EX-10.31






Exhibit
10.31


EXECUTION VERSION




JUNIOR SUBORDINATED INDENTURE




between




ARBOR REALTY SR, INC.




AND




THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION,

as trustee




 






Dated as of May 6, 2009




 






Indenture II




 









 








-i-




TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	ARTICLE I Definitions and Other Provisions of General Application
	 	 	1	 
	SECTION 1.1 Definitions
	 	 	1	 
	SECTION 1.2 Compliance Certificate and Opinions
	 	 	9	 
	SECTION 1.3 Forms of Documents Delivered to Trustee
	 	 	10	 
	SECTION 1.4 Acts of Holders
	 	 	11	 
	SECTION 1.5 Notices, Etc. to Trustee and Company
	 	 	12	 
	SECTION 1.6 Notice to Holders; Waiver
	 	 	13	 
	SECTION 1.7 Effect of Headings and Table of Contents
	 	 	14	 
	SECTION 1.8 Successors and Assigns
	 	 	14	 
	SECTION 1.9 Separability Clause
	 	 	14	 
	SECTION 1.10 Benefits of Indenture
	 	 	14	 
	SECTION 1.11 Governing Law
	 	 	14	 
	SECTION 1.12 Submission to Jurisdiction
	 	 	14	 
	SECTION 1.13 Non-Business Days
	 	 	15	 
	SECTION 1.14 Shareholder Communications Act
	 	 	15	 
	 
	 	 	 	 
	ARTICLE II Security Forms
	 	 	16	 
	SECTION 2.1 Form of Security
	 	 	16	 
	SECTION 2.2 Restricted Legend
	 	 	20	 
	SECTION 2.3 Form of Trustee’s Certificate of Authentication
	 	 	22	 
	SECTION 2.4 Temporary Securities
	 	 	22	 
	SECTION 2.5 Definitive Securities
	 	 	22	 
	 
	 	 	 	 
	ARTICLE III The Securities
	 	 	23	 
	SECTION 3.1 Payment of Principal and Interest
	 	 	23	 
	SECTION 3.2 Denominations
	 	 	25	 
	SECTION 3.3 Execution, Authentication, Delivery and Dating
	 	 	25	 
	SECTION 3.4 Global Securities
	 	 	26	 
	SECTION 3.5 Registration, Transfer and Exchange Generally
	 	 	28	 
	SECTION 3.6 Mutilated, Destroyed, Lost and Stolen Securities
	 	 	29	 
	SECTION 3.7 Persons Deemed Owners
	 	 	30	 
	SECTION 3.8 Cancellation
	 	 	30	 
	SECTION 3.9 Reserved
	 	 	30	 
	SECTION 3.10 Reserved
	 	 	31	 
	SECTION 3.11 Agreed Tax Treatment
	 	 	31	 
	SECTION 3.12 CUSIP Numbers
	 	 	31	 
	 
	 	 	 	 
	ARTICLE IV Satisfaction and Discharge
	 	 	31	 
	SECTION 4.1 Satisfaction and Discharge of Indenture
	 	 	31	 
	SECTION 4.2 Application of Trust Money
	 	 	33	 
	 
	 	 	 	 
	ARTICLE V Remedies
	 	 	33	 
	SECTION 5.1 Events of Default
	 	 	33	 
	SECTION 5.2 Acceleration of Maturity; Rescission and Annulment
	 	 	34	 






 









 






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	SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee
	 	 	35	 
	SECTION 5.4 Trustee May File Proofs of Claim
	 	 	36	 
	SECTION 5.5 Trustee May Enforce Claim Without Possession of Securities
	 	 	36	 
	SECTION 5.6 Application of Money Collected
	 	 	36	 
	SECTION 5.7 Limitation on Suits
	 	 	37	 
	SECTION 5.8 Unconditional Right of Holders to Receive Principal, Premium, if any, and
Interest
	 	 	38	 
	SECTION 5.9 Restoration of Rights and Remedies
	 	 	38	 
	SECTION 5.10 Rights and Remedies Cumulative
	 	 	38	 
	SECTION 5.11 Delay or Omission Not Waiver
	 	 	38	 
	SECTION 5.12 Control by Holders
	 	 	38	 
	SECTION 5.13 Waiver of Past Defaults
	 	 	39	 
	SECTION 5.14 Undertaking for Costs
	 	 	39	 
	SECTION 5.15 Waiver of Usury, Stay or Extension Laws
	 	 	39	 
	 
	 	 	 	 
	ARTICLE VI The Trustee
	 	 	40	 
	SECTION 6.1 Corporate Trustee Required
	 	 	40	 
	SECTION 6.2 Certain Duties and Responsibilities
	 	 	40	 
	SECTION 6.3 Notice of Defaults
	 	 	42	 
	SECTION 6.4 Certain Rights of Trustee
	 	 	42	 
	SECTION 6.5 May Hold Securities
	 	 	44	 
	SECTION 6.6 Compensation; Reimbursement; Indemnity
	 	 	44	 
	SECTION 6.7 Resignation and Removal; Appointment of Successor
	 	 	45	 
	SECTION 6.8 Acceptance of Appointment by Successor
	 	 	45	 
	SECTION 6.9 Merger, Conversion, Consolidation or Succession to Business
	 	 	46	 
	SECTION 6.10 Not Responsible for Recitals or Issuance of Securities
	 	 	46	 
	SECTION 6.11 Appointment of Authenticating Agent
	 	 	46	 
	 
	 	 	 	 
	ARTICLE VII Holder’s Lists and Reports by Company
	 	 	48	 
	SECTION 7.1 Company to Furnish Trustee Names and Addresses of Holders
	 	 	48	 
	SECTION 7.2 Preservation of Information, Communications to Holders
	 	 	48	 
	SECTION 7.3 Reports by Company
	 	 	49	 
	 
	 	 	 	 
	ARTICLE VIII Consolidation, Merger, Conveyance, Transfer or Lease
	 	 	49	 
	SECTION 8.1 Company May Consolidate, Etc., Only on Certain Terms
	 	 	49	 
	SECTION 8.2 Successor Company Substituted
	 	 	50	 
	 
	 	 	 	 
	ARTICLE IX Supplemental Indentures
	 	 	51	 
	SECTION 9.1 Supplemental Indentures without Consent of Holders
	 	 	51	 
	SECTION 9.2 Supplemental Indentures with Consent of Holders
	 	 	51	 
	SECTION 9.3 Execution of Supplemental Indentures
	 	 	52	 
	SECTION 9.4 Effect of Supplemental Indentures
	 	 	52	 
	SECTION 9.5 Reference in Securities to Supplemental Indentures
	 	 	52	 
	 
	 	 	 	 
	ARTICLE X Covenants
	 	 	53	 
	SECTION 10.1 Payment of Principal, Premium, if any, and Interest
	 	 	53	 
	SECTION 10.2 Money for Security Payments to be Held in Trust
	 	 	53	 
	SECTION 10.3 Statement as to Compliance
	 	 	54	 






 









 






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	SECTION 10.4 Calculation Agent
	 	 	54	 
	SECTION 10.5 Additional Indebtedness
	 	 	55	 
	SECTION 10.6 Additional Covenants
	 	 	55	 
	SECTION 10.7 Waiver of Covenants
	 	 	57	 
	SECTION 10.8 Treatment of Securities
	 	 	57	 
	SECTION 10.9 Inspection Rights
	 	 	57	 
	 
	 	 	 	 
	ARTICLE XI Redemption of Securities
	 	 	57	 
	SECTION 11.1 Optional Redemption
	 	 	57	 
	SECTION 11.2 Special Event Redemption
	 	 	58	 
	SECTION 11.3 Election to Redeem; Notice to Trustee
	 	 	58	 
	SECTION 11.4 Selection of Securities to be Redeemed
	 	 	58	 
	SECTION 11.5 Notice of Redemption
	 	 	59	 
	SECTION 11.6 Deposit of Redemption Price
	 	 	59	 
	SECTION 11.7 Payment of Securities Called for Redemption
	 	 	60	 
	 
	 	 	 	 
	ARTICLE XII Subordination of Securities
	 	 	60	 
	SECTION 12.1 Securities Subordinate to Senior Debt
	 	 	60	 
	SECTION 12.2 No Payment When Senior Debt in Default; Payment Over of Proceeds Upon
Dissolution, Etc.
	 	 	60	 
	SECTION 12.3 Payment Permitted If No Default
	 	 	62	 
	SECTION 12.4 Subrogation to Rights of Holders of Senior Debt
	 	 	62	 
	SECTION 12.5 Provisions Solely to Define Relative Rights
	 	 	63	 
	SECTION 12.6 Trustee to Effectuate Subordination
	 	 	63	 
	SECTION 12.7 No Waiver of Subordination Provisions
	 	 	63	 
	SECTION 12.8 Notice to Trustee
	 	 	63	 
	SECTION 12.9 Reliance on Judicial Order or Certificate of Liquidating Agent
	 	 	64	 
	SECTION 12.10 Trustee Not Fiduciary for Holders of Senior Debt
	 	 	64	 
	SECTION 12.11 Rights of Trustee as Holder of Senior Debt; Preservation of Trustee’s
Rights
	 	 	64	 
	SECTION 12.12 Article Applicable to Paying Agents
	 	 	65	 






 









 






-iv-




SCHEDULES




Schedule A  —  Determination of LIBOR




Exhibit A  —  Form of Officer’s Financial Certificate




Exhibit B —  Form of Officers’ Certificate Under Section 10.3




 









 





     This Junior Subordinated Indenture (the “Indenture”), dated as of May 6, 2009, between ARBOR
REALTY SR, INC., a Maryland corporation (the “Company”), and THE BANK OF NEW YORK MELLON TRUST
COMPANY, NATIONAL ASSOCIATION, a national banking association, as Trustee (in such capacity, the
“Trustee”).



Recitals of the Company




     WHEREAS, the Company has duly authorized the execution and delivery of this Indenture to
provide for the issuance of its unsecured junior subordinated notes (the “Securities”) and to
provide the terms and conditions upon which the Securities are to be authenticated, issued and
delivered; and



     WHEREAS, all things necessary to make this Indenture a valid agreement of the Company, in
accordance with its terms, have been done.



     NOW, THEREFORE, this Indenture Witnesseth:



     For and in consideration of the premises and the purchase of the Securities by the Holders
thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Securities, as follows:



ARTICLE I




Definitions and Other Provisions of General Application




     SECTION 1.1 Definitions.



     For all purposes of this Indenture, except as otherwise expressly provided or unless the
context otherwise requires:



     (a) the terms defined in this Article I have the meanings assigned to them in this
Article I;



     (b) the words “include”, “includes” and “including” shall be deemed to be followed by the
phrase “without limitation”;



     (c) all accounting terms not otherwise defined herein have the meanings assigned to them in
accordance with GAAP;



     (d) unless the context otherwise requires, any reference to an “Article” or a “Section” refers
to an Article or a Section, as the case may be, of this Indenture;



     (e) the words “hereby”, “herein”, “hereof” and “hereunder” and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;



     (f) a reference to the singular includes the plural and vice versa; and



1









 





     (g) the masculine, feminine or neuter genders used herein shall include the masculine,
feminine and neuter genders.



     “Act” when used with respect to any Holder, has the meaning specified in Section 1.4.



     “Additional Interest” means the interest, if any, that shall accrue on any amounts payable on
the Securities, the payment of which has not been made on the applicable Interest Payment Date and
which shall accrue at the rate per annum specified or determined as specified in such Security, in
each case to the extent legally enforceable.



     “Affiliate” means in relation to any Person, any other Person (a) that is directly or
indirectly Controlling or Controlled by or under direct or indirect common Control with such first
Person, (b) that is directly or indirectly the beneficial owner of twenty-five percent (25%) or
more of the Equity Interests in the first Person or twenty-five percent (25%) or more of the total
voting power of the first Person or of rights or warrants to purchase Equity Interests or voting
power (whether or not currently exercisable) of the first Person, (c) twenty-five percent (25%) or
more of whose Equity Interests or total voting power is directly or indirectly beneficially owned
by the first Person or such first Person has rights or warrants to purchase Equity Interests or
voting power (whether or not currently exercisable) of such Person, or (d) any officer or director
of such Person.



     “Applicable Depositary Procedures” means, with respect to any transfer or transaction
involving a Global Security or beneficial interest therein, the rules and procedures of the
Depositary for such Security, in each case to the extent applicable to such transaction and as in
effect from time to time.



     “Attentus Indenture I” means that certain Junior Subordinated Indenture dated as of May 6,
2009 by and among the Company, Arbor Realty Trust, Inc., as guarantor and Wilmington Trust Company,
as trustee, pursuant to which Company issued Twenty One Million Two Hundred Twenty Four Thousand
Dollars ($21,224,000) in original principal amount of Junior Subordinated Notes due 2035.



     “Attentus Indenture II” means that certain Junior Subordinated Indenture dated as of May 6,
2009 by and among the Company, Arbor Realty Trust, Inc., as guarantor and Wilmington Trust Company,
as trustee, pursuant to which Company issued Two Million Six Hundred Thirty Two Thousand Dollars
($2,632,000) in original principal amount of Junior Subordinated Notes due 2036.



     “Authenticating Agent” means any Person authorized by the Trustee pursuant to Section
6.11 to act on behalf of the Trustee to authenticate the Securities.



     “Bankruptcy Code” means Title 11 of the United States Code or any successor statute(s)
thereto, or any similar federal or state law for the relief of debtors, in each case as amended
from time to time.



     “Board of Directors” means the board of directors of the Company or any duly authorized
committee of that board.



2









 





     “Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors and to be in full
force and effect on the date of such certification.



     “Business Day” means any day other than (i) a Saturday or Sunday, (ii) a day on which banking
institutions in the City of New York are authorized or required by law or executive order to remain
closed or (iii) a day on which the Corporate Trust Office of the Trustee is closed for business.



     “Calculation Agent” has the meaning specified in Section 10.4.



     “Commission” has the meaning specified in Section 7.3(c).



     “Company” means the Person named as the “Company” in the first paragraph of this Indenture
until a successor Person shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter “Company” shall mean such successor Person.



     “Company Request” and “Company Order” mean, respectively, the written request or order signed
in the name of the Company by its Chairman of the Board of Directors, its Vice Chairman of the
Board of Directors, its Chief Executive Officer, President or a Vice President, and by its Chief
Financial Officer, its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary,
and delivered to the Trustee.



     “Control” when used with respect to any specified Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have
meanings correlative to the foregoing.



     “Corporate Trust Office” means the principal office of the Trustee at which at any particular
time its corporate trust business shall be administered, which office at the date of this Indenture
is located at 601 Travis Street, 16th Floor, Houston, Texas 77019 Attn: Global Corporate
Trust. Initially, all notices and correspondence shall be addressed to Mudassir Mohamed, telephone
no.:(713) 483-6029.



     “Debt” means, with respect to any Person, whether recourse is to all or a portion of the
assets of such Person, whether currently existing or hereafter incurred and whether or not
contingent and without duplication, (i) every obligation of such Person for money borrowed; (ii)
every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property, assets or
businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit,
bankers’ acceptances or similar facilities issued for the account of such Person; (iv) every
obligation of such Person issued or assumed as the deferred purchase price of property or services
(but excluding trade accounts payable or other accrued liabilities arising in the ordinary course
of business); (v) every capital lease obligation of such Person; (vi) all indebtedness of such
Person, whether incurred on or prior to the date of this Indenture or thereafter incurred, for
claims in respect of derivative products, including interest rate, foreign exchange rate and
commodity forward contracts, options and swaps and similar arrangements; (vii) every obligation of
the type referred to in clauses (i) through (vi) of another Person and all dividends of



3









 







another Person the payment of which, in either case, such Person has guaranteed or is
responsible or liable for, directly or indirectly, as obligor or otherwise; and (viii) any
renewals, extensions, refundings, amendments or modifications of any obligation of the type
referred to in clauses (i) through (vii).



     “Defaulted Interest” has the meaning specified in Section 3.1.



     “Depositary” means an organization registered as a clearing agency under the Exchange Act that
is designated as Depositary by the Company or any successor thereto.



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



     “Dollar” or “$” means the currency of the United States of America that, as at the time of
payment, is legal tender for the payment of public and private debts.



     “EDGAR” has the meaning specified in Section 7.3(c).



     “Equity Interests” means with respect to any person (a) if such Person is a partnership, the
partnership interests (general or limited) in a partnership, (b) if such Person is a limited
liability company, the membership interests in a limited liability company and (c) if such Person
is a corporation, the shares or stock interests (both common stock and preferred stock) in a
corporation.



     “Event of Default” has the meaning specified in Section 5.1.



     “Exchange Act” means the Securities Exchange Act of 1934 or any statute successor thereto, in
each case as amended from time to time.



     “Exchange Agreement” means that certain Exchange Agreement executed and delivered
contemporaneously with this Indenture by and among the Company and the parties named therein, as
the same may be modified, amended, supplemented, restated or replaced from time to time.



     “Expiration Date” has the meaning specified in Section 1.4(h).



     “Fixed Rate” means a fixed rate equal to one half of one percent (0.50%) per annum.



     “GAAP” means United States generally accepted accounting principles, consistently applied,
from time to time in effect.



     “Global Security” means a Security that evidences all or part of the Securities, the ownership
and transfers of which shall be made through book entries by a Depositary.



     “Government Obligation” means (a) any security that is (i) a direct obligation of the United
States of America of which the full faith and credit of the United States of America is pledged or
(ii) an obligation of a Person controlled or supervised by and acting as an agency or



4









 







instrumentality of the United States of America or the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of America, which, in either
case (i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (b) any
depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as
custodian with respect to any Government Obligation that is specified in clause (a) above and held
by such bank for the account of the holder of such depositary receipt, or with respect to any
specific payment of principal of or interest on any Government Obligation that is so specified and
held, provided, that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depositary receipt from any amount received
by the custodian in respect of the Government Obligation or the specific payment of principal or
interest evidenced by such depositary receipt.



     “Holder” means a Person in whose name a Security is registered in the Securities Register.



     “Indenture” means this instrument as originally executed or as it may from time to time be
amended or supplemented by one or more amendments or indentures supplemental hereto entered into
pursuant to the applicable provisions hereof.



     “Interest Payment Date” means July 30, October 30, January 30 and April 30 of each year during
the term of this Indenture.



