merger, conversion or consolidation to
which the Trustee shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder; provided such corporation shall be otherwise
qualified and eligible under this Article 6, without the execution or filing of
any paper or any further act on the part of any of the parties hereto. In case
any of the Notes have been authenticated, but not delivered, by the Trustee then
in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Notes so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Notes.
Section 6.12 Co-Trustees and Separate Trustee.
At any time or times, including for the purpose of meeting the legal
requirements of any jurisdiction in which any part of the Assets may at the time
be located, the Issuer, the Co-Issuer and the Trustee shall have power to
appoint, one or more Persons to act as co-trustee jointly with the Trustee of
all or any part of the Assets, with the power to file such proofs of claim and
take such other actions pursuant to Section 5.6 herein and to make such claims
and enforce such rights of action on behalf of the Holders of the Notes as such
Holders themselves may have the right to do, subject to the other provisions of
this Section 6.12.
Each of the Issuer and the Co-Issuer shall join with the Trustee in
the execution, delivery and performance of all instruments and agreements
necessary or proper to appoint a co-trustee. If the Issuer and the Co-Issuer do
not both join in such appointment within 15 days after the receipt by them of a
request to do so, the Trustee shall have power to make such appointment.
Should any written instrument from the Issuer or the Co-Issuer be
required by any co-trustee, so appointed, more fully confirming to such
co-trustee such property, title, right or power, any and all such instruments
shall, on request, be executed, acknowledged and delivered
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by the Issuer or the Co-Issuer, as the case may be. The Issuer agrees to pay
(but only from and to the extent of the Assets) to the extent funds are
available therefor under clauses (3) and (26) of Section 11.1(a)(i), for any
reasonable fees and expenses in connection with such appointment.
Every co-trustee, shall, to the extent permitted by law, but to such
extent only, be appointed subject to the following terms:
(a) the Notes shall be authenticated and delivered and all rights,
powers, duties and obligations hereunder in respect of the custody of
securities, Cash and other personal property held by, or required to be
deposited or pledged with, the Trustee hereunder, shall be exercised solely by
the Trustee;
(b) the rights, powers, duties and obligations hereby conferred or
imposed upon the Trustee in respect of any property covered by the appointment
of a co-trustee shall be conferred or imposed upon and exercised or performed by
the Trustee or by the Trustee and such co-trustee jointly in the case of the
appointment of a co-trustee as shall be provided in the instrument appointing
such co-trustee, except to the extent that under any law of any jurisdiction in
which any particular act is to be performed, the Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers, duties and
obligations shall be exercised and performed by a co-trustee;
(c) the Trustee at any time, by an instrument in writing executed by
it, with the concurrence of the Issuer and the Co-Issuer evidenced by an Issuer
Order, may accept the resignation of, or remove, any co-trustee appointed under
this Section 6.12, and in case an Event of Default has occurred and is
continuing, the Trustee shall have the power to accept the resignation of, or
remove, any such co-trustee without the concurrence of the Issuer or the
Co-Issuer. A successor to any co-trustee so resigned or removed may be appointed
in the manner provided in this Section 6.12;
(d) no co-trustee hereunder shall be personally liable by reason of
any act or omission of the Trustee hereunder;
(e) the Trustee shall not be liable by reason of any act or omission
of a co-trustee; and
(f) any Act of Securityholders delivered to the Trustee shall be
deemed to have been delivered to each co-trustee.
Section 6.13 Certain Duties of Trustee Related to Delayed Payment of
Proceeds.
In the event that in any month the Trustee shall not have received a
Scheduled Distribution, (a) the Trustee shall promptly notify the Issuer and the
Collateral Manager in writing and (b) unless within three Business Days (or the
end of the applicable grace period for such payment, if longer) after such
notice such payment shall have been received by the Trustee, or the Issuer, in
its absolute discretion (but only to the extent permitted by Section 10.2(a)),
shall have made provision for such payment satisfactory to the Trustee in
accordance with Section 10.2(a), the Trustee shall request the obligor of such
Pledged Obligation, the trustee under the related Underlying Instrument or
paying agent designated by either of them, as the case may be,
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to make such payment as soon as practicable after such request but in no event
later than three Business Days after the date of such request. In the event that
such payment is not made within such time period, the Trustee, subject to the
provisions of Section 6.1(d)(iv), shall take such action as the Collateral
Manager reasonably shall direct in writing. Any such action shall be without
prejudice to any right to claim a Default or Event of Default under this
Indenture. In the event that the Issuer or the Collateral Manager requests a
release of a Pledged Obligation in connection with any such action under the
Collateral Management Agreement, such release shall be subject to Section 10.12
and Article 12 of this Indenture, as the case may be. Notwithstanding any other
provision hereof, the Trustee shall deliver to the Issuer or its designee any
payment with respect to any Pledged Obligation received after the Due Date
thereof to the extent the Issuer previously made provisions for such payment
satisfactory to the Trustee in accordance with this Section 6.13 and such
payment shall not be deemed part of the Assets.
Section 6.14 Representations and Warranties of the Trustee.
The Trustee represents and warrants that:
(a) the Trustee is a national banking association with trust powers,
duly and validly existing under the laws of the United States of America, with
corporate power and authority to execute, deliver and perform its obligations
under this Indenture, and is duly eligible and qualified to act as trustee under
this Indenture;
(b) this Indenture has been duly authorized, executed and delivered by
the Trustee and constitutes the valid and binding obligation of the Trustee,
enforceable against it in accordance with its terms except (i) as limited by
bankruptcy, fraudulent conveyance, fraudulent transfer, insolvency,
reorganization, liquidation, receivership, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally and by general
equitable principles, regardless of whether considered in a proceeding in equity
or at law, and (ii) that the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought;
(c) neither the execution or delivery by the Trustee of this Indenture
nor the performance by the Trustee of its obligations under this Indenture
requires the consent or approval of, the giving of notice to or the registration
or filing with, any governmental authority or agency under any existing law of
the United States of America governing the banking or trust powers of the
Trustee;
(d) neither the execution, delivery and performance of this Indenture,
nor the consummation of the transactions contemplated by this Indenture, (i) is
prohibited by, or requires the Trustee to obtain any consent, authorization,
approval or registration under, any law, statute, rule, regulation, or any
judgment, order, writ, injunction or decree that is binding upon the Trustee or
any of its properties or assets, (ii) will violate the provisions of the
Governing Documents of the Trustee or (iii) will violate any provision of,
result in any default or acceleration of any obligations under, result in the
creation or imposition of any lien pursuant to, or require any consent under,
any material agreement to which the Trustee is a party or by which
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it or any of its property is bound, the violation of which would have a material
adverse effect on the Trustee or its property; and
(e) there are no proceedings pending or, to the best knowledge of the
Trustee, threatened against the Trustee before any Federal, state or other
governmental agency, authority, administrator or regulatory body, arbitrator,
court or other tribunal, foreign or domestic, which could have a material
adverse effect on the Pledged Obligations or the performance by the Trustee of
its obligations under this Indenture.
Section 6.15 Requests for Consents.
In the event that the Trustee receives written notice of any proposed
amendment, consent or waiver under the Underlying Instruments of any Collateral
Debt Security (before or after any default) or in the event any action is
required to be taken in respect to an Underlying Instrument, the Trustee shall
promptly contact the Issuer and the Collateral Manager. The Collateral Manager
may, on behalf of the Issuer, instruct the Trustee pursuant to an Issuer Order
to, and the Trustee shall, with respect to which a Collateral Debt Security as
to which a consent or waiver under the Underlying Instruments of such Collateral
Debt Security (before or after any default) has been proposed or with respect to
action required to be taken in respect of an Underlying Instrument, give
consent, grant a waiver, vote or exercise any or all other rights or remedies
with respect to any such Collateral Debt Security in accordance with such Issuer
Order. In the absence of any instruction from the Collateral Manager, the
Trustee shall not engage in any vote or take any action with respect to such a
Collateral Debt Security.
Section 6.16 Withholding.
If any amount is required to be deducted or withheld from any payment
to any Noteholder, such amount shall reduce the amount otherwise distributable
to such Noteholder. The Trustee is hereby authorized to withhold or deduct from
amounts otherwise distributable to any Noteholder sufficient funds for the
payment of any tax that is legally required to be withheld or deducted (but such
authorization shall not prevent the Trustee from contesting any such tax in
appropriate proceedings and legally withholding payment of such tax, pending the
outcome of such proceedings). The amount of any withholding tax imposed with
respect to any Noteholder shall be treated as Cash distributed to such
Noteholder at the time it is deducted or withheld by the Issuer or the Trustee,
as applicable, and remitted to the appropriate taxing authority. If there is a
possibility that withholding tax is payable with respect to a distribution, the
Trustee may in its sole discretion withhold such amounts in accordance with this
Section 6.16. If any Noteholder wishes to apply for a refund of any such
withholding tax, the Trustee shall reasonably cooperate with such Noteholder in
making such claim so long as such Noteholder agrees to reimburse the Trustee for
any out-of-pocket expenses incurred. Nothing herein shall impose an obligation
on the part of the Trustee to determine the amount of any tax or withholding
obligation on the part of the Issuer or in respect of the Notes.
ARTICLE 7
COVENANTS
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Section 7.1 Payment of Principal and Interest and Class A-1AR
Commitment Fee.
The Issuer and the Co-Issuer shall duly and punctually pay the
principal of and interest on each Class of Notes, and in the case of the Class
A-1AR Notes, the Class A-1AR Commitment Fee and any Class A-1AR Breakage Costs,
in accordance with the terms of such Notes and this Indenture. Amounts properly
withheld under the Code or other applicable law by any Person from a payment to
any Noteholder of interest and/or principal shall be considered as having been
paid by the Issuer and the Co-Issuer, and, with respect to the Preferred Shares,
by the Issuer, to such Preferred Shareholder for all purposes of this Indenture.
The Trustee shall, unless prevented from doing so for reasons beyond
its reasonable control, give notice to each Securityholder of any such
withholding requirement no later than ten days prior to the related Payment Date
from which amounts are required (as directed by the Issuer (or the Collateral
Manager on behalf of the Issuer)) to be withheld, provided that, despite the
failure of the Trustee to give such notice, amounts withheld pursuant to
applicable tax laws shall be considered as having been paid by the Issuer and
the Co-Issuer, as provided above.
Section 7.2 Maintenance of Office or Agency.
The Issuer and the Co-Issuer hereby appoint the Trustee as a Paying
Agent for the payment of principal of and interest on the Notes and where Notes
may be surrendered for registration of transfer or exchange and the Issuer and
the Co-Issuer hereby appoint CT Corporation System, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as their agent where notices and demands to or
upon the Co-Issuer in respect of the Notes or this Indenture, or the Issuer in
respect of the Notes or this Indenture, may be served.
The Issuer and the Co-Issuer hereby appoint the Irish Paying Agent as
a Paying Agent for the payment of principal of and interest on the Notes and to
act as their agent where notices and demands to or upon the Issuer or the
Co-Issuer in respect of the Notes or this Indenture may be served and where
Notes may be surrendered for registration of transfer or exchange.
The Issuer or the Co-Issuer may at any time and from time to time vary
or terminate the appointment of any such agent or appoint any additional agents
for any or all of such purposes; provided, however, that the Issuer and the
Co-Issuer, if applicable, will maintain in the Borough of Manhattan, The City of
New York, an office or agency where notices and demands to or upon the Issuer
and the Co-Issuer in respect of the Notes and this Indenture may be served, and,
subject to any laws or regulations applicable thereto, an office or agency
outside of the United States where Notes may be presented and surrendered for
payment; provided, further, that no paying agent shall be appointed in a
jurisdiction which subjects payments on the Notes to withholding tax. The Issuer
or the Co-Issuer, as the case may be, shall give prompt written notice to the
Trustee, the Class A-1AR Note Agent, each Rating Agency and the Noteholders of
the appointment or termination of any such agent and of the location and any
change in the location of any such office or agency.
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If at any time the Issuer and the Co-Issuer, if applicable, shall fail
to maintain any such required office or agency in the Borough of Manhattan, The
City of New York, or outside the United States, or shall fail to furnish the
Trustee with the address thereof, presentations and surrenders may be made
(subject to the limitations described in the preceding paragraph) at and notices
and demands may be served on the Issuer and the Co-Issuer, and Notes may be
presented and surrendered for payment to the appropriate Paying Agent at its
main office and the Issuer and the Co-Issuer hereby appoint the same as their
agent to receive such respective presentations, surrenders, notices and demands.
Section 7.3 Money for Note Payments to be Held in Trust.
All payments of amounts due and payable with respect to any Notes that
are to be made from amounts withdrawn from the Payment Account shall be made on
behalf of the Issuer and the Co-Issuer by the Trustee or a Paying Agent (in each
case, from and to the extent of available funds in the Payment Account and
subject to the Priority of Payments) with respect to payments on the Notes.
When the Paying Agent is not also the Notes Registrar, the Issuer and
the Co-Issuer shall furnish, or cause the Notes Registrar to furnish, no later
than the fifth calendar day after each Record Date a list, if necessary, in such
form as such Paying Agent may reasonably request, of the names and addresses of
the Holders of Notes and of the certificate numbers of individual Notes held by
each such Holder.
Whenever the Paying Agent is not also the Trustee, the Issuer, the
Co-Issuer, and such Paying Agent shall, on or before the Business Day next
preceding each Payment Date or Redemption Date, as the case may be, direct the
Trustee to deposit on such Payment Date with such Paying Agent, if necessary, an
aggregate sum sufficient to pay the amounts then becoming due pursuant to the
terms of this Indenture (to the extent funds are then available for such purpose
in the Payment Account, and subject to the Priority of Payments), such sum to be
held for the benefit of the Persons entitled thereto and (unless such Paying
Agent is the Trustee) the Issuer and the Co-Issuer shall promptly notify the
Trustee of its action or failure so to act. Any Monies deposited with a Paying
Agent (other than the Trustee) in excess of an amount sufficient to pay the
amounts then becoming due on the Notes with respect to which such deposit was
made shall be paid over by such Paying Agent to the Trustee for application in
accordance with Article 11. Any such Paying Agent shall be deemed to agree by
assuming such role not to cause the filing of a petition in bankruptcy against
the Issuer or the Co-Issuer for the non-payment to the Paying Agent of any
amounts payable thereto until at least one year and one day (or, if longer, the
applicable preference period then in effect) after the payment in full of all
Notes issued under this Indenture.
The initial Paying Agent shall be as set forth in Section 7.2. Any
additional or successor Paying Agents shall be appointed by Issuer Order of the
Issuer and Issuer Order of the Co-Issuer with written notice thereof to the
Trustee; provided, however, that so long as any Class of the Notes are rated by
a Rating Agency and with respect to any additional or successor Paying Agent for
the Notes, either (i) such Paying Agent has a long-term debt rating of "Aa3" or
higher by Moody's, "AA-"or higher by Fitch and "AA-" or higher by S&P or a
short-term debt rating of "P-1" by Moody's, "F1+" by Fitch and "A-1+" by S&P or
(ii) each Rating Agency confirms that
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employing such Paying Agent shall not adversely affect the then-current ratings
of the Notes. In the event that such successor Paying Agent ceases to have a
long-term debt rating of "Aa3" or higher by Moody's, "AA-"or higher by Fitch or
"AA-" or higher by S&P or a short-term debt rating of at least "P-1" by Moody's,
"F1+" by Fitch and "A-1+" by S&P, the Issuer and the Co-Issuer shall promptly
remove such Paying Agent and appoint a successor Paying Agent. The Issuer and
the Co-Issuer shall not appoint any Paying Agent that is not, at the time of
such appointment, a depository institution or trust company subject to
supervision and examination by federal and/or state and/or national banking
authorities. The Issuer and the Co-Issuer shall cause the Paying Agent other
than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee (and if the Trustee acts as
Paying Agent, it hereby so agrees), subject to the provisions of this Section
7.3, that such Paying Agent will:
(a) allocate all sums received for payment to the Holders of Notes for
which it acts as Paying Agent on each Payment Date and Redemption Date among
such Holders in the proportion specified in the applicable report or Redemption
Date Statement, as the case may be, in each case to the extent permitted by
applicable law;
(b) hold all sums held by it for the payment of amounts due with
respect to the Notes for the benefit of the Persons entitled thereto until such
sums shall be paid to such Persons or otherwise disposed of as herein provided
and pay such sums to such Persons as herein provided;
(c) if such Paying Agent is not the Trustee, immediately resign as a
Paying Agent and forthwith pay to the Trustee all sums held by it for the
payment of Notes if at any time it ceases to meet the standards set forth above
required to be met by a Paying Agent at the time of its appointment;
(d) if such Paying Agent is not the Trustee, immediately give the
Trustee notice of any Default by the Issuer or the Co-Issuer (or any other
obligor upon the Notes) in the making of any payment required to be made; and
(e) if such Paying Agent is not the Trustee at any time during the
continuance of any such Default, upon the written request of the Trustee,
forthwith pay to the Trustee all sums so held by such Paying Agent.
The Issuer or the Co-Issuer may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture or for any other
purpose, pay, or by Issuer Order direct the Paying Agent to pay, to the Trustee
all sums held by the Issuer or the Co-Issuer or held by the Paying Agent for
payment of the Notes, such sums to be held by the Trustee in trust for the same
Noteholders as those upon which such sums were held by the Issuer, the Co-Issuer
or the Paying Agent; and, upon such payment by the Paying Agent to the Trustee,
the Paying Agent shall be released from all further liability with respect to
such Money.
Except as otherwise required by applicable law, any Money deposited
with the Trustee in trust or deposited with the Paying Agent for the payment of
the principal of or interest on any Note and remaining unclaimed for two years
after such principal or interest has become due and payable shall be paid to the
Issuer; and the Holder of such Note shall thereafter, as an
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unsecured general creditor, look only to the Issuer for payment of such amounts
and all liability of the Trustee or the Paying Agent with respect to such Money
(but only to the extent of the amounts so paid to the Issuer or the Co-Issuer,
as applicable) shall thereupon cease; provided, however, that the Irish Paying
Agent, before being required to make any such payment, shall at the expense of
the Issuer cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in Dublin, Ireland, notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such publication, any unclaimed balance of such money then remaining shall be
repaid to the Issuer. The Trustee or the Paying Agent, before being required to
make any such release of payment, may, but shall not be required to, adopt and
employ, at the expense of the Issuer or the Co-Issuer, as the case may be, any
reasonable means of notification of such release of payment, including, but not
limited to, mailing notice of such release to Holders whose Notes have been
called but have not been surrendered for redemption or whose right to or
interest in Monies due and payable but not claimed is determinable from the
records of the Paying Agent, at the last address of record of each such Holder.
Section 7.4 Existence of the Issuer and Co-Issuer.
(a) So long as any Note is Outstanding, the Issuer shall, to the
maximum extent permitted by applicable law, maintain in full force and effect
its existence and rights as an exempted company incorporated with limited
liability under the laws of the Cayman Islands and shall obtain and preserve its
qualification to do business as a foreign limited liability company in each
jurisdiction in which such qualifications are or shall be necessary to protect
the validity and enforceability of this Indenture, the Notes or any of the
Assets; provided that the Issuer shall be entitled to change its jurisdiction of
registration from the Cayman Islands to any other jurisdiction reasonably
selected by the Issuer so long as (i) such change is not disadvantageous in any
material respect to the Holders of the Notes or the Preferred Shares or any
Hedge Counterparty, (ii) written notice of such change shall have been given by
the Trustee to the Holders of the Notes or Preferred Shares, the Preferred
Shares Paying Agent, each Hedge Counterparty and each Rating Agency 15 Business
Days prior to such change and (iii) on or prior to the 15th Business Day
following such notice the Trustee shall not have received written notice from a
Majority of the Controlling Class or a Majority of the Preferred Shares or any
Hedge Counterparty objecting to such change. So long as any Note is Outstanding,
the Issuer will maintain at all times at least one director who is Independent
of the Collateral Manager and its Affiliates.
(b) So long as any Note is Outstanding, the Co-Issuer shall maintain
in full force and effect its existence and rights as a limited liability company
organized under the laws of Delaware and shall obtain and preserve its
qualification to do business as a foreign limited liability company in each
jurisdiction in which such qualifications are or shall be necessary to protect
the validity and enforceability of this Indenture or the Notes; provided,
however, that the Co-Issuer shall be entitled to change its jurisdiction of
formation from Delaware to any other jurisdiction reasonably selected by the
Co-Issuer so long as (i) such change is not disadvantageous in any material
respect to the Holders of the Notes or any Hedge Counterparty, (ii) written
notice of such change shall have been given by the Trustee to the Holders of the
Notes, each Hedge Counterparty and each Rating Agency 15 Business Days prior to
such change and (iii) on or prior to the 15th Business Day following such notice
the Trustee shall not have
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received written notice from a Majority of the Controlling Class or any Hedge
Counterparty objecting to such change. So long as any Note is Outstanding, the
Co-Issuer shall maintain at all times at least one manager who is Independent of
the Collateral Manager and its Affiliates.
(c) So long as any Note is Outstanding, the Issuer shall ensure that
all corporate or other formalities regarding its existence are followed
(including correcting any known misunderstanding regarding its separate
existence). So long as any Note is Outstanding, the Issuer shall not take any
action or conduct its affairs in a manner that is likely to result in its
separate existence being ignored or its assets and liabilities being
substantively consolidated with any other Person in a bankruptcy, reorganization
or other insolvency proceeding. So long as any Note is Outstanding, the Issuer
shall maintain and implement administrative and operating procedures reasonably
necessary in the performance of the Issuer's obligations hereunder, and the
Issuer shall at all times keep and maintain, or cause to be kept and maintained,
separate books, records, accounts and other information customarily maintained
for the performance of the Issuer's obligations hereunder. Without limiting the
foregoing, so long as any Note is Outstanding, (i) the Issuer shall (A) pay its
own liabilities only out of its own funds and (B) use separate stationery,
invoices and checks, (C) hold itself out and identify itself as a separate and
distinct entity under its own name and (ii) the Issuer shall not (A) have any
subsidiaries, (B) have any employees (other than its directors), (C) engage in
any transaction with any shareholder that is not permitted under the terms of
the Collateral Management Agreement, (D) pay dividends other than in accordance
with the terms of this Indenture, its governing documents and the Preferred
Shares Paying Agency Agreement, (E) conduct business under an assumed name
(i.e., no "DBAs"), (F) commingle its funds or assets with those of any other
Person, or (G) enter into any contract or agreement with any of its Affiliates,
except upon terms and conditions that are commercially reasonable and
substantially similar to those available in arm's-length transactions with an
unrelated party.; provided that the foregoing shall not prohibit the Issuer from
entering into the transactions contemplated by the Administration Agreement with
the Company Administrator, the Preferred Shares Paying Agency Agreement with the
Share Registrar and any other agreement contemplated or permitted by the
Collateral Management Agreement or this Indenture.
(d) So long as any Note is Outstanding, the Co-Issuer shall ensure
that all limited liability company or other formalities regarding its existence
are followed, as well as correcting any known misunderstanding regarding its
separate existence. The Co-Issuer shall not take any action or conduct its
affairs in a manner, that is likely to result in its separate existence being
ignored or its assets and liabilities being substantively consolidated with any
other Person in a bankruptcy, reorganization or other insolvency proceeding. The
Co-Issuer shall maintain and implement administrative and operating procedures
reasonably necessary in the performance of the Co-Issuer's obligations
hereunder, and the Co-Issuer shall at all times keep and maintain, or cause to
be kept and maintained, books, records, accounts and other information
customarily maintained for the performance of the Co- Issuer's obligations
hereunder. Without limiting the foregoing, the Co-Issuer shall not (A) have any
subsidiaries, (B) have any employees (other than its managers), (C) join in any
transaction with any member that is not permitted under the terms of the
Collateral Management Agreement, (D) pay dividends other than in accordance with
the terms of this Indenture, (E) commingle its funds or assets with those of any
other Person, or (F) enter into any contract or agreement with any of its
Affiliates, except upon terms and conditions
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that are commercially reasonable and substantially similar to those available in
arm's-length transactions with an unrelated party.
Section 7.5 Protection of Assets.
(a) The Trustee, on behalf of the Issuer, pursuant to any Opinion of
Counsel received pursuant to Section 7.5(d) shall execute and deliver all such
Financing Statements, continuation statements, instruments of further assurance
and other instruments, and shall take such other action as may be necessary or
advisable or desirable to secure the rights and remedies of the Holders and each
Hedge Counterparty hereunder and to:
(i) Grant more effectively all or any portion of the Assets;
(ii) maintain or preserve the lien (and the priority thereof) of this
Indenture or to carry out more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture (including, without limitation, any
and all actions necessary or desirable as a result of changes in law or
regulations);
(iv) enforce any of the Pledged Obligations or other instruments or
property included in the Assets;
(v) preserve and defend title to the Assets and the rights of the
Trustee, the Holders of the Notes and each Hedge Counterparty in the Assets
against the claims of all persons and parties; and
(vi) pursuant to Sections 11.1(a)(i)(1) and 11.1(a)(ii)(1), pay or
cause to be paid any and all taxes levied or assessed upon all or any part
of the Assets.
The Issuer hereby designates the Trustee as its agent and
attorney-in-fact to execute any Financing Statement, continuation statement or
other instrument required pursuant to this Section 7.5. The Trustee agrees that
it will from time to time execute and cause to be filed Financing Statements and
continuation statements (it being understood that the Trustee shall be entitled
to rely upon an Opinion of Counsel described in Section 7.5(d), at the expense
of the Issuer, as to the need to file such Financing Statements and continuation
statements, the dates by which such filings are required to be made and the
jurisdictions in which such filings are required to be made).
(b) The Trustee shall not (except in accordance with Section 10.12(a),
(b) or (c) and except for payments, deliveries and distributions otherwise
expressly permitted under this Indenture) (i) remove any portion of the Assets
that consists of Cash or is evidenced by an instrument, certificate or other
writing (A) from the jurisdiction in which it was held at the date as described
in the Opinion of Counsel delivered at the Closing Date pursuant to Section
3.1(d) or (B) from the possession of the Person who held it on such date or (ii)
cause or permit the Custodial Account or the Custodial Securities Intermediary
to be located in a different jurisdiction from the jurisdiction in which such
securities accounts and Custodial Securities Intermediary were located on the
Closing Date, unless the Trustee shall have first received an
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Opinion of Counsel to the effect that the lien and security interest created by
this Indenture with respect to such property will continue to be maintained
after giving effect to such action or actions.
(c) The Issuer shall (i) pay or cause to be paid taxes, if any, levied
on account of the beneficial ownership by the Issuer of any Pledged Obligations
that secure the Notes and timely file all tax returns and information statements
as required, and (ii) if required to prevent the withholding or imposition of
United States income tax, deliver or cause to be delivered a United States
Internal Revenue Service Form W-9 or successor applicable form, to each issuer,
counterparty or paying agent with respect to (as applicable) an item included in
the Assets at the time such item is purchased or entered into and thereafter
prior to the expiration or obsolescence of such form.
(d) For so long as the Notes are Outstanding, (i) on December 31, 2011
and (ii) every 60 months after such date, the Issuer (or the Collateral Manager
on behalf of the Issuer) shall deliver to the Trustee for the benefit of the
Trustee, the Collateral Manager, each Hedge Counterparty and each Rating Agency,
at the expense of the Issuer, an Opinion of Counsel stating what is required, in
the opinion of such counsel, as of the date of such opinion, to maintain the
lien and security interest created by this Indenture with respect to the Assets,
and confirming the matters set forth in the Opinion of Counsel, furnished
pursuant to Section 3.1(d), with regard to the perfection and priority of such
security interest (and such Opinion may likewise be subject to qualifications
and assumptions similar to those set forth in the Opinion delivered pursuant to
Section 3.1(d)).
Section 7.6 Notice of Any Amendments.
Each of the Issuer and the Co-Issuer shall give notice to the Rating
Agencies of, and satisfy the Rating Agency Condition and, so long as MBIA is
deemed to be the Controlling Class hereunder, obtain the consent of MBIA with
respect to, any amendments to its Governing Documents.
Section 7.7 Performance of Obligations.
(a) Each of the Issuer and the Co-Issuer shall not take any action,
and will use commercially reasonable efforts not to permit any action to be
taken by others, that would release any Person from any of such Person's
covenants or obligations under any instrument included in the Assets, except in
the case of enforcement action taken with respect to any Defaulted Security in
accordance with the provisions hereof and as otherwise required hereby.
(b) The Issuer or the Co-Issuer may, with the prior written consent of
the Majority of the Notes (or if there are no Notes Outstanding, a Majority of
the Preferred Shares), contract with other Persons, including the Collateral
Manager, the Class A-1AR Note Agent or the Trustee, for the performance of
actions and obligations to be performed by the Issuer or the Co-Issuer, as the
case may be, hereunder by such Persons and the performance of the actions and
other obligations with respect to the Assets of the nature set forth in the
Collateral Management Agreement by the Collateral Manager. Notwithstanding any
such arrangement, the Issuer or the Co-Issuer, as the case may be, shall remain
primarily liable with respect thereto. In the event of
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such contract, the performance of such actions and obligations by such Persons
shall be deemed to be performance of such actions and obligations by the Issuer
or the Co-Issuer; and the Issuer or the Co-Issuer shall punctually perform, and
use commercially reasonable efforts to cause the Collateral Manager or such
other Person to perform, all of their obligations and agreements contained in
the Collateral Management Agreement or such other agreement.
(c) Unless the Rating Agency Condition with respect to S&P and ▇▇▇▇▇'▇
is satisfied with respect thereto, the Issuer shall maintain the Servicing
Agreement in full force and effect so long as any Notes remain Outstanding and
shall not terminate the Servicing Agreement with respect to any Collateral Debt
Security except upon the sale or other liquidation of such Collateral Debt
Security in accordance with the terms and conditions of this Indenture.
Section 7.8 Negative Covenants.
(a) The Issuer and the Co-Issuer shall not:
(i) sell, assign, participate, transfer, exchange or otherwise dispose
of, or pledge, mortgage, hypothecate or otherwise encumber (or permit such
to occur or suffer such to exist), any part of the Assets, except as
otherwise expressly permitted by this Indenture or the Collateral
Management Agreement;
(ii) claim any credit on, make any deduction from, or dispute the
enforceability of, the payment of the principal or interest payable in
respect of the Notes (other than amounts required to be paid, deducted or
withheld in accordance with any applicable law or regulation of any
governmental authority) or, in the case of the Class A-1AR Notes, the Class
A-1AR Commitment Fee or Class A-1AR Breakage Costs, or assert any claim
against any present or future Noteholder by reason of the payment of any
taxes levied or assessed upon any part of the Assets;
(iii) (A) incur or assume or guarantee any indebtedness, other than
the Notes and this Indenture and the transactions contemplated hereby; (B)
issue any additional class of securities, other than the Notes, the
Preferred Shares, the ordinary shares of the Issuer and the limited
liability company membership interests of the Co-Issuer; or (C) issue any
additional shares of stock, other than the ordinary shares of the Issuer
and the Preferred Shares;
(iv) (A) permit the validity or effectiveness of this Indenture or any
Grant hereunder to be impaired, or permit the lien of this Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or permit
any Person to be released from any covenants or obligations with respect to
this Indenture or the Notes, except as may be expressly permitted hereby;
(B) permit any lien, charge, adverse claim, security interest, mortgage or
other encumbrance (other than the lien of this Indenture) to be created on
or extend to or otherwise arise upon or burden the Assets or any part
thereof, any interest therein or the proceeds thereof, except as may be
expressly permitted hereby; or (C) take any action that would permit the
lien of this Indenture not to constitute a valid first priority security
interest in the Assets, except as may be expressly permitted hereby;
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(v) amend the Collateral Management Agreement, except pursuant to the
terms thereof;
(vi) amend the Preferred Shares Paying Agency Agreement, except
pursuant to the terms thereof;
(vii) to the maximum extent permitted by applicable law, dissolve or
liquidate in whole or in part, except as permitted hereunder;
(viii) make or incur any capital expenditures, except as reasonably
required to perform its functions in accordance with the terms of this
Indenture and, in the case of the Issuer, the Preferred Shares Paying
Agency Agreement;
(ix) become liable in any way, whether directly or by assignment or as
a guarantor or other surety, for the obligations of the lessee under any
lease, hire any employees or pay any dividends to its shareholders, except
with respect to the Preferred Shares in accordance with the Priority of
Payments;
(x) maintain any bank accounts other than the Accounts and the bank
account in the Cayman Islands in which (inter alia) the proceeds of the
Issuer's issued share capital and the transaction fees paid to the Issuer
for agreeing to issue the Securities will be kept;
(xi) conduct business under an assumed name, or change its name
without first delivering at least 30 days' prior written notice to the
Trustee, the Class A-1AR Note Agent, the Noteholders and the Rating
Agencies, each Hedge Counterparty and an Opinion of Counsel to the effect
that such name change will not adversely affect the security interest
hereunder of the Trustee or the Secured Parties;
(xii) take any action that would result in it failing to qualify as a
Qualified REIT Subsidiary of the Arbor Parent for federal income tax
purposes (including, but not limited to, an election to treat the Issuer as
a "taxable REIT subsidiary," as defined in Section 856(l) of the Code),
unless (A) based on an Opinion of Counsel, the Issuer will be treated as a
Qualified REIT Subsidiary of a REIT other than Arbor Parent, or (B) based
on an Opinion of Counsel, the Issuer will be treated as a foreign
corporation that is not engaged in a trade or business in the United States
for U.S. federal income tax purposes;
(xiii) except for any agreements involving the purchase and sale of
Collateral Debt Securities having customary purchase or sale terms and
documented with customary loan trading documentation, enter into any
agreements unless such agreements contain "non-petition" and "limited
recourse" provisions; or
(xiv) amend their respective organizational documents without
satisfaction of the Rating Agency Condition with respect to S&P and Moody's
in connection therewith.
(b) Neither the Issuer nor the Trustee shall sell, transfer, exchange
or otherwise dispose of Assets, or enter into or engage in any business with
respect to any part of
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the Assets, except as expressly permitted or required by this Indenture or the
Collateral Management Agreement.
(c) The Co-Issuer shall not invest any of its assets in "securities"
(as such term is defined in the Investment Company Act) and shall keep all of
the Co-Issuer's assets in Cash.
(d) For so long as any of the Notes are Outstanding, the Co-Issuer
shall not issue any limited liability company membership interests of the
Co-Issuer to any Person other than the Arbor Parent or a wholly-owned subsidiary
of the Arbor Parent.
(e) The Issuer shall not enter into any material new agreements (other
than any Hedge Agreement, Hedge Counterparty Credit Support, Collateral Debt
Security, Collateral Debt Security Purchase Agreement or other agreement
(including, without limitation, in connection with the sale of Assets by the
Issuer) contemplated by this Indenture) without the prior written consent of the
Holders of a Majority of the Notes (or if there are no Notes Outstanding, a
Majority of the Preferred Shares) and shall provide notice of all new agreements
(other than any Hedge Agreement, Collateral Debt Security or other agreement
specifically contemplated by this Indenture) to the Holders of the Notes and
each Hedge Counterparty. The foregoing notwithstanding, the Issuer may agree to
any material new agreements; provided that (i) the Issuer (or the Collateral
Manager on behalf of the Issuer) determines that such new agreements would not,
upon or after becoming effective, adversely affect the rights or interests of
any Class or Classes of Noteholders and (ii) subject to satisfaction of the
Rating Agency Condition and, so long as MBIA is the Controlling Class hereunder,
the consent of MBIA.
(f) As long as any Note is Outstanding, ARMS Equity may not transfer
the Preferred Shares or ordinary shares of the Issuer to any other Person.
Section 7.9 Statement as to Compliance.
(a) On or before January 31, in each calendar year, commencing in 2008
or immediately if there has been a Default in the fulfillment of an obligation
under this Indenture, the Issuer shall deliver to the Trustee (which will
deliver a copy to each Hedge Counterparty and each Rating Agency) an Officer's
Certificate given on behalf of the Issuer and without personal liability
stating, as to each signer thereof, that, since the date of the last certificate
or, in the case of the first certificate, the Closing Date, to the best of the
knowledge, information and belief of such Officer, the Issuer has fulfilled all
of its obligations under this Indenture or, if there has been a Default in the
fulfillment of any such obligation, specifying each such Default known to them
and the nature and status thereof.
Section 7.10 Issuer and Co-Issuer May Consolidate or Merge Only on
Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any other
Person or transfer or convey all or substantially all of its assets to any
Person, unless permitted by the Governing Documents and Cayman Islands law and
unless:
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(i) the Issuer shall be the surviving entity, or the Person (if other
than the Issuer) formed by such consolidation or into which the Issuer is
merged or to which all or substantially all of the assets of the Issuer are
transferred shall be an entity organized and existing under the laws of the
Cayman Islands or such other jurisdiction approved by a Majority of each
and every Class of the Notes (each voting as a separate Class), a Majority
of the Preferred Shares and each Hedge Counterparty; provided that no such
approval shall be required in connection with any such transaction
undertaken solely to effect a change in the jurisdiction of registration
pursuant to Section 7.4 hereof; and provided, further, that the surviving
entity shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, each Noteholder and each Hedge
Counterparty, the due and punctual payment of the principal of and interest
on all Notes and in the case of the Class A-1AR Notes, the Class A-1AR
Commitment Fee, and other amounts payable hereunder and under each Hedge
Agreement and the Collateral Management Agreement and the performance and
observance of every covenant of this Indenture and under each Hedge
Agreement and the Collateral Management Agreement on the part of the Issuer
to be performed or observed, all as provided herein;
(ii) (A) each Rating Agency shall have been notified in writing of
each proposed consolidation or merger of the Issuer and the Trustee shall
have received written confirmation from each Rating Agency that the ratings
issued with respect to each Class of Notes shall not be reduced or
withdrawn as a result of the consummation of such transaction and (B) so
long as MBIA is deemed to be the Controlling Class hereunder, MBIA has
consented to the consummation of such transaction;
(iii) if the Issuer is not the surviving entity, the Person formed by
such consolidation or into which the Issuer is merged or to which all or
substantially all of the assets of the Issuer are transferred shall have
agreed with the Trustee (A) to observe the same legal requirements for the
recognition of such formed or surviving entity as a legal entity separate
and apart from any of its Affiliates as are applicable to the Issuer with
respect to its Affiliates and (B) not to consolidate or merge with or into
any other Person or transfer or convey all or substantially all of the
Assets or all or substantially all of its assets to any other Person except
in accordance with the provisions of this Section 7.10, unless in
connection with a sale of the Assets pursuant to Article 5, Article 9 or
Article 12;
(iv) if the Issuer is not the surviving entity, the Person formed by
such consolidation or into which the Issuer is merged or to which all or
substantially all of the assets of the Issuer are transferred shall have
delivered to the Trustee, each Hedge Counterparty, the Collateral Manager
and each Rating Agency an Officer's Certificate and an Opinion of Counsel
each stating that such Person is duly organized, validly existing and in
good standing in the jurisdiction in which such Person is organized+; that
such Person has sufficient power and authority to assume the obligations
set forth in Section 7.10(a)(i) above and to execute and deliver an
indenture supplemental hereto for the purpose of assuming such obligations;
that such Person has duly authorized the execution, delivery and
performance of an indenture supplemental hereto for the purpose of assuming
such obligations and that such supplemental indenture is a valid, legal and
binding obligation of such Person, enforceable in accordance with its
terms, subject only
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to bankruptcy, reorganization, insolvency, moratorium and other laws
affecting the enforcement of creditors' rights generally and to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law); that, immediately
following the event which causes such Person to become the successor to the
Issuer, (A) such Person has good and marketable title, free and clear of
any lien, security interest or charge, other than the lien and security
interest of this Indenture, to the Assets securing, in the case of a
consolidation or merger of the Issuer, all of the Notes or, in the case of
any transfer or conveyance of the Assets securing any of the Notes, such
Notes, (B) the Trustee continues to have a valid perfected first priority
security interest in the Assets securing, in the case of a consolidation or
merger of the Issuer, all of the Notes, or, in the case of any transfer or
conveyance of the Assets securing any of the Notes, such Notes and (C) such
other matters as the Trustee, each Hedge Counterparty, the Collateral
Manager or any Noteholder may reasonably require;
(v) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing;
(vi) the Issuer shall have delivered to the Trustee, the Preferred
Shares Paying Agent, each Hedge Counterparty, the Collateral Manager and
each Noteholder, an Officer's Certificate and an Opinion of Counsel each
stating that such consolidation, merger, transfer or conveyance and such
supplemental indenture comply with this Article 7 and that all conditions
precedent in this Article 7 provided for relating to such transaction have
been complied with;
(vii) the Issuer has received advice from Cadwalader, ▇▇▇▇▇▇▇▇▇▇ &
▇▇▇▇ LLP or an opinion of other nationally recognized U.S. tax counsel
experienced in such matters that the Issuer or the Person referred to in
clause (a) either will (a) be treated as a Qualified REIT Subsidiary or (b)
not be treated as a foreign corporation engaged in a U.S. trade or business
or otherwise subject to U.S. federal income tax on a net income tax basis;
(viii) the Issuer has received advice from Cadwalader, ▇▇▇▇▇▇▇▇▇▇ &
▇▇▇▇ LLP or an opinion of other nationally recognized U.S. tax counsel
experienced in such matters that such action will not adversely affect the
tax treatment of the Noteholders as described in the Offering Memorandum
under the heading "Certain U.S. Federal Income Tax Considerations" to any
material extent; and
(ix) after giving effect to such transaction, the Issuer shall not be
required to register as an investment company under the Investment Company
Act.
