Exhibit 10.1

 

EXECUTION VERSION

 

 

ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1, LTD.,
as Issuer,

 

ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1 LLC,
as Co-Issuer,

 

ARBOR REALTY SR, INC.,
as Advancing Agent

 

AND

 

U.S. BANK NATIONAL ASSOCIATION,
as Trustee, Paying Agent, Calculation Agent, Transfer Agent,
Custodial Securities Intermediary, Backup Advancing Agent and Notes Registrar

 

INDENTURE

 

Dated as of February 27, 2015

 

 

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TABLE OF CONTENTS

 

 

 

Page

ARTICLE 1

 

 

DEFINITIONS

 

 

Section 1.1

Definitions

3

Section 1.2

Assumptions as to Assets

41

Section 1.3

Interest Calculation Convention

43

Section 1.4

Rounding Convention

43

 

 

 

ARTICLE 2

 

 

THE NOTES

 

 

Section 2.1

Forms Generally

43

Section 2.2

Forms of Notes and Certificate of Authentication

44

Section 2.3

Authorized Amount; Stated Maturity Date; and Denominations

45

Section 2.4

Execution, Authentication, Delivery and Dating

45

Section 2.5

Registration, Registration of Transfer and Exchange

46

Section 2.6

Mutilated, Defaced, Destroyed, Lost or Stolen Note

53

Section 2.7

Payment of Principal and Interest and Other Amounts; Principal and Interest
Rights Preserved

54

Section 2.8

Persons Deemed Owners

58

Section 2.9

Cancellation

58

Section 2.10

Global Securities; Definitive Notes; Temporary Notes

59

Section 2.11

U.S. Tax Treatment of Notes and the Issuer

60

Section 2.12

Authenticating Agents

61

Section 2.13

Forced Sale on Failure to Comply with Restrictions

62

Section 2.14

No Gross Up

62

 

 

ARTICLE 3

 

 

CONDITIONS PRECEDENT; PLEDGED LOAN OBLIGATIONS

 

 

Section 3.1

General Provisions

63

Section 3.2

Security for Notes

66

Section 3.3

Transfer of Assets

67

 

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ARTICLE 4

 

 

 

SATISFACTION AND DISCHARGE

 

 

Section 4.1

Satisfaction and Discharge of Indenture

75

Section 4.2

Application of Amounts held in Trust

77

Section 4.3

Repayment of Amounts Held by Paying Agent

77

Section 4.4

Limitation on Obligation to Incur Company Administrative Expenses

77

 

 

 

ARTICLE 5

 

 

REMEDIES

 

 

Section 5.1

Events of Default

78

Section 5.2

Acceleration of Maturity; Rescission and Annulment

80

Section 5.3

Collection of Indebtedness and Suits for Enforcement by Trustee

82

Section 5.4

Remedies

84

Section 5.5

Preservation of Assets

86

Section 5.6

Trustee May Enforce Claims Without Possession of Notes

87

Section 5.7

Application of Amounts Collected

88

Section 5.8

Limitation on Suits

88

Section 5.9

Unconditional Rights of Noteholders to Receive Principal and Interest

89

Section 5.10

Restoration of Rights and Remedies

89

Section 5.11

Rights and Remedies Cumulative

89

Section 5.12

Delay or Omission Not Waiver

89

Section 5.13

Control by the Controlling Class

89

Section 5.14

Waiver of Past Defaults

90

Section 5.15

Undertaking for Costs

90

Section 5.16

Waiver of Stay or Extension Laws

91

Section 5.17

Sale of Assets

91

Section 5.18

Action on the Notes

92

 

 

 

ARTICLE 6

 

 

THE TRUSTEE

 

 

Section 6.1

Certain Duties and Responsibilities

92

Section 6.2

Notice of Default

94

Section 6.3

Certain Rights of Trustee

95

Section 6.4

Not Responsible for Recitals or Issuance of Notes

97

Section 6.5

May Hold Notes

97

Section 6.6

Amounts Held in Trust

97

Section 6.7

Compensation and Reimbursement

97

Section 6.8

Corporate Trustee Required; Eligibility

99

Section 6.9

Resignation and Removal; Appointment of Successor

99

Section 6.10

Acceptance of Appointment by Successor

101

 

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Section 6.11

Merger, Conversion, Consolidation or Succession to Business of Trustee

101

Section 6.12

Co-Trustees and Separate Trustee

101

Section 6.13

Certain Duties of Trustee Related to Delayed Payment of Proceeds

103

Section 6.14

Representations and Warranties of the Trustee

103

Section 6.15

Requests for Consents

104

Section 6.16

Withholding

104

 

 

 

ARTICLE 7

 

 

COVENANTS

 

 

Section 7.1

Payment of Principal and Interest

105

Section 7.2

Maintenance of Office or Agency

105

Section 7.3

Amounts for Note Payments to be Held in Trust

106

Section 7.4

Existence of the Issuer and Co-Issuer

108

Section 7.5

Protection of Assets

110

Section 7.6

Notice of Any Amendments

111

Section 7.7

Performance of Obligations

111

Section 7.8

Negative Covenants

112

Section 7.9

Statement as to Compliance

115

Section 7.10

Issuer and Co-Issuer May Consolidate or Merge Only on Certain Terms

115

Section 7.11

Successor Substituted

118

Section 7.12

No Other Business

118

Section 7.13

Reporting

119

Section 7.14

Calculation Agent

119

Section 7.15

REIT Status

120

Section 7.16

Permitted Subsidiaries

121

Section 7.17

Repurchase Requests

121

Section 7.18

Purchase of Additional Loan Obligations

122

Section 7.19

Portfolio Finalization Date Actions

122

 

 

ARTICLE 8

 

 

SUPPLEMENTAL INDENTURES

 

 

Section 8.1

Supplemental Indentures Without Consent of Securityholders

123

Section 8.2

Supplemental Indentures with Consent of Securityholders

127

Section 8.3

Execution of Supplemental Indentures

129

Section 8.4

Effect of Supplemental Indentures

129

Section 8.5

Reference in Notes to Supplemental Indentures

130

 

 

ARTICLE 9

 

 

REDEMPTION OF SECURITIES; REDEMPTION PROCEDURES

 

 

Section 9.1

Clean-up Call; Tax Redemption and Optional Redemption

130

 

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Section 9.2

Notice of Redemption

131

Section 9.3

Notice of Redemption or Maturity by the Issuer

132

Section 9.4

Notes Payable on Redemption Date

132

Section 9.5

Mandatory Redemption

133

 

 

ARTICLE 10

 

 

ACCOUNTS, ACCOUNTINGS AND RELEASES

 

 

Section 10.1

Collection of Amounts; Custodial Account

133

Section 10.2

Collection Accounts

133

Section 10.3

Payment Account

136

Section 10.4

Unused Proceeds Account

136

Section 10.5

Reserved

137

Section 10.6

RDD Funding Account

137

Section 10.7

Expense Account

138

Section 10.8

Interest Rate Cap Termination Receipts Account

139

Section 10.9

Interest Advances

140

Section 10.10

Reports by Parties

143

Section 10.11

Reports; Accountings

143

Section 10.12

Release of Loan Obligations; Release of Assets

150

Section 10.13

Reports by Independent Accountants

151

Section 10.14

Reports to Rating Agencies

152

Section 10.15

Certain Procedures

152

 

 

ARTICLE 11

 

 

APPLICATION OF AMOUNTS

 

 

Section 11.1

Disbursements of Amounts from Payment Account

153

Section 11.2

Securities Accounts

157

 

 

ARTICLE 12

 

 

SALE OF LOAN OBLIGATIONS

 

 

Section 12.1

Sales of Loan Obligations

158

Section 12.2

Replacement Loan Obligations

160

Section 12.3

Conditions Applicable to all Transactions Involving Sale or Grant

161

Section 12.4

Modifications to Moody’s Tests

162

 

 

 

ARTICLE 13

 

 

NOTEHOLDERS’ RELATIONS

 

 

Section 13.1

Subordination

162

 

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Section 13.2

Standard of Conduct

164

 

 

 

ARTICLE 14

 

 

MISCELLANEOUS

 

 

Section 14.1

Form of Documents Delivered to the Trustee

164

Section 14.2

Acts of Securityholders

165

Section 14.3

Notices, etc., to the Trustee, the Issuer, the Co-Issuer, the Advancing Agent,
the Loan Obligation Manager, the Co-Placement Agents and the Rating Agencies

166

Section 14.4

Notices to Noteholders; Waiver

167

Section 14.5

Effect of Headings and Table of Contents

168

Section 14.6

Successors and Assigns

168

Section 14.7

Severability

168

Section 14.8

Benefits of Indenture

168

Section 14.9

Governing Law

169

Section 14.10

Submission to Jurisdiction

169

Section 14.11

Counterparts

169

Section 14.12

Liability of Co-Issuers

169

Section 14.13

17g-5 Information

170

Section 14.14

Rating Agency Condition

170

 

 

 

ARTICLE 15

 

 

ASSIGNMENT OF LOAN OBLIGATION PURCHASE AGREEMENTS AND LOAN MANAGEMENT AGREEMENT

 

 

Section 15.1

Assignment of Loan Obligation Purchase Agreements and the Loan Obligation
Management Agreement

171

 

 

ARTICLE 16

 

 

INTEREST RATE CAP AGREEMENT; CURE RIGHTS; PURCHASE RIGHTS; REPLACEMENT LOAN
OBLIGATIONS

 

 

Section 16.1

Issuer’s Obligations under Interest Rate Cap Agreements

173

Section 16.2

Loan Obligation Purchase Agreements

175

Section 16.3

Representations and Warranties Related to Replacement Loan Obligations

175

Section 16.4

Operating Advisor

176

Section 16.5

Purchase Right; Holder of a Majority of the Preferred Shares

176

 

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ARTICLE 17

 

ADVANCING AGENT

 

 

Section 17.1

Liability of the Advancing Agent

176

Section 17.2

Merger or Consolidation of the Advancing Agent

177

Section 17.3

Limitation on Liability of the Advancing Agent and Others

177

Section 17.4

Representations and Warranties of the Advancing Agent

177

Section 17.5

Resignation and Removal; Appointment of Successor

178

Section 17.6

Acceptance of Appointment by Successor Advancing Agent

179

 

SCHEDULES

 

 

 

 

 

Schedule A

 

Closing Date Loan Obligations

Schedule B

 

LIBOR

Schedule C

 

List of Authorized Officers of Loan Obligation Manager

 

 

 

EXHIBITS

 

 

 

 

 

Exhibit A-1

 

Form of Class A Senior Secured Floating

 

 

Rate Note (Global Security)

Exhibit A-2

 

Form of Class A Senior Secured Floating

 

 

Rate Note (Definitive Note)

Exhibit B-1

 

Form of Class B Secured Floating

 

 

Rate Note (Global Security)

Exhibit B-2

 

Form of Class B Secured Floating

 

 

Rate Note (Definitive Note)

Exhibit C-1

 

Form of Class C Secured Floating

 

 

Rate Note (Global Security)

Exhibit C-2

 

Form of Class C Secured Floating

 

 

Rate Note (Definitive Note)

Exhibit D-1

 

Form of Transfer Certificate — Regulation S Global Security

Exhibit D-2

 

Form of Transfer Certificate — Rule 144A Global Security

Exhibit D-3

 

Form of Transfer Certificate — Definitive Note

Exhibit E

 

Form of Closing Document Checklist Regarding the Loan Obligation File

Exhibit F

 

Form of Trust Receipt

Exhibit G

 

Form of Request for Release

Exhibit H

 

Form of NRSRO Certification

Exhibit I

 

Form or Representations and Warranties For Loan Obligations

 

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INDENTURE, dated as of February 27, 2015, by and between ARBOR REALTY COMMERCIAL
REAL ESTATE NOTES 2015-FL1, LTD., an exempted company incorporated in the Cayman
Islands with limited liability (the “Issuer”), ARBOR REALTY COMMERCIAL REAL
ESTATE NOTES 2015-FL1 LLC, a limited liability company formed under the laws of
Delaware (the “Co-Issuer”), U.S. 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, U.S.
Bank National Association, in all of its capacities, 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:

 

(a)                                 the Loan Obligations listed in the Schedule
of Closing Date Loan Obligations 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 Loan
Obligations which are delivered to the Trustee (directly or through an agent or
bailee) after the Closing Date pursuant to the terms hereof (including all
Additional Loan Obligations and Replacement Loan Obligations) and all payments
thereon or with respect thereto,

 

(b)                                 the Collection Accounts, the Payment
Account, the Expense Account, the Unused Proceeds Account, the RDD Funding
Account, the Custodial Account, the Interest Rate Cap Termination Receipts
Account and the related security entitlements and all income from the investment
of funds in any of the foregoing at any time credited to any of the foregoing
accounts,

 

(c)                                  the Eligible Investments,

 

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(d)                                 the rights of the Issuer under the Loan
Obligation Management Agreement, each Loan Obligation Purchase Agreement
(including any Loan Obligation Purchase Agreement entered into after the Closing
Date), the Servicing Agreement and any Interest Rate Cap Agreement,

 

(e)                                  all amounts delivered to the Trustee (or
its bailee) (directly or through a securities intermediary),

 

(f)                                   all other investment property, instruments
and general intangibles in which the Issuer has an interest, other than the
Excepted Assets,

 

(g)                                  the Issuer’s ownership interest in, and
rights to, all Permitted Subsidiaries and

 

(h)                                 all proceeds with respect to the foregoing
clauses (a) through (g).

 

The collateral described in the foregoing clauses (a) through (h), with the
exception of any Excepted Assets, is referred to herein as the “Assets.”  Such
Grants are made to secure the Notes equally and ratably without prejudice,
priority or distinction between any Note and any other Note for any reason,
except as expressly provided in this Indenture (including, but not limited to,
the Priority of Payments) and to secure (i) the payment of all amounts due on
and in respect of the Notes 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.  The foregoing
Grant shall, for the purpose of determining the property subject to the lien of
this Indenture, 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 “Loan Obligation” 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.  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 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 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 exercise, 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.

 

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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 “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.  Any capitalized term used herein without definition shall have the
meaning ascribed to such term in the Servicing Agreement.

 

“17g-5 Information”:  The meaning specified in Section 14.3(h) hereof.

 

“17g-5 Website”:  A password-protected internet website which shall initially be
located at www.usbank.com/abs.  Any change of the 17g-5 Website shall only occur
after notice has been delivered by the Issuer to the Information Agent, the
Trustee, the Collateral Administrator, the Loan Obligation Manager, the
Co-Placement Agents, and the Rating Agencies, which notice shall set forth the
date of change and new location of the 17g-5 Website.

 

“1940 Act”:  Investment Company Act of 1940, as amended.

 

“5 Times Square Junior Participation”: The participation represented by
Certificate A-1-1 of Sub-Participation A-1, as defined in that certain
Sub-Participation and Servicing Agreement, dated as of October 6, 2011, by and
among Arbor Realty Participation, LLC, Arbor Realty Mortgage Securities
Series 2005-1, Ltd. and Arbor Realty Mortgage Securities Series 2006-1, Ltd., of
the 5 Times Square Whole Loan.

 

“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.

 

“Accepted Loan Servicer”:  Any commercial mortgage loan master or primary
servicer that (1) is engaged in the business of servicing commercial mortgage
loans (with a minimum servicing portfolio of U.S.$100,000,000) that are
comparable to the Loan Obligations owned or to be owned by the Issuer, (2) as to
which Moody’s has not cited servicing concerns of such servicer as the sole or
material factor in any downgrade or withdrawal of the ratings (or placement on
“watch status” in contemplation of a ratings downgrade or withdrawal) of

 

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securities in any commercial mortgage backed securities transaction serviced by
such servicer prior to the time of determination and (3) is currently acting as
a servicer in a commercial mortgage backed securities transaction rated by DBRS
and DBRS has not cited servicing concerns of such servicer as the sole or
material factor in any downgrade or withdrawal of the ratings within the prior
12 month period (or placement on “watch status” in contemplation of a ratings
downgrade or withdrawal) of securities in any commercial mortgage backed
securities transaction serviced by such servicer prior to the time of
determination.

 

“Account”: Any of the Interest Collection Account, the Principal Collection
Account, the Unused Proceeds Account, the RDD Funding Account, the Payment
Account, the Expense Account, the Custodial Account and the Preferred Share
Distribution Account 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 Loan Obligation Manager.

 

“Acquired Participation”: Collectively, the Senior Participations and the 5
Times Square Junior Participation.

 

“Act” or “Act of Securityholders”:  The meaning specified in Section 14.2
hereof.

 

“Additional Loan Obligations”:  Loan Obligations that are acquired by the Issuer
during the Post-Closing Acquisition Period.

 

“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 monthly in arrears on each Payment Date
to the Advancing Agent in accordance with the Priority of Payments, equal to
0.07% per annum on the Aggregate Outstanding Amount of the Notes on such Payment
Date prior to giving effect to payments on such Payment Date; which fee may be
waived by the Advancing Agent, in its discretion in connection with any Payment
Date unless such fee is payable to the Back-up Advancing Agent pursuant to the
Priority of Payments.

 

“Advisers Act”: The Investment Advisers Act of 1940, as amended.

 

“Advisory Committee”: The meaning specified in the Loan Obligation 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

 

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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 Loan
Obligation Manager, the Arbor Parent nor any of the Arbor Parent’s subsidiaries
shall be deemed to be Affiliates of the Issuer.  The CLO Servicer and the
Trustee may rely on certifications of any Holder or party hereto regarding such
Person’s affiliations.

 

“Agent Members”:  Members of, or participants in, the Depository, Clearstream,
Luxembourg or Euroclear.

 

“Aggregate Collateral Balance”:  The sum of (without duplication) (i) the
aggregate Principal Balance of Loan Obligations (excluding for purposes of this
clause (i), for the avoidance of doubt, the then unfunded portion of any RDD
Obligation), (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 and (iv) the sum of cash and the aggregate Principal Balance of Eligible
Investments held in the RDD Funding Account.

 

“Aggregate Outstanding Amount”:  With respect to any Class or Classes of the
Notes as of any date of determination, the aggregate principal balance of such
Class or Classes of Notes Outstanding as of such date of determination.

 

“Aggregate Principal Balance”: When used with respect to any Loan Obligations as
of any date of determination, the sum of the Principal Balances on such date of
determination of all such Loan Obligations.

 

“Arbor Parent”: The meaning specified in the first paragraph of this Indenture.

 

“ARMS Equity”:  ARMS 2015-1 Equity Holdings LLC, a Delaware limited liability
company.

 

“Article 15 Agreement”:  The meaning specified in Section 15.1(a) hereof.

 

“Article 405(1)”:  Article 405(1) of EU Regulation 575/2013, the technical
standards adopted by the European Commission in relation thereto and the
guidelines and other materials published by the European Banking Authority in
relation thereto.

 

“As-Stabilized Appraisal DSCR”:  With respect to any Loan Obligation, the ratio,
as calculated by the Loan Obligation Manager in accordance with the Loan
Obligation Management Standard, of (a) the “stabilized” annual net cash flow
generated from the related property before interest, depreciation and
amortization, as reflected in an appraisal that was obtained not less than 12
months prior to the date of determination, which may be based on the assumption
that certain events will occur with respect to the re-tenanting, renovation or
other repositioning of such property; to (b) the annual payments of principal
and interest due pursuant to the terms of the related Underlying Instruments
(but excluding any balloon payments, required principal paydowns or reserve
payments, and including any required funding of working capital

 

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reserves) determined based on the capitalization rate reflected in such
appraisal; provided, further, that if the appraisal was not obtained within 3
months prior to the date of determination, the Loan Obligation Manager may
adjust such interest rate in its reasonable good faith judgment executed in
accordance with the Loan Obligation Management Standard.  In determining
As-Stabilized Appraisal DSCR for any Senior Participation, the calculation of
As-Stabilized Appraisal DSCR shall take into account the annual payments of
principal and interest due on the Senior Participation pursuant to the terms of
the related senior participation agreement (and, in the case of a Senior
Participation that is a Senior Pari Passu Participation, the annual payments of
principal and interest due pursuant to the terms of the related Non-Acquired
Participation that is pari passu with the Senior Participation being acquired)
and shall exclude the annual payments of principal and interest due on any
related Junior Participation.

 

“As-Stabilized Appraisal LTV”:  With respect to any Loan Obligation, the ratio,
expressed as a percentage, as calculated by the Loan Obligation Manager in
accordance with the Loan Obligation Management Standard, of the Principal
Balance of such Loan Obligation to the value estimate of the related Underlying
Mortgaged Property as reflected in an appraisal that was obtained not less than
6 months prior to the date of determination, which value is based on the
appraisal or portion of an appraisal that states an “as-stabilized” value and/or
“as-renovated” value for such property, which may be based on the assumption
that certain events will occur, including without limitation, with respect to
the re-tenanting, renovation or other repositioning of such property.  In
determining As-Stabilized Appraisal LTV for any Senior Participation, the
calculation of As-Stabilized Appraisal LTV shall take into account the
outstanding Principal Balance of the Senior Participation being acquired by the
Issuer (and, in the case of a Senior Participation that is a Senior Pari Passu
Participation, the Principal Balance of the related Non-Acquired Participation
that is pari passu with the Senior Participation being acquired) and shall
exclude the Principal Balance of any related Junior Participation.

 

“Assets”:  The meaning specified in the first paragraph of the Granting Clause
of this Indenture.

 

“Asset Detail Report”:  With respect to each Loan Obligation File, a report
generated in written or electronic format by Custodial Securities Intermediary
containing a list of the Loan Obligation Files, the related loan documents, and
any exceptions found in its review of such Loan Obligation Files pursuant to
Section 3.3(e) of this Indenture.

 

“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 Loan Obligation Manager, the persons
listed on Schedule C 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

 

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considered as in full force and effect until receipt by such other party of
written notice to the contrary.

 

“Available Principal Proceeds”:  With respect to any Payment Date, the amount of
Principal Proceeds standing to the credit of the Principal Collection Account as
of the Determination Date related to such Payment Date.

 

“Backup Advancing Agent”:  U.S. 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 long-term debt rating
(1) from Moody’s at least equal to “A2” and a short-term debt rating from
Moody’s at least equal to “P-1” and (2) at least equal to “A” by DBRS (or, if
not rated by DBRS, an equivalent (or higher) rating by any two other NRSROs
(which may include Moody’s)).

 

“Backup Advancing Agent Fee”:  The fee payable monthly in arrears on each
Payment Date to the Backup Advancing Agent in accordance with the Priority of
Payments, equal to 0.001% per annum on the Aggregate Outstanding Amount of the
Notes on such Payment Date prior to giving effect to payments on such Payment
Date.

 

“Bailee Letter”:  The meaning specified in Section 12.4(b)(v) hereof.

 

“Bank”:  U.S. 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 and Part V of the Companies Law (2013 Revision) of the Cayman
Islands, as amended from time to time, the Bankruptcy Law (1997 Revision) of the
Cayman Islands, as amended from time to time and the Foreign Bankruptcy
Proceedings (International Cooperation) Rules 2008 of the Cayman Islands, as
amended from time to time.

 

“Bearer Securities”:  The meaning specified in Section 3.3(a)(iv) 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.

 

“Buy/Sell Interest”:  A Loan Obligation for which one of the participants has
exercised, or has the right to exercise, the purchase its corresponding
participant’s interest, or sell

 

7

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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 Loan Obligation, at any time, the
lesser of (a) the Moody’s Recovery Rate of such Loan Obligation multiplied by
the Principal Balance of such Loan Obligation and (b) the market value of such
Loan Obligation, as determined by the Loan Obligation Manager in accordance with
the Loan Obligation Management Standard based upon, among other things, a recent
appraisal and information from one or more third party commercial real estate
brokers and such other information as the Loan Obligation Manager deems
appropriate.

 

“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.

 

“Certificate of Authentication”:  The meaning specified in Section 2.1 hereof.

 

“Certificated Security”:  A “certificated security” as defined in
Section 8-102(a)(4) of the UCC.

 

“Class”:  The Class A Notes, the Class B Notes and the Class C Notes, as
applicable.

 

“Class A Defaulted Interest Amount”:  With respect to the Class A Notes as of
each Payment Date, the accrued and unpaid amount due to Holders of the Class A
Notes on account of any shortfalls in the payment of the Class A Interest
Distribution Amount with respect to any preceding Payment Date or Payment Dates,
together with interest accrued thereon (to the extent lawful).

 

“Class A Interest Distribution Amount”:  On each Payment Date, the amount due to
Holders of the Class A Notes on account of interest equal to the product of
(i) the Aggregate Outstanding Amount of the Class A Notes on the first day of
the related Interest Accrual Period, (ii) the actual number of days in such
Interest Accrual Period divided by 360 and (iii) the Class A Rate.

 

“Class A Notes”:  The Class A Senior Secured Floating Rate Notes, due 2025,
issued by the Issuer and the Co-Issuer pursuant to this Indenture.

 

“Class A Rate”:  With respect to any Class A Note, the per annum rate at which
interest accrues on such Note for any Interest Accrual Period, which shall be
equal to (a) one-month LIBOR for the related Interest Accrual Period plus
(b) 1.75% per annum.

 

“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 to any preceding Payment Date or Payment Dates,
together with interest accrued thereon (to the extent lawful).

 

8

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“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 on the first day of
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 Notes”:  The Class B Secured Floating Rate Notes due 2025, 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) one-month LIBOR for the related Interest Accrual Period plus
(b) 3.25% per annum.

 

“Class C Defaulted Interest Amount”:  With respect to the Class C Notes as of
each Payment Date, the accrued and unpaid amount due to Holders of the Class C
Notes on account of any shortfalls in the payment of the Class C Interest
Distribution Amount with respect to any preceding Payment Date or Payment Dates,
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 of the Class C Notes on the first day of
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.

 

“Class C Notes”:  The Class C Senior Secured Floating Rate Notes, due 2025,
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) one-month LIBOR for the related Interest Accrual Period plus
(b) 4.25% per annum.

 

“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.

 

“Clearstream, Luxembourg”: Clearstream Banking, société anonyme, a limited
liability company organized under the laws of the Grand Duchy of Luxembourg.

 

“CLO 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 and special servicer pursuant to the provisions
of the Servicing Agreement.

 

“Closing”:  The transfer of any Note to the initial registered Holder of such
Note.

 

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“Closing Date”:  February 27, 2015.

 

“Closing Date Loan Obligations”:  The Loan Obligations listed on Schedule A
attached hereto.

 

“Closing Document Checklist”:  As to each Loan Obligation File, a document
checklist substantially in the form included as Exhibit E attached hereto, which
shall be the definitive list of documents to be delivered to the Custodial
Securities Intermediary.

 

“Co-Issuer”:  Arbor Realty Commercial Real Estate Notes 2015-FL1 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 Administration Agreement”:  An agreement dated as of the Closing
Date among the Issuer, the Loan Obligation Manager and the Collateral
Administrator, as amended from time to time.

 

“Collateral Administrator”:  The Bank, in its capacity as such under the
Collateral Administration Agreement, and any successor thereto.

 

“Collection Accounts”:  The trust accounts so designated and established
pursuant to Section 10.2(a) hereof.

 

“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, the
Co-Issuer or any Permitted Subsidiary (including legal fees and expenses) 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), (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) payable in the
order in which invoices are received by the Issuer, 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 assessment or rating of the Loan Obligations, (vi) the Loan Obligation
Manager under this Indenture and the Loan Obligation Management

 

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Agreement, (vii) the Loan Obligation Manager or other Persons as indemnification
pursuant to the Loan Obligation Management Agreement, (viii) the Advancing Agent
or other Persons as indemnification pursuant to Section 17.3, (ix) the
CREFC® Intellectual Property Royalty License Fee, (x) 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); (xi) the Preferred Shares
Paying Agent and the Share Registrar under the Preferred Share Paying Agency
Agreement (including amounts payable as indemnification), (xii) payable in the
order in which invoices are received by the Issuer, any other Person in 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 (xiii) payable in the order in which invoices
are received by the Issuer, 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 Loan Obligations or any other transaction
authorized by this Indenture); provided that Company Administrative Expenses
shall not include (a) amounts payable in respect of the Notes and (b) any Loan
Obligation Manager Fee payable pursuant to the Loan Obligation Management
Agreement.

 

“Company Administrator”:  MaplesFS 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.

 

“Controlling Class”:  The Class A Notes, so long as any Class A Notes are
Outstanding, then the Class B Notes, so long as Class B Notes are Outstanding,
then the Class C Notes, so long as Class C Notes are Outstanding, and then the
Preferred Shares.

 

“Co-Placement Agents”:  Sandler O’Neill & Partners, L.P., in its capacity as
co-placement agent, and J.P. Morgan Securities LLC, in its capacity as
co-placement agent.

 

“Corporate Trust Office”:  The designated corporate trust office of the Trustee,
currently located at: (a) for Note transfer purposes, presentment of the Notes
for final payment thereon, 111 Fillmore Ave E, St. Paul, MN 55107-2292,
Attention: Corporate Trust Services—Arbor Realty Commercial Real Estate Notes
2015-FL1, Ltd.; (b) for the delivery of the Loan Obligation Files, 1133 Rankin
Street, Suite 100, St. Paul, Minnesota 55116, Attention: Commercial
Certifications — Arbor  2015-1, fax: (651) 695-6102; and (c) for all other
purposes, 190 South LaSalle Street, 8th Floor, Chicago, Illinois, 60603,
Attention: Corporate Trust Services—Arbor Realty Commercial Real Estate Notes
2015-FL1, Ltd., fax: (312) 332-8010, 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 Loan Obligation Manager, the Rating Agencies and the
Issuer or the principal corporate trust office of any successor Trustee.

 

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“Credit Risk/Defaulted Obligation Cash Purchase”:  The meaning specified in
Section 12.1(a)(i) hereof.

 

“Credit Risk Obligation”: Any Loan Obligation that, in the Loan Obligation
Manager’s reasonable business judgment, has a significant risk of declining in
credit quality or, with a lapse of time, becoming a Defaulted Obligation.

 

“CREFC® Intellectual Property Royalty License Fee” means with respect to each
Loan Obligation and for any Payment Date, an amount accrued during the related
Interest Accrual Period at the CREFC® Intellectual Property Royalty License Fee
Rate on the Principal Balance of such Loan Obligation as of the close of
business on the Determination Date in such Interest Accrual Period.  Such
amounts shall be computed for the same period and on the same interest accrual
basis respecting which any related interest payment due or deemed due on the
related Loan Obligation is computed and shall be prorated for partial periods.

 

“CREFC® Intellectual Property Royalty License Fee Rate” means, with respect to
each Loan Obligation, a rate equal to 0.0005% per annum.

 

“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.

 

“DBRS”: Means DBRS, Inc., and its successors in interest.

 

“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 Defaulted Interest Amount, the Class B
Defaulted Interest Amount or the Class C Defaulted Interest Amount, as the
context requires.

 

“Defaulted Obligation”:  Any Loan Obligation if a foreclosure or default
(whether or not declared) with respect to the related Whole Loan (or, in the
case of an Acquired Participation, the related Underlying Whole Loan) has
occurred and, with respect to a default, is continuing as determined by the Loan
Obligation Manager; provided, however, that notwithstanding the foregoing, a
Loan Obligation shall not be deemed to be a Defaulted Obligation as a result of
(A) the related borrower’s failure to pay interest on such Loan Obligation or on
the related Whole Loan (or, in the case of an Acquired Participation, the
related Underlying Whole Loan) on the due date therefor, if the related lender
or holder of such Loan Obligation or of the related Whole Loan (or, in the case
of an Acquired Participation, the related Underlying Whole 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 Loan Obligation
Manager, on behalf of 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), or (B) the related borrower’s failure to pay
principal on such Loan Obligation or on the related Whole Loan (or, in the case
of an Acquired

 

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Participation, the related Underlying Whole Loan) on the maturity date thereof,
if the maturity date has been extended by the related servicer or special
servicer in connection with a modification of such related Whole Loan (or, in
the case of an Acquired Participation, the related Underlying Whole Loan) (so
long as the Maturity Extension Requirements are met), or (C) the occurrence of
any default other than a payment default with respect to such Loan Obligation or
the related Whole Loan (or, in the case of an Acquired Participation, the
related Underlying Whole Loan), unless and until the earlier of (x) the
declaration of default and acceleration of the maturity of the Loan Obligation
by the lender or holder thereof and (y) the continuance of such default uncured
for 60 days after such default became known to the Loan Obligation Manager or
the CLO Servicer or, subject to the satisfaction of the Rating Agency Condition,
such longer period as the Loan Obligation Manager (subject to the applicable
provisions of the Servicing Agreement) determines.  Notwithstanding the
foregoing, any Loan Obligation that has sustained an implied reduction of
principal balance due to an appraisal reduction will not necessarily be
considered a Defaulted Obligation solely due to such implied reduction.

 

For purposes of the definition of “Defaulted Obligation,” the “Maturity
Extension Requirements” will be satisfied with respect to any extension if the
maturity date is extended to a new maturity date that is not more than three
years after the original maturity date.  As used above, the term “original
maturity date” means the maturity date of a Loan Obligation or the related Whole
Loan (or, in the case of an Acquired Participation, the related Underlying Whole
Loan) as extended by all extensions thereof that the related borrower had the
right to elect and did elect under the terms of the instruments and agreements
relating to such Loan Obligation or to the related Whole Loan (or, in the case
of an Acquired Participation, the related Underlying Whole Loan), but before
taking into account any additional extensions thereof that are consented to by
the servicer or special servicer of such Loan Obligation.

 

For the avoidance of doubt (x) any initial permissible 60 day extension period
described in this definition shall in no event be combined with any subsequent
permissible 30 day extension period described in this definition and (y) if a
Defaulted Obligation is the subject of a work-out, modification or otherwise has
cured the default such that the subject Loan Obligation is no longer in default
pursuant to its terms (as such terms may have been modified), such Loan
Obligation will no longer be treated as a Defaulted Obligation.

 

“Defaulted Obligation Exchange”: The meaning specified in
Section 12.1(a) hereof.

 

“Definitive Notes”:  The meaning specified in Section 2.2(b) hereof.

 

“Depository” or “DTC”:  The Depository Trust Company, its nominees, and their
respective successors.

 

“Determination Date”:  With respect to any Payment Date, the fourth Business Day
prior to such Payment Date.

 

“Disqualified Transferee”:  The meaning specified in Section 2.5(l) hereof.

 

“Dissolution Expenses”:  The amount of expenses reasonably likely to be incurred
in connection with the discharge of this Indenture, the liquidation of the
Assets and the

 

13

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dissolution of the Co-Issuers, as reasonably certified by the Loan Obligation
Manager or the Issuer, based in part on expenses incurred by the Trustee and
reported to the Loan Obligation Manager.

 

“Dollar,” “U.S. $” or “$”:  A U.S. dollar or other equivalent unit in Cash.

 

“Due Date”:  Each date on which a Scheduled Distribution is due on an Asset.

 

“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.

 

“Eligibility Criteria”:  The criteria set forth below with respect to any Loan
Obligation, other than a Closing Date Loan Obligation, whether an Additional
Loan Obligation or a Replacement Loan Obligation, acquired by the Issuer after
the Closing Date, compliance with which shall be evidenced by an Officer’s
Certificate of the Loan Obligation Manager delivered to the Trustee as of the
date of such acquisition:

 

(i)                                    it is a Whole Loan or a Senior
Participation that is secured by a Multi-Family Property;

 

(ii)                                 the obligor is incorporated or organized
under the laws of, and the Loan Obligation is secured by property located in,
the United States;

 

(iii)                              it was originated after January 2013;

 

(iv)                             it provides for monthly payments of interest at
a floating rate of interest based on one-month LIBOR;

 

(v)                                it has a Moody’s Rating;

 

(vi)                             the Whole Loan (or, as applicable, the mortgage
loan underlying a Senior Participation) has a maturity date, assuming the
exercise of all extension options (if any) that are exercisable at the option of
the related borrower under the terms of such Whole Loan (or, as applicable, the
mortgage loan underlying a Senior Participation) is not more than five years
from its origination date;

 

(vii)                          it is not an Equity Interest;

 

(viii)                       it has an As-Stabilized Appraisal LTV that is not
greater than 75%;

 

(ix)                             it has an As-Stabilized Appraisal DSCR that is
not less than 1.25x;

 

(x)                                the Principal Balance of such Loan Obligation
is not greater than U.S.$29,000,000;

 

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(xi)                             (I) with respect to the Additional Loan
Obligations, as of the Portfolio Finalization Date and (II) with respect to any
Replacement Loan Obligation, immediately after giving effect to the acquisition
of such Replacement Loan Obligation:

 

(A)              the Weighted Average Life of all the Loan Obligations is not
greater than 4.5 years from the Closing Date;

 

(B)              the Weighted Average Spread of all the Loan Obligations
(excluding the Fixed Rate Loan Obligations) is not less than 4.60%;

 

(C)              the aggregate Principal Balance of all Loan Obligations
allocated to all of the mortgaged properties located in any one state is no
greater than 40% of the Portfolio Finalization Date Collateral Principal
Balance; and

 

(D)              the aggregate Principal Balance of all Loan Obligations divided
by the number of Loan Obligations does not exceed U.S.$18,000,000;

 

(xii)                          with respect to each (1) Replacement Loan
Obligation, the Moody’s Rating Factor for such Replacement Loan Obligation is
equal to or less than the Moody’s Rating Factor attached to the initial Loan
Obligation (i.e., Closing Date Loan Obligation or Additional Loan Obligation)
that generated the Principal Proceeds that are being applied to the purchase
such Replacement Loan Obligations; and (2) Additional Loan Obligation, the
Moody’s Rating for such Loan Obligation is equal to or better than the Moody’s
Rating that equates to the Moody’s Weighted Average Rating Factor for all Loan
Obligations acquired by the Issuer on the Closing Date;

 

(xiii)                       except with respect to RDD Obligations, it will not
require the Issuer to make any future payments after the initial purchase
thereof;

 

(xiv)                      if it is an RDD Obligation, the aggregate amount of
RDD Funding Advances with respect to such RDD Obligation is deposited into the
RDD Funding Account on the date such RDD Obligation is acquired by the Issuer;

 

(xv)                         it is not prohibited under its Underlying
Instruments from being purchased by the Issuer and pledged to the Trustee;

 

(xvi)       it is not the subject of any solicitation by the borrower or Junior
Participation holder to amend, modify or waive any provision of any of the
related Underlying Instruments;

 

(xvii)      it is not an interest that, in the Loan Obligation Manager’s
reasonable business judgment, has a significant risk of declining in credit
quality or, with lapse of time or notice, becoming a Defaulted Obligation;

 

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(xviii)     it is not a Defaulted Obligation (as determined by the Loan
Obligation Manager after reasonable inquiry);

 

(xix)       it is Dollar denominated and may not be converted into an obligation
payable in any other currencies;

 

(xx)        if such Loan Obligation 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;

 

(xxi)       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;

 

(xxii)      it is serviced pursuant to the Servicing Agreement or it is serviced
by an Accepted Loan Servicer pursuant to a commercial mortgage servicing
arrangement that includes the standard servicing provisions found in commercial
mortgage backed securities transactions;

 

(xxiii)     the requirements set forth in Section 16.3 hereof have been met
(subject to such exceptions as are reasonably acceptable to the Loan Obligation
Manager);

 

(xxiv)     if it is a Senior Participation, the related Participating
Institution is any of (1) a “special purpose entity” or a “qualified
institutional lender” as such terms are typically defined in the Underlying
Instruments related to participations; (2) an entity that has (x) a long-term
unsecured debt rating from Moody’s of “A3” or higher and (y) a long-term
unsecured debt rating from DBRS of “A(low)” or higher (if rated by DBRS, or if
not rated by DBRS, an equivalent (or higher) rating by any two other NRSROs
(which may include Moody’s)); (3) a securitization trust, a CDO issuer or a
similar securitization vehicle, or (4) a special purpose entity that is 100%
directly or indirectly owned by the Arbor Parent, 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);

 

(xxv)      its acquisition will be in compliance with Section 206 of the
Advisers Act;

 

(xxvi)     its acquisition, ownership, enforcement and disposition will not
cause the Issuer to fail to be a Qualified REIT Subsidiary unless an appropriate
tax opinion has previously been received from Cadwalader, Wickersham & Taft 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
(which opinion may be conditioned on compliance with certain restrictions on the
investment or other activity of the Issuer and/or the Loan Obligation Manager on
behalf of the Issuer);

 

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(xxvii)    its acquisition would not cause the Issuer, the Co-Issuer or the pool
of Assets to be required to register as an investment company under the 1940
Act; and if the borrowers with respect to the Loan Obligation are excepted from
the definition of an “investment company” solely by reason of Section 3(c)(1) of
the 1940 Act, then either (x) such Loan Obligation does not constitute a “voting
security” for purposes of the 1940 Act or (y) the aggregate amount of such Loan
Obligation held by the Issuer is less than 10% of the entire issue of such Loan
Obligation;

 

(xxviii)   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,
other than any taxes imposed pursuant to FATCA, unless the borrower under such
Loan Obligation is required to make “gross up” payments that ensure that the net
amount actually received by the Issuer or the relevant Permitted Subsidiary
(free and clear of taxes, whether assessed against such borrower or the Issuer
or such Permitted Subsidiary) will equal the full amount that the Issuer or such
Permitted Subsidiary would have received had no such deduction or withholding
been required;

 

(xxix)     with respect to each Additional Loan Obligation, the Principal
Balance of (1) the largest Additional Loan Obligation is equal to or less than
U.S.$21,000,000, (2) the second-largest Additional Loan Obligation is equal to
or less than U.S.$15,000,000 and (3) the third-largest Additional Loan
Obligation is equal to or less than U.S.$15,000,000;

 

(xxx)      a No Downgrade Confirmation has been received from DBRS prior to the
acquisition of each Additional Loan Obligation and Replacement Loan Obligation;

 

(xxxi)     after giving effect to its acquisition, together with the acquisition
of any other Loan Obligations to be acquired on the same date, the aggregate
outstanding principal amount of Loan Obligations held by the Issuer that are
Retention Holder Originated Loan Obligations is in excess of 50% of the
aggregate outstanding principal amount of Loan Obligations held by the Issuer;

 

(xxxii)    if it is a Non-Controlling Participation, its acquisition will not
(1) cause the aggregate Principal Balance of all Non-Controlling Participations
to exceed 15% of the aggregate Principal Balance of all Loan Obligations then
owned by the Issuer or (2) cause the Weighted Average Life of all of the
Non-Controlling Participations (without regard to whether or not any
Non-Controlling Participation is a Defaulted Obligation) to exceed the Weighted
Average Life of all of the other Loan Obligations (such determination to be
calculated both on an initial maturity date and an final extended maturity
basis); and

 

(xxxiii)   it is not acquired for the primary purpose of recognizing gains or
decreasing losses resulting from market value changes.

 

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“Eligible Account”: As defined 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, and which constitute “government securities” within the meaning
of Section 856(c)(4) of the Code;

 

(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 (other than asset-backed 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 of not less than “Aa3” by Moody’s, in the case of long-term debt
obligations, and “P-1” by Moody’s, for short-term debt obligations, and, in each
case, have a credit rating of the highest long-term or short-term category of
DBRS, and if not rated by DBRS, then an equivalent rating by any two other
NRSROs (which may include Moody’s);

 

(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 “Aa3” by Moody’s, and whose short-term credit rating is not
less than “P-1” by Moody’s, and, in each case, have a credit rating of the
highest long-term or short-term category of DBRS, and if not rated by DBRS, then
an equivalent rating by any two other NRSROs (which may include Moody’s);

 

(iv)             a reinvestment agreement issued by any bank (if treated as a
deposit by such bank) that has a short-term credit rating of not less than “P-1”
by Moody’s; provided that the issuer thereof must also have at the time of such

 

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investment a long-term credit rating of not less than “Aa3” by Moody’s, and, in
each case, have a credit rating of the highest long-term or short-term category
of DBRS, and if not rated by DBRS, then an equivalent rating by any two other
NRSROs (which may include Moody’s); and

 

(v)                any other investment similar to those described in clauses
(i) through (vi) above that (1) Moody’s has confirmed may be included in the
portfolio of Assets 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 “Aa3” by Moody’s and a short-term credit rating of not less than “P-1”
by Moody’s, and, in each case, have a credit rating of the highest long-term or
short-term category of DBRS, and if not rated by DBRS, then an equivalent rating
by any two other NRSROs (which may include Moody’s);

 

provided that mortgage-backed securities and interest only securities shall not
constitute Eligible Investments; 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 three Business Days 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, Wickersham & Taft
LLP or another nationally recognized tax counsel experienced in such matters
opining that the Issuer will be treated as a foreign corporation not 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 engaged in a trade or business in the United States for U.S.
federal income tax purposes or to otherwise become subject to U.S. federal
income tax on a net income basis), (d) Eligible Investments shall not be subject
to deduction or withholding for or on account of any withholding or similar tax
(other than any taxes imposed pursuant to FATCA), 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 and (f) Eligible Investments shall
not include margin stock.  Eligible Investments may be purchased from the
Trustee and its Affiliates so long as the Trustee has a capital and surplus of
at least U.S.$200,000,000 and has a long-term unsecured credit rating of at
least “Baa1” by Moody’s, and may include obligations for which the Trustee or an
Affiliate thereof receives compensation for providing services.

 

Notwithstanding the foregoing clauses (i) through (v), unless the Issuer and the
Loan Obligation Manager have received the written advice of counsel of national
reputation experienced in such matters to the contrary (together with an
Officer’s certificate of the Issuer or the Loan Obligation Manager to the
Trustee (on which the Trustee may rely) that the advice specified in this
definition has been received by the Issuer and the Loan Obligation Manager), on
and after July 21, 2015 (or such later date as may be determined by the Issuer
and the Loan Obligation Manager based upon such advice), Eligible Investments
may only include obligations or securities that constitute cash equivalents for
purposes of the rights and assets in paragraph

 

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.10(c)(8)(i)(B) of the exclusions from the definition of “covered fund” for
purposes of the Volcker Rule.

 

“Entitlement Order”: The meaning specified in Section 8-102(a)(8) of the UCC.

 

“Equity Interest”: A security or other interest that does not entitle the holder
thereof to receive periodic payments of interest and one or more installments of
principal, including (i) any bond or note or similar instrument that is by its
terms convertible into or exchangeable for an equity interest, (ii) any bond or
note or similar instrument that includes warrants or other interests that
entitle its holder to acquire an equity interest, or (iii) any other similar
instrument that would entitle its holder to receive periodic payments of
interest or a return of a residual value.

 

“ERISA”:  The United States Employee Retirement Income Security Act of 1974, as
amended.

 

“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 U.S.$250 proceeds of share capital contributed by
ARMS Equity as the holder of the ordinary shares of the Issuer, the U.S.$250
representing a profit fee to the Issuer, and, in each case, any interest earned
thereon and the bank account in which such amounts are held and (ii) the
Preferred Share Distribution Account and all of the funds and other property
from time to time deposited in or credited to the Preferred Share Distribution
Account.

 

“Exchange Act”:  The Securities Exchange Act of 1934, as amended.

 

“Exchange Obligation”: The meaning specified in Section 12.1(a(ii)) hereof.

 

“Expense Account”:  The account established pursuant to Section 10.7(a) hereof.

 

“FATCA”:  Sections 1471 through 1474 of the Code, any current or future
regulations or official interpretations thereof, any agreement entered into
pursuant to Section 1471(b) of the Code, or any U.S. or non-U.S. fiscal or
regulatory legislation, rules, guidance notes or practices adopted pursuant to
any intergovernmental agreement entered into in connection with the
implementation of such sections of the Code or analogous provisions of non-U.S.
law.

 

“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.

 

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“Fixed Rate Loan Obligations”: The Loan Obligations identified on Schedule A as
“420 Fifth Avenue” and “5 Times Square.”

 

“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.

 

“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
Assets 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
Assets (or any other security or instrument), and all other amounts payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the granting party or otherwise, and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.

 

“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.

 

“IAI”:  An institution that is an “accredited investor” within the meaning of
Rule 501(a)(1), (2), (3) or (7) under Regulation D under the Securities Act or
any entity in which all of the equity owners are such “accredited investors”.

 

“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.

 

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“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.

 

“Information Agent”:  The meaning specified in Section 14.13(b) hereof.

 

“Initial Maturity Date”:  With respect to any Loan Obligation, (i) the maturity
date of such Loan Obligation without giving effect to any exercised extension
options available under the terms of such Loan Obligation, or (ii) if the
related borrower has exercised an extension option, the maturity date of such
Loan Obligation after giving effect to the exercised extension option, but
without giving effect to any additional extension option available under the
terms of such Loan Obligation.

 

“Instrument”:  The meaning specified in Section 9-102(a)(47) of the UCC.

 

“Interest Accrual Period”:  With respect to the Notes, (i) with respect to the
first Payment Date, the period from and including the Closing Date to, but
excluding, such first Payment Date 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”: As of any Measurement Date, the ratio calculated in
accordance with the assumptions set forth in Section 1.2(e) hereof by dividing:

 

(a)                                 (i) the sum of (A) Cash standing to the
credit of the Expense Account, plus (B) the scheduled interest payments due (in
each case regardless of whether the due date for any such interest payment has
yet occurred) in the Due Period in which such Measurement Date occurs on (x) the
Loan Obligations (excluding, subject to clause (3) below, accrued and unpaid
interest on Defaulted Obligations); provided that no interest (or dividends or
other distributions) will be included with respect to any Loan Obligation to the
extent that such Loan Obligation 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 RDD
Funding Account and the

 

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Expense Account (whether purchased with Interest Proceeds or Principal
Proceeds), plus (C) Interest Advances, if any, advanced by the Advancing Agent
or the Backup Advancing Agent, with respect to the related Payment Date, minus
(ii) any amounts scheduled to be paid pursuant to Section 11.1(a)(i)(1) through
(4) (other than any Loan Obligation Manager Fees that the Loan Obligation
Manager has agreed to waive in accordance with this Indenture and the Loan
Obligation Management Agreement); by

 

(b)                                 the sum of (i) the scheduled interest on the
Class A Notes payable on the Payment Date immediately following such Measurement
Date, plus (ii) any Class A Defaulted Interest Amount payable on the Payment
Date immediately following such Measurement Date, plus (iii) the scheduled
interest on the Class B Notes payable immediately following such Measurement
Date, plus (iv) any Class B Defaulted Interest Amount payable on the Payment
Date immediately following such Measurement Date, plus (v) the scheduled
interest on the Class C Notes payable immediately following such Measurement
Date, plus (vi) any Class C Defaulted Interest Amount payable on the Payment
Date immediately following such Measurement Date.

 

“Interest Coverage Test”:  The test that will be met as of any Measurement Date
on which any Notes remain Outstanding if the Interest Coverage Ratio as of such
Measurement Date is equal to or greater than 120.00%.

 

“Interest Distribution Amount”:  Each of the Class A Interest Distribution
Amount, the Class B Interest Distribution Amount and the Class C Interest
Distribution 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 a Loan Obligation or an Eligible Investment) or other
distributions received during the related Due Period on all Loan Obligations
other than Defaulted Obligations (net of the Servicing Fee and other amounts
payable in accordance with the Servicing Agreement) and Eligible Investments,
including, in the Loan Obligation Manager’s commercially reasonable discretion
(exercised as of the trade date), the accrued interest received in connection
with a sale of such Loan Obligations or Eligible Investments (to the extent such
accrued interest was not applied to the purchase of Replacement Loan
Obligations), in each case, excluding any accrued interest included in Principal
Proceeds pursuant to clause (A)(3) or (4) of the definition of Principal
Proceeds, (2) all make-whole premiums, yield maintenance or prepayment premiums
or any interest amount paid in excess of the stated interest amount of a Loan
Obligation received during the related Due Period, (3) all amendment,
modification 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 Loan Obligations and Eligible Investments
(other than, in each such case, fees and commissions received in connection with
the restructuring of a Defaulted Obligation or default of Loan Obligations and
Eligible Investments), (4) all payments received by the Issuer in respect of the
Interest Rate Cap Agreements, excluding any Interest Rate Cap Termination
Receipts, during the related Due Period, (5) those funds in the Expense Account
designated as Interest Proceeds by the Loan Obligation Manager pursuant to
Section 10.7(a), (6) all funds remaining on deposit in the Expense Account upon
redemption of the Notes in whole, pursuant to Section 10.7(a), (7) Interest
Advances, if any, advanced by the Advancing Agent or the

 

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Backup Advancing Agent, with respect to such Payment Date, (8) all accrued
original issue discount on Eligible Investments, (9) any interest payments
received in Cash by the Issuer during the related Due Period on any asset held
by a Permitted Subsidiary that is not a Defaulted Obligation, (10) all payments
of principal on Eligible Investments purchased with proceeds of items (A)(1),
(2) and (3) of this definition, (11) Cash and Eligible Investments contributed
by ARMS Equity pursuant to Section 12.2(c) and designated as “Interest Proceeds”
by ARMS Equity and (12) any excess proceeds received in respect of a Loan
Obligation to the extent such proceeds are designated “Interest Proceeds” by the
Loan Obligation Manager in its sole discretion with notice to the Trustee on or
before the related Determination Date; provided that Interest Proceeds will in
no event include any payment or proceeds specifically defined as “Principal
Proceeds” in the definition thereof, minus (B) the aggregate amount of any
Nonrecoverable Interest Advances that were previously reimbursed to the
Advancing Agent or the Backup Advancing Agent.

 

“Interest Rate Cap Agreement”: Collectively, the interest rate cap agreement
with respect to the 420 5th Avenue Loan Obligation, dated as of the Closing
Date,  the interest rate cap agreement with respect to the 5 Times Square Loan
Obligation, dated as of the Closing Date, in each case, by and between the
Issuer and SMBC Capital Markets Inc. as counterparty, and any replacement
interest rate cap agreement, each as amended, supplemented or otherwise modified
from time to time in accordance with its terms.

 

“Interest Rate Cap Counterparty”:  Any institution or institutions with whom the
Issuer enters into an Interest Rate Cap Agreement.

 

“Interest Rate Cap Termination Receipts”: In the event of any early termination
of any Interest Rate Cap Agreement, any termination or similar payment paid by
the Interest Rate Cap Counterparty to the Issuer pursuant to the terms of any
Interest Rate Cap Agreement.

 

“Interest Shortfall”:  The meaning set forth in Section 10.9(a) hereof.

 

“Issuer”:  Arbor Realty Commercial Real Estate Notes 2015-FL1, Ltd., an exempted
company incorporated under the laws of the Cayman Islands with limited
liability, 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 Loan Obligation Manager.

 

“Issuer Parent”: A REIT that, for U.S. federal income tax purposes, directly or
indirectly, owns (or is deemed to own) 100% of the stock of the Issuer within
the meaning of Section 856(i)(2) of the Code.

 

“Issuer Parent Disregarded Entity”: Any qualified REIT subsidiary of the Issuer
Parent and any other entity that is disregarded as an entity separate from
Issuer Parent within the meaning of Section 301.7701-3 of the Treasury
Regulations.

 

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“Junior Participation”: (i) One or more junior participation interests (or B
Notes) in an Underlying Whole Loan pursuant to a Senior AB Participation, in
which the related Senior Participation is a Loan Obligation that has been
acquired by the Issuer or (ii) the 5 Times Square Junior Participation, as the
context may require.

 

“LIBOR”:  The meaning set forth in Schedule B attached hereto.

 

“LIBOR Determination Date”:  The meaning set forth in Schedule B attached
hereto.

 

“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 Obligation Management Agreement”:  The Loan Obligation Management
Agreement, dated as of the Closing Date, by and between the Issuer and the Loan
Obligation Manager, as amended, supplemented or otherwise modified from time to
time in accordance with its terms.

 

“Loan Obligation” and “Loan Obligations”:  Any Whole Loan, Senior Participation
or Junior Participation acquired by the Issuer in accordance with the provisions
of this Indenture.

 

“Loan Obligation File”: The meaning set forth in Section 3.3(d).

 

“Loan Obligation 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 Loan Obligation
Manager pursuant to the provisions of the Loan Obligation Management Agreement
and thereafter “Loan Obligation Manager” shall mean such successor Person.

 

“Loan Obligation Manager Fee”: The meaning set forth in the Loan Obligation
Management Agreement.

 

“Loan Obligation Management Standard”:  The meaning set forth in the Loan
Obligation Management Agreement.

 

“Loan Obligation Purchase Agreement”: Any Loan Obligation Purchase agreement
entered into on or about the Closing Date and any other Loan Obligation 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.

 

“London Banking Day”:  The meaning set forth in Schedule B attached hereto.

 

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“Loss Value Payment”:  A Cash payment made to the Issuer by the Seller in
connection with a breach of representation or warranty with respect to any Loan
Obligation pursuant to the Loan Obligation Purchase Agreement in an amount that
the Loan Obligation Manager on behalf of the Issuer, subject to the consent of a
majority of the holders of each Class of Notes (excluding any Note held by any
Seller or any of their respective affiliates), determines is sufficient to
compensate the Issuer for such breach of representation or warranty, which Loss
Value Payment will be deemed to cure sure breach of representation or warranty.

 

“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 of the aggregate liquidation preference of
outstanding Preferred Shares.

 

“Mandatory Redemption”:  The meaning specified in Section 9.5 hereof.

 

“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 Date or by declaration of acceleration or otherwise.

 

“Measurement Date”:  Any of the following: (i) the Closing Date, (ii) the date
of acquisition or disposition of any Loan Obligation, (iii) any date on which
any Loan Obligation becomes a Defaulted Obligation, (iv) each Determination
Date, (v) the Portfolio Finalization Date 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.

 

“Minimum Interest Rate Cap Counterparty Rating”: With respect to the rating of
the Interest Rate Cap Counterparty or the Interest Rate Cap Counterparty’s
guarantor, both a short term debt rating of “P-1” or better by Moody’s and a
long-term senior unsecured debt rating of “A2” by Moody’s.

 

“Minnesota Collateral”:  The meaning specified in Section 3.3(a)(v) hereof.

 

“Monthly Report”:  The meaning specified in Section 10.11(c) hereof.

 

“Moody’s”:  Moody’s Investors Service, Inc., and its successors in interest.

 

“Moody’s Portfolio Finalization Date Deemed Rating Confirmation”:  A deemed
written confirmation from Moody’s of the ratings assigned by Moody’s to the
Notes on the Closing Date.

 

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“Moody’s Rating”:  With respect to any Loan Obligation, the private credit
assessment assigned to such Loan Obligation by Moody’s for the Issuer.

