EXHIBIT 10.1

 

 

 

ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2017-FL1, LTD.,
as Issuer,

 

ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2017-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 April 11, 2017

 

 

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

ARTICLE 1

 

 

DEFINITIONS

 

 

 

Section 1.1

 

Definitions

3

Section 1.2

 

Assumptions as to Assets

42

Section 1.3

 

Interest Calculation Convention

44

Section 1.4

 

Rounding Convention

44

 

 

 

 

ARTICLE 2

 

 

 

 

THE NOTES

 

 

 

 

Section 2.1

 

Forms Generally

45

Section 2.2

 

Forms of Notes and Certificate of Authentication

45

Section 2.3

 

Authorized Amount; Stated Maturity Date; and Denominations

46

Section 2.4

 

Execution, Authentication, Delivery and Dating

47

Section 2.5

 

Registration, Registration of Transfer and Exchange

48

Section 2.6

 

Mutilated, Defaced, Destroyed, Lost or Stolen Note

54

Section 2.7

 

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

55

Section 2.8

 

Persons Deemed Owners

59

Section 2.9

 

Cancellation

60

Section 2.10

 

Global Securities; Definitive Notes; Temporary Notes

60

Section 2.11

 

U.S. Tax Treatment of Notes and the Issuer

62

Section 2.12

 

Authenticating Agents

62

Section 2.13

 

Forced Sale on Failure to Comply with Restrictions

63

Section 2.14

 

No Gross Up

64

Section 2.15

 

U.S. Credit Risk Retention

64

 

 

 

 

ARTICLE 3

 

 

 

 

CONDITIONS PRECEDENT; PLEDGED LOAN OBLIGATIONS

 

 

 

 

Section 3.1

 

General Provisions

64

Section 3.2

 

Security for Notes

67

Section 3.3

 

Transfer of Assets

69

 

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ARTICLE 4

 

 

 

 

SATISFACTION AND DISCHARGE

 

 

 

 

Section 4.1

 

Satisfaction and Discharge of Indenture

76

Section 4.2

 

Application of Amounts held in Trust

78

Section 4.3

 

Repayment of Amounts Held by Paying Agent

78

Section 4.4

 

Limitation on Obligation to Incur Company Administrative Expenses

79

 

 

 

 

ARTICLE 5

 

 

 

 

REMEDIES

 

 

 

 

Section 5.1

 

Events of Default

79

Section 5.2

 

Acceleration of Maturity; Rescission and Annulment

81

Section 5.3

 

Collection of Indebtedness and Suits for Enforcement by Trustee

83

Section 5.4

 

Remedies

85

Section 5.5

 

Preservation of Assets

87

Section 5.6

 

Trustee May Enforce Claims Without Possession of Notes

89

Section 5.7

 

Application of Amounts Collected

89

Section 5.8

 

Limitation on Suits

89

Section 5.9

 

Unconditional Rights of Noteholders to Receive Principal and Interest

90

Section 5.10

 

Restoration of Rights and Remedies

90

Section 5.11

 

Rights and Remedies Cumulative

90

Section 5.12

 

Delay or Omission Not Waiver

91

Section 5.13

 

Control by the Controlling Class

91

Section 5.14

 

Waiver of Past Defaults

91

Section 5.15

 

Undertaking for Costs

92

Section 5.16

 

Waiver of Stay or Extension Laws

92

Section 5.17

 

Sale of Assets

92

Section 5.18

 

Action on the Notes

93

 

 

 

 

ARTICLE 6

 

 

 

 

THE TRUSTEE

 

 

 

 

Section 6.1

 

Certain Duties and Responsibilities

94

Section 6.2

 

Notice of Default

96

Section 6.3

 

Certain Rights of Trustee

96

Section 6.4

 

Not Responsible for Recitals or Issuance of Notes

99

Section 6.5

 

May Hold Notes

99

Section 6.6

 

Amounts Held in Trust

99

Section 6.7

 

Compensation and Reimbursement

99

Section 6.8

 

Corporate Trustee Required; Eligibility

101

Section 6.9

 

Resignation and Removal; Appointment of Successor

101

Section 6.10

 

Acceptance of Appointment by Successor

103

 

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Section 6.11

 

Merger, Conversion, Consolidation or Succession to Business of Trustee (or
Custodian)

103

Section 6.12

 

Co-Trustees and Separate Trustee

104

Section 6.13

 

Certain Duties of Trustee Related to Delayed Payment of Proceeds

105

Section 6.14

 

Representations and Warranties of the Trustee

105

Section 6.15

 

Requests for Consents

106

Section 6.16

 

Withholding

107

 

 

 

 

ARTICLE 7

 

 

 

 

COVENANTS

 

 

 

 

Section 7.1

 

Payment of Principal and Interest

107

Section 7.2

 

Maintenance of Office or Agency

107

Section 7.3

 

Amounts for Note Payments to be Held in Trust

108

Section 7.4

 

Existence of the Issuer and Co-Issuer

110

Section 7.5

 

Protection of Assets

112

Section 7.6

 

Notice of Any Amendments

113

Section 7.7

 

Performance of Obligations

114

Section 7.8

 

Negative Covenants

114

Section 7.9

 

Statement as to Compliance

117

Section 7.10

 

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

117

Section 7.11

 

Successor Substituted

120

Section 7.12

 

No Other Business

121

Section 7.13

 

Reporting

121

Section 7.14

 

Calculation Agent

121

Section 7.15

 

REIT Status

122

Section 7.16

 

Permitted Subsidiaries

123

Section 7.17

 

Repurchase Requests

124

Section 7.18

 

Purchase of Additional Loan Obligations

125

Section 7.19

 

Portfolio Finalization Date Actions

125

 

 

 

 

ARTICLE 8

 

 

 

 

SUPPLEMENTAL INDENTURES

 

 

 

 

Section 8.1

 

Supplemental Indentures Without Consent of Securityholders

126

Section 8.2

 

Supplemental Indentures with Consent of Securityholders

130

Section 8.3

 

Execution of Supplemental Indentures

132

Section 8.4

 

Effect of Supplemental Indentures

133

Section 8.5

 

Reference in Notes to Supplemental Indentures

133

 

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ARTICLE 9

 

 

 

 

REDEMPTION OF SECURITIES; REDEMPTION PROCEDURES

 

 

 

 

Section 9.1

 

Clean-up Call; Tax Redemption and Optional Redemption

133

Section 9.2

 

Notice of Redemption

134

Section 9.3

 

Notice of Redemption or Maturity by the Issuer

135

Section 9.4

 

Notes Payable on Redemption Date

135

Section 9.5

 

Mandatory Redemption

136

 

 

 

 

ARTICLE 10

 

 

 

 

ACCOUNTS, ACCOUNTINGS AND RELEASES

 

 

 

 

Section 10.1

 

Collection of Amounts; Custodial Account

136

Section 10.2

 

Collection Accounts

137

Section 10.3

 

Payment Account

139

Section 10.4

 

Unused Proceeds Account

140

Section 10.5

 

Reserved

140

Section 10.6

 

RDD Funding Account

140

Section 10.7

 

Expense Account

141

Section 10.8

 

Reserved

142

Section 10.9

 

Interest Advances

142

Section 10.10

 

Reports by Parties

145

Section 10.11

 

Reports; Accountings

146

Section 10.12

 

Release of Loan Obligations; Release of Assets

152

Section 10.13

 

Reports by Independent Accountants

154

Section 10.14

 

Reports to Rating Agencies

154

Section 10.15

 

Certain Procedures

155

 

 

 

 

ARTICLE 11

 

 

 

 

APPLICATION OF AMOUNTS

 

 

 

 

Section 11.1

 

Disbursements of Amounts from Payment Account

156

Section 11.2

 

Securities Accounts

160

 

 

 

 

ARTICLE 12

 

 

 

 

SALE OF LOAN OBLIGATIONS

 

 

 

 

Section 12.1

 

Sales of Loan Obligations

161

Section 12.2

 