(b) The Co-Issuer shall not consolidate or merge with or into any
other Person or transfer or convey all or substantially all of its assets to any
Person, unless no Notes remain Outstanding or:
(i) the Co-Issuer shall be the surviving entity, or the Person (if
other than the Co-Issuer) formed by such consolidation or into which the
Co-Issuer is merged or to which all or substantially all of the assets of
the Co-Issuer are transferred shall be a
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company organized and existing under the laws of Delaware or such other
jurisdiction approved by a Majority of the Controlling Class and each Hedge
Counterparty; provided that no such approval shall be required in
connection with any such transaction undertaken solely to effect a change
in the jurisdiction of formation pursuant to Section 7.4; and provided,
further, that the surviving entity shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee and each
Noteholder, the due and punctual payment of the principal of and interest
on all Notes and in the case of the Class A-1AR Notes, the Class A-1AR
Commitment Fee, and the performance and observance of every covenant of
this Indenture on the part of the Co-Issuer to be performed or observed,
all as provided herein;
(ii) (A) each Rating Agency shall have been notified in writing of
each proposed consolidation or merger of the Co-Issuer and the Trustee
shall have received written confirmation from each Rating Agency that the
ratings issued with respect to each Class of Notes shall not be reduced or
withdrawn as a result of the consummation of such transaction and (B) so
long as MBIA is deemed to be the Controlling Class hereunder, MBIA has
consented to the consummation of such transaction;
(iii) if the Co-Issuer is not the surviving entity, the Person formed
by such consolidation or into which the Co-Issuer is merged or to which all
or substantially all of the assets of the Co-Issuer are transferred shall
have agreed with the Trustee (A) to observe the same legal requirements for
the recognition of such formed or surviving entity as a legal entity
separate and apart from any of its Affiliates as are applicable to the
Co-Issuer with respect to its Affiliates and (B) not to consolidate or
merge with or into any other Person or transfer or convey all or
substantially all of its assets to any other Person except in accordance
with the provisions of this Section 7.10;
(iv) if the Co-Issuer is not the surviving entity, the Person formed
by such consolidation or into which the Co-Issuer is merged or to which all
or substantially all of the assets of the Co-Issuer are transferred shall
have delivered to the Trustee and each Rating Agency an Officer's
Certificate and an Opinion of Counsel each stating that such Person is duly
organized, validly existing and in good standing in the jurisdiction in
which such Person is organized; that such Person has sufficient power and
authority to assume the obligations set forth in Section 7.10(b)(i) above
and to execute and deliver an indenture supplemental hereto for the purpose
of assuming such obligations; that such Person has duly authorized the
execution, delivery and performance of an indenture supplemental hereto for
the purpose of assuming such obligations and that such supplemental
indenture is a valid, legal and binding obligation of such Person,
enforceable in accordance with its terms, subject only to bankruptcy,
reorganization, insolvency, moratorium and other laws affecting the
enforcement of creditors' rights generally and to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law); such other matters as the Trustee or any
Noteholder may reasonably require;
(v) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing;
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(vi) the Co-Issuer shall have delivered to the Trustee, the Preferred
Shares Paying Agent, each Hedge Counterparty and each Noteholder an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger, transfer or conveyance and such supplemental
indenture comply with this Article 7 and that all conditions precedent in
this Article 7 provided for relating to such transaction have been complied
with and that no adverse tax consequences will result therefrom to the
Holders of the Notes, each Hedge Counterparty or the Preferred
Shareholders; and
(vii) after giving effect to such transaction, the Co-Issuer shall not
be required to register as an investment company under the Investment
Company Act.
Section 7.11 Successor Substituted.
Upon any consolidation or merger, or transfer or conveyance of all or
substantially all of the assets of the Issuer or the Co-Issuer, in accordance
with Section 7.10 hereof, the Person formed by or surviving such consolidation
or merger (if other than the Issuer or the Co-Issuer), or the Person to which
such consolidation, merger, transfer or conveyance is made, shall succeed to,
and be substituted for, and may exercise every right and power of, the Issuer or
the Co-Issuer, as the case may be, under this Indenture with the same effect as
if such Person had been named as the Issuer or the Co-Issuer, as the case may
be, herein. In the event of any such consolidation, merger, transfer or
conveyance, the Person named as the "Issuer" or the "Co-Issuer" in the first
paragraph of this Indenture or any successor which shall theretofore have become
such in the manner prescribed in this Article 7 may be dissolved, wound-up and
liquidated at any time thereafter, and such Person thereafter shall be released
from its liabilities as obligor and maker on all the Notes and from its
obligations under this Indenture.
Section 7.12 No Other Business.
The Issuer shall not engage in any business or activity other than
issuing and selling the Notes pursuant to this Indenture and any supplements
thereto, issuing its ordinary shares and issuing and selling the Preferred
Shares in accordance with its Governing Documents, entering into any Hedge
Agreement, the Collateral Management Agreement, and acquiring, owning, holding,
disposing of and pledging the Assets in connection with the Notes and such other
activities which are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith. The Co-Issuer shall
not engage in any business or activity other than issuing and selling the Notes
pursuant to this Indenture and any supplements thereto and such other activities
which are necessary, suitable or convenient to accomplish the foregoing or are
incidental thereto or connected therewith.
Section 7.13 Reporting.
At any time when the Issuer and/or the Co-Issuer is not subject to
Section 13 or 15(d) of the Exchange Act and is not exempt from reporting
pursuant to Rule 12g3-2(b) under the Exchange Act, upon the request of a Holder
or beneficial owner of a Note, the Issuer and/or the Co-Issuer shall promptly
furnish or cause to be furnished "Rule 144A Information" (as defined below) to
such Holder or beneficial owner, to a prospective purchaser of such Note
designated by such Holder or
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beneficial owner or to the Trustee for delivery to such Holder or beneficial
owner or a prospective purchaser designated by such Holder or beneficial owner,
as the case may be, in order to permit compliance by such Holder or beneficial
owner with Rule 144A under the Securities Act in connection with the resale of
such Note by such Holder or beneficial owner. "Rule 144A Information" shall be
such information as is specified pursuant to Rule 144A(d)(4) under the
Securities Act (or any successor provision thereto). The Trustee shall
reasonably cooperate with the Issuer and/or the Co-Issuer in mailing or
otherwise distributing (at the Issuer's expense) to such Noteholders or
prospective purchasers, at and pursuant to the Issuer's and/or the Co-Issuer's
written direction the foregoing materials prepared by or on behalf of the Issuer
and/or the Co-Issuer; provided, however, that the Trustee shall be entitled to
prepare and affix thereto or enclose therewith reasonable disclaimers to the
effect that such Rule 144A Information was not assembled by the Trustee, that
the Trustee has not reviewed or verified the accuracy thereof, and that it makes
no representation as to such accuracy or as to the sufficiency of such
information under the requirements of Rule 144A or for any other purpose.
Section 7.14 Calculation Agent.
(a) The Issuer and the Co-Issuer hereby agree that for so long as any
Notes remain Outstanding there shall at all times be an agent appointed to
calculate LIBOR in respect of each Interest Accrual Period in accordance with
the terms of Schedule J attached hereto (the "Calculation Agent"). The Issuer
and the Co-Issuer initially have appointed the Trustee as Calculation Agent for
purposes of determining LIBOR for each Interest Accrual Period. The Calculation
Agent may be removed by the Issuer at any time. The Calculation Agent may resign
at any time by giving written notice thereof to the Issuer, the Co-Issuer, the
Collateral Manager, each Hedge Counterparty, the Class A-1AR Note Agent, the
Noteholders and each Rating Agency. If the Calculation Agent is unable or
unwilling to act as such or is removed by the Issuer in respect of any Interest
Accrual Period, the Issuer and the Co-Issuer shall, with the prior written
consent of each Hedge Counterparty and the Class A-1AR Note Agent, promptly
appoint as a replacement Calculation Agent a leading bank which is engaged in
transactions in Eurodollar deposits in the international Eurodollar market and
which does not control or is not controlled by or under common control with the
Issuer or its Affiliates. The Calculation Agent may not resign its duties
without a successor having been duly appointed, and shall promptly inform the
Hedge Counterparty and the Class A-1AR Note Agent of any such appointment. If no
successor Calculation Agent shall have been appointed within 30 days after
giving of a notice of resignation, the resigning Calculation Agent, each Hedge
Counterparty, the Class A-1AR Note Agent, a Majority of the Notes or any Holder
of a Note, on behalf of himself and all others similarly situated, may petition
a court of competent jurisdiction for the appointment of a successor Calculation
Agent.
(b) The Calculation Agent shall be required to agree that, as soon as
practicable after 11:00 a.m. (London time) on each LIBOR Determination Date (as
defined in Schedule J attached hereto), but in no event later than 11:00 a.m.
(New York time) on the London Banking Day immediately following each LIBOR
Determination Date, the Calculation Agent shall calculate (x) LIBOR for the next
Interest Accrual Period and (y) the amount of interest for such Interest Accrual
Period payable in respect of each $1,000 principal amount of each Class of Notes
(rounded to the nearest cent, with half a cent being rounded upward) on the
related Payment Date, and will communicate such rates and amounts to the Issuer,
the Co-Issuer, the Trustee, the Collateral Manager, the Paying Agent, each Hedge
Counterparty and, if any
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Note is in the form of a Regulation S Global Security, to Euroclear and
Clearstream, Luxembourg. The Calculation Agent shall also specify to the Issuer
and the Co-Issuer the quotations upon which LIBOR is based, and in any event the
Calculation Agent shall notify the Issuer and the Co-Issuer before 5:00 p.m.
(New York time) on each LIBOR Determination Date if it has not determined and is
not in the process of determining LIBOR and the Interest Distribution Amounts
for each Class of Notes, together with the reasons therefor. The determination
of the Class A-1A Rate, Class A-1AR Rate, Class A-2 Rate, Class B Rate, Class C
Rate, Class D Rate, Class E Rate, Class F Rate, Class G Rate and Class H Rate
and the related Class A-1A Interest Distribution Amount, Class A-1AR Interest
Distribution Amount, Class A-2 Interest Distribution Amount, Class B Interest
Distribution Amount, Class C Interest Distribution Amount, Class D Interest
Distribution Amount, Class E Interest Distribution Amount, Class F Interest
Distribution Amount, Class G Interest Distribution Amount and Class H Interest
Distribution Amount, respectively, by the Calculation Agent shall, absent
manifest error, be final and binding on all parties.
Section 7.15 Maintenance of Listing.
(a) For so long as any of the Notes remain Outstanding, the Issuer and
Co-Issuer shall use all reasonable efforts to arrange and maintain the listing
of the Notes (other than the Class A-1AR Notes) on the Irish Stock Exchange.
(b) If the Notes (other than the Class A-1AR Notes) are listed on the
Irish Stock Exchange, the Issuer shall:
(i) in each calendar year commencing in 2007, request from the Irish
Stock Exchange a waiver of the Irish Stock Exchange's requirement to
publish annual reports and accounts;
(ii) submit to the Irish Stock Exchange draft copies of any proposed
amendments to the Governing Documents which would affect the rights of the
Holders of the Notes listed on the Irish Stock Exchange;
(iii) pay the annual fee for listing the Notes (other than the Class
A-1AR Notes) on the Irish Stock Exchange, if any; and
(iv) inform the Irish Stock Exchange if the rating assigned to any of
the Notes is reduced or withdrawn.
(c) All notices, documents, reports and other announcements delivered
to such Company Announcements Office shall be in the English language.
(d) Notwithstanding the foregoing, if the Collateral Manager on behalf
of the Co-Issuers determines that the maintenance of the listing of any Class of
Notes on the Irish Stock Exchange (or any alternative listing on another
securities exchange) is unduly onerous or burdensome, the Co-Issuers will have
the right to cause such Class of Notes to be delisted from the Irish Stock
Exchange (or such other securities exchange). If any such delisting occurs with
respect to such Class, the Issuer shall use reasonable efforts to apply for the
alternative listing of such Class on such other securities exchange as the
Collateral Manager on behalf of the Issuer
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may choose, except to the extent that the Collateral Manager determines on
behalf of the Issuer that obtaining or maintaining such alternative listing
would itself be unduly onerous or burdensome. Without limiting the Collateral
Manager's discretion with respect to any determination that maintaining or
obtaining a listing is unduly onerous or burdensome, the Collateral Manager may
take into account various factors, including any requirement, resulting from a
listing, that either Co-Issuer prepare financial statements of any particular
kind or provide additional disclosure of any particular kind, in each case
including any such requirement arising out of disclosure or transparency
directives of the European Union or any other law or governmental rule.
Section 7.16 Purchase of Assets.
The Issuer (or the Collateral Manager on behalf of the Issuer) shall
use commercially reasonable efforts to invest Principal Proceeds, any remaining
Deposit and any Reinvestment Income during the Ramp-Up Period in Collateral Debt
Securities in accordance with the provisions hereof. Subject to the provisions
of this Section 7.17, Principal Proceeds, all or any portion of any remaining
Deposit and any Reinvestment Income thereon may be applied prior to the
Effective Date to purchase Collateral Debt Securities (which shall be, and
hereby are, Granted to the Trustee pursuant to the Granting Clause of this
Indenture) for inclusion in the Assets upon receipt by the Trustee of an Issuer
Order executed by the Issuer (or the Collateral Manager on behalf of the Issuer)
with respect thereto directing the Trustee to pay out the amount specified
therein against delivery of the Collateral Debt Security specified therein and a
certificate of an Authorized Officer of the Issuer (or the Collateral Manager),
dated as of the trade date, and delivered to the Trustee on or prior to the date
of such purchase and Grant, to the effect that the criteria set forth below in
this Section 7.17 will be satisfied (such criteria to be applied as of the trade
date) after giving effect to such purchase and Grant of the Collateral Debt
Securities:
(a) the Eligibility Criteria are met with respect to the Collateral
Debt Securities purchased;
(b) the Reinvestment Criteria are satisfied after giving effect to
such investment; and
(c) the procedures relating to the perfection of the Trustee's
security interest in the Collateral Debt Securities described in this Indenture
have been satisfied.
Section 7.17 Effective Date Actions.
(a) The Issuer (or the Collateral Manager on behalf of the Issuer)
shall cause to be delivered to the Trustee and each Rating Agency on the
Effective Date an amended Schedule of Closing Date Collateral Debt Securities
listing all Collateral Debt Securities Granted to the Trustee pursuant to
Section 7.17 on or before the Effective Date and included in the Assets on the
Effective Date, which schedule shall supersede any prior Schedule of Closing
Date Collateral Debt Securities delivered to the Trustee.
(b) Within ten Business Days after the Effective Date, the Issuer (or
the Collateral Manager on behalf of the Issuer) shall request each Rating Agency
rating a Class of
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Notes to confirm within 20 Business Days after the Effective Date, and to so
notify in writing the Trustee and any Hedge Counterparty, that it has not
reduced or withdrawn the ratings assigned by it on the Closing Date to such
Class of Notes. If, within 20 Business Days after the Effective Date, any rating
assigned as of the Closing Date to any Class of Notes has not been confirmed, or
is reduced or withdrawn, the Collateral Manager may, on behalf of the Issuer,
within ten Business Days, provide to such Rating Agency a proposal (a
"Proposal") with respect to the Collateral Debt Securities. If such Rating
Agency does not accept the Proposal, or the Collateral Manager, on behalf of the
Issuer, elects not to submit a Proposal, a "Rating Confirmation Failure" shall
have occurred. If such Rating Agency accepts the Proposal, a Rating Confirmation
Failure shall not be deemed to have occurred unless and until the Collateral
Manager fails to meet the conditions set forth in the Proposal in accordance
with the time requirements set forth in such Proposal. Within ten Business Days
after the conditions set forth in the Proposal have been satisfied, the Issuer
shall be required to request a Rating Confirmation. If the relevant Rating
Agency does not confirm its ratings, a Rating Confirmation Failure shall have
occurred. If a Rating Confirmation Failure occurs, on the first Payment Date
thereafter, (i) as provided in Section 10.4, all amounts remaining on deposit in
the Unused Proceeds Account, (ii) as provided in Section 11.1(a)(i), all
Interest Proceeds remaining after payment of the amounts referred to in clauses
(1) through (23) of Section 11.1(a)(i) and (iii) as provided in Section
11.1(a)(ii), all Principal Proceeds remaining after payment of the amounts
referred to in clauses (1) through (6) of Section 11.1(a)(ii), in each case will
be used to pay principal of each such Class of Notes, in each case sequentially
in accordance with the Priority of Payments, until each such rating is confirmed
or reinstated or such Class of Notes has been paid in full (and, in the case of
the Class A-1AR Notes, the Class A-1AR Commitments have been reduced to zero).
(c) The Collateral Manager on behalf of the Issuer shall cause to be
delivered to the Trustee, each Hedge Counterparty and each Rating Agency, within
six Business Days after the Effective Date, an Accountants' Report, dated as of
the Effective Date, confirming that the Collateral Quality Tests and the
Coverage Tests have been satisfied and that the Collateral Debt Securities
(together with the Aggregate Class A-1AR Undrawn Amount) have an aggregate par
amount (or, in the case of the Aggregate Class A-1AR Undrawn Amount, an
aggregate dollar amount) equal to at least the Minimum Ramp-Up Amount and
certifying the procedures applied and such accountants' associated findings with
respect to the Eligibility Criteria and specifying the procedures undertaken by
them to review data and computations relating to such information. The
Collateral Manager may on any date, prior to the 270th day following the Closing
Date or the purchase of Collateral Debt Securities (together with the Aggregate
Class A-1AR Undrawn Amount) having an aggregate par amount equal to the Minimum
Ramp-Up Amount, upon written notice to the Trustee, the Class A-1AR Note Agent,
the Issuer and the Co-Issuer and each Rating Agency (with a copy to each Hedge
Counterparty), declare that the Effective Date shall occur on the date specified
in such notice; provided that each of the Collateral Quality Tests and the
Coverage Tests will be satisfied as of such Effective Date, the Rating Agency
Condition has been satisfied and, so long as MBIA is deemed to be the
Controlling Class hereunder, MBIA has consented. The Issuer (or the Collateral
Manager on behalf of the Issuer) shall cause to be delivered to S&P on the
Effective Date a Microsoft Excel file that provides all of the inputs required
to determine whether the S&P CDO Monitor Test has been satisfied.
Section 7.18 REIT Status.
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The Arbor Parent shall not take any action that results in the Issuer
failing to qualify as a Qualified REIT Subsidiary of the Arbor Parent for
federal income tax purposes, unless (A) based on an Opinion of Counsel, the
Issuer will be treated as a Qualified REIT Subsidiary of a REIT other than Arbor
Parent, or (B) based on an Opinion of Counsel, the Issuer will be treated as a
foreign corporation that is not engaged in a trade or business in the United
States for U.S. federal income tax purposes.
ARTICLE 8
SUPPLEMENTAL INDENTURES
Section 8.1 Supplemental Indentures Without Consent of
Securityholders.
Without the consent of the Holders of any Notes or any Preferred
Shareholders, the Issuer, the Co-Issuer, when authorized by Board Resolutions,
and the Trustee, with the written consent of each Hedge Counterparty delivered
to the Issuer, the Co-Issuer and the Trustee, and, at any time and from time to
time subject to the requirement provided below in this Section 8.1, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the Issuer or the
Co-Issuer and the assumption by any such successor Person of the covenants of
the Issuer or the Co-Issuer herein and in the Notes;
(b) to add to the covenants of the Issuer, the Co-Issuer or the
Trustee for the benefit of the Holders of the Notes, Preferred Shareholders,
each Hedge Counterparty or to surrender any right or power herein conferred upon
the Issuer or the Co-Issuer, as applicable;
(c) to convey, transfer, assign, mortgage or pledge any property to or
with the Trustee, or add to the conditions, limitations or restrictions on the
authorized amount, terms and purposes of the issue, authentication and delivery
of the Notes;
(d) to evidence and provide for the acceptance of appointment
hereunder of a successor Trustee and to add to or change any of the provisions
of this Indenture as shall be necessary to facilitate the administration of the
trusts hereunder by more than one Trustee, pursuant to the requirements of
Sections 6.9, 6.10 and 6.12 hereof;
(e) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or to better assure, convey and confirm
unto the Trustee any property subject or required to be subjected to the lien of
this Indenture (including, without limitation, any and all actions necessary or
desirable as a result of changes in law or regulations) or to subject to the
lien of this Indenture any additional property;
(f) to modify the restrictions on and procedures for resales and other
transfers of Notes to reflect any changes in applicable law or regulation (or
the interpretation thereof) or to
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enable the Issuer and the Co-Issuer to rely upon any exemption from registration
under the Securities Act, the Exchange Act or the Investment Company Act or to
remove restrictions on resale and transfer to the extent not required
thereunder;
(g) to accommodate the issuance, if any, of Notes in global or
book-entry form through the facilities of the Depository or otherwise;
(h) otherwise to correct any inconsistency or cure any ambiguity or
mistake;
(i) to take any action commercially reasonably necessary or advisable
to prevent the Issuer from failing to qualify as a Qualified REIT Subsidiary or
to prevent the Issuer, the Holders of the Notes, the Holders of the Preferred
Shares or the Trustee from being subject to withholding or other taxes, fees or
assessments or otherwise subject to U.S. federal, state, local or foreign income
or franchise tax on a net income tax basis; and
(j) to conform this Indenture to the provisions described in the
Offering Memorandum (or any supplement thereto).
The Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations which may be therein contained, but the Trustee shall not be
obligated to enter into any such supplemental indenture which affects the
Trustee's own rights, duties, liabilities or immunities under this Indenture or
otherwise, except to the extent required by law.
If any Class of Notes is Outstanding and rated by a Rating Agency, the
Trustee shall not enter into any such supplemental indenture unless the Rating
Agency Condition has been satisfied, the notice of which may be in electronic
form, and, so long as MBIA is deemed to be the Controlling Class hereunder, MBIA
consents. At the cost of the Issuer, for so long as any Class of Notes shall
remain Outstanding and is rated by a Rating Agency, the Trustee shall provide to
such Rating Agency a copy of any proposed supplemental indenture at least 15
days prior to the execution thereof by the Trustee, and, for so long as such
Notes are Outstanding and so rated, request written confirmation, which may be
in electronic form, that such Rating Agency will not, as a result of such
supplemental indenture, cause the rating of any such Class of Notes to be
reduced or withdrawn, and, as soon as practicable after the execution by the
Trustee, the Issuer and the Co-Issuer of any such supplemental indenture,
provide to such Rating Agency a copy of the executed supplemental indenture.
The Trustee shall not enter into any such supplemental indenture if
(i) as a result of such supplemental indenture, the interests of any Holder of
Securities would be materially and adversely affected thereby, unless the
Majority of each and every Class of Notes or the Preferred Shares so affected
have approved such supplemental indenture or (ii) such action would adversely
affect the tax treatment of the Holders of the Notes as described in the
Offering Memorandum under the heading "Certain U.S. Federal Income Tax
Considerations" to any material extent or otherwise cause any of the statements
described in the Offering Memorandum under the heading "Certain U.S. Federal
Income Tax Considerations" to be inaccurate or incorrect to any material extent.
The Trustee shall be entitled to rely upon (i) the receipt of notice, which may
be in electronic form, that the Rating Agency Condition has been satisfied and
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(ii) receipt of an Officer's Certificate of the Collateral Manager in
determining whether or not the Holders of Securities would be adversely affected
by such change (after giving notice of such change to the Holders of
Securities). Such determination shall be conclusive and binding on all present
and future Holders of Securities. The Trustee shall not be liable for any such
determination made in good faith and in reliance upon such Officer's
Certificate.
Furthermore, the Trustee shall not enter into any such supplemental
indenture unless the Trustee has received an Opinion of Counsel from Cadwalader,
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP or other nationally recognized U.S. tax counsel
experienced in such matters that the proposed supplemental indenture will not
cause the Issuer to (x) fail to be treated as a Qualified REIT Subsidiary or (y)
otherwise be treated as a foreign corporation that is engaged in a trade or
business in the United States for U.S. federal income tax purposes.
Section 8.2 Supplemental Indentures with Consent of Securityholders.
Except as set forth below, the Trustee and the Co-Issuers may enter
into one or more indentures supplemental hereto to add any provisions to, or
change in any manner or eliminate any of the provisions of, this Indenture or
modify in any manner the rights of the Holders of any Class of Notes or the
Preferred Shares under this Indenture only (x) with the written consent of (a)
the Holders of a Majority in Aggregate Outstanding Amount of the Notes of each
Class materially and adversely affected thereby (excluding any Notes owned by
the Collateral Manager or any of its Affiliates, or by any accounts managed by
them) and the Holder of Preferred Shares if materially and adversely affected
thereby, by Act of said Securityholders delivered to the Trustee and the
Co-Issuers, and (b) the consent of each Hedge Counterparty (to the extent
required by the related Hedge Agreement), and (c) the Class A-1AR Note Agent if
it is materially and adversely affected thereby, and (y) subject to satisfaction
of the Rating Agency Condition, notice of which may be in electronic form, and,
so long as MBIA is deemed to be the Controlling Class hereunder, the consent of
MBIA. Unless the Trustee is notified (after giving 15 Business Days' notice of
such change to the Holders of each Class of Notes, the Holder of the Preferred
Shares, each Hedge Counterparty and the Class A-1AR Note Agent) by Holders of a
Majority in Aggregate Outstanding Amount of the Notes of any Class (excluding
any Notes owned by the Collateral Manager or any of its Affiliates, or by any
accounts managed by them) that such Class of Notes will be materially and
adversely affected by the proposed supplemental indenture (and upon receipt of
an Officer's Certificate of the Collateral Manager), the interests of such Class
and the interests of the Preferred Shares will be deemed not to be materially
and adversely affected by such proposed supplemental indenture and the Trustee
will be permitted to enter into such supplemental indenture. Such determinations
shall be conclusive and binding on all present and future Noteholders. The
consent of the Holders of the Preferred Shares shall be binding on all present
and future Holders of the Preferred Shares. The Trustee shall not be liable for
any such determination made in good faith and in reliance upon an Officer's
Certificate of the Collateral Manager.
Without the consent of (w) each Hedge Counterparty (except to the
extent required by the related Hedge Agreement), (x) all of the Holders of each
Outstanding Class of Notes adversely affected, and in each such case subject to
satisfaction of the Rating Agency Condition, notice of which may be in
electronic form, (y) all of the Holders of the Preferred
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Shares adversely affected thereby and (z) MBIA, so long as MBIA is deemed to be
the Controlling Class hereunder, no supplemental indenture may:
(a) change the Stated Maturity of the principal of or the due date of
any installment of interest on any Note or the Class A-1AR Commitment Fee,
reduce the principal amount thereof or the Note Interest Rate thereon or the
Redemption Price with respect to any Note, change the date of any scheduled
distribution on the Preferred Shares, or the Redemption Price with respect
thereto, change the earliest date on which any Note may be redeemed at the
option of the Issuer, change the provisions of this Indenture that apply the
proceeds of any Assets to the payment of principal of or interest on Notes or of
distributions to the Preferred Shares Paying Agent for the payment of
distributions in respect of the Preferred Shares or change any place where, or
the coin or currency in which, any Note or the principal thereof or interest
thereon is payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the applicable Redemption Date);
(b) reduce the percentage of the Aggregate Outstanding Amount of
Holders of Notes of each Class or the Notional Amount of Preferred Shares of the
Holders thereof whose consent is required for the authorization of any such
supplemental indenture or for any waiver of compliance with certain provisions
of this Indenture or certain Defaults hereunder or their consequences provided
for in this Indenture;
(c) impair or adversely affect the Assets except as otherwise
permitted in this Indenture;
(d) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Assets or
terminate such lien on any property at any time subject hereto or deprive the
Holder of any Note, or the Holder of any Preferred Share as an indirect
beneficiary, of the security afforded to such Holder by the lien of this
Indenture;
(e) reduce the percentage of the Aggregate Outstanding Amount of
Holders of Notes of each Class whose consent is required to request the Trustee
to preserve the Assets or rescind the Trustee's election to preserve the Assets
pursuant to Section 5.5 or to sell or liquidate the Assets pursuant to Section
5.4 or 5.5 hereof;
(f) modify any of the provisions of this Section 8.2, except to
increase any percentage of Outstanding Notes whose holders' consent is required
for any such action or to provide that other provisions of this Indenture cannot
be modified or waived without the consent of the Holder of each Outstanding Note
affected thereby;
(g) modify the definition of the term "Outstanding" or the provisions
of Section 11.1 or Section 13.1 hereof; or
(h) modify any of the provisions of this Indenture in such a manner as
to affect the calculation of the amount of any payment of interest or principal
on any Note or the payment of the Class A-1AR Commitment Fee on any Payment Date
or of distributions to the Preferred Shares Paying Agent for the payment of
distributions in respect of the Preferred Shares
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on any Payment Date (or any other date) or to affect the rights of the Holders
of Securities to the benefit of any provisions for the redemption of such
Securities contained herein;
provided, however, that no supplemental indenture may reduce the permitted
minimum denominations of the Notes or modify any provisions regarding limited
recourse or non-petition covenants with respect to the Issuer and the Co-Issuer.
If any Class of Notes is Outstanding and rated by a Rating Agency, the
Trustee shall not enter into any such supplemental indenture unless the Rating
Agency Condition is satisfied with respect thereto, the notice of which may be
in electronic form, and, so long as MBIA is deemed to be the Controlling Class
hereunder, MBIA consents. At the cost of the Issuer, for so long as any Class of
Notes shall remain Outstanding and is rated by a Rating Agency, the Trustee
shall provide to such Rating Agency a copy of any proposed supplemental
indenture at least 15 days prior to the execution thereof by the Trustee, and,
for so long as such Notes are Outstanding and so rated, request written
confirmation, which may be in electronic form, that such Rating Agency will not,
as a result of such supplemental indenture, cause the rating of any such Class
of Notes to be reduced or withdrawn.
The Trustee shall be entitled to rely upon an Opinion of Counsel
provided by and at the expense of the party requesting such supplemental
indenture in determining whether or not the Holders of Securities would be
adversely affected by such change (after giving notice of such change to the
Holders of Securities). Such determination shall be conclusive and binding on
all present and future Holders of Securities. The Trustee shall not be liable
for any such determination made in good faith and in reliance upon an Opinion of
Counsel delivered to the Trustee as described in Section 8.3 hereof.
It shall not be necessary for any Act of Securityholders under this
Section 8.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Promptly after the execution by the Issuer, the Co-Issuer and the
Trustee of any supplemental indenture pursuant to this Section 8.2, the Trustee,
at the expense of the Issuer, shall mail to the Securityholders, the Class A-1AR
Note Agent, each Hedge Counterparty, the Preferred Shares Paying Agent, the
Collateral Manager, and, so long as the Notes are Outstanding and so rated, each
Rating Agency a copy thereof based on an outstanding rating. Any failure of the
Trustee to publish or mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture.
Section 8.3 Execution of Supplemental Indentures.
In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article 8 or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture and that all conditions precedent thereto have been
satisfied. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise. The
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Collateral Manager will be bound to follow any amendment or supplement to this
Indenture of which it has received written notice at least ten Business Days
prior to the execution and delivery of such amendment or supplement; provided,
however, that with respect to any amendment or supplement to this Indenture
which may, in the judgment of the Collateral Manager adversely affect the
Collateral Manager, the Collateral Manager shall not be bound (and the Issuer
agrees that it will not permit any such amendment to become effective) unless
the Collateral Manager gives written consent to the Trustee and the Issuer to
such amendment. The Issuer and the Trustee shall give written notice to the
Collateral Manager of any amendment made to this Indenture pursuant to its
terms. In addition, the Collateral Manager's written consent shall be required
prior to any amendment to this Indenture by which it is adversely affected.
Section 8.4 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article 8,
this Indenture shall be modified in accordance therewith, such supplemental
indenture shall form a part of this Indenture for all purposes and every Holder
of Notes theretofore and thereafter authenticated and delivered hereunder, and
every Holder of Preferred Shares, shall be bound thereby.
Section 8.5 Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article 8 may, and if required by the
Trustee shall, bear a notice in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Issuer and the Co-Issuer
shall so determine, new Notes, so modified as to conform in the opinion of the
Trustee and the Issuer and the Co-Issuer to any such supplemental indenture, may
be prepared and executed by the Issuer and the Co-Issuer and authenticated and
delivered by the Trustee in exchange for Outstanding Notes.
Section 8.6 Certain Consents Required for all Supplemental Indentures.
Notwithstanding anything in this Article 8 to the contrary, so long as
MBIA is deemed to be the Controlling Class hereunder, the Issuer, the Co-Issuer
and the Trustee shall not enter into any supplemental indenture without
obtaining the consent of MBIA (such consent not to be unreasonably withheld or
delayed); provided that, if MBIA does not object to such supplemental indenture
within 14 days after notice is given and all applicable conditions set forth in
this Section 8 are satisfied, such Holders will be deemed to have consented to
such supplemental indenture.
ARTICLE 9
REDEMPTION OF SECURITIES; REDEMPTION PROCEDURES
Section 9.1 Clean-up Call; Tax Redemption and Optional Redemption.
(a) The Notes may be redeemed by the Issuer at the option of and at
the direction of the Collateral Manager (such redemption, a "Clean-up Call"), in
whole but not in
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part, at a price equal to the applicable Redemption Prices on any Payment Date
(the "Clean-up Call Date") on or after the Payment Date on which the Aggregate
Outstanding Amount of the Notes has been reduced to 10% of the Aggregate
Outstanding Amount of the Notes on the Closing Date; provided that any payments
due and payable upon a termination of each Hedge Agreement will be made on the
Clean-up Call Date in accordance with the terms thereof and this Indenture;
provided, further, that the funds available to be used for such Clean-up Call
will be sufficient to pay the Total Redemption Price.
(b) The Notes and the Preferred Shares shall be redeemable, in whole
but not in part, by Act of a Majority of the Preferred Shares delivered to the
Trustee, on the Payment Date (the "Tax Redemption Date") following the
occurrence of a Tax Event if the Tax Materiality Condition is satisfied at a
price equal to the applicable Redemption Prices (such redemption, a "Tax
Redemption"); provided that any payments due and payable upon a termination of
each Hedge Agreement will be made in accordance with the terms thereof and this
Indenture; provided, further, that the funds available to be used for such Tax
Redemption will be sufficient to pay the Total Redemption Price. Upon the
occurrence of a Tax Event, the Issuer and the Co-Issuer, at the direction of the
Collateral Manager shall provide written notice thereof to the Trustee, the
Irish Paying Agent (for so long as any Notes (other than the Class A-1AR Notes)
are listed on the Irish Stock Exchange), each Hedge Counterparty, the Class
A-1AR Note Agent and each Rating Agency.
(c) The Notes and the Preferred Shares shall be redeemable, in whole
but not in part, at a price equal to the applicable Redemption Prices, on any
Payment Date after the end of the Non-call Period, at the direction of the
Issuer (such redemption, an "Optional Redemption") by Act of a Majority of the
Preferred Shares delivered to the Trustee; provided, however, that any payments
due and payable upon a termination of each Hedge Agreement will be made in
accordance with the terms thereof and this Indenture; provided, further, that
the funds available to be used for such Optional Redemption will be sufficient
to pay the Total Redemption Price. Notwithstanding anything herein to the
contrary, the Issuer shall not sell any Asset to the Collateral Manager or any
Affiliate of the Collateral Manager other than ARMS Equity in connection with an
Optional Redemption.
(d) The election by the Collateral Manager to redeem the Notes
pursuant to a Clean-up Call shall be evidenced by an Officer's Certificate from
the Collateral Manager directing the Trustee to make the payment to the Paying
Agent of the applicable Redemption Price of all of the Notes to be redeemed from
funds in the Payment Account in accordance with the Priority of Payments. In
connection with a Tax Redemption, the occurrence of a Tax Event and satisfaction
of the Tax Materiality Condition shall be evidenced by an Issuer Order from the
Issuer or from the Collateral Manager on behalf of the Issuer certifying that
such conditions for a Tax Redemption have occurred. The election by the
Collateral Manager to redeem the Notes pursuant to an Optional Redemption shall
be evidenced by an Officer's Certificate from the Collateral Manager on behalf
of the Issuer certifying that the conditions for an Optional Redemption have
occurred.
(e) A redemption pursuant to Section 9.1(a), 9.1(b) or 9.1(c) shall
not occur unless (i) at least six Business Days before the scheduled Redemption
Date, (A) the Collateral Manager shall have certified to the Trustee that the
Collateral Manager, on behalf of the Issuer,
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has entered into a binding agreement or agreements with (1) one or more
financial institutions whose long-term unsecured debt obligations (other than
such obligations whose rating is based on the credit of a person other than such
institution) have a credit rating from each Rating Agency at least equal to the
highest rating of any Notes then Outstanding or whose short-term unsecured debt
obligations have a credit rating of "P-1" by Moody's (as long as the term of
such agreement is 90 days or less) and "A-1" by S&P or (2) one or more
Affiliates of the Collateral Manager, to sell all or part of the Pledged
Obligations not later than the Business Day immediately preceding the scheduled
Redemption Date or (B) the Trustee shall have received written confirmation that
the method of redemption satisfies the Rating Agency Condition and so, long as
MBIA is deemed to be the Controlling Class hereunder, MBIA has consented (ii)
the related Sale Proceeds (in immediately available funds), together with all
other available funds (including proceeds from the sale of the Assets, Eligible
Investments maturing on or prior to the scheduled Redemption Date, all amounts
in the Collection Accounts and available Cash), shall be an aggregate amount
sufficient to pay all amounts, payments, fees and expenses in accordance with
the Priority of Payments due and owing on such Redemption Date.
