EXHIBIT 10.2

 

LOAN OBLIGATION MANAGEMENT AGREEMENT

 

This Loan Obligation Management Agreement, dated as of August 24, 2017 (this
“Agreement”), is entered into by and between ARBOR REALTY COMMERCIAL REAL ESTATE
NOTES 2017-FL2, LTD., an exempted company incorporated with limited liability
under the laws of the Cayman Islands (together with successors and assigns
permitted hereunder, the “Issuer”), and ARBOR REALTY COLLATERAL MANAGEMENT, LLC,
a limited liability company organized under the laws of the State of Delaware
(together with its successors and assigns, the “Loan Obligation Manager” or
“ARCM”).  Capitalized terms used herein but not otherwise defined herein shall
have the respective meanings ascribed thereto in the Indenture, dated as of the
date hereof (the “Indenture”), by and among the Issuer, Arbor Realty Commercial
Real Estate Notes 2017-FL2, LLC, as co-issuer (the “Co-Issuer”), U.S. Bank
National Association, as trustee (in such capacity, the “Trustee”), paying
agent, calculation agent, transfer agent, custodial securities intermediary,
backup advancing agent and notes registrar, and Arbor Realty SR, Inc., as
advancing agent.

 

WHEREAS, the Issuer desires to engage the Loan Obligation Manager to provide the
services described herein and the Loan Obligation Manager desires to provide
such services;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties hereto hereby agree as follows:

 

1.                                      Management Services.  The Loan
Obligation Manager is hereby appointed as the Issuer’s exclusive agent to
provide the Issuer with certain services in relation to the Assets specified
herein and in the Indenture.  Accordingly, the Loan Obligation Manager accepts
such appointment and shall provide the Issuer with the following services (in
accordance with all applicable requirements of the Indenture, the Servicing
Agreement and this Agreement, including, without limitation, the Loan Obligation
Management Standard):

 

(a)                                 determining specific Loan Obligations,
Additional Loan Obligations and Replacement Loan Obligations to be purchased and
the timing of such purchases, as permitted by the Indenture;

 

(b)                                 determining specific Eligible Investments to
be purchased or sold and the timing of such purchases and sales, in each case,
as permitted by the Indenture;

 

(c)                                  effecting or directing the purchase of Loan
Obligations, any loan conditionally designated for purchase (each a “Targeted
Additional Loan Obligation”), Additional Loan Obligations during the
Post-Closing Acquisition Period and Eligible Investments, effecting or directing
the sale of Loan Obligations and Eligible Investments, and directing the
investment or reinvestment of proceeds therefrom in Replacement Loan
Obligations, in each case, as permitted by the Indenture.  In addition, in the
event that the Loan Obligation Manager determines that a Targeted Additional
Loan Obligation may not close during the Post-Closing Acquisition Period, or
decides not to acquire such Loan Obligation, the Loan Obligation Manager on
behalf of the Issuer may use such funds credited to the Unused Proceeds Account
to be used to acquire such Loan Obligation to acquire Additional Loan
Obligations

 

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during the Post-Closing Acquisition Period that satisfy the Eligibility Criteria
as permitted by the Indenture;

 

(d)                                 negotiating with issuers of Loan Obligations
as to proposed modifications or waivers of the documentation governing such Loan
Obligations;

 

(e)                                  taking action, or advising the Trustee with
respect to actions to be taken, with respect to the Issuer’s exercise of any
rights (including, without limitation, voting rights, tender rights and rights
arising in connection with the bankruptcy or insolvency of an issuer of a Loan
Obligation or the consensual or non-judicial restructuring of the debt or equity
of an issuer of a Loan Obligation) or remedies in connection with Loan
Obligations and Eligible Investments, as provided in the related Underlying
Instruments, and participating in the committees or other groups formed by
creditors of an issuer of any Loan Obligation, or taking any other action with
respect to Loan Obligations and Eligible Investments which the Loan Obligation
Manager determines, in accordance with the Loan Obligation Management Standard
(and subject to the applicable provisions of the Servicing Agreement), is in the
best interests of all of the Noteholders in accordance with and as permitted by
the terms of the Indenture;

 

(f)                                   consulting with each Rating Agency at such
times as may be reasonably requested by any Rating Agency in compliance with
Section 19 of this Agreement and providing each Rating Agency with any
information reasonably requested in connection with such Rating Agency’s
maintenance of its ratings of the Notes and their assigning credit indicators to
prospective Loan Obligations, if applicable, and estimating the ratings that
such Rating Agency would assign to prospective Loan Obligations, as permitted or
required under the Indenture;

 

(g)                                  determining whether specific Loan
Obligations are Credit Risk Obligations or Defaulted Obligations and determining
whether such Loan Obligations, and any other Loan Obligations that are permitted
or required to be sold pursuant to the Indenture, should be sold, and directing
the Trustee to effect a disposition of any such Loan Obligations, subject to,
and in accordance with the Indenture;

 

(h)                                 (i) monitoring the Assets on an ongoing
basis, (ii) determining the As-Stabilized DSCR and As-Stabilized LTV of each
Loan Obligation in accordance with the Indenture, (iii) determining the market
value of any Collateral Obligation in connection with determining the
Calculation Amount when required pursuant to the Indenture and (iv) providing or
causing to be provided to the Issuer and/or the other parties specified in the
Indenture all reports, schedules and certificates which relate to the Assets and
which the Issuer is required to prepare and deliver under the Indenture, which
are not prepared and delivered by the Trustee on behalf of the Issuer under the
Indenture, in the form and containing all information required thereby
(including, in the case of the Monthly Reports and the Notes Valuation Reports
providing the information to the Trustee as specified in Section 10.10 of the
Indenture in sufficient time for the Trustee to prepare the Monthly Report and
the Note Valuation Report) and, if applicable, in sufficient time for the Issuer
to review such required reports and schedules and to deliver them to the parties
entitled thereto under the Indenture;

 

(i)                                     managing the Issuer’s investments in
accordance with the Indenture, including the limitations relating to the
Eligibility Criteria, the Note Protection Tests, the

 

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Replacement Criteria and the other requirements of the Indenture and taking
action that the Loan Obligation Manager deems appropriate and consistent with
the Indenture, the Loan Obligation Management Standard, the applicable
provisions of the Servicing Agreement and the standard of care set forth herein
with respect to any portion of the Assets that does not constitute Loan
Obligations or Eligible Investments;

 

(j)                                    providing notification, in writing, to
the Trustee and the Issuer upon receiving actual notice that a Loan Obligation
is subject to an Offer, has become a Defaulted Obligation or a Credit Risk
Obligation or has suffered an appraisal reduction;

 

(k)                                 providing notification, in writing, to the
Trustee, the Holders of the Notes, the Rating Agencies and the Issuer upon
becoming actually aware of a Default or an Event of Default under the Indenture;

 

(l)                                     determining (in its sole discretion but
subject to the Indenture) whether, in light of the composition of Loan
Obligations, general market conditions and other factors considered pertinent by
the Loan Obligation Manager, investments in replacement Loan Obligations would,
at any time during the Replacement Period, either be impractical or not
beneficial to the Holder of the Preferred Shares;

 

(m)                             taking reasonable action on behalf of the Issuer
to effect any Optional Redemption, any Tax Redemption or any Clean-up Call in
accordance with the Indenture;

 

(n)                                 monitoring the ratings of the Loan
Obligations and the Issuer’s compliance with the covenants by the Issuer in the
Indenture;

 

(o)                                 making such determinations, exercising such
rights and taking such actions, on behalf of the Issuer, as the Loan Obligation
Manager is authorized to do under the Indenture, the Servicing Agreement or this
Agreement;

 

(p)                                 complying with the Investment Advisers Act
of 1940, as amended (the “Advisers Act”), with respect to the Issuer;

 

(q)                                 in order to render the Securities eligible
for resale pursuant to Rule 144A under the Securities Act, while any of such
Securities remain outstanding, making available, upon request, to any Holder or
prospective purchaser of such Securities, additional information regarding the
Issuer and the Assets if such information is reasonably available to the Loan
Obligation Manager and constitutes Rule 144A Information required to be
furnished by the Issuer pursuant to Section 7.13 of the Indenture, unless the
Issuer furnishes information to the United States Securities and Exchange
Commission (the “Commission”) pursuant to Section 13 or Section 15(d) of the
Exchange Act;

 

(r)                                    the Loan Obligation Manager may, subject
to and in accordance with the Indenture and this Agreement, in its capacity as
the Loan Obligation Manager, direct the Issuer to establish a Permitted
Subsidiary and such Permitted Subsidiary may acquire, retain, sell or otherwise
dispose of any Sensitive Asset in accordance with the Indenture and this
Agreement;

 

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(s)                                   upon reasonable request, assisting the
Trustee or the Issuer with respect to such actions to be taken after the Closing
Date, as is necessary to maintain the clearing and transfer of the Notes through
DTC; and

 

(t)                                    in accordance with the Loan Obligation
Management Standard (but subject to the applicable provisions of the Servicing
Agreement), enforcing the rights of the Issuer as holder of the Loan
Obligations, including, without limitation, taking such action as is necessary
to enforce the Issuer’s rights with respect to remedies related to breaches of
representations, warranties or covenants in the Underlying Instruments for the
benefit of the Issuer.

 

In furtherance of the foregoing, the Issuer hereby appoints the Loan Obligation
Manager the Issuer’s true and lawful agent and attorney-in-fact, with full power
of substitution and full authority in the Issuer’s name, place and stead and
without any necessary further approval of the Issuer, in connection with the
performance of the Loan Obligation Manager’s duties provided for in this
Agreement, including the following powers: (i) to buy, sell, exchange, and
convert Loan Obligations and Eligible Investments, and (ii) to execute (under
hand, under seal or as a deed) and deliver all necessary and appropriate
documents and instruments on behalf of the Issuer to the extent necessary or
appropriate to perform the services referred to in (a) through (t) above of this
Section 1 and under the Indenture.  The foregoing power of attorney is a
continuing power, coupled with an interest, and shall remain in full force and
effect until revoked by the Issuer in writing by virtue of the termination of
this Agreement pursuant to Section 12 hereof or an assignment of this Agreement
pursuant to Section 17 hereof; provided that any such revocation shall not
affect any transaction initiated prior to such revocation.  Nevertheless, if so
requested by the Loan Obligation Manager or a purchaser of a Loan Obligation or
Eligible Investment, the Issuer shall ratify and confirm any such sale or other
disposition by executing and delivering to the Loan Obligation Manager or such
purchaser all proper bills of sale, assignments, releases and other instruments
as may be designated in any such request.