     “Interest Period” means the period commencing on, and including, an Interest Payment Date and
continuing through and including the day prior to the next succeeding Interest Payment Date;
provided, however, that the initial Interest Period shall commence on May 6, 2009.



     “Investment Company Act” means the Investment Company Act of 1940 or any successor statute
thereto, in each case as amended from time to time.



     “Kodiak” has the meaning specified in Section 5.16.



     “Kodiak/Attentus Indenture III” means that certain Junior Subordinated Indenture dated as of
May 6, 2009 by and among the Company, Arbor Realty Trust, Inc., as guarantor and Wilmington Trust
Company, as trustee, pursuant to which Company issued Forty Seven Million One Hundred Eighty
Thousand Dollars ($47,180,000) in original principal amount of Junior Subordinated Notes due 2037.



     “LIBOR” has the meaning specified in Schedule A.



     “LIBOR Business Day” has the meaning specified in Schedule A.



     “LIBOR Determination Date” has the meaning specified in Schedule A.



     “Maturity,” means when used with respect to any Security, the date on which the principal of
such Security or any installment of principal becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or
otherwise.



5









 





     “Modification Period” means the period commencing as of May 6, 2009 and continuing through,
but excluding, the Modification Period Termination Date.



     “Modification Period Termination Date” means the earliest of (a) April 30, 2012, (b) the first
Interest Payment Date occurring after the Company has elected to terminate the Modification Period
in accordance with the terms of Section 3.1(g), (c) the effective date set forth in Section
10.5, if applicable, and (d) the effective date set forth in Section 10.6, if
applicable.



     “New Stock Class” shall have the definition set forth in Section 10.6(c) herein.



     “Notice of Default” means a written notice of the kind specified in Section 5.1(c).



     “Officers’ Certificate” means a certificate signed by the Chairman of the Board, a Vice
Chairman of the Board, the Chief Executive Officer, the President or a Vice President, and by the
Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary, of the Company and delivered to the Trustee.



     “Operative Documents” means the Indenture, the Securities and the Parent Guarantee, as the
same may be modified, amended, supplemented, restated or replaced from time to time.



     “Opinion of Counsel” means a written opinion of counsel, who may be counsel for or an employee
of the Company or any Affiliate of the Company.



     “Optional Redemption Price” has the meaning set forth in Section 11.1.



     “Original Issue Date” means the date of original issuance of each Security.



     “Original Kodiak Indentures” has the meaning specified in Section 5.16.



     “Other Taxes” has the meaning set forth in Section 3.11(c).



     “Outstanding” means, when used in reference to any Securities, as of the date of
determination, all Securities theretofore authenticated and delivered under this Indenture, except:




     (i) Securities theretofore canceled by the Trustee or delivered to the Trustee for
cancellation;




     (ii) Securities for whose payment or redemption money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such
Securities; provided, that, if such Securities are to be redeemed, notice of such redemption
has been duly given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made; and




     (iii) Securities that have been paid or in substitution for or in lieu of which other
Securities have been authenticated and delivered pursuant to the provisions of this
Indenture, unless proof satisfactory to the Trustee is presented that any such Securities



6









 







are held by Holders in whose hands such Securities are valid, binding and legal
obligations of the Company;


provided, that in determining whether the Holders of the requisite principal amount of Outstanding
Securities have given any request, demand, authorization, direction, notice, consent or waiver
hereunder, Securities owned by the Company, if any, or any other obligor upon the Securities, if
any, or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to
be Outstanding unless the Company shall hold all Outstanding Securities, except that, in
determining whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities that a Responsible Officer of
the Trustee actually knows to be so owned shall be so disregarded. Securities so owned that have
been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor.




     “Paying Agent” means the Trustee or any Person (other than the Company or any Affiliate of the
Company) authorized by the Trustee to pay the principal of or any premium or interest on, or other
amounts in respect of, any Securities on behalf of the Company.



     “Person” means a legal person, including any individual, corporation, estate, partnership,
joint venture, association, joint stock company, limited liability company, trust, unincorporated
association, or any government or agency or political subdivision thereof, or any other entity of
whatever nature.



     “Place of Payment” means, with respect to the Securities, the Corporate Trust Office of the
Trustee.



     “Predecessor Security” of any particular Security means every previous Security evidencing all
or a portion of the same debt as that evidenced by such particular Security. For the purposes of
this definition, any security authenticated and delivered under Section 3.6 in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the
mutilated, destroyed, lost or stolen Security.



     “Proceeding” has the meaning specified in Section 12.2(b).



     “Redemption Date” means, when used with respect to any Security to be redeemed, the date fixed
for such redemption by or pursuant to this Indenture.



     “Redemption Price” means, when used with respect to any Security to be redeemed, in whole or
in part, the Special Redemption Price or the Optional Redemption Price, as applicable, at which
such Security or portion thereof is to be redeemed as fixed by or pursuant to this Indenture.



     “Reference Banks” has the meaning specified in Schedule A.



7









 





     “Regular Record Date” for the interest payable on any Interest Payment Date with respect to
the Securities means the date that is fifteen (15) days preceding such Interest Payment Date
(whether or not a Business Day).



     “Responsible Officer” means, when used with respect to the Trustee, the officer in the
Worldwide Securities Services department of the Trustee having direct responsibility for the
administration of this Indenture.



     “Rights Plan” means a plan of the Company providing for the issuance by the Company to all
holders of its Equity Interests of rights entitling the holders thereof to subscribe for or
purchase Equity Interests or any class or series of Equity Interests in the Company which rights
(i) are deemed to be transferred with such Equity Interests and (ii) are also issued in respect of
future issuances of such Equity Interests, in each case until the occurrence of a specified event
or events.



     “Securities” or “Security” means any debt securities or debt security, as the case may be,
authenticated and delivered under this Indenture.



     “Securities Act” means the Securities Act of 1933 or any successor statute thereto, in each
case as amended from time to time.



     “Securities Register” and “Securities Registrar” have the respective meanings specified in
Section 3.5.



     “Senior Debt” means the principal of and any premium and interest on (including interest
accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the
Company, whether or not such claim for post-petition interest is allowed in such proceeding) all
Debt of the Company, whether incurred on or prior to the date of this Indenture or thereafter
incurred, unless it is provided in the instrument creating or evidencing the same or pursuant to
which the same is outstanding, that such obligations are not superior in right of payment to the
Securities issued under this Indenture; provided, that Senior Debt shall not be deemed to include
any (i) debt or (ii) other debt securities (and guarantees, if any, in respect of such debt
securities) issued to any trust (or a trustee of any such trust), partnership or other entity
affiliated with the Company that is a financing vehicle of the Company (a “financing entity”) in
connection with the issuance by such financing entity of equity securities or other securities, in
each case of (i) or (ii) pursuant to an instrument that ranks pari passu with or junior in right of
payment to this Indenture.



     “Special Event” means the occurrence of a Tax Event.



     “Special Record Date” for the payment of any Defaulted Interest means a date fixed by the
Trustee pursuant to Section 3.1.



     “Special Redemption Price” has the meaning set forth in Section 11.2.



     “Stated Maturity” means March 30, 2034.



8









 





     “Subsidiary” of a Person means (a) any corporation more than fifty percent 50% of the
outstanding securities having ordinary voting power of which shall at the time be owned or
Controlled, directly or indirectly, by such Person and/or by one or more of its Subsidiaries or (b)
any partnership, limited liability company, association, joint venture or similar business
organization more than fifty percent 50% of the ownership interests having ordinary voting power of
which shall at the time be owned or Controlled, directly or indirectly, by such Person and/or by
one or more of its Subsidiaries.



     “Taberna Capital Management, LLC” means Taberna Capital Management, LLC and its successors
and/or assigns as collateral manager of the Holders, as applicable.



     “Taberna Indenture I” means that certain Junior Subordinated Indenture dated as of May 6,
2009, between the Company and The Bank of New York Mellon Trust Company, National Association, as
trustee, pursuant to which the Company issued Twenty-Nine Million Four Hundred Thousand Dollars
($29,400,000) in original aggregate principal amount of Junior Subordinated Notes.



     “Tax Event” means the receipt by the Company of an Opinion of Counsel experienced in such
matters to the effect that, as a result of (a) any amendment to or change (including any announced
prospective change) in the laws or any regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein or (b) any judicial decision or any official
administrative pronouncement (including any private letter ruling, technical advice memorandum or
field service advice) or regulatory procedure, including any notice or announcement of intent to
adopt any such pronouncement or procedure (an “Administrative Action”), regardless of whether such
judicial decision or Administrative Action is issued to or in connection with a proceeding
involving the Company and whether or not subject to review or appeal, which amendment, change,
judicial decision or Administrative Action is enacted, promulgated or announced, in each case, on
or after the date of issuance of the Securities, there is more than an insubstantial risk that
interest payable by the Company on the Securities is not, or within ninety (90) days of the date of
such opinion, will not be, deductible by the Company, in whole or in part, for United States
federal income tax purposes.



     “Trustee” means the Person named as the “Trustee” in the first paragraph of this instrument,
solely in its capacity as such and not in its individual capacity, until a successor Trustee shall
have become such pursuant to the applicable provisions of this Indenture, and, thereafter,
“Trustee” shall mean or include each Person who is then a Trustee hereunder.



     “Trust Indenture Act” means the Trust Indenture Act of 1939, as amended and as in effect on
the date as of this Indenture.



     SECTION 1.2 Compliance Certificate and Opinions.



     (a) Upon any application or request by the Company to the Trustee to take any action under any
provision of this Indenture, the Company shall, if requested by the Trustee, furnish to the
Trustee an Officers’ Certificate stating that all conditions precedent (including covenants
compliance with which constitutes a condition precedent), if any, provided for in this Indenture
relating to the proposed action have been complied with and an Opinion of Counsel stating that



9









 







in the opinion of such counsel all such conditions precedent (including covenants compliance
with which constitutes a condition precedent), if any, have been complied with.



     (b) Every certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than the certificate provided pursuant to Section
10.3) shall include:




     (i) a statement by each individual signing such certificate or opinion that such
individual has read such covenant or condition and the definitions herein relating thereto;




     (ii) a brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions of such individual contained in such certificate or
opinion are based;




     (iii) a statement that, in the opinion of such individual, he or she has made such
examination or investigation as is necessary to enable him or her to express an informed
opinion as to whether or not such covenant or condition has been complied with; and




     (iv) a statement as to whether, in the opinion of such individual, such condition or
covenant has been complied with.



     SECTION 1.3 Forms of Documents Delivered to Trustee.



     (a) In any case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be so certified or covered by only
one document, but one such Person may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.



     (b) Any certificate or opinion of an officer of the Company may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless
such officer knows, or after reasonable inquiry should know, that the certificate or opinion or
representations with respect to matters upon which his or her certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an officer or officers of
the Company stating that the information with respect to such factual matters is in the possession
of the Company, unless such counsel knows, or after reasonable inquiry should know, that the
certificate or opinion or representations with respect to such matters are erroneous.



     (c) Where any Person is required to make, give or execute two or more applications, requests,
consents, certificates, statements, opinions or other instruments under this Indenture, they may,
but need not, be consolidated and form one instrument.



     (d) Whenever, subsequent to the receipt by the Trustee of any Board Resolution, Officers’
Certificate, Opinion of Counsel or other document or instrument, a clerical, typographical or other
inadvertent or unintentional error or omission shall be discovered therein, a new document or
instrument may be substituted therefor in corrected form with the same force



10









 







and effect as if originally received in the corrected form and, irrespective of the date or
dates of the actual execution and/or delivery thereof, such substitute document or instrument shall
be deemed to have been executed and/or delivered as of the date or dates required with respect to
the document or instrument for which it is substituted. Without limiting the generality of the
foregoing, any Securities issued under the authority of such defective document or instrument shall
nevertheless be the valid obligations of the Company entitled to the benefits of this Indenture
equally and ratably with all other Outstanding Securities.



     SECTION 1.4 Acts of Holders.



     (a) Any request, demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given to or taken by Holders may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by such Holders in person or by an
agent thereof duly appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments (including any appointment of an
agent) is or are delivered to the Trustee, and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section 1.4.



     (b) The fact and date of the execution by any Person of any such instrument or writing may be
proved by the affidavit of a witness of such execution or by the certificate of any notary public
or other officer authorized by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him or her the execution thereof. Where such
execution is by a Person acting in other than his or her individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his or her authority. The fact and date of the
execution by any Person of any such instrument or writing, or the authority of the Person executing
the same, may also be proved in any other manner that the Trustee deems sufficient and in
accordance with such reasonable rules as the Trustee may determine.



     (c) The ownership of Securities shall be proved by the Securities Register.



     (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by
the Holder of any Security shall bind every future Holder of the same Security and the Holder of
every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such Security.



     (e) Without limiting the foregoing, a Holder entitled to take any action hereunder with regard
to any particular Security may do so with regard to all or any part of the principal amount of such
Security or by one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such principal amount.



     (f) Except as set forth in paragraph (g) of this Section 1.4, the Company may set any
day as a record date for the purpose of determining the Holders of Outstanding Securities entitled



11









 







to give, make or take any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given, made or taken by Holders of
Securities. If any record date is set pursuant to this paragraph, the Holders of Outstanding
Securities on such record date, and no other Holders, shall be entitled to take the relevant
action, whether or not such Holders remain Holders after such record date; provided, that no such
action shall be effective hereunder unless taken on or prior to the applicable Expiration Date (as
defined in Section 1.4(h)) by Holders of the requisite principal amount of Outstanding
Securities on such record date. Nothing in this paragraph shall be construed to prevent the
Company from setting a new record date for any action for which a record date has previously been
set pursuant to this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be canceled and of no effect). Promptly after any record date is set
pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record
date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee
in writing and to each Holder of Securities in the manner set forth in Section 1.6.



     (g) The Trustee may set any day as a record date for the purpose of determining the Holders of
Outstanding Securities entitled to join in the giving or making of (i) any Notice of Default, (ii)
any declaration of acceleration or rescission or annulment thereof referred to in Section
5.2, (iii) any request to institute proceedings referred to in Section 5.7(b) or (iv)
any direction referred to in Section 5.12. If any record date is set pursuant to this
paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall
be entitled to join in such notice, declaration, request or direction, whether or not such Holders
remain Holders after such record date; provided, that no such action shall be effective hereunder
unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal
amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed
to prevent the Trustee from setting a new record date for any action for which a record date has
previously been set pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be canceled and of no effect). Promptly after any
record date is set pursuant to this paragraph, the Trustee, at the Company’s expense, shall cause
notice of such record date, the proposed action by Holders and the applicable Expiration Date to be
given to the Company in writing and to each Holder of Securities in the manner set forth in
Section 1.6.



     (h) With respect to any record date set pursuant to paragraph (f) or (g) of this Section
1.4, the party hereto that sets such record date may designate any day as the “Expiration Date”
and from time to time may change the Expiration Date to any earlier or later day; provided, that no
such change shall be effective unless notice of the proposed new Expiration Date is given to the
other party hereto in writing, and to each Holder of Securities in the manner set forth in
Section 1.6, on or prior to the existing Expiration Date. If an Expiration Date is not
designated with respect to any record date set pursuant to this Section 1.4, the party
hereto that set such record date shall be deemed to have initially designated the ninetieth
(90th) day after such record date as the Expiration Date with respect thereto, subject
to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the
foregoing, no Expiration Date shall be later than the one hundred eightieth (180th) day
after the applicable record date.



     SECTION 1.5 Notices, Etc. to Trustee and Company.



12









 





     (a) Any request, demand, authorization, direction, notice, consent, waiver, Act of Holders, or
other document provided or permitted by this Indenture to be made upon, given or furnished to, or
filed with:




     (i) The Trustee by any Holder or the Company shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing to or with and received by the
Trustee at its Corporate Trust Office, or




     (ii) The Company by the Trustee or any Holder shall be sufficient for every purpose
hereunder if in writing and mailed, first class, postage prepaid, to the Company addressed
to it at 333 Earle Ovington Blvd., Suite 900, Uniondale, NY 11553, Attention: John
Natalone, or at any other address previously furnished in writing to the Trustee by the
Company.



     (b) The Trustee may, but is not required to, rely upon and comply with instructions and
directions sent by email or facsimile, (or any other reasonable means of communication) by persons
believed by the Trustee in good faith to be authorized to provide such instructions or direction;
provided, however, that the Trustee may require such additional evidence, confirmation or
certification from any such party or parties as the Trustee, in its reasonable discretion, deems
necessary or advisable before acting or refraining from acting upon any such instruction or
direction.



     (c) The Trustee agrees to accept and act upon instructions or directions pursuant to this
Agreement sent by unsecured email, facsimile transmission or other similar unsecured electronic
methods; provided, however, that any Person providing such instructions or directions shall provide
to the Trustee an incumbency certificate listing such designated persons, which incumbency
certificate shall be amended whenever a person is to be added or deleted from the listing. If such
Person elects to give the Trustee email or facsimile instructions (or instructions by a similar
electronic method) and the Trustee in its discretion elects to act upon such instructions, the
Trustee’s understanding of such instructions shall be deemed controlling. The Trustee shall not be
liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance
upon and compliance with such instructions notwithstanding such instructions conflict or are
inconsistent with a subsequent written instruction. Each Person providing instructions or
directions to the Trustee hereunder agrees to assume all risks arising out of the use of such
electronic methods to submit instructions and directions to the Trustee, including without
limitation the risk of the Trustee acting, in good faith, on unauthorized instructions, and the
risk of interception and misuse by third parties.



     SECTION 1.6 Notice to Holders; Waiver.



     Where this Indenture provides for notice to Holders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first
class, postage prepaid, to each Holder affected by such event to the address of such Holder as it
appears in the Securities Register, not later than the latest date, (if any) and not earlier than
the earliest date (if any), prescribed for the giving of such notice. If, by reason of the
suspension of or irregularities in regular mail service or for any other reason, it shall be
impossible or impracticable to mail notice of any event to Holders when said notice is required to
be given



13









 







pursuant to any provision of this Indenture, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. In any case
where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect
in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this Indenture provides for notice in any manner, such notice may
be waived in writing by the Person entitled to receive such notice, either before or after the
event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall
be filed with the Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.



     SECTION 1.7 Effect of Headings and Table of Contents.