 

“Moody’s Rating Factor”:  With respect to any Loan Obligation, the number set
forth in the table below opposite the Moody’s Rating of such Loan Obligation:

 

Moody’s Rating

 

Moody’s Rating Factor

 

Moody’s Rating

 

Moody’s Rating Factor

 

Aaa

 

1

 

 

Ba1

 

 

940

 

 

Aa1

 

10

 

 

Ba2

 

 

1350

 

 

Aa2

 

20

 

 

Ba3

 

 

1766

 

 

Aa3

 

40

 

 

B1

 

 

2220

 

 

A1

 

70

 

 

B2

 

 

2720

 

 

A2

 

120

 

 

B3

 

 

3490

 

 

A3

 

180

 

 

Caa1

 

 

4770

 

 

Baa1

 

260

 

 

Caa2

 

 

6500

 

 

Baa2

 

360

 

 

Caa3

 

 

8070

 

 

Baa3

 

610

 

 

Ca or lower

 

 

10000

 

 

 

“Moody’s Recovery Rate”:  With respect to any Loan Obligation, 60%, except that
with respect to the 420 5th Avenue Loan Obligation and the 5 Times Square Loan
Obligation, the Moody’s Recovery Rate will be 55%.

 

“Moody’s Test Modification”:  The meaning specified in Section 12.4 hereof.

 

“Moody’s Weighted Average Rating Factor”:  An amount determined by (i) summing
the products obtained by multiplying the Principal Balance of each Loan
Obligation (excluding Defaulted Obligations) by its Moody’s Rating Factor and
(ii) dividing such sum by the aggregate outstanding Principal Balance of all
such Loan Obligations and rounding the result up to the nearest whole number.

 

“Multi-Family Property” A real property with five or more residential rental
units (including mixed use multi-family/office and multi-family/retail) as to
which the majority of the underwritten revenue is from residential rental units.

 

“Net Outstanding Portfolio Balance”:  On any Measurement Date, the sum (without
duplication) of:

 

(i)                    the Aggregate Principal Balance on such Measurement Date
of the Loan Obligations (other than Defaulted Obligations);

 

(ii)                 the Aggregate Principal Balance of all Principal Proceeds
held as Cash and Eligible Investments and all Cash and Eligible Investments held
in the RDD Funding Account and the Unused Proceeds Account; and

 

(iii)              with respect to each Defaulted Obligation, the Calculation
Amount of such Defaulted Obligation;

 

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provided, however, that (A) with respect to each Defaulted Obligation that has
been owned by the Issuer for more than three years after becoming a Defaulted
Obligation, the Principal Balance of such Defaulted Obligation shall be zero for
purposes of computing the Net Outstanding Portfolio Balance, and (B) with
respect to each Defaulted Obligation as to which the Loan Obligation Manager has
delivered written notice to the Issuer and the Trustee of its intent to engage
in either (1) Credit Risk/Defaulted Obligation Cash Purchase or (2) an exchange
for an Exchange Obligation, the Loan Obligation Manager will have 45 days to
exercise such purchase or exchange and during such period such Loan Obligation
will not be treated as a Defaulted Obligation for purposes of computing the Net
Outstanding Portfolio Balance.

 

“No Downgrade Confirmation”:  A confirmation from each Rating Agency that any
proposed action, or failure to act or other specified event will not, in and of
itself, result in the downgrade or withdrawal of the then-current rating
assigned to any Class of Notes then rated by such Rating Agency.

 

“Non-Acquired Participation”:  With respect to (i) any Senior Participation
acquired by the Issuer, any related participation interest (whether a Senior
Pari Passu Participation or a Junior Participation) in the related Underlying
Whole Loan, or (ii) the 5 Times Square Junior Participation, the related
participation interests (whether senior, pari passu or subordinate in right and
priority), in either case, which related participation interest is not acquired
by the Issuer.

 

“Non-call Period”:  The period from the Closing Date to and including the
Business Day immediately preceding the Payment Date in September 2017 during
which no Optional Redemption is permitted to occur.

 

“Non-Controlling Participation”: Any Acquired Participation as to which the
holder of the related Non-Acquired Participation has the right to have effective
control over the remedies relating to the enforcement of the Underlying Whole
Loan, including ultimate control of the foreclosure process, by having a right
to (x) appoint and remove the special servicer or (y) direct or approve the
special servicer’s exercise of remedies.

 

“Non-Permitted Holder”: The meaning specified in Section 2.13(b) hereof.

 

“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 related
Loan Obligation.

 

“Note Liquidation Event”:  The meaning specified in Section 12.1(d) hereof.

 

“Note Protection Tests”:  The Par Value Test and the Interest Coverage Test.

 

“Noteholder”:  The Person in whose name such Note is registered in the Notes
Register.

 

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“Note Interest Rate”:  With respect to the Class A Notes, the Class B Notes and
the Class C Notes, the Class A Rate, the Class B Rate and the Class C Rate,
respectively.

 

“Notes”:  The Class A Notes, the Class B Notes and the Class C Notes,
collectively, authorized by, and authenticated and delivered under, this
Indenture.

 

“Notes Register” and “Notes Registrar”:  The respective meanings specified in
Section 2.5(a) hereof.

 

“Notional Amount”:  In respect of the Preferred Shares, the per share notional
amount of U.S.$1,000.  The aggregate Notional Amount of the Preferred Shares on
the Closing Date will be U.S.$81,000,000.

 

“NRSRO”:  Any nationally recognized statistical rating organization, including
the Rating Agencies.

 

“NRSRO Certification”:  A certification substantially in the form of Exhibit H
executed by a NRSRO in favor of the Issuer and the Information Agent that states
that such NRSRO has provided the Issuer with the appropriate certifications
under Exchange Act Rule 17g-5(a)(3)(iii)(B) and that such NRSRO has access to
the 17g-5 Website.

 

“Offering Memorandum”:  The Offering Memorandum, dated February 20, 2015,
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 Loan Obligation Manager, any
Director, Manager, 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 Loan
Obligation Manager, any certificate executed by an Authorized Officer thereof.

 

“Opinion of Counsel”:  A written opinion addressed to the Trustee and/or the
Issuer and the Rating Agencies in form and substance reasonably satisfactory to
the Trustee and the Rating Agencies of an outside third party counsel of
national recognition 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 the Rating Agencies or shall state
that the Trustee and the Rating Agencies shall be entitled to rely thereon.

 

“Optional Redemption”:  The meaning specified in Section 9.1(c) hereof.

 

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“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 (i) the exercise by Noteholders of their
right, in connection with certain Events of Default, to accelerate amounts due
under the Notes and (ii) any amendment or other modification of, or assignment
or termination of, any of the express rights or obligations of the Loan
Obligation Manager under the Loan Obligation Management Agreement or this
Indenture, Notes owned by the Loan Obligation 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 Co-Issuer, the Loan Obligation Manager or any
other obligor upon the Notes or any Affiliate of the Issuer, the Co-Issuer, the
Loan Obligation Manager or such other obligor.

 

“Par Value Ratio”:  As of any Measurement Date, the number (expressed as a
percentage) calculated in accordance with the assumptions set forth in
Section 1.2(d) by dividing (a) the sum of the Net Outstanding Portfolio Balance
on such Measurement Date by (b) the sum of the aggregate outstanding principal
amount of the Class A Notes, the Class B Notes and the Class C Notes and the
amount of any unreimbursed Interest Advances.

 

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“Par Value Test”:  The test that will be met as of any Measurement Date on which
any Notes remain Outstanding if the Par Value Ratio on such Measurement Date is
equal to or greater than 135.99%.

 

“Participating Institution”:  With respect to any participation, the entity that
holds legal title to the participated asset.

 

“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, is April 15, 2015, and
monthly thereafter on the 15th day of each calendar month (or if such day is not
a Business Day, the next succeeding Business Day) to and including, in the case
of the Notes, the Stated Maturity Date, or, in the case of the Preferred Shares,
the Preferred Shares Redemption Date, unless redeemed prior thereto.

 

“Permitted Subsidiary”: Any one or more wholly-owned, single purpose entities
established exclusively for the purpose of taking title to mortgage, real estate
or any Sensitive Asset in connection, in each case, with the exercise of
remedies or otherwise.

 

“Permitted Exchange Security”: A bond, note or other security received by the
Issuer in connection with the workout, restructuring or modification of a Loan
Obligation that is a loan.

 

“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 Agreement”:  The placement agreement relating to the Notes dated as
of the Closing Date by and among the Issuer, the Co-Issuer and the Co-Placement
Agents.

 

“Pledged Loan Obligation”:  On any date of determination, any Loan Obligation
that has been Granted to the Trustee and not been released from the lien of this
Indenture pursuant to Section 10.12 hereof.

 

“Portfolio Finalization Date”:  The date which is the earliest of (i) the
120th day after the Closing Date; (ii) the first date on which the Aggregate
Principal Balance of the Pledged Loan Obligations is at least equal to the
Portfolio Finalization Date Collateral Principal Balance and (iii) the date that
the Loan Obligation Manager determines, in its sole discretion, and notifies the
Trustee of such determination, that investment in Additional Loan Obligations is
no longer practical or desirable.

 

“Portfolio Finalization Date Collateral Principal Balance”:  U.S.$300,000,000.

 

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“Post-Closing Acquisition Period”:  The period commencing on the Closing Date
and ending on the earlier of (i) the Portfolio Finalization Date and (ii) the
occurrence of an Event of Default (after the expiry of any applicable grace
periods).

 

“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.

 

“Preferred Share Distribution Account”:  A segregated account established and
designated as such by the Preferred Shares Paying Agent pursuant to the
Preferred Share 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 Share 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 Share Paying Agency Agreement”:  The Preferred Share 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 Share 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 Share Paying
Agency Agreement, and thereafter Preferred Shares Paying Agent shall mean such
successor Person.

 

“Preferred Shares Redemption Date”:  the earlier of (i) the Stated Maturity Date
and (ii) the Payment Date on which a redemption of the Preferred Shares occurs.

 

“Principal Balance” or “par”:  With respect to any Loan Obligation or Eligible
Investment, as of any date of determination, the outstanding principal amount of
such Loan Obligation or Eligible Investment; provided that:

 

(i)                    the Principal Balance of any Eligible Investment that
does not pay Cash interest on a current basis will be the accreted value
thereof; and

 

(ii)                 the Principal Balance of any RDD Obligation also will be
deemed to include the unfunded portion of such RDD Obligation on deposit in the
RDD Funding Account.

 

“Principal Collection Account”:  The trust account established pursuant to
Section 10.2(a) hereof.

 

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“Principal Proceeds”:  With respect to any Payment Date, (A) the sum (without
duplication) of (1) all principal payments (including Unscheduled Principal
Payments and any casualty or condemnation proceeds and any proceeds from the
exercise of remedies (including liquidation proceeds)) received during the
related Due Period in respect of (a) Eligible Investments (other than Eligible
Investments purchased with Interest Proceeds, Eligible Investments in the
Expense Account, Eligible Investments in the RDD Funding Account and any amount
representing the accreted portion of a discount from the face amount of a Loan
Obligation or an Eligible Investment) and (b) Loan Obligations as a result of
(i) a maturity, scheduled amortization or mandatory prepayment on a Loan
Obligation, (ii) optional prepayments made at the option of the related
borrower, (iii) recoveries on Defaulted Obligations or (iv) any other principal
payments received with respect to Loan Obligations, (2) all fees and commissions
received during such Due Period in connection with Defaulted Obligations and
Eligible Investments and the restructuring or default of such Defaulted
Obligations and Eligible Investments, (3) any interest received during such Due
Period on such Loan Obligations 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, (4) Sale Proceeds received during such Due Period in respect
of sales (excluding those previously reinvested or currently being reinvested in
Loan Obligations 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 Loan Obligation
Manager as Interest Proceeds in accordance with clause (A)(1) of the definition
of Interest Proceeds), (5) all Cash payments of interest received during such
Due Period on Defaulted Obligations, (6) funds transferred to the Principal
Collection Account from the RDD Funding Account in respect of amounts previously
held on deposit in respect of unfunded commitments for RDD Obligations that have
been sold or otherwise disposed of before such commitments thereunder have been
drawn or as to which excess funds remain, (7) any principal payments received in
Cash by the Issuer during the related Due Period on any asset held by a
Permitted Subsidiary, (8) any Loss Value Payments received by the Issuer from a
Seller, (9) all other payments received in connection with the Loan Obligations
and Eligible Investments that are not included in Interest Proceeds (10) after
the Portfolio Finalization Date, all amounts in the Unused Proceeds Account,
(11) any amounts remaining in the Interest Rate Cap Termination Receipts Account
following the purchase of any replacement Interest Rate Cap Agreement (or a
determination by the Loan Obligation Manager not to purchase a replacement
Interest Rate Cap Agreement) during the related Due Period and (12) all Cash and
Eligible Investments contributed by ARMS Equity pursuant to the terms of
Section 12.2(c) and designated as “Principal Proceeds” by ARMS Equity; provided
that in no event will Principal Proceeds include any proceeds from the Excepted
Assets minus (B)(1) the aggregate amount of any Nonrecoverable Interest Advances
that were not previously reimbursed to the Advancing Agent or the Backup
Advancing Agent from Interest Proceeds and (2) the portion of such Principal
Proceeds previously reinvested or currently being held for reinvestment in
Replacement Loan Obligations if the Issuer is permitted to purchase Replacement
Loan Obligations in accordance with Section 12.2.

 

“Priority of Payments”:  The meaning specified in Section 11.1(a) hereof.

 

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“Proceeding”:  Any suit in equity, action at law or other judicial or
administrative proceeding.

 

“Purchase Price”: The purchase price identified for each Loan Obligation against
its name in Schedule A attached hereto.

 

“QIB”:  A “qualified institutional buyer” as defined in Rule 144A.

 

“Qualified Purchaser”: A “qualified purchaser” within the meaning of
Section 2(a)(51) of the 1940 Act or an entity owned exclusive by one or more
such “qualified purchasers.”

 

“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.

 

“Rating Agency”: Moody’s, DBRS and any successor thereto, or, with respect to
the Assets generally, if at any time Moody’s or DBRS or any such successor
ceases to provide rating services with respect to the Notes or certificates
similar to the Notes, any other NRSRO selected by the Issuer and reasonably
satisfactory to a Majority of the Notes voting as a single Class.

 

“Rating Agency Condition”: A condition that is satisfied if:

 

(a)                                 the party required to satisfy the Rating
Agency Condition (the “Requesting Party”) has made a written request to each
Rating Agency for a No Downgrade Confirmation; and

 

(b)                                 any one of the following has occurred with
respect to each such Rating Agency:

 

(i)                                     a No Downgrade Confirmation has been
received from such Rating Agency; or

 

(ii)                                  (A) within 10 Business Days of such
request being sent to such Rating Agency, such Rating Agency has not replied to
such request or has responded in a manner that indicates that such Rating Agency
is neither reviewing such request nor waiving the requirement for confirmation;

 

(B)                               the Requesting Party has confirmed that such
Rating Agency has received the confirmation request,

 

(C)                               the Requesting Party promptly requests the No
Downgrade Confirmation a second time; and

 

(D)                               there is no response to either confirmation
request within five Business Days of such second request.

 

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“Rating Confirmation Failure”:  The meaning specified in Section 7.19(b) hereof.

 

“RDD Funding Account”:  The account established pursuant to
Section 10.6(a) hereof.

 

“RDD Funding Advance”:  With respect to RDD Obligations, 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.

 

“RDD Obligation”: Any Loan Obligation that requires the lender to make one or
more additional advances to the borrower upon the satisfaction of certain
conditions precedent specified in the related Underlying Instruments.

 

“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 hereof.

 

“Redemption Date Statement”:  The meaning specified in Section 10.11(i) hereof.

 

“Redemption Price”: The Redemption Price of each Class of Notes or the Preferred
Shares, as applicable, on a Redemption Date will be calculated as follows:

 

Class A Notes.  The redemption price for the Class A Notes will be calculated on
the related Determination Date and will equal the Aggregate Outstanding Amount
of the Class A Notes to be redeemed, together with the Class A Interest
Distribution Amount (plus any Class A Defaulted Interest Amount) due on the
applicable Redemption Date;

 

Class B Notes.  The redemption price for the Class B Notes will be calculated on
the related Determination Date and will equal 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 for the Class C Notes will be calculated on
the related Determination Date and will equal the Aggregate Outstanding Amount
of the Class C Notes to be redeemed, together with the Class C Interest
Distribution Amount (plus any Class C 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 Assets in accordance with Article 12 hereof
and Cash (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 payment of all amounts and expenses, including payments made in
respect of the Notes, described under clauses (1) through (11) of
Section 11.1(a)(i) and clauses

 

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(1) through (7) of Section 11.1(a)(ii); provided that, if there are no such net
proceeds or Cash remaining, the redemption price for the Preferred Shares shall
be equal to U.S.$0.

 

“Reference Banks”:  The meaning set forth in Schedule S 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 Office Agreement”:  The registered office agreement dated
January 16, 2015 between the Issuer and MaplesFS Limited as registered office
provider, as modified, supplemented and in effect from time to time.

 

“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 Loan Obligation 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 Loan Obligation
Manager will select, in its reasonable discretion, a comparable interest rate
index.

 

“REIT”:  A “real estate investment trust” under the Code.

 

“Replacement Loan Obligation”:  Any Loan Obligation that is acquired after the
Closing Date that satisfies the Eligibility Criteria and the Replacement
Criteria in accordance with the terms of Section 12.2(a) hereof.

 

“Replacement Criteria”:  The meaning specified in Section 12.2(a) hereof.

 

“Replacement Period”:  The period beginning on the Closing Date and ending on
and including the first to occur of any of the following events or dates: 
(i) the end of the Due Period related to the Payment Date in September 2017;
(ii) the end of the Due Period related to the Payment Date on which all of the
Securities are redeemed as described herein under Section 9.1; and (iii) the
date on which an Event of Default has occurred.

 

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“Repurchase Price”: The meaning specified in Section 16.3(c) hereof.

 

“Repurchase Request”:  The meaning specified in Section 7.17 hereof.

 

“Retained Interest”:  A material net economic interest in the securitization
position comprised by the Notes of not less than 5% in the form specified in
paragraph (d) of Article 405(1).

 

“Retention Holder”:  The meaning specified in Section 10.11(c)(xxxii) hereof.

 

“Retention Holder Originated Loan Obligations”:  A Loan Obligation that the
Retention Holder either (i) has purchased or will purchase for its own account
prior to selling or transferring such Loan Obligation to the Issuer or
(ii) itself or through related entities, directly or indirectly, was involved in
the original agreement which created such Loan Obligation.

 

“Risk Retention Letter”:  That certain risk retention letter by and between
Arbor Parent and ARMS Equity, dated February 27, 2015.

 

“Rule 17g-5”:  The meaning specified in Section 14.13 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.

 

“S&P”:  Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and its successors in interest.

 

“Sale”:  The meaning specified in Section 5.17(a) hereof.

 

“Sale Proceeds”:  All proceeds (including accrued interest) received with
respect to Loan Obligations and Eligible Investments as a result of sales of
such Loan Obligations and Eligible Investments, sales in connection with the
exercise of a purchase option by the holder of a Non-Acquired Participation or a
mezzanine lender, and sales in connection with a repurchase for a breach of a
representation or warranty, in each case, net of any reasonable out-of-pocket
expenses of the Loan Obligation Manager or the Trustee in connection with any
such sale.

 

“Schedule of Closing Date Loan Obligations”:  The Loan Obligations listed on
Schedule A attached hereto, which Schedule shall include the Principal Balance,
the spread and the relevant floating reference rate, the maturity date, the
Moody’s Rating of each such Loan Obligation.

 

“Scheduled Distribution”:  With respect to any Loan Obligation or Eligible
Investment, 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 Loan Obligation or Eligible Investment,
determined in accordance with the assumptions specified in Section 1.2 hereof.

 

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“SEC”:  The Securities and Exchange Commission.

 

“Secured Parties”:  Collectively, the Trustee, the Noteholders and the Loan
Obligation 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.

 

“Security”:  Any Note or Preferred Share or, collectively, the Notes and
Preferred Shares, as the context may require.

 

“Seller”:  The meaning specified in the applicable Loan Obligation Purchase
Agreement.

 

“Senior AB Participation”: A Loan Obligation that is a participation interest
(or an A Note) in an Underlying Whole Loan pursuant to a participation agreement
(or intercreditor agreement) in which the interest acquired by the Issuer is
senior to one or more Junior Participations.

 

“Senior Pari Passu Participation”:  A Loan Obligation that is a participation
interest in an Underlying Whole Loan in which the interest acquired by the
Issuer is pari passu with one or more other Senior Pari Passu Participation
Interests that are each Non-Acquired Participations and which each are the
senior-most interest in such Underlying Whole Loan.

 

“Senior Participation”:  A Loan Obligation that is a senior participation
interest (including A Notes and senior or pari passu participation interests) in
an Underlying Whole Loan pursuant to a Senior AB Participation, in which the
related Junior Participation is a Non-Acquired Participation.

 

“Sensitive Asset”: means (i) a Loan Obligation, or a portion thereof, or (ii) a
real property or other interest (including, without limitation, an interest in
real property) resulting from the conversion, exchange, other modification or
exercise of remedies with respect to a Loan Obligation or portion thereof, in
either case, as to which the Loan Obligation Manager has determined, based on an
Opinion of Counsel, could give rise to material liability of the Issuer
(including liability for taxes) if held directly by the Issuer.

 

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“Servicing Agreement”:  The Servicing Agreement, dated as of the Closing Date,
by and among the Issuer, the Trustee, the Loan Obligation Manager and the CLO
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 CLO 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”:  MaplesFS Limited, unless a successor Person shall have
become the Share Registrar pursuant to the applicable provisions of the
Preferred Share Paying Agency Agreement, and thereafter “Share Registrar” shall
mean such successor Person.

 

“Specified Person”:  The meaning specified in Section 2.6(a) hereof.

 

“Stated Maturity Date”:  The Payment Date occurring in March 2025.

 

“Tax Event”: (i) Any borrower is, or on the next scheduled payment date under
any Loan Obligation, will be, required to deduct or withhold from any payment
under any Loan Obligation to the Issuer for or on account of any tax for
whatever reason and such borrower 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
borrower 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 or
(iii) the Issuer fails to maintain its status as a Qualified REIT Subsidiary or
other disregarded entity of a REIT and is not a foreign corporation that is not
engaged in a trade or business in the United States for U.S. federal income tax
purposes.  Withholding taxes imposed under FATCA, if any, shall be disregarded
in applying the definition of “Tax Event.”

 

“Tax Materiality Condition”:  The condition that will be satisfied if either
(i) as a result 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 or other disregarded entity of a REIT and
is not 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 (4) and (10) of
Section 11.1(a)(i) and to redeem all Notes at their applicable Redemption
Prices.

 

“Transaction Documents”:  This Indenture, the Loan Obligation Management
Agreement, the Loan Obligation Purchase Agreements, the Placement Agreement, the
Interest Rate Cap Agreements, the Company Administration Agreement, the
Preferred Share Paying

 

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Agency Agreement, the Servicing Agreement, the Collateral Administration
Agreement and the Securities Account Control Agreement.

 

“Transfer Agent”:  The Person or Persons, which may be the Issuer, authorized by
the Issuer to exchange or register the transfer of Notes in its capacity as
Transfer Agent.

 

“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
Global 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 Global 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.

 

“Trustee”:  U.S. 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.

 

“Uncertificated Security”:  The meaning specified in Section 3.3(a)(ii) hereof.

 

“Underlying Instruments”:  The indenture, loan agreement, note, mortgage,
intercreditor agreement, participation agreement, co-lender agreement or other
agreement pursuant to which a Loan Obligation or Eligible Investment has been
issued or created and each other agreement that governs the terms of or secures
the obligations represented by such Loan Obligation or Eligible Investment or of
which holders of such Loan Obligation or Eligible Investment are the
beneficiaries.

 

“Underlying Mortgaged Property”: With respect to a Loan Obligation that is (i) a
Whole Loan, the commercial mortgage property or properties securing the Whole
Loan and (ii) a Senior Participation, the commercial mortgage property or
properties securing the Underlying Whole Loan.

 

“Underlying Whole Loan”:  With respect to any Loan Obligation that is an
Acquired Participation, the Whole Loan in which such Acquired Participation
represents a participation interest.

 

“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.

 

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“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 Loan Obligation (or, in the case of an Acquired Participation, the related
Underlying Whole Loan) prior to the stated maturity date of such Loan Obligation
(or, in the case of an Acquired Participation, the related Underlying Whole
Loan).

 

“Unused Proceeds Account”:  The trust account established pursuant to
Section 10.4(a) hereof.

 

“U.S. Person”: The meaning specified in Regulation S.

 

“Volcker Rule”: Section 13 of the Bank Holding Company Act of 1956, as amended,
and the applicable rules and regulations promulgated thereunder.

 

“Weighted Average Life”:  As of any Measurement Date with respect to the Loan
Obligations (other than Defaulted Obligations), the number obtained by
(i) summing the products obtained by multiplying (a) the Average Life at such
time of each Loan Obligation (other than Defaulted Obligations) by (b) the
outstanding Principal Balance of such Loan Obligation and (ii) dividing such sum
by the Aggregate Principal Balance at such time of all Loan Obligations (other
than Defaulted Obligations).  For purposes of this definition, “Average Life”
means, on any Measurement Date with respect to any Loan Obligation (other than a
Defaulted Obligation), the quotient obtained by the Loan Obligation 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 Loan Obligation and
(b) the respective amounts of such expected distributions of principal by
(ii) the sum of all successive expected distributions of principal on such Loan
Obligation.

 

“Weighted Average Spread”:  As of any date of determination, the number obtained
(rounded up to the next 0.001%), by (A) summing the products obtained by
multiplying (i) with respect to any Loan Obligation (other than a Defaulted
Obligation), the greater of (x) the current stated spread above LIBOR (net of
any servicing fees and expenses) at which interest accrues on each such Loan
Obligation and (y) if such Loan Obligation provides for a minimum interest rate
payable thereunder, the excess, if any, of the minimum interest rate applicable
to such Loan Obligation (net of any servicing fees and expenses) over LIBOR by
(ii) the Principal Balance of such Loan Obligation as of such date, and
(B) dividing such sum by the aggregate Principal Balance of all Loan Obligations
(excluding all Defaulted Obligations).

 

“Whole Loan”:  A commercial mortgage loan secured by a first-lien mortgage on a
Multi-Family Property or an office property.

 

Section 1.2                                    Assumptions as to Assets.

 

(a)                                 In connection with all calculations required
to be made pursuant to this Indenture with respect to Scheduled Distributions on
any Loan Obligation and Eligible Investment, or any payments on any other
Assets, and with respect to the income that can be earned on Scheduled
Distributions on any Loan Obligation or Eligible Investment and on any

 

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other amounts that may be received for credit to 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 Loan Obligations and Eligible Investments shall be made on
the basis of information as to the terms of each such Asset and upon report of
payments, if any, received on such Asset that are furnished by or on behalf of
the related borrower, obligor or issuer of such Asset 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 Loan Obligation (other than a Defaulted Obligation, which,
except as otherwise provided herein, shall be assumed to have a Scheduled
Distribution of zero) or Eligible Investment shall be the sum of (i) the total
amount of payments and collections in respect of such Loan Obligation or
Eligible Investment (including all Sales Proceeds received during the Due Period
and not reinvested in Replacement Loan Obligations 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. On any date of determination, the
amount of any Scheduled Distribution due on any future date with respect to any
Loan Obligation as to which any interest or other payment thereon is subject to
withholding tax of any relevant jurisdiction 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.

 

(d)                                 For purposes of calculating the Par Value
Ratio (1) an appraisal reduction of a Loan Obligation will be assumed to result
in an implied reduction of Principal Balance for such Loan Obligation only if
such appraisal reduction is intended to reduce the interest payable on such Loan
Obligation and only in proportion to such interest reduction and (2) any Loan
Obligation that has sustained an implied reduction of Principal Balance due to
an appraisal reduction will not be considered a Defaulted Obligation solely due
to such implied reduction.

 

(e)                                  For purposes of calculating the Interest
Coverage Ratio, (1) the expected interest income on the Loan Obligations and
Eligible Investments and the expected interest payable on the Notes shall be
calculated using the interest rates applicable thereto on the applicable
Measurement Date, (2) accrued original issue discount on Eligible Investments
shall be deemed to be Scheduled Distributions due on the date such original
issue discount is scheduled to be paid, (3) with respect to each Defaulted
Obligation as to which the Loan Obligation Manager has delivered written notice
to the Issuer and the Trustee of its intent to engage in either (x) Credit
Risk/Defaulted Obligation Cash Purchase or (y) an exchange for an Exchange
Obligation, the Loan Obligation Manager will have 45 days to exercise such
purchase or exchange and during such period such Loan Obligation will not be
treated as a Defaulted Obligation, (4) there will be excluded all scheduled or
deferred payments of interest on or principal of Loan Obligations and any
payment that the Loan Obligation Manager has determined in its reasonable
judgment will not be made in cash or received when due and

 

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(5) with respect to any Loan Obligation as to which any interest or other
payment thereon is subject to withholding tax of any relevant jurisdiction, each
payment thereon shall be deemed to be payable net of such withholding tax unless
the related borrower is required to make additional payments to fully compensate
the Issuer for such withholding taxes (including in respect of any such
additional payments).

 

(f)                                   Each Scheduled Distribution receivable
with respect to a Loan Obligation or Eligible Investment 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 Loan Obligation 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 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 Assets, shall be made on the basis of the date on which the Issuer makes a
binding commitment to purchase or sell a Loan Obligation or Eligible Investment
rather than the date upon which such purchase or sale settles.

 

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

 

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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 A and B hereto.

 

(b)                                 Global Securities and Definitive Notes.

 

(i)                                     The 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 A and B 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 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 initially offered and sold in
the United States to (or to U.S. Persons who are) IAIs shall be issued in
definitive form, registered in the name of the legal or beneficial owner thereof
attached without interest coupons with the applicable legend set forth in
Exhibits A and B hereto added to the form of such Notes (each a “Definitive
Note”), which shall be duly executed by the Issuer and the Co-Issuer and
authenticated by the Trustee as hereinafter provided.  The aggregate principal
amount of the Definitive Notes 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)                               The Notes initially sold to non-U.S. Persons
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 A and B,
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.

 

(c)                                  Book-Entry Provisions.  This
Section 2.2(c) shall apply only to Global Securities deposited with or on behalf
of the Depository.

 

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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.

 

(d)                                 Delivery of Definitive 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 Definitive Note.

 

Section 2.3                                    Authorized Amount; Stated
Maturity Date; and Denominations.

 

(a)                                 The aggregate principal amount of Notes that
may be authenticated and delivered under this Indenture is limited to
U.S.$219,000,000, 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 three Classes having designations and original
principal amounts as follows:

 

Designation

 

Original
Principal
Amount

 

Class A Senior Secured Floating Rate Notes Due March 2025

 

U.S.$

165,750,000

 

Class B Secured Floating Rate Notes Due March 2025

 

U.S.$

24,750,000

 

Class C Secured Floating Rate Notes Due March 2025

 

U.S.$

28,500,000

 

 

(b)                                 The Notes shall be issuable in minimum
denominations of U.S.$250,000 and integral multiples of U.S.$500 in excess
thereof (plus any residual amount).

 

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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.

 

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 maintaining the Notes Registrar and 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.

 

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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, 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

 

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and in accordance with Rule 144A to QIBs or, solely with respect to Definitive
Notes, IAIs who are also Qualified Purchasers purchasing for their own account
or for the accounts of one or more QIBs or IAIs who are also Qualified
Purchasers, for which the purchaser is acting as fiduciary or agent.  The Notes
may be offered, sold, resold or 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 Date 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)                                     Except as otherwise set forth below,
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.  Transfers of a Global
Security to a Definitive Note may only be made in accordance with Section 2.10.

 

(ii)                                  Regulation S Global Security to Rule 144A
Global Security or Definitive Note.  If a holder of a beneficial interest in a
Regulation S Global Security wishes at any time to exchange its interest in such
Regulation S Global Security for an interest in the corresponding Rule 144A
Global Security or for a Definitive Note or to transfer its interest in such
Regulation S Global Security to a Person who wishes to take delivery thereof in
the form of an interest in the corresponding Rule 144A Global Security or for a
Definitive Note, such holder may, subject to the immediately succeeding sentence
and the rules and procedures of Euroclear, Clearstream and/or DTC, as the case
may be, exchange or transfer, or cause the exchange or transfer of, such
interest for an equivalent beneficial interest in the corresponding Rule 144A
Global Security or for a Definitive Note.  Upon receipt by the Trustee or the
Notes Registrar of:

 

(1)                                 if the transferee is taking a beneficial
interest in a Rule 144A Global Security, instructions from Euroclear,
Clearstream and/or DTC, as the case may be, directing the Notes Registrar to
cause to be credited a beneficial interest in the corresponding Rule 144A Global
Security in an amount equal to the beneficial interest in such Regulation S
Global Security, but not less than the minimum denomination applicable to such
holder’s Notes to be exchanged or transferred, such instructions to contain
information regarding the participant account with DTC to be credited with such
increase and a duly completed certificate in the form of Exhibit D-2 attached
hereto; or

 

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(2)                                 if the transferee is taking a Definitive
Note, a duly completed transfer certificate in substantially the form of
Exhibit D-3 hereto, certifying that such transferee is an IAI and a Qualified
Purchaser,

 

then the Notes Registrar shall either (x) if the transferee is taking a
beneficial interest in a Rule 144A Global Security, approve the instructions at
DTC to reduce, or cause to be reduced, the Regulation S Global Security by the
aggregate principal amount of the beneficial interest in the Regulation S Global
Security to be transferred or exchanged and the Notes Registrar shall instruct
DTC, concurrently with such reduction, to credit or cause to be credited to the
securities account of the Person specified in such instructions a beneficial
interest in the corresponding Rule 144A Global Security equal to the reduction
in the principal amount of the Regulation S Global Security or (y) if the
transferee is taking an interest in a Definitive Note, the Notes Registrar shall
record the transfer in the Notes Register in accordance with Section 2.5(a) and,
upon execution by the Issuers, the Authenticating Agent shall authenticate and
deliver one or more Definitive Notes, as applicable, registered in the names
specified in the instructions described above, in principal amounts designated
by the transferee (the aggregate of such principal amounts being equal to the
aggregate principal amount of the interest in the Regulation S Global Security
transferred by the transferor).

 

(iii)                               Definitive Note or Rule 144A Global Security
to Regulation S Global Security.  If a holder of a beneficial interest in a
Rule 144A Global Security or a Holder of a Definitive Note wishes at any time to
exchange its interest in such Rule 144A Global Security or Definitive Note for
an interest in the corresponding Regulation S Global Security, or to transfer
its interest in such Rule 144A Global Security or Definitive Note to a Person
who wishes to take delivery thereof in the form of an interest in the
corresponding Regulation S Global Security, such holder, provided such holder
or, in the case of a transfer, the transferee is not a U.S. person and is
acquiring such interest in an offshore transaction, may, subject to the
immediately succeeding sentence and the rules and procedures of DTC, exchange or
transfer, or cause the exchange or transfer of, such interest for an equivalent
beneficial interest in the corresponding Regulation S Global Security.  Upon
receipt by the Trustee or the Notes Registrar of:

 

(1)                                 instructions given in accordance with DTC’s
procedures from an Agent Member directing the Trustee or the Notes Registrar to
credit or cause to be credited a beneficial interest in the corresponding
Regulation S Global Security, but not less than the minimum denomination
applicable to such holder’s Notes, in an amount equal to the beneficial interest
in the Rule 144A Global Security or Definitive Note to be exchanged or
transferred, and in the case of a transfer of Definitive Notes, such Holder’s
Definitive Notes properly endorsed for assignment to the transferee,

 

(2)                                 a written order given in accordance with
DTC’s procedures containing information regarding the participant account of DTC
and the Euroclear or Clearstream account to be credited with such increase,

 

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(3)                                 in the case of a transfer of Definitive
Notes, a Holder’s Definitive Note properly endorsed for assignment to the
transferee, and

 

(4)                                 a duly completed certificate in the form of
Exhibit D-1 attached hereto,

 

then the Trustee or the Notes Registrar shall approve the instructions at DTC to
reduce the principal amount of the Rule 144A Global Security (or, in the case of
a transfer of Definitive Notes, the Trustee or the Notes Registrar shall cancel
such Definitive Notes) and to increase the principal amount of the Regulation S
Global Security by the aggregate principal amount of the beneficial interest in
the Rule 144A Global Security or Definitive Note to be exchanged or transferred,
and to credit or cause to be credited to the securities account of the Person
specified in such instructions a beneficial interest in the corresponding
Regulation S Global Security equal to the reduction in the principal amount of
the Rule 144A Global Security (or, in the case of a cancellation of Definitive
Notes, equal to the principal amount of Definitive Notes so cancelled).

 

(iv)                              Transfer of Rule 144A Global Securities to
Definitive Notes.  If, in accordance with Section 2.10, a holder of a beneficial
interest in a Rule 144A Global Security wishes at any time to exchange its
interest in such Rule 144A Global Security for a Definitive Note or to transfer
its interest in such Rule 144A Global Security to a Person who wishes to take
delivery thereof in the form of a Definitive Note in accordance with
Section 2.10, such holder may, subject to the immediately succeeding sentence
and the rules and procedures of DTC, exchange or transfer, or cause the exchange
or transfer of, such interest for a Definitive Note.  Upon receipt by the
Trustee or the Notes Registrar of (A) a duly complete certificate substantially
in the form of Exhibit D-3 and (B) appropriate instructions from DTC, if
required, the Trustee or the Notes Registrar shall approve the instructions at
DTC to reduce, or cause to be reduced, the Rule 144A Global Security by the
aggregate principal amount of the beneficial interest in the Rule 144A Global
Security to be transferred or exchanged, record the transfer in the Register in
accordance with Section 2.5(a) and upon execution by the Issuers authenticate
and deliver one or more Definitive Notes, registered in the names specified in
the instructions described in clause (B) above, in principal amounts designated
by the transferee (the aggregate of such principal amounts being equal to the
aggregate principal amount of the interest in the Rule 144A Global Security
transferred by the transferor).

 

(v)                                 Transfer of Definitive Notes to Rule 144A
Global Securities.  If a holder of a Definitive Note wishes at any time to
exchange its interest in such Definitive Note for a beneficial interest in a
Rule 144A Global Security or to transfer such Definitive Note to a Person who
wishes to take delivery thereof in the form of a beneficial interest in a
Rule 144A Global Security, such holder may, subject to the immediately
succeeding sentence and the rules and procedures of DTC, exchange or transfer,
or cause the exchange or transfer of, such Definitive Note for beneficial
interest in a Rule 144A Global Security (provided that no IAI may hold an
interest in a Rule 144A Global Security).  Upon receipt by the Trustee or the
Notes Registrar of (A) a Holder’s Definitive Note properly endorsed for
assignment to the transferee; (B) a duly completed

 

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certificate substantially in the form of Exhibit D-2 attached hereto;
(C) instructions given in accordance with DTC’s procedures from an Agent Member
to instruct DTC to cause to be credited a beneficial interest in the Rule 144A
Global Securities in an amount equal to the Definitive Notes to be transferred
or exchanged; and (D) a written order given in accordance with DTC’s procedures
containing information regarding the participant’s account of DTC to be credited
with such increase, the Trustee or the Notes Registrar shall cancel such
Definitive Note in accordance herewith, record the transfer in the Notes
Register in accordance with Section 2.5(a) and approve the instructions at DTC,
concurrently with such cancellation, to credit or cause to be credited to the
securities account of the Person specified in such instructions a beneficial
interest in the corresponding Rule 144A Global Security equal to the principal
amount of the Definitive Note transferred or exchanged.

 

(vi)             Other Exchanges.  In the event that, pursuant to Section 2.10
hereof, a Global Security is exchanged for Definitive 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)                Removal of Legend.  If Notes are issued upon the transfer,
exchange or replacement of Notes bearing the applicable legends set forth in
Exhibits A and B 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 1940 Act or ERISA. 
So long as the Issuer or the Co-Issuer is relying on an exemption under or
promulgated pursuant to the 1940 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 1940 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.

 

(g)               Each beneficial owner of Regulation S Global Securities shall
be deemed to make the representations and agreements set forth in Exhibit D-1
hereto.

 

(h)              Each beneficial owner of Rule 144A Global Securities shall be
deemed to make the representations and agreements set forth in Exhibit D-2
hereto.

 

(i)                  Each Holder of Definitive Notes shall make the
representations and agreements set forth in the certificate attached as
Exhibit D-3 hereto.

 

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(j)                 Any purported transfer of a Note not in accordance with
Section 2.5(a) 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 1940 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 Loan Obligation 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 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 Loan Obligation Manager at a price determined by
the Issuer or the Loan Obligation 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, none of the Issuer, the Trustee nor the Loan Obligation
Manager shall 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 Loan Obligations by the Issuer from Affiliates of the Loan
Obligation Manager on the Closing Date and (ii) any other transaction between
the Issuer and the Loan Obligation Manager or its Affiliates that are permitted
under the terms of this Indenture or the Loan Obligation Management Agreement.

 

(n)              As long as any Note is Outstanding, Notes held by Issuer Parent
or an Issuer Parent Disregarded Entity may not be transferred, pledged or
hypothecated to any other Person (except to Issuer Parent or an Issuer Parent
Disregarded Entity) unless the Issuer receives an opinion of Cadwalader,
Wickersham & Taft LLP or another nationally recognized tax counsel

 

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experienced in such matters that such transfer will not cause the Issuer to be
treated as a foreign corporation engaged in a trade or business in the United
States for federal income tax purposes or to otherwise become subject to federal
income tax on a net income basis (or has previously received an opinion of
Cadwalader, Wickersham & Taft 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
federal income tax purposes).

 

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 U.S.$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 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.

 

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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 Other Amounts; Principal and Interest Rights Preserved.

 

(a)                                 The Class A Notes shall accrue interest
during each Interest Accrual Period at the Class A Rate.  Interest on each
Class A 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 Note bears to the Aggregate Outstanding Amount
of all Class A Notes; provided, however, that the payment of interest on the
Class A Notes is subordinated to the payment on each Payment Date of certain
amounts in accordance with the Priority of Payments.

 

(b)                                 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 certain other amounts in accordance with the Priority of
Payments.

 

(c)                                  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 any Class B Defaulted Interest Amount)
and certain other amounts in accordance with the Priority of Payments.

 

(d)                                 Upon any Optional Redemption, Tax Redemption
or Clean-up Call, all net proceeds remaining after the sale of the Loan
Obligations 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 (11) of
Section 11.1(a)(i) and clauses (1) through (7) 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 Share
Paying Agency Agreement, whereupon the Preferred Shares will be cancelled and
deemed paid in full for all purposes.

 

(e)                                  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 the Stated Maturity Date,

 

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whichever occurs first, unless payment of principal is improperly withheld or
unless a Default has occurred with respect to such payments of principal.

 

(f)                                   The principal of each Class of Notes
matures at par and is due and payable on the Stated Maturity Date, unless such
principal has been previously repaid or 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 on the Class B Notes (other than payment of principal
pursuant to Section 9.5) may only occur after the principal on the Class A Notes
has been paid in full and is subordinated to the payment on each Payment Date of
the principal and interest due and payable on the Class A Notes and other
amounts in accordance with the Priority of Payments and any payment of principal
on 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; provided, further, that the payment of principal
on the Class C Notes (other than payment of principal pursuant to Section 9.5)
may only occur after the principal on the Class B Notes has been paid in full
and is subordinated to the payment on each Payment Date of the principal and
interest due and payable on the Class B Notes and other amounts in accordance
with the Priority of Payments and any payment of principal on 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 B Notes have been
paid in full.  Payments of principal on the Notes in connection with a Clean-up
Call, Tax Redemption or Optional Redemption will be made in accordance with
Section 9.1 and the Priority of Payments.

 

(g)                                  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 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 (Certificate of Foreign
Status of Beneficial Owner for United States Tax Withholding and Reporting
(Individuals)), IRS Form W-8BEN-E (Certificate of Foreign Status of Beneficial
Owner for United States Tax Withholding and Reporting (Entities)), IRS
Form W-8IMY (Certificate of Foreign Intermediary, Foreign Flow-through Entity,
or Certain U.S. Branches for United States Tax Withholding and Reporting), IRS
Form W-9 (Request for Taxpayer Identification Number and Certification), or IRS
Form W-8ECI (Certificate of Foreign Person’s Claim that Income is Effectively
Connected with the Conduct of a Trade or Business in the United States)) 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 this Section 2.7(g) and
to update or replace such form or

 

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certification in accordance with its terms or its subsequent amendments. 
Furthermore, (i) if a Holder is a “foreign financial institution” or other
foreign financial entity subject to FATCA or (ii) if the Issuer is no longer a
Qualified REIT Subsidiary, but is instead a foreign corporation for U.S. federal
income tax purposes, the Issuer shall require information to comply with FATCA
requirements pursuant to clause (xii) of the representations and warranties set
forth under the third paragraph of Exhibit D-1 hereto, as deemed made pursuant
to Section 2.5(g) hereto, or pursuant to clause (xiii) of the representations
and warranties set forth under the third paragraph of Exhibit D-2 hereto, as
deemed made pursuant to Section 2.5(h) hereto, or pursuant to clause (xi) of the
representations and warranties set forth under the third paragraph of
Exhibit D-3 hereto, made pursuant to Section 2.5(i) hereto, as applicable.  In
the event a Holder fails to provide such information, or to the extent the
Holder’s ownership of Notes would otherwise cause the Issuer to be subject to
any tax under FATCA, (A) the Issuer is authorized to withhold amounts otherwise
distributable to the Holder as compensation for any tax imposed under FATCA as a
result of such failure or the Holder’s ownership, and (B) to the extent
necessary to avoid an adverse effect on the Issuer as a result of such failure
or the Holder’s ownership, the Issuer will have the right to compel the Holder
to sell its Notes, and, if the Holder does not sell its Notes within 10 Business
Days after notice from the Issuer, to sell such Notes at a public or private
sale called and conducted in any manner permitted by law, and to remit the net
proceeds of such sale (taking into account any taxes incurred by the Issuer in
connection with such sale) to the Holder as payment in full for such Notes.  The
Issuer may also assign each such Note a separate CUSIP number or CUSIP numbers
in the Issuer’s sole discretion.

 

(h)                                 Payments in respect of interest on and
principal on 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 Definitive 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 Date 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

 

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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 and shall specify the place where such Notes may be presented and
surrendered for such payment.

 

(i)                                     Subject to the provisions of Sections
2.7(a) through (h) and Section 2.7(l) hereof, Holders of Notes as of the Record
Date in respect of a Payment Date shall be entitled to 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).

 

(j)                                    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.

 

(k)                                 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.

 

(l)                                     Interest accrued with respect to the
Notes shall be calculated as described in the applicable form of Note attached
hereto.

 

(m)                             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.

 

(n)                                 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
limited-recourse obligations of the Issuer and non-recourse obligations of 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

 

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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.

 

(o)                                 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.

 

(p)                                 Notwithstanding any of the foregoing
provisions with respect to payments of principal of and interest on the Notes
(but subject to Sections 2.7(f) and (l)), 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.

 

(q)                                 Payments in respect of the Preferred Shares
as contemplated by Sections 11.1(a)(i)(12) and 11.1(a)(ii)(8) 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.  Notes
of the most senior Class Outstanding that are held by the

 

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Issuer, the Co-Issuer, the Loan Obligation Manager or any of their respective
Affiliates may be submitted to the Trustee for cancellation at any time.

 

Section 2.10                             Global Securities; Definitive Notes;
Temporary Notes.

 

(a)                                 Definitive Notes.  Definitive Notes shall
only be issued in the following limited circumstances:

 

(i)                                     upon Transfer of Global Securities to an
IAI in accordance with the procedures set forth in Section 2.5(e)(ii) or
Section 2.5(e)(iii);

 

(ii)                                  if a holder of a Definitive Note wishes at
any time to exchange such Definitive Note for one or more Definitive Notes or
transfer such Definitive Note to a transferee who wishes to take delivery
thereof in the form of a Definitive Note in accordance with Section 2.10, such
holder may effect such exchange or transfer upon receipt by the Trustee or the
Notes Registrar of (A) a Holder’s Definitive Note properly endorsed for
assignment to the transferee, and (B) duly completed certificates in the form of
Exhibit D-3, upon receipt of which the Trustee or the Notes Registrar shall then
cancel such Definitive Note in accordance herewith, record the transfer in the
Notes Register in accordance with Section 2.5(a) and upon execution by the
Co-Issuers authenticate and deliver one or more Definitive Notes bearing the
same designation as the Definitive Note endorsed for transfer, registered in the
names specified in the assignment described in clause (A) above, in principal
amounts designated by the transferee (the aggregate of such principal amounts
being equal to the aggregate principal amount of the Definitive Note surrendered
by the transferor);

 

(iii)                               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 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 exchanged for a
Definitive Note shall be surrendered by the Depository to the Trustee’s
Corporate Trust Office together with necessary instruction for the registration
and delivery of a Definitive 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 Definitive Notes of the same Class and authorized
denominations.  Any Definitive Notes delivered in exchange for an interest in a
Global Security shall, except as otherwise provided by Section 2.5(f), bear the
applicable legend set forth in Exhibits C-1 or C-2, as applicable, 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.

 

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(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 Definitive
Notes.

 

Pending the preparation of Definitive 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 Notes, Class B Notes or Class C
Notes that are printed, lithographed, typewritten, mimeographed or otherwise
reproduced, in any authorized denomination, substantially of the tenor of the
Definitive Notes in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the Officers
executing such Definitive Notes may determine, as conclusively evidenced by
their execution of such Definitive Notes.

 

If temporary Definitive Notes are issued, the Issuer and the Co-Issuer shall
cause permanent Definitive Notes to be prepared without unreasonable delay.  The
Definitive 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 Definitive Notes.  After the
preparation of Definitive Notes, the temporary Notes shall be exchangeable for
Definitive Notes upon surrender of the applicable temporary Class A, Class B or
Class C Notes at the office or agency maintained by the Issuer and the Co-Issuer
for such purpose, without charge to the Holder.  Upon surrender for cancellation
of any one or more temporary Class A Notes, Class B Notes or Class C 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 Definitive
Notes of authorized denominations.  Until so exchanged, the temporary Class A
Notes, Class B Notes or Class C Notes shall in all respects be entitled to the
same benefits under this Indenture as Definitive 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 (unless held by Issuer
Parent or an Issuer Parent Disregarded Entity) be treated as debt and that the
Issuer be treated as a Qualified REIT Subsidiary (unless the Issuer has received
an opinion of Cadwalader, Wickersham & Taft LLP or another nationally recognized
tax counsel experienced in such matters opining that the Issuer will be treated
as a foreign corporation not engaged in a trade or business in the United States
for U.S. federal income tax purposes).  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.

 

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(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 (Certificate of Foreign Status of
Beneficial Owner for United States Tax Withholding and Reporting
(Individuals)), IRS Form W-8BEN-E (Certificate of Foreign Status of Beneficial
Owner for United States Tax Withholding and Reporting (Entities)), IRS
Form W-8IMY (Certificate of Foreign Intermediary, Foreign Flow-through Entity,
or Certain U.S. Branches for United States Tax Withholding and Reporting), IRS
Form W-9 (Request for Taxpayer Identification Number and Certification), or IRS
Form W-8ECI (Certificate of Foreign Person’s Claim that Income is Effectively
Connected with the Conduct of a Trade or Business in the United States)) 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.  Furthermore, if the
Issuer is no longer treated as a Qualified REIT Subsidiary but is instead a
foreign corporation for U.S. federal income tax purposes or if a Noteholder is a
“foreign financial institution” or other foreign financial entity subject to
FATCA, Noteholders shall timely furnish any information required pursuant to
Section 2.7(g).

 

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 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

 

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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.

 

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.

 

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ARTICLE 3

 

CONDITIONS PRECEDENT; PLEDGED LOAN 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 Loan Obligation Management Agreement, the
Placement Agreement, the Interest Rate Cap Agreements and related documents, the
execution, authentication and delivery of the Notes and specifying the Stated
Maturity Date 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) the total
aggregate Notional Amount of the Preferred Shares shall have been received in
Cash by the Issuer on the Closing Date;

 

(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 Date 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) each Officer
authorized to execute and deliver the documents referenced in clause
(b)(i) above holds the office and has the signature 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 except as may have been given, 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

 

(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

 

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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)                                 an opinion of Cadwalader, Wickersham & Taft
LLP, special U.S. counsel to the Co-Issuers, the Loan Obligation Manager and
certain Affiliates thereof (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 Sections 2.5(g), (h) and (i))
dated the Closing Date, as to certain matters of New York law and certain United
States federal income tax and securities law matters, in a form satisfactory to
the Co-Placement Agents and the Trustee;

 

(e)                                  opinions of Cadwalader, Wickersham & Taft
LLP, special counsel to the Co-Issuers dated the Closing Date, relating to
(i) the validity of the Grant hereunder and the perfection of the Trustee’s
security interest in the Assets and (ii) certain bankruptcy matters, in each
case, in a form satisfactory to the Trustee;

 

(f)                                   an opinion of Allen & Overy LLP, special
counsel to the Arbor Parent, dated the Closing Date, regarding certain 1940 Act
issues, in a form satisfactory to the Trustee;

 

(g)                                  an opinion of Skadden, Arps, Slate,
Meagher & Flom LLP, special tax counsel to the Arbor Parent, dated the Closing
Date, regarding its qualification and taxation as a REIT, in a form satisfactory
to the Trustee;

 

(h)                                 an opinion of Richards, Layton & Finger,
P.A., special Delaware counsel to the Co-Issuer, dated the Closing Date,
regarding certain issues of Delaware law, in a form satisfactory to the Trustee;

 

(i)                                     an opinion of Richards, Layton & Finger,
P.A., special Delaware counsel to ARMS Equity, dated the Closing Date, regarding
certain issues of Delaware law, in a form satisfactory to the Trustee;

 

(j)                                    an opinion of Richards, Layton & Finger,
P.A., special Delaware counsel to the Loan Obligation Manager, dated the Closing
Date, regarding certain issues of Delaware law, in a form satisfactory to the
Trustee;

 

(k)                                 an opinion of (i) General Counsel to the CLO
Servicer, dated the Closing Date, regarding certain issues of New York law, in a
form satisfactory to the Trustee and (ii) Venable LLP, counsel to Arbor Realty
SR, Inc., dated the Closing Date, regarding certain issues of Maryland law, in a
form satisfactory to the Trustee;

 

(l)                                     an opinion of Maples and Calder, Cayman
Islands counsel to the Issuer, dated the Closing Date, regarding certain issues
of Cayman Islands law, in a form satisfactory to the Trustee;

 

(m)                             an opinion of Alston & Bird LLP, counsel to U.S.
Bank National Association, regarding certain matters of United States, New York
and Minnesota law;

 

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(n)                                 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 by the
Issuer 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 Share Paying Agency
Agreement relating to the issuance by the Issuer of the Preferred Shares have
been complied with;

 

(o)                                 an Officer’s Certificate given on behalf of
the Co-Issuer stating that the Co-Issuer is not in Default under this Indenture
and that the issuance of the Notes by the Co-Issuer 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;

 

(p)                                 executed counterparts of the Loan Obligation
Purchase Agreement, the Servicing Agreement, the Loan Obligation Management
Agreement, the Advisory Committee Member Agreement, the Placement Agreement, the
Preferred Share Purchase Agreement, the Preferred Share Paying Agency Agreement,
the Interest Rate Cap Agreements (including an executed collateral assignment of
any Interest Rate Cap Agreement) (which may be delivered within 30 days after
the Closing Date) and the Securities Account Control Agreement;

 

(q)                                 an Accountants’ Report comparing and
agreeing to the following information as of the Closing Date:  (i) the
information with respect to each Loan Obligation set forth on the Schedule of
Closing Date Loan Obligations attached hereto as Schedule A 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;

 

(r)                                    an Officer’s Certificate from the Loan
Obligation Manager confirming that Schedule A hereto correctly lists the Closing
Date Loan Obligations to be Granted to the Trustee on the Closing Date;

 

(s)                                   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 in those Assets in which a security interest may be perfected by
filing under the UCC;

 

(t)                                    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

 

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registered in the name(s) set forth therein and (ii) deliver the authenticated
Notes as directed by the Issuer and the Co-Issuer; and

 

(u)                                 such other documents as the Trustee may
reasonably require.

 

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 Loan
Obligations.  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 Closing Date Loan Obligations acquired in connection therewith
purchased by the Issuer on the Closing Date (as set forth in Schedule A hereto)
to the Trustee, without recourse (except as expressly provided in each
applicable Loan Obligation 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 Closing Date Loan Obligations 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 Closing Date Loan Obligation 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 Closing
Date Loan Obligation free and clear of any liens, claims or encumbrances of any
nature whatsoever except for those which are being released on the Closing Date
and the liens created pursuant to the Indenture;

 

(ii)                                  the Issuer has acquired its ownership in
such Closing Date Loan Obligation 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 Closing Date Loan Obligation (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 each
such Closing Date Loan Obligation does not prohibit the Issuer from Granting a
security interest in and assigning and pledging such Closing Date Loan
Obligation to the Trustee;

 

(v)                                 the information set forth with respect to
each such Closing Date Loan Obligation in Schedule A is true correct;

 

(vi)                              the Closing Date Loan Obligations included in
the Assets satisfy the requirements of Section 3.2(a); and

 

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(vii)                           (1) the Grant pursuant to the Granting Clauses
of this Indenture shall, upon execution and delivery of this Indenture by the
parties hereto, result in a valid and continuing 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 Closing Date Loan Obligations pledged to the
Trustee for inclusion in the Assets on the Closing Date; and

 

(2) upon (x) the execution and delivery of the Securities Account Control
Agreement and the crediting of each Instrument evidencing the obligations of the
borrowers under each Closing Date Loan Obligation to the Custodial Account in
the manner set forth in Section 3.3(a)(i) hereof, (y) the delivery of the
Instruments evidencing the obligations of the borrowers under each Closing Date
Loan Obligation to the Custodial Securities Intermediary as set forth in
Section 3.3(a)(iii) hereof and (z) the filing of a UCC-1 financing statement as
set forth in Section 3.3(a)(v) hereof, the Trustee’s security interest in all
Closing Date Loan Obligations shall be a validly perfected, first priority
security interest under the UCC as in effect in each applicable jurisdiction.