Replacement Loan Obligations

163

Section 12.3

 

Conditions Applicable to all Transactions Involving Sale or Grant

164

Section 12.4

 

Modifications to Moody’s Tests

164

 

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ARTICLE 13

 

 

 

 

NOTEHOLDERS’ RELATIONS

 

 

 

 

Section 13.1

 

Subordination

165

Section 13.2

 

Standard of Conduct

166

 

 

 

 

ARTICLE 14

 

 

 

 

MISCELLANEOUS

 

 

 

 

Section 14.1

 

Form of Documents Delivered to the Trustee

167

Section 14.2

 

Acts of Securityholders

168

Section 14.3

 

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

168

Section 14.4

 

Notices to Noteholders; Waiver

170

Section 14.5

 

Effect of Headings and Table of Contents

171

Section 14.6

 

Successors and Assigns

171

Section 14.7

 

Severability

171

Section 14.8

 

Benefits of Indenture

171

Section 14.9

 

Governing Law

171

Section 14.10

 

Submission to Jurisdiction

171

Section 14.11

 

Counterparts

172

Section 14.12

 

Liability of Co-Issuers

172

Section 14.13

 

17g-5 Information

172

Section 14.14

 

Rating Agency Condition

173

 

 

 

 

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

174

 

 

 

 

ARTICLE 16

 

 

 

 

CURE RIGHTS; PURCHASE RIGHTS; REPLACEMENT LOAN OBLIGATIONS

 

 

 

 

Section 16.1

 

Reserved

176

Section 16.2

 

Loan Obligation Purchase Agreements

176

Section 16.3

 

Representations and Warranties Related to Replacement Loan Obligations

176

Section 16.4

 

Operating Advisor

177

Section 16.5

 

Purchase Right; Holder of a Majority of the Preferred Shares

177

 

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ARTICLE 17

 

 

 

 

ADVANCING AGENT

 

 

 

 

Section 17.1

 

Liability of the Advancing Agent

178

Section 17.2

 

Merger or Consolidation of the Advancing Agent

178

Section 17.3

 

Limitation on Liability of the Advancing Agent and Others

178

Section 17.4

 

Representations and Warranties of the Advancing Agent

179

Section 17.5

 

Resignation and Removal; Appointment of Successor

180

Section 17.6

 

Acceptance of Appointment by Successor Advancing Agent

181

 

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 of Representations and Warranties For Loan Obligations

 

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INDENTURE, dated as of April 11, 2017, by and among ARBOR REALTY COMMERCIAL REAL
ESTATE NOTES 2017-FL1, LTD., an exempted company incorporated in the Cayman
Islands with limited liability (the “Issuer”), ARBOR REALTY COMMERCIAL REAL
ESTATE NOTES 2017-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 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) and the
Servicing 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.structuredfn.com.  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
Placement Agent, 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.

 

“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
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

 

3

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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.

 

“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 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.

 

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“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 2017-1 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 more 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 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 the annual payments of principal and interest due
pursuant to the terms of any related Non-Acquired

 

5

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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 more than
12 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 the Principal Balance of any 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 (which shall include contact information and email
addresses) as conclusive evidence of the authority of any Person to act, and
such certification may be considered as in full force and effect until receipt
by such other party of written notice to the contrary.

 

“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)).

 

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“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 its right, or has the right, to purchase its corresponding
participant’s interest, or sell its interest to such corresponding participant
for the same price, in accordance with the related Underlying Instrument.

 

“Calculation Agent”:  The meaning specified in Section 7.14(a) hereof.

 

“Calculation Amount”:  With respect to any 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.

 

7

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“Cayman FATCA Legislation”:  The Cayman Islands Tax Information Authority Law
(2016 Revision), together with regulation and guidance notes made pursuant to
such law.

 

“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 or 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 2027,
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) 1.30% 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).

 

“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 2027, 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) 2.50% per annum.

 

8

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“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 Secured Floating Rate Notes, due 2027, 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) 4.50% 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 Multifamily Lending, LLC, each of Arbor Multifamily
Lending, 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.

 

“Closing Date”:  April 11, 2017.

 

“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 2017-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.

 

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“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 and Custodian pursuant to Section 6.7 hereof or any co-trustee
appointed pursuant to this Indenture (including amounts payable by the Issuer as
indemnification pursuant to this Indenture) and the Collateral Administrator
pursuant to the Collateral Administration Agreement, (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 and any amounts in relation to FATCA Compliance,
(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 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

 

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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.

 

“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 55107-1402,
Attention: Bondholder Services—EP-MN-WS2N-Arbor Realty Commercial Real Estate
Notes 2017-FL1, Ltd.; (b) for the delivery of the Loan Obligation Files, 1133
Rankin Street, Suite 100, St. Paul, Minnesota 55116, Attention: Commercial
Certifications — Arbor  2017-1, 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
2017-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.

 

“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

 

11

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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 a Senior 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 a Senior 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 a
Senior 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 a Senior
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 a Senior 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 a Senior 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

 

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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 a Senior 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 a Senior 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 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

 

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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, Industrial Property,
Retail Property, Office Property or Self-Storage Property;

 

(ii)                                         with respect to (A) any Additional
Loan Obligation, as of the Portfolio Finalization Date and (B) any Replacement
Loan Obligation, immediately after giving effect to the acquisition of such
Replacement Loan Obligation, the Principal Balance of the Loan Obligations
secured by Industrial Properties, Retail Properties, Office Properties and
Self-Storage Properties do not exceed in the aggregate 25% of the aggregate
Principal Balance of all Loan Obligations;

 

(iii)                                      with respect to (A) any Additional
Loan Obligation, as of the Portfolio Finalization Date and (B) any Replacement
Loan Obligation, immediately after giving effect to the acquisition of such
Replacement Loan Obligation, the Principal Balance of the Loan Obligations
secured by Self-Storage Properties do not exceed in the aggregate 5% of the
aggregate Principal Balance of all Loan Obligations;

 

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

 

(v)                                        it was originated after June 2013;

 

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

 

(vii)                                  it has a Moody’s Rating;

 

(viii)                               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;

 

(ix)                                     it is not an Equity Interest;

 

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

 

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(xi)                                     it has an As-Stabilized Appraisal DSCR
that is not less than (A) in the case of  Loan Obligations secured by
Multi-Family Properties, 1.25x, and (B) in the case of Loan Obligations secured
by Industrial Properties, Retail Properties, Office Properties or Self-Storage
Properties, 1.30x;

 

(xii)                                  the Principal Balance of such Loan
Obligation is not greater than U.S. $33,000,000;

 

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

 

(I)                                   the Weighted Average Life of all the Loan
Obligations is not greater than 4.50 years from the Closing Date;

 

(II)                              the Weighted Average Spread of all the Loan
Obligations is not less than 4.35%;

 

(III)                         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

 

(IV)                          the aggregate Principal Balance of all Loan
Obligations divided by the number of Loan Obligations does not exceed U.S.
$19,000,000;

 

(xiv)                              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 original Moody’s Rating Factor attached to the Loan
Obligation that generated the Principal Proceeds that are being applied to the
purchase of such Replacement Loan Obligations; and (2) Additional Loan
Obligation, the Moody’s Rating for such Additional Loan Obligation is equal to
or better than the Moody’s Rating that equates to the median original Moody’s
Weighted Average Rating Factor for all Loan Obligations acquired by the Issuer
on the Closing Date;

 

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

 

(xvi)                              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;

 

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

 

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(xviii)                        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;

 

(xix)                              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;

 

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

 

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

 

(xxii)                           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;

 

(xxiii)                        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;

 

(xxiv)                       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 servicing provisions substantially
similar to those that are standard in commercial mortgage backed securities
transactions;

 

(xxv)                          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);

 

(xxvi)                       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 CLO 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);

 

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

 

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(xxviii)                 its acquisition, ownership, enforcement and disposition
will not cause the Issuer to fail to be a Qualified REIT Subsidiary or other
disregarded entity of a REIT unless a No Trade or Business Opinion has been
received (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);