Section 9.2 Auction Call Redemption.
(a) During the period from and including the Payment Date occurring in
January 2017 and to but not including the first Payment Date on which the
Clean-up Call may be exercised (the "Auction Call Period"), the Securities shall
be redeemed by the Issuer, in whole but not in part, at their applicable
Redemption Prices if a Successful Auction is completed (such redemption, an
"Auction Call Redemption"); provided that any payments due and payable upon a
termination of each Hedge Agreement will be made on the Auction Call Redemption
Date in accordance with the terms thereof and this Indenture; and provided,
further, that the funds available to be used for such Auction Call Redemption
will be sufficient to pay the Total Redemption Price. An Auction Call Redemption
may occur only on a Payment Date occurring in January or April during the
Auction Call Period (such Payment Date, the "Auction Call Redemption Date").
(b) The Trustee shall sell and transfer the Collateral Debt Securities
to the highest bidder for all of the Collateral Debt Securities (or to each
highest bidder for one or more (but not all) of the Collateral Debt Securities),
at the Auction, as long as:
(i) the Auction has been conducted in accordance with the Auction
Procedures, as evidenced by a certification of the Collateral Manager;
(ii) at least one bidder delivers to the Collateral Manager a bid
(which bid may be based upon a fixed spread above or below a generally
recognized price index) for (x) the purchase of all of the Collateral Debt
Securities or (y) the purchase of each Collateral Debt Security (which bid
may be for one or more (but not all) of the Collateral Debt Securities);
(iii) based on the Collateral Manager's certification to the Trustee
of the amount of the Cash purchase price of each bid, the Trustee, in
consultation with the Collateral Manager, determines that the Highest
Auction Price would result in a Cash purchase price for the Collateral Debt
Securities which, together with the balance of all
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Eligible Investments and Cash in the Collection Accounts, the Payment
Account and the Expense Account, will be at least equal to the Total
Redemption Price; and
(iv) each bidder who offered the Highest Auction Price for all of the
Collateral Debt Securities or for one or more of the Collateral Debt
Securities enters into a written agreement with the Issuer (which the
Issuer shall execute if the conditions set forth in clauses (i) through
(iii) above are satisfied) obligating the highest bidder for all of the
Collateral Debt Securities (or the highest bidder for one or more (but not
all) of the Collateral Debt Securities) to purchase all (either
individually or together with other bidders, as applicable) of the
Collateral Debt Securities with the closing of such purchase (and full
payment in Cash to the Trustee) to occur on or before the 10th Business Day
prior to the scheduled Redemption Date.
(c) If any of the foregoing conditions is not met with respect to any
Auction, or if the highest bidder or the Collateral Manager, as the case may be,
fails to pay the purchase price on or before the sixth Business Day following
the relevant Auction Date, (i) the Auction Call Redemption shall not occur on
the Payment Date following the relevant Auction Date, (ii) the Trustee shall
give notice of the withdrawal pursuant to Section 9.3, (iii) subject to
subclause (iv) below, the Trustee shall decline to consummate such sale and
shall not solicit any further bids or otherwise negotiate any further sale of
Collateral Debt Securities in relation to such Auction and (iv) unless the Notes
and the Preferred Shares are redeemed in full prior to the next succeeding
Auction Date, or the Collateral Manager notifies the Trustee that market
conditions are such that such Auction is not likely to be successful, the
Trustee shall conduct another Auction on the next succeeding Auction Date.
Section 9.3 Notice of Redemption.
(a) In connection with an Optional Redemption, a Clean-up Call or a
Tax Redemption pursuant to Section 9.1 or an Auction Call Redemption pursuant to
Section 9.2, the Trustee on behalf of the Issuer and the Co-Issuer shall (i) set
the applicable Record Date and (ii) at least 45 days prior to the proposed
Redemption Date, notify the Collateral Manager, each Hedge Counterparty, the
Class A-1AR Note Agent, the Rating Agencies and each Preferred Shareholder at
such Preferred Shareholder's address in the register maintained by the Share
Registrar, of such proposed Redemption Date, the applicable Record Date, the
principal amount of Notes to be redeemed on such Redemption Date and the
Redemption Price of such Notes in accordance with Section 9.1 or Section 9.2.
The Redemption Price shall be determined no earlier than 60 days prior to the
proposed Redemption Date.
(b) Any such notice of an Auction Call Redemption, an Optional
Redemption, a Clean-up Call or a Tax Redemption may be withdrawn by the Issuer
and the Co-Issuer at the direction of the Collateral Manager up to the fourth
Business Day prior to the scheduled Redemption Date by written notice to the
Trustee, the Class A-1AR Note Agent, the Irish Paying Agent (for so long as any
Notes (other than the Class A-1AR Notes) are listed on the Irish Stock
Exchange), the Class A-1AR Note Agent, each Hedge Counterparty, to each Holder
of Notes to be redeemed, and the Collateral Manager only if (i) in the case of
an Optional Redemption, a Clean-up Call or a Tax Redemption the Collateral
Manager is unable to deliver the sale agreement or agreements or certifications
referred to in Section 9.1(e), as the case may be or (ii)
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in the case of an Auction Call Redemption, the Auction is unable to be
consummated pursuant to the Auction Procedures.
Section 9.4 Notice of Redemption or Maturity by the Issuer.
Notice of redemption pursuant to Section 9.1, Section 9.2 or the
Maturity of any Notes shall be given by first class mail, postage prepaid,
mailed not less than ten Business Days (or four Business Days where the notice
of an Auction Call Redemption, an Optional Redemption, a Clean-up Call or a Tax
Redemption is withdrawn pursuant to Section 9.3(b)) prior to the applicable
Redemption Date or Maturity, to each Holder of Notes to be redeemed, at its
address in the Notes Register.
All notices of redemption shall state:
(a) the applicable Redemption Date;
(b) the applicable Redemption Price;
(c) that all the Notes are being paid in full and all Class A-1AR
Commitments shall terminate, and that interest on the Notes shall cease to
accrue on the Redemption Date specified in the notice; and
(d) the place or places where such Notes to be redeemed in whole are
to be surrendered for payment of the Redemption Price which shall be the office
or agency of the Paying Agent as provided in Section 7.2.
Notice of redemption shall be given by the Issuer and Co-Issuer, or at
their request, by the Trustee in their names, and at the expense of the Issuer.
Failure to give notice of redemption, or any defect therein, to any Holder of
any Note shall not impair or affect the validity of the redemption of any other
Notes. In addition, so long as any Notes (other than the Class A-1AR Notes) are
listed on the Irish Stock Exchange, notice of redemption or Maturity shall be
published in the Irish Stock Exchange's Daily Official List or as otherwise
required by the rules of the Irish Stock Exchange not less than ten Business
Days prior to the applicable Redemption Date or Maturity.
Section 9.5 Notes Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Notes to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified and all Class A-1AR Commitments shall terminate on such
date, and from and after the Redemption Date (unless the Issuer shall Default in
the payment of the Redemption Price and accrued interest thereon) the Notes
shall cease to bear interest on the Redemption Date. Upon final payment on a
Note to be redeemed, the Holder shall present and surrender such Note at the
place specified in the notice of redemption on or prior to such Redemption Date;
provided, however, that if there is delivered to the Issuer, the Co-Issuer and
the Trustee such security or indemnity as may be required by them to hold each
of them harmless (an unsecured indemnity agreement delivered to the Issuer, the
Co-Issuer and the Trustee by an institutional investor with a net worth of at
least $200,000,000 being deemed to satisfy such security or indemnity
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requirement) and an undertaking thereafter to surrender such Note, then, in the
absence of notice to the Issuer, the Co-Issuer and the Trustee that the
applicable Note has been acquired by a bona fide purchaser, such final payment
shall be made without presentation or surrender. Payments of interest on Notes
of a Class so to be redeemed whose Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Notes, or one or more predecessor
Notes, registered as such at the close of business on the relevant Record Date
according to the terms and provisions of Section 2.7(n).
If any Note called for redemption shall not be paid upon surrender
thereof for redemption, the principal thereof shall, until paid, bear interest
from the Redemption Date at the applicable Note Interest Rate for each
successive Interest Accrual Period the Note remains Outstanding.
Section 9.6 Mandatory Redemption.
On any Payment Date on which any of the Coverage Tests applicable to
any Class of Notes is not satisfied as of the most recent Measurement Date on or
after the Effective Date, the Notes shall be redeemed (a "Mandatory
Redemption"), first from Interest Proceeds, net of amounts set forth in Section
11.1(a)(i)(1) through (5), and then from Principal Proceeds, net of amounts set
forth in clause (1) of Section 11.1(a)(ii), in an amount necessary, and only to
the extent necessary, to cause each of the Coverage Tests to be satisfied (and
the Class A-1AR Commitments will be reduced simultaneously as described in
Section 18.1(e)); provided that, to the extent that the sum of all Class A-1AR
Commitments is reduced to an amount less than the Minimum Class A-1AR
Commitment, a portion of the Interest Proceeds and/or Principal Proceeds that
are available for distribution shall be deposited into the Delayed Funding
Obligations Account until the Aggregate Class A-1AR Undrawn Amount equals the
Minimum Class A-1AR Commitment. Further, each Hedge Agreement will be terminated
in part in accordance with the terms thereof and any payments due and payable on
the Hedge Agreement in connection with the termination of the Hedge Agreement
will be made on such Payment Date in accordance with the terms thereof and this
Indenture, including satisfaction of the Rating Agency Condition and so long as
MBIA is deemed to be the Controlling Class hereunder, the consent of MBIA. Such
Principal Proceeds and Interest Proceeds shall be applied to each of the
Outstanding Classes of Notes in accordance with its relative seniority in
accordance with the Priority of Payments. On or promptly after such Mandatory
Redemption, the Issuer and the Co-Issuer shall certify or cause to be certified
to each of the Rating Agencies and the Trustee whether the Coverage Tests have
been met.
Section 9.7 Special Amortization.
The Notes may be amortized in part by the Issuer (at the election and
direction of the Collateral Manager) if, at any time during the Reinvestment
Period, the Collateral Manager has been unable to identify Collateral Debt
Securities that it determines would be appropriate and would meet the
Eligibility Criteria in sufficient amounts to permit the reinvestment of all or
a portion of the Principal Proceeds then on deposit in the Principal Collection
Account and the amounts on deposit in the Unused Proceeds Account in Substitute
Collateral Debt Securities. The Collateral Manager shall notify the Trustee, the
Issuer, the Co-Issuer, the Class A-1AR Note Agent, and each Hedge Counterparty
(if any) of such election (a "Special Amortization") and the
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amount to be amortized (such amount, the "Special Amortization Amount"). On the
first Payment Date following the date on which such notice is given (so long as
such notice is given by the related Determination Date), the Special
Amortization Amount will be applied to amortize the Notes in accordance with the
Priority of Payments (x) on a pro rata basis (based on the Aggregate Outstanding
Amount of each Class) among all Classes of Notes (without regard to any
Capitalized Interest and assuming for purposes of the Class A-1A/A-1AR Pro Rata
Allocation, the Class A-1AR Notes are fully drawn, but allocating the amounts
between the Class A-1A Notes and the Class A-1AR Notes, as described in Section
11.1(a)(iii)), if each of the S&P Special Amortization Pro Rata Condition and
the Moody's Special Amortization Pro Rata Condition is satisfied with respect to
the related Payment Date and, so long as MBIA is deemed to be the Controlling
Class hereunder, MBIA otherwise consents, the Class A/B Par Value Test has not
failed to be satisfied on any prior Determination Date or (y) sequentially among
all Classes of Notes if (A) either the S&P Special Amortization Pro Rata
Condition or the Moody's Special Amortization Pro Rata Condition is not
satisfied with respect to the related Payment Date or, (B) so long as MBIA is
deemed to be the Controlling Class hereunder and MBIA does not otherwise
consent, the Class A/B Par Value Test has failed to be satisfied on any prior
Determination Date; provided that, in the case of the foregoing clause (B), if
the Class A/B Par Value Test has failed to be satisfied on any prior
Determination Date and, so long as MBIA is deemed to be the Controlling Class
hereunder, MBIA does not otherwise consent, the Issuer shall be entitled to cure
such failure (and effect pro rata amortizations thereafter, subject to
satisfaction of any other relevant conditions) by selling one Collateral Debt
Security in accordance with the relevant provisions of this Indenture to the
extent necessary so that the Class A/B Par Value Test is satisfied after such
sale; provided, further, however, if the Class A/B Par Value Test is failed on
any Determination Date thereafter, no pro rata Special Amortizations may be
effected thereafter. Notwithstanding the foregoing, all amounts representing
recoveries in respect of Defaulted Securities will be distributed sequentially
in any event, in accordance with Section 11.1(a)(ii)(9). In connection with any
Special Amortization, the Class A-1AR Commitments will be reduced simultaneously
as described in Section 18.1(e).
ARTICLE 10
ACCOUNTS, ACCOUNTINGS AND RELEASES
Section 10.1 Collection of Money; Custodial Account.
(a) Except as otherwise expressly provided herein, the Trustee may
demand payment or delivery of, and shall receive and collect, directly and
without intervention or assistance of any fiscal agent or other intermediary,
all Money and other property payable to or receivable by the Trustee pursuant to
this Indenture, including all payments due on the Pledged Obligations in
accordance with the terms and conditions of such Pledged Obligations. The
Trustee shall segregate and hold all such Money and property received by it in
trust for the Secured Parties, and shall apply it as provided in this Indenture.
(b) The Trustee shall credit all Collateral Debt Securities and
Eligible Investments to an account designated as the "Custodial Account."
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Section 10.2 Collection Accounts.
(a) The Trustee shall, prior to the Closing Date, establish a
segregated trust account which shall be designated as the "Collection Account"
(which may be a subaccount of the Custodial Account) and shall consist of two
subaccounts, the "Interest Collection Account" and the "Principal Collection
Account" (collectively, the "Collection Accounts"), which shall be held in trust
in the name of the Trustee for the benefit of the Secured Parties, into which
Collection Accounts, as applicable, the Trustee shall from time to time deposit
(i) all amounts, if any, received by the Issuer pursuant to the Hedge Agreements
(other than amounts received by the Issuer by reason of an event of default or
termination event (each as defined in the related Hedge Agreement) or other
comparable event that are required, pursuant to Section 16.1(g) to be used for
the purchase by the Issuer of a replacement Hedge Agreement) and amounts held in
each Hedge Collateral Account pursuant to Section 16.1(e), (ii) all Sale
Proceeds (unless simultaneously reinvested in Substitute Collateral Debt
Securities, subject to the Reinvestment Criteria) and (iii) all Interest
Proceeds and all Principal Proceeds. In addition, the Issuer may, but under no
circumstances shall, be required to, deposit from time to time such Monies in
the Collection Accounts as it deems, in its sole discretion, to be advisable.
All Monies deposited from time to time in the Collection Accounts pursuant to
this Indenture shall be held by the Trustee as part of the Assets and shall be
applied to the purposes herein provided. The Collection Accounts shall remain at
all times with the Corporate Trust Office or a financial institution having a
long-term debt rating at least equal to "A-" or "A2," as applicable, or a
short-term debt rating at least equal to "A-1," "P-1" or "F1," as applicable.
(b) All distributions of principal or interest received in respect of
the Assets, and any Sale Proceeds from the sale or disposition of a Collateral
Debt Security or other Assets received by the Trustee in Dollars shall be
immediately deposited into the Interest Collection Account or the Principal
Collection Account, as Interest Proceeds or Principal Proceeds, respectively
(unless, in the case of proceeds received from the sale or disposition of any
Assets, such proceeds are simultaneously reinvested pursuant to Section 10.2(d)
in Substitute Collateral Debt Securities, subject to the Reinvestment Criteria,
or in Eligible Investments). In addition, any amounts borrowed under the Class
A-1AR Notes in connection with a Special Amortization will be remitted to the
Principal Collection Account. Subject to Sections 10.2(d), 10.2(e) and 11.2, all
such property, together with any securities in which funds included in such
property are or will be invested or reinvested during the term of this
Indenture, and any income or other gain realized from such investments, shall be
held by the Trustee in the Collection Accounts as part of the Assets subject to
disbursement and withdrawal as provided in this Section 10.2. Subject to Section
10.2(e) by Issuer Order (which may be in the form of standing instructions), the
Issuer (or the Collateral Manager on behalf of the Issuer) shall at all times
direct the Trustee to, and, upon receipt of such Issuer Order, the Trustee
shall, invest all funds received into the Collection Accounts during a Due
Period, and amounts received in prior Due Periods and retained in the Collection
Accounts, as so directed in Eligible Investments having stated maturities no
later than the Business Day immediately preceding the next Payment Date. The
Trustee, within one Business Day after receipt of any Scheduled Distribution or
other proceeds in respect of the Assets which is not Cash, shall so notify the
Issuer and the Collateral Manager and the Issuer (or the Collateral Manager on
behalf of the Issuer) shall, within five Business Days of receipt of such notice
from the Trustee, sell such Scheduled Distribution or other non-Cash proceeds
for Cash in an arm's length transaction to a Person which is not an Affiliate of
the Issuer or the
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Collateral Manager and deposit the proceeds thereof in the applicable Collection
Account for investment pursuant to this Section 10.2; provided, however, that
the Issuer (or the Collateral Manager on behalf of the Issuer) need not sell
such Scheduled Distributions or other non-Cash proceeds if it delivers an
Officer's Certificate to the Trustee certifying that such Scheduled
Distributions or other proceeds constitute Collateral Debt Securities or
Eligible Investments.
(c) If prior to the occurrence of an Event of Default, the Issuer (or
the Collateral Manager on behalf of the Issuer) shall not have given any
investment directions pursuant to Section 10.2(b), the Trustee shall seek
instructions from the Issuer (or the Collateral Manager on behalf of the Issuer)
within three Business Days after transfer of such funds to the applicable
Collection Account. If the Trustee does not thereupon receive written
instructions from the Issuer (or the Collateral Manager on behalf of the Issuer)
within five Business Days after transfer of such funds to the applicable
Collection Account, it shall invest and reinvest the funds held in the
applicable Collection Account in one or more Eligible Investments described in
clause (ii) of the definition of Eligible Investments maturing no later than the
Business Day immediately preceding the next Payment Date. If after the
occurrence of an Event of Default, the Issuer (or the Collateral Manager on
behalf of the Issuer) shall not have given investment directions to the Trustee
pursuant to Section 10.2(b) for three consecutive days, the Trustee shall invest
and reinvest such Monies as fully as practicable in Eligible Investments
described in clause (ii) of the definition of Eligible Investments maturing not
later than the earlier of (i) 30 days after the date of such investment or (ii)
the Business Day immediately preceding the next Payment Date. All interest and
other income from such investments shall be deposited in the applicable
Collection Account, any gain realized from such investments shall be credited to
the applicable Collection Account, and any loss resulting from such investments
shall be charged to the applicable Collection Account. The Trustee shall not in
any way be held liable (except as a result of negligence, willful misconduct or
bad faith) by reason of any insufficiency of such applicable Collection Account
resulting from any loss relating to any such investment, except with respect to
investments in obligations of the Trustee or any Affiliate thereof.
(d) During the Reinvestment Period (and thereafter to the extent
necessary to acquire Collateral Debt Securities pursuant to contracts entered
into during the Reinvestment Period), the Collateral Manager on behalf of the
Issuer may by Issuer Order direct the Trustee to, and upon receipt of such
Issuer Order the Trustee shall, reinvest Principal Proceeds in Collateral Debt
Securities selected by the Collateral Manager as permitted under and in
accordance with the requirements of Article 12 and such Issuer Order.
(e) The Trustee shall transfer to the Payment Account for application
pursuant to Section 11.1(a) and in accordance with the calculations and the
instructions contained in the Notes Valuation Report prepared by the Trustee on
behalf of the Issuer pursuant to Section 10.11(e), on or prior to the Business
Day prior to each Payment Date, any amounts then held in the Collection Accounts
other than (i) Interest Proceeds or Principal Proceeds received after the end of
the Due Period with respect to such Payment Date and (ii) amounts that the
Issuer is entitled to reinvest in accordance with Section 12.2 and which the
Issuer so elects to reinvest in accordance with the terms of this Indenture,
except that, to the extent that Principal Proceeds in the Principal Collection
Account as of such date are in excess of the amounts required to be applied
pursuant to the Priority of Payments up to and including the next Payment Date
as shown in the Notes Valuation Report with respect to such Payment Date, the
Issuer may
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direct the Trustee to retain such excess amounts in the Principal Collection
Account and not to transfer such excess amounts to the Payment Account and the
Trustee shall do so.
Section 10.3 Payment Account.
The Trustee shall, prior to the Closing Date, establish a single,
segregated trust account which shall be designated as the "Payment Account,"
which shall be held in trust for the benefit of the Secured Parties and over
which the Trustee shall have exclusive control and the sole right of withdrawal.
Any and all funds at any time on deposit in, or otherwise to the credit of, the
Payment Account shall be held in trust by the Trustee for the benefit of the
Secured Parties. Except as provided in Sections 11.1 and 11.2, the only
permitted withdrawal from or application of funds on deposit in, or otherwise to
the credit of, the Payment Account shall be (i) to pay the interest on and the
principal of the Notes and make other payments in respect of the Notes in
accordance with their terms and the provisions of this Indenture, (ii) to pay
the Preferred Shares Paying Agent for deposit into the Preferred Share
Distribution Account for distributions to the Preferred Shareholders in
accordance with the terms and the provisions of the Preferred Shares Paying
Agency Agreement, (iii) upon Issuer Order, to pay other amounts specified
therein, and (iv) otherwise to pay amounts payable pursuant to and in accordance
with the terms of this Indenture, each in accordance with the Priority of
Payments. The Trustee agrees to give the Issuer and the Co-Issuer immediate
notice if it becomes aware that the Payment Account or any funds on deposit
therein, or otherwise to the credit of the Payment Account, shall become subject
to any writ, order, judgment, warrant of attachment, execution or similar
process. Neither the Issuer nor the Co-Issuer shall have any legal, equitable or
beneficial interest in the Payment Account other than in accordance with the
Priority of Payments. The Payment Account shall remain at all times with the
Corporate Trust Office or a financial institution having a long-term debt rating
by each Rating Agency at least equal to "A-" or "A2," as applicable, or a
short-term debt rating by each Rating Agency at least equal to "A-1," "P-1" or
"F1," as applicable. Amounts in the Payment Account shall not be invested.
Section 10.4 Unused Proceeds Account.
(a) The Trustee shall prior to the Closing Date establish a single,
segregated trust account which shall be designated as the "Unused Proceeds
Account" which shall be held in trust in the name of the Trustee for the benefit
of the Secured Parties, into which the amount specified in Section 3.2(g) shall
be deposited. All Monies deposited from time to time in the Unused Proceeds
Account pursuant to this Indenture, including, without limitation, any amounts
transferred to the Unused Proceeds Account pursuant to Section 10.6(c), shall be
held by the Trustee as part of the Assets and shall be applied to the purposes
herein provided.
(b) The Trustee agrees to give the Issuer immediate notice if it
becomes aware that the Unused Proceeds Account or any funds on deposit therein,
or otherwise to the credit of the Unused Proceeds Account, shall become subject
to any writ, order, judgment, warrant of attachment, execution or similar
process. The Unused Proceeds Account shall remain at all times with the
Corporate Trust Office or a financial institution having a long-term debt rating
by each Rating Agency at least equal to "A-" or "A2," as applicable, or a
short-term debt rating at least equal to "A-1," "P-1" or "F1," as applicable.
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(c) During the Reinvestment Period, amounts on deposit in the Unused
Proceeds Account may or shall be designated by the Collateral Manager as Special
Amortization Amounts to be included as Principal Proceeds pursuant to Section
9.7. If the Aggregate Principal Balance (including the Aggregate Class A-1AR
Undrawn Amount) of the Collateral Debt Securities exceeds the Minimum Ramp-Up
Amount on the Effective Date, amounts remaining on deposit in the Unused
Proceeds Account at the end of the Ramp-Up Period (following receipt of Rating
Confirmation with respect to the Effective Date) not to exceed an amount equal
to 5% of the Deposit may, at the option of the Collateral Manager, be designated
as Interest Proceeds. Any such election will be made on a one-time basis and
must be made by written notice to the Trustee no later than the 20th Business
Day after the Effective Date, which notice shall set forth any such amounts in
the Unused Proceeds Account so designated (and any interest or earnings
thereon). Upon receipt of such notice, the Trustee shall transfer such amount to
the Interest Collection Account (for subsequent transfer to the Payment
Account), which will be treated as Interest Proceeds and applied in accordance
with the Priority of Payments. Any amounts remaining in the Unused Proceeds
Account on the 20th Business Day after the Effective Date, to the extent not
designated as Interest Proceeds and provided a Rating Confirmation Failure has
not occurred, shall be transferred by the Trustee to the Principal Collection
Account (for subsequent transfer to the Payment Account) and treated as
Principal Proceeds and applied in accordance with the Priority of Payments.
(d) If a Rating Confirmation Failure occurs, upon receipt of notice
from the Collateral Manager pursuant to Section 7.18, the Trustee shall transfer
amounts in the Unused Proceeds Account to the Payment Account for application on
the immediately following Payment Date to pay principal of the Notes, first, to
the payment of principal of the Class A-1 Notes as described in Section
11.1(a)(iii), second, to the payment of principal of the Class A-2 Notes, third,
to the payment of principal of the Class B Notes, fourth, to the payment of
principal of the Class C Notes, fifth, to the payment of principal of the Class
D Notes, sixth, to the payment of principal of the Class E Notes, seventh, to
the payment of principal of the Class F Notes, eighth, to the payment of
principal of the Class G Notes and ninth, to the payment of principal of the
Class H Notes, in each case until the ratings assigned on the Closing Date to
each Class of Notes have been reinstated or such Class has been paid in full.
Any excess amount shall be treated as Principal Proceeds and applied in
accordance with the Priority of Payments. If no Rating Confirmation Failure
occurs, to the extent the Collateral Manager has not identified such amounts as
Interest Proceeds pursuant to Section 10.4(c), the Trustee shall transfer the
amounts on deposit in the Unused Proceeds Account to the Principal Collection
Account, and such amounts will be treated as Principal Proceeds and applied in
accordance with the Priority of Payments.
(e) During the Ramp-Up Period, the Issuer (or the Collateral Manager
on behalf of the Issuer) may by Issuer Order direct the Trustee to, and upon
receipt of such Issuer Order the Trustee shall, apply amounts on deposit in the
Unused Proceeds Account to acquire Collateral Debt Securities selected by the
Collateral Manager as permitted under and in accordance with the requirements of
Section 7.17 and such Issuer Order.
(f) To the extent not applied pursuant to Section 7.17, the Collateral
Manager, on behalf of the Issuer, may direct the Trustee to, and upon such
direction the Trustee shall, invest all funds in the Unused Proceeds Account in
Eligible Investments designated by the
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Collateral Manager. All interest and other income from such investments shall be
deposited in the Unused Proceeds Account, any gain realized from such
investments shall be credited to the Unused Proceeds Account, and any loss
resulting from such investments shall be charged to the Unused Proceeds Account.
The Trustee shall not in any way be held liable (except as a result of
negligence, willful misconduct or bad faith) by reason of any insufficiency of
the Unused Proceeds Account resulting from any loss relating to any such
investment, except with respect to investments in obligations of the Trustee or
any Affiliate thereof. If the Trustee does not receive investment instructions
from an Authorized Officer of the Collateral Manager, the Trustee shall invest
funds received in the Unused Proceeds Account in Eligible Investments of the
type described in clause (ii) of the definition thereto.
Section 10.5 Interest Reserve Account.
The Trustee shall prior to the Closing Date establish a single,
segregated trust account which shall be designated as the "Interest Reserve
Account" which shall be held in trust in the name of the Trustee for the benefit
of the Secured Parties. On the Closing Date, the Trustee shall deposit into the
Interest Reserve Account an amount equal to $500,000 from the net proceeds
received by the Issuer on such date from the issuance of Securities. Funds on
deposit in the Interest Reserve Account will be withdrawn on any Payment Date,
provided the Trustee is given notice thereof by the related Determination Date,
for application as Interest Proceeds, in the sole discretion of the Collateral
Manager. In addition, funds in the Interest Reserve Account may be invested in
Eligible Investments as designated by the Collateral Manager. If the Trustee
does not receive investment instructions from an Authorized Officer of the
Collateral Manager, the Trustee shall invest funds received in the Interest
Reserve Account in Eligible Investments of the type described in clause (ii) of
the definition thereto.
Section 10.6 Delayed Funding Obligations Account.
(a) The Trustee shall prior to the Closing Date establish a single,
segregated trust account (the "Delayed Funding Obligations Account") which shall
be held in trust for the benefit of the Secured Parties, into which Delayed
Funding Obligations Account the Trustee shall deposit funds for any additional
funding commitments of the Issuer under any Delayed Draw Term Loans included in
the Collateral Debt Securities. All amounts in the Delayed Funding Obligations
Account shall be deposited in overnight funds in Eligible Investments and
released to fulfill such commitments. If a Delayed Draw Term Loan is sold or
otherwise disposed before the full commitment thereunder has been drawn, or if
excess funds remain following the termination of the funding obligation giving
rise to the deposit of such funds in the Delayed Funding Obligations Account,
such Eligible Investments on deposit in the Delayed Funding Obligations Account
for the purpose of fulfilling such commitment shall be transferred to the
Principal Collection Account as Principal Proceeds. The Delayed Funding
Obligations Account shall remain at all times with the Corporate Trust Office or
a financial institution having a long-term debt rating from each Rating Agency
at least equal to "A-" or "A2," as applicable, or a short-term debt rating at
least equal to "A-1," "P-1" or "F1," as applicable.
(b) Except as provided in Section 10.6(c) below, funds in the Delayed
Funding Obligations Account shall be available solely to fulfill any additional
funding commitments of the Issuer under any Delayed Draw Term Loans included in
the Collateral Debt
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Securities. Upon the purchase of any Collateral Debt Security that is a Delayed
Draw Term Loan, the Collateral Manager shall direct the Trustee to deposit
Principal Proceeds into the Delayed Funding Obligations Account in an amount
equal to the excess, if any, of the sum of (x) the aggregate amount of the
Issuer's remaining future funding obligations with respect to such Delayed Draw
Term Loan and (y) the aggregate of the Issuer's remaining future funding
obligations in respect of all other Delayed Draw Term Loans then currently owned
by the Issuer, over the Aggregate Class A-1AR Undrawn Amount. The Collateral
Manager shall not permit, at any time, all amounts then on deposit in the
Delayed Funding Obligations Account, together with the Aggregate Class A-1AR
Undrawn Amount, to be less than the aggregate amount of all future funding
obligations outstanding under the terms of all Delayed Draw Term Loans that
constitute Collateral Debt Securities.
(c) The Collateral Manager shall direct the Trustee to withdraw funds
from the Delayed Funding Obligations Account to fund amounts drawn under any
Delayed Draw Term Loan. Pursuant to an Issuer Order delivered prior to the
Mandatory Class A-1AR Draw Date, all or a portion of the funds, as specified in
such Issuer Order, on deposit in the Delayed Funding Obligations Account at any
time up to an amount equal to the lesser of (x) the amount then on deposit in
the Delayed Funding Obligations Account or (y) the amount by which (A) the sum
of the amount then on deposit in the Delayed Funding Obligations Account plus
the Aggregate Class A-1AR Undrawn Amount exceeds (B) the aggregate principal
amount of commitments which may be drawn upon under the Delayed Draw Term Loans
shall be transferred by the Trustee to the Unused Proceeds Account. Pursuant to
an Issuer Order delivered on or after the Mandatory Class A-1AR Draw Date, all
or a portion of the funds, as specified in such Issuer Order, on deposit in the
Delayed Funding Obligations Account at any time in excess of the aggregate
principal amount of commitments which may be drawn upon under the Delayed Draw
Term Loan shall be transferred by the Trustee to the Collection Account as
Principal Proceeds.
Section 10.7 Expense Account.
(a) The Trustee shall prior to the Closing Date establish a single,
segregated trust account which shall be designated as the "Expense Account"
which shall be held in trust in the name of the Trustee for the benefit of the
Secured Parties. The only permitted withdrawal from or application of funds on
deposit in, or otherwise standing to the credit of, the Expense Account shall be
to pay (on any day other than a Payment Date) (i) accrued and unpaid Company
Administrative Expenses (other than accrued and unpaid expenses and indemnities
payable to the Collateral Manager under the Collateral Management Agreement) and
(ii) amounts representing accrued interest in connection with the purchase by
the Issuer during the Ramp Up Period of Collateral Debt Securities. On the
Closing Date, the Trustee shall deposit into the Expense Account an amount equal
to $976,869.50 from the net proceeds received by the Issuer on such date from
the initial issuance of the Securities. On or after the Effective Date, any
amount remaining in the Expense Account may, at the election of the Collateral
Manager be designated as Interest Proceeds. On the date on which substantially
all of the Issuer's assets have been sold or otherwise disposed of, the Issuer
by Issuer Order executed by an Authorized Officer of the Collateral Manager
shall direct the Trustee to, and, upon receipt of such Issuer Order, the Trustee
shall, transfer all amounts on deposit in the Expense Account to the Interest
Collection Account for application pursuant to Section 11.1(a)(i) as Interest
Proceeds. Amounts credited to the
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Expense Account may be applied on or prior to the Determination Date preceding
the first Payment Date to pay amounts due in connection with the offering of the
Notes.
(b) The Trustee agrees to give the Issuer immediate notice if it
becomes aware that the Expense Account or any funds on deposit therein, or
otherwise to the credit of the Expense Account, shall become subject to any
writ, order, judgment, warrant of attachment, execution or similar process. The
Issuer shall not have any legal, equitable or beneficial interest in the Expense
Account. The Expense Account shall remain at all times with the Corporate Trust
Office or a financial institution having a long-term debt rating by each Rating
Agency at least equal to "A-" or "Baa1," as applicable.
(c) The Collateral Manager, on behalf of the Issuer, may direct the
Trustee to, and upon such direction the Trustee shall, invest all funds in the
Expense Account in Eligible Investments designated by the Collateral Manager.
All interest and other income from such investments shall be deposited in the
Expense Account, any gain realized from such investments shall be credited to
the Expense Account, and any loss resulting from such investments shall be
charged to the Expense Account. The Trustee shall not in any way be held liable
(except as a result of negligence, willful misconduct or bad faith) by reason of
any insufficiency of such Expense Account resulting from any loss relating to
any such investment, except with respect to investments in obligations of the
Trustee or any Affiliate thereof. If the Trustee does not receive investment
instructions from an Authorized Officer of the Collateral Manager, the Trustee
shall invest funds received in the Expense Account in Eligible Investments of
the type described in clause (ii) of the definition thereto.
Section 10.8 Defeased Collateral Accounts.
(a) The Trustee shall, on or after the Closing Date, at the direction
of the Issuer (or the Collateral Manager on the Issuer's behalf) establish and
maintain one or more segregated trust accounts which will be designated the
"Defeased Collateral Accounts." On each date on which the Issuer receives from
the related borrower in respect of a Loan included in the Assets substitute or
additional collateral in the form of Cash or Eligible Investments in connection
with a defeasance of such Loan, such substitute or additional collateral shall
be transferred by the Issuer (or by the Collateral Manger on behalf of the
Issuer) to the Trustee and the Trustee thereafter shall deposit such substitute
or additional collateral into a Defeased Collateral Account; provided that this
Section 10.8(a) shall not apply to any such substitute or additional collateral
received by the Issuer in connection with the release of any lien on condominium
units to the extent that such additional or substitute collateral is held by the
Servicer in an Eligible Account pending application of such collateral to pay
principal of and/or interest on the related Collateral Debt Security in
accordance with the terms of the applicable Underlying Instruments. Amounts on
deposit in each Defeased Collateral Account shall be transferred by the Trustee
for deposit into the Interest Collection Account, the Principal Collection
Account and/or the Payment Account, in each case as directed by the Issuer (or
by the Collateral Manager on behalf of the Issuer) pursuant to an Issuer Order.
All Monies deposited from time to time in the Defeased Collateral Account
pursuant to this Indenture shall be held by the Trustee as part of the Assets
and shall be applied to the purposes herein provided.
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(b) The Trustee agrees to give the Issuer immediate notice if it
becomes aware that a Defeased Collateral Account or any funds on deposit
therein, or otherwise to the credit of a Defeased Collateral Account, shall
become subject to any writ, order, judgment, warrant of attachment, execution or
similar process. The Issuer shall not have any legal, equitable or beneficial
interest in any Defeased Collateral Account. Each Defeased Collateral Account
shall remain at all times with the Corporate Trust Office or a financial
institution having a long-term debt rating from each Rating Agency at least
equal to "A-" or "A2," as applicable, or a short-term debt rating at least equal
to "A-1," "P-1" or "F1," as applicable.
(c) The Collateral Manager, on behalf of the Issuer, may direct the
Trustee to, and upon such direction the Trustee shall, invest all funds in the
Defeased Collateral Account in Eligible Investments designated by the Collateral
Manager. All interest and other income from such investments shall be deposited
in the Defeased Collateral Account, any gain realized from such investments
shall be credited to the Defeased Collateral Account, and any loss resulting
from such investments shall be charged to the Defeased Collateral Account. The
Trustee shall not in any way be held liable (except as a result of negligence,
willful misconduct or bad faith) by reason of any insufficiency of the Defeased
Collateral Account resulting from any loss relating to any such investment,
except with respect to investments in obligations of the Trustee or any
Affiliate thereof. If the Trustee does not receive investment instructions from
an Authorized Officer of the Collateral Manager, the Trustee shall invest funds
received in the Defeased Collateral Account in Eligible Investments of the type
described in clause (ii) of the definition thereto.
Section 10.9 Interest Advances.