     The Article and Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction of this Indenture.



     SECTION 1.8 Successors and Assigns.



     This Indenture shall be binding upon and shall inure to the benefit of any successor to the
Company and the Trustee, including any successor by operation of law. Except in connection with a
transaction involving the Company that is permitted under Article VIII and pursuant to
which the assignee agrees in writing to perform the Company’s obligations hereunder, the Company
shall not assign its obligations hereunder.



     SECTION 1.9 Separability Clause.



     If any provision in this Indenture or in the Securities shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby, and there shall be deemed substituted for the provision at
issue a valid, legal and enforceable provision as similar as possible to the provision at issue.



     SECTION 1.10 Benefits of Indenture.



     Nothing in this Indenture or in the Securities, express or implied, shall give to any Person,
other than the parties hereto and their successors and assigns, the holders of Senior Debt and the
Holders of the Securities any benefit or any legal or equitable right, remedy or claim under this
Indenture.



     SECTION 1.11 Governing Law.



     This Indenture and the rights and obligations of each of the Holders, the Company and the
Trustee shall be construed and enforced in accordance with and governed by the laws of the State of
New York without reference to its conflict of laws provisions (other than Section 5-1401 of the
General Obligations Law).



     SECTION 1.12 Submission to Jurisdiction.



     ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING
OUT OF THIS INDENTURE MAY



14









 







BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW
YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE
SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS INDENTURE, EACH PARTY
ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION
OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR
IN CONNECTION WITH THIS INDENTURE.



     SECTION 1.13 Non-Business Days.



     If any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be
a Business Day, then (notwithstanding any other provision of this Indenture or the Securities)
payment of interest, premium, if any, or principal or other amounts in respect of such Security
shall not be made on such date, but shall be made on the next succeeding Business Day (and no
interest shall accrue in respect of the amounts whose payment is so delayed for the period from and
after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, until
such next succeeding Business Day) except that, if such Business Day falls in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on the Interest Payment Date or Redemption Date or at the
Stated Maturity.



     SECTION 1.14 Shareholder Communications Act



     (a) With respect to securities under and as defined in the Shareholders Communications Act of
1985 (the “SCA”) issued in the United States, the SCA requires the Trustee to disclose to the
issuers, upon their request, the name, address and securities position of its customers who are (i)
the “beneficial owners” (as defined in the SCA) of the issuer’s securities if the beneficial owner
does not object to such disclosure, or (ii) acting as a “respondent bank” (as defined in the SCA)
with respect to the securities. Under the SCA, “respondent banks” do not have the option of
objecting to such disclosure upon the issuers’ request. The SCA defines a “beneficial owner” as
any person who has, or shares, the power to vote a security (pursuant to an agreement or
otherwise), or who directs the voting of a security. The SCA defines a “respondent bank” as any
bank, association or other entity that exercises fiduciary powers which holds securities on behalf
of beneficial owners and deposits such securities for safekeeping with a bank, such as Trustee.
Under the SCA, each Holder is either the “beneficial owner” or a “respondent bank.”



     (b) For purposes of this Indenture, until Trustee receives a contrary written instruction from
a Holder, Trustee shall assume that such Holder is the beneficial owner of the Securities.



     (c) For purposes of this Indenture, until Trustee receives a contrary instruction from a
Holder, Trustee shall release the name, address and securities position to the Company, if the
Company requests such information pursuant to the SCA for the specific purpose of direct
communications between the Company and such Holder. With respect to securities issued



15









 







outside of the United States, if applicable, information shall be released to issuers only if
required by law or regulation of the particular country in which the securities are located.



ARTICLE II




Security Forms




     SECTION 2.1 Form of Security.



     Any Security issued hereunder shall be in substantially the following form:



Arbor Realty SR, Inc.




Junior Subordinated Note due 2034




	 	 	 
	No.                                        

	 	$[                    ]





Arbor Realty SR, Inc., a corporation organized and existing under the laws of Maryland (hereinafter
called the “Company,” which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to ___, the principal sum of
[___] ($[___]) or such other principal amount represented hereby as may be
set forth in the records of the Securities Registrar hereinafter referred to in accordance with the
Indenture, on March 30, 2034. The Company further promises to pay interest on said principal sum
from May 6, 2009, or from the most recent date on and to which interest has been paid or duly
provided for, quarterly in arrears on July 30, October 30, January 30 and April 30, of each year,
or if any such day is not a Business Day, on the next succeeding Business Day (and no interest
shall accrue in respect of the amounts whose payment is so delayed for the period from and after
such Interest Payment Date until such next succeeding Business Day), except that, if such Business
Day falls in the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case, with the same force and effect as if made on the Interest
Payment Date, at the Fixed Rate during the Modification Period, and thereafter at a variable rate
equal to LIBOR plus 2.87% per annum until the principal hereof is paid or duly provided for or made
available for payment; provided, further, that any overdue principal, premium, if any, and any
overdue installment of interest shall bear Additional Interest at the Fixed Rate during the
Modification Period, and thereafter at a variable rate equal to LIBOR plus 2.87% per annum (in each
case, to the extent that the payment of such interest shall be legally enforceable), compounded
quarterly, from the dates such amounts are due until they are paid or made available for payment,
and such interest shall be payable on demand.




     Payments of interest on the Securities shall include interest accrued to but excluding the
respective Interest Payment Dates. During the Modification Period, the amount of interest payable
shall be computed on the basis of a 360-day year of twelve 30-day months and the amount payable for
any partial period shall be computed on the basis of the number of days elapsed in a 360-day year
of twelve 30-day months. Upon expiration of the Modification Period, the amount of interest
payable for any Interest Period shall be computed on the basis of a 360-



16









 







day year and the actual number of days elapsed in the relevant Interest Period. The interest
so payable, and punctually paid or duly provided for, on any Interest Payment Date shall, as
provided in the Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular Record Date for such
interest installment. Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to
the Person in whose name this Security (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to Holders of Securities not less than ten (10) days
prior to such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such exchange, all as more fully provided in the
Indenture.



     Payment of principal of, premium, if any, and interest on this Security shall be made in such
coin or currency of the United States of America as at the time of payment is legal tender for
payment of public and private debts. Payments of principal, premium, if any, and interest due at
the Maturity of this Security shall be made at the Place of Payment upon surrender of such
Securities to the Paying Agent, and payments of interest shall be made, subject to such surrender
where applicable, by wire transfer at such place and to such account at a banking institution in
the United States as may be designated in writing to the Paying Agent at least ten (10) Business
Days prior to the date for payment by the Person entitled thereto unless proper written transfer
instructions have not been received by the relevant record date, in which case such payments shall
be made by check mailed to the address of such Person as such address shall appear in the Security
Register.



     The indebtedness evidenced by this Security is, to the extent provided in the Indenture,
subordinate and junior in right of payment to the prior payment in full of all Senior Debt, and
this Security is issued subject to the provisions of the Indenture with respect thereto. Each
Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take such actions as may
be necessary or appropriate to effectuate the subordination so provided and (c) appoints the
Trustee his or her attorney-in-fact for any and all such purposes. Each Holder hereof, by his or
her acceptance hereof, waives all notice of the acceptance of the subordination provisions
contained herein and in the Indenture by each holder of Senior Debt, whether now outstanding or
hereafter incurred, and waives reliance by each such holder upon said provisions.



     Unless the certificate of authentication hereon has been executed by the Trustee by manual
signature, this Security shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.



[FORM OF REVERSE OF SECURITY]




     This Security is one of a duly authorized issue of securities of the Company (the
“Securities”) issued under the Junior Subordinated Indenture, dated as of May 6, 2009 (the
“Indenture”), between the Company and The Bank of New York Mellon Trust Company, National
Association, as Trustee (in such capacity, the “Trustee,” which term includes any



17









 







successor trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee, the holders of Senior Debt and the
Holders of the Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered.



     All terms used in this Security that are defined in the Indenture shall have the meanings
assigned to them in the Indenture. The Company may, on any Interest Payment Date, at its option,
upon not less than thirty (30) days’ nor more than sixty (60) days’ written notice to the Holders
of the Securities (unless a shorter notice period shall be satisfactory to the Trustee) on or after
July 30, 2011 and subject to the terms and conditions of Article XI of the Indenture, redeem this
Security in whole at any time or in part from time to time at a Redemption Price equal to one
hundred percent (100%) of the principal amount hereof, together, in the case of any such
redemption, with accrued interest, including any Additional Interest, through but excluding the
date fixed as the Redemption Date.



     In addition, upon the occurrence and during the continuation of a Special Event, the Company
may, at its option, upon not less than thirty (30) days’ nor more than sixty (60) days’ written
notice to the Holders of the Securities (unless a shorter notice period shall be satisfactory to
the Trustee), redeem this Security, in whole but not in part, subject to the terms and conditions
of Article XI of the Indenture at a Redemption Price equal to one hundred seven and one
half percent (107.5%) of the principal amount hereof, together, in the case of any such redemption,
with accrued interest, including any Additional Interest, through but excluding the date fixed as
the Redemption Date.



     In the event of redemption of this Security in part only, a new Security or Securities for the
unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation
hereof. If less than all the Securities are to be redeemed, the particular Securities to be
redeemed shall be selected not more than sixty (60) days prior to the Redemption Date by the
Trustee from the Outstanding Securities not previously called for redemption, by such method as the
Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a
portion of the principal amount of any Security.



     The Indenture permits, with certain exceptions as therein provided, the Company and the
Trustee at any time to enter into a supplemental indenture or indentures for the purpose of
modifying in any manner the rights and obligations of the Company and of the Holders of the
Securities, with the consent of the Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities. The Indenture also contains provisions permitting Holders of
specified percentages in principal amount of the Securities, on behalf of the Holders of all
Securities, to waive compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder
of this Security shall be conclusive and binding upon such Holder and upon all future Holders of
this Security and of any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this
Security.



18









 





     No reference herein to the Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the principal of and any premium, if any, and interest, including any Additional Interest (to the
extent legally enforceable), on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.



     As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is restricted to transfers to “Qualified Purchasers” (as such term is
defined in the Investment Company Act of 1940, as amended), and is registrable in the Securities
Register, upon surrender of this Security for registration of transfer at the office or agency of
the Company maintained for such purpose, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Securities Registrar and duly executed by,
the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more
new Securities, of like tenor, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.



     The Securities are issuable only in registered form without coupons in minimum denominations
of $100,000 and any integral multiple of $1,000 in excess thereof. As provided in the Indenture and
subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate
principal amount of Securities and of like tenor of a different authorized denomination, as
requested by the Holder surrendering the same.



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



     The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in
whose name this Security is registered as the owner hereof for all purposes, whether or not this
Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.



     The Company and, by its acceptance of this Security or a beneficial interest herein, the
Holder of, and any Person that acquires a beneficial interest in, this Security agree that, for
United States federal, state and local tax purposes, it is intended that this Security constitute
indebtedness.



     This Security shall be construed and enforced in accordance with and governed by the laws of
the State of New York, without reference to its conflict of laws provisions (other than Section
5-1401 of the General Obligations Law).



     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed on this 6th day
of May, 2009.



	 	 	 	 	 	 	 
	 	 	ARBOR REALTY SR, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





19









 






     SECTION 2.2  Restricted Legend.



     (a) Any Security issued hereunder shall bear a legend in substantially the following form:




“[IF THIS SECURITY IS A GLOBAL SECURITY INSERT: THIS SECURITY IS A GLOBAL SECURITY
WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC. THIS SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO
TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY DTC
TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE
REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.




UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.]




THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND SUCH SECURITIES, AND ANY INTEREST THEREIN, MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF ANY SECURITIES IS HEREBY NOTIFIED
THAT THE SELLER OF THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE
SECURITIES ACT.




THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT
OF THE COMPANY THAT



20









 







(A) SUCH SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE
COMPANY OR (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED
PURCHASER” (AS DEFINED IN SECTION 2(a)(51) OF THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED), AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY SECURITIES FROM IT OF
THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.




THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN
AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000. TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN, IN
A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF
$1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE
SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING,
BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR INTEREST ON SUCH SECURITIES, OR
ANY INTEREST THEREIN, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO
INTEREST WHATSOEVER IN SUCH SECURITIES.




THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF OR
THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT,
INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION
4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (EACH A “PLAN”),
OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S
INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY
ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN. ANY PURCHASER OR HOLDER OF
THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS
PURCHASE AND HOLDING THEREOF THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE
MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS
APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN
OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN
OR PLAN TO FINANCE SUCH PURCHASE.”



     (b) The above legends shall not be removed from any Security unless there is delivered to the
Company satisfactory evidence, which may include an Opinion of Counsel, as



21









 




may be reasonably required to ensure that any future transfers thereof may be made without
restriction under or violation of the provisions of the Securities Act and other applicable
law. Upon provision of such satisfactory evidence, the Company shall execute and deliver to the
Trustee, and the Trustee shall deliver, upon receipt of a Company Order directing it to do so, a
Security that does not bear the legend.




     SECTION 2.3 Form of Trustee’s Certificate of Authentication.



     The Trustee’s certificate of authentication shall be in substantially the following form:



     This is one of the within mentioned Securities referred to in the within-mentioned Indenture.



     Dated:                                        



	 	 	 	 	 
	 	The Bank of New York Mellon Trust

Company, National Association, not in its

individual capacity, but solely as Trustee

 	 
	 	By:  	 	 
	 	 	Authorized signatory 	 
	 	 	 	 
	 




     SECTION 2.4 Temporary Securities.



     (a) Pending the preparation of definitive Securities, the Company may execute, and upon
Company Order the Trustee shall authenticate and deliver, temporary Securities that are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially
of the tenor of the definitive Securities in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the officers executing
such Securities may determine, as evidenced by their execution of such Securities.



     (b) If temporary Securities are issued, the Company will cause definitive Securities to be
prepared without unreasonable delay. After the preparation of definitive Securities, the temporary
Securities shall be exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for that purpose without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor one or more definitive
Securities of any authorized denominations having the same Original Issue Date and Stated Maturity
and having the same terms as such temporary Securities. Until so exchanged, the temporary
Securities shall in all respects be entitled to the same benefits under this Indenture as
definitive Securities.



     SECTION 2.5 Definitive Securities.



     The Securities issued on the Original Issue Date shall be in definitive form. The definitive
Securities shall be printed, lithographed or engraved, or produced by any combination



22









 




of these methods, if required by any securities exchange on which the Securities may be listed,
on a steel engraved border or steel engraved borders or may be produced in any other manner
permitted by the rules of any securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by their execution of such
Securities.




ARTICLE III




The Securities




     SECTION 3.1 Payment of Principal and Interest.



     (a) The unpaid principal amount of the Securities shall bear interest at the Fixed Rate during
the Modification Period and thereafter at a variable rate of LIBOR plus 2.87% per annum until paid
or duly provided for, such interest to accrue from the Original Issue Date or from the most recent
Interest Payment Date on and to which interest has been paid or duly provided for, and any overdue
principal, premium, if any, and any overdue installment of interest shall bear Additional Interest
at the Fixed Rate during the Modification Period, and thereafter at a variable rate of LIBOR plus
2.87% per annum, compounded quarterly from the dates such amounts are due until they are paid or
funds for the payment thereof are made legally available for payment.



     (b) Interest and Additional Interest on any Security that is payable, and is punctually paid
or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, except that interest and any Additional Interest payable on
the Stated Maturity (or any date of principal repayment upon early maturity) of the principal of a
Security or on a Redemption Date shall be paid to the Person to whom principal is paid. The initial
payment of interest on any Security that is issued between a Regular Record Date and the related
Interest Payment Date shall be payable as provided in such Security.



     (c) Any interest on any Security that is due and payable, but is not timely paid or duly
provided for, on any Interest Payment Date for Securities (herein called “Defaulted Interest”)
shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date by
virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in paragraph (i) or (ii) below:




     (i) The Company may elect to make payment of any Defaulted Interest to the Persons in
whose names the Securities (or their respective Predecessor Securities) are registered at
the close of business on a special record date for the payment of such Defaulted Interest (a
“Special Record Date”), which shall be fixed in the following manner. At least thirty (30)
days prior to the date of the proposed payment, the Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each Security and the
date of the proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of
such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons



23









 






entitled to such Defaulted Interest. Thereupon the
Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest, which shall be not more than fifteen (15)
days and not less than ten (10) days prior to the date of the proposed payment and not less
than ten (10) days after the receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such Special Record Date and, in the name
and at the expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed, first class, postage
prepaid, to each Holder of a Security at the address of such Holder as it appears in the
Securities Register not less than ten (10) days prior to such Special Record Date. Notice
of the proposed payment of such Defaulted Interest and the Special Record Date therefor
having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names
the Securities (or their respective Predecessor Securities) are registered on such Special
Record Date; or




     (ii) The Company may make payment of any Defaulted Interest in any other lawful manner
not inconsistent with the requirements of any securities exchange or automated quotation
system on which the Securities may be listed, traded or quoted and, upon such notice as may
be required by such exchange or automated quotation system (or by the Trustee if the
Securities are not listed), if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this clause, such payment shall be deemed practicable by the
Trustee.



     (d) Payments of interest on the Securities shall include interest accrued to but excluding the
respective Interest Payment Dates. During the Modification Period, the amount of interest payable
shall be computed on the basis of a 360-day year of twelve 30-day months and the amount payable for
any partial period shall be computed on the basis of the number of days elapsed in a 360-day year
of twelve 30-day months. Upon expiration of the Modification Period, the amount of interest
payable shall be computed on the basis of a 360-day year and the actual number of days elapsed in
the relevant Interest Period.



     (e) Payment of principal of, premium, if any, and interest on the Securities shall be made in
such coin or currency of the United States of America as at the time of payment is legal tender for
payment of public and private debts. Payments of principal, premium, if any, and interest due at
the Maturity of such Securities shall be made at the Place of Payment upon surrender of such
Securities to the Paying Agent and payments of interest shall be made subject to such surrender
where applicable, by wire transfer at such place and to such account at a banking institution in
the United States as may be designated in writing to the Paying Agent at least ten (10) Business
Days prior to the date for payment by the Person entitled thereto unless proper written transfer
instructions have not been received by the relevant record date, in which case such payments shall
be made by check mailed to the address of such Person as such address shall appear in the Security
Register.