 

(c)                                  Rating Letters.  The Trustee’s receipt of a
letter signed by the Rating Agencies and confirming that (i) the Class A Notes
have been rated “Aaa(sf)” by Moody’s and “AAA(sf)” by DBRS, (ii) the Class B
Notes have been rated at least “Baa2(sf)” by Moody’s and “A(low)(sf)” by DBRS
and (iii) the Class C Notes have been rated at least “BBB(low)(sf)” by DBRS 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
RDD Funding Account, the Expense Account, the Preferred Share 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, U.S.$200,000.

 

(f)                                   Deposit to Unused Proceeds Account.  On
the Closing Date, the Issuer shall deposit into the Unused Proceeds Account,
U.S.$ 50,342,074.54.

 

(g)                                  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 Assets.

 

(a)                                 U.S. Bank National Association is hereby
appointed as Securities Intermediary (in such capacity, the “Custodial
Securities Intermediary”) to hold all Assets delivered to it in physical form at
its office in St. Paul, 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 U.S.$200,000,000  and whose long-term unsecured debt is rated at least
“Baa1” by Moody’s and “AA (low)” by DBRS.  Subject to the limited right to
relocate Assets set forth in Section 7.5(b), the Custodial Securities
Intermediary, as a Securities Intermediary, shall hold all Loan Obligations in
the

 

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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 Share
Distribution Account), the Trustee shall have entered into a securities account
control agreement with the Issuer, as debtor and the Custodial Securities
Intermediary, as “securities intermediary” (within the meaning of
Section 8-102(a)(14) of the UCC as in effect in the State of New York) and the
Trustee, as secured party (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, Assets 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 Assets, such Asset 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 Assets shall be perfected
and otherwise evidenced as follows:

 

(i)                    in the case of such Assets 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 Assets 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 Assets 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;

 

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(iv)             in the case of Assets 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 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 Assets that consist of 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;
and

 

(vi)             in the case of Assets that consist of General Intangibles and
all other Assets of the Issuer in which a security interest may be perfected by
filing a financing statement under Article 9 of the UCC as in effect in the
District of Columbia, filing or causing the filing of a UCC financing statement
naming the Issuer as debtor and the Trustee as secured party, which financing
statement reasonably identifies all such Assets, with the Recorder of Deeds of
the District of Columbia.

 

(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, in connection with each
Grant of a Loan Obligation hereunder, the Issuer shall deliver (or cause to be
delivered by the applicable

 

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Seller) to the Custodial Securities Intermediary, in each case to the extent
specified on the Closing Document Checklist in the form of Exhibit E attached
hereto for such Loan Obligation provided to the Custodial Securities
Intermediary by the Issuer (or the applicable Seller) the following documents
(collectively, the “Loan Obligation File”):

 

(i)                    The original mortgage note or promissory note, as
applicable, bearing all intervening endorsements, endorsed in blank or endorsed
“Pay to the order of US Bank as Trustee without recourse,” and signed in the
name of the last endorsee by an authorized Person;

 

(ii)                 An original of any participation certificate together with
any and all intervening endorsements thereon, endorsed in blank on its face or
by endorsement or stock power attached thereto (without recourse, representation
or warranty, express or implied);

 

(iii)              An original of any participation agreement relating to any
item of collateral that is not evidenced by a promissory note;

 

(iv)             An original blanket assignment of all unrecorded documents in
blank (or, in the case of an Acquired Participation, a copy of any omnibus
assignment in blank), in each case in form and substance acceptable for
recording;

 

(v)                The original (or in the case of an Acquired Participation, a
copy) of any guarantee executed in connection with the promissory note;

 

(vi)             The original mortgage with evidence of recording thereon, or a
copy thereof together with an Officer’s Certificate of the Issuer (or the
applicable Seller) certifying that such represents a true and correct copy of
the original and that such original has been submitted or delivered to an escrow
agent for recordation in the appropriate governmental recording office of the
jurisdiction where the encumbered property is located, in which case,
recordation information shall not be required;

 

(vii)          The originals of all assumption, modification, consolidation or
extension agreements with evidence of recording thereon (or a copy thereof
together with an Officer’s Certificate of the Issuer (or the applicable Seller)
certifying that such represents a true and correct copy of the original and that
such original has been submitted or delivered to an escrow agent for recordation
in the appropriate governmental recording office of the jurisdiction where the
encumbered property is located, in which case, recordation information shall not
be required), together with any other recorded document relating to the Loan
Obligation otherwise included in the Loan Obligation File;

 

(viii)       The original assignment of mortgage in blank or in the name of the
Issuer, in form and substance acceptable for recording and signed in the name of
the last endorsee;

 

(ix)             The originals of all intervening assignments of mortgage, if
any, with evidence of recording thereon, showing an unbroken chain of title from
the originator thereof to the last endorsee, or copies thereof together with an
Officer’s Certificate of the

 

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Issuer (or the Seller) certifying that such represent true and correct copies of
the originals and that such originals have each been submitted or delivered to
an escrow agent for recordation in the appropriate governmental recording office
of the jurisdiction where the encumbered property is located, in which case,
recordation information shall not be required;

 

(x)                An original mortgagee policy of title insurance or a
conformed version of the mortgagee’s title insurance commitment either marked as
binding for insurance or attached to an escrow closing letter, countersigned by
the title company or its authorized agent if the original mortgagee’s title
insurance policy has not yet been issued;

 

(xi)             The original (or, in the case of an Acquired Participation, a
copy) of any security agreement, chattel mortgage or equivalent document
executed in connection with the Loan Obligation;

 

(xii)          The original assignment of leases and rents, if any, with
evidence of recording thereon, or a copy thereof together with an Officer’s
Certificate of the Issuer certifying that such copy represents a true and
correct copy of the original that has been submitted or delivered to an escrow
agent for recordation in the appropriate governmental recording office of the
jurisdiction where the encumbered property is located, in which case,
recordation information shall not be required;

 

(xiii)       The original assignment of any assignment of leases and rents in
blank, in form and substance acceptable for recording;

 

(xiv)      A filed copy of the UCC-1 financing statements (and, with respect to
Senior Participations, to the extent that the Issuer (or the applicable Seller)
has been furnished with same) with evidence of filing thereon, and UCC-3
assignments in blank, which UCC-3 assignments shall be in form and substance
acceptable for filing;

 

(xv)         The original (or, in the case of an Acquired Participation, a copy)
of any environmental indemnity agreement;

 

(xvi)      The original (or, in the case of an Acquired Participation, a copy)
of any general collateral assignment of all other documents held by the Issuer
(or, in the case of an Acquired Participation, by the lead lender) in connection
with the Loan Obligation;

 

(xvii)   An original (or, in the case of an Acquired Participation, a copy) of
any disbursement letter from the collateral obligor to the original mortgagee;

 

(xviii)   An original of the survey of the encumbered property (or, in the case
of an Acquired Participation, a copy thereof provided same has been furnished to
the Issuer (or the applicable Seller) by the related lead lender);

 

(xix)      A copy of any opinion of counsel (and, with respect to an Acquired
Participation, only to the extent such copy shall have been furnished to the
Issuer (or the applicable Seller) by the lead lender);

 

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(xx)         A copy of any property management agreement(s); and

 

(xxi)      With respect to any Loan Obligation secured by a ground lease, the
related ground lease or a copy thereof and any related ground lessor estoppels.

 

With respect to any documents which have been delivered or are being delivered
to recording offices for recording and have not been returned to the Issuer (or
the applicable Seller) in time to permit their delivery hereunder at the time
required, the Issuer (or the applicable Seller) shall deliver such original
recorded documents to the Custodial Securities Intermediary promptly when
received by the Issuer (or the applicable Seller) from the applicable recording
office.

 

(e)               The execution and delivery of this Indenture by the Trustee
shall constitute certification by the Trustee that (i) each original note
specified to the Trustee by the Issuer (or the applicable Seller) and all
allonges thereto, if any, have been received by the Custodial Securities
Intermediary; and (ii) such original note has been reviewed by the Custodial
Securities Intermediary and (A) appears regular on its face (handwritten
additions, changes or corrections shall not constitute irregularities if
initialed by the borrower), (B) appears to have been executed and (C) purports
to relate to the Loan Obligation.  The Trustee agrees to review or cause to be
reviewed the Loan Obligation File within 30 days after the Closing Date, and to
deliver to the Issuer, the CLO Servicer and the Loan Obligation Manager an Asset
Detail Report and Trust Receipt, in the form of Exhibit F attached hereto,
indicating, subject to any exceptions found by it in such review, (A) those
documents referred to in Section 3.3(d) that have been received, and (B) that
such documents have been executed, appear on their face to be what they purport
to be, purport to be recorded or filed (as applicable) and have not been torn,
mutilated or otherwise defaced, and appear on their faces to relate to the
Mortgage Loan.  The Custodial Securities Intermediary shall have no
responsibility for reviewing the Loan Obligation File except as expressly set
forth in this Section 3.3(e).  Neither the Trustee nor the Custodial Securities
Intermediary shall be under any duty or obligation to inspect, review, or
examine any such documents, instruments or certificates to independently
determine that they are valid, genuine, enforceable, legally sufficient, duly
authorized, or appropriate for the represented purpose, whether the text of any
assignment or endorsement is in proper or recordable form (except to determine
if the endorsement conforms to the requirements of Section 3.3(d), whether any
document has been recorded in accordance with the requirements of any applicable
jurisdiction, to independently determine that any document has actually been
filed or recorded in the appropriate office, that any document is other than
what it purports to be on its face, or whether the title insurance policies
relate to the Underlying Mortgaged Property.

 

(f)                Upon the first anniversary of the Closing Date, the Custodial
Securities Intermediary shall (i) deliver to the Issuer and the Loan Obligation
Manager a final exception report as to any remaining documents that are not in
the Loan Obligation File and (ii) request that the Issuer cause such document
deficiency to be cured.

 

(g)               Without limiting the generality of the foregoing:

 

(i)                    from time to time upon the request of the Trustee, Loan
Obligation Manager or CLO Servicer, the Issuer shall deliver (or cause to be
delivered) to the Custodial Securities Intermediary any Underlying Instrument in
the possession of the

 

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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, Loan Obligation Manager or CLO Servicer, as applicable, shall
have reasonably determined to be necessary or appropriate for the administration
of such Loan Obligation hereunder or under the Loan Obligation Management
Agreement or under the Servicing Agreement or for the protection of the security
interest of the Trustee under this Indenture;

 

(ii)                 in connection with any delivery of documents to the
Custodial Securities Intermediary pursuant to clause (i) above, the Trustee
shall deliver to the Loan Obligation Manager and the CLO Servicer, on behalf of
the Issuer, a trust receipt in the form of Exhibit F 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; and

 

(iii)              from time to time upon request of the Loan Obligation Manager
or the CLO Servicer, the Custodial Securities Intermediary shall, upon delivery
by the Loan Obligation Manager or the CLO Servicer of a duly completed request
for release in the form of Exhibit G hereto, release to the Loan Obligation
Manager or the CLO Servicer such of the Underlying Instruments then in its
custody as the Loan Obligation Manager or the CLO Servicer reasonably so
requests.  By submission of any such request for release, the Loan Obligation
Manager or the CLO Servicer, as applicable, shall be deemed to have represented
and warranted that it has determined in accordance with the Loan Obligation
Manager Standard or the Accepted Servicing Practices, respectively, set forth in
the Loan Obligation Management Agreement or the Servicing Agreement, as the case
may be, that the requested release is necessary for the administration of such
Loan Obligation hereunder or under the Loan Obligation Management Agreement or
under the Servicing Agreement or for the protection of the security interest of
the Trustee under this Indenture.  The Loan Obligation Manager or the CLO
Servicer shall return to the Custodial Securities Intermediary each Underlying
Instrument released from custody pursuant to this clause (iii) 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 Loan Obligation that is
consummated within such 20-day period).  Notwithstanding the foregoing
provisions of this clause (iii), (A) any note, certificate or other instrument
evidencing a Pledged Loan Obligation shall be released only for the purpose of
(1) a sale, exchange or other disposition of such Pledged Loan Obligation that
is permitted in accordance with the terms of this Indenture, (2) presentation,
collection, renewal or registration of transfer of such Loan Obligation 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.

 

(h)              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:

 

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(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;

 

(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 any of the Accounts 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
each of the Accounts without further consent of the Issuer; none of the Accounts
is in the name of any person other than the Issuer or the Trustee; the Issuer
has not consented to the Custodial Securities Intermediary to comply with any
Entitlement Orders in respect of the Accounts and any Security Entitlement
credited to any of the Accounts originated by any person other than the Trustee;

 

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(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;

 

(xii)          each of the Accounts constitutes a Securities Account in respect
of which U.S. Bank National Association has accepted to be Custodial Securities
Intermediary pursuant to the Securities Account Control Agreement on behalf of
the Trustee as secured party under this Indenture.

 

(i)             The Trustee shall cause all Eligible Investments purchased by
the Trustee or the Loan Obligation Manager on behalf of the Issuer to be
promptly credited to the applicable Account.

 

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
except as to (i) rights of registration of transfer and exchange,
(ii) substitution of mutilated, defaced, destroyed, lost or stolen Notes,
(iii) rights of Noteholders to receive payments of principal thereof and
interest thereon, (iv) the rights, protections, indemnities and immunities of
the Trustee and the specific obligations set forth below hereunder, (v) the
rights, obligations and immunities of the Loan Obligation Manager hereunder and
under the Loan Obligation Management Agreement, (vi) the rights, protections,
indemnities and immunities of the Collateral Administrator hereunder and under
the Collateral Administration Agreement and (vii) the rights of Noteholders as
beneficiaries hereof with respect to the property deposited with the Trustee and
payable to all or any of them (and the Trustee, on demand of and at the expense
of the Issuer, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture) when:

 

(a)                                 (i) either:

 

(1)                                 all Notes theretofore authenticated and
delivered to Noteholders (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 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

 

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(2)                                 all Notes not theretofore delivered to the
Trustee for cancellation (A) have become due and payable, or (B) shall become
due and payable at their Stated Maturity Date within one year, or (C) are to be
called for redemption pursuant to Article 9 under an arrangement satisfactory to
the Trustee for the giving of notice of redemption by the Issuer and the
Co-Issuer pursuant to Section 9.3 and either (x) the Issuer has irrevocably
deposited or caused to be deposited with the Trustee, in trust for such purpose,
Cash or non-callable direct obligations of the United States of America; which
obligations are entitled to the full faith and credit of the United States of
America or are debt obligations which are rated “Aaa” by Moody’s in an amount
sufficient, as recalculated by a firm of Independent nationally-recognized
certified public accountants, 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 respective Stated
Maturity Date or the respective Redemption Date, as the case may be or (y) in
the event all of the Assets are liquidated following the satisfaction of the
conditions specified in Article 5, the Issuer shall have deposited or caused to
be deposited with the Trustee, in trust, all proceeds of such liquidation of the
Assets, for payment in accordance with the Priority of Payments;

 

(ii)                                  the Issuer has paid or caused to be paid
all other sums then due and payable hereunder (including any amounts then due
and payable pursuant to the Collateral Administration Agreement and the Loan
Obligation Management Agreement) by the Issuer and no other amounts are
scheduled to be due and payable by the Issuer other than Dissolution Expenses; 
and

 

(iii)                               the Co-Issuers have delivered to the Trustee
Officer’s certificates and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with;

 

provided, however, that in the case of clause (a)(i)(2)(x) above, the Issuer has
delivered to the Trustee an opinion of Cadwalader, Wickersham & Taft LLP, or an
opinion of another tax counsel of nationally recognized standing in the United
States experienced in such matters to the effect that the Noteholders would
recognize no income gain or loss for U.S. federal income tax purposes as a
result of such deposit and satisfaction and discharge of this Indenture; or

 

(b)                                 (i) the Trustee confirms to the Issuer that:

 

(1)                                 the Trustee is not holding any Assets (other
than (x) the Loan Obligation Management Agreement, the Servicing Agreement, the
Collateral Administration Agreement, the Interest Rate Cap Agreements and the
Securities Account Control Agreement and (y) Cash in an amount not greater than
the Dissolution Expenses); and

 

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(2)                                 no assets (other than Excepted Assets or
Cash in an amount not greater than the Dissolution Expenses) are on deposit in
or to the credit of any Accounts in the name of the Issuer (or the Trustee for
the benefit of the Issuer or any Secured Party);

 

(ii)                                  each of the Co-Issuers has delivered to
the Trustee a certificate stating that (1) there are no Assets (other than
(x) the Loan Obligation Management Agreement, the Servicing Agreement, the
Collateral Administration Agreement, the Interest Rate Cap Agreements and the
Securities Account Control Agreement and (y) Cash in an amount not greater than
the Dissolution Expenses) that remain subject to the lien of this Indenture, and
(2) all funds on deposit in or to the credit of the Accounts have been
distributed in accordance with the terms of this Indenture or have otherwise
been irrevocably deposited with the Trustee for such purpose; and

 

(iii)                               the Co-Issuers have delivered to the Trustee
Officer’s certificates and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.

 

Notwithstanding the satisfaction and discharge of this Indenture, the rights and
obligations of the 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.

 

Section 4.2                                    Application of Amounts held in
Trust.

 

All amounts 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 (including, without limitation, the Priority of Payments) to the
payment of the principal and interest, either directly or through any Paying
Agent, as the Trustee may determine, and such amounts shall be held in a
segregated account identified as being held in trust for the benefit of the
Secured Parties.

 

Section 4.3                                    Repayment of Amounts Held by
Paying Agent.

 

In connection with the satisfaction and discharge of this Indenture with respect
to the Notes, all amounts then held by any Paying Agent other than the Trustee
under the provisions of this Indenture shall, upon demand of the Issuer and the
Co-Issuer, be remitted to the Trustee to be held and applied pursuant to
Section 7.3 hereof and, in the case of amounts 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 amounts.

 

Section 4.4                                    Limitation on Obligation to Incur
Company Administrative Expenses.

 

If at any time after an Event of Default has occurred and the Notes have been
declared immediately due and payable, the sum of (i) Eligible Investments,
(ii) Cash and (iii) amounts reasonably expected to be received by the Issuer in
Cash during the current Due Period (as certified by the Loan Obligation Manager
in its reasonable judgment) is less than the sum of Dissolution Expenses and any
accrued and unpaid Company Administrative Expenses,

 

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then notwithstanding any other provision of this Indenture, the Issuer shall no
longer be required to incur Company Administrative Expenses as otherwise
required by this Indenture to any Person other than the Trustee and its
Affiliates, and failure to pay such amounts or provide or obtain such opinions,
reports or services no longer required hereunder shall not constitute a Default
hereunder, and the Trustee shall have no liability for any failure to obtain or
receive any of the foregoing opinions, reports or services.

 

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)                                 a default in the payment of any interest on
any Note when the same becomes due and payable and the continuation of any such
default for three Business Days after a trust officer of the Trustee has actual
knowledge or receives notice from any holder of Notes of such payment default;
provided that in the case of a failure to disburse funds due to an
administrative error or omission by the Loan Obligation Manager, Trustee,
Collateral Administrator or any paying agent, such failure continues for five
Business Days after a trust officer of the Trustee receives written notice or
has actual knowledge of such administrative error or omission; or

 

(b)                                 a default in the payment of principal (or
the related Redemption Price, if applicable) of any Class A Note when the same
becomes due and payable, at its Stated Maturity Date or any Redemption Date, or
if there are no Class A 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 Date 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
when the same becomes due and payable at its Stated Maturity Date or any
Redemption Date; provided, in each case, that in the case of a failure to
disburse funds due to an administrative error or omission by the Loan Obligation
Manager, Trustee, Collateral Administrator or any paying agent, such failure
continues for five Business Days after a trust officer of the Trustee receives
written notice or has actual knowledge of such administrative error or omission;

 

(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

 

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administrative error or omission by the Trustee or Paying Agent, which failure
continues for five Business Days;

 

(d)                                 any of the Issuer, the Co-Issuer or the pool
of Assets becomes an investment company required to be registered under the 1940
Act;

 

(e)                                  a default in any material respect in the
performance, or breach, of any other covenant or other agreement of the Issuer
or Co-Issuer (other than the covenant to make the payments described in clauses
(a), (b) or (c) above or to meet the Note Protection Tests) or any
representation or warranty of the Issuer or 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 Loan Obligation Manager has actual knowledge thereof or after
notice thereof to the Issuer, the Co-Issuer and the Loan Obligation Manager by
the Trustee or to the Issuer, the Co-Issuer, the Loan Obligation Manager and the
Trustee by Holders of at least 25% of the Aggregate Outstanding Amount of the
Controlling Class;

 

(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 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,
U.S.$1,000,000 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 the Rating Agencies) a No Downgrade
Confirmation has been received from each Rating Agency;

 

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(i)                                     the Issuer loses its status as a
Qualified REIT Subsidiary or other disregarded entity of the Arbor Parent for
U.S. federal income tax purposes, 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 or disregarded entity status for
U.S. federal income tax purposes, 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 or disregarded entity status for U.S. federal
income tax purposes 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 (11) 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)                                    if the aggregate principal balance of
(1) all Non-Controlling Participations owned by the Issuer and (2) all other
assets that do not qualify as “qualifying interests” in real estate for purposes
of Rule 3(c)(5)(c) of the 1940 Act (as described in the related no-action
letters and other guidance provided by the SEC) owned by the Issuer is in excess
of 35% of the aggregate principal balance of all Loan Obligations and other
assets then owned by the Issuer.

 

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
Preferred Shares Paying Agent and the Preferred Shareholders in writing.  If the
Loan Obligation Manager has actual knowledge of the occurrence of an Event of
Default, the Loan Obligation Manager shall promptly notify, in writing, the
Trustee, the Noteholders and the Rating Agencies 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 a Majority, by
outstanding principal amount, of each Class of Notes voting as a separate
Class (excluding any Notes owned by the Loan Obligation 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 Replacement
Period).  Upon any such declaration such principal, together with all accrued
and unpaid interest thereon, and other amounts payable thereunder in accordance
with the Priority of Payments will become immediately due and payable (except
that in the case of an Event of Default described in Section 5.1(f) or
5.1(g) above, such an acceleration shall occur automatically and without any
further action and any such acceleration shall automatically terminate the
Replacement Period).  If the Notes are accelerated, payments shall be made in
the order and priority set forth in Section 11.1(a) hereof.  If the Notes are
accelerated (whether such acceleration is automatic or otherwise), the Issuer
(or the Loan Obligation Manager on its behalf) shall take the actions described
in Section 18.1(c) herein.

 

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(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 amounts 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) or 5.1(i), by written notice to the
Issuer, the Co-Issuer and the Trustee, 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 on the
Notes that would be due and payable hereunder if the Event of Default giving
rise to such acceleration had not occurred;

 

(B)               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;

 

(C)               with respect to the Advancing Agent and the Backup Advancing
Agent, any amount due and payable for unreimbursed Interest Advances and
Reimbursement Interest; and

 

(D)               with respect to the Loan Obligation Management Agreement, any
Loan Obligation Manager Fee then due and any Company Administrative Expense due
and payable to the Loan Obligation Manager thereunder; and

 

(ii)                                  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, 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.

 

(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

 

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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 subject it to 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.

 

(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 Aggregate Outstanding
Amount of Notes of the Controlling Class, may, prior to the time a judgment or
decree for the payment of amounts 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.

 

Section 5.3                                    Collection of Indebtedness and
Suits for Enforcement by Trustee.

 

(a)                                 The Issuer covenants that if a Default shall
occur in respect of the payment of any interest on any Class A Note, 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 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 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 and Class B
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 C Note
(but only after interest and principal with respect to the Class A Notes 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 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

 

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any other obligor upon the Notes and collect the amounts 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; provided, that (a) such direction must not conflict
with any rule of law or with any express provision of this Indenture, (b) the
Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction, (c) the Trustee has been provided with
security or indemnity reasonably satisfactory to it, and (d) notwithstanding the
foregoing, any direction to the Trustee to undertake a sale of Assets may be
given only in accordance with the preceding paragraph, in connection with any
sale and liquidation of all or a portion of the Assets, the preceding sentence,
and, in all cases, the applicable provisions of this Indenture.  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:

 

(b)                                 to file and prove a claim or claims for the
whole amount of principal and interest 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;

 

(c)                                  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

 

(d)                                 to collect and receive any amounts or other
property payable to or deliverable on any such claims, and to distribute all
amounts received with respect to the claims

 

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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.

 

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 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 amounts 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;

 

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(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 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.

 

(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 Loan Obligation 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 either be returned to
the Holders thereof after proper notation has been made thereon to show partial
payment or a new note shall be delivered to the Holders reflecting the reduced
interest thereon.

 

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

 

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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, the Co-Issuer or any Issuer Permitted
Subsidiary 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 (except as otherwise expressly
permitted or required under this Indenture) 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 and shall not sell or liquidate the Assets,
unless either:

 

(i)                                     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,
Company Administrative Expenses due and payable pursuant to the Priority of
Payments, the Loan Obligation Manager Fees due and payable pursuant to the
Priority of Payments 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 agrees with such determination;

 

(ii)                                  the Holders of at least 66-2/3% of the
Aggregate Outstanding Amount of each Class of Notes (each voting as a separate
Class) direct, subject to the provisions of this Indenture, the sale and
liquidation of all or a portion of the Assets; or

 

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(iii)                               an Event of Default as described in
Section 5.1(j) occurs and is continuing, in which case the Loan Obligation
Manager shall promptly proceed to liquidate the Assets (or such portion of the
Assets as is necessary to cure such Event of Default).

 

In the event of a sale of a portion of the Assets pursuant to clause (ii) above,
the Trustee shall sell those Assets identified by requisite Noteholders pursuant
to a written direction in form and substance satisfactory to the Trustee and all
proceeds of such sale shall be distributed in the order set forth in
Section 11.1(a)(iii).

 

The Trustee shall give written notice of the retention of the Assets to the
Issuer, the Co-Issuer, the Loan Obligation Manager 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.

 

(c)                                  To assist the Trustee in determining
whether the condition specified in Section 5.5(a)(i) exists, the Loan Obligation
Manager shall obtain bid prices with respect to each Pledged Loan Obligation
from two dealers (Independent of the Loan Obligation Manager and any of its
Affiliates) at the time making a market in such Loan Obligations (or, if there
is only one market maker, then the Loan Obligation Manager shall obtain a bid
price from that market maker or, if no market maker, from a pricing service). 
The Loan Obligation Manager shall compute the anticipated proceeds of sale or
liquidation on the basis of the lowest of such bid prices for each such Pledged
Loan Obligation and provide the Trustee with the results thereof.  For the
purposes of determining issues relating to the market value of any Pledged Loan
Obligation 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 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.

 

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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 deemed to represent all
the Holders of the Notes.

 

Section 5.7                                    Application of Amounts Collected.

 

Any amounts collected by the Trustee with respect to the Notes pursuant to this
Article 5 and any amounts 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 (the
right of a Noteholder to institute any proceeding with respect to the Indenture
is subject to any non-petition covenants set forth in the Indenture), 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;

 

(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.

 

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Section 5.9                                    Unconditional Rights of
Noteholders to Receive Principal and Interest.

 

Notwithstanding any other provision in this Indenture (except for
Section 2.7(e) and 2.7(n)), 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 on such Class of Note as such principal, interest 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
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 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 and for exercising any trust, right, remedy or
power conferred on the Trustee in respect of the Notes; provided that:

 

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(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 shall not be required to take
any action that it reasonably determines might subject it to liability;

 

(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.

 

Section 5.14                             Waiver of Past Defaults.

 

Prior to the time a judgment or decree for payment of the amounts due has been
obtained by the Trustee, as provided in this Article 5, 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 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 adversely affected thereby; or

 

(d)                                 in respect of any right, covenant or
provision hereof for the individual protection or benefit of the Trustee,
without the Trustee’s express written consent thereto.

 

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 Loan Obligation Manager and each
Noteholder.

 

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

 

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undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys’ fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.15 shall not apply to any suit instituted by
(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 on any Note or any other amount payable hereunder on or after the
Stated Maturity Date (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 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

 

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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, 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 amounts.

 

(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

 

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(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 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 Loan Obligation
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 Loan Obligation
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;

 

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(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, 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 Loan Obligation 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), 5.1(i) or 5.1(j) 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, permit the Issuer, the Co-Issuer, the Loan Obligation 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 Loan Obligation Manager, the Rating Agencies (for so
long as any Class of Notes is Outstanding and rated by the Rating Agencies) and
to all Holders of Notes as their names and addresses appear on

 

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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 (including with respect to any
matters, other than factual matters, in connection with the execution by the
Trustee of a supplemental indenture pursuant to Section 8.3) 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, 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 Loan Obligation
Manager and the CLO 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 Loan Obligation Manager, personally or by agent or attorney
during the Issuer’s, the Co-Issuer’s or the

 

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Loan Obligation 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 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 (other than for affiliates of the Collateral
Administrator); provided, however, that the Trustee in any event shall remain
responsible for the performance of its duties 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 Loan Obligation 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 Loan Obligation Manager with the terms hereof or the
Loan Obligation Management Agreement, or to verify or independently determine
the accuracy of information received by it from the Loan Obligation Manager (or
from any selling institution, agent bank, trustee or similar source) with
respect to the Loan Obligations;

 

(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; and

 

(l)                                     neither the Trustee nor the Collateral
Administrator shall have any responsibility to the Issuer or the Secured Parties
hereunder to make any inquiry or investigation as to, and shall have no
obligation in respect of, the terms of any engagement of Independent accountants
by the Issuer (or the Loan Obligation Manager on behalf of the Issuer);
provided, however, that the Trustee shall be authorized, upon receipt of an
Issuer Order directing the same, to execute any acknowledgement or other
agreement with the Independent accountants required for the Trustee to receive
any of the reports or instructions provided for herein, which acknowledgement or
agreement may include, among other things, (i) acknowledgement that the

 

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Issuer has agreed that the “agreed upon procedures” between the Issuer and the
Independent accountants are sufficient for its purposes, (ii) releases by the
Trustee (on behalf of itself and the Holders) of claims and acknowledgement of
other limitation of liability in favor of the Independent accounts, and
(iii) restrictions or prohibitions on the disclosure of information or documents
provided to it by such firm of Independent accounts (including to the Holders). 
Notwithstanding the foregoing, in no event shall the Trustee be required to
execute any agreement in respect of the Independent accountants that the Trustee
determines adversely affects it in its individual capacity.

 

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 amounts paid to the Issuer or the Co-Issuer
pursuant to the provisions hereof.

 

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                                    Amounts Held in Trust.

 

Amounts 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
amounts 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)                                 Subject to the Priority of Payments, 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

 

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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 Loan Obligation 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.

 

(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 amounts 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, the Co-Issuer
or any Permitted Subsidiary 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.

 

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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 U.S.$200,000,000,
subject to supervision or examination by federal or State authority, having a
rating of at least “Baa1” by Moody’s and “A” by DBRS or, if not rated by DBRS,
an equivalent (or higher) rating by any two other NRSROs (which may include
Moody’s))  (or such other lower rating as may be approved by the Rating Agencies
from time to time) and having an office within the United States.  If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section 6.8, 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 such 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 Loan Obligation
Manager, the Noteholders and the Rating Agencies.  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 and the
Loan Obligation 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 Preferred Shareholders) 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

 

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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 Preferred Shareholders) 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 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, 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 the Loan Obligation 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 Loan Obligation 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, 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 the Rating Agencies, the Preferred Shares
Paying Agent, the Loan Obligation 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

 

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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 Loan Obligation Manager, the CLO
Servicer 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
Loan Obligation 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 the rights, powers and trusts of the
retiring Trustee, and shall duly assign, transfer and deliver to such successor
Trustee all property and amounts 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 the Rating Agencies, and (c) the Rating Agency Condition is
satisfied.

 

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 or banking association 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 or
banking association 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

 

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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 on its own.

 

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 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 the Priority of
Payments, for any reasonable fees and expenses in connection with such
appointment.

 

Every co-trustee, shall, to the extent permitted by law, but to such extent
only, be appointed subject to the following terms:

 

(a)                                 the 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

 

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(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 Loan
Obligation 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
Asset, the trustee under the related Underlying Instrument or paying agent
designated by either of them, as the case may be, to make such payment as soon
as practicable after such request but in no event later than three Business Days
after the date of such request.  In the event that such payment is not made
within such time period, the Trustee, subject to the provisions of
Section 6.1(d)(iv), shall take such action as the Loan Obligation 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 Loan Obligation Manager requests a release of
an Asset in connection with any such action under the Loan Obligation 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 Asset 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

 

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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 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 Assets 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 Loan Obligation
(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 Loan Obligation Manager.  The Loan Obligation 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 Loan Obligation as to which a consent
or waiver under the Underlying Instruments of such Loan Obligation (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 Loan
Obligation in accordance with such Issuer Order.  In the absence of any
instruction from the Loan Obligation Manager, the Trustee shall not engage in
any vote or take any action with respect to such a Loan Obligation.

 

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

 

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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

 

Section 7.1                                    Payment of Principal and
Interest.

 

The Issuer and the Co-Issuer shall duly and punctually pay the principal of and
interest on each Class of Notes in accordance with the terms of 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 Loan Obligation 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, 111 Eighth Avenue, 13th Floor,
New York, New York 10011, 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 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

 

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written notice to the Trustee, the Rating Agencies 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.

 

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                                    Amounts for Note Payments to be
Held in Trust.

 

(a)                                 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 amounts 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, the Co-Issuer or any Permitted Subsidiary 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

 

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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 and “AA (low)” or higher by DBRS (or, if not rated by
DBRS, an equivalent rating by any two other NRSROs (which may include Moody’s))
or a short-term debt rating of “P-1” by Moody’s, “F1+” by Fitch and “A-1+” by
S&P or (ii) each of the Rating Agencies confirms that 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, “AA-” or higher by S&P or
“AA (low)” or higher by DBRS (or, if not rated by DBRS, an equivalent rating by
any two other NRSROs (which may include Moody’s)) 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

 

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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
amounts.

 

Except as otherwise required by applicable law, any amounts 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 on request; and the Holder of such Note shall thereafter, as an 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 amounts (but
only to the extent of the amounts so paid to the Issuer or the Co-Issuer, as
applicable) shall thereupon cease. 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 amounts 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, (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 and the Rating Agencies 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 Preferred Shareholders 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 Loan Obligation 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, (ii) written notice of such
change shall have been given by the Trustee to the Holders of the Notes and the
Rating Agencies 15 Business Days prior to such change and (iii) on or prior to
the 15th Business Day following

 

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such notice the Trustee shall not have received written notice from a Majority
of the Controlling Class 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 Loan Obligation 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 (other than a Permitted
Subsidiary and, in the case of the Issuer, the Co-Issuer), (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 Loan Obligation
Management Agreement, (D) pay dividends other than in accordance with the terms
of this Indenture, its governing documents and the Preferred Share 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; provided that the foregoing shall not
prohibit the Issuer from entering into the transactions contemplated by the
Registered Office Agreement with the registered office provider, the Company
Administration Agreement with the Company Administrator, the Preferred Share
Paying Agency Agreement with the Share Registrar and any other agreement
contemplated or permitted by the Loan Obligation 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 Loan Obligation 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

 

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Person, or (F) 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.

 

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 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 Assets 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 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 Assets that secure the Notes and timely file all tax returns and
information statements as required, (ii) take all actions necessary or advisable
to prevent the Issuer from becoming subject to any withholding or other taxes or
assessments and to allow the Issuer to comply with FATCA, and (iii) 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 the
applicable form W-8, if appropriate) or successor applicable form, to each
borrower, 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 January 31, 2019 and (ii) every 60 months after such date, the Issuer (or
the Loan Obligation Manager on behalf of the Issuer) shall deliver to the
Trustee for the benefit of the Trustee, the Loan Obligation Manager and the
Rating Agencies, 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 of Counsel may likewise
be subject to qualifications and assumptions similar to those set forth in the
Opinion of Counsel 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 each Rating Agency of,
and satisfy the Rating Agency Condition 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
Obligation 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 Preferred Shareholders), contract with other Persons,
including the Loan Obligation Manager 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 Loan
Obligation Management Agreement by the Loan Obligation Manager. Notwithstanding
any such

 

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arrangement, the Issuer or the Co-Issuer, as the case may be, shall remain
primarily liable with respect thereto. In the event of such contract, the
performance of such actions and obligations by such Persons shall be deemed to
be performance of such actions and obligations by the Issuer or the Co-Issuer;
and the Issuer or the Co-Issuer shall punctually perform, and use commercially
reasonable efforts to cause the Loan Obligation Manager or such other Person to
perform, all of their obligations and agreements contained in the Loan
Obligation Management Agreement or such other agreement.

 

(c)                                  Unless the Rating Agency Condition 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 Loan Obligation
except upon the sale or other liquidation of such Loan Obligation in accordance
with the terms and conditions of this Indenture.

 

(d)                                 If the Co-Issuers receive a notice from the
Rating Agencies stating that they are not in compliance with Rule 17g-5, the
Co-Issuers shall take such action as mutually agreed between the Co-Issuers and
the Rating Agencies in order to comply with Rule 17g-5.

 

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 Loan
Obligation 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 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

 

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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;

 

(v)                                 amend the Loan Obligation Management
Agreement, except pursuant to the terms thereof;

 

(vi)                              amend the Preferred Share 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 Share 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 Noteholders and the Rating Agencies 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 Loan Obligations 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;

 

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(xiv)                       amend their respective organizational documents
without satisfaction of the Rating Agency Condition in connection therewith;

 

(xv)                          with respect to any Loan Obligation that by its
terms permits the conversion from a LIBOR-based interest rate to a fixed
interest rate, convert such Loan Obligation from a LIBOR-based interest rate to
a fixed interest rate; or

 

(xvi)                       acquire (whether directly or indirectly, in any
Account or in any sub-account) any assets that do not consist of Loan
Obligations, Eligible Investments or cash (or the proceeds with respect to the
foregoing).  The foregoing is not intended to limit the Issuer’s ability to
enter into or enforce its rights under the Loan Obligation Management Agreement,
each Loan Obligation Purchase Agreement (including any Loan Obligation Purchase
Agreement entered into after the Closing Date) or the Servicing Agreement.

 

(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 the Assets, except as expressly
permitted or required by this Indenture or the Loan Obligation Management
Agreement.

 

(c)                                  The Co-Issuer shall not invest any of its
assets in “securities” (as such term is defined in the 1940 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 Issuer Parent
or an Issuer Parent Disregarded Entity.

 

(e)                                  The Issuer shall not enter into any
material new agreements (other than any Loan Obligation, Loan Obligation
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 Preferred
Shareholders) and shall provide notice of all new agreements (other than any
Loan Obligation or other agreement specifically contemplated by this Indenture)
to the Holders of the Notes.  The foregoing notwithstanding, the Issuer may
agree to any material new agreements; provided that (i) the Issuer (or the Loan
Obligation 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.

 

(f)                                   As long as any Note is Outstanding, Issuer
Parent or any Issuer Parent Disregarded Entity may not transfer, pledge or
hypothecate any retained or repurchased Notes or Preferred Shares (whether
issued on the Closing Date or reissued in a single or multiple classes on a
later date) or ordinary shares of the Issuer to any other Person (except to
Issuer Parent or any Issuer Parent Disregarded Entity) unless the Issuer
receives an opinion of Cadwalader, Wickersham & Taft LLP or another nationally
recognized tax counsel experienced in such matters that such transfer, pledge or
hypothecation will not cause the Issuer to be treated as a foreign corporation
engaged in a trade or business in the United States for federal income tax
purposes or to otherwise become subject to federal income tax on a net income
basis, or has

 

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previously received an opinion of Cadwalader, Wickersham & Taft 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 federal income tax purposes.

 

Section 7.9                                    Statement as to Compliance.

 

On or before January 31, in each calendar year, commencing in 2016 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 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:

 

(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),
and a Majority of Preferred Shareholders; 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 and each
Noteholder, the due and punctual payment of the principal of and interest on all
Notes and other amounts payable hereunder and under the Loan Obligation
Management Agreement and the performance and observance of every covenant of
this Indenture and the Loan Obligation Management Agreement on the part of the
Issuer to be performed or observed, all as provided herein;

 

(ii)                                  the Rating Agency Condition shall be
satisfied;

 

(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

 

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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, the Loan Obligation Manager and the Rating
Agencies 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 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, the Loan
Obligation 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, the Loan Obligation 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 an opinion from
Cadwalader, Wickersham & Taft 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) be treated as (or part of) a foreign corporation not engaged
in a U.S. trade or business or otherwise not subject to U.S. federal income tax
on a net income tax basis;

 

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(viii)                        the Issuer has received an opinion from
Cadwalader, Wickersham & Taft 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 1940
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 company organized and
existing under the laws of Delaware or such other jurisdiction approved by a
Majority of the Controlling Class; 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
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)                                  the Rating Agency Condition has been
satisfied;

 

(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 the Rating Agencies 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

 

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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;

 

(vi)                              the Co-Issuer shall have delivered to the
Trustee, the Preferred Shares Paying Agent 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 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
1940 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, the Loan Obligation 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

 

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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 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 B 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 Loan Obligation Manager, the Noteholders and the
Rating Agencies.  If the Calculation Agent is unable or unwilling to act as such
or is removed by the Issuer, or if the Calculation Agent fails to determine
LIBOR or the Interest Distribution Amount for any Class of Notes for any
Interest Accrual Period, the Issuer shall 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.  If no successor Calculation Agent shall have been appointed
within 30 days after giving of a notice of resignation, the resigning
Calculation 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.

 

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(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 B 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
LIBOR for the next Interest Accrual Period and will communicate such rates to
the Issuer, the Co-Issuer, the Trustee, the Loan Obligation Manager, the Paying
Agent and, if any 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 Rate, Class B Rate and Class C Rate
and the related Class A Interest Distribution Amount, Class B Interest
Distribution Amount and Class C Interest Distribution Amount, respectively, by
the Calculation Agent shall, absent manifest error, be final and binding on all
parties.

 

Section 7.15                             REIT Status.

 

(a)                                 The Issuer Parent shall not take any action
that results in the Issuer failing to qualify as a Qualified REIT Subsidiary of
the Issuer 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 Issuer 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.

 

(b)                                 If the Issuer is no longer a Qualified REIT
Subsidiary, prior to the time that:

 

(i)                                     any Loan Obligation would cause the
Issuer to be treated as engaged in a trade or business in the United States or
to become subject to U.S. federal tax on a net income basis,

 

(ii)                                  the Issuer would acquire or receive any
asset in connection with a workout or restructuring of a Loan Obligation that
could cause the Issuer to be treated as engaged in a trade or business in the
United States or to become subject to U.S. federal tax on a net income basis,

 

(iii)                               the Issuer would acquire the real property
underlying any Loan Obligation pursuant to a foreclosure or deed-in-lieu of
foreclosure, or

 

(iv)                              any Loan Obligation is modified in such a
manner that could cause the Issuer to be treated as engaged in a trade or
business in the United States or to become subject to U.S. federal tax on a net
income basis,

 

the Issuer will either (x) organize one or more Permitted Subsidiaries and
contribute the subject property to such Permitted Subsidiary, (y) contribute
such Loan Obligation to an existing Permitted Subsidiary, or (z) sell such Loan
Obligation in accordance with Section 12.1.

 

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Section 7.16                             Permitted Subsidiaries.

 

Notwithstanding any other provision of this Indenture, the Loan Obligation
Manager on behalf of the Issuer shall be permitted to sell to a Permitted
Subsidiary at any time any Sensitive Asset for consideration consisting entirely
of the equity interests of such Permitted Subsidiary (or for an increase in the
value of equity interests already owned).  The Trustee shall, upon receipt of an
Issuer Order certifying that the sale of a Sensitive Asset is being made in
accordance with satisfaction of all requirements of this Indenture, release such
Sensitive Asset and shall deliver such Sensitive Asset as specified in such
Issuer Order.  The following provisions shall apply to all Sensitive Assets and
Permitted Subsidiaries:

 

(a)                                 For all purposes under this Indenture, any
Sensitive Asset transferred to a Permitted Subsidiary shall be treated as if it
were an asset owned directly by the Issuer.

 

(b)                                 Any distribution of Cash by a Permitted
Subsidiary to the Issuer shall be characterized as Interest Proceeds or
Principal Proceeds to the same extent that such Cash would have been
characterized as Interest Proceeds or Principal Proceeds if received directly by
the Issuer and each Permitted Subsidiary shall cause all proceeds of and
collections on each Sensitive Asset owned by such Permitted Subsidiary to be
deposited into the applicable Collection Account.

 

(c)                                  To the extent applicable, the Issuer shall
form one or more Securities Accounts with the Custodial Securities Intermediary
for the benefit of each Permitted Subsidiary and shall, to the extent
applicable, cause Sensitive Assets to be credited to such Securities Accounts.

 

(d)                                 Notwithstanding the complete and absolute
transfer of a Sensitive Asset to a Permitted Subsidiary, for purposes of
measuring compliance with the Note Protection Tests, the ownership interests of
the Issuer in a Permitted Subsidiary or any property distributed to the Issuer
by a Permitted Subsidiary shall be treated as a continuation of its ownership of
the Sensitive Asset that was transferred to such Permitted Subsidiary (and shall
be treated as having the same characteristics as such Sensitive Asset).

 

(e)                                  If the Trustee or any other authorized
party takes any action under this Indenture to sell, liquidate or dispose of all
or substantially all of the Assets, the Issuer or the Loan Obligation Manager on
the Issuer’s behalf shall cause each Permitted Subsidiary to sell each Sensitive
Asset and all other assets held by such Permitted Subsidiary and distribute the
proceeds of such sale, net of any amounts necessary to satisfy any related
expenses and tax liabilities, to the Issuer in exchange for the equity interest
in such Permitted Subsidiary held by the Issuer.

 

Section 7.17                             Repurchase Requests.

 

If the Issuer, the Trustee or the Loan Obligation Manager receives or otherwise
becomes aware of any request or demand whether oral or written that a Loan
Obligation be repurchased or replaced arising from any breach of a
representation or warranty made with respect to such Loan Obligation (any such
request or demand, a “Repurchase Request”) or a withdrawal of a Repurchase
Request from any Person other than the CLO Servicer, then the

 

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Trustee or the Loan Obligation Manager on behalf of the Issuer, as applicable,
shall promptly forward or otherwise provide written notice of such Repurchase
Request or withdrawal of a Repurchase Request, as the case may be, to the CLO
Servicer, and include the following statement in the related correspondence: 
“This is a “[Repurchase Request]/[withdrawal of a Repurchase Request]” under
Section 3.01(c) of the Servicing Agreement relating to Arbor Realty Commercial
Real Estate Notes 2015-FL1, Ltd. requiring action by you as the “Repurchase
Request Recipient” thereunder.”  Upon receipt of such Repurchase Request or
withdrawal of a Repurchase Request by the Trustee or Loan Obligation Manager
pursuant to the prior sentence, the CLO Servicer shall be deemed to be the
Repurchase Request Recipient in respect of such Repurchase Request or withdrawal
of a Repurchase Request, as the case may be, and shall be responsible for
complying with the procedures set forth in Section 3.01(c) of the Servicing
Agreement with respect to such Repurchase Request.  If the Trustee, the Issuer
or the Loan Obligation Manager receives notice or has knowledge of a withdrawal
of a Repurchase Request of which notice has been previously received or given,
and such notice was not received from or copied to the CLO Servicer, then the
Trustee or the Loan Obligation Manager on behalf of the Issuer, as applicable,
shall promptly give notice of such withdrawal to the CLO Servicer.

 

Section 7.18                             Purchase of Additional Loan
Obligations.

 

The Issuer (or the Loan Obligation Manager on behalf of the Issuer) shall, prior
to the Portfolio Finalization Date, use commercially reasonable efforts to apply
amounts on deposit in the Unused Proceeds Account to purchase Additional Loan
Obligations in accordance with Section 10.4(d) (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 Loan Obligation Manager on behalf of the Issuer) with
respect thereto directing the Trustee to pay out the amount specified therein
against delivery of the Additional Loan Obligation specified therein and a
certificate of an Authorized Officer of the Issuer (or the Loan Obligation
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 after giving effect
to such purchase and Grant of the Additional Loan Obligations, except for
Closing Date Loan Obligations acquired during the Post-Closing Acquisition
Period, the Eligibility Criteria are met with respect to the Additional Loan
Obligations purchased.  Each Additional Loan Obligation, except for Closing Date
Loan Obligations acquired during the Post-Closing Acquisition Period, shall
satisfy the applicable Eligibility Criteria.

 

Section 7.19                             Portfolio Finalization Date Actions.

 

(a)                                 The Issuer (or the Loan Obligation Manager
on behalf of the Issuer) shall cause to be delivered to the Trustee and the
Rating Agencies on the Portfolio Finalization Date an amended Schedule A listing
all Loan Obligations Granted to the Trustee pursuant to Section 7.18 on or
before the Portfolio Finalization Date and included in the Assets on the
Portfolio Finalization Date, which schedule shall supersede any prior Schedule A
delivered to the Trustee.

 

(b)                                 Within 30 Business Days after the Portfolio
Finalization Date, the Issuer shall provide, or (at the Issuer’s expense) cause
the Loan Obligation Manager to provide, the following documents to the Trustee
and the Rating Agencies: (A) a report of the Collateral

 

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Administrator (x) confirming the name of the borrower, the unpaid principal
balance, coupon, maturity date and Moody’s Rating with respect to each
Additional Loan Obligation owned by the Issuer as of the Portfolio Finalization
Date, and (y) confirming that, as of the Portfolio Finalization Date, the Note
Protection Tests were satisfied (the “Portfolio Finalization Date Report”) and
(B) a certificate of the Loan Obligation Manager on behalf of the Issuer
(x) certifying the satisfaction of the items set forth in clause (A) above, and
the receipt of an accountants’ report specifying the agreed-upon procedures
performed, at the request of the Issuer, on the items set forth in the Portfolio
Finalization Date Report and (y) certifying that each Additional Loan Obligation
satisfied all of the Eligibility Criteria applicable to Additional Loan
Obligations.  If the Portfolio Finalization Date Report provided by the
Collateral Administrator confirms that the immediately foregoing subclause
(A) have been met, then a Moody’s Portfolio Finalization Date Deemed Rating
Confirmation shall occur.  If, within such 30 Business Day period the Issuer, or
the Loan Obligation Manager on behalf of the Issuer, fails to provide the items
described in foregoing subclauses (A) and (B) or any rating assigned as of the
Closing Date to any Class of Notes has been downgraded or withdrawn, a “Rating
Confirmation Failure” shall occur; provided that Issuer Parent or an Issuer
Parent Disregarded Entity may contribute additional Cash, Eligible Investments
and/or Loan Obligations to the Issuer in accordance with Section 12.2(c) of this
Agreement.

 

For the avoidance of doubt, the Loan Obligation Manager’s certificate described
in the foregoing clause (B) shall not include the Accountants’ Report.

 

ARTICLE 8

 

SUPPLEMENTAL INDENTURES

 

Section 8.1                                    Supplemental Indentures Without
Consent of Securityholders.

 

(a)                                 Without the consent of the Holders of any
Notes or any Preferred Shareholders, the Issuer, the Co-Issuer, when authorized
by Board Resolutions of the Co-Issuers, and when authorized by the Trustee, 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:

 

(i)                                     evidence the succession of any Person to
the Issuer or the Co-Issuer and the assumption by any such successor of the
covenants of the Issuer or the Co-Issuer, as applicable, herein and in the
Notes;

 

(ii)                                  add to the covenants of the Issuer, the
Co-Issuer or the Trustee for the benefit of the Holders of the Notes, Preferred
Shareholders or to surrender any right or power herein conferred upon the Issuer
or the Co-Issuer, as applicable;

 

(iii)                               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;

 

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(iv)                              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;

 

(v)                                 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
subject 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 any additional property to the lien of this Indenture;

 

(vi)                              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 enable the Issuer and the
Co-Issuer to rely upon any exemption from registration under the Securities Act,
the Exchange Act or the 1940 Act or to remove restrictions on resale and
transfer to the extent not required thereunder;

 

(vii)                           accommodate the issuance, if any, of Notes in
global or book-entry form through the facilities of DTC or otherwise;

 

(viii)                        otherwise correct any inconsistency or cure any
ambiguity, omission or mistake;

 

(ix)                              take any action commercially reasonably
necessary or advisable for the Issuer to comply with FATCA or to prevent the
Issuer from failing to qualify as a Qualified REIT Subsidiary or other
disregarded entity of a REIT for U.S. federal income tax purposes or from being
treated as a foreign corporation engaged in a trade or business in the United
States for federal income tax purposes, 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;

 

(x)                                 evidence any waiver or elimination by a
Rating Agency of any requirement or condition of such Rating Agency set forth
herein or to amend or supplement any provision of this Indenture to the extent
necessary to maintain the then-current ratings assigned to the Notes;

 

(xi)                              accommodate the settlement of the Notes in
book-entry form through the facilities of DTC, Euroclear or Clearstream,
Luxembourg or otherwise;

 

(xii)                           authorize the appointment of any listing agent,
transfer agent, paying agent or additional registrar for any Class of Notes
required or advisable in connection with the listing of any Class of Notes on
any stock exchange, and otherwise to amend this Indenture to incorporate any
changes required or requested by any governmental authority, stock exchange
authority, listing agent, transfer agent, paying agent or additional registrar
for any Class of Notes in connection therewith;

 

(xiii)                        evidence changes to applicable laws and
regulations;

 

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(xiv)                       reduce the minimum denominations required for
transfer of the Notes;

 

(xv)                          modify the provisions of this Indenture with
respect to reimbursement of Nonrecoverable Interest Advances if (a) the Loan
Obligation Manager determines that the commercial mortgage securitization
industry standard for such provisions has changed, in order to conform to such
industry standard and (b) such modification does not adversely affect the status
of Issuer for federal income tax purposes, as evidenced by an Opinion of
Counsel;

 

(xvi)                       modify the procedures set forth in this Indenture
relating to compliance with Rule 17g-5 of the Exchange Act; provided that the
change would not materially increase the obligations of the Loan Obligation
Manager, the Trustee, any paying agent, the servicer or the special servicer (in
each case, without such party’s consent) and would not adversely affect in any
material respect the interests of any Noteholder or holder of the Preferred
Shares; provided, further, that the Loan Obligation Manager must provide a copy
of any such amendment to the Information Agent for posting to the Rule 17g-5
Website and provide notice of any such amendment to the Rating Agencies;

 

(xvii)                    make any change to any other provisions with respect
to matters or questions arising under this Indenture; provided that the required
action will not adversely affect in any material respect the interests of any
Noteholder not consenting thereto, as evidenced by (A) an Opinion of Counsel or
(B) an Officer’s Certificate of the Loan Obligation Manager; and

 

(xviii)                 make any modification or amendment determined by the
Issuer or the Loan Obligation Manager (in consultation with legal counsel of
national reputation experienced in such matters and independent of the Issuer
and any Affiliates thereof) as necessary or advisable (A) for any Class of Notes
to not be considered an “ownership interest” as defined for purposes of the
Volcker Rule or (B) (1) to enable the Issuer to rely upon the exemption or
exclusion from registration as an investment company provided by Rule 3a-7 under
the Investment Company Act or another exemption or exclusion from registration
as an investment company under the Investment Company Act (other than
Section 3(c)(1) or Section 3(c)(7) thereof) or (2) for the Issuer to not
otherwise be considered a “covered fund” as defined for purposes of the Volcker
Rule, in each case so long as any such modification or amendment would not have
a material adverse effect on any Class of Notes.

 

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, 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.  At the cost of the
Issuer, the Trustee shall provide to each Noteholder and each holder of
Preferred Shares and, for so long as any Class of Notes shall

 

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remain Outstanding and is rated, the Trustee shall provide to the Rating
Agencies a copy of any proposed supplemental indenture at least 15 Business 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, from each noteholder and holder of Preferred Shares, that such
proposed supplemental indenture will not materially and adversely affect such
Noteholder or holder of Preferred Shares, and, as soon as practicable after the
execution by the Trustee, the Issuer and the Co-Issuer of any such supplemental
indenture, provide to the Rating Agencies a copy of the executed supplemental
indenture.  Following such initial 15 Business Day period, the Trustee will
provide an additional 15 Business Days’ notice to any Noteholder or holder of
Preferred Shares that did not respond to the initial notice and, unless the
Trustee is notified (after giving such initial 15 Business Days’ notice and
second 15 Business Days’ notice, as applicable) by such Noteholder or such
holder of Preferred Shares that such Person will be materially and adversely
affected by the proposed supplemental indenture, the interests of such Person
will be deemed not to be materially and adversely affected by such proposed
supplemental indenture.

 

The Trustee shall not enter into any such supplemental indenture if 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
from the Rating Agencies or the Requesting Party, which may be in electronic
form, that the Rating Agency Condition has been satisfied and (ii) receipt of an
Officer’s Certificate of the Loan Obligation Manager certifying that, following
provision of notice of such supplemental indenture to the Noteholders and
holders of the Preferred Shares and expiry of the time period set forth in the
above paragraph, that the Holders of Securities would not be materially and
adversely affected by such supplemental indenture.  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,
Wickersham & Taft 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
other disregarded entity of a REIT for U.S. federal income tax purposes or
(y) 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 or to otherwise become
subject to U.S. federal income tax on a net income basis.

 

(b)                                 Notwithstanding Section 8.1(a) or any other
provision of this Indenture, without the consent of the Holders of any Notes or
any Preferred Shareholders, the Issuer, the Co-Issuer, when authorized by Board
Resolutions of the Co-Issuers, and when authorized by the Trustee, the Trustee,
may enter into one or more indentures supplemental hereto, in form satisfactory
to the Trustee, for any of the following purposes:

 

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(i)                                     conform this Indenture to the provisions
described in the Offering Memorandum (or any supplement thereto);

 

(ii)                                  to correct any defect or ambiguity in this
Indenture in order to address any manifest error in any provision of this
Indenture; and

 

(iii)                               to update this Indenture for any Moody’s
Test Modification in the manner set forth in Section 12.4 hereof.

 

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 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 Loan Obligation
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
(y) subject to satisfaction of the Rating Agency Condition, notice of which may
be in electronic form.  Unless the Trustee is notified (after giving (x) 15
Business Days’ notice of such change to the Holders of each Class of Notes and
the Holder of the Preferred Shares requesting notification by such Noteholders
and holders of the Preferred Shares if any such Noteholders or holders of the
Preferred Shares would be materially and adversely affected by the proposed
supplemental indenture and (y) following such initial 15 Business Day period, an
additional 15 Business Days’ notice to any holder of Notes or Preferred Shares
that did not respond to the initial notice) by Holders of a Majority in
Aggregate Outstanding Amount of the Notes of any Class 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 Loan Obligation 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 Loan Obligation Manager.