(a) With respect to each Determination Date for which the sum of
Interest Proceeds and, if applicable, Principal Proceeds, collected during the
related Due Period that are available to pay interest on the Class A-1 Notes,
the Class A-2 Notes and the Class B Notes in accordance with the Priority of
Payments, are insufficient to remit the interest due and payable with respect to
the Class A-1 Notes, the Class A-2 Notes and the Class B Notes on the following
Payment Date to the extent such shortfall results from interest shortfalls on
the Non-Advancing Collateral Debt Securities (the amount of such insufficiency,
an "Interest Shortfall"), the Trustee shall provide the Advancing Agent with
written notice of such Interest Shortfall no later than the close of business on
the Business Day following such Determination Date. The Trustee shall provide
the Advancing Agent with notice, prior to any funding of an Interest Advance by
the Advancing Agent, of any additional interest remittances received by the
Trustee after delivery of such initial notice that reduce such Interest
Shortfall. No later than 5:00 p.m. (New York time) on the Business Day
immediately preceding the related Payment Date (but in any event no earlier than
one Business Day following the Advancing Agent's receipt of notice of such
Interest Shortfall), the Advancing Agent shall advance the difference between
such amounts (each such advance, an "Interest Advance") by deposit of an amount
equal to such Interest Advance in the Payment Account, subject to a
determination of recoverability by the Advancing Agent as described in Section
10.9(b), and subject to a maximum limit in respect of any Payment Date equal to
the lesser of (i) the aggregate of such Interest Shortfalls that would otherwise
occur on the Class A-1 Notes, the Class A-2 Notes and Class B Notes and (ii) the
aggregate of the interest payments not received in respect of Non-Advancing
Collateral Debt Securities. Notwithstanding the foregoing, in no circumstance
will the Advancing Agent be required to make an Interest
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Advance in respect of a Non-Advancing Collateral Debt Security (x) to the extent
that the aggregate outstanding amount of all unreimbursed Interest Advances
would exceed the aggregate outstanding principal amount of the Class A Notes and
the Class B Notes or (y) if the Class A/B Par Value Ratio on the relevant
Measurement Date is less than 100%. Any Interest Advance made by the Advancing
Agent with respect to a Payment Date that is in excess of the actual Interest
Shortfall for such Payment Date shall be refunded to the Advancing Agent by the
Trustee on the same Business Day that such Interest Advance was made (or, if
such Interest Advance is made prior to final determination by the Trustee of
such Interest Shortfall, on the Business Day of such final determination). The
Advancing Agent shall provide the Trustee written notice of a determination by
the Advancing Agent that a proposed Interest Advance would constitute a
Nonrecoverable Interest Advance no later than the close of business on the
Business Day immediately preceding the related Payment Date (or, in the event
that the Advancing Agent did not receive notice of the related Interest
Shortfall on the related Determination Date, no later than the close of business
on the Business Day immediately following the Advancing Agent's receipt of
notice of such Interest Shortfall). If the Advancing Agent shall fail to make
any required Interest Advance at or prior to the time at which distributions are
to be made pursuant to Section 11.1(a), the Backup Advancing Agent shall be
required to make such Interest Advance, subject to a determination of
recoverability by the Backup Advancing Agent as described in Section 10.9(b).
The Backup Advancing Agent shall be entitled to conclusively rely on any
affirmative determination by the Advancing Agent that an Interest Advance would
constitute a Nonrecoverable Interest Advance. Based upon available information
at the time, the Backup Advancing Agent, the Collateral Manager or the Advancing
Agent will provide 15 days prior notice to each Rating Agency if recovery of a
Nonrecoverable Interest Advance would result in an Interest Shortfall on the
next succeeding Payment Date. No later than the close of business on the
Determination Date related to a Payment Date on which the recovery of a
Nonrecoverable Interest Advance would result in an Interest Shortfall, the
Collateral Manager will provide each Rating Agency notice of such recovery.
(b) Notwithstanding anything herein to the contrary, neither the
Advancing Agent nor the Backup Advancing Agent, as applicable, shall be required
to make any Interest Advance unless such Person determines, in its sole
discretion, exercised in good faith that such Interest Advance, or such proposed
Interest Advance, plus interest expected to accrue thereon at the Reimbursement
Rate, will be recoverable from subsequent payments or collections with respect
to all Collateral Debt Securities and has determined in its reasonable judgment
that the recovery would not result in an Interest Shortfall. In determining
whether any proposed Interest Advance will be, or whether any Interest Advance
previously made is, a Nonrecoverable Interest Advance, the Advancing Agent or
the Backup Advancing Agent, as applicable, will take into account:
(i) amounts that may be realized on each Underlying Mortgage Property
in its "as is" or then-current condition and occupancy;
(ii) that the related Senior Tranches of any Collateral Debt Security
may be required to be fully paid and any advances (and interest thereon)
made in respect of such Senior Tranches may be required to be fully
reimbursed, prior to any amounts recovered in respect of the Underlying
Mortgage Properties are allocated or otherwise made available to the
Collateral Debt Securities;
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(iii) the possibility and effects of future adverse change with
respect to the Underlying Mortgage Properties, the potential length of time
before such Interest Advance may be reimbursed and the resulting degree of
uncertainty with respect to such reimbursement; and
(iv) the fact that Interest Advances are intended to provide liquidity
only and not credit support to the Holders of the Class A-1 Notes, the
Class A-2 Notes and the Class B Notes.
For purposes of any such determination of whether an Interest Advance
constitutes or would constitute a Nonrecoverable Interest Advance, an Interest
Advance will be deemed to be nonrecoverable if the Advancing Agent or the Backup
Advancing Agent, as applicable, determines that future Interest Proceeds and
Principal Proceeds may be ultimately insufficient to fully reimburse such
Interest Advance, plus interest thereon at the Reimbursement Rate within a
reasonable period of time. Absent bad faith, the determination by the Advancing
Agent or the Backup Advancing Agent, as applicable, as to the nonrecoverability
of any Interest Advance shall be conclusive and binding on the Holders of the
Notes.
(c) Each of the Advancing Agent and the Backup Advancing Agent will
each be entitled to recover any previously unreimbursed Interest Advance made by
it (including any Nonrecoverable Interest Advance), together with interest
thereon, first, from Interest Proceeds and second (to the extent that there are
insufficient Interest Proceeds for such reimbursement), from Principal Proceeds
to the extent that such reimbursement would not trigger an additional Interest
Shortfall; provided that if at any time an Interest Advance is determined to be
a Nonrecoverable Interest Advance, the Advancing Agent or the Backup Advancing
Agent shall be entitled to recover all outstanding Interest Advances from the
Collection Accounts on any Business Day during any Interest Accrual Period prior
to the related Determination Date (or on a Payment Date prior to any payment of
interest on or principal of the Notes in accordance with the Priority of
Payments). The Advancing Agent shall be permitted (but not obligated) to defer
or otherwise structure the timing of recoveries of Nonrecoverable Interest
Advances in such manner as the Advancing Agent determines is in the best
interest of the Class A Notes and the Class B Notes, as a collective whole,
which may include being reimbursed for Nonrecoverable Interest Advances in
installments.
(d) The Advancing Agent and the Backup Advancing Agent will each be
entitled with respect to any Interest Advance made by it (including
Nonrecoverable Interest Advances) to interest accrued on the amount of such
Interest Advance for so long as it is outstanding at the Reimbursement Rate.
(e) The obligations of the Advancing Agent and the Backup Advancing
Agent to make Interest Advances in respect of the Collateral Debt Securities
will continue through the Stated Maturity, unless the Class A Notes and the
Class B Notes are previously redeemed or repaid in full.
(f) In no event will the Advancing Agent in its capacity as such
hereunder or the Trustee, in its capacity as Backup Advancing Agent hereunder,
be required to make Interest Advances for distributions to the Holders of any
Class of Notes other than the Class A-1 Notes,
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the Class A-2 Notes and the Class B Notes or with respect to any Collateral Debt
Security other than a Non-Advancing Collateral Debt Security, and in no event
will the Advancing Agent or the Backup Advancing Agent be required to advance
any amounts in respect of payments of Principal of any Collateral Debt Security.
(g) In consideration of the performance of its obligations hereunder,
the Advancing Agent shall be entitled to receive, at the times set forth herein
and subject to the Priority of Payments, to the extent funds are available
therefor, the Advancing Agent Fee. In consideration of the Backup Advancing
Agent's obligations hereunder, the Backup Advancing Agent shall be entitled to
receive, at the times set forth herein and subject to the Priority of Payments,
to the extent funds are available therefor, the Backup Advancing Agent Fee. If
the Backup Advancing Agent makes an Interest Advance that the Advancing Agent
failed to make and did not determine to be nonrecoverable, the Backup Advancing
Agent will be entitled to receive the Advancing Agent's Fee for so long as such
Interest Advance is outstanding.
(h) The determination by the Advancing Agent or the Backup Advancing
Agent, as applicable, (i) that it has made a Nonrecoverable Interest Advance or
(ii) that any proposed Interest Advance, if made, would constitute a
Nonrecoverable Interest Advance, shall be evidenced by an Officer's Certificate
delivered promptly to the Trustee (or, if applicable, retained thereby), the
Issuer, S&P, Fitch and ▇▇▇▇▇'▇, setting forth the basis for such determination;
provided that failure to give such notice, or any defect therein, shall not
impair or affect the validity of, or the Advancing Agent or the Backup Advancing
Agent, entitlement to reimbursement with respect to, any Interest Advance.
(i) If a Scheduled Distribution on any Collateral Debt Security is not
paid to the Trustee on the Due Date therefor, the Trustee shall provide the
Advancing Agent with notice of such default on the Business Day immediately
following such default. In addition, upon request, the Trustee shall provide the
Advancing Agent (either electronically or in hard-copy format), with copies of
all reports received from any trustee, trust administrator, master servicer or
similar administrative entity with respect to the Collateral Debt Securities and
the Trustee shall promptly make available to the Advancing Agent any other
information reasonably available to the Trustee by reason of its acting as
Trustee hereunder to permit the Advancing Agent to make a determination of
recoverability with respect to any Interest Advance and to otherwise perform its
advancing functions under this Indenture.
Section 10.10 Reports by Parties.
(a) The Trustee shall supply, in a timely fashion, to the Issuer, the
Co-Issuer, the Preferred Shares Paying Agent and the Collateral Manager any
information regularly maintained by the Trustee that the Issuer, the Co-Issuer,
the Preferred Shares Paying Agent or the Collateral Manager may from time to
time request with respect to the Pledged Obligations or the Accounts and provide
any other information reasonably available to the Trustee by reason of its
acting as Trustee hereunder and required to be provided by Section 10.11 or to
permit the Collateral Manager to perform its obligations under the Collateral
Management Agreement. The Trustee shall forward to the Collateral Manager and
each Hedge Counterparty copies of notices and other writings received by it from
the issuer of any Collateral Debt Security or from any Clearing Agency with
respect to any Collateral Debt Security advising the holders of such
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security of any rights that the holders might have with respect thereto
(including, without limitation, notices of calls and redemptions of securities)
as well as all periodic financial reports received from such issuer and Clearing
Agencies with respect to such issuer. Each of the Issuer and Collateral Manager
shall promptly forward to the Trustee any information in their possession or
reasonably available to them concerning any of the Pledged Obligations that the
Trustee reasonably may request or that reasonably may be necessary to enable the
Trustee to prepare any report or perform any duty or function on its part to be
performed under the terms of this Indenture.
Section 10.11 Reports; Accountings.
(a) The Trustee shall monitor the Assets on an ongoing basis and
provide access to the information maintained by the Trustee to, and upon
reasonable request of the Collateral Manager, shall assist the Collateral
Manager in performing its duties under the Collateral Management Agreement, each
in accordance with this Indenture.
(b) The Trustee shall perform the following functions during the term
of this Indenture:
(i) create and maintain a database with respect to the Collateral Debt
Securities (the "Database");
(ii) permit access to the information contained in the Database by the
Collateral Manager and the Issuer;
(iii) on a monthly basis monitor and update the Database for ratings
changes;
(iv) update the Database for Collateral Debt Securities or Eligible
Investments acquired or sold or otherwise disposed of;
(v) prepare and arrange for the delivery to each Rating Agency, the
Collateral Manager, each Hedge Counterparty, the Initial Purchaser, MBIA,
for so long as it is deemed to be the Controlling Class hereunder, and upon
request therefor, any Holder of a Note shown on the Note Registrar, any
Preferred Shareholder shown on the register maintained by the Share
Registrar, and, for so long as any Notes (other than the Class A-1AR Notes)
are listed on the Irish Stock Exchange, the Irish Paying Agent of the
Monthly Reports;
(vi) prepare and arrange for the delivery to the Collateral Manager,
each Hedge Counterparty, MBIA, for so long as it is deemed to be the
Controlling Class hereunder, and upon request therefor, any Holder of a
Note shown on the Notes Register, any Preferred Shareholder shown on the
register maintained by the Share Registrar, the firm of Independent
certified public accountants appointed pursuant to Section 10.13(a) hereof,
each Rating Agency, the Depository (with instructions to forward it to each
of its participants who are holders of any Notes) and, for so long as any
Notes (other than the Class A-1AR Notes) are listed on the Irish Stock
Exchange, the Irish Paying Agent, of the Notes Valuation Report;
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(vii) assist in preparing and arrange for the delivery to the
Collateral Manager, each Hedge Counterparty and MBIA, for so long as it is
deemed to be the Controlling Class hereunder, of the Redemption Date
Statement;
(viii) arrange for the delivery to each Rating Agency of all
information or reports required under this Indenture, including, but not
limited to, providing S&P, ▇▇▇▇▇'▇ and Fitch with (A) written notice of (1)
any breaches under any of the Transaction Documents and (2) the termination
or change of any parties to the Transaction Documents, in each case, for
which the Trustee has received prior written notice pursuant to the terms
of the Transaction Document and (B) each Monthly Report in Microsoft Excel
spreadsheet format; and
(ix) assist the Independent certified public accountants in the
preparation of those reports required under Section 10.13 hereof by
providing access to the information contained in the Database.
(c) The Trustee, on behalf of the Issuer, shall compile and provide or
make available on its website initially located at ▇▇▇.▇▇▇▇▇▇▇.▇▇▇ to each
Rating Agency, the Collateral Manager, each Hedge Counterparty, MBIA, for so
long as it is deemed to be the Controlling Class hereunder, the Initial
Purchaser, for so long as any Notes (other than the Class A-1AR Notes) are
listed on the Irish Stock Exchange, and upon request therefor, any Holder of a
Note shown on the Notes Register, any Preferred Shareholder shown on the
register maintained by the Share Registrar, not later than the fifth Business
Day after the first day of each month commencing in April 2007 (or solely in the
case of the first Monthly Report, the fifteenth Business Day), determined as of
the last Business Day of the preceding month, a monthly report (the "Monthly
Report"). The Monthly Report shall contain the following information and
instructions with respect to the Pledged Obligations included in the Assets
based in part on information provided by the Collateral Manager:
(i) the Aggregate Principal Balance of all Collateral Debt Securities,
together with a calculation, in reasonable detail, of the sum of (A) the
Aggregate Principal Balance of all Collateral Debt Securities (other than
Defaulted Securities and Written Down Securities) plus (B) the Principal
Balance of each Pledged Obligation which is Written Down Security and (C)
the Principal Balance of each Pledged Obligation which is a Defaulted
Security;
(ii) the balance of all Eligible Investments and Cash in each of the
Interest Collection Account, the Principal Collection Account, the Delayed
Funding Obligations Account and the Expense Account;
(iii) the nature, source and amount of any proceeds in the Collection
Accounts, including Interest Proceeds, Principal Proceeds, Unscheduled
Principal Payments and Sale Proceeds, received since the date of
determination of the last Monthly Report;
(iv) with respect to each Collateral Debt Security and each Eligible
Investment that is part of the Assets, its Principal Balance, annual
interest rate, average life, issuer, ▇▇▇▇▇'▇ Rating, S&P Rating and Fitch
Rating;
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(v) the identity of each Collateral Debt Security that was sold or
disposed of pursuant to Section 12.1 (indicating whether such Collateral
Debt Security is a Defaulted Security, Credit Risk Security or otherwise
(in each case, as reported in writing to the Issuer by the Collateral
Manager) and whether such Collateral Debt Security was sold pursuant to
Section 12.1(a)(i) or (ii)) or Granted to the Trustee since the date of
determination of the most recent Monthly Report;
(vi) the identity of each Collateral Debt Security which became a
Defaulted Security, Credit Risk Security or a Written Down Security since
the date of determination of the last Monthly Report;
(vii) the identity of each Collateral Debt Security that has been
upgraded or downgraded by one or more Rating Agencies;
(viii) the Aggregate Principal Balance of all Fixed Rate Securities;
(ix) the Aggregate Principal Balance of all Floating Rate Securities;
(x) based on information provided by the Collateral Manager, the
Aggregate Principal Balance of all Floating Rate Securities that constitute
Covered Fixed Rate Securities;
(xi) the Aggregate Principal Balance of all Collateral Debt Securities
that are guaranteed as to ultimate or timely payment of principal or
interest;
(xii) with respect to each Specified Type of Collateral Debt Security,
the Aggregate Principal Balance of all Collateral Debt Securities
consisting of such Specified Type of Collateral Debt Securities;
(xiii) based on information provided by the Collateral Manager, the
identity of, and the Aggregate Principal Balance of all Collateral Debt
Securities whose ▇▇▇▇▇'▇ Rating is determined as provided in each clause of
the definition of "▇▇▇▇▇'▇ Rating" and the identity of, and the Aggregate
Principal Balance of all Collateral Debt Securities whose S&P Rating is
determined as provided in each of the clauses of the definition of "S&P
Rating," identifying in reasonable detail the basis for such calculation
with respect to Collateral Debt Securities with an S&P Rating assigned
pursuant to Annex 1, 2 or 3 of Schedule F attached hereto, based on
information provided by the Collateral Manager;
(xiv) with respect to each Collateral Debt Security, the Aggregate
Principal Balance of all Collateral Debt Securities that are part of the
same issuance;
(xv) the Aggregate Principal Balance of all Collateral Debt Securities
that are securities that provide for periodic payments of interest less
frequently than quarterly;
(xvi) based upon the information supplied by the Collateral Manager,
the Aggregate Principal Balance of all Collateral Debt Securities issued by
any single issuer (provided that, for avoidance of doubt, with respect to
any Loan, the issuer of such Loan shall be deemed to be the borrower of
such Loan);
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(xvii) based upon the information supplied by the Collateral Manager,
the Aggregate Collateral Balance of the Collateral Debt Securities
consisting of CMBS Securities issued in any single calendar year;
(xviii) the Aggregate Principal Balance of all Collateral Debt
Securities (other than CMBS Securities, CRE CDO Securities and REIT Debt
Securities) backed by each single Property Type based on information
provided by the Collateral Manager;
(xix) the Aggregate Principal Balance of all Collateral Debt
Securities (other than CMBS Securities, CRE CDO Securities and REIT Debt
Securities) that are backed or otherwise invested in properties located in
any single U.S. state (for each such state) based on information provided
by the Collateral Manager;
(xx) the Class A/B Par Value Ratio, the Class A/B Interest Coverage
Ratio, the Class C/D/E Par Value Ratio, the Class C/D/E Interest Coverage
Ratio, the Class F/G/H Par Value Ratio and the Class F/G/H Interest
Coverage Ratio, and a statement as to whether the Interest Coverage Tests
and the Par Value Tests are satisfied;
(xxi) the Weighted Average ▇▇▇▇▇'▇ Rating Factor and a statement as to
whether the Moody's Maximum Tranched Rating Factor Test is satisfied;
(xxii) the ▇▇▇▇▇▇▇▇▇▇ Score, the amount of Cash that has been received
in respect of Principal Proceeds of the Collateral Debt Securities since
the immediately preceding Measurement Date but has not been reinvested in
additional Collateral Debt Securities (and what the ▇▇▇▇▇▇▇▇▇▇ Score would
have been had such Cash in respect of such Principal Proceeds not existed),
a statement as to whether the ▇▇▇▇▇▇▇▇▇▇ Diversity Test was satisfied or
deemed satisfied on the immediately preceding Measurement Date and a
statement as to whether the ▇▇▇▇▇▇▇▇▇▇ Diversity Test is satisfied;
(xxiii) the Weighted Average Coupon and a statement as to whether the
Minimum Weighted Average Coupon Test is satisfied;
(xxiv) the Weighted Average Spread and a statement as to whether the
Minimum Weighted Average Spread Test is satisfied;
(xxv) the Extended Weighted Average Maturity and a statement as to
whether the Moody's Weighted Average Extended Maturity Test is satisfied;
(xxvi) based upon information supplied by the Collateral Manager, the
Average Life of each Collateral Debt Security, the Weighted Average Life
and a statement as to whether the Weighted Average Life Test is satisfied;
(xxvii) the Class A-1A/A-1AR Loss Differential, the Class A-2 Loss
Differential, the Class B Loss Differential, the Class C Loss Differential,
the Class D Loss Differential, the Class E Loss Differential and the Class
F Loss Differential of the Current Portfolio and a statement as to whether
the S&P CDO Monitor Test is satisfied;
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(xxviii) the S&P Weighted Average Recovery Rate and a statement as to
whether the S&P Recovery Test is satisfied;
(xxix) a calculation in reasonable detail necessary to determine
compliance with each of the other Collateral Quality Tests;
(xxx) the Principal Balance of each Collateral Debt Security that is
on credit watch with negative implications;
(xxxi) the Principal Balance of each Collateral Debt Security that is
on credit watch with positive implications;
(xxxii) the amount of the current portion and the unpaid portion, if
any, of the Senior Collateral Management Fee and the Subordinated
Collateral Management Fee with respect to the related Payment Date;
(xxxiii) based upon information supplied by the Collateral Manager,
the current ratings of any Hedge Counterparty and any Hedge Counterparty
Credit Support Provider;
(xxxiv) the Maximum Class A-1AR Commitment and the Aggregate Class
A-1AR Undrawn Amount;
(xxxv) in the case of each Monthly Report through and including the
first Monthly Report after the Commitment Termination Time, the amount of
all Class A-1AR Prepayments and Class A-1AR Draws since the date of
determination of the last Monthly Report;
(xxxvi) the amount of all Delayed Funding Amounts advanced by the
Issuer since the date of determination of the last Monthly Report;
(xxxvii) the Total Unfunded Delayed Funding Amount; and
(xxxviii) such other information as the Collateral Manager, the
Trustee or any Hedge Counterparty may reasonably request.
(d) The Trustee, on behalf of the Issuer, shall perform the following
functions and report to the Issuer, the Co-Issuer and the Collateral Manager on
each Measurement Date:
(i) calculate the Class A/B Par Value Ratio and the Class A/B Interest
Coverage Ratio and indicate whether the Class A/B Par Value Test and the
Class A/B Interest Coverage Test are met;
(ii) calculate the Class C/D/E Par Value Ratio and the Class C/D/E
Interest Coverage Ratio and indicate whether the Class C/D/E Par Value Test
and the Class C/D/E Interest Coverage Test are met; and
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(iii) calculate the Class F/G/H Par Value Ratio and the Class F/G/H
Interest Coverage Ratio and indicate whether the Class F/G/H Par Value Test
and the Class F/G/H Interest Coverage Test are met.
(e) The Trustee, on behalf of the Issuer, shall perform the following
functions and prepare a report thereof relating to the most recently ended Due
Period determined as of each Determination Date not later than the Payment Date
(the "Notes Valuation Report"), which shall contain the following information,
based in part on information provided by the Collateral Manager:
(i) calculate the percentage (based on the outstanding Aggregate
Principal Balances of the Pledged Collateral Debt Securities) of the
Pledged Collateral Debt Securities which have a maturity date occurring on
or prior to each Payment Date;
(ii) identify the Principal Proceeds and Interest Proceeds;
(iii) determine the Net Outstanding Portfolio Balance as of the close
of business on the last Business Day of each Due Period after giving effect
to the Principal Proceeds as of the last Business Day of such Due Period,
principal collections received from Collateral Debt Securities in the
related Due Period, the reinvestment of such proceeds in Eligible
Investments during such Due Period and the Collateral Debt Securities that
were released during such Due Period;
(iv) determine the Aggregate Outstanding Amount of the Notes of each
Class at the beginning of the Due Period and such Aggregate Outstanding
Amount as a percentage of the original Aggregate Outstanding Amount of the
Notes of such Class, the amount of principal payments to be made on the
Notes of each Class on the next Payment Date, the amount of any Class C
Capitalized Interest on the Class C Notes, the amount of any Class D
Capitalized Interest on the Class D Notes, the amount of any Class E
Capitalized Interest on the Class E Notes, the amount of any Class F
Capitalized Interest on the Class F Notes, the amount of any Class G
Capitalized Interest on the Class G Notes, the amount of any Class H
Capitalized Interest on the Class H Notes, the Aggregate Outstanding Amount
of the Notes of each Class after giving effect to the payment of principal
(and with respect to the Class C Notes, the Class D Notes, the Class E
Notes, the Class F Notes, the Class G Notes and the Class H Notes, Class C
Capitalized Interest, Class D Capitalized Interest, Class E Capitalized
Interest, Class F Capitalized Interest, Class G Capitalized Interest or
Class H Capitalized Interest, as applicable), on the related Payment Date
and such Aggregate Outstanding Amount as a percentage of the original
Aggregate Outstanding Amount of the Notes of such Class;
(v) calculate the Class A-1A Interest Distribution Amount, the Class
A-1AR Interest Distribution Amount, the Class A-2 Interest Distribution
Amount, the Class B Interest Distribution Amount, the Class C Interest
Distribution Amount, the Class D Interest Distribution Amount, the Class E
Interest Distribution Amount, the Class F Interest Distribution Amount, the
Class G Interest Distribution Amount and the Class H Interest Distribution
Amount, for the related Payment Date, the Class A-1AR
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Commitment Fee and the aggregate amount paid for all prior Payment Dates in
respect of such amounts;
(vi) with the assistance of the Collateral Manager, determine the
Company Administrative Expenses on an itemized basis, the Senior Collateral
Management Fee and the Subordinate Collateral Management Fee payable by the
Issuer on the related Payment Date;
(vii) with the assistance of the Collateral Manager as set forth in
Section 10.11(f), determine (A) the balance on deposit in the Interest
Collection Account and the Principal Collection Account at the end of the
related Due Period, (B) the amounts payable from the Collection Accounts to
the Payment Account in order to make payments pursuant to Section 11.1(a)
on the related Payment Date (the amounts payable pursuant to each such
clause to be set forth and identified separately) and (C) the balance of
Principal Proceeds and the balance of Interest Proceeds remaining in the
Collection Accounts immediately after all payments and deposits to be made
on the related Payment Date;
(viii) calculate the Class A-1A/A-1AR Pro Rata Allocation as of the
related Determination Date;
(ix) calculate the amount to be paid to each Hedge Counterparty and
the amount to be paid by each Hedge Counterparty in each case, specifying
(a) the amount to be paid under each Hedge Agreement (other than any
payments due and payable upon a termination of the related Hedge Agreement)
and (b) the amount owing as a result of a termination with respect to each
Hedge Agreement;
(x) calculate the amount to be paid to the Advancing Agent or the
Backup Advancing Agent, as applicable, as reimbursement of Interest
Advances and Reimbursement Interest and calculate the amount of the
Nonrecoverable Interest Advances to be paid to the Advancing Agent or the
Backup Advancing Agent, as applicable;
(xi) calculate the amount on deposit in the Expense Account, the
Unused Proceeds Account, the Delayed Funding Obligations Account, each
Hedge Collateral Account and each Hedge Termination Account;
(xii) the nature, source and amount of any proceeds in the Collection
Accounts, including Interest Proceeds, Principal Proceeds, Unscheduled
Principal Payments and Sale Proceeds, received since the date of
determination of the last Monthly Report;
(xiii) with respect to each Collateral Debt Security and each Eligible
Investment that is part of the Assets, its Principal Balance, annual
interest rate, average life, issuer, ▇▇▇▇▇'▇ Rating, S&P Rating and Fitch
Rating;
(xiv) the identity of each Collateral Debt Security that was sold or
disposed of pursuant to Section 12.1 (indicating whether such Collateral
Debt Security is a Defaulted Security, Credit Risk Security or otherwise
(in each case, as reported in writing to the
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Issuer by the Collateral Manager) and whether such Collateral Debt Security
was sold pursuant to Section 12.1(a)(i) or (ii)) or Granted to the Trustee
since the date of determination of the most recent Monthly Report;
(xv) subject to the availability of such information to the Collateral
Manager and the delivery of such information by the Collateral Manager to
the Trustee, with respect to each Collateral Debt Security on a semi-annual
basis, the net cash flow on each real property underlying or related to
such Collateral Debt Security; and
(xvi) the identity of each Collateral Debt Security which became a
Defaulted Security, Credit Risk Security or a Written Down Security since
the date of determination of the last Monthly Report.
(f) Upon receipt of each Monthly Report, each Notes Valuation Report
and each Redemption Date Statement, the Collateral Manager shall compare the
information contained in its records with respect to the Pledged Obligations and
shall, within five Business Days after receipt of each such Monthly Report, such
Notes Valuation Report or such Redemption Date Statement, notify the Issuer and
the Trustee whether such information contained in the Monthly Report, the Notes
Valuation Report or the Redemption Date Statement, as the case may be, conforms
to the information maintained by the Collateral Manager with respect to the
Pledged Obligations, or detail any discrepancies. If any discrepancy exists, the
Trustee, the Issuer and the Collateral Manager shall attempt to resolve the
discrepancy. If such discrepancy cannot be promptly resolved, the Trustee shall
cause the firm of Independent certified public accountants appointed by the
Issuer pursuant to Section 10.13 hereof to review such Monthly Report, Notes
Valuation Report or Redemption Date Statement, as the case may be, and the
Collateral Manager's records and the Trustee's records to determine the cause of
such discrepancy. If such review reveals an error in the Monthly Report, Notes
Valuation Report or Redemption Date Statement, as the case may be, or the
Trustee's or the Collateral Manager's records, the Monthly Report, Notes
Valuation Report or Redemption Date Statement, as the case may be, or the
Trustee's or the Collateral Manager's records, shall be revised accordingly and,
as so revised, shall be utilized in making all calculations pursuant to this
Indenture. Each Rating Agency (in each case only so long as any Class of Notes
is rated), the Initial Purchaser, MBIA, for so long as it is deemed to be the
Controlling Class hereunder, and the Collateral Manager shall be notified in
writing of any such revisions by the Trustee, on behalf of the Issuer.
(g) The Trustee shall prepare the Notes Valuation Report and shall
deliver or make available on its website initially located at ▇▇▇.▇▇▇▇▇▇▇.▇▇▇
such Notes Valuation Report to the Collateral Manager, each Hedge Counterparty,
MBIA, for so long as it is deemed to be the Controlling Class hereunder, and
upon request therefor, any Holder of a Note shown on the Notes Register, any
Holder of a Preferred Share shown on the register maintained by the Share
Registrar, the firm of Independent certified public accountants appointed
pursuant to Section 10.13(a) hereof, each Rating Agency, the Depository (with
instructions to forward it to each of its participants who are holders of any
Notes) and, for so long as any Notes (other than the Class A-1AR Notes) are
listed on the Irish Stock Exchange, the Irish Paying Agent not later than the
related Payment Date. The Notes Valuation Report shall have attached to it (with
the exception of the first Notes Valuation Report) the most recent Monthly
Report. All information made available on the Trustee's website will be
restricted and the Trustee will only provide
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access to such reports to those parties entitled thereto pursuant to this
Indenture. In connection with providing access to its website, the Trustee may
require registration and the acceptance of a disclaimer. Questions regarding the
Trustee's website can be directed to the Trustee's customer service desk at
(▇▇▇) ▇▇▇-▇▇▇▇.
The Notes Valuation Report shall also contain the following statements:
"Instruction to Participant: Please send
this to the beneficial owners of the Notes"
REMINDER TO OWNERS OF EACH CLASS OF NOTES:
Each owner or beneficial owner of Notes must be either a U.S. Person
who is a qualified institutional buyer as defined in Rule 144A under the
Securities Act of 1933 and a Qualified Purchaser as defined by the Investment
Company Act of 1940 or not a U.S. Person, and if a U.S. Person, can represent as
follows:
(i) it is not a broker-dealer which owns and invests on a
discretionary basis less than $25 million in securities of unaffiliated
issuers;
(ii) it is not a participant-directed employee plan such as a 401(k)
plan;
(iii) it is acting for its own account or for the account of another
who is a qualified institutional buyer and a qualified purchaser that is
not included in (i) or (ii) above;
(iv) it is not formed for the purpose of investing in the Notes;
(v) it, and each account for which it holds the Notes, shall hold at
least the minimum denomination therefor; and
(vi) it will provide notice of these transfer restrictions to any
transferee from it.
(h) Each Notes Valuation Report (after approval by the Collateral
Manager after giving effect to any revisions thereto in accordance with Section
10.11(f)) shall constitute instructions from the Collateral Manager, on behalf
of the Issuer, to the Trustee to transfer funds from the Collection Accounts to
the Payment Account pursuant to Section 10.2(d) and to withdraw on the related
Payment Date from the Payment Account and pay or transfer the amounts set forth
in the Notes Valuation Report, as applicable, in the manner specified, and in
accordance with the priorities established, in Section 11.1 hereof.
(i) Not more than five Business Days after receiving an Issuer Request
requesting information regarding a redemption of the Notes of a Class as of a
proposed Redemption Date set forth in such Issuer Request, the Trustee shall
compute the following information and provide such information in a statement
(the "Redemption Date Statement") delivered to the Collateral Manager (which
shall review such statement in the manner provided for in Section 10.11(f)), the
Preferred Shares Paying Agent and each Hedge Counterparty:
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(i) the Aggregate Outstanding Amount of the Notes of the Class or
Classes to be redeemed as of such Redemption Date;
(ii) the amount of accrued interest due on such Notes as of the last
day of the Interest Accrual Period immediately preceding such Redemption
Date;
(iii) the Redemption Price;
(iv) the sum of all amounts due and unpaid under Section 11.1(a)
(other than amounts payable on the Notes being redeemed or to the
Noteholders thereof);
(v) the amount due and payable to each Hedge Counterparty pursuant to
the applicable Hedge Agreement; and
(vi) the amount in the Accounts (other than the Preferred Shares
Distribution Account) available for application to the redemption of such
Notes.
(j) In the event of a sale by the Issuer of any Collateral Debt
Security that is subject to an Asset Specific Hedge, the Issuer (at the
direction Collateral Manager) shall provide written notice to each Hedge
Counterparty under such Asset Specific Hedge at least five Business Days prior
to such sale.
Section 10.12 Release of Pledged Collateral Debt Securities; Release
of Assets.
(a) If no Event of Default has occurred and is continuing and subject
to Article 12 hereof, the Issuer (or the Collateral Manager on behalf of the
Issuer) may, by Issuer Order delivered to the Trustee at least two Business Days
prior to the settlement date for any sale of a Pledged Collateral Debt Security
certifying that (i) it has sold such Pledged Collateral Debt Security pursuant
to and in compliance with Article 12 or (ii) in the case of a redemption
pursuant to Section 9.1 or Section 9.2 the proceeds from any such sale of
Pledged Collateral Debt Securities are sufficient to redeem the Notes pursuant
to Section 9.1 or Section 9.2, direct the Trustee to release such Pledged
Collateral Debt Security from the lien of this Indenture and, upon receipt of
such Issuer Order, the Trustee shall deliver any such Pledged Collateral Debt
Security, if in physical form, duly endorsed to the broker or purchaser
designated in such Issuer Order or to the Issuer if so requested in the Issuer
Order, or, if such Pledged Collateral Debt Security is represented by a Security
Entitlement, cause an appropriate transfer thereof to be made, in each case
against receipt of the sales price therefor as set forth in such Issuer Order;
provided, however, that the Trustee may deliver any such Pledged Collateral Debt
Security in physical form for examination (prior to receipt of the sales
proceeds) in accordance with street delivery custom. The Trustee shall (i)
deliver any agreements and other documents in its possession relating to such
Pledged Collateral Debt Security and (ii) if applicable, duly assign each such
agreement and other document, in each case, to the broker or purchaser
designated in such Issuer Order or to the Issuer if so requested in the Issuer
Order.
(b) The Issuer (or the Collateral Manager on behalf of the Issuer)
may, by Issuer Order, delivered to the Trustee at least three Business Days
prior to the date set for redemption or payment in full of a Pledged Collateral
Debt Security, certifying that such Pledged Collateral Debt Security is being
redeemed or paid in full, direct the Trustee, or at the Trustee's
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instructions, the Custodial Securities Intermediary, to deliver such Pledged
Collateral Debt Security, if in physical form, duly endorsed, or, if such
Pledged Collateral Debt Security is a Clearing Corporation Security, to cause it
to be presented, to the appropriate paying agent therefor on or before the date
set for redemption or payment, in each case against receipt of the applicable
redemption price or payment in full thereof.
(c) If no Event of Default has occurred and is continuing and subject
to Article 12, the Issuer (or the Collateral Manager on behalf of the Issuer)
may, by Issuer Order delivered to the Trustee at least two Business Days prior
to the date set for an exchange, tender or sale, certifying that a Collateral
Debt Security is subject to an Offer and setting forth in reasonable detail the
procedure for response to such Offer, direct the Trustee or at the Trustee's
instructions, the Custodial Securities Intermediary, to deliver such security,
if in physical form, duly endorsed, or, if such security is a Clearing
Corporation Security, to cause it to be delivered, in accordance with such
Issuer Order, in each case against receipt of payment therefor.
(d) The Trustee shall deposit any proceeds received by it from the
disposition of a Pledged Collateral Debt Security in the Principal Collection
Account unless simultaneously applied to the purchase of Substitute Collateral
Debt Securities, subject to the Reinvestment Criteria, or Eligible Investments
under and in accordance with the requirements of Article 12 and this Article 10.
Neither the Trustee nor the Custodial Securities Intermediary shall be
responsible for any loss resulting from delivery or transfer of any security
prior to receipt of payment in accordance herewith.
(e) The Trustee shall, upon receipt of an Issuer Order at such time as
there are no Notes Outstanding and all obligations of the Issuer hereunder have
been satisfied, release the Assets from the lien of this Indenture.
Section 10.13 Reports by Independent Accountants.
(a) On or about the Closing Date, the Issuer shall appoint a firm of
Independent certified public accountants of recognized national reputation for
purposes of preparing and delivering the reports or certificates of such
accountants required by this Indenture. The Collateral Manager, on behalf of the
Issuer, shall have the right to remove such firm or any successor firm. Upon any
resignation by or removal of such firm, the Collateral Manager, on behalf of the
Issuer, shall promptly appoint, by Issuer Order delivered to the Trustee, each
Hedge Counterparty and each Rating Agency, a successor thereto that shall also
be a firm of Independent certified public accountants of recognized national
reputation. If the Collateral Manager, on behalf of the Issuer, shall fail to
appoint a successor to a firm of Independent certified public accountants which
has resigned or been removed, within 30 days after such resignation or removal,
the Issuer shall promptly notify the Trustee of such failure in writing. If the
Collateral Manager, on behalf of the Issuer, shall not have appointed a
successor within ten days thereafter, the Trustee shall promptly appoint a
successor firm of Independent certified public accountants of recognized
national reputation. The fees of such Independent certified public accountants
and its successor shall be payable by the Issuer or by the Trustee as provided
in the Priority of Payments.
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(b) Within 60 days after December 31 of each year (commencing with
December 31, 2007), the Issuer shall cause to be delivered to the Trustee, the
Collateral Manager, each Hedge Counterparty, MBIA, for so long as it is deemed
to be the Controlling Class hereunder, and each Rating Agency an Accountants'
Report specifying the procedures applied and the associated findings with
respect to the Monthly Reports, the Notes Valuation Reports and any Redemption
Date Statements prepared in the year ending on such date. At least 60 days prior
to the Payment Date in April 2007 (and, if at any time a successor firm of
Independent certified public accountants is appointed, to the Payment Date
following the date of such appointment), the Issuer shall deliver to the Trustee
an Accountant's Report specifying in advance the procedures that such firm will
apply in making the aforementioned findings throughout the term of its service
as accountants to the Issuer. The Trustee shall promptly forward a copy of such
Accountant's Report to the Collateral Manager and each Holder of Notes of the
Controlling Class, at the address shown on the Note Register. The Issuer shall
not approve the institution of such procedures if a Majority of the Aggregate
Outstanding Amount of Notes of the Controlling Class, by written notice to the
Issuer and the Trustee within 30 days after the date of the related notice to
the Trustee, object thereto.