 

In performing its duties hereunder, the Loan Obligation Manager shall endeavor,
subject to the provisions of this Agreement and the Indenture, to manage the
Assets in a manner that will (i) permit a timely performance of all payment
obligations of the Issuer under the Indenture and (ii) subject to such
objective, optimize the returns to the Holders of the Securities.  The Loan
Obligation Manager does not hereby guarantee that sufficient funds will be
available on each Payment Date to satisfy any such payment obligations.  The
Loan Obligation Manager agrees that it shall perform its obligations hereunder
and under the Indenture in accordance with reasonable care and in good faith,
using a degree of skill and attention no less than that which it (i) exercises
with respect to comparable assets that it manages for itself and (ii) exercises
with respect to comparable assets that it manages for others, and in a manner
consistent with the practices and procedures then in effect followed by
reasonable and prudent institutional managers of national standing relating to
assets of the nature and character of the Assets, except as expressly provided
in this Agreement or in the Indenture and without regard to any conflicts of
interest to which it may be subject (the “Loan Obligation Management
Standard”).  In addition, the Loan Obligation Manager shall use its best efforts
to ensure that (i) inquiries are made, to the extent practicable, from sources
normally available to it, with respect to the occurrence of any default or event
of default in respect of any Loan Obligation under any Underlying Instrument and
(ii) commitments to purchase Loan Obligations and Eligible

 

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Investments are made by the Loan Obligation Manager only if, in the Loan
Obligation Manager’s best judgment at the time of such commitment, payment at
settlement in respect of any such purchase could be made without any breach or
violation of, or default under, the terms of the Indenture or this Agreement. 
The Loan Obligation Manager shall comply with and perform all the duties and
functions that have been specifically delegated to the Loan Obligation Manager
under the Indenture (including those duties and functions described in
Section 5.5(a)(iii) of the Indenture).  The Loan Obligation Manager shall be
bound to follow any amendment, supplement or modification to the Indenture of
which it has received written notice at least 10 Business Days prior to the
execution and delivery thereof by the parties thereto; provided, however, that
with respect to any amendment, supplement, modification or waiver to the
Indenture which may affect the Loan Obligation Manager, the Loan Obligation
Manager shall not be bound thereby (and the Issuer agrees that it will not
permit any such amendment, supplement, modification or waiver to become
effective) unless the Loan Obligation Manager has been given prior written
notice thereof and gives its written consent thereto (which consent shall not be
unreasonably withheld) to the Trustee and the Issuer prior to the effectiveness
thereof.

 

The Loan Obligation Manager shall take all actions reasonably requested by the
Trustee to facilitate the perfection of the Trustee’s security interest in the
Assets pursuant to the Indenture.

 

So long as any of the Notes are Outstanding, with respect to any Loan Obligation
that by its terms permits the conversion from a LIBOR-based interest rate to a
fixed interest rate, the Loan Obligation Manager shall not consent or agree to
convert such Loan Obligation from a LIBOR-based interest rate to a fixed
interest rate.

 

2.                                      Delegation of Duties.  The Loan
Obligation Manager may delegate its obligations as Loan Obligation Manager to
another person and the Loan Obligation Manager may enter into arrangements
pursuant to which the Loan Obligation Manager’s Affiliates or third parties may
perform certain services on behalf of the Loan Obligation Manager, but (i) such
arrangements will not relieve the Loan Obligation Manager from any of its duties
or obligations hereunder as a result of such delegation to or employment of
third parties, (ii) the Loan Obligation Manager shall be solely responsible for
the fees and expenses payable to any such third party, except as set forth in
Section 6 hereof, and (iii) such delegation does not constitute an “assignment”
under the Advisers Act.

 

3.                                      Purchase and Sale Transactions;
Brokerage.

 

(a)                                 The Loan Obligation Manager shall use
reasonable efforts to obtain the best prices and executions for all orders
placed with respect to the Assets, considering all reasonable circumstances,
including, if applicable, the conditions or terms of early redemption of the
Securities, it being understood that the Loan Obligation Manager has no
obligation to obtain the lowest prices available.  Subject to the objective of
obtaining best prices and executions, the Loan Obligation Manager may take into
consideration all factors the Loan Obligation Manager reasonably determines to
be relevant, including, without limitation, timing, general relevant trends and
research and other brokerage services and support equipment and services related
thereto furnished to the Loan Obligation Manager or its Affiliates by brokers
and dealers in

 

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compliance with Section 28(e) of the Exchange Act or, if Section 28(e) of the
Exchange Act is not applicable, in accordance with the provisions set forth
herein.  Such services may be used in connection with the other advisory
activities or investment operations of the Loan Obligation Manager and/or its
Affiliates.  In addition, subject to the objective of obtaining best prices and
executions, the Loan Obligation Manager may take into account available prices,
rates of brokerage commissions and size and difficulty of the order, in addition
to other relevant factors (such as, without limitation, execution capabilities,
reliability (based on total trading rather than individual trading), integrity,
financial condition in general, execution and operational capabilities of
competing brokers and/or dealers, and the value of the ongoing relationship with
such brokers and/or dealers), without having to demonstrate that such factors
are of a direct benefit to the Issuer in any specific transaction.  The Issuer
acknowledges that the determination by the Loan Obligation Manager of any
benefit to the Issuer is subjective and represents the Loan Obligation Manager’s
evaluation at the time that the Issuer will be benefited by relatively better
purchase or sales prices, lower brokerage commissions and beneficial timing of
transactions or a combination of these and other factors.

 

The Loan Obligation Manager may aggregate sales and purchase orders of
securities placed with respect to the Assets with similar orders being made
simultaneously for other accounts managed by the Loan Obligation Manager or with
accounts of the Affiliates of the Loan Obligation Manager if, in the Loan
Obligation Manager’s reasonable judgment, such aggregation will not have an
adverse effect on the Issuer.  When any aggregate sales or purchase orders
occur, the objective of the Loan Obligation Manager (and any of its Affiliates
involved in such transactions) shall be to allocate the executions among the
accounts in a fair and equitable manner and generally to seek to allocate
securities available for investment to all such accounts pro rata in proportion
to the optimum amount sought by the Loan Obligation Manager for each respective
account.  Investment opportunities and the purchases or sales of instruments
shall be allocated in a manner believed by the Loan Obligation Manager to be
fair and equitable, taking into consideration, among other relevant factors, the
differing investment objectives of the Issuer and the Loan Obligation Manager’s
other clients, the amount of capital available, the Eligibility Criteria set
forth in the Indenture and in any governing documents relating to the Loan
Obligation Manager’s other clients, the maturity of the account and the exposure
to similar or offsetting positions.  The Loan Obligation Manager, whenever
possible, will average the prices paid or received by all such clients
(including the Issuer) whenever particular positions are acquired or disposed of
at the same time.  Circumstances may arise, however, in which such an allocation
could have adverse effects upon the Issuer or the other clients of the Loan
Obligation Manager with respect to the price or size of positions obtainable or
saleable.

 

All purchases and sales of Eligible Investments and Loan Obligations by the Loan
Obligation Manager on behalf of the Issuer shall be conducted in compliance with
all applicable laws (including, without limitation, Section 206(3) of the
Advisers Act) and the terms of the Indenture.  After (and excluding) the Closing
Date, the Loan Obligation Manager shall cause any purchase or sale of any Loan
Obligation or Eligible Investment to be conducted on an arm’s-length basis or,
if applicable, in compliance with Section 3(b) hereof.  The parties hereto
acknowledge and agree that all purchases of Eligible Investments and Loan
Obligations by the Loan Obligation Manager on behalf of the Issuer on the
Closing Date (including, without limitation, all such purchases from Affiliates
of the Loan Obligation Manager) in a manner

 

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contemplated by the Offering Memorandum, dated August 7, 2017, related to the
Notes (or any supplement thereto) are hereby approved.

 

Notwithstanding the foregoing or anything to contrary contained herein or in the
Indenture, in no event shall the Loan Obligation Manager purchase or sell an
Eligible Investment or a Loan Obligation for the primary purpose of recognizing
gains or decreasing losses resulting from market value changes.

 

(b)                                 The Loan Obligation Manager, subject to and
in accordance with the Indenture, may effect direct trades between the Issuer
and the Loan Obligation Manager or any of its Affiliates, acting as principal
(any such transaction, a “Restricted Transaction”); provided, however, that a
Restricted Transaction after (and excluding) the Closing Date, other than
(x) Credit Risk/Defaulted Obligation Cash Purchases and (y) sales of Assets in
connection with a redemption of the Notes pursuant to Article 9 of the
Indenture, may be effected only (i) upon disclosure to and with the prior
consent of an advisory committee containing at least one member independent from
the Loan Obligation Manager (whose affirmative vote will be required to grant
such consent) that has been appointed from time to time as needed by the Issuer
(the “Advisory Committee”) and based on the Advisory Committee’s determination
that such transaction is on terms substantially as favorable to the Issuer as
would be the case if a such transaction were effected with Persons not so
affiliated with the Loan Obligation Manager or any of its Affiliates and
(ii) subject to a requirement that the purchase price in respect of any Loan
Obligation acquired by the Issuer from a Seller pursuant to such a direct trade
may not exceed the Principal Balance thereof plus accrued and unpaid interest
thereon. The Advisory Committee, if any, shall be formed subject to the Advisory
Committee Guidelines attached hereto as Exhibit A (the “Advisory Committee
Guidelines”).  The Issuer consents and agrees that, if any transaction relating
to the Issuer, including any transaction effected between the Issuer and the
Loan Obligation Manager or its Affiliates, shall be subject to the disclosure
and consent requirements of Section 206(3) of the Advisers Act, such
requirements shall be satisfied with respect to the Issuer and all Holders of
the Securities if disclosure shall be given to, and consent obtained from, the
Advisory Committee.  For avoidance of doubt, it is hereby understood and agreed
by the parties hereto that no disclosure to, or consent of, the Advisory
Committee shall be required with respect to (x) Credit Risk/Defaulted Obligation
Cash Purchases and (y) sales of Assets in connection with a redemption of the
Notes pursuant to Article 9 of the Indenture.