 

(xxix)                       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;

 

(xxx)                          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;

 

(xxxi)                       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. $25,000,000 and (2) the second-largest Additional Loan
Obligation is equal to or less than U.S. $22,000,000;

 

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

 

(xxxiii)                 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;

 

(xxxiv)                if it is a Non-Controlling Participation, its acquisition
will not (1) cause the aggregate Principal Balance of all Non-Controlling
Participations (excluding Non-Controlling Participations that are Senior Pari
Passu Participations as to which 100% of the controlling interests are
collectively held by the Issuer and affiliates that are under 100% common
control with the Issuer) to exceed 15% of the aggregate Principal Balance of all
Loan Obligations then

 

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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 and excluding
Non-Controlling Participations that are Senior Pari Passu Participations as to
which 100% of the controlling interests are collectively held by the Issuer and
affiliates that are under 100% common control with the Issuer) 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

 

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

 

“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

 

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(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
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 (unless such Eligible Investments are issued by the Trustee in its
capacity as a banking institution, in which event such Eligible Investments may
mature on such Payment Date), (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 or other disregarded entity of a REIT (unless the Issuer has
previously received a No Trade or Business Opinion, 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

 

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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 44.10(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.

 

“E.U. Risk Retention Letter”:  That certain risk retention letter delivered by
Arbor Parent and ARMS Equity to the Issuer, the Co-Issuer, the Loan Obligation
Manager, the Trustee and the Placement Agent, dated April 11, 2017.

 

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“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.

 

“FATCA Compliance”:  Compliance with FATCA and Cayman FATCA Legislation.

 

“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.

 

“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

 

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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.

 

“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.

 

“Industrial Property”:  A real property with industrial rental units (including
mixed use industrial/office) as to which the majority of the underwritten
revenue is from industrial rental units.

 

“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

 

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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 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

 

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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) those funds in the Expense Account designated as
Interest Proceeds by the Loan Obligation Manager pursuant to Section 10.7(a),
(5) all funds remaining on deposit in the Expense Account upon redemption of the
Notes in whole, pursuant to Section 10.7(a), (6) Interest Advances, if any,
advanced by the Advancing Agent or the Backup Advancing Agent, with respect to
such Payment Date, (7) all accrued original issue discount on Eligible
Investments, (8) 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, (9) all payments of principal on Eligible Investments
purchased with proceeds of items (A)(1), (2) and (3) of this definition,
(10) Cash and Eligible Investments contributed by ARMS Equity pursuant to
Section 12.2(c) and designated as “Interest Proceeds” by ARMS Equity and
(11) 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 Shortfall”:  The meaning set forth in Section 10.9(a) hereof.

 

“Issuer”:  Arbor Realty Commercial Real Estate Notes 2017-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.  An Issuer Order may be
provided in an email (or other electronic communication) unless the Trustee
requests otherwise.

 

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“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.

 

“Junior Participation”: 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.

 

“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” and “Loan Obligations”:  Any Whole Loan or Senior
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 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 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.

 

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“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.

 

“Loss Value Payment”:  A Cash payment made to the Issuer by the Seller in
connection with a material 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.

 

“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, the percentage
set forth in the table below opposite the property type securing such Loan
Obligation:

 

Property Type

 

Moody’s Recovery Rate

 

Multi-Family Property

 

60

%

Industrial Property

 

60

%

Office Property

 

55

%

Anchored Retail

 

60

%

Unanchored Retail

 

55

%

Self-Storage Property

 

40

%

 

“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);

 

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(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;

 

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.

 

“No Entity-Level Tax Opinion”:  An opinion of Cadwalader, Wickersham & Taft LLP
or another nationally recognized tax counsel experienced in such matters that
the Issuer will not be treated as a foreign corporation engaged in a trade or
business in the United States for U.S. federal income tax purposes or otherwise
become subject to U.S. federal income tax on a net income basis, which opinion
may be conditioned on compliance with certain restrictions on the investment or
other activities of the Issuer and the Loan Obligation Manager on behalf of the
Issuer.

 

“No Trade or Business Opinion”:  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 U.S. federal income tax purposes,
which opinion may be conditioned on compliance with certain restrictions on the
investment or other activities of the Issuer and the Loan Obligation Manager on
behalf of the Issuer.

 

“Non-Acquired Participation”:  With respect to any Senior Participation acquired
by the Issuer, any related participation interest (whether a Senior Pari Passu
Participation, Senior AB Pari Passu Participation or a Junior Participation) in
the related Underlying Whole Loan, 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 November 2019 during
which no Optional Redemption is permitted to occur.

 

“Non-Controlling Participation”: Any Senior Participation acquired by the Issuer
as to which the holder of the related Non-Acquired Participation has the right
to have effective

 

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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.

 

“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 March 28, 2017, relating
to the offering of the Notes.

 

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

 

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“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.

 

“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

 

30

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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.

 

“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 128.03%.

 

“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 May 15, 2017, 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.

 

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“Person”:  An individual, corporation (including a business trust), partnership,
limited liability company, joint venture, association, joint stock company,
trust (including any beneficiary thereof), unincorporated association or
government or any agency or political subdivision thereof.

 

“Placement Agent”:  J.P. Morgan Securities LLC, in its capacity as placement
agent.

 

“Placement Agreement”:  The placement agreement relating to the Notes dated as
of March 28, 2017 by and among the Issuer, the Co-Issuer and the Placement
Agent.

 

“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.$360,000,000.

 

“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.

 

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“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.

 

“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

 

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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 and (11) 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.

 

“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:

 

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(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.

 

“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(h) 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;

 

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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 (10) of
Section 11.1(a)(i) and clauses (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 terms and conditions for the provision of
registered office services 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

 

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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 April 2020;
(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.

 

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

 

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

 

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

 

“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)(xxxi) 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.

 

“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.

 

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“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.

 

“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.

 

“Self-Storage Property”:  A real property with self-storage rental units
(including mixed use property) as to which the majority of the underwritten
revenue is from self-storage rental units.

 

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

 

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“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 AB Pari Passu 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 but 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 Pari Passu 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 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 Senior AB Participation, a Senior AB Pari Passu
Participation or a Senior Pari Passu 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.

 

“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 April 2027.

 

“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

 

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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 or otherwise subject to U.S. federal income tax
on a net income basis.  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 or otherwise subject to U.S.
federal income tax on a net income basis.

 

“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
Company Administration Agreement, the Preferred Share Paying 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

 

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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 a Senior
Participation, the Whole Loan in which such Senior 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.

 

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

 

“U.S. Credit Risk Retention Rules”:  The final rule promulgated to implement the
credit risk retention requirements under Section 15G of the Exchange Act, as
added by Section 941 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (79 F.R. 77601; Pages: 77740-77766), as such rule may be amended
from time to time, and subject to such clarification and interpretation as have
been provided by the Department of Treasury, the Federal Reserve System, the
Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the
Securities and Exchange Commission and the Department of Housing and Urban
Development in the adopting release (79 FR 77601 et seq.) or by the staff of any
such agency, or as may be

 

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provided by any such agency or its staff from time to time, in each case, as
effective from time to time as of the applicable compliance date specified
therein.

 

“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, a Retail Property, an Office Property, a Self-Storage
Property or an Industrial 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 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

 

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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 (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).

 

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(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.

 

(h)           Any direction or Issuer Order required hereunder relating to the
purchase, acquisition, sale, disposition or other transfer of Assets may be in
the form of a trade ticket, confirmation of trade, instruction to post or to
commit to the trade or similar instrument or document or other written
instruction (including by email or other electronic communication or file
transfer protocol) from the Loan Obligation Manager on which the Trustee may
rely.