(c) If any Hedge Counterparty is required to post collateral pursuant
to the related Hedge Agreement during any Due Period, then on or prior to the
Payment Date following such Due Period and on or prior to each anniversary of
such Payment Date the Issuer shall cause a firm of Independent certified public
accountants to review and verify that the value of collateral posted is in
accordance with the applicable provisions of the related Hedge Agreement.
Section 10.14 Reports to Rating Agencies.
(a) In addition to the information and reports specifically required
to be provided to each Rating Agency pursuant to the terms of this Indenture,
the Trustee shall provide each Rating Agency and each Hedge Counterparty with
all information or reports delivered by the Trustee hereunder, and such
additional information as each Rating Agency may from time to time reasonably
request and the Trustee determines in its sole discretion may be obtained and
provided without unreasonable burden or expense. The Issuer shall promptly
notify the Trustee and the Preferred Shares Paying Agent if a Rating Agency's
rating of any Class of Notes has been, or it is known by the Issuer that such
rating will be, reduced, or qualified or withdrawn.
(b) The Issuer (or the Collateral Manager on behalf of the Issuer)
shall provide the Rating Agencies with all information and reports delivered to
the Trustee hereunder, and shall provide (x) to Fitch (i) the Operating
Statement Analysis Report for each applicable Collateral Debt Security and (ii)
on a monthly basis, the file, shown in Exhibit O attached hereto, in Microsoft
Excel format and (y) to S&P, to the best of the Collateral Manager's knowledge
based on documentation available to the Collateral Manager, notification of any
change in (i) the holder of each Unfunded Other Loan, (ii) the entity holding
legal title to the underlying loan related to any Collateral Debt Security in
the form of a participation, and (iii) the servicing of any underlying asset and
whether such underlying asset is serviced pursuant to a commercial mortgage
servicing arrangement which includes the standard servicing provisions found in
CMBS Securities transactions.
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(c) All additional reports to be sent to the Rating Agencies pursuant
to clause (a) above shall be reviewed prior to such transmission by the
Collateral Manager.
The information referenced in Section 10.14(b) should be sent to Fitch
by e-mail to ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and
▇▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ or hardcopy to Fitch, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇, Attention:
Commercial Real Estate Loan CDOs, Performance Analytics, or such other address
that Fitch shall designate in the future.
Section 10.15 Certain Procedures.
(a) For so long as the Notes may be transferred only in accordance
with Rule 144A or another exemption from registration under the Securities Act,
the Issuer (or the Collateral Manager on behalf of the Issuer) will ensure that
any Bloomberg screen containing information about the Rule 144A Global
Securities includes the following (or similar) language:
(i) the "Note Box" on the bottom of the "Security Display" page
describing the Rule 144A Global Securities will state: "Iss'd Under
144A/3c7";
(ii) the "Security Display" page will have the flashing red indicator
"See Other Available Information"; and
(iii) the indicator will link to the "Additional Security Information"
page, which will state that the Notes "are being offered in reliance on the
exemption from registration under Rule 144A of the Securities Act to
persons who are both (i) qualified institutional buyers (as defined in Rule
144A under the Securities Act) and (ii) qualified purchasers (as defined
under Section 3(c)(7) under the Investment Company Act of 1940).
(b) For so long as the Rule 144A Global Securities are registered in
the name of DTC or its nominee, the Issuer (or the Collateral Manager on behalf
of the Issuer) will instruct DTC to take these or similar steps with respect to
the Rule 144A Global Securities:
(i) the DTC 20-character security descriptor and 48-character
additional descriptor will indicate with marker "3c7" that sales are
limited to (i) QIBs and (ii) Qualified Purchasers;
(ii) where the DTC deliver order ticket sent to purchasers by DTC
after settlement is physical, it will have the 20-character security
descriptor printed on it. Where the DTC deliver order ticket is electronic,
it will have a "3c7" indicator and a related user manual for participants,
which will contain a description of the relevant restriction; and
(iii) DTC will send an "Important Notice" outlining the 3(c)(7)
restrictions applicable to the Rule 144A Global Securities to all DTC
participants in connection with the initial offering of Notes by the
issuers.
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ARTICLE 11
APPLICATION OF MONIES
Section 11.1 Disbursements of Monies from Payment Account.
(a) Notwithstanding any other provision in this Indenture, but subject
to the other subsections of this Section 11.1 and Section 13.1 hereof, on each
Payment Date or Redemption Date, the Trustee shall disburse amounts transferred
to the Payment Account from the Interest Collection Account and the Principal
Collection Account pursuant to Section 10.2 hereof in accordance with the
following priorities (the "Priority of Payments"):
(i) Interest Proceeds. On each Payment Date or Redemption Date,
(except as otherwise provided in Section 11.1(d)) Interest Proceeds with
respect to the related Due Period shall be distributed in the following
order of priority:
(1) to the payment of taxes and filing fees (including any
registered office and government fees) owed by the Issuer, if any;
(2) (a) first, to the extent not previously reimbursed, to the
Advancing Agent or the Backup Advancing Agent, the aggregate amount of
any Nonrecoverable Interest Advances due and payable to such party,
(b) second, to the extent not previously reimbursed, to the Collateral
Manager, the aggregate amount of any Nonrecoverable Cure Advance due
and payable to the Collateral Manager, (c) third, to the Advancing
Agent, the Advancing Agent Fee and any previously due but unpaid
Advancing Agent Fee (provided that the Advancing Agent has not failed
to make any Interest Advance required to be made in respect of such
Payment Date pursuant to the terms of this Indenture), (d) fourth, to
the Advancing Agent and the Backup Advancing Agent, (i) to the extent
due and payable to such party, Reimbursement Interest and (ii)
reimbursement of any outstanding Interest Advances not (in the case of
this clause (ii)) to exceed the amount that would result in an
Interest Shortfall with respect to such Payment Date and (e) fifth, to
the extent due and payable to the Collateral Manager, reimbursement of
any outstanding Cure Advance (but only to the extent that such payment
would not result in an Interest Shortfall with respect to such Payment
Date);
(3) (a) first, to the payment to the Backup Advancing Agent, the
Backup Advancing Agent Fee (or if the Advancing Agent has failed to
make any Interest Advance required to be made by the Advancing Agent
in respect of such Payment Date pursuant to the terms of this
Indenture, the Advancing Agent Fee otherwise payable to the Advancing
Agent on such Payment Date) and any previously due but unpaid Backup
Advancing Agent Fees, (b) second, to the payment to the Trustee of the
accrued and unpaid fees in respect of its services equal to the
greater of (i) 0.0145% per annum of the Aggregate Collateral Balance
and (ii) $25,000 per annum, (c) third, to the payment of other accrued
and unpaid Company Administrative Expenses of the Trustee, the Paying
Agent, the
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Preferred Shares Paying Agent and the Calculation Agent and (d)
fourth, to the payment of any other accrued and unpaid Company
Administrative Expenses, the aggregate of all such amounts in clauses
(c) and (d) above (including such amounts paid since the previous
Payment Date from the Expense Account) not to exceed 0.065% per annum
of the Aggregate Collateral Balance;
(4) to the payment of the Senior Collateral Management Fee and
any previously due but unpaid Senior Collateral Management Fees;
(5) pro rata on the basis of amounts payable under each Hedge
Agreement (if any), to the payment of any amounts (including, without
limitation, any Hedge Payment Amounts) scheduled to be paid to each
Hedge Counterparty, if any, pursuant to any Hedge Agreement, along
with any payments (however described) due and payable by the Issuer
under any Hedge Agreement in connection with a termination (in whole
or in part) of any Hedge Agreement (including any interest that may
accrue thereon), other than by reason of an Event of Default (as
defined in the related Hedge Agreement) or Termination Event (other
than Illegality or Tax Event) (each as defined in the related Hedge
Agreement) in each case, with respect to which the Hedge Counterparty
is the Defaulting Party or the sole Affected Party (as defined in the
related Hedge Agreement);
(6) to the pro rata payment of (a) the Class A-1A Interest
Distribution Amount, plus, any Class A-1A Defaulted Interest Amount
and the Class A-1AR Interest Distribution Amount, plus, any Class
A-1AR Defaulted Interest Amount and (b) the Class A-1AR Commitment
Fee;
(7) to the payment of the Class A-2 Interest Distribution Amount,
plus, any Class A-2 Defaulted Interest Amount;
(8) to the payment of the Class B Interest Distribution Amount,
plus, any Class B Defaulted Interest Amount;
(9) as long as any of the Class A Notes or the Class B Notes are
Outstanding, to the payment of the following amounts:
(a) in the event that the Class A-1 Notes become due
and payable (x) as a result of an acceleration following an
Event of Default, (y) pursuant to an Auction Call
Redemption, an Optional Redemption, a Clean-up Call or a Tax
Redemption or (z) upon the Stated Maturity of the Class A-1
Notes, to the payment in full of principal of the Class A-1A
Notes and the Class A-1AR Notes, pro rata, based on the
Class A-1A/A-1AR Pro Rata Allocation;
(b) in the event that the Class A-2 Notes become due
and payable (x) as a result of an acceleration following an
Event of Default, (y) pursuant to an Auction Call
Redemption, an Optional Redemption, a Clean-up Call or a Tax
Redemption or (z) upon the
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Stated Maturity of the Class A-2 Notes, to the payment in
full of principal of, first, the Class A-1A Notes and the
Class A-1AR Notes, pro rata, based on the Class A-1A/A-1AR
Pro Rata Allocation, and second, the Class A-2 Notes;
(c) in the event that the Class B Notes become due and
payable (x) as a result of an acceleration following an
Event of Default, (y) pursuant to an Auction Call
Redemption, an Optional Redemption, a Clean-up Call or a Tax
Redemption or (z) upon the Stated Maturity of the Class B
Notes, to the payment in full of principal of, first, the
Class A-1A Notes and the Class A-1AR Notes, pro rata, based
on the Class A-1A/A-1AR Pro Rata Allocation, second, the
Class A-2 Notes and third, the Class B Notes; or
(d) in the event of a Mandatory Redemption of the Class
A Notes and the Class B Notes, first, to the payment of
principal of the Class A-1A Notes and the Class A-1AR Notes,
pro rata, based on the Class A-1A/A-1AR Pro Rata Allocation
and as described in Section 11.1(a)(iii), second, to the
payment of principal of the Class A-2 Notes and third, to
the payment of principal of the Class B Notes, to the extent
necessary to cause each of the Class A/B Coverage Tests to
be satisfied (after giving effect to the payment of all
amounts previously paid on such Payment Date pursuant to
this Section 11.1(a)(i);
(10) to the payment of the Class C Interest Distribution Amount,
plus, any Class C Defaulted Interest Amount;
(11) to the payment of the Class C Capitalized Interest (if any);
(12) to the payment of the Class D Interest Distribution Amount,
plus, any Class D Defaulted Interest Amount;
(13) to the payment of the Class D Capitalized Interest (if any);
(14) to the payment of the Class E Interest Distribution Amount,
plus, any Class E Defaulted Interest Amount;
(15) to the payment of the Class E Capitalized Interest (if any);
(16) as long as any of the Class C Notes, the Class D Notes or
the Class E Notes are Outstanding, to the payment of the following
amounts:
(a) in the event that the Class C Notes become due and
payable (x) as a result of an acceleration following an
Event of Default, (y) pursuant to an Auction Call
Redemption, an Optional Redemption, a Clean-up Call or a Tax
Redemption or (z) upon the
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Stated Maturity of the Class C Notes, to the payment in full
of principal of first, the Class A-1A Notes and the Class
A-1AR Notes, pro rata, based on the Class A-1A/A-1AR Pro
Rata Allocation, second, the Class A-2 Notes, third, the
Class B Notes and fourth, the Class C Notes;
(b) in the event that the Class D Notes become due and
payable (x) as a result of an acceleration following an
Event of Default, (y) pursuant to an Auction Call
Redemption, an Optional Redemption, a Clean-up Call or a Tax
Redemption or (z) upon the Stated Maturity of the Class D
Notes, to the payment in full of principal of first, the
Class A-1A Notes and the Class A-1AR Notes, pro rata, based
on the Class A-1A/A-1AR Pro Rata Allocation, second, the
Class A-2 Notes, third, the Class B Notes, fourth, the Class
C Notes and fifth, the Class D Notes;
(c) in the event that the Class E Notes become due and
payable (x) as a result of an acceleration following an
Event of Default, (y) pursuant to an Auction Call
Redemption, an Optional Redemption, a Clean-up Call or a Tax
Redemption or (z) upon the Stated Maturity of the Class E
Notes, to the payment in full of principal of first, the
Class A-1A Notes and the Class A-1AR Notes, pro rata, based
on the Class A-1A/A-1AR Pro Rata Allocation, second, the
Class A-2 Notes, third, the Class B Notes, fourth, the Class
C Notes, fifth, the Class D Notes and sixth, the Class E
Notes; or
(d) in the event of a Mandatory Redemption of the Class
C Notes, the Class D Notes and the Class E Notes, first, to
the payment of principal of the Class A-1A Notes and the
Class A-1AR Notes, based on the Class A-1A/A-1AR Pro Rata
Allocation and as described in Section 11.1(a)(iii), second,
to the payment of principal of the Class A-2 Notes, third,
to the payment of principal of the Class B Notes, fourth, to
the payment of principal of the Class C Notes, fifth, to the
payment of principal of the Class D Notes and sixth, to the
payment of principal of the Class E Notes, to the extent
necessary to cause each of the Class C/D/E Coverage Tests to
be satisfied (after giving effect to the payment of all
amounts previously paid on such Payment Date pursuant to
this Section 11.1(a)(i));
(17) to the payment of the Class F Interest Distribution Amount,
plus, any Class F Defaulted Interest Amount;
(18) to the payment of the Class F Capitalized Interest (if any);
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(19) to the payment of the Class G Interest Distribution Amount,
plus, any Class G Defaulted Interest Amount;
(20) to the payment of the Class G Capitalized Interest (if any);
(21) to the payment of the Class H Interest Distribution Amount,
plus, any Class H Defaulted Interest Amount;
(22) to the payment of the Class H Capitalized Interest (if any);
(23) as long as any of the Class F Notes, Class G Notes or Class
H Notes are Outstanding, to the payment of the following amounts:
(a) in the event that the Class F Notes become due and
payable (x) as a result of an acceleration following an
Event of Default, (y) pursuant to an Auction Call
Redemption, an Optional Redemption, a Clean-up Call or a Tax
Redemption or (z) upon the Stated Maturity of the Class F
Notes, to the payment in full of principal of first, the
Class A-1A Notes and the Class A-1AR Notes, pro rata, based
on the Class A-1A/A-1AR Pro Rata Allocation, second, the
Class A-2 Notes, third, the Class B Notes, fourth, the Class
C Notes, fifth, the Class D Notes, sixth, the Class E Notes
and seventh, the Class F Notes;
(b) in the event that the Class G Notes become due and
payable (x) as a result of an acceleration following an
Event of Default, (y) pursuant to an Auction Call
Redemption, an Optional Redemption, a Clean-up Call or a Tax
Redemption or (z) upon the Stated Maturity of the Class G
Notes, to the payment in full of principal of first, the
Class A-1A Notes and the Class A-1AR Notes, pro rata, based
on the Class A-1A/A-1AR Pro Rata Allocation, second, the
Class A-2 Notes, third, the Class B Notes, fourth, the Class
C Notes, fifth, the Class D Notes, sixth, the Class E Notes,
seventh, the Class F Notes and eighth, the Class G Notes;
(c) in the event that the Class H Notes become due and
payable (x) as a result of an acceleration following an
Event of Default, (y) pursuant to an Auction Call
Redemption, an Optional Redemption, a Clean-up Call or a Tax
Redemption or (z) upon the Stated Maturity of the Class H
Notes, to the payment in full of principal of first, the
Class A-1A Notes and the Class A-1AR Notes, pro rata, based
on the Class A-1A/A-1AR Pro Rata Allocation, second, the
Class A-2 Notes, third, the Class B Notes, fourth, the Class
C Notes, fifth, the Class D Notes, sixth, the Class E Notes,
seventh, the Class F Notes, eighth, the Class G Notes and
ninth, the Class H Notes; or
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(d) in the event of a Mandatory Redemption of the Class
F Notes, the Class G Notes and the Class H Notes, first, to
the payment of principal of the Class A-1A Notes and the
Class A-1AR Notes, pro rata, based on the Class A-1A/A-1AR
Pro Rata Allocation and as described in Section
11.1(a)(iii), second, to the payment of principal of the
Class A-2 Notes, third, to the payment of principal of the
Class B Notes, fourth, to the payment of principal of the
Class C Notes, fifth, to the payment of principal of the
Class D Notes, sixth, to the payment of principal of the
Class E Notes, seventh, to the payment of principal of the
Class F Notes, eighth, to the payment of principal of the
Class G Notes and ninth, to the payment of principal of the
Class H Notes, to the extent necessary to cause the Class
F/G/H Coverage Tests to be satisfied (after giving effect to
the payment of all amounts previously paid on such Payment
Date pursuant to this Section 11.1(a)(i));
(24) on the first Payment Date following the occurrence of a
Rating Confirmation Failure, to the extent that application of any
unused proceeds remaining on deposit on the Unused Proceeds Account is
insufficient to cause the ratings assigned to each Class of Notes to
be reinstated or any affected Class to be paid in full, to the payment
of principal of each Class of Note, (i) first, to the Class A-1A Notes
and the Class A-1AR Notes, pro rata, based on the Class A-1A/A-1AR Pro
Rata Allocation and as described in Section 11.1(a)(iii), (ii) second,
to the Class A-2 Notes, (iii) third, to the Class B Notes, (iv)
fourth, to the Class C Notes, (v) fifth, to the Class D Notes, (vi)
sixth, to the Class E Notes, (vii) seventh, to the Class F Notes,
(viii) eighth, to the Class G Notes and (ix) ninth, to the Class H
Notes, in each case until the ratings assigned on the Closing Date to
each Class of Notes have been reinstated or such Class has been paid
in full;
(25) to the Holder of the Class A-1AR Notes, any accrued and
unpaid Class A-1AR Breakage Costs;
(26) to the payment of any Company Administrative Expenses not
paid pursuant to clause (3) above, in the order specified therein;
(27) to the payment of the Subordinate Collateral Management Fee
and any accrued and unpaid Subordinate Collateral Management Fee;
(28) pro rata on the basis of amounts payable under each Hedge
Agreement (if any), to the payment of (i) any amounts (including,
without limitation, any Hedge Payment Amounts) (including any interest
accrued thereon), if any, payable by the Issuer to the Hedge
Counterparty under the related Hedge Agreement following an Event of
Default or Termination Event (other than Illegality or Tax Event)
(each as defined in the related Hedge Agreement) with respect to which
the Hedge Counterparty is the Defaulting Party or the sole Affected
Party (as defined in the related Hedge Agreement) and (ii) any costs
attributable to entering into an additional or replacement Hedge
Agreement in
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accordance with Section 16.1(g) to the extent such amounts are payable
but exceed the balance on deposit in the related Hedge Termination
Account; and
(29) any remaining Interest Proceeds to be released from the lien
of this Indenture and paid (upon standing order of the Issuer) to the
Preferred Shares Paying Agent for deposit into the Preferred Shares
Distribution Account for distribution to the Holder of the Preferred
Shares as payments of the Preferred Shares Distribution Amount subject
to and in accordance with the provisions of the Preferred Shares
Paying Agency Agreement.
(ii) Principal Proceeds. On each Payment Date or Redemption Date,
Principal Proceeds with respect to the related Due Period shall be
distributed in the following order of priority:
(1) to the payment of the amounts referred to in clauses (1)
through (8) of Section 11.1(a)(i) in the same order of priority
specified therein, but only to the extent not paid in full thereunder;
(2) to the extent that the amounts paid pursuant to clause (9) of
Section 11.1(a)(i) hereof are insufficient to pay such amounts in full
thereunder and any Class A Notes or Class B Notes are Outstanding, to
the payment of the following amounts:
(a) in the event that the Class A-1 Notes become due
and payable (x) as a result of an acceleration following an
Event of Default, (y) pursuant to an Auction Call
Redemption, an Optional Redemption, a Clean-up Call or a Tax
Redemption or (z) upon the Stated Maturity of the Class A-1
Notes, to the payment in full of principal of the Class A-1A
Notes and the Class A-1AR Notes, pro rata, based on the
Class A-1A/A-1AR Pro Rata Allocation;
(b) in the event that the Class A-2 Notes become due
and payable (x) as a result of an acceleration following an
Event of Default, (y) pursuant to an Auction Call
Redemption, an Optional Redemption, a Clean up Call or a Tax
Redemption or (z) upon the Stated Maturity of the Class A-2
Notes, to the payment in full of principal of, first, the
Class A-1A Notes and the Class A-1AR Notes, pro rata, based
on the Class A-1A/A-1AR Pro Rata Allocation and second, the
Class A-2 Notes;
(c) in the event that the Class B Notes become due and
payable (x) as a result of an acceleration following an
Event of Default, (y) pursuant to an Auction Call
Redemption, an Optional Redemption, a Clean up Call or a Tax
Redemption or (z) upon the Stated Maturity of the Class B
Notes, to the payment in full of principal of, first, the
Class A-1A Notes and the Class A-1AR Notes, pro rata, based
on the Class A-1A/A-1AR Pro Rata
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Allocation, second, the Class A-2 Notes and third, the Class
B Notes; or
(d) in the event of a Mandatory Redemption of the Class
A Notes and the Class B Notes, first, to the payment of
principal of the Class A-1A Notes and the Class A-1AR Notes,
pro rata, based on the Class A-1A/A-1AR Pro Rata Allocation
and as described in Section 11.1(a)(iii), second, to the
payment of principal of the Class A-2 Notes and third, to
the payment of principal of the Class B Notes, to the extent
necessary to cause each of the Class A/B Coverage Tests to
be satisfied (after giving effect to the payment of all
amounts previously paid on such Payment Date pursuant to
Section 11.1(a)(i) and this Section 11.1(a)(ii));
(3) (a) if the Class A Notes and the Class B Notes are no longer
Outstanding, to the payment of first, the amounts referred to in
clause (10) of Section 11.1(a)(i) and second, the amounts referred to
in clause (11) of Section 11.1(a)(i), but only to the extent not paid
in full thereunder;
(b) if the Class A Notes, the Class B Notes and the
Class C Notes are no longer Outstanding, to the payment of
first, the amounts referred to in clause (12) of Section
11.1(a)(i) and second, the amounts referred to in clause
(13) of Section 11.1(a)(i) but only to the extent not paid
in full thereunder;
(c) if the Class A Notes, the Class B Notes, the Class
C Notes and the Class D Notes are no longer Outstanding, to
the payment of first, the amounts referred to in clause (14)
of Section 11.1(a)(i) and second, the amounts referred to in
clause (15) of Section 11.1(a)(i) but only to the extent not
paid in full thereunder;
(4) to the extent that the amounts paid pursuant to clause (16)
of Section 11.1(a)(i) above are insufficient to pay such amounts in
full thereunder and any Class C Notes, Class D Notes or Class E Notes
are Outstanding, to the payment of the following amounts:
(a) in the event that the Class C Notes become due and
payable (x) as a result of an acceleration following an
Event of Default, (y) pursuant to an Auction Call
Redemption, an Optional Redemption, a Clean-up Call or a Tax
Redemption or (z) upon the Stated Maturity of the Class C
Notes, to the payment in full of principal (including any
applicable Capitalized Interest) of first, the Class A-1A
Notes and the Class A-1AR Notes, pro rata, based on the
Class A-1A/A-1AR Pro Rata Allocation, second, the Class A-2
Notes, third, the Class B Notes and fourth, the Class C
Notes;
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(b) in the event that the Class D Notes become due and
payable (x) as a result of an acceleration following an
Event of Default, (y) pursuant to an Auction Call
Redemption, an Optional Redemption, a Clean up Call or a Tax
Redemption or (z) upon the Stated Maturity of the Class D
Notes, to the payment in full of principal (including any
applicable Capitalized Interest) of first, the Class A-1A
Notes and the Class A-1AR Notes, pro rata, based on the
Class A-1A/A-1AR Pro Rata Allocation, second, the Class A-2
Notes, third, the Class B Notes, fourth, the Class C Notes
and fifth, the Class D Notes;
(c) in the event that the Class E Notes become due and
payable (x) as a result of an acceleration following an
Event of Default, (y) pursuant to an Auction Call
Redemption, an Optional Redemption, a Clean-up Call or a Tax
Redemption or (z) upon the Stated Maturity of the Class E
Notes, to the payment in full of principal (including any
applicable Capitalized Interest) of first, the Class A-1A
Notes and the Class A-1AR Notes, pro rata, based on the
Class A-1A/A-1AR Pro Rata Allocation, second, the Class A-2
Notes, third, the Class B Notes, fourth, the Class C Notes,
fifth, the Class D Notes and sixth, the Class E Notes; or
(d) in the event of a Mandatory Redemption of the Class
C Notes, the Class D Notes and the Class E Notes, first, to
the pro rata payment of principal of the Class A-1A Notes
and the Class A-1AR Notes, based on the Class A-1A/A-1AR Pro
Rata Allocation and as described in Section 11.1(a)(iii),
second, to the payment of principal of the Class A-2 Notes,
third, to the payment of principal of the Class B Notes,
fourth, to the payment of principal of the Class C Notes,
fifth, to the payment of principal of the Class D Notes and
sixth, to the payment of principal of the Class E Notes, to
the extent necessary to cause each of the Class C/D/E
Coverage Tests to be satisfied (after giving effect to the
payment of all amounts previously paid on such Payment Date
pursuant to Section 11.1(a)(i) and this Section
11.1(a)(ii));
(5) (a) if the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes and the Class E Notes are no longer
Outstanding, to the payment of first, the amounts referred to in
clause (17) of Section 11.1(a)(i) and second, the amounts referred to
in clause (18) of Section 11.1(a)(i), but only to the extent not paid
in full thereunder;
(b) if the Class A Notes, the Class B Notes, the Class
C Notes, the Class D Notes, the Class E Notes and the Class
F Notes are no longer Outstanding, to the payment of first,
the amounts referred to in clause (19) of Section 11.1(a)(i)
and second, the
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amounts referred to in clause (20) of Section 11.1(a)(i) but
only to the extent not paid in full thereunder;
(c) if the Class A Notes, the Class B Notes, the Class
C Notes, the Class D Notes, the Class E Notes, the Class F
Notes and the Class G Notes are no longer Outstanding, to
the payment of first, the amounts referred to in clause (21)
of Section 11.1(a)(i) and second, the amounts referred to in
clause (22) of Section 11.1(a)(i), but only to the extent
not paid in full thereunder;
(6) to the extent that the amounts paid pursuant to clause (23)
of Section 11.1(a)(i) are insufficient to pay such amounts in full
thereunder and any Class F Notes, Class G Notes or Class H Notes are
Outstanding, to the payment of the following amounts:
(a) in the event that the Class F Notes become due and
payable (x) as a result of an acceleration following an
Event of Default, (y) pursuant to an Auction Call
Redemption, an Optional Redemption, a Clean up Call or a Tax
Redemption or (z) upon the Stated Maturity of the Class F
Notes, to the payment in full of principal (including any
applicable Capitalized Interest) of first, the Class A-1A
Notes and the Class A-1AR Notes, based on the Class
A-1A/A-1AR Pro Rata Allocation, second, the Class A-2 Notes,
third, the Class B Notes, fourth, the Class C Notes, fifth,
the Class D Notes, sixth, the Class E Notes and seventh, the
Class F Notes;
(b) in the event that the Class G Notes become due and
payable (x) as a result of an acceleration following an
Event of Default, (y) pursuant to an Auction Call
Redemption, an Optional Redemption, a Clean up Call or a Tax
Redemption or (z) upon the Stated Maturity of the Class G
Notes, to the payment in full of principal (including any
applicable Capitalized Interest) of first, the Class A-1A
Notes and the Class A-1AR Notes, pro rata, based on the
Class A-1A/A-1AR Pro Rata Allocation, second, the Class A-2
Notes, third, the Class B Notes, fourth, the Class C Notes,
fifth, the Class D Notes, sixth, the Class E Notes, seventh,
the Class F Notes and eighth, the Class G Notes;
(c) in the event that the Class H Notes become due and
payable (x) as a result of an acceleration following an
Event of Default, (y) pursuant to an Auction Call
Redemption, an Optional Redemption, a Clean up Call or a Tax
Redemption or (z) upon the Stated Maturity of the Class H
Notes, to the payment in full of principal (including any
applicable Capitalized Interest) of first, the Class A-1A
Notes and the Class A-1AR Notes, pro rata, based on the
Class A-1A/A-1AR Pro Rata Allocation, second, the
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Class A-2 Notes, third, the Class B Notes, fourth, the Class
C Notes, fifth, the Class D Notes, sixth, the Class E Notes,
seventh, the Class F Notes, eighth, the Class G Notes and
ninth, the Class H Notes; or
(d) in the event of a Mandatory Redemption of the Class
F Notes, the Class G Notes and the Class H Notes, first, to
the pro rata payment of principal of the Class A-1A Notes
and the Class A-1AR Notes, based on the Class A-1A/A-1AR Pro
Rata Allocation and as described in Section 11.1(a)(iii),
second, to the payment of principal of the Class A-2 Notes,
third, to the payment of principal of the Class B Notes,
fourth, to the payment of principal of the Class C Notes,
fifth, to the payment of principal of the Class D Notes,
sixth, to the payment of principal of the Class E Notes,
seventh, to the payment of principal of the Class F Notes,
eighth, to the payment of principal of the Class G Notes and
ninth, to the payment of principal of the Class H Notes, to
the extent necessary to cause each of the Class F/G/H
Coverage Tests to be satisfied (after giving effect to the
payment of all amounts previously paid on such Payment Date
pursuant to Section 11.1(a)(i) and Section 11.1(a)(ii));
(7) to the extent that the amounts paid pursuant to clause (24)
of Section 11.1(a)(i) are insufficient to pay such amounts in full
thereunder and any Notes are Outstanding, on the first Payment Date
following the occurrence of a Rating Confirmation Failure, to the
payment of principal of each Class of Notes, (i) first, to the Class
A-1A Notes and the Class A-1AR Notes, pro rata, based on the Class
A-1A/A-1AR Pro Rata Allocation and as described in Section
11.1(a)(iii), (ii) second, to the Class A-2 Notes, (iii) third, to the
Class B Notes, (iv) fourth, to the Class C Notes, (v) fifth, to the
Class D Notes, (vi) sixth, to the Class E Notes, (vii) seventh, to the
Class F Notes, (viii) eighth, to the Class G Notes, and (ix) ninth, to
the Class H Notes, in each case until the ratings assigned on the
Closing Date to each Class of Notes have been reinstated or such Class
has been paid in full;
(8) in such amounts pursuant to written instructions to the
Trustee from the Collateral Manager no later than the related
Determination Date, in the Collateral Manager's discretion and in the
priority directed by the Collateral Manager (a) prior to the last day
of the Reinvestment Period, to the Class A-1AR Notes, as Class A-1AR
Prepayments and (b) to the Delayed Funding Obligations Account (during
the Reinvestment Period);
(9) on or prior to the last day of the Reinvestment Period, to
the investment in Eligible Investments and reinvestment in Substitute
Collateral Debt Securities subject to the Reinvestment Criteria or, if
determined by the Collateral Manager, to pay any Special Amortization
Amount, to amortize the Class A-1 Notes as described in Section
11.1(a)(iii), the Class A-2 Notes, the Class B Notes,
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the Class C Notes, the Class D Notes, the Class E Notes, the Class F
Notes, the Class G Notes and the Class H Notes as follows: (x) if each
of the S&P Special Amortization Pro Rata Condition and the ▇▇▇▇▇'▇
Special Amortization Pro Rata Condition is satisfied with respect to
such Payment Date and, except as otherwise described in Section 9.7,
the Class A/B Par Value Test has not failed to be satisfied on any
prior Determination Date, on a pro rata basis (based on the Aggregate
Outstanding Amount of each Class) among all Classes of Notes, or (y)
if either the S&P Special Amortization Pro Rata Condition or the
▇▇▇▇▇'▇ Special Amortization Pro Rata Condition is not satisfied with
respect to such Payment Date or, except as otherwise described in
Section 9.7, the Class A/B Par Value Test has failed to be satisfied
on any prior Determination Date, sequentially among all Classes of
Notes; provided, however, that amounts representing recoveries in
respect of Defaulted Securities will be distributed sequentially in
any event;
(10) after the Reinvestment Period (x) on each Payment Date that
is not also a Redemption Date or the Stated Maturity of the Notes and
(y) in the absence of an acceleration following an Event of Default,
to the payment of principal (including any applicable Capitalized
Interest) of (i) first, to the pro rata payment of principal of the
Class A-1A Notes and the Class A-1AR Notes, based on the Class
A-1A/A-1AR Pro Rata Allocation, until the Class A-1 Notes have been
paid in full, (ii) second, the Class A-2 Notes, until the Class A-2
Notes have been paid in full, (iii) third, the Class B Notes, until
the Class B Notes have been paid in full, (iv) fourth, the Class C
Notes, until the Class C Notes have been paid in full, (v) fifth, the
Class D Notes, until the Class D Notes have been paid in full, (vi)
sixth, the Class E Notes, until the Class E Notes have been paid in
full, (vii) seventh, the Class F Notes, until the Class F Notes have
been paid in full, (viii) eighth, the Class G Notes, until the Class G
Notes have been paid in full, and (ix) ninth, the Class H Notes, until
the Class H Notes have been paid in full;
(11) to the payment of amounts referred to in clause (25) of
Section 11.1(a)(i) to the extent not paid thereunder;
(12) the payment of amounts referred to in clause (26) of Section
11.1(a)(i) to the extent not paid thereunder;
(13) the payment of amounts referred to in clause (27) of Section
11.1(a)(i) to the extent not paid thereunder;
(14) the payment of amounts referred to in clause (28) of Section
11.1(a)(i) to the extent not paid thereunder; and
(15) any remaining Principal Proceeds to be released from the
lien of this Indenture and paid (upon standing order of the Issuer) to
the Preferred Shares Paying Agent for deposit into the Preferred
Shares Distribution Account for distribution to the Holders of the
Preferred Shares as payments of the Preferred
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Shares Distribution Amount subject to and in accordance with the
provisions of the Preferred Shares Paying Agency Agreement.
(iii) Notwithstanding anything herein to the contrary, in connection
with any distributions to the Holders of the Notes prior to the Commitment
Termination Time as a result of any Mandatory Redemption, Special
Amortization or redemption in connection with a Rating Confirmation
Failure, amounts will be allocated to the Class A-1 Notes assuming that the
Class A-1AR Notes are fully drawn. In each case, the portion of such
amounts allocable to the Class A-1AR Notes will be distributed as follows:
first, pro rata to the Holders of the Class A-1AR Notes in reduction of the
Aggregate Outstanding Amount of the Class A-1AR Notes; second, for deposit
into the Delayed Funding Obligations Account until the amount on deposit
therein is equal to the Total Unfunded Delayed Funding Amount; and third,
for deposit into the Collection Account as Principal Proceeds. Immediately
following any such distribution, the Class A-1AR Commitments will be
reduced as described herein.
(b) On or before the Business Day prior to each Payment Date, the
Issuer shall, pursuant to Section 10.2(e), remit or cause to be remitted to the
Trustee for deposit in the Payment Account an amount of Cash sufficient to pay
the amounts described in Section 11.1(a) required to be paid on such Payment
Date.
(c) If on any Payment Date the amount available in the Payment Account
from amounts received in the related Due Period is insufficient to make the full
amount of the disbursements required by the statements furnished by the Trustee
pursuant to Section 10.11(e) hereof, the Trustee shall make the disbursements
called for in the order and according to the priority set forth under Section
11.1(a) above, subject to Section 13.1 hereof, to the extent funds are available
therefor.
(d) Except as otherwise expressly provided in this Section 11.1, if on
any Payment Date the amount available in the Payment Account from amounts
received in the related Due Period are insufficient to make the full amount of
the disbursements required by any lettered clause of Section 11.1(a)(i) or
Section 11.1(a)(ii), the Trustee shall make the disbursements called for by such
clause ratably in accordance with the respective amounts of such disbursements
then due and payable to the extent funds are available therefor, unless such
clause provides otherwise.
(e) [Reserved].
(f) In connection with the payment to each Hedge Counterparty pursuant
to each Hedge Agreement of any amount scheduled to be paid from time to time
between Payment Dates from amounts received with respect to the Collateral Debt
Securities or otherwise as required pursuant to the terms of the related Hedge
Agreement, such amounts shall be distributed to each Hedge Counterparty pursuant
to the related Hedge Agreement.
(g) In connection with any required payment by the Issuer to the
Servicer pursuant to the Servicing Agreement of any amount scheduled to be paid
from time to time between Payment Dates from amounts received with respect to
the Collateral Debt Securities,
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such amounts shall be distributed to the Servicer pursuant to the terms of the
Servicing Agreement.
Section 11.2 Trust Accounts.
All Monies held by, or deposited with the Trustee in the Collection
Accounts, the Defeased Collateral Accounts, the Payment Account, the Expense
Account, the Unused Proceeds Account or the Delayed Funding Obligations Account
pursuant to the provisions of this Indenture, and not invested in Eligible
Investments as herein provided, shall be deposited in one or more trust
accounts, maintained at the Corporate Trust Office or at a financial institution
whose long-term rating is at least equal to, "A2" by Moody's and "A-" by S&P and
Fitch to be held in trust for the benefit of the Noteholders. To the extent
Monies deposited in such trust account exceed amounts insured by the Bank
Insurance Fund or Savings Association Insurance Fund administered by the Federal
Deposit Insurance Corporation, or any agencies succeeding to the insurance
functions thereof, and are not fully collateralized by direct obligations of the
United States of America, such excess shall be invested in Eligible Investments
as directed by Issuer Order.
ARTICLE 12
SALE OF COLLATERAL DEBT SECURITIES
Section 12.1 Sales of Collateral Debt Securities.