     (f) The parties hereto acknowledge and agree that the Holders of the Securities have certain
rights to direct the Company to modify the Interest Payment Dates and corresponding Redemption Date
and Stated Maturity of the Securities or a portion of the Securities pursuant to the Exchange
Agreement. In the event any such modifications are made to the Securities or a portion of the
Securities, appropriate changes to the form of Security set forth in Article II hereof



24









 







shall be made prior to the issuance and authentication of new or replacement Securities. Any
such modification of the Interest Payment Date and corresponding Redemption Date and Stated
Maturity with respect to any Securities or tranche of Securities shall not require or be subject to
the consent of the Trustee. The Company shall promptly notify the Trustee of any such
modifications, which notice shall identify with particularity the necessary changes to the form of
security set forth in Article II. The Company agrees to cooperate with all reasonable requests of
the Trustee and the Holders in connection with any of the foregoing, provided that no action
requested of the Company in connection with such cooperation shall materially increase the
obligations or materially decrease the rights of the Company pursuant to the Securities.



     (g) The Company may, at its option from time to time, upon not less than thirty (30) days
prior written notice to the Trustee (with a copy to Chuck Logan at The Bank of New York Mellon
Global Trust, N.A., 525 William Penn Boulevard, 8th Floor, Pittsburg, Pennsylvania
15259, Facsimile: (412) 236-1141) and the Holders, elect to terminate the Modification Period.



     (h) Subject to the foregoing provisions of this Section 3.1, each Security delivered
under this Indenture upon transfer of or in exchange for or in lieu of any other Security shall
carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other
Security.



     SECTION 3.2 Denominations.



     The Securities shall be in registered form without coupons and shall be issuable in minimum
denominations of $100,000 and any integral multiple of $1,000 in excess thereof.



     SECTION 3.3 Execution, Authentication, Delivery and Dating.



     (a) At any time and from time to time after the execution and delivery of this Indenture, the
Company may deliver Securities in an aggregate principal amount (including all then Outstanding
Securities) not in excess of One Hundred Sixty-Eight Million Dollars ($168,000,000) executed by the
Company to the Trustee for authentication, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with the Company Order shall
authenticate and deliver such Securities. In authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such Securities, the Trustee shall
be entitled to receive, and shall be fully protected in relying upon:




     (i) a copy of any Board Resolution relating thereto; and




     (ii) an Opinion of Counsel stating that: (1) such Securities, when authenticated and
delivered by the Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute, and the Indenture
constitutes, valid and legally binding obligations of the Company, each enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to or
affecting creditors’ rights and to general equity principles; (2) the Securities have been
duly authorized and executed by the Company and have been delivered to the Trustee for
authentication in accordance with this Indenture; (3) the Securities are not required to be



25









 







registered under the Securities Act; and (4) the Indenture is not required to be
qualified under the Trust Indenture Act.



     (b) The Securities shall be executed on behalf of the Company by its Chairman of the Board,
its Vice Chairman of the Board, its Chief Executive Officer, its President or one of its Vice
Presidents. The signature of any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who were at any time the
proper officers of the Company shall bind the Company, notwithstanding that such individuals or any
of them have ceased to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities.



     (c) No Security shall be entitled to any benefit under this Indenture or be valid or
obligatory for any purpose, unless there appears on such Security a certificate of authentication
substantially in the form provided for herein executed by the Trustee by the manual signature of
one of its authorized signatories, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly authenticated and delivered
hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and
delivered hereunder but never issued and sold by the Company, and the Company shall deliver such
Security to the Trustee for cancellation as provided in Section 3.8, for all purposes of
this Indenture such Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.



     (d) Each Security shall be dated the date of its authentication.



     SECTION 3.4 Global Securities.



     (a) Upon the election of the Holder after the Original Issue Date, which election need not be
in writing, the Securities owned by such Holder shall be issued in the form of one or more Global
Securities registered in the name of the Depositary or its nominee. Each Global Security issued
under this Indenture shall be registered in the name of the Depositary designated by the Company
for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof
or custodian therefor, and each such Global Security shall constitute a single Security for all
purposes of this Indenture.



     (b) Notwithstanding any other provision in this Indenture, no Global Security may be exchanged
in whole or in part for registered Securities, and no transfer of a Global Security in whole or in
part may be registered, in the name of any Person other than the Depositary for such Global
Security or a nominee thereof unless (i) such Depositary advises the Trustee and the Company in
writing that such Depositary is no longer willing or able to properly discharge its
responsibilities as Depositary with respect to such Global Security, and no qualified successor is
appointed by the Company within ninety (90) days of receipt by the Company of such notice, (ii)
such Depositary ceases to be a clearing agency registered under the Exchange Act and no successor
is appointed by the Company within ninety (90) days after obtaining knowledge of such event, (iii)
the Company executes and delivers to the Trustee a Company Order stating that the Company elects to
terminate the book-entry system through the Depositary or (iv) an Event of Default shall have
occurred and be continuing. Upon the occurrence of any event specified in clause (i), (ii), (iii)
or (iv) above, the Trustee shall notify the Depositary and instruct the



26









 







Depositary to notify all owners of beneficial interests in such Global Security of the
occurrence of such event and of the availability of Securities to such owners of beneficial
interests requesting the same. The Trustee may conclusively rely, and be protected in relying,
upon the written identification of the owners of beneficial interests furnished by the Depositary,
and shall not be liable for any delay resulting from a delay by the Depositary. Upon the issuance
of such Securities and the registration in the Securities Register of such Securities in the names
of the Holders of the beneficial interests therein, the Trustee shall recognize such holders of
beneficial interests as Holders.



     (c) If any Global Security is to be exchanged for other Securities or canceled in part, or if
another Security is to be exchanged in whole or in part for a beneficial interest in any Global
Security, then either (i) such Global Security shall be so surrendered for exchange or cancellation
as provided in this Article III or (ii) the principal amount thereof shall be reduced or
increased by an amount equal to (x) the portion thereof to be so exchanged or canceled, or (y) the
principal amount of such other Security to be so exchanged for a beneficial interest therein, as
the case may be, by means of an appropriate adjustment made on the records of the Securities
Registrar, whereupon the Trustee, in accordance with the Applicable Depositary Procedures, shall
instruct the Depositary or its authorized representative to make a corresponding adjustment to its
records. Upon any such surrender or adjustment of a Global Security by the Depositary, accompanied
by registration instructions, the Company shall execute and the Trustee upon receipt of a Company
Order shall authenticate and deliver any Securities issuable in exchange for such Global Security
(or any portion thereof) in accordance with the instructions of the Depositary. The Trustee shall
not be liable for any delay in delivery of such instructions and may conclusively rely on, and
shall be fully protected in relying on, such instructions.



     (d) Every Security authenticated and delivered upon registration of transfer of, or in
exchange for or in lieu of, a Global Security or any portion thereof shall be authenticated and
delivered in the form of, and shall be, a Global Security, unless such Security is registered in
the name of a Person other than the Depositary for such Global Security or a nominee thereof.



     (e) Reserved.



     (f) The Depositary or its nominee, as the registered owner of a Global Security, shall be the
Holder of such Global Security for all purposes under this Indenture and the Securities, and owners
of beneficial interests in a Global Security shall hold such interests pursuant to the Applicable
Depositary Procedures. Accordingly, any such owner’s beneficial interest in a Global Security shall
be shown only on, and the transfer of such interest shall be effected only through, records
maintained by the Depositary or its nominee or its Depositary Participants. The Securities
Registrar and the Trustee shall be entitled to deal with the Depositary for all purposes of this
Indenture relating to a Global Security (including the payment of principal and interest thereon
and the giving of instructions or directions by owners of beneficial interests therein and the
giving of notices) as the sole Holder of the Security and shall have no obligations to the owners
of beneficial interests therein. Neither the Trustee nor the Securities Registrar shall have any
liability in respect of any transfers effected by the Depositary.



27









 





     (g) The rights of owners of beneficial interests in a Global Security shall be exercised only
through the Depositary and shall be limited to those established by law and agreements between such
owners and the Depositary and/or its Depositary Participants.



     (h) No holder of any beneficial interest in any Global Security held on its behalf by a
Depositary shall have any rights under this Indenture with respect to such Global Security, and
such Depositary may be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the owner of such Global Security for all purposes whatsoever. None of the Company, the
Trustee nor any agent of the Company or the Trustee will have any responsibility or liability for
any aspect of the records relating to or payments made on account of beneficial ownership interests
of a Global Security or maintaining, supervising or reviewing any records relating to such
beneficial ownership interests. Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by a Depositary or impair, as between a
Depositary and such holders of beneficial interests, the operation of customary practices governing
the exercise of the rights of the Depositary (or its nominee) as Holder of any Security.



     SECTION 3.5 Registration, Transfer and Exchange Generally.



     (a) The Trustee shall cause to be kept at the Corporate Trust Office a register (the
“Securities Register”) in which the registrar and transfer agent with respect to the Securities
(the “Securities Registrar"), subject to such reasonable regulations as it may prescribe, shall
provide for the registration of Securities and of transfers and exchanges of Securities. The
Trustee shall at all times also be the Securities Registrar. The provisions of Article VI
shall apply to the Trustee in its role as Securities Registrar.



     (b) Subject to compliance with Section 2.2(b), upon surrender for registration of
transfer of any Security at the offices or agencies of the Company designated for that purpose the
Company shall execute, and the Trustee upon receipt of a Company Order shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more new Securities of any
authorized denominations of like tenor and aggregate principal amount.



     (c) At the option of the Holder, Securities may be exchanged for other Securities of any
authorized denominations, of like tenor and aggregate principal amount, upon surrender of the
Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for
exchange, the Company shall execute, and the Trustee upon receipt of a Company Order shall
authenticate and deliver, the Securities that the Holder making the exchange is entitled to
receive.



     (d) All Securities issued upon any transfer or exchange of Securities shall be the valid
obligations of the Company, evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such transfer or exchange.



     (e) Every Security presented or surrendered for transfer or exchange shall (if so required by
the Company or the Trustee) be duly endorsed, or be accompanied by a written



28









 







instrument of transfer in form satisfactory to the Company and the Securities Registrar, duly
executed by the Holder thereof or such Holder’s attorney duly authorized in writing.



     (f) No service charge shall be made to a Holder for any transfer or exchange of Securities,
but the Company may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of Securities.



     (g) Neither the Company nor the Trustee shall be required pursuant to the provisions of this
Section 3.5 (g): (i) to issue, register the transfer of or exchange any Security during a
period beginning at the opening of business fifteen (15) days before the day of selection for
redemption of Securities pursuant to Article XI and ending at the close of business on the
day of mailing of the notice of redemption or (ii) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except, in the case of any such Security
to be redeemed in part, any portion thereof not to be redeemed.



     (h) The Company shall designate an office or offices or agency or agencies where Securities
may be surrendered for registration or transfer or exchange. The Company initially designates the
Corporate Trust Office as its office and agency for such purposes. The Company shall give prompt
written notice to the Trustee and to the Holders of any change in the location of any such office
or agency.



     (i) The Securities may only be transferred to the Company or a “Qualified Purchaser” as such
term is defined in Section 2(a)(51) of the Investment Company Act.



     (j) Neither the Trustee nor the Securities Registrar shall be responsible for ascertaining
whether any transfer hereunder complies with the registration provisions of or any exemptions from
the Securities Act, applicable state securities laws or the applicable laws of any other
jurisdiction, ERISA, the United States Internal Revenue Code of 1986, as amended, or the Investment
Company Act; provided, that if a certificate is specifically required by the express terms of this
Section 3.5 to be delivered to the Trustee or the Securities Registrar by a Holder or transferee of
a Security, the Trustee and the Securities Registrar shall be under a duty to receive and examine
the same to determine whether or not the certificate substantially conforms on its face to the
requirements of this Indenture and shall promptly notify the party delivering the same if such
certificate does not comply with such terms.



     SECTION 3.6 Mutilated, Destroyed, Lost and Stolen Securities.



     (a) If any mutilated Security is surrendered to the Trustee together with such security or
indemnity as may be required by the Trustee to save the Company and the Trustee harmless, the
Company shall execute and the Trustee upon receipt of a Company Order shall authenticate and
deliver in exchange therefor a new Security of like tenor and aggregate principal amount and
bearing a number not contemporaneously outstanding.



     (b) If there shall be delivered to the Trustee (i) evidence to its satisfaction of the
destruction, loss or theft of any Security and (ii) such security or indemnity as may be required
by it to save each of the Company and the Trustee harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide purchaser, the



29









 







Company shall execute and upon its receipt of a Company Order written request the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new
Security of like tenor and aggregate principal amount as such destroyed, lost or stolen Security,
and bearing a number not contemporaneously outstanding.



     (c) If any such mutilated, destroyed, lost or stolen Security has become or is about to become
due and payable, the Company in its discretion may, instead of issuing a new Security, pay such
Security.



     (d) Upon the issuance of any new Security under this Section 3.6, the Company may
require the payment of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee)
connected therewith.



     (e) Every new Security issued pursuant to this Section 3.6 in lieu of any mutilated,
destroyed, lost or stolen Security shall constitute an original additional contractual obligation
of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any
time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.



     (f) The provisions of this Section 3.6 are exclusive and shall preclude (to the extent
lawful) all other rights and remedies with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities.



     SECTION 3.7 Persons Deemed Owners.



     The Company, the Trustee and any agent of the Company or the Trustee shall treat the Person in
whose name any Security is registered as the owner of such Security for the purpose of receiving
payment of principal of and any interest on such Security and for all other purposes whatsoever,
and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected
by notice to the contrary.



     SECTION 3.8 Cancellation.



     All Securities surrendered for payment, redemption, transfer or exchange shall, if surrendered
to any Person other than the Trustee, be delivered to the Trustee, and any such Securities and
Securities surrendered directly to the Trustee for any such purpose shall be promptly canceled by
it. The Company may at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder that the Company may have acquired in any manner whatsoever,
and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided in this Section
3.8, except as expressly permitted by this Indenture. All canceled Securities shall be retained
or disposed of by the Trustee in accordance with its customary practices and the Trustee shall
deliver to the Company a certificate of such disposition.



     SECTION 3.9 Reserved.



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     SECTION 3.10 Reserved.




     SECTION 3.11 Agreed Tax Treatment.



          (a) Each Security issued hereunder shall provide that the Company and, by its acceptance or
acquisition of a Security or a beneficial interest therein, the Holder of, and any Person that
acquires a direct or indirect beneficial interest in, such Security, intend and agree, unless
otherwise required by law, to treat such Security as indebtedness of the Company for United States
Federal, state and local and foreign tax purposes. The provisions of this Indenture shall be
interpreted to further this intention and agreement of the parties.



          (b) Intentionally Omitted.



          (c) The Company shall pay to the relevant taxing authority in accordance with applicable law,
and indemnify and hold the Holders harmless from, any present or future stamp, documentary, excise,
property or similar taxes, charges or levies that arise from any payment made hereunder or under
the Securities or from the execution, delivery or registration of, performance under, or otherwise
with respect to, this Indenture or the Securities (hereinafter referred to as “Other Taxes”).



          (d) The Company shall indemnify each Holder for and hold each Holder harmless against the full
amount of Other Taxes, and for the full amount of Other Taxes of any kind imposed by any
jurisdiction on amounts payable under this Section 3.11, imposed on or paid by any such
Holder and any liability (including penalties, additions to tax, interest and expenses) arising
therefrom or with respect thereto. This indemnification shall be made within thirty (30) days from
the date any such Holder makes written demand therefor.



          (e) Intentionally Omitted.



     SECTION 3.12 CUSIP Numbers.



     The Company in issuing the Securities may use “CUSIP” numbers (if then generally in use), and,
if so, the Trustee shall use “CUSIP” numbers in notices of redemption and other similar or related
materials as a convenience to Holders; provided, that any such notice or other materials may state
that no representation is made as to the correctness of such numbers either as printed on the
Securities or as contained in any notice of redemption or other materials and that reliance may be
placed only on the other identification numbers printed on the Securities, and any such redemption
shall not be affected by any defect in or omission of such numbers.



ARTICLE IV




Satisfaction and Discharge




     SECTION 4.1 Satisfaction and Discharge of Indenture.



     This Indenture shall, upon Company Request, cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Securities herein expressly provided
for and as otherwise provided in this Section 4.1) and the Trustee, on demand of and at




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the expense of the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when




     (a) either




     (i) all Securities theretofore authenticated and delivered (other than (A) Securities
that have been mutilated, destroyed, lost or stolen and that have been replaced or paid as
provided in Section 3.6 and (B) Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company and thereafter repaid to
the Company or discharged from such trust as provided in Section 10.2) have been delivered
to the Trustee for cancellation; or




     (ii) all such Securities not theretofore delivered to the Trustee for cancellation




     (A) have become due and payable, or




     (B) will become due and payable at their Stated Maturity within one year of the
date of deposit, or




     (C) are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the Trustee in
the name, and at the expense, of the Company,


and the Company, in the case of subclause (ii)(A), (B) or (C) above, has deposited
or caused to be deposited with the Trustee as trust funds in trust for such purpose (x) an amount
in the currency or currencies in which the Securities are payable, (y) Government Obligations which
through the scheduled payment of principal and interest in respect thereof in accordance with their
terms will provide, not later than the due date of any payment, money in an amount or (z) a
combination thereof, in each case sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge the entire indebtedness on such Securities not theretofore delivered
to the Trustee for cancellation, for principal and any premium and interest (including any
Additional Interest) to the date of such deposit (in the case of Securities that have become due
and payable) or to the Stated Maturity (or any date of principal repayment upon early maturity) or
Redemption Date, as the case may be;




     (b) the Company has paid or caused to be paid all other sums payable hereunder by the Company;
and



     (c) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel each stating that all conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.



     Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the
Company to the Trustee under Section 6.6, the obligations of the Company to any
Authenticating Agent under Section 6.11 and, if money shall have been deposited with the
Trustee pursuant to subclause (a)(ii) of this Section 4.1, the obligations of the Trustee
under Section 4.2 and Section 10.2(e) shall survive.



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     SECTION 4.2 Application of Trust Money.