 

Without the consent of (x) all of the Holders of each Outstanding Class of Notes
materially adversely affected and (y) all of the Holders of the Preferred Shares
materially adversely affected thereby, no supplemental indenture may:

 

(a)                                 change the Stated Maturity Date of the
principal of or the due date of any installment of interest on any Note, 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

 

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provisions of this Indenture that apply 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 Date 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 the 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;

 

(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 on or principal of any Note on any Payment Date or of
distributions to the Preferred Shares Paying Agent for the payment of
distributions in respect of the Preferred Shares 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;

 

(i)                                     reduce the permitted minimum
denominations of the Notes below the minimum denomination necessary to maintain
an exemption from the registration requirements of the Securities Act or the
1940 Act; or

 

(j)                                    modify any provisions regarding non-
recourse or non-petition covenants with respect to the Issuer and the Co-Issuer.

 

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The Trustee shall be entitled to rely upon an Officer’s Certificate of the
Issuer or the Loan Obligation Manager on behalf of the Issuer 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 of the Issuer or
the Loan Obligation Manager on behalf of the Issuer, 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 Preferred Shares Paying
Agent, the Loan Obligation Manager, and, so long as the Notes are Outstanding
and so rated, the Rating Agencies 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 Officer’s Certificate of the Issuer or
the Loan Obligation Manager on behalf of the Issuer 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 Loan Obligation 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 Loan Obligation Manager
adversely affect the Loan Obligation Manager, the Loan Obligation Manager shall
not be bound (and the Issuer agrees that it will not permit any such amendment
to become effective) unless the Loan Obligation Manager gives written consent to
the Trustee and the Issuer to such amendment.  The Issuer and the Trustee shall
give written notice to the Loan Obligation Manager of any amendment made to this
Indenture pursuant to its terms.  In addition, the Loan Obligation 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

 

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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.  Notwithstanding the
foregoing, any Note authenticated and delivered hereunder shall be subject to
the terms and provisions of this Indenture, and any 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 Loan Obligation Manager (such
redemption, a “Clean-up Call”), in whole but not in 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 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 Preferred
Shareholders 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 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 Loan Obligation Manager shall provide written notice thereof to
the Trustee and the Rating Agencies.

 

(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 Preferred Shareholders delivered to the Trustee; provided,
however, 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 Loan
Obligation Manager or any Affiliate of the Loan Obligation Manager other than
ARMS Equity in connection with an Optional Redemption.

 

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(d)                                 The election by the Loan Obligation Manager
to redeem the Notes pursuant to a Clean-up Call shall be evidenced by an
Officer’s Certificate from the Loan Obligation 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 Loan Obligation Manager
on behalf of the Issuer certifying that such conditions for a Tax Redemption
have occurred.  The election by the Loan Obligation Manager to redeem the Notes
pursuant to an Optional Redemption shall be evidenced by an Officer’s
Certificate from the Loan Obligation 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 Loan Obligation Manager shall have
certified to the Trustee that the Loan Obligation Manager, on behalf of the
Issuer, 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 Moody’s and DBRS (if rated by DBRS) 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 Loan Obligation Manager, to sell all or part
of the Assets 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 (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                                    Notice of Redemption.

 

(a)                                 In connection with an Optional Redemption, a
Clean-up Call or a Tax Redemption pursuant to Section 9.1, 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 Loan
Obligation Manager, the Rating Agencies, the Preferred Share Paying Agent 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.  The Redemption Price shall be determined no earlier than 60 days
prior to the proposed Redemption Date.

 

(b)                                 Any such notice of 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 Loan Obligation Manager up to the fourth
Business Day prior to the scheduled Redemption Date by written notice to the
Trustee, the Preferred Share Paying Agent, to each Holder of Notes to be

 

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redeemed, and the Loan Obligation Manager only if the Loan Obligation Manager is
unable to deliver the sale agreement or agreements or certifications referred to
in Section 9.1(e), as the case may be.

 

Section 9.3                                    Notice of Redemption or Maturity
by the Issuer.

 

Notice of redemption pursuant to Section 9.1 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 Optional Redemption, a
Clean-up Call or a Tax Redemption is withdrawn pursuant to Section 9.2(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 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.

 

Section 9.4                                    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 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 U.S.$200,000,000 being deemed to satisfy such security or
indemnity 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

 

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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(g).

 

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 9.5                                    Mandatory Redemption.

 

On any Payment Date on which any of the Note Protection Tests applicable to any
Class of Notes is not satisfied as of the most recent Measurement 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 (7), and
then from Principal Proceeds, as 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
Note Protection Tests to be satisfied).  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 the Rating Agencies and the
Trustee whether the Note Protection Tests have been met.

 

ARTICLE 10

 

ACCOUNTS, ACCOUNTINGS AND RELEASES

 

Section 10.1                             Collection of Amounts; 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 amounts and other property payable to or receivable by
the Trustee pursuant to this Indenture, including all payments due on the Assets
in accordance with the terms and conditions of such Assets.  The Trustee shall
segregate and hold all such amounts 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 Loan
Obligations and Eligible Investments to an Eligible Account in the name of the
Issuer for the benefit of the Secured Parties designated as the “Custodial
Account.”

 

Section 10.2                             Collection Accounts.

 

(a)                                 The Trustee shall, prior to the Closing
Date, establish a Securities Account with the Custodial Securities Intermediary
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

 

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time deposit (i) all Sale Proceeds (unless simultaneously reinvested in
Replacement Loan Obligations in accordance with terms set forth in
Section 12.2(a)) and (ii) 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 amounts in the Collection Accounts as it deems,
in its sole discretion, to be advisable.  All amounts 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 “Aa3” by Moody’s and a short-term debt rating at least equal to “P-1”
by Moody’s.

 

(b)                                 All distributions of principal or interest
received in respect of the Assets, and any Sale Proceeds from the sale or
disposition of a Loan Obligation or other Assets received by the Trustee shall
be immediately credited to 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 Replacement Loan Obligations, in accordance with
Section 12.2(a)).  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 Loan Obligation 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 Loan Obligation Manager and the Issuer (or the Loan Obligation 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 Loan Obligation 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 Loan Obligation 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 Loan
Obligations or Eligible Investments.

 

(c)                                  If prior to the occurrence of an Event of
Default, the Issuer (or the Loan Obligation 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 Loan Obligation 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 Loan Obligation 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

 

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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 Loan
Obligation 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 amounts as fully as practicable
in Eligible Investments described in clause (ii) of the definition of Eligible
Investments with maturities of less than 30 days and that are sold by the Issuer
not later than two Business Days 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 Replacement Period (and up to 60
days thereafter to the extent necessary to acquire Loan Obligations pursuant to
binding commitments entered into during the Replacement Period using Principal
Proceeds received during or after the Replacement Period), the Loan Obligation
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 Loan Obligations selected by the Loan Obligation Manager as permitted under
and in accordance with the requirements of Article 12 and such Issuer Order. 
Any Principal Proceeds standing to the credit of the Principal Collection
Account may be designated by the Loan Obligation Manager for application to
reinvestment in Replacement Loan Obligations (such Principal Proceeds,
“Designated Principal Proceeds”) and, if and for so long as such Principal
Proceeds are Designated Principal Proceeds, such Principal Proceeds shall remain
in the Principal Collection Account (or invested in Eligible Investments) until
the earlier of (i) the time the Loan Obligation Manager notifies the Trustee in
writing that such Principal Proceeds are no longer so designated, (ii) the Loan
Obligation Manager notifies the Trustee in writing that such Principal Proceeds
are to be applied to the purchase of Replacement Loan Obligations in accordance
with Section 12.2(a) and (iii) the later of (x) the first Business Day after the
last day of the Replacement Period and (y) if after the last day of the
Replacement Period, the last settlement date within 60 days of the last day of
the Replacement Period with respect to the last Replacement Loan Obligation that
the Issuer has entered into an irrevocable commitment to purchase.  Any
Principal Proceeds that are not Designated Principal Proceeds as of the
Determination Date related to any Payment Date shall be applied pursuant to
clauses (4) through (8) of Section 11.1(a)(ii) or pursuant to
Section 11.1(a)(iii), as applicable.

 

(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 Monthly 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

 

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to the Priority of Payments up to and including the next Payment Date as shown
in the Monthly Report with respect to such Payment Date, the Issuer may 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 Securities Account
with the Custodial Securities Intermediary 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 on 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 Share 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
of at least “Aa3” by Moody’s and “A (low)” by DBRS (or, if not rated by DBRS, an
equivalent (or higher) rating by any two other NRSROs (which may include
Moody’s)) or a short-term debt rating of at least “P-1” by Moody’s and the
equivalent by DBRS (if rated by DBRS) (or, in each case, such lower rating as
the applicable Rating Agency shall approve).  Amounts on deposit in the Payment
Account shall remain uninvested.

 

Section 10.4                             Unused Proceeds Account.

 

(a)                                 The Trustee shall, on or 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(f) shall be deposited.  All amounts credited
from time to time to the Unused Proceeds 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.

 

(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, becomes subject to any writ, order, judgment, warrant of attachment,
execution or similar process.  The Unused Proceeds Account shall remain at all

 

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times with the Corporate Trust Office or a financial institution having a
long-term debt rating of at least “Aa3” by Moody’s or a short-term debt rating
of at least “P-1” by Moody’s.

 

(c)                                  Amounts remaining in the Unused Proceeds
Account shall, on the Business Day after the Portfolio Finalization Date, 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 on the next Payment Date after the
Portfolio Finalization Date.

 

(d)                                 During the Post-Closing Acquisition Period,
the Issuer (or the Loan Obligation 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 Additional Loan Obligations selected by the Loan Obligation Manager as
permitted under and in accordance with the requirements of Section 7.18 and such
Issuer Order.

 

(e)                                  To the extent not applied pursuant to
Section 7.18, the Loan Obligation 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 Loan
Obligation 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 Loan Obligation Manager, the Trustee may
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                             Reserved.

 

Section 10.6                             RDD Funding Account.

 

(a)                                 In the event any RDD Obligation is purchased
by the Issuer, the Trustee will establish a Securities Account with the
Custodial Securities Intermediary (the “RDD Funding Account”) which shall be
held in trust for the benefit of the Secured Parties, into which the Issuer will
be required to deposit the full amount of all funding amounts with respect to
such RDD Obligation.  All amounts in the RDD Funding Account shall be deposited
in overnight funds in Eligible Investments and released to fulfill such
commitments.  If a RDD Obligation 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 RDD Funding Account, such Eligible Investments on deposit in the RDD
Funding Account for the purpose of fulfilling such commitment shall be
transferred to the Principal Collection Account, treated as Principal Proceeds
and applied in accordance with the Priority of Payments.  The RDD Funding
Account shall remain at all times with the Corporate Trust Office or a financial
institution having a long-term debt rating from Moody’s at least equal to “A-”
or “A2,” as applicable, and “A (low)” by DBRS (or, if not rated by DBRS, an
equivalent

 

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(or higher) rating by any two other NRSROs (which may include Moody’s)) or a
short-term debt rating at least equal to “A-1,” “P-1” or “F1,” as applicable,
and the equivalent by DBRS (if rated by DBRS) (or, in each case, such lower
rating as the applicable Rating Agency shall approve).

 

(b)                                 Except as provided in Section 10.6(c) below,
funds in the RDD Funding Account shall be available solely to fund RDD Funding
Advances under any RDD Obligations included in the Loan Obligations.

 

(c)                                  The Loan Obligation Manager or the CLO
Servicer, as applicable, shall direct the Trustee to withdraw funds from the RDD
Funding Account to fund any required RDD Funding Advances for any RDD
Obligation.  Pursuant to an Issuer Order, all or a portion of the funds, as
specified in such Issuer Order, on deposit in the RDD Funding Account in respect
of amounts previously held on deposit in respect of unfunded commitments for RDD
Obligations that have been sold or otherwise disposed of before such commitments
thereunder have been drawn or as to which excess funds remain 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 Securities Account with the Custodial Securities Intermediary 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), accrued and unpaid Company Administrative Expenses (other than
accrued and unpaid expenses and indemnities payable to the Loan Obligation
Manager under the Loan Obligation Management Agreement); provided that the
Trustee shall be entitled (but not required) without liability on its part, to
refrain from making any such payment of a Company Administrative Expense on any
day other than a Payment Date if, in its reasonable determination, taking into
account the Priority of Payments, the payment of such amounts is likely to leave
insufficient funds available to pay in full each of the items payable prior
thereto in the Priority of Payments on the next succeeding Payment Date.  On the
Closing Date, Arbor Parent or its Affiliates shall deposit into the Expense
Account an amount equal to U.S.$200,000.  On or after the first Payment Date,
any amount remaining in the Expense Account may, at the election of the Loan
Obligation Manager be designated as Interest Proceeds.  On the date on which all
or 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 Loan
Obligation 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 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)                                 On each Payment Date, the Loan Obligation
Manager may designate Interest Proceeds (in an amount not to exceed U.S.$100,000
on such Payment Date) after application of amounts payable pursuant to clauses
(1) through (10) of Section 11.1(a)(i) for deposit into the Expense Account.

 

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(c)                                  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 capital and
surplus of at least U.S.$200,000,000 and a long-term debt rating at least equal
to “Baa1” by Moody’s and “AA (low)” by DBRS (or, if not rated by DBRS, an
equivalent (or higher)  rating by any two other NRSROs (which may include
Moody’s)).

 

(d)                                 The Loan Obligation 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 Loan Obligation 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 Loan Obligation 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                             Interest Rate Cap Termination Receipts
Account.

 

(a)                                 The Trustee shall, on or prior to the
Closing Date, establish a single, segregated trust account which shall be
designated as the “Interest Rate Cap Termination Receipts Account” which shall
be held in trust in the name of the Trustee for the benefit of the Secured
Parties, into which any Interest Rate Cap Termination Receipts shall be
deposited.  All amounts credited from time to time to the Interest Rate Cap
Termination Receipts 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.

 

(b)                                 The Trustee agrees to give the Issuer
immediate notice if it becomes aware that the Interest Rate Cap Termination
Receipts Account or any funds on deposit therein, or otherwise to the credit of
the Interest Rate Cap Termination Receipts Account, becomes subject to any writ,
order, judgment, warrant of attachment, execution or similar process.  The
Interest Rate Cap Termination Receipts Account shall remain at all times with
the Corporate Trust Office or a financial institution having a long-term debt
rating of at least “Aa3” by Moody’s or a short-term debt rating of at least
“P-1” by Moody’s.

 

(c)                                  Amounts on deposit in the Interest Rate Cap
Termination Receipts Account shall be applied at the direction of the Loan
Obligation Manager to satisfy any costs attributable to entering into any
replacement Interest Rate Cap Agreement.  Amounts remaining in the Interest Rate
Cap Termination Receipts Account shall, on the first Determination Date
following the date on which (1) any such replacement Interest Rate Cap Agreement
is entered into and the costs of which have been paid out of Interest Rate Cap
Termination Receipts or (2)

 

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the Loan Obligation Manager determines not to purchase a replacement Interest
Rate Cap Agreement, 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 on
the next Payment Date.

 

(d)                                 Notwithstanding anything to the contrary
contained herein, the Issuer (or the Arbor Parent on behalf of the Issuer) may
only enter into a replacement Interest Rate Cap Agreement from time to time on
or after the Closing Date if either (x) it obtains an Opinion of Counsel that
such replacement Interest Rate Cap Agreement would not cause the Issuer or Loan
Obligation Manager to be required to register with the CFTC or that the Issuer
and Loan Obligation Manager would be eligible for an exemption to the
requirement to register with the CFTC (a “CFTC Event”) or (y) the Loan
Obligation Manager has registered or will register as a commodity pool operator
and will comply with the requirements of the CFTC relating thereto.  The Issuer
represents and warrants that its execution of the initial Interest Rate Cap
Agreement does not result in a CFTC Event.

 

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 Notes in accordance with the Priority of Payments, are insufficient to remit
the interest due and payable with respect to the Notes on the following Payment
Date as a result of interest shortfalls on the Loan Obligations (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 in all events 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 Notes and (ii) the aggregate of the
interest payments not received in respect of Loan Obligations.  Notwithstanding
the foregoing, in no circumstance will the Advancing Agent be required to make
an Interest Advance in respect of a Loan Obligation to the extent that the
aggregate outstanding amount of all unreimbursed Interest Advances would exceed
the aggregate outstanding principal amount of the Notes.  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

 

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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 Loan Obligation Manager or the
Advancing Agent will provide 15 days prior notice to the Rating Agencies 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 Loan Obligation Manager will provide the Rating Agencies 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 Loan Obligations 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 Mortgaged Property in its “as is” or then-current condition and
occupancy;

 

(ii)                                  the potential length of time before such
Interest Advance may be reimbursed and the resulting degree of uncertainty with
respect to such reimbursement; and

 

(iii)                               the possibility and effects of future
adverse changes with respect to the Underlying Mortgaged Properties, and

 

(iv)                              the fact that Interest Advances are intended
to provide liquidity only and not credit support to the Holders of the Class A
Notes, the Class B Notes and the Class C 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

 

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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 be entitled to recover any previously unreimbursed Interest
Advance made by it (including any Nonrecoverable Interest Advance to the extent
made), 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, the Class B Notes
and the Class C 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 any Nonrecoverable Interest Advance to the extent made) 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 Loan
Obligations will continue through the Stated Maturity Date, unless the Class A
Notes, the Class B Notes and the Class C 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 advance any amounts in respect of
payments of principal of any Loan Obligation.

 

(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

 

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be evidenced by an Officer’s Certificate delivered promptly to the Trustee (or,
if applicable, retained thereby), the Issuer and the Rating Agencies, 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 Loan
Obligation 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 Loan Obligations 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
Loan Obligation Manager any information regularly maintained by the Trustee that
the Issuer, the Co-Issuer, the Preferred Shares Paying Agent or the Loan
Obligation Manager may from time to time request with respect to the Assets 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 Loan Obligation Manager to perform its
obligations under the Loan Obligation Management Agreement.  The Trustee shall
forward to the Loan Obligation Manager copies of notices and other writings
received by it from the borrower with respect to any Loan Obligation advising
the holders of such Loan Obligation of any rights that the holders might have
with respect thereto as well as all periodic financial reports received from
such borrower with respect to such borrower.  Each of the Issuer and Loan
Obligation Manager shall promptly forward to the Trustee any information in
their possession or reasonably available to them concerning any of the Assets
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 Collateral Administrator shall monitor
the Assets on an ongoing basis and provide access to the information maintained
by the Collateral Administrator to, and upon reasonable request of the Loan
Obligation Manager, shall assist the Loan Obligation Manager in performing its
duties under the Loan Obligation Management Agreement, each in accordance with
this Indenture.

 

(b)                                 The Collateral Administrator shall perform
the following functions during the term of this Indenture:

 

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(i)                    create and maintain a database with respect to the Loan
Obligations (the “Database”);

 

(ii)                 permit access to the information contained in the Database
by the Loan Obligation Manager and the Issuer;

 

(iii)              on a monthly basis monitor and update the Database for
ratings changes;

 

(iv)             update the Database for Loan Obligations or Eligible
Investments acquired or sold or otherwise disposed of;

 

(v)                prepare and arrange for the delivery to the Rating Agencies,
the Loan Obligation Manager, Co-Placement Agents and upon request therefor, any
Holder of a Note shown on the Notes Registrar, any Preferred Shareholder shown
on the register maintained by the Share Registrar;

 

(vi)             prepare and arrange for the delivery to the Loan Obligation
Manager and upon request therefor, any Holder of a Note shown on the register
maintained by the Notes Registrar, 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, the Rating
Agencies, the Depository (with instructions to forward it to each of its
participants who are holders of any Notes);

 

(vii)          assist in preparing and arrange for the delivery to the Loan
Obligation Manager of the Redemption Date Statement;

 

(viii)       arrange for the delivery to the Rating Agencies of all information
or reports required under this Indenture, including, but not limited to,
providing the Rating Agencies 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 Collateral
Administrator 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 Collateral Administrator, on behalf of the Issuer, shall
compile and provide or make available on its website initially located at
https://usbtrustgateway.usbank.com to the Rating Agencies, the Trustee, the Loan
Obligation Manager, the Co-Placement Agents 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 and
the Depository, on each Payment Date, determined as of the preceding
Determination Date, a monthly report (the “Monthly Report”).  The Monthly Report
shall contain the following information and instructions with respect to the
Loan Obligations and Eligible Investments included in the Assets based in part
on information provided by the Loan Obligation Manager:

 

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(i)                    the Aggregate Principal Balance of all Loan Obligations,
together with a calculation, in reasonable detail, of the sum of (A) the
Aggregate Principal Balance of all Loan Obligations (other than Defaulted
Obligations) plus (B) the Principal Balance of each Asset which is a Defaulted
Obligation;

 

(ii)                 the balance of all Eligible Investments and Cash in each of
the Interest Collection Account, the Principal Collection Account, the RDD
Funding 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 Loan Obligation and each Eligible
Investment that is part of the Assets, its Principal Balance, annual interest
rate, average life, borrower and Moody’s Rating;

 

(v)                the identity of each Loan Obligation that was sold or
disposed of pursuant to Section 12.1 (indicating whether such Loan Obligation is
a Defaulted Obligation or a Credit Risk Obligation (in each case, as reported in
writing to the Issuer by the Loan Obligation Manager) and whether such Loan
Obligation 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 Loan Obligation which became a Defaulted
Obligation or a Credit Risk Obligation since the date of determination of the
last Monthly Report;

 

(vii)          the Aggregate Principal Balance of all Loan Obligations 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 Loan Obligation Manager;

 

(viii)       the Par Value Ratio and the Interest Coverage Ratio, and a
statement as to whether the Interest Coverage Test and the Par Value Test are
satisfied;

 

(ix)             the Weighted Average Spread;

 

(x)                based upon information supplied by the Loan Obligation
Manager, the Average Life of each Loan Obligation and the Weighted Average Life
of all the Loan Obligations;

 

(xi)             based upon information supplied by the Loan Obligation Manager,
the Moody’s Rating Factor of each Loan Obligation and the Moody’s Weighted
Average Rating Factor;

 

(xii)          the Principal Balance of each Loan Obligation that is on credit
watch with negative implications;

 

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(xiii)       the Principal Balance of each Loan Obligation that is on credit
watch with positive implications;

 

(xiv)      the amount of the current portion and the unpaid and unwaived
portion, if any, of the Loan Obligation Manager Fee with respect to the related
Payment Date;

 

(xv)         the amount of all RDD Funding Advances that were advanced;

 

(xvi)      the percentage (based on the outstanding Aggregate Principal Balances
of the Loan Obligations) of the Loan Obligations which have a maturity date
occurring on or prior to each Payment Date;

 

(xvii)   Principal Proceeds and Interest Proceeds received by the Issuer
received in the related Due Period;

 

(xviii)  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 Loan Obligations in the related Due Period, the reinvestment of
such proceeds in Eligible Investments during such Due Period and the Loan
Obligations that were released during such Due Period;

 

(xix)      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 Aggregate Outstanding Amount of the Notes of each
Class after giving effect to the payment of principal 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;

 

(xx)         the Class A Interest Distribution Amount, the Class B Interest
Distribution Amount and the Class C Interest Distribution Amount for the related
Payment Date and the aggregate amount paid for all prior Payment Dates in
respect of such amounts;

 

(xxi)      with the assistance of the Loan Obligation Manager, the Company
Administrative Expenses on an itemized basis, the Loan Obligation Manager Fee
payable by the Issuer on the related Payment Date;

 

(xxii)   with the assistance of the Loan Obligation Manager as set forth in
Section 10.11(f), (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;

 

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(xxiii)  the calculation of the amount to be paid by each counterparty in each
case as provided by the calculation agent under the Interest Rate Cap Agreement,
specifying (a) the amount to be paid under each Interest Rate Cap Agreement
(other than any payments due and payable upon a termination of the related
Interest Rate Cap Agreement) and (b) the amount owing as a result of a
termination with respect to each Interest Rate Cap Agreement;

 

(xxiv)  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;

 

(xxv)   the amount on deposit in the Expense Account, the Unused Proceeds
Account and the RDD Funding Account;

 

(xxvi)  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; and

 

(xxvii) with respect to each Loan Obligation and each Eligible Investment that
is part of the Assets, its Principal Balance, annual interest rate, average
life, issuer and Moody’s Rating;

 

(xxviii) the identity of each Loan Obligation that was sold or disposed of
pursuant to Section 12.1 (indicating whether such Loan Obligation is a Defaulted
Obligation or Credit Risk Obligation or otherwise (in each case, as reported in
writing to the Issuer by the Loan Obligation Manager) and whether such Loan
Obligation was sold pursuant to Section 12.1(a) or (b)) or Granted to the
Trustee since the date of determination of the most recent Monthly Report;

 

(xxix)   the identity of each Loan Obligation which became a Defaulted
Obligation or a Credit Risk Obligation since the date of determination of the
last Monthly Report; and

 

(xxx)    subject to the availability of such information to the Loan Obligation
Manager and the delivery of such information by the Loan Obligation Manager to
the Collateral Administrator, with respect to each Loan Obligation on a
semi-annual basis, the net cash flow on each real property underlying or related
to such Loan Obligation;

 

(xxxi)    the identity of each bond, note and other security held by the Issuer
(together with a notation with respect thereto as to whether such bond, note or
other security is a Permitted Exchange Security);

 

(xxxii)   confirmation that the Loan Obligation Manager has received written
confirmation from ARMS Equity (in such capacity, the “Retention Holder”) and
Arbor Parent that the Retention Holder continues to retain the Retained
Interest, that Arbor Parent continues to retain a 100% ownership interest in the
Retention Holder; and that none of the Retention Holder, Arbor Parent and any of
its respective affiliates has sold,

 

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hedged or otherwise mitigated its credit risk under or associated with the
Retained Interest, the 100% ownership interest in the Retention Holder or the
underlying portfolio of Loan Obligations, except to the extent permitted in
accordance with Article 405(1); and

 

(xxxiii)  such other information as the Loan Obligation Manager, the Collateral
Administrator or the Trustee may reasonably request.

 

(d)                                       The Collateral Administrator, on
behalf of the Issuer and upon request of the Loan Obligation Manager shall
calculate the Par Value Ratio and the Interest Coverage Ratio in respect of each
Measurement Date and indicate pursuant to clause (viii) of each Monthly Report
whether the Par Value Test and the Interest Coverage Test are met and report to
the Issuer, the Co-Issuer and the Loan Obligation Manager on each Measurement
Date.

 

(e)                                        Upon receipt of each Monthly Report
and each Redemption Date Statement, the Loan Obligation Manager shall compare
the information contained in its records with respect to the Assets and shall,
within five Business Days after receipt of each such Monthly Report or such
Redemption Date Statement, notify the Issuer and the Collateral Administrator
whether such information contained in the Monthly Report or the Redemption Date
Statement, as the case may be, conforms to the information maintained by the
Loan Obligation Manager with respect to the Assets, or detail any
discrepancies.  If any discrepancy exists, the Collateral Administrator, the
Issuer and the Loan Obligation Manager shall attempt to resolve the
discrepancy.  If such discrepancy cannot be promptly resolved, the Collateral
Administrator shall cause the firm of Independent certified public accountants
appointed by the Issuer pursuant to Section 10.13 hereof to review such Monthly
Report or Redemption Date Statement, as the case may be, and the Loan Obligation
Manager’s records and the Collateral Administrator’s records to determine the
cause of such discrepancy.  If such review reveals an error in the Monthly
Report or Redemption Date Statement, as the case may be, or the Collateral
Administrator’s or the Loan Obligation Manager’s records, the Monthly Report or
Redemption Date Statement, as the case may be, or the Collateral Administrator’s
or the Loan Obligation Manager’s records, shall be revised accordingly and, as
so revised, shall be utilized in making all calculations pursuant to this
Indenture.  The Rating Agencies (in each case only so long as any Class of Notes
is rated), the Co-Placement Agents and the Loan Obligation Manager shall be
notified in writing of any such revisions by the Collateral Administrator, on
behalf of the Issuer.

 

(f)                                         All information made available on
the Collateral Administrator’s website will be restricted and the Collateral
Administrator will only provide access to such reports to those parties entitled
thereto pursuant to this Indenture.  In connection with providing access to its
website, the Collateral Administrator may require registration and the
acceptance of a disclaimer.

 

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The Monthly 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 (A) either (1) a U.S. Person who
is a QIB or (2) solely with respect to Notes issued as Definitive Notes, a U.S.
Person who is an IAI that is, in each case, also a Qualified Purchaser as
defined by the Investment Company Act of 1940 or an entity owned exclusively by
one or more Qualified Purchasers or (B) 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 U.S.$25 million in securities of unaffiliated
issuers;

 

(ii)                 it is not a participant-directed employee plan such as a
401(k) plan or a trust fund that holds the assets of such a plan;

 

(iii)              it is acting for its own account or for the account of
another person who is a QIB 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.

 

(g)             Each Monthly Report (after approval by the Loan Obligation
Manager after giving effect to any revisions thereto in accordance with
Section 10.11(f)) shall constitute instructions from the Loan Obligation
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 Monthly Report, as applicable, in the
manner specified, and in accordance with the priorities established, in
Section 11.1 hereof.

 

(h)            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 Loan Obligation
Manager (which shall review such statement in the manner provided for in
Section 10.11(f)), the Preferred Shares Paying Agent:

 

(i)                  the Aggregate Outstanding Amount of the Notes of the
Class or Classes to be redeemed as of such Redemption Date;

 

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(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); and

 

(v)                the amount in the Accounts (other than the Preferred Share
Distribution Account) available for application to the redemption of such Notes.

 

Section 10.12                                                 Release of Loan
Obligations; Release of Assets.

 

(a)            If no Event of Default has occurred and is continuing and subject
to Article 12 hereof, the Issuer (or the Loan Obligation Manager on behalf of
the Issuer) may direct the Trustee to release such Pledged Loan Obligation from
the lien of this Indenture, by Issuer Order delivered to the Trustee at least
two Business Days prior to the settlement date for any sale of a Pledged Loan
Obligation certifying that (i) it has sold such Pledged Loan Obligation pursuant
to and in compliance with Article 12 or (ii) in the case of a redemption
pursuant to Section 9.1, the proceeds from any such sale of Loan Obligations are
sufficient to redeem the Notes pursuant to Section 9.1, and, upon receipt of
such Issuer Order, the Trustee shall deliver any such Pledged Loan Obligation,
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 Loan Obligation 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.  If requested, the
Trustee may deliver any such Pledged Loan Obligation 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 Loan Obligation 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 Loan Obligation 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 Loan
Obligation, certifying that such Pledged Loan Obligation is being paid in full,
direct the Trustee, or at the Trustee’s instructions, the Custodial Securities
Intermediary, to deliver such Pledged Loan Obligation and the related Loan
Obligation File 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)             With respect to any Loan Obligation subject to a workout or
restructured, the Issuer (or the Loan Obligation 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 Loan
Obligation is subject to a workout or restructuring and setting forth in
reasonable detail the procedure for response thereto, direct the Trustee or at
the Trustee’s instructions, the Custodial Securities Intermediary, to deliver
any Assets in accordance with such Issuer Order, in each case against receipt of
payment therefor.

 

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(d)            The Trustee shall deposit any proceeds received by it from the
disposition of a Pledged Loan Obligation in the Principal Collection Account
unless simultaneously applied to the purchase of Replacement Loan Obligations,
subject to the Replacement 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 such proceeds 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.

 

(f)              Upon receiving actual notice of any offer or any request for a
waiver, consent, amendment or other modification with respect to any Loan
Obligation, the Trustee on behalf of the Issuer will promptly notify the Loan
Obligation Manager and the CLO Servicer of such request, and the Trustee shall
grant any waiver or consent, and enter into any amendment or other modification
as instructed in writing by the CLO Servicer in accordance with the Servicing
Agreement.  In the case of any modification or amendment that results in the
release of the related Loan Obligation, notwithstanding anything to the contrary
in Section 5.5(a), the Trustee shall release of the related Loan Obligation and
the related Loan Obligation File from the lien of this Indenture upon the
written instruction of the CLO Servicer in accordance with the Servicing
Agreement.  In the absence of such instruction from the CLO Servicer, the
Trustee shall have no obligation to take any such action.

 

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 Loan
Obligation 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 Loan Obligation Manager, on behalf of the Issuer, shall promptly appoint, by
Issuer Order delivered to the Trustee, a successor thereto that shall also be a
firm of Independent certified public accountants of recognized national
reputation.  If the Loan Obligation 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 Loan Obligation 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 as provided in the
Priority of Payments.

 

(b)                                 Within 60 days after December 31 of each
year (commencing with December 31, 2015), the Issuer shall cause to be delivered
to the Trustee and the Loan Obligation Manager an Accountants’ Report specifying
the procedures applied and the associated findings with respect to the Monthly
Reports and any Redemption Date Statements prepared in the year ending on such
date.  If at any time a successor firm of Independent certified

 

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public accountants is appointed, prior to the Payment Date following the date of
such appointment), the Issuer shall deliver to the Trustee a draft of an (or
form of) Accountant’s Report specifying in advance the procedures that such firm
will be applying 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 draft of an (or form of) Accountant’s Report to the Loan Obligation
Manager.

 

Section 10.14                      Reports to Rating Agencies.

 

(a)                                 In addition to the information and reports
specifically required to be provided to the Rating Agencies pursuant to the
terms of this Indenture, the Trustee shall provide the Rating Agencies with all
information or reports delivered by the Trustee hereunder, and such additional
information as the Rating Agencies 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,
downgraded or withdrawn.

 

(b)                                 The Issuer (or the Loan Obligation Manager
on behalf of the Issuer) shall provide the Rating Agencies with all information
and reports delivered to the Trustee hereunder.

 

(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 Loan Obligation Manager.

 

(d)                                 The Issuer shall cause to be provided all
17g-5 Information to the Rating Agencies in the manner specified in
Section 14.13.

 

For the avoidance of doubt, any such information referred to in this
Section 10.14 shall not include any of the Accountants’ Reports.

 

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 Loan Obligation 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 1940 Act of 1940).

 

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(b)                                 For so long as the Rule 144A Global
Securities are registered in the name of DTC or its nominee, the Issuer (or the
Loan Obligation 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
Co-Issuers.

 

ARTICLE 11

 

APPLICATION OF AMOUNTS

 

Section 11.1                             Disbursements of Amounts from Payment
Account.

 

(a)                                 Notwithstanding any other provision in this
Indenture, but subject to the other subsections of this Section 11.1 hereof, on
each Payment 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
that is not a Redemption Date or a Payment Date following the occurrence and
continuation of an acceleration of the Notes as a result of an Event of
Default, 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 Advancing Agent or the Backup Advancing Agent (if the
Advancing Agent has failed to make any Interest Advance required to be made by
the Advancing Agent pursuant to the terms hereof), the Advancing Agent Fee and
any previously due but unpaid Advancing Agent Fee (unless waived by the
Advancing Agent) (provided that the Advancing Agent or Backup Advancing Agent,
as applicable, has not failed to make any Interest Advance required to be made
in respect of any

 

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Payment Date pursuant to the terms of this Indenture) and (c) third, 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;

 

(3)                                 (a) first, to the Backup Advancing Agent,
the Backup Advancing Agent Fee and any previously due but unpaid Backup
Advancing Agent Fees (provided that the Backup Advancing Agent has not failed to
make any Interest Advance required to be made in respect of any Payment Date
pursuant to the terms of this Indenture), (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) 0.023% per annum of the Aggregate Collateral Balance and
(ii) U.S.$10,000 per annum, (c) third, to the payment of other accrued and
unpaid Company Administrative Expenses of the Trustee, the Collateral
Administrator, the Custodial Securities Intermediary, the Paying Agent, the
Preferred Shares Paying Agent and the Calculation Agent, (d) fourth, to the CLO
Servicer for payment of the Servicing Fee under the Servicing Agreement (but
only in the event that Arbor Commercial Mortgage LLC or an affiliate thereof is
not acting as the servicer of the Loan Obligations and only to the extent such
fees were not previously retained by the CLO Servicer out of amounts collected
in respect of the Loan Obligations in accordance with the terms of the Servicing
Agreement) and (e) fifth, to the payment of any other accrued and unpaid Company
Administrative Expenses, the aggregate of all such amounts in clauses (c),
(d) and (e) above (including such amounts paid since the previous Payment Date
from the Expense Account) not to exceed the greater of (i) 0.10% per annum of
the Aggregate Collateral Balance and (ii) U.S.$125,000 per annum;

 

(4)                                 to the payment of the Loan Obligation
Manager Fee and any previously due but unpaid Loan Obligation Manager Fees (but
only in the event that Arbor Realty Collateral Management, LLC or an affiliate
thereof is not acting as Loan Obligation Manager);

 

(5)                                 to the payment of the Class A Interest
Distribution Amount, plus, any Class A Defaulted Interest Amount;

 

(6)                                 to the payment of the Class B Interest
Distribution Amount, plus, any Class B Defaulted Interest Amount;

 

(7)                                 to the payment of the Class C Interest
Distribution Amount, plus, any Class C Defaulted Interest Amount;

 

(8)                                 if either of the Note Protection Tests are
not satisfied as of the Determination Date relating to such Payment Date, to the
payment of, first, principal on the Class A Notes, second, principal on the
Class B Notes, and third, principal on the Class C Notes, in each case to the
extent necessary to cause each

 

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of the Note Protection Tests to be satisfied or, if sooner, until the Class A
Notes, Class B Notes and Class C Notes have been paid in full;

 

(9)                                 on each 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 Notes, (ii) second, to the Class B
Notes and (iii) third, to the Class C Notes, in each case until the rating
assigned on the Closing Date to each Class of Notes has been reinstated or such
Class has been paid in full;

 

(10)                          to the payment of any Company Administrative
Expenses not paid pursuant to clause (3) above in the order specified therein;

 

(11)                          upon direction of the Loan Obligation Manager, for
deposit into the Expense Account in an amount not to exceed U.S.$100,000 in
respect of such Payment Date; and

 

(12)                          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 Share
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 Share Paying Agency Agreement.

 

(ii)                                  Principal Proceeds. On each Payment Date
that is not a Redemption Date or a Payment Date following the occurrence and
continuation of an acceleration of the Notes as a result of an Event of Default,
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 (9) of Section 11.1(a)(i) in the same order of priority
specified therein, without giving effect to any limitations on amounts payable
set forth therein, but only to the extent not paid in full thereunder;

 

(2)                                 on the Payment Date following the Portfolio
Finalization Date, to the payment of principal, in an amount equal to all
amounts remaining in the Unused Proceeds Account as of the Portfolio
Finalization Date, (i) first, to the Class A Notes, (ii) second, to the Class B
Notes and (iii) third, to the Class C Notes, in each case until such Class has
been paid in full;

 

(3)                                 on each Payment Date following the
occurrence of a Rating Confirmation Failure, to the extent that application of
Interest Proceeds pursuant to Section 11.1(a)(i)(9) is insufficient to cause the
ratings assigned to each Class of Notes to be reinstated or to cause any
affected Class to be paid in full, to the payment of principal (i) first, to the
Class A Notes, (ii) second, to the Class B Notes and (iii) third, to the Class C
Notes, in each case until the rating assigned on the Closing Date to each
Class of Notes has been reinstated or such Class has been paid in full;

 

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(4)                                 during the Replacement Period, so long as
the Issuer is permitted to purchase Replacement Loan Obligations in accordance
with Section 12.2, at the direction of the Loan Obligation Manager, the amount
designated by the Loan Obligation Manager during the related Interest Accrual
Period for payment of the purchase price of Replacement Loan Obligations;

 

(5)                                 to the payment of principal of the Class A
Notes until the Class A Notes have been paid in full;

 

(6)                                 to the payment of principal of the Class B
Notes until the Class B Notes have been paid in full;

 

(7)                                 to the payment of principal of the Class C
Notes until the Class C Notes have been paid in full; and

 

(8)                                 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
Share Distribution Account for distribution to the Holders of the Preferred
Shares as payments of the Preferred Shares Distribution Amount subject to and in
accordance with the provisions of the Preferred Share Paying Agency Agreement.

 

(iii)                               Redemption Dates During Events of Default. 
On any Redemption Date or a Payment Date following the occurrence and
continuation of an acceleration of the Notes as result of an Event of
Default, Interest Proceeds and Principal Proceeds with respect to the related
Due Period will be distributed in the following order of priority:

 

(1)                                 to the payment of the amounts referred to in
clauses (1) through (4) of Section 11.1(a)(i) in the same order of priority
specified therein, but without giving effect to any limitations on amounts
payable set forth therein;

 

(2)                                 to the payment of any out-of-pocket fees and
expenses of the Issuer and Trustee (including legal fees and expenses) incurred
in connection with an acceleration of the Notes following an Event of Default,
including in connection with sale and liquidation of any of the Assets in
connection therewith;

 

(3)                                 to the payment of the Class A Interest
Distribution Amount, plus, any Class A Defaulted Interest Amount;

 

(4)                                 to the payment in full of principal of the
Class A Notes;

 

(5)                                 to the payment of the Class B Interest
Distribution Amount, plus, any Class B Defaulted Interest Amount;

 

(6)                                 to the payment in full of principal of the
Class B Notes;

 

(7)                                 to the payment of the Class C Interest
Distribution Amount, plus, any Class C Defaulted Interest Amount;

 

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(8)                                 to the payment in full of principal of the
Class C Notes; and

 

(9)                                 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
Share 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 Share Paying Agency Agreement.

 

(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)                                 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), Section 11.1(a)(ii) or
Section 11.1(a)(iii), 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.

 

(e)                                  In the event that Interest Proceeds or
Principal Proceeds on any Payment Date are to be applied to the payment of
principal of or interest on any Class of Notes pursuant to Section 11.1(a)(i),
Section 11.1(a)(ii) or Section 11.1(a)(iii), such payments will be made to
Noteholders of each applicable Class, as to each such Section, pro rata based on
the amounts thereof then due and payable.

 

(f)                                   In connection with any required payment by
the Issuer to the CLO 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 Loan Obligations, such amounts shall be distributed
to the CLO Servicer pursuant to the terms of the Servicing Agreement.

 

Section 11.2                             Securities Accounts.

 

All amounts held by, or deposited with the Trustee in the Collection Accounts,
the Payment Account, the Expense Account, the Unused Proceeds Account or the RDD
Funding Account pursuant to the provisions of this Indenture, and not invested
in Eligible Investments as herein provided, shall be credited to one or more
securities accounts established and maintained pursuant to the Securities
Account Control Agreement at the Corporate Trust Office of the Trustee, in its
capacity as Custodial Securities Intermediary or at another financial
institution

 

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whose long-term rating is at least equal to, “A2” by Moody’s and “A” by DBRS
(or, if not rated by DBRS, an equivalent (or higher) rating by any two other
NRSROs (which may include Moody’s)) (or, in each case, such lower rating as the
applicable Rating Agency shall approve) and agrees to act as a Securities
Intermediary on behalf of the Trustee on behalf of the Secured Parties pursuant
to an account control agreement in form and substance similar to the Securities
Account Control Agreement.  To the extent amounts 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 LOAN OBLIGATIONS

 

Section 12.1                             Sales of Loan Obligations.

 

(a)                                 Except as otherwise expressly permitted or
required by this Indenture, the Issuer shall not sell or otherwise dispose of
any Loan Obligation.  The Loan Obligation Manager, on behalf of the Issuer,
acting pursuant to the Loan Obligation Management Agreement may direct the
Trustee in writing to sell:

 

(i)                                       any Defaulted Obligation at any time;

 

(ii)                                    a Buy/Sell Interest at any time; and

 

(iii)                                 any Credit Risk Obligation on or prior to
the last day of the Replacement Period unless (x) either of the Note Protection
Tests were not satisfied as of the immediately preceding Determination Date and
have not been cured as of the proposed sale date or (y) the Trustee, upon
written direction of a majority of the Controlling Class, has provided written
notice to the Loan Obligation Manager that no further sales of Credit Risk
Obligations shall be permitted.  The Trustee shall sell any Loan Obligation in
any sale permitted pursuant to this Section 12.1(a), as directed by the Loan
Obligation Manager.

 

(b)                                 In addition with respect to any Defaulted
Obligation or Credit Risk Obligation permitted to be sold pursuant to
Section 12.1(a), the Loan Obligation Manager may, on behalf of the Issuer,
instruct the Trustee to dispose of such Defaulted Obligation or Credit Risk
Obligation in one of the following additional manners:

 

(i)                                     by purchasing or causing its affiliate
to purchase (x) such Credit Risk Obligation or Defaulted Obligation from the
Issuer for a cash purchase price that will be equal to the sum of (i) the
Principal Balance thereof plus (ii) all accrued and unpaid interest thereon
(such purchase, a “Credit Risk/Defaulted Obligation Cash Purchase”) (and no
Advisory Committee consent will be required in connection with a Credit
Risk/Defaulted Obligation Cash Purchase); or

 

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(ii)                 upon disclosure to, and with the prior consent of, the
Advisory Committee, directing the Issuer to exchange such Defaulted Obligation
for (1) a substitute Loan Obligation owned by an affiliate of the Loan
Obligation Manager that satisfies the Eligibility Criteria (such Replacement
Loan Obligation, an “Exchange Obligation”) or (2) a combination of an Exchange
Obligation and cash (such exchange, a “Defaulted Obligation Exchange”); provided
that:

 

(1)                                 the sum of (1) the Principal Balance of such
Exchange Obligation plus (2) all accrued and unpaid interest thereon plus
(3) the Cash amount (if any) to be paid to the Issuer in respect of such
exchange by such affiliate of the Loan Obligation Manager, is equal to or
greater than:

 

(2)                                 the sum of (1) the Principal Balance of the
Defaulted Obligation sought to be exchanged plus (2) all accrued and unpaid
interest thereon.

 

If a Loan Obligation that is a Defaulted Obligation is not sold by the Issuer
(at the direction of the Loan Obligation Manager) within three years of such
Loan Obligation becoming a Defaulted Obligation, the Loan Obligation Manager, on
behalf of the Issuer, will use its commercially reasonable efforts to sell such
Loan Obligation as soon as commercially practicable thereafter.

 

(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, the Loan Obligation Manager, on behalf of the Issuer, and
acting pursuant to the Loan Obligation Management Agreement, may at any time
direct the Trustee in writing to sell, and the Trustee shall sell in the manner
directed by the Loan Obligation Manager in writing, any Loan Obligation 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 upon any such sale the Trustee shall release such
Loan Obligation 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 Loan Obligation
pursuant to this Section 12.1(b) unless:

 

(1)                                 the Loan Obligation Manager certifies to the
Trustee that, in the Loan Obligation Manager’s reasonable business judgment
based on calculations included in the certification (which shall include the
sales prices of the Loan Obligations), the Sale Proceeds from the sale of one or
more of the Loan Obligations and all Cash and proceeds from Eligible Investments
will be at least equal to the Total Redemption Price; and

 

(2)                                 the Independent accountants appointed by the
Issuer pursuant to Section 10.13 shall recalculate the calculations made in
clause (1) above and prepare an agreed-upon procedures report.

 

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(iii)                               in connection with an Optional Redemption, a
Clean-up Call or a Tax Redemption, all the Loan Obligations to be sold pursuant
to this Section 12.1(b) must be sold in accordance with the requirements set
forth in Section 9.1(e).

 

(d)                                 In the event that any Notes remain
Outstanding as of the Payment Date occurring six months prior to the Stated
Maturity Date of the Notes, the Loan Obligation Manager will be required to
determine whether the proceeds expected to be received on the Assets prior to
the Stated Maturity Date of the Notes will be sufficient to pay in full the
principal amount of (and accrued interest on) the Notes on the Stated Maturity
Date.  If the Loan Obligation 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 Date of the Notes, the Issuer will, at the direction of the Loan
Obligation Manager, be obligated to liquidate the portion of Loan Obligations
sufficient to pay the remaining principal amount of and interest on the Notes on
or before the Stated Maturity Date.  The Loan Obligations to be liquidated by
the Issuer will be selected by the Loan Obligation Manager.

 

(e)                                  Notwithstanding anything herein to the
contrary, (a) in the event that a “buy/sell” arrangement has been initiated with
respect to a Buy/Sell Interest, or (b) a Loan Obligation is subject to a workout
and, in either case, the Loan Obligation Manager determines in accordance with
the Loan Obligation Manager Standard that the sale of any such Loan Obligation
is in the best interest of the Noteholders, the Loan Obligation Manager may, on
behalf of the Issuer, direct the Trustee to sell such Loan Obligation in
accordance with the terms of the related Underlying Instruments; provided that,
in the event any such sale is to be made to an Affiliate of the Issuer or the
Loan Obligation Manager, such sale may be made only upon disclosure to, and with
the prior consent of, the Advisory Committee.

 

(f)                                   Notwithstanding anything herein to the
contrary, the Loan Obligation Manager on behalf of the Issuer shall be permitted
to sell to a Permitted Subsidiary any Sensitive Asset for consideration
consisting of equity interests in such Permitted Subsidiary (or an increase in
the value of equity interests already owned).

 

(g)                                  Notwithstanding anything herein to the
contrary, to the extent the Loan Obligation Manager deems necessary or advisable
in accordance with the Loan Obligation Manager Standard, the Issuer may, at the
direction of the Loan Obligation 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 Loan Obligation to the Holder of
the Preferred Shares or any Affiliate thereof.

 

Section 12.2                             Replacement Loan Obligations.

 

(a)                                 Except as provided in Section 12.3(c),
during the Replacement Period (or within 60 days after the end of the
Replacement Period with respect to reinvestments made pursuant to binding
commitments to purchase entered into during the Replacement Period), Principal
Proceeds received may, but are not required to, be reinvested in Replacement
Loan Obligations (which shall be, and hereby are upon acquisition by the Issuer,
Granted to the Trustee pursuant to the Granting Clause of this Indenture) that
satisfy the applicable Eligibility

 

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Criteria and the following additional criteria (the “Replacement Criteria”), as
evidenced by an Officer’s Certificate of the Loan Obligation Manager on behalf
of the Issuer delivered to the Trustee, as of the date of the commitment to
purchase such Replacement Loan Obligations:

 

(i)                                     the Note Protection Tests are satisfied;
and

 

(ii)                                  no Event of Default has occurred and is
continuing.

 

(b)                                 Notwithstanding the foregoing provisions,
(i) Cash on deposit in the Collection Accounts may be invested in Eligible
Investments, pending investment in Replacement Loan Obligations and (ii) if an
Event of Default shall have occurred and be continuing, no Replacement Loan
Obligation 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.

 

(c)                                  Notwithstanding the foregoing provisions,
at any time when ARMS Equity or an Affiliate that is wholly-owned by the Arbor
Parent and is a disregarded entity for U.S. federal income tax purposes holds
100% of the Preferred Shares, it may contribute additional Cash, Eligible
Investments and/or Loan Obligations to the Issuer so long as any such
contributions satisfy the Eligibility Criteria at the time of such contribution,
including, but not limited to, for purposes of avoiding a Rating Confirmation
Failure and effecting any cure rights reserved for the holder of the Acquired
Participations, pursuant to and in accordance with the terms of the related
participation agreement.  Cash contributed to the Issuer by ARMS Equity (whether
before or after the Replacement Period) may be reinvested by the Issuer in
Replacement Loan Obligations in accordance with the requirements set forth in
Section 12.2(a).

 

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 Loan Obligation Management Agreement; provided that
(1) the Loan Obligation Manager shall not direct the Trustee to acquire any
Replacement Loan Obligation for inclusion in the Assets from the Loan Obligation
Manager or any of its Affiliates as principal or to sell any Loan Obligation
from the Assets to the Loan Obligation Manager or any of its Affiliates as
principal unless the transaction is effected in accordance with the Loan
Obligation Management Agreement and (2) the Loan Obligation Manager shall not
direct the Trustee to acquire any Replacement Loan Obligation for inclusion in
the Assets from any account or portfolio for which the Loan Obligation Manager
serves as investment adviser or direct the Trustee to sell any Loan Obligation
to any account or portfolio for which the Loan Obligation Manager serves as
investment adviser unless such transactions comply with the Loan Obligation
Management Agreement and Section 206(3) of the Advisers Act.  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 Asset or Securities shall
be Granted to the Trustee pursuant to this Indenture, such Asset or Securities
shall be registered in the name of the Trustee, and, if applicable, the Trustee
shall receive such Pledged Loan Obligation or Securities.  The Trustee also
shall receive, not later than the date of delivery of any Loan Obligation
delivered after the Closing Date, an

 

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Officer’s Certificate of the Loan Obligation 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 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).

 

Section 12.4                             Modifications to Moody’s Tests.

 

In the event Moody’s modifies the definitions or calculations relating to any of
the Eligibility Criteria or either of the Note Protection Tests (each, a
“Moody’s Test Modification”), in any case in order to correspond with published
changes in the guidelines, methodology or standards established by Moody’s, the
Issuer may, but is under no obligation solely as a result of this Section 12.4
to, incorporate corresponding changes into this Indenture by an amendment or
supplement 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) the Rating Agency Condition is satisfied and (y) written notice of
such modification is delivered by the Loan Obligation Manager to the Trustee and
the Holders of the Notes and Preferred Shares (which notice may be included in
the next regularly scheduled report to Noteholders).  Any such Moody’s Test
Modification 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 Loan
Obligation Manager and delivered to the Trustee, (ii) accompanied by delivery by
the Issuer to the Trustee of an Officer’s Certificate of the Issuer (or the Loan
Obligation Manager on behalf of the Issuer) certifying that such amendment has
been made pursuant to and in compliance with this Section 12.4.

 

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 agree that, for the
benefit of the Holders of the Class A Notes that the rights of the Holders of
the Class B Notes and the Class C Notes shall be subordinate and junior to the
Class A Notes to the extent and in the manner set forth in Article XI of this
Indenture. On each Redemption Date and each Payment Date as a result of the
occurrence and continuation of the acceleration of the Notes following the
occurrence of an Event of Default, all accrued and unpaid interest on and
outstanding principal on the Class A Notes shall be paid pursuant to
Section 11.1(a)(iii) in full in Cash or, to the extent 100% of Holders of the
Class A Notes consent, other than in Cash, before any further payment or
distribution is made on account of any other Class of Notes, to the extent and
in the manner provided in Section 11.1(a)(iii).

 

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(b)                                 Anything in this Indenture or the Notes to
the contrary notwithstanding, the Issuer and the Holders agree that, for the
benefit of the Holders of the Class B Notes that the rights of the Holders of
the Class C Notes shall be subordinate and junior to the Class B Notes to the
extent and in the manner set forth in Article XI of this Indenture. On each
Redemption Date and each Payment Date as a result of the occurrence and
continuation of the acceleration of the Notes following the occurrence of an
Event of Default, all accrued and unpaid interest on and outstanding principal
on the Class B Notes shall be paid pursuant to Section 11.1(a)(iii) in full in
Cash or, to the extent 100% of Holders of the Class B Notes consent, other than
in Cash, before any further payment or distribution is made on account of the
Class C Notes, to the extent and in the manner provided in Section 11.1(a)(iii).

 

(c)                                  In the event that notwithstanding the
provisions of this Indenture, any Holders of any Class of Notes shall have
received any payment or distribution in respect of such Class contrary to the
provisions of this Indenture, then, unless and until all accrued and unpaid
interest on and outstanding principal of all more senior Classes of Notes has
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 shall pay and
deliver the same to the Holders of the more senior Class of Notes in accordance
with this Indenture.

 

(d)                                 Each Holder of Class A Notes agrees with the
Trustee on behalf of the Secured Parties that such Holder shall not demand,
accept, or receive any payment or distribution in respect of the Class A Notes
in violation of the provisions of this Indenture including Section 11.1(a) and
this Section 13.1.  Nothing in this Section 13.1 shall affect the obligation of
the Issuer to pay Holders of the Class A Notes any amounts due and payable
hereunder.

 

(e)                                  Each Holder of Class B Notes agrees with
the Trustee on behalf of the Secured Parties that such Holder shall not demand,
accept, or receive any payment or distribution in respect of the Class B Notes
in violation of the provisions of this Indenture including Section 11.1(a) and
this Section 13.1; provided, however, that after all accrued and unpaid interest
on, and principal of, the Class A Notes have been paid in full, the Holders of
the Class B Notes shall be fully subrogated to the rights of the Holders the
Class A Notes.  Nothing in this Section 13.1 shall affect the obligation of the
Issuer to pay Holders of the Class B Notes any amounts due and payable
hereunder.

 

(f)                                   Each Holder of Class C Notes agrees with
the Trustee on behalf of the Secured Parties that such Holder shall not demand,
accept, or receive any payment or distribution in respect of the Class C Notes
in violation of the provisions of this Indenture including Section 11.1(a) and
this Section 13.1; provided, however, that after all accrued and unpaid interest
on, and principal of, the Class A Notes and the Class B Notes have been paid in
full, the Holders of the Class C Notes shall be fully subrogated to the rights
of the Holders the Class A Notes and the Class B Notes.  Nothing in this
Section 13.1 shall affect the obligation of the Issuer to pay Holders of the
Class C Notes any amounts due and payable hereunder.

 

(g)                                  The Holders of each Class of Notes agree,
for the benefit of all Holders of each Class of Notes, not to cause the filing
of a petition in bankruptcy against the Issuer, the Co-Issuer or any Permitted
Subsidiary until the payment in full of the Notes and not before one year

 

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and a day, or if longer, the applicable preference period then in effect, has
elapsed since such payment.

 

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, 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 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
Loan Obligation 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 Loan Obligation 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, or the Loan Obligation
Manager on behalf of the Issuer, certifying as to the factual matters that form
a basis for such Opinion of Counsel and stating that the information with
respect to such matters is in the possession of the Issuer or the Co-Issuer or
the Loan Obligation Manager on behalf of the Issuer, unless such counsel knows
that the certificate or opinion or representations with respect to such matters
are erroneous.

 

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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.

 

(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.

 

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Section 14.3                             Notices, etc., to the Trustee, the
Issuer, the Co-Issuer, the Advancing Agent, the Loan Obligation Manager, the
Co-Placement Agents and the Rating Agencies.