 

4.                                      Representations and Warranties of the
Issuer.  The Issuer represents and warrants to the Loan Obligation Manager that:

 

(a)                                 the Issuer (i) has been duly incorporated
and registered as an exempted company and is validly existing under the laws of
the Cayman Islands; (ii) has full power and authority to own the Issuer’s assets
and the securities proposed to be owned by the Issuer and included among the
Assets and to transact the business for which the Issuer was incorporated;
(iii) is duly qualified under the laws of each jurisdiction where the Issuer’s
ownership or lease of property or the conduct of the Issuer’s business requires
or the performance of the Issuer’s obligations under this Agreement and the
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 Issuer or the ability
of the Issuer to perform its obligations under, or on the validity or
enforceability of, this Agreement and the

 

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Indenture; and (iv) has full power and authority to execute, deliver and perform
the Issuer’s obligations hereunder and thereunder;

 

(b)                                 this Agreement and the Indenture have been
duly authorized, executed and delivered by the Issuer and constitute legal,
valid and binding agreements enforceable against the Issuer in accordance with
their terms except that the enforceability thereof may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium, receivership,
conservatorship 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)                                  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
Issuer of its duties hereunder or under the Indenture, except those that may be
required under state securities or “blue sky” laws or the applicable laws of any
jurisdiction outside of the United States, and such as have been duly made or
obtained;

 

(d)                                 neither the execution, delivery and
performance of this Agreement or the Indenture nor the performance by the Issuer
of its duties hereunder or under the Indenture (i) conflicts with or will
violate or result in a default under the Issuer’s Governing Documents or any
material contract or agreement to which the Issuer is a party or by which it or
its assets may be bound, or any law, decree, order, rule, or regulation
applicable to the Issuer of any court or regulatory, administrative or
governmental agency, body or authority or arbitrator having jurisdiction over
the Issuer or its properties, or (other than as contemplated or permitted by the
Indenture) will result in a lien on any of the property of the Issuer and
(ii) would have a material adverse effect upon the ability of the Issuer to
perform its duties under this Agreement or the Indenture;

 

(e)                                  the Issuer and its Affiliates are not in
violation of any federal, state or Cayman Islands laws or regulations, and there
is no charge, investigation, action, suit or proceeding before or by any court
or regulatory agency pending or, to the best knowledge of the Issuer, threatened
that, in any case, would have a material adverse effect upon the ability of the
Issuer to perform its duties under this Agreement or the Indenture;

 

(f)                                   the Issuer is not an “investment company”
under the Investment Company Act; and

 

(g)                                  the assets of the Issuer do not and will
not at any time constitute the assets of any plan subject to the fiduciary
responsibility provisions of ERISA or of any plan subject to Section 4975 of the
Code.

 

5.                                      Representations and Warranties of the
Loan Obligation Manager.  The Loan Obligation Manager represents and warrants to
the Issuer that:

 

(a)                                 the Loan Obligation Manager (i) has been
duly organized, is validly existing and is in good standing under the laws of
the State of Delaware; (ii) has full power and authority to own the Loan
Obligation Manager’s assets and to transact the business in which it is
currently engaged; (iii) is duly qualified and in good standing under the laws
of each jurisdiction

 

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where the Loan Obligation Manager’s ownership or lease of property or the
conduct of the Loan Obligation Manager’s business requires, or the performance
of this Agreement and the 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
Loan Obligation Manager or the ability of the Loan Obligation Manager to perform
its obligations under, or on the validity or enforceability of, this Agreement
and the provisions of the Indenture applicable to the Loan Obligation Manager;
and (iv) has full power and authority to execute, deliver and perform this
Agreement and the Loan Obligation Manager’s obligations hereunder and the
provisions of the Indenture applicable to the Loan Obligation Manager;

 

(b)                                 this Agreement has been duly authorized,
executed and delivered by the Loan Obligation Manager and constitutes a legal,
valid and binding agreement of the Loan Obligation Manager, 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 Loan Obligation Manager nor any
of its Affiliates is in violation of any federal or state securities law or
regulation promulgated thereunder that would have a material adverse effect upon
the ability of the Loan Obligation Manager to perform its duties under this
Agreement or the Indenture, and there is no charge, investigation, action, suit
or proceeding before or by any court or regulatory agency pending or, to the
best knowledge of the Loan Obligation Manager, threatened which could reasonably
be expected to have a material adverse effect upon the ability of the Loan
Obligation Manager to perform its duties under this Agreement or the Indenture;

 

(d)                                 neither the execution and delivery of this
Agreement nor the performance by the Loan Obligation Manager of its duties
hereunder or under the Indenture 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 limited liability company agreement of the Loan
Obligation Manager, (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 Loan
Obligation Manager is a party or is bound, (iii) any law, decree, order, rule or
regulation applicable to the Loan Obligation Manager of any court or regulatory,
administrative or governmental agency, body or authority or arbitrator having
jurisdiction over the Loan Obligation Manager or its properties, and which would
have, in the case of any of (i), (ii) or (iii) of this Section 5(d), either
individually or in the aggregate, a material adverse effect on the business,
operations, assets or financial condition of the Loan Obligation Manager or the
ability of the Loan Obligation Manager to perform its obligations under this
Agreement or the Indenture;

 

(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
Loan Obligation Manager of its duties hereunder and under the Indenture, except
such as have been duly made or obtained;

 

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(f)                                   the Section entitled “The Loan Obligation
Manager” in the Offering Memorandum, as of the date thereof (including as of the
date of any supplement thereto) and as of the Closing Date, does not contain any
untrue statement of a material fact and does not omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; and

 

(g)                                  the Loan Obligation Manager is a registered
investment adviser under the Advisers Act.

 

6.                                      Expenses.  Both parties hereto
acknowledge and agree that a portion of the gross proceeds received from the
issuance and sale of the Securities will be used to pay certain organizational
and structuring fees and expenses of the Co-Issuers, including the legal fees
and expenses of counsel to the Loan Obligation Manager.  The Loan Obligation
Manager shall pay all expenses and costs incurred by it in the course of
performing its obligations under this Agreement; provided, however, that the
Loan Obligation Manager shall not be liable for, and (subject to the Priority of
Payments set forth in the Indenture and to the extent funds are available
therefor) the Issuer shall be responsible for the payment of, reasonable
expenses and costs of (i) independent accountants, consultants and other
advisers retained by the Issuer or by the Loan Obligation Manager on behalf of
the Issuer in connection with the services provided by the Loan Obligation
Manager pursuant to clause (c), (d), (e), (f), (m), (n), (q) or (r) of Section 1
hereof, (ii) legal advisers retained by the Issuer or by the Loan Obligation
Manager on behalf of the Issuer in connection with the services provided by the
Loan Obligation Manager pursuant to clause (c), (d), (e), (f), (m), (n), (o),
(q), (r) or (t) of Section 1 hereof and (iii) reasonable travel expenses
(airfare, meals, lodging and other transportation) undertaken in connection with
the performance by the Loan Obligation Manager of its duties pursuant to this
Agreement or pursuant to the Indenture and for an allocable share of the cost of
certain credit databases used by the Loan Obligation Manager in providing
services to the Issuer under this Agreement.

 

7.                                      Fees.

 

(a)                                 ARCM, in its capacity as the Loan Obligation
Manager and acting in its sole discretion, hereby waives any and all Loan
Obligation Manager Fees payable to it or any of its Affiliates for so long as it
or any of its Affiliates act in the capacity as Loan Obligation Manager
hereunder.

 

(b)                                 Any successor Loan Obligation Manager may
determine to waive, reduce or defer the Loan Obligation Manager Fees payable to
it (without interest thereon) by written notice to the Trustee on or prior to
the Determination Date in which such waiver, reduction or deferral applies.  Any
Loan Obligation Manager Fees (x) so reduced or waived, shall be reduced or
waived permanently and (y) so deferred, shall not accrue interest.

 

(c)                                  Each successor Loan Obligation Manager that
is not an affiliate of ARCM shall receive as compensation for the performance of
its obligations as Loan Obligation Manager hereunder and under the Indenture, to
the extent not waived pursuant to clause (b) above, a fee, payable monthly in
arrears on each Payment Date in accordance with the Priority of Payments, equal
to 0.10% per annum of the Net Outstanding Portfolio Balance (the “Loan
Obligation Manager Fee”).  Each Loan Obligation Manager Fee will be calculated
for each Interest Accrual

 

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Period assuming a 360-day year with 12 thirty-day months.  The Loan Obligation
Manager Fee, if any, will be calculated based on the Net Outstanding Portfolio
Balance for such Payment Date to the extent funds are available as of the first
day of the applicable Interest Accrual Period.  If on any Payment Date there are
insufficient funds to pay such fees (and/or any other amounts due and payable to
the Loan Obligation Manager) in full, in accordance with the Priority of
Payments, the amount not so paid shall be deferred and such amounts shall be
payable on such later Payment Date on which funds are available therefor as
provided in the Priority of Payments set forth in the Indenture.  Any accrued
and unpaid Loan Obligation Manager Fee that is deferred due to the operation of
the Priority of Payments shall accrue interest at a per annum rate equal to
LIBOR in effect for the applicable Interest Accrual Period computed on an
actual/360-day basis and shall be paid as a Company Administrative Expense.  The
Loan Obligation Manager hereby agrees not to cause the filing of a petition in
bankruptcy against the Issuer for the nonpayment to the Loan Obligation Manager
of any amounts due it hereunder except in accordance with Section 18 hereof and,
subject to the provisions of Section 12, to continue to serve as Loan Obligation
Manager.  If this Agreement is terminated pursuant to Section 12 hereof or
otherwise, the accrued fees payable to the Loan Obligation Manager, if any,
shall be prorated for any partial periods between the Payment Dates during which
this Agreement was in effect and shall be due and payable on the first Payment
Date following the date of such termination, together with all expenses payable
to the Loan Obligation Manager in accordance with Section 6 hereof, and subject
to the provisions of the Indenture and the Priority of Payments.

 

8.                                      Non-Exclusivity.  Nothing herein shall
prevent the Loan Obligation Manager or any of its Affiliates from engaging in
any other businesses or providing investment management, advisory or other types
of services to any Persons, including the Issuer, the Trustee and the
Noteholders; provided, however, that the Loan Obligation Manager may not take
any of the foregoing actions which the Loan Obligation Manager knows or
reasonably should know (a) would require the Issuer or the Assets to register as
an “investment company” under the Investment Company Act or (b) would with
respect to the Issuer violate any provisions of federal or state law applicable
to the Loan Obligation Manager or any law, rule or regulation of any
governmental body or agency having jurisdiction over the Issuer.

 

9.                                      Conflicts of Interest.

 

(a)                                 After (but excluding) the Closing Date and
the sales by Affiliates of the Loan Obligation Manager of Loan Obligations to
the Issuer on the Closing Date (and except in the case of Credit Risk/Defaulted
Obligation Cash Purchases and sales of Assets in connection with a redemption of
the Notes pursuant to Article 9 of the Indenture), the Loan Obligation Manager
will not cause the Issuer to enter into any transaction with the Loan Obligation
Manager or any of its Affiliates as principal unless the applicable terms and
conditions set forth in Section 3(b) are complied with.