 

(i)            To the extent of any ambiguity in the interpretation of any
definition or term contained in this Indenture or to the extent more than one
methodology can be used to make any of the determinations or calculations set
forth herein, the Loan Obligation Manager may direct the Collateral
Administrator, or the Collateral Administrator may request direction from the
Loan Obligation Manager, as to the interpretation and/or methodology to be used,
in either case, and the Collateral Administrator shall follow such direction (if
given), and together with the Trustee, shall be entitled to conclusively rely
thereon without any responsibility or liability therefor.

 

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.

 

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ARTICLE 2

 

THE NOTES

 

Section 2.1            Forms Generally.

 

The Notes and the Trustee’s or Authenticating Agent’s certificate of
authentication thereon (the “Certificate of Authentication”) shall be in
substantially the forms required by this Article 2, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon, as may be
consistent herewith, determined by the Authorized Officers of the Issuer and the
Co-Issuer, executing such Notes as evidenced by their execution of such Notes. 
Any portion of the text of any Note may be set forth on the reverse thereof,
with an appropriate reference thereto on the face of the Note.

 

Section 2.2            Forms of Notes and Certificate of Authentication.

 

(a)           Form.  The form of each Class of Notes including the Certificate
of Authentication, shall be substantially as set forth in Exhibits 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 institutions that are not 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

 

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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.

 

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.$279,000,000, 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.

 

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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 April 2027

 

U.S.$

201,600,000

 

Class B Secured Floating Rate Notes Due April 2027

 

U.S.$

27,000,000

 

Class C Secured Floating Rate Notes Due April 2027

 

U.S.$

50,400,000

 

 

(b)           The Notes shall be issuable in minimum denominations of
U.S.$250,000 (or, in the case of Notes held in reliance on Rule 144A, in minimum
denominations of $100,000) and integral multiples of U.S.$500 in excess thereof
(plus any residual amount).

 

Section 2.4            Execution, Authentication, Delivery and Dating.

 

The Notes shall be executed on behalf of the Issuer and the Co-Issuer by an
Authorized Officer of the Issuer and the Co-Issuer, respectively.  The signature
of such Authorized Officers on the Notes may be manual or facsimile.

 

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 (which Issuer
Order shall, in connection with a transfer of Notes hereunder, be deemed to have
been provided upon the delivery of an executed Note to the Trustee), 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

 

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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.

 

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.

 

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Every Note presented or surrendered for registration of transfer or exchange
shall be duly endorsed, or be accompanied by a written instrument of transfer in
form satisfactory to the Issuer and the Notes Registrar duly executed by the
Holder thereof or his attorney duly authorized in writing.

 

No service charge shall be made to a Holder for any registration of transfer or
exchange of Notes, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

 

None of the Notes Registrar, the Issuer or the Co-Issuer shall be required
(i) to issue, register the transfer of or exchange any Note during a period
beginning at the opening of business 15 days before any selection of Notes to be
redeemed and ending at the close of business on the day of the mailing of the
relevant notice of redemption, or (ii) to register the transfer of or exchange
any Note so selected for redemption.

 

(b)           No Note may be sold or transferred (including, without limitation,
by pledge or hypothecation) unless such sale or transfer is exempt from the
registration requirements of the Securities Act and is exempt from the
registration requirements under applicable state securities laws.

 

(c)           No Note may be offered, sold, resold or delivered, within the
United States or to, or for the benefit of, U.S. Persons except in accordance
with Section 2.5(e) below and in accordance with Rule 144A to QIBs 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 institutions that are not 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.

 

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(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

 

(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

 

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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,

 

(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

 

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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 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 institutions that are not U.S. Persons, 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

 

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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.

 

(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

 

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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 (whether by means of
actual transfer or transfer of beneficial ownership for U.S. federal income tax
purposes), pledged or hypothecated to any other Person (except to Issuer Parent
or an Issuer Parent Disregarded Entity) unless the Issuer receives a No
Entity-Level Tax Opinion (or has previously received a No Trade or Business
Opinion).

 

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.

 

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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.

 

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

 

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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 (10) 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, 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

 

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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
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 Cayman FATCA Legislation (ii) if
the Issuer is no longer a Qualified REIT Subsidiary or other disregarded entity
of a REIT, but is instead a foreign corporation for U.S. federal income tax
purposes, the Issuer shall require information to comply with FATCA or Cayman
FATCA Legislation 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 (xii) 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 (ix) 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 of the Notes
shall be payable by wire transfer in immediately available funds to a Dollar
account maintained by the Holder or its nominee; provided that the Holder has
provided wiring instructions to the Trustee on or before the related Record Date
or, if wire transfer cannot be effected, by a Dollar check drawn on a bank in
the United States, or by a Dollar check mailed to the Holder at its address in
the Notes Register.  The Issuer expects that the Depository or its nominee, upon
receipt of any payment of principal or interest in respect of a Global Security
held by the Depository or its nominee, shall immediately credit the applicable
Agent Members’ accounts with payments in amounts proportionate to the respective
beneficial interests in such Global Security as shown on

 

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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 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.

 

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(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 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

 

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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 (and no other Class of Notes) that are held
by the 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

 

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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.

 

(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 Notes,
Class B Notes 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

 

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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 a No
Entity-Level Tax Opinion).  Each prospective purchaser and any subsequent
transferee of a Note or any interest therein shall, by virtue of its purchase or
other acquisition of such Note or interest therein, be deemed to have agreed to
treat such Note in a manner consistent with the preceding sentence for U.S.
federal income tax purposes.

 

(b)           The Issuer and the Co-Issuer shall account for the Notes and
prepare any reports to Noteholders and tax authorities consistent with the
intentions expressed in Section 2.11(a) above.

 

(c)           Each Holder of Notes shall timely furnish to the Issuer, the
Co-Issuer or its agents any U.S. federal income tax form or certification (such
as IRS Form W-8BEN (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 or other disregarded entity of a REIT 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

 

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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 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

 

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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.

 

Section 2.15          U.S. Credit Risk Retention.

 

Pursuant to the Loan Obligation Purchase Agreement, the Securitization Sponsor
shall be required to timely deliver (or cause to be timely delivered) to the
Trustee any notices contemplated by Section 10.11(i) of this Agreement.

 

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 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;

 

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(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 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 Placement
Agent 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;

 

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(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 Arbor Commercial Mortgage,
LLC, dated the Closing Date, regarding certain enforceability issues, in a form
satisfactory to the Trustee, (ii) Richards, Layton & Finger, P.A., special
Delaware counsel to the CLO Servicer, dated the Closing Date, regarding certain
issues of Delaware law, in a form satisfactory to the Trustee and (iii) 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;

 

(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 and the
Securities Account Control Agreement;

 

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(q)           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;

 

(r)            evidence of preparation for filing at the appropriate filing
office in the District of Columbia of a financing statement, on behalf of the
Issuer, relating to the perfection of the lien of this Indenture in those Assets
in which a security interest may be perfected by filing under the UCC;

 

(s)            an Issuer Order executed by the Issuer and the Co-Issuer
directing the Trustee to (i) authenticate the Notes specified therein, in the
amounts set forth therein and registered in the name(s) set forth therein and
(ii) deliver the authenticated Notes as directed by the Issuer and the
Co-Issuer;

 

(t)            the E.U. Risk Retention Letter; 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;

 

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(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

 

(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 “AA(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.$63,845,000.

 

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(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”) under
the Securities Account Control Agreement to credit the Assets to the applicable
Account as set forth in this Indenture.  U.S. Bank National Association is
hereby appointed as Custodian to hold all Loan Obligation Files delivered to it
in physical form at its office in St. Paul, Minnesota, and by signing this
Indenture to acknowledge and agree to the terms of this Indenture, U.S. Bank
National Association accepts such appointment and agrees to act in such
capacity.  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 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

 

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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 Wisconsin 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 Wisconsin, to acknowledge
that it holds such Registered Securities for the Trustee and (B) causing (1) the
endorsement of such Registered Securities to the Trustee by an effective
endorsement or (2) the registration of such Registered Securities in the name of
the Trustee by the issuer thereof upon its original issue or registration of
transfer;

 

(iv)          in the case of 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 Wisconsin 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 Wisconsin, 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.