 

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 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 Commercial Real
Estate Notes 2015-FL1, Ltd. at c/o MaplesFS Limited, P.O. Box 1093, Queensgate
House, Grand Cayman, KY1-1104 Cayman Islands, facsimile number: 345-945-7100,
Attention:  The Directors, or at any other address previously furnished in
writing to the Trustee by the Issuer, with a copy to the Loan Obligation 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, 850
Library Avenue, Suite 204, Newark, Delaware 19711, Attention: Donald J. Puglisi,
facsimile number: (302) 738-7210, or at any other address previously furnished
in writing to the Trustee by the Co-Issuer, with a copy to the Loan Obligation
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 Earle Ovington Boulevard, 9th Floor, Uniondale, New York
11553, Attention:  Executive Vice President — Structured Securitization, or at
any other address previously furnished in writing to the Trustee and the
Co-Issuers, with a copy to the Loan Obligation 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 its Corporate Trust Office or at any other address previously furnished in
writing by the Trustee;

 

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(f)                                   the Loan Obligation 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 Loan
Obligation Manager addressed to it at Arbor Realty Collateral Management, LLC,
333 Earle Ovington Boulevard, 9th Floor, Uniondale, New York 11553, 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)                                  the Rating Agencies, as applicable, by the
Issuer, the Co-Issuer, the Loan Obligation 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 the Rating
Agencies addressed to it at (i) Moody’s Investor Services, Inc., 7 World Trade
Center, 250 Greenwich Street, New York, New York 10007, Attention: CRE CDO
Surveillance (or by electronic mail at moodys_cre_cdo_monitoring@moodys.com) and
(ii) DBRS, Inc., 101 N. Wacker, Suite 100, Chicago, Illinois 60606, Attention:
Commercial Mortgage Surveillance, Fax: (312) 332-3492 (or by electronic mail at
cmbs.surveillance@dbrs.com) or such other address that either Rating Agency
shall designate in the future; provided that any request, demand, authorization,
direction, order, 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 the Rating Agency (“17g-5 Information”) shall be
given in accordance with, and subject to, the provisions of Section 14.13
hereof; and

 

(h)                                 the Co-Placement Agents by the Issuer, the
Co-Issuer, the Trustee or the Loan Obligation 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 Co-Placement Agents at Sandler O’Neill & Partners, L.P., 1251 Avenue
of the Americas — 6th Floor, New York, New York 10020, Attention:  General
Counsel, Telephone:  (212) 466-7800, Fax:  (212) 466-7996, and to J.P. Morgan
Securities LLC, 383 Madison Avenue, 8th Floor, New York, New York 10179,
facsimile number: (212) 834-6250; Attention: CMBS.

 

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; and

 

(c)                                  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.

 

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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.

 

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.

 

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 Loan

 

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Obligation Manager, the Preferred Shareholders, the Preferred Shares Paying
Agent, the Share Registrar and the Noteholders (each of whom, in the case of
this clause (ii), 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.

 

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Section 14.13                      17g-5 Information.

 

(a)                                 The parties hereto agree that all 17g-5
Information provided to the Rating Agencies, or any of its officers, directors
or employees, to be given or provided to the Rating Agencies pursuant to, in
connection with or related, directly or indirectly, to this Indenture, any other
Transaction Document, the Assets or the Notes, shall be in each case furnished
directly to the Rating Agencies at the address set forth in clause
Section 14.3(h) with a prior electronic copy to the Issuer or the Information
Agent, as provided in Section 2A of the Collateral Administration Agreement (for
forwarding to the 17g-5 Website in accordance with the Collateral Administration
Agreement).  The Co-Issuers also shall furnish such other information regarding
the Co-Issuers or the Assets as may be reasonably requested by the Rating
Agencies to the extent such party has or can obtain such information without
unreasonable effort or expense.  Notwithstanding the foregoing, the failure to
deliver such notices or copies shall not constitute an Event of Default under
this Indenture.  Any confirmation of the rating by the Rating Agencies required
hereunder shall be in writing.  For the avoidance of doubt, such information
under this Section 14.13 shall not include any Accountants’ Reports.

 

(b)                                 The Co-Issuers shall comply with their
obligations under Rule 17g-5 promulgated under the Exchange Act (“Rule 17g-5”),
by their or their agent’s posting on the 17g-5 Website, no later than the time
such information is provided to the Rating Agencies, all 17g-5 Information.  At
all times while any Notes are rated by the Rating Agencies or any other NRSRO,
the Co-Issuers shall engage a third-party to post 17g-5 Information to the 17g-5
Website, which shall initially be the Collateral Administrator (in such
capacity, the “Information Agent”).

 

(c)                                  To the extent any of the Co-Issuers, the
Trustee or the Loan Obligation Manager are engaged in oral communications with
the Rating Agencies, for the purposes of determining the initial credit rating
of the Notes or credit rating surveillance of the Notes, the party communicating
with the Rating Agencies shall cause such oral communication to either be
(x) recorded and an audio file containing the recording to be promptly delivered
to the Information Agent for posting to the 17g-5 Website or (y) summarized in
writing and the summary to be promptly delivered to the Information Agent for
posting to the 17g-5 Website.

 

(d)                                 Notwithstanding the requirements herein, the
Trustee shall have no obligation to engage in or respond to any oral
communications, for the purposes of determining the initial credit rating of the
Notes or undertaking credit rating surveillance of the Notes, with the Rating
Agencies or any of their respective officers, directors or employees.

 

(e)                                  Notwithstanding anything to the contrary in
this Indenture, a breach of this Section 14.13 shall not constitute a Default or
Event of Default.

 

Section 14.14                      Rating Agency Condition.

 

Any request for satisfaction of the Rating Agency Condition made by the Issuer,
Co-Issuer or Trustee, as applicable, pursuant to this Indenture, shall be made
in writing, which writing shall contain a cover page indicating the nature of
the request for satisfaction of the Rating Agency Condition, and shall contain
all back-up material necessary for the Rating

 

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Agencies to process such request.  Such written request for satisfaction of the
Rating Agency Condition shall be provided in electronic format to the
Information Agent for posting on the 17g-5 Website in accordance with
Section 14.13 hereof and after receiving actual knowledge of such posting (which
may be in the form of an automatic email notification of posting delivered by
the 17g-5 Website to such party), the Requesting Party shall send the request
for satisfaction of such Condition to the Rating Agencies in accordance with the
instructions for notices set forth in Section 14.3(h) hereof.

 

ARTICLE 15

 

ASSIGNMENT OF LOAN OBLIGATION PURCHASE AGREEMENTS AND LOAN MANAGEMENT AGREEMENT

 

Section 15.1                             Assignment of Loan Obligation Purchase
Agreements and the Loan Obligation 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, all of the Issuer’s estate, right,
title and interest in, to and under each Loan Obligation Purchase Agreement (now
or hereafter entered into) and the Loan Obligation 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 Loan Obligation 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 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 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.

 

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(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.

 

(f)                                   The Issuer hereby agrees, and hereby
undertakes to obtain the agreement and consent of the Sellers and the Loan
Obligation Manager, as applicable, in the Loan Obligation Purchase Agreements
and the Loan Obligation Management Agreement, as applicable, to the following:

 

(i)                                     each of the Sellers and the Loan
Obligation 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 Loan Obligation Manager pursuant to the applicable
Article 15 Agreement;

 

(ii)                                  each of the Sellers and the Loan
Obligation Manager, as applicable, acknowledges that the Issuer is collaterally
assigning all of its right, title and interest in, to and under the Loan
Obligation Purchase Agreements and the Loan Obligation Management Agreement, as
applicable, to the Trustee for the benefit of the Noteholders, and each of the
Sellers and the Loan Obligation Manager, as applicable, agrees that all of the
representations, covenants and agreements made by each of the Sellers and the
Loan Obligation Manager, as applicable, in the applicable Article 15 Agreement
are also for the benefit of, and enforceable by, the Trustee and the
Noteholders;

 

(iii)                               each of the Sellers and the Loan Obligation
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 Loan
Obligation 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 Loan Obligation Manager, as
applicable, without notifying the Rating Agencies and without the prior written
consent and written confirmation of the Rating Agencies that such amendment,
modification or termination will not cause its then-current ratings of the Notes
to be downgraded or withdrawn;

 

(v)                                 except as otherwise set forth herein and
therein (including, without limitation, pursuant to Section 12 of the Loan
Obligation Management Agreement), the Loan Obligation Manager shall continue to
serve as Loan Obligation Manager under the Loan Obligation Management Agreement,
notwithstanding that the Loan Obligation Manager shall not have received amounts
due it under the Loan Obligation Management

 

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Agreement because sufficient funds were not then available hereunder to pay such
amounts pursuant to the Priority of Payments.  The Loan Obligation 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 Loan Obligation
Manager under the Loan Obligation 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

 

(vi)                              the Loan Obligation 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
Loan Obligation 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 Loan Obligation 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 Loan Obligation 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., 333 Earle Ovington Boulevard, 9th
Floor, Uniondale, New York 11553, Attention: Executive Vice President—Structured
Securitization.  The Loan Obligation 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

 

INTEREST RATE CAP AGREEMENT; CURE RIGHTS; PURCHASE RIGHTS; REPLACEMENT LOAN
OBLIGATIONS

 

Section 16.1                             Issuer’s Obligations under Interest
Rate Cap Agreements.

 

(a)                                 The Issuer (or the Loan Obligation Manager
on its behalf) is authorized and shall enter into, and enforce all rights and
remedies under, the Interest Rate Cap Agreement, including any replacement
Interest Rate Cap Agreement, pursuant to the terms thereof and the terms of this
Agreement and the other Transaction Documents.  Without limiting the generality
of the foregoing, the Issuer (or the Loan Obligation Manager on its behalf) is
authorized and may execute and deliver all instruments and agreements evidencing
the initial Interest Rate Cap Agreement at any time after the Closing Date, but
subject to the requirements of Section 3.1(p).

 

(b)                                 Upon receipt of notice that a default by an
Interest Rate Cap Counterparty in the payment when due of its obligations to the
Issuer under the related Interest Rate Cap Agreement (following the expiration
of any applicable grace period) has occurred, the Trustee shall forthwith
provide electronic notice thereof to the Issuer, the Loan Obligation Manager and
each of the Rating Agencies.  When the Trustee becomes aware of such default,
the Trustee shall make a demand on the applicable Interest Rate Cap Counterparty
demanding payment forthwith.  The Trustee shall give notice to the Noteholders
and further notice to the Loan Obligation

 

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Manager upon the continuing failure by such Interest Rate Cap Counterparty to
perform its obligations during the two Business Days following a demand made by
the Trustee on such Interest Rate Cap Counterparty.

 

(c)                                  Upon the default by an Interest Rate Cap
Counterparty (including any termination event specified in the Interest Rate Cap
Agreement), if the Interest Rate Cap Counterparty fails to transfer all of its
rights and obligations to, or obtain a guaranty from, a counterparty whose
ratings are at least equal to the Minimum Interest Rate Cap Counterparty Rating
on or before the time periods specified in the Interest Rate Cap Agreement, the
Issuer may terminate the Interest Rate Cap Agreement, subject to satisfaction of
the Rating Agency Condition.

 

(d)                                 Upon the termination or partial termination
of each Interest Rate Cap Agreement, the Issuer (or the Loan Obligation Manager
on its behalf) 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 Interest Rate Cap Agreement) to
enforce the rights of the Issuer and the Trustee thereunder as may be permitted
by the terms of the related Interest Rate Cap 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 Interest Rate Cap Counterparty) to enter into an additional
or replacement Interest Rate Cap Agreements within 30 days of the expiration of
any such grace period and such applicable time period as set forth in the
related Interest Rate Cap Agreement on substantially identical terms or on such
other terms as required by the related Interest Rate Cap Counterparty to any
such additional or replacement Interest Rate Cap Agreement subject to the Rating
Agency Condition.  Any payments (other than payments relating to past-due
scheduled payments on an Interest Rate Cap Agreement) received by the Issuer or
Trustee in connection with the termination (in whole or in part) of a related
Interest Rate Cap Agreement shall be immediately transferred to the Trustee for
deposit into the Interest Rate Cap Termination Receipts Account.  Any costs
attributable to entering into a replacement Interest Rate Cap Agreement shall be
paid from amounts on deposit in the Interest Rate Cap Termination Receipts
Account.

 

(e)                                  The Loan Obligation Manager shall use
reasonable efforts to cause the Issuer, promptly following the early termination
of an Interest Rate Cap Agreement due to an event of default or termination
event (each as defined in the related Interest Rate Cap Agreement) under an
Interest Rate Cap Agreement, to use the funds available in the Interest Rate Cap
Termination Receipts Account and enter into a replacement Interest Rate Cap
Agreement, subject to satisfaction of the Rating Agency Condition unless, in the
exercise of the Loan Obligation Manager’s business judgment, made in accordance
with the Loan Obligation Management Standard, the Issuer would benefit from not
entering into a replacement Interest Rate Cap Agreement.  The Issuer (or the
Loan Obligation Manager on behalf of the Issuer) shall use commercially
reasonable efforts to cause the termination of the related Interest Rate Cap
Agreement to become effective simultaneously with the effectiveness of a
replacement thereto, described as aforesaid.

 

(f)                                   Each Interest Rate Cap Agreement shall
provide that if at any time the ratings of the Interest Rate Cap Counterparty
or, if the obligations of the Interest Rate Cap

 

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Counterparty are absolutely and unconditionally guaranteed, its guarantor, cease
to satisfy the Minimum Interest Rate Cap Counterparty Rating, then the Interest
Rate Cap Counterparty shall be required (within the time period specified in the
Interest Rate Cap Agreement and at its own cost or benefit) to (i) transfer all
of its rights and obligations under the Interest Rate Cap Agreement to another
counterparty the ratings of whom at least satisfy the Minimum Interest Rate Cap
Counterparty Rating, or (ii) obtain a guaranty or indemnity from any entity the
ratings of whom at least satisfy the Minimum Interest Rate Cap Counterparty
Rating.

 

Section 16.2                             Loan Obligation Purchase Agreements.

 

Following the Closing Date, unless a Loan Obligation Purchase Agreement is
necessary to comply with the provisions of this Indenture, the Issuer may
acquire Loan Obligations in accordance with customary settlement procedures in
the relevant markets. In any event, the Issuer (or the Loan Obligation Manager
on behalf of the Issuer) shall obtain from any seller of a Loan Obligation, all
Underlying Instruments with respect to each Loan Obligation that govern,
directly or indirectly, the rights and obligations of the owner of the Loan
Obligation with respect to the Loan Obligation and any certificate evidencing
the Loan Obligation.

 

Section 16.3                             Representations and Warranties Related
to Replacement Loan Obligations.

 

(a)                                 Upon the acquisition of a Replacement Loan
Obligation by the Issuer, the related seller shall be required to make
representations and warranties substantially in the form attached as Exhibit I
hereto.

 

(b)                                 The representations and warranties in
Section 16.3(a) with respect to the acquisition of a Replacement Loan Obligation
may be subject to any modification, limitation or qualification that the Loan
Obligation Manager determines to be reasonably acceptable in accordance with the
Loan Obligation Manager Standard; provided that the Loan Obligation Manager will
provide the Rating Agencies 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 Replacement Loan Obligation during the period covered by the Monthly
Report, which report may contain explanations by the Loan Obligation Manager as
to its determinations.

 

(c)                                  The Issuer (or the Loan Obligation Manager
on behalf of the Issuer) shall obtain a covenant from the Person making any
representation or warranty to the Issuer pursuant to Section 16.3(a) that such
Person shall repurchase the related Loan Obligation 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 Loan
Obligation 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 Loan Obligation,
discounted based on the percentage amount of any discount that was applied when
such Loan Obligation was purchased by the Issuer, plus (ii) accrued and unpaid
interest on such Loan Obligation, plus (iii) any unreimbursed advances, plus
(iv) accrued and unpaid interest on advances on the Loan Obligation, plus
(v) any reasonable costs and

 

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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).

 

Section 16.4                             Operating Advisor.

 

If the Issuer, as holder of an Acquired Participation 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 Loan Obligation Manager shall take such
actions as are reasonably necessary to appoint the Loan Obligation Manager to
such position.

 

Section 16.5                             Purchase Right; Holder of a Majority of
the Preferred Shares.

 

If the Issuer, as holder of an Acquired Participation, has the right pursuant to
the related Underlying Instruments to purchase any other interest in the same
Underlying Whole Loan as the Acquired Participation (an “Other Tranche”), the
Issuer shall, if directed by the Holder of a Majority of the Preferred Shares,
exercise such right, if the Loan Obligation Manager determines, in accordance
with the Loan Obligation Management Standard, that the exercise of the option
would be in the best interest of the Noteholders, but shall not exercise such
right if the Loan Obligation Manager determines otherwise.  The Loan Obligation
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 Other 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 Other 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 Other 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 Other 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 Loan Obligation
Manager in accordance with terms of the Underlying Instruments related to the
acquisition of such Other Tranche(s).  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 Other Tranche(s) and the
Trustee shall have no responsibility with regard to such Other Tranche(s). 
Notwithstanding anything to the contrary herein, any Other Tranche purchased
hereunder by the Issuer shall not be subject to the Grant to the Trustee under
the Granting Clauses.

 

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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 negligence in the performance of duties or by reason of negligent
disregard of obligations and duties 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

 

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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 charter 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, 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

 

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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
Loan Obligation Manager, the Noteholders and the Rating Agencies.

 

(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 Loan Obligation 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, subject to the satisfaction of
the Rating Agency Condition.  In the event that the Loan Obligation 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 and the Loan Obligation 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 Preferred
Shareholders.  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

 

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Agent by mailing written notice of such event by first class mail, postage
prepaid, to the Rating Agencies 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,
the Loan Obligation 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 the Rating Agencies have confirmed in
writing that the employment of such successor would not adversely affect the
rating on the Notes.

 

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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 COMMERCIAL REAL ESTATE NOTES 2015-FL1, LTD., as Issuer

 

 

 

 

 

 

 

By

/s/ Jarladth Travers

 

 

Name: Jarladth Travers

 

 

Title: Director

 

 

 

 

 

 

 

In the presence of:

 

 

 

 

 

 

 

/s/ Lasma Purs

 

Witness:

 

Name: Lasma Purs

 

Title: Corporate Assistant

 

 

 

 

 

 

 

ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1 LLC, as Co-Issuer

 

 

 

 

 

 

 

By:

/s/ Donald J. Puglisi

 

 

Name: Donald J. Puglisi

 

 

Title: Independent Manager

 

 

 

 

 

 

 

U.S. 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/ Vincent P. Paglio

 

 

Name: Vincent P. Paglio

 

 

Title: Vice President

 

 

 

 

--------------------------------------------------------------------------------

 

 

ARBOR REALTY SR, INC., as Advancing Agent

 

 

 

 

 

 

 

By:

/s/ Valerie Rubin

 

 

Name: Valerie Rubin

 

 

Title: Authorized Signatory

 

--------------------------------------------------------------------------------

 

Schedule A

 

Closing Date Loan Obligations

 

Part 1 — Loan Obligations Acquired on the Closing Date

 

Loan Obligation

 

Unpaid Principal Balance(1)

 

 

 

 

 

Standard Maryland - Seneca Bay

 

$

31,200,000.00

 

Emerald Place

 

$

28,750,000.00

 

420 5th Avenue

 

$

28,500,000.00

 

Standard Maryland - Cedar Creek

 

$

27,300,000.00

 

Water Ridge

 

$

23,380,000.00

 

511-521 Ninth Ave (Residential)

 

$

16,923,925.46

 

5 Times Square

 

$

15,000,000.00

 

Crystal Lake

 

$

12,900,000.00

 

Charter Landing

 

$

12,193,000.00

 

Cardinal Multifamily Portfolio

 

$

11,960,000.00

 

Sylvan & Mirlen

 

$

10,000,000.00

 

Creekwood

 

$

7,000,000.00

 

Forest Edge

 

$

5,500,000.00

 

Shoals

 

$

5,476,000.00

 

Pueblo South

 

$

4,750,000.00

 

Grand Oaks Apartments

 

$

4,575,000.00

 

Hollow Creek Communities

 

$

4,250,000.00

 

Total

 

$

249,657,925.46

 

 

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(1)  As of February 27, 2015

 

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Schedule B

 

LIBOR

 

The London interbank offered rate (“LIBOR”) shall be determined by the
Calculation Agent in accordance with the following provisions:

 

On the second London Banking Day preceding the first Business Day of an Interest
Accrual Period (each such day, a “LIBOR Determination Date”), LIBOR (other than
for the initial Interest Accrual Period) will equal the rate, as obtained by the
Calculation Agent, for deposits in U.S. Dollars for a period of one month, which
appears on the Reuters Page LIBOR01 (or such other page that may replace that
page on such service for the purpose of displaying comparable rates) as reported
by Bloomberg Financial Markets Commodities News as of 11:00 a.m., London time,
on the LIBOR Determination Date.  “London Banking Day” means any day on which
commercial banks are open for general business (including dealings in foreign
exchange and foreign currency deposits) in London, England.

 

If, on any LIBOR Determination Date, such rate does not appear on Reuters Screen
LIBOR01, the Calculation Agent will determine LIBOR on the basis of the rates at
which deposits in U.S. Dollars are offered by Reference Banks at approximately
11:00 a.m. (London time) on the LIBOR Determination Date to prime banks in the
London interbank market for a period of one month commencing on the LIBOR
Determination Date and in a representative amount of U.S.$1,000.  The
Calculation Agent will request the principal London office of each of the
Reference Banks to provide a quotation of its rate.  If at least two such
quotations are provided, the rate for that LIBOR Determination Date will be the
arithmetic mean of the quotations.  If fewer than two quotations are provided as
requested, the rate for that LIBOR Determination Date will be the arithmetic
mean of the rates quoted by major banks in New York City, selected by the
Calculation Agent, at approximately 11:00 a.m. (New York City time) on the LIBOR
Determination Date for loans in U.S. Dollars to leading European banks for a
period of one month commencing on the LIBOR Determination Date and in a
representative amount of U.S.$1,000.  As used herein, “Reference Banks” means
four major banks in the London interbank market selected by the Calculation
Agent and approved by the Loan Obligation Manager.

 

In respect of the initial Interest Accrual Period, LIBOR will be determined on
the second London Banking Day preceding the Closing Date.

 

In making the above calculations, (A) all percentages resulting from the
calculation (other than the calculation determined pursuant to clause (c) above)
will be rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point (0.00001%) and (B) all percentages determined pursuant to
clause (c) above will be rounded, if necessary, in accordance with the method
set forth in (A), but to the same degree of accuracy as the two rates used to
make the determination (except that such percentages will not be rounded to a
lower degree of accuracy than the nearest one thousandth of a percentage point
(0.001%)).

 

--------------------------------------------------------------------------------

 

Schedule C

 

List of Authorized Officers of Loan Obligation Manager

 

1.                                      Ivan Kaufman

 

2.                                      Paul Elenio

 

3.                                      Fred Weber

 

4.                                      Gene Kilgore

 

5.                                      Andrew Guziewicz

 

--------------------------------------------------------------------------------

 

EXHIBIT A-1

 

FORM OF CLASS A SENIOR SECURED FLOATING RATE NOTE DUE 2025
[REGULATION S] [RULE 144A] GLOBAL SECURITY

 

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED OR QUALIFIED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION, AND
NEITHER THE ISSUER NOR THE CO-ISSUER HAS BEEN REGISTERED UNDER THE UNITED STATES
INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “1940 ACT”).  THIS NOTE MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT: (A)(1) TO A
“QUALIFIED INSTITUTIONAL BUYER” (A “QIB”), AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT (“RULE 144A”) WHO IS A “QUALIFIED PURCHASER,” AS DEFINED IN
SECTION 2(a)(51) OF THE 1940 ACT AND THE RULES THEREUNDER (A “QUALIFIED
PURCHASER”), AND IS EITHER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QIB WHO IS A QUALIFIED PURCHASER, IN A PRINCIPAL AMOUNT OF NOT LESS THAN
U.S.$250,000 (AND INTEGRAL MULTIPLES OF U.S.$500 IN EXCESS THEREOF) FOR THE
PURCHASER AND FOR EACH SUCH ACCOUNT, IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A,
SUBJECT TO THE SATISFACTION OF CERTAIN CONDITIONS SPECIFIED IN THE INDENTURE; OR
(2) TO AN INSTITUTION THAT IS NOT A “U.S. PERSON” IN AN “OFFSHORE TRANSACTION,”
AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”), IN
ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S IN A
PRINCIPAL AMOUNT OF NOT LESS THAN U.S.$250,000 (AND INTEGRAL MULTIPLES OF
U.S.$500 IN EXCESS THEREOF), SUBJECT TO THE SATISFACTION OF CERTAIN CONDITIONS
SPECIFIED IN THE INDENTURE, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION. 
EACH PURCHASER OF A GLOBAL SECURITY WILL BE DEEMED TO HAVE MADE THE
REPRESENTATIONS AND AGREEMENTS SET FORTH IN SECTION 2.5 OF THE INDENTURE.  ANY
TRANSFER IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT, WILL BE
VOID AB INITIO, AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE TRANSFEREE,
NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE ISSUER, THE CO-ISSUER,
AS APPLICABLE, THE TRUSTEE OR ANY INTERMEDIARY.  IF AT ANY TIME THE ISSUER AND
THE CO-ISSUER, AS APPLICABLE, DETERMINE OR ARE NOTIFIED THAT THE HOLDER OF SUCH
BENEFICIAL INTEREST IN SUCH GLOBAL SECURITY WAS IN BREACH, AT THE TIME GIVEN, OF
ANY OF THE REPRESENTATIONS SET FORTH IN THE INDENTURE, THE TRUSTEE MAY CONSIDER
THE ACQUISITION OF SUCH INTEREST IN SUCH GLOBAL SECURITY VOID AND REQUIRE THAT
SUCH INTEREST HEREIN BE TRANSFERRED TO A PERSON DESIGNATED BY THE ISSUER AND THE
CO-ISSUER, AS APPLICABLE.

 

ANY TRANSFER, PLEDGE OR OTHER USE OF THIS NOTE FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO. HAS AN
INTEREST HEREIN, UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (“DTC”), NEW YORK, NEW YORK, TO THE CO-ISSUERS
OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR OF SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO.).

 

THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY.  THIS NOTE
MAY NOT BE EXCHANGED OR TRANSFERRED IN WHOLE OR IN PART FOR A NOTE REGISTERED IN
THE NAME OF ANY PERSON OTHER THAN THAT DEPOSITARY OR ITS NOMINEE EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN.  ACCORDINGLY, THE
OUTSTANDING PRINCIPAL OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN

 

A-1-1

--------------------------------------------------------------------------------

 

ON THE FACE HEREOF.  ANY PERSON ACQUIRING THIS NOTE MAY ASCERTAIN ITS CURRENT
PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE.

 

[AN INTEREST IN THIS NOTE MAY NOT BE HELD BY A PERSON THAT IS A U.S. PERSON (AS
DEFINED IN REGULATION S UNDER THE SECURITIES ACT) AT ANY TIME.  IN ADDITION, AN
INTEREST IN THIS NOTE MAY BE HELD ONLY THROUGH EUROCLEAR OR CLEARSTREAM,
LUXEMBOURG AT ANY TIME.](1)

 

--------------------------------------------------------------------------------

(1)         Regulation S Global Securities.

 

A-1-2

--------------------------------------------------------------------------------

 

ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1, LTD.
ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1 LLC

 

CLASS A SENIOR SECURED FLOATING RATE NOTE DUE 2025

 

No. [Reg. S][144A]-

Up to

CUSIP No.  [          ](2)[          ](3)

U.S.$165,750,000

ISIN: [          ](4) [          ](5)

 

 

Each of ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1, LTD., a Cayman
Islands exempted company with limited liability (the “Issuer”) and ARBOR REALTY
COMMERCIAL REAL ESTATE NOTES 2015-FL1 LLC, a Delaware limited liability company
(the “Co-Issuer”) for value received, hereby promises to pay to CEDE & CO. or
its registered assigns (a) upon presentation and surrender of this Note (except
as otherwise permitted by the Indenture referred to below), the principal sum of
up to ONE HUNDRED SIXTY FIVE MILLION SEVEN HUNDRED FIFTY THOUSAND United States
Dollars (U.S.$165,750,000), or such other principal sum as is equal to the
aggregate principal amount of the Class A Notes identified from time to time on
the records of the Trustee and Schedule A hereto as being represented by this
[Rule 144A] [Regulation S] Global Security, on the Payment Date occurring in
March 2025 (the “Stated Maturity Date”), to the extent not previously paid, in
accordance with the Indenture referred to below unless the unpaid principal of
this Note becomes due and payable at an earlier date by declaration of
acceleration, call for redemption or otherwise and (b) the Class A Interest
Distribution Amount allocable to this Note in accordance with the Indenture
payable initially on April 15, 2015, and thereafter monthly on the 15th day of
each calendar month (or if such day is not a Business Day, then on the next
succeeding Business Day) (each, a “Payment Date”).  Interest on the Class A
Notes shall accrue at the Class A Note Interest Rate and shall be computed on
the basis of the actual number of days in the related Interest Accrual Period
divided by 360.  The interest so payable on any Payment Date will, as provided
in the Indenture, be paid to the Person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the Record Date for
such interest, which shall be the fifteenth day (whether or not a Business Day)
prior to the applicable Payment Date.

 

The obligations of the Issuer and the Co-Issuer under this Note and the
Indenture are limited recourse obligations of the Issuer and non-recourse
obligations of the Co-Issuer payable solely from the Loan Obligations and other
Assets pledged by the Issuer as security for the Notes under the Indenture, and
in the event the Loan Obligations and such other Assets are insufficient to
satisfy such obligations, any claims of the Holders of the Notes shall be
extinguished, all in accordance with the Indenture.

 

The payment of interest on this Note is senior to the payments of the principal
of, and interest on, the Class B Notes, the Class C Notes and the Preferred
Shares.  So long as any Class A Notes are Outstanding, the Class B Notes, the
Class C Notes and the Preferred Shares will receive payments only in accordance
with the Priority of Payments.  The principal of this Note shall be due and
payable no later than the Stated Maturity Date unless the unpaid principal of
such Note becomes due and payable at an earlier date by declaration of
acceleration, call for redemption or otherwise.

 

Payments in respect of principal and interest and any other amounts due on any
Payment Date on this Note shall be payable by the Trustee or a Paying Agent,
subject to any laws or regulations applicable thereto, 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

 

--------------------------------------------------------------------------------

(2)         For Regulation S Global Security.

 

(3)         For Rule 144A Global Security.

 

(4)         For Regulation S Global Security.

 

(5)         For Rule 144A Global Security.

 

A-1-3

--------------------------------------------------------------------------------

 

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, as provided in the Indenture.

 

Interest will cease to accrue on this Note, or in the case of a partial
repayment, on such part, from the date of repayment or the Stated Maturity Date,
unless payment of principal is improperly withheld or unless a Default is
otherwise made with respect to such payments of principal.

 

Notwithstanding the foregoing, the final payment of interest and principal due
on this Note shall be made only upon presentation and surrender of this Note
(except as otherwise provided in the Indenture) at the Corporate Trust Office of
the Trustee or at the office of the Paying Agent.

 

The Holder of this Note shall be treated as the owner hereof for all purposes.

 

Except as specifically provided herein and in the Indenture, neither the Issuer
nor the Co-Issuer shall be required to make any payment with respect to any tax,
assessment or other governmental charge imposed by any government or any
political subdivision or taxing authority thereof or therein.

 

Unless the certificate of authentication hereon has been executed by the Trustee
or by the Authenticating Agent by the manual signature of one of their
Authorized Officers, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.

 

This Note is one of a duly authorized issue of Class A Senior Secured Floating
Rate Notes Due 2025, of the Issuer and the Co-Issuer (the “Class A Notes”),
limited in aggregate principal amount to U.S.$165,750,000 issued under an
indenture dated as of February 27, 2015 (the “Indenture”) by and among the
Issuer, the Co-Issuer, U.S. Bank National Association, as trustee (in such
capacity and together with any successor trustee permitted under the Indenture,
the “Trustee”), paying agent, calculation agent, transfer agent, custodial
securities intermediary, backup advancing agent and notes registrar and Arbor
Realty SR, Inc., as advancing agent.  Also authorized under the Indenture are
(a) up to U.S.$24,750,000 Class B Secured Floating Rate Notes Due 2025 (the
“Class B Notes”) and (b) up to U.S.$28,500,000 Class C Secured Floating Rate
Notes Due 2025 (the “Class C Notes” and, together with the Class A Notes and the
Class B Notes, the “Notes”).

 

Concurrently with the issuance of the Notes, the Issuer also will issue
preferred shares (the “Preferred Shares”), under the Issuer’s memorandum and
articles of association as part of its issued share capital.

 

Reference is hereby made to the Indenture and all indentures supplemental
thereto for a statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Issuer, the Co-Issuer, the Trustee, the
Advancing Agent, the Holders of the Notes and the Preferred Shares and the terms
upon which the Notes and the Preferred Shares are, and are to be, executed,
authenticated and delivered.

 

Payments of principal of the Class A Notes shall be payable in accordance with
Section 11.1(a) of the Indenture.

 

Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Indenture.

 

Pursuant to Section 9.1(a) of the Indenture, the Notes are subject to redemption
by the Issuer at the direction of the Loan Obligation Manager (such redemption,
a “Clean-up Call Redemption”), in whole but not in part, at a price equal to the
applicable Redemption Price, upon notice given in the manner provided in the
Indenture, on any Payment 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 the
funds available to be used for such redemption will be sufficient to pay the
Total Redemption Price.

 

Pursuant to Section 9.1(b) of the Indenture, 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 following the
occurrence of a Tax Event if the Tax Materiality Condition is satisfied at a
price equal

 

A-1-4

--------------------------------------------------------------------------------

 

to the applicable Redemption Prices; provided that that the funds available to
be used for such Tax Redemption will be sufficient to pay the Total Redemption
Price.

 

Pursuant to Section 9.1(c) of the Indenture, the Notes and the Preferred Shares
are subject to redemption, in whole but not in part, by the Issuer at a price
equal to the applicable Redemption Prices, on any Payment Date occurring 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 that the funds available to be used for such Optional
Redemption will be sufficient to pay the Total Redemption Price.

 

Notes for whose redemption and payment provision is made in accordance with the
Indenture shall cease to bear interest on the applicable Redemption Date (unless
the Issuer shall default in the payment of the Redemption Price and accrued
interest thereon).

 

Pursuant to Section 9.5 of the Indenture, if any of the Note Protection Tests
applicable to any Class of Notes is not satisfied as of the most recent
Measurement Date the Notes shall be redeemed in accordance with the Priority of
Payments set forth in the Indenture, only, and to the extent necessary, to cause
each of the Note Protection Tests to be satisfied.

 

If an Event of Default shall occur and be continuing, the Class A Notes may
become or be declared due and payable in the manner and with the effect provided
in the Indenture.

 

At any time after a declaration of acceleration of Maturity of the Notes has
been made, and before a judgment or decree for payment of the amounts due has
been obtained by the Trustee as provided in the Indenture, 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) or 5.1(i) of the
Indenture, by written notice to the Issuer, the Co-Issuer and the Trustee, may
rescind and annul such declaration and its consequences if certain conditions
set forth in the Indenture are satisfied.

 

The Indenture may be amended and supplemented under the circumstances, and in
accordance with the conditions, set forth therein.

 

The Notes are issuable in minimum denominations of U.S.$250,000 and integral
multiples of $500 in excess thereof.

 

The principal of each Note shall be payable on the Stated Maturity Date, unless
the unpaid principal of such Note becomes due and payable at an earlier date by
declaration of acceleration, call for redemption or otherwise.

 

The term “Issuer” as used in this Note includes any successor-in-interest to the
Issuer under the Indenture and the term “Co-Issuer” as used in this Note
includes any successor-in-interest to the Co-Issuer under the Indenture.

 

Each purchaser and any subsequent transferee of this Note or any interest herein
shall, by virtue of its purchase or other acquisition of this Note or any
interest herein, be deemed to have agreed to treat this Note as debt for U.S.
federal income tax purposes.

 

In connection with the purchase of this Note, the Holder and each beneficial
owner thereof agrees that: (A) none of the Co-Issuers, the Loan Obligation
Manager, the CLO Servicer, the Co-Placement Agents, the Trustee, the Collateral
Administrator or any of their respective affiliates is acting as a fiduciary or
financial or investment advisor for such Holder or beneficial owner; (B) such
Holder or beneficial 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 Co-Issuers, the Loan Obligation Manager, the CLO
Servicer, the Trustee, the Collateral Administrator, the Co-Placement Agents or
any of their respective affiliates other than any statements in the final
offering memorandum for such Notes, and such Holder or beneficial owner has read
and understands such final offering memorandum; (C) such Holder or beneficial
owner has consulted with its own legal, regulatory, tax,

 

A-1-5

--------------------------------------------------------------------------------

 

business, investment, financial and accounting advisors to the extent it has
deemed necessary and has made its own investment decisions (including decisions
regarding the suitability of any transaction pursuant to the Indenture) based
upon its own judgment and upon any advice from such advisors as it has deemed
necessary and not upon any view expressed by the Co-Issuers, the Loan Obligation
Manager, the CLO Servicer, the Trustee, the Collateral Administrator, the
Co-Placement Agents or any of their respective affiliates.

 

Each Holder, by its acquisition of an interest in the Notes, shall be deemed to
have represented to the Issuer, the Co-Issuer, the Loan Obligation Manager, the
CLO Servicer, the Co-Placement Agents 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, will not constitute or result in a non-exempt
violation of Similar Law.

 

Title to Notes shall pass by registration in the Register kept by the Trustee,
acting through its Corporate Trust Office.

 

No service charge shall be made to a Holder for any registration of transfer or
exchange of this Note, but the Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.

 

No right or remedy conferred herein or in the Indenture upon or reserved to the
Trustee or to the Holder hereof 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
thereunder or now or hereafter existing at law or in equity or otherwise.  The
assertion or employment of any right or remedy hereunder or under the Indenture,
or otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.

 

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.

 

THE HOLDER OF THIS NOTE AGREES NOT TO CAUSE THE FILING OF A PETITION IN
BANKRUPTCY AGAINST THE ISSUER, THE CO-ISSUER OR ANY PERMITTED SUBSIDIARY IN ANY
APPLICABLE OR RELEVANT JURISDICTION 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 THE INDENTURE.

 

AS PROVIDED IN THE INDENTURE, THE INDENTURE AND THE NOTES SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO THE CONFLICT OF
LAWS PRINCIPLES THEREOF.

 

A-1-6

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Co-Issuers have caused this Note to be duly executed.

 

Dated as of February 27, 2015

 

 

 

ARBOR REALTY COMMERCIAL REAL ESTATE
NOTES 2015-FL1, LTD., as Issuer

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

ARBOR REALTY COMMERCIAL REAL ESTATE
NOTES 2015-FL1 LLC, as Co-Issuer

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

A-1-7

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CERTIFICATE OF AUTHENTICATION

 

This is one of the Notes referred to in the within-mentioned Indenture.

 

 

 

U.S. BANK NATIONAL ASSOCIATION,
as Trustee

 

 

 

 

 

 

By:

 

 

 

Authenticating Agent

 

 

 

A-1-8

--------------------------------------------------------------------------------

 

ASSIGNMENT FORM

 

For value received

 

 

 

 

hereby sell, assign and transfer unto

 

 

 

 

 

 

 

 

Please insert social security or

 

 

other identifying number of assignee

 

 

 

 

 

Please print or type name

 

 

and address, including zip code,

 

 

of assignee:

 

 

 

 

 

 

 

 

 

 

 

the within Note and does hereby irrevocably constitute and appoint
                                                       Attorney to transfer the
Note on the books of the Issuer with full power of substitution in the premises.

 

Date:

Your Signature:

 

 

 

(Sign exactly as your name

 

 

appears on this Note)

 

A-1-9

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SCHEDULE A

 

EXCHANGES IN GLOBAL SECURITY

 

This Note shall be issued in the original principal balance of
U.S.$[·](6)[·](7) on the Closing Date. The following exchanges of a part of this
[Rule 144A][Regulation S] Global Security have been made:

 

Date of Exchange

 

Amount of
Decrease in
Principal Amount
of this
Global Security

 

Amount of
Increase in
Principal Amount
of this
Global Security

 

Principal Amount
of
this Global Security
following such
decrease (or
increase)

 

Signature of
authorized officer
of Trustee or
securities
Custodian

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

(6)  Rule 144A Global Security

 

(7)  Regulation S Global Security

 

A-1-10

--------------------------------------------------------------------------------

 

EXHIBIT A-2

 

FORM OF CLASS A SENIOR SECURED FLOATING RATE NOTE DUE 2025
DEFINITIVE NOTE

 

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED OR QUALIFIED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION, AND
NEITHER THE ISSUER NOR THE CO-ISSUER HAS BEEN REGISTERED UNDER THE UNITED STATES
INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “1940 ACT”). THIS NOTE MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT: (A)(X) EITHER (1) TO
A “QUALIFIED INSTITUTIONAL BUYER” (A “QIB”), AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT (“RULE 144A”) OR (2) AN INSTITUTION THAT IS AN “ACCREDITED
INVESTOR” (WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT) OR ANY ENTITY IN WHICH ALL OF THE EQUITY OWNERS ARE
SUCH “ACCREDITED INVESTORS”, AND (Y) WHO IS A “QUALIFIED PURCHASER” AS DEFINED
IN SECTION 2(a)(51) OF THE 1940 ACT AND THE RULES THEREUNDER (A “QUALIFIED
PURCHASER”) AND IS EITHER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QIB WHO IS A QUALIFIED PURCHASER, IN A PRINCIPAL AMOUNT OF NOT LESS THAN
U.S.$250,000 (AND INTEGRAL MULTIPLES OF U.S.$500 IN EXCESS THEREOF) FOR THE
PURCHASER AND FOR EACH SUCH ACCOUNT, IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A,
SUBJECT TO THE SATISFACTION OF CERTAIN CONDITIONS SPECIFIED IN THE INDENTURE, OR
(3) TO AN INSTITUTION THAT IS NOT A “U.S. PERSON” IN AN “OFFSHORE TRANSACTION,”
AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”), IN
ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S IN A
PRINCIPAL AMOUNT OF NOT LESS THAN U.S.$250,000 (AND INTEGRAL MULTIPLES OF
U.S.$500 IN EXCESS THEREOF), SUBJECT TO THE SATISFACTION OF CERTAIN CONDITIONS
SPECIFIED IN THE INDENTURE, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION.
EACH PURCHASER OF A DEFINITIVE NOTE WILL BE DEEMED TO HAVE MADE THE
REPRESENTATIONS AND AGREEMENTS SET FORTH IN SECTION 2.5 OF THE INDENTURE. ANY
TRANSFER IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT, WILL BE
VOID AB INITIO, AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE TRANSFEREE,
NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE ISSUER, THE CO-ISSUER,
AS APPLICABLE, THE TRUSTEE OR ANY INTERMEDIARY. IF AT ANY TIME, THE ISSUER AND
THE CO-ISSUER, AS APPLICABLE, DETERMINE OR ARE NOTIFIED THAT THE HOLDER OF SUCH
NOTE WAS IN BREACH, AT THE TIME GIVEN, OF ANY OF THE REPRESENTATIONS SET FORTH
IN THE INDENTURE, THE TRUSTEE MAY CONSIDER THE ACQUISITION OF THIS NOTE VOID AND
REQUIRE THAT THIS NOTE BE TRANSFERRED TO A PERSON DESIGNATED BY THE ISSUER AND
THE CO-ISSUER, AS APPLICABLE.

 

A-2-1

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ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1, LTD.
ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1 LLC

 

CLASS A SENIOR SECURED FLOATING RATE NOTE DUE 2025

 

No. IAI-

 

CUSIP No.  [          ]

U.S.$[              ]

ISIN: [          ]

 

 

Each of ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1, LTD., a Cayman
Islands exempted company with limited liability (the “Issuer”) and ARBOR REALTY
COMMERCIAL REAL ESTATE NOTES 2015-FL1 LLC, a Delaware limited liability company
(the “Co-Issuer”) for value received, hereby promises to pay to [              ]
or its registered assigns (a) upon presentation and surrender of this Note
(except as otherwise permitted by the Indenture referred to below), the
principal sum of [                    ] United States Dollars
(U.S.$[                    ]) on the Payment Date occurring in March 2025 (the
“Stated Maturity Date”), to the extent not previously paid, in accordance with
the Indenture referred to below unless the unpaid principal of this Note becomes
due and payable at an earlier date by declaration of acceleration, call for
redemption or otherwise and (b) the Class A Interest Distribution Amount
allocable to this Note in accordance with the Indenture payable initially on
April 15, 2015, and thereafter monthly on the 15th day of each calendar month
(or if such day is not a Business Day, then on the next succeeding Business Day)
(each, a “Payment Date”). Interest on the Class A Notes shall accrue at the
Class A Note Interest Rate and shall be computed on the basis of the actual
number of days in the related Interest Accrual Period divided by 360. The
interest so payable on any Payment Date will, as provided in the Indenture, be
paid to the Person in whose name this Note (or one or more predecessor Notes) is
registered at the close of business on the Record Date for such interest, which
shall be the fifteenth day (whether or not a Business Day) prior to the
applicable Payment Date.

 

The obligations of the Issuer and the Co-Issuer under this Note and the
Indenture are limited recourse obligations of the Issuer and non-recourse
obligations of the Co-Issuer payable solely from the Loan Obligations and other
Assets pledged by the Issuer as security for the Notes under the Indenture, and
in the event the Loan Obligations and such other Assets are insufficient to
satisfy such obligations, any claims of the Holders of the Notes shall be
extinguished, all in accordance with the Indenture.

 

The payment of interest on this Note is senior to the payments of the principal
of, and interest on, the Class B Notes, the Class C Notes and the Preferred
Shares. So long as any Class A Notes are Outstanding, the Class B Notes, the
Class C Notes and the Preferred Shares will receive payments only in accordance
with the Priority of Payments. The principal of this Note shall be due and
payable no later than the Stated Maturity Date unless the unpaid principal of
such Note becomes due and payable at an earlier date by declaration of
acceleration, call for redemption or otherwise.

 

Payments in respect of principal and interest and any other amounts due on any
Payment Date on this Note shall be payable by the Trustee or a Paying Agent,
subject to any laws or regulations applicable thereto, 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, as provided in
the Indenture.

 

Interest will cease to accrue on this Note, or in the case of a partial
repayment, on such part, from the date of repayment or the Stated Maturity Date,
unless payment of principal is improperly withheld or unless a Default is
otherwise made with respect to such payments of principal.

 

Notwithstanding the foregoing, the final payment of interest and principal due
on this Note shall be made only upon presentation and surrender of this Note
(except as otherwise provided in the Indenture) at the Corporate Trust Office of
the Trustee or at the office of the Paying Agent.

 

A-2-2

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The Holder of this Note shall be treated as the owner hereof for all purposes.

 

Except as specifically provided herein and in the Indenture, neither the Issuer
nor the Co-Issuer shall be required to make any payment with respect to any tax,
assessment or other governmental charge imposed by any government or any
political subdivision or taxing authority thereof or therein.

 

Unless the certificate of authentication hereon has been executed by the Trustee
or by the Authenticating Agent by the manual signature of one of their
Authorized Officers, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.

 

This Note is one of a duly authorized issue of Class A Senior Secured Floating
Rate Notes Due 2025, of the Issuer and the Co-Issuer (the “Class A Notes”),
limited in aggregate principal amount to U.S.$165,750,000 issued under an
indenture dated as of February 27, 2015 (the “Indenture”) by and among the
Issuer, the Co-Issuer, U.S. Bank National Association, as trustee (in such
capacity and together with any successor trustee permitted under the Indenture,
the “Trustee”), paying agent, calculation agent, transfer agent, custodial
securities intermediary, backup advancing agent and notes registrar and Arbor
Realty SR, Inc., as advancing agent. Also authorized under the Indenture are
(a) up to U.S.$24,750,000 Class B Secured Floating Rate Notes Due 2025 (the
“Class B Notes”) and (b) up to U.S.$28,500,000 Class C Secured Floating Rate
Notes Due 2025 (the “Class C Notes” and, together with the Class A Notes and the
Class B Notes, the “Notes”).

 

Concurrently with the issuance of the Notes, the Issuer also will issue
preferred shares (the “Preferred Shares”), under the Issuer’s memorandum and
articles of association as part of its issued share capital.

 

Reference is hereby made to the Indenture and all indentures supplemental
thereto for a statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Issuer, the Co-Issuer, the Trustee, the
Advancing Agent, the Holders of the Notes and the Preferred Shares and the terms
upon which the Notes and the Preferred Shares are, and are to be, executed,
authenticated and delivered.

 

Payments of principal of the Class A Notes shall be payable in accordance with
Section 11.1(a) of the Indenture.

 

Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Indenture.

 

Pursuant to Section 9.1(a) of the Indenture, the Notes are subject to redemption
by the Issuer at the direction of the Loan Obligation Manager (such redemption,
a “Clean-up Call Redemption”), in whole but not in part, at a price equal to the
applicable Redemption Price, upon notice given in the manner provided in the
Indenture, on any Payment 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 the
funds available to be used for such redemption will be sufficient to pay the
Total Redemption Price.

 

Pursuant to Section 9.1(b) of the Indenture, 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 following the
occurrence of a Tax Event if the Tax Materiality Condition is satisfied at a
price equal to the applicable Redemption Prices; provided that that the funds
available to be used for such Tax Redemption will be sufficient to pay the Total
Redemption Price.

 

Pursuant to Section 9.1(c) of the Indenture, the Notes and the Preferred Shares
are subject to redemption, in whole but not in part, by the Issuer at a price
equal to the applicable Redemption Prices, on any Payment Date occurring 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 that the funds available to be used for such Optional
Redemption will be sufficient to pay the Total Redemption Price.

 

A-2-3

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Notes for whose redemption and payment provision is made in accordance with the
Indenture shall cease to bear interest on the applicable Redemption Date (unless
the Issuer shall default in the payment of the Redemption Price and accrued
interest thereon).

 

Pursuant to Section 9.5 of the Indenture, if any of the Note Protection Tests
applicable to any Class of Notes is not satisfied as of the most recent
Measurement Date the Notes shall be redeemed in accordance with the Priority of
Payments set forth in the Indenture, only, and to the extent necessary, to cause
each of the Note Protection Tests to be satisfied.

 

If an Event of Default shall occur and be continuing, the Class A Notes may
become or be declared due and payable in the manner and with the effect provided
in the Indenture.

 

At any time after a declaration of acceleration of Maturity of the Notes has
been made, and before a judgment or decree for payment of the amounts due has
been obtained by the Trustee as provided in the Indenture, 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) or 5.1(i) of the
Indenture, by written notice to the Issuer, the Co-Issuer and the Trustee, may
rescind and annul such declaration and its consequences if certain conditions
set forth in the Indenture are satisfied.

 

The Indenture may be amended and supplemented under the circumstances, and in
accordance with the conditions, set forth therein.

 

The Notes are issuable in minimum denominations of U.S.$250,000 and integral
multiples of $500 in excess thereof.

 

The principal of each Note shall be payable on the Stated Maturity Date, unless
the unpaid principal of such Note becomes due and payable at an earlier date by
declaration of acceleration, call for redemption or otherwise.

 

The term “Issuer” as used in this Note includes any successor-in-interest to the
Issuer under the Indenture and the term “Co-Issuer” as used in this Note
includes any successor-in-interest to the Co-Issuer under the Indenture.

 

Each purchaser and any subsequent transferee of this Note or any interest herein
shall, by virtue of its purchase or other acquisition of this Note or any
interest herein, be deemed to have agreed to treat this Note as debt for U.S.
federal income tax purposes.

 

In connection with the purchase of this Note, the Holder and each beneficial
owner thereof agrees that: (A) none of the Co-Issuers, the Loan Obligation
Manager, the CLO Servicer, the Co-Placement Agents, the Trustee, the Collateral
Administrator or any of their respective affiliates is acting as a fiduciary or
financial or investment advisor for such Holder or beneficial owner; (B) such
Holder or beneficial 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 Co-Issuers, the Loan Obligation Manager, the CLO
Servicer, the Trustee, the Collateral Administrator, the Co-Placement Agents or
any of their respective affiliates other than any statements in the final
offering memorandum for such Notes, and such Holder or beneficial owner has read
and understands such final offering memorandum; (C) such Holder or beneficial
owner has consulted with its own legal, regulatory, tax, business, investment,
financial and accounting advisors to the extent it has deemed necessary and has
made its own investment decisions (including decisions regarding the suitability
of any transaction pursuant to the Indenture) based upon its own judgment and
upon any advice from such advisors as it has deemed necessary and not upon any
view expressed by the Co-Issuers, the Loan Obligation Manager, the CLO Servicer,
the Trustee, the Collateral Administrator, the Co-Placement Agents or any of
their respective affiliates.

 

Each Holder, by its acquisition of an interest in the Notes, shall be deemed to
have represented to the Issuer, the Co-Issuer, the Loan Obligation Manager, the
CLO Servicer, the Co-Placement Agents 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

 

A-2-4

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“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, will not constitute or result in a non-exempt violation of Similar
Law.

 

Title to Notes shall pass by registration in the Register kept by the Trustee,
acting through its Corporate Trust Office.

 

No service charge shall be made to a Holder for any registration of transfer or
exchange of this Note, but the Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.

 

No right or remedy conferred herein or in the Indenture upon or reserved to the
Trustee or to the Holder hereof 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
thereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder or under the Indenture,
or otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.

 

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.

 

THE HOLDER OF THIS NOTE AGREES NOT TO CAUSE THE FILING OF A PETITION IN
BANKRUPTCY AGAINST THE ISSUER, THE CO-ISSUER OR ANY PERMITTED SUBSIDIARY IN ANY
APPLICABLE OR RELEVANT JURISDICTION 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 THE INDENTURE.

 

AS PROVIDED IN THE INDENTURE, THE INDENTURE AND THE NOTES SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO THE CONFLICT OF
LAWS PRINCIPLES THEREOF.

 

A-2-5

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IN WITNESS WHEREOF, the Co-Issuers have caused this Note to be duly executed.

 

Dated as of February 27, 2015

 

 

 

ARBOR REALTY COMMERCIAL REAL ESTATE
NOTES 2015-FL1, LTD., as Issuer

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

ARBOR REALTY COMMERCIAL REAL ESTATE
NOTES 2015-FL1 LLC, as Co-Issuer

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

A-2-6

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CERTIFICATE OF AUTHENTICATION

 

This is one of the Notes referred to in the within-mentioned Indenture.

 

 

 

U.S. BANK NATIONAL ASSOCIATION,
as Trustee

 

 

 

 

 

By:

 

 

 

Authenticating Agent

 

A-2-7

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ASSIGNMENT FORM

 

For value received

 

 

 

hereby sell, assign and transfer unto

 

 

 

 

 

 

 

Please insert social security or

other identifying number of assignee

 

Please print or type name
and address, including zip code,
of assignee:

 

 

 

 

 

 

 

 

 

the within Note and does hereby irrevocably constitute and appoint
                                                       Attorney to transfer the
Note on the books of the Issuer with full power of substitution in the premises.

 

Date:

Your Signature:

 

 

 

(Sign exactly as your name
appears on this Note)

 

A-2-8

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EXHIBIT B-1

 

FORM OF CLASS B SECURED FLOATING RATE NOTE DUE 2025
[REGULATION S] [RULE 144A] GLOBAL SECURITY

 

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED OR QUALIFIED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION, AND
NEITHER THE ISSUER NOR THE CO-ISSUER HAS BEEN REGISTERED UNDER THE UNITED STATES
INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “1940 ACT”).  THIS NOTE MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT: (A)(1) TO A
“QUALIFIED INSTITUTIONAL BUYER” (A “QIB”), AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT (“RULE 144A”) WHO IS A “QUALIFIED PURCHASER,” AS DEFINED IN
SECTION 2(a)(51) OF THE 1940 ACT AND THE RULES THEREUNDER (A “QUALIFIED
PURCHASER”), AND IS EITHER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QIB WHO IS A QUALIFIED PURCHASER, IN A PRINCIPAL AMOUNT OF NOT LESS THAN
U.S.$250,000 (AND INTEGRAL MULTIPLES OF U.S.$500 IN EXCESS THEREOF) FOR THE
PURCHASER AND FOR EACH SUCH ACCOUNT, IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A,
SUBJECT TO THE SATISFACTION OF CERTAIN CONDITIONS SPECIFIED IN THE INDENTURE; OR
(2) TO AN INSTITUTION THAT IS NOT A “U.S. PERSON” IN AN “OFFSHORE TRANSACTION,”
AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”), IN
ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S IN A
PRINCIPAL AMOUNT OF NOT LESS THAN U.S.$250,000 (AND INTEGRAL MULTIPLES OF
U.S.$500 IN EXCESS THEREOF), SUBJECT TO THE SATISFACTION OF CERTAIN CONDITIONS
SPECIFIED IN THE INDENTURE, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION. 
EACH PURCHASER OF A GLOBAL SECURITY WILL BE DEEMED TO HAVE MADE THE
REPRESENTATIONS AND AGREEMENTS SET FORTH IN SECTION 2.5 OF THE INDENTURE.  ANY
TRANSFER IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT, WILL BE
VOID AB INITIO, AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE TRANSFEREE,
NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE ISSUER, THE CO-ISSUER,
AS APPLICABLE, THE TRUSTEE OR ANY INTERMEDIARY.  IF AT ANY TIME THE ISSUER AND
THE CO-ISSUER, AS APPLICABLE, DETERMINE OR ARE NOTIFIED THAT THE HOLDER OF SUCH
BENEFICIAL INTEREST IN SUCH GLOBAL SECURITY WAS IN BREACH, AT THE TIME GIVEN, OF
ANY OF THE REPRESENTATIONS SET FORTH IN THE INDENTURE, THE TRUSTEE MAY CONSIDER
THE ACQUISITION OF SUCH INTEREST IN SUCH GLOBAL SECURITY VOID AND REQUIRE THAT
SUCH INTEREST HEREIN BE TRANSFERRED TO A PERSON DESIGNATED BY THE ISSUER AND THE
CO-ISSUER, AS APPLICABLE.

 

ANY TRANSFER, PLEDGE OR OTHER USE OF THIS NOTE FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO. HAS AN
INTEREST HEREIN, UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (“DTC”), NEW YORK, NEW YORK, TO THE CO-ISSUERS
OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR OF SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO.).