 

(b)                                 The Loan Obligation Manager shall perform
its obligations hereunder in accordance with the requirements of the Advisers
Act and the Indenture.  The Issuer acknowledges (i) that an Affiliate of the
Loan Obligation Manager will acquire on the Closing Date 100% of the Preferred
Shares and the Ordinary Shares, (ii) that Affiliates of the Loan Obligation
Manager will sell Loan Obligations to the Issuer on or prior to the Closing
Date, and (iii) that the Loan Obligation Manager, its Affiliates and funds or
accounts for which the Loan

 

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Obligation Manager or its Affiliates acts as investment adviser may at times own
Notes of one or more Classes.  After the Closing Date, the Loan Obligation
Manager agrees to provide the Trustee with written notice upon the acquisition
or transfer (after, but excluding, the Closing Date) of any Securities held by
the Loan Obligation Manager, any of its Affiliates or any fund managed or
controlled by the Loan Obligation Manager or any Affiliate thereof.

 

(c)                                  Nothing herein shall prevent the Loan
Obligation Manager or any of its Affiliates or officers and directors of the
Loan Obligation Manager from engaging in other businesses, or from rendering
services of any kind to the Issuer and its Affiliates, the Trustee, the Holders
or any other Person.  Without prejudice to the generality of the foregoing,
directors, officers, employees and agents of the Loan Obligation Manager,
Affiliates of the Loan Obligation Manager, and the Loan Obligation Manager may,
subject to the Indenture, among other things:

 

(i)                                     serve as directors (whether supervisory
or managing), officers, employees, partners, members, managers, agents, nominees
or signatories for the Issuer or any Affiliate thereof, or for any obligor in
respect of any of the Loan Obligations or Eligible Investments, or any of their
respective Affiliates, except to the extent prohibited by their respective
Underlying Instruments, as from time to time amended; provided that (x) in the
reasonable judgment of the Loan Obligation Manager, such activity will not have
an adverse effect on the ability of the Issuer or the Trustee to enforce its
respective rights with respect to any Assets and (y) nothing in this paragraph
shall be deemed to limit the duties of the Loan Obligation Manager set forth in
Section 1 hereof;

 

(ii)                                  serve as the Servicer pursuant to the
Servicing Agreement or Advancing Agent pursuant to the Indenture;

 

(iii)                               receive fees for services of whatever nature
rendered to an obligor in respect of any of the Loan Obligations or Eligible
Investments, including acting as master servicer, sub-servicer or special
servicer with respect to any commercial mortgage loan or senior participation
interest therein constituting or underlying any Loan Obligation; provided that,
(i) in the reasonable judgment of the Loan Obligation Manager, such activity
will not have a material adverse effect on the ability of the Issuer or the
Trustee to enforce its respective rights with respect to any of the Assets and
(ii) in the reasonable judgment of the Loan Obligation Manager, such activity by
any Affiliate of the Loan Obligation Manager as to which the Loan Obligation
Manager has actual knowledge, will not have a material adverse effect on the
ability of the Issuer or the Trustee to enforce its respective rights with
respect to any of the Assets;

 

(iv)                              be retained to provide services unrelated to
this Agreement to the Issuer or its Affiliates and be paid therefor;

 

(v)                                 be a secured or unsecured creditor of, or
hold an equity interest in the Issuer, its Affiliates or any obligor of any Loan
Obligation or Eligible Investment; provided, however, that the Loan Obligation
Manager may not be such a creditor or hold any of such interests  if, in the
opinion of counsel to the Issuer, the existence of such interest would require
registration of the Issuer or the pool of Loan Obligations and

 

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Eligible Investments as an “investment company” under the Investment Company Act
or violate any provisions of federal or applicable state law or any law, rule or
regulation of any governmental body or agency having jurisdiction over the
Issuer;

 

(vi)                              except as otherwise provided in this
Section 9, sell any Loan Obligation or Eligible Investment to, or purchase any
Loan Obligation from, the Issuer while acting in the capacity of principal or
agent; and

 

(vii)                           subject to its obligations in Section 1 hereof
to protect the Holder of the Preferred Shares, serve as a member of any
“creditors’ board” with respect to any Defaulted Obligation, Eligible Investment
or with respect to any commercial mortgage loan underlying or constituting any
Loan Obligation or the respective borrower for any such commercial mortgage
loan.

 

It is understood that the Loan Obligation Manager and any of its Affiliates may
engage in any other business and furnish investment management and advisory
services to others, including Persons that may have investment policies similar
to those followed by the Loan Obligation Manager with respect to the Assets and
that may own instruments of the same class, or of the same type, as the Loan
Obligations or other instruments of the issuers of Loan Obligations and may
manage portfolios similar to the Assets.  The Loan Obligation Manager and its
Affiliates shall be free, in their sole discretion, to make recommendations to
others, or effect transactions on behalf of themselves or for others, which may
be the same as or different from those the Loan Obligation Manager causes the
Issuer to effect with respect to the Assets.

 

The Loan Obligation Manager and its Affiliates may cause or advise their
respective clients to invest in instruments that would be appropriate as
security for the Notes.  Such investments may be different from those made on
behalf of the Issuer.  The Loan Obligation Manager, its Affiliates and their
respective clients may have ongoing relationships with Persons whose instruments
are pledged to secure the Notes and may own instruments issued by, or loans to,
issuers of the Loan Obligations or to any borrower or Affiliate of any borrower
on any commercial mortgage loans underlying or constituting the Loan Obligations
or the Eligible Investments.  The Loan Obligation Manager and its Affiliates may
cause or advise their respective clients to invest in instruments that are
senior to, or have interests different from or adverse to, the instruments that
are pledged to secure the Notes.

 

Nothing contained in this Agreement shall prevent the Loan Obligation Manager or
any of its Affiliates from recommending to or directing any other account to buy
or sell, at any time, securities of the same kind or class, or securities of a
different kind or class of the same issuer, as those directed by the Loan
Obligation Manager to be purchased or sold hereunder.  It is understood that, to
the extent permitted by applicable law, the Loan Obligation Manager, its
Affiliates, and any member, manager, officer, director, stockholder or employee
of the Loan Obligation Manager or any such Affiliate or any member of their
families or a Person advised by the Loan Obligation Manager may have an interest
in a particular transaction or in securities of the same kind or class, or
securities of a different kind or class of the same issuer, as those purchased
or sold by the Loan Obligation Manager hereunder.  When the Loan Obligation
Manager is considering purchases or sales for the Issuer and one or more of such
other accounts at the same time, the Loan Obligation Manager shall allocate
available investments or

 

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opportunities for sales in its discretion and make investment recommendations
and decisions that may be the same as or different from those made with respect
to the Issuer’s investments, in accordance with applicable law.

 

Subject to the Indenture and the provisions of this Agreement, the Loan
Obligation Manager shall not be obligated to pursue any specific investment
strategy or opportunity that may arise with respect to the Assets.

 

The Issuer hereby consents to the various potential and actual conflicts of
interest that may exist with respect to the Loan Obligation Manager as described
above; provided, however, that nothing contained in this Section 9 shall be
construed as altering or limiting the duties of the Loan Obligation Manager set
forth in this Agreement or in the Indenture nor the requirement of any law,
rule or regulation applicable to the Loan Obligation Manager.

 

10.                               Records; Confidentiality.  The Loan Obligation
Manager shall maintain appropriate books of account and records relating to
services performed hereunder, and such books of account and records shall be
accessible for inspection by an authorized representative of the Issuer, the
Trustee and the Independent accountants appointed by the Issuer pursuant to the
Indenture at a mutually agreed-upon time during normal business hours and upon
reasonable prior notice; provided that the Loan Obligation Manager shall not be
obligated to provide access to any non-public information if the Loan Obligation
Manager in good faith determines that the disclosure of such information would
violate any applicable law, regulation or contractual arrangement.  The Loan
Obligation Manager shall follow its customary procedures to keep confidential
all information obtained in connection with the services rendered hereunder and
shall not disclose any such information except (i) with the prior written
consent of the Issuer (which consent shall not be unreasonably withheld),
(ii) such information as the Rating Agencies shall reasonably request in
connection with its rating or evaluation of the Notes and/or the Loan Obligation
Manager, as applicable, (iii) as required by law, regulation, court order or the
rules, regulations, or request of any regulatory or self-regulating
organization, body or official (including any securities exchange on which the
Notes may be listed from time to time) having jurisdiction over the Loan
Obligation Manager or as otherwise required by law or judicial process,
(iv) such information as shall have been publicly disclosed other than in
violation of this Agreement, (v) to its members, officers, directors, and
employees, and to its attorneys, accountants and other professional advisers in
conjunction with the transactions described herein, (vi) such information as may
be necessary or desirable in order for the Loan Obligation Manager to prepare,
publish and distribute to any Person any information relating to the investment
performance of the Assets, (vii) in connection with the enforcement of the Loan
Obligation Manager’s rights hereunder or in any dispute or proceeding related
hereto, (viii) to the Trustee and (ix) to Holders and potential purchasers of
any of the Securities.

 

11.                               Term.  This Agreement shall become effective
on the Closing Date and shall continue in full force and effect until the first
of the following occurs:  (a) the payment in full of the Notes and the
termination of the Indenture in accordance with its terms, (b) the liquidation
of the Assets and the final distribution of the proceeds of such liquidation to
the Holders of the Securities and the Issuer, or (c) the termination of this
Agreement pursuant to Section 12 hereof.

 

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12.                               Termination.  (a)  The Loan Obligation Manager
may be removed upon at least 30 days’ prior written notice upon the occurrence
of a Loan Obligation Manager Event of Default, by the Issuer or the Trustee, if
the Holders of at least 66-2/3% in Aggregate Outstanding Amount of each Class of
Notes then outstanding, give written notice to the Loan Obligation Manager, the
Issuer and the Trustee directing such removal.  Notice of any such removal shall
be delivered by the Trustee on behalf of the Issuer to the Rating Agencies.  The
Loan Obligation Manager cannot be removed without cause.  None of the Loan
Obligation Manager, its affiliates and clients and funds for whom the Loan
Obligation Manager or any of its affiliates acts as investment adviser
(collectively, the “Loan Obligation Manager Related Parties”) are entitled to
vote the Preferred Shares or Notes held by any of the Loan Obligation Manager
Related Parties with respect to the removal of the Loan Obligation Manager (or
waiver of any event or circumstance constituting grounds for removal),
appointment of a successor loan obligation manager following removal that is an
affiliate of the Loan Obligation Manager or termination or assignment of this
Agreement.  However, at any given time, the Loan Obligation Manager Related
Parties may vote the Preferred Shares and Notes (if any) held by them with
respect to all other matters in accordance with the applicable documents.