 

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(b)           The Issuer hereby authorizes the filing of UCC financing
statements describing as the collateral covered thereby “all of the debtor’s
personal property and assets,” or words to that effect, notwithstanding that
such wording may be broader in scope than the Assets described in this
Indenture.

 

(c)           Without limiting the foregoing, the Issuer and the Trustee on
behalf of the Bank agree, and the Bank shall cause the Custodial Securities
Intermediary and Custodian, 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 Seller) to the Custodian, 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 Custodian 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 a Senior 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 a Senior 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

 

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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 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 a Senior 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;

 

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

 

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

 

(xvii)       An original (or, in the case of a Senior 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 a Senior 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 a Senior
Participation, only to the extent such copy shall have been furnished to the
Issuer (or the applicable Seller) by the lead lender);

 

(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 Custodian 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 Custodian
shall constitute certification by the Custodian 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 Custodian; and (ii) such
original note has been reviewed by the Custodian 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 Custodian 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 Custodian 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

 

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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 Custodian
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 Custodian any Underlying Instrument in the possession of the
Issuer and not previously delivered hereunder (including originals of Underlying
Instruments not previously required to be delivered as originals) and as to
which the Trustee, 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 Custodian
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 Custodian
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 Custodian 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 Custodian 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

 

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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 Custodian 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:

 

(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;

 

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(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;

 

(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 Custodian for the benefit
of the Trustee, (B) the Issuer has received a written acknowledgement from the
Custodian that the Custodian 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; and

 

(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

 

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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

 

(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

 

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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 and the Securities Account Control Agreement and
(y) Cash in an amount not greater than the Dissolution Expenses); and

 

(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 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

 

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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, 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;

 

(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

 

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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 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

 

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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;

 

(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 (10) 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 (excluding Non-Controlling Participations
that are Senior Pari Passu Participations as to which 100% of the controlling
interests are collectively held by the Issuer and affiliates that are under 100%
common control with 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

 

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(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.

 

(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.

 

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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 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

 

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payable pursuant to Section 11.1(a) having a higher priority have been paid in
full), the Issuer and Co-Issuer shall, upon demand of the Trustee or any
affected Noteholder, pay to the Trustee, for the benefit of the Holder of such
Note, the whole amount, if any, then due and payable on such Note for principal
and interest or other payment with interest on the overdue principal and, to the
extent that payments of such interest shall be legally enforceable, upon overdue
installments of interest, at the applicable interest rate and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee and such Noteholder and their
respective agents and counsel.

 

If the Issuer or the Co-Issuer fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as Trustee of an express trust, may
institute a Proceeding for the collection of the sums so due and unpaid, and may
prosecute such Proceeding to judgment or final decree, and may enforce the same
against the Issuer and the Co-Issuer or any other obligor upon the Notes and
collect the 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

 

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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 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

 

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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;

 

(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

 

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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 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:

 

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(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

 

(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.

 

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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.

 

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 this Indenture
is subject to any non-petition covenants set forth in this 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

 

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(d)           no direction inconsistent with such written request has been given
to the Trustee during such 30-day period by a Majority of the Controlling Class;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatsoever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Notes of the same Class or to obtain or to seek to obtain
priority or preference over any other Holders of the Notes of the same Class or
to enforce any right under this Indenture, except in the manner herein provided
and for the equal and ratable benefit of all the Holders of Notes of the same
Class subject to and in accordance with Section 13.1 hereof and the Priority of
Payments.

 

In the event the Trustee shall receive conflicting or inconsistent requests and
indemnity from two or more groups of Holders of the Controlling Class, each
representing less than a Majority of the Controlling Class, the Trustee in its
sole discretion may determine what action, if any, shall be taken,
notwithstanding any other provisions of this Indenture.

 

Section 5.9            Unconditional Rights of Noteholders to Receive Principal
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.

 

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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:

 

(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.

 

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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
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

 

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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 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

 

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Trustee or the Noteholders shall be impaired by the recovery of any judgment by
the Trustee against the Issuer or the Co-Issuer or by the levy of any execution
under such judgment upon any portion of the Assets or upon any of the assets of
the Issuer or the Co-Issuer.

 

ARTICLE 6

 

THE TRUSTEE

 

Section 6.1            Certain Duties and Responsibilities.

 

(a)           Except during the continuance of an Event of Default:

 

(i)            the Trustee undertakes to perform such duties and only such
duties as are set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and

 

(ii)           in the absence of manifest error, or bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming 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, Independent accountants and experts in performing
its duties hereunder and be deemed to have acted in good faith if it acts in
accordance with such advice.

 

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(d)           No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:

 

(i)            this subsection shall not be construed to limit the effect of
Section 6.1(a);

 

(ii)           the Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it shall be proven that the Trustee was
negligent in ascertaining the pertinent facts;

 

(iii)          the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
the Issuer in accordance with this Indenture and/or the Controlling
Class relating to the time, method and place of conducting any Proceeding for
any remedy available to the Trustee in respect of any Note or exercising any
trust or power conferred upon the Trustee under this Indenture;

 

(iv)          no provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers contemplated hereunder, 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).

 

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(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 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;

 

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(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 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 and Custodian shall not be liable for the actions or
omissions of the Loan Obligation Manager, the Issuer, the Co-Issuer, the CLO
Servicer or the Advancing Agent; 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
such Person with the terms hereof or the Transaction Documents, or to verify or
independently determine the accuracy of information received by it from such
Person

 

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(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;

 

(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 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;

 

(m)          neither the Trustee nor the Collateral Administrator shall be
responsible for determining if a Loan Obligation meets the criteria or
eligibility restrictions imposed by this Indenture; and

 

(n)           to help fight the funding of terrorism and money laundering
activities, the Trustee will obtain, verify, and record information that
identifies individuals or entities that establish a relationship or open an
account with the Trustee.  The Trustee will ask for the name, address, tax
identification number and other information that will allow the Trustee to
identify the individual or entity who is establishing the relationship or
opening the account.  The Trustee may also ask for formation documents such as
articles of incorporation, an offering memorandum, or other identifying
documents to be provided;

 

(o)           the Trustee is hereby authorized and directed to execute and
deliver the other Transaction Documents to which it is a party;

 

(p)           the Bank shall be entitled to all of the same rights, protections,
immunities and indemnities afforded to it as Trustee as it serves in each
capacity (as Trustee or otherwise) hereunder and under the Transaction Documents
(including without limitation, as Paying Agent, Calculation Agent, Transfer
Agent, Custodial Securities Intermediary, Backup Advancing Agent, Notes
Registrar and Custodian);

 

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(q)           in no event shall the Trustee be liable for special, indirect,
punitive or consequential loss or damage of any kind whatsoever (including but
not limited to lost profits) even if the Trustee has been advised of the
likelihood of such loss or damage and regardless of the form of action.

 

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 and Custodian (subject to any written agreement between the Issuer and
the Trustee) in a timely manner upon its request for all reasonable expenses,
disbursements and advances (except as otherwise provided herein with respect to
Interest Advances) incurred or made by the Trustee and Custodian 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

 

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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 Custodian 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, Custodian 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 Section 6.7 shall survive termination of this
Indenture or the resignation or removal of the Trustee (or Custodian).

 

(d)           The Trustee agrees that the payment of all amounts to which it is
entitled pursuant to Sections 6.7(a)(i), (a)(ii), (a)(iii) and (a)(iv) shall be
subject to the Priority of Payments, shall be payable only to the extent funds
are available in accordance with such Priority of Payments, shall be payable
solely from the Assets and following realization of the Assets, any such claims
of the Trustee against the Issuer, and all obligations of the Issuer, shall be
extinguished.  The Trustee will have a lien upon the Assets to secure the
payment of such payments to it in accordance with the Priority of Payments;
provided that the Trustee shall not institute any proceeding for enforcement of
such lien except in connection with an action taken pursuant to Section 5.3
hereof for enforcement of the lien of this Indenture for the benefit of the
Noteholders.