     Subject to the provisions of Section 10.2(e), all money deposited with the Trustee
pursuant to Section 4.1 shall be held in trust and applied by the Trustee, in accordance
with the provisions of the Securities and this Indenture, to the payment in accordance with
Section 3.1, either directly or through any Paying Agent as the Trustee may determine, to
the Persons entitled thereto, of the principal and any premium and interest (including any
Additional Interest) for the payment of which such money or obligations have been deposited with or
received by the Trustee. Moneys held by the Trustee under this Section 4.2 shall not be
subject to the claims of holders of Senior Debt under Article XII.



ARTICLE V




Remedies




     SECTION 5.1 Events of Default.



     “Event of Default” means, wherever used herein with respect to the Securities, any one of the
following events (whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or governmental body):



     (a) default in the payment of any interest upon any Security, including any Additional
Interest in respect thereof, when it becomes due and payable, and continuance of such default for a
period of thirty (30) days; provided, however, that during the Modification Period, such thirty
(30) day period shall be reduced to fifteen (15) Business Days;



     (b) default in the payment of the principal of or any premium on any Security at its Maturity;



     (c) except as otherwise set forth in this Section 5.1, default in the performance, or breach,
of any covenant or warranty of the Company in this Indenture and continuance of such default or
breach for a period of thirty (30) days after there has been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least
twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities a written
notice specifying such default or breach and requiring it to be remedied and stating that such
notice is a “Notice of Default” hereunder;



     (d) the entry by a court having jurisdiction in the premises of a decree or order adjudging
the Company a bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of the Company under any
applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or
appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of any substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or order for relief or any such
other decree or order unstayed and in effect for a period of sixty (60) consecutive days;



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     (e) the institution by the Company of proceedings to be adjudicated a bankrupt or insolvent,
or the consent by the Company to the institution of bankruptcy or insolvency proceedings against
it, or the filing by the Company of a petition or answer or consent seeking reorganization or
relief under any applicable Federal or state bankruptcy, insolvency, reorganization or other
similar law, or the consent by it to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of any substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the admission by it in writing of its inability to pay
its debts generally as they become due and its willingness to be adjudicated a bankrupt or
insolvent, or the taking of corporate action by the Company in furtherance of any such action;



     (f) subject to the limitations contained in Section 5.16, any Event of Default (as defined in
the applicable Original Kodiak Indentures) under any of the Original Kodiak Indentures;



     (g) default in the performance or breach of any covenant or warranty of the Company set forth
in Section 10.9 (Inspections), and the continuance of such default or breach for a period of ten
(10) days;



     (h) any Event of Default under any of the Taberna Indenture I or the Attentus Indenture I,
Attentus Indenture II; or Kodiak/Attentus Indenture III;



     (i) Intentionally Omitted.



     (j) except as otherwise set forth in this Section 5.1, default in the performance, or breach,
of any representation, covenant or warranty of the Company or Guarantor in the Exchange Agreement
that has a material adverse effect on the Company’s ability to make payments on the Securities or
the Guarantor’s ability to make any Parent Guarantee Payments (as defined in the Parent Guarantee
Agreement), or that has a material adverse effect on the value of the Securities, and the
continuance of any such default or breach for a period of thirty (30) days after either (i) the
Company’s or Guarantor’s discovery thereof and failure to cure or remedy same within such time
period, or (ii) after there has been given, by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least twenty-five percent (25%) in
aggregate principal amount of the Outstanding Securities a written notice specifying such default
or breach and requiring it to be remedied and stating that such notice is a “Notice of Default”
hereunder.



     SECTION 5.2 Acceleration of Maturity; Rescission and Annulment.



     (a) If an Event of Default occurs and is continuing, then and in every such case the Trustee
or the Holders of not less than twenty-five percent (25%) in aggregate principal amount of the
Outstanding Securities may declare the principal amount of all the Securities to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and
upon any such declaration the principal amount of and the accrued interest (including any
Additional Interest) on all the Securities shall become immediately due and payable.



34









 





     (b) At any time after such a declaration of acceleration with respect to Securities has been
made and before a judgment or decree for payment of the money due has been obtained by the Trustee
as hereinafter provided in this Article V, the Holders of a majority in aggregate principal
amount of the Outstanding Securities, by written notice to the Trustee, may rescind and annul such
declaration and its consequences if:




     (i) the Company has paid or deposited with the Trustee a sum sufficient to pay:




     (A) all overdue installments of interest on all Securities,




     (B) any accrued Additional Interest on all Securities,




     (C) the principal of and any premium on any Securities that have become due
otherwise than by such declaration of acceleration and interest (including any
Additional Interest) thereon at the rate borne by the Securities, and




     (D) all sums paid or advanced by the Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of the Trustee and its agents and
counsel; and




     (ii) all Events of Default with respect to Securities, other than the non-payment of
the principal of Securities that has become due solely by such acceleration, have been cured
or waived as provided in Section 5.13;



     No such rescission shall affect any subsequent default or impair any right consequent thereon.



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



     (a) The Company covenants that if:




     (i) default is made in the payment of any installment of interest (including any
Additional Interest) on any Security when such interest becomes due and payable and such
default continues for a period of thirty (30) days, provided, however, that during the
Modification Period, such thirty (30) day period shall be reduced to fifteen (15) Business
Days, or




     (ii) default is made in the payment of the principal of and any premium on any Security
at the Maturity thereof,



     the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such Securities for principal
and any premium and interest (including any Additional Interest) and, in addition thereto, all
amounts owing the Trustee under Section 6.6.



     (b) If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its
own name and as trustee of an express trust, may institute a judicial proceeding for



35









 







the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or
final decree, and may enforce the same against the Company or any other obligor upon such
Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law
out of the property of the Company or any other obligor upon the Securities, wherever situated.



     (c) If an Event of Default with respect to Securities occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights of the Holders of
Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.



     SECTION 5.4 Trustee May File Proofs of Claim.



     In case of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or similar judicial proceeding relative to the Company (or any other
obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and
empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized
hereunder in order to have claims of the Holders and the Trustee allowed in any such proceeding. In
particular, the Trustee shall be authorized to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same; and any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments directly to the Holders, to
first pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts owing the Trustee, any
predecessor Trustee and other Persons under Section 6.6.



     SECTION 5.5 Trustee May Enforce Claim Without Possession of Securities.



     All rights of action and claims under this Indenture or the Securities may be prosecuted and
enforced by the Trustee without the possession of any of the Securities or the production thereof
in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of judgment shall, subject
to Article XII and after provision for the payment of all the amounts owing the Trustee,
any predecessor Trustee and other Persons under Section 6.6, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been recovered.



     SECTION 5.6 Application of Money Collected.



     Any money or property collected or to be applied by the Trustee with respect to the Securities
pursuant to this Article V shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money or property on account of
principal or any premium or interest (including any Additional Interest), upon presentation of the
Securities and the notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:



36









 





     FIRST: To the payment of all amounts due the Trustee, any predecessor Trustee and other
Persons under Section 6.6;



     SECOND: To the payment of all Senior Debt of the Company if and to the extent required by
Article XII;



     THIRD: Subject to Article XII, to the payment of the amounts then due and unpaid upon
the Securities for principal and any premium and interest (including any Additional Interest) in
respect of which or for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable on the Securities for
principal and any premium and interest (including any Additional Interest), respectively; and



     FOURTH: The balance, if any, to the Person or Persons entitled thereto.



     SECTION 5.7 Limitation on Suits.



     Subject to Section 5.8, no Holder of any Securities shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture or for the appointment of a
custodian, receiver, assignee, trustee, liquidator, sequestrator (or other similar official) or for
any other remedy hereunder, unless:



     (a) such Holder has previously given written notice to the Trustee of a continuing Event of
Default with respect to the Securities;



     (b) the Holders of not less than a majority in aggregate principal amount of the Outstanding
Securities shall have made written request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder;



     (c) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs,
expenses and liabilities to be incurred in compliance with such request;



     (d) the Trustee after its receipt of such notice, request and offer of indemnity has failed to
institute any such proceeding for sixty (60) days; and



     (e) no direction inconsistent with such written request has been given to the Trustee during
such sixty (60)-day period by the Holders of a majority in aggregate principal amount of the
Outstanding Securities;



     it being understood and intended that no one or more of such Holders shall have any right in
any manner whatever by virtue of, or by availing itself of, any provision of this Indenture to
affect, disturb or prejudice the rights of any other Holders of Securities, or to obtain or to seek
to obtain priority or preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable benefit of all such
Holders.



37









 





     SECTION 5.8 Unconditional Right of Holders to Receive Principal, Premium, if any, and
Interest.



     Notwithstanding any other provision in this Indenture, the Holder of any Security shall have
the right, which is absolute and unconditional, to receive payment of the principal of and any
premium on such Security at its Maturity and payment of interest (including any Additional
Interest) on such Security when due and payable and to institute suit for the enforcement of any
such payment, and such right shall not be impaired without the consent of such Holder.



     SECTION 5.9 Restoration of Rights and Remedies.



     If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee or such Holder, then and in every such case the Company,
the Trustee and such Holders shall, subject to any determination in such proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and such Holder shall continue as though no such proceeding had been
instituted.



     SECTION 5.10 Rights and Remedies Cumulative.



     Except as otherwise provided in Section 3.6(f), no right or remedy herein conferred
upon or reserved to the Trustee or the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.



     SECTION 5.11 Delay or Omission Not Waiver.



     No delay or omission of the Trustee or any Holder of any Securities to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by
this Article V or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or the Holders, as the case may be.



     SECTION 5.12 Control by Holders.



     The Holders of not less than a majority in aggregate principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee;
provided, that:



     (a) such direction shall not be in conflict with any rule of law or with this Indenture,



     (b) the Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction, and



38









 





     (c) subject to the provisions of Section 6.2, the Trustee shall have the right to
decline to follow such direction if a Responsible Officer or Officers of the Trustee shall, in good
faith, reasonably determine that the proceeding so directed would be unjustly prejudicial to the
Holders not joining in any such direction or would involve the Trustee in personal liability.



     SECTION 5.13 Waiver of Past Defaults.



     (a) The Holders of not less than a majority in aggregate principal amount of the Outstanding
Securities may waive any past Event of Default hereunder and its consequences except an Event of
Default:




     (i) in the payment of the principal of or any premium or interest (including any
Additional Interest) on any Outstanding Security (unless such Event of Default has been
cured and the Company has paid to or deposited with the Trustee a sum sufficient to pay all
installments of interest (including any Additional Interest) due and past due and all
principal of and any premium on all Securities due otherwise than by acceleration), or




     (ii) in respect of a covenant or provision hereof that under Article IX cannot
be modified or amended without the consent of each Holder of any Outstanding Security.



     (b) Any such waiver shall be deemed to be on behalf of the Holders of all the Outstanding
Securities.



     (c) Upon any such waiver, such Event of Default shall cease to exist and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Event of Default or impair any right consequent
thereon.



     SECTION 5.14 Undertaking for Costs.



     All parties to this Indenture agree, and each Holder of any Security by his or her acceptance
thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee
for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of
an undertaking to pay the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in
such suit, having due regard to the merits and good faith of the claims or defenses made by such
party litigant; but the provisions of this Section 5.14 shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than ten percent (10%) in aggregate principal amount of the Outstanding
Securities, or to any suit instituted by any Holder for the enforcement of the payment of the
principal of or any premium on the Security after the Stated Maturity or any interest (including
any Additional Interest) on any Security after it is due and payable.



     SECTION 5.15 Waiver of Usury, Stay or Extension Laws.



     The Company covenants (to the extent that it may lawfully do so) that it will not at any time
insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of,



39









 







any usury, stay or extension law wherever enacted, now or at any time hereafter in force,
which may affect the covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though no such law had
been enacted.



     SECTION 5.16 Original Kodiak Indentures Events of Default.



     Notwithstanding anything to the contrary contained in Section 5.1(f), the Company
shall not be deemed to be in default as a result of any payment default under that certain (a)
Junior Subordinated Indenture, dated April 6, 2005 (as amended), by and among the Company, Arbor
Realty Trust, Inc., as guarantor, and Wilmington Trust Company, as trustee and (b) Junior
Subordinated Indenture, dated June 2, 2006, by and among the Company, Arbor Realty Trust, Inc., as
guarantor, and Wilmington Trust Company, as trustee (the indentures described in (a) and (b)
hereof, together with any operative documents executed in connection therewith, collectively, the
“Original Kodiak Indentures”); provided, however, that at such time as such Kodiak Indentures are
terminated or all of the original preferred securities issued thereunder are exchanged by the
holders thereof with the Company or any of its Affiliates for notes, debt, equity interests or
other securities, this Section 5.16 shall be void and of no further force and effect.



ARTICLE VI




The Trustee




     SECTION 6.1 Corporate Trustee Required.



     There shall at all times be a Trustee hereunder with respect to the Securities. The Trustee
shall be a corporation or national banking association organized and doing business under the laws
of the United States or of any state thereof, authorized to exercise corporate trust powers, having
a combined capital and surplus of at least $50,000,000, subject to supervision or examination by
Federal or state authority and having an office within the United States. If such entity publishes
reports of condition at least annually, pursuant to law or to the requirements of such supervising
or examining authority, then, for the purposes of this Section 6.1, the combined capital
and surplus of such entity shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 6.1, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article VI.



     SECTION 6.2 Certain Duties and Responsibilities.



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




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



40









 






     (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the requirements of this
Indenture; provided, that in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether or not they substantially conform
on their face to the requirements of this Indenture.



     (b) If an Event of Default known to the Trustee has occurred and is continuing, the Trustee
shall, prior to the receipt of directions, if any, from the Holders of at least a majority in
aggregate principal amount of the Outstanding Securities, exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a
prudent person would exercise or use under the circumstances in the conduct of such person’s own
affairs.



     (c) Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the performance of any
of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it. Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this Section 6.2.
To the extent that, at law or in equity, the Trustee has duties and liabilities relating to the
Holders, the Trustee shall not be liable to any Holder for the Trustee’s good faith reliance on the
provisions of this Indenture. The provisions of this Indenture, to the extent that they restrict
the duties and liabilities of the Trustee otherwise existing at law or in equity, are agreed by the
Company and the Holders to replace such other duties and liabilities of the Trustee.



     (d) No provisions of this Indenture shall be construed to relieve the Trustee from liability
with respect to matters that are within the authority of the Trustee under this Indenture for its
own negligent action, negligent failure to act or willful misconduct, except that:




     (i) the Trustee shall not be liable for any error or judgment made in good faith by an
authorized officer of the Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts;




     (ii) the Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction of the Holders of at least a
majority in aggregate principal amount of the Outstanding Securities;




     (iii) the Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed in writing with the Company and money held by the
Trustee in trust hereunder need not be segregated from other funds except to the extent
required by law; and




     (iv) the Trustee shall not be liable for the failure to take any action with respect to
any Event of Default described in (A) Section 5.1(j) or (B) Section 5.1(h) unless and



41









 







until there has been given to the Trustee and the Company by the Holders of at least
twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities a
written notice specifying such default or breach and requiring it to be remedied and stating
that such notice is a “Notice of Default” hereunder.



     SECTION 6.3 Notice of Defaults.



     Within thirty (30) days after the occurrence of any default actually known to the Trustee, the
Trustee shall give the Holders notice of such default unless such default shall have been cured or
waived; provided, that except in the case of a default in the payment of the principal of or any
premium or interest on any Securities, the Trustee shall be fully protected in withholding the
notice if and so long as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determines that withholding the
notice is in the interest of Holders of Securities. For the purpose of this Section 6.3,
the term “default” means any event which is, or after notice or lapse of time or both would become,
an Event of Default.



     SECTION 6.4 Certain Rights of Trustee.



     Subject to the provisions of Section 6.2:



     (a) the Trustee may conclusively rely and shall be fully protected in acting or refraining
from acting in good faith and in accordance with the terms hereof upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note or other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;



     (b) if (i) in performing its duties under this Indenture the Trustee is required to decide
between alternative courses of action, (ii) in construing any of the provisions of this Indenture
the Trustee finds ambiguous or inconsistent with any other provisions contained herein or (iii) the
Trustee is unsure of the application of any provision of this Indenture, then, except as to any
matter as to which the Holders are entitled to decide under the terms of this Indenture, the
Trustee shall deliver a notice to the Company requesting the Company’s written instruction as to
the course of action to be taken and the Trustee shall take such action, or refrain from taking
such action, as the Trustee shall be instructed in writing to take, or to refrain from taking, by
the Company; provided, that if the Trustee does not receive such instructions from the Company
within ten Business Days after it has delivered such notice or such reasonably shorter period of
time set forth in such notice the Trustee may, but shall be under no duty to, take such action, or
refrain from taking such action, as the Trustee shall deem advisable and in the best interests of
the Holders, in which event the Trustee shall have no liability except for its own negligence, bad
faith or willful misconduct;



     (c) any request or direction of the Company shall be sufficiently evidenced by a Company
Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced
by a Board Resolution;



     (d) the Trustee may consult with counsel (which counsel may be counsel to the Trustee, the
Company or any of its Affiliates, and may include any of its employees) and the



42









 







advice of such counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;



     (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in
it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture,
unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory
to it against the costs, expenses (including reasonable attorneys’ fees and expenses) and
liabilities that might be incurred by it in compliance with such request or direction, including
reasonable advances as may be requested by the Trustee;



     (f) the Trustee shall not be bound to make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, indenture, note or other paper or document, but the Trustee in its discretion
may make such inquiry or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney;



     (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents, attorneys, custodians or nominees and the
Trustee shall not be responsible for any misconduct or negligence on the part of any such agent,
attorney, custodian or nominee appointed with due care by it hereunder;



     (h) whenever in the administration of this Indenture the Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or right or taking any other action with
respect to enforcing any remedy or right hereunder, the Trustee (i) may request instructions from
the Holders (which instructions may only be given by the Holders of the same aggregate principal
amount of Outstanding Securities as would be entitled to direct the Trustee under this Indenture in
respect of such remedy, right or action), (ii) may refrain from enforcing such remedy or right or
taking such action until such instructions are received and (iii) shall be protected in acting in
accordance with such instructions;



     (i) except as otherwise expressly provided by this Indenture, the Trustee shall not be under
any obligation to take any action that is discretionary under the provisions of this Indenture;



     (j) without prejudice to any other rights available to the Trustee under applicable law, when
the Trustee incurs expenses or renders services in connection with any bankruptcy, insolvency or
other proceeding referred to in clauses (d) or (e) of the definition of Event of Default, such
expenses (including legal fees and expenses of its agents and counsel) and the compensation for
such services are intended to constitute expenses of administration under any bankruptcy laws or
law relating to creditors rights generally;



     (k) whenever in the administration of this Indenture the Trustee shall deem it desirable that
a matter be proved or established prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may, in the



43









 







absence of bad faith on its part, conclusively rely upon an Officers’ Certificate addressing
such matter, which, upon receipt of such request, shall be promptly delivered by the Company;



     (l) the Trustee shall not be charged with knowledge of any Event of Default unless either (i)
a Responsible Officer of the Trustee shall have actual knowledge or (ii) the Trustee shall have
received written notice thereof from the Company or a Holder; and



     (m) in the event that the Trustee is also acting as Paying Agent, Authenticating Agent,
Securities Registrar or Calculation Agent hereunder, the rights and protections afforded to the
Trustee pursuant to this Article VI shall also be afforded such Paying Agent,
Authenticating Agent, Securities Registrar and/or Calculation Agent.