 

THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY.  THIS NOTE
MAY NOT BE EXCHANGED OR TRANSFERRED IN WHOLE OR IN PART FOR A NOTE REGISTERED IN
THE NAME OF ANY PERSON OTHER THAN THAT DEPOSITARY OR ITS NOMINEE EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

B-1-1

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PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN.  ACCORDINGLY, THE
OUTSTANDING PRINCIPAL OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN
ON THE FACE HEREOF.  ANY PERSON ACQUIRING THIS NOTE MAY ASCERTAIN ITS CURRENT
PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE.

 

[AN INTEREST IN THIS NOTE MAY NOT BE HELD BY A PERSON THAT IS A U.S. PERSON (AS
DEFINED IN REGULATION S UNDER THE SECURITIES ACT) AT ANY TIME.  IN ADDITION, AN
INTEREST IN THIS NOTE MAY BE HELD ONLY THROUGH EUROCLEAR OR CLEARSTREAM,
LUXEMBOURG AT ANY TIME.](1)

 

--------------------------------------------------------------------------------

(1)         Regulation S Global Securities.

 

B-1-2

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ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1, LTD.
ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1 LLC

 

CLASS B SECURED FLOATING RATE NOTE DUE 2025

 

No. [Reg. S][144A] -

Up to

CUSIP No.  [          ](2)[          ](3)

U.S.$24,750,000

ISIN: [          ](4) [          ](5)

 

 

Each of ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1, LTD., a Cayman
Islands exempted company with limited liability (the “Issuer”) and ARBOR REALTY
COMMERCIAL REAL ESTATE NOTES 2015-FL1 LLC, a Delaware limited liability company
(the “Co-Issuer”) for value received, hereby promises to pay to CEDE & CO. or
its registered assigns (a) upon presentation and surrender of this Note (except
as otherwise permitted by the Indenture referred to below), the principal sum of
up to TWENTY FOUR MILLION SEVEN HUNDRED FIFTY THOUSAND United States Dollars
(U.S.$24,750,000), or such other principal sum as is equal to the aggregate
principal amount of the Class B Notes identified from time to time on the
records of the Trustee and Schedule A hereto as being represented by this
[Rule 144A] [Regulation S] Global Security, on the Payment Date occurring in
March 2025 (the “Stated Maturity Date”), to the extent not previously paid, in
accordance with the Indenture referred to below unless the unpaid principal of
this Note becomes due and payable at an earlier date by declaration of
acceleration, call for redemption or otherwise and (b) the Class B Interest
Distribution Amount allocable to this Note in accordance with the Indenture
payable initially on April 15, 2015, and thereafter monthly on the 15th day of
each calendar month (or if such day is not a Business Day, then on the next
succeeding Business Day) (each, a “Payment Date”).  Interest on the Class B
Notes shall accrue at the Class B Note Interest Rate and shall be computed on
the basis of the actual number of days in the related Interest Accrual Period
divided by 360.  The interest so payable on any Payment Date will, as provided
in the Indenture, be paid to the Person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the Record Date for
such interest, which shall be the fifteenth day (whether or not a Business Day)
prior to the applicable Payment Date.

 

The obligations of the Issuer and the Co-Issuer under this Note and the
Indenture are limited recourse obligations of the Issuer and non-recourse
obligations of the Co-Issuer payable solely from the Loan Obligations and other
Assets pledged by the Issuer as security for the Notes under the Indenture, and
in the event the Loan Obligations and such other Assets are insufficient to
satisfy such obligations, any claims of the Holders of the Notes shall be
extinguished, all in accordance with the Indenture.

 

The payment of interest on this Note is senior to the payments of the principal
of, and interest on, the Preferred Shares.  Except as set forth in the
Indenture, the payment of principal of this Note is subordinate to the payments
of principal of and interest on the Class A Notes and no payments of principal
on the Class B Notes will be made until the Class A Notes are paid in full.  The
principal of this Note shall be due and payable no later than the Stated
Maturity Date unless the unpaid principal of such Note becomes due and payable
at an earlier date by declaration of acceleration, call for redemption or
otherwise; provided, however, that, except as set forth in the Indenture, the
payment of principal of this Note may only occur after principal on the Class A
Notes has been paid in full and is subordinated to the payment on each Payment
Date of the principal and interest due and payable on the Class A Notes and
other amounts in accordance with the Priority of Payments, all in accordance
with the Indenture.

 

Payments in respect of principal and interest and any other amounts due on any
Payment Date on this Note shall be payable by the Trustee or a Paying Agent,
subject to any laws or regulations applicable thereto, by

 

--------------------------------------------------------------------------------

(2)         For Regulation S Global Security.

 

(3)         For Rule 144A Global Security.

 

(4)         For Regulation S Global Security.

 

(5)         For Rule 144A Global Security.

 

B-1-3

--------------------------------------------------------------------------------

 

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, as provided in the Indenture.

 

Interest will cease to accrue on this Note, or in the case of a partial
repayment, on such part, from the date of repayment or the Stated Maturity Date,
unless payment of principal is improperly withheld or unless a Default is
otherwise made with respect to such payments of principal.

 

Notwithstanding the foregoing, the final payment of interest and principal due
on this Note shall be made only upon presentation and surrender of this Note
(except as otherwise provided in the Indenture) at the Corporate Trust Office of
the Trustee or at the office of the Paying Agent.

 

The Holder of this Note shall be treated as the owner hereof for all purposes.

 

Except as specifically provided herein and in the Indenture, neither the Issuer
nor the Co-Issuer shall be required to make any payment with respect to any tax,
assessment or other governmental charge imposed by any government or any
political subdivision or taxing authority thereof or therein.

 

Unless the certificate of authentication hereon has been executed by the Trustee
or by the Authenticating Agent by the manual signature of one of their
Authorized Officers, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.

 

This Note is one of a duly authorized issue of Class B Secured Floating Rate
Notes Due 2025, of the Issuer and the Co-Issuer (the “Class B Notes”), limited
in aggregate principal amount to U.S.$24,750,000 issued under an indenture dated
as of February 27, 2015 (the “Indenture”) by and among the Issuer, the
Co-Issuer, U.S. Bank National Association, as trustee (in such capacity and
together with any successor trustee permitted under the Indenture, the
“Trustee”), paying agent, calculation agent, transfer agent, custodial
securities intermediary, backup advancing agent and notes registrar and Arbor
Realty SR, Inc., as advancing agent.  Also authorized under the Indenture are
(a) U.S. $ 165,750,000 Class A Senior Secured Floating Rate Notes Due 2025 (the
“Class A Notes”) and (b) U.S. $ 28,500,000 Class C Secured Floating Rate Notes
Due 2025 (the “Class C Notes” and, together with the Class A Notes and the
Class B Notes, the “Notes”).

 

Concurrently with the issuance of the Notes, the Issuer also will issue
preferred shares (the “Preferred Shares”), under the Issuer’s memorandum and
articles of association as part of its issued share capital.

 

Reference is hereby made to the Indenture and all indentures supplemental
thereto for a statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Issuer, the Co-Issuer, the Trustee, the
Advancing Agent, the Holders of the Notes and the Preferred Shares and the terms
upon which the Notes and the Preferred Shares are, and are to be, executed,
authenticated and delivered.

 

Payments of principal of the Class B Notes shall be payable in accordance with
Section 11.1(a) of the Indenture.

 

Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Indenture.

 

Pursuant to Section 9.1(a) of the Indenture, the Notes are subject to redemption
by the Issuer at the direction of the Loan Obligation Manager (such redemption,
a “Clean-up Call Redemption”), in whole but not in part, at a price equal to the
applicable Redemption Price, upon notice given in the manner provided in the
Indenture, on any Payment 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 the
funds available to be used for such redemption will be sufficient to pay the
Total Redemption Price.

 

B-1-4

--------------------------------------------------------------------------------

 

Pursuant to Section 9.1(b) of the Indenture, 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 following the
occurrence of a Tax Event if the Tax Materiality Condition is satisfied at a
price equal to the applicable Redemption Prices; provided that that the funds
available to be used for such Tax Redemption will be sufficient to pay the Total
Redemption Price.

 

Pursuant to Section 9.1(c) of the Indenture, the Notes and the Preferred Shares
are subject to redemption, in whole but not in part, by the Issuer at a price
equal to the applicable Redemption Prices, on any Payment Date occurring 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 that the funds available to be used for such Optional
Redemption will be sufficient to pay the Total Redemption Price.

 

Notes for whose redemption and payment provision is made in accordance with the
Indenture shall cease to bear interest on the applicable Redemption Date (unless
the Issuer shall default in the payment of the Redemption Price and accrued
interest thereon).

 

Pursuant to Section 9.5 of the Indenture, if any of the Note Protection Tests
applicable to any Class of Notes is not satisfied as of the most recent
Measurement Date the Notes shall be redeemed in accordance with the Priority of
Payments set forth in the Indenture, only, and to the extent necessary, to cause
each of the Note Protection Tests to be satisfied.

 

If an Event of Default shall occur and be continuing, the Class B Notes may
become or be declared due and payable in the manner and with the effect provided
in the Indenture.

 

At any time after a declaration of acceleration of Maturity of the Notes has
been made, and before a judgment or decree for payment of the amounts due has
been obtained by the Trustee as provided in the Indenture, 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) or 5.1(i) of the
Indenture, by written notice to the Issuer, the Co-Issuer and the Trustee, may
rescind and annul such declaration and its consequences if certain conditions
set forth in the Indenture are satisfied.

 

The Indenture may be amended and supplemented under the circumstances, and in
accordance with the conditions, set forth therein.

 

The Notes are issuable in minimum denominations of U.S.$250,000 and integral
multiples of $500 in excess thereof.

 

The principal of each Note shall be payable on the Stated Maturity Date, unless
the unpaid principal of such Note becomes due and payable at an earlier date by
declaration of acceleration, call for redemption or otherwise.

 

The term “Issuer” as used in this Note includes any successor-in-interest to the
Issuer under the Indenture and the term “Co-Issuer” as used in this Note
includes any successor-in-interest to the Co-Issuer under the Indenture.

 

Each purchaser and any subsequent transferee of this Note or any interest herein
shall, by virtue of its purchase or other acquisition of this Note or any
interest herein, be deemed to have agreed to treat this Note as debt for U.S.
federal income tax purposes.

 

In connection with the purchase of this Note, the Holder and each beneficial
owner thereof agrees that: (A) none of the Co-Issuers, the Loan Obligation
Manager, the CLO Servicer, the Co-Placement Agents, the Trustee, the Collateral
Administrator or any of their respective affiliates is acting as a fiduciary or
financial or investment advisor for such Holder or beneficial owner; (B) such
Holder or beneficial 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 Co-Issuers, the Loan Obligation Manager, the CLO
Servicer, the Trustee, the Collateral

 

B-1-5

--------------------------------------------------------------------------------

 

Administrator, the Co-Placement Agents or any of their respective affiliates
other than any statements in the final offering memorandum for such Notes, and
such Holder or beneficial owner has read and understands such final offering
memorandum; (C) such Holder or beneficial owner has consulted with its own
legal, regulatory, tax, business, investment, financial and accounting advisors
to the extent it has deemed necessary and has made its own investment decisions
(including decisions regarding the suitability of any transaction pursuant to
the Indenture) based upon its own judgment and upon any advice from such
advisors as it has deemed necessary and not upon any view expressed by the
Co-Issuers, the Loan Obligation Manager, the CLO Servicer, the Trustee, the
Collateral Administrator, the Co-Placement Agents or any of their respective
affiliates.

 

Each Holder, by its acquisition of an interest in the Notes, shall be deemed to
have represented to the Issuer, the Co-Issuer, the Loan Obligation Manager, the
CLO Servicer, the Co-Placement Agents 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, will not constitute or result in a non-exempt
violation of Similar Law.

 

Title to Notes shall pass by registration in the Register kept by the Trustee,
acting through its Corporate Trust Office.

 

No service charge shall be made to a Holder for any registration of transfer or
exchange of this Note, but the Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.

 

No right or remedy conferred herein or in the Indenture upon or reserved to the
Trustee or to the Holder hereof 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
thereunder or now or hereafter existing at law or in equity or otherwise.  The
assertion or employment of any right or remedy hereunder or under the Indenture,
or otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.

 

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.

 

THE HOLDER OF THIS NOTE AGREES NOT TO CAUSE THE FILING OF A PETITION IN
BANKRUPTCY AGAINST THE ISSUER, THE CO-ISSUER OR ANY PERMITTED SUBSIDIARY IN ANY
APPLICABLE OR RELEVANT JURISDICTION 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 THE INDENTURE.

 

AS PROVIDED IN THE INDENTURE, THE INDENTURE AND THE NOTES SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO THE CONFLICT OF
LAWS PRINCIPLES THEREOF.

 

B-1-6

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Co-Issuers have caused this Note to be duly executed.

 

Dated as of February 27, 2015

 

 

 

ARBOR REALTY COMMERCIAL REAL ESTATE
NOTES 2015-FL1, LTD., as Issuer

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

ARBOR REALTY COMMERCIAL REAL ESTATE
NOTES 2015-FL1 LLC, as Co-Issuer

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

B-1-7

--------------------------------------------------------------------------------

 

CERTIFICATE OF AUTHENTICATION

 

This is one of the Notes referred to in the within-mentioned Indenture.

 

 

 

U.S. BANK NATIONAL ASSOCIATION,

 

as Trustee

 

 

 

 

 

By:

 

 

 

Authenticating Agent

 

B-1-8

--------------------------------------------------------------------------------

 

ASSIGNMENT FORM

 

For value received

 

 

 

hereby sell, assign and transfer unto

 

 

 

 

 

 

 

Please insert social security or
other identifying number of assignee

 

Please print or type name
and address, including zip code,
of assignee:

 

 

 

 

 

 

 

 

 

the within Note and does hereby irrevocably constitute and appoint
                                                       Attorney to transfer the
Note on the books of the Issuer with full power of substitution in the premises.

 

Date:

Your Signature:

 

 

 

(Sign exactly as your name
appears on this Note)

 

B-1-9

--------------------------------------------------------------------------------

 

SCHEDULE A

 

This Note shall be issued in the original principal balance of
U.S.$[·](6)[·](7) on the Closing Date.  The following exchanges of a part of
this [Rule 144A][Regulation S] Global Security have been made:

 

Date of Exchange

 

Amount of
Decrease in
Principal Amount
of this
Global Security

 

Amount of
Increase in
Principal Amount
of this
Global Security

 

Principal Amount
of
this Global Security
following such
decrease (or
increase)

 

Signature of
authorized officer
of Trustee or
securities
Custodian

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

(6)         Rule 144A Global Security

(7)         Regulation S Global Security

 

B-1-10

--------------------------------------------------------------------------------

 

EXHIBIT B-2

 

FORM OF CLASS B SECURED FLOATING RATE NOTE DUE 2025
DEFINITIVE NOTE

 

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED OR QUALIFIED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION, AND
NEITHER THE ISSUER NOR THE CO-ISSUER HAS BEEN REGISTERED UNDER THE UNITED STATES
INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “1940 ACT”).  THIS NOTE MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT: (A)(X) EITHER (1) TO
A “QUALIFIED INSTITUTIONAL BUYER” (A “QIB”), AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT (“RULE 144A”) OR (2) AN INSTITUTION THAT IS AN “ACCREDITED
INVESTOR” (WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT) OR ANY ENTITY IN WHICH ALL OF THE EQUITY OWNERS ARE
SUCH “ACCREDITED INVESTORS”, AND (Y) WHO IS A “QUALIFIED PURCHASER” AS DEFINED
IN SECTION 2(a)(51) OF THE 1940 ACT AND THE RULES THEREUNDER (A “QUALIFIED
PURCHASER”) AND IS EITHER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QIB WHO IS A QUALIFIED PURCHASER, IN A PRINCIPAL AMOUNT OF NOT LESS THAN
U.S.$250,000 (AND INTEGRAL MULTIPLES OF U.S.$500 IN EXCESS THEREOF) FOR THE
PURCHASER AND FOR EACH SUCH ACCOUNT, IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A,
SUBJECT TO THE SATISFACTION OF CERTAIN CONDITIONS SPECIFIED IN THE INDENTURE; OR
(3) TO AN INSTITUTION THAT IS NOT A “U.S. PERSON” IN AN “OFFSHORE TRANSACTION,”
AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”), IN
ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S IN A
PRINCIPAL AMOUNT OF NOT LESS THAN U.S.$250,000 (AND INTEGRAL MULTIPLES OF
U.S.$500 IN EXCESS THEREOF), SUBJECT TO THE SATISFACTION OF CERTAIN CONDITIONS
SPECIFIED IN THE INDENTURE, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION. 
EACH PURCHASER OF A DEFINITIVE NOTE WILL BE DEEMED TO HAVE MADE THE
REPRESENTATIONS AND AGREEMENTS SET FORTH IN SECTION 2.5 OF THE INDENTURE.  ANY
TRANSFER IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT, WILL BE
VOID AB INITIO, AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE TRANSFEREE,
NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE ISSUER, THE CO-ISSUER,
AS APPLICABLE, THE TRUSTEE OR ANY INTERMEDIARY.  IF AT ANY TIME, THE ISSUER AND
THE CO-ISSUER, AS APPLICABLE, DETERMINE OR ARE NOTIFIED THAT THE HOLDER OF SUCH
NOTE WAS IN BREACH, AT THE TIME GIVEN, OF ANY OF THE REPRESENTATIONS SET FORTH
IN THE INDENTURE, THE TRUSTEE MAY CONSIDER THE ACQUISITION OF THIS NOTE VOID AND
REQUIRE THAT THIS NOTE BE TRANSFERRED TO A PERSON DESIGNATED BY THE ISSUER AND
THE CO-ISSUER, AS APPLICABLE.

 

B-2-1

--------------------------------------------------------------------------------

 

ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1, LTD.
ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1 LLC

 

CLASS B SECURED
FLOATING RATE NOTE DUE 2025

 

No. IAI -

 

CUSIP No.  [              ]

U.S.$[                      ]

ISIN: [              ]

 

 

Each of ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1, LTD., a Cayman
Islands exempted company with limited liability (the “Issuer”) and ARBOR REALTY
COMMERCIAL REAL ESTATE NOTES 2015-FL1 LLC, a Delaware limited liability company
(the “Co-Issuer”) for value received, hereby promises to pay to
[                      ] or its registered assigns (a) upon presentation and
surrender of this Note (except as otherwise permitted by the Indenture referred
to below), the principal sum of [                      ] United States Dollars
(U.S.$[                      ]) on the Payment Date occurring in March 2025 (the
“Stated Maturity Date”), to the extent not previously paid, in accordance with
the Indenture referred to below unless the unpaid principal of this Note becomes
due and payable at an earlier date by declaration of acceleration, call for
redemption or otherwise and (b) the Class B Interest Distribution Amount
allocable to this Note in accordance with the Indenture payable initially on
April 15, 2025, and thereafter monthly on the 15th day of each calendar month
(or if such day is not a Business Day, then on the next succeeding Business Day)
(each, a “Payment Date”).  Interest on the Class B Notes shall accrue at the
Class B Note Interest Rate and shall be computed on the basis of the actual
number of days in the related Interest Accrual Period divided by 360.  The
interest so payable on any Payment Date will, as provided in the Indenture, be
paid to the Person in whose name this Note (or one or more predecessor Notes) is
registered at the close of business on the Record Date for such interest, which
shall be the fifteenth day (whether or not a Business Day) prior to the
applicable Payment Date.

 

The obligations of the Issuer and the Co-Issuer under this Note and the
Indenture are limited recourse obligations of the Issuer and non-recourse
obligations of the Co-Issuer payable solely from the Loan Obligations and other
Assets pledged by the Issuer as security for the Notes under the Indenture, and
in the event the Loan Obligations and such other Assets are insufficient to
satisfy such obligations, any claims of the Holders of the Notes shall be
extinguished, all in accordance with the Indenture.

 

The payment of interest on this Note is senior to the payments of the principal
of, and interest on, the Preferred Shares.  Except as set forth in the
Indenture, the payment of principal of this Note is subordinate to the payments
of principal of and interest on the Class A Notes and no payments of principal
on the Class B Notes will be made until the Class A Notes are paid in full.  The
principal of this Note shall be due and payable no later than the Stated
Maturity Date unless the unpaid principal of such Note becomes due and payable
at an earlier date by declaration of acceleration, call for redemption or
otherwise; provided, however, that, except as set forth in the Indenture, the
payment of principal of this Note may only occur after principal on the Class A
Notes has been paid in full and is subordinated to the payment on each Payment
Date of the principal and interest due and payable on the Class A Notes and
other amounts in accordance with the Priority of Payments, all in accordance
with the Indenture.

 

Payments in respect of principal and interest and any other amounts due on any
Payment Date on this Note shall be payable by the Trustee or a Paying Agent,
subject to any laws or regulations applicable thereto, 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, as provided in
the Indenture.

 

Interest will cease to accrue on this Note, or in the case of a partial
repayment, on such part, from the date of repayment or the Stated Maturity Date,
unless payment of principal is improperly withheld or unless a Default is
otherwise made with respect to such payments of principal.

 

B-2-2

--------------------------------------------------------------------------------

 

Notwithstanding the foregoing, the final payment of interest and principal due
on this Note shall be made only upon presentation and surrender of this Note
(except as otherwise provided in the Indenture) at the Corporate Trust Office of
the Trustee or at the office of the Paying Agent.

 

The Holder of this Note shall be treated as the owner hereof for all purposes.

 

Except as specifically provided herein and in the Indenture, neither the Issuer
nor the Co-Issuer shall be required to make any payment with respect to any tax,
assessment or other governmental charge imposed by any government or any
political subdivision or taxing authority thereof or therein.

 

Unless the certificate of authentication hereon has been executed by the Trustee
or by the Authenticating Agent by the manual signature of one of their
Authorized Officers, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.

 

This Note is one of a duly authorized issue of Class B Secured Floating Rate
Notes Due 2025, of the Issuer and the Co-Issuer (the “Class B Notes”), limited
in aggregate principal amount to U.S.$24,750,000 issued under an indenture dated
as of February 27, 2015 (the “Indenture”) by and among the Issuer, the
Co-Issuer, U.S. Bank National Association, as trustee (in such capacity and
together with any successor trustee permitted under the Indenture, the
“Trustee”), paying agent, calculation agent, transfer agent, custodial
securities intermediary, backup advancing agent and notes registrar and Arbor
Realty SR, Inc., as advancing agent.  Also authorized under the Indenture are
(a) U.S. $ 165,750,000 Class A Senior Secured Floating Rate Notes Due 2025, (the
“Class A Notes”) and (b) U.S. $ 28,500,000 Class C Secured Floating Rate Notes
Due 2025 (the “Class C Notes” and, together with the Class A Notes and the
Class B Notes, the “Notes”).

 

Concurrently with the issuance of the Notes, the Issuer also will issue
preferred shares (the “Preferred Shares”), under the Issuer’s memorandum and
articles of association as part of its issued share capital.

 

Reference is hereby made to the Indenture and all indentures supplemental
thereto for a statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Issuer, the Co-Issuer, the Trustee, the
Advancing Agent, the Holders of the Notes and the Preferred Shares and the terms
upon which the Notes and the Preferred Shares are, and are to be, executed,
authenticated and delivered.

 

Payments of principal of the Class B Notes shall be payable in accordance with
Section 11.1(a) of the Indenture.

 

Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Indenture.

 

Pursuant to Section 9.1(a) of the Indenture, the Notes are subject to redemption
by the Issuer at the direction of the Loan Obligation Manager (such redemption,
a “Clean-up Call Redemption”), in whole but not in part, at a price equal to the
applicable Redemption Price, upon notice given in the manner provided in the
Indenture, on any Payment 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 the
funds available to be used for such redemption will be sufficient to pay the
Total Redemption Price.

 

Pursuant to Section 9.1(b) of the Indenture, 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 following the
occurrence of a Tax Event if the Tax Materiality Condition is satisfied at a
price equal to the applicable Redemption Prices; provided that that the funds
available to be used for such Tax Redemption will be sufficient to pay the Total
Redemption Price.

 

Pursuant to Section 9.1(c) of the Indenture, the Notes and the Preferred Shares
are subject to redemption, in whole but not in part, by the Issuer at a price
equal to the applicable Redemption Prices, on any Payment Date occurring after
the end of the Non-call Period at the direction of the Issuer (such redemption,
an

 

B-2-3

--------------------------------------------------------------------------------

 

“Optional Redemption”) by Act of a Majority of the Preferred Shares delivered to
the Trustee; provided that the funds available to be used for such Optional
Redemption will be sufficient to pay the Total Redemption Price.

 

Notes for whose redemption and payment provision is made in accordance with the
Indenture shall cease to bear interest on the applicable Redemption Date (unless
the Issuer shall default in the payment of the Redemption Price and accrued
interest thereon).

 

Pursuant to Section 9.5 of the Indenture, if any of the Note Protection Tests
applicable to any Class of Notes is not satisfied as of the most recent
Measurement Date the Notes shall be redeemed in accordance with the Priority of
Payments set forth in the Indenture, only, and to the extent necessary, to cause
each of the Note Protection Tests to be satisfied.

 

If an Event of Default shall occur and be continuing, the Class B Notes may
become or be declared due and payable in the manner and with the effect provided
in the Indenture.

 

At any time after a declaration of acceleration of Maturity of the Notes has
been made, and before a judgment or decree for payment of the amounts due has
been obtained by the Trustee as provided in the Indenture, 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) or 5.1(i) of the
Indenture, by written notice to the Issuer, the Co-Issuer and the Trustee, may
rescind and annul such declaration and its consequences if certain conditions
set forth in the Indenture are satisfied.

 

The Indenture may be amended and supplemented under the circumstances, and in
accordance with the conditions, set forth therein.

 

The Notes are issuable in minimum denominations of U.S.$250,000 and integral
multiples of $500 in excess thereof.

 

The principal of each Note shall be payable on the Stated Maturity Date, unless
the unpaid principal of such Note becomes due and payable at an earlier date by
declaration of acceleration, call for redemption or otherwise.

 

The term “Issuer” as used in this Note includes any successor-in-interest to the
Issuer under the Indenture and the term “Co-Issuer” as used in this Note
includes any successor-in-interest to the Co-Issuer under the Indenture.

 

Each purchaser and any subsequent transferee of this Note or any interest herein
shall, by virtue of its purchase or other acquisition of this Note or any
interest herein, be deemed to have agreed to treat this Note as debt for U.S.
federal income tax purposes.

 

In connection with the purchase of this Note, the Holder and each beneficial
owner thereof agrees that: (A) none of the Co-Issuers, the Loan Obligation
Manager, the CLO Servicer, the Co-Placement Agents, the Trustee, the Collateral
Administrator or any of their respective affiliates is acting as a fiduciary or
financial or investment advisor for such Holder or beneficial owner; (B) such
Holder or beneficial 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 Co-Issuers, the Loan Obligation Manager, the CLO
Servicer, the Trustee, the Collateral Administrator, the Co-Placement Agents or
any of their respective affiliates other than any statements in the final
offering memorandum for such Notes, and such Holder or beneficial owner has read
and understands such final offering memorandum; (C) such Holder or beneficial
owner has consulted with its own legal, regulatory, tax, business, investment,
financial and accounting advisors to the extent it has deemed necessary and has
made its own investment decisions (including decisions regarding the suitability
of any transaction pursuant to the Indenture) based upon its own judgment and
upon any advice from such advisors as it has deemed necessary and not upon any
view expressed by the Co-Issuers, the Loan Obligation Manager, the CLO Servicer,
the Trustee, the Collateral Administrator, the Co-Placement Agents or any of
their respective affiliates.

 

B-2-4

--------------------------------------------------------------------------------

 

Each Holder, by its acquisition of an interest in the Notes, shall be deemed to
have represented to the Issuer, the Co-Issuer, the Loan Obligation Manager, the
CLO Servicer, the Co-Placement Agents 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, will not constitute or result in a non-exempt
violation of Similar Law.

 

Title to Notes shall pass by registration in the Register kept by the Trustee,
acting through its Corporate Trust Office.

 

No service charge shall be made to a Holder for any registration of transfer or
exchange of this Note, but the Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.

 

No right or remedy conferred herein or in the Indenture upon or reserved to the
Trustee or to the Holder hereof 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
thereunder or now or hereafter existing at law or in equity or otherwise.  The
assertion or employment of any right or remedy hereunder or under the Indenture,
or otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.

 

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.

 

THE HOLDER OF THIS NOTE AGREES NOT TO CAUSE THE FILING OF A PETITION IN
BANKRUPTCY AGAINST THE ISSUER, THE CO-ISSUER OR ANY PERMITTED SUBSIDIARY IN ANY
APPLICABLE OR RELEVANT JURISDICTION 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 THE INDENTURE.

 

AS PROVIDED IN THE INDENTURE, THE INDENTURE AND THE NOTES SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO THE CONFLICT OF
LAWS PRINCIPLES THEREOF.

 

B-2-5

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Co-Issuers have caused this Note to be duly executed.

 

Dated as of February 27, 2015

 

 

 

 

ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1, LTD., as Issuer

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1 LLC, as Co-Issuer

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

B-2-6

--------------------------------------------------------------------------------

 

CERTIFICATE OF AUTHENTICATION

 

This is one of the Notes referred to in the within-mentioned Indenture.

 

 

U.S. BANK NATIONAL ASSOCIATION,
as Trustee

 

 

 

 

 

 

 

By:

 

 

 

Authenticating Agent

 

B-2-7

--------------------------------------------------------------------------------

 

ASSIGNMENT FORM

 

For value received

 

 

hereby sell, assign and transfer unto

 

 

 

 

 

 

 

Please insert social security or

 

other identifying number of assignee

 

 

 

Please print or type name

 

and address, including zip code,

 

of assignee:

 

 

 

 

 

 

 

 

 

 

 

 

 

the within Note and does hereby irrevocably constitute and appoint
                                                       Attorney to transfer the
Note on the books of the Issuer with full power of substitution in the premises.

 

Date:

Your Signature:

 

 

 

(Sign exactly as your name

 

 

appears on this Note)

 

B-2-8

--------------------------------------------------------------------------------

 

EXHIBIT C-1

 

FORM OF CLASS C SECURED FLOATING RATE NOTE DUE 2025
[REGULATION S] [RULE 144A] GLOBAL SECURITY

 

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED OR QUALIFIED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION, AND
NEITHER THE ISSUER NOR THE CO-ISSUER HAS BEEN REGISTERED UNDER THE UNITED STATES
INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “1940 ACT”).  THIS NOTE MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT: (A)(1) TO A
“QUALIFIED INSTITUTIONAL BUYER” (A “QIB”), AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT (“RULE 144A”) WHO IS A “QUALIFIED PURCHASER,” AS DEFINED IN
SECTION 2(a)(51) OF THE 1940 ACT AND THE RULES THEREUNDER (A “QUALIFIED
PURCHASER”), AND IS EITHER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QIB WHO IS A QUALIFIED PURCHASER, IN A PRINCIPAL AMOUNT OF NOT LESS THAN
U.S.$250,000 (AND INTEGRAL MULTIPLES OF U.S.$500 IN EXCESS THEREOF) FOR THE
PURCHASER AND FOR EACH SUCH ACCOUNT, IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A,
SUBJECT TO THE SATISFACTION OF CERTAIN CONDITIONS SPECIFIED IN THE INDENTURE; OR
(2) TO AN INSTITUTION THAT IS NOT A “U.S. PERSON” IN AN “OFFSHORE TRANSACTION,”
AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”), IN
ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S IN A
PRINCIPAL AMOUNT OF NOT LESS THAN U.S.$250,000 (AND INTEGRAL MULTIPLES OF
U.S.$500 IN EXCESS THEREOF), SUBJECT TO THE SATISFACTION OF CERTAIN CONDITIONS
SPECIFIED IN THE INDENTURE, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION. 
EACH PURCHASER OF A GLOBAL SECURITY WILL BE DEEMED TO HAVE MADE THE
REPRESENTATIONS AND AGREEMENTS SET FORTH IN SECTION 2.5 OF THE INDENTURE.  ANY
TRANSFER IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT, WILL BE
VOID AB INITIO, AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE TRANSFEREE,
NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE ISSUER, THE CO-ISSUER,
AS APPLICABLE, THE TRUSTEE OR ANY INTERMEDIARY.  IF AT ANY TIME THE ISSUER AND
THE CO-ISSUER, AS APPLICABLE, DETERMINE OR ARE NOTIFIED THAT THE HOLDER OF SUCH
BENEFICIAL INTEREST IN SUCH GLOBAL SECURITY WAS IN BREACH, AT THE TIME GIVEN, OF
ANY OF THE REPRESENTATIONS SET FORTH IN THE INDENTURE, THE TRUSTEE MAY CONSIDER
THE ACQUISITION OF SUCH INTEREST IN SUCH GLOBAL SECURITY VOID AND REQUIRE THAT
SUCH INTEREST HEREIN BE TRANSFERRED TO A PERSON DESIGNATED BY THE ISSUER AND THE
CO-ISSUER, AS APPLICABLE.

 

ANY TRANSFER, PLEDGE OR OTHER USE OF THIS NOTE FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO. HAS AN
INTEREST HEREIN, UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (“DTC”), NEW YORK, NEW YORK, TO THE CO-ISSUERS
OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR OF SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO.).

 

THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY.  THIS NOTE
MAY NOT BE EXCHANGED OR TRANSFERRED IN WHOLE OR IN PART FOR A NOTE REGISTERED IN
THE NAME OF ANY PERSON OTHER THAN THAT DEPOSITARY OR ITS NOMINEE EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

C-1-1

--------------------------------------------------------------------------------

 

PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN.  ACCORDINGLY, THE
OUTSTANDING PRINCIPAL OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN
ON THE FACE HEREOF.  ANY PERSON ACQUIRING THIS NOTE MAY ASCERTAIN ITS CURRENT
PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE.

 

[AN INTEREST IN THIS NOTE MAY NOT BE HELD BY A PERSON THAT IS A U.S. PERSON (AS
DEFINED IN REGULATION S UNDER THE SECURITIES ACT) AT ANY TIME.  IN ADDITION, AN
INTEREST IN THIS NOTE MAY BE HELD ONLY THROUGH EUROCLEAR OR CLEARSTREAM,
LUXEMBOURG AT ANY TIME.](1)

 

--------------------------------------------------------------------------------

(1)         Regulation S Global Securities.

 

C-1-2

--------------------------------------------------------------------------------

 

ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1, LTD.
ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1 LLC

 

CLASS C SECURED FLOATING RATE NOTE DUE 2025

 

No. [Reg. S][144A] -

Up to

CUSIP No.  [          ](2)[          ](3)

U.S.$28,500,000

ISIN: [          ](4)[          ](5)

 

 

 

Each of ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1, LTD., a Cayman
Islands exempted company with limited liability (the “Issuer”) and ARBOR REALTY
COMMERCIAL REAL ESTATE NOTES 2015-FL1 LLC, a Delaware limited liability company
(the “Co-Issuer”) for value received, hereby promises to pay to CEDE & CO. or
its registered assigns (a) upon presentation and surrender of this Note (except
as otherwise permitted by the Indenture referred to below), the principal sum of
up to TWENTY EIGHT MILLION FIVE HUNDRED THOUSAND United States Dollars
(U.S.$28,500,000), or such other principal sum as is equal to the aggregate
principal amount of the Class C Notes identified from time to time on the
records of the Trustee and Schedule A hereto as being represented by this
[Rule 144A] [Regulation S] Global Security, on the Payment Date occurring in
March 2025 (the “Stated Maturity Date”), to the extent not previously paid, in
accordance with the Indenture referred to below unless the unpaid principal of
this Note becomes due and payable at an earlier date by declaration of
acceleration, call for redemption or otherwise and (b) the Class C Interest
Distribution Amount allocable to this Note in accordance with the Indenture
payable initially on April 15, 2015, and thereafter monthly on the 15th day of
each calendar month (or if such day is not a Business Day, then on the next
succeeding Business Day) (each, a “Payment Date”).  Interest on the Class C
Notes shall accrue at the Class C Note Interest Rate and shall be computed on
the basis of the actual number of days in the related Interest Accrual Period
divided by 360.  The interest so payable on any Payment Date will, as provided
in the Indenture, be paid to the Person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the Record Date for
such interest, which shall be the fifteenth day (whether or not a Business Day)
prior to the applicable Payment Date.

 

The obligations of the Issuer and the Co-Issuer under this Note and the
Indenture are limited recourse obligations of the Issuer and non-recourse
obligations of the Co-Issuer payable solely from the Loan Obligations and other
Assets pledged by the Issuer as security for the Notes under the Indenture, and
in the event the Loan Obligations and such other Assets are insufficient to
satisfy such obligations, any claims of the Holders of the Notes shall be
extinguished, all in accordance with the Indenture.

 

The payment of interest on this Note is senior to the payments of the principal
of, and interest on, the Preferred Shares.  Except as set forth in the
Indenture, the payment of principal of this Note is subordinate to the payments
of principal of and interest on the Class A Notes and the Class B Notes and no
payments of principal on the Class C Notes will be made until the Class A Notes
and the Class B Notes are paid in full.  The principal of this Note shall be due
and payable no later than the Stated Maturity Date unless the unpaid principal
of such Note becomes due and payable at an earlier date by declaration of
acceleration, call for redemption or otherwise; provided, however, that, except
as set forth in the Indenture, the payment of principal of this Note may only
occur after principal on the Class A Notes and the Class B Notes has been paid
in full and is subordinated to the payment on each Payment Date of the principal
and interest due and payable on the Class A Notes and the Class B Notes and
other amounts in accordance with the Priority of Payments, all in accordance
with the Indenture.

 

--------------------------------------------------------------------------------

(2)         For Regulation S Global Security.

(3)         For Rule 144A Global Security.

(4)         For Regulation S Global Security.

(5)         For Rule 144A Global Security.

 

C-1-3

--------------------------------------------------------------------------------

 

Payments in respect of principal and interest and any other amounts due on any
Payment Date on this Note shall be payable by the Trustee or a Paying Agent,
subject to any laws or regulations applicable thereto, 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, as provided in
the Indenture.

 

Interest will cease to accrue on this Note, or in the case of a partial
repayment, on such part, from the date of repayment or the Stated Maturity Date,
unless payment of principal is improperly withheld or unless a Default is
otherwise made with respect to such payments of principal.

 

Notwithstanding the foregoing, the final payment of interest and principal due
on this Note shall be made only upon presentation and surrender of this Note
(except as otherwise provided in the Indenture) at the Corporate Trust Office of
the Trustee or at the office of the Paying Agent.

 

The Holder of this Note shall be treated as the owner hereof for all purposes.

 

Except as specifically provided herein and in the Indenture, neither the Issuer
nor the Co-Issuer shall be required to make any payment with respect to any tax,
assessment or other governmental charge imposed by any government or any
political subdivision or taxing authority thereof or therein.

 

Unless the certificate of authentication hereon has been executed by the Trustee
or by the Authenticating Agent by the manual signature of one of their
Authorized Officers, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.

 

This Note is one of a duly authorized issue of Class C Secured Floating Rate
Notes Due 2025, of the Issuer and the Co-Issuer (the “Class C Notes”), limited
in aggregate principal amount to U.S.$28,500,000 issued under an indenture dated
as of February 27, 2015 (the “Indenture”) by and among the Issuer, the
Co-Issuer, U.S. Bank National Association, as trustee (in such capacity and
together with any successor trustee permitted under the Indenture, the
“Trustee”), paying agent, calculation agent, transfer agent, custodial
securities intermediary, backup advancing agent and notes registrar and Arbor
Realty SR, Inc., as advancing agent.  Also authorized under the Indenture are
(a) U.S. $ 165,750,000 Class A Senior Secured Floating Rate Notes Due 2025, (the
“Class A Notes”) and (b) U.S. $ 24,750,000 Class B Secured Floating Rate Notes
Due 2025, (the “Class B Notes” and, together with the Class A Notes and the
Class C Notes, the “Notes”).

 

Concurrently with the issuance of the Notes, the Issuer also will issue
preferred shares (the “Preferred Shares”), under the Issuer’s memorandum and
articles of association as part of its issued share capital.

 

Reference is hereby made to the Indenture and all indentures supplemental
thereto for a statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Issuer, the Co-Issuer, the Trustee, the
Advancing Agent, the Holders of the Notes and the Preferred Shares and the terms
upon which the Notes and the Preferred Shares are, and are to be, executed,
authenticated and delivered.

 

Payments of principal of the Class C Notes shall be payable in accordance with
Section 11.1(a) of the Indenture.

 

Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Indenture.

 

Pursuant to Section 9.1(a) of the Indenture, the Notes are subject to redemption
by the Issuer at the direction of the Loan Obligation Manager (such redemption,
a “Clean-up Call Redemption”), in whole but not in part, at a price equal to the
applicable Redemption Price, upon notice given in the manner provided in the
Indenture, on any Payment 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 the
funds available to be used for such redemption will be sufficient to pay the
Total Redemption Price.

 

C-1-4

--------------------------------------------------------------------------------

 

Pursuant to Section 9.1(b) of the Indenture, 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 following the
occurrence of a Tax Event if the Tax Materiality Condition is satisfied at a
price equal to the applicable Redemption Prices; provided that that the funds
available to be used for such Tax Redemption will be sufficient to pay the Total
Redemption Price.

 

Pursuant to Section 9.1(c) of the Indenture, the Notes and the Preferred Shares
are subject to redemption, in whole but not in part, by the Issuer at a price
equal to the applicable Redemption Prices, on any Payment Date occurring 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 that the funds available to be used for such Optional
Redemption will be sufficient to pay the Total Redemption Price.

 

Notes for whose redemption and payment provision is made in accordance with the
Indenture shall cease to bear interest on the applicable Redemption Date (unless
the Issuer shall default in the payment of the Redemption Price and accrued
interest thereon).

 

Pursuant to Section 9.5 of the Indenture, if any of the Note Protection Tests
applicable to any Class of Notes is not satisfied as of the most recent
Measurement Date the Notes shall be redeemed in accordance with the Priority of
Payments set forth in the Indenture, only, and to the extent necessary, to cause
each of the Note Protection Tests to be satisfied.

 

If an Event of Default shall occur and be continuing, the Class C Notes may
become or be declared due and payable in the manner and with the effect provided
in the Indenture.

 

At any time after a declaration of acceleration of Maturity of the Notes has
been made, and before a judgment or decree for payment of the amounts due has
been obtained by the Trustee as provided in the Indenture, 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) or 5.1(i) of the
Indenture, by written notice to the Issuer, the Co-Issuer and the Trustee, may
rescind and annul such declaration and its consequences if certain conditions
set forth in the Indenture are satisfied.

 

The Indenture may be amended and supplemented under the circumstances, and in
accordance with the conditions, set forth therein.

 

The Notes are issuable in minimum denominations of U.S.$250,000 and integral
multiples of $500 in excess thereof.

 

The principal of each Note shall be payable on the Stated Maturity Date, unless
the unpaid principal of such Note becomes due and payable at an earlier date by
declaration of acceleration, call for redemption or otherwise.

 

The term “Issuer” as used in this Note includes any successor-in-interest to the
Issuer under the Indenture and the term “Co-Issuer” as used in this Note
includes any successor-in-interest to the Co-Issuer under the Indenture.

 

Each purchaser and any subsequent transferee of this Note or any interest herein
shall, by virtue of its purchase or other acquisition of this Note or any
interest herein, be deemed to have agreed to treat this Note as debt for U.S.
federal income tax purposes.

 

In connection with the purchase of this Note, the Holder and each beneficial
owner thereof agrees that: (A) none of the Co-Issuers, the Loan Obligation
Manager, the CLO Servicer, the Co-Placement Agents, the Trustee, the Collateral
Administrator or any of their respective affiliates is acting as a fiduciary or
financial or investment advisor for such Holder or beneficial owner; (B) such
Holder or beneficial 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 Co-Issuers, the Loan Obligation Manager, the CLO
Servicer, the Trustee, the Collateral

 

C-1-5

--------------------------------------------------------------------------------

 

Administrator, the Co-Placement Agents or any of their respective affiliates
other than any statements in the final offering memorandum for such Notes, and
such Holder or beneficial owner has read and understands such final offering
memorandum; (C) such Holder or beneficial owner has consulted with its own
legal, regulatory, tax, business, investment, financial and accounting advisors
to the extent it has deemed necessary and has made its own investment decisions
(including decisions regarding the suitability of any transaction pursuant to
the Indenture) based upon its own judgment and upon any advice from such
advisors as it has deemed necessary and not upon any view expressed by the
Co-Issuers, the Loan Obligation Manager, the CLO Servicer, the Trustee, the
Collateral Administrator, the Co-Placement Agents or any of their respective
affiliates.

 

Each Holder, by its acquisition of an interest in the Notes, shall be deemed to
have represented to the Issuer, the Co-Issuer, the Loan Obligation Manager, the
CLO Servicer, the Co-Placement Agents 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, will not constitute or result in a non-exempt
violation of Similar Law.

 

Title to Notes shall pass by registration in the Register kept by the Trustee,
acting through its Corporate Trust Office.

 

No service charge shall be made to a Holder for any registration of transfer or
exchange of this Note, but the Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.

 

No right or remedy conferred herein or in the Indenture upon or reserved to the
Trustee or to the Holder hereof 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
thereunder or now or hereafter existing at law or in equity or otherwise.  The
assertion or employment of any right or remedy hereunder or under the Indenture,
or otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.

 

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.

 

THE HOLDER OF THIS NOTE AGREES NOT TO CAUSE THE FILING OF A PETITION IN
BANKRUPTCY AGAINST THE ISSUER, THE CO-ISSUER OR ANY PERMITTED SUBSIDIARY IN ANY
APPLICABLE OR RELEVANT JURISDICTION 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 THE INDENTURE.

 

AS PROVIDED IN THE INDENTURE, THE INDENTURE AND THE NOTES SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO THE CONFLICT OF
LAWS PRINCIPLES THEREOF.

 

C-1-6

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Co-Issuers have caused this Note to be duly executed.

 

Dated as of February 27, 2015

 

 

 

 

ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1, LTD., as Issuer

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1 LLC, as Co-Issuer

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

C-1-7

--------------------------------------------------------------------------------

 

CERTIFICATE OF AUTHENTICATION

 

This is one of the Notes referred to in the within-mentioned Indenture.

 

 

U.S. BANK NATIONAL ASSOCIATION,

 

as Trustee

 

 

 

 

 

 

By:

 

 

 

Authenticating Agent

 

C-1-8

--------------------------------------------------------------------------------

 

ASSIGNMENT FORM

 

For value received

 

 

hereby sell, assign and transfer unto

 

 

 

 

 

 

 

Please insert social security or

 

other identifying number of assignee

 

 

 

Please print or type name

 

and address, including zip code,

 

of assignee:

 

 

 

 

 

 

 

 

 

 

 

 

 

the within Note and does hereby irrevocably constitute and appoint
                                                       Attorney to transfer the
Note on the books of the Issuer with full power of substitution in the premises.

 

Date:

Your Signature:

 

 

 

(Sign exactly as your name

 

 

appears on this Note)

 

C-1-9

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SCHEDULE A

 

This Note shall be issued in the original principal balance of
U.S.$[·](6)[·](7) on the Closing Date.  The following exchanges of a part of
this [Rule 144A][Regulation S] Global Security have been made:

 

Date of Exchange

 

Amount of
Decrease in
Principal Amount
of this
Global Security

 

Amount of
Increase in
Principal Amount
of this
Global Security

 

Principal Amount
of
this Global Security
following such
decrease (or
increase)

 

Signature of
authorized officer
of Trustee or
securities
Custodian

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

(6)         Rule 144A Global Security

(7)         Regulation S Global Security

 

C-1-10

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EXHIBIT C-2

 

FORM OF CLASS C SECURED FLOATING RATE NOTE DUE 2025
DEFINITIVE NOTE

 

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED OR QUALIFIED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION, AND
NEITHER THE ISSUER NOR THE CO-ISSUER HAS BEEN REGISTERED UNDER THE UNITED STATES
INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “1940 ACT”).  THIS NOTE MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT: (A)(X) EITHER (1) TO
A “QUALIFIED INSTITUTIONAL BUYER” (A “QIB”), AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT (“RULE 144A”) OR (2) AN INSTITUTION THAT IS AN “ACCREDITED
INVESTOR” (WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT) OR ANY ENTITY IN WHICH ALL OF THE EQUITY OWNERS ARE
SUCH “ACCREDITED INVESTORS”, AND (Y) WHO IS A “QUALIFIED PURCHASER” AS DEFINED
IN SECTION 2(a)(51) OF THE 1940 ACT AND THE RULES THEREUNDER (A “QUALIFIED
PURCHASER”) AND IS EITHER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QIB WHO IS A QUALIFIED PURCHASER, IN A PRINCIPAL AMOUNT OF NOT LESS THAN
U.S.$250,000 (AND INTEGRAL MULTIPLES OF U.S.$500 IN EXCESS THEREOF) FOR THE
PURCHASER AND FOR EACH SUCH ACCOUNT, IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A,
SUBJECT TO THE SATISFACTION OF CERTAIN CONDITIONS SPECIFIED IN THE INDENTURE; OR
(3) TO AN INSTITUTION THAT IS NOT A “U.S. PERSON” IN AN “OFFSHORE TRANSACTION,”
AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”), IN
ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S IN A
PRINCIPAL AMOUNT OF NOT LESS THAN U.S.$250,000 (AND INTEGRAL MULTIPLES OF
U.S.$500 IN EXCESS THEREOF), SUBJECT TO THE SATISFACTION OF CERTAIN CONDITIONS
SPECIFIED IN THE INDENTURE, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION. 
EACH PURCHASER OF A DEFINITIVE NOTE WILL BE DEEMED TO HAVE MADE THE
REPRESENTATIONS AND AGREEMENTS SET FORTH IN SECTION 2.5 OF THE INDENTURE.  ANY
TRANSFER IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT, WILL BE
VOID AB INITIO, AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE TRANSFEREE,
NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE ISSUER, THE CO-ISSUER,
AS APPLICABLE, THE TRUSTEE OR ANY INTERMEDIARY.  IF AT ANY TIME, THE ISSUER AND
THE CO-ISSUER, AS APPLICABLE, DETERMINE OR ARE NOTIFIED THAT THE HOLDER OF SUCH
NOTE WAS IN BREACH, AT THE TIME GIVEN, OF ANY OF THE REPRESENTATIONS SET FORTH
IN THE INDENTURE, THE TRUSTEE MAY CONSIDER THE ACQUISITION OF THIS NOTE VOID AND
REQUIRE THAT THIS NOTE BE TRANSFERRED TO A PERSON DESIGNATED BY THE ISSUER AND
THE CO-ISSUER, AS APPLICABLE.

 

C-2-1

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ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1, LTD.
ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1 LLC

 

CLASS C SECURED
FLOATING RATE NOTE DUE 2025

 

No. IAI -       

CUSIP No.  [          ]

U.S.$[                      ]

ISIN:  [          ]

 

Each of ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1, LTD., a Cayman
Islands exempted company with limited liability (the “Issuer”) and ARBOR REALTY
COMMERCIAL REAL ESTATE NOTES 2015-FL1 LLC, a Delaware limited liability company
(the “Co-Issuer”) for value received, hereby promises to pay to
[                      ] or its registered assigns (a) upon presentation and
surrender of this Note (except as otherwise permitted by the Indenture referred
to below), the principal sum of [                      ] United States Dollars
(U.S.$[                      ]) on the Payment Date occurring in March 2025 (the
“Stated Maturity Date”), to the extent not previously paid, in accordance with
the Indenture referred to below unless the unpaid principal of this Note becomes
due and payable at an earlier date by declaration of acceleration, call for
redemption or otherwise and (b) the Class C Interest Distribution Amount
allocable to this Note in accordance with the Indenture payable initially on
April 15, 2015, and thereafter monthly on the 15th day of each calendar month
(or if such day is not a Business Day, then on the next succeeding Business Day)
(each, a “Payment Date”).  Interest on the Class C Notes shall accrue at the
Class C Note Interest Rate and shall be computed on the basis of the actual
number of days in the related Interest Accrual Period divided by 360.  The
interest so payable on any Payment Date will, as provided in the Indenture, be
paid to the Person in whose name this Note (or one or more predecessor Notes) is
registered at the close of business on the Record Date for such interest, which
shall be the fifteenth day (whether or not a Business Day) prior to the
applicable Payment Date.

 

The obligations of the Issuer and the Co-Issuer under this Note and the
Indenture are limited recourse obligations of the Issuer and non-recourse
obligations of the Co-Issuer payable solely from the Loan Obligations and other
Assets pledged by the Issuer as security for the Notes under the Indenture, and
in the event the Loan Obligations and such other Assets are insufficient to
satisfy such obligations, any claims of the Holders of the Notes shall be
extinguished, all in accordance with the Indenture.

 

The payment of interest on this Note is senior to the payments of the principal
of, and interest on, the Preferred Shares.  Except as set forth in the
Indenture, the payment of principal of this Note is subordinate to the payments
of principal of and interest on the Class A Notes and the Class B Notes and no
payments of principal on the Class C Notes will be made until the Class A Notes
and the Class B Notes are paid in full.  The principal of this Note shall be due
and payable no later than the Stated Maturity Date unless the unpaid principal
of such Note becomes due and payable at an earlier date by declaration of
acceleration, call for redemption or otherwise; provided, however, that, except
as set forth in the Indenture, the payment of principal of this Note may only
occur after principal on the Class A Notes and the Class B Notes has been paid
in full and is subordinated to the payment on each Payment Date of the principal
and interest due and payable on the Class A Notes and the Class B Notes and
other amounts in accordance with the Priority of Payments, all in accordance
with the Indenture.

 

Payments in respect of principal and interest and any other amounts due on any
Payment Date on this Note shall be payable by the Trustee or a Paying Agent,
subject to any laws or regulations applicable thereto, 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, as provided in
the Indenture.

 

Interest will cease to accrue on this Note, or in the case of a partial
repayment, on such part, from the date of repayment or the Stated Maturity Date,
unless payment of principal is improperly withheld or unless a Default is
otherwise made with respect to such payments of principal.

 

C-2-2

--------------------------------------------------------------------------------

 

Notwithstanding the foregoing, the final payment of interest and principal due
on this Note shall be made only upon presentation and surrender of this Note
(except as otherwise provided in the Indenture) at the Corporate Trust Office of
the Trustee or at the office of the Paying Agent.

 

The Holder of this Note shall be treated as the owner hereof for all purposes.

 

Except as specifically provided herein and in the Indenture, neither the Issuer
nor the Co-Issuer shall be required to make any payment with respect to any tax,
assessment or other governmental charge imposed by any government or any
political subdivision or taxing authority thereof or therein.

 

Unless the certificate of authentication hereon has been executed by the Trustee
or by the Authenticating Agent by the manual signature of one of their
Authorized Officers, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.

 

This Note is one of a duly authorized issue of Class C Secured Floating Rate
Notes Due 2025, of the Issuer and the Co-Issuer (the “Class C Notes”), limited
in aggregate principal amount to U.S.$28,500,000 issued under an indenture dated
as of February 27, 2015 (the “Indenture”) by and among the Issuer, the
Co-Issuer, U.S. Bank National Association, as trustee (in such capacity and
together with any successor trustee permitted under the Indenture, the
“Trustee”), paying agent, calculation agent, transfer agent, custodial
securities intermediary, backup advancing agent and notes registrar  and Arbor
Realty SR, Inc., as advancing agent.  Also authorized under the Indenture are
(a) U.S. $165,750,000 Class A Senior Secured Floating Rate Notes Due 2025 (the
“Class A Notes”) and (b) U.S. $24,750,000 Class B Secured Floating Rate Notes
Due 2025 (the “Class B Notes” and, together with the Class A Notes and the
Class C Notes, the “Notes”).

 

Concurrently with the issuance of the Notes, the Issuer also will issue
preferred shares (the “Preferred Shares”), under the Issuer’s memorandum and
articles of association as part of its issued share capital.

 

Reference is hereby made to the Indenture and all indentures supplemental
thereto for a statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Issuer, the Co-Issuer, the Trustee, the
Advancing Agent, the Holders of the Notes and the Preferred Shares and the terms
upon which the Notes and the Preferred Shares are, and are to be, executed,
authenticated and delivered.

 

Payments of principal of the Class C Notes shall be payable in accordance with
Section 11.1(a) of the Indenture.

 

Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Indenture.

 

Pursuant to Section 9.1(a) of the Indenture, the Notes are subject to redemption
by the Issuer at the direction of the Loan Obligation Manager (such redemption,
a “Clean-up Call Redemption”), in whole but not in part, at a price equal to the
applicable Redemption Price, upon notice given in the manner provided in the
Indenture, on any Payment 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 the
funds available to be used for such redemption will be sufficient to pay the
Total Redemption Price.

 

Pursuant to Section 9.1(b) of the Indenture, 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 following the
occurrence of a Tax Event if the Tax Materiality Condition is satisfied at a
price equal to the applicable Redemption Prices; provided that that the funds
available to be used for such Tax Redemption will be sufficient to pay the Total
Redemption Price.

 

Pursuant to Section 9.1(c) of the Indenture, the Notes and the Preferred Shares
are subject to redemption, in whole but not in part, by the Issuer at a price
equal to the applicable Redemption Prices, on any Payment Date occurring after
the end of the Non-call Period at the direction of the Issuer (such redemption,
an

 

C-2-3

--------------------------------------------------------------------------------

 

“Optional Redemption”) by Act of a Majority of the Preferred Shares delivered to
the Trustee; provided that the funds available to be used for such Optional
Redemption will be sufficient to pay the Total Redemption Price.

 

Notes for whose redemption and payment provision is made in accordance with the
Indenture shall cease to bear interest on the applicable Redemption Date (unless
the Issuer shall default in the payment of the Redemption Price and accrued
interest thereon).

 

Pursuant to Section 9.5 of the Indenture, if any of the Note Protection Tests
applicable to any Class of Notes is not satisfied as of the most recent
Measurement Date the Notes shall be redeemed in accordance with the Priority of
Payments set forth in the Indenture, only, and to the extent necessary, to cause
each of the Note Protection Tests to be satisfied.

 

If an Event of Default shall occur and be continuing, the Class C Notes may
become or be declared due and payable in the manner and with the effect provided
in the Indenture.

 

At any time after a declaration of acceleration of Maturity of the Notes has
been made, and before a judgment or decree for payment of the amounts due has
been obtained by the Trustee as provided in the Indenture, 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) or 5.1(i) of the
Indenture, by written notice to the Issuer, the Co-Issuer and the Trustee, may
rescind and annul such declaration and its consequences if certain conditions
set forth in the Indenture are satisfied.