 

(b)                                 For purposes of this Agreement, a “Loan
Obligation Manager Event of Default” means any of the following events:

 

(i)                                     the Loan Obligation Manager willfully
breaches, or takes any action that it knows violates, any provision of this
Agreement or any term of the Indenture applicable to the Loan Obligation Manager
(not including a willful breach or knowing violation that results from a good
faith dispute regarding alternative courses of action or interpretation of
instructions);

 

(ii)                                  other than as provided under clause
(i) above, the Loan Obligation Manager breaches any material provision of this
Agreement or any material terms of the Indenture applicable to the Loan
Obligation Manager and fails to cure such breach within 30 days after the first
to occur of (A) notice of such failure is given to the Loan Obligation Manager
or (B) the Loan Obligation Manager has actual knowledge of such breach;

 

(iii)                               the Loan Obligation Manager (A) ceases to be
able to, or admits in writing the Loan Obligation Manager’s inability to, pay
the Loan Obligation Manager’s debts when and as they become due, (B) files, or
consents by answer or otherwise to the filing against the Loan Obligation
Manager of, a petition for relief or reorganization or arrangement or any other
petition in bankruptcy, for liquidation or takes advantage of any bankruptcy,
insolvency, reorganization, moratorium or other similar law of any jurisdiction,
(C) makes an assignment for the benefit of the Loan Obligation Manager’s
creditors, (D) consents to the appointment of a custodian, receiver, trustee or
other officer with similar powers with respect to the Loan Obligation Manager or
with respect to any substantial part of the Loan Obligation Manager’s property,
or (E) is adjudicated as insolvent or to be liquidated;

 

(iv)                              the occurrence of an act by the Loan
Obligation Manager or any of its Affiliates that constitutes fraud or criminal
activity in the performance of its obligations

 

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under this Agreement or the Loan Obligation Manager or any of its respective
officers or directors is indicted for a criminal offense involving an investment
or investment-related business, fraud, false statements or omissions, wrongful
taking of property, bribery, forgery, counterfeiting or extortion;

 

(v)                                 the failure of any representation, warranty,
certificate or statement of the Loan Obligation Manager in or pursuant to this
Agreement or the Indenture to be correct in any material respect and (A) such
failure has (or could reasonably be expected to have) a material adverse effect
on the Noteholders, the Issuer or the Co-Issuer and (B) if such failure can be
cured, no correction is made for 45 days after the Loan Obligation Manager
becomes aware of such failure or receives notice thereof from the Trustee;

 

(vi)                              the occurrence and continuation of any of the
Events of Default described in Section 5.1(a) or 5.1(b) of the Indenture;

 

(vii)                           Arbor Realty Collateral Management, LLC resigns
as or otherwise ceases to be the Loan Obligation Manager; or

 

(viii)                        the Loan Obligation Manager consolidates or
amalgamates with, or merges with or into, or transfers all or substantially all
its assets to, another Person and either (A) at the time of such consolidation,
amalgamation, merger or transfer, the resulting, surviving or transferee Person
fails to or cannot assume all the obligations of the Loan Obligation Manager
under this Agreement or (B) the resulting, surviving or transferee Person lacks
the legal capacity to perform the obligations of the Loan Obligation Manager
hereunder and under the Indenture.

 

The Loan Obligation Manager shall notify the Trustee, the Rating Agencies and
the Issuer in writing promptly upon becoming aware of any event that constitutes
a Loan Obligation Manager Event of Default under this Section 12(b). In no event
will the Trustee be required to determine whether or not a Loan Obligation
Manager Event of Default has occurred for the removal of the Loan Obligation
Manager.

 

(c)                                  Notwithstanding that it will constitute a
Loan Obligation Manager Event of Default, the Loan Obligation Manager may
resign, upon 90 days’ prior written notice to the Issuer, the Co-Issuer, the
Trustee and the Rating Agencies; provided, however, that (i) no such termination
or resignation shall be effective until the date as of which a successor Loan
Obligation Manager shall have agreed in writing to assume all of the Loan
Obligation Manager’s duties and obligations pursuant to this Agreement and
(ii) the Issuer shall use its best efforts to appoint a successor Loan
Obligation Manager to assume such duties and obligations.  Notwithstanding the
foregoing, the Loan Obligation Manager shall have the right to resign without
prior notice if, due to a change in any applicable law or regulation or
interpretation thereof, the performance by the Loan Obligation Manager of its
duties under this Agreement would adversely affect the Arbor Parent’s status as
a REIT, the Issuer’s status as a Qualified REIT Subsidiary (within the meaning
of Section 856(i)(2) of the Code) or other disregarded entity of Arbor Parent
for U.S. federal income tax purposes (unless the Issuer has received an opinion
of Clifford Chance US LLP or another nationally recognized tax counsel
experienced in such matters that the Issuer will be treated as a foreign
corporation that will not be treated as

 

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engaged in a trade or business in the United States for federal income tax
purposes (which opinion may be conditioned on compliance with certain
restrictions on the investment or other activities of the issuer and/or Loan
Obligation Manager on behalf of the Issuer), or constitute a violation of such
applicable law or regulation; provided, further, that no such resignation or
termination will be effective unless a replacement Loan Obligation Manager is
appointed as described herein.  The Issuer will use its best efforts to appoint
a successor Loan Obligation Manager to assume such duties.

 

(d)                                 No removal, termination or resignation of
the Loan Obligation Manager or termination of this Agreement shall be effective
unless (A) a successor Loan Obligation Manager (a “Replacement Loan Obligation
Manager”) has been appointed by the Issuer and has agreed in writing to assume
all of the Loan Obligation Manager’s duties and obligations pursuant to this
Agreement and (B) written notification shall have been provided in accordance
with Section 12(a), (b) or (c), as applicable.  The appointment of any
Replacement Loan Obligation Manager shall be subject to satisfaction of the
Rating Agency Condition and each such Replacement Loan Obligation Manager
(i) shall have demonstrated an ability to professionally and competently perform
duties similar to those imposed upon the Loan Obligation Manager, (ii) is
legally qualified and has the capacity to act as Loan Obligation Manager,
(iii) by its appointment will not cause or result in the Issuer or Co-Issuer
becoming an “investment company” under the Investment Company Act, (iv) has
accepted its appointment in writing and (v) by its appointment will not cause
the Issuer, the Co-Issuer or the pool of Assets to become subject to income or
withholding tax that would not have been imposed but for such appointment.

 

(e)                                  Upon the resignation or removal of the Loan
Obligation Manager while any of the Notes are Outstanding, the holders of a
Majority of Preferred Shareholders (excluding any Preferred Shares held by the
Loan Obligation Manager Related Parties to the extent the Replacement Loan
Obligation Manager is an Affiliate of the Loan Obligation Manager or the Loan
Obligation Manager has been removed upon the occurrence of a Loan Obligation
Manager Event of Default) will have the right to instruct the Issuer to appoint
an institution identified by such Holders as Replacement Loan Obligation
Manager; provided that in the event that 100% of the aggregate outstanding
Preferred Shares are held by any one or more Loan Obligation Manager Related
Parties and the proposed Replacement Loan Obligation Manager is an Affiliate of
the Loan Obligation Manager, the holders of at least a Majority of the most
junior Class of Notes not 100% owned by the Loan Obligation Manager Related
Parties (excluding any Notes held by the Loan Obligation Manager Related Parties
to the extent the Replacement Loan Obligation Manager is an Affiliate of the
Loan Obligation Manager or the Loan Obligation Manager has been removed upon the
occurrence of a Loan Obligation Manager Event of Default) may appoint an
institution as replacement loan obligation manager; provided, that (A) the
Issuer provides the Noteholders and the holder of the Preferred Shares notice of
such proposed appointment, (B) the Holders of at least a Majority of each
Class of Notes (excluding any Notes held by the Loan Obligation Manager, any
Affiliate of the Loan Obligation Manager or any fund managed or controlled by
the Loan Obligation Manager or any Affiliate thereof to the extent the
Replacement Loan Obligation Manager is an Affiliate of the Loan Obligation
Manager or the Loan Obligation Manager has been removed upon the occurrence of a
Loan Obligation Manager Event of Default) do not disapprove of such institution
in writing within 30 days of notice of such appointment, (C) the Rating Agency
Condition has been satisfied and (D) such institution (i) has demonstrated an
ability to professionally and competently perform

 

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duties similar to those imposed upon the Loan Obligation Manager, (ii) is
legally qualified and has the capacity to act as Loan Obligation Manager,
(iii) by its appointment will not cause or result in the Issuer or Co-Issuer
becoming an investment company under the 1940 Act, (iv) has accepted its
appointment in writing and (v) by its appointment will not cause the Issuer or
the Co-Issuer or the pool of Assets to become subject to income or withholding
tax that would not have been imposed but for such appointment.  No removal of or
resignation by the Loan Obligation Manager will be effective until a successor
loan obligation manager has been appointed and approved in the manner specified
in the Indenture and in this Agreement.

 

(f)                                   In the event that the Loan Obligation
Manager resigns pursuant to Section 12(c) or is terminated pursuant to
Section 12(a) hereof and the Loan Obligation Manager and the Issuer have not
appointed a successor prior to the day following the termination (or
resignation) date specified in such notice, the Loan Obligation Manager will be
entitled to appoint a successor and will so appoint a successor within 60 days
thereafter, subject to the requirements set forth in Section 12(e)(D)(i) through
(v).  In the event a proposed successor Loan Obligation Manager is not approved
by the Holders of a Majority of each Class of Notes within 30 days of the notice
of such appointment, the resigning or removed Loan Obligation Manager may
petition any court of competent jurisdiction for the appointment of a successor
Loan Obligation Manager, which appointment will not require the consent of, or
be subject to the disapproval of, the Issuer, any Noteholder or any Holder of
the Preferred Shares.  Upon expiration of the applicable notice periods with
respect to termination specified in Section 12(a) or (d) hereof, and upon
acceptance of such appointment by a Replacement Loan Obligation manager, all
authority and power of the Loan Obligation Manager under this Agreement and the
Indenture, whether with respect to the Assets or otherwise, shall automatically
and without further action by any person or entity pass to and be vested in the
successor Loan Obligation Manager upon the appointment thereof.

 

Notwithstanding any provision contained in this Agreement, the Indenture or
otherwise, so long as the Loan Obligation Manager is an entity other than ARCM
or any Affiliate thereof, and such entity continues to perform its obligations
hereunder, the Loan Obligation Manager Fee shall continue to accrue for the
benefit of the Loan Obligation Manager until termination of this Agreement under
this Section 12 shall become effective as set forth herein.  In addition, the
Loan Obligation Manager shall, subject to Section 6, be entitled to
reimbursement of out-of-pocket expenses incurred in cooperating with the
Replacement Loan Obligation Manager, including in connection with the delivery
of any documents or property.  In the event that the Loan Obligation Manager is
removed or resigns and a Replacement Loan Obligation Manager is appointed, such
former Loan Obligation Manager (to the extent such former Loan Obligation
Manager is an entity other than ARCM or any Affiliate thereof) nonetheless shall
be entitled to receive payment of all unpaid Loan Obligation Manager Fees
accrued through the effective date of the removal or resignation, to the extent
that funds are available for that purpose in accordance with the Priority of
Payments, and such payments shall rank in the Priority of Payments pari passu
with the Loan Obligation Manager Fees due to the Replacement Loan Obligation
Manager.