     SECTION 6.5 May Hold Securities.



     The Trustee, any Authenticating Agent, any Paying Agent, any Securities Registrar or any other
agent of the Company, in its individual or any other capacity, may become the owner or pledgee of
Securities and may otherwise deal with the Company with the same rights it would have if it were
not Trustee, Authenticating Agent, Paying Agent, Securities Registrar or such other agent.



     SECTION 6.6 Compensation; Reimbursement; Indemnity.



     (a) The Company agrees:




     (i) to pay to the Trustee from time to time reasonable compensation for all services
rendered by it hereunder in such amounts as the Company and the Trustee shall agree from
time to time (which compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);




     (ii) to reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses and disbursements
of its agents and counsel), except any such expense, disbursement or advance as may be
attributable to its negligence, bad faith or willful misconduct; and




     (iii) to the fullest extent permitted by applicable law, to indemnify the Trustee and
its Affiliates, and their officers, directors, shareholders, agents, representatives and
employees for, and to hold them harmless against, any loss, damage, liability, tax (other
than income, franchise or other taxes imposed on amounts paid pursuant to (i) or (ii)
hereof), penalty, expense or claim of any kind or nature whatsoever incurred without
negligence, bad faith or willful misconduct on its part arising out of or in connection with
the acceptance or administration of this trust or the performance of the Trustee’s duties
hereunder, including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or duties
hereunder.



     (b) To secure the Company’s payment obligations in this Section 6.6, the Company
hereby grants and pledges to the Trustee and the Trustee shall have a lien prior to the Securities



44









 







on all money or property held or collected by the Trustee, other than money or property held
in trust to pay principal and interest on particular Securities. Such lien shall survive the
satisfaction and discharge of this Indenture or the resignation or removal of the Trustee.



     (c) The obligations of the Company under this Section 6.6 shall survive the
satisfaction and discharge of this Indenture and the earlier resignation or removal of the Trustee.



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



     (e) In no event shall the Trustee be liable for any failure or delay in the performance of its
obligations hereunder because of circumstances beyond its control, including, but not limited to,
acts of God, flood, war (whether declared or undeclared), terrorism, fire, riot, embargo,
government action, including any laws, ordinances, regulations, governmental action or the like
which delay, restrict or prohibit the providing of the services contemplated by this Indenture.



     SECTION 6.7 Resignation and Removal; Appointment of Successor.



     (a) No resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article VI shall become effective until the acceptance of appointment by
the successor Trustee under Section 6.8.



     (b) The Trustee may resign at any time by giving written notice thereof to the Company.



     (c) The Trustee may be removed by the Act of the Holders of at least a majority in aggregate
principal amount of the Outstanding Securities, delivered to the Trustee and the Company.



     (d) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy
shall occur in the office of Trustee for any reason, the Holders of a majority in aggregate
principal amount of the Outstanding Securities shall promptly appoint a successor Trustee, and such
successor Trustee and the retiring Trustee shall comply with the applicable requirements of Section
6.8. If no successor Trustee shall have been so appointed by such Holders and accepted appointment
within sixty (60) days after the giving of a notice of resignation by the Trustee or the removal of
the Trustee in the manner required by Section 6.8, any Holder who has been a bona fide Holder of a
Security for at least six months (or, if the Securities have been Outstanding for less than six (6)
months, the entire period of such lesser time) may, on behalf of such Holder and all others
similarly situated, and any resigning Trustee may, at the expense of the Company, petition any
court of competent jurisdiction for the appointment of a successor Trustee.



     SECTION 6.8 Acceptance of Appointment by Successor.



     (a) In case of the appointment hereunder of a successor Trustee, each successor Trustee so
appointed shall execute, acknowledge and deliver to the Company and to the retiring



45









 







Trustee an instrument accepting such appointment, and thereupon the resignation or removal of
the retiring Trustee shall become effective and such successor Trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the
retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by such retiring Trustee
hereunder.



     (b) Upon request of any such successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and confirming to such successor Trustee all
rights, powers and trusts referred to in paragraph (a) of this Section 6.8.



     (c) No successor Trustee shall accept its appointment unless at the time of such acceptance
such successor Trustee shall be qualified and eligible under this Article VI.



     SECTION 6.9 Merger, Conversion, Consolidation or Succession to Business.



     Any Person into which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Person succeeding to all or substantially all of the corporate
trust business of the Trustee, shall be the successor of the Trustee hereunder, without the
execution or filing of any paper or any further act on the part of any of the parties hereto,
provided, that such Person shall be otherwise qualified and eligible under this Article VI.
In case any Securities shall have been authenticated, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolidation or as otherwise provided above in this
Section 6.9 to such authenticating Trustee may adopt such authentication and deliver the
Securities so authenticated, and in case any Securities shall not have been authenticated, any
successor to the Trustee may authenticate such Securities either in the name of any predecessor
Trustee or in the name of such successor Trustee, and in all cases the certificate of
authentication shall have the full force which it is provided anywhere in the Securities or in this
Indenture that the certificate of the Trustee shall have.



     SECTION 6.10 Not Responsible for Recitals or Issuance of Securities.



     The recitals contained herein and in the Securities, except the Trustee’s certificates of
authentication, shall be taken as the statements of the Company, and neither the Trustee nor any
Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the Securities. Neither
the Trustee nor any Authenticating Agent shall be accountable for the use or application by the
Company of the Securities or the proceeds thereof.



     SECTION 6.11 Appointment of Authenticating Agent.



     (a) The Trustee may appoint an Authenticating Agent or Agents with respect to the Securities,
which shall be authorized to act on behalf of the Trustee to authenticate Securities issued upon
original issue and upon exchange, registration of transfer or partial redemption thereof or
pursuant to Section 3.6, and Securities so authenticated shall be entitled to the benefits



46









 







of this Indenture and shall be valid and obligatory for all purposes as if authenticated by
the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and
delivery of Securities by the Trustee or the Trustee’s certificate of authentication, such
reference shall be deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation or national banking association organized and doing business under the laws
of the United States of America, or of any State or Territory thereof or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of
not less than $50,000,000 and subject to supervision or examination by Federal or state authority.
If such Authenticating Agent publishes reports of condition at least annually pursuant to law or to
the requirements of said supervising or examining authority, then for the purposes of this
Section 6.11 the combined capital and surplus of such Authenticating Agent shall be deemed
to be its combined capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.11, such Authenticating Agent shall resign immediately in the
manner and with the effect specified in this Section 6.11.



     (b) Any Person into which an Authenticating Agent may be merged or converted or with which it
may be consolidated, or any Person resulting from any merger, conversion or consolidation to which
such Authenticating Agent shall be a party, or any Person succeeding to all or substantially all of
the corporate trust business of an Authenticating Agent shall be the successor Authenticating Agent
hereunder, provided such Person shall be otherwise eligible under this Section 6.11,
without the execution or filing of any paper or any further act on the part of the Trustee or the
Authenticating Agent.



     (c) An Authenticating Agent may resign at any time by giving written notice thereof to the
Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating
Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon
receiving such a notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the provisions of this
Section 6.11, the Trustee may appoint a successor Authenticating Agent eligible under the
provisions of this Section 6.11, which shall be acceptable to the Company, and shall give
notice of such appointment to all Holders. Any successor Authenticating Agent upon acceptance of
its appointment hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an Authenticating Agent.



     (d) The Company agrees to pay to each Authenticating Agent from time to time reasonable
compensation for its services under this Section 6.11 in such amounts as the Company and
the Authenticating Agent shall agree from time to time.



     (e) If an appointment of an Authenticating Agent is made pursuant to this Section
6.11, the Securities may have endorsed thereon, in addition to the Trustee’s certificate of
authentication, an alternative certificate of authentication in the following form:


This is one of the Securities referred to in the within mentioned Indenture.




47









 








	 	 	 	 	 	 	 
	Dated:	 	THE BANK OF NEW YORK MELLON TRUST 

COMPANY, NATIONAL ASSOCIATION, not in 

its individual capacity, but solely as Trustee
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Authenticating Agent
	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Authorized Signatory
	 	 






ARTICLE VII




Holder’s Lists and Reports by Company




     SECTION 7.1 Company to Furnish Trustee Names and Addresses of Holders.



     The Company will furnish or cause to be furnished to the Trustee:



     (a) semiannually, on or before June 30 and December 31 of each year, a list, in such form as
the Trustee may reasonably require, of the names and addresses of the Holders as of a date not more
than fifteen (15) days prior to the delivery thereof, and



     (b) at such other times as the Trustee may request in writing, within thirty (30) days after
the receipt by the Company of any such request, a list of similar form and content as of a date not
more than fifteen (15) days prior to the time such list is furnished,



     in each case to the extent such information is in the possession or control of the Company and
has not otherwise been received by the Trustee in its capacity as Securities Registrar.



     SECTION 7.2 Preservation of Information, Communications to Holders.



     (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names
and addresses of Holders contained in the most recent list furnished to the Trustee as provided in
Section 7.1 and the names and addresses of Holders received by the Trustee in its capacity
as Securities Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.



     (b) The rights of Holders to communicate with other Holders with respect to their rights under
this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee,
shall be as provided in the Trust Indenture Act.



     (c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and
the Trustee that neither the Company nor the Trustee nor any agent of either of



48









 







them shall be held accountable by reason of the disclosure of information as to the names and
addresses of the Holders made pursuant to the Trust Indenture Act.



     SECTION 7.3 Reports by Company.



     (a) The Company shall furnish to the Holders and to prospective purchasers of Securities, upon
their request, the information required to be furnished pursuant to Rule 144A(d)(4) under the
Securities Act. The delivery requirement set forth in the preceding sentence may be satisfied by
compliance with Section 7.3(b) hereof.



     (b) The Company shall furnish to each of (i) the Trustee, (ii) the Holders and to subsequent
holders of Securities, (iii) Taberna Capital Management, LLC, 450 Park Avenue, New York, New York
10022, Attn: Raphael Licht or such other address as designated by Taberna Capital Management, LLC
and (iv) any beneficial owner of the Securities reasonably identified to the Company (which
identification may be made either by such beneficial owner or by Taberna Capital Management, LLC.),
a duly completed and executed certificate substantially and substantively in the form attached
hereto as Exhibit A, including the financial statements referenced in such Exhibit, which
certificate and financial statements shall be so furnished by the Company not later than forty-five
(45) days after the end of each of the first three fiscal quarters of each fiscal year of the
Company and not later than ninety (90) days after the end of each fiscal year of the Company.



     (c) If the Company intends to file its annual and quarterly information with the Securities
and Exchange Commission (the “Commission”) in electronic form pursuant to Regulation S-T of the
Commission using the Commission’s Electronic Data Gathering, Analysis and Retrieval (“EDGAR”)
system, the Company shall notify the Trustee in the manner prescribed herein of each such annual
and quarterly filing. The Trustee is hereby authorized and directed to access the EDGAR system for
purposes of retrieving the financial information so filed. Compliance with the foregoing shall
constitute delivery by the Company of its financial statements to the Trustee in compliance with
the provisions of Section 314(a) of the Trust Indenture Act, if applicable. The Trustee shall have
no duty to search for or obtain any electronic or other filings that the Company makes with the
Commission, regardless of whether such filings are periodic, supplemental or otherwise. Delivery
of reports, information and documents to the Trustee pursuant to this Section 7.3(c) shall
be solely for purposes of compliance with this Section 7.3(c) and, if applicable, with
Section 314(a) of the Trust Indenture Act. The Trustee’s receipt of such reports, information and
documents shall not constitute notice to it of the content thereof or any matter determinable from
the content thereof, including the Company’s compliance with any of its covenants hereunder, as to
which the Trustee is entitled to rely upon Officers’ Certificates.



ARTICLE VIII




Consolidation, Merger, Conveyance, Transfer or Lease




     SECTION 8.1 Company May Consolidate, Etc., Only on Certain Terms.



49









 





     The Company shall not consolidate with or merge into any other Person or convey, transfer or
lease its properties and assets substantially as an entirety to any Person, and no Person shall
consolidate with or merge into the Company or convey, transfer or lease its properties and assets
substantially as an entirety to the Company, unless:



     (a) if the Company shall consolidate with or merge into another Person or convey, transfer or
lease its properties and assets substantially as an entirety to any Person, the entity formed by
such consolidation or into which the Company is merged or the Person that acquires by conveyance or
transfer, or that leases, the properties and assets of the Company substantially as an entirety
shall be an entity organized and existing under the laws of the United States of America or any
State or Territory thereof or the District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the
Trustee, the due and punctual payment of the principal of and any premium and interest (including
any Additional Interest) on all the Securities and the performance of every covenant of this
Indenture on the part of the Company to be performed or observed;



     (b) immediately after giving effect to such transaction, no Event of Default, and no event
that, after notice or lapse of time, or both, would constitute an Event of Default, shall have
happened and be continuing; and



     (c) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction, any such supplemental
indenture comply with this Article VIII and that all conditions precedent herein provided
for relating to such transaction have been complied with; and the Trustee may rely upon such
Officers’ Certificate and Opinion of Counsel as conclusive evidence that such transaction complies
with this Section 8.1.



     SECTION 8.2 Successor Company Substituted.



     (a) Upon any consolidation or merger by the Company with or into any other Person, or any
conveyance, transfer or lease by the Company of its properties and assets substantially as an
entirety to any Person in accordance with Section 8.1 and the execution and delivery to the
Trustee of the supplemental indenture described in Section 8.1(a), the successor entity
formed by such consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Indenture with the same effect as if such successor Person had
been named as the Company herein; and in the event of any such conveyance or transfer, following
the execution and delivery of such supplemental indenture, the Company shall be discharged from all
obligations and covenants under the Indenture and the Securities.



     (b) Such successor Person may cause to be executed, and may issue either in its own name or in
the name of the Company, any or all of the Securities issuable hereunder that theretofore shall not
have been signed by the Company and delivered to the Trustee; and, upon the order of such successor
Person instead of the Company and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities that
previously shall have been signed and delivered by the officers of the



50









 







Company to the Trustee for authentication, and any Securities that such successor Person
thereafter shall cause to be executed and delivered to the Trustee on its behalf. All the
Securities so issued shall in all respects have the same legal rank and benefit under this
Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this
Indenture.



     (c) In case of any such consolidation, merger, sale, conveyance or lease, such changes in
phraseology and form may be made in the Securities thereafter to be issued as may be appropriate to
reflect such occurrence.



ARTICLE IX




Supplemental Indentures




     SECTION 9.1 Supplemental Indentures without Consent of Holders.



     Without the consent of any Holders, the Company, when authorized by a Board Resolution, and
the Trustee, at any time and from time to time, may enter into one or more indentures supplemental
hereto, in form reasonably satisfactory to the Trustee, for any of the following purposes:



     (a) to evidence the succession of another Person to the Company, and the assumption by any
such successor of the covenants of the Company herein and in the Securities; or



     (b) to cure any ambiguity, to correct or supplement any provision herein that may be defective
or inconsistent with any other provision herein, or to make or amend any other provisions with
respect to matters or questions arising under this Indenture, which shall not be inconsistent with
the other provisions of this Indenture, provided, that such action pursuant to this clause (c)
shall not adversely affect in any material respect the interests of any Holders; or



     (c) to add to the covenants, restrictions or obligations of the Company or to add to the
Events of Default, provided, that such action pursuant to this clause (c) shall not adversely
affect in any material respect the interests of any Holders; or



     (d) to modify, eliminate or add to any provisions of the Indenture or the Securities to such
extent as shall be necessary to ensure that the Securities are treated as indebtedness of the
Company for United States Federal income tax purposes, provided, that such action pursuant to this
clause (d) shall not adversely affect in any material respect the interests of any Holders.



     SECTION 9.2 Supplemental Indentures with Consent of Holders.



     (a) Subject to Section 9.1, with the consent of the Holders of not less than a
majority in aggregate principal amount of the Outstanding Securities, by Act of said Holders
delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and
the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions of this Indenture
or of modifying in any manner the rights of the Holders of Securities under this Indenture;
provided, that no such supplemental indenture shall, without the consent of the Holder of each
Outstanding Security,



51









 






     (i) change the Stated Maturity of the principal or any premium of any Security or
change the date of payment of any installment of interest (including any Additional
Interest) on any Security, or reduce the principal amount thereof or the rate of interest
thereon or any premium payable upon the redemption thereof or change the place of payment
where, or the coin or currency in which, any Security or interest thereon is payable, or
restrict or impair the right to institute suit for the enforcement of any such payment on or
after such date, or




     (ii) reduce the percentage in aggregate principal amount of the Outstanding Securities,
the consent of whose Holders is required for any such supplemental indenture, or the consent
of whose Holders is required for any waiver of compliance with any provision of this
Indenture or of defaults hereunder and their consequences provided for in this Indenture, or




     (iii) modify any of the provisions of this Section 9.2, Section 5.13 or
Section 10.7, except to increase any percentage in aggregate principal amount of the
Outstanding Securities, the consent of whose Holders is required for any reason, or to
provide that certain other provisions of this Indenture cannot be modified or waived without
the consent of the Holder of each Security.



     (b) It shall not be necessary for any Act of Holders under this Section 9.2 to approve
the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act
shall approve the substance thereof.



     SECTION 9.3 Execution of Supplemental Indentures.