 

Fees shall be accrued on the actual number of days in the related Interest
Accrual Period.  The Trustee shall receive amounts pursuant to this Section 6.7
and Section 11.1(a) only to the extent that such payment is made in accordance
with the Priority of Payments and the failure to pay such amounts to the Trustee
will not, by itself, constitute an Event of Default.  Subject to Section 6.9,
the Trustee shall continue to serve as Trustee under this Indenture
notwithstanding the fact that the Trustee shall not have received amounts due to
it hereunder.  No

 

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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 (or Custodian) and no
appointment of a successor Trustee (or Custodian) pursuant to this Article 6
shall become effective until the acceptance of appointment by such successor
Trustee (or Custodian) under Section 6.10.

 

(b)           The Trustee (or Custodian) 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 (or custodian or custodians), 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
(or Custodian) so resigning and one copy to the successor Trustee or Trustees
(or Custodian or Custodians), together with a copy to each Noteholder and the
Loan Obligation Manager; provided that such successor Trustee (or Custodian)
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 (or Custodian) has been appointed pursuant to Section 6.10,
by Act of a Majority of the Controlling Class.  If no successor Trustee (or
Custodian) shall have been appointed and an instrument of acceptance by a
successor Trustee (or Custodian) shall not have been delivered to

 

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the Trustee (or Custodian) within 30 days after the giving of such notice of
resignation, the resigning Trustee (or Custodian), 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 (or Custodian) 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 (or Custodian)
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
(or Custodian) and to the Issuer and the Co-Issuer.

 

(d)           If at any time:

 

(i)            the Trustee (or Custodian) 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 (or Custodian) 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
Custodian) or of its respective property shall be appointed or any public
officer shall take charge or control of the Trustee (or Custodian) or of its
respective 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 Custodian) 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 (or Custodian) and the
appointment of a successor Trustee (or Custodian).

 

(e)           If the Trustee (or Custodian) 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 (or Custodian).  If the Issuer and the Co-Issuer shall fail to
appoint a successor Trustee (or Custodian) within 60 days after such
resignation, removal or incapability or the occurrence of such vacancy, a
successor Trustee (or Custodian) 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 (or Custodian).  The successor Trustee (or
Custodian) so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee (or Custodian) and supersede any
successor Trustee (or Custodian) proposed by the Issuer and the Co-Issuer.  If
no successor Trustee (or Custodian) 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 (or Custodian).

 

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(f)            The Issuer and the Co-Issuer shall give prompt notice of each
resignation and each removal of the Trustee (or Custodian) and each appointment
of a successor Trustee (or Custodian) 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 successor Trustee (or Custodian) 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 (or
Custodian), the successor Trustee (or Custodian) 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 (or Custodian) appointed hereunder shall execute,
acknowledge and deliver to the Issuer, the Co-Issuer, the Loan Obligation
Manager, the CLO Servicer and the retiring Trustee (or Custodian) an instrument
accepting such appointment.  Upon delivery of the required instruments, the
resignation or removal of the retiring Trustee (or Custodian) shall become
effective and such successor Trustee (or Custodian), without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts,
duties and obligations of the retiring Trustee (or Custodian); 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 (or Custodian), such retiring
Trustee (or Custodian) shall, upon payment of its charges then unpaid, execute
and deliver an instrument transferring to such successor Trustee (or Custodian)
all the rights, powers and trusts of the retiring Trustee (or Custodian), and
shall duly assign, transfer and deliver to such successor Trustee (or Custodian)
all property and amounts held by such retiring Trustee (or Custodian) hereunder,
subject nevertheless to its lien, if any, provided for in Section 6.7(d).  Upon
request of any such successor Trustee (or Custodian), 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 (or Custodian) all such
rights, powers and trusts.

 

No successor Trustee (or Custodian) 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 (or Custodian).

 

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 (or Custodian) shall be a party, or any corporation or banking
association succeeding to all or substantially all of the corporate trust
business of the Trustee (or Custodian), 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

 

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delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication and
deliver the Notes so authenticated with the same effect as if such successor
Trustee had itself authenticated such Notes.

 

Section 6.12          Co-Trustees and Separate Trustee.

 

At any time or times, including for the purpose of meeting the legal
requirements of any jurisdiction in which any part of the Assets may at the time
be located, the Issuer, the Co-Issuer and the Trustee shall have power to
appoint, one or more Persons to act as co-trustee jointly with the Trustee of
all or any part of the Assets, with the power to file such proofs of claim and
take such other actions pursuant to Section 5.6 herein and to make such claims
and enforce such rights of action on behalf of the Holders of the Notes as such
Holders themselves may have the right to do, subject to the other provisions of
this Section 6.12.

 

Each of the Issuer and the Co-Issuer shall join with the Trustee in the
execution, delivery and performance of all instruments and agreements necessary
or proper to appoint a co-trustee.  If the Issuer and the Co-Issuer do not both
join in such appointment within 15 days after the receipt by them of a request
to do so, the Trustee shall have power to make such appointment 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

 

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resignation of, or remove, any such co-trustee without the concurrence of the
Issuer or the Co-Issuer.  A successor to any co-trustee so resigned or removed
may be appointed in the manner provided in this Section 6.12;

 

(d)           no co-trustee hereunder shall be personally liable by reason of
any act or omission of the Trustee hereunder;

 

(e)           the Trustee shall not be liable by reason of any act or omission
of a co-trustee; and

 

(f)            any Act of Securityholders delivered to the Trustee shall be
deemed to have been delivered to each co-trustee.

 

Section 6.13          Certain Duties of Trustee Related to Delayed Payment of
Proceeds.

 

In the event that in any month the Trustee shall not have received a Scheduled
Distribution, (a) the Trustee shall promptly notify the Issuer and the 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

 

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transfer, insolvency, reorganization, liquidation, receivership, moratorium or
other similar laws now or hereafter in effect relating to creditors’ rights
generally and by general equitable principles, regardless of whether considered
in a proceeding in equity or at law, and (ii) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought;

 

(c)           neither the execution or delivery by the Trustee of this Indenture
nor the performance by the Trustee of its obligations under this Indenture
requires the consent or approval of, the giving of notice to or the registration
or filing with, any governmental authority or agency under any existing law of
the United States of America governing the banking or trust powers of the
Trustee;

 

(d)           neither the execution, delivery and performance of this Indenture,
nor the consummation of the transactions contemplated by this Indenture, (i) is
prohibited by, or requires the Trustee to obtain any consent, authorization,
approval or registration under, any law, statute, rule, regulation, or any
judgment, order, writ, injunction or decree that is binding upon the Trustee or
any of its properties or assets, (ii) will violate the provisions of the
Governing Documents of the Trustee or (iii) will violate any provision of,
result in any default or acceleration of any obligations under, result in the
creation or imposition of any lien pursuant to, or require any consent under,
any material agreement to which the Trustee is a party or by which 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.

 

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Section 6.16          Withholding.

 

If any amount is required to be deducted or withheld from any payment to any
Noteholder, such amount shall reduce the amount otherwise distributable to such
Noteholder.  The Trustee is hereby authorized to withhold or deduct from amounts
otherwise distributable to any Noteholder sufficient funds for the payment of
any tax that is legally required to be withheld or deducted (but such
authorization shall not prevent the Trustee from contesting any such tax in
appropriate proceedings and legally withholding payment of such tax, pending the
outcome of such proceedings).  The amount of any withholding tax imposed with
respect to any Noteholder shall be treated as Cash distributed to such
Noteholder at the time it is deducted or withheld by the Issuer or the Trustee,
as applicable, and remitted to the appropriate taxing authority.  If there is a
possibility that withholding tax is payable with respect to a distribution, the
Trustee may in its sole discretion withhold such amounts in accordance with this
Section 6.16.  If any Noteholder wishes to apply for a refund of any such
withholding tax, the Trustee shall reasonably cooperate with such Noteholder in
making such claim so long as such Noteholder agrees to reimburse the Trustee for
any out-of-pocket expenses incurred.  Nothing herein shall impose an obligation
on the part of the Trustee to determine the amount of any tax or withholding
obligation on the part of the Issuer or in respect of the Notes.