(a) Except as otherwise expressly permitted or required by this
Indenture, the Issuer shall not sell or otherwise dispose of any Collateral Debt
Security; provided that, subject to satisfaction of any applicable conditions in
Section 10.12, so long as (A) no Event of Default has occurred and is continuing
and (B) on or prior to the trade date for such sale the Collateral Manager has
certified to the Trustee that each of the conditions applicable to such sale set
forth below has been satisfied, the Collateral Manager, on behalf of the Issuer,
acting pursuant to the Collateral Management Agreement may direct the Trustee in
writing to sell, and the Trustee shall sell in the manner directed by the
Collateral Manager in writing (which writing shall specify whether such security
is a Defaulted Security, Credit Risk Security or a Buy/Sell Interest, if
applicable, or whether such security is otherwise permitted to be sold pursuant
to this Section 12.1(a)):
(i) any Defaulted Security at any time; provided that, if such Sale
Proceeds are reinvested, the Collateral Manager will use commercially
reasonable efforts to purchase one or more Substitute Collateral Debt
Securities having an aggregate Principal Balance (including for this
purpose accrued interest) no less than such Sale Proceeds (excluding
accrued interest);
(ii) a Credit Risk Security, (a) during the Reinvestment Period, if
the Collateral Manager has certified to the Trustee that it shall use
commercially reasonable efforts to purchase one or more Substitute
Collateral Debt Securities having an Aggregate Principal Balance (including
for this purpose accrued interest) no less than the Sale Proceeds
(excluding accrued interest) from such sale, and after giving effect to
such sale
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and to the purchase of Substitute Collateral Debt Securities with the Sale
Proceeds thereof, in the judgment of the Collateral Manager (which shall
not be called into question solely as a result of subsequent events), the
Reinvestment Criteria shall be satisfied and (b) after the Reinvestment
Period, at any time;
(iii) if a Collateral Debt Security that is a Defaulted Security is
not sold by the Issuer (at the direction of the Collateral Manager) within
three years of such Collateral Debt Security becoming a Defaulted Security,
the Collateral Manager, on behalf of the Issuer, shall use its commercially
reasonable efforts to sell such Collateral Debt Security as soon as
commercially practicable thereafter;
(iv) any Buy/Sell Interest at any time; provided that if Sale Proceeds
in respect of any Buy/Sell Interest are reinvested, the Collateral Manager
will use commercially reasonable efforts to purchase one or more Substitute
Collateral Debt Securities having an aggregate Principal Balance (including
for this purpose accrued interest) no less than such Sale Proceeds
(excluding accrued interest); and
(v) without limiting the foregoing, any Collateral Debt Security that
is not a Defaulted Security or a Credit Risk Security may be sold during
the Reinvestment Period, if (a) the Aggregate Principal Balance of
Collateral Debt Securities sold pursuant to this paragraph for a given
calendar year does not exceed 10% of the Aggregate Collateral Balance as of
the beginning of that year, (b) the Collateral Manager believes in good
faith that proceeds from the sale of such Collateral Debt Security can be
reinvested, within five Business Days after the trade date on which such
Collateral Debt Security is sold in one or more Substitute Collateral Debt
Securities having an Aggregate Principal Balance (including for this
purpose accrued interest) of not less than 100% of the Principal Balance of
the Collateral Debt Security being sold, (c) after giving effect to such
sale and to the purchase of Substitute Collateral Debt Securities with the
Sale Proceeds thereof, the Reinvestment Criteria will be satisfied and (d)
so long as MBIA is deemed to be the Controlling Class, unless MBIA
otherwise consents, ARCM has not been removed, or voted to be removed, as
Collateral Manager under the Collateral Management Agreement. For the
avoidance of doubt, any sales of Collateral Debt Securities made pursuant
to Section 12.2(c) or (d) shall be disregarded in determining compliance
with this Section 12.1(a)(v).
(b) Notwithstanding the foregoing, the Collateral Manager (at its
option and at any time) shall be permitted to effect a sale of a Credit Risk
Security or a Defaulted Security hereunder by purchasing (or causing its
Affiliate to purchase) such Defaulted Security or Credit Risk Security from the
Issuer for a Cash purchase price that shall be equal to the sum of (i) the
Aggregate Principal Balance thereof plus (ii) all accrued and unpaid interest
(or, in the case of a Preferred Equity Security, all accrued and unpaid
dividends or other distributions not attributable to the return of capital by
the related Underlying Instruments) thereon. Notwithstanding anything to the
contrary set forth herein, no Advisory Committee consent shall be required in
connection with such Cash purchase (the "Credit Risk/Defaulted Security Cash
Purchase").
In addition and notwithstanding anything to the contrary set forth
herein (and provided no Event of Default has occurred and is continuing), the
Collateral Manager (at its
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option but only upon disclosure to, and with the prior consent of, the Advisory
Committee) shall be permitted to effect a sale of a Defaulted Security or a
Credit Risk Security hereunder by directing the Issuer to exchange such
Defaulted Security or Credit Risk Security for (i) a Substitute Collateral Debt
Security (that is not a Defaulted Security or a Credit Risk Security) owned by
an Affiliate of the Collateral Manager (such Substitute Collateral Debt
Security, the "Exchange Security") or (ii) a combination of an Exchange Security
and Cash; provided that:
(i) (A) the sum of (1) the Principal Balance of such Exchange Security
plus (2) all accrued and unpaid interest (or, in the case of a Preferred
Equity Security, all accrued and unpaid dividends or other distributions
not attributable to the return of capital by its governing documents)
thereon plus (3) the Cash amount (if any) to be paid to the Issuer in
respect of such exchange by such Affiliate of the Collateral Manager, shall
be equal to or greater than (B) the sum of (1) the Principal Balance of
such Defaulted Security or Credit Risk Security sought to be substituted
plus (2) all accrued and unpaid interest (or, in the case of a Preferred
Equity Security, all accrued and unpaid dividends or other distributions
not attributable to the return of capital by its governing documents)
thereon;
(ii) the Eligibility Criteria and the Reinvestment Criteria shall be
satisfied immediately after such exchange; and
(iii) the Aggregate Principal Balance of all such Defaulted Securities
and Credit Risk Securities so exchanged shall not exceed 10% of the
Aggregate Collateral Balance as of the Closing Date (such limitation, the
"10% Limit").
(c) After the Issuer has notified the Trustee of an Optional
Redemption, a Clean-Up Call or a Tax Redemption in accordance with Section 9.1
or an Auction Call Redemption in accordance with Section 9.2, the Collateral
Manager, on behalf of the Issuer, and acting pursuant to the Collateral
Management Agreement, may at any time direct the Trustee in writing to sell, and
the Trustee shall sell in the manner directed by the Collateral Manager in
writing, any Collateral Debt Security without regard to the foregoing
limitations in Section 12.1(a); provided that:
(i) the Sale Proceeds therefrom must be used to pay certain expenses
and redeem all of the Notes in whole but not in part pursuant to Section
9.1 and Section 9.2, and upon any such sale the Trustee shall release such
Collateral Debt Security pursuant to Section 10.12;
(ii) the Issuer may not direct the Trustee to sell (and the Trustee
shall not be required to release) a Collateral Debt Security pursuant to
this Section 12.1(c) unless:
(1) the Collateral Manager certifies to the Trustee that (x) in
the Collateral Manager's reasonable business judgment based on
calculations included in the certification (which shall include the
sales prices of the Collateral Debt Securities), the Sale Proceeds
from the sale of one or more of the Collateral Debt Securities and all
Cash and proceeds from Eligible Investments will be at least equal to
the Total Redemption Price, and (y) an Independent bond pricing
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service (which shall be one or more broker-dealers selected by the
Collateral Manager which are rated at least "P-1" by Moody's and at
least "A-1+" by S&P and which make a market in the applicable
Collateral Debt Securities) has confirmed (which confirmation may be
in the form of a firm bid) the sales prices contained in the
certification in clause (x) above (and attaching a copy of such
confirmation); and
(2) the Independent accountants appointed by the Issuer pursuant
to Section 10.13 shall confirm in writing the calculations made in
clause (1)(x) above.
(iii) in connection with an Optional Redemption, an Auction Call
Redemption, a Clean-up Call or a Tax Redemption, all the Collateral Debt
Securities to be sold pursuant to this Section 12.1(c) must be sold in
accordance with the requirements set forth in Section 9.1(e) and Section
9.2, as applicable.
(d) In the event that any Collateral Debt Security becomes the subject
of a conversion, exchange, redemption or offer, whether voluntary or
involuntary, the Issuer (or the Collateral Manager on behalf of the Issuer)
shall take no action to acquire the asset or instrument into which such
Collateral Debt Security is convertible or exchangeable unless such asset or
instrument would qualify as a Substitute Collateral Debt Security. In the event
of an involuntary exchange or conversion of a Collateral Debt Security, if the
resulting asset or instrument would not qualify as a Substitute Collateral Debt
Security, the Issuer (or the Collateral Manager on behalf of the Issuer) shall
use commercially reasonable efforts to sell such Collateral Debt Security prior
to conversion or exchange and, in any event, shall refuse to accept, and shall
not acquire or hold, the asset or instrument offered in exchange.
(e) In the event that any Notes remain Outstanding as of the Payment
Date occurring six months prior to the Stated Maturity of the Notes, the
Collateral Manager will be required to determine whether the proceeds expected
to be received on the Assets prior to the Stated Maturity of the Notes will be
sufficient to pay in full the principal amount of (and accrued interest on) the
Notes on the Stated Maturity. If the Collateral Manager determines, in its sole
discretion, that such proceeds will not be sufficient to pay the outstanding
principal amount of and accrued interest on the Notes (a "Note Liquidation
Event") on the Stated Maturity of the Notes, the Issuer will, at the direction
of the Collateral Manager, be obligated to liquidate the portion of Collateral
Debt Securities sufficient to pay the remaining principal amount of and interest
on the Notes on or before the Stated Maturity. The Collateral Debt Securities to
be liquidated by the Issuer will be selected by the Collateral Manager.
(f) Notwithstanding anything herein to the contrary, in the event that
a "buy/sell" arrangement has been initiated with respect to a Collateral Debt
Security as a dispute resolution mechanism and the Collateral Manager determines
in accordance with the Collateral Manager Servicing Standard that the sale of
such Collateral Debt Security is in the best interest of the Noteholders, the
Collateral Manager may, on behalf of the Issuer, direct the Trustee to sell such
Collateral Debt Security in accordance with the related Underlying Instruments;
provided that, in the event any such sale is to be made to an Affiliate of the
Issuer or the Collateral
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Manager, such sale may be made only upon disclosure to, and with the prior
consent of, the Advisory Committee.
(g) Notwithstanding anything contained in this Section 12.1 to the
contrary, the Issuer may sell any Collateral Debt Security in accordance with
the provisions of Sections 12.2(c), 12.2(d) and/or 12.2(f).
Section 12.2 Reinvestment Criteria and Trading Restrictions.
(a) Except as provided in Section 12.3(c), during the Reinvestment
Period, Unscheduled Principal Payments, Sale Proceeds and other Principal
Proceeds (including excess amounts on deposit in the Delayed Funding Obligations
Account and certain Class A-1AR Draws) will be reinvested in Substitute
Collateral Debt Securities (which shall be, and hereby are, Granted to the
Trustee pursuant to the Granting Clause of this Indenture) only if the
Collateral Manager has not been removed, or voted to be removed, as a Collateral
Manager under the Collateral Management Agreement or a substitute collateral
manager has been appointed and, after giving effect to such reinvestment, the
following criteria (which criteria shall also apply with respect to investments
in Collateral Debt Securities during the Ramp-Up Period) (the "Reinvestment
Criteria") are satisfied, as evidenced by an Officer's Certificate of the Issuer
or the Collateral Manager delivered to the Trustee, as of the date of the
commitment to purchase such Substitute Collateral Debt Securities:
(i) such security satisfies the Eligibility Criteria;
(ii) the Collateral Quality Tests are satisfied, or, if any Collateral
Quality Test was not satisfied immediately prior to such reinvestment, the
extent of compliance with such Collateral Quality Test will be maintained
or improved following such reinvestment, except as otherwise specified in
the Reinvestment Criteria below;
(iii) the Coverage Tests are satisfied (or, if not satisfied, are
maintained or improved); provided that, if the Class A/B
Overcollateralization Test is not satisfied, the Issuer will not effect
such reinvestment if sufficient proceeds would not remain on deposit in the
Collection Accounts following such reinvestment to cause the Class A/B
Overcollateralization Test to be satisfied following disbursements on the
following Payment Date in accordance with the Priority of Payments;
(iv) if immediately prior to such reinvestment the S&P CDO Monitor
Test or the S&P Recovery Test was not satisfied, such test result is
maintained or improved after giving effect to such reinvestment; provided,
however, that notwithstanding the foregoing, Sale Proceeds of Credit Risk
Securities may be reinvested as long as the Collateral Manager provides
written notice of each such sale and reinvestment to S&P within three
Business Days after such reinvestment; and
(v) no Event of Default has occurred and is continuing.
(b) Subject to the conditions set forth in Sections 12.2(c) and
12.2(d), during the Ramp-Up Period and the Reinvestment Period the Issuer may
acquire Loans based on an Estimated Rating; provided, however, that after the
Effective Date the Issuer may not acquire a
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Collateral Debt Security based on an Estimated Rating if (a) such acquisition
would cause the aggregate Principal Balance of all Collateral Debt Securities
owned by the Issuer which do not yet have an S&P Assigned Rating to exceed 20%
of the Aggregate Collateral Balance as of the Closing Date, (b) such acquisition
would cause the Aggregate Principal Balance of all Collateral Debt Securities
owned by the Issuer which do not yet have a Moody's Assigned Rating to exceed
20% of the Aggregate Collateral Balance as of the Closing Date, (c) solely with
respect to Collateral Debt Securities that are collateralized or backed by
interests on a Property Type other than a Non-Core Property Type related to a
single obligor, such acquisition would cause the Aggregate Principal Balance of
all such Collateral Debt Securities owned by the Issuer which do not yet have a
Moody's Assigned Rating to exceed 5% of the Aggregate Collateral Balance as of
the Closing Date, or (d) solely with respect to Collateral Debt Securities that
are collateralized or backed by interests on a Non-Core Property Type related to
a single obligor, such acquisition would cause the Aggregate Principal Balance
of all such Collateral Debt Securities owned by the Issuer which do not yet have
a Moody's Assigned Rating to exceed 3.5% of the Aggregate Collateral Balance as
of the Closing Date. In addition, no Future Advance Loan with respect to which
the related Unfunded Other Loan is a Construction Loan may be purchased by the
Issuer based on a Moody's Estimated Rating.
(c) Within ten Business Days after acquiring a Collateral Debt
Security based on a Moody's Estimated Rating, the Collateral Manager shall
deliver to Moody's a comprehensive set of asset and underwriting materials
describing such Collateral Debt Security, in form and substance acceptable to
Moody's. With respect to each Substitute Collateral Debt Security acquired based
on a Moody's Estimated Rating after the Effective Date, the Collateral Manager
shall determine compliance with the Moody's Post-Acquisition Compliance Test
when it receives notice from Moody's of the Moody's Assigned Rating for such
Substitute Collateral Debt Security. Within 45 days after finding that the
acquisition of a Substitute Collateral Debt Security after the Effective Date
resulted in a failure to satisfy the Moody's Post-Acquisition Compliance Test (a
"Moody's Post-Acquisition Failure"), the Collateral Manager shall use
commercially reasonable efforts to remedy such Moody's Post-Acquisition Failure
by either: (a) causing the Issuer and instructing the Trustee to sell to the
Collateral Manager or its Affiliates or to a third party the Substitute
Collateral Debt Security that caused the Moody's Post-Acquisition Failure, for a
cash price that is greater than or equal to the sum of (i) the then outstanding
Principal Balance of such Substitute Collateral Debt Security, discounted based
on the percentage amount of any discount that was applied when such Substitute
Collateral Debt Security was purchased by the Issuer (or, if such asset was
purchased by the Issuer at a premium, then the outstanding Principal Balance
shall be subject to a percentage premium not less than that at which the Issuer
purchased such asset), plus (ii) any accrued but unpaid interest on such
Substitute Collateral Debt Security plus (iii) any fees and expenses of the
Issuer attributable to such sale, or (b) causing the Issuer and instructing the
Trustee to sell other Collateral Debt Securities (in the case of each such
Collateral Debt Security, for a cash price that is greater than or equal to the
sum of (i) the then outstanding Principal Balance of such Collateral Debt
Security, discounted based on the percentage amount of any discount that was
applied when such Collateral Debt Security was purchased by the Issuer (or, if
such asset was purchased by the Issuer at a premium, then the outstanding
Principal Balance shall be subject to a percentage premium not less than that at
which the Issuer purchased such asset), plus (ii) any accrued but unpaid
interest on such Collateral Debt Security) and/or purchase other Collateral Debt
Securities (subject to the Reinvestment Criteria) so that either (x) the Moody's
Maximum
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Tranched Rating Factor Test is satisfied, or (y) if the Moody's Maximum Tranched
Rating Factor Test was not satisfied immediately prior to the purchase of the
Substitute Collateral Debt Security that resulted in the Moody's
Post-Acquisition Failure, the level of compliance with the Moody's Maximum
Tranched Rating Factor Test is restored to the level that would exist if that
Substitute Collateral Debt Security had not been purchased. Following a Moody's
Post-Acquisition Failure, until such time as the Moody's Post-Acquisition
Failure has been remedied as provided above, the Issuer may only purchase
Substitute Collateral Debt Securities that have a Moody's Assigned Rating;
provided, however, that if the Moody's Post-Acquisition Failure has not been
remedied within 45 days after a finding of such Moody's Post-Acquisition
Failure, then each Substitute Collateral Debt Security thereafter acquired by
the Issuer must have a Moody's Assigned Rating until such time as the Rating
Agency Condition with respect to Moody's has been satisfied and, so long as MBIA
is deemed to be the Controlling Class hereunder, MBIA has consented; provided,
further, that if the Moody's Post-Acquisition Failure has not been remedied
within 120 days after a finding of such Moody's Post-Acquisition Failure, then
the Issuer may no longer acquire Substitute Collateral Debt Securities based on
a Moody's Estimated Rating, even if such Moody's Post-Acquisition Failure is
later remedied.
(d) Within ten Business Days after acquiring a Collateral Debt
Security based on an S&P Estimated Rating, the Collateral Manager shall deliver
to S&P a comprehensive set of asset and underwriting materials describing such
Collateral Debt Security, in form and substance acceptable to S&P. With respect
to each Substitute Collateral Debt Security acquired based on an S&P Estimated
Rating after the Effective Date, the Collateral Manager shall determine
compliance with the S&P Post-Acquisition Compliance Test when it receives notice
from S&P of the S&P Assigned Rating for such Substitute Collateral Debt
Security. Within 45 days after finding that the acquisition of a Substitute
Collateral Debt Security after the Effective Date resulted in a failure to
satisfy the S&P's Post-Acquisition Compliance Test (an "S&P Post-Acquisition
Failure"), the Collateral Manager may remedy such S&P Post-Acquisition Failure
by either: (a) causing the Issuer and instructing the Trustee to sell to the
Collateral Manager or its Affiliates or to a third party the Substitute
Collateral Debt Security that caused the S&P Post-Acquisition Failure, for a
cash price that is greater than or equal to the sum of (i) the then outstanding
Principal Balance of such Substitute Collateral Debt Security, discounted based
on the percentage amount of any discount that was applied when such Substitute
Collateral Debt Security was purchased by the Issuer (or, if such asset was
purchased by the Issuer at a premium, then the outstanding Principal Balance
shall be subject to a percentage premium not less than that at which the Issuer
purchased such asset), plus (ii) any accrued but unpaid interest on such
Substitute Collateral Debt Security, plus (iii) any fees and expenses of the
Issuer attributable to such sale, or (b) causing the Issuer and instructing the
Trustee to sell other Collateral Debt Securities and/or purchase other
Substitute Collateral Debt Securities (subject to the Reinvestment Criteria) so
that either (x) the S&P CDO Monitor Test is satisfied, or (y) if the S&P CDO
Monitor Test was not satisfied immediately prior to the purchase of the
Substitute Collateral Debt Security that resulted in the S&P Post-Acquisition
Failure, the level of compliance with the S&P CDO Monitor Test is restored to
the level that would exist if that Substitute Collateral Debt Security had not
been purchased. Following an S&P Post-Acquisition Failure, until such time as
the S&P Post-Acquisition Failure has been remedied as provided above, the Issuer
may only purchase Substitute Collateral Debt Securities that have an S&P
Assigned Rating.
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(e) No Advisory Committee consent will be required in connection with
a sale or transfer of a Substitute Collateral Debt Security in connection with
any action taken by the Collateral Manager to remedy a Moody's Post-Acquisition
Failure or an S&P Post-Acquisition Failure, even if the Collateral Manager or
its Affiliate is the purchaser or assignee of such asset, so long as the
purchase price for such Collateral Debt Security is payable in cash and is
greater than or equal to the sum of (i) the then outstanding Principal Balance
of such Collateral Debt Security, discounted based on the percentage amount of
any discount that was applied when such Collateral Debt Security was purchased
by the Issuer (or, if such asset was purchased by the Issuer at a premium, then
the outstanding Principal Balance shall be subject to a percentage premium not
less than that at which the Issuer purchased such asset), plus (ii) any accrued
but unpaid interest on such Collateral Debt Security plus (iii) any fees and
expenses of the Issuer attributable to such sale.
(f) Within ten Business Days after the applicable Rating Agency
notifies the Collateral Manager of the Assigned Rating determined for a
Collateral Debt Security acquired by the Issuer based on an Estimated Rating, if
such Assigned Rating is lower than such Estimated Rating (but, for the avoidance
of doubt, such Assigned Rating is not low enough to cause a Moody's
Post-Acquisition Failure or an S&P Post-Acquisition Failure, as applicable), the
Collateral Manager shall have the option, but not the obligation, to cause the
Issuer and direct the Trustee (x) to sell such Collateral Debt Security to the
Collateral Manager or any of its Affiliates or any third party for a cash price
that is greater than or equal to the sum of (i) the then outstanding Principal
Balance of such Collateral Debt Security, discounted based on the percentage
amount of any discount that was applied when such Collateral Debt Security was
purchased by the Issuer (or, if such asset was purchased by the Issuer at a
premium, then the outstanding Principal Balance shall be subject to a percentage
premium not less than that at which the Issuer purchased such asset), plus (ii)
any accrued but unpaid interest on such Collateral Debt Security plus (iii) any
fees and expenses of the Issuer attributable to such sale. No Advisory Committee
consent will be required in connection with a trade executed in connection with
the exercise of this option even if the Collateral Manager or its Affiliate is
the purchaser or assignee.
(g) Notwithstanding the foregoing provisions, (i) Cash on deposit in
the Collection Accounts may be invested in Eligible Investments, pending
investment in Substitute Collateral Debt Securities and (ii) if an Event of
Default shall have occurred and be continuing, no Substitute Collateral Debt
Security may be acquired unless it was the subject of a commitment entered into
by the Issuer prior to the occurrence of such Event of Default.
Section 12.3 Conditions Applicable to all Transactions Involving Sale
or Grant.
(a) Any transaction effected after the Closing Date under this Article
12 or Section 10.12 shall be conducted in accordance with the requirements of
the Collateral Management Agreement; provided that (1) the Collateral Manager
shall not direct the Trustee to acquire any Substitute Collateral Debt Security
for inclusion in the Assets from the Collateral Manager or any of its Affiliates
as principal or to sell any Collateral Debt Security from the Assets to the
Collateral Manager or any of its Affiliates as principal unless the transaction
is effected in accordance with the Collateral Management Agreement and (2) the
Collateral Manager shall not direct the Trustee to acquire any Substitute
Collateral Debt Security for
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inclusion in the Assets from any account or portfolio for which the Collateral
Manager serves as investment adviser or direct the Trustee to sell any
Collateral Debt Security to any account or portfolio for which the Collateral
Manager serves as investment adviser unless such transactions comply with the
requirements of any applicable laws. The Trustee shall have no responsibility to
oversee compliance with this clause by the other parties.
(b) Upon any Grant pursuant to this Article 12, all of the Issuer's
right, title and interest to the Pledged Obligation or Securities shall be
Granted to the Trustee pursuant to this Indenture, such Pledged Obligation or
Securities shall be registered in the name of the Trustee, and, if applicable,
the Trustee shall receive such Pledged Collateral Debt Security or Securities.
The Trustee also shall receive, not later than the date of delivery of any
Collateral Debt Security delivered after the Closing Date, an Officer's
Certificate of the Collateral Manager certifying that, as of the date of such
Grant, such Grant complies with the applicable conditions of and is permitted by
this Article 12 (and setting forth, to the extent appropriate, calculations in
reasonable detail necessary to determine such compliance).
(c) Notwithstanding anything contained in this Article 12 to the
contrary, the Issuer shall, subject to this Section 12.3(c), have the right to
effect any transaction which has been consented to (i) by the Holders of Notes
evidencing 100% of the Aggregate Outstanding Amount of each and every Class of
Notes (or if there are no Notes Outstanding, 100% of the Preferred Shares) and
(ii) each Hedge Counterparty, and of which each Rating Agency has been notified.
Section 12.4 Sale of Collateral Debt Securities with respect to an
Auction Call Redemption.
(a) Pre-Auction Process.
(i) Each Auction will occur on the Business Day that is at least 13
Business Days prior to the proposed Auction Call Redemption Date (such
date, the "Auction Date").
(ii) The Collateral Manager will initiate the Auction Procedures at
least 24 Business Days before the proposed Auction Call Redemption Date by:
(a) preparing a list of Collateral Debt Securities (including CUSIP Number,
if any, par amount and issuer name for each Collateral Debt Security); (b)
deriving a list of not less than three qualified bidders (the "Listed
Bidders") and requesting from each Listed Bidder bids by the applicable
Auction Date; and (c) notifying the Trustee of the list of Listed Bidders
(the "List").
(iii) The Collateral Manager will deliver a general solicitation
package to the Listed Bidders consisting of: (a) a form of a purchase
agreement ("Auction Purchase Agreement") provided to the Trustee by the
Collateral Manager (which shall provide that (I) upon satisfaction of all
conditions precedent therein, the purchaser is irrevocably obligated to
purchase, and the Issuer is irrevocably obligated to sell, the Collateral
Debt Securities on the date and on the terms stated therein, (II) each
bidder may tender a separate bid for one or more Collateral Debt Securities
in an Auction, (III) if the
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Collateral Debt Securities are to be sold to different bidders, that the
consummation of the purchase of all Collateral Debt Securities must occur
simultaneously and that the closing of each purchase is conditional on the
closing of the other purchases, (IV) if for any reason whatsoever the
Trustee has not received, by a specified Business Day (which shall be more
than ten Business Days before the proposed Auction Call Redemption Date),
payment in full in immediately available funds of the purchase price for
all Collateral Debt Securities, the obligations of the parties shall
terminate and the Issuer shall have no obligation or liability whatsoever
and (V) any prospective purchasers will be subject to the "limited
recourse" and "non-petition" provisions set forth in this Indenture); (b)
the minimum aggregate Cash purchase price (which shall be determined by the
Collateral Manager as the Total Redemption Price less the balance of all
Eligible Investments and Cash in the Collection Accounts, the Payment
Account, the Delayed Funding Obligations Account, each Hedge Termination
Account and the Expense Account); (c) the list of Collateral Debt
Securities; (d) a formal bid sheet (which will permit a bidder to bid for
all of the Collateral Debt Securities or separately for any one or more
(but not all) Collateral Debt Securities and will include a representation
from the bidder that it is eligible to purchase all of the Collateral Debt
Securities or any one or more (but not all) Collateral Debt Securities) to
be provided to the Trustee by the Collateral Manager; (e) a detailed
timetable; and (f) copies of all transfer documents provided to the Trustee
by the Collateral Manager (including transfer certificates and subscription
agreements which a bidder must execute pursuant to the underlying
instruments and a list of the requirements which the bidder must satisfy
under the underlying instruments (i.e., QIB status, Qualified Purchaser
status, etc.)).
(iv) The Collateral Manager will send solicitation packages to all
Listed Bidders on the List at least 20 Business Days before the proposed
Auction Call Redemption Date. The Listed Bidders will be required to submit
any due diligence questions (or comments on the draft purchase agreement)
in writing to the Collateral Manager by a date specified in the
solicitation package. The Collateral Manager will be required to answer all
reasonable and relevant questions by the date specified in the solicitation
package and the Collateral Manager will distribute the questions and
answers and the revised final Auction Purchase Agreement to all Listed
Bidders (with a copy to the Issuer and the Trustee).
(b) Auction Process.
(i) ▇▇▇▇▇ Fargo Bank, National Association or its Affiliates may, but
shall not be required to, bid at the Auction. The Collateral Manager and
its Affiliates may bid in the Auction if the Collateral Manager deems such
bidding to be appropriate but is not required to do so.
(ii) On the second Business Day prior to the Auction Date (the
"Auction Bid Date"), all bids will be due by facsimile at the offices of
the Trustee by 11:00 a.m. New York City time, with the winning bidder or
bidders to be notified by 2:00 p.m. New York City time. All bids from
Listed Bidders on the List will be due on the bid sheet contained in the
solicitation package. Each bid shall be for the purchase and delivery to
one
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purchaser (A) of all (but not less than all) of the Collateral Debt
Securities or (B) of one or more (but not all) of the Collateral Debt
Securities.
(iii) Unless the Trustee receives (A) at least one bid from a Listed
Bidder to purchase all of the Collateral Debt Securities or (B) receives
bids from one or more Listed Bidders (to purchase one or more (but not all)
Collateral Debt Securities) for all Collateral Debt Securities in the
aggregate, the Trustee will decline to consummate the sale.
(iv) Subject to clause (iii) above, with the advice of the Collateral
Manager, the Trustee shall select the bid or bids which result in the
Highest Auction Price from one or more Listed Bidders (in excess of the
specified minimum purchase price). "Highest Auction Price" means the higher
of (A) the highest price bid by any Listed Bidder for all of the Collateral
Debt Securities or (B) the sum of the highest prices bid by one or more
Listed Bidders (for one or more (but not all) Collateral Debt Securities)
for all Collateral Debt Securities in the aggregate. In each case, the
price bid by a Listed Bidder will be the dollar amount which the Collateral
Manager certifies to the Trustee based on the Collateral Manager's review
of the bids, which certification shall be binding and conclusive.
(v) Upon notification to the winning bidder or bidders, the winning
bidder (or, if the Highest Auction Price requires the sale of the
Collateral Debt Securities to more than one bidder, each winning bidder)
will be required to deliver to the Trustee a signed counterpart of the
Auction Purchase Agreement no later than 4:00 p.m. New York City time on
the Auction Date. The winning bidder (or, if the Highest Auction Price
requires the sale of the Collateral Debt Securities to more than one
bidder, each winning bidder) will make payment in full of the purchase
price on the Business Day (the "Auction Purchase Closing Date") specified
in the general solicitation package (which will be no later than ten
Business Days prior to the proposed Auction Call Redemption Date). If a
winning bidder so requests, the Trustee and the Issuer will enter into a
bailee letter in the form agreed upon by the Trustee and the Collateral
Manager to this Indenture (a "Bailee Letter") with each winning bidder and
its designated bank (which bank will be subject to approval by the Issuer
(or the Collateral Manager on behalf of the Issuer)); provided that such
bank enters into an account control agreement with the Trustee and the
Issuer and has a long term debt rating of at least "BBB+" by S&P's and (if
rated by Fitch) at least "BBB+" by Fitch and (if rated by Moody's) at least
"A2" by Moody's. If the above requirements are satisfied, the Trustee will
deliver the Collateral Debt Securities (to be sold to such bidder) pursuant
thereto to the bailee bank at least one Business Day prior to the closing
on the sale of the Collateral Debt Securities and accept payment of the
purchase price pursuant thereto. If payment in full of the purchase price
is not made by the Auction Purchase Closing Date for any reason whatsoever
(or, if the Collateral Debt Securities are to be sold to more than one
bidder, if any bidder fails to make payment in full of the purchase price
by the Auction Purchase Closing Date for any reason whatsoever), the Issuer
will decline to consummate the sale of all Collateral Debt Securities, the
Trustee and the Issuer will direct the bailee bank to return the Collateral
Debt Securities to the Trustee, and (if notice of redemption has been given
by the
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Trustee) the Trustee will give notice (in accordance with the terms of this
Indenture) that the Auction Call Redemption will not occur.
(vi) Notwithstanding the foregoing, but subject to the satisfaction of
the conditions set forth in Section 9.2(b), the Holder of the Preferred
Shares or any of its Affiliates, although it may not have been the highest
bidder, will have the option to purchase any one or more Collateral Debt
Securities for a purchase price equal to the highest bid therefor.
(c) Notwithstanding anything to the contrary set forth in this Section
12.4, at the election of the Holder of the Preferred Shares, in lieu of
initiating or conducting any Auction, the Holder of the Preferred Shares or any
of its Affiliates will have the option to purchase all of the Collateral Debt
Securities that would otherwise be subject to such Auction for a price equal to
the Total Redemption Price. Such purchase of Collateral Debt Securities by the
Holder of the Preferred Shares or its Affiliates pursuant to this Section
12.4(c) will be deemed to be a Successful Auction pursuant to this Indenture and
the Notes and the Preferred Shares shall be redeemed, in whole and not in part,
at their applicable Redemption Prices in accordance with the applicable
provisions of Article 9.
Section 12.5 Modifications to Collateral Quality Tests or Coverage
Tests.
In the event any of the Rating Agencies modifies the definitions or
calculations relating to (i) the method of calculating any of its respective
Collateral Quality Tests included in clauses (xx) through (xxx) of the
Collateral Quality Tests (a "Collateral Quality Test Modification"), (ii) any of
the Coverage Tests (a "Coverage Test Modification") or (iii) its requirements
for pro rata "special amortizations" (a "Pro Rata Special Amortization
Modification"), in either case in order to correspond with published changes in
the guidelines, methodology or standards established by such Rating Agency, the
Issuer may, but is under no obligation solely as a result of this Section 12.5
to, incorporate corresponding changes into this Indenture by an amendment hereto
without the consent of the Holders of the Notes (except as provided below) (but
with written notice to the Noteholders) or the Preferred Shares if (x)(1) in the
case of a Collateral Quality Test Modification, the Rating Agency Condition is
satisfied with respect to the Rating Agency that made such modification or (2)
in the case of a Coverage Test Modification or a Pro Rata Special Amortization,
the Rating Agency Condition is satisfied with respect to each Rating Agency then
rating the Notes and (y) written notice of such modification is delivered by the
Collateral Manager to the Trustee, each Hedge Counterparty and to the Holders of
the Notes and Preferred Shares (which notice may be included in the next
regularly scheduled report to Noteholders). Any such Collateral Quality Test
Modification, Coverage Test Modification or Pro Rata Special Amortization, as
the case may be, shall be effected without execution of a supplemental
indenture; provided, however, that such amendment shall be (i) evidenced by a
written instrument executed and delivered by each of the Co-Issuers and the
Collateral Manager and delivered to the Trustee and each Hedge Counterparty,
(ii) accompanied by delivery by the Issuer to the Trustee of (A) an Officer's
Certificate of the Issuer certifying that such amendment has been made pursuant
to and in compliance with this Section 12.5 and (B) if requested by the Trustee,
an Opinion of Counsel stating that such amendment is authorized or permitted by
this Section 12.5 and that all applicable conditions precedent under this
Section 12.5 have been satisfied, on which such Officer's Certificate or such
Officer's Certificate and
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Opinion of Counsel, as the case may be, the Trustee shall be entitled to rely.
Notwithstanding the foregoing, so long as MBIA is deemed to be the Controlling
Class hereunder, the Issuer will not be permitted to make any such change with
respect to Moody's or Fitch or, on or after the date that is 18 months after the
Closing Date, S&P, without obtaining the consent of MBIA (such consent not to be
unreasonably withheld); provided that, if MBIA does not object to such change
within 14 days after notice thereof is given, MBIA will be deemed to have
consented to such change. Notwithstanding the foregoing, any such amendment
reasonably determined by the Trustee to be unduly burdensome to the Trustee,
shall not take effect without the Trustee's express written consent.
ARTICLE 13
NOTEHOLDERS' RELATIONS
Section 13.1 Subordination.
(a) Anything in this Indenture or the Notes to the contrary
notwithstanding, the Issuer and the Holders of the Class A-2 Notes, the Class B
Notes, the Class C Notes, the Class D Notes, the Class E Notes, the Class F
Notes, the Class G Notes and the Class H Notes agree for the benefit of the
Holders of the Class A-1 Notes and each Hedge Counterparty that the Class A-2
Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes, the Class F Notes, the Class G Notes and the Class H Notes and the
Issuer's rights in and to the Assets (the "Class A-2 Subordinate Interests")
shall be subordinate and junior to the Class A-1 Notes to the extent and in the
manner set forth in this Indenture including as set forth in Section 11.1(a) and
hereinafter provided. If any Event of Default has not been cured or waived and
acceleration occurs in accordance with Article 5, including as a result of an
Event of Default specified in Section 5.1(f) or 5.1(g), the Class A-1 Notes
shall be paid in full before any further payment or distribution is made on
account of the Class A-2 Subordinate Interests. The Holders of the Class A-2
Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes, the Class F Notes, the Class G Notes and the Class H Notes agree for the
benefit of the Holders of the Class A-1 Notes and each Hedge Counterparty, not
to cause the filing of a petition in bankruptcy against the Issuer for failure
to pay to them amounts due under the Class A-2 Notes, the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes, the Class F Notes, the
Class G Notes and the Class H Notes hereunder until the payment in full of the
Class A-1 Notes and not before one year and one day, or, if longer, the
applicable preference period then in effect, has elapsed since such payment.
(b) Anything in this Indenture or the Notes to the contrary
notwithstanding, the Issuer and the Holders of the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes, the Class F Notes, the Class G
Notes and the Class H Notes agree for the benefit of the Holders of the Class A
Notes and each Hedge Counterparty that the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes, the Class F Notes, the Class G Notes and the
Class H Notes and the Issuer's rights in and to the Assets (the "Class B
Subordinate Interests") shall be subordinate and junior to the Class A Notes to
the extent and in the manner set forth in this Indenture including as set forth
in Section 11.1(a) and hereinafter provided. If any Event of Default has not
been cured or waived and acceleration occurs in accordance with Article 5,
including as a result of an Event of Default specified in Section 5.1(f) or
5.1(g), the
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Class A Notes shall be paid in full before any further payment or distribution
is made on account of the Class B Subordinate Interests. The Holders of the
Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes, the
Class F Notes, the Class G Notes and the Class H Notes agree for the benefit of
the Holders of the Class A Notes and each Hedge Counterparty, not to cause the
filing of a petition in bankruptcy against the Issuer for failure to pay to them
amounts due under the Class B Notes, the Class C Notes, the Class D Notes, the
Class E Notes, the Class F Notes, the Class G Notes and the Class H Notes
hereunder until the payment in full of the Class A Notes and not before one year
and one day, or, if longer, the applicable preference period then in effect, has
elapsed since such payment.
(c) Anything in this Indenture or the Notes to the contrary
notwithstanding, the Issuer and the Holders of the Class C Notes, the Class D
Notes, the Class E Notes, the Class F Notes, the Class G Notes and the Class H
Notes agree for the benefit of the Holders of the Class A Notes, the Class B
Notes and each Hedge Counterparty that the Class C Notes, the Class D Notes, the
Class E Notes, the Class F Notes, the Class G Notes, the Class H Notes and the
Issuer's rights in and to the Assets (the "Class C Subordinate Interests") shall
be subordinate and junior to the Class A Notes and the Class B Notes to the
extent and in the manner set forth in this Indenture including as set forth in
Section 11.1(a) and hereinafter provided. If any Event of Default has not been
cured or waived and acceleration occurs in accordance with Article 5, including
as a result of an Event of Default specified in Section 5.1(f) or 5.1(g), the
Class A Notes and the Class B Notes shall be paid in full before any further
payment or distribution is made on account of the Class C Subordinate Interests.
The Holders of the Class C Notes, the Class D Notes, the Class E Notes, the
Class F Notes, the Class G Notes and the Class H Notes agree, for the benefit of
the Holders of the Class A Notes and the Class B Notes and each Hedge
Counterparty, not to cause the filing of a petition in bankruptcy against the
Issuer for failure to pay to them amounts due under the Class C Notes, the Class
D Notes, the Class E Notes, the Class F Notes, the Class G Notes and the Class H
Notes hereunder until the payment in full of the Class A Notes and the Class B
Notes and not before one year and one day, or, if longer, the applicable
preference period then in effect, has elapsed since such payment.