     In executing or accepting the additional trusts created by any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and shall be fully protected in conclusively
relying upon, an Officers’ Certificate and an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture, and that all conditions
precedent herein provided for relating to such action have been complied with. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture that affects the Trustee’s
own rights, duties, indemnities or immunities under this Indenture or otherwise. Copies of the
final form of each supplemental indenture shall be delivered by the Trustee at the expense of the
Company to each Holder, promptly after the execution thereof.



     SECTION 9.4 Effect of Supplemental Indentures.



     Upon the execution of any supplemental indenture under this Article IX, this Indenture
shall be modified in accordance therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes; and every Holder of Securities theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.



     SECTION 9.5 Reference in Securities to Supplemental Indentures.



     Securities authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and shall if required by the Company, bear a notation in
form



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approved by the Company as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Securities so modified as to conform, in the opinion of the
Company, to any such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding Securities.



ARTICLE X




Covenants




     SECTION 10.1 Payment of Principal, Premium, if any, and Interest.



     The Company covenants and agrees for the benefit of the Holders of the Securities that it will
duly and punctually pay the principal of and any premium and interest (including any Additional
Interest) on the Securities in accordance with the terms of the Securities and this Indenture.



     SECTION 10.2 Money for Security Payments to be Held in Trust.



     (a) Whenever the Company shall have one or more Paying Agents, it will, prior to 10:00 a.m.,
New York City time, on each due date of the principal of or any premium or interest (including any
Additional Interest) on any Securities, deposit with a Paying Agent a sum sufficient to pay such
amount, such sum to be held as provided in the Trust Indenture Act and (unless such Paying Agent is
the Trustee) the Company will promptly notify the Trustee of its failure so to act.



     (b) The Company will cause each Paying Agent for the Securities other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of this Section 10.2, that such Paying Agent will (i)
comply with the provisions of this Indenture and the Trust Indenture Act applicable to it as a
Paying Agent and (ii) during the continuance of any default by the Company (or any other obligor
upon the Securities) in the making of any payment in respect of the Securities, upon the written
request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent
for payment in respect of the Securities.



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



     (d) Any money deposited with the Trustee or any Paying Agent, for the payment of the principal
of and any premium or interest (including any Additional Interest) on any Security and remaining
unclaimed for two years after such principal and any premium or interest has become due and payable
shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or
unclaimed property law) be paid on Company Request to the Company, or (if then held by the Company)
shall (unless otherwise required by mandatory provision of



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applicable escheat or abandoned or unclaimed property law) be discharged from such trust; and
the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of the Company as trustee thereof, shall thereupon cease;
provided, that the Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in a newspaper published in the
English language, customarily published on each Business Day and of general circulation in the
Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than thirty (30) days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid to the Company.



     SECTION 10.3 Statement as to Compliance.



     The Company shall deliver to the Trustee, within one hundred and twenty (120) days after the
end of each fiscal year of the Company ending after the date hereof, an Officers’ Certificate
(substantially in the form attached hereto as Exhibit B) covering the preceding fiscal
year, stating whether or not to the knowledge of the signers thereof the Company is in default in
the performance or observance of any of the terms, provisions and conditions of this Indenture
(without regard to any period of grace or requirement of notice provided hereunder), and if the
Company shall be in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.



     SECTION 10.4 Calculation Agent.



     (a) The Company hereby agrees that for so long as any of the Securities remain Outstanding,
there will at all times be an agent appointed to calculate LIBOR in respect of each Interest
Payment Date in accordance with the terms of Schedule A (the “Calculation Agent”). The
Trustee shall initially serve as Calculation Agent for purposes of determining LIBOR for each
Interest Payment Date. The Calculation Agent may be removed by the Trustee or the Holders of a
majority in aggregate principal amount of the Outstanding Securities at any time. If the
Calculation Agent is unable or unwilling to act as such or is removed, Trustee or the Holders of a
majority in aggregate principal amount of the Outstanding Securities will promptly appoint as a
replacement Calculation Agent the London office of a leading bank which is engaged in transactions
in Eurodollar deposits in the international Eurodollar market and which does not control or is not
controlled by or under common control with the Company or its Affiliates. The Calculation Agent
may not resign its duties without a successor having been duly appointed.



     (b) The Calculation Agent shall be required to agree that, as soon as possible after 11:00
a.m. (London time) on each LIBOR Determination Date (as defined in Schedule A), but in no
event later than 11:00 a.m. (London time) on the Business Day immediately following each LIBOR
Determination Date, the Calculation Agent will calculate the interest rate (the Interest Payment
shall be rounded to the nearest cent, with half a cent being rounded upwards) for the related
Interest Payment Date, and will communicate such rate and amount to the Company, the Trustee, each
Paying Agent and the Depositary. The Calculation Agent will also specify to the Company the
quotations upon which the foregoing rates and amounts are based and, in any event, the Calculation
Agent shall notify the Company before 5:00 p.m. (London time) on each



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LIBOR Determination Date that either: (i) it has determined or is in the process of
determining the foregoing rates and amounts or (ii) it has not determined and is not in the process
of determining the foregoing rates and amounts, together with its reasons therefor. The
Calculation Agent’s determination of the foregoing rates and amounts for any Interest Payment Date
will (in the absence of manifest error) be final and binding upon all parties. For the sole
purpose of calculating the interest rate for the Securities, “Business Day” shall be defined as any
day on which dealings in deposits in Dollars are transacted in the London interbank market.



     SECTION 10.5 Additional Indebtedness.



     (a) The Company shall be permitted to incur additional Debt (including convertible debt);
provided, that, during the Modification Period any such additional Debt shall not be used, in whole
or in part, to redeem, purchase or otherwise acquire, or make a liquidation payment on, any of the
Company’s common or preferred stock or other Equity Interests. If the Company elects to use any or
all proceeds of such Debt for purposes prohibited hereunder, then the Company shall give notice of
such election to the Holders within ten (10) days after such election and shall be deemed to have
elected to terminate the Modification Period effective as of the first Interest Payment Date
occurring after nine (9) months have elapsed since the incurrence of such additional Debt. If the
Company inadvertently violates the terms hereof, then if the Company has not cured such violation
or breach to the satisfaction of the Holders of a majority in aggregate principal amount of the of
the Outstanding Securities within seven (7) days after such breach or violation, the Company shall
be deemed to have elected to terminate the Modification Period effective nine (9) months after the
incurrence of such Debt and such election shall not be deemed to constitute an Event of Default.
The foregoing restrictions shall not be deemed to prohibit the conversion of convertible debt to
common or preferred stock or other Equity Interests.



     SECTION 10.6 Additional Covenants.



     (a) The Company covenants and agrees with each Holder of Securities that (i) during the
Modification Period and (ii) if an Event of Default shall have occurred and be continuing, it shall
not (i) declare or pay any dividends or distributions on, or redeem, purchase, or otherwise
acquire, or make a liquidation payment with respect to, any of the Company’s common or preferred
stock or other Equity Interests, (ii) vote in favor of or permit or otherwise allow any of its
Subsidiaries to declare or pay any dividends or distributions on, or redeem, purchase, or otherwise
acquire, or make a liquidation payment with respect to, any shares of any such Subsidiary’s common
or preferred stock or other Equity Interests (for the avoidance of doubt, whether such Equity
Interests are perpetual or otherwise) other than to the Company, or (iii) make any payment of
principal of or any interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank pari passu in all respects with or junior in interest to the
Securities (other than (A) repurchases, redemptions or other acquisitions of shares of capital
stock of the Company in connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or more employees, officers, directors or
consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in
connection with the issuance of capital stock of the Company (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition transaction entered into
while the Modification Period is not in effect prior to an Event of



55









 







Default, (B) as a result of an exchange or conversion of any class or series of the Company’s
capital stock (or any capital stock of a Subsidiary of the Company) for any class or series of the
Company’s capital stock or of any class or series of the Company’s indebtedness for any class or
series of the Company’s capital stock upon substantially the same terms, (C) the purchase of
fractional interests in shares of the Company’s capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or exchanged, (D) any
declaration of a dividend in connection with any Rights Plan, the issuance of rights, stock or
other property under any Rights Plan or the redemption or repurchase of rights pursuant thereto,
(E) any dividend in the form of stock, warrants, options or other rights where the dividend stock
or the stock issuable upon exercise of such warrants, options or other rights is the same stock as
that on which the dividend is being paid or ranks pari passu with or junior to such stock), (F)
with respect to the Taberna Indenture I, the Attentus Indenture I, the Attentus Indenture II, the
Kodiak/Attentus Indenture III and the Original Kodiak Indentures or (G) any other dividends or
distributions necessary in order for the Company to maintain its REIT status, provided that (x)
such dividend or distributions shall be declared and paid in stock in an amount up to the maximum
extent permitted by the Code or rules and regulations promulgated thereunder, with the balance
payable in cash, and (y) the Company shall be permitted to increase its distributions from the
minimum requirement under the Code to distribute ninety percent (90%) of its taxable income to one
hundred percent (100%) of its taxable income and, with respect to this subsection (G), any
violation of this subsection (G) shall not be an Event of Default unless the Company fails to cure
to the satisfaction of the Holders of a majority in aggregate principal amount of the Outstanding
Securities any such violation within seven (7) days after discovery thereof.



     (b) Intentionally omitted.



     (c) Notwithstanding the provisions of Section 10(a) the Company shall be permitted
during the Modification Period to issue common or preferred shares of the Company’s stock (each, a
“New Stock Class”) and to declare dividends upon such New Stock Class, provided that (i) such
dividends are permitted to be declared without declaring or paying dividends upon or otherwise
making payments upon any other Equity Interests (except to comply with the REIT status maintenance
requirements described in Section 10(a)); (ii) the holders of such New Stock Class shall
not receive dividends that exceed 15% per annum of the purchase price of such New Stock Class; and
(iii) not more than 25% of the capital raised from the issuance of such New Stock Class is used to
repurchase, redeem or otherwise acquire Equity Interests of the Company. If at any time the
Company elects to issue a New Stock Class and more than 25% of the capital raised from the issuance
of the New Stock Class is used for the repurchase or redemption of any common or preferred stock of
the Company, then the Company may elect, and shall be deemed to have elected to, terminate the
Modification Period effective nine (9) months after such repurchase or redemption. If the Company
has otherwise violated or breached the terms hereinabove, then the Company shall notify the Holders
and shall cure such violation or breach to the satisfaction of the Holders of a majority in
aggregate principal amount of the Outstanding Securities within seven (7) days, the failure of
which shall be deemed an election to terminate the Modification Period effective nine (9) months
after such repurchase or redemption and such election shall not be deemed to constitute an Event of
Default. So long as no Event of Default has occurred and is continuing, from and after the
Modification Period Termination Date, there shall be no limitation on the Company’s rights to issue
common or preferred shares of the Company’s stock, declare or pay any dividends or distributions
on, or redeem, purchase or



56









 







otherwise acquire, or make a liquidation payment with respect to, any of the Company’s common
or preferred stock or other Equity Interests.



     SECTION 10.7 Waiver of Covenants.



     The Company may omit in any particular instance to comply with any covenant or condition
contained in Sections 10.5 and 10.6 if, before or after the time for such compliance, the
Holders of at least a majority in aggregate principal amount of the Outstanding Securities shall,
by Act of such Holders, either waive such compliance in such instance or generally waive compliance
with such covenant or condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall become effective,
the obligations of the Company in respect of any such covenant or condition shall remain in full
force and effect.



     SECTION 10.8 Treatment of Securities.



     The Company will treat the Securities as indebtedness of the Company, and the amounts, other
than payments of principal, payable in respect of the principal amount of such Securities as
interest, for all U.S. federal income tax purposes.



     SECTION 10.9 Inspection Rights.



     During the Modification Period, upon written notice from the Holders of a majority in
aggregate principal amount of the Outstanding Securities at least five (5) Business Days in
advance, the Company and Guarantor shall permit representatives appointed by the Holders the
Holders of a majority in aggregate principal amount of the Outstanding Securities to examine the
books and records of account of the Company and Guarantor and its subsidiaries (and to make copies
thereof and extracts therefrom) and to discuss the affairs, finances and accounts of such Persons
with, and to be advised as to the same by such management representatives of the Company and its
subsidiaries as the Holders of a majority in aggregate principal amount of the Outstanding
Securities may reasonably request, either in person at the Company’s offices or telephonically, all
at such reasonable times and intervals during normal business hours as the Holders of a majority in
aggregate principal amount of the Outstanding Securities may reasonably request, at the expense of
the Company. Notwithstanding the foregoing, so long as no Event of Default has occurred and is
continuing the inspections provided for herein shall be limited to once per calendar quarter.
Except to the extent (i) required by law, (ii) required by any court order, or any directive of a
Governmental Authority, or (iii) that any such information is available or accessible in the public
domain, the Holders shall maintain all information disclosed and/or copied in the course of any
such inspection confidential in all respects, except that it may share such information with the
Trustee, any collateral manager for the Holders, any other Holder and any of their respective
counsel provided that such Person agrees to maintain the confidentially of such information.



ARTICLE XI




Redemption of Securities




     SECTION 11.1 Optional Redemption.



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     The Company may, at its option, on any Interest Payment Date, on or after July 30, 2011,
redeem the Securities in whole at any time or in part from time to time, at a Redemption Price
equal to one hundred percent (100%) of the principal amount thereof (or of the redeemed portion
thereof, as applicable), together, in the case of any such redemption, with accrued interest,
including any Additional Interest, through but excluding the date fixed as the Redemption Date (the
“Optional Redemption Price”).



     SECTION 11.2 Special Event Redemption.



     Prior to July 30, 2011, upon the occurrence and during the continuation of a Special Event,
the Company may, at its option, redeem the Securities, in whole but not in part, at a Redemption
Price equal to one hundred seven and one half percent (107.5%) of the principal amount thereof,
together, in the case of any such redemption, with accrued interest, including any Additional
Interest, through but excluding the date fixed as the Redemption Date (the “Special Redemption
Price”).



     SECTION 11.3 Election to Redeem; Notice to Trustee.



     The election of the Company to redeem any Securities, in whole or in part, shall be evidenced
by or pursuant to a Board Resolution. In case of any redemption at the election of the Company,
the Company shall, not less than forty-five (45) days and not more than seventy-five (75) days
prior to the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee in writing of such date and of the principal amount of the Securities to be redeemed
and provide the additional information required to be included in the notice or notices
contemplated by Section 11.5. In the case of any redemption of Securities, in whole or in
part, (a) prior to the expiration of any restriction on such redemption provided in this Indenture
or the Securities or (b) pursuant to an election of the Company which is subject to a condition
specified in this Indenture or the Securities, the Company shall furnish the Trustee with an
Officers’ Certificate and an Opinion of Counsel evidencing compliance with such restriction or
condition.



     SECTION 11.4 Selection of Securities to be Redeemed.



     (a) If less than all the Securities are to be redeemed, the particular Securities to be
redeemed shall be selected and redeemed on a pro rata basis not more than sixty (60) days prior to
the Redemption Date by the Trustee from the Outstanding Securities not previously called for
redemption, provided, that the unredeemed portion of the principal amount of any Security shall be
in an authorized denomination (which shall not be less than the minimum authorized denomination)
for such Security.



     (b) The Trustee shall promptly notify the Company in writing of the Securities selected for
redemption and, in the case of any Securities selected for partial redemption, the principal amount
thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the case of any Security
redeemed or to be redeemed only in part, to the portion of the principal amount of such Security
that has been or is to be redeemed.



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     (c) The provisions of paragraphs (a) and (b) of this Section 11.4 shall not apply with
respect to any redemption affecting only a single Security, whether such Security is to be redeemed
in whole or in part. In the case of any such redemption in part, the unredeemed portion of the
principal amount of the Security shall be in an authorized denomination (which shall not be less
than the minimum authorized denomination) for such Security.



     SECTION 11.5 Notice of Redemption.



     (a) Notice of redemption shall be given not later than the thirtieth (30th) day,
and not earlier than the sixtieth (60th) day, prior to the Redemption Date to the
Trustee and each Holder of Securities to be redeemed, in whole or in part, (unless a shorter notice
shall be satisfactory to the Trustee).



     (b) With respect to Securities to be redeemed, in whole or in part, each notice of redemption
shall state:




     (i) the Redemption Date;




     (ii) the Redemption Price or, if the Redemption Price cannot be calculated prior to the
time the notice is required to be sent, the estimate of the Redemption Price, as calculated
by the Company, together with a statement that it is an estimate and that the actual
Redemption Price will be calculated on the fifth Business Day prior to the Redemption Date
(and if an estimate is provided, a further notice shall be sent of the actual Redemption
Price on the date that such Redemption Price is calculated);




     (iii) if less than all Outstanding Securities are to be redeemed, the identification
(and, in the case of partial redemption, the respective principal amounts) of the particular
Securities to be redeemed;




     (iv) that on the Redemption Date, the Redemption Price will become due and payable upon
each such Security or portion thereof, and that any interest (including any Additional
Interest) on such Security or such portion, as the case may be, shall cease to accrue on and
after said date; and




     (v) the place or places where such Securities are to be surrendered for payment of the
Redemption Price.



     (c) Notice of redemption of Securities to be redeemed, in whole or in part, at the election of
the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name
and at the expense of the Company and shall be irrevocable. The notice if mailed in the manner
provided above shall be conclusively presumed to have been duly given, whether or not the Holder
receives such notice. In any case, a failure to give such notice by mail or any defect in the
notice to the Holder of any Security designated for redemption as a whole or in part shall not
affect the validity of the proceedings for the redemption of any other Security.



     SECTION 11.6 Deposit of Redemption Price.



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     Prior to 10:00 a.m., New York City time, on the Redemption Date specified in the notice of
redemption given as provided in Section 11.5, the Company will deposit with the Trustee or
with one or more Paying Agents an amount of money sufficient to pay the Redemption Price of, and
any accrued interest (including any Additional Interest) on, all the Securities (or portions
thereof) that are to be redeemed on that date.



     SECTION 11.7 Payment of Securities Called for Redemption.



     (a) If any notice of redemption has been given as provided in Section 11.5, the
Securities or portion of Securities with respect to which such notice has been given shall become
due and payable on the date and at the place or places stated in such notice at the applicable
Redemption Price, together with accrued interest (including any Additional Interest) to the
Redemption Date. On presentation and surrender of such Securities at a Place of Payment specified
in such notice, the Securities or the specified portions thereof shall be paid and redeemed by the
Company at the applicable Redemption Price, together with accrued interest (including any
Additional Interest) to the Redemption Date.