 

The Indenture may be amended and supplemented under the circumstances, and in
accordance with the conditions, set forth therein.

 

The Notes are issuable in minimum denominations of U.S.$250,000 and integral
multiples of $500 in excess thereof.

 

The principal of each Note shall be payable on the Stated Maturity Date, unless
the unpaid principal of such Note becomes due and payable at an earlier date by
declaration of acceleration, call for redemption or otherwise.

 

The term “Issuer” as used in this Note includes any successor-in-interest to the
Issuer under the Indenture and the term “Co-Issuer” as used in this Note
includes any successor-in-interest to the Co-Issuer under the Indenture.

 

Each purchaser and any subsequent transferee of this Note or any interest herein
shall, by virtue of its purchase or other acquisition of this Note or any
interest herein, be deemed to have agreed to treat this Note as debt for U.S.
federal income tax purposes.

 

In connection with the purchase of this Note, the Holder and each beneficial
owner thereof agrees that: (A) none of the Co-Issuers, the Loan Obligation
Manager, the CLO Servicer, the Co-Placement Agents, the Trustee, the Collateral
Administrator or any of their respective affiliates is acting as a fiduciary or
financial or investment advisor for such Holder or beneficial owner; (B) such
Holder or beneficial 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 Co-Issuers, the Loan Obligation Manager, the CLO
Servicer, the Trustee, the Collateral Administrator, the Co-Placement Agents or
any of their respective affiliates other than any statements in the final
offering memorandum for such Notes, and such Holder or beneficial owner has read
and understands such final offering memorandum; (C) such Holder or beneficial
owner has consulted with its own legal, regulatory, tax, business, investment,
financial and accounting advisors to the extent it has deemed necessary and has
made its own investment decisions (including decisions regarding the suitability
of any transaction pursuant to the Indenture) based upon its own judgment and
upon any advice from such advisors as it has deemed necessary and not upon any
view expressed by the Co-Issuers, the Loan Obligation Manager, the CLO Servicer,
the Trustee, the Collateral Administrator, the Co-Placement Agents or any of
their respective affiliates.

 

C-2-4

--------------------------------------------------------------------------------

 

Each Holder, by its acquisition of an interest in the Notes, shall be deemed to
have represented to the Issuer, the Co-Issuer, the Loan Obligation Manager, the
CLO Servicer, the Co-Placement Agents 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, will not constitute or result in a non-exempt
violation of Similar Law.

 

Title to Notes shall pass by registration in the Register kept by the Trustee,
acting through its Corporate Trust Office.

 

No service charge shall be made to a Holder for any registration of transfer or
exchange of this Note, but the Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.

 

No right or remedy conferred herein or in the Indenture upon or reserved to the
Trustee or to the Holder hereof 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
thereunder or now or hereafter existing at law or in equity or otherwise.  The
assertion or employment of any right or remedy hereunder or under the Indenture,
or otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.

 

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.

 

THE HOLDER OF THIS NOTE AGREES NOT TO CAUSE THE FILING OF A PETITION IN
BANKRUPTCY AGAINST THE ISSUER, THE CO-ISSUER OR ANY PERMITTED SUBSIDIARY IN ANY
APPLICABLE OR RELEVANT JURISDICTION 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 THE INDENTURE.

 

AS PROVIDED IN THE INDENTURE, THE INDENTURE AND THE NOTES SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO THE CONFLICT OF
LAWS PRINCIPLES THEREOF.

 

C-2-5

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IN WITNESS WHEREOF, the Co-Issuers have caused this Note to be duly executed.

 

Dated as of February 27, 2015

 

 

ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1, LTD., as Issuer

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2015-FL1 LLC, as Co-Issuer

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

C-2-6

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CERTIFICATE OF AUTHENTICATION

 

This is one of the Notes referred to in the within-mentioned Indenture.

 

 

 

U.S. BANK NATIONAL ASSOCIATION,

 

as Trustee

 

 

 

 

 

By:

 

 

 

Authenticating Agent

 

C-2-7

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ASSIGNMENT FORM

 

For value received

 

 

 

 

 

hereby sell, assign and transfer unto

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Please insert social security or

 

 

other identifying number of assignee

 

 

 

 

 

Please print or type name

 

 

and address, including zip code,

 

 

of assignee:

 

 

 

 

 

 

 

 

 

 

 

the within Note and does hereby irrevocably constitute and appoint
                                                       Attorney to transfer the
Note on the books of the Issuer with full power of substitution in the premises.

 

Date:

Your Signature:

 

 

 

(Sign exactly as your name

 

 

appears on this Note)

 

C-2-8

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EXHIBIT D-1

 

FORM OF TRANSFER CERTIFICATE FOR TRANSFER FROM A RULE 144A
GLOBAL SECURITY OR A DEFINITIVE NOTE TO A REGULATION S GLOBAL SECURITY
(Transfers pursuant to Article 2 of the Indenture)

 

U.S. Bank National Association
111 Fillmore Ave East
St. Paul, Minnesota 55107-2292
Attn:  Corporate Trust Services — Arbor Realty Commercial Real Estate Notes
2015-FL1, Ltd.

 

Re:                             Arbor Realty Commercial Real Estate Notes
2015-FL1, Ltd., as Issuer and Arbor Realty Commercial Real Estate Notes 2015-FL1
LLC, as Co-Issuer of:  the Class A Senior Secured Floating Rate Notes, Due 2025,
the Class B Secured Floating Rate Notes, Due 2025 and the Class C Secured
Floating Rate Notes, Due 2025 (the “Transferred Notes”)

 

Reference is hereby made to the Indenture, dated as of February 27, 2015 (the
“Indenture”) by and among Arbor Realty Commercial Real Estate Notes
2015-FL1, Ltd., as Issuer and Arbor Realty Commercial Real Estate Notes 2015-FL1
LLC, as Co-Issuer of the Class A Notes, Class B Notes and the Class C Notes,
U.S. Bank National Association, as Trustee, and Arbor Realty SR, Inc., as
Advancing Agent.  Capitalized terms used but not defined herein will have the
meanings assigned to such terms in the Indenture and if not defined in the
Indenture then such terms will have the meanings assigned to them in
Regulation S (“Regulation S”), or Rule 144A (“Rule 144A”), under the United
States Securities Act of 1933, as amended (the “Securities Act”), and the
rules promulgated thereunder, or as defined under the Investment Company Act of
1940, as amended (the “1940 Act”), and the rules promulgated thereunder.

 

This letter relates to the transfer of U.S.$[·] aggregate principal amount of
[Class A][Class B][Class C] Notes being transferred in exchange for an
equivalent beneficial interest in a Regulation S Global Security of the same
Class in the name of [name of transferee] (the “Transferee”).

 

In connection with such request, the Transferee hereby certifies that such
transfer has been effected in accordance with the transfer restrictions set
forth in the Indenture and the Offering Memorandum, dated February February 20,
2015, and hereby represents, warrants and agrees for the benefit of the Issuer,
the Co-Issuer, the Trustee, the Loan Obligation Manager and their counsel that:

 

at the time the buy order was originated, the Transferee was outside the United
States;

 

the Transferee is not a U.S. Person (“U.S. Person”), as defined in Regulation S;

 

the transfer is being made in an “offshore transaction” (“Offshore
Transaction”), as defined in Regulation S, pursuant to Rule 903 or 904 of
Regulation S;

 

the Transferee will notify future transferees of the transfer restrictions;

 

the Transferee understands that the Notes, including the Transferred 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, including the
Transferred Notes, have not been and will not be registered or qualified under
the Securities Act or the securities laws of any state or other jurisdiction,
and, if in the future the owner decides to reoffer, resell, pledge or otherwise
transfer the Transferred Notes, such Transferred Notes may only be reoffered,
resold, pledged or otherwise transferred only in accordance with the Indenture
and the legend on such Transferred Notes.  The Transferee acknowledges that no
representation is made by the Issuer, the Co-Issuer or the Co-Placement Agents,
as the case may be, as to the availability of any exemption from registration or
qualification under the Securities Act or any state or other securities laws for
resale of the Transferred Notes;

 

the Transferee is not purchasing the Transferred Notes with a view to the
resale, distribution or other disposition thereof in violation of the Securities
Act or the securities laws of any state or other jurisdiction.

 

D-1-1

--------------------------------------------------------------------------------

 

The Transferee understands that an investment in the Transferred Notes involves
certain risks, including the risk of loss of all or a substantial part of its
investment under certain circumstances.  The Transferee has had access to such
financial and other information concerning the Issuer, the Co-Issuer and the
Transferred Notes as it deemed necessary or appropriate in order to make an
informed investment decision with respect to its purchase of the Transferred
Notes, including, without limitation, an opportunity to ask questions of and
request information from the Loan Obligation Manager, the Co-Placement Agents,
the Issuer and the Co-Issuer, including without limitation, an opportunity to
access to such legal and tax representation as the Transferee deemed necessary
or appropriate;

 

in connection with the purchase of the Transferred Notes:  (A) none of the
Issuer, the Co-Issuer, the Co-Placement Agents, the Loan Obligation Manager, the
Trustee, the Collateral Administrator or any of their respective affiliates is
acting as a fiduciary or financial or investment adviser for the Transferee;
(B) the Transferee is not relying (for purposes of making any investment
decision or otherwise) upon any written or oral advice, counsel or
representations of the Issuer, the Co-Issuer, the Co-Placement Agents, the Loan
Obligation Manager, the Trustee, the Collateral Administrator or any of their
respective affiliates, other than any statements in the final offering
memorandum relating to such Transferred Notes and any representations expressly
set forth in a written agreement with such party; (C) the Transferee has read
and understands the final offering memorandum relating to the Transferred Notes
(including, without limitation, the descriptions therein of the structure of the
transaction in which the Transferred Notes are being issued and the risks to
purchasers of the Notes); (D) none of the Issuer, the Co-Issuer, the
Co-Placement Agents, the Loan Obligation Manager, the Trustee, the Collateral
Administrator or any of their respective affiliates has given to the Transferee
(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 the
Transferee’s purchase of the Transferred Notes; (E) the Transferee has consulted
with its own legal, regulatory, tax, business, investment, financial, accounting
and other 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 the 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 Co-Placement Agents, the Trustee,
the Loan Obligation Manager, the Collateral Administrator or any of their
respective affiliates; (F) the Transferee will hold and transfer at least the
minimum denomination of such Transferred Notes; (G) the Transferee was not
formed for the purpose of investing in the Transferred Notes; and (H) the
Transferee is purchasing the Transferred 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;

 

the Transferee understands that the Transferred Notes will bear the applicable
legend set forth on such Transferred Notes;

 

the Transferee represents that either (a) it is not and is not investing on
behalf of an “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) its purchase and holding of the Transferred Notes
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 a Benefit
Plan subject to Similar Law, do not result in a non-exempt violation of Similar
Law;

 

Except to the extent permitted by the Securities Act and the 1940 Act and any
rules thereunder as in effect and applicable at the time of any such offer, the
Transferee will not, at any time, offer to buy or offer to sell the Transferred
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;

 

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the Transferee is not a member of the public in the Cayman Islands, within the
meaning of Section 175 of the Cayman Islands Companies Law (2013 Revision);

 

the Transferee understands that (A) the Issuer, the Co-Issuer, the Trustee or
the Paying Agent will require certification acceptable to them (1) as a
condition to the payment of principal of and interest on any Notes without, or
at a reduced rate of, U.S. withholding or backup withholding tax, and (2) 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, which certification may include U.S. federal income tax forms (such
as IRS Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United
States Tax Withholding and Reporting (Individuals)), IRS Form W-8BEN-E
(Certificate of Foreign Status of Beneficial Owner for United States Tax
Withholding and Reporting (Entities)), IRS Form W-8IMY (Certificate of Foreign
Intermediary, Foreign Flow-through Entity, or Certain U.S. Branches for United
States Tax Withholding and Reporting), IRS Form W-9 (Request for Taxpayer
Identification Number and Certification), or IRS Form W-8ECI (Certificate of
Foreign Person’s Claim that Income is Effectively Connected with the Conduct of
a Trade or Business in the United States) or any successors to such IRS forms);
(B) the Issuer, the Co-Issuer, the Trustee or the Paying Agent may require
certification acceptable to them 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; (C) if the Issuer is no longer a Qualified REIT
Subsidiary but is instead considered to be a foreign corporation for U.S.
federal income tax purposes, the Issuer, the Co-Issuer, the Trustee or the
Paying Agent will require the Transferee to provide the Issuer, the Co-Issuer,
the Trustee or the Paying Agent with any correct, complete and accurate
information that may be required for the Issuer, the Co-Issuer, the Trustee or
the Paying Agent to comply with FATCA requirements and will take any other
actions necessary for the Issuer, the Co-Issuer, the Trustee or the Paying Agent
to comply with FATCA requirements and, in the event the Transferee fails to
provide such information or take such actions, (1) the Issuer, the Co-Issuer,
the Trustee and the Paying Agent are authorized to withhold amounts otherwise
distributable to the Transferee as compensation for any amount withheld from
payments to the Issuer, the Co-Issuer, the Trustee or the Paying Agent as a
result of such failure, (2) to the extent necessary to avoid an adverse effect
on the Issuer or any other holder of Notes as a result of such failure, the
Issuer, the Co-Issuer, the Trustee and the Paying Agent will have the right to
compel the Transferee to sell its Notes or, if the Transferee does not sell its
Notes within 10 Business Days after notice from the Issuer, the Co-Issuer, the
Trustee or the Paying Agent, to sell such Notes at a public or private sale
called and conducted in any manner permitted by law, and to remit the net
proceeds of such sale (taking into account any taxes incurred by the Issuer in
connection with such sale) to the Transferee as payment in full for such Notes
and (3) the Issuer may also assign each such Note a separate CUSIP or CUSIPs in
the Issuer’s sole discretion; (D) if the Transferee is a “foreign financial
institution” or other foreign financial entity subject to FATCA and does not
provide the Issuer, Co-Issuer, Trustee or Paying Agent with evidence that it has
complied with the applicable FATCA requirements, the Issuer, Co-Issuer, Trustee
or Paying Agent will be required to withhold amounts under FATCA on payments to
the Transferee; and (E) the Transferee 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;

 

the Transferee 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 disregarded subsidiary of the Arbor Parent owns 100% of
the Preferred Shares and the Issuer Ordinary Shares, the Issuer will be treated
as a Qualified REIT Subsidiary and the Notes will be treated as indebtedness
solely of the Arbor Parent; the Transferee agrees to such treatment and agrees
to take no action inconsistent with such treatment;

 

the Transferee, 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); (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

 

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and 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 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 Transferee’s jurisdiction with
respect to payments made on the Loan Obligations held by the Issuer;

 

the Transferee 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 adequacy or accuracy of the final offering memorandum relating to the
Notes.  The Transferee further understands that any representation to the
contrary is a criminal offense;

 

the Transferee will, prior to any sale, pledge or other transfer by such
Transferee 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 Loan
Obligation Manager in the form of the relevant exhibit attached to the
Indenture, and such other certificates and other information as the Issuer, the
Co-Issuer, the Loan Obligation Manager or the Trustee may reasonably require to
confirm that the proposed transfer complies with the transfer restrictions
contained in the Indenture;

 

the Transferee agrees that no Note may be purchased, sold, pledged or otherwise
transferred in an amount less than the minimum denomination set forth in the
Indenture.  In addition, the Transferee understands that the Notes will be
transferable only upon registration of the transferee in the Notes Register of
the Issuer following delivery to the Notes Registrar of a duly executed transfer
certificate and any other certificates and other information required by the
Indenture;

 

the Transferee is aware and agrees that no Note (or beneficial interest therein)
may be reoffered, resold, 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 Transferee reasonably believes is a QIB, purchasing
for its account or the account of another QIB, 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 a non-U.S. Person acquiring such interest in an Offshore
Transaction in accordance with Rule 903 or Rule 904 of Regulation S, (B) to a
transferee that is not a U.S. resident (within the meaning of the 1940 Act)
unless such transferee is a Qualified Purchaser, (C) such transfer is made in
compliance with the other requirements set forth in the 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, the Co-Issuer or the pool of
Assets to register as an “investment company” under the 1940 Act;

 

the Transferee understands that there is no assurance that the Notes will be
approved for listing or that such listing will be maintained and that there is
no secondary 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 Transferee further understands
that, although the Co-Placement Agents may from time to time make a market in
the Notes, the Co-Placement Agents 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 Transferee must be prepared to hold the Notes until the
Stated Maturity Date;

 

the Transferee 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 the Indenture, or made based upon any false or inaccurate
representation made by the Transferee or a transferee to the Issuer, the Trustee
or the Notes Registrar, will be void and of no force or effect and (ii) none of
the Issuer, the Trustee and the Notes Registrar has any obligation to recognize
any sale, pledge or other transfer of a Note (or any beneficial

 

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interest therein) made in violation of any such transfer restriction or made
based upon any such false or inaccurate representation;

 

the Transferee approves and consents to any direct trades between the Issuer and
the Loan Obligation Manager and/or its affiliates that is permitted under the
terms of the Indenture and the Loan Obligation Management Agreement; and

 

the Transferee acknowledges that the Issuer, the Co-Issuer, the Trustee, the
Notes Registrar, the Loan Obligation Manager, the Co-Placement Agents 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 Transferee
will promptly notify the Issuer, the Co-Issuer, the Trustee, Notes Registrar,
the Loan Obligation Manager and the Co-Placement Agents.

 

the Notes will bear a legend to the following effect unless the Issuer and the
Co-Issuer determine otherwise in compliance with applicable law:

 

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED OR QUALIFIED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION, AND
NEITHER THE ISSUER NOR THE CO-ISSUER HAS BEEN REGISTERED UNDER THE UNITED STATES
INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “1940 ACT”).  THIS NOTE MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT:  (A)(1) TO A
“QUALIFIED INSTITUTIONAL BUYER” (A “QIB”), AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT (“RULE 144A”) WHO IS A “QUALIFIED PURCHASER,” AS DEFINED IN
SECTION 2(a)(51) OF THE 1940 ACT AND THE RULES THEREUNDER (A “QUALIFIED
PURCHASER”), AND IS EITHER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QIB WHO IS A QUALIFIED PURCHASER, IN A PRINCIPAL AMOUNT OF NOT LESS THAN
U.S.$250,000 (AND INTEGRAL MULTIPLES OF U.S.$500 IN EXCESS THEREOF) FOR THE
PURCHASER AND FOR EACH SUCH ACCOUNT, IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A,
SUBJECT TO THE SATISFACTION OF CERTAIN CONDITIONS SPECIFIED IN THE INDENTURE; OR
(2) TO AN INSTITUTION THAT IS NOT A “U.S. PERSON” IN AN “OFFSHORE TRANSACTION,”
AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”), IN
ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S IN A
PRINCIPAL AMOUNT OF NOT LESS THAN U.S.$250,000 (AND INTEGRAL MULTIPLES OF
U.S.$500 IN EXCESS THEREOF), SUBJECT TO THE SATISFACTION OF CERTAIN CONDITIONS
SPECIFIED IN THE INDENTURE, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION. 
EACH PURCHASER OF A GLOBAL SECURITY WILL BE DEEMED TO HAVE MADE THE
REPRESENTATIONS AND AGREEMENTS SET FORTH IN SECTION 2.5 OF THE INDENTURE.  ANY
TRANSFER IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT, WILL BE
VOID AB INITIO, AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE TRANSFEREE,
NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE ISSUER, THE CO-ISSUER,
AS APPLICABLE, THE TRUSTEE OR ANY INTERMEDIARY.  IF AT ANY TIME THE ISSUER AND
THE CO-ISSUER, AS APPLICABLE, DETERMINE OR ARE NOTIFIED THAT THE HOLDER OF SUCH
BENEFICIAL INTEREST IN SUCH GLOBAL SECURITY WAS IN BREACH, AT THE TIME GIVEN, OF
ANY OF THE REPRESENTATIONS SET FORTH IN THE INDENTURE, THE TRUSTEE MAY CONSIDER
THE ACQUISITION OF SUCH INTEREST IN SUCH GLOBAL SECURITY VOID AND REQUIRE THAT
SUCH INTEREST HEREIN BE TRANSFERRED TO A PERSON DESIGNATED BY THE ISSUER AND THE
CO-ISSUER, AS APPLICABLE.

 

ANY TRANSFER, PLEDGE OR OTHER USE OF THIS NOTE FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO. HAS AN
INTEREST HEREIN, UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (“DTC”), NEW YORK, NEW YORK, TO THE CO-ISSUERS
OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR OF SUCH OTHER ENTITY AS IS

 

D-1-5

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REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO.).

 

THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY.  THIS NOTE
MAY NOT BE EXCHANGED OR TRANSFERRED IN WHOLE OR IN PART FOR A NOTE REGISTERED IN
THE NAME OF ANY PERSON OTHER THAN THAT DEPOSITARY OR ITS NOMINEE EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN.  ACCORDINGLY, THE
OUTSTANDING PRINCIPAL OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN
ON THE FACE HEREOF.  ANY PERSON ACQUIRING THIS NOTE MAY ASCERTAIN ITS CURRENT
PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE.

 

The owner understands and agrees that an additional legend in substantially the
following form will be placed on each Note in the form of a Regulation S Global
Security:

 

AN INTEREST IN THIS NOTE MAY NOT BE HELD BY A PERSON THAT IS A U.S. PERSON (AS
DEFINED IN REGULATION S UNDER THE SECURITIES ACT) AT ANY TIME.  IN ADDITION, AN
INTEREST IN THIS NOTE MAY BE HELD ONLY THROUGH EUROCLEAR OR CLEARSTREAM,
LUXEMBOURG AT ANY TIME.

 

You, the Issuer, the Co-Issuer and the Loan Obligation Manager are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceedings
or official inquiry with respect to the matters covered hereby.

 

 

 

[Name of Transferee]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

cc:                                Arbor Realty Commercial Real Estate Notes
2015-FL1, Ltd.
Arbor Realty Commercial Real Estate Notes 2015-FL1 LLC

 

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EXHIBIT D-2

 

FORM OF TRANSFER CERTIFICATE FOR TRANSFER FROM A REGULATION S
GLOBAL SECURITY OR A DEFINITIVE NOTE TO A RULE 144A GLOBAL SECURITY
(Transfers pursuant to Article 2 of the Indenture)

 

U.S. Bank National Association
111 Fillmore Ave East
St. Paul, Minnesota 55107-2292
Attn:  Corporate Trust Services — Arbor Realty Commercial Real Estate Notes
2015-FL1, Ltd.

 

Re:                             Arbor Realty Commercial Real Estate Notes
2015-FL1, Ltd., as Issuer and Arbor Realty Commercial Real Estate Notes 2015-FL1
LLC, as Co-Issuer of:  the Class A Senior Secured Floating Rate Notes, Due 2025,
the Class B Secured Floating Rate Notes, Due 2025 and the Class C Secured
Floating Rate Notes, Due 2025 (the “Transferred Notes”)

 

Reference is hereby made to the Indenture dated as of February 27, 2015 (the
“Indenture”), by and among Arbor Realty Commercial Real Estate Notes
2015-FL1, Ltd., as Issuer and Arbor Realty Commercial Real Estate Notes 2015-FL1
LLC, as Co-Issuer of the Class A Notes, the Class B Notes and the Class C Notes,
U.S. Bank National Association, as Trustee, and Arbor Realty SR, Inc., as
Advancing Agent.  Capitalized terms used but not defined herein will have the
meanings assigned to such terms in the Indenture and if not defined in the
Indenture then such terms will have the meanings assigned to them in
Regulation S (“Regulation S”), or Rule 144A (“Rule 144A”), under the United
States Securities Act of 1933, as amended (the “Securities Act”), and the
rules promulgated thereunder, or as defined under the Investment Company Act of
1940, as amended (the “1940 Act”), and the rules promulgated thereunder.

 

This letter relates to the transfer of U.S.$[·] aggregate principal amount of
[Class A][Class B][Class C] Notes being transferred in exchange for an
equivalent beneficial interest in a Rule 144A Global Security of the same
Class in the name of [name of transferee] (the “Transferee”).

 

In connection with such request, the Transferee hereby certifies that such
transfer has been effected in accordance with the transfer restrictions set
forth in the Indenture and the Offering Memorandum dated February February 20,
2015 and hereby represents, warrants and agrees for the benefit of the Issuer,
the Co-Issuer and the Trustee that:

 

the Transferee is a “qualified institutional buyer” as defined in Rule 144A (a
“QIB”), and a “qualified purchaser” as defined in the 1940 Act and the
rules promulgated thereunder (a “Qualified Purchaser”);

 

(A) the Transferee is acquiring a beneficial interest in such Transferred Notes
for its own account or for an account that is both a QIB and a Qualified
Purchaser and as to each of which the Transferee exercises sole investment
discretion, and (B) the Transferee and each such account is acquiring not less
than the minimum denomination of the Transferred Notes;

 

the Transferee will notify future transferees of the transfer restrictions;

 

the Transferee is obtaining the Transferred Notes in a transaction pursuant to
Rule 144A;

 

the Transferee is obtaining the Transferred Notes in accordance with any
applicable securities laws of any state of the United States and any other
applicable jurisdiction;

 

the Transferee understands that the Notes, including the Transferred 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, including the
Transferred Notes, have not been and will not be registered or qualified under
the Securities Act or the securities laws of any state or other jurisdiction,
and, if in the future the owner decides to reoffer, resell, pledge or otherwise
transfer the Transferred Notes, such Transferred Notes may

 

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only be reoffered, resold, pledged or otherwise transferred only in accordance
with the Indenture and the legend on such Transferred Notes.  The Transferee
acknowledges that no representation is made by the Issuer, the Co-Issuer or the
Co-Placement Agents, as the case may be, as to the availability of any exemption
from registration or qualification under the Securities Act or any state or
other securities laws for resale of the Transferred Notes;

 

the Transferee is not purchasing the Transferred Notes with a view to the
resale, distribution or other disposition thereof in violation of the Securities
Act or the securities laws of any state or other jurisdiction.  The Transferee
understands that an investment in the Transferred Notes involves certain risks,
including the risk of loss of all or a substantial part of its investment under
certain circumstances.  The Transferee has had access to such financial and
other information concerning the Issuer, the Co-Issuer and the Transferred Notes
as it deemed necessary or appropriate in order to make an informed investment
decision with respect to its purchase of the Transferred Notes, including,
without limitation, an opportunity to ask questions of and request information
from the Loan Obligation Manager, the Co-Placement Agents, the Issuer and the
Co-Issuer, including without limitation, an opportunity to access to such legal
and tax representation as the Transferee deemed necessary or appropriate;

 

in connection with the purchase of the Transferred Notes:  (A) none of the
Issuer, the Co-Issuer, the Co-Placement Agents, the Loan Obligation Manager, the
Trustee, the Collateral Administrator or any of their respective affiliates is
acting as a fiduciary or financial or investment adviser for the Transferee;
(B) the Transferee is not relying (for purposes of making any investment
decision or otherwise) upon any written or oral advice, counsel or
representations of the Issuer, the Co-Issuer, the Co-Placement Agents, the Loan
Obligation Manager, the Trustee, the Collateral Administrator or any of their
respective affiliates, other than any statements in the final offering
memorandum relating to such Transferred Notes and any representations expressly
set forth in a written agreement with such party; (C) the Transferee has read
and understands the final offering memorandum relating to the Transferred Notes
(including, without limitation, the descriptions therein of the structure of the
transaction in which the Transferred Notes are being issued and the risks to
purchasers of the Notes); (D) none of the Issuer, the Co-Issuer, the
Co-Placement Agents, the Loan Obligation Manager, the Trustee, the Collateral
Administrator or any of their respective affiliates has given to the Transferee
(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 the
Transferee’s purchase of the Transferred Notes; (E) the Transferee has consulted
with its own legal, regulatory, tax, business, investment, financial, accounting
and other 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 the 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 Co-Placement Agents, the Loan
Obligation Manager, the Trustee, the Collateral Administrator or any of their
respective affiliates; (F) the Transferee will hold and transfer at least the
minimum denomination of such Transferred Notes; (G) the Transferee was not
formed for the purpose of investing in the Transferred Notes; and (H) the
Transferee is purchasing the Transferred 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;

 

the Transferee understands that the Transferred Notes will bear the applicable
legend set forth on such Transferred Notes;

 

the Transferee represents that either (a) it is not and is not investing on
behalf of an “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) its purchase and holding of the Transferred Notes
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 a Benefit
Plan subject to Similar Law, do not result in a non-exempt violation of Similar
Law;

 

D-2-2

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Except to the extent permitted by the Securities Act and the 1940 Act and any
rules thereunder as in effect and applicable at the time of any such offer, the
Transferee will not, at any time, offer to buy or offer to sell the Transferred
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;

 

the Transferee is not a member of the public in the Cayman Islands, within the
meaning of Section 175 of the Cayman Islands Companies Law (2013 Revision);

 

the Transferee understands that (A) the Issuer, the Co-Issuer, the Trustee or
the Paying Agent will require certification acceptable to them (1) as a
condition to the payment of principal of and interest on any Notes without, or
at a reduced rate of, U.S. withholding or backup withholding tax, and (2) 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, which certification may include U.S. federal income tax forms (such
as IRS Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United
States Tax Withholding and Reporting (Individuals)), IRS Form W-8BEN-E
(Certificate of Foreign Status of Beneficial Owner for United States Tax
Withholding and Reporting (Entities)), IRS Form W-8IMY (Certificate of Foreign
Intermediary, Foreign Flow-through Entity, or Certain U.S. Branches for United
States Tax Withholding and Reporting), IRS Form W-9 (Request for Taxpayer
Identification Number and Certification), or IRS Form W-8ECI (Certificate of
Foreign Person’s Claim that Income is Effectively Connected with the Conduct of
a Trade or Business in the United States) or any successors to such IRS forms);
(B) the Issuer, the Co-Issuer, the Trustee or the Paying Agent may require
certification acceptable to them 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; (C) if the Issuer is no longer a Qualified REIT
Subsidiary but is instead considered to be a foreign corporation for U.S.
federal income tax purposes, the Issuer, the Co-Issuer, the Trustee or the
Paying Agent will require the Transferee to provide the Issuer, the Co-Issuer,
the Trustee or the Paying Agent with any correct, complete and accurate
information that may be required for the Issuer, the Co-Issuer, the Trustee or
the Paying Agent to comply with FATCA requirements and will take any other
actions necessary for the Issuer, the Co-Issuer, the Trustee or the Paying Agent
to comply with FATCA requirements and, in the event the Transferee fails to
provide such information or take such actions, (1) the Issuer, the Co-Issuer,
the Trustee and the Paying Agent are authorized to withhold amounts otherwise
distributable to the Transferee as compensation for any amount withheld from
payments to the Issuer, the Co-Issuer, the Trustee or the Paying Agent as a
result of such failure, (2) to the extent necessary to avoid an adverse effect
on the Issuer or any other holder of Notes as a result of such failure, the
Issuer, the Co-Issuer, the Trustee and the Paying Agent will have the right to
compel the Transferee to sell its Notes or, if the Transferee does not sell its
Notes within 10 Business Days after notice from the Issuer, the Co-Issuer, the
Trustee or the Paying Agent, to sell such Notes at a public or private sale
called and conducted in any manner permitted by law, and to remit the net
proceeds of such sale (taking into account any taxes incurred by the Issuer in
connection with such sale) to the Transferee as payment in full for such Notes
and (3) the Issuer may also assign each such Note a separate CUSIP or CUSIPs in
the Issuer’s sole discretion; (D) if the Transferee is a “foreign financial
institution” or other foreign financial entity subject to FATCA and does not
provide the Issuer, Co-Issuer, Trustee or Paying Agent with evidence that it has
complied with the applicable FATCA requirements, the Issuer, Co-Issuer, Trustee
or Paying Agent will be required to withhold amounts under FATCA on payments to
the Transferee; and (E) the Transferee 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;

 

the Transferee 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 disregarded subsidiary of the Arbor Parent owns 100% of
the Preferred Shares and the Issuer Ordinary Shares, the Issuer will be treated
as a Qualified REIT Subsidiary

 

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and the Notes will be treated as indebtedness solely of the Arbor Parent; the
Transferee agrees to such treatment and agrees to take no action inconsistent
with such treatment;

 

the Transferee, 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); (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 eligible for benefits under an income
tax treaty with the United States that eliminates U.S. federal income taxation
of U.S. source interest 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
Transferee’s jurisdiction with respect to payments made on the Loan Obligations
held by the Issuer;

 

the Transferee 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 adequacy or accuracy of the final offering memorandum relating to the
Notes.  The Transferee further understands that any representation to the
contrary is a criminal offense;

 

the Transferee will, prior to any sale, pledge or other transfer by such
Transferee 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 Loan
Obligation Manager in the form of the relevant exhibit attached to the
Indenture, and such other certificates and other information as the Issuer, the
Co-Issuer, the Loan Obligation Manager or the Trustee may reasonably require to
confirm that the proposed transfer complies with the transfer restrictions
contained in the Indenture;

 

the Transferee agrees that no Note may be purchased, sold, pledged or otherwise
transferred in an amount less than the minimum denomination set forth in the
Indenture.  In addition, the Transferee understands that the Notes will be
transferable only upon registration of the transferee in the Notes Register of
the Issuer following delivery to the Notes Registrar of a duly executed transfer
certificate and any other certificates and other information required by the
Indenture;

 

the Transferee is aware and agrees that no Note (or beneficial interest therein)
may be reoffered, resold, 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 Transferee reasonably believes is a QIB, purchasing
for its account or the account of another QIB, 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 a non-U.S. Person acquiring such interest in an Offshore
Transaction in accordance with Rule 903 or Rule 904 of Regulation S, (B) to a
transferee that is not a U.S. resident (within the meaning of the 1940 Act)
unless such transferee is a Qualified Purchaser, (C) such transfer is made in
compliance with the other requirements set forth in the 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, the Co-Issuer or the pool of
Assets to register as an “investment company” under the 1940 Act;

 

the Transferee understands that there is no assurance that the Notes will be
approved for listing or that such listing will be maintained and that there is
no secondary 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 Transferee further understands
that, although the Co-Placement Agents may from time to time make a market in
the Notes, the Co-Placement Agents are not under any obligation to do so and,
following the commencement of any market-making, may discontinue

 

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the same at any time.  Accordingly, the Transferee must be prepared to hold the
Notes until the Stated Maturity Date;

 

the Transferee 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 the Indenture, or made based upon any false or inaccurate
representation made by the Transferee or a transferee to the Issuer, the Trustee
or the Notes Registrar, will be void and of no force or effect and (ii) none of
the Issuer, the Trustee and the Notes 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;

 

the Transferee approves and consents to any direct trades between the Issuer and
the Loan Obligation Manager and/or its affiliates that is permitted under the
terms of the Indenture and the Loan Obligation Management Agreement;

 

the Transferee acknowledges that the Issuer, the Co-Issuer, the Trustee, the
Notes Registrar, the Loan Obligation Manager, the Co-Placement Agents 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 Transferee
will promptly notify the Issuer, the Co-Issuer, the Trustee, Notes Registrar,
the Loan Obligation Manager and the Co-Placement Agents; and

 

the Notes will bear a legend to the following effect unless the Issuer and the
Co-Issuer determine otherwise in compliance with applicable law:

 

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED OR QUALIFIED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION, AND
NEITHER THE ISSUER NOR THE CO-ISSUER HAS BEEN REGISTERED UNDER THE UNITED STATES
INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “1940 ACT”).  THIS NOTE MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT:  (A)(1) TO A
“QUALIFIED INSTITUTIONAL BUYER” (A “QIB”), AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT (“RULE 144A”) WHO IS A “QUALIFIED PURCHASER,” AS DEFINED IN
SECTION 2(a)(51) OF THE 1940 ACT AND THE RULES THEREUNDER (A “QUALIFIED
PURCHASER”), AND IS EITHER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QIB WHO IS A QUALIFIED PURCHASER, IN A PRINCIPAL AMOUNT OF NOT LESS THAN
U.S.$250,000 (AND INTEGRAL MULTIPLES OF U.S.$500 IN EXCESS THEREOF) FOR THE
PURCHASER AND FOR EACH SUCH ACCOUNT, IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A,
SUBJECT TO THE SATISFACTION OF CERTAIN CONDITIONS SPECIFIED IN THE INDENTURE; OR
(2) TO AN INSTITUTION THAT IS NOT A “U.S. PERSON” IN AN “OFFSHORE TRANSACTION,”
AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”), IN
ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S IN A
PRINCIPAL AMOUNT OF NOT LESS THAN U.S.$250,000 (AND INTEGRAL MULTIPLES OF
U.S.$500 IN EXCESS THEREOF), SUBJECT TO THE SATISFACTION OF CERTAIN CONDITIONS
SPECIFIED IN THE INDENTURE, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE JURISDICTION. 
EACH PURCHASER OF A GLOBAL SECURITY WILL BE DEEMED TO HAVE MADE THE
REPRESENTATIONS AND AGREEMENTS SET FORTH IN SECTION 2.5 OF THE INDENTURE.  ANY
TRANSFER IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT, WILL BE
VOID AB INITIO, AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE TRANSFEREE,
NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE ISSUER, THE CO-ISSUER,
AS APPLICABLE, THE TRUSTEE OR ANY INTERMEDIARY.  IF AT ANY TIME THE ISSUER AND
THE CO-ISSUER, AS APPLICABLE, DETERMINE OR ARE NOTIFIED THAT THE HOLDER OF SUCH
BENEFICIAL INTEREST IN SUCH GLOBAL SECURITY WAS IN BREACH, AT THE TIME GIVEN, OF
ANY OF THE REPRESENTATIONS SET FORTH IN THE INDENTURE, THE TRUSTEE MAY CONSIDER
THE ACQUISITION OF SUCH INTEREST IN SUCH GLOBAL SECURITY VOID AND REQUIRE THAT
SUCH

 

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INTEREST HEREIN BE TRANSFERRED TO A PERSON DESIGNATED BY THE ISSUER AND THE
CO-ISSUER, AS APPLICABLE.

 

ANY TRANSFER, PLEDGE OR OTHER USE OF THIS NOTE FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO. HAS AN
INTEREST HEREIN, UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (“DTC”), NEW YORK, NEW YORK, TO THE CO-ISSUERS
OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR OF SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO.).

 

THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY.  THIS NOTE
MAY NOT BE EXCHANGED OR TRANSFERRED IN WHOLE OR IN PART FOR A NOTE REGISTERED IN
THE NAME OF ANY PERSON OTHER THAN THAT DEPOSITARY OR ITS NOMINEE EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN.  ACCORDINGLY, THE
OUTSTANDING PRINCIPAL OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN
ON THE FACE HEREOF.  ANY PERSON ACQUIRING THIS NOTE MAY ASCERTAIN ITS CURRENT
PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE.

 

You, the Issuer, the Co-Issuer and the Loan Obligation Manager are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceedings
or official inquiry with respect to the matters covered hereby.

 

 

[Name of Transferee]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

cc:                                Arbor Realty Commercial Real Estate Notes
2015-FL1, Ltd.
Arbor Realty Commercial Real Estate Notes 2015-FL1 LLC

 

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EXHIBIT D-3

 

FORM OF TRANSFER CERTIFICATE FOR TRANSFER FROM A REGULATION S GLOBAL
SECURITY, RULE 144A GLOBAL SECURITY OR A DEFINITIVE NOTE TO A DEFINITIVE NOTE
(Transfers pursuant to Article 2 of the Indenture)

 

U.S. Bank National Association
111 Fillmore Ave East
St. Paul, Minnesota 55107-2292
Attn:  Corporate Trust Services — Arbor Realty Commercial Real Estate Notes
2015-FL1, Ltd.

 

Re:                             Arbor Realty Commercial Real Estate Notes
2015-FL1, Ltd., as Issuer and Arbor Realty Commercial Real Estate Notes 2015-FL1
LLC, as Co-Issuer of:  the Class A Senior Secured Floating Rate Notes, Due 2025,
the Class B Secured Floating Rate Notes, Due 2025 and the Class C Secured
Floating Rate Notes, Due 2025 (the “Transferred Notes”)

 

Reference is hereby made to the Indenture dated as of February 27, 2015 (the
“Indenture”), by and among Arbor Realty Commercial Real Estate Notes
2015-FL1, Ltd., as Issuer and Arbor Realty Commercial Real Estate Notes 2015-FL1
LLC, as Co-Issuer of the Class A Notes, the Class B Notes and the Class C Notes,
U.S. Bank National Association, as Trustee, and Arbor Realty SR, Inc., as
Advancing Agent.  Capitalized terms used but not defined herein will have the
meanings assigned to such terms in the Indenture and if not defined in the
Indenture then such terms will have the meanings assigned to them in
Regulation S (“Regulation S”), or Rule 144A (“Rule 144A”), under the United
States Securities Act of 1933, as amended (the “Securities Act”), and the
rules promulgated thereunder, or as defined under the Investment Company Act of
1940, as amended (the “1940 Act”), and the rules promulgated thereunder.

 

This letter relates to the transfer of U.S.$[·] aggregate principal amount of
[Class A][Class B][Class C] Notes being transferred in exchange for a Definitive
Note of the same Class in the name of [name of transferee] (the “Transferee”).

 

In connection with such request, the Transferee hereby certifies that such
transfer has been effected in accordance with the transfer restrictions set
forth in the Indenture and the Offering Memorandum dated February February 20,
2015 and hereby represents, warrants and agrees for the benefit of the Issuer,
the Co-Issuer and the Trustee that:

 

(i) the Transferee is an institution that is an “accredited investor” as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act or
any entity in which all of the equity owners are such “accredited investors” (an
“IAI”) who is also a “qualified purchaser” as defined in Section 2(a)(51) of the
1940 Act and the rules promulgated thereunder (a “Qualified Purchaser”);

 

(ii) the Transferee is acquiring the Notes for its own account (and not for the
account of any other Person) in a minimum denomination of U.S.$250,000 and in
integral multiples of U.S.$500 in excess thereof;

 

(iii) the Transferee understands that the Notes have not been and will not be
registered or qualified under the Securities Act or the securities laws of any
state or other jurisdiction, and, if in the future the Transferee decides to
reoffer, resell, pledge or otherwise transfer the Notes, such Notes may be
reoffered, resold, pledged or otherwise transferred only in accordance with the
provisions of the Indenture and the legends on such Notes, including the
requirement for written certifications.  In particular, the Transferee
understands that the Notes may be transferred only to a person that is either
(a) a Qualified Purchaser or a corporation, partnership, limited liability
company or other entity (other than a trust), each shareholder, partner, member
or other equity owner of which is a Qualified Purchaser, that in each case is
either (i) a “qualified institutional buyer” as defined in Rule 144A (a “QIB”)
who purchases such Notes in reliance on the exemption from Securities Act
registration provided by Rule 144A, or (ii) solely in the case of Notes that are
issued in the form of Definitive Securities, an IAI; or (b) a person that is not
a “U.S. person” as defined in Regulation S (a “U.S. Person”), and is acquiring
the Notes in an “offshore transaction”

 

D-3-1

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as defined in Regulation S (an “Offshore Transaction”), in reliance on the
exemption from registration provided by Regulation S.  The Transferee
acknowledges that no representation is made as to the availability of any
exemption from registration or qualification under the Securities Act or any
state or other securities laws for resale of the Notes;

 

(iv) in connection with the Transferee’s purchase of the Notes:  (a) none of the
Issuer, the Co-Issuer, the Co-Placement Agents, the Loan Obligation Manager, the
Trustee, the Collateral Administrator or any of their respective affiliates is
acting as a fiduciary or financial or investment adviser for the Transferee;
(b) the Transferee is not relying (for purposes of making any investment
decision or otherwise) upon any written or oral advice, counsel or
representations of the Issuer, the Co-Issuer, the Co-Placement Agents, the Loan
Obligation Manager, the Trustee, the Collateral Administrator or any of their
respective affiliates, other than any statements in the final offering
memorandum relating to such Transferred Notes and any representations expressly
set forth in a written agreement with such party; (c) the Transferee has read
and understands the final offering memorandum relating to such Transferred Notes
(including, without limitation, the descriptions therein of the structure of the
transaction in which such Transferred Notes are being issued and the risks to
purchasers of the Transferred Notes); (d) none of the Issuer, the Co-Issuer, the
Co-Placement Agents, the Loan Obligation Manager, the Trustee, the Collateral
Administrator or any of their respective affiliates has given to the Transferee
(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 the
Transferee’s purchase of the Transferred Notes; (e) the Transferee has consulted
with its own legal, regulatory, tax, business, investment, financial, accounting
and other advisers to the extent it has deemed necessary, and has made its own
investment decisions (including decisions regarding the suitability of any
transaction pursuant to the 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 Co-Placement Agents, the Loan
Obligation Manager, the Trustee, the Collateral Administrator or any of their
respective affiliates; (f) the Transferee will hold and transfer at least the
minimum denomination of such Transferred Notes; (g) the Transferee was not
formed for the purpose of investing in the Transferred Notes; and (h) the
Transferee is a sophisticated investor and is purchasing the Transferred Notes
with a full understanding of all of the terms, conditions and risks thereof
(economic and otherwise), and it is capable of assuming and willing to assume
those risks;

 

(v) the Transferee is acquiring the Notes as principal solely for its own
account for investment and not with a view to the resale, distribution or other
disposition thereof in violation of the Securities Act or the securities laws of
any state or other jurisdiction; it is not a (A) partnership, (B) common trust
fund, or (C) special trust, pension, profit-sharing or other retirement trust
fund or plan in which the partners, beneficiaries or participants may designate
the particular investments to be made; it agrees that it shall not hold any
Notes for the benefit of any other person, that it shall at all times be the
sole beneficial owner thereof for purposes of the 1940 Act and all other
purposes and that it shall not sell participation interests in the Notes or
enter into any other arrangement pursuant to which any other person shall be
entitled to a beneficial interest in the distributions on the Notes;

 

(vi) the Transferee represents that either (a) it is not and is not investing on
behalf of an “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) its purchase and holding of the Transferred Notes
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 a Benefit
Plan subject to Similar Law, do not result in a non-exempt violation of Similar
Law;

 

(vii) the Transferee will treat its Notes as debt of the Issuer for United
States federal and, to the extent permitted by law, state and local income and
franchise tax purposes unless otherwise required by any relevant taxing
authority;

 

(viii) the Transferee is a “United States person” within the meaning of
Section 7701(a)(30) of the Code, and has submitted a properly completed and
signed IRS Form W-9 containing its name, address and U.S. taxpayer
identification number (or applicable successor form); or it is not a “United
States person” within the meaning of Section 7701(a)(30) of the Code, and has
submitted a properly completed and signed applicable IRS Form W-8 (or applicable
successor form);

 

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(ix)                              the Transferee 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 disregarded subsidiary
of the Arbor Parent owns 100% of the Preferred Shares and the Issuer Ordinary
Shares, the Issuer will be treated as a Qualified REIT Subsidiary and the Notes
will be treated as indebtedness solely of the Arbor Parent; the Transferee
agrees to such treatment and agrees to take no action inconsistent with such
treatment;

 

(x) the Transferee is not a “United States person” (as defined in
Section 7701(a)(30) of the Code), it hereby represents that (i) either (A) it is
not a bank extending credit pursuant to a loan agreement entered into in the
ordinary course of its trade or business (within the meaning of
Section 881(c)(3)(A) of the Code), a 10% shareholder of the Issuer within the
meaning of Section 871(h)(3) of the Code or a controlled foreign corporation
within the meaning of Section 957(a) of the Code that is related to the Issuer
within the meaning of Section 881(c)(3) of the Code, or (B) it is a person that
is eligible for benefits under an income tax treaty with the United States that
completely eliminates U.S. federal income taxation of U.S. source interest not
attributable to a permanent establishment in the United States, and (ii) it is
not purchasing the Notes in order to reduce its U.S. federal income tax
liability pursuant to a tax avoidance plan;

 

(xi) the Transferee understands that (A) the Issuer, the Co-Issuer, the Trustee
or the Paying Agent will require certification acceptable to them (1) as a
condition to the payment of principal of and interest on any Notes without, or
at a reduced rate of, U.S. withholding or backup withholding tax, and (2) 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, which certification may include U.S. federal income tax forms (such
as IRS Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United
States Tax Withholding and Reporting (Individuals)), IRS Form W-8BEN-E
(Certificate of Foreign Status of Beneficial Owner for United States Tax
Withholding and Reporting (Entities)), IRS Form W-8IMY (Certificate of Foreign
Intermediary, Foreign Flow-through Entity, or Certain U.S. Branches for United
States Tax Withholding and Reporting), IRS Form W-9 (Request for Taxpayer
Identification Number and Certification), or IRS Form W-8ECI (Certificate of
Foreign Person’s Claim that Income is Effectively Connected with the Conduct of
a Trade or Business in the United States) or any successors to such IRS forms);
(B) the Issuer, the Co-Issuer, the Trustee or the Paying Agent may require
certification acceptable to them 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; (C) if the Issuer is no longer a Qualified REIT
Subsidiary but is instead considered to be a foreign corporation for U.S.
federal income tax purposes, the Issuer, the Co-Issuer, the Trustee or the
Paying Agent will require the Transferee to provide the Issuer, the Co-Issuer,
the Trustee or the Paying Agent with any correct, complete and accurate
information that may be required for the Issuer, the Co-Issuer, the Trustee or
the Paying Agent to comply with FATCA requirements and will take any other
actions necessary for the Issuer, the Co-Issuer, the Trustee or the Paying Agent
to comply with FATCA requirements and, in the event the Transferee fails to
provide such information or take such actions, (1) the Issuer, the Co-Issuer,
the Trustee and the Paying Agent are authorized to withhold amounts otherwise
distributable to the Transferee as compensation for any amount withheld from
payments to the Issuer, the Co-Issuer, the Trustee or the Paying Agent as a
result of such failure, (2) to the extent necessary to avoid an adverse effect
on the Issuer or any other holder of Notes as a result of such failure, the
Issuer, the Co-Issuer, the Trustee and the Paying Agent will have the right to
compel the Transferee to sell its Notes or, if the Transferee does not sell its
Notes within 10 Business Days after notice from the Issuer, the Co-Issuer, the
Trustee or the Paying Agent, to sell such Notes at a public or private sale
called and conducted in any manner permitted by law, and to remit the net
proceeds of such sale (taking into account any taxes incurred by the Issuer in
connection with such sale) to the Transferee as payment in full for such Notes
and (3) the Issuer may also assign each such Note a separate CUSIP or CUSIPs in
the Issuer’s sole discretion; (D) if the Transferee is a “foreign financial
institution” or other foreign financial entity subject to FATCA and does not
provide the Issuer, Co-Issuer, Trustee or Paying Agent with evidence that it has
complied with the applicable FATCA requirements, the Issuer, Co-Issuer, Trustee
or Paying Agent will be required to withhold amounts under FATCA on payments to
the Transferee; and (E) the Transferee 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;

 

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(xii) the Transferee agrees not to seek to commence in respect of the Issuer, or
cause the Issuer to commence, a bankruptcy proceeding before a year and a day
has elapsed since the payment in full to the holders of the Notes issued
pursuant to the Indenture or, if longer, the applicable preference period (plus
one day) then in effect;

 

(xiii) the Transferee acknowledges that, to the extent required by the Issuer,
as determined by the Issuer or the Loan Obligation Manager on behalf of the
Issuer, the Issuer may, upon notice to the Trustee, impose additional transfer
restrictions on the Notes to comply with the Uniting and Strengthening America
by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001 (the “USA PATRIOT Act”) and other similar laws or regulations,
including, without limitation, requiring each transferee of a Note to make
representations to the Issuer in connection with such compliance;

 

(xiv) the Transferee acknowledges that, each investor or prospective investor
will be required to make such representations to the Issuer, as determined by
the Issuer or the Loan Obligation Manager on behalf of the Issuer, as the Issuer
will require in connection with applicable AML/OFAC obligations, including,
without limitation, representations to the Issuer that such investor or
prospective investor (or any person controlling or controlled by the investor or
prospective investor; if the investor or prospective investor is a privately
held entity, any person having a beneficial interest in the investor or
prospective investor; or any person for whom the investor or prospective
investor is acting as agent or nominee in connection with the investment) is not
(i) an individual or entity named on any available lists of known or suspected
terrorists, terrorist organizations or of other sanctioned persons issued by the
United States government and the government(s) of any jurisdiction(s) in which
the Partnership is doing business, including the List of Specially Designated
Nationals and Blocked Persons administered by OFAC, as such list may be amended
from time to time; (ii) an individual or entity otherwise prohibited by the OFAC
sanctions programs; or (iii) a current or former senior foreign political figure
or politically exposed person , or an immediate family member or close associate
of such an individual.  Further, such investor or prospective investor must
represent to the Issuer that it is not a prohibited foreign shell bank;

 

(xv) the Transferee acknowledges that, each investor or prospective investor
will also be required to represent to the Issuer that amounts invested with the
Issuer were not directly or indirectly derived from activities that may
contravene U.S. Federal, state or international laws and regulations, including,
without limitation, any applicable anti-money laundering laws and regulations;

 

(xvi) the Transferee acknowledges that, by law, the Issuer, the Co-Placement
Agents, the Loan Obligation Manager or other service providers acting on behalf
of the Issuer, may be obligated to “freeze” any investment in a Note by such
investor.  The Issuer, the Co-Placement Agents, the Loan Obligation Manager or
other service providers acting on behalf of the Issuer may also be required to
report such action and to disclose the investor’s identity to OFAC or other
applicable governmental and regulatory authorities;

 

(xvii) the Transferee understands that the Issuer, the Trustee and the
Co-Placement Agents will rely upon the accuracy and truth of the foregoing
representations, and it hereby consents to such reliance; and

 

(xviii) the Definitive Notes will bear a legend to the following effect unless
the Issuer and the Co-Issuer determine otherwise in compliance with applicable
law:

 

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED OR QUALIFIED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION, AND
NEITHER THE ISSUER NOR THE CO-ISSUER HAS BEEN REGISTERED UNDER THE UNITED STATES
INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “1940 ACT”).  THIS NOTE MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT:  (A)(X) EITHER
(1) TO A “QUALIFIED INSTITUTIONAL BUYER” (A “QIB”), AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT (“RULE 144A”) OR (2) AN INSTITUTION THAT IS AN
“ACCREDITED INVESTOR” (WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) OR ANY ENTITY IN WHICH ALL OF THE EQUITY
OWNERS ARE SUCH “ACCREDITED INVESTORS”, AND (Y) WHO IS A “QUALIFIED PURCHASER”
AS DEFINED IN SECTION 2(a)(51) OF THE 1940 ACT AND THE RULES THEREUNDER (A
“QUALIFIED PURCHASER”) AND IS EITHER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QIB WHO IS A QUALIFIED PURCHASER, IN A

 

D-3-4

--------------------------------------------------------------------------------

 

PRINCIPAL AMOUNT OF NOT LESS THAN U.S.$250,000 (AND INTEGRAL MULTIPLES OF
U.S.$500 IN EXCESS THEREOF) FOR THE PURCHASER AND FOR EACH SUCH ACCOUNT, IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, SO LONG AS THIS NOTE IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, SUBJECT TO THE SATISFACTION OF
CERTAIN CONDITIONS SPECIFIED IN THE INDENTURE; OR (3) TO AN INSTITUTION THAT IS
NOT A “U.S. PERSON” IN AN “OFFSHORE TRANSACTION,” AS DEFINED IN REGULATION S
UNDER THE SECURITIES ACT (“REGULATION S”), IN ACCORDANCE WITH RULE 903 OR RULE
904 (AS APPLICABLE) OF REGULATION S IN A PRINCIPAL AMOUNT OF NOT LESS THAN
U.S.$250,000 (AND INTEGRAL MULTIPLES OF U.S.$500 IN EXCESS THEREOF), SUBJECT TO
THE SATISFACTION OF CERTAIN CONDITIONS SPECIFIED IN THE INDENTURE, AND (B) IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
AND ANY OTHER APPLICABLE JURISDICTION.  EACH PURCHASER OF A DEFINITIVE NOTE WILL
BE DEEMED TO HAVE MADE THE REPRESENTATIONS AND AGREEMENTS SET FORTH IN
SECTION 2.5 OF THE INDENTURE.  ANY TRANSFER IN VIOLATION OF THE FOREGOING WILL
BE OF NO FORCE AND EFFECT, WILL BE VOID AB INITIO, AND WILL NOT OPERATE TO
TRANSFER ANY RIGHTS TO THE TRANSFEREE, NOTWITHSTANDING ANY INSTRUCTIONS TO THE
CONTRARY TO THE ISSUER, THE CO-ISSUER, AS APPLICABLE, THE TRUSTEE OR ANY
INTERMEDIARY.  IF AT ANY TIME, THE ISSUER AND THE CO-ISSUER, AS APPLICABLE,
DETERMINE OR ARE NOTIFIED THAT THE HOLDER OF SUCH NOTE WAS IN BREACH, AT THE
TIME GIVEN, OF ANY OF THE REPRESENTATIONS SET FORTH IN THE INDENTURE, THE
TRUSTEE MAY CONSIDER THE ACQUISITION OF THIS NOTE VOID AND REQUIRE THAT THIS
NOTE BE TRANSFERRED TO A PERSON DESIGNATED BY THE ISSUER AND THE CO-ISSUER, AS
APPLICABLE.

 

You, the Issuer, the Co-Issuer and the Loan Obligation Manager are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceedings
or official inquiry with respect to the matters covered hereby.

 

 

 

[Name of Transferee]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

cc:                                Arbor Realty Commercial Real Estate Notes
2015-FL1, Ltd.
Arbor Realty Commercial Real Estate Notes 2015-FL1 LLC

 

D-3-5

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EXHIBIT E

 

FORM OF TRUSTEE REPORT REGARDING THE LOAN OBLIGATION FILE

 

LOAN OBLIGATION SCHEDULE / CLOSING DOCUMENT CHECKLIST

 

Loan Number

 

 

Date

Check one: Initial delivery

 

Trailing documents

 

Final delivery

 

CRITICAL DOCUMENTS:

 

 

 

DOCUMENT NAME

 

REQUIRED

 

ENCLOSED

 

STATUS

 

A.

 

Promissory Note

 

 

(22)

 

(23)

 

(24)

B.

 

Allonge(s)/Endorsement(s)
Endorsed to                                                     
List complete chain

 

 

 

 

 

 

 

C.

 

Participation Certificate

 

 

 

 

 

 

 

D.