(d) Anything in this Indenture or the Notes to the contrary
notwithstanding, the Issuer and the Holders of the Class D Notes, the Class E
Notes, the Class F Notes, the Class G Notes and the Class H Notes agree for the
benefit of the Holders of the Class A Notes, the Class B Notes, the Class C
Notes and each Hedge Counterparty that the Class D Notes, the Class E Notes, the
Class F Notes, the Class G Notes, the Class H Notes and the Issuer's rights in
and to the Assets (the "Class D Subordinate Interests") shall be subordinate and
junior to the Class A Notes, the Class B Notes and the Class C Notes to the
extent and in the manner set forth in this Indenture including as set forth in
Section 11.1(a) and hereinafter provided. If any Event of Default has not been
cured or waived and acceleration occurs in accordance with Article 5, including
as a result of an Event of Default specified in Section 5.1(f) or 5.1(g), the
Class A Notes, the Class B Notes and the Class C Notes shall be paid in full
before any further payment or distribution is made on account of the Class D
Subordinate Interests. The Holders of the Class D Notes, the Class E Notes, the
Class F Notes, the Class G Notes and the Class H Notes agree, for the benefit of
the Holders of the Class A Notes, the Class B Notes, and the Class C Notes and
each Hedge Counterparty, not to cause the filing of a petition in bankruptcy
against the Issuer for failure to pay to them amounts due under the Class D
Notes, the Class E Notes, the Class F Notes, the Class G Notes and the Class H
Notes hereunder until the payment in full of the Class
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A Notes, the Class B Notes and the Class C Notes and not before one year and one
day, or, if longer, the applicable preference period then in effect, has elapsed
since such payment.
(e) Anything in this Indenture or the Notes to the contrary
notwithstanding, the Issuer and the Holders of the Class E Notes, the Class F
Notes, the Class G Notes and the Class H Notes agree for the benefit of the
Holders of the Class A Notes, the Class B Notes, the Class C Notes and the Class
D Notes and each Hedge Counterparty that the Class E Notes, the Class F Notes,
the Class G Notes and the Class H Notes and the Issuer's rights in and to the
Assets (the "Class E Subordinate Interests") shall be subordinate and junior to
the Class A Notes, the Class C Notes and the Class D Notes to the extent and in
the manner set forth in this Indenture including as set forth in Section 11.1(a)
and hereinafter provided. If any Event of Default has not been cured or waived
and acceleration occurs in accordance with Article 5, including as a result of
an Event of Default specified in Section 5.1(f) or 5.1(g), the Class A Notes,
the Class B Notes, the Class C Notes, and the Class D Notes shall be paid in
full before any further payment or distribution is made on account of the Class
E Subordinate Interests. The Holders of the Class E Notes, the Class F Notes,
the Class G Notes and the Class H Notes agree, for the benefit of the Holders of
the Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes
and each Hedge Counterparty, not to cause the filing of a petition in bankruptcy
against the Issuer for failure to pay to them amounts due under the Class E
Notes, the Class F Notes, the Class G Notes and the Class H Notes hereunder
until the payment in full of the Class A Notes, the Class B Notes, the Class C
Notes and the Class D Notes and not before one year and one day, or, if longer,
the applicable preference period in effect, has elapsed since such payment.
(f) Anything in this Indenture or the Notes to the contrary
notwithstanding, the Issuer and the Holders of the Class F Notes, the Class G
Notes and the Class H Notes agree for the benefit of the Holders of the Class A
Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes and each Hedge Counterparty that the Class F Notes, the Class G Notes and
the Class H Notes and the Issuer's rights in and to the Assets (the "Class F
Subordinate Interests") shall be subordinate and junior to the Class A Notes,
the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes to
the extent and in the manner set forth in this Indenture including as set forth
in Section 11.1(a) and hereinafter provided. If any Event of Default has not
been cured or waived and acceleration occurs in accordance with Article 5,
including as a result of an Event of Default specified in Section 5.1(f) or
5.1(g), the Class A Notes, the Class B Notes, the Class C Notes, the Class D
Notes and the Class E Notes shall be paid in full before any further payment or
distribution is made on account of the Class F Subordinate Interests. The
Holders of the Class F Notes, the Class G Notes and the Class H Notes agree, for
the benefit of the Holders of the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes and each Hedge Counterparty, not to
cause the filing of a petition in bankruptcy against the Issuer for failure to
pay to them amounts due under the Class F Notes, the Class G Notes and the Class
H Notes hereunder until the payment in full of the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes and the Class E Notes and not before
one year and one day, or, if longer, the applicable preference period then in
effect, has elapsed since such payment.
(g) Anything in this Indenture or the Notes to the contrary
notwithstanding, the Issuer and the Holders of the Class G Notes and the Class H
Notes agree for the benefit of the
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Holders of the Class A Notes, the Class B Notes, the Class C Notes, the Class D
Notes, the Class E Notes, the Class F Notes and each Hedge Counterparty that the
Class G Notes, the Class H Notes and the Issuer's rights in and to the Assets
(the "Class G Subordinate Interests") shall be subordinate and junior to the
Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes, the
Class E Notes and the Class F Notes to the extent and in the manner set forth in
this Indenture including as set forth in Section 11.1(a) and hereinafter
provided. If any Event of Default has not been cured or waived and acceleration
occurs in accordance with Article 5, including as a result of an Event of
Default specified in Section 5.1(f) or 5.1(g), the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes, the Class E Notes and the Class F
Notes shall be paid in full before any further payment or distribution is made
on account of the Class G Subordinate Interests. The Holders of the Class G
Notes and the Class H Notes agree, for the benefit of the Holders of the Class A
Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes and the Class F Notes and each Hedge Counterparty, not to cause the filing
of a petition in bankruptcy against the Issuer for failure to pay to them
amounts due under the Class G Notes and the Class H Notes hereunder until the
payment in full of the Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes and the Class F Notes and not before one year
and one day, or, if longer, the applicable preference period then in effect, has
elapsed since such payment.
(h) Anything in this Indenture or the Notes to the contrary
notwithstanding, the Issuer and the Holders of the Class H Notes agree for the
benefit of the Holders of the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes, the Class F Notes, the Class G
Notes and each Hedge Counterparty that the Class H Notes and the Issuer's rights
in and to the Assets (the "Class H Subordinate Interests") shall be subordinate
and junior to the Class A Notes, the Class B Notes, the Class C Notes, the Class
D Notes, the Class E Notes, the Class F Notes and the Class G Notes to the
extent and in the manner set forth in this Indenture including as set forth in
Section 11.1(a) and hereinafter provided. If any Event of Default has not been
cured or waived and acceleration occurs in accordance with Article 5, including
as a result of an Event of Default specified in Section 5.1(f) or 5.1(g), the
Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes, the
Class E Notes, the Class F Notes and the Class G Notes shall be paid in full
before any further payment or distribution is made on account of the Class H
Subordinate Interests. The Holders of the Class H Notes agree, for the benefit
of the Holders of the Class A Notes, the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes, the Class F Notes and the Class G Notes and
each Hedge Counterparty, not to cause the filing of a petition in bankruptcy
against the Issuer for failure to pay to them amounts due under the Class H
Notes hereunder until the payment in full of the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes, the Class E Notes, the Class F
Notes and the Class G Notes and not before one year and one day, or if longer,
the applicable preference period then in effect, has elapsed since such payment.
(i) In the event that notwithstanding the provisions of this
Indenture, any holder of any Subordinate Interests shall have received any
payment or distribution in respect of such Subordinate Interests contrary to the
provisions of this Indenture, then, unless and until the Class A Notes, the
Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes, the
Class F Notes, the Class G Notes and the Class H Notes, as the case may be,
shall have been paid in full in accordance with this Indenture, such payment or
distribution shall be received and held in trust for the benefit of, and shall
forthwith be paid over and delivered to, the Trustee, which
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shall pay and deliver the same to the Holders of the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes, the Class E Notes, the Class F
Notes, the Class G Notes and the Class H Notes, as the case may be, in
accordance with this Indenture.
(j) Each Holder of Subordinate Interests agrees with all Holders of
the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes, the
Class E Notes, the Class F Notes, the Class G Notes, and the Class H Notes, as
the case may be, that such Holder of Subordinate Interests shall not demand,
accept, or receive any payment or distribution in respect of such Subordinate
Interests in violation of the provisions of this Indenture including this
Section 13.1; provided, however, that after the Class A Notes, the Class B
Notes, the Class C Notes, the Class D Notes, the Class E Notes, the Class F
Notes, the Class G Notes and the Class H Notes, as the case may be, have been
paid in full, the Holders of Subordinate Interests shall be fully subrogated to
the rights of the Holders of the Class A Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes, the Class E Notes, the Class F
Notes, the Class G Notes and the Class H Notes, as the case may be. Nothing in
this Section 13.1 shall affect the obligation of the Issuer to pay Holders of
Subordinate Interests.
Section 13.2 Standard of Conduct.
In exercising any of its or their voting rights, rights to direct and
consent or any other rights as a Securityholder under this Indenture, subject to
the terms and conditions of this Indenture, including, without limitation,
Section 5.9, a Securityholder or Securityholders shall not have any obligation
or duty to any Person or to consider or take into account the interests of any
Person and shall not be liable to any Person for any action taken by it or them
or at its or their direction or any failure by it or them to act or to direct
that an action be taken, without regard to whether such action or inaction
benefits or adversely affects any Securityholder, the Issuer, or any other
Person, except for any liability to which such Securityholder may be subject to
the extent the same results from such Securityholder's taking or directing an
action, or failing to take or direct an action, in bad faith or in violation of
the express terms of this Indenture.
ARTICLE 14
MISCELLANEOUS
Section 14.1 Form of Documents Delivered to the Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer or
the Co-Issuer may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such
Authorized Officer knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to the
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matters upon which his certificate or opinion is based are erroneous. Any such
certificate of an Authorized Officer of the Issuer or the Co-Issuer or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, the Issuer, the Co-Issuer, the
Collateral Manager or any other Person, stating that the information with
respect to such factual matters is in the possession of the Issuer, the
Co-Issuer, the Collateral Manager or such other Person, unless such Authorized
Officer of the Issuer or the Co-Issuer or such counsel knows that the
certificate or opinion or representations with respect to such matters are
erroneous. Any Opinion of Counsel also may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
Authorized Officer of the Issuer or the Co-Issuer, stating that the information
with respect to such matters is in the possession of the Issuer or the
Co-Issuer, unless such counsel knows that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture it is provided that the absence of the
occurrence and continuation of a Default or Event of Default is a condition
precedent to the taking of any action by the Trustee at the request or direction
of the Issuer or the Co-Issuer, then notwithstanding that the satisfaction of
such condition is a condition precedent to the Issuer's or the Co-Issuer's
rights to make such request or direction, the Trustee shall be protected in
acting in accordance with such request or direction if it does not have
knowledge of the occurrence and continuation of such Default or Event of Default
as provided in Section 6.1(e).
Section 14.2 Acts of Securityholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Securityholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Securityholders in person or by an
agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee, and, where it is hereby expressly required, to the
Issuer and/or the Co-Issuer. Such instrument or instruments (and the action or
actions embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Securityholders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Indenture and conclusive in
favor of the Trustee, the Issuer and the Co-Issuer, if made in the manner
provided in this Section 14.2.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Trustee deems
sufficient.
(c) The principal amount and registered numbers of Notes held by any
Person, and the date of his holding the same, shall be proved by the Notes
Register. The Notional Amount and registered numbers of the Preferred Shares
held by any Person, and the date of his holding the same, shall be proved by the
register maintained with respect to the Preferred Shares.
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(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Securityholder shall bind such Securityholder (and
any transferee thereof) of such Security and of every Security issued upon the
registration thereof or in exchange therefor or in lieu thereof, in respect of
anything done, omitted or suffered to be done by the Trustee, the Preferred
Shares Paying Agent, the Share Registrar, the Issuer or the Co-Issuer in
reliance thereon, whether or not notation of such action is made upon such
Security.
Section 14.3 Notices, etc., to the Trustee, the Issuer, the Co-Issuer,
the Advancing Agent, the Collateral Manager, the Initial Purchaser, each Hedge
Counterparty, the Class A-1AR Note Agent, each Rating Agency and MBIA.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Securityholders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with:
(a) the Trustee by any Securityholder or by the Issuer or the
Co-Issuer shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to and mailed, by certified mail, return receipt
requested, hand delivered, sent by overnight courier service guaranteeing next
day delivery or by facsimile in legible form, to the Trustee addressed to it at
▇.▇. ▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: CDO Trust Services Group -
Arbor Realty Mortgage Securities Series 2006-1, facsimile number: (410)
715-3748, with a copy to its Corporate Trust Office, or at any other address
previously furnished in writing to the Issuer, the Co-Issuer or Securityholders
by the Trustee;
(b) the Issuer by the Trustee or by any Securityholder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first class postage prepaid, hand delivered,
sent by overnight courier service or by facsimile in legible form, to the Issuer
addressed to it at Arbor Realty Mortgage Securities Series 2006-1, Ltd. at ▇/▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ House, South Church Street,
▇▇▇▇▇▇ Town, Grand Cayman, Cayman Islands, facsimile number: ▇▇▇-▇▇▇-▇▇▇▇,
Attention: The Directors, or at any other address previously furnished in
writing to the Trustee by the Issuer, with a copy to the Collateral Manager at
its address set forth below;
(c) the Co-Issuer by the Trustee or by any Securityholder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first class postage prepaid, hand delivered,
sent by overnight courier service or by facsimile in legible form, to the
Co-Issuer addressed to it in c/o Puglisi & Associates, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, facsimile number:
(▇▇▇) ▇▇▇-▇▇▇▇, or at any other address previously furnished in writing to the
Trustee by the Co-Issuer, with a copy to the Collateral Manager at its address
set forth below;
(d) the Advancing Agent by the Trustee, the Issuer or the Co-Issuer
shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first class postage prepaid, hand
delivered, sent by overnight courier service or by facsimile in legible form, to
the Advancing Agent addressed to it at Arbor Realty SR, Inc., 333 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Executive Vice
President - Structured Securitization, or at any other address previously
furnished in writing to
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the Trustee and the Co-Issuers, with a copy to the Collateral Manager at its
address set forth below.
(e) the Preferred Shares Paying Agent shall be sufficient for every
purpose hereunder if made, given, furnished or filed in writing to and mailed,
by certified mail, return receipt requested, hand delivered, sent by overnight
courier service guaranteeing next day delivery or by facsimile in legible form,
to the Preferred Shares Paying Agent addressed to it at ▇.▇. ▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: CDO Trust Services Group - Arbor Realty Mortgage
Securities Series 2006-1, facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇ or at any other
address previously furnished in writing by the Trustee;
(f) the Collateral Manager by the Issuer, the Co-Issuer or the Trustee
shall be sufficient for every purpose hereunder if in writing and mailed, first
class postage prepaid, hand delivered, sent by overnight courier service or by
facsimile in legible form, to the Collateral Manager addressed to it at Arbor
Realty Collateral Management, LLC, 333 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Executive Vice President - Structured
Securitization, or at any other address previously furnished in writing to the
Issuer, the Co-Issuer or the Trustee;
(g) each Rating Agency, as applicable, by the Issuer, the Co-Issuer,
the Collateral Manager or the Trustee shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided) if in writing and mailed,
first class postage prepaid, hand delivered, sent by overnight courier service
or by facsimile in legible form, to each Rating Agency addressed to it at
Standard & Poor's Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, telecopy no. (212)
438-2664, Attention: Structured Finance Ratings, Asset-Backed Securities CBO/CLO
Surveillance (and by electronic mail at ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇;
provided that all reports required to be submitted to S&P pursuant to this
Indenture only shall be provided in electronic form to such e-mail address);
▇▇▇▇▇'▇ Investor Services, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: CMBS Surveillance (or by electronic
mail at ▇▇▇▇▇▇_▇▇▇_▇▇▇_▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇) and Fitch, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇, Attention:
Commercial Real Estate Loan CDOs, Performance Analytics (or by electronic mail
at ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and ▇▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇) or such
other address that a Rating Agency shall designate in the future;
(h) each Hedge Counterparty by the Issuer, the Co-Issuer, the
Collateral Manager or the Trustee shall be sufficient for every purpose
hereunder if in writing and mailed, first class postage prepaid, hand delivered,
sent by overnight courier service or by facsimile in legible form, to each Hedge
Counterparty addressed to it at the address specified in the related Hedge
Agreement or at any other address previously furnished in writing to the Issuer,
the Co-Issuer, the Collateral Manager and the Trustee by each Hedge
Counterparty;
(i) the Initial Purchaser by the Issuer, the Co-Issuer, the Trustee or
the Collateral Manager shall be sufficient for every purpose hereunder if in
writing and mailed, first class postage prepaid, hand delivered, sent by
overnight courier service or by facsimile in legible form to the Initial
Purchaser c/o at Wachovia Capital Markets, LLC, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
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(NY4087), ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇▇▇, facsimile no.:
(▇▇▇) ▇▇▇-▇▇▇▇.
(j) the Class A-1AR Note Agent by the Issuer, the Co-Issuer, the
Trustee or the Collateral Manager shall be sufficient for every purpose
hereunder if in writing and mailed, first class postage prepaid, hand delivered,
sent by overnight courier service or by facsimile in legible form, to the Class
A-1AR Note Agent addressed to it at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: CDO Trust Services Group - Arbor Realty Mortgage Securities
2006-1, facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇, or at any other address previously
furnished in writing to the Issuer, the Co-Issuer, the Collateral Manager and
the Trustee by the Class A-1AR Note Agent.
(k) MBIA by the Issuer, the Co-Issuer, the Trustee or the Collateral
Manager shall be sufficient for every purpose hereunder if in writing and
mailed, first class postage prepaid, hand delivered, sent by overnight courier
service or by facsimile in legible form, to MBIA addressed to it at c/o MBIA
Insurance Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇/▇▇▇▇▇▇▇▇ ▇▇▇▇▇/IPM CDO Manager, facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to LaCrosse Financial Products, LLC, c/o Global Securitization
Services, LLC, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Vice President, facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇ or at any other address
previously furnished in writing to the Issuer, the Co-Issuer, the Collateral
Manager and the Trustee by MBIA.
Section 14.4 Notices to Noteholders; Waiver.
Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of Notes of any event,
(a) such notice shall be sufficiently given to Holders of Notes if in
writing and mailed, first class postage prepaid, to each Holder of a Note
affected by such event, at the address of such Holder as it appears in the Notes
Register, not earlier than the earliest date and not later than the latest date,
prescribed for the giving of such notice;
(b) such notice shall be in the English language;
(c) such notice shall also be provided to the Irish Paying Agent (for
so long as any Notes are listed on the Irish Stock Exchange); and
(d) all reports or notices to Preferred Shareholders shall be
sufficiently given if provided in writing and mailed, first class postage
prepaid, to the Preferred Shares Paying Agent.
Notwithstanding clause (a) above, a Holder of Notes may give the
Trustee written notice that it is requesting that notices to it be given by
facsimile transmissions and stating the facsimile number for such transmission.
Thereafter, the Trustee shall give notices to such Holder by facsimile
transmission; provided that if such notice also requests that notices be given
by mail, then such notice shall also be given by mail in accordance with clause
(a) above.
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The Trustee shall deliver to the Holders of the Notes any information
or notice requested to be so delivered by at least 25% of the Holders of any
Class of Notes.
Neither the failure to mail any notice, nor any defect in any notice
so mailed, to any particular Holder of a Note shall affect the sufficiency of
such notice with respect to other Holders of Notes. In case by reason of the
suspension of regular mail service or by reason of any other cause, it shall be
impracticable to give such notice by mail, then such notification to Holders of
Notes shall be made with the approval of the Trustee and shall constitute
sufficient notification to such Holders of Notes for every purpose hereunder.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In the event that, by reason of the suspension of the regular mail
service as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Trustee shall be
deemed to be a sufficient giving of such notice.
For so long as any Notes are listed on the Irish Stock Exchange and
the rules of such exchange so require, all notices to Noteholders of such Notes
will be published in the Daily Official List of the Irish Stock Exchange.
Section 14.5 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 14.6 Successors and Assigns.
All covenants and agreements in this Indenture by the Issuer and the
Co-Issuer shall bind their respective successors and assigns, whether so
expressed or not.
Section 14.7 Severability.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality, and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 14.8 Benefits of Indenture.
Nothing in this Indenture or in the Securities, expressed or implied,
shall give to any Person, other than (i) the parties hereto and their successors
hereunder and (ii) the Collateral Manager, each Hedge Counterparty, the
Preferred Shareholders, the Preferred Shares Paying Agent, the Share Registrar
and the Noteholders (each of whom, in the case of this clause (ii),
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shall be an express third party beneficiary hereunder), any benefit or any legal
or equitable right, remedy or claim under this Indenture.
Section 14.9 Governing Law.
THIS INDENTURE AND EACH NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED THEREIN WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
Section 14.10 Submission to Jurisdiction.
Each of the Issuer and the Co-Issuer hereby irrevocably submits to the
non-exclusive jurisdiction of any New York State or federal court sitting in the
Borough of Manhattan in The City of New York in any action or proceeding arising
out of or relating to the Notes or this Indenture, and each of the Issuer and
the Co-Issuer hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in such New York State or
federal court. Each of the Issuer and the Co-Issuer hereby irrevocably waives,
to the fullest extent that they may legally do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding. Each of the
Issuer and the Co-Issuer irrevocably consents to the service of any and all
process in any action or proceeding by the mailing or delivery of copies of such
process to it at the office of the Issuer's and the Co-Issuer's agent set forth
in Section 7.2. Each of the Issuer and the Co-Issuer agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
Section 14.11 Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 14.12 Liability of Co-Issuers.
Notwithstanding any other terms of this Indenture, the Notes or any
other agreement entered into between, inter alios, the Issuer and the Co-Issuer
or otherwise, neither the Issuer nor the Co-Issuer shall have any liability
whatsoever to the Co-Issuer or the Issuer, respectively, under this Indenture,
the Notes, any such agreement or otherwise and, without prejudice to the
generality of the foregoing, neither the Issuer nor the Co-Issuer shall be
entitled to take any steps to enforce, or bring any action or proceeding, in
respect of this Indenture, the Notes, any such agreement or otherwise against
the other Co-Issuer or the Issuer, respectively. In particular, neither the
Issuer nor the Co-Issuer shall be entitled to petition or take any other steps
for the winding up or bankruptcy of the Co-Issuer or the Issuer, respectively or
shall have any claim in respect of any assets of the Co-Issuer or the Issuer,
respectively.
ARTICLE 15
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ASSIGNMENT OF COLLATERAL DEBT SECURITIES PURCHASE AGREEMENTS AND COLLATERAL
MANAGEMENT AGREEMENT
Section 15.1 Assignment of Collateral Debt Securities Purchase
Agreement and the Collateral Management Agreement.
(a) The Issuer, in furtherance of the covenants of this Indenture and
as security for the Notes and amounts payable to the Secured Parties hereunder
and the performance and observance of the provisions hereof, hereby collaterally
assigns, transfers, conveys and sets over to the Trustee, for the benefit of the
Noteholders and each Hedge Counterparty, all of the Issuer's estate, right,
title and interest in, to and under each Collateral Debt Securities Purchase
Agreement (now or hereafter entered into) and the Collateral Management
Agreement (each, an "Article 15 Agreement"), including, without limitation, (i)
the right to give all notices, consents and releases thereunder, (ii) the right
to give all notices of termination and to take any legal action upon the breach
of an obligation of a Seller or the Collateral Manager thereunder, including the
commencement, conduct and consummation of proceedings at law or in equity, (iii)
the right to receive all notices, accountings, consents, releases and statements
thereunder and (iv) the right to do any and all other things whatsoever that the
Issuer is or may be entitled to do thereunder; provided, however, that the
Trustee hereby grants the Issuer a license to exercise all of the Issuer's
rights pursuant to the Article 15 Agreements without notice to or the consent of
the Trustee (except as otherwise expressly required by this Indenture,
including, without limitation, as set forth in Section 15.1(f)) which license
shall be and is hereby deemed to be automatically revoked upon the occurrence of
an Event of Default hereunder until such time, if any, that such Event of
Default is cured or waived.
(b) The assignment made hereby is executed as collateral security, and
the execution and delivery hereby shall not in any way impair or diminish the
obligations of the Issuer under the provisions of each of the Article 15
Agreements, nor shall any of the obligations contained in each of the Article 15
Agreements be imposed on the Trustee.
(c) Upon the retirement of the Notes, the payment by the Issuer of all
amounts payable under each Hedge Agreement and the release of the Assets from
the lien of this Indenture, this assignment and all rights herein assigned to
the Trustee for the benefit of the Noteholders and each Hedge Counterparty shall
cease and terminate and all the estate, right, title and interest of the Trustee
in, to and under each of the Article 15 Agreements shall revert to the Issuer
and no further instrument or act shall be necessary to evidence such termination
and reversion.
(d) The Issuer represents that it has not executed any assignment of
any of the Article 15 Agreements other than this collateral assignment.
(e) The Issuer agrees that this assignment is irrevocable, and that it
shall not take any action which is inconsistent with this assignment or make any
other assignment inconsistent herewith. The Issuer shall, from time to time upon
the request of the Trustee, execute all instruments of further assurance and all
such supplemental instruments with respect to this assignment as the Trustee may
specify.
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(f) The Issuer hereby agrees, and hereby undertakes to obtain the
agreement and consent of the Sellers and the Collateral Manager, as applicable,
in the Collateral Debt Securities Purchase Agreements and the Collateral
Management Agreement, as applicable, to the following:
(i) each of the Sellers and the Collateral Manager consents to the
provisions of this collateral assignment and agrees to perform any
provisions of this Indenture made expressly applicable to each of the
Sellers and the Collateral Manager pursuant to the applicable Article 15
Agreement;
(ii) each of the Sellers and the Collateral Manager, as applicable,
acknowledges that the Issuer is collaterally assigning all of its right,
title and interest in, to and under the Collateral Debt Securities Purchase
Agreements and the Collateral Management Agreement, as applicable, to the
Trustee for the benefit of the Noteholders and each Hedge Counterparty, and
each of the Sellers and the Collateral Manager, as applicable, agrees that
all of the representations, covenants and agreements made by each of the
Sellers and the Collateral Manager, as applicable, in the applicable
Article 15 Agreement are also for the benefit of, and enforceable by, the
Trustee, the Noteholders and each Hedge Counterparty;
(iii) each of the Sellers and the Collateral Manager, as applicable,
shall deliver to the Trustee duplicate original copies of all notices,
statements, communications and instruments delivered or required to be
delivered to the Issuer pursuant to the applicable Article 15 Agreement;
(iv) none of the Issuer, the Sellers or the Collateral Manager shall
enter into any agreement amending, modifying or terminating the applicable
Article 15 Agreement, (other than in respect of an amendment or
modification to cure any inconsistency, ambiguity or manifest error) or
selecting or consenting to a successor collateral manager, as applicable,
without notifying each Rating Agency and without the prior written consent
and written confirmation of each Rating Agency that such amendment,
modification or termination will not cause its then-current ratings of the
Notes to be reduced;
(v) except as otherwise set forth herein and therein (including,
without limitation, pursuant to Sections 12 and 13 of the Collateral
Management Agreement), the Collateral Manager shall continue to serve as
Collateral Manager under the Collateral Management Agreement,
notwithstanding that the Collateral Manager shall not have received amounts
due it under the Collateral Management Agreement because sufficient funds
were not then available hereunder to pay such amounts pursuant to the
Priority of Payments. The Collateral Manager agrees not to cause the filing
of a petition in bankruptcy against the Issuer for the nonpayment of the
fees or other amounts payable to the Collateral Manager under the
Collateral Management Agreement until the payment in full of all Notes
issued under this Indenture and the expiration of a period equal to the
applicable preference period under the Bankruptcy Code plus ten days
following such payment; and
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(vi) the Collateral Manager irrevocably submits to the non-exclusive
jurisdiction of any New York State or federal court sitting in the Borough
of Manhattan in The City of New York in any action or proceeding arising
out of or relating to the Notes or this Indenture, and the Collateral
Manager irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York State or federal
court. The Collateral Manager irrevocably waives, to the fullest extent it
may legally do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding. The Collateral Manager irrevocably consents
to the service of any and all process in any action or Proceeding by the
mailing by certified mail, return receipt requested, or delivery requiring
signature and proof of delivery of copies of such initial process to it at
Arbor Realty Trust, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Executive Vice President--Structured
Securitization. The Collateral Manager agrees that a final and
non-appealable judgment by a court of competent jurisdiction in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law.
ARTICLE 16
HEDGE AGREEMENT; CURE RIGHTS; PURCHASE RIGHTS; SUBSEQUENT COLLATERAL DEBT
SECURITIES
Section 16.1 Issuer's Obligations under Hedge Agreement.
(a) On the Closing Date and thereafter, and on and after any date on
which the Issuer enters into an additional or replacement Hedge Agreement
(including any related Hedge Counterparty Credit Support), the Issuer, as
directed by the Collateral Manager, shall (i) require that each Hedge
Counterparty thereto, or any third party (including an Affiliate of such Hedge
Counterparty) that (A) has absolutely and unconditionally guaranteed, pursuant
to a guarantee that satisfies S&P's published criteria on guarantees, the
obligations of the Hedge Counterparty under the related Hedge Agreement (with
such form of guaranty as shall be satisfactory to each Rating Agency then rating
any Notes hereunder), (B) has entered into credit intermediation arrangements in
respect of the obligations of the Hedge Counterparty under the related Hedge
Agreement satisfactory to each Rating Agency then rating any Notes hereunder,
(C) is the issuing bank on one or more letters of credit supporting the
obligations of the Hedge Counterparty under the related Hedge Agreement and that
shall be reasonably acceptable to each Rating Agency then rating any Notes
hereunder or (D) has provided any other additional credit support and such
inclusion of additional credit support shall have satisfied the Rating Agency
Condition and, so long as MBIA is deemed to be the Controlling Class hereunder,
MBIA consents (any such third party, including an Affiliate of such Hedge
Counterparty, a "Hedge Counterparty Credit Support Provider") has, at the time
the Hedge Agreement is executed, with respect to itself as an issuer or with
respect to its indebtedness, credit ratings at least equal to the Hedge
Counterparty Collateral Threshold Ratings by each Rating Agency then rating any
Notes hereunder, (ii) except with respect to a Form-Approved Asset Specific
Hedge, obtain a written confirmation from each Rating Agency then rating any
Notes hereunder that any additional or replacement Hedge Agreement and the
related Hedge Counterparty would not cause such Rating
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Agency's then-current rating on any Class of Notes to be adversely qualified,
reduced, suspended or withdrawn and (iii) assign and grant a security interest
in such Hedge Agreement to the Trustee pursuant to this Indenture. Each Hedge
Agreement will provide that no amendment, modification or waiver in respect of
such Hedge Agreement, including any additional or replacement Hedge Agreement,
will be effective unless (A) evidenced by a writing executed by each party
thereto, (B) the Trustee has acknowledged its consent thereto in writing and (C)
each Rating Agency confirms that such amendment, modification or waiver will not
cause the reduction or withdrawal of its then-current rating on any Class of
Notes. For the avoidance of doubt, the Issuer may enter into any Hedge Agreement
with respect to which the Rating Agency Condition is satisfied and, so long as
MBIA is deemed to be the Controlling Class hereunder, MBIA has consented. In
addition, so long as MBIA is deemed to be the Controlling Class hereunder, the
Issuer shall provide MBIA with a copy of any Hedge Agreement.
(b) The Trustee shall, on behalf of the Issuer, pay amounts due to
each Hedge Counterparty under the related Hedge Agreements in accordance with
the Priority of Payments, Section 11.1(f) hereof and Section 16.1(g) hereof.
(c) The notional amount schedule of each Hedge Agreement providing for
floating rate payments to the Issuer will be calculated as a percentage of the
principal amount of the Notes originally anticipated to be Outstanding on each
Payment Date based on certain assumptions. In accordance with the terms of each
Hedge Agreement (other than any interest rate basis swap agreements), such
notional amount schedule will be reduced by the Issuer (or the Collateral
Manager on behalf of the Issuer) or each Hedge Counterparty on each Payment Date
to the extent that (i) the outstanding principal amount of the Notes is less
than the scheduled aggregate notional amount of the related Hedge Agreements
(other than any interest rate basis swap agreements) for such Payment Date
and/or (ii) the Net Outstanding Portfolio Balance is less than the scheduled
aggregate notional amount of the related Hedge Agreements (other than any
interest rate basis swap agreements) for such Payment Date; provided that if any
Notes are then Outstanding, the Trustee shall first have received written
evidence that the Rating Agency Condition with respect to Moody's and S&P has
been satisfied with respect to such reduction (other than as originally
scheduled pursuant to the terms of the Hedge Agreement) and the giving of notice
to Fitch and, so long as MBIA is the Controlling Class hereunder, MBIA, of such
reduction other than a scheduled reduction. Additionally, subject to
satisfaction of the Rating Agency Condition with respect to Moody's and S&P and
the notification of Fitch and, so long as MBIA is the Controlling Class
hereunder, MBIA, in respect thereof, a termination in part of a Hedge Agreement
and a corresponding reduction in the notional amount of the Hedge Agreement may
occur, in the event of a Mandatory Redemption or Special Amortization of the
Notes. The Issuer's remaining obligations in accordance with the Priority of
Payments will not be affected by any such reduction. Notwithstanding any right
of the Issuer to terminate each Hedge Agreement upon the occurrence of a
Termination Event or an Event of Default (each as defined in each Hedge
Agreement) or otherwise pursuant to a Hedge Agreement, the Issuer shall not (x)
terminate any Hedge Agreement or (y) cause the non-replacement of any terminated
Hedge Agreement, unless in each case the Issuer notifies Fitch thereof and
obtains a written confirmation from Moody's and S&P that such termination or
non-replacement, as applicable, would not cause such Rating Agency's
then-current rating on any Class of Notes, as applicable, to be adversely
qualified, reduced, suspended or withdrawn. For the avoidance of doubt, subject
to the consent of the related Hedge Counterparty if required in the Hedge
Agreement, the Issuer
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may terminate, reduce the notional amount of or otherwise modify the terms of
any Hedge Agreement if the Rating Agency Condition is satisfied in connection
therewith.
(d) Each Hedge Agreement shall provide for termination, and shall be
capable of being terminated (i) by or on behalf of the Issuer upon the failure
of the related Hedge Counterparty to, unless the Rating Agency Condition is
satisfied, post collateral under a Hedge Counterparty Credit Support within the
time period specified in the related Hedge Agreement or provide other alternate
credit enhancement in accordance with the related Hedge Agreement, or upon the
failure of the related Hedge Counterparty to make a Permitted Transfer (at the
Hedge Counterparty's sole cost and expense) of all of its rights and obligations
under the related Hedge Agreement within the time period specified in the
related Hedge Agreement, after the failure of the related Hedge Counterparty (or
any Hedge Counterparty Credit Support Provider) to have the Hedge Counterparty
Collateral Threshold Ratings; (ii) by or on behalf of the Issuer upon the
failure of the related Hedge Counterparty to make a Permitted Transfer (at the
related Hedge Counterparty's sole cost and expense) of all of its rights and
obligations under the related Hedge Agreement within the time period specified
in the related Hedge Agreement after the failure of the related Hedge
Counterparty (or any Hedge Counterparty Credit Support Provider) to have the
Hedge Counterparty Required Ratings (provided, however, that the related Hedge
Counterparty shall continue to post collateral and use its best efforts to find
a replacement pursuant to the related Hedge Agreement until the earlier to occur
of termination of the related Hedge Agreement by or on behalf of the Issuer or
consummation of a Permitted Transfer) unless the Rating Agency Condition has
been satisfied with respect to such termination, (iii) by the related Hedge
Counterparty, upon the failure of the Issuer to make, when due, any scheduled
periodic payments under the related Hedge Agreement, (iv) in whole or in part,
as provided in the related Hedge Agreement, upon the final sale of the Assets,
an Auction Call Redemption, an Optional Redemption, a Clean-up Call or a Tax
Redemption, (v) in part, as provided in the related Hedge Agreement, subject to
satisfaction of the Rating Agency Condition with respect to Moody's and S&P,
and, so long as MBIA is deemed to be the Controlling Class hereunder, the
consent of MBIA, upon a Mandatory Redemption, a Special Amortization or a Rating
Confirmation Failure, unless there will be sufficient Interest Proceeds on the
following Payment Date to pay in full any termination payment due from the
Issuer in connection therewith plus all of the amounts required to be paid by
the Issuer on such Payment Date pursuant to clauses (1) through (28) of Section
11.1(a)(i) or (vi) as otherwise expressly provided for in the related Hedge
Agreement. The Issuer shall satisfy the Rating Agency Condition with respect to
Moody's and S&P and, so long as MBIA is deemed to be the Controlling Class
hereunder, give notice to MBIA with respect to any transfer of all of the rights
and obligations of any Hedge Counterparty under any Hedge Agreement.
(e) The Trustee shall, promptly after the Closing Date, establish a
single, segregated trust account with respect to each Hedge Counterparty in the
name of the Trustee, each designated as the "Hedge Collateral Account," which
shall be held in trust for the benefit of the Noteholders and the applicable
Hedge Counterparty, over which the Trustee shall have exclusive control and the
sole right of withdrawal, and in which no Person other than the Trustee and the
Noteholders and the applicable Hedge Counterparty shall have any legal or
beneficial interest. The Trustee shall deposit all collateral received from the
related Hedge Counterparty under the related Hedge Agreement in the related
Hedge Collateral Account. Any and all funds at any time on deposit in, or
otherwise to the credit of, each Hedge Collateral Account shall be
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held in trust by the Trustee for the benefit of the Noteholders and for the
related Hedge Counterparty in accordance with the terms of the Hedge Agreement.
The only permitted withdrawal from or application of funds on deposit in, or
otherwise to the credit of, each Hedge Collateral Account shall be (i) for
application to obligations of the applicable Hedge Counterparty to the Issuer
under the related Hedge Agreement in accordance with the terms of such Hedge
Agreement or (ii) to return collateral to the applicable Hedge Counterparty when
and as required by the related Hedge Agreement, which the Trustee shall return
to the applicable Hedge Counterparty in accordance with the related Hedge
Agreement. Each Hedge Collateral Account shall remain at all times with the
Corporate Trust Office or a financial institution having a long-term debt rating
at least equal to "A-" or "A2," as applicable, or a short-term debt rating at
least equal to "A-1," "P-1" or "F1," as applicable.
(f) Upon the default by a Hedge Counterparty in the payment when due
of its obligations to the Issuer under the related Hedge Agreement (following
the expiration of any applicable grace period), the Trustee shall forthwith
provide facsimile notice thereof to the Issuer, the Collateral Manager, each of
the Rating Agencies and, if applicable, any Hedge Counterparty Credit Support
Provider. When the Trustee becomes aware of such default, the Trustee shall make
a demand on the applicable Hedge Counterparty, or any Hedge Counterparty Credit
Support Provider, if applicable, demanding payment forthwith. The Trustee shall
give notice to the Noteholders and further notice to the Collateral Manager upon
the continuing failure by such Hedge Counterparty or any Hedge Counterparty
Credit Support Provider to perform its obligations during the two Business Days
following a demand made by the Trustee on such Hedge Counterparty or any such
Hedge Counterparty Credit Support Provider.