     (b) Upon presentation of any Security redeemed in part only, the Company shall execute and the
Trustee upon receipt of a Company Order shall authenticate and deliver to the Holder thereof, at
the expense of the Company, a new Security or Securities, of authorized denominations, in aggregate
principal amount equal to the unredeemed portion of the Security so presented and having the same
Original Issue Date, Stated Maturity and terms.



     (c) If any Security called for redemption shall not be so paid upon surrender thereof for
redemption, the principal of and any premium on such Security shall, until paid, bear interest from
the Redemption Date at the rate prescribed therefor in the Security.



ARTICLE XII




Subordination of Securities




     SECTION 12.1 Securities Subordinate to Senior Debt.



     The Company covenants and agrees, and each Holder of a Security, by its acceptance thereof,
likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this
Article XII, the payment of the principal of and any premium and interest (including any
Additional Interest) on each and all of the Securities are hereby expressly made subordinate and
subject in right of payment to the prior payment in full of all Senior Debt.



     SECTION 12.2 No Payment When Senior Debt in Default; Payment Over of Proceeds Upon
Dissolution, Etc.



     (a) In the event and during the continuation of any default by the Company in the payment of
any principal of or any premium or interest on any Senior Debt (following any grace period, if
applicable) when the same becomes due and payable, whether at maturity or at a date fixed for
prepayment or by declaration of acceleration or otherwise, then, upon written notice of such
default to the Company by the holders of such Senior Debt or any trustee therefor, unless and until
such default shall have been cured or waived or shall have ceased to exist, no direct or



60









 







indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or
agreed to be made on account of the principal of or any premium or interest (including any
Additional Interest) on any of the Securities, or in respect of any redemption, repayment,
retirement, purchase or other acquisition of any of the Securities.



     (b) In the event of a bankruptcy, insolvency or other proceeding described in clause
(d) or (e) of the definition of Event of Default (each such event, if any, herein
sometimes referred to as a “Proceeding”), all Senior Debt (including any interest thereon accruing
after the commencement of any such proceedings) shall first be paid in full before any payment or
distribution, whether in cash, securities or other property, shall be made to any Holder of any of
the Securities on account thereof. Any payment or distribution, whether in cash, securities or
other property (other than securities of the Company or any other entity provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least to the extent provided
in these subordination provisions with respect to the indebtedness evidenced by the Securities, to
the payment of all Senior Debt at the time outstanding and to any securities issued in respect
thereof under any such plan of reorganization or readjustment), which would otherwise (but for
these subordination provisions) be payable or deliverable in respect of the Securities shall be
paid or delivered directly to the holders of Senior Debt in accordance with the priorities then
existing among such holders until all Senior Debt (including any interest thereon accruing after
the commencement of any Proceeding) shall have been paid in full.



     (c) In the event of any Proceeding, after payment in full of all sums owing with respect to
Senior Debt, the Holders of the Securities, together with the holders of any obligations of the
Company ranking on a parity with the Securities, shall be entitled to be paid from the remaining
assets of the Company the amounts at the time due and owing on account of unpaid principal of and
any premium and interest (including any Additional Interest) on the Securities and such other
obligations before any payment or other distribution, whether in cash, property or otherwise, shall
be made on account of any Equity Interests or any obligations of the Company ranking junior to the
Securities and such other obligations. If, notwithstanding the foregoing, any payment or
distribution of any character or any security, whether in cash, securities or other property (other
than securities of the Company or any other entity provided for by a plan of reorganization or
readjustment the payment of which is subordinate, at least to the extent provided in these
subordination provisions with respect to the indebtedness evidenced by the Securities, to the
payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof
under any such plan of reorganization or readjustment) shall be received by the Trustee or any
Holder in contravention of any of the terms hereof and before all Senior Debt shall have been paid
in full, such payment or distribution or security shall be received in trust for the benefit of,
and shall be paid over or delivered and transferred to, the holders of the Senior Debt at the time
outstanding in accordance with the priorities then existing among such holders for application to
the payment of all Senior Debt remaining unpaid, to the extent necessary to pay all such Senior
Debt (including any interest thereon accruing after the commencement of any Proceeding) in full. In
the event of the failure of the Trustee or any Holder to endorse or assign any such payment,
distribution or security, each holder of Senior Debt is hereby irrevocably authorized to endorse or
assign the same.



     (d) The Trustee and the Holders, at the expense of the Company, shall take such reasonable
action (including the delivery of this Indenture to an agent for any holders of Senior



61









 







Debt or consent to the filing of a financing statement with respect hereto) as may, in the
opinion of counsel designated by the holders of a majority in aggregate principal amount of the
Senior Debt at the time outstanding, be necessary or appropriate to assure the effectiveness of the
subordination effected by these provisions.



     (e) The provisions of this Section 12.2 shall not impair any rights, interests,
remedies or powers of any secured creditor of the Company in respect of any security interest the
creation of which is not prohibited by the provisions of this Indenture.



     (f) The securing of any obligations of the Company, otherwise ranking on a parity with the
Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations
from constituting, respectively, obligations ranking on a parity with the Securities or ranking
junior to the Securities.



     SECTION 12.3 Payment Permitted If No Default.



     Nothing contained in this Article XII or elsewhere in this Indenture or in any of the
Securities shall prevent (a) the Company, at any time, except during the pendency of the conditions
described in paragraph (a) of Section 12.2 or of any Proceeding referred to in Section
12.2, from making payments at any time of principal of and any premium or interest (including
any Additional Interest) on the Securities or (b) the application by the Trustee of any moneys
deposited with it hereunder to the payment of or on account of the principal of and any premium or
interest (including any Additional Interest) on the Securities or the retention of such payment by
the Holders, if, at the time of such application by the Trustee, it did not have knowledge (in
accordance with Section 12.8) that such payment would have been prohibited by the
provisions of this Article XII, except as provided in Section 12.8.



     SECTION 12.4 Subrogation to Rights of Holders of Senior Debt.



     Subject to the payment in full of all amounts due or to become due on all Senior Debt, or the
provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the
holders of Senior Debt, the Holders of the Securities shall be subrogated to the extent of the
payments or distributions made to the holders of such Senior Debt pursuant to the provisions of
this Article XII (equally and ratably with the holders of all indebtedness of the Company
that by its express terms is subordinated to Senior Debt of the Company to substantially the same
extent as the Securities are subordinated to the Senior Debt and is entitled to like rights of
subrogation by reason of any payments or distributions made to holders of such Senior Debt) to the
rights of the holders of such Senior Debt to receive payments and distributions of cash, property
and securities applicable to the Senior Debt until the principal of and any premium and interest
(including any Additional Interest) on the Securities shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Senior Debt of any cash, property
or securities to which the Holders of the Securities or the Trustee would be entitled except for
the provisions of this Article XII, and no payments made pursuant to the provisions of this
Article XII to the holders of Senior Debt by Holders of the Securities or the Trustee,
shall, as among the Company, its creditors other than holders of Senior Debt, and the Holders of
the Securities, be deemed to be a payment or distribution by the Company to or on account of the
Senior Debt.



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     SECTION 12.5 Provisions Solely to Define Relative Rights.



     The provisions of this Article XII are and are intended solely for the purpose of
defining the relative rights of the Holders of the Securities on the one hand and the holders of
Senior Debt on the other hand. Nothing contained in this Article XII or elsewhere in this
Indenture or in the Securities is intended to or shall (a) impair, as between the Company and the
Holders of the Securities, the obligations of the Company, which are absolute and unconditional, to
pay to the Holders of the Securities the principal of and any premium and interest (including any
Additional Interest) on the Securities as and when the same shall become due and payable in
accordance with their terms, (b) affect the relative rights against the Company of the Holders of
the Securities and creditors of the Company other than their rights in relation to the holders of
Senior Debt or (c) prevent the Trustee or the Holder of any Security from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture, including filing and
voting claims in any Proceeding, subject to the rights, if any, under this Article XII of
the holders of Senior Debt to receive cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder.



     SECTION 12.6 Trustee to Effectuate Subordination.



     Each Holder of a Security by his or her acceptance thereof authorizes and directs the Trustee
on his or her behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination provided in this Article XII and appoints the Trustee his or
her attorney-in-fact for any and all such purposes.



     SECTION 12.7 No Waiver of Subordination Provisions.



     No right of any present or future holder of any Senior Debt to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the
part of the Company or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless
of any knowledge thereof that any such holder may have or be otherwise charged with.



     SECTION 12.8 Notice to Trustee.



     (a) The Company shall give prompt written notice to a Responsible Officer of the Trustee of
any fact known to the Company that would prohibit the making of any payment to or by the Trustee in
respect of the Securities. Notwithstanding the provisions of this Article XII or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts that would prohibit the making of any payment to or by the Trustee in respect of the
Securities, unless and until a Responsible Officer of the Trustee shall have received written
notice thereof from the Company or a holder of Senior Debt or from any trustee, agent or
representative therefor; provided, that if the Trustee shall not have received the notice provided
for in this Section 12.8 at least two (2) Business Days prior to the date upon which by the
terms hereof any monies may become payable for any purpose (including, the payment of the principal
of and any premium on or interest (including any Additional Interest) on any Security), then,
anything herein contained to the contrary notwithstanding, the Trustee shall have full



63









 







power and authority to receive such monies and to apply the same to the purpose for which they
were received and shall not be affected by any notice to the contrary that may be received by it
within two (2) Business Days prior to such date.



     (b) The Trustee shall be entitled to rely on the delivery to it of a written notice by a
Person representing himself or herself to be a holder of Senior Debt (or a trustee, agent,
representative or attorney-in-fact therefor) to establish that such notice has been given by a
holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor). In the
event that the Trustee determines in good faith that further evidence is required with respect to
the right of any Person as a holder of Senior Debt to participate in any payment or distribution
pursuant to this Article XII, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, the
extent to which such Person is entitled to participate in such payment or distribution and any
other facts pertinent to the rights of such Person under this Article XII, and if such
evidence is not furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.



     SECTION 12.9 Reliance on Judicial Order or Certificate of Liquidating Agent.



     Upon any payment or distribution of assets of the Company referred to in this Article
XII, the Trustee and the Holders of the Securities shall be entitled to conclusively rely upon
any order or decree entered by any court of competent jurisdiction in which such Proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian,
assignee for the benefit of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the holders of the Senior Debt and
other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this Article XII.



     SECTION 12.10 Trustee Not Fiduciary for Holders of Senior Debt.



     The Trustee, in its capacity as trustee under this Indenture, shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt and shall not be liable to any such holders if it
shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or
to any other Person cash, property or securities to which any holders of Senior Debt shall be
entitled by virtue of this Article XII or otherwise.



     SECTION 12.11 Rights of Trustee as Holder of Senior Debt; Preservation of Trustee’s
Rights.



     The Trustee in its individual capacity shall be entitled to all the rights set forth in this
Article XII with respect to any Senior Debt that may at any time be held by it, to the same
extent as any other holder of Senior Debt, and nothing in this Indenture shall deprive the Trustee
of any of its rights as such holder. With respect to the holders of Senior Debt of the Company,
the Trustee undertakes to perform only such of its obligations as are specifically set forth in
this Article XII, and no implied covenant or obligations with respect to the holders of
such Senior



64









 







Debt of the Company shall be read into this Indenture as against the Trustee. Nothing in this
Article XII shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 6.6.



     SECTION 12.12 Article Applicable to Paying Agents.



     If at any time any Paying Agent other than the Trustee shall have been appointed by the
Company and be then acting hereunder, the term “Trustee” as used in this Article XII shall
in such case (unless the context otherwise requires) be construed as extending to and including
such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article XII in addition to or in place of the Trustee. For the
avoidance of doubt, the Company shall not be permitted to appoint itself or any Affiliate as a
Paying Agent hereunder.



* * * *




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



* * * *




65









 








     IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of
the day and year first above written.



	 	 	 	 	 	 	 	 	 
	 	 	Arbor Realty SR, Inc.
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/
Guy R. Milone, Jr.
	 	 	 	 	   
	 

	 	 	 	Name:	 	Guy R. Milone, Jr.
	 	 	 	 	Title:
	 	Vice
President	 	 
	 	 	 	 	 	 	 	 	 






	 	 	 	 	 	 	 	 	 
	 	 	The Bank of New York Mellon Trust Company, National
Association, as Trustee	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/
Bill Marshall	 	 	 	 
	 	 	 	 	   	 	 
	 

	 	 	 	Name:	 	Bill Marshall	 	 
	 

	 	 	 	Title:
	 	Vice
President	 	 
	 

	 	 	 	 	 	 	 	 






 









 






EXHIBIT A

DETERMINATION OF LIBOR




     With respect to the Securities, the London interbank offered rate (“LIBOR”) shall be
determined by the Calculation Agent in accordance with the following provisions (in each case
rounded to the nearest .000001%):



     (1) On the second LIBOR Business Day (as defined below) prior to an Interest Payment Date
(each such day, a “LIBOR Determination Date”), LIBOR for any given security shall for the following
interest payment period equal the rate, as obtained by the Calculation Agent from Bloomberg
Financial Markets Commodities News, for three-month Eurodollar deposits that appears on Dow Jones
Telerate Page 3750 (as defined in the International Swaps and Derivatives Association, Inc. 1991
Interest Rate and Currency Exchange Definitions), or such other page as may replace such Page 3750,
as of 11:00 a.m. (London time) on such LIBOR Determination Date.



     (2) If, on any LIBOR Determination Date, such rate does not appear on Dow Jones Telerate Page
3750 or such other page as may replace such Page 3750, the Calculation Agent shall determine the
arithmetic mean of the offered quotations of the Reference Banks (as defined below) to leading
banks in the London interbank market for three-month Eurodollar deposits in an amount determined by
the Calculation Agent by reference to requests for quotations as of approximately 11:00 a.m.
(London time) on the LIBOR Determination Date made by the Calculation Agent to the Reference Banks.
If, on any LIBOR Determination Date, at least two of the Reference Banks provide such quotations,
LIBOR shall equal such arithmetic mean of such quotations. If, on any LIBOR Determination Date,
only one or none of the Reference Banks provide such quotations, LIBOR shall be deemed to be the
arithmetic mean of the offered quotations that leading banks in the City of New York selected by
the Calculation Agent are quoting on the relevant LIBOR Determination Date for three-month
Eurodollar deposits in an amount determined by the Calculation Agent by reference to the principal
London offices of leading banks in the London interbank market; provided that, if the
Calculation Agent is required but is unable to determine a rate in accordance with at least one of
the procedures provided above, LIBOR shall be LIBOR as determined on the previous LIBOR
Determination Date.



     (3) As used herein: “Reference Banks” means four major banks in the London interbank market
selected by the Calculation Agent; and “LIBOR Business Day” means a day on which commercial banks
are open for business (including dealings in foreign exchange and foreign currency deposits) in
London.



EXH. A-1









 





EXHIBIT B




FORM OF OFFICERS’ CERTIFICATE UNDER SECTION 10.3




     Pursuant to Section 10.3 of the Indenture, dated as of May ___, 2009 (as amended or
supplemented from time to time, the “Indenture”), between Arbor Realty SR, Inc., as issuer (the
“Company”) and The Bank of New York Mellon Trust Company, National Association, as trustee, each of
the undersigned hereby certifies that, to the knowledge of the undersigned, the Company is not in
default in the performance or observance of any of the terms, provisions or conditions contained in
the Indenture (without regard to any period of grace or requirement of notice provided under the
Indenture), for the [fiscal/calendar] year ending on
___, 20___ [, except as follows:
specify each such default and the nature and status thereof].



     Capitalized terms used herein, and not otherwise defined herein, have the respective meanings
assigned thereto in the Indenture.



     IN
WITNESS WHEREOF, the undersigned have executed this Officers’ Certificate as of                    , 20                    .



	 	 	 	 	 
	 
	 

	 	 

Name:
	 	 
	 

	 	Title: [Must be the Chairman of the Board, a
Vice Chairman of the Board, the Chief
Executive Officer, the President or a Vice
president of Arbor Realty SR, Inc.]	 	 






	 	 	 	 	 
	 
	 

	 	 

Name:
	 	 
	 

	 	Title: [Must be the Chief Financial Officer,
the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of Arbor
Realty SR, Inc.]	 	 






EXH. B-1









 






Schedule A

Form of Officer’s Financial Certificate




     The undersigned, the [Chief Financial Officer/Treasurer/Assistant Treasurer/ Secretary/
Assistant Secretary, Chairman/Vice Chairman/Chief Executive Officer/President/Vice President]
hereby certifies, pursuant to Section 7.3(b) of the Junior Subordinated Indenture, dated as of May
[___], 2009 (the “Indenture”), among Arbor Realty SR, Inc. (the “Company”) and The Bank of New York
Mellon Trust Company, National Association, as trustee, that, as of [date], [20___]:



     [FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial statements
(including the balance sheet, income statement and statement of cash flows, and notes thereto,
together with the report of the independent accountants thereon) of the Guarantor and its
consolidated subsidiaries for the three years ending [date], 20___.]



     [FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and consolidating
financial statements (including the balance sheet and income statement) of the Guarantor and its
consolidated subsidiaries for the fiscal quarter ending [date], 20___.]



     The financial statements fairly present in all material respects, in accordance with U.S.
generally accepted accounting principles (“GAAP”), the financial position of the Guarantor and its
consolidated subsidiaries, and the results of operations and changes in financial condition as of
the date, and for the [quarter] [annual] period ending [date], 20___, and such financial statements
have been prepared in accordance with GAAP consistently applied throughout the period involved
(expect as otherwise noted therein).



     There has been no monetary default with respect to any indebtedness owed by the Guarantor
and/or its subsidiaries (other than those defaults cured within 30 days of the occurrence of the
same) [, except as set forth below:].



     IN WITNESS WHEREOF, the undersigned has executed this Officer’s Financial Certificate as of
this ___ day of                    , 200[___].



	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

Arbor Realty SR, Inc. 


333 Earle Ovington Blvd., Suite 900


Uniondale, NY 11553


(516) 832-7408
	 	 







SCH. A-1