 

ARTICLE 7

 

COVENANTS

 

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

 

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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 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

 

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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 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;

 

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(d)           if such Paying Agent is not the Trustee, immediately give the
Trustee notice of any Default by the Issuer or the Co-Issuer (or any other
obligor upon the Notes) in the making of any payment required to be made; and

 

(e)           if such Paying Agent is not the Trustee at any time during the
continuance of any such Default, upon the written request of the Trustee,
forthwith pay to the Trustee all sums so held by such Paying Agent.

 

The Issuer or the Co-Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Issuer Order direct the Paying Agent to pay, to the Trustee all sums held by
the Issuer or the Co-Issuer or held by the Paying Agent for payment of the
Notes, such sums to be held by the Trustee in trust for the same Noteholders as
those upon which such sums were held by the Issuer, the Co-Issuer or the Paying
Agent; and, upon such payment by the Paying Agent to the Trustee, the Paying
Agent shall be released from all further liability with respect to such 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

 

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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 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.

 

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(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 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

 

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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
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 or Cayman FATCA Legislation, 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 February 15, 2022
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.

 

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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 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;

 

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(iii)          (A) incur or assume or guarantee any indebtedness, other than the
Notes and this Indenture and the transactions contemplated hereby; (B) issue any
additional class of securities, other than the Notes, the Preferred Shares, the
ordinary shares of the Issuer and the limited liability company membership
interests of the Co-Issuer; or (C) issue any additional shares of stock, other
than the ordinary shares of the Issuer and the Preferred Shares;

 

(iv)          (A) permit the validity or effectiveness of this Indenture or any
Grant hereunder to be impaired, or permit the lien of this Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or permit any
Person to be released from any covenants or obligations with respect to this
Indenture or the Notes, except as may be expressly permitted hereby; (B) permit
any lien, charge, adverse claim, security interest, mortgage or other
encumbrance (other than the lien of this Indenture) to be created on or extend
to or otherwise arise upon or burden the Assets or any part thereof, any
interest therein or the proceeds thereof, except as may be expressly permitted
hereby; or (C) take any action that would permit the lien of this Indenture not
to constitute a valid first priority security interest in the Assets, except as
may be expressly permitted hereby;

 

(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;

 

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(xii)         take any action that would result in it failing to qualify as a
Qualified REIT Subsidiary of the Arbor Parent for U.S. 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 the
Issuer receives (A) an Opinion of Counsel that the Issuer will be treated as a
Qualified REIT Subsidiary or other disregarded entity of a REIT other than Arbor
Parent, or (B) a No Trade or Business Opinion;

 

(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;

 

(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 or transfer 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

 

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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 (whether by means of actual transfer
or transfer of beneficial ownership for U.S. federal income tax purposes),
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 a No Entity-Level Tax Opinion, or has previously received a No Trade or
Business Opinion.

 

(g)           Any financing arrangement pursuant to Section 7.8(f) shall
prohibit any further transfer (whether by means of actual transfer or a transfer
of beneficial ownership for U.S. federal income tax purposes) of the retained or
repurchased Notes or Preferred Shares, including a transfer in connection with
any exercise of remedies under such financing unless the Issuer receives a No
Entity-Level Tax Opinion.

 

Section 7.9            Statement as to Compliance.

 

On or before January 31, in each calendar year, commencing in 2018 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

 

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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 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;

 

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(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 other
disregarded entity of a REIT 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;

 

(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

 

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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 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

 

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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 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

 

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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.

 

(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 U.S. federal income tax purposes, unless  the Issuer receives (A) an Opinion
of Counsel that the Issuer will be treated as a Qualified REIT Subsidiary or
other disregarded entity of a REIT other than Arbor Parent, or (B) a No Trade or
Business Opinion.

 

(b)           If the Issuer is no longer a Qualified REIT Subsidiary or other
disregarded entity of a REIT, 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

 

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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.

 

(c)           At the direction of 100% of the Preferred Shareholders (including
any party that will become the beneficial owner of 100% of the Preferred Shares
because of a default under any financing arrangement for which the Preferred
Shares are security), the Issuer may operate as a foreign corporation that is
not engaged in a trade or business in the United States for U.S. federal income
tax purposes, provided that (i) the Issuer receives a No Entity-Level Tax
Opinion; (ii) this Indenture and the Servicing Agreement, as applicable, are
revised (A) to adopt written tax guidelines governing the Issuer’s origination,
acquisition, disposition and modification of Mortgage Loans designed to prevent
the Issuer from being treated as engaged in a trade or business in the United
States for U.S. federal income tax purposes, (B) to form one or more “grantor
trusts” to the hold Mortgage Loans and (C) to implement any other provisions
deemed necessary (as determined by the tax counsel providing the opinion) to
prevent the Issuer from being treated as a foreign corporation engaged in a
trade or business in the United States for U.S. federal income tax purposes or
otherwise becoming subject to U.S. federal withholding tax or U.S. federal
income tax on a net income basis; (iii) the Preferred Shareholder shall pay the
administrative and other costs related to the Issuer converting from a Qualified
REIT Subsidiary to operating as a foreign corporation, including the costs of
any opinions and amendments; and (iv) the Preferred Shareholder agrees to pay
any ongoing expenses related to the Issuer’s status as a foreign corporation not
engaged in a trade or business in the United States for U.S. federal income tax
purposes, including but not limited to U.S. federal income tax filings required
by the Issuer, the “grantor trusts” or any taxable subsidiaries or required
under FATCA.

 

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:

 

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(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 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 2017-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

 

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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 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

 

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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;

 

(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;

 

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

 

(viii)        take any action commercially reasonably necessary or advisable for
the Issuer to comply with FATCA or Cayman FATCA Legislation 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 U.S. federal income tax purposes or otherwise subject to U.S. federal
income tax on a net income basis, 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;

 

(ix)          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;

 

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

 

(xi)          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;

 

(xii)         evidence changes to applicable laws and regulations;

 

(xiii)        to modify, eliminate or add to any of its provisions in the event
the U.S. Credit Risk Retention Rules or any other regulations applicable to the
risk retention requirements for this securitization transaction are amended or
repealed, in order to modify or eliminate the risk retention requirements in the
event of such amendment or repeal; provided that the Trustee has received an
opinion of counsel to the effect the action is consistent with and will not
cause a violation of the U.S. Credit Risk Retention Rules;

 

(xiv)        reduce the minimum denominations required for transfer of the Notes
(except as provided in Section 8.2(i));

 

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(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
U.S. 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)       at the direction of 100% of the holders of the Preferred Shares
(including any party that will become the beneficial owner of 100% of the
Preferred Shares because of a default under any financing arrangement for which
the Preferred Shares are security), modify the provisions of this Indenture to
adopt restrictions provided by tax counsel in order to prevent the Issuer from
being 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 otherwise become
subject to U.S. federal withholding tax or U.S. federal income tax on a net
income basis;

 

(xviii)      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

 

(xix)        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

 

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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 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.

 

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(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:

 

(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 conform this Indenture to 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.

 

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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
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

 

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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.

 

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

 

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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 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% or less 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.

 

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(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.

 

(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

 

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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 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-

 

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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 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.”

 

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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 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.

 

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(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 Investments described
in clause (ii) of the definition of Eligible Investments maturing no later than
the Business Day immediately preceding the next Payment Date (unless such
Eligible Investments are issued by the Trustee in its capacity as a banking
institution, in which event such Eligible Investments may mature on such 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
(unless such Eligible Investments are issued by the Trustee in its capacity as a
banking institution, in which event such Eligible Investments may mature on such
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

 

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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 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.

 

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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 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

 

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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” 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 at least equal to
“A-1,” “P-1” or “F1,” as applicable, and “R-1(middle)” 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).