 

Participation Agreement

 

 

 

 

 

 

 

E.

 

Letter(s) of Credit (list separately)
Beneficiary                                                   
Is this an Essential Letter of Credit(25)

 

 

 

 

 

 

 

F.

 

Letter of Credit Rider to the Closing Checklist List all terms including
Beneficiary, Amount, Expiration Date, Transferability, Issuing Bank and Address

 

 

 

 

 

 

 

G.

 

Assignment of Letters of Credit
Assignee

 

 

 

 

 

 

 

H.

 

Ground Lease
Include Amendments, Modifications and Extensions

 

 

 

 

 

 

 

I.

 

Memorandum of Lease (Ground Lease)

 

 

 

 

 

 

 

J.

 

Ground Lease Estoppel

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

(22)                          Indicate whether or not the document is part of
the loan structure.

(23)                          Applies to this delivery only - do not list if
documents were previously sent.

(24)                          Indicate if the document is an original,
jurisdiction certified copy or copy.  For Recordable documents - Indicate if the
document is recorded, sent for recordation, not sent for recordation.

(25)                          Essential Letters of Credit are in an amount
greater to the lesser of (i) 5% of the principal amount of the loan or
(ii) $500,000.

 

E-1

--------------------------------------------------------------------------------

 

BASIC AND TRANSFER DOCUMENTS

 

 

 

DOCUMENT NAME

 

REQUIRED

 

ENCLOSED

 

STATUS

 

1.

 

Mortgage(s)/Deed(s) of Trust and Security Agreement

 

 

 

 

 

 

 

2.

 

Interim Assignment of Mortgage/Deed of Trust Assignee (if any)

 

 

 

 

 

 

 

3.

 

Assignment of Mortgage/Deed of Trust Assignee Blank or Trust

 

 

 

 

 

 

 

4.

 

Consolidation Agreement
List all underlying notes

 

 

 

 

 

 

 

5.

 

Assignment(s) of Leases and Rents

 

 

 

 

 

 

 

6.

 

Interim Assignment of Assignment of Leases and Rents Assignee (if any)

 

 

 

 

 

 

 

7.

 

Assignment of Assignment of Leases and Rents Assignee Blank or Trust

 

 

 

 

 

 

 

8.

 

Title Policy

 

 

 

 

 

 

 

9.

 

Preliminary Evidence of Title
Type

 

 

 

 

 

 

 

10.

 

UCC-1 Financing Statement -
State =

 

 

 

 

 

 

 

11.

 

Interim UCC-3 Assignment
State =

Assignee =

 

 

 

 

 

 

 

12.

 

Interim UCC-3 Assignment
State =
Assignee =

 

 

 

 

 

 

 

13.

 

UCC-1 Financing Statement -
Fixture Filing
Jurisdiction =

 

 

 

 

 

 

 

14.

 

UCC-3 Assignment
Fixture Filing
Jurisdiction =
Assignee =

 

 

 

 

 

 

 

15.

 

UCC-3 Assignment
Jurisdiction =
Assignee - Blank or Trust

 

 

 

 

 

 

 

16.

 

UCC-1 Financing Statement -
Other Filing
Jurisdiction =

 

 

 

 

 

 

 

17.

 

UCC-3 Assignment
Other Filing
Jurisdiction =
Assignee =

 

 

 

 

 

 

 

18.

 

UCC-3 Assignment
Other filing
Jurisdiction =
Assignee - Blank or Trust

 

 

 

 

 

 

 

 

E-2

--------------------------------------------------------------------------------

 

19.

 

Loan Agreement

 

 

 

 

 

 

 

20.

 

Reserve or Escrow Agreement
List if multiple Agreements

 

 

 

 

 

 

 

21.

 

Cash Management Arrangements

 

 

 

 

 

 

 

 

 

a. Cash Management Agreement

 

 

 

 

 

 

 

 

 

b. Lockbox Agreement

 

 

 

 

 

 

 

 

 

c. Property Account/Clearing Account Agreement

 

 

 

 

 

 

 

 

 

d. Investment Property/Deposit Account Control Agreement

 

 

 

 

 

 

 

22.

 

Security Agreement (if separate from Mortgage)

 

 

 

 

 

 

 

23.

 

Guaranty/Indemnity Agreement (applies to all non-recourse events)

 

 

 

 

 

 

 

24.

 

Environmental Indemnity

 

 

 

 

 

 

 

 

SPECIALIZED PROPERTY DOCUMENTS

 

 

 

DOCUMENT NAME

 

REQUIRED

 

ENCLOSED

 

STATUS

 

 

 

List all other collateral(26) being delivered such as:

 

 

 

 

 

 

 

25.

 

For Franchise Loans
Franchise Agreement

 

 

 

 

 

 

 

26.

 

For Hotels
Comfort Letters/Tri-Party Letters (list all parties)

 

 

 

 

 

 

 

 

OTHER DOCUMENTS

 

 

 

DOCUMENT NAME

 

REQUIRED

 

ENCLOSED

 

STATUS

 

27.

 

List each document

 

 

 

 

 

 

 

28.

 

List each document

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

(26)                          The Checklist documents should match the headings
listed on the individual documents.  Documents should be sent in the order
listed on the Checklist.

 

E-3

--------------------------------------------------------------------------------

 

EXHIBIT F

 

FORM OF TRUST RECEIPT

 

Arbor Realty Commercial Real Estate Notes 2015-FL1, Ltd.
(the “Issuer”)

 

Arbor Realty Collateral Management, LLC
(the “Loan Obligation Manager”)

 

Re:                             Arbor Realty Commercial Real Estate Notes
2015-FL1, Ltd.

 

Ladies and Gentlemen:

 

In accordance with the provisions of the Indenture, dated as of February 27,
2015, by and among the Issuer, Arbor Realty Commercial Real Estate Notes
2015-FL1 LLC, as Co-Issuer, Arbor Realty SR, Inc., as Advancing Agent, and U.S.
Bank National Association, as Trustee, Paying Agent, Calculation Agent, Transfer
Agent, Custodial Securities Intermediary, Backup Advancing Agent and Notes
Registrar (the “Indenture”), the undersigned, as the Custodial Securities
Intermediary, hereby certifies that it has received the documents identified on
Schedule A hereto with respect to the Initial Loan Obligations identified on
such schedule and that it is holding all such documents in its capacity as the
Custodial Securities Intermediary subject to the terms of the Indenture,
Capitalized terms used but not defined in this Receipt have the meanings
assigned to them in the Indenture.

 

The Custodial Securities Intermediary makes no representations as to, and shall
not be responsible to verify, (i) the validity, legality, enforceability, due
authorization, recordability, sufficiency, or genuineness of any of the
documents in its custody relating to a Loan Obligation, or (ii) the
collectability, insurability, effectiveness or suitability of any such documents
in its custody relating to a Loan Obligation.

 

 

U.S. BANK NATIONAL ASSOCIATION, solely in its capacity

 

as Trustee and Custodial Securities Intermediary

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

F-1

--------------------------------------------------------------------------------

 

EXHIBIT G

 

FORM OF REQUEST FOR RELEASE

 

REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT

 

To:                             U.S. Bank National Association

 

In connection with the administration of the Loan Obligations held by you as the
Custodial Securities Intermediary on behalf of the Issuer, we request the
release, to the Loan Obligation Manager of [specify document] for the Loan
Obligation described below, for the reason indicated.

 

Borrower’s Name, Address & Zip Code:

 

Ship Files To:

 

 

 

·

 

·    Name:

 

 

 

·

 

·    Address:

 

 

 

·

 

·    Telephone Number:

 

 

 

·    Loan Obligation Description:

 

·

 

 

 

·    Current Outstanding Principal Balance:

 

·

 

Reason for Requesting Documents (check one):

 

o 1.

 

Purchased Asset Paid in Full. The Loan Obligation Manager hereby certifies that
all amounts received in connection therewith that are required to be remitted by
the borrower or other obligors thereunder have been paid in full and that any
amounts in respect thereof required to be remitted to the Trustee pursuant to
the Indenture have been so remitted.

 

 

 

o 2.

 

Purchased Asset Liquidated By                           . The Loan Obligation
Manager hereby certifies that all proceeds of insurance, condemnation or other
liquidation have been finally received and that any amounts in respect thereof
required to be remitted to the Trustee pursuant to the Indenture have been so
remitted.

 

 

 

o 3.

 

Other (explain)                                                         .

 

If box 1 or 2 above is checked, and if all or part of the Underlying Instruments
was previously released to us, please release to us our previous request and
receipt on file with you, as well as any additional documents in your possession
relating to the specified Loan Obligation.

 

If box 3 above is checked, upon our return of all of the above documents to you
as the Custodial Securities Intermediary, please acknowledge your receipt by
signing in the space indicated below and returning this form.

 

If box 3 above is checked, it is hereby acknowledged that a security interest
pursuant to the Uniform Commercial Code in the Loan Obligation described above
and in the proceeds of said Loan Obligation has been granted to the Trustee
pursuant to the Indenture.

 

If box 3 above is checked, in consideration of the aforesaid delivery by the
Custodial Securities Intermediary, the Loan Obligation Manager hereby agrees to
hold said Loan Obligation in trust for the Trustee, as provided under

 

G-1

--------------------------------------------------------------------------------

 

and in accordance with all provisions of the Indenture and the Loan Obligation
Management Agreement, and to return said Loan Obligation to the Custodial
Securities Intermediary no later than the close of business on the twentieth
(20th) Business Day following the date hereof or, if such day is not a Business
Day, on the immediately preceding Business Day.

 

The Loan Obligation Manager hereby acknowledges that it shall hold the
above-described Loan Obligation and any related Underlying Instruments in trust
for, and as the bailee of, the Trustee, and shall return said Loan Obligation
and any related documents only to the Custodial Securities Intermediary.

 

Capitalized terms used but not defined in this Request have the meanings
assigned to them in the Indenture, dated as of February 27, 2015, by and among
Arbor Realty Commercial Real Estate Notes 2015-FL1, LTD., as Issuer, Arbor
Realty Commercial Real Estate Notes 2015-FL1 LLC, as Co-Issuer, Arbor Realty
SR, Inc. as Advancing Agent, and U.S. Bank National Association, as Trustee,
Paying Agent, Calculation Agent, Transfer Agent, Custodial Securities
Intermediary, Backup Advancing Agent and Notes Registrar.

 

 

ARBOR REALTY COLLATERAL MANAGEMENT, LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

Acknowledgment of documents returned:

 

U.S. BANK NATIONAL ASSOCIATION

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

Date:

 

G-2

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EXHIBIT H

 

FORM OF NRSRO CERTIFICATION

 

[Date]

 

Arbor Realty Commercial Real Estate Notes 2015-FL1, Ltd.
c/o MaplesFS Limited
P.O. Box 1093, Queensgate House
Grand Cayman, KY1-1102 Cayman Islands

 

U.S. Bank National Association
190 South LaSalle Street, 8th Floor
Chicago, Illinois 60603

 

Attention:                                         Arbor Realty Commercial Real
Estate Notes 2015-FL1, Ltd. and Arbor Realty Commercial Real Estate Notes
2015-FL1 LLC

 

In accordance with the requirements for obtaining certain information pursuant
to the Indenture, dated as of February 27, 2015 (the “Indenture”), by and among
Arbor Realty Commercial Real Estate Notes 2015-FL1, Ltd. (the “Issuer”), as
Issuer, Arbor Realty Commercial Real Estate Notes 2015-FL1 LLC, as Co-Issuer,
Arbor Realty SR, Inc., as Advancing Agent, and U.S. Bank National Association
(the “Trustee”), as Trustee, the undersigned hereby certifies and agrees as
follows:

 

1.              The undersigned, a Nationally Recognized Statistical Rating
Organization, has provided the Issuer with the appropriate certifications under
Rule 17g-5(e) as promulgated under the Exchange Act.

 

2.              The undersigned has access to the 17g-5 Website.

 

3.              The undersigned shall be deemed to have recertified to the
provisions herein each time it accesses the 17g-5 Information on the 17g-5
Website.

 

Capitalized terms used but not defined herein shall have the respective meanings
assigned thereto in the Indenture.

 

H-1

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned has caused its name to be signed hereto by
its duly authorized signatory, as of the day and year written above.

 

 

 

Nationally Recognized Statistical Rating Organization

 

 

 

Name:

 

Title:

 

 

 

Company:

 

Phone:

 

Email:

 

H-2

--------------------------------------------------------------------------------

 

Exhibit I

 

Representations and Warranties

 

All capitalized terms used in this schedule to Exhibit I will have the meanings
assigned to such terms in the applicable Loan Obligations Purchase Agreement.

 

(A)                               Whole Loan; Ownership of Loan Obligations. 
Except for the Loan Obligations identified in Annex A to the Offering Memorandum
as a Senior Participation or as a Junior Participation, each Closing Date Loan
Obligation is a whole loan and not a participation interest in a Mortgage Loan. 
Each Additional Loan Obligation and Replacement Loan Obligation that is a Senior
Participation is a senior portion (or a pari passu interest in a senior portion)
of a whole mortgage loan.  At the time of the sale, transfer and assignment to
Purchaser, no Note, Mortgage or Senior Participation was subject to any
assignment (other than assignments to the Seller), participation (other than
with respect to the Senior Participations) or pledge, and the Seller had good
title to, and was the sole owner of, each Loan Obligation free and clear of any
and all liens, charges, pledges, encumbrances, participations (other than with
respect to the Senior Participations), any other ownership interests on, in or
to such Loan Obligation other than any servicing rights appointment or similar
agreement.  Seller has full right and authority to sell, assign and transfer
each Loan Obligation, and the assignment to Purchaser constitutes a legal, valid
and binding assignment of such Loan Obligation free and clear of any and all
liens, pledges, charges or security interests of any nature encumbering such
Loan Obligation.

 

(B)                               Loan Document Status. Each related Note,
Mortgage, Assignment of Leases, Rents and Profits (if a separate instrument),
guaranty and other agreement executed by or on behalf of the related borrower,
guarantor or other obligor in connection with such Mortgage Loan is the legal,
valid and binding obligation of the related borrower, guarantor or other obligor
(subject to any non-recourse provisions contained in any of the foregoing
agreements and any applicable state anti-deficiency or market value limit
deficiency legislation), as applicable, and is enforceable in accordance with
its terms, except (i) as such enforcement may be limited by (a) bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws affecting the enforcement of creditors’ rights generally and (b) general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law) and (ii) that certain provisions in such Loan
Documents (including, without limitation, provisions requiring the payment of
default interest, late fees or prepayment/yield maintenance or prepayment fees,
charges and/or premiums) are, or may be, further limited or rendered
unenforceable by or under applicable law, but (subject to the limitations set
forth in clause (i) above) such limitations or unenforceability will not render
such Loan Documents invalid as a whole or materially interfere with the
mortgagee’s realization of the principal benefits and/or security provided
thereby (clauses (i) and (ii) collectively, the “Standard Qualifications”).

 

Except as set forth in the immediately preceding sentences, there is no valid
offset, defense, counterclaim or right of rescission available to the related
borrower with respect to any of the related Notes, Mortgages or other Loan
Documents, including, without limitation, any such valid offset, defense,
counterclaim or right based on intentional fraud by Seller in connection with
the origination of the Mortgage Loan, that would deny the mortgagee the
principal benefits intended to be provided by the Note, Mortgage or other Loan
Documents.

 

(C)                               Mortgage Provisions.  The Loan Documents for
each Mortgage Loan contain provisions that render the rights and remedies of the
holder thereof adequate for the practical realization against the Mortgaged
Property of the principal benefits of the security intended to be provided
thereby, including realization by judicial or, if applicable, nonjudicial
foreclosure subject to the limitations set forth in the Standard Qualifications.

 

(D)                               Mortgage Status; Waivers and Modifications. 
Since origination and except prior to the Cut-off Date by written instruments
set forth in the related Mortgage File (a) the material terms of such Mortgage,
Note, Mortgage Loan guaranty, participation agreement, if applicable, and
related Loan Documents have not been waived, impaired, modified, altered,
satisfied, canceled, subordinated or rescinded in any respect

 

I-1

--------------------------------------------------------------------------------

 

which materially interferes with the security intended to be provided by such
Mortgage; (b) no related Mortgaged Property or any portion thereof has been
released from the lien of the related Mortgage in any manner which materially
interferes with the security intended to be provided by such Mortgage or the use
or operation of the remaining portion of such Mortgaged Property; and
(c) neither the related borrower nor the related guarantor nor the related
Participating Institution has been released from its material obligations under
the Mortgage Loan or participation agreement, if applicable.

 

(E)                                Lien; Valid Assignment.  Subject to the
Standard Qualifications, each assignment of Mortgage and assignment of
Assignment of Leases, Rents and Profits from the Seller constitutes a legal,
valid and binding assignment from the Seller.  Each related Mortgage is a legal,
valid and enforceable first lien on the related borrower’s fee or leasehold
interest in the Mortgaged Property in the principal amount of such Mortgage Loan
or allocated loan amount subject to the Title Exceptions, Permitted Encumbrances
and Standard Qualifications (each as defined herein). Each related Assignment of
Mortgage and Assignment of Leases, Rents and Profits from the Seller to the
Purchaser constitutes the legal, valid and binding first priority assignment
from the Seller, except as such enforcement may be limited by the Standard
Qualifications, any Permitted Encumbrances and any Title Exceptions (as defined
herein).  Each Mortgage and Assignment of Leases, Rents and Profits is freely
assignable. Notwithstanding anything herein to the contrary, no representation
is made as to the perfection of any security interest in rents or other personal
property to the extent that possession or control of such items or actions other
than the filing of Uniform Commercial Code (“UCC”) financing statements is
required in order to effect such perfection.

 

(F)                                 Permitted Liens; Title Insurance.  Each
Mortgaged Property securing a Mortgage Loan is covered by an American Land Title
Association loan title insurance policy or a comparable form of loan title
insurance policy approved for use in the applicable jurisdiction (or, if such
policy is yet to be issued, by a pro forma policy, a preliminary title policy
with escrow instructions or a “marked up” commitment, in each case binding on
the title insurer) (the “Title Policy”) in the original principal amount of such
Mortgage Loan (or with respect to a Mortgage Loan secured by multiple
properties, an amount equal to at least the allocated loan amount with respect
to the Title Policy for each such property) after all advances of principal
(including any advances held in escrow or reserves), that insures for the
benefit of the owner of the indebtedness secured by the Mortgage, the first
priority lien of the Mortgage, which lien is subject only to the following title
exceptions (each such title exception, including any exceptions set forth on
Schedule 1(a) to the applicable Loan Obligations Purchase Agreement, a “Title
Exception” and collectively, the “Title Exceptions”): (a) the lien of current
real property taxes, water charges, sewer rents and assessments not yet due and
payable; (b) covenants, conditions and restrictions, rights of way, easements
and other matters of public record; (c) the exceptions (general and specific)
and exclusions set forth in such Title Policy; (d) other matters to which like
properties are commonly subject; (e) the rights of tenants (as tenants only)
under leases (including subleases) pertaining to the related Mortgaged Property
and condominium declarations; and (f) if the related Mortgage Loan is
cross-collateralized and cross-defaulted with another Mortgage Loan (each a
“Crossed Mortgage Loan”), the lien of the Mortgage for another Mortgage Loan
that is cross-collateralized and cross-defaulted with such Crossed Mortgage
Loan; provided that none of which items (a) through (f), individually or in the
aggregate, materially and adversely interferes with the value or current use of
the Mortgaged Property or the security intended to be provided by such Mortgage
or the borrower’s ability to pay its obligations when they become due
(collectively, the “Permitted Encumbrances”).  Except as contemplated by clause
(f) of the preceding sentence, none of the Permitted Encumbrances are mortgage
liens that are senior to or coordinate and co-equal with the lien of the related
Mortgage.  Such Title Policy (or, if it has yet to be issued, the coverage to be
provided thereby) is in full force and effect, all premiums thereon have been
paid and no claims have been made by the Seller thereunder and no claims have
been paid thereunder. Neither the Seller, nor to the Seller’s knowledge, any
other holder of the Mortgage Loan, has done, by act or omission, anything that
would materially impair the coverage under such Title Policy.

 

(G)                               Junior Liens.  It being understood that B
notes and junior participation interests secured by the same Mortgage as a
Mortgage Loan are not subordinate mortgages or junior liens, except for any
Crossed Mortgage Loan, there are, as of origination, and to the Seller’s
knowledge, as of the Cut-off Date, no subordinate mortgages or junior liens
securing the payment of money encumbering the related Mortgaged Property (other
than Permitted Encumbrances and the Title Exceptions, taxes and assessments,
mechanics

 

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and materialmens liens (which are the subject of the representation in paragraph
(5) above), and equipment and other personal property financing).  Except as set
forth in Schedule 1(b) to the applicable Loan Obligations Purchase Agreement,
the Seller has no knowledge of any mezzanine debt secured directly by interests
in the related borrower.

 

(H)                              Assignment of Leases, Rents and Profits.  There
exists as part of the related Mortgage File an Assignment of Leases, Rents and
Profits (either as a separate instrument or incorporated into the related
Mortgage). Subject to the Permitted Encumbrances and the Title Exceptions, each
related Assignment of Leases, Rents and Profits creates a valid first-priority
collateral assignment of, or a valid first-priority lien or security interest
in, rents and certain rights under the related lease or leases, subject only to
a license granted to the related borrower to exercise certain rights and to
perform certain obligations of the lessor under such lease or leases, including
the right to operate the related leased property, except as the enforcement
thereof may be limited by the Standard Qualifications.  The related Mortgage or
related Assignment of Leases, Rents and Profits, subject to applicable law,
provides that, upon an event of default under the Mortgage Loan, a receiver is
permitted to be appointed for the collection of rents or for the related
mortgagee to enter into possession to collect the rents or for rents to be paid
directly to the mortgagee.

 

(I)                                   UCC Filings.  The Seller has filed and/or
recorded or caused to be filed and/or recorded (or, if not filed and/or
recorded, have been submitted in proper form for filing and/or recording), UCC
financing statements in the appropriate public filing and/or recording offices
necessary at the time of the origination of the Mortgage Loan to perfect a valid
security interest in all items of physical personal property reasonably
necessary to operate such Mortgaged Property owned by such borrower and located
on the related Mortgaged Property (other than any non-material personal
property, any personal property subject to a purchase money security interest, a
sale and leaseback financing arrangement as permitted under the terms of the
related Mortgage Loan documents or any other personal property leases applicable
to such personal property), to the extent perfection may be effected pursuant to
applicable law by recording or filing, as the case may be.  Subject to the
Standard Qualifications, each related Mortgage (or equivalent document) creates
a valid and enforceable lien and security interest on the items of personalty
described above.  No representation is made as to the perfection of any security
interest in rents or other personal property to the extent that possession or
control of such items or actions other than the filing of UCC financing
statements are required in order to effect such perfection.

 

(J)                                   Condition of Property.  Seller or the
originator of the Mortgage Loan (i) inspected or caused to be inspected each
related Mortgaged Property at least six months prior to origination of the
Mortgage Loan and, (ii) if the term of the Mortgage Loan has already continued
for at least twelve months, inspected or caused to be inspected each related
Mortgaged Property at least once during the past twelve months.

 

An engineering report or property condition assessment was prepared in
connection with the origination of each Mortgage Loan not more than twelve
months prior to the origination of such Mortgage Loan.  To the Seller’s
knowledge, based solely upon due diligence customarily performed in connection
with the origination of comparable mortgage loans, as of the Closing Date, each
related Mortgaged Property was free and clear of any material damage (other than
(i) deferred maintenance or repairs for which escrows were established at
origination and (ii) any damage fully covered by insurance) that would affect
materially and adversely the use or value of such Mortgaged Property as security
for the Mortgage Loan.

 

(K)                              Taxes and Assessments.  All taxes, governmental
assessments and other outstanding governmental charges (including, without
limitation, water and sewage charges), or installments thereof, that could be a
lien on the related Mortgaged Property that would be of equal or superior
priority to the lien of the Mortgage and that prior to the Cut-off Date have
become delinquent in respect of each related Mortgaged Property have been paid,
or an escrow of funds has been established in an amount sufficient to cover such
payments and reasonably estimated interest and penalties, if any, thereon.  For
purposes of this representation and warranty, real estate taxes and governmental
assessments and other outstanding governmental charges and installments thereof
shall not be considered delinquent until the earlier of (a) the date on which
interest and/or penalties would first be payable thereon and (b) the date on
which enforcement action is entitled to be taken by the related taxing
authority.

 

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(L)                                Condemnation.  As of the date of origination
and to the Seller’s knowledge as of the Cut-off Date, there is no proceeding
pending, and, to the Seller’s knowledge as of the date of origination and as of
the Cut-off Date, there is no proceeding threatened, for the total or partial
condemnation of such Mortgaged Property that would have a material adverse
effect on the value, use or operation of the Mortgaged Property.

 

(M)                            Actions Concerning Mortgage Loan.  As of the date
of origination and to the Seller’s knowledge as of the Cut-off Date, there was
no pending or filed action, suit or proceeding, arbitration or governmental
investigation involving any borrower, guarantor, or borrower’s interest in the
Mortgaged Property, an adverse outcome of which would reasonably be expected to
materially and adversely affect (a) such borrower’s title to the Mortgaged
Property, (b) the validity or enforceability of the Mortgage, (c) such
borrower’s ability to perform under the related Mortgage Loan, (d) such
guarantor’s ability to perform under the related guaranty, (e) the principal
benefit of the security intended to be provided by the Mortgage Loan documents
or (f) the current principal use of the Mortgaged Property.

 

(N)                               Escrow Deposits.  All escrow deposits and
payments required to be escrowed with lender pursuant to each Mortgage Loan are
in the possession, or under the control, of the Seller or its servicer, and
there are no deficiencies (subject to any applicable grace or cure periods) in
connection therewith, and all such escrows and deposits (or the right thereto)
that are required to be escrowed with lender under the related Loan Documents
are being conveyed by the Seller to Purchaser or its servicer.

 

(O)                               No Holdbacks.  The Stated Principal Balance as
of the Cut-off Date of the Mortgage Loan set forth on the mortgage loan schedule
attached as Exhibit A to the applicable Loan Obligations Purchase Agreement has
been fully disbursed as of the Closing Date and there is no requirement for
future advances thereunder (except in those cases where the full amount of the
Mortgage Loan has been disbursed but a portion thereof is being held in escrow
or reserve accounts pending the satisfaction of certain conditions relating to
leasing, repairs or other matters with respect to the related Mortgaged
Property, the borrower or other considerations determined by Seller to merit
such holdback).

 

(P)                                 Insurance.  Each related Mortgaged Property
is, and is required pursuant to the related Mortgage to be, insured by a
property insurance policy providing coverage for loss in accordance with
coverage found under a “special cause of loss form” or “all risk form” that
includes replacement cost valuation issued by an insurer meeting the
requirements of the related Loan Documents and having a claims-paying or
financial strength rating of at least A or better and a financial class of X or
better by A.M. Best Company, Inc. (collectively the “Insurance Rating
Requirements”), in an amount (subject to a customary deductible) not less than
the lesser of (1) the original principal balance of the Mortgage Loan and
(2) the full insurable value on a replacement cost basis of the improvements,
furniture, furnishings, fixtures and equipment owned by the borrower and
included in the Mortgaged Property (with no deduction for physical
depreciation), but, in any event, not less than the amount necessary or
containing such endorsements as are necessary to avoid the operation of any
coinsurance provisions with respect to the related Mortgaged Property.

 

Each related Mortgaged Property is also covered, and required to be covered
pursuant to the related Loan Documents, by business interruption or rental loss
insurance which (subject to a customary deductible) covers a period of not less
than 12 months (or with respect to each Mortgage Loan on a single asset with a
principal balance of $50 million or more, 18 months).

 

If any material part of the improvements, exclusive of a parking lot, located on
a Mortgaged Property is in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards, the related
borrower is required to maintain insurance in the maximum amount available under
the National Flood Insurance Program.

 

If the Mortgaged Property is located within 25 miles of the coast of the Gulf of
Mexico or the Atlantic coast of Florida, Georgia, South Carolina or North
Carolina, the related borrower is required to maintain coverage for windstorm
and/or windstorm related perils and/or “named storms” issued by an insurer
meeting the Insurance Rating Requirements or endorsement covering damage from
windstorm and/or windstorm related perils and/or named storms.

 

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The Mortgaged Property is covered, and required to be covered pursuant to the
related Loan Documents, by a commercial general liability insurance policy
issued by an insurer meeting the Insurance Rating Requirements including
coverage for property damage, contractual damage and personal injury (including
bodily injury and death) in amounts as are generally required by the Seller for
loans originated for securitization, and in any event not less than $1 million
per occurrence and $1 million in the aggregate.

 

An architectural or engineering consultant has performed an analysis of each of
the Mortgaged Properties located in seismic zones 3 or 4 in order to evaluate
the structural and seismic condition of such property, for the sole purpose of
assessing the scenario expected limit (“SEL”) for the Mortgaged Property in the
event of an earthquake. In such instance, the SEL was based on a 475-year return
period, an exposure period of 50 years and a 10% probability of exceedance. If
the resulting report concluded that the SEL would exceed 20% of the amount of
the replacement costs of the improvements, earthquake insurance on such
Mortgaged Property was obtained by an insurer rated least “A:VIII” by A.M. Best
Company or “A3” (or the equivalent) from Moody’s Investors Service, Inc. or
“A-”  by Standard & Poor’s Ratings Service in an amount not less than 100% of
the SEL.

 

The Loan Documents provide that if a specified percentage (which is in no event
greater than 20%) of the reasonably estimated aggregate fair market value of the
Mortgaged Property is damaged or destroyed, the lender shall have the option, in
its sole discretion, to apply the net casualty insurance proceeds received to
the payment of the Mortgage Loan or to allow such proceeds to be used for the
repair or restoration of the Mortgaged Property.

 

All premiums on all insurance policies referred to in this section required to
be paid as of the Cut-off Date have been paid, and such insurance policies name
the lender under the Mortgage Loan and its successors and assigns as a loss
payee under a mortgagee endorsement clause or, in the case of the general
liability insurance policy, as named or additional insured. Such insurance
policies will inure to the benefit of the Trustee.  Each related Mortgage Loan
obligates the related borrower to maintain all such insurance and, at such
borrower’s failure to do so, authorizes the lender to maintain such insurance at
the borrower’s cost and expense and to charge such borrower for related
premiums.  All such insurance policies (other than commercial liability
policies) require at least 30 days prior notice to the lender of termination or
cancellation (or such lesser period, not less than 10 days, as may be required
by applicable law) arising for any reason other than non-payment of a premium
and no such notice has been received by Seller.

 

(Q)                               Access; Utilities; Separate Tax Lots.  Each
Mortgaged Property (a) is located on or adjacent to a public road and has direct
legal access to such road, or has access via an irrevocable easement or
irrevocable right of way permitting ingress and egress to/from a public road,
(b) is served by or has uninhibited access rights to public or private water and
sewer (or well and septic) and all required utilities, all of which are
appropriate for the current use of the Mortgaged Property, and (c) constitutes
one or more separate tax parcels which do not include any property which is not
part of the Mortgaged Property or is subject to an endorsement under the related
Title Policy insuring the Mortgaged Property, or in certain cases, an
application has been, or will be, made to the applicable governing authority for
creation of separate tax lots, in which case the Mortgage Loan requires the
borrower to escrow an amount sufficient to pay taxes for the existing tax parcel
of which the Mortgaged Property is a part until the separate tax lots are
created.

 

(R)                               No Encroachments.  To Seller’s knowledge based
solely on surveys obtained in connection with origination and the lender’s Title
Policy (or, if such policy is not yet issued, a pro forma title policy, a
preliminary title policy with escrow instructions or a “marked up” commitment)
obtained in connection with the origination of each Mortgage Loan, all material
improvements that were included for the purpose of determining the appraised
value of the related Mortgaged Property at the time of the origination of such
Mortgage Loan are within the boundaries of the related Mortgaged Property,
except encroachments that do not materially and adversely affect the value or
current use of such Mortgaged Property or for which insurance or endorsements
were obtained under the Title Policy.  No improvements on adjoining parcels
encroach onto the related Mortgaged Property except for encroachments that do
not materially and adversely affect the value or current use of such Mortgaged
Property or for which insurance or endorsements were obtained under the Title
Policy.  No improvements encroach upon any easements except for encroachments
the

 

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removal of which would not materially and adversely affect the value or current
use of such Mortgaged Property or for which insurance or endorsements obtained
with respect to the Title Policy.

 

(S)                                 No Contingent Interest or Equity
Participation.  No Mortgage Loan has a shared appreciation feature, any other
contingent interest feature or a negative amortization feature or an equity
participation by Seller.

 

(T)                                Compliance with Usury Laws.  The Mortgage
Rate (exclusive of any default interest, late charges, yield maintenance charge,
or prepayment premiums) of such Mortgage Loan complied as of the date of
origination with, or was exempt from, applicable state or federal laws,
regulations and other requirements pertaining to usury.

 

(U)                               Authorized to do Business.  To the extent
required under applicable law, as of the Cut-off Date or as of the date that
such entity held the Note, each holder of the Note was authorized to transact
and do business in the jurisdiction in which each related Mortgaged Property is
located, or the failure to be so authorized does not materially and adversely
affect the enforceability of such Mortgage Loan.

 

(V)                               Trustee under Deed of Trust.  With respect to
each Mortgage which is a deed of trust, as of the date of origination and, to
the Seller’s knowledge, as of the Closing Date, a trustee, duly qualified under
applicable law to serve as such, currently so serves and is named in the deed of
trust or has been substituted in accordance with the Mortgage and applicable law
or may be substituted in accordance with the Mortgage and applicable law by the
related mortgagee.

 

(W)                            Local Law Compliance.  To the Seller’s knowledge,
based upon any of a letter from any governmental authorities, a legal opinion,
an architect’s letter, a zoning consultant’s report, an endorsement to the
related Title Policy, or other affirmative investigation of local law compliance
consistent with the investigation conducted by the Seller for similar commercial
and multi-family mortgage loans intended for securitization, with respect to the
improvements located on or forming part of each Mortgaged Property securing a
Mortgage Loan as of the date of origination of such Mortgage Loan and as of the
Cut-off Date, there are no material violations of applicable zoning ordinances,
building codes and land laws (collectively “Zoning Regulations”) other than
those which (i) are insured by the Title Policy or a law and ordinance or other
insurance policy or (ii) would not have a material adverse effect on the
Mortgage Loan.  The terms of the Loan Documents require the borrower to comply
in all material respects with all applicable governmental regulations, zoning
and building laws.

 

(X)                               Licenses and Permits.  Each borrower covenants
in the Loan Documents that it shall keep all material licenses, permits and
applicable governmental authorizations necessary for its operation of the
Mortgaged Property in full force and effect, and to the Seller’s knowledge based
upon a letter from any government authorities or other affirmative investigation
of local law compliance consistent with the investigation conducted by the
Seller for similar commercial and multi-family mortgage loans intended for
securitization, all such material licenses, permits and applicable governmental
authorizations are in effect.  The Mortgage Loan requires the related borrower
to be qualified to do business in the jurisdiction in which the related
Mortgaged Property is located.

 

(Y)                               Recourse Obligations.  The Loan Documents for
each Mortgage Loan provide that such Mortgage Loan is non-recourse to the
related parties thereto except for certain carve-outs, including but not limited
to the following: (a) the related borrower and at least one individual or entity
shall be fully liable for actual losses, liabilities, costs and damages arising
from certain acts of the related borrower and/or its principals specified in the
related Loan Documents, which acts generally include the following: (i) acts of
fraud or intentional material misrepresentation, (ii) misapplication or
misappropriation of rents, insurance proceeds or condemnation awards, (iii) 
intentional material physical waste of the Mortgaged Property, and (iv) any
breach of the environmental covenants contained in the related Loan Documents,
and (b) the Mortgage Loan shall become full recourse to the related borrower and
at least one individual or entity, if the related borrower files a voluntary
petition under federal or state bankruptcy or insolvency law.

 

(Z)                                Mortgage Releases.  The terms of the related
Mortgage or related Loan Documents do not provide for release of any material
portion of the Mortgaged Property from the lien of the Mortgage except (a) a
partial

 

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release, accompanied by principal repayment of not less than a specified
percentage at least equal to the lesser of (i) 110% of the related allocated
loan amount of such portion of the Mortgaged Property and (ii) the outstanding
principal balance of the Mortgage Loan, (b) upon payment in full of such
Mortgage Loan, (c) releases of out-parcels that are unimproved or other portions
of the Mortgaged Property which will not have a material adverse effect on the
underwritten value of the Mortgaged Property and which were not afforded any
value in the appraisal obtained at the origination of the Mortgage Loan and are
not necessary for physical access to the Mortgaged Property or compliance with
zoning requirements, or (d) as required pursuant to an order of condemnation.

 

(AA)                      Financial Reporting and Rent Rolls.  Each Mortgage
requires the borrower to provide the owner or holder of the Mortgage with
quarterly and annual operating statements, and quarterly rent rolls for
properties and annual financial statements, which annual financial statements
with respect to each Mortgage Loan with more than one borrower are in the form
of an annual combined balance sheet of the borrower entities (and no other
entities), together with the related combined statements of operations, members’
capital and cash flows, including a combining balance sheet and statement of
income for the Mortgaged Properties on a combined basis.

 

(BB)                      Acts of Terrorism Exclusion.  With respect to each
Mortgage Loan over $20 million, the related special-form all-risk insurance
policy and business interruption policy (issued by an insurer meeting the
Insurance Rating Requirements) do not specifically exclude Acts of Terrorism, as
defined in the Terrorism Risk Insurance Act of 2002, as amended by the Terrorism
Risk Insurance Program Reauthorization Act of 2007 and further amended by the
Terrorism Risk Insurance Program Reauthorization Act of 2015 (collectively
referred to as “TRIA”), from coverage, or if such coverage is excluded, it is
covered by a separate terrorism insurance policy.  With respect to each other
Mortgage Loan, the related special-form all-risk insurance policy and business
interruption policy (issued by an insurer meeting the Insurance Rating
Requirements) did not, as of the date of origination of the Mortgage Loan, and,
to Seller’s knowledge, do not, as of the Cut-off Date, specifically exclude Acts
of Terrorism, as defined in TRIA, from coverage, or if such coverage is
excluded, it is covered by a separate terrorism insurance policy.  With respect
to each Mortgage Loan, the related Loan Documents do not expressly waive or
prohibit the mortgagee from requiring coverage for Acts of Terrorism, as defined
in TRIA, or damages related thereto except to the extent that any right to
require such coverage may be limited by commercial availability on commercially
reasonable terms, or as otherwise indicated in Schedule 1(a) to the applicable
Loan Obligations Purchase Agreement; provided, however, that if TRIA or a
similar or subsequent statute is not in effect, then; provided that terrorism
insurance is commercially available, the borrower under each Mortgage Loan is
required to carry terrorism insurance, but in such event the borrower shall not
be required to spend on terrorism insurance coverage more than two times the
amount of the insurance premium that is payable in respect of the property and
business interruption/rental loss insurance required under the related Loan
Documents (without giving effect to the cost of terrorism and earthquake
components of such casualty and business interruption/rental loss insurance) at
the time of the origination of the Mortgage Loan, and if the cost of terrorism
insurance exceeds such amount, the borrower is required to purchase the maximum
amount of terrorism insurance available with funds equal to such amount.

 

(CC)                      Due on Sale or Encumbrance.  Subject to specific
exceptions set forth below, each Mortgage Loan contains a “due on sale” or other
such provision for the acceleration of the payment of the unpaid principal
balance of such Mortgage Loan if, without the consent of the holder of the
Mortgage (which consent, in some cases, may not be unreasonably withheld) and/or
complying with the requirements of the related Loan Documents (which provide for
transfers without the consent of the lender which are customarily acceptable to
the Seller lending on the security of property comparable to the related
Mortgaged Property, including, without limitation, transfers of worn-out or
obsolete furnishings, fixtures, or equipment promptly replaced with property of
equivalent value and functionality and transfers by leases entered into in
accordance with the Loan Documents), (a) the related Mortgaged Property, or any
equity interest of greater than 50% in the related borrower, is directly or
indirectly pledged, transferred or sold, other than as related to (i) family and
estate planning transfers or transfers upon death or legal incapacity,
(ii) transfers to certain affiliates as defined in the related Loan Documents,
(iii) transfers of less than, or other than, a controlling interest in the
related borrower, (iv) transfers to another holder of direct or indirect equity
in the borrower, a specific Person designated in the related Loan Documents or a
Person satisfying specific criteria identified in the

 

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related Loan Documents, such as a qualified equityholder, (v) transfers of stock
or similar equity units in publicly traded companies or (vi) a substitution or
release of collateral within the parameters of paragraph (26) herein or the
exceptions thereto set forth in Schedule 1(a) to the applicable Loan Obligations
Purchase Agreement, or (vii) as set forth on Schedule 1(b) to the applicable
Loan Obligations Purchase Agreement by reason of any mezzanine debt that existed
at the origination of the related Mortgage Loan, or future permitted mezzanine
debt as set forth on Schedule 1(c) to the applicable Loan Obligations Purchase
Agreement or (b) the related Mortgaged Property is encumbered with a subordinate
lien or security interest against the related Mortgaged Property, other than
(i) any Companion Loan or any subordinate debt that existed at origination and
is permitted under the related Loan Documents, (ii) purchase money security
interests, (iii) any Crossed Mortgage Loan as set forth on Schedule 1(d) to the
applicable Loan Obligations Purchase Agreement, or (iv) Permitted Encumbrances. 
The Mortgage or other Loan Documents provide that to the extent any Rating
Agency fees are incurred in connection with the review of and consent to any
transfer or encumbrance, the borrower is responsible for such payment along with
all other reasonable fees and expenses incurred by the Mortgagee relative to
such transfer or encumbrance.

 

(DD)                      Single-Purpose Entity.  Each Mortgage Loan requires
the borrower to be a Single-Purpose Entity for at least as long as the Mortgage
Loan is outstanding.  Both the Loan Documents and the organizational documents
of the borrower with respect to each Mortgage Loan with a Cut-off Date Stated
Principal Balance in excess of $5 million provide that the borrower is a
Single-Purpose Entity, and each Mortgage Loan with a Cut-off Date Stated
Principal Balance of $20 million or more has a counsel’s opinion regarding
non-consolidation of the borrower.  For this purpose, a “Single-Purpose Entity”
shall mean an entity, other than an individual, whose organizational documents
(or if the Mortgage Loan has a Cut-off Date Stated Principal Balance equal to $5
million or less, its organizational documents or the related Loan Documents)
provide substantially to the effect that it was formed or organized solely for
the purpose of owning and operating one or more of the Mortgaged Properties
securing the Mortgage Loans and prohibit it from engaging in any business
unrelated to such Mortgaged Property or Properties, and whose organizational
documents further provide, or which entity represented in the related Loan
Documents, substantially to the effect that it does not have any assets other
than those related to its interest in and operation of such Mortgaged Property
or Properties, or any indebtedness other than as permitted by the related
Mortgage(s) or the other related Loan Documents, that it has its own books and
records and accounts separate and apart from those of any other person (other
than a borrower for a Crossed Mortgage Loan), and that it holds itself out as a
legal entity, separate and apart from any other person or entity.

 

(EE)                        Ground Leases.  For purposes of each Loan
Obligations Purchase Agreement, a “Ground Lease” shall mean a lease creating a
leasehold estate in real property where the fee owner as the ground lessor
conveys for a term or terms of years its entire interest in the land and
buildings and other improvements, if any, comprising the premises demised under
such lease to the ground lessee (who may, in certain circumstances, own the
building and improvements on the land), subject to the reversionary interest of
the ground lessor as fee owner and does not include industrial development
agency (IDA) or similar leases for purposes of conferring a tax abatement or
other benefit.

 

With respect to any Mortgage Loan where the Mortgage Loan is secured by a
leasehold estate under a Ground Lease in whole or in part, and the related
Mortgage does not also encumber the related lessor’s fee interest in such
Mortgaged Property, based upon the terms of the Ground Lease and any estoppel or
other agreement received from the ground lessor in favor of Seller, its
successors and assigns, Seller represents and warrants that:

 

(a)         The Ground Lease or a memorandum regarding such Ground Lease has
been duly recorded or submitted for recordation in a form that is acceptable for
recording in the applicable jurisdiction.  The Ground Lease or an estoppel or
other agreement received from the ground lessor permits the interest of the
lessee to be encumbered by the related Mortgage and does not restrict the use of
the related Mortgaged Property by such lessee, its successors or assigns in a
manner that would materially adversely affect the security provided by the
related Mortgage;

 

(b)         The lessor under such Ground Lease has agreed in a writing included
in the related Mortgage File (or in such Ground Lease) that the Ground Lease may
not be amended or modified, or canceled or

 

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terminated by agreement of lessor and lessee, without the prior written consent
of the lender, and no such consent has been granted by the Seller since the
origination of the Mortgage Loan except as reflected in any written instruments
which are included in the related Mortgage File;

 

(c)          The Ground Lease has an original term (or an original term plus one
or more optional renewal terms, which, under all circumstances, may be
exercised, and will be enforceable, by either borrower or the mortgagee) that
extends not less than 20 years beyond the stated maturity of the related
Mortgage Loan, or 10 years past the stated maturity if such Mortgage Loan fully
amortizes by the stated maturity (or with respect to a Mortgage Loan that
accrues on an actual 360 basis, substantially amortizes);

 

(d)         The Ground Lease either (i) is not subject to any liens or
encumbrances superior to, or of equal priority with, the Mortgage, except for
the related fee interest of the ground lessor and the Permitted Encumbrances, or
(ii)  is subject to a subordination, non-disturbance and attornment agreement to
which the mortgagee on the lessor’s fee interest in the Mortgaged Property is
subject;

 

(e)          The Ground Lease does not place commercially unreasonable
restrictions on the identity of the Mortgagee and the Ground Lease is assignable
to the holder of the Mortgage Loan and its successors and assigns without the
consent of the lessor thereunder, and in the event it is so assigned, it is
further assignable by the holder of the Mortgage Loan and its successors and
assigns without the consent of the lessor;

 

(f)           The Seller has not received any written notice of material default
under or notice of termination of such Ground Lease.  To the Seller’s knowledge,
there is no material default under such Ground Lease and no condition that, but
for the passage of time or giving of notice, would result in a material default
under the terms of such Ground Lease and to the Seller’s knowledge, such Ground
Lease is in full force and effect as of the Closing Date;

 

(g)          The Ground Lease or ancillary agreement between the lessor and the
lessee requires the lessor to give to the lender written notice of any default,
and provides that no notice of default or termination is effective against the
lender unless such notice is given to the lender;

 

(h)         A lender is permitted a reasonable opportunity (including, where
necessary, sufficient time to gain possession of the interest of the lessee
under the Ground Lease through legal proceedings) to cure any default under the
Ground Lease which is curable after the lender’s receipt of notice of any
default before the lessor may terminate the Ground Lease;

 

(i)             The Ground Lease does not impose any restrictions on subletting
that would be viewed as commercially unreasonable by the Seller in connection
with loans originated for securitization;

 

(j)            Under the terms of the Ground Lease, an estoppel or other
agreement received from the ground lessor and the related Mortgage (taken
together), any related insurance proceeds or the portion of the condemnation
award allocable to the ground lessee’s interest (other than (i) de minimis
amounts for minor casualties or (ii) in respect of a total or substantially
total loss or taking as addressed in clause (k) below) will be applied either to
the repair or to restoration of all or part of the related Mortgaged Property
with (so long as such proceeds are in excess of the threshold amount specified
in the related Loan Documents) the lender or a trustee appointed by it having
the right to hold and disburse such proceeds as repair or restoration
progresses, or to the payment of the outstanding principal balance of the
Mortgage Loan, together with any accrued interest;

 

(k)         In the case of a total or substantially total taking or loss, under
the terms of the Ground Lease, an estoppel or other agreement and the related
Mortgage (taken together), any related insurance proceeds, or portion of the
condemnation award allocable to ground lessee’s interest in respect of a total
or substantially total loss or taking of the related Mortgaged Property to the
extent not

 

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applied to restoration, will be applied first to the payment of the outstanding
principal balance of the Mortgage Loan, together with any accrued interest; and

 

(l)             Provided that the lender cures any defaults which are
susceptible to being cured, the ground lessor has agreed to enter into a new
lease with the lender upon termination of the Ground Lease for any reason,
including rejection of the Ground Lease in a bankruptcy proceeding.

 

(FF)                          Servicing.  The servicing and collection practices
used by the Seller with respect to the Mortgage Loan have been, in all respects,
legal and have met customary industry standards for servicing of commercial
loans for conduit loan programs.

 

(GG)                      Origination and Underwriting.  The origination
practices of the Seller (or the related originator if the Seller was not the
originator) with respect to each Mortgage Loan have been, in all material
respects, legal and as of the date of its origination, such Mortgage Loan and
the origination thereof complied in all material respects with, or was exempt
from, all requirements of federal, state or local law relating to the
origination of such Mortgage Loan; provided that such representation and
warranty does not address or otherwise cover any matters with respect to
federal, state or local law otherwise covered in this Exhibit I.

 

(HH)                    No Material Default; Payment Record.  No Mortgage Loan
has been more than 30 days delinquent, without giving effect to any grace or
cure period, in making required payments since origination, and as of the date
hereof, no Mortgage Loan is more than 30 days delinquent (beyond any applicable
grace or cure period) in making required payments as of the Closing Date.  To
the Seller’s knowledge, there is (a) no material default, breach, violation or
event of acceleration existing under the related Mortgage Loan or participation
agreement, if applicable, or (b) no event (other than payments due but not yet
delinquent) which, with the passage of time or with notice and the expiration of
any grace or cure period, would constitute a material default, breach, violation
or event of acceleration, which default, breach, violation or event of
acceleration, in the case of either clause (a) or clause (b), materially and
adversely affects the value of the Mortgage Loan or participation agreement, if
applicable, or the value, use or operation of the related Mortgaged Property;
provided, however, that this representation and warranty does not cover any
default, breach, violation or event of acceleration that specifically pertains
to or arises out of an exception scheduled to any other representation and
warranty made by the Seller in this Exhibit I.  No person other than the holder
of such Mortgage Loan may declare any event of default under the Mortgage Loan
or accelerate any indebtedness under the Loan Documents.

 

(II)                              Bankruptcy.  As of the date of origination of
the related Mortgage Loan and to the Seller’s knowledge as of the Cut-off Date,
no borrower, guarantor or tenant occupying a single-tenant property is a debtor
in state or federal bankruptcy, insolvency or similar proceeding.

 

(JJ)                              Organization of Borrower.  With respect to
each Mortgage Loan, in reliance on certified copies of the organizational
documents of the borrower delivered by the borrower in connection with the
origination of such Mortgage Loan, the borrower is an entity organized under the
laws of a state of the United States of America, the District of Columbia or the
Commonwealth of Puerto Rico.  Except with respect to any Crossed Mortgage Loan,
no Mortgage Loan has a borrower that is an Affiliate of another borrower. (An
“Affiliate” for purposes of this paragraph (36) means, a borrower that is under
direct or indirect common ownership and control with another borrower.)

 

(KK)                    Environmental Conditions.  A Phase I environmental site
assessment (or update of a previous Phase I and or Phase II site assessment)
and, with respect to certain Mortgage Loans, a Phase II environmental site
assessment (collectively, an “ESA”) meeting ASTM requirements conducted by a
reputable environmental consultant in connection with such Mortgage Loan was
delivered to seller within 12 months prior to the origination date of each
Mortgage Loan (or an update of a previous ESA was prepared), and such ESA
(i) did not identify the existence of recognized environmental conditions (as
such term is defined in ASTM E1527-05 or its successor, hereinafter
“Environmental Condition”) at the related Mortgaged Property or the need for
further investigation, or (ii) if the existence of an Environmental Condition or
need for further investigation was indicated in any such ESA, then at least one
of the following statements is true:  (A) an amount reasonably estimated by a
reputable environmental consultant to be sufficient to cover the

 

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estimated cost to cure any material noncompliance with applicable environmental
laws or the Environmental Condition has been escrowed by the related borrower
and is held or controlled by the related lender; (B) if the only Environmental
Condition relates to the presence of asbestos-containing materials, radon in
indoor air, lead based paint or lead in drinking water, and the only recommended
action in the ESA is the institution of such a plan, an operations or
maintenance plan has been required to be instituted by the related borrower that
can reasonably be expected to mitigate the identified risk; (C) the
Environmental Condition identified in the related environmental report was
remediated or abated in all material respects prior to the date hereof, and, if
and as appropriate, a no further action or closure letter was obtained from the
applicable governmental regulatory authority (or the Environmental Condition
affecting the related Mortgaged Property was otherwise listed by such
governmental authority as “closed” or a reputable environmental consultant has
concluded that no further action is required); (D) a secured creditor
environmental policy or a pollution legal liability insurance policy that covers
liability for the Environmental Condition was obtained from an insurer rated no
less than A- (or the equivalent) by Moody’s, S&P and/or Fitch; (E) a party not
related to the borrower was identified as the responsible party for such
Environmental Condition and such responsible party has financial resources
reasonably estimated to be adequate to address the situation; or (F) a party
related to the borrower having financial resources reasonably estimated to be
adequate to address the situation is required to take action.  To Seller’s
knowledge, except as set forth in the ESA, there is no Environmental Condition
(as such term is defined in ASTM E1527-05 or its successor) at the related
Mortgaged Property.

 

(LL)                        Appraisal.  The Servicing File contains an appraisal
of the related Mortgaged Property with an appraisal date within six months of
the Mortgage Loan origination date.  The appraisal is signed by an appraiser who
is either a Member of the Appraisal Institute (“MAI”) and/or has been licensed
and certified to prepare appraisals in the state where the Mortgaged Property is
located. Each appraiser has represented in such appraisal or in a supplemental
letter that the appraisal satisfies the requirements of the “Uniform Standards
of Professional Appraisal Practice” as adopted by the Appraisal Standards Board
of the Appraisal Foundation and has certified that such appraiser had no
interest, direct or indirect, in the Mortgaged Property or the borrower or in
any loan made on the security thereof, and its compensation is not affected by
the approval or disapproval of the Mortgage Loan.

 

(MM)                Loan Obligation Schedule.  The information pertaining to
each Loan Obligation that is set forth in the schedule attached as Exhibit A to
the Loan Obligations Purchase Agreement is true and correct in all material
respects as of the Cut-off Date and contains all information required by the
Loan Obligations Purchase Agreement to be contained therein.

 

(NN)                      Cross-Collateralization.  No Mortgage Loan is
cross-collateralized or cross-defaulted with any mortgage loan that is not owned
by the Issuer, except as set forth in Schedule 1(d) to the applicable Loan
Obligations Purchase Agreement.

 

(OO)                     Advance of Funds by the Seller.  After origination, no
advance of funds has been made by Seller to the related borrower other than in
accordance with the Loan Documents, and, to Seller’s knowledge, no funds have
been received from any person other than the related borrower or an affiliate
for, or on account of, payments due on the Mortgage Loan (other than as
contemplated by the Loan Documents, such as, by way of example and not in
limitation of the foregoing, amounts paid by the tenant(s) into a
lender-controlled lockbox if required or contemplated under the related lease or
Loan Documents).  Neither Seller nor any affiliate thereof has any obligation to
make any capital contribution to any borrower under a Mortgage Loan, other than
contributions made on or prior to the date hereof.

 

(PP)                          Compliance with Anti-Money Laundering Laws. 
Seller (or the related originator if the Seller was not the originator) has
complied in all material respects with all applicable anti-money laundering laws
and regulations, including without limitation the USA Patriot Act of 2001 with
respect to the origination of the Mortgage Loan, the failure to comply with
which would have a material adverse effect on the Mortgage Loan.

 

(QQ)                      Floating Interest Rates. Each Mortgage Loan bears
interest at a floating rate based on LIBOR.

 

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(RR)                      Participations. With respect to each Loan Obligation
that is a Participation:

 

(i)             Either (A) the Participation is treated as a real estate asset
for purposes of Section 856(c) of the Code, and the interest payable pursuant to
such Participation is treated as interest on an obligation secured by a mortgage
on real property or on an interest in real property for purposes of
Section 856(c) of the Code, or (B) the Participation qualifies as a security
that would not otherwise cause ARMS Equity to fail to qualify as a REIT under
the Code (including after the sale, transfer and assignment to the Issuer of
such Senior Participation);

 

(ii)          To the actual knowledge of the Seller, as of the Closing Date, the
related Participating Institution was not a debtor in any outstanding proceeding
pursuant to the federal bankruptcy code;

 

(iii)       The Seller has not received written notice of any outstanding
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind for which the holder of such
Participation is or may become obligated;

 

(iv)      The participation agreement is legal, valid and enforceable as between
its parties;

 

(v)         Each other participant (each, a “Third Party Participant”) is
required to pay its pro rata share of any expenses, costs and fees associated
with servicing and enforcing rights and remedies under the related Loan
Obligation upon request therefor by the related servicer or lead and control
participant (the “Lead Participant”);

 

(vi)      Each participation agreement is effective to convey the participation
interest to the related participants and is not intended to be or effective as a
loan or other financing secured by the Loan Obligation or the underlying Whole
Loan.  If the Issuer will be the Lead Participant, the Lead Participant owes no
fiduciary duty or obligation to any third party participant pursuant to the
participation agreement;

 

(vii)   All amounts due and owing to any Third Party Participant pursuant to
each participation agreement have been duly and timely paid.  There is no
default by the Lead Participant, or to the Seller’s knowledge, by any Third
Party Participant under any participation agreement;

 

(viii)       The participation interest and, if being transferred to the Issuer,
the Lead Participant role, rights and responsibilities are assignable by the
Seller without consent or approval other than those that have been obtained;

 

(ix)      If the Issuer will be the Lead Participant, the terms of the
participation agreement do not require or obligate the Lead Participant or its
successor or assigns to repurchase the participation interest under any
circumstances; and

 

(x)         The Seller, in selling any other participation interest to a Third
Party Participant, made no misrepresentation, fraud or omission of information
necessary for such Third Party Participant to make an informed decision to
purchase its participation interest.

 

For purposes of these representations and warranties, the phrases “the Seller’s
knowledge” or “the Seller’s belief” and other words and phrases of like import
shall mean, except where otherwise expressly set forth herein, the actual state
of knowledge or belief of the Seller, its officers and employees directly
responsible for the underwriting, origination, servicing or sale of the Mortgage
Loans regarding the matters expressly set forth herein.

 

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