 

(g)                                  Upon the effective date of termination of
this Agreement, the Loan Obligation Manager shall as soon as practicable:

 

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(i)                                     deliver to the Issuer, or as the Issuer
directs, all property and documents of the Trustee or the Issuer or otherwise
relating to the Assets then in the custody of the Loan Obligation Manager
(although the Loan Obligation Manager may keep copies of such documents for its
records); and

 

(ii)                                  deliver to the Trustee an accounting with
respect to the books and records delivered to the Issuer or the Replacement Loan
Obligation Manager appointed pursuant to this Section 12 hereof.

 

The Loan Obligation Manager shall reasonably assist and cooperate with the
Trustee and the Issuer (as reasonably requested by the Trustee or the Issuer) in
the assumption of the Loan Obligation Manager’s duties by any Replacement Loan
Obligation Manager as provided for in this Agreement, as applicable. 
Notwithstanding such termination, the Loan Obligation Manager shall remain
liable to the extent set forth herein (but subject to Section 13 hereof) for the
Loan Obligation Manager’s acts or omissions hereunder arising prior to its
termination as Loan Obligation Manager hereunder and for any expenses, losses,
damages, liabilities, demands, charges and claims (including reasonable
attorneys’ fees) in respect of or arising out of a breach of the representations
and warranties made by it in Section 5 hereof or from any failure of the Loan
Obligation Manager to comply with the provisions of this Section 12(g).

 

(h)                                 The Loan Obligation Manager agrees that,
notwithstanding any termination, the Loan Obligation Manager shall reasonably
cooperate in any Proceeding arising in connection with this Agreement, the
Indenture or any of the Assets (excluding any such Proceeding in which claims
are asserted against the Loan Obligation Manager or any Affiliate of the Loan
Obligation Manager) so long as the Loan Obligation Manager shall have been
offered (in its judgment) reasonable security, indemnity or other provision
against the cost, expenses and liabilities that might be incurred in connection
therewith, but, in any event, shall not be required to make any admission or to
take any action against the Loan Obligation Manager’s own interests or the
interests of other funds and accounts advised by the Loan Obligation Manager.

 

(i)                                     If this Agreement is terminated pursuant
to Section 12(a) or (c) hereof, such termination shall be without any further
liability or obligation of the Issuer or the Loan Obligation Manager to the
other, except as provided in Sections 6, 7, 12 and 13 and the last sentence of
Section 10 hereof.

 

13.                               Liability of Loan Obligation Manager. 
(a)  The Loan Obligation Manager assumes no responsibility under this Agreement
other than to render the services called for from the Loan Obligation Manager
hereunder and under the Indenture in the manner prescribed herein and therein. 
The Loan Obligation Manager and its Affiliates, and each of their respective
partners, shareholders, members, managers, officers, directors, employees,
agents, accountants and attorneys shall have no liability to the Noteholders,
the Trustee, the Issuer, the Co-Issuer, the Placement Agent or any of their
respective Affiliates, partners, shareholders, officers, directors, employees,
agents, accountants and attorneys, for any error of judgment, mistake of law, or
for any claim, loss, liability, damage, settlement, costs, or other expenses
(including reasonable attorneys’ fees and court costs) of any nature whatsoever
(collectively “Liabilities”) that arise out of or in connection with any act or
omissions of the Loan Obligation Manager in the

 

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performance of its duties under this Agreement or the Indenture or for any
decrease in the value of the Loan Obligations or Eligible Investments, except
(i) by reason of acts or omissions constituting bad faith, willful misconduct or
negligence in the performance of, or negligent disregard of, the duties of the
Loan Obligation Manager hereunder and under the terms of the Indenture and
(ii) with respect to the information concerning the Loan Obligation Manager
under the heading “The Loan Obligation Manager” in the Offering Memorandum
containing any untrue statement of material fact or omitting to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.  The Issuer agrees
that the Loan Obligation Manager shall not be liable for any consequential,
special, exemplary or punitive damages hereunder.  The breaches described in
this Section 13(a)(i) and (ii) are collectively referred to for purposes of this
Section 13 as “Loan Obligation Manager Breaches.”

 

(b)                                 The Loan Obligation Manager shall indemnify,
defend and hold harmless the Issuer and each of its partners, shareholders,
members, managers, officers, directors, employees, agents, accountants and
attorneys (each, an “Issuer Indemnified Party”) from and against any claims that
may be made against an Issuer Indemnified Party by third parties and any
damages, losses, claims, liabilities, costs or expenses (including all
reasonable legal and other expenses) which are incurred as a direct consequence
of the Loan Obligation Manager Breaches, except for liability to which such
Issuer Indemnified Party would be subject by reason of willful misconduct, bad
faith, negligence in the performance of, or negligent disregard of the
obligations of the Issuer hereunder and under the terms of the Indenture.

 

(c)                                  The Issuer shall reimburse, indemnify and
hold harmless the Loan Obligation Manager, its members, managers, directors,
officers, stockholders, partners, agents and employees and any Affiliate of the
Loan Obligation Manager and its directors, officers, stockholders, partners,
members, agents and employees (the Loan Obligation Manager and such other
persons collectively, the “Loan Obligation Manager Indemnified Parties”) from
any and all Liabilities, as are incurred in investigating, preparing, pursuing
or defending any claim, action, proceeding or investigation (whether or not such
Loan Obligation Manager Indemnified Party is a party) caused by, or arising out
of or in connection with this Agreement, the Indenture and the transactions
contemplated hereby and thereby, including the issuance of the Notes, or any
acts or omissions of any Loan Obligation Manager Indemnified Parties except
those that are the result of Loan Obligation Manager Breaches.  Any amounts
payable by the Issuer under this Section 13(c) shall be payable only subject to
the Priority of Payments set forth in the Indenture and to the extent Assets are
available therefor.

 

(d)                                 With respect to any claim made or threatened
against an Issuer Indemnified Party or a Loan Obligation Manager Indemnified
Party (each an “Indemnified Party”), or compulsory process or request or other
notice of any loss, claim, damage or liability served upon an Indemnified Party,
for which such Indemnified Party is or may be entitled to indemnification under
this Section 13, such Indemnified Party shall (or, with respect to Indemnified
Parties that are directors, managers, officers, stockholders, members, managers,
agents or employees of the Issuer or the Loan Obligation Manager, the Issuer or
the Loan Obligation Manager, as the case may be, shall cause such Indemnified
Party to):

 

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(i)                                     give written notice to the indemnifying
party of such claim within ten Business Days after such Indemnified Party’s
receipt of actual notice that such claim is made or threatened, which notice to
the indemnifying party shall specify in reasonable detail the nature of the
claim and the amount (or an estimate of the amount) of the claim; provided,
however, that the failure of any Indemnified Party to provide such notice to the
indemnifying party shall not relieve the indemnifying party of its obligations
under this Section 13 unless the rights or defenses available to the Indemnified
Party are materially prejudiced or otherwise forfeited by reason of such
failure;

 

(ii)                                  at the indemnifying party’s expense,
provide the indemnifying party such information and cooperation with respect to
such claim as the indemnifying party may reasonably require, including making
appropriate personnel available to the indemnifying party at such reasonable
times as the indemnifying party may request;

 

(iii)                               at the indemnifying party’s expense,
cooperate and take all such steps as the indemnifying party may reasonably
request to preserve and protect any defense to such claim;

 

(iv)                              in the event suit is brought with respect to
such claim, upon reasonable prior notice, afford to the indemnifying party the
right, which the indemnifying party may exercise in its sole discretion and at
its expense, to participate in the investigation, defense and settlement of such
claim;

 

(v)                                 neither incur any material expense to defend
against nor release or settle any such claim or make any admission with respect
thereto (other than routine or incontestable admissions or factual admissions
the failure to make of which would expose such Indemnified Party to
unindemnified liability) nor permit a default or consent to the entry of any
judgment in respect thereof, in each case without the prior written consent of
the indemnifying party; and

 

(vi)                              upon reasonable prior notice, afford to the
indemnifying party the right, in such party’s sole discretion and at such
party’s sole expense, to assume the defense of such claim, including the right
to designate counsel reasonably acceptable to the Indemnified Party and to
control all negotiations, litigation, arbitration, settlements, compromises and
appeals of such claim; provided that, if the indemnifying party assumes the
defense of such claim, it shall not be liable for any fees and expenses of
counsel for any Indemnified Party incurred thereafter in connection with such
claim except that, if such Indemnified Party reasonably determines that counsel
designated by the indemnifying party has a conflict of interest, such
indemnifying party shall pay the reasonable fees and disbursements of one
counsel (in addition to any local counsel) separate from such indemnifying
party’s own counsel for all Indemnified Parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances; and provided,
further, that the indemnifying party shall not have the right, without the
Indemnified Party’s written consent, to settle any such claim if, in a case
where the Issuer is the indemnifying party, the Issuer does not make available
(in accordance with the Priority of Payments), in a segregated account available
only for this purpose, the full amount

 

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required to pay any amounts due from the Indemnified Party under such settlement
or, in any case, such settlement (A) arises from or is part of any criminal
action, suit or proceeding, (B) contains a stipulation to, confession of
judgment with respect to, or admission or acknowledgement of, any liability or
wrongdoing on the part of the Indemnified Party, (C) relates to any federal,
state or local tax matters or (D) provides for injunctive relief, or other
relief other than damages, which is binding on the Indemnified Party.

 

(e)                                  In the event that any Indemnified Party
waives its right to indemnification hereunder, the indemnifying party shall not
be entitled to appoint counsel to represent such Indemnified Party nor shall the
indemnifying party reimburse such Indemnified Party for any costs of counsel to
such Indemnified Party.

 

(f)                                   Nothing herein shall in any way constitute
a waiver or limitation of any rights that the Issuer or the Loan Obligation
Manager may have under any United States federal or state securities laws.