 

(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

 

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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.

 

(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 “A” 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          Reserved.

 

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

 

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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 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

 

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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 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

 

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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 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

 

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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 update the Assets on a database
with information provided to it 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:

 

(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, the Placement Agent 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);

 

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(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 Placement Agent 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:

 

(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 and borrower;

 

(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;

 

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(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 Weighted Average Rating Factor;

 

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

 

(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

 

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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(e), (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;

 

(xxiii)      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;

 

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

 

(xxv)      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

 

(xxvi)     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;

 

(xxvii)    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;

 

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(xxviii)   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

 

(xxix)     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;

 

(xxx)      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);

 

(xxxi)     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, 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

 

(xxxii)    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

 

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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 Placement Agent 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.

 

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(e)) 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.

 

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(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(e)), 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;

 

(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.

 

(i)            After the Closing Date, the Trustee shall make available via its
website the following “risk retention special notices”, if any, in each case to
the extent received by the Trustee from the Collateral Manager:

 

(i)            the fair value (expressed as a percentage of the fair value of
all of the Securities and dollar amount) of the eligible horizontal residual
interest that the sponsor is required to retain under the U.S. Credit Risk
Retention Rules; and

 

(ii)           any material differences between the valuation methodology or any
of the key inputs and assumptions that were used in calculating the fair value
or range of fair values prior to the pricing of the Notes and the Closing Date.

 

The Trustee shall have no responsibility for the accuracy or completeness of
such received risk retention special notice.

 

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 (which certifications
shall be deemed to be made upon delivery of an Issuer Order in respect of such
sale), 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

 

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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.

 

(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

 

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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, 2017), 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 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.

 

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(c)           All additional reports to be sent to the Rating Agencies pursuant
to clause (a) above shall be reviewed prior to such transmission by the 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).

 

(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.

 

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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
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) 0.022% 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 Custodian, 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

 

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the Servicing Fee under the Servicing Agreement (but only in the event that
Arbor Multifamily Lending, 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) 0.1% 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 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

 

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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
(8) 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;

 

(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

 

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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;

 

(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

 

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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 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.

 

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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

 

(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:

 

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(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.

 

(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

 

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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
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, delivered 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.

 

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(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 Senior Participations, pursuant
to and in accordance with the terms of the related participation agreement. 
Cash contributed to the Issuer by ARMS Equity (during the Replacement Period)
may be reinvested by the Issuer in Replacement Loan Obligations so long as no
Event of Default has occurred and is continuing.

 

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 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).

 

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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).

 

(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

 

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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 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

 

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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.

 

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).

 

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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.

 

Section 14.3          Notices, etc., to the Trustee, the Issuer, the Co-Issuer,
the Advancing Agent, the Loan Obligation Manager, the Placement Agent 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 2017-

 

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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;

 

(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., 333 West Wacker
Drive, Suite 1800, 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

 

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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 Placement Agent 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 Placement Agent
at 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.

 

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
related to this Indenture in the possession of the Trustee requested to be so
delivered by at least 25% of the Holders of any Class of Notes.  The Trustee
shall have no liability for such disclosure or, subject to its duties herein,
the accuracy thereof.

 

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

 

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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 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

 

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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.

 

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
(except as set forth under clause (f )) 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

 

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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.

 

(f)            If any of the parties to this Indenture receives a Form ABS Due
Diligence-15E from any party in connection with any third-party due diligence
services such party may have provided with respect to the Loan Obligations (“Due
Diligence Service Provider”), such receiving party shall promptly forward such
Form ABS Due Diligence-15E to the 17g-5 Information Provider for posting on the
17g-5 Information Provider’s Website.  The 17g-5 Information Provider shall post
on the 17g-5 Information Provider’s Website any Form ABS Due Diligence-15E it
receives directly from a Due Diligence Service Provider or from another party to
this Indenture, promptly upon receipt thereof.

 

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 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.

 

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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.

 

(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

 

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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 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

 

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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

 

CURE RIGHTS; PURCHASE RIGHTS; REPLACEMENT LOAN OBLIGATIONS

 

Section 16.1          Reserved.

 

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.

 

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(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 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 a Senior 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 a Senior Participation, has the right pursuant to
the related Underlying Instruments to purchase any other interest in the same
Underlying Whole Loan as the Senior 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

 

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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.

 

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

 

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any loss, liability or expense (i) specifically required to be borne by the
Advancing Agent pursuant to the terms hereof or otherwise incidental to the
performance of obligations and duties hereunder (except as any such loss,
liability or expense shall be otherwise reimbursable pursuant to this
Indenture); or (ii) incurred by reason of any breach of a representation,
warranty or covenant made herein, any misfeasance, bad faith or negligence by
the Advancing Agent in the performance of or negligent disregard of, obligations
or duties hereunder or any violation of any state or federal securities law.

 

Section 17.4          Representations and Warranties of the Advancing Agent.

 

The Advancing Agent represents and warrants that:

 

(a)           the Advancing Agent (i) has been duly organized, is validly
existing and is in good standing under the laws of the State of Maryland,
(ii) has full power and authority to own the Advancing Agent’s assets and to
transact the business in which it is currently engaged, and (iii) is duly
qualified and in good standing under the laws of each jurisdiction where the
Advancing Agent’s ownership or lease of property or the conduct of the Advancing
Agent’s business requires, or the performance of this Indenture would require,
such qualification, except for failures to be so qualified that would not in the
aggregate have a material adverse effect on the business, operations, assets or
financial condition of the Advancing Agent or the ability of the Advancing Agent
to perform its obligations under, or on the validity or enforceability of, the
provisions of this Indenture applicable to the Advancing Agent;

 

(b)           the Advancing Agent has full power and authority to execute,
deliver and perform this Indenture; this Indenture has been duly authorized,
executed and delivered by the Advancing Agent and constitutes a legal, valid and
binding agreement of the Advancing Agent, enforceable against it in accordance
with the terms hereof, except that the enforceability hereof may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors’ rights and (ii) general principles
of equity (regardless of whether such enforcement is considered in a proceeding
in equity or at law);

 

(c)           neither the execution and delivery of this Indenture nor the
performance by the Advancing Agent of its duties hereunder conflicts with or
will violate or result in a breach or violation of any of the terms or
provisions of, or constitutes a default under: (i) the 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

 

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the execution, delivery or enforceability of this Indenture or the ability of
the Advancing Agent to perform any of its obligations under this Indenture in
accordance with the terms hereof; and

 

(e)           no consent, approval, authorization or order of or declaration or
filing with any government, governmental instrumentality or court or other
Person is required for the performance by the Advancing Agent of its duties
hereunder, except such as have been duly made or obtained.

 

Section 17.5          Resignation and Removal; Appointment of Successor.

 

(a)           No resignation or removal of the Advancing Agent and no
appointment of a successor Advancing Agent pursuant to this Article 17 shall
become effective until the acceptance of appointment by the successor Advancing
Agent under Section 17.6.

 

(b)           The Advancing Agent may resign at any time by giving written
notice thereof to the Issuer, the Co-Issuer, the Trustee, the 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

 

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situated, may petition any court of competent jurisdiction for the appointment
of a successor Advancing Agent.

 

(f)            The Issuer and the Co-Issuer shall give prompt notice of each
resignation and each removal of the Advancing Agent and each appointment of a
successor Advancing Agent by mailing written notice of such event by first class
mail, postage prepaid, to 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 2017-FL1, LTD., as Issuer

 

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

 

 

 

In the presence of:

 

 

 

 

 

Witness:

 

Name:

 

Title:

 

 

 

 

 

ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2017-FL1, LLC, as Co-Issuer

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

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:

 

 

 

Name:

 

 

Title:

 

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

 

 

ARBOR REALTY SR, INC., as Advancing Agent

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

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

 

 

Acknowledged and Agreed:

 

 

 

U.S. BANK NATIONAL ASSOCIATION, solely as Custodian and not in its individual
capacity

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

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