(g) Upon the termination or partial termination of each Hedge
Agreement, the Issuer at the direction of the Collateral Manager and the Trustee
shall take such commercially reasonable actions (following the expiration of any
applicable grace period and after the expiration of the applicable time period
set forth in the related Hedge Agreement) to enforce the rights of the Issuer
and the Trustee thereunder as may be permitted by the terms of the related Hedge
Agreement and consistent with the terms hereof, and shall apply the proceeds of
any such actions (including, without limitation, the proceeds of the liquidation
of any collateral pledged by or on behalf of each Hedge Counterparty) to enter
into an additional or replacement Hedge Agreements within 30 days of the
expiration of any such grace period and such applicable time period as set forth
in the related Hedge Agreement on substantially identical terms or on such other
terms as required by the related Hedge Counterparty to any such additional or
replacement Hedge Agreement subject to the Rating Agency Condition and, so long
as MBIA is deemed to be the Controlling Class hereunder, the consent of MBIA.
The Trustee shall, promptly after the Closing Date, in respect of each Hedge
Counterparty, establish a single segregated trust account in the name of the
Trustee, each designated the "Hedge Termination Account," which shall be held in
trust for the benefit of the Noteholders and each Hedge Counterparty and over
which the Trustee will have exclusive control and the sole right of withdrawal,
and in each of which no person other than the Trustee, the Noteholders and the
Hedge Counterparty will have any legal or beneficial interest. Each Hedge
Termination Account shall remain at all times with the Corporate Trust Office or
a financial institution having a long-term debt rating at least equal to "A-" or
"A2," as applicable, or a short-term debt rating at least equal to "A-1," "P-1"
or "F1," as applicable. Notwithstanding anything contained in this Indenture to
the contrary, any payments (other than payments relating to past-due scheduled
payments on a Hedge Agreement) received
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by the Issuer or Trustee in connection with either (x) the termination (in whole
or in part) of a related Hedge Agreement or (y) the execution of an additional
or replacement Hedge Agreements shall be immediately transferred to the Trustee
for deposit into the related Hedge Termination Account. Any costs attributable
to entering into an additional or replacement Hedge Agreements (other than in
connection with a Permitted Transfer) with respect to the related Hedge
Counterparty shall be paid from the related Hedge Termination Account, and any
such amounts which are payable but exceed the balance on deposit in the related
Hedge Termination Account shall be borne solely by the Issuer and constitute
amounts payable under clause (28) of Section 11.1(a)(i) hereof. Additionally,
any amounts that are due and payable to a Hedge Counterparty upon a termination
of a Hedge Agreement shall be paid from any amounts on deposit in the related
Hedge Termination Account, and, to the extent the amounts on deposit in such
Hedge Termination Account are insufficient to pay all such amounts, then such
amounts will be payable in accordance with Section 11.1(a) hereof. Any amounts
remaining on deposit in a Hedge Termination Account related to a Hedge Agreement
following payment to the Hedge Counterparty shall be transferred to the
Principal Collection Account and shall constitute Principal Proceeds. If
determining the amount payable under the terminated Hedge Agreement, the Issuer
(or the Collateral Manager on behalf of the Issuer) shall seek quotations in
accordance with the terms of the related Hedge Agreement from reference
market-makers whose ratings are at least equal to the Hedge Counterparty
Collateral Threshold Ratings. Each Hedge Agreement may provide that the
applicable Hedge Counterparty is responsible for determining the amounts payable
in certain circumstances. In addition, the Issuer (or the Collateral Manager on
behalf of the Issuer) shall use commercially reasonable efforts to cause the
termination of the related Hedge Agreement to become effective simultaneously
with the effectiveness of a replacement thereto, described as aforesaid.
Section 16.2 Collateral Debt Securities Purchase Agreements.
Following the Closing Date, unless a Collateral Debt Securities
Purchase Agreement is necessary to comply with the provisions of this Indenture,
the Issuer may acquire Collateral Debt Securities in accordance with customary
settlement procedures in the relevant markets. In any event, the Issuer (or the
Collateral Manager on behalf of the Issuer) shall obtain from any seller of a
Loan, all Underlying Instruments with respect to each Collateral Debt Security,
and all Underlying Instruments related to any related Senior Tranche that
govern, directly or indirectly, the rights and obligations of the owner of the
Collateral Debt Security with respect to the Underlying Term Loan, the
Underlying Mortgage Property and the Collateral Debt Security and any
certificate evidencing the Collateral Debt Security.
Section 16.3 Cure Rights.
(a) If the Issuer, as holder of a Loan, has the right pursuant to the
related Underlying Instruments to cure an event of default on the Underlying
Term Loan, the Collateral Manager may, in accordance with the Collateral Manager
Servicing Standard and subject to the applicable provisions of the Servicing
Agreement, advance from its own funds with respect to the Loan as a reimbursable
Cure Advance, all such amounts as are necessary to effect the timely cure of
such event of default pursuant to the terms of the related Underlying
Instruments; provided that (i) such advances may only be made to the extent that
the Collateral Manager reasonably believes that such Cash advance can be repaid
from future payments on the related
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underlying commercial mortgage loan (subject to the Collateral Manager Servicing
Standard and to the applicable provisions of the Servicing Agreement) and (ii)
the particular advance would not, if made, constitute a Nonrecoverable Cure
Advance. The determination by the Collateral Manager that it has made a
Nonrecoverable Cure Advance or that any proposed Cure Advance, if made, would
constitute a Nonrecoverable Cure Advance shall be made by the Collateral Manager
in its reasonable, good faith judgment (subject to the Collateral Manager
Servicing Standard and to the applicable provisions of the Servicing Agreement)
and shall be evidenced by an Officer's Certificate delivered promptly to the
Trustee, setting forth the basis for such determination, accompanied by an
appraisal, if available, or an independent broker's opinion of the value of the
Underlying Mortgage Property and any information that the Collateral Manager may
have obtained and that supports such determination. The Collateral Manager will
be entitled to reimbursement from any subsequent payments or recoveries on each
Collateral Debt Security in respect of which it makes a Cure Advance in
accordance with the Priority of Payments if such reimbursement would not cause
an Interest Shortfall; provided that, if at any time the Collateral Manager
shall determine (subject to the applicable provisions of the Servicing
Agreement) that a Cure Advance previously made is a Nonrecoverable Cure Advance,
the Collateral Manager shall be entitled to reimbursements for such
Nonrecoverable Cure Advance from subsequent payments or collections with respect
to the Assets on any Business Day during any Interest Accrual Period prior to
the related Determination Date (or on a Payment Date prior to any payment of
interest on or principal of the Notes in accordance with the Priority of
Payments). Notwithstanding the foregoing, the Collateral Manager will be
permitted (but not obligated) to defer or otherwise structure the timing of
recovery of any Nonrecoverable Cure Advance in such manner as the Collateral
Manager determines is in the best interest of the Holders of the Class A Notes
and the Class B Notes, as a collective whole, which may include being reimbursed
for such Nonrecoverable Cure Advance in installments.
(b) No later than 11:00 a.m. on the Business Day preceding each
Determination Date, the Collateral Manager may request by Officer's Certificate
delivered to the Trustee, reimbursement for any (i) Cure Advance or (ii)
Nonrecoverable Cure Advance, from any amounts received with respect to the
related Collateral Debt Security or the Assets, respectively. No later than the
Payment Date related to the Determination Date for which the Collateral Manager
has delivered an Officer's Certificate requesting reimbursement of a Cure
Advance or a Nonrecoverable Cure Advance, the Trustee shall transfer to the
Collateral Manager, by wire transfer to an account identified to the Trustee in
writing, the amount of such Cure Advance or Nonrecoverable Cure Advance, as
applicable.
(c) Notwithstanding anything to the contrary set forth herein, the
Collateral Manager shall not be required to make any Cure Advance that it
determines in its reasonable, good faith judgment would constitute a
Nonrecoverable Cure Advance as determined pursuant to Section 16.3(a).
Section 16.4 Purchase Right; Holder of a Majority of the Preferred
Shares.
If the Issuer, as holder of a Participation or B Note, has the right
pursuant to the related Underlying Instruments to purchase any related Senior
Tranche(s), the Issuer may, and shall if directed by the Holder of a Majority of
the Preferred Shares, exercise such right, if the Collateral Manager determines,
in accordance with the Collateral Manager Servicing Standard,
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that the exercise of the option would be in the best interest of the
Noteholders, but may not exercise such right if the Collateral Manager
determines otherwise. The Collateral Manager shall deliver to the Trustee an
Officer's Certificate certifying such determination, accompanied by an Act of
the Holder of a Majority of the Preferred Shares directing the Issuer to
exercise such right. In connection with the purchase of any such Senior
Tranche(s), the Issuer shall assign to the Holder of a Majority of the Preferred
Shares or its designee all of its right, title and interest in such Senior
Tranche(s) in exchange for a purchase price (such price and any other associated
expense of such exercise to be paid by the Holder of a Majority of the Preferred
Shares) of the Senior Tranche(s) (or, if the Underlying Instruments permit, the
Issuer may assign the purchase right to the Holder of a Majority of the
Preferred Shares or its designee; otherwise the Holder of a Majority of the
Preferred Shares or its designee shall fund the purchase by the Issuer, which
shall then assign the Senior Tranche(s) to the Holder of a Majority of the
Preferred Shares or its designee) (the "Purchase Option Purchase Price"), which
amount shall be delivered by such Holder or its designee from its own funds to
or upon the instruction of the Collateral Manager in accordance with terms of
the Underlying Instruments related to the acquisition of such Senior Tranche(s).
The Trustee or the Issuer shall execute and deliver at the direction of such
Holder of a Majority of the Preferred Shares such instruments of transfer or
assignment prepared by such Holder, in each case without recourse, as shall be
necessary to transfer title to such Holder of the Majority of Preferred Shares
or its designee of the Senior Tranche(s) and the Trustee shall have no
responsibility with regard to such Senior Tranche(s).
Section 16.5 Representations and Warranties Related to Subsequent
Collateral Debt Securities.
(a) If the Collateral Debt Security is a Subsequent Collateral Debt
Security, upon the acquisition of such Subsequent Collateral Debt Security by
the Issuer, the related seller has made or assigned to the Issuer the following:
(i) (A) representations and warranties in form and substance
substantially similar to the representations and warranties set forth as
Schedule L attached hereto with respect to the Underlying Term Loan and the
Underlying Mortgage Property (except with respect to Mezzanine Loans and
Preferred Equity Securities) and (B) representations and warranties
regarding good title, no liens, no modifications, no defaults and valid
assignment with respect to the Loan itself; and
(ii) in the case of a B Note, the representations and warranties in
form and substance substantially similar to the representations and
warranties set forth as Schedule M attached hereto with respect to such B
Note;
(iii) in the case of a Participation, the representations and
warranties in form and substance substantially similar to the
representations and warranties set forth as Schedule N attached hereto with
respect to such Participation;
(iv) in the case of a Mezzanine Loan, the representations and
warranties in form and substance substantially similar to the
representations and warranties set forth as Schedule O attached hereto with
respect to such Mezzanine Loan;
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(v) in the case of a Preferred Equity Security, the representations
and warranties in form and substance substantially similar to the
representations and warranties set forth as Schedule P attached hereto with
respect to such Preferred Equity Security;
(vi) in the case of a CMBS Security, the representations and
warranties in form and substance substantially similar to the
representations and warranties set forth as Schedule Q attached hereto with
respect to such CMBS Security;
(vii) in the case of a CRE CDO Security, the representations and
warranties in form and substance substantially similar to the
representations and warranties set forth as Schedule Q attached hereto with
respect to such CRE CDO Security;
(viii) in the case of a REIT Debt Security, the representations and
warranties in form and substance substantially similar to the
representations and warranties set forth as Schedule Q attached hereto with
respect to such REIT Debt Security; and
(ix) in the case of a Rake Bond, the representations and warranties in
form and substance substantially similar to the representations and
warranties set forth as Schedule Q attached hereto with respect to such
Rake Bond.
(b) The representations and warranties in Section 16.5(a) with respect
to the acquisition of a Subsequent Collateral Debt Security may be subject to
any modification, limitation or qualification that the Collateral Manager
determines to be reasonably acceptable in accordance with the Collateral Manager
Servicing Standard; provided that the Collateral Manager will provide each
Rating Agency with a report attached to each Monthly Report identifying each
such affected representation or warranty and the modification, exception,
limitation or qualification received with respect to the acquisition of any
Subsequent Collateral Debt Security during the period covered by the Monthly
Report, which report may contain explanations by the Collateral Manager as to
its determinations.
(c) The Issuer (or the Collateral Manager on behalf of the Issuer)
shall obtain a covenant from the Person making any representation or warranty to
the Issuer pursuant to Section 16.5(a) that such Person shall repurchase the
related Collateral Debt Security if any such representation or warranty is
breached (but only after the expiration of any permitted cure periods and
failure to cure such breach). The purchase price for any Collateral Debt
Security repurchased (the "Repurchase Price") shall be a price equal to the sum
of the following (in each case, without duplication) as of the date of such
repurchase: (i) the then outstanding Principal Balance of such Collateral Debt
Security, discounted based on the percentage amount of any discount that was
applied when such Collateral Debt Security was purchased by the Issuer (or, if
such asset was purchased by the Issuer at a premium, then the outstanding
Principal Balance shall be subject to a percentage premium not less than that at
which the Issuer purchased such asset), plus (iv) accrued and unpaid interest on
such Collateral Debt Security, plus (v) any unreimbursed advances, plus (vi)
accrued and unpaid interest on advances on the Collateral Debt Security, plus
(vii) any reasonable costs and expenses (including, but not limited to, the cost
of any enforcement action, incurred by the Issuer or the Trustee in connection
with any such purchase by a seller).
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Section 16.6 Operating Advisor; Additional Debt.
If the Issuer, as holder of a B Note, a Participation, Preferred
Equity Security or a Mezzanine Loan, has the right pursuant to the related
Underlying Instruments to appoint the operating advisor, directing holder or
Person serving a similar function under the Underlying Instruments, each of the
Issuer, the Trustee and the Collateral Manager shall take such actions as are
reasonably necessary to appoint the Collateral Manager to such position. If the
Issuer, as holder of a B Note, a Participation or a Mezzanine Loan, has the
right pursuant to the related Underlying Instruments to consent to the related
borrower incurring any additional debt, such consent will be subject to
satisfaction of the Rating Agency Condition.
ARTICLE 17
ADVANCING AGENT
Section 17.1 Liability of the Advancing Agent.
The Advancing Agent shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by the
Advancing Agent.
Section 17.2 Merger or Consolidation of the Advancing Agent.
(a) The Advancing Agent will keep in full effect its existence, rights
and franchises as a corporation under the laws of the jurisdiction in which it
was formed, and will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of this Indenture to
perform its duties under this Indenture.
(b) Any Person into which the Advancing Agent may be merged or
consolidated, or any corporation resulting from any merger or consolidation to
which the Advancing Agent shall be a party, or any Person succeeding to the
business of the Advancing Agent shall be the successor of the Advancing Agent,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding (it being understood and agreed by the parties hereto that the
consummation of any such transaction by the Advancing Agent shall have no effect
on the Trustee's obligations under Section 10.9, which obligations shall
continue pursuant to the terms of Section 10.9).
Section 17.3 Limitation on Liability of the Advancing Agent and
Others.
None of the Advancing Agent or any of its affiliates, directors,
officers, employees or agents shall be under any liability for any action taken
or for refraining from the taking of any action in good faith pursuant to this
Indenture, or for errors in judgment; provided, however, that this provision
shall not protect the Advancing Agent against liability to the Issuer or
Noteholders for any breach of warranties or representations made herein or any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of negligent
disregard of obligations and duties
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hereunder. The Advancing Agent and any director, officer, employee or agent of
the Advancing Agent may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Advancing Agent and any director, officer, employee or
agent of the Advancing Agent shall be indemnified by the Issuer pursuant to the
priorities set forth in Section 11.1(a) and held harmless against any loss,
liability or expense incurred in connection with any legal action relating to
this Indenture or the Notes, other than any loss, liability or expense (i)
specifically required to be borne by the Advancing Agent pursuant to the terms
hereof or otherwise incidental to the performance of obligations and duties
hereunder (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Indenture); or (ii) incurred by reason of any
breach of a representation, warranty or covenant made herein, any misfeasance,
bad faith or negligence by the Advancing Agent in the performance of or
negligent disregard of, obligations or duties hereunder or any violation of any
state or federal securities law.
Section 17.4 Representations and Warranties of the Advancing Agent.
The Advancing Agent represents and warrants that:
(a) the Advancing Agent (i) has been duly organized, is validly
existing and is in good standing under the laws of the State of Maryland, (ii)
has full power and authority to own the Advancing Agent's assets and to transact
the business in which it is currently engaged, and (iii) is duly qualified and
in good standing under the laws of each jurisdiction where the Advancing Agent's
ownership or lease of property or the conduct of the Advancing Agent's business
requires, or the performance of this Indenture would require, such
qualification, except for failures to be so qualified that would not in the
aggregate have a material adverse effect on the business, operations, assets or
financial condition of the Advancing Agent or the ability of the Advancing Agent
to perform its obligations under, or on the validity or enforceability of, the
provisions of this Indenture applicable to the Advancing Agent;
(b) the Advancing Agent has full power and authority to execute,
deliver and perform this Indenture; this Indenture has been duly authorized,
executed and delivered by the Advancing Agent and constitutes a legal, valid and
binding agreement of the Advancing Agent, enforceable against it in accordance
with the terms hereof, except that the enforceability hereof may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights and (ii) general principles
of equity (regardless of whether such enforcement is considered in a proceeding
in equity or at law);
(c) neither the execution and delivery of this Indenture nor the
performance by the Advancing Agent of its duties hereunder conflicts with or
will violate or result in a breach or violation of any of the terms or
provisions of, or constitutes a default under: (i) the Articles of Incorporation
and bylaws of the Advancing Agent, (ii) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement or other evidence of indebtedness
or other agreement, obligation, condition, covenant or instrument to which the
Advancing Agent is a party or is bound, (iii) any law, decree, order, rule or
regulation applicable to the Advancing Agent of any court or regulatory,
administrative or governmental agency, body or authority or arbitrator having
jurisdiction over the Advancing Agent or its properties, and which would have,
in the case of any of (i), (ii) or (iii) of this Section 17.4(c), either
individually or in the aggregate,
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a material adverse effect on the business, operations, assets or financial
condition of the Advancing Agent or the ability of the Advancing Agent to
perform its obligations under this Indenture;
(d) no litigation is pending or, to the best of the Advancing Agent's
knowledge, threatened, against the Advancing Agent that would materially and
adversely affect the execution, delivery or enforceability of this Indenture or
the ability of the Advancing Agent to perform any of its obligations under this
Indenture in accordance with the terms hereof; and
(e) no consent, approval, authorization or order of or declaration or
filing with any government, governmental instrumentality or court or other
person is required for the performance by the Advancing Agent of its duties
hereunder, except such as have been duly made or obtained.
Section 17.5 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Advancing Agent and no
appointment of a successor Advancing Agent pursuant to this Article 17 shall
become effective until the acceptance of appointment by the successor Advancing
Agent under Section 17.6.
(b) The Advancing Agent may resign at any time by giving written
notice thereof to the Issuer, the Co-Issuer, the Trustee, the Collateral
Manager, each Hedge Counterparty, the Noteholders and each Rating Agency.
(c) The Advancing Agent may be removed at any time by Act of at least
66-2/3% of the Preferred Shares upon written notice delivered to the Trustee and
to the Issuer and the Co-Issuer.
(d) If the Advancing Agent fails to make an Interest Advance required
by this Indenture with respect to a Payment Date, the Backup Advancing Agent
shall be required to make such Interest Advance and shall be entitled to
receive, in consideration thereof, the Advancing Agent Fee (in lieu of the
Backup Advancing Agent Fee) in accordance with the Priority of Payments. If the
Advancing Agent fails to make a required Interest Advance and it has not
determined such Interest Advance to be a Nonrecoverable Interest Advance, the
Collateral Manager may, and at the direction of the Controlling Class shall,
terminate such Advancing Agent and replace such Advancing Agent with a successor
advancing agent the appointment of which satisfies the Rating Agency Condition
and, so long as MBIA is deemed to be the Controlling Class hereunder, to which
MBIA consents. In the event that the Collateral Manager has not terminated and
replaced such Advancing Agent within 30 days of such Advancing Agent's failure
to make a required Interest Advance, the Trustee may terminate such Advancing
Agent and appoint a successor Advancing Agent.
(e) Subject to Section 17.5(d), if the Advancing Agent shall resign or
be removed, upon receiving such notice of resignation or removal, the Issuer and
the Co-Issuer shall promptly appoint a successor advancing agent by written
instrument, in duplicate, executed by an Authorized Officer of the Issuer and an
Authorized Officer of the Co-Issuer, one copy of which shall be delivered to the
Advancing Agent so resigning and one copy to the successor Advancing Agent,
together with a copy to each Noteholder, the Trustee, each Hedge
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Counterparty and the Collateral Manager; provided that such successor Advancing
Agent shall be appointed only subject to satisfaction of the Rating Agency
Condition, upon the written consent of a Majority of the Preferred Shares and,
so long as MBIA is deemed to be the Controlling Class hereunder, the consent of
MBIA. If no successor Advancing Agent shall have been appointed and an
instrument of acceptance by a successor Advancing Agent shall not have been
delivered to the Advancing Agent within 30 days after the giving of such notice
of resignation, the resigning Advancing Agent, the Trustee or any Preferred
Shareholder, on behalf of himself and all others similarly situated, may
petition any court of competent jurisdiction for the appointment of a successor
Advancing Agent.
(f) The Issuer and the Co-Issuer shall give prompt notice of each
resignation and each removal of the Advancing Agent and each appointment of a
successor Advancing Agent by mailing written notice of such event by first class
mail, postage prepaid, to each Rating Agency, each Hedge Counterparty and to the
Holders of the Notes as their names and addresses appear in the Notes Register.
Section 17.6 Acceptance of Appointment by Successor Advancing Agent.
(a) Every successor Advancing Agent appointed hereunder shall execute,
acknowledge and deliver to the Issuer, the Co-Issuer, each Hedge Counterparty,
the Collateral Manager, the Trustee and the retiring Advancing Agent an
instrument accepting such appointment. Upon delivery of the required
instruments, the resignation or removal of the retiring Advancing Agent shall
become effective and such successor Advancing Agent, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts,
duties and obligations of the retiring Advancing Agent.
(b) No appointment of a successor Advancing Agent shall become
effective unless each Rating Agency has confirmed in writing that the employment
of such successor would not adversely affect the rating on the Notes.
ARTICLE 18
CLASS A-1AR NOTES
Section 18.1 Draws on the Class A-1AR Notes and Class A-1AR
Commitments.
(a) Pursuant to the Class A-1AR Note Purchase Agreement and subject to
compliance with the conditions set forth therein and herein, the Issuer (or the
Collateral Manager on behalf of the Issuer) may request, and the Holders of the
Class A-1AR Notes (or any Liquidity Provider with respect to such Holders) shall
be obligated to fund, one or more Class A-1AR Draws under the Class A-1AR Notes
(i) prior to the Commitment Termination Time, (x) to fund Delayed Funding
Amounts relating to Delayed Draw Term Loans included in the Collateral Debt
Securities, (y) to acquire Collateral Debt Securities and (z) in connection with
a Special Amortization and (ii) after the occurrence of an Event of Default but
prior to acceleration of the Notes, solely to fund Delayed Funding Amounts
relating to Delayed Draw Term Loans included in the Collateral Debt Securities.
Any Class A-1AR Draw will be made by the Collateral Manager on behalf of the
Issuer, pro rata, according to the unused portion of the
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Class A 1AR Commitment of each Holder of Class A-1AR Notes. After the occurrence
of an Event of Default but prior to acceleration of the Notes, Class A-1AR Draws
may not be used to acquire additional Collateral Debt Securities or in
connection with a Special Amortization. Class A-1AR Draws may be made on any
Business Day from and including the Closing Date to but excluding the Commitment
Termination Time (the date of such Class A-1AR Draw, the "Class A-1AR Draw
Date"). Promptly following any request for a Class A-1AR Draw under the Class
A-1AR Note Purchase Agreement and in no event later than 5:00 pm on the Business
Day immediately prior to such Class A-1AR Draw, the Trustee shall determine the
LIBOR rate applicable to such Class A-1AR Draw and inform the Class A-1AR Note
Agent and the Issuer of such rate.
(b) Draws may be made from time to time in accordance with the Class
A-1AR Note Purchase Agreement. The Issuer shall duly and punctually perform each
of its obligations under the Class A-1AR Note Purchase Agreement. The Issuer is
not required to borrow any amount under the Class A-1AR Notes on the Closing
Date or at any other time unless the applicable servicer or the Collateral
Manager, as applicable, has determined that a Delayed Funding Advance is
required under the related Underlying Instruments related to a Delayed Draw Term
Loan included in the Collateral Debt Securities and the amounts on deposit in
the Delayed Funding Obligations Account, if any, are insufficient to make such
Delayed Funding Advance.
(c) On the Mandatory Class A-1AR Draw Date, the Issuer (or the
Collateral Manager on its behalf) will make a Class A-1AR Draw in an amount
equal to the Aggregate Class A-1AR Undrawn Amount, the proceeds of which shall
be deposited as follows: (i) the amount necessary to make the amount on deposit
in the Delayed Funding Obligations Account equal to the Total Unfunded Delayed
Funding Amount shall be deposited in the Delayed Funding Obligations Account,
and (ii) any remainder shall be deposited in the Collection Account as Principal
Proceeds. Immediately following such draw, the Class A-1AR Commitments shall
terminate.
(d) To the extent that a Class A-1AR Draw (or a portion thereof) is
being made to fund Delayed Funding Amounts relating to Delayed Draw Term Loans,
the Trustee shall (at the direction of the Collateral Manager) upon receipt of
the proceeds of any Class A-1AR Draw, deposit such proceeds (or the applicable
portion thereof) into the Delayed Funding Obligations Account where such amounts
shall be applied in accordance with Section 10.6. To the extent that a Class
A-1AR Draw (or a portion thereof) is being made in connection with a Special
Amortization, the Trustee shall (at the direction of the Collateral Manager)
upon receipt of the proceeds of any Class A-1AR Draw, deposit such proceeds (or
the applicable portion thereof) into the Principal Collection Account where such
amounts shall be applied in accordance with Section 10.2.
(e) The total of all Class A-1AR Commitments for all Holders of Class
A-1AR Notes shall not exceed the Maximum Class A-1AR Commitment. Notwithstanding
the foregoing, to the extent the Aggregate Outstanding Amount of the Class A-1
Notes is reduced in connection with a Mandatory Redemption, a Special
Amortization or a redemption in connection with a Rating Confirmation Failure,
the Class A-1AR Commitments will be reduced so that, after giving effect to such
reduction, the ratio (expressed as a percentage) of the
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Maximum Class A-1AR Commitment to the Aggregate Outstanding Amount of the Class
A-1A Notes is equal to the Class A-1AR Proportion (and the Class A-1AR
Commitment related to each Class A-1AR Note will be reduced on a pro rata
basis). In connection with any Mandatory Redemption, to the extent that the
Class A-1AR Commitments are reduced to an amount less than the Minimum Class
A-1AR Commitment, a portion of the Interest Proceeds and/or Principal Proceeds
that are available for distribution shall be deposited into the Delayed Funding
Obligations Account until the Aggregate Class A-1AR Undrawn Amount equals the
Minimum Class A-1AR Commitment.
Section 18.2 Class A-1AR Interest and Class A-1AR Commitment Fee.
(a) With respect to any Payment Date, interest on the Class A-1AR
Notes will be payable in arrears in an amount equal to (A) the product of (i)
the Weighted Average Drawn Class A-1AR Note Portion during the related Interest
Accrual Period, (ii) the Class A-1AR Rate, and (iii) the actual number of days
elapsed in such Interest Accrual Period, divided by (B) 360; provided that
interest accrued in respect of amounts borrowed under the Class A-1AR Notes
during the period following the Determination Date through such Payment Date
will be payable (without penalty interest thereon) on the next succeeding
Payment Date. Interest on the Class A-1AR Notes will be payable from the date of
each Class A-1AR Draw under the Class A-1AR Notes, and accrued and unpaid
interest will be payable in arrears on each Payment Date. Interest will be
payable to the Holders of the Class A-1AR Notes, pro rata, based on their Class
A-1AR Interest Allocation.
(b) The Class A-1AR Commitment Fee will accrue on the daily undrawn
amount of each Class A-1AR Commitment for each Interest Accrual Period at a rate
per annum equal to 0.22% (computed on the basis of a 360-day year and the actual
number of days elapsed). Among the Class A-1 Notes, the Class A-1AR Commitment
Fee will be payable in arrears on each Payment Date and will rank pari passu
with the payment of interest on the Class A-1A Notes and the Class A-1AR Notes.
Interest at the Class A-1AR Rate will accrue on any portion of the Class A-1AR
Commitment Fee that is not paid when due.
Section 18.3 Prepayments of Class A-1AR Notes.
(a) Prior to the Commitment Termination Time, the Class A-1AR Notes
may be prepaid (in whole or in part), at the option of the Issuer (at the
direction of the Collateral Manager) in accordance with the terms of the Class
A-1AR Note Purchase Agreement, without payment of a premium, on (i) any Payment
Date and prior to any payments on any other Class of Notes, from Principal
Proceeds to the extent Principal Proceeds are available for such application
pursuant to Section 11.1(a)(ii) and/or amounts on deposit in the Delayed Funding
Obligations Account or (ii) any Business Day other than a Payment Date, from
Principal Proceeds to the extent Principal Proceeds are available for such
application and/or amounts on deposit in the Delayed Funding Obligations
Account, but subject to the payment of Class A-1AR Breakage Costs. Any Class
A-1AR Breakage Costs will be paid in accordance with the Priority of Payments on
the Payment Date following the applicable Class A-1AR Prepayment Date.
(b) The aggregate principal amount of any partial voluntary Class
A-1AR Prepayment, in respect of the Class A-1AR Notes (taken as a whole), will
be at least $500,000
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(and integral multiples of $500 in excess thereof) or, if the aggregate
outstanding amount under the Class A-1AR Notes is less than $500,000, such
lesser amount. The Issuer shall make all Class A-1AR Prepayments pro rata based
on the Aggregate Outstanding Amount of the Class A-1AR Notes at the time such
prepayment is made. Subject to compliance with certain draw conditions specified
in the Class A-1AR Note Purchase Agreement and herein, all such prepaid amounts
may be re-borrowed until the Commitment Termination Time.
(c) After the Mandatory Class A-1AR Draw Date, principal will be
payable to the Class A-1AR Notes pro rata with the Class A-1A Notes based on the
Class A-1A/A-1AR Pro Rata Allocation.
(d) Prior to the Commitment Termination Time, the Aggregate Class
A-1AR Undrawn Amount must be an amount at least equal to the Minimum Class A-1AR
Commitment.
Section 18.4 Class A-1AR Ratings Criteria.
In accordance with the applicable provisions of the Class A-1AR Note
Purchase Agreement, at the time of its purchase of a Class A-1AR Note and prior
to the Commitment Termination Time, each Holder (including any transferee) of a
Class A-1AR Note must satisfy the Class A-1AR Ratings Criteria. Except in the
case of any "Committed Liquidity Provider" (as defined in the Class A-1AR Note
Purchase Agreement) which has funded the related Holder Subaccount in an amount
equal to its unfunded Class A-1AR Commitment, if any Holder of Class A-1AR Notes
at any time prior to the Commitment Termination Time fails to satisfy the Class
A-1AR Ratings Criteria, such Holder shall within five Business Days thereafter
deposit cash in a Holder Subaccount in an amount equal to the undrawn amount of
such Holder's Class A-1AR Commitment. If such Holder fails to fund a Holder
Subaccount as described in the preceding sentence, (i) the Issuer (or the
Collateral Manager on behalf of the Issuer) shall promptly replace such Holder
(at the cost of such Holder) with another entity that meets the Class A-1AR
Ratings Criteria (by requiring the replaced Holder to transfer all of its rights
and obligations in respect of the Class A-1AR Notes to the transferee entity)
and (ii) any payments of principal of, or interest on, any Class A-1AR Note held
by such Noteholder, and any payments of a Class A-1AR Commitment Fee otherwise
payable to such Noteholder, shall be remitted to a Holder Subaccount of such
Noteholder (each, a "Holder Subaccount") and held to secure the obligation of
such Noteholder. The purchase of Class A-1AR Notes (whether in connection with
the initial placement or in a subsequent transfer) by any purchaser who does not
satisfy the Class A-1AR Ratings Criteria set forth in clause (a) of the
definition thereof at the time of such purchase but who is then entitled to the
benefits of a Liquidity Facility described in clause (c) of such definition
shall not be permitted unless the Rating Agency Condition is satisfied with
respect thereto and such Liquidity Provider enters into an assignment and
acceptance agreement agreeing to undertake and be bound by the provisions of the
Class A-1AR Note Purchase Agreement applicable thereto.
Section 18.5 Class A-1AR Holder Collateral Account.
(a) The Trustee shall, prior to the Closing Date, establish a single,
segregated trust account which shall be designated as the "Class A-1AR Holder
Collateral Account," which account, together with any and all funds at any time
on deposit therein, or otherwise credited
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thereto, shall be held in trust for the benefit of the Holders of the Class
A-1AR Notes and each Liquidity Provider (and, to the extent of amounts applied
in accordance with the Class A-1AR Note Purchase Agreement for such purpose, for
the benefit of the Holders of the Notes) and over which the Trustee shall have
exclusive control and the sole right of withdrawal. If at any time any Holder of
a Class A-1AR Note shall be required to deposit funds into the Class A-1AR
Holder Collateral Account pursuant to the terms of the Class A-1AR Note Purchase
Agreement, then (i) the Collateral Manager shall direct the Trustee to and the
Trustee shall create a Holder Subaccount and (ii) the Holder shall deposit all
required funds into such Holder Subaccount. All payments of principal of the
Class A-1AR Notes otherwise payable to such Holder shall be deposited in such
Holder Subaccount to the extent provided in the Class A-1AR Note Purchase
Agreement. The only permitted withdrawal from or application of funds credited
to a Holder Subaccount shall, notwithstanding the occurrence of any Event of
Default, be to satisfy such Holder's obligations under the Class A-1AR Note
Purchase Agreement, as specified in this Section 18.5 and to return such amounts
to such Holder in accordance with Section 18.5(d).
(b) The deposit of funds into a Holder Subaccount pursuant to Section
18.5(a) by any Holder of a Class A-1AR Note shall not constitute a Class A-1AR
Draw by the Issuer and shall not constitute a Class A-1AR Draw or a utilization
of the Class A-1AR Commitment of such Holder, and the funds so deposited shall
not constitute principal outstanding under such Class A-1AR Note. However, from
and after the establishment of a Holder Subaccount with respect to any Holder of
Class A-1AR Notes until otherwise provided below, (i) the obligation of such
Holder to advance funds under its Class A-1AR Notes as part of any Class A-1AR
Draw under this Indenture and the Class A-1AR Note Purchase Agreement shall be
satisfied by the Collateral Manager withdrawing funds from such Holder
Subaccount in the amount of such Holder's share of such Class A-1AR Draw
(determined in accordance with the Class A-1AR Note Purchase Agreement), and
(ii) all payments of principal with respect to advances made by such Holder
under its Class A-1AR Notes (whether or not originally funded from such Holder
Subaccount) (and, in the case of any defaulting Holder, all payments of interest
thereon) shall be satisfied by the Collateral Manager depositing or causing the
deposit of the related funds into such Holder Subaccount, with notice of such
deposit to the Class A-1AR Note Agent. The Collateral Manager shall have full
power and authority to withdraw funds (with prior notice of any such withdrawal
to the Class A-1AR Note Agent) from each such Holder Subaccount at the time of,
and in connection with, the making of any such Class A-1AR Draw and to deposit
funds (with notice of any such deposit to the Class A-1AR Note Agent) into each
such Holder Subaccount, all in accordance with the terms of and for the purposes
set forth in this Indenture and the Class A-1AR Note Purchase Agreement.
(c) If at any time the amount of funds on deposit in the Holder
Subaccount relating to any Holder of Class A-1AR Notes, net of any earnings in
respect of Class A-1AR Eligible Investments, exceeds the undrawn amount of the
Class A-1AR Commitment of such Holder (whether due to a reduction in the Class
A-1AR Commitment or otherwise), then the Collateral Manager on behalf of the
Issuer shall instruct the Trustee to remit to such Holder a specified portion of
such funds then held in the related Holder Subaccount in an amount equal to such
excess.
(d) If at any time a Holder of Class A-1AR Notes is no longer required
to deposit or maintain funds in the Class A-1AR Holder Collateral Account
pursuant to the terms of
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the Class A-1AR Note Purchase Agreement to which such Holder is a party, then
the Collateral Manager shall notify the Trustee of such fact and direct the
Trustee to remit all funds (including, for the avoidance of doubt, earnings in
respect of Class A-1AR Eligible Investments) then held in the relevant Holder
Subaccount (after giving effect to any Class A-1AR Draw in respect of such Class
A-1AR Notes to be made on such date) to such Holder (with notice thereof to the
Class A-1AR Note Agent), and thereafter all payments of principal and interest
with respect to advances made by such Holder shall be paid directly to such
Holder in accordance with the terms of this Indenture and the Class A-1AR Note
Purchase Agreement.
(e) The Trustee agrees to give the Issuer, the Collateral Manager and
the related Holder immediate notice if it becomes aware that the Class A-1AR
Holder Collateral Account, any Holder Subaccount or any funds on deposit
therein, or otherwise to the credit of the Class A-1AR Holder Collateral Account
or any Holder Subaccount, shall become subject to any writ, order, judgment,
warrant of attachment, execution or similar process. Except to the extent
specifically set forth herein, the Issuer shall not have any legal, equitable or
beneficial interest in the Class A-1AR Holder Collateral Account. The Class
A-1AR Holder Collateral Account shall remain at all times with the Corporate
Trust Office or a financial institution having a long term debt rating by each
Rating Agency at least equal to "A" or "A2," as applicable, and a short term
debt rating at least equal to "A-1" or "P-1," as applicable.
(f) For so long as any amounts are on deposit in a Holder Subaccount,
the Trustee shall, at the written direction of the related Class A-1AR
Noteholder (which may be in the form of standing instructions), invest and
reinvest such funds in investments which satisfy the definition of the term
"Eligible Investments" but which mature not later than the day following the
date of acquisition thereof (collectively, "Class A-1AR Eligible Investments").
Investment earnings received during each Due Period in respect of Eligible
Investments in the Holder Subaccount of a Holder of Class A-1AR Notes will (so
long as such Holder is not a defaulting Holder) be paid to such Holder on the
related Payment Date. In the absence of such instructions, such funds will
remain uninvested.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Indenture as of the day and year first above written.
ARBOR REALTY MORTGAGE SECURITIES SERIES
2006-1, LTD., as Issuer
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
ARBOR REALTY MORTGAGE SECURITIES SERIES
2006-1 LLC, as Co-Issuer
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
------------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Authorized Signatory
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
solely as Trustee, Paying Agent,
Calculation Agent, Transfer Agent,
Custodial Securities Intermediary,
Backup Advancing Agent and Notes
Registrar and not in its individual
capacity
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
ARBOR REALTY SR, INC., as Advancing
Agent
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
------------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Authorized Signatory