 

14.                               Obligations of Loan Obligation Manager. 
(a)  Unless otherwise required by a provision of the Indenture or this Agreement
or by applicable law, the Loan Obligation Manager shall use all commercially
reasonable efforts to ensure that no action is taken by it, and shall not
intentionally or with negligent disregard take any action, which the Loan
Obligation Manager knows or reasonably should know (i) could reasonably be
expected to materially adversely affect the Issuer or the Co-Issuer for purposes
of Cayman Islands law, Delaware law, United States federal or state law or any
other law known to the Loan Obligation Manager to be applicable to the Issuer or
the Co-Issuer, (ii) would not be permitted under the Issuer or the Co-Issuer’s
Governing Documents, (iii) would require registration of the Issuer or the
Co-Issuer or the Assets as an “investment company” under the Investment Company
Act, (iv) would cause the Issuer or the Co-Issuer to violate the terms of the
Indenture or any other agreement, representation or certification contemplated
by or provided pursuant to the Indenture, (v) would cause the Issuer to fail to
qualify as a Qualified REIT Subsidiary unless the Issuer has received an opinion
of Clifford Chance US LLP or another nationally recognized tax counsel
experienced in such matters that the Issuer will be treated as a foreign
corporation that will not be treated as engaged in a trade or business in the
United States for federal income tax purposes, (vi) would have a materially
adverse United States federal or state income tax effect on the Issuer or
(vii) would result in the Issuer entering into any “reportable transactions” in
connection with the U.S. Internal Revenue Service tax shelter rules unless the
Loan Obligation Manager notifies the Issuer immediately after entering into any
such reportable transactions.

 

The Loan Obligation Manager shall not take any action that would cause the
Issuer to be required to register as or become subject to regulatory supervision
or other legal requirements under the laws of any country or political
subdivision thereof as a bank, insurance company or finance company.  The Loan
Obligation Manager shall not take any action that would cause the Issuer to be
treated as a bank, insurance company or finance company for purposes of (i) any
tax, securities law or other filing or submission made to any governmental
authority, (ii) any application made to a rating agency or (iii) qualification
for any exemption from tax, securities law or any other legal requirements.  The
Loan Obligation Manager shall not cause the Issuer to hold itself out to the
public as a bank, insurance company or finance

 

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company.  The Loan Obligation Manager shall not cause the Issuer to hold itself
out to the public, through advertising or otherwise, as originating loans,
lending funds, or making a market in loans, derivative financial instruments or
other assets.  The Loan Obligation Manager shall not have any liability under
this Section 14 for any action taken by the Loan Obligation Manager in good
faith in reliance on information provided by the Issuers or the Trustee.

 

(b)                                 The Loan Obligation Manager to the extent
required under the Indenture, and on behalf of the Issuer, shall:  (i) engage
the services of an Independent certified accountant to prepare any United States
federal, state or local income tax or information returns and any non-United
States income tax or information returns that the Issuer may from time to time
be required to file under applicable law (each a “Tax Return”), (ii) deliver, at
least 30 days before any applicable due date upon which penalties and interest
would accrue, each Tax Return, properly completed, to the Company Administrator
for signature by an Authorized Officer of the Issuer and (iii) file or deliver
such Tax Return on behalf of the Issuer within any applicable time limit with
any authority or Person as required under applicable law.

 

(c)                                  Notwithstanding anything to the contrary
herein, the Loan Obligation Manager or any of its Affiliates may take any action
that is not specifically prohibited by the Indenture, this Agreement or
applicable law that the Loan Obligation Manager or any Affiliate of the Loan
Obligation Manager deems to be in its (or in its portfolio’s) best interest
regardless of its impact on the Loan Obligations.

 

15.                               No Partnership or Joint Venture.  The Issuer
and the Loan Obligation Manager are not partners or joint venturers with each
other, and nothing herein shall be construed to make them such partners or joint
venturers or impose any liability as such on either of them.  The Loan
Obligation Manager’s relation to the Issuer shall be that of an independent
contractor and not a general agent.  Except as expressly provided in this
Agreement and in the Indenture, the Loan Obligation Manager shall not have
authority to act for or represent the Issuer in any way and shall not otherwise
be deemed to be the Issuer’s agent.

 

16.                               Notices.  Any notice from a party under this
Agreement shall be in writing and sent by answer-back facsimile or addressed and
delivered or sent by certified mail, postage prepaid, return receipt requested,
to the other party at such address as such other party may designate for the
receipt of such notice.  Until further notice to the other party, it is agreed
that the address of the Issuer for this purpose shall be:

 

Arbor Realty Commercial Real Estate Notes 2017-FL2, Ltd.

c/o MaplesFS Limited, P.O. Box 1093

Queensgate House

Grand Cayman, KY1-1102 Cayman Islands

Attention:  The Directors

Fax:  (345) 945-7100

Telephone:  (345) 945-7099

 

with a copy to the Loan Obligation Manager (as addressed below).

 

the address of the Loan Obligation Manager for this purpose shall be:

 

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Arbor Realty Collateral Management, LLC

333 Earle Ovington Boulevard, 9th Floor

Uniondale, New York  11553

Attention:  Executive Vice President, Structured Securitization

Fax:  (212) 389-6573

Telephone:  (212) 389-6546

 

17.                               Succession; Assignment.  This Agreement shall
inure to the benefit of, and be binding upon the successors to, the parties
hereto.  Any assignment of this Agreement by operation of law or otherwise to
any Person, in whole or in part, by the Loan Obligation Manager shall be deemed
null and void unless:

 

(a)                                 if the assignee is an Affiliate of the Loan
Obligation Manager, (i) such assignment would not constitute an “assignment”
under the Adviser’s Act, (ii) the Rating Agency Condition is satisfied and
(iii) the assignee has agreed in writing to assume all of the Loan Obligation
Manager’s duties and obligations hereunder, and

 

(b)                                 if the assignee is not an Affiliate of the
Loan Obligation Manager (i) such assignment is consented to in writing by the
Issuer and a Majority of the most junior Class of Securities not 100% owned by
the Loan Obligation Manager Related Parties (excluding in any such calculation
any Securities held by the Loan Obligation Manager Related Parties), (B) the
Rating Agency Condition is satisfied and (C) the assignee has agreed in writing
to assume all of the Loan Obligation Manager’s duties and obligations,
hereunder.

 

Any assignment consented to by the Issuer in accordance with Article 15 of the
Indenture shall bind the assignee hereunder in the same manner as the Loan
Obligation Manager is bound.  In addition, the assignee shall execute and
deliver to the Issuer and the Trustee a counterpart of this Agreement naming
such assignee as Loan Obligation Manager.  Upon the execution and delivery of
such a counterpart by the assignee, the Loan Obligation Manager shall be
released from further obligations pursuant to this Agreement, except with
respect to the Loan Obligation Manager’s obligations arising under Section 13 of
this Agreement prior to such assignment and except with respect to the Loan
Obligation Manager’s obligations under the last sentence of Section 10 and
Sections 7 and 12 hereof.

 

This Agreement shall not be assigned by the Issuer without the prior written
consent of the Loan Obligation Manager and the Trustee (subject to the
satisfaction of the Rating Agency Condition), except in the case of assignment
by the Issuer to (i) an entity that is a successor to the Issuer permitted under
the Indenture, in which case such successor organization shall be bound
hereunder and by the terms of said assignment in the same manner as the Issuer
is bound hereunder and thereunder or (ii) the Trustee as contemplated by the
Indenture (and, in connection therewith, the Loan Obligation Manager agrees to
be bound by Article 15 of the Indenture).  In the event of any assignment by the
Issuer, the Issuer shall use its best efforts to cause its successor to execute
and deliver to the Loan Obligation Manager such documents as the Loan Obligation
Manager shall consider reasonably necessary to effect fully such assignment. 
The Loan Obligation Manager hereby consents to the assignment and other matters
set forth in Article 15 of the Indenture.

 

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18.                               No Bankruptcy Petition/Limited Recourse.  The
Loan Obligation Manager covenants and agrees that, prior to the date that is one
year and one day (or, if longer, the applicable preference period then in
effect) after the payment in full of all Notes issued by the Issuer under the
Indenture, the Loan Obligation Manager will not institute against, or join any
other Person in instituting against, the Issuer (or any Permitted Subsidiary) or
the Co-Issuer any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other proceedings under any bankruptcy, insolvency,
reorganization or similar law of any jurisdiction; provided, however, that
nothing in this provision shall preclude, or be deemed to stop, the Loan
Obligation Manager 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) in (x) any case or proceeding voluntarily
filed or commenced by the Issuer or the Co-Issuer, as the case may be, or
(y) any involuntary insolvency proceeding filed or commenced against the Issuer
or the Co-Issuer, as the case may be, by a Person other than the Loan Obligation
Manager.  The Loan Obligation Manager hereby acknowledges and agrees that the
Issuer’s obligations hereunder will be solely the corporate obligations of the
Issuer, and the Loan Obligation Manager will not have recourse to any of the
directors, officers, employees, shareholders or affiliates of the Issuer, or any
members of the Advisory Committee, with respect to any claims, losses, damages,
liabilities, indemnities or other obligations hereunder or in connection with
any transaction contemplated hereby.  Notwithstanding any provision hereof, all
obligations of the Issuer and any claims arising from this Agreement or any
transactions contemplated by this Agreement shall be limited solely to the Loan
Obligations and the other Assets payable in accordance with the Priority of
Payments.  If payments on any such claims from the Assets are insufficient, no
other assets shall be available for payment of the deficiency and, following
liquidation of all the Assets, all claims against the Issuer and the obligations
of the Issuer to pay such deficiencies shall be extinguished and shall not
thereafter revive.  The Issuer hereby acknowledges and agrees that the Loan
Obligation Manager’s obligations hereunder shall be solely the limited liability
company obligations of the Loan Obligation Manager, and the Issuer shall not
have any recourse to any of the members, managers, directors, officers,
employees, shareholders or Affiliates of the Loan Obligation Manager with
respect to any claims, losses, damages, liabilities, indemnities or other
obligations in connection with any transactions contemplated hereby.  The
provisions of this Section 18 shall survive the termination of this Agreement
for any reason whatsoever.

 

19.                               Rating Agency Information. All information and
notices required to be delivered to the Rating Agencies pursuant to this
Agreement or requested by the Rating Agencies in connection herewith, shall
first be provided in electronic format to the Information Agent in compliance
with the terms of the Indenture (who shall post such information to the 17g-5
Website in accordance with Section 14.13 of the Indenture).

 

Each party hereto, insofar as it may communicate with any Rating Agency pursuant
to any provision of this Agreement, each other party to this Agreement, agrees
to comply (and to cause each and every sub-servicer, subcontractor, vendor or
agent for such Person and each of its officers, directors and employees to
comply) with the provisions relating to communications with the Rating Agencies
set forth in this Section 19 and shall not deliver to any Rating Agency any
report, statement, request or other information relating to the Notes or the
Loan Obligations other than in compliance with such provisions.

 

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None of the foregoing restrictions in this Section 19 prohibit or restrict oral
or written communications, or providing information, between the Loan Obligation
Manager, on the one hand, and any Rating Agency, on the other hand, with regard
to (i) such Rating Agency’s review of the ratings, if any, it assigns to such
party, (ii) such Rating Agency’s approval, if any, of such party as a commercial
mortgage master, special or primary servicer or (iii) such Rating Agency’s
evaluation of such party’s servicing operations in general; provided, however,
that such party shall not provide any information relating to the Notes or the
Loan Obligations to any Rating Agency in connection with any such review and
evaluation by such Rating Agency unless (x) borrower, property or deal specific
identifiers are redacted; or (y) such information has already been provided to
the 17g-5 Information Provider and has been uploaded onto the 17g-5 Website.

 

20.                               Miscellaneous.  (a)  This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York without regard to the conflict of laws principles thereof.  With
respect to any suit, action or proceedings relating to this Agreement
(“Proceedings”), each party irrevocably (i) submits to the nonexclusive
jurisdiction of the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in New York City and
(ii) waives any objection that such party may have at any time to the laying of
venue of any Proceedings brought in any such court, waives any claim that such
Proceedings have been brought in an inconvenient forum and further waives the
right to object, with respect to such Proceedings, that such court does not have
any jurisdiction over such party.  Nothing in this Agreement precludes either
party from bringing Proceedings in any other jurisdiction, nor shall the
bringing of Proceedings in any one or more jurisdictions preclude the bringing
of Proceedings in any other jurisdiction.  The Loan Obligation Manager
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 the Loan
Obligation Manager at the office of the Loan Obligation Manager, 333 Earle
Ovington Boulevard, 9th Floor, Uniondale, New York 11553, Attention:  Executive
Vice President — Structured Securitization or such other address as the Loan
Obligation Manager may advise the Issuer in writing.  The Issuer 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 CT Corporation System at 111 8th Avenue,
New York, New York 10011 (and any successor entity), as its authorized agent to
receive and forward on its behalf service of any and all process which may be
served in any such suit, action or proceeding in any such court and agrees that
service of process upon CT Corporation System shall be deemed in every respect
effective service of process upon it in any such suit, action or proceeding and
shall be taken and held to be valid personal service upon it.  Each party hereto
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.

 

EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(b)                                 The captions in this Agreement are included
for convenience only and in no way define or limit any of the provisions hereof
or otherwise affect their construction or effect.

 

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(c)                                  In the event any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.

 

(d)                                 This Agreement (including Exhibit A attached
hereto) may be modified without the prior written consent of the Trustee or the
Holders of Notes to correct any inconsistency or cure any ambiguity or mistake
or to provide for any other modification that does not materially and adversely
affect the rights of any Noteholder or holder of the Preferred Shares.  Any
other amendment of this Agreement (including Exhibit A attached hereto) shall
require the prior written consent of a Majority of each Class of Notes and a
Majority of Preferred Shareholders that would be materially and adversely
affected by such proposed amendment.

 

(e)                                  This Agreement constitutes the entire
understanding and agreement between the parties hereto and supersedes all other
prior and contemporaneous understandings and agreements, whether written or
oral, between the parties hereto concerning this subject matter (other than the
Indenture).

 

(f)                                   The Loan Obligation Manager hereby agrees
and consents to the terms of Section 15.1(f) of the Indenture applicable to the
Loan Obligation Manager and shall perform any provisions of the Indenture made
applicable to the Loan Obligation Manager by the Indenture as required by
Section 15.1(f) of the Indenture.  The Loan Obligation Manager agrees that all
of the representations, covenants and agreements made by the Loan Obligation
Manager herein are also for the benefit of the Trustee, the Noteholders and the
Holder of the Preferred Shares.

 

(g)                                  This Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed an original,
but all such counterparts shall together constitute one and the same instrument.

 

(h)                                 The words “include,” “includes” and
“including” shall be deemed to be followed by the phrase “but not limited to.”

 

(i)                                     Subject to the last sentence of the
penultimate paragraph of Section 1 hereof, in the event of a conflict between
the terms of this Agreement and the Indenture, including with respect to the
obligations of the Loan Obligation Manager hereunder and thereunder, the terms
of this Agreement shall be controlling.

 

(j)                                    No failure or delay on the part of any
party hereto to exercise any right or remedy under this Agreement shall operate
as a waiver thereof, and no waiver shall be effective unless it is in writing
and signed by the party granting such waiver.

 

(k)                                 This Agreement is made solely for the
benefit of the Issuer, the Loan Obligation Manager and the Trustee, on behalf of
the Noteholders and the Holder of the Preferred Shares a, their successors and
assigns, and no other person shall have any right, benefit or interest under or
because of this Agreement.

 

(l)                                     The Loan Obligation Manager hereby
irrevocably waives any rights it may have to set off against the Assets.

 

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(m)                             No Noteholder or Holder of any Preferred Share
is a third party beneficiary under this Agreement for any purpose.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective authorized representatives as of the day and year first
above written.

 

 

ARBOR REALTY COMMERCIAL REAL ESTATE NOTES 2017-FL2, LTD., as Issuer

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

Loan Obligation Management
Agreement

 

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

 

 

ARBOR REALTY COLLATERAL MANAGEMENT, LLC,

 

as Loan Obligation Manager

 

 

 

 

 

By: Arbor Realty SR, Inc., its sole member

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

Loan Obligation Management
Agreement

 

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EXHIBIT A

 

Advisory Committee Guidelines

 

1.                                      General.

 

If, at any time after and excluding the Closing Date, the Loan Obligation
Manager desires to direct a Restricted Transaction, before effecting such trade,
it shall first present such Restricted Transaction to the Advisory Committee for
(1) review and prior approval and (2) a determination by the Advisory Committee
that such Restricted Transaction is on terms substantially as favorable to the
Issuer as would be the case if such transaction were effected with Persons not
so affiliated with the Loan Obligation Manager or any of its Affiliates.

 

2.                                      Composition of the Advisory Committee.

 

The Advisory Committee must be comprised of at least one person (which may be an
individual or an entity), who is not an Affiliate of the Loan Obligation Manager
(each such person, an “Independent Member”).

 

The Advisory Committee also may have one or more members appointed by the Loan
Obligation Manager and employed by the Loan Obligation Manager or an Affiliate
thereof (each such person, an “Affiliated Member”).

 

3.                                      Requisite Experience.

 

Each member of the Advisory Committee must at the time of appointment and at all
relevant times thereafter have Requisite Experience.

 

The Loan Obligation Manager and the Issuer will have the right to accept a
representation and warranty from a member regarding its Requisite Experience, in
the absence of actual knowledge by a responsible officer of the Loan Obligation
Manager to the contrary.

 

“Requisite Experience” means experience as a sophisticated investor, including,
without limitation, in fixed income investing (directly and/or through
investment vehicles) and/or substantial experience and knowledge in and of the
commercial real estate loan market and related investment arenas, such that the
relevant Advisory Committee member believes that it is capable of determining
whether or not to participate in Advisory Committee decisions on the basis of
the provisions described herein.  Such person need not be a professional loan
investor or loan originator.

 

4.                                      Appointment of Initial Members of the
Advisory Committee.

 

The initial members of the Advisory Committee may be appointed by the Loan
Obligation Manager.

 

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5.                                      Removal of Independent Members of the
Advisory Committee; Replacement of Independent Members of the Advisory
Committee.

 

A Majority of the Controlling Class (excluding any Notes held by the Loan
Obligation Manager, any of its Affiliates or any funds (other than the Issuer)
managed by the Loan Obligation Manager or its Affiliates) shall have the right
to remove any member of the Advisory Committee.

 

Any replacement Independent Member must be approved by a Majority of the
Controlling Class.

 

Any replacement Affiliated Member, if any, shall be appointed by the Loan
Obligation Manager.

 

The Loan Obligation Manager will have the right to remove an Independent Member
for “cause,” but such removal will be subject to the appointment of a successor
Independent Member.  For this purpose, “cause” will be defined narrowly (in an
agreement to be entered into between each member of the Advisory Committee and
the Issuer) to mean failure to comply with the terms governing the Advisory
Committee.

 

The Loan Obligation Manager will have the right to remove any Affiliated Member
at any time and in its sole discretion (with or without cause), and such removal
will not be subject to the appointment of any successor Affiliated Member.

 

6.                                      Term; Resignation of Members of the
Advisory Committee.

 

Each member of the Advisory Committee will serve until it resigns, dies or is
removed or until all of the Loan Obligations have been sold and the lien of the
Indenture in respect thereto has been released.

 

Each member of the Advisory Committee will have the right to resign at any time,
and such resignation will not be subject to the appointment of a replacement
member.

 

7.                                      Approval Process.

 

If the Loan Obligation Manager wants the Issuer to consider a Restricted
Transaction, the Loan Obligation Manager will give notice of the proposed
Restricted Transaction to the members of the Advisory Committee.  The notice
will contain the request by the Loan Obligation Manager for the Advisory
Committee’s consent to the Restricted Transaction.  The notice will be
accompanied by:

 

·                  an investment memorandum; and

 

·                  an underwriting analysis.

 

The investment memorandum (a) will be a reasonably detailed (anticipated to be
approximately two pages) description of the proposed investment, the issuer
thereof and related information and (b) will include information about the
identity of any Affiliated Person involved in the proposed investment and the
capacity in which it will be acting and a narrative about why, in the judgment
of the Loan Obligation Manager, the investment is appropriate to be purchased or
sold by the Issuer, as the case may be.  The notice will contain the Loan
Obligation Manager’s offer to provide additional information as requested to the
Advisory Committee.

 

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8.                                      Unanimous Written Consent.

 

Regardless of the composition of the Advisory Committee, each Restricted
Transaction must be approved in writing by each member of the Advisory
Committee.

 

The members of the Advisory Committee are under no obligation to consent to a
Restricted Transaction.

 

·                  If all of the members of the Advisory Committee approve a
Restricted Transaction in writing, the Issuer will effect it at the option of
the Loan Obligation Manager.

 

·                  If the members of the Advisory Committee notify the Loan
Obligation Manager that the Advisory Committee will not approve the Restricted
Transaction, the Issuer will not affect the Restricted Transaction.

 

If at any time the Advisory Committee does not have at least one Independent
Member or any member does not have Requisite Experience, the Loan Obligation
Manager will not be permitted to use the Advisory Committee to approve any
Restricted Transaction.

 

9.                                      Indemnification; Compensation.

 

Each Independent Member shall receive arm’s length compensation by the Issuer
for serving on the Advisory Committee as agreed between such member and the
Issuer.  Any such payment shall be payable by the Issuer as part of its expenses
in accordance with the Priority of Payments (or, in the case of any amounts due
on the Closing Date, from the gross proceeds of the sale of the Notes).

 

Pursuant to an agreement to be entered into between each member of the Advisory
Committee and the Issuer, each member of the Advisory Committee will be entitled
to indemnification from the Issuer and broad exculpation provisions, i.e., no
liability except for such member’s willful misconduct, fraud or gross
negligence.